personal finance Archives – Page 4 of 10

5 ways to make your financial life easier

March 2, 2017September 27, 2016 by Vipin Khandelwal

5 WAYS IN WHICH YOUR FINANCIAL LIFE BECOMES EASIER

We have lived through times where tedious paperwork defines every single activity related to money and our financial life.

Not just that, access to your own information was a nightmare with several agencies holding various parts of it. Every single time, the responsibility is on you to get it all together and prove that the person in question is you. This dreaded process is also called KYC.

Over the years, the hassles have reduced but not been eliminated. We have greater access to online tools with some organisations promising us completely seamless and paperless experience. We have all had the experience in some measure, small or large.

But I was recently floored by my interaction and experience with the government departments. This includes the Income Tax Department and UIDAI (issuer of Aadhar).

I would like to share some of these super initiatives with you.

This post highlights 5 such initiatives that aim to bring a significant change in the way you will handle your financial life.

Investing Math – Distance, Speed and Time

August 29, 2016 by Vipin Khandelwal

$Investing math - Distance, Speed, Time$

Consider the following problem.

Two trains are running on the same track. The only issue is they are running towards each other. It is apparent that they will collide at some point.

Now, there is a fly which is happily flying between the two trains. The problem is what is the total distance that the fly will be able to cover before its crushed.

The speed of Train 1 is 60 km/hr while the Train 2 is running at a speed of 40 km/hr. The distance between the two trains is 20 kms. The speed of the fly is 10 km/hr.

This appears to be a complicated problem. Is it?

What approach will you take to solve the problem?

…

As you now know, this problem can be solved using some basic school maths. Yes!

The formula to use is Distance = Speed * Time.

Do you remember this simple formula from school?

Go ahead and apply it to the problem.

However, to make you solve this problem is not the purpose of the post.

What if I tell you that this very formula has an important role to play in your investing decisions too?

Death and taxes

January 5, 2017July 31, 2016 by Vipin Khandelwal

On Death

I spent the past few days in a hospital. I was attending to a family member diagnosed with brain tumour.

For the first few hours, it was chaos. The implications were not clear and given the way the human mind works, everyone assumed the worst. It was later confirmed that the tumour is not life threatening.

The hospital is a place where you come face to face with real pain – age no bar. It is a place where you witness people make friends with suffering, pain and ultimately, death.

Such an environment sets one thinking. There were moments when I would just sit and wonder about the inevitable. It has to happen one day. That’s certain. What will be that day, is not.

Steve Jobs said something very apt about death-

Insurance – the investment mirage

July 4, 2016 by Vipin Khandelwal

Insurance continues to disappoint.

Every comment or email that I receive reflects the disillusionment with investment based insurance products, more specifically with “Pension Plans”.

The customer now wants to surrender these plans. Some are not happy with the returns, others don’t see the fit with their goals.

I wonder how millions of people were taken for a ride.

The answer is easy. Here’s a piece that you should read to know why? Insurance: All that is wrong with it and you!

The Pension Plan reality

In reality the pension plans are – “wolf in sheep’s clothing”.

Saving for Child’s Education – Is it enough?

June 14, 2016 by Vipin Khandelwal

Saving for Child's Education - Calculator

In my recent workshop in Gurgaon, one of the topics that came up for discussion was “child’s education”.

One of the participants, let’s call him Ashok, mentioned that he pays Rs. 25,000 a month as fee of the school where her daughter studies.

It ensued a debate on how education expenses have risen dramatically over the past 10 to 15 years.

Ashok himself incurred only about Rs. 1 lac to complete his engineering – 20 years ago though.

Yet another participant mentioned that he spent just about Rs. 2 lacs as fee for his engineering and MBA.

I couldn’t resist mentioning that my own MBA – all tuition, lodging, travel and fun expenses included was completed in less than Rs. 1.5 lacs.

In fact, my entire year school expenses including fee in Class 10 was Rs. 10,000 only. This is a far cry from the fee of Rs.25,000 a month that Ashok pays for his daughter.

Of course in all these cases, the people went to Government funded and subsidised institutions, which charged only a nominal fee.

Times have changed though. The government institution doesn’t cut it any more.

As a parent, the one thing that you want to prepare your child for is to be ready for life in the best way possible. You want to equip her with the necessary skills and knowledge. You want the child to have an exposure that enables her do her best in life. You want her to stand on her own feet.

There’s a new breed of educational institutions (Schools, Colleges, Universities) that promise the fulfilment of these conditions.

You want the best for your child. Period.

However, what does it mean to you in terms of money? How much would you need to invest for your child’s education?

How much will you need to Retire? Updated Calculator with 9 scenarios

January 7, 2017May 31, 2016 by Vipin Khandelwal

For all the financial savviness that one might have, numbers still find a way to stump us.

This is what exactly happened with Vaibhav.

“You will need Rs. 25 crores as your retirement fund.” I announced to him after inputting the numbers in the retirement planning calculator. I was working with him on his financial plan.

“What! Really?” was his instant reaction.

“Yes. Why do you seem so surprised? Did you have something else in mind?”

“Well, I had done some back of the envelope numbers for my retirement. But this one is way off what I had got.”

“Hmm. What did you factor in as post retirement inflation and rate of return?”

“Well, I took more aggressive numbers – higher rate of return and lower inflation. Though I understand that it may not be the right thing to do. I also see that my life expectancy assumption at 80 is lower.”

“Yes, that’s a big mistake one can make. My question always is “what if you lived longer?”

“You are right. It’s better to plan for a longer life. Anyways, I guess I now know what I have to prepare for.”