[DreamRun]

@reachmonil :
u shud have invested in only abt 2 MFs 'cos most of the MFs have an entry load....they charge u a fee of 2-2.5% of the money u invest..so if u invested abt 40,000 and there was an entry load of 2.5% in each of ur schemes then i think that makes it abt 1000 Rs entry load on 40,000. so u already lessend the amount to 39,000. again i'm not sure whether the schemes u put the money in had the entry load or not....but generallly they do. but most of the 3-yr ELSS dont have them. Also there is an exit load....and before investing in any MF scheme u shud keep in mind these things:
1.whether it'll save tax(only ELSS do)
2.whether there is a lock-in period
3.whether there is any entry and/or exit load.

Also the SIP(Systematic Investment Plan) is the best way to invest in the MFs since in the long run this turns out to b a cheaper way of investing in MFs and also u can start saving monthly in the MF with as little as 500 Rs. per month. Also this protects u from the volaitilities in the stock markets.

[reachmonil]

Originally Posted by DreamRun

Also the SIP(Systematic Investment Plan) is the best way to invest in the MFs since in the long run this turns out to b a cheaper way of investing in MFs and also u can start saving monthly in the MF with as little as 500 Rs. per month. Also this protects u from the volaitilities in the stock markets.

As far as SIP is concerned, I feel there is a fundamental flaw in how it works as far as Tax-saving scheme in concerned.

In SIP, you invest a fixed amount, lets say Rs.1000, every month on 1st. So, on 1st, the amount invested is used to buy MF units. Lets say the price of one unit is Rs.50. So, 20 units would be purchased.

Next month, the price is Rs.100. So, your fresh investment of Rs.1000 goes in purchasing 10 units. So, the investor is happy that he is insulated from the volatilities of the market since your average is Rs.75.

But give it a thought. Had you been tracking the MF regularly and had there been no lock-in period, would you have actually bought the MF at higher rate of Rs.100? Or, booked profits from ur earlier investment? With SIP, you are not in control of your investments!


PS: 2 MFs coz of entry load doesn't make much sense as it is a % entry load. So, 2 or 6, as long as the amount invested totals up the same, its same.

[maheshtk_21]

Mera ek funda hai,for financial wellbeing---

NEVER USE CREDIT CARD.

Of course sometimes it is not avoidable.
Otherwise,yeh narak ka fastest raasta hai

I also believe that people of our age should not be averse to risk if they dont have any liabilities or family commitments.

[Run Time Error]

Originally Posted by maheshtk_21

Mera ek funda hai,for financial wellbeing---

NEVER USE CREDIT CARD.

well if you follow payment cycles carefully, there is nothing better than credit card...who gives you money to use without any interest for almost 45 days....

P.S. assuming you have free credit card...

[billybolimeeaaaw]

I ve always believed that money is number one... paisa hai to log bolega kaisa hai... without money nothing happens... Ppl who deliver lengthy dialogues like "money is important, but not the ultimate thing" must either be having so much money that they are bored of it or do not know how to spend it... ask someone who is on the streets, ask the guy with the tomato cart across the traffic signal... Money matters yaar...

[reachmonil]

Baachhaalooogg... Shhhuuuu.....
Ab Arun Unkil ka Interview lenge!

Originally Posted by arun agarwal

I can very well visulaise what you are trying to say. I have walked kilometers in hot summer during 1990-91 to save few bucks on transportation. However later on I was able to travel international with my family in business class at my own expense. All courtesy to good financial management and some good luck.

Arun, this certainly calls for exemplary financial management. Certainly commendable.

Would it be possible for you to narrate your situation at the time you laid the foundation stones of Money Management in your life and how did you go about planning investments?

Then maybe even your mantra on planning for a middle-class guy, 25, new to the financial world, earning 2.5L - 3L p.a. go about doing it in these times?
Read: Middle-class hoga to he would desire handsome returns but with a low risk-profile. Heck, it sounds self-contradictive!

PS: Now don't say the cliched line, 'It is subjective, varies from a case-to-case basis'

[arun agarwal]

Originally Posted by reachmonil

I get your point. I did analyse close to 15 Tax Saving schemes from www (dot) mutualfundsindia (dot) com (I suggest this site for the sheer amount of information it has, all up-to-date). But, since I was still new to the MF market, I couldn't convincingly zero down to which scheme would work and which won't. Hence, split the investments so as to ensure good returns, if not really handsome.

This year I plan do a similar excercise and invest almost the same amount in 3-4 schemes. Another point I would like to mention out here is that MF industry is not yet in the groove as it may seem. Fund Managers keep changing often, so do their investment portfolios. Something which may work now may not a year down the line. But you are locked for 3 years, right?


Exactly what I am now thinking of. Even last year after I took up LIC policy, I thought I should have opted for quarterly or half-yearly premiums rather than annual one.
I desire to chalk out an investment plan throughout the year, roughly in 4-5 nodes. Per node, the money pumped into investment ideally 20,000. But, looking for options now.



I am lost. Please throw some light. Or, give a link or so, where I can read something. Maybe I sound stupid, but have never heard about it before.


Ya ya! PF investment on. Roughly 15,000 p.a. Oops, 15k from my side, 15k contributed by company, 30k total.

OK Monil,

You have given many items to reply.

First of all you have not clarified whether your investment in Mutual funds are in Physical form or Online. With Internet savy people here, I don't know how many people are using online investment facility provided by many agencies (I use ICICI and it is quite user freindly and can be used for Shares (avoid it), Mutual funds, NSC etc). Advantages of online investment.:-

1. Once you open an account (a time taking prcoess but really worth it), you don't have to visit any office, post office for any investemnt. It all can be done at evening or whenever you are free (Even on sunday) and have a net connection.

2. All investment are directly debitted to your bank account and no need to issue a cheque.All investments are in demat form in your ICICI (or any other) account and you can view the same whenever you want.

3. All dividend/ maturity are directly credited to your bank account hence don't have to worry about transit loss or visit to bank for depositing.

4. In case of address change, which is very common now a days, just change the addres with bank and all address are automatically changed. Just imagine if you had to follow up with all agencies for address change.

PS. Everybody in my family has an account and I keep on playing with them all the time. . I am eagelry waiting for my son to turn 18 so that I can have a PAN card for him and a seperate account for him as well. I really enjoy money matters.


Coming to insurance bit. I don't know about "Jeevan Anand Policy". But I can make some assumptions safely and based on my experience, just with little deviation they will turn out to be true.

When insurance agent sold you the policy he was all along talking about 25000 installment but when you gave your first cheque it was for about 26-27000+ ???

I don't know what is the duration of your policy but I don't think that sum assured will not be more than 5 Lacs. Do you really think that 5 Lacs are enough for a family without bread earner to live comfortably. In fact it is a joke. Insurance industry has done areal great dis-service to this industry by wrong selling only because people are not willing to pay premium for life cover. They sell investment with very low yield as insurance.

At today's cost of living at least 20,000 PM are required for a lady with two children to live a middle class life. Assuming a risk free yield of 8% per annum, you need a corpus of atleast 30 Lacs so that it will yield an income of 20,000 per month in case something happens to you. As cost of living increases even this may not be sufficient. So at your level, as of now any insurance cover of less than this amount is just not sufficient. :(

Just think about the issues raised by me and reply, more on this in next post. This is a huge issue and will be dealt in many posts.

As of now I have not answered your question, will do so in next post.


Coming to PF, I am really sorry that I reminded you about this. Make a promise here in front of all these guys that you will forget about this investment after reading this post. In no case you will touch this money, except in some real emergency where you have no option and lives are dependent only on this money.

You are creating a real gold chest here and this money should be for your retirement. Now be ready for positive jolt, don't do any actual calculation and try to guess how much money this will create for you with following assumption:-

1. As of now you are 24 yrs. of age. and you will retire at 58 and get back your PPF money.

2. This contribution from you and your employer (15K + 15K) will continue till you are 58. (as a matter of fact it will increase with rise in salary but it will become subjective hence let us exclude it).

3. Rate of return on this investment is 8-9%.

Try to answer this without reading my reply.
.






(At 8% it wil be about 55 Lacs and at 9% it will be about 70 Lacs and out of which your + companies contribution will be only 10.5 Lacs. This is power of compounding)

Enough food for thought in this post.


Arun

[BUGS BUNNY]

A fabulous discussion going on here
Arun Unkill I have a doubt. When you say we should go in for a life term policy what eggjactly does it mean? Could you elaborate a bit about that? Isnt ULIP better in the sense that not only do you get an insurance cover but also better returns? :eh:

I have invested 25k per annum in Aviva ULIP and have an SIP from SBI (whose NAV has gone from 49 to 59 in 6 months ) I didnt wanna invest too much cos if I get into a B school I will need a sizeable sum at my disposal and If I had invested a lot it would all have been locked in.


P.S. If the question itself is fundamentally wrong or incredibly stupid have a good laugh at it but do reply



-
Bugs

[arun agarwal]

Originally Posted by reachmonil

Baachhaalooogg... Shhhuuuu.....
Ab Arun Unkil ka Interview lenge!



Arun, this certainly calls for exemplary financial management. Certainly commendable.

Would it be possible for you to narrate your situation at the time you laid the foundation stones of Money Management in your life and how did you go about planning investments?

Then maybe even your mantra on planning for a middle-class guy, 25, new to the financial world, earning 2.5L - 3L p.a. go about doing it in these times?
Read: Middle-class hoga to he would desire handsome returns but with a low risk-profile. Heck, it sounds self-contradictive!

PS: Now don't say the cliched line, 'It is subjective, varies from a case-to-case basis'

Dear Monil,

My reply (quoted by you) was in context of entrepreneure, I think you have been one. It is very dificult for a salaried person to understand when he is sure of certain amount in his bank on 1st of every month. Only an entrepreneure can realise the value of money and what it means when going is real tuff.

Also, let us not turn this thread on what I did, I will continue to quote from my experience as and when required.

And low risk high return is not contradictory at all, as , long as you know what is low risk and what is high return. At times, people are ignorant but most of time they are really lazy. One works for a month (200 hrs.) to earn 25000 rs and then saves may be 8-10K. But when it comes to taking care of this hard earned saving, he is not willing to give even 8-10 hrs a month. This is shear stupidity. After sometimes once you are used to good financial management it does not take even this much time, but you start to spend your time on it only becuase you see the result and start to enjoy the same.

Let us take an example of saving of 50K by a guy/gal 25 Yrs. of age for 25 yrs. Now one can get 8% return without even doing any research but he/she still has to save it and invest the same. With little risk and research you can get a long term safe returns upto 12% ( here I am not talkin about 25%-50% returns by playing roulette.) Let me show you how much difference this 8 to 12 % makes on this investment.

Initial Investment 50,000 for 25 Yrs.

at 8% it becomes 3.4 Lacs

at 9% it becomes 4.3 Lacs

at 10% it becomes 5.4 Lacs

at 11% it becomes 6.8 Lacs

at 12% it becomes 8.5 Lacs.

Now you can see that for long term, even 1 % increase in return counts and also why one should start real early in life to enjoy the full benefits of savings.

It is just matter of being aware of these issues and taking some pains so that their money works while they sleep.

Arun

[arun agarwal]

Originally Posted by BUGS BUNNY

A fabulous discussion going on here
Arun Unkill I have a doubt. When you say we should go in for a life term policy what eggjactly does it mean? Could you elaborate a bit about that? Isnt ULIP better in the sense that not only do you get an insurance cover but also better returns? :eh:

I have invested 25k per annum in Aviva ULIP and have an SIP from SBI (whose NAV has gone from 49 to 59 in 6 months ) I didnt wanna invest too much cos if I get into a B school I will need a sizeable sum at my disposal and If I had invested a lot it would all have been locked in.

P.S. If the question itself is fundamentally wrong or incredibly stupid have a good laugh at it but do reply



-
Bugs

Dear Bugs,

Before I go into details, please note that I am no expert on insurance hence if anybody notices any discrepency, please point it out immediatly and help everybody.

In my city no insurance agent wants see my face, as I ask many questions for which they don't want to answer/don't have answer, but still want my money .

A trem plan is a pure risk cover. In this plan you pay for the risk (life) and in case nothing happens (Thank god) you don't get back any thing (just like car insurance except no-accident bonus by way of reduced premium).

Before I go into your details, please post some more info and I think we can have a healthy discussion useful to all:-

1. Life cover Or sum assured on your policy.

2. Durtaion of risk cover.

3. How many installments you are suppose to pay.

4. Amount of installment.

and any other financial info, related to above insurance you think may be useful.


Also don't be too happy with the NAV of 59 Check it tomorrow evening and it may not be more than 53 ( My guess, may be even lower).

Your query is very relevant and we should discuss this in detail once we have the desired info from you.


Arun