Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

 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 ...

1) 80% of gains come in 20% of the time. So an investor needs enormous patience and conviction to hold stocks for 10 or 20 years. 2) Why not all investors get rich? They like to get rich without going through many years of discipline & patience. Process leads to the outcome. 3)Prices change frequently. Value change over a period of time. There lies the opportunity. 4) Compounding is backloaded. It works well only over a long period of time. There is no substitute for time in compounding. 5) 99% of the time, doing nothing is the best thing to do in the market. 6) You cannot predict or control markets. What you can control is how much you save, investment process and behavior. Focus only on that. 7)Markets usually run ahead or fall behind. Rarely in equilibrium. Over or under valuation can last for a long time. Don’t time the market. 8) Buying and selling are easy. It is holding on through ups and downs is difficult but ultimately most rewarding. 9) Invest regularly. Invest for the l...

 These pointers can help anyone who runs a business and looking to invest in mutual funds. 1) Use mutual funds for diversification. Most of your investment is in your business itself, as well as in real estate. 2) Invest a minimum of 70-75% of your savings back in your business, and focus on increasing your stock value. 3) Use a part of the remaining 25-30% for investing in equity mutual funds. Use SIPs and tag it to a goal like your child's education. 4) Invest 30-40% of your emergency fund in pure liquid funds. 5) Use the SIP route for monthly investment and systematic transfer plan or STP for lump sum investments. 6) Do not invest in equity mutual funds if you cannot park it for a minimum of seven years. 7) Invest in stocks only when you have the time and expertise to monitor them, and the money to spare, and when you are sure it will not disturb the focus on your business.

When you parents(any of them) cross  70 years of age, there are few simple but important things which needs to be done for better personal finance. 1.  Talk to your parents. See how their finances are managed 2.  some of them could not sign properly .  Be prepared for such things. Selling Real Estate in this country is impossible if the person cannot go to the city of the property, and sign in the presence of the Registrar. Getting a Power of Attorney is just as painful.   Get ready for that. 3.  some of them could not sign properly hence bank cheques clearing might be an issue. Get all bank accounts, mutual funds, etc. to Either or Survivor mode, and ensure digital access 4. Outsource AS MUCH AS POSSIBLE. Stop guessing. Prepare for a real long innings. Get an extra maid. Cook. Driver (Ola Uber may help). If you need a nurse start looking. Trained nurses are far more expensive. Take a call. 5. Either you will have to move to the location of your p...

What do you thing rich people are doing in real world? They are constantly flying to Bahamas, drinking champagne and party hopping . Well, let me share the life style of one real -seriously rich man I know. He is up at about 5 am and hits the home gym. His instructor comes in at 5.15 and leaves at about 6 am, then this man does his treadmill, and by the time it is 7 am he is ready for break fast. By 7.45 he is in office checking out his emails etc. – he has a rule that he does not do any business at home – not even checking his emails. Almost all his mails get marked to his secy and the secy checks them – and an occasional emergency call is attended to. He tells me he attends to one such call in a week – and he is trying to make it once a fortnight. He works pretty long hours but tries to be back home by 7 pm for his dinner. Not a party animal at all, he tries to get one/ two days holiday when he goes on his plant visits. Twoof his plants are near very beautiful spots, so he goe...

AM I investing enough to sustaining my family's life style in future? . This is the question will most of the person's mind considering the cost of living we are going through now. For this I have prepared the below sheet considering various age and monthly expenses . This will help you to understand what is the monthly income required in future considering inflation. Also what is corpus amount required after my active employment/business income ends(may be at age 55/60) and till my last day(80 years). How to read this sheet? For example if my age is 35 years and monthly expense is Rs 30,000 ,considering 6% inflation I need Rs 96,214 monthly after 20 years(2039) , Rs 172,305 monthly after 30 years(2049) to manage monthly expenses. What if after my retirement? Say if you retiring after 20 years (2039) at age of 55 years , you need to create a retirement corpus of Rs 23,274,641(2.32 Crores) .This is to withdraw monthly Rs 96,214 (equal to Rs 30,000 monthly expenses t...

Why my overall returns from Mutual Funds is less than my current FD rates(6%)? This is the question i get today from most of my mutual fund clients.To clarify this i take one investor who has invested in L&T Hybrid Equity fund ,which is an balanced fund(in old context to keep it simple) which invests 65-75% in direct equity(stocks) and 35-25% in Fixed income products like Bonds,NCD,Gilts etc from year 2015. you can see first 18 investments from oct'15 till Dec'16 he has got more than 8% annualized returns in all cases that is  invested above 800 days Let us see what happend after this you can see investments made 1 year(365 days) before till 799 days he has got less than +8% to -4% varies. Let us take the overall investment how it looks like His overall investment has given +3.5% returns which is less than the current FD interest rates (6%).  Sounds right?  No. It is not true.  Observation 1 Out of overall 57 installmen...