Personal Finance 2.01

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Indians may take the ‘a penny saved is a penny earned,’ maxim seriously, but a 9 per cent robust growth rate, saw an increasing number of them spending more than before. According to the Reserve Bank of India’s annual report, though net household savings in ab solute term went up by 8.18 per cent to 5,26,033 crore in 2007-08, as a percentage of gross domestic product (GDP) it is estimated to have fallen by 50 basis points (100 basis points equals one per cent) to 11.2 per cent during 2007-08. The reason: a robust growth of about 9 per cent boosting GDP during the year.
Investments in shares, debentures and mutual funds have seen a healthy growth last year. It also highlighted growing investor preference for riskier but high-yielding investment instruments compared to bank deposits.

The report said that investments in stocks, debentures and mutual funds grew by nearly 51 per cent to Rs 77,073 crore during 2007-08. In terms of share in the household savings it constitutes 10.5 per cent against 6.6 per cent at the end of previous year.

“The flow of household investments into mutual funds and growth in number of accounts with the industry in 2007-08 reflects this trend,” said AP Kurian, chairman, Association of Mutual Funds of India (AMFI).

However, growth is marginal when pegged to GDP—1.6 per cent against 1.2 per cent in 200607.

This growth is also not phenomenal when compared to global standards. “In the US, mutual fund corpus size is equal to over 70 per cent of the US GDP,” Kurian added.

Among the other components of household financial assets, assets in cash and investments in insurance, provident and pension funds went up by 21 per cent and 1.72 per cent respectively. But deposits (including bank, nonbank and trade debt) fell by about Rs 10,000 crore to Rs 4,15,245 crore, while claims on government became negative at Rs 27,042, against a positive figure of Rs 40,627 for the previous year, the central bank’s report said.

Personal Finance saving, Spending

Ideasmoney shares an interesting story about a friend on Saving/Investing Regularly

It’s a story about a guy who got a car ( worth almost 7 Lakhs) out of just 70,000 which he invested a decade ago and left with some good money too!!On the contrary lets look at a person who buys a car on EMI. he pays almost 15% as interest. By making money work for you ..you tend to gain in the long run. But this requires tremendous patience and a systematic approach.

Check out the full story

Financial Literacy Series, Personal Finance Investing, saving, Spending

Financial infidelity is a pretty wide umbrella term, including any situation where anything less than the full truth about your money situation is shared with your partner. This not only includes outright lies (from the big ones down to little white lies), but also deception by omission and deception by misdirection as well. In short, any time you actively manipulate information to give your spouse a false impression of your personal financial situation, you’re committing financial infidelity, and since it is an act of dishonesty, it interferes with the trust in your relationship.

See this detailed post and review on The Simple Dollar

Personal Finance

As the name suggests, company fixed deposits is a term associated with FDs issued by companies. They are distinct from the FDs offered by post-offices and banks (like nationalised banks for instance). Company FDs are known to offer attractive returns vis-a-vis FDs issued by banks and post offices.

But then the same comes at a price - higher risk. Company FDs are unsecured in nature. Hence, should a default occur, investors would find themselves in a rather unenviable situation. Of course, this doesn’t mean that every company FD is likely to result in a default; all the same, the risk involved shouldn’t be ignored.

Risk-averse investors who accord higher priority to safety of capital and an assured income over higher returns would do well to steer clear of company FDs, especially the ones that don’t carry an ‘FAAA’/equivalent credit rating indicating the highest degree of safety. For such investors fixed deposits from post-offices and nationalised banks may be more suitable.

Personal Finance FD

After the Reserve Bank of India hiked the cash reserve ratio (CRR) from 8.75% to 9%, there has been a quantum jump in the number of home loan borrowers approaching banks for foreclosures and partial repayments.

Yes, it is very painful for borrowers to see all their repayments going as Interest and very little of it going into “Principal” So it is always better to prepay and take the pain in your stride. As they say that if you want to teach your kids about personal finance, show them what is poverty. So let’s take this as an education for your management of money!!

According to industry estimates, the number of home loan borrowers making foreclosures and partial repayments has almost shot up by 20-25% during the past few weeks. These borrowers are typically the ones who have taken floating loans in the last 12-18 months and are now trying to make balloon payments through their salary bonuses. Floating rates account for 90 % of the India’s home loan portfolio.

Personal Finance Home Loans

Over the last one year, I have built a lot of web real estate in the personal finance space. It has been a lot of learning for me too along the way. Here’s a preview of my internet real estate on personal finance:

Here they are:

• Personal Finance 2.01: India’s first online weekly on personal finance, is my most prized possession. Built on Joomla CMS almost singlehandedly and without knowing any HTML, coding etc. It is Page Rank 4 and figures as the first/second coption when you Google for “Personal Finance” and “pages from India”

• RanjanBlog.com: My first blog which is PR5 now started it all. It has over 450 posts and most of them on personal finance and it’s allied areas.

• Blog.PersonalFinance2.01: My PR 3 Blog focussed on personal finance. This blog was hacked and somebody had put some malware on that one. Now it’s clean and back in control. Phew, that was very stressful times when it was under hacker’s control.

• Learn.PersonalFinance201.com: I have installed Moodle Learning Management System software on this subdomain. I need to understand how it works, though the framework has been understood. This has immense potential and perhaps all my future efforts would revolve around this domain.

• Blogs201.info: This is a multi user Wordpress platform where a subdomain can be created by anybody in seconds! It attracted a lot of spam subdomains and I had to disable new registrations. Now I have taken the control back to myself. So now I have created 4 subdomains that will serve as my e-scratch pad on Stocks, Mutual Funds, Insurance, Startups. I’m planning a few more on my hobbies and other interests.

The knowledge that I have gained is priceless. Hope to go stronger in this space.

Personal Finance

Sundar is a Google Software Engineer and has been selected to IIM, Bangalore’s PGP this year. He had some very interesting questions on personal finance. He wanted to know why people do a shoddy job when it comes to financial planning among other things.

Read my interview at компютриCoffee with Sundar

I enjoyed answering those interesting questions.
Thanks Sundar

Financial Literacy Series, Personal Finance, Planning

I am a big fan of Ramit Sethi’s blog on personal finance (banking, saving, budgeting and investing) and personal entrepreneurship. And I was delighted to be able to meet him in person while he is on a vacation to India.

Ramit is a graduate of Stanford, where he studied technology and psychology. He’s the co-founder & VP of Marketing for PBwiki, a wiki startup in Silicon Valley.

We chatted up on many things included the ghee filled wedding food, bargaining/negotiation skills of Indians and how even poor people are happier here compared to USA and the Dharavi tour. I suggested him to take a local train ride to understand the spirit of Mumbai!!

I also got a lot of insights on how to be a better blogger and I want to share some of those.

• Understand your reader: Have we ever thought of or tried to find out what kind of readers are coming to our blog. We need to know the audience. Some kind of research/ poll should tell us about the visitors to our blog.
• Write with that reader in mind: Writing for a techie or college grad would be different from writing for a guy who already has 4-5 years of work experience.
• Have a tag line that people can identify you with: There should be a small but distinct description of what you write or who you are. It’s like describing a brand that you are or want to become.
• Focus on content and telling stories: The best way to talk about personal finance is to tell stories and how it is related to other interesting things like food, losing weight , etc.
  
• Find out where you want to see your blog in 3-5 years.

Thanks Ramit.

Personal Finance, Website , India, Ramit Sethi

Personal Finance is a “threatening” concept and most people phase out when money/ savings/ investing/ tax/ stocks/ insurance/ funds are discussed. After tackling them over the last one year on my blog and website , I hope to construct an easy-to-digest, friendly e-book that people want to read and understand!

This e-book is only 21 pages and will not take more than an hour to go through. No matter who you are and what you earn, my feeling is that this one hour can help you understand money and change a lot of things for you, for the better!

Personal Finance is about managing your own money. There are scores of books and courses to manage the finance of your business or a Company. Then there are books on finances of the Government (Monetary, Fiscal Economics).

But are there enough for managing your own finances? Which is equally, if not more, important for all of us. And moreover it’s simple and not rocket science!

Download the eBook

Budgeting, Financial Literacy Series, India, Personal Finance, Planning Budgeting, eBook, financial planning, Investing, Personal Finance, saving, tax

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Personal Finance