After you have taken the insurances and covered yourselves against unforeseen risks, now is the time to save for an emergency.
Try to have about 3-6 months of expenses in in a savings or SWEEP in account.
Do not touch this saving till you need in case of quitting a job or losing one.
Now is the crux of the entire story that I have been unraveling.
We must use the path of mutual funds for all the savings that we intend NOT to use for long time.
The experts will tell you that 3-5 years is a LONG time- not I'll say till the important stages for which you are savings have been achieved.
The Mutual fund that I'm talking and the ones that I've tried out are the Open Ended DIVERSIFIED EQUITY ones.
Their advantages being:
1. You can invest as much and as less (as Rs.500) you like.
2.You can invest systematically (ever month , every week or even EVERYDAY).
3. You will not need to withdraw without needing - as there is no maturity.
4. You can use it as a pension plan , Child education or any other purpose as you like- even repatriating it if you've invested as a NRI.
5.There is no entry load (commission) on these investments now.
The mutual funds invest it in the stocks of various companies. As the no. of companies is fairly large your risk is quite spread with the various companies and sectors.
One must invest in a maximum of 7 funds.
Few axioms that I give to my colleagues on board ships is:
1. Never invest in a NFO (new fund offer).
2. The fund that you select must be at least 3-5 years old and a proven track record.
3. Avoid Sector funds and invest in diversified equity type.
4. Invest with a second applicant (being a close family member) on EOS(either or survivor)basis.
5. Use the option of nomination.
6.Put a common email address while filling the forms of all the mutual funds.
7. For dividends or redemption use the DIRECT CREDIT TO BANK option. This will expedite the process of getting your money.
For more learning on the subject, visit valueresearchonline.com - it is the virtual bible of the mutual fund industry and will be very helpful for selecting your funds.
Wednesday, March 17, 2010
Sunday, March 7, 2010
SAVINGS PHILOSOPHY- 003 INSURANCE
SAVINGS as a definition that I read somewhere, means , a deffered consumption.
So once you have a job and before you have your first pay in hand, the first requirement as per Abraham Maslow's pyramid you will have to pay for the "ROTI"-yes even before the first pay check.
Then after the first paycheck comes to the bank it will be the "KAPDA", unless of course papa has been generous.
It is from the 3rd constituent, that's right, THE MAKAAN, that starts our vicious cycle of savings and the same being never enough.
So let us first understand that to save we must always start from our very first pay check as that will instill in us the determination of our purpose.
You might ask me that there will be taxes to be paid, insurance to be done, etc. etc.
We'll take all of them into consideration.
First , if your remaining salary allows you and your employer does not provide for your insurance- go ahead and take a TERM INSURANCE of AS MUCH sum assured as possible.
As you must have found out by now- term insurance is the cheapest insurance of securing your income for your parents or dependents at this stage.
It is important to understand that any other form of insurance is expensive and even if you are assured money at the end of maturity - it is your own money that is being returned at a very very less appreciation. We will soon see that this excess premium that you will save will earn more for you than from the insurance.
So go in for a moderate amount of coverage (the premium that you can afford) but for maximum duration that is offered- later you can take an additional policy when your salary goes up.
The beneficiary at this stage can be your parents/dependents and can be changed later to your wife/children etc.
Second type of insurance that you must goin for is a health insurance (that is if your employer does not cover youin some form),You can take a floater policy soas to cover your dependents.
Third insurance that one must go for is a householder's policy if (and when) the house is your own.
After doing the above you have covered all the risks,eventualities, emergencies that could have led to any outgo of your limited resources. You can keep adding to these 3 types of insurances as your income and responsibilities grows.
You can take specific health insurances for cancer, diabetes, specific women insurances.
There are also health insurance products from some life insurers where you have a very large amount as sum assured and the policy premium remains constant for the entire period of the policy.
It is important to understand that the premium is a factor of your age hence it is best to secure yourself early in life- that is the philosophyof planning- always for long term.So that you have more money to spend at the most important juncture of your life.
So once you have a job and before you have your first pay in hand, the first requirement as per Abraham Maslow's pyramid you will have to pay for the "ROTI"-yes even before the first pay check.
Then after the first paycheck comes to the bank it will be the "KAPDA", unless of course papa has been generous.
It is from the 3rd constituent, that's right, THE MAKAAN, that starts our vicious cycle of savings and the same being never enough.
So let us first understand that to save we must always start from our very first pay check as that will instill in us the determination of our purpose.
You might ask me that there will be taxes to be paid, insurance to be done, etc. etc.
We'll take all of them into consideration.
First , if your remaining salary allows you and your employer does not provide for your insurance- go ahead and take a TERM INSURANCE of AS MUCH sum assured as possible.
As you must have found out by now- term insurance is the cheapest insurance of securing your income for your parents or dependents at this stage.
It is important to understand that any other form of insurance is expensive and even if you are assured money at the end of maturity - it is your own money that is being returned at a very very less appreciation. We will soon see that this excess premium that you will save will earn more for you than from the insurance.
So go in for a moderate amount of coverage (the premium that you can afford) but for maximum duration that is offered- later you can take an additional policy when your salary goes up.
The beneficiary at this stage can be your parents/dependents and can be changed later to your wife/children etc.
Second type of insurance that you must goin for is a health insurance (that is if your employer does not cover youin some form),You can take a floater policy soas to cover your dependents.
Third insurance that one must go for is a householder's policy if (and when) the house is your own.
After doing the above you have covered all the risks,eventualities, emergencies that could have led to any outgo of your limited resources. You can keep adding to these 3 types of insurances as your income and responsibilities grows.
You can take specific health insurances for cancer, diabetes, specific women insurances.
There are also health insurance products from some life insurers where you have a very large amount as sum assured and the policy premium remains constant for the entire period of the policy.
It is important to understand that the premium is a factor of your age hence it is best to secure yourself early in life- that is the philosophyof planning- always for long term.So that you have more money to spend at the most important juncture of your life.
SAVINGS PHILOSOPHY- 002 MY DISCLAIMER
In the world that we exist it is difficult to do anything with a noble intention without raising doubts about ones own interests. Hence I must, prior to commencing my 'odyssey' , make a few disclaimers so that you can rest easy while you read :
1. I am not a certified adviser for the purpose of any investments , as such I do not work in this field for myself or any company.
2. From the above it follows that I will at any stage be not directly or indirectly rewarded for any of your investment decisions if you share them with me.
3. My endeavour is simply to raise awareness about different financial products available in the market as I understand them and the plans that you can adopt.
4. I will use simple mathematical tools to explain why we must chose one product over the other. Final decision and plan must be your own.
5. I will not reveal to you the investment schemes that I hold so that you do not get influenced by my decisions - after all you must be responsible for your own decisions and be credited with the gains that you make or the losses that you incur.
Shall we start?
Light , Camera ,Action.... Roll over to 003
1. I am not a certified adviser for the purpose of any investments , as such I do not work in this field for myself or any company.
2. From the above it follows that I will at any stage be not directly or indirectly rewarded for any of your investment decisions if you share them with me.
3. My endeavour is simply to raise awareness about different financial products available in the market as I understand them and the plans that you can adopt.
4. I will use simple mathematical tools to explain why we must chose one product over the other. Final decision and plan must be your own.
5. I will not reveal to you the investment schemes that I hold so that you do not get influenced by my decisions - after all you must be responsible for your own decisions and be credited with the gains that you make or the losses that you incur.
Shall we start?
Light , Camera ,Action.... Roll over to 003
Friday, March 5, 2010
SAVINGS PHILOSOPHY- 001 MY AXIOMS
There are a lot individuals and companies making money by making money or seemingly attempting to make money for other people.
This reminds me of a very old saying " Fool and his money are soon separated."
Then where does that leave us in the complex maze of financial world today.
With the goverment offered hi interest products being out of the market since last 7-8 years, today one has to fend for oneself.
I have spent past 23 years getting the jist of this maze and trying to get to the other end of the entangled thread (the cliche'that I will use very often on this blog), after all providing the means to one's family is the first step to being holistic.
If you are a well versed individual who has made a big buck in the field of stocks- THEN THIS POST IS FOR YOU.
If you are a recluse, happy contented person with the savings in a nice FD with a nationalised bank -THEN THIS POST IS FOR YOU.
If you are a rational person trying to make modest returns on your hard earned money and also provide for your age old pension-THEN THIS POST IS FOR YOU.
I ENUMERATED MY REQUIREMENTS AS FOLLOWS:
1. The process of savings must be simple and assured by the law of the land.
2. The savings must be able to be build slowly and steadily in form of a SINGLE corpus, so that you can account for HOW much money you put WHEN and how much is it worth NOW.
3. You should be able to save as much as you HAVE, or want to without any commitment or penalty.
4. You should be able to withdraw AS MUCH as you NEED, WHEN you like- in the easiest and safest possible way- with least possible running around. With NO TDS or penaalty.
5. Your savings must be able to grow MORE than the inflation and in keeping with the times ( I should not be disadvantaged in the sunset years of my life with having saved less than my requirements).
6. You should be able to get the flexibility to terminate or switch the savings if the return in future do not give you expected return.
7. You should be able to put any windfall gains into the same channel of your savings that you have been following.
8. In case of being an NRI you should be able to invest on a REPATRIABLE basis.
This reminds me of a very old saying " Fool and his money are soon separated."
Then where does that leave us in the complex maze of financial world today.
With the goverment offered hi interest products being out of the market since last 7-8 years, today one has to fend for oneself.
I have spent past 23 years getting the jist of this maze and trying to get to the other end of the entangled thread (the cliche'that I will use very often on this blog), after all providing the means to one's family is the first step to being holistic.
If you are a well versed individual who has made a big buck in the field of stocks- THEN THIS POST IS FOR YOU.
If you are a recluse, happy contented person with the savings in a nice FD with a nationalised bank -THEN THIS POST IS FOR YOU.
If you are a rational person trying to make modest returns on your hard earned money and also provide for your age old pension-THEN THIS POST IS FOR YOU.
I ENUMERATED MY REQUIREMENTS AS FOLLOWS:
1. The process of savings must be simple and assured by the law of the land.
2. The savings must be able to be build slowly and steadily in form of a SINGLE corpus, so that you can account for HOW much money you put WHEN and how much is it worth NOW.
3. You should be able to save as much as you HAVE, or want to without any commitment or penalty.
4. You should be able to withdraw AS MUCH as you NEED, WHEN you like- in the easiest and safest possible way- with least possible running around. With NO TDS or penaalty.
5. Your savings must be able to grow MORE than the inflation and in keeping with the times ( I should not be disadvantaged in the sunset years of my life with having saved less than my requirements).
6. You should be able to get the flexibility to terminate or switch the savings if the return in future do not give you expected return.
7. You should be able to put any windfall gains into the same channel of your savings that you have been following.
8. In case of being an NRI you should be able to invest on a REPATRIABLE basis.
Sunday, February 28, 2010
PROFILE IN COURAGE- BABAR ALI
Very often we come across people and news about people that inspires us.
Sometime it happens that the ideas of these people also make us feel insignificant and sometimes stupid .We think that we always wanted to do this but never could.
Babar Ali is one such teacher and a 16 (yes it is 16)year old head master in Murshidabad district of West Bengal.
Himself from a very poor family , he started teaching the poor and deprived children of his village who could not travel 16 kms. that he travels to reach his own school.
From the age of 12 , he started teaching his very own age group and peers, in the way that he was taught and by making some improvements in the methodology.
Rest of the story you can read on the net by searching"Babar Ali School."
What is important is that it is something you and me thought of doing all this time but did not do it.
Probably because I was afraid of missing the world go past while I served in wilderness.
It is such a simple idea- that any of us could have carried on.
...however I'm happy a teenager with everything stacked up against him has taught me that the simplest of the ideas have the power to become most efficient .
Thank You Babar!
Sometime it happens that the ideas of these people also make us feel insignificant and sometimes stupid .We think that we always wanted to do this but never could.
Babar Ali is one such teacher and a 16 (yes it is 16)year old head master in Murshidabad district of West Bengal.
Himself from a very poor family , he started teaching the poor and deprived children of his village who could not travel 16 kms. that he travels to reach his own school.
From the age of 12 , he started teaching his very own age group and peers, in the way that he was taught and by making some improvements in the methodology.
Rest of the story you can read on the net by searching"Babar Ali School."
What is important is that it is something you and me thought of doing all this time but did not do it.
Probably because I was afraid of missing the world go past while I served in wilderness.
It is such a simple idea- that any of us could have carried on.
...however I'm happy a teenager with everything stacked up against him has taught me that the simplest of the ideas have the power to become most efficient .
Thank You Babar!
Friday, February 26, 2010
I wandered lonely as a cloud....
At the start of the last winters , circumstances conspired in such a way that I was once again came across some 'daffodils'.
It unfolded in a particular form of lifestyle (that I will not name- so that people do not develop a prejudice to it because of the prejudice they may have towards me).
However this particular form helped me another step in trying to tie up the ends of my HOLISTIC beliefs.
I have always believed that for a person everything that he thinks and does is linked to the outcome of his daily and even immediate happenings.
What he thinks when he gets up and eats for breakfast definitely has link to his performance during the day.
Sorry, I made a mistake - with 2 ladies at home I have to be politically correct and say HER instead of HIS.
Our sudden attack of sinusitis or migraine is definitely linked to what we ate in the morning, which side of the bed that we got up from, how we cringed at the site of that gruesome murder reported in the paper... this all this ends up on our desk for problem solving at 11:00.
Then again the small signals that we ignore in our daily life are the ones that make up our final 'WHOLE' .
Being the son of a dexterous homoeopath- I was introduced to the various human body constitutions , quite early in life - I learnt how just one medicine can treat the person of various ailments that one may not even know that existed.
It was so shocking to learn that my destiny was taking me to work in an environment (physical) which would actually treat my chronic cold . The salty air , I was told by my father was actually the medicine for my cold.
It happened!!!
Now to be back to the experiment that I mentioned in the beginning.
This skill or exercise that I learnt- taught me to treat the 2 sides of the coin 'just the same'(Kipling again). However this was not in the philosophical sense- not those big talks of treating good and bad times equal etc.etc.
This was actually about treating the physically opposed things as same. Painful and good sensations were to be treated equal in actual physical and metaphysical sense.
Then I thought that if this were true then I must try out this theory immediately .
Hence the idea came to try out the opposite in the winter season that was ensuing.
Starting from taking bath in cold water and sleeping with the same type of covering as in summers I tried out the theory.
I would like to emphasize that this was not to show off and the element of 'tolerating' the cold was not to be there.
The results surprised me. Not only I was comfortable in Dehradun , in a T-shirt in the month of December - my famous 45 year old cold also kept away from me. The nagging headache that I used to have after exposure to low temperatures was missing.
Now that the summers are looking up here in Jaipur- I'm still comfortable in the same clothes and 'treating' the environment just the same.
I know Girish is laughing- since he's been in a T-shirt for last 40 years and teasing me.
HAPPY HOLI!!!
It unfolded in a particular form of lifestyle (that I will not name- so that people do not develop a prejudice to it because of the prejudice they may have towards me).
However this particular form helped me another step in trying to tie up the ends of my HOLISTIC beliefs.
I have always believed that for a person everything that he thinks and does is linked to the outcome of his daily and even immediate happenings.
What he thinks when he gets up and eats for breakfast definitely has link to his performance during the day.
Sorry, I made a mistake - with 2 ladies at home I have to be politically correct and say HER instead of HIS.
Our sudden attack of sinusitis or migraine is definitely linked to what we ate in the morning, which side of the bed that we got up from, how we cringed at the site of that gruesome murder reported in the paper... this all this ends up on our desk for problem solving at 11:00.
Then again the small signals that we ignore in our daily life are the ones that make up our final 'WHOLE' .
Being the son of a dexterous homoeopath- I was introduced to the various human body constitutions , quite early in life - I learnt how just one medicine can treat the person of various ailments that one may not even know that existed.
It was so shocking to learn that my destiny was taking me to work in an environment (physical) which would actually treat my chronic cold . The salty air , I was told by my father was actually the medicine for my cold.
It happened!!!
Now to be back to the experiment that I mentioned in the beginning.
This skill or exercise that I learnt- taught me to treat the 2 sides of the coin 'just the same'(Kipling again). However this was not in the philosophical sense- not those big talks of treating good and bad times equal etc.etc.
This was actually about treating the physically opposed things as same. Painful and good sensations were to be treated equal in actual physical and metaphysical sense.
Then I thought that if this were true then I must try out this theory immediately .
Hence the idea came to try out the opposite in the winter season that was ensuing.
Starting from taking bath in cold water and sleeping with the same type of covering as in summers I tried out the theory.
I would like to emphasize that this was not to show off and the element of 'tolerating' the cold was not to be there.
The results surprised me. Not only I was comfortable in Dehradun , in a T-shirt in the month of December - my famous 45 year old cold also kept away from me. The nagging headache that I used to have after exposure to low temperatures was missing.
Now that the summers are looking up here in Jaipur- I'm still comfortable in the same clothes and 'treating' the environment just the same.
I know Girish is laughing- since he's been in a T-shirt for last 40 years and teasing me.
HAPPY HOLI!!!
THE ANNUAL FESTIVAL
No I'm not talking about Holi or BARAWAFAT- was referring to the presentation of the Union Budget.
Not only does it give a perpetual topic to the "aam" gentleman "aadmi" of the country who decide everything from the India cricket team to the Indian Foreign Policy (except the mundane matters of bringing up the family). It give the Print-Media to fill up the unending pages of the ONE RUPEE newspaper (that costs Rs.12 to print).
It also gives an opportunity for the electronic media to fill those unforgiving minutes (as Kipling said) and invite tuppenny brokers, economists and politicians to their channel.
So strong is the attraction and presence of this annual festival that even my hair dresser asks if he should invest now or after the budget.
In fact a close friend from Dehradun asked the same question yesterday.
Today after the budget was nice and properly out and printed- people were not lauding the extra tax savings that the FM gave them- they were lamenting the rise of fuel prices by Rs 2.76.
Even my father-in -law mourned on the 4800 rupee rise of the vehicle that he's buying.
Did anyone hear a word when everyone's salary's were rising 40% after the 6th pay commission.
But then a person like me who's never paid a paisa as income tax has no right to comment.
However being a strongly democratic country (especially in terms of asserting our rights)- guess it is alright to celebrate this secular festival in times when wishing someone a Happy Holi becomes a risky considering the husband and wife may hail from different beliefs and it may be politically incorrect ( and hazardous) to do so.
Not only does it give a perpetual topic to the "aam" gentleman "aadmi" of the country who decide everything from the India cricket team to the Indian Foreign Policy (except the mundane matters of bringing up the family). It give the Print-Media to fill up the unending pages of the ONE RUPEE newspaper (that costs Rs.12 to print).
It also gives an opportunity for the electronic media to fill those unforgiving minutes (as Kipling said) and invite tuppenny brokers, economists and politicians to their channel.
So strong is the attraction and presence of this annual festival that even my hair dresser asks if he should invest now or after the budget.
In fact a close friend from Dehradun asked the same question yesterday.
Today after the budget was nice and properly out and printed- people were not lauding the extra tax savings that the FM gave them- they were lamenting the rise of fuel prices by Rs 2.76.
Even my father-in -law mourned on the 4800 rupee rise of the vehicle that he's buying.
Did anyone hear a word when everyone's salary's were rising 40% after the 6th pay commission.
But then a person like me who's never paid a paisa as income tax has no right to comment.
However being a strongly democratic country (especially in terms of asserting our rights)- guess it is alright to celebrate this secular festival in times when wishing someone a Happy Holi becomes a risky considering the husband and wife may hail from different beliefs and it may be politically incorrect ( and hazardous) to do so.
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