Simple Financial Sense

Planning just before retiring

2024-04-21T13:13:00.000+05:30

There is a silent fear when we are near the magic age.. on how the next many years will be .. how the lifestyle will be and how to continue to be engaged in a good way

Retirement is not only about ensuring you have the right level of money to ensure a good lifestyle, it is also about how to be engaged in a fruitful way so as to not degenerate away.

In our working world we are very very highly engaged.. Our life is our work. I know I work 15 to 16 hrs a day, with weekends also being mostly engaged.

Unfortunately from such a hectic lifestyle, once a person retires, he/she has plenty of time in their hands with mostly no idea of how to fill it.

Here's what I am thinking of doing as I retire over the next decade..

1. Do some consulting work with large companies

2. Write a book

3. Join an NGO and help out to expand

4. Maybe participate in the local politics

5. Be healthy with an active lifestyle

What about you.. What's your mantra

How to make 100 crores

2023-08-22T18:34:00.001+05:30

Yes, that was the post I saw on a youtube short by renowned investor Mr Ramdeo Agarwal.

He basically used the power of compounding.. Doubling your money every 3 yrs... A 23% cagr over a period of 30 yrs.

If you start young and focus on the consistent return the outcome will be amazing.

So if you start at 25 by investing 10l Rs, by the time you are 55 you will have an humongous wealth number of Rs 100 cr.

There is one basic thing that comes to your mind.. The doubling every 3 yrs concept. This is not something very common and is extremely difficult to do.

I don't think I have even one ( apart from the sbi small cap fund that I have invested in) giving me such high returns.

I have scoured the mf pages in the magazines, there also it is difficult to get to any large number of funds which have delivered such returns.

Maybe the idea is to use PMS to help drive these kinds of returns... That I need to check on the level of returns

Sometimes the concepts are simple.. But to implement is not simplefinancialsense!

What does it mean to "be" rich

2023-02-18T22:36:00.001+05:30

Today , I listened to a Ramit Sethi . He was in a podcast of a FIRE enthusiast. It was an eye opener..or a brain starter.

The FIRE enthusiast was talking about how Ramit focused on the 360 view of what it means to be rich...that life wasn't about just making more money ..but about living life fully.

There was a point about how the age of 40 to 60 is the time to be spending money..because while you may have more money at the age of 70 ..but you will not have the energy to be able to live life

Of course no one is saying that one should spend with no care..but to spend money which enables experiences to be built..something that will build memories.

Life is about living and using money to enable it..it's not about living to make money.

It's simplefinancialsense

Planning for transfer of wealth at death

2022-02-20T10:08:00.001+05:30

Ok. This is not a great topic that everyone wants to read, but a critical one that we all need to address in our lives.

No one lives forever..but the wealth that we generate can be passed on to our family and its next generation in the right manner

Here is an interesting podcast from capital minds that I think is critical for everyone to listen to. podcast.

Here are a few critical points that I got which you can follow

1. Ensure the right visibility to your family members on the investments you have made.. Or liabilities.

2. Make a will.. Without which your family members will have significant issues in accessing the funds. The podcast talks about some examples where spouse had significant issues.

3. Ensure the right access to the will.

4. Create a plan on how to use the money basis your understanding.. Eg which fund to be sold if there is a requirement.

5. Nominations. One cannot emphasize this more. Get the nomination right in each and everyone of your assets.

This as I said is not a comfortable topic.. But critical one for your family.

To focus on this.. Its simplefinancialsense!

rationalizing the digital content at home-cancelling tata sky

2021-12-25T11:29:00.001+05:30

In the new digital age, we have lots of gadgets and ways to get content, and our box of gadgets continues to rise without ever looking at any level of rationalization. This year we should look at how we clean up the old unused stuff and optimize

Let's take a simple example which I had an experience yesterday. I cancelled my Tata sky subscription.... I would use it only once a week when I would get access to watch the TV.

At my house we have a fire stick which obviously we added on Netflix, hotstar and prime video.

Hotstar is critical to watch the cricket matches since usually when there is a critical match, Tata sky doesn't work if there is bad weather outside.

Netflix and prime.. To watch the latest movies

YouTube.. One can watch all the live news from cnbc to et now to India today to CNN ibn.. Basically all.

Last night, I got access to my television and put on tata sky, but it wasn't working. There was no rains outside! I tried re starting and found that it still did not work.

I had to do the onerous task of calling them up and they said they will send a technician and " they will charge me for it".

I was absolutely unhappy about them charging me a min of 1 month of fees for a visit. I was also sure that they would charge me for a new set top box ( which I had to change just before covid last year)... And had changed one two years earlier also.

So it felt like a scam. A cheap way to get its customers to pay more and fill its coffers.

I cancelled the plan.... Saving around 6000 rs a year plus 2000 rs every alternate yrs for changing their set top boxes.

Of course when they refund the money is another battle which i am sure i will face.

Their bad service giving me the push to make the change.

I can use this money to support my favourite charity and add onto the little help I provide.

What do you think? I am sure you have multiple such programs which you are paying for which is really not required.

Identify these and rationalize.. Its simplefinancialsense

One step at a time.. in the right direction

2021-11-27T21:58:00.000+05:30

INERTIA is what is the key message of Newtons first law... " A body continues in its state of rest or uniform motion unless an external force acts on it."

Inertia can be positive or negative. Positive when Good work has happened and one feels the benefits until the momentum becomes zero... Negative when the change is not seen until quite some time and lots of people abandon the change because of no visible outcome.

Small steps make huge difference. It was Arnold shwazeneggar who said " I always smiled in the gym because each rep took me closer to my goal of being an Olympian champion"

Each step that we take consistently enables us to be better than what we were before and as this happens visible results start to show up exponentially.

Recently I was coming back from the airport and was in a cab. The cab driver started talking about paytm shares flopping 40% down in two days time and we got onto to a discussion about trading. I told him that trading is very risky and he shouldn't be doing things like this.

We got talking about mutual funds and how it can help build a lot of wealth and I got to explaining the rule of 72 and how he can calculate how much he could make over a period of time. I started showing him that if he spent 30 yrs in the market.. He could easily convert 5lakhs into 1crore.

It was an exciting moment for him to realize this... And we got to discussing how this can create so much wealth for the next generation.

It was a small step.. In the right direction for the cab driver.. He was not in inertia.. But the motion was towards trading and in the wrong direction

I don't know if he will follow the advice... But maybe it is a step.. In the right direction

Its simplefinancialsense

Prepare for the worst

2021-08-08T21:37:00.001+05:30

Financial planning is about "Hoping for the Best but Preparing for the worst" .

This is a critical rule that should be one of YOUR top 5 finance planning rules. Nothing has shown this more than the covid 19 pandemic and the impact it has on our financial lives.

Many people lost jobs or getting reduced salaries or suddenly had huge costs due to medical bills.. I have seen people hugely stressed on finance when they should have been focussed on settling their private lives.

The ONE way to help protect oneself is to have ONE year of emergency funds.

Take the example of the pandemic .. if one had the emergency fund it totally released a lot of pressure on getting time to search for a second job... cos it takes time in such a situation.

Lots of financial planners talk about a six months of emergency fund . But post this pandemic i would think that it makes sense to double this... it gives you much more downside protection.

Invest or keep this money in a liquid fund or a fixed deposit.

Downside protection makes sense.. simplefinancialsense.

Dividend income thoughts

2021-07-18T17:40:00.001+05:30

I follow a few of the personal finance stalwarts on twitter and one of them is d muthu.

He propogates a lot on dividend income. He has bought multiple shares of companies who provide some good dividend income.. Like ITC, UBL etc. He does say that with his dividend income he is able to satisfy his monthly expenses quite a bit. He is not working anymore so continues to invest and potentially mostly in dividend playing scrips.

He is of course very well respected as I can see in the twitter feeds. Someone that would be good to follow if you are on twitter.

For me, I have been thinking a lot about this strategy and had invested similarly in two companies with a great dividend playing opportunity.. Namely ITC and IOC.

I have invested in these and while I get some returns.. Around 8% in IOC and around 5% in ITC, I do see that these scrips haven't grown at all in quite some years.

IOC have been holding for over 2 yrs now and my capital appreciation is all of 14000 Rs... Quite minimal.

I do believe that the share had opportunity to grow as it fell from all the way from 150 Rs to 80 Rs when the government asked it to subsidize Rs 1 per liter around 3 yrs back (IT was when Arun Jaitley was the finance minister).

Do in about 2 yrs I have maybe gotten around 23k in this scrip... Quite a measly amount with all the changes.

I am wondering what other people think about the dividend strategy? Vs the growth investment scrips.

Do let me know

Back from the brink

2021-05-13T22:40:00.001+05:30

The last 12 days have been extremely tough for me with the entire family being down with covid.

Started with my wife who suddenly fell sick and all of the work came on my shoulders. With two young children my world came crashing down.

Soon they also fell sick and with me being in tow.

While my family recovered quickly, it took a toll on me and at certain points of time I thought I was a gonner. Concerns around how my family will survive after me became my biggest worry. I was planning for the worst.

There were a couple of things I had done which helped me be calm in such a situation... Things which I hope you ensure you also create.

1. List of all passwords and accounts.

I use an encrypted password protected sheet which I force my wife to remember where it is saved and kept. This I keep updated every once a few weeks... Which meant that that these were 99% updated.

2. Summary of assets and liabilities

What I ensure is that I keep a quick summary guide on investments in all of our names and these are available for them at arms length.

3. Nominations

Had ensured that nominations are always there with every asset... This would help in case of death

4. No will

This is a gap that needs to be set in place. While I had tried it before... Did not take it to completion. Now it is urgent and critical

5. Health insurance

Always on my phone these details are a must. Keep your insurance updated. The people in the US are much better at this... So should we be.

Be safe... Be prepared... One never knows when it is required

Where to invest when goals are close

2020-12-27T23:10:00.000+05:30

Our financial plans revolve around our goals. Goals can be childrens education, marriage, retirement , any goals around big buying decisions like house and car or vacations.

We plan , ensure the right asset allocation and monitor our progress as we go ahead.

So as our goals date come nearer , does our asset allocation need to change ? Does our methods require a shift?

if there is anything that covid and the debt fiasco in India has taught us is that planning is required and one should not wait for changing the plan as the time of goals closing comes near.

imagine if one had plans for school fees and the march mayhem happened in the market and you were still invested in the market at that time. your funds would have dropped by 40% of their value! imagine taking out the required money but then having that drop come back up and your portfolio now has at least a 10% hole from Before.

Having seen the panic .. panic for life and money happening at the same time, I believe that we need to be extra careful as the time for our goals comes near.

The Debt crisis last year also did not help. People's faith in debt underwent a beating when the debt market in India froze due to DHFL and ILFS crisis. Even the debt market wouldn't have been safe.

Corporation banks had a big downfall with PMC and LVB . People are still stuck trying to get their money out of PMC.

so .. what is the option left ? where can we invest to at least get some returns and be careful enough to not lose the money .

Maybe the answer lies in fixed deposits . This too with the largest banks or Public Sector Banks . Banks like HDFC and Kotak will not fail due to governance issues... they are rock solid. or invest in PSBs like SBI which cannot fail since they are part of the GOI and have a sovereign guarantee.

what other ideas can their be ? would be good to hear from you

Financial freedom in India is real..

2020-11-28T11:26:00.000+05:30

What a scenario , no need to work to ensure that you have to put food on the table or to ensure you have enough to put your children through college and advanced studies or to arrange for their marriages.. It sounds idealistic.

However I find that this is becoming more and more real and I am finding people I know who are in this phase already or getting there.

Children have started jobs and house bills and any debt is repaid.

And they still have another 10 to 15 years before retirement.

In fact one of my neighbours is exactly in this state. Child has finished his MBA from a prime college and it's an only child too. Parents are doting and suddenly find that they have so much time that they don't know what to do with it. They are not old yet... They want to spend more time with their child ( who btw wants to spend more time with friends and colleagues ) .An altogether interesting situation.

These are usually people who got married early and had early children...mostly on.. Had and have successful corporate careers and are now stuck in a situation which others in their generation haven't been in.

With increasing lifespans what they will do unless they can fire up their ambition for the next 40 to 50 years is going to be interesting to see how it plays out. Will it lead to depression or more openness in the relationship with family and children? We need to wait and see.

Coming back to the main point on the idyllic scenario.. It's not far fetched .. It's playing out around you and it does have quite a few positive effects on people's working life. They might not have planned it out but we can learn quite a bit of how we can achieve the same by learning from their lives.

I will look to share some of these learning by taking examples of these people and what made them reach this position.

Learning from others ... But putting them in your own context... That's simplefinancialsense

Rework your Asset Allocation

2020-11-08T11:10:00.001+05:30

The stock market is back to its highs. At least my portfolio- thanks to the Systematic Investment plans is back to where it was in Dec 2019 ( Phew). The uncertainty in the market though still continues with the second and third waves of corona virus all across the globe.

This is the right time to review ones asset allocation and look at your money boxes to ensure they are rightly aligned to the requirements .

Just so that we are reminded of the money boxes, a quick recap .... there are three money boxes

1. In 10 years time... keep a high equity allocation

2. Required in some time .... 4 to 7 years... keep a higher debt allocation than equity ... but equity is a important.

3. Required Soon... in the next 3 years. Keep the money in a fixed investment.. debt is the way to go.

The markets will remain volatile . It is best to ensure that you are looking at each your goals and aligning them to each of the boxes. This will define how your strategy for the asset allocation will be.

It's as simple as that...

simplefinancialsense

A Health Card for every Indian

2020-08-16T14:22:00.001+05:30

What an Idea to create a universal Health Card for all Indians! Where all info of medicines taken and documents and doctor visits can be available at an instant.

This idea is not new.. this is not an innovation created by PM Narendra Modi. The US health care companies have been pushing for the IHR for quite many years and haven't been able to make significant progress becsuse of " competive advantage " issues across many hospitals and health care insurance companies. Many companies fear that this will make their knowledge of the patient... or the fact that the patient knows that their hospital and insurance companies knows about them .. and hence can provide better service redundant.It is an uphill battle in the US... even though companies like the United Health Group has been pushing the agenda significantly . The IHR can significantly reduce healthcare costs in the US.

In India the fact that this competitive "Disadvantage" doesnt exist is a big Advantage. The Government can put policies in place and push this over the next few years... have all payment made available and while brining all info in one place can also curb tax gaps from hospitals and doctors.

The government has an execution mindset.. sharp focus let it be on the Jan Dhan account, the gas for villages , electricity for every person, toilets etc.

If we achieve this.. in the right manner.. this would be a game changer for the people in India. Will be looking forward very carefully on this topic developing over the next few months.

I will be one of the first few people in line if i get the chance..

Why you should "Own your own time"

2020-08-09T12:58:00.001+05:30

imagine a world where you only needed to work when you felt like it. You could get up early or late... read a book or bake a cake... go to the gym when it's not too crowded ... be there to celebrate your children's birthdays, or your anniversary or even go and attend a 100% of parent teachers meeting.

The above paragraph is what it would feel like if you owned your own time . Freedom to do what you want and when you want it.

This can only happen if you were financially free. If you had enough wealth to take care of your needs and wants even if you were not children of Ambanis or Tata or Birla.

To be financially free one either needs to be extremely lucky , be born in a wealthy family or be disciplined in financial investing.

The third part is extremely important .. that option implies that anyone can become financially free if they start early enough and stay consistent in their plan.

I have friends from the professional world who lost their jobs but still did not have too much tension from a day to day living perspective. Let me give you some examples

Example 1

A friend who has been based in the US for many years.. from Hyderabad who in early 2018 was laid off . He was a great professional... is .. but due to some unforseen and unfortunate circumstances he lost his job.

We spoke quite often and after a few months he still did not have a new job with him. He was not panicking and one day he told me that he had immediately on losing the role done a calculation and found that his net worth was $ 6Mn. He did not need to work at all. He has young children but they could be well taken care off with his funds flow.

However he continued to focus on finding a new job because he had too much time on his hands and he had 15 yrs to go before retirement.

Example 2

Here is a story of a friend who I met a few years ago. He tells me of a time when he used to sleep on floors over a newspaper. A Gujarati, he always dabbled in equity and over time he invested in stocks which have given him stellar returns.He started small but started young.

He lost his job 18 months ago.. and hasn't found a new one since then. Extremely talented but unfortunately got stuck in office politics.

He told me that he has enough money to last him without any work for another 90 years. His son is a stellar student and will continue to go to college outside of India.

He started his own start-up while looking for a new role... keeping himself busy.

Adversities can hit us anytime... we need to prepare for them. How we can support ourselves by focusing on being financially prudent and financially smart ....

That to me is simplefinancialsense!

The 40 +7 rule

2020-08-02T19:35:00.000+05:30

The people most interested in our success is ourselves or our near family members. The company that we work for is paying us money for the talent that we bring to them and their customers. It is a transaction, definately a profitable one for them and most of the times a profitable one for you too.

If you are lucky you may find a mentor or someone in the organization who will care for you as a family member , take you under their wing and help mentor you and grow.

If not, the transaction that you do with your company is valid till that transaction is profitable for them. If the value that you provide continues to get them profits then they will continue to pay you well and take care of your needs.. if not, they will be quick to let you go.

While a lot of companies claim to provide significant training to their employees, it is usually in the direction that they need more talent, it is not where you may want to go.

So, talent is important and value that you deliver keeps you in a profitable situation.

If one remembers the first law of motion .. it states that " A body will remain at rest or in uniform motion until an external unbalanced force is applied on it ".

The above means that if you don't put in efforts to add onto your talent, your knowledge... and stay relevant .. you will soon reach your " Level of incompetence"

Now how do really put this in motion ( pun intended) is to use the law of 40+7.

Work for 40 hrs per week for your firm and the money you get paid

AND

Work for 7 hrs per week for yourself and keeping yourself relevant for the future... your future.

The 7hrs a week sharpens your saw ( 7 habits ), the 7 hrs a weeks expands your horizons , the 7 hrs a week keeps you Relevant.

These 7 hrs can be anything... it doesnt only mean taking a course .... it can mean speaking to some one who is more knowledgeable than you in a particular subject.... listening to a podcast... learning a musical instrument.... anything.

We will discuss more about the 7 hrs ... but if you do have thoughts pls do leave some comments and share...

learning ... and the 40 +7 rule..

That's simplefinancialsense.

consistency is the answer

2020-07-19T12:08:00.000+05:30

It is believed that to create a new habit one needs to perform the activity for the next 60 days. If we succeed in doing this then we would have formed a pretty good habit.

Nowdays YouTube is a great way where people interact with their viewers and i see many videos where they show before and after view of say doing 100 burpees a day for 30 days. Now they may not be able to start with a 100 burpees a day but they continue to push ahead. The difference is remarkable.

So is the case for financial planning.. building a habit.. being consistent.

So if you think about saving 100 rs additional a day... what do you think you would have collected over a month... 3000 rs.. over 3 months 9000 and over a year 36000. Money saved and invested in a 9% yield per annum will make this 1 yr of 36k into 72k Rs in 8 yrs.

So... an additional 100 Rs a day consistent saving can give you 36k in a year.

The point is consistently saving an additional 100 Rs a day.

There are many ways to do this..but it's about changing behaviours.. your behaviour.

Use less petrol.. walk more than taking out your car

Don't eat outside every weekend...

Smoke three cigarette less..

Etc etc

Or you could do a project which gets you 100 rs of additional income per day..

Attack both sides... revenue stream and cost stream.

Be consistent... and you will see exponential results...

That's simplefinancialsense

Rentals are dying...#covidtimes

2020-07-11T19:00:00.001+05:30

If you have a house on rent and the tenants are continuing in the house and paying the rent.. then you are one of the lucky ones!

With the impact of covid on jobs and the fact that lots of people are working from home, many of the tenants are moving back to their houses in their hometown.

In my society itself in my block there at 8 to 10 flats which have all been emptied in the last 1 month. The impact of the blockades between delhi and NCR also hasnt allowed new tenants to move from delhi to the suburbs.

These have also caused rentals to go down.. forget about the 10% increase in the rentals. ... though my landlord did not agree and wanted his 10%... which i gave. Him being a senior it would impact his earning income.

This is tough on the passive income streams for many people, especially retired seniors.

For others the banks haven't reduced the emi interest rates by anything appreciable and other income channels have impacted salaries.

Its a vicious circle.

Time to be careful about ones money... thats simplefinancialsense

The job loss is still coming..

2020-06-27T13:25:00.001+05:30

I might have some ten people who have contacted me on linked in where their jobs have been covid impacted. Senior people.. mostly in their late 40s . I can imagine the pain amd insecurity that they are going through. Children are not settled yet, home loans need to be paid and jobs not being available.

I try to help as much as i can.

But this is the tip of the iceberg. The impact to the jobs that companies held onto is coming in this and the next quarter as the economy doesnt pick up.

Companies which provided consulting roles and contractors are going to be the first ones impacted. Firms are

1. first stopping all people in contractor roles... may keep some freelancing people.

2. Going to weed out the Needs improvement in the bell curve fast. This usually was 5%.. maybe this is going to be 10% this year.

3. All promotions are going to be stopped... no bonuses and you may get to keep the same salary if you are lucky.

Things are not going to be better at least in the next quarter.

I would suggest a few things for people out there to do quickly

1. Open up your network .. both internally and externally in the market.

2. Work extra hard to bring value to your organization

3. Dont shift your job unless you are absolutely sure the other person is not going to renege.

4 keep creating your emergency fund.

5. Scrunge a little to keep your savings high

Its tight times... and the impact is going to be felt even more now.

Stay safe... its simplefinancialsense

Immunize yourself .. some videos

2020-06-07T11:19:00.001+05:30

Covid is creating havoc in our lives and things are uncertain (apart from the US markets which seems to have had a V shaped recovery ).

Jobs are insecure and so is health. There are many things that we can do and must do to remain safe.

I saw this video on zee business on the Ayush ministry presenting ways to maintain and improve immunity.

Here is another one which focuses on precautions when going back to work

Taking precautions is absolutely critical.. its also simplefinancialsense

Preparing for the worst...#covidtimes

2020-05-30T22:22:00.001+05:30

We dont expect the worst..thats human nature. We hope ..and hope for the best. However as covid 19 has shown us, things can become difficult and we need to be prepared financially for tough times to come.

As we see across the world, companies are under distress, millions of people are out of jobs and millions of people are facing salary cuts. When will this become better? We can only hope.

There are a few things that we should do immediately to ensure a safe future for ourselves and our near and dear ones. There should be no delay for any of these actions. Here they are..

1. Get a personal medical insurance

Most people are used to believe that they dont need any insurance because they are covered by their companies. The big point here is that they have to be employed by the company for this coverage to be available.

If you are in a company which is going to have significant issues in its industry or even if not,. It is just prudent to get health insurance asap for at least the next few years. Getting a new job may not be that easy ... and health can be impacted anytime.

If you are a student who is just graduating.. check if you are still eligible for health insurance under your parents... if not.. get one!

2. Build quickly your emergency fund

One needs at least some money in case of challenges. If it requires you to make use of the moratarium ( only if it is a must), evaluate that option also.. but not in any case for credit card bills ( that interest rate is too high!). Else with the lockdown one has understood what is really required in terms of expenses.

If you are investing via sips in equity .. move that to the emergency fund ( liquid or arbitrage) until you have it completed. Dont worry.. the market will remain volatile for some time.

3. Insure your life

Get a life insurance. This should be at least 10× of your salary. This is again something that one cannot depend on the company policies. That may also not be sufficient.

4. Make a will

This is the toughest of them all... thinking about death and planning for it. But it needs to be done. Ensure you have it written down and you have shared your investment details with your spouse.

4 things. Thats it .. not more.

Hope will save us. But lets be prepared for difficult times. Hopefully it will not happen

Lets prepare.. its simplefinancialsense

please join my site at www.simplefinancialsense.wordpress.com

What shall i do with all my unused dress shirts?

2020-05-10T23:22:00.001+05:30

Over the weekend i decided to try and dress up nicer. Not that i had any plans to go outside , we are still in a lock down situation, but just to feel a little bit more normal.

While opening my cupboard , i noticed that i had lots of new dress shirts. In pristine condition, still in their covers. With the status of work from home still going to go strong at least for the next many months, i did not know what to do with them.

The lockdown has actually opened up our eyes on so many things that going back to the way it was would be foolhardy. In fact many of the global ceo are saying they never want to go back to the way it was.

This disruption has broken norms , heredity cultures, fabled ways of working into the dustbin. Businesses are still running.. some of them without travel .. no more 6 am flights for me for the forseeable future.. no more jetsetting continents. Things have changed for the better.

We still havent gotten used to it.. it will take time.. change is a process and one has to go through the process to reach the acceptance of it. Covid 19 was the trigger.

So back to my question of what do i do with my dress shirts. I still have my 40 odd ties there... ones which i havent worn since the time i joined the workforce... we got them as gifts .. passed on by my father and uncles to me. ... now almost obsolete .

But they still adorn my cupboard. Taking up space. Most likely that will be the story of my many dress shirts. I will need a lot less.

We similiarly have lots of obsolete things in our financial plan. Old beliefs, shares that no longer have any value. Industries that we thought were futuristic... now no longer valid

Time we cleaned them up... like my ties and dress shirts.

Its simplefinancialsense

Asset allocation ... # covidtimes

2020-05-03T22:16:00.001+05:30

"We will remember these times when things become alright again."

A quote said by many. A feeling felt by most. A hope of things becoming alright again by all.

Trepidation is still in our hearts as we move from lockdown to partial opening up of the Indian economy. The economic impact of the lockdown is going to be immense.

Today we got a call from our maid who didnt have enough money to buy ration or gas for her home. She had not done any work in April and neither her husband. Someone who had sent her children to decent school.. even to ask for money would have been a big blow to their ego... of no longer improving their personal status. It was simple enough to do a quick transfer to her account. No questions asked. IMPS ensured she called back immediately to confirm money received.

I was reading a blog of someone who has been a successful retiree in the FIRE program. Retired in his 30s with over 3 Mn usd in savings. Plans all in place. This market crash has impacted his net worth by over 600k usd. With additional expenses coming because of a second child on its way.. he now needs to rethink the point of being retired. Hey i would have thought even 2.4mn was huge !

The point i am making is that things are quite unpredictable and this covid impact will need us to rethink our financial plans and statuses.

Think of the students who were to get into the job marketplace in march and june. What is their future? Tough. And they may have educational loans to pay off. .

With all of these changes one needs to sit down and re evaluate our risk appetites... i know i feel that mine has definately become more conservative that what i used to be a few yrs ago. We need to rethink our asset allocation.

Equities has gone back to where it was 8 yrs ago... we have lost 8 yrs of gain... and to recover it will take us that much more time. ( buffet is sitting on 130Bn USD of cash and he hasnt bought any thing in this downturn).

Gold has had a stellar run... and most dont have much in their portfolio.

Its best to relook at the folio and rebalance... debt and equity . In equity rebalance small mid and bluechips.

Its time to sharpen our pencils.

Moving my blog to www.simplefinancialsense.wordpress.com

Major Paradigm shifts post corona for the IT and ITES industry

2020-04-25T13:41:00.001+05:30

Its a defining moment for all of us... this corona pandemic. This has forced us into our homes cowering for protection, changed our basic human instincts of social togetherness.. changed the social fabric. This is changing us and it will have a huge impact on the way we operate going forward.

I will talk about a few points on how this changes our IT and ITES industry significantly.

Almost everyone is working from home today. Hiring is being done digitally and new joiner orientation is being done by joiners bringing theor own devices... and all online.

Teams are doing projects with no human face to face interactions.. brainstorming sessions , orals and contract negotiations. Amazing stuff that would all require travel ... to the office or to the client.

It is of course not easy.. it takes more time and more effort... but it is less impact to the environment.

With these changes ... one can work from anywhere... and more and more work can happen outside of the region's.

Offices are not required anymore

People can be more liquid...

Disruption is at hand

How this impacts us is how we can build skill sets in these areas... faster and execute them at scale.

Opportunity to grow significantly for this industry...

Understanding impacts by industry.. that's simplefinancialsense

covidtimes . Debt ... or not to Debt?

2020-04-20T10:42:00.001+05:30

Times are tough and will get tougher as we progress. Some of us may have to take on debt to wade us through these tough times.

What rules should be applied while taking on debt IF and only IF one has to ( read my previous post on creating an exit strategy of your investments).

Credit card debt is a NO-NO.

This is the highest debt interest. 30-40% pa interest rates. Which means your amount to be paid back doubles in 2 to 2.5 years. Do not fall into this trap .

If required move away completely from using credit cards to debit cards.

Hopefully you havent taken the moratorium on credit card payments because all that the banks are doing is to postpone the payment but are still charging the exorbitant interest rates

Home loan extensions or additions

This is usually the lowest possible interest rates available. Good to use and and is also long term in nature.

Personal loans

Above the home loan interest rates and definately possible to use. However do not use these loans for stuff like travel ( not the time to travel). Use it if you need to buy some sort of an asset like a car or something.

Zero cost EMI

Lots of companies do provide zero cost emi to help reduce the burden on cash flow for people. Ask the manufacturer or service provider to give an option. If they do have an option ask if you pay upfront can you get a larger discount.

I got a nice discount for an online course yesterday by paying upfront.

In short the rules dont differ too much from regular times, but the important point in these times of covid is to conserve capital and be frugal until things improve.

Be smart.. simplefinancialsense.

Have started using another site for my blog.. please visit there as i stop off this site over the next few weeks. Www.simplefinancialsense.wordpress.com

Time to do a few urgent things financially

2020-04-19T13:20:00.001+05:30

These are tough times , unprecedented. We are fighting a battle against an unseen enemy. We cannot see it.. it has all the features of a world war but we dont see other human beings fighting us.

We cannot forment up nationalism to motivate people, we cannot rely on the heroism of our armed forces or the bangs of our missiles to obliterate our enemy.

The only thing that can see us through this is the focus on ourselves and self motivation. Hope that we can still survive and keep ourselves away from depression cause every morning we wake up and realise that this is not a dream.

Financial plans that existed before Feb are no longer valid... and we need to re evaluate them and replan our entire future and the future of our children. Hopefully they will continue to see a bright future .

The financial markets are in a turmoil , life is in a turmoil and while i hope that is not the case we may as an individual not survive this crisis. Our families might.

Create your will

It is important to ensure your will is ready and available. One can easily write it on a piece of paper or even create a video will .

While there are people who believe that nominations allow for some sort of a will structure to be created , the will takes preference.

Share your investment documents with people you trust.

Quickly build an emergency fund

Cash in bank savings account is not an emergency fund. Build an emergency fund for the next six months of expenses. The future is not sure, a job is not sure regardless of your capability and neither is a salary ( many companies have already announced salary cuts and salary increase freezes)

Build an exit plan from your investment

If you do need money, what will you sell first. Which investment should be redeemed is best known to you only. Stocks are down by 30 40 % .. selling them now may not make sense. Maybe selling a debt may be more helpful... whatever it is .. make your plan now.

Life is not simple anymore. But simplefinancialsense is always important