Random Ramblings

You can also read this at BeingFinWise __ When you look around for investments, there is a glut - of investment products, of products packaged as investments and products masquerading as investments. However, when it comes to spending real money you need to have a right mix of investments. There is no one right approach towards investments, and there can be several approaches one can take. However, eventually it boils down to one number - what is the expected return on investment (ROI)?  For some products - like fixed deposits, it is fairly straightforward, and probably a good number to benchmark.  Currently,  Most of the banks offer 7-8% rate of interest for 1-2 year duration fixed deposits (actual returns can be lower depending upon tax you need to pay).  PPF (Public Provident Fund)  is currently offering 8% rate of interest Employee Provident Fund (EPF) offers 8.55% rate of interest. If you are a salaried employee you can also top up your EPF (Employee Providen

Originally published at BeinfFinWise __ Giving loans is a risky business. Business of banks and financial institutions rely on people taking loans and then repaying it, thus giving them profits. Many have built a fortune based upon giving loans. Loans also serve an important function for the economy by being a facilitator to businesses, housing, automobiles and other elements of consumption.  However,  what is good for financial institutions may not necessarily be good for you, especially when it comes to loans. While some loans may be good loans and help you prosper, there are several others which may derail your financial plans, if any! Taking loans can also lead to compounding work against you - a situation which anyone with long term financial goals would like to avoid. (Lot of the below is based upon Indian context. However, variants of this will be applicable to many places across the world) 1. Credit card debt Credit card defaults cos t a lot in terms of i

You can also read this on BeingFinWise __ How you handle your personal finances, can go a long way in determining you overall financial well-being. If you are good at handling it, you can be on path to financial independence even with a decent (not necessarily high) income. Conversely, if you don't handle your personal finances well, you may end up never being financially independence even though you may be making tons of money.  Much has been already written about the basic principles of personal finances that can help you move ahead in direction of your financial goals, and frankly, it is not a rocket science.  Here are my 2 cents on the principles of personal finance which can enable you reach closer to your financial goals. All seemingly obvious, yet often forgotten.  1. Keep expenses less than earning  Pretty obvious. Isn't it? Yet many of us fail to follow it. If your expenses exceed your income, then soon you'll lend up in a debt trap (personal loan, cred

You can also read this on BeingFinWise __ Credit cards are often too attractive to resist. Many of them come loaded with some good welcome gifts, some good offers, a good credit period and the promise of enabling you fulfill your dreams via credit limit. Yet, for many people, especially first timers, this euphoria vanishes before few months. The underlying reason for most of them is - "I don't know how the money vanishes and I land up with so much of credit card bill". In other words, they are unable to control expenses. Credit cards can be very helpful in organizing your expenses, getting rewarded via reward points and earning interest as you defer your payments by around a month on average.  However, use of credit cards, if indiscriminate, can soon backfire. You need to stop using credit cards if - You are an impulse shopper and don't think twice before buying stuff worth thousands - with/ without any clearance sale. When you are unable to pay your car

You can also read this on BeingFinWise __ Almost everyone wants to have an amazing lifestyle - with best possible food in best possible places, awesome travel destinations, a swanky car, few trending gadgets, elite memberships and many other symbols which can proudly announce- "I have arrived". Yet a lot of us get so obsessed with chasing this lifestyle that before we realize, we are on a downward spiral and caught in the vortex of lifestyle trap. This becomes more pronounced when our income/ sources of earning fails to keep pace with lifestyle inflation led spending. And this is a sure shot sign of you falling into lifestyle trap. The best step to avoid chasing lifestyle. The next best option is to realize that you are falling into this trap. Here are five signs that you are falling into a lifestyle trap. You are looking to upgrade your "I have arrived" possessions like iPhone, car, Fitbit etc. rather too  frequently. And often when you don't even n

Investing is a often a long journey, and to make the best out of it, one needs to follow the right process and have a clear sense of direction. There may be many ways in which one can follow the right approach (if there is any!), and all of them can be correct.  However, as one embarks on this path it is important to ask the right questions and seek justified answers (which may or may not turn out to be correct, but at least there is a method and not madness in the approach.) 1. What is your purpose of investing? Asking this question is the beginning of your investment journey. Any systematic approach to investment entails knowing your goals (e.g. kids' education, your marriage, financial independence, buying a house, a comfortable lifestyle post retirement etc.) and aligning your approach towards it. And this goal should be more than just "everyone is doing it " or " i have some spare cash" (You may also be interested in - What is the purpose of invest

You can also read this on  BeingFinWise   __ Buying a house is a big decision for most  of the people. And more so for a first time buyer. And for someone who can afford it (with home loan and associated EMIs, most of the times) it is not an uncommon investment. In fact, lot of buyers buy homes as a investment, rather than as a place of residences. Given the amount of money one commits while buying a house which can be hefty 7 or 8 digit number (in Rupee terms) it is important to do a due diligence before taking the plunge and buying a house. Here are some of the common mistakes to avoid as you look to buy a house for living or just as an investment. For calculation & illustration I'll consider price of the house as Rs. 50 Lac. Of course, if you live in a metro city, you may wonder what you'll get for this amount! 1.  Stretching too much with home loan The fact that you are eligible for X amount of loan doesn't necessarily mean that you use the entire a

It is not uncommon to see people taking personal loans. It is also not uncommon to see banks & NBFCs pushing for personal loan. For the users, personal loans provide immediate cash to fulfill their requirements - e.g. funding a wedding, vacation, house construction or repairs, buying furniture, unforeseen medical emergency and so on. For banks, it provide a great way to increase profits, since the interest rate is usually higher, given the relative insecure nature of personal loans. If you are a regular user of personal loan, then all may not be well. Personal loans come with its own set of problems, and are something one should ideally be staying away from it. Bankers may however disagree, and may sell you the idea of fulfilling your dreams using a personal loan and so on. But then, they make money out of it! Here are few reasons why you should be avoiding personal loans.

You can also read this article on BeingFinWise __ As Albert Einstein once famously said, compound interest is the eight wonder of the world. Whether it is a wonder of the world or not, it is surely an amazing concept. If you understand it, you can make it work for you (via investments). If not, if can work against you (via debts). That way, compounding can be a double edged sword. One of the most well-known investment tactics that many people wish they had implemented (but seldom do) is the "start young" tactic. This investment approach assumes that rates of return are compounded. Yet, often the idea of compounding is assumed to come from income-paying investments - e.g. fixed deposits On the contrary, compounding can also come in the different shapes & sizes - like profits in mutual funds, equities or other assets. For example, suppose equity has gained an average of 12% in value every year could be said to have a compounded rate of return of 12%. This is

eCommerce is changing the way lot of us shop today. And websites/ Apps like Amazon, Flipkart, Myntra, Bigbasket etc. are now extremely popular among internet users in India. Most of these come up with regular sale & offers, often linked to a payment method (Amazon Pay, Credit Card, UPI etc). But there is something more that can help you squeeze a better deal - using affiliates to get cashbacks. (as discussed in one of the earlier articles)   Here is how you can get cashbacks on Amazon (and several other eCommerce sites) Sign up with an affiliate partner. Cashkaro , Gopaisa , JioMoney , Jetprivilage , Payback etc. are some of them.  Use their website App to go to Amazon website (not Amazon mobile app) Shop normally, checkout and pay. Please ensure that your shopping cart is empty before shopping & your don't close the browsing session in between.  Amazon gives a commission to these partners for referring traffic, and these partners pass on a good chunk of commissio

Credit card can be a wonderful thing. It can help you manage your cashflows, get some attractive deals and reward you with their loyalty program. Yet, credit cards don't come without its share of problems. And most of these problems are not about credit cards, but human behaviour. If not managed properly, they can soon lead you into a downward financial spiral which entails a never ending series of interest payments, balance transfers, bad credit rating, mental stress and more. So, it is important to handle credit cards with care and avoid credit card debt like plague.

Whether one admits it or not - most of our lifestyle needs are inflationary in nature. This is in addition to the inflation that affects our day to day lives. As life progresses one may feel the need to get better house, better cars, better facilities for kids, better vacations, more healthcare needs and so on. On few of the things where you were spending Rs. 100, you may be spending Rs. 200 two years later. And during this time the inflation may be like 5 percent. So, how does this translate into your financial plan?

What will you do if you get a windfall gain, of say USD 1 Million? Will you continue working or will you retire? Will keep working but be choosy? Will you switch to something more "meaningful"? Will you think of the next 9 million? Will nothing change in your life?

Link to original post A lot of buyers, especially first-timers, worry about whether or not they’re going about their home search the right way. On the one hand, buyers fret that if they find their "dream home" too early, they might be missing out on something better. But, on the other, if the process takes a while, they worry that they’ll never find a home that works for them. The FOMO is real. Keep reading to find out if you’re on track with your home search and what you should do if you find that you need to go back to the drawing board. How many homes should you see? Honestly, that depends. While we understand the impulse to try and rely on hard-and-fast statistics, homebuying is a truly personal experience rather than a science. Trust your intuition. You know your needs, likes, and dislikes better than anyone else. You’ll know when you’ve landed on the property that makes the most sense for you to call home. That said, though, there are a few

Read somewhere - "It is paradoxical that as our incomes rise, we find it more and more difficult to live within our means.  " ( Source ) We live in the age of abundance, where, more often than not, we have lot of options, many of which hadn't even existed few decades back. Yes we are often unhappy and keep longing for more. Got a car? Probably you'll want' a bigger one. And then even bigger, probably an SUV. And then probably a Audi or Mercedes or BMW ...  Wear a watch? You may want upgrade to a swanker one. And then probably something with a charismatic logo. With every increase in means, our goals also increase, usually disproportionately and our lifestyle upgrades. But at what cost? Does chasing all these lifestyle goals matter? Or, to what extent does it matter? Rather what really matters? Do we often ignore the trade-offs? Things or moments? Lifestyle trap or freedom that arises from financial independence? Showoff that five you adrenaline ru

Chasing returns is a good goal, but ... Are you underestimating the inherent risks while chasing lofty goals like - 18 percent annualized returns via equities? Or doubling your property worth in 5 years via real estate? Or hoping to double your money via cryptocurreny? Are you someone who looks at fixed returns instruments like FD/ PPF etc as something that is for losers? Well, I am no one so say which asset class will give what returns (except fixed returns instruments) but when you are "sold" something with a "grantee" of "assured" x% returns, do you see the risks? Or is seeing risks is for the boring or losers or unexciting people? When you are chasing 15  percent returns via equities, do you understand that there may be times when the returns may be higher but there may be times when returns may be lower, or even negatives. Historically it has always been good and will hopefully continue to be, but are you so over-enthusiastic that you e

Some time back, I happened to read an amazing book called The Power OF Habit by Charles Duhigg . Among many things he talks about in it, one is about different small cues/ triggers and mini-habits which can help shape up larger habits, hopefully for good. Since last couple of years, I have made a constant endeavor to be healthier than before and have cultivated some mini habits that have helped me achieve some of these goals. And I believe that these mini-habits have been quite helpful.  Here are some of the mini habits I tried to adopt while trying to make my lifestyle healthier. Restricting this to 3 for the sake of brevity.  1. Since some time (guess 2-3 years) I have a kind of "permanent alarm"set for 6 AM in the morning (which I disable only if there is some really important). This, on most of the days ensures that I am in a position to get up early, and hence, do some kind of workout. At least, lack of time is not a stopping factor most of the days. So far, it