Wealthy Mantra

The Future of AI for Finance & Accounting: Navigating the New Frontier

2026-02-09T03:55:00.004+05:30

101 New Year’s Financial Resolutions to Become Wealthy in 2026

2025-12-04T21:01:00.000+05:30

Kickstart 2026 with these 101 smart financial resolutions! From budgeting and investing to debt-free living and wealth building — master your money, finance, grow your wealth, and achieve financial freedom in year 2026.

🎯 Introduction: Make 2026 the Year You Master Money

A brand-new year brings a brand-new opportunity to rewrite your financial story. Whether 2025 was a year of growth or struggle, 2026 can be the year you take complete control of your money and move closer to financial freedom.

These 101 New Year’s Financial Resolutions are designed to help you:

Build a solid wealthy mindset
Strengthen savings habits
Grow wealth through smart investing
Manage debt precisely
Plan for the future with confidence

You don’t need to do all 101 at once — start small, stay consistent, and by next December you’ll be amazed at the progress.

💡 Mindset & Awareness

Take full responsibility for your financial future.
Track every rupee/dollar spent for one month.
Review your net worth quarterly.
Read at least one personal finance book this year.
Cultivate a positive, abundant money mindset.
Stop comparing your lifestyle with others.
Learn to delay gratification.
Write down clear short-, medium-, and long-term financial goals.
Visualize what financial freedom looks like to you.
Stop making excuses about “not having enough to start.”

💰 Budgeting & Saving Habits

Create a simple 50/30/20 monthly budget.
Automate savings every payday.
Maintain a separate emergency savings account.
Save at least 20% of your monthly income.
Identify and cut three unnecessary expenses.
Cancel unused subscriptions.
Use cash occasionally to feel your spending.
Plan monthly groceries in advance.
Use cashback wisely — not impulsively.
Try a “no-spend weekend” monthly.
Auto-transfer funds into SIP or recurring deposit.
Build an emergency fund for 6 months of expenses.
Buy essentials in bulk to save long term.
Review utility bills annually.
Reward discipline, not spending.

📈 Investing & Wealth Building

Start or increase your SIP this year.
Learn stock market basics.
Diversify across equity, debt, and gold.
Review mutual fund performance semiannually.
Begin investing for retirement.
Open a demat account if you don’t have one.
Add index funds for long-term stability.
Understand ETFs and experiment safely.
Focus on time in the market, not timing it.
Invest bonuses instead of splurging them.
Learn to read company financials.
Avoid get-rich-quick schemes.
Rebalance your portfolio once a year.
Invest in personal skill growth.
Track investment returns quarterly.
Understand your risk profile before investing.
Don’t panic during market corrections.
Explore gold ETFs or sovereign gold bonds.
Keep investment documents organized.
Let goals, not emotions, guide investment decisions.

🧾 Debt & Credit Management

Pay off high-interest credit card debt first.
Pay EMIs on time — protect your credit score.
Avoid unnecessary personal or BNPL loans.
Check your credit score every 6 months.
Use credit cards for convenience, not luxury.
Automate bill payments to avoid late fees.
Never use one loan to pay another.
Create a roadmap to become debt-free.
Negotiate lower interest rates where possible.
Understand good vs. bad debt clearly.

🛡️ Insurance & Risk Protection

Review health insurance coverage.
Buy a term life insurance policy.
Keep all premiums paid on time.
Store policies digitally.
Consider critical illness coverage.
Maintain adequate vehicle insurance.
Never mix insurance and investment.
Ensure dependents are covered.
Update nominees regularly.
Educate family about policy details.

🧮 Tax Planning & Compliance

Start tax planning early in the year.
Understand your tax slab and exemptions.
Use Section 80C options wisely.
Keep digital proofs of all tax-saving investments.
Utilize HRA, LTA, and other exemptions.
File ITR before the deadline.
Maintain income & expense records for 3 years.
Track capital gains and TDS quarterly.
Use online filing or consult a CA.
Compare new vs. old tax regime carefully.

💼 Income Growth & Career

Ask for a raise or negotiate pay based on performance.
Start a side hustle or freelance project.
Learn a high-income skill.
Network with financially smart people.
Diversify income via digital products.
Monetize your expertise through blogs or videos.
Create an e-book or mini-course.
Build a personal brand online.
Focus on long-term career growth.
Document accomplishments for future leverage.

🏠 Lifestyle & Smart Spending

Live below your means.
Buy quality, not quantity.
Avoid impulse online shopping.
Plan vacations with a travel fund.
Use discounts smartly.
Cook more, dine out less.
Repair before replacing gadgets.
Sell unused items online.
Follow a 30-day rule before big purchases.
Differentiate wants vs. needs.

🧭 Future Planning & Legacy

Write a will or assign nominees.
Discuss long-term goals with family.
Review estate and inheritance plans.
Start education planning for kids.
Build a retirement corpus early.
Teach financial literacy to someone this year.

🌱 Bonus Tip: Progress, Not Perfection

Don’t overwhelm yourself by chasing all 101 resolutions at once.
Start with five habits per month, track them, and gradually add more.
By the end of 2026, your mindset, money, and life will look completely different.

🧭 Final Thoughts

Wealth isn’t built overnight — it’s created by daily habits, smart decisions, and consistent action.
Use these 101 resolutions as your 2026 Wealth Roadmap. Bookmark this post, revisit monthly, and share it with friends or family who want to grow financially stronger this year.

💬 Which of these resolutions are you starting with first? Share in the comments below!

🏠💰 Should You Prepay Your Home Loan or Invest?

2025-10-29T22:00:00.000+05:30

🔍 The Big Question

If you’ve taken a home loan, you’ve probably wondered —

“Should I repay it early to become debt-free?”
Or “Should I continue the EMIs and invest the extra money for better returns?”

This is one of the most common financial dilemmas for today’s middle-class professionals.
Both options seem smart — one gives peace of mind, the other builds wealth.

So, what’s the right move? Let’s break it down simply.

🧮 Understanding the Two Paths

Option 1: Prepay Your Home Loan

You pay off your loan faster by putting extra money toward your principal.

✅ Pros:
- You become debt-free earlier.
- You save big on total interest cost.
- Your credit score improves.
- Emotional peace — no loan pressure.
❌ Cons:
- You lose liquidity (cash in hand).
- Once you prepay, that money is locked into your house — it doesn’t earn you anything.
- You might miss higher returns from long-term investments.

Option 2: Keep the Loan & Invest Instead

You continue paying EMIs as usual and invest your surplus in assets like mutual funds, stocks, or bonds.

✅ Pros:
- Your money stays liquid and working for you.
- You can potentially earn higher returns than your loan interest rate.
- You build parallel wealth.
❌ Cons:
- You stay in debt longer.
- Market returns are not guaranteed.
- Requires discipline and emotional control — you must actually invest, not spend.

📊 Let’s Simplify With a Case Study

Meet Rahul, a 35-year-old working professional.

Home loan amount: ₹40 lakhs
Loan tenure: 20 years
Interest rate: 8% per year
Monthly EMI: ₹33,458
Extra money available yearly: ₹3 lakhs (bonus or savings)

Now, Rahul has two choices.

🏠 Case A: Prepay the Home Loan

Rahul uses his ₹3 lakh every year to prepay the principal.
Result:

His loan ends in ~10 years instead of 20.
He saves around ₹19–20 lakhs in total interest.
He becomes completely debt-free by age 45.

👉 Peace of mind, no EMIs, complete ownership of his home.

📈 Case B: Invest Instead

Rahul invests ₹3 lakh every year in a balanced mutual fund earning an average return of 10% per year.
Result after 10 years:

Investment value grows to about ₹52 lakhs.
His home loan continues normally — after 10 years, he has paid roughly ₹25–26 lakhs in EMIs and still owes around ₹24 lakhs principal.

At this stage, Rahul can part-prepay the remaining ₹24 lakhs using his investments and still have money left over.

👉 He ends up with both — a paid-off home and extra wealth.

⚖️ The Key Insight

Parameter	Prepay Loan	Invest Instead
Debt-Free Timeline	Faster	Slower
Total Interest Paid	Lower	Higher
Liquidity	Low	High
Potential Wealth	Moderate	Higher
Risk	Low	Medium
Peace of Mind	High	Depends on discipline

💬 What Financial Experts Suggest

The smarter choice depends on your interest rate vs. expected investment return.

If your loan rate > 9%, consider prepaying — it’s like earning a risk-free return of 9%.
If your loan rate < 7% and you can earn 9–12% in mutual funds or stocks, invest instead.
Always keep an emergency fund and insurance before either option.

🧘‍♂️ A Balanced Strategy (Best of Both Worlds)

You don’t have to choose just one.
Here’s a practical 50-50 approach many smart investors use:

Use half your surplus to prepay the loan (reduce interest burden).
Invest the other half in long-term assets (build parallel wealth).

Over 10 years, you’ll enjoy:

Lower debt,
Steady investments,
Flexibility for future goals.

💡 Simple Example

Let’s say you earn ₹10 lakhs per year.
You save ₹2 lakhs after expenses.

Option A → You prepay = peace of mind
Option B → You invest = wealth growth
Option C → You split = peace + wealth ✅

🧭 Final Thoughts

There’s no one-size-fits-all answer.
But here’s the golden rule:

If being debt-free helps you sleep better, prepay.
If you’re comfortable with moderate risk and disciplined investing, invest.

At the end of the day, your financial decision should align with your personality, risk tolerance, and goals — not just numbers on paper.

Because true wealth is not just about having money —
It’s about having control, choice, and peace of mind.

✍️ Author’s Note

If you liked this article, visit www.wealthymantra.blogspot.com for more practical guides on personal finance, wealth building, and smart money habits.

9 Signs You Are Smart with Money

2025-10-24T08:10:00.004+05:30

Being financially smart isn’t just about earning a high income. It’s about how effectively you manage, save, and grow your money. This article highlights key habits and behaviors that demonstrate financial intelligence and responsibility.

Let’s take a closer look at each of these indicators and what they mean for your financial well-being.

1. Emergency Fund of 3–6 Month

A solid emergency fund is a cornerstone of financial security. It provides a safety net for unexpected expenses like medical bills, car repairs, or job loss. By setting aside three to six months of living expenses, you protect yourself from falling into debt when life throws surprises your way. An emergency fund acts as your financial safety cushion when life throws surprises your way — like a sudden job loss, medical emergency, or urgent car repair.

💡 Example:
If your monthly expenses are $2,500, you should aim to save between $7,500 and $15,000 in an easily accessible account.

Why it matters: This fund prevents you from relying on high-interest credit cards or loans during tough times. It gives you peace of mind knowing you’re financially prepared for the unexpected.

2. Maintain a Good Credit Score (700+)

A strong credit score reflects responsible borrowing and repayment behavior. It opens doors to better loan terms, lower interest rates, and even job opportunities. Smart money managers pay their bills on time, keep credit utilization low, and monitor their credit reports regularly. A high credit score shows lenders that you’re reliable with money. It helps you qualify for better interest rates on loans, mortgages, and even car insurance.

💡 Example:
Someone with a credit score of 760 might get a mortgage rate of 5.0%, while another person with a 650 score could pay 6.5%. Over 30 years, that difference can add up to tens of thousands of dollars in savings.

Pro Tip: Always pay bills on time, keep your credit card utilization below 30%, and review your credit report annually.

3. Invest Regularly

Investing consistently, whether in stocks, bonds, real estate, or retirement accounts, is a sign of financial foresight. Regular investing allows you to take advantage of compound interest and market growth, helping your wealth grow over time. Smart money managers don’t let their money sit idle — they make it grow through regular investments. Whether it’s mutual funds, ETFs, or retirement accounts, consistency beats timing.

💡 Example:
If you invest $200 a month at a 7% annual return, you’ll have over $240,000 after 35 years — all from steady contributions and compound growth.

Start small: Even $25–$50 a month can build serious wealth over time.

4. Budget System

Budgeting is the foundation of financial control. Having a system to track income, expenses, and savings goals helps you make informed decisions, avoid overspending, and stay on track toward your financial objectives. Budgeting doesn’t mean restriction, it’s about control and clarity. A good budget helps you understand where your money goes and how to align it with your goals.

💡 Example:
Try the 50/30/20 rule:

50% on needs (rent, food, bills)
30% on wants (dining out, entertainment)
20% on savings or debt repayment

Bonus Tip: Use apps like YNAB, Mint, or EveryDollar to automate tracking and stay accountable.

5. Diverse Set of Assets

Financially savvy individuals don’t put all their eggs in one basket. Diversification, spreading investments across various asset types, reduces risk and ensures that poor performance in one area doesn’t derail your entire portfolio. Financially smart people don’t put all their eggs in one basket. They build a mix of assets — stocks, real estate, bonds, and even side businesses — to protect against risk.

💡 Example:
If the stock market dips, your real estate investment or savings bonds might still perform well. That balance helps you stay stable no matter what the economy does.

Goal: Aim for a portfolio that reflects your age, goals, and risk tolerance — for example, 70% stocks and 30% bonds for a long-term investor.

6. Minimal to No Debt

Being smart with money often means managing debt wisely or avoiding it altogether. Paying off high-interest loans and using credit strategically frees up income for savings and investments, rather than interest payments. Being debt-free — or managing debt wisely — is a huge sign of financial intelligence. Not all debt is bad, but understanding how to use it strategically is key.

💡 Example:
Paying off a high-interest credit card (20% APR) is smarter than rushing to pay off a 3% student loan.

Strategy: Use the avalanche method (tackling highest interest rates first) or the snowball method (paying off smallest balances first for motivation).

7. Live Below Your Means

Living below your means is one of the simplest yet most powerful financial habits. It ensures that you’re not overspending and allows you to save and invest the difference. This discipline creates long-term financial stability and independence. Living below your means doesn’t mean deprivation — it means choosing financial freedom over instant gratification.

💡 Example:
Instead of buying a brand-new $40,000 car with a loan, buy a reliable used car for $15,000 and invest the difference. Over time, that investment could grow dramatically.

Smart money mindset: Focus on long-term satisfaction, not short-term splurges.

8. High Financial Literacy

Understanding how money works—taxes, investing, inflation, and budgeting—gives you control over your financial future. Financial literacy empowers you to make informed decisions and avoid costly mistakes. Financial literacy is your superpower in today’s world. Understanding how money, taxes, and investments work helps you make smarter decisions.

💡 Example:
Knowing the difference between a Roth IRA and a traditional IRA can save you thousands in taxes over your lifetime.

How to build it: Read books like The Millionaire Next Door or Rich Dad Poor Dad, listen to finance podcasts, and take free online courses on budgeting and investing.

9. Plan for the Future

Financially intelligent people think ahead. Whether it’s saving for retirement, children’s education, or long-term goals, planning ensures that future needs are met without financial strain. Financially smart people think long-term — not just about next month, but the next decade. They plan for retirement, future education expenses, and even estate planning.

💡 Example:
Someone contributing to a 401(k) with an employer match is essentially getting free money every paycheck. That’s strategic planning in action.

Pro Tip: Review your financial goals annually and adjust your savings or investment plan as your life evolves.

Final Thoughts

Financial intelligence isn’t about perfection—it’s about consistency, awareness, and smart decision-making. If you recognize yourself in many of these signs, you’re likely on a strong path toward lasting financial health. And if not, it’s never too late to start developing these habits—one smart money move at a time. Each small step moves you closer to financial independence. Remember, financial success doesn’t happen overnight. It’s built through habits — saving consistently, spending intentionally, and always learning.

So, take a moment today to check how many of these nine signs describe you. And if you’re not there yet — start with just one. Your future self will thank you. 💪

Setting SMART Goals for 2025: A Path to Success and Growth

2024-12-30T00:16:00.005+05:30

Setting SMART Goals for 2025: A Path to Success and Growth

Starting the new year with clear, meaningful goals is a great way to set yourself up for a year of personal growth and achievement. But how do you begin? The secret lies in setting SMART goals. Here’s how to use the SMART framework and make your goals truly yours in 2025.

Start with Your Core Values

Before diving into goal-setting, take a moment to understand what truly matters to you. Aligning your goals with your core values makes them more meaningful and gives you the motivation to stick with them. For example, if financial security is important to you, your goals might include paying off debt or building an emergency fund.

Understanding your “why” is key. Dig deeper into why a goal matters to you. Ask yourself “why” five times to uncover the true motivation behind it. This will provide the intrinsic drive you need when challenges arise.

The Power of SMART Goals

The SMART framework helps you create clear, achievable goals. The SMART framework stands for Specific, Measurable, Achievable, Realistic, and Time-bound. Each part helps clarify your goals and gives you a roadmap to success.

Specific: Define clearly what you want to achieve. Avoid vague statements and make sure it's focused. e.g. "I want to save $5,000 for an emergency fund" instead of "I want to save money."
Measurable: Your goal should have clear criteria to track progress. Break down your goal into trackable steps, like saving $5,000 by saving $417 each month for the next 12 months to reach your target.
Achievable: Set a goal that’s challenging yet within reach, considering your resources and constraints. If you set goals that are too big, you may get discouraged. e.g. "I will cut back on dining out to save $100 per month to reach my savings goal."
Realistic: Stretch your limits but set goals that are still within reach. Ensure that the goal is realistic given your current situation and capabilities. e.g. "I’ll save $5,000 by reducing unnecessary spending and using a budgeting app."
Time-bound: Set a clear deadline for your goal to create urgency and a sense of accountability. For example, "I will save $5,000 for an emergency fund within one year."

Short-term vs Long-term Goals

It’s helpful to separate your goals into short-term and long-term categories. Short-term goals help you build momentum toward bigger, long-term goals. If your long-term goal is to pay off $50,000 in debt, break it down into smaller chunks like paying off $1,000 in three months.

This method not only keeps you focused but allows you to celebrate small victories along the way.

Prioritizing Your Goals

Once you’ve outlined your goals, it’s time to prioritize. Focus on what will have the greatest impact on your life. Maybe paying off high-interest debt will give you immediate relief, or perhaps a quick win with a short-term goal will boost your confidence.

You can also prioritize by time frame—starting with quick, achievable goals can create momentum, while long-term goals may require consistent effort.

Align Your Goals with Your Budget

Your financial goals should be aligned with your budget. If you’re serious about building an emergency fund, allocate a specific amount to this goal each month. For instance, if you want to pay off $2,000 in credit card debt by June 2025, set aside $300 a month.

As you progress, revisit and adjust your budget as needed, especially if unexpected expenses come up. Staying proactive will help you stay on track and reach your goals.

Implementing Your Goals

Setting goals is only the first step; the next is taking action. One way to keep yourself motivated is to visualize your goals with a vision board. Keep your goals front and center to remind yourself why you started.

Accountability also plays a big role. Share your goals with a friend, family member, or even on social media. This can help you stay focused and encourage you to keep going.

Remember, be kind to yourself. Progress may be slow at times, but small, consistent steps will eventually lead to big results. If things don’t go as planned, don’t be afraid to adjust your goals. Flexibility is key.

Staying Focused and Motivated

Staying motivated throughout the year can be challenging, but connecting small milestones to your bigger goals can help keep you on track. Also, replacing negative thoughts with positive affirmations can shift your mindset and increase your motivation.

Lastly, remember that life is unpredictable. If setbacks occur, don’t view them as failures. Instead, use them as an opportunity to reassess and adjust your plans accordingly.

Conclusion: Ready to Achieve Your Goals?

By setting SMART goals and aligning them with your core values, you’ll create a clear path for success. Break your goals down into short-term and long-term categories, prioritize them, and keep them connected to your budget. Stay focused with visual reminders, accountability, and a positive mindset. With determination and flexibility, you can make 2025 your best year yet. Let’s make it happen!

Are you suffering from overthinking?

2023-05-21T03:28:00.004+05:30

Are you suffering from overthinking?

You overthink because you are not able to control your mind. If you can control your mind, you can control your life, too. Work on your mental models to become highly successful & happy individual.

1. Identify the indicators:

Begin by familiarizing when you're coming under patterns of overthinking. Keep in mind of repeated or uncontrollable ideas coupled with attempt to comprehend their hidden reasons.

2. Challenge your thoughts:

When you notice yourself overthinking, challenge the thoughts that are causing it. Ask yourself if there is any evidence to support these thoughts, or if they are just assumptions or fears. Dig down and find the root cause of your overthinking.

3. Practice mindfulness:

Mindfulness can help you focus on the present moment and reduce the power of overthinking. Engage in tasks like yoga exercise or reflection that urge mindfulness coupled with existing in the minute. Growing this recognition can lessen the grasp of overthinking on your mind. Living in the present moment is the key to eliminating overthinking.

4. Take decisive action:

Overthinking often leads to indecision and inaction. Break your goals into smaller, manageable steps and focus on completing them one at a time. Action speaks louder than words, so prioritize taking concrete steps towards your objectives.

5. Set aside "worry time":

Designate a certain time every day to resolve your concerns as well as overthinking. Throughout this duration take down your worries yet after that establish them apart till the list below day. This technique promotes self-awareness plus assists consist of overthinking propensities.

Remember, overcoming overthinking is a gradual process that requires persistence and patience. By consistently applying these strategies, you'll gradually diminish the hold that overthinking has on your life, leading to greater happiness and fulfillment.

9 Habits Help You in Achieving Your Goals

2023-05-15T07:44:00.004+05:30

Here are nine habits that can help you become unstoppable in achieving your goals and fulfilling your potential:

1) Set clear goals:

Have a clear vision of what you want to achieve and set specific, measurable goals that will help you get there.

2) Create a plan:

Break down your goals into smaller, achievable tasks and create a plan of action to accomplish them.

3) Stay focused:

Stay focused on your goals and avoid distractions that can derail your progress.

4) Take action:

Take consistent action towards your goals, even when faced with challenges or setbacks.

5) Embrace failure:

Use failure as a learning opportunity and a chance to grow, rather than a reason to give up.

6) Be adaptable:

Be open to change and willing to adjust your approach as needed to achieve your goals.

7) Build strong relationships:

Surround yourself with supportive and like-minded people who can help you achieve your goals.

8) Practice self-care:

Take care of your physical and mental health through regular exercise, healthy eating, and stress-reducing activities like meditation or yoga.

9) Continuously learn and grow:

Keep learning new skills and knowledge, and continuously seek opportunities for personal and professional growth.

Intelligent Investment Learnings in Stock Market by Madhusudan Kela

2021-01-31T23:03:00.000+05:30

About Madhusudan Kela:

Madhusudan Kela is an Indian businessman and investor from Kurud, Chhattisgarh. He was chief investment strategist at Reliance Capital until 2017. He is currently the promoter of MK Ventures and a member on Board of various companies. Madhusudan Kela frequently comments on Capital Markets

He graduated in 1991 from K. J. Somaiya Institute of Management Studies and Research (SIMSR), Mumbai with a Masters in Management Studies. Thereafter he did equity research at CIFCO and Sharekhan. In 1994, he joined Motilal Oswal to start its institutional desk before moving to UBS in 1996. In 2001, he joined Reliance Mutual Fund.

During this tenure, Reliance Mutual Fund`s assets grew from nearly Rs 200 Crore in 2002 to more than Rs 1 Lakh Crore in 2011. Under his leadership, Reliance Mutual Fund received many awards and was rated the most trusted Mutual Fund House for three consecutive years by The Economic Times. He is also one of the investors in the Healthcare startup Sukino Healthcare Solutions Pvt. Ltd.

Kela was awarded the Business Standard Equity Fund Manager of the Year (2004) by Manmohan Singh, the Prime Minister of India.

Intelligent Investment Learnings in Stock Market by Madhusudan Kela

A. Investment Learnings - Portfolio Allocation/Stock Selection:

1. There is always a bull market somewhere - One of the keys to successful investing is to understand the macro direction, and get your thematic calls right. There is always an investment opportunity to be found in every market condition. Why swim against the tide, when you can swim right with it.

2. Prudent capital allocation - Getting our Asset Allocation right drives majority of the total long-term return of an investment portfolio.

3. Choosing the right Horse - Look out for businesses or companies (horse) with scalability potential and capability to generate hard cash, maintain consistently good ROEs. However, in some cases, we also seek out investments where there can be frenzy in a particular sector e.g. IT, Pharma etc.

4. Selecting the right Jockey - Always look out for promoters with passion/hunger and integrity towards the business. Only a passionate jockey can drive the horse to the winning line!

5. If you have 3 aces, bet big! - The most important rule to creating significant wealth, is to get it big. We only need a few big ideas to work. Companies like Amazon, Google, Apple, are anyways not created everyday. Hence, when you have all the right ingredients for the investment and are confident on top of the business, bet sizing is what will differentiate your portfolio!

B. Investment Learning – Portfolio Monitoring

1. Tracking of Portfolio - While longer term convection is very important, close monitoring is very important, so you are in sync in with reality. A lot of investors end up chasing the next multi bagger, when their earlier investment bets would have done the tricks! Being convicted with what you have and constantly evaluating that conviction is critical to successful investment monetization.

2. Play for the Bull Run and not for the Bounce - Differentiate between tactical trades and investment. Cut your losses whenever you realize that a particular investment was a bad one.

3. Making Money vs Being Right - The market does not acknowledge being right. It only acknowledges making money. So, focus on the investments that will make you the money, rather than trying to be right on every investment. Concentrated bets are the key.

4. The Art of Selling - Selling is an art; most people do not appreciate it enough. Only if you know how to sell and when to sell, will your paper profits ever materialize into something concrete.

5. Well defined investment process with clear exit strategies - Have high conviction in your process and adhere to it with discipline. Only this will allow you to hold on to your winners better, and let go of the bad investments.

C. Investment Philosophy – Behavioral

1. Patience and Long-term mind set - In long term Wealth creation “Time” becomes the most determinant of returns. We prefer staying invested over longer periods on our conviction bets. Divi’s Lab, to quote an example. We have invested for over than 14 years, through thick and thin.

2. Perception Gaps - Sometimes, great business can remain under appreciated by markets for long. When this gap corrects, it leads to a huge opportunity for wealth creation. Indiabulls Group is an excellent example – one of the biggest wealth creators in India.

3. Digest the right information and ignore the noise – This is biggest Challenge in the present world.

4. Keep it Simple - Stay focused and have a disciplined approach.

5. Investing can not be modelled for disruptions - Companies like Google, Amazon, Tesla, Facebook, Netflix etc. have to bought early, with a strong belief the underlying opportunity and a disregard for the near-term numbers. This, is also an art few understand.

6. Finally - Do it yourself only if you have the required understanding. Else there are lot of good people doing this for a nominal fee. Rarely on experts to do their jobs. Devote time, learn and look for opportunities.

Reference and Source:
https://en.wikipedia.org/wiki/Madhusudan_Kela
https://www.youtube.com/watch?v=aEHBzfzlDV8
Nation Next YouTube Channel

“Rome cant be built in a day”

2021-01-30T15:37:00.001+05:30

“Rome cant be built in a day”

Same thing applies to your wealth too. In this fast changing world, everyone expects everything to happen quickly and reacts quickly.

One thing which cannot change is “Slow and steady wins the race”.

In your childhood, you would have heard the race between Tortoise and Rabbit.

Rabbit will move ahead and sleep as it covered large distance. Tortoise will slowly and steadily marches ahead and wins the race.

SIP in mutual fund is like Tortoise winning the race. You can start a SIP and just forget it. In the sense, don’t react to market movements very often. Monitor once every 3 months or 6 months to gauge the performance.

As some of your goals like kids education, kids marriage, retirement are all for long term, you need to wait till your goal of final planned amount is reached.

If investing and making money is easy, everybody would have jumped in this SIP mode and achieved the results. You need patience to create wealth and hence the challenge of less participation.

Do you have patience ?

7 Tips to Improve your Financial Health during this Corona Lockdown

2020-05-02T12:17:00.000+05:30

The world is reeling under the Corona Virus Pandemic. Many people are experiencing job losses as companies across globe shut production. Markets have also shown huge fluctuation wiping our crores of investor's wealth. Needless to say, people are concerned about their finances due to COVID-19 pandemic. With so much uncertainty around, it’s important now more than ever to focus on saving and reduce spending. During this Corona lockdown, follow some essential financial tips to improve your financial health.

1. Keep Emergency Fund

Emergency is unpredictable and difficult to manage. The old saying that holds always. Save as much as possible. Maintain a budget. Avoid expenses that you can. In short, keep an emergency fund.

2. Insurance Cover

Situation and instances like COVID-19 can happen anytime. Do check that you have proper health and term insurance cover. Check your health coverage benefits and know how much it will cost you during any critical illness. If needed, increase the premium amount by taking more coverage. This will benefit you during a health emergency. Take proper health coverage for your family. Do an honest assessment.

3. Continue with SIPs

Keep your SIPs. Don't do panic withdrawal. You never know what is in store for you in future. To keep you financially strong, keep saving your money by continuing your SIPs and long-term investments. Don’t panic and redeem all your investments due to the huge volatility in the markets. Rather, if possible, continue your SIPs, it will help you in creating bigger corpus when the market’s rebound. Top up your existing investment in equity using asset allocation strategy.

4. Check your EMI/Instalments

If you have not opted for the banks EMI moratorium, and not paid your EMIs instalments yet, your credit score might get impacted. Either you opt for a moratorium or pay your dues on time. Good credit score will help you in the future loan if needed. Don’t ignore your CIBIL score.

5. Relook Investment Portfolio

It is advisable to relook at your investment portfolio and just sell the equity or any holdings which are not giving you benefit since long. One can sell and buy some good stocks and invest in strong margins coupled with low debt companies for the long term. Invest for the long term.

6. Go Digital

As per Government health guidelines we need to keep social distancing to avoid COVID-19. So, it is better to use a digital wallet as much as you can. Completely avoid going to your Banks or ATMs for any financial need and use. Use online banking, cards, UPI or wallets for payments and managing investments. Avoid using cash, keep ATM visits minimum.

7. Refrain from Panic Buying

Don’t spend your money buying food items, groceries, medicines just to stock up things due to fear of lockdown. Essential supplies will continue. Only buy those items which are very much important apart from daily use items. Panic buying will put a strain on your finances.

Source: https://www.indiatvnews.com/business/news-coronavirus-crisis-tips-to-keep-financial-safety-during-covid-19-lockdown-605896

10 Golden Rules of Investing

2018-12-18T23:19:00.000+05:30

Investing does not have to be complicated and it should not be exciting either. Putting your hard-earned money to work in the financial markets is all about helping you get what you want from life while making sure you can sleep easily at night. It is not about riding roller-coasters.

To invest, you need to draw up a clear plan, do your own research, build in a margin of safety by always thinking about the valuation and, ultimately, be patient. By all means include some speculative picks if you wish, but ensure they are only a small part of your portfolio. Looking for an oil explorer whose shares double, treble and double again is exciting but such firms are very rare. There are a lot more which have a consistent record of paying out the dividends which really make the markets work for you, once they are reinvested.

The trick is how to select the picks which best suit your investment goal, target returns, appetite for risk and time horizon. These 10 golden rules summarise entire guide and they should help everyone spot profitable portfolio picks and also escape likely failures.

1. Have a plan

The financial plan of every investment is the tool that maximizes your potential profit and minimizes risk. Depending on how fast you need make a decision and how complex your investment is, you can elaborate a detailed and accurate plan or simple plan. Before you put any cash to work, you must know what you are investing for. This will condition your target return, time horizon and appetite for risk and therefore the asset classes best suited for your aims.

2. Never invest in something you do not understand

Peter Lynch of Fidelity was one of the most successful fund managers ever, and he said he never touched anything he could not describe on one sheet of paper with a crayon. You will be angry with yourself if you lose money on something and cannot explain why. Stick to what you know and always do your own research. You can’t manage or improve something that you don’t fully understand. So before you start, gain knowledge about the subject of your investment.

3. Diversify your portfolio

“Never put all your eggs in one basket”, if the basket falls, you have no eggs left for breakfast. Same applies to investments. Diversify between debt and equity and even further within those. Invest in Mutual Funds and some direct equity if you are inclined towards equity. For debt too, choose bank FDs, Debt Mutual Funds, balanced funds, FMPs etc. Diversify. Also you can look at Gold, Silver, Real Estate, if you have the funds. If one investment class doesn’t work, the other will support it.

4. Respect the market

Stunning rises and huge crashes show that markets are not efficient, but you must respect their views. When you buy or sell something you are saying the market is wrong, so you need to have a good reason why.

5. Start with something small

There is one great strategy to start with. Start with a simple investment. Treat it as a testing ground. See how your rules work. Draw conclusions. Make adjustments. Improve. And then prepare for bigger profits. The earlier you start, the faster you will be reaping the benefits.

6. Go against the herd

Punters go skint backing favourites on the horses, and although it may work in the short-term, purely following hyped, momentum names can be dangerous. To get the best long-term returns you will eventually need to sell what everyone is talking about and buy what is being ignored – providing the valuation is right and growth, risk and quality checks are met.

7. Cash is king

Profit is a matter of opinion; cash flow is a matter of fact. Some unscrupulous managers will try and dress up their profits but they cannot fiddle cash. Accidents happen when companies look profitable but generate little cash so focus your research here when looking at individual stocks.

8. Dividend reinvestment is vital

Patient portfolio builders should focus on firms with a strong competitive advantage and a good reason why clients want to pay for their goods or services. This confers the pricing power that enables companies to generate cash and pay the dividends that really get your savings to tot up over time. There are many funds dedicated to such firms, too.

9. Never invest money that you can’t afford to lose

This parameter of your investment protects your business against losses too big to handle. Your business should run smoothly and be managed evenly and rationally. Investment business is certainly not about gambling. It is about gradually multiplying your assets.

10. Focus on value, not price

Prices are temporary, but values are eternal. Prices usually depend on values. If you are able to recognize the real value of your investment, then you will never pay too much or too less. Prices are often a matter of speculation, while values are built on passion and dreams to make a difference. Most of the time it’s good to ignore facades, diligently prepared by PR agencies and know what goes on backstage. e.g. you would not enter a restaurant and buy a pizza regardless of whether it cost Rs. 50, Rs. 100, Rs. 200 or more. You would use your judgement to decide what is good value, and the same discipline must apply to financial investments. Several simple metrics, in the context of growth, risk and quality, will help you decide whether a valuation is cheap, expensive or about right.

Do you have any specific principle of investment that your follow? It will be interesting to share your views, leave your thoughts in the comments below.

What should be your investment strategy when you are in debt?

2018-06-25T10:23:00.000+05:30

While managing your personal finance, you may face a dilemma of giving appropriate weightage to either investment or debt since both are important aspects of your personal finance. If you ignore debt repayment, then compounding interest will quickly spiral out and you may easily get into financial distress. If you ignore investment, then you may fail to accomplish many of your financial objectives. So, it is important to maintain the right balance between debt and investment.

Now, when you are already in debt, should you still invest money or wait till your existing debt becomes zero?

To invest or avoid while in debt

Certain important factors like interest rate can help you decide on whether to invest or pay the debt first. If the existing and expected interest rate on debt is substantially lower as compared to the interest or return you expect to earn from an investment, then you should prefer to invest over prepaying. For example, prevailing interest rate on a home loan is around 8.5 percent p.a. and you have earned extra income through annual bonus. You have the option to prepay the loan or to invest the bonus in a balanced fund, which is expected to give a return of 12 percent p.a. (assumed) after tax. In this case you, should continue to pay home loan EMI and use the fund for investing in a balanced fund to earn a better return, considering a risk while investing money in a mutual fund. If the interest rate on loan is close to or higher than the expected return from investment, then use your extra income to first clear the outstanding debt and thereafter use the remaining fund, if any, for investment in appropriate instrument.

Assessment of existing liquidity

Another important factor that you must check before using the income to pay debt or invest is to assess your prevailing liquidity situation. If you find it difficult to manage your regular monthly expenses after paying the EMI, then using the surplus income for repaying such debt could help you to reduce the financial burden.

Repaying the debt on time is very crucial for maintaining a good credit score. If you have surplus fund and you invest it, then do assess whether you will be able to liquidate it at the time of emergency without any capital loss. If yes, then you can think of investing money over prepaying the loan amount. For example, if you face financial emergency, such as job loss or an accident, and you don’t have enough money to repay existing debt EMI, then you can use this investment for emergency cash flow. However, if you are not sure about retaining the value of investing funds and its liquidity factor, then it is better to avoid such investment.

Invest surplus in appropriate instrument

If you are planning to take a loan for other big ticket purchases, then instead of using the surplus income to repay your existing loan, you can use it to invest in appropriate instrument and later on use it to pay for your buying. For example, you are planning to buy a car after three months and you got a surplus income of Rs. 5 lakh. You have an existing home loan with Rs. 20 lakh outstanding and remaining tenure of 15 years, with an interest rate at 8.8 percent per year. Instead of using the surplus income to repay your home loan and taking a car loan to buy a new vehicle, you should invest it in a liquid fund for three months. The invested money can come handy later on for your car buying.

It's important to maintain a balance between risk and reward

To make a correct decision you should focus on maintaining a fine balance between risk and reward while selecting one of the options. You must analyze the impact of your decision on your retirement goal and your other financial objectives. Try to cut down the risk associated with your debt by utilizing the reward you expect to get by investing the fund.

Team WealthyMantra

Source: Moneycontrol

20 Important Lessons from Rich Dad, Poor Dad

2018-06-04T16:07:00.000+05:30

Many people work very hard in their life, few work 10+ hours a day but eventually do not save much and never get rich. Robert Kiyosaki, author of the book explains smart ways to escape this “Rat Race”.

Important Lessons from the Book (Summary):

1. For most people, their profession is their income and they live through their work to survive. For rich people, assets they maintain, invest is their income.

2. If, I want to buy something, I must first generate enough cash flow from my assets to cover these expenses. Buy luxuries last, not first.

3. Excess cash flow generated by my assets should be invested again into other assets.

4. Do not simply aim for more income, aim for more valuable assets, repeat the circle.

5. Reduce your expenses low and reduce your liabilities.

6. Create a corporation to protect your assets and reduce tax expenses. An employee earns, gets taxed, and then spends what is left.

7. Know a little about a lot. Learn something about accounting, investing, markets, the law, sales, marketing, leadership, writing, speaking, and communication. Know little about everything you can. Also See Bill Gates talking about the same point.

8. Work to learn, don’t work to earn. Find a job where you can learn one or more of the above mentioned skills. Alibaba’s Jack Ma also emphasized on this particular point here.

9. Do not simply buy investments. first learn how to invest as no one else can do it better than you.

10. You become what you study, so choose your study materials carefully and do read a lot.

11. Every rich person has lost money at some point, but many poor people have never lost a dime. Playing not to lose money means you will never make money. “Winning means being unafraid to lose.

12. “Failure inspires winners and defeats losers. Do not be afraid of losing and be bold enough to admit and learn from the failure. No one is born perfect.

13. Be in control over your emotions. Do not let fear or opinions of the general public dictate your actions.

14. Most sellers ask too much. It is rare that the asking price is lower than something is worth.

15. Surround yourself with winners. Sit with people who are smarter than you and you can learn from them.

16. Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain.

17. Pay yourself first. Each month, first invest a certain amount of money into income generating assets before you pay your bills. Short of money, use this pressure to keep yourself on your toes.

18. Dream big, have a clear game plan in your mind. Always seek answers to important questions such as Why do you want to earn more passive income? For me, because I do not want to work all my life. I want to have control over how I decide to spend my time. Also, I want to support my parents financially because they helped me all my life.

19. Develop a skill to listen. Listening is more important than talking. Do not constantly argue and think with your mouth. Ask questions, grab as much knowledge as you can from others.

20. On the market: do not follow the crowd, and do not try to time the market. Profits are made when you buy, not when you sell.

Source: Web

10 Small Money Moves That Can Have a Big Impact

2017-04-23T12:37:00.000+05:30

When it comes to money, small changes may work better than big ones. It's because smaller bite-size changes are more likely to grow into new habits that stick. These changes may seem minor, but they can have a major impact.

Try these 10 small money moves to build habits that can have a major impact on your financial success.

1. Save a Little

Sure, saving a lot would be great. But saving what you can is even better. Maybe that’s Rs. 10 a month into the piggy bank on the kitchen counter, putting an extra Rs. 100 a month into your bank savings account, or beginning a 1 percent contribution to your provident fund. Small moves like this have a big impact over time.

2. Make an Extra Payment

What if you made one extra mortgage payment a year? Or rounded your car payment up to the nearest hundred dollars? A little extra here and there can mean your mortgage is paid off years in advance or your car is paid off months in advance.

One word of caution — with mortgages you may have to make the entire extra payment at once rather than paying a little more each month. If you add a little extra each month the lender may not apply the extra payment to principal. Contact your lender to find out how to pay extra in a way that the excess payment reduces your principal balance.

3. Learn Your Bracket

Taxes matter. If you pay them, you should learn how they work. Start by studying the tax brackets. When you look at the bracket you’ll see that after your taxable income exceeds certain limits, the tax rate goes up. Once you understand this you can see the benefit of contributing higher income amounts to a retirement/provident funds or traditional PPF - the deductible contributions save you money at the higher rate.

4. Switch to an Index Fund

Just because you can’t see the fee being deducted doesn’t mean it doesn’t matter. Mutual funds deduct fees before they give your share of the investment returns. It’s been proven that one of the best ways to find the best performing mutual funds is to switch to lower fee funds — which usually means using an index fund. As your account balances grow this simple change can save you thousands year after year.

5. Project

It would be hard to find your way through a thick forest if there was no trail. It can also be hard to save for retirement without a sense of where your actions will take you. Online retirement calculators project your path - they help you see how your savings will grow over time and what kind of income might be available to you later. If you’ve never run a projection - get online and give it a go.

6. Read One Finance Book

A single book can impart knowledge that will serve you for a lifetime. Even if you don’t like reading, surely you can get through one book? The one I would recommend is Behavior Gap, by Carl Richards. It’s a great book on how our behaviors cause us to unknowingly make dumb decisions with our money.

7. Organize

Financial stuff can feel overwhelming. A simple step you can use to make it more manageable is to get your financial information organized. I was buried in debt at one point in my life. I didn’t want to see how bad it was - but it was only after I forced myself to organize all my credit card statements and tally up the totals that I began to make significant progress toward paying things off.

8. Buy Used

Cars, furniture, clothing… you can almost always find what you want and pay less for it by buying used. If you get in the habit of looking for used items first you can save hundreds, sometimes thousands, every transaction.

9. Cancel Something

Too many of you have some type of recurring charge that is coming out of your bank account or being charged to your credit card — and it is for something you don’t even use. It might be a magazine subscription, annual membership renewal fee, or something you signed up for accidentally. Scour your statements and set aside the time it will take to cancel those things you don’t use.

10. Turn off Financial TV

One client told me that one of the things he really liked about working with a financial advisor was that he didn’t watch financial TV anymore. He found life to be far more relaxing once he tuned that stuff out. Everyone can benefit from turning off the financial stock tip shows. Put a solid long-term plan in place and watch stuff that will make you laugh - not stuff that will only stress you out.

https://www.thebalance.com/small-money-moves-with-big-impact-2388361

Asset Allocation: 5 Things You Should Know

2017-02-15T21:49:00.000+05:30

The general saying – “Don’t put all eggs in one basket” – in itself explains the concept of asset allocation. Asset allocation is the process of deciding how to divide your investment across several asset categories like stocks, bonds/fixed deposits real estate, gold and cash. The general goal is to minimize volatility while maximizing return. The process involves dividing your investment among asset categories that do not all respond to the same market forces in the same way at the same time. Diversifying your funds in different asset classes helps you to gain from volatile market conditions in the long run. Asset allocation is a key to become wealthy in a life.

Asset allocation is defined as an investment strategy that aims to balance risk and reward by allocating a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.

Individual's goals — Individual investment goal like short term, medium term or long term
Risk tolerance — how willing you are to experience the market’s ups and downs in exchange for more growth potential over the long term
Time horizon — how long you expect you’ll need your assets to last

Here are five things you must know before doing asset allocation:

1. Know asset classes

Investment options are broadly classified into equity, debt, hybrid and cash. The exposure of investment to funds should be according to the timeline of financial goals decided by investors. Howsoever, the market’s up and down requires certain asset allocation strategy from time to time.

2. Understand your strength

Asset classes are chosen according to the risk appetite of investors. Basically, it is the tolerance power that an investor can take over the market. An aggressive investor is some who can take 70% to 80% of exposure in equity while a moderate investor can go for 50%-50% or 60%-40% and a conservative investor whose main goal is to protect its core value can take an exposure of 20% to 30% in equity. As a thumb rule, we can say that if your life expectancy is 100 years, so whatever your age is today the same amount of debt exposure you can take and the remaining can be taken into equity as per the time horizon.

3. Evaluate your portfolio

It is necessary to observe the performance of your portfolio which can be reviewed by checking which funds are able to beat their respective benchmarks (Nifty and Sensex). Strategic asset allocation plays an important role between investors to investors on the basis of their risk tolerance and appetite. Investors should understand the critical sides of the portfolio. Therefore, it is advisable to consult a financial advisor in every review process.

4. Diversification

To make your investment portfolio less risky, it is necessary to diversify your investment component. It means that diversification itself requires a concern over market trend and moreover to optimize the risk properly you need to review over funds category from time to time and apply asset allocation strategy as per the required need.

5. Structure and re-balance your portfolio

At times it becomes necessary to understand the market movement and accordingly you need to release and buy investment asset. Investment vehicles like mutual funds require a level of understanding among investors. In fact, it is one of the best investment options which enjoys the power of economies to scale in which pooling of funds in a single scheme is done by a number of investors which in turn is much higher than getting a single stock. A single stock can have its own cons related to market fluctuations. Keeping a regular watch on your portfolio taking suggestions from your advisor is the basics which each and every investor should follow and regularize their asset at every interval of time.

The Bottom Line

Asset allocation can be an active process to varying degrees or strictly passive in nature. Whether an investor chooses a precise asset allocation strategy or a combination of different strategies depends on that investor's goals, age, market expectations and risk tolerance. The right asset allocation can help you maintain your confidence through economic ups and downs and may even increase your potential for better returns over time.

#WealthyMantra

You can also read:

Never fool yourself into confusing "Speculation" with "Investment"

Dos and Don’ts of Financial Planning

2017-02-13T23:05:00.001+05:30

Good money habits are the key to financial independence. When you deal with money, you would not want to take any chances. You might do everything right with your money. Yet, you run out of luck when the financial need arrives. These basic dos and don’ts of financial planning could set you on the path to financial success.

Do’s

Identify Your Goals:

Successful financial planning is dependent on the financial goals you set. It is necessary for you to know why you want to draw out a plan. Begin by asking yourself some straightforward questions. Why do you want to save money? What are your short-term and long-term responsibilities? What are your expectations from a retired life? Answers to these could give you a heads-up on your purpose for planning your finances.

Stick to Your Budget:

Understand your current and future financial requirements. This will help you create a budget. However, sticking to the budget is important too! Cheating on a budget is as good as not having one. Know the difference between what you want and what you wish for. Though you could treat yourself to little surprises once in a while, remember to spend less than what you earn.

Make The Right Investments:

Investments are a favorable way to wealth creation. With a little caution, look at the ways to invest your money. Your investments could reap rewards if you choose where to place them. Try and identify what kind of investment suits your needs the best. Ask yourself how much and how often can you set aside money to invest. Can you afford a long-term investment? This could help you make right investments that suit your purpose.

Purchase Insurance:

Money saved is equal to money earned. You can multiply your wealth, or save enough for the lean periods. Buying an insurance plan provides both savings and protection. If you do not have one, you could lose a substantial amount to uncertainty. In an emergency, the funds will have to come out of your savings. Some policies offer added benefits such as tax savings. Some could serve your financial goals along with adding to your wealth. These include retirement or pension plans that give you annuity benefits.

Don’ts

Procrastinate:

Starting early has advantages. You must start financial planning as soon as you can. Delaying this decision will lead to lost opportunities. Starting early also prepares you to prioritize your responsibilities. In the long run, you will have more time by your side to save or to invest. Even if you make wrong decisions, you have time to rectify them. Additionally, you can handle risks better.

Refuse Financial Help:

Financial help does not mean accepting monetary help. That is debt. Financial help is taking financial assistance from a professional to plan better. If your planning efforts have not yielded results, it is alright to look for guidance. A finance advisor or a wealth manager is an expert who will analyze your goals. They could devise a robust plan for you to get to your financial goals.

Go On Credit:

It is easy to have a good time when someone else pays. However, this philosophy is not convenient if you want financial independence. Borrowing money on credit could force you to pay out of your savings later. You could start keeping a check on the number of times you swipe your card. You could also restrict borrowing to fund your passion. A debt can eat into your savings faster than you think.

Mishandle Your Money:

Don’t abuse your money; respect it. You might want to stick to a few thumb rules. Do not leave extravagant amounts as tips. Avoid lending money. Remember to recover any money that you lend. Any money saved under the carpet does not earn interest. Have faith in the power of compounding and invest early. Every penny counts. Therefore, you should be careful in handling your money.

There isn’t a perfect list of dos and don’ts that work. When it comes to financial planning, different approaches work for different individuals. Yet, a more practical approach is likely to make financial planning a success.

#WealthyMantra

10 Essentials to Stay Wealthy in 2017

2017-01-06T13:04:00.000+05:30

Come New Year and its celebration time. It’s generally a happy time spent with near and dear ones. In the same spirit, it’s good to take stock of one’s financial well-being as well and chart a set of resolutions that could help you stay wealthy in the year 2017.

Here’s a list of ten resolutions which could help you with this:

Resolution 1: Go digital. With online banking, wallets and UPI seeing a significant penetration and surge, a large portion of transactions can be done digitally. What’s more, one can earn some good karma by introducing these facilities to one’s maid, cook or driver!

Resolution 2: Move excess money in the bank to an FD or a liquid fund. Too much money in the bank is not going to help. What with most banks offering 4% on saving accounts.

Resolution 3: Stick to the asset allocation that has been decided for the portfolio. Reams of data have been published outlining the virtues of asset allocation. The trick is to stay the course and not get swayed by short term volatility.

Resolution 4: Continue the SIP even if that near-term data looks shaky. In the short run, SIPs may not appear great, but for a great majority of investors, regular disciplined savings is a tool that can build a nice corpus over time. Caveat here is that one should ensure there aren’t too many or too few schemes in the list. If you are a new investor, it’s always a good time to start an SIP.

Resolution 5: MF scheme selection should be based on long term trends in performance and consistency of fund mandates and managers. Most investors and their wealth managers tend to highlight near term performance over long term consistency. It’s important to allow some time for the portfolio picks to play out. Similarly, while stock picks are great conversation items at parties, selection of the stock needs to be after careful research. Remember, one’s financial well-being is more important than idle party chatter. If an investor does not have the time or inclination to conduct this study, its best to allocate monies to a set of well rated mutual funds.

Resolution 6: The Indian mindset considers Bank FDs to be safe and comfortable. Of course, they are. But, with falling rates along with tax on the income, these are not great long term investment options. Its critical to measure the after-tax returns on any investment. An investor can diversify into Debt MFs and FDs of well rated and safe Institutions (for someone in the low tax bracket).

Resolution 7: A trend that is emerging of late is for wealth managers to offer portfolio management schemes and close ended private equity fund and real estate funds. These sound sophisticated and exotic, which in turn, drives investors to believe that these are superior vehicles to simpler instruments such as mutual funds etc. However, one needs to assess the level of risk, cost and historic performance (if any) before committing to these options. Most have steep exit costs or lock-ins. Hence, exiting may be expensive or not possible at all. If the investment thesis does not play out as expected, there may be no flexibility to exit and reallocate. A detailed study and careful examination is a must, before signing up.

Resolution 8: It is imperative to monitor an existing portfolio at regular intervals. MF schemes may have outlived their utility or may have changed the mandate. Stocks may not have turned out as expected. A clean up ensures robustness of the portfolio. Even better, if there’s a quarterly or a half yearly review built in.

Resolution 9: Current lifestyles have forced us to take stock of insurance needs. While a decent health cover is always helpful, sufficient term life cover is an absolute must. Unit linked plans need to be viewed as investment products and measured accordingly, whereas most investors blissfully, ignore this aspect. Pure term cover works as the best form of life insurance. Period.

Resolution 10: A house keeping exercise will do a world of good in keeping one’s portfolio ship shape. Important documents and bank accounts need to be up to date to reflect the current details. Unused bank accounts need to be shut, as there is no point in retaining too many accounts. An aspect a significant percentage of Indians tend to overlook due to sentimental reasons, is to ensure a will is written. Age is not a consideration here as human life is dynamic and uncertain. Large households and families with special needs, would be well advised to look at setting up Trusts to ensure continuity and smooth transition of wealth.

The 10 commandments outlined above are timeless and thus, it’s always a good time to revisit them. The motto for the year ahead should be simplification and consolidation.

30 minutes a week can go a long way in ensuring a robust financial portfolio.

Cheers to a wonderful 2017!!!

Other Posts: Consider These 7 Things Before You Invest

The Magic of Compounding

2017-01-05T11:20:00.001+05:30

Napoleon Hill author of best seller ‘Think and Grow Rich’ is often credited as saying that ‘Make your money work so hard for you; so that you do not have to work for it.’ Various books have been written on the art and science of making money based on more or less the same principle.

Mathematically speaking ‘Make money work for you’ is called as compounding or simply compound interest. Albert Einstein was amazed by the power of compounding and called it the eighth wonder of the world.

The only way to attain the wealth you desire is to spend less than you earn and to save the difference. The rich are not rich because they earn a lot of money; the rich are rich because they saved a lot of money. Those who become wealthy do so by spending less than they earn. There is no other source of saving, and, by extension, of building wealth.

If saving is the key to wealth, then time is the hand that turns the key to unlock the door. There is no reliable method to quick riches. There are, however, proven methods to get rich slowly. If you are patient, and if you are disciplined, you can produce a golden nest egg that will hatch later in life. It might appear that the pittance you save now could not possibly make a difference, but that is because you haven’t considered the extraordinary power of compound interest.

Before we move on to identifying financial goals and how to achieve them it is important to understand the power of compounding and regular saving.

Understanding Compounding

Regular saving in relatively safer financial instruments yielding moderate returns can work wonders over a long period of time. If a parent starts saving Rs 25 daily for their child from the day he or she is born for the next 25 years at a rate of 10 per cent compounded annually, they would be able to gift the child an amount of Rs 9.25 lakh on his 25th birthday.

Apart from the money the amount will teach the child the advantage of savings. If he learns to save and invest in the same way as his parents and starts saving Rs 3,000 per month religiously in the same instrument earning 10 per cent compounded annually he would be able to get an amount of Rs 1.02 crore at the time of his retirement (60 years).

Compounding works wonders over longer period

Wealth cannot be accumulated overnight, like a tree it needs to be nurtured. Compounding teaches us that it does not take too much of money to save a decent amount. What is required is the discipline of regular saving and time on your side. Longer the time better will be the return.

Take the earlier example of the parent saving Rs 25 daily for a period of 25 years. In order to get the same amount in a span of five years they would have had to save Rs 400 every day. If the parents had saved Rs 150 every day for a period of 10 years they would have been able to save around Rs 9 lakh.

Another way of looking at the above example of retirement planning is that the amount of Rs 3,000 per month saved for 35 years, from the time he starts saying to his retirement, will earn the person Rs 1.02 crore. This is equivalent to receiving Rs 34,000 per month for the next 25 years of his retired life, assuming that the entire amount of Rs 1.02 crore does not earn any more interest post his retirement. In reality the amount of Rs 1.02 crore itself will be earning an interest of Rs 10 lakh per annum if it is invested in a fixed deposit yielding 10 per cent return, which would work out to Rs 83,330 per month.

In other words a small saving at a time when you are working and can afford to save can result in good revenue at a time when you yourself are not earning. This is what Napoleon Hill meant when he said to make your money work for you.

Impact of interest rate on compounding

It is a no brainer to suggest that higher the interest rate higher will be the returns. But interest rates have a magical impact on returns.

We will go back to the parent’s example to understand the impact of interest rates. Assume the same Rs 25 per day is kept in the savings bank earning 4 per cent interest. At the end of 25 years the parent would have been able to give their child a gift of only Rs 3.81 lakh. If on the other hand they would have invested in an 8.5 per cent instrument the return would have been Rs 7.35 lakh. While a 12 per cent instrument would have given them a higher amount of Rs 12.65 per cent.

However, as interest rates rises so does the risk. Higher yielding returns are possible only from riskier instruments like equities.

The problem with higher returns are that they are not steady and predictable in nature. Because of this unpredictability element they are difficult to work with in long term planning. There might be number of years when the return would be negative which would be counterproductive for the purpose.

Compounding and goal planning

Financial goal planning has to be on a steady and predictable return. Starting to save early in life prevents us from taking riskier bet. It is harder for your savings to catch up with your needs if you start investing later.

How to get rich slowly

You can make compounding work for you by doing a few simple things:

1. Start early: The younger you start, the more time compounding has to work in your favor and the wealthier you can become. The next best thing to starting early is starting now.

2. Make regular investments: Don’t be haphazard. Remain disciplined, and make saving for retirement a priority. Do whatever it takes to maximize your contributions.

3. Be patient: Do not touch the money. Compounding only works if you allow your investment to grow. The results will seem slow at first, but continue on. Persevere! Most of the magic of compounding returns comes at the very end. Compounding creates a snowball of money. At first, your returns seem small; but if you are patient, they will become enormous.

Why Buying a Home Scores Over Investing in Stocks...

2016-11-16T20:48:00.000+05:30

I am no fan of real estate, and certainly won't advise investing in property to earn rent. However, I strongly believe that one should own a debt-free house in which one will live in. Most of us have read about how Rakesh Jhunjhunwala sold his Crisil shares in 2005 for Rs 27 crore to buy a flat at Malabar Hill in Mumbai. Had he remained invested, his shares would be worth Rs 600 crore in 2015. The flat, on the other hand, was only worth Rs 65 crore. This story has hindsight wisdom written all over it. If instead of Crisil, Jhunjhunwala was holding Hindalco shares, his Rs 27 crore would now be worth Rs 18 crore. This story has too much of survivorship bias.

Putting all your eggs in the equity basket is not a good idea. Another ludicrous suggestion is to invest in equities in the formative years and then buy a property in the late forties, assuming that you would have built wealth by then. The assumption that you will continue with your job and draw a high salary to pay EMIs in your late forties or early fifties is quite cute, especially when I see voluntary and forced retirements all around. By the late forties, you may have gotten used to a certain lifestyle which could be difficult to cut down with the huge home loan EMI. If the house is bought early, you learn to live within your means.

Leverage is a beautiful financial concept. When used to buy a property, leverage fetches us tax exemption. But the same leverage used to buy stocks (popularly known as derivatives) is a dangerous game. Can you imagine leveraging heavily year after year to buy the most convincing stock ideas? It is an extremely specialized field and requires phenomenal skill to make money out of leverage trades in the market. But owning a house does not need any special skill. After paying a certain number of EMIs, there is surety that you have a roof of your own.

What is important is to keep the leverage multiple in check when you buy that mortgage. Stretch it too far and suffer sleepless nights. Keep it too low and you will probably look foolish a few years later for having bought a property much below your aspirations. On the other hand, rent is nothing but a sunk cost. Even if you are claiming tax benefit, it remains money spent which did not build you an asset. Staying on rent forever with a great equity portfolio sounds quite exciting when you are young. But when you get old, the idea may sound criminal. One does not have the energy, patience, willingness or strength to endure the burden of a rental home. All said and done, you are at the mercy of your landlord who may send you packing.

Another argument against owning a house is that a young person may relocate in future. It's a valid argument, but once you decide to settle down in a city, buy a house quickly. Of course, this will also depend on the buyer's occupation and income. If he is a salaried employee with a regular income, buying a house makes more sense. But if you are living by the adventures of self-employment or upcoming business, it is more logical to live on rent. The return on capital employed in your business will be far higher than blocking money in a house.

Reverse mortgage is another fantastic financial innovation. A couple gets a stipulated amount every month depending on the value of their property and when they both die, their heirs repay the lender the accrued interest and principle of the annuities given to the owners. This may not be the most efficient or cost effective tool, but it is very useful. It allows a couple to live a better life even when they get old without burdening their children.

Your wealth can dwindle, plans can go haywire, money can be philandered or lost, businesses can get wiped out, medical ailments or court cases can leave you broke, but a house remains. When I was a child, my dad suffered a huge business loss which stripped us of our savings. But the house which he had bought earlier stayed. He was desperate to sell it to repay debts, but my mom did not allow it. She would send prospective buyers away, saying the house was not for sale. The house gave us a reason to fight it out, giving us comfort. The house was our strength. It can be yours too.

Eight Tips on How Not to Invest

2016-09-30T10:54:00.000+05:30

Despite loads of information available, investors often jump into the stock market without much of an idea on what lies ahead. Here are a few tips on how not to invest.

1. Not Knowing Why to Invest: Is it for capital protection, capital appreciation, returns, risk diversification, hedging or pure safety?

2. Avoid DIY Investing: Investing requires being alert about the state of your investments and calls for active participation - a feat which not many can achieve.

3. Not Actually Investing: Most of us begin investing with a long-term view, expect returns in the medium term, and end up trading in the short term. So, the grand goal of investing practically gets reduced to trading and speculating.

4. Stock Tips: It's not the tips that are the problem, it's from whom and how you take them. However, any tip actually means that you don't invest without doing your own research.

5. Not Asking the Right Questions: Why should I invest in the stock? Is it the right asset to invest? Do I know enough about the company to remain invested? These are worryingly missing from the popular narrative.

6. What Looks Cheap may Not Be: A stock priced at Rs. 20 doesn't necessarily make it cheap to buy. Price-to-earnings, price-to-book, and price-to-sales ratios will help you judge the true value of a stock.

7. Succumbing to Hype: Consulting financial advisors, investing in time-tested companies or investing based on personal experience as a customer are more effective ways.

8. Repeating Mistakes: Time-tested classic principles of investing, such as not to follow the herd, buying low and selling high, are forgotten in the rush to make a quick buck.

Warren Buffett’s 4-Point Strategy to Beat the Stock Market

2016-09-02T17:51:00.002+05:30

Warren Buffett’s 4-Point Strategy to Beat the Stock Market

Over the past couple of years, the market has been rather unpredictable. For example, who would have thought oil prices would collapse like they did, or that the market would plunge by nearly 10% during the first six weeks of 2016 only to make it all back and then some?

The point is that nobody knows what’s next for the market. The S&P 500 index could plunge 20% this year, or it could reach new record highs just as easily. So the best course of action is to employ investment principles that work no matter what, like the four that have been used by Warren Buffett and his team to produce incredible returns at Berkshire Hathaway through good times and bad.

Buffett’s investment goals

When Warren Buffett wrote his 2008 letter to Berkshire Hathaway’s shareholders, investors were justifiably nervous about what was going on in the economy. Banks were collapsing, the U.S. auto industry was on the brink of failure, and even rock-solid stocks like Berkshire were trading at levels not seen in years.

Buffett ensured investors that 2008 was just another bump in the road, and said that it’s important to keep things in perspective - especially during the tough times. He pointed out that during the 20^th century, Americans’ real standard of living had improved sevenfold, despite two huge wars, the Great Depression, a period of rapid inflation, and about a dozen other panics and recessions along the way.

He even went on to say that the economy would likely be in shambles for several years, but that there was no need to panic. Berkshire would simply continue to do what it does best by focusing on four specific goals that boost the company’s long-term potential no matter what the market is doing this week, this month, or this year.

1. Maintain Berkshire’s financial position:

No matter what happens, Berkshire maintains modest to minimal debt levels, lots of liquidity, few near-term obligations, and lots of income streams. This allows the company to not only absorb any adverse market conditions, but to come out of the bad times even better off than it went in. In fact, during the 2008-2009 market turbulence, Berkshire was a provider of liquidity to the banking industry, and ended up with some pretty profitable investments as a result.

2. Widen the moats:

A “wide economic moat” is a Buffett term that essentially means a durable competitive advantage that should allow a company to prosper in good times and bad for the foreseeable future, and that makes it relatively immune to competition. For example, Wal-Mart’s wide moat consists of its size and distribution network, which allows it to sell goods at a lower price than any of its competitors. As Wal-Mart’s global footprint continues to grow, its moat continues to widen.

3. Acquire and develop new and varied streams of earnings:

Berkshire is always on the lookout for new acquisitions and investments, in good times and bad. During the financial crisis, for example, Berkshire acquired a new revenue stream in the form of Bank of America preferred stock, which came with warrants to buy shares cheaply down the road. Just recently, Berkshire made its biggest acquisition yet when it bought Precision Castparts. The point is that Berkshire is always looking to grow and diversify its revenue stream. While it’s impossible for a company like Berkshire to grow its profits every single year, varied streams of earnings allow it to grow its profit potential every year without fail.

4. Focus on good management:

I can’t emphasize enough how much value Buffett places on good management. He literally believes that the right management team can add billions to a business’s intrinsic value, while the wrong management can make an otherwise good company an undesirable investment. Therefore, the goal, no matter what the market is doing, is to always be on the lookout for outstanding managers and to nurture those who are already part of the organization.

How you can apply these goals to your own portfolio

While the most obvious way to benefit from these four investment goals in your portfolio would be to invest in Berkshire Hathaway, that’s not really my point here (although Berkshire is one of my favorite stocks and makes up a large portion of my own portfolio).

Rather, the point is that these lessons can be modified slightly in order to apply them to your own investment strategy:

Buy stocks with financial flexibility and low debt.
Identify a durable competitive advantage before buying a stock.
Don’t worry about what the market is doing now - always be on the lookout for opportunities.
Investing in companies with shareholder-friendly management can make all the difference over the long run.

Successful implementation of these four goals has allowed Berkshire to increase its book value during 48 of the past 50 years. Although the stock price didn’t increase in all 48 of these years, that wasn’t the goal. Rather, the objective was to set the company up for long-term market-beating performance, an objective which was clearly achieved.

You can apply these moves to your own portfolio.

Source: time.com/money

Warren Buffett’s Best Investing Advice in 10 Quotes

2016-08-05T11:34:00.001+05:30

One great way to learn the basics of investing is by studying the greatest buy-and-hold investor of all time, Warren Buffett. Here are 10 of the Oracle of Omaha’s famous quotes that could translate into investing success for you and might prevent you from making mistakes.

1. “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

You may have heard the expression “don’t throw good money after bad,” and this is the point of what Buffett is saying here. If you own a stock that’s gone down and your original reasons for buying it no longer apply — get out. It’s a common mistake to attempt to “average down” on losing positions. Instead, you’re better off cutting your losses and finding a better way to use that money.

On the other hand, if a stock you own has gone down for no other reason than general market or sector weakness, but the business is as strong as ever, that’s the time to double down.

2. “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

In other words, don’t hesitate when you see a great opportunity. In the aftermath of the financial crisis, Buffett didn’t simply tiptoe into bank stocks. Rather, he made multibillion-dollar investments in Bank of America and Goldman Sachs that have paid off tremendously.

3. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.”

I like to apply what I call the “30-year test” to most of the stocks I consider for my own portfolio. I ask myself if the business will be around in 30 years, and if the company has a clear competitive advantage that should allow it to maintain or grow its market share and profitability during those 30 years. If the answer to either question is “no,” or “I’m not sure,” I move on.

4. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Cheap garbage is still garbage. Radio Shack was trading for a ridiculously low valuation a couple of years back — but that’s because it had serious problems, eventually leading to bankruptcy. Instead, a better idea would be to compare rock-solid retailers such as Wal-Mart, Target, and Costco to see which is trading for the best price.

5. “Our favorite holding period is forever.”

There are plenty of valid reasons to sell stocks. For example, if a company’s business strategy changes, its growth or profitability declines, or if you simply need the money, it can be in your best interest to sell a stock. In fact, Buffett-led Berkshire Hathaway BRK 0% sells stocks regularly, and for a variety of reasons. However, Buffett’s point is that you should go into every stock investment with the intention of holding it forever.

6. “Only when the tide goes out do you discover who’s been swimming naked.”

Anybody can make money in a rising market. We’ve been in a bull market for seven years now, so if someone brags about how much his or her portfolio has risen since 2009, take it with a grain of salt.

On the other hand, it takes real talent and discipline to consistently do well in falling markets. Since 1965, the S&P has finished the year in the red 11 times. In those 11 years, Berkshire has beaten the market in all but two of them.

7. “Never invest in a business you cannot understand.”

Buffett doesn’t understand tech stocks well, so they’re mostly absent from Berkshire’s portfolio. I don’t have a particularly good grasp on the biotech industry, so I’m not going to invest in it.

Before you buy any stock, you should have a thorough understanding of how the business makes its money, and how it expects to continue to make money going forward. Getting into a stock you don’t fully understand is a recipe for disaster.

8. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

As a classic value investor, Buffett looks for stocks trading below their intrinsic value. While there are many different methods for determining whether a stock is on sale, here’s a quick guide to value investing that can help you get started.

9. “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.”

Perhaps the most famous Buffett quote of all, it’s actually one of the most inaccurate — at least in the literal sense. Buffett will be the first to admit that he’s made a few bad investments over the years, and no investor will be right 100% of the time.

Instead, the point is that protecting your principal from losses should be a higher priority than making money. Berkshire Hathaway has produced a 50-year return of nearly 1,600,000% for its shareholders, even though it often underperforms the S&P in years when the market rises quickly. The real trick to long-term success is to outperform during the bad times.

10. On buying individual stocks: “If you like spending six to eight hours per week working on investments, do it. If you don’t, then dollar-cost average into index funds.”

The bottom line is that investing in stocks the right way requires time. You’ll need to do your homework and research and compare stocks before investing, make sure your profile is properly diversified, and monitor your stocks on a regular basis. If you’re not willing to do that, there’s absolutely nothing wrong with buying a low-cost S&P 500 index fund, which Buffett has said is the best investment most people can make. Not only does this method do all of the hard work for you, but history has also shown that you’ll probably beat the majority of mutual funds over the long run.

http://time.com/money

6 Things Millennials Should Do Now That Will Pay Off Big Later On

2016-08-01T10:32:00.000+05:30

Getting started as a saver and investor can be a tricky balancing act. You have bills to pay, student loans to settle, and a career to jump start. You have to create a cash cushion for emergencies at the same time that you are being urged to salt away money for a far-off retirement date. Here’s some smart advice on how set your priorities.

Adapted from “101 Ways to Build Wealth,” by Daniel Bortz, Kara Brandeisky, Paul J. Lim, and Taylor Tepper, which originally appeared in the May 2015 issue of MONEY magazine.

1. Tuck away a month of expenses.

Even if this means paying off debt more slowly. The money can cover surprises like car repairs. Once you’ve hit that point, focus on the next goal: six months of expenses, to cover you should you lose a job.

2. Juggle emergency saving and a provident funds by playing it safe.

Until you have six months’ liquid savings (see No. 1 above), investing isn’t a top priority. But you should put enough into a provident funds i.e. EPF and PPF to get retire peacefully. To partly reconcile the two goals, hold some less risky fare like bonds. With taxes and penalties, cashing out a 401(k) and provident funds is a last resort. But if you’re forced to do it, it’s better to have some safe money.

3. Start first, be an expert later.

Getting going on a 401(k) and provident funds can feel like jumping into the deep end. How much in stock funds? What about bonds? But early on, saving at all matters more than picking the best mix. Say you put away 6% of your pay, with a 3% match, starting at 25. For 10 years you earn a lousy 2%, and then adjust your portfolio so that you earn 6% for the next 30 years. That wobbly first decade will still have added 47% to your total wealth by age 65.

4. Begin your career in a wealth-building city.

Zillow.com says these metros offer job growth above the median 1.3% and homes for less than the typical 2.9 times income:

Dallas: Its many affordable ‘burbs include MONEY’s No. 1 Best Place to Live in 2014, McKinney. Job Growth: 3.3% Housing Cost: 2.5 x income

Atlanta: Home to HQs of Fortune 500 companies including Coca-Cola and the United Parcel Service. Job Growth: 2.4% Housing Cost: 2.7 x income

Indianapolis: Metro boasts another Best Place: walkable, arts-rich Carmel. Job Growth: 2% Housing Cost: 2.4 x income

5. Go ahead, have a latte.

Reducing small expenses can’t hurt, but housing is where you can save real money when you’re young. Rent on a two-bedroom, with a roommate, can be 44% less than for a one-bedroom alone, according to Apartment List data.

6. Spend money to invest in yourself too.

Economists at the Federal Reserve Bank of New York have found that most Americans get their biggest raises during their first decade in the workforce. So lay the groundwork for wage growth early. Don’t be afraid to shell out some money for a business communication class, technology training, or an additional job certification. A $500 class that leads to a promotion and raise could pay off in compounding returns throughout your career, as future raises build on top of your higher base wage. It may literally be the single greatest investment you can make.

http://time.com/money/3817434/saving-tips-advice-millennials/

Six tips that can help you to save Money

2016-07-20T22:54:00.000+05:30

Many individuals asking this question- How should I save money? Many of them started with a lucrative career but after a while they find it difficult to generate enough surplus from their income. Different reasons can be attributed to it- a sudden increase in debt, high lifestyle, insufficient increase in salaries etc. Whatever be the scenario, it's always important that one keeps generating a healthy savings to have enough money to cater to future requirements.

Here are few steps one should take to ensure savings rate do not take a bigger hit:

1. Know what’s coming in and what’s going out

It is necessary that you should know what you are earning. There is a difference between the salary package and the net income in your hand. You need to pay taxes on the income you receive. You have to plan your expenses and future with money that you get after paying taxes on your income. For salaried employees, tax payment is done by employers but you may still have to pay tax when you file your income tax returns. Do a detailed analysis and find out how much money you will really get in your hand. Once you know your right income, it pays to understand your outflows too. If your spending behavior is your main concern then analyze your bills. This will help you to know where you are overspending. It can be your outings or impulsive buying which might be forming a major chunk of these. It may also be high debt which you availed with expectation of increase in salary which never happened. Whatever be the cause find ways to curtail your overspending. If your cash outflows are high due to debt repayment then prepare a strategy to reduce your interest burden so that you can have more savings in your hand.

2. Stick to your budget

Once you know where your money goes and how much money you have, budgeting becomes essential. It helps to keep track of your money matters. It gives a very good picture of what’s happening with your cash flows and why. When you are at initial stages of your career this exercise may look too boring. Even if so, make it a point to prepare a budget. By making a budget you will do well in restraining yourselves from spending on items which you may want but are not needed today. You also get a glimpse of the surplus you are going to generate in next few months- provided you stick to your budget.

3. Separate your savings account

Savings will not be there unless you accumulate some money. Make it a practice of letting your savings go into a specific bank account from where you can invest them. As we say ‘Pay Yourself First’, this savings first need to be in practice to actually save money. You can divide your expense and savings account so that both do not get mixed up and you know clearly what you are saving.

4. How can you earn more?

Many times, your job growth is not decent enough to take care of rising expenses. But changing of job or a career is easier said than done. Identify, if there can be earning opportunities along with your job which can help you to increase your income. Part time teaching, consultancy assignments can become a good source of your extra earnings.

5. Resist impulsive buying

Youngsters fall prey to the advertisements offering big discounts. Impulsive buying is spending money on items which you have not planned to buy. If one goes on spending on things he does not need in a reckless way, there is a high chance of the landing in debts. Better plan what you want to buy and prepare a plan to fund that purchase. This will help you resisting impulsive buying and save for a brighter tomorrow.

6. Avoid credit to satisfy ‘wants’

If you are borrowing to pay for your ‘wants’ and not needs, better to avoid such borrowings. If you avail a personal loan to go for a long vacation overseas, you not only have to repay the money borrowed but also have to pay heavy interest on it, which further reduces possibility of saving money. Instead if you take a short holiday in India, you may end up saving some money.

To make savings a habit, it is necessary to remember below points:

§ Plan for all purchases.

§ Know what you need and what you want. Wants are the things which brings overspending in your finances.

§ While buying things try to negotiate. What is available in a mall may be available at an old shopping market but at a reduced cost. No harm in going there.

§ Fix time wise target for savings and follow it rigorously. Maintain a minimum saving rate of 10%- higher the better.

Source: MoneyControl.com

Five investment mistakes you must avoid in 2016

2016-05-06T20:12:00.002+05:30

Making mistakes is part of the learning process. However, it's all too often that plain old common sense separates a successful investor from a poor one. At the same time, nearly all investors, new or experienced, have fallen astray from common sense and made a mistake or two. Being perfect may be impossible, but knowing some of common investing errors can help deter you from going down the well-traveled, yet rocky, path of losses.

This time of the year, many individuals want to begin with their financial plans. Sometimes it pays not to make mistakes. While it is not possible for anyone to predict definite returns when investing, it sure is possible to avoid some common mistakes which can help you from losing your money.

Encapsulated below are some mistakes that you sure must avoid starting in 2016:

1. Over investing in one asset class:

Like Warren Buffett rightly said “Don’t put all your eggs in one basket”, it is always advisable to manage your financial portfolio by the way of diversification. Diversification is when one chooses to put his money in more than one investment platform than just one, for example having the right balance of equities and debt funds in your portfolio. Most Indians have a poor exposure in equities which is not advisable; to make profits a right amount of equity investment is proposed. It should be noted that fixed deposits, real estate and gold are almost similar in nature, as over a long period of time all three asset classes perform at par with inflation.

2. Postponing investment decisions:

Most people are too busy to invest; they just wait for the right time to invest. May be for a next promotion, a better salary or also a good raise. It should be noted that investment decisions should not be postponed. You can start as early as 20 years of age; you can save from your pocket money itself. Imagine your money resting in your savings bank account where it will earn only an interest of 4%, whereas when invested wisely it can earn you anything from 14% to 16%.

3. Constantly looking for “What is New” syndrome:

Anyone who makes systematic investment decisions can easily say that the Indian equity market has performed 14-16% over the period of 10-20 years. An individual can easily keep adding more to it systematically to gain on their investments. However, people are more bothered about the “What is New” craze and unknowingly over diversify or what we call it as diworsefy.

4. Periodic review:

Reviewing and analyzing ones wealth pie is very important, most individuals skip the process, in turn losing money. A holistic view of the assets one has and taking corrective measures at the right time is what is required to keep the investments healthy. It is imperative to note that reviewing your investments once a year is advisable, as this helps you to keep a check on what asset classes are performing and which are giving a negative return. If you notice negative returns you may want to switch your investments.

5. Being affected by “Get Rich Quick” syndrome:

In the hurry to get rich most individuals do not want to give time, often falling prey to fast trading and quick losses. They buy expensive stocks and the moment the stocks start depreciating they sell them, as they get scared of losing money. The result is, instead of making money they end up incurring a loss. The worrying aspect of this syndrome is that both first time and experienced investors are affected by this. The ideal thing to do is to buy slow but steady, in this process you should ignore the highs and the lows. For stable returns one needs to stay invested for a considerable amount of time. Seek professional help as and when you need.

Summing up, I would like to add that it’s a pleasure to see your money go up, but it can be devastating to see your money going away. The idea is to avoid the above mistakes and stay safe. One just needs to stay focused on your wealth creation.

Source: Moneycontrol.com