Skip to main content


Action plan 5 for Financial Well Being - Understand the Risks in Investments

  Risk means different things to different people in Investments. Why most people don't want to invest in market based products like Equity Mutual Funds or Stocks?One reason might be due to advertisement condition   “Mutual Fund investments are subject to market risks, read the offer document carefully before investing” But unknowingly they investment in unit linked insurance plan(ULIP) which is also a market based product..We will discuss about ULIP story in another series. Coming back to few types of investment risks we face  everyday 1.Market risk - it is applicable for products based on stock market. It means investment returns are impacted by market movements.It is visible day to day basis..Right? 2.Reinvestment Risk- This happens when you are trying to renew your existing FD after maturity and seeing the new rates are less comparing to existing one, which most of the senior citizen's today facing during reducing FD rates compared to 10,5,3,2 years before. 3.Inflation risk
Recent posts

Action Plan 4 for Financial Well Being - Where to START with?

 Where to start with? This is most of the people ask when asked about investments To invest you need to have surplus money available with you to do ..So you need to create monthly surplus money from your salary or business income. If you don't have any monthly surplus then you running "paycheck to paycheck" mode which is a strong warning signal for potential future financial disaster. you need to identify needs and wants and cut some thing to create  space for your monthly investments  “If you buy things you do not need, soon you will have to sell things you need.”―  Warren Buffett How much I can start with ? As much as you can..but minimum 15% of your monthly income for investments can be good start.As soon as soon close some liabilities you can keep increasing. Another interesting aspect is as every year our income ,expenses increase also has to be increased similar way..

Action Plan 3 for Financial Well Being - Know what is inflation and how it impacts YOU

 Inflation is in simple terms cost of living increase over previous year. For example inflation what government publishes periodically CPI is say 5% that means government is officially telling us overall prices are increased by 5% compared to last year. In reality common person know the actual inflation we is facing everyday at ground will be much more than official figures . Another point , the education and medical inflation will be mostly in double digits.Do a  quick fact check what you paid for your kids school fees last year vs this year and any medical expenses happened last year vs this year. you will agree to my point How can we use this data 1.When we plan some thing for future be it school fees, car ,home buying you need to factor this. More importantly you need to factor this in your retirement planning for you pension income after 15/20/25 years away. Think what is prices of common things like Milk,Rice,Bread,Egg,Petrol etc 15/20/25 years before. 2.Check your existing ongoi

Action Plan 2 for Financial Well being - Differentiate Investments Vs Insurance

Know the difference between Investments & Insurance.  Insurance is meant for protection same like car,home insurance focus is not return generation/grow money as your investments.Are we taking car insurance to get back money of what we paid or protecting us in case of money required to fix the damages? Most of the products (endowment ,money back etc)from life insurance companies are hybrid ,they sell as investment and protection policies . The normal bench mark is if you pay for 15-20 years then you will approx 2 times of what you paid as maturity benefit (including revolutionary , additional, loyalty bonuses etc) and if you die in between sum insured(mostly planned premium payments) will be paid back to nominee. First,The return s from these policies range in 4-5% for 15-20 years policy. Does it make sense even today when FD rates are around 5-6%?I will leave it to you to all. Second,  Sum Assured on Death  is defined as higher of 125% of Basic Sum Assured or 10 times of annualise

Action Plan 1 for Financial Well being - Financially Protect Yourselves

COVID has reminded us on financial protection in multiple ways from Job Loss or Salary cut, Financial shock due to sudden medical expenses or in extreme case of demise of sole bread winner of the family. We take protection in every part of our life from wearing helmets, seat belts, wearing face masks etc. Same way, we need to protect our near and dear ones financially. It is basic financial hygiene, we can't afford to ignore or miss it. First things first...take term life insurance(not your endowment ,ULIP ,Money back policies) till your 60-65 yrs of age and basic medical floater insurance apart from your employer provided .

What is Financial Well being?

Financial Well Being is that state of being wherein a person is making the most efficient use of his financial resources and in a position to absorb any financial shocks , is on track for meeting current & future financial goals and has a feeling of peace & satisfaction about his financial position. Simplified form Those who made efficient use of his assets (Equity, Debt, Real estate ,Gold etc) and can absorb any sudden financial shocks(Job loss, out of pocket medical expenses ,demise of earning bread winner of the family etc) and also on track for his current & future financial goals( Home buying, car buying, children higher education/marriage expenses, Retirement/Pension income etc) with sense of peace & satisfaction of his financial position. Hope it make sense for you..I will share more actions in a simplified manner (common person can understand) in next weeks how one can plan for better financial well being. That is what it matters to most of us in the end :-)

Are you financially ready to buy your first house?

 Before buying your first house, assess the affordability and future serviceability of any loan you take. Sundar, a software engineer from Chennai got married five years back to Raji, a banker. Sundar and Raji are now 34 and 31 years old, respectively. Two years into their marriage, they decided to buy a house that cost them Rs 54 lakh, funded by a joint home loan of Rs 45 lakh. At the time their combined salary was Rs 1.1 lakh (Rs 65,000 and Rs 45,000, respectively). Fast forward to the present and the couple is expecting their first child in a few months. Raji has decided to be a stay-at-home parent to take care of the child, but it is not going to be an easy road ahead. As they transition from a double-income-no-kids household to a single-income household with a child, they are worried about servicing the EMI which is about Rs 42,500. "At the time of buying the house, we did not think about such a situation arising. We exhausted all our savings in the down payment while buying