Category Archives: Financial Planning

4 Ratios which can give a quick idea about your present Financial Health

Share Button
It is amazing how certain subjects we dread or find boring in our primary school days become interesting later on in life. Maths was not really my most loved subject in schooling years. As I started working, I realised I was using many of the concepts in my daily job. One of the most extensively used was ratios. Ratios help compare two or more numbers. I used it to analyse company balance sheets in my earlier job. In fact, knowingly or unknowingly, we all take help of ratios in our daily lives. Be it measuring in probabilities, in proportions while cooking, interpreting health diagnostic reports, etc.

Similarly, ratios can be used in your personal finance lives too. Ratios are a beautiful way to interpret your personal finances. It will give you some rough idea about where you stand financially.

How you can create a separate Vacation Fund for frequent getaways

Share Button
There has been a marked change in the way Indians are holidaying in recent years. Instead of one big break, you will observe that many couples frequently undertake multiple short trips. This is unlike the earlier generation which waited till retirement to plan an international trip or travelled just once in a year. Be it an adventure trip or just relaxing in a resort, a weekend trip is a perfect way for the current generation to unwind. These short trips are undertaken 2-3 times in a year. Planned within a month, the cost of these short trips start from Rs.10,000-15,000, each. If one stays in a more than decent resort, the cost can go up to Rs.30,000-35,000 for a usual family of four. If planned further from the home city and in another state for 4-5 days, the cost can go up to Rs.60,000-70,000 or even more.

3 options to go Digital and protect your important Documents

Share Button

Technology nowadays pervades almost every aspect of our financial lives – from digital banking to automated investing, filing tax returns, buying online insurance, etc. It can help us even in the small things to enable us to stay organised. I am referring to maintaining records of financial documents.

Physical copies always face the risk of damage from fire, wear & tear, etc, or loss and are not retrievable. Nowadays, there are so many documents to take care of like mutual fund & demat statements, insurance policies, tax return statements, credit card & home loan statements, house & office property docs incl. share certificate, health insurance card, etc. Even identity proofs like PAN card, Aadhar Card, Driving License, Voting Card, Passport, etc and educational certificates.

It is a hassle to maintain a big stack and going through heaps of files to locate a document can be cumbersome, especially when at the need of the hour.

Mutual fund Reclassification – how does it impact you as an Investor?

Share Button

If you are a mutual fund investor, then you must be having a brief idea about the recent SEBI directive on mutual fund reclassification. As I write this post, there are many funds which have already reclassified their schemes or are in the process of doing so. This is a big step in regulating the otherwise loose structure of the mutual fund industry where there were too many similar schemes and vaguely defined categories. To start with, there are over 2000 mutual fund schemes on offer and considering the various options like dividend, growth, dividend reinvestment and the variants like direct/indirect, the possible choices are humungous. The new system which has now evolved has rationalised the number of funds per sub-category making an investor’s job much easier.

Herd Behaviour and how it can affect your Financial Decisions

Share Button

Nowadays, the most popular question I come across on personal finance forums is ‘How to buy Bitcoins, is it regulated in India’?  It is one of the top 5 most searched words in Google. Many investors do not know the head and tail of how cryptocurrencies like Bitcoin work. But they are lured by the mind-boggling returns Bitcoin has clocked (300 per cent in just the last quarter as per ET reports) or they know someone who has minted huge money out of it. They do not want to miss the bus too.

In this Digital Age, we humans get fast attracted to any event or news which is trending or ‘the next big thing’. In these times of too much reliance on social media, it is interesting to observe how rumours are created. For instance, people blindly forward news on WatsApp to others which someone else has forwarded to them without checking the veracity of it – be it a hoax on accidents, death of a celebrity, etc.

How much money is sufficient for you?

Share Button

If I ask you how much money is adequate for you, you may find it absurd to answer or will be clueless. You might even interpret from the philosophical aspect. Is the question about being greedy or working just for money?

But this is a practical question. We have all heard of the popular proverb – time is money. The more you work, the more money you make. How you spend your time will determine how much wealth you will create in the future. That’s the logic.

But people have no clue how much money is enough. Typically, how it works in almost every average household is people work at least 10 hours a day, caught up in the daily grind. They earn to cover household expenses, children’s education, pay EMIs, and take regular short breaks to escape from the work rut. Some savings are channelised into investments, mostly fixed & recurring deposits, or an insurance policy with the objective of saving tax. People have no clue whether they are earning enough or saving enough or even investing right.

How much are you worth?

Share Button
Last week i was watching a television series ‘Suits’ based on corporate law. The firm in the series is bleeding and on the verge of bankruptcy. Only 3 loyal partners decide to stick around and keep the firm afloat, vowing to give their everything to the firm. Each of them take a piece of paper and write down a magical number – what they are worth in monetary terms, i.e., their personal net worth to contribute a portion to the firm. Eventually, they bail the firm out of the crisis using their personal wealth.

Calculating personal net worth can be a very interesting exercise and is a good measure to gauge one’s financial health. Imagine telling yourself you are worth Rs.1 crore!  Of course, here we are not taking into account your potential earning capacity, your biggest asset which would be much more.

What would you prefer to be – Rich or Wealthy?

Share Button
You must have heard inspiring rags to riches stories many times. But have you heard stories of riches to rags? They do exist although you may not have heard many. Take the case of celebrities in the movie business. They earn crores, own big houses, drive swanky cars, travel in private jets, wear branded clothes and accessories. (I always naively wondered as a kid whether they repeated any of the clothes they wore!)  They have all the riches in the world, can they ever face financial troubles? Yes, they have. While some have landed in a temporary financial mess, some have gone totally broke.

Power Fund – a Fund for every Woman’s Financial Security

Share Button

While more and more women are becoming financially independent today, many of them are still not actively involved in managing their own hard earned money. This to me is a big irony! They are working but are not financially empowered in a true sense. Financial empowerment for a woman here not just means taking informed decisions about investments, insurance, banking, etc., on her own. It means not getting stuck in a situation which she doesn’t want to be in. She is totally free to live life on her own terms and is not bonded by any societal or family pressure. And the confidence to be truly free also stems from the situation when she has adequate money. That’s where a Power Fund comes in, to provide sufficient financial security.

Can you rely only on health insurance in retirement to meet medical costs?

Share Button

Recently, a dear friend told me how her grandmother slipped in the bathroom and fractured her left hip. The fall was really bad and she had to undergo a hip replacement surgery costing about Rs.4.5 lakhs. Occurrences of slippages in the bathroom and the consequent fractures are common for elderly people. The risk factors increase with ageing as the bones become weak, especially in women. Another friend talked about knee replacement surgery of her mother’s which costed about Rs.7-8 lakhs for both knees. Think about the health insurance our elderly generation must be having – our parents and grandparents. Due to lack of awareness, I bet majority do not have health insurance at all or at most paltry amounts of Rs.1-2 lakhs. Many of them if government employees would probably be covered under group insurance scheme of the Central Government but still the sum assured would be peanuts. Majority are forced to dip into their retirement savings to cover hospitalisation costs or depend upon their children for funds.