Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

“Compound interest is the eight wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” ― Albert Einstein As time progresses some things just get better.. Red wine gets an enhanced taste while aged cheese is so much more tastier.Don’t you agree? Now what’s with Money?? It grows.. grows with time… And why?? Because it gets compounded. So what’s compound interest exactly? Its earning interest for interest already earned. In other words, your interest on savings also earns interest . Suppose you deposit some money in your account today, there will be an increase in the value of it after a year. And, that’s because it has earned interest. The journey to wealth can begin with even keeping aside the smallest amount each day. Don’t believe?? The picture below says a thousand words. Rs. 15000/- invested per month for 20 years will turn into more than Rs 1.13 crores. On the contrary, if you left it in a savings account, it would be worth

Equities have out-performed other investment asset classes over the long-term in India as well as globally. With growing maturity, retail Investors in India have begun to realize this and also take into stride the short-term volatility of this asset class. Better regulatory environment and improved corporate governance have also helped bring more investors to Equities. Currently, retail equity investment in India is mostly channeled directly in stocks. I ndividual investors hold around 20% of the total equity market value, while mutual funds account for about 3%. This is almost the opposite of global trends where retail money is mostly professionally managed and mutual funds are the investment vehicle of choice for equities. Why should India be different? Does direct investing provide any benefit over investing in equity mutual funds? To answer this question, we conducted a study to compare the historical performance of Indian equity funds to that of the stock market over

It is amusing to note the kind of views kids have on money. I know of a little one who thinks she can solve world poverty by simply getting an ATM at home. Smart girl! Life is magical when you are still discovering the world and forming your ideas. While I hate to break the spell, it is important to gradually unravel the science behind this magic.  Unlike natural sciences like the law of gravity which kids test on their own (by throwing your shoes and watches out of the window), money facts are not something that will get ingrained into their minds naturally. It has to be understood systematically with deliberate efforts.  As your child observes the economic activities happening around and develops their views, it is important to get a few facts established well in their mind as a means to build the right foundation:  1. Money is a means of exchange  This is a simple fact that kids understand quickly with little effort from your end. At some point they refrain from grabbing the att

NAV or Net Asset value is the price per unit of a scheme on a given date. It is the NAV of the fund that determines the number of units you will get when you invest in a particular scheme. Many investors have misconceptions about the NAV of mutual funds and about how NAV is linked to a fund’s performance and its returns. Hence as an investor, it becomes very important for you to understand:  1. What is NAV? 2. How is it Calculated? 3. The Application of NAV  1. What is NAV in mutual funds? Net Asset Value (NAV) in simple terms is the current worth of each unit of the mutual fund . NAV is the single most important number for a mutual fund scheme because all transactions of a fund are with reference to NAV. NAV, which reflects the worth of each unit of a scheme, is computed and declared by mutual fund AMCs on all business days. Depending on the type of scheme NAV is calculated up to 2 or 4 decimal places. 2. How to calculate NAV? On subtracting liabilities of a scheme from its to

Regardless of how financially secure you currently are, the first step towards eventually closing your home loan early is always the creation of a safety net. Paying off a home loan invariably requires a considerable corpus of accounted-for cash. The most important benefit of closing your home loan early is obvious - you become free of EMIs, which are probably the biggest recurring debt currently straining your monthly income . This is definitely a desirable scenario under the right circumstances. In previous years, the penalty involved in prepaying or closing a home loan was a major deterrent, but banks can no longer levy such a penalty.  Assuming that getting rid of this monthly burden is more important to you than the tax benefits of servicing a home loan, you need to start planning your finances and get ready for the big push. This is not an overly complicated process, but it does require you to keep your ultimate goal - closing your home loan - firmly in mind at all times. The

It is POWER OF COMPOUNDING .Please see the below picture to see the MAGIC of  it :)