Maslow’s fourth level need on esteem indicates the need for recognition on wealth, position and power. In fact, these needs are double edged swords and act like salt in a curry. Excess of it brings unhappiness rather than happiness. I got its validation at a Satsang; “The loser in an undesirable ego battle is happier than the winner”. This has been my secret in being happy in the housing society I live. Social comparison is an innate human tendency. On the one hand, it can fuel motivation and on the other it can bring jealously. The assessments are not evaluated […]

Investment author Jonathan Burton puts forth the Golden Rule of Investing” Don’t be overconfident.  Every investment mistake is rooted in overconfidence”.  In his book Thinking Fast and Slow, Nobel laureate Daniel Kahneman called overconfidence “the most significant of the cognitive biases.” He also holds the view that the most damaging of biases that plague an investor is overconfidence. He said “it is the bias he would most like to eliminate if he had a magic wand. But it is built so deeply into the structure of the mind that you couldn’t change it without changing many other things”. It has been described […]

Creating and managing a portfolio by the investor requires investment decisions to be made on which asset classes to invest in, how to invest, timing of entry & exits and review & rebalancing the portfolio. These decisions have to be based on the analysis of available information so that they reflect the expected performance and risks associated with the investment. Very often the decisions are influenced by behavioral biases, which lead to less than optimal choices being made. Some of the well documented biases that are observed in decision making are;  Greed and Fear These are the most common biases […]

Traditionally women are better at managing family’s budget and are more concerned about children’s education and marriage. We find women groups take to streets when prices of vegetables and other essential items increase beyond tolerable levels. Nowadays increasing number of women are opting for career in regular jobs. It provides them opportunity for financial independence. It is high time for women to take control of their finance for the following reasons; (1)   Increasing divorce rates – India is witnessing a surge in divorce rates and therefore entrusting the spouse with financial matters can create money crunch. It is prudent to keep a […]

Asset Classes There are four major asset classes; Real Estate & Gold under physical assets and Equity & Debt under financial assets. The trend of physical assets providing higher return is now reversing. Real Estate: Real estate investment is indivisible and illiquid. It carries liquidity risk. It may take longer time to find a buyer for selling the property and hence one must invest in real estate only if one wants to remain invested for longer period. Further real estate prices are correcting and may not provide the higher return it has generated in the past. Gold: Investing in physical gold and ornaments depresses return due to making […]

The cost of education is rising every year. Educating a child has become quite expensive now days. Warren Buffet says “The perfect amount to spend on children is  enough money so that they would feel they could do anything, but not so much that they could do nothing.“ Spending on children’s education is an investment. Many parents do not have an idea about the surprise and shock they may get if funding for children’s education are not planned in advance. It  always pays if one starts saving and investing early. We have made estimation on the funding cost of the newly born […]

We need “Roti, Kapada and Makaan” before thinking about achievement of other financial goals. The key financial goals for families currently are; Children’s education and Retirement corpus. A roof over our head is a basic necessity no doubt, but should we go for owning it or stay in a rented house? If you aspire to own an expensive house, the home loan EMI may make you poor and you may have no money left for other expenses after paying the EMI. It will be difficult to maintain a healthy balance between housing and other critical goals. The factors to consider […]

NPS has emerged as a popular tax saving tool at par with EPF. but the issue on taxation of 60% of the proceeds on maturity or buying annuity is a moot point and hoped to be resolved soon. Opening of NPS account was a herculean task till now but have been made easier through online NPS account. Types of NPS accounts: There are Two types of account i.e TIER I and TIER II Tier I is the mandatory account for long-term savings. Additional Tax benefit upto Rs.50,000 is available u/s 80CCD (1B) over and above the 80C limit of Rs1,50,000/- […]

These are times of uncertainties! Who could have predicted the address to the nation by the Prime Minister on the evening of 8th November 2016. Remonitisation have become painful for many for standing in long queues. More uncertainties are in store in the coming days! GST will overhaul the indirect taxation system in the country. Short term pains but long term gains? Now coming to personal finance; there is a need to question our core beliefs and think differently. Let us take income, assets, liabilities, expenses and retirement! Income: Where does your income come from? Is it salary from your employer? This is […]

Today our office cleaning lady was very worried .On enquiry we were told that her son got his first salary which was credited to his Bank of India account. But when he went to withdraw the amount, there was no balance; it has already been withdrawn. On further enquiry he revealed that someone asked him his debit card number for reissuing a new card and after some time also asked to share the  OTP which was just sent. Ignorant of the risk, he shared the details. The long queues before ATMs and Bank branches for exchange, deposit and withdrawal of […]