7 Things to do Before You Start Investing cover

7 Things to do Before You Start Investing

A guide on things to do before you start investing for Newbie Investors: So, you’re thinking to start investing. But before you enter, are you prepared? Do you actually meet all the requirements that will make your investment journey smoother? In this post, we’ll discuss seven such things that you should do before you start investing.

7 Things to do Before You Start Investing

1. Build an Emergency Fund

As the name suggests, an emergency fund is money that you put aside for emergencies. It is the money that you can reach out to during your hour of need and pay for those unforeseen and unexpected expenses such loss of a primary job, medical emergency, personal emergencies or even a car breakdown.

As a thumb rule, before you start making investments for your long-term goals, first you should build an emergency fund which should be greater than at least three times your monthly expenses. Keep this money aside in a separate account. You can read more about how to build an emergency fund here.

2. Have a budget & know your cash-flows

If you want to enjoy a healthy financial life, it’s really important to have a balance between your savings and your expenses. Budgeting your monthly finances and knowing your ‘cash’ inflow and outflow can help you plan how much you can afford to invest per month.

A simple profit and loss formula that you can use in your day-to-day life to understand your cash position is ‘Revenue — Expenses = Profit”.

Here, your total revenue (inflow) is the sum of all the income that you make from different sources like your job, business, interests on savings/fixed deposits, dividends, rental income, etc. And your total expenses (outflow) include your rent, groceries, transportation, bills, EMI’s, household expenses, etc.

When you deduct the total expenses from your net revenue, you’ll be able to find out how much you keep per month or year. And after calculating this, you can plan where to allocate this money and how much to invest in different investment options.

Note: If you are struggling with your personal budgeting, one of the easiest strategies that you can use to figure out how much should you save is the 50/20/30 Strategy.

50/20/30 is a really simple and straightforward budgeting strategy that can help you to define how much should you spend on your essential spendings (needs), savings and finally on your preferences (wants and choices). According to 50/20/30 strategy, you should allocate:

  • 50% of your monthly income on ‘Needs’ (like rent, food, etc)
  • 20% of your monthly income on ‘Savings’ (like your retirement fund, investments, etc)
  • And the remaining 30% of your monthly income on your ‘Wants’ (like traveling, dining out, etc)

50-30-20 rule

You can read more about the 50/20/30 budgeting strategy here.

3. Pay down high-interest debt

First of all, please note that not all loans or debts are bad. Here, we are talking about high-interest debts. For example, if you have taken a personal loan, it’s interest rate may vary from 13–18%. Similarly, a credit card company may charge you even higher interest on the outstanding amounts.

It doesn’t make much sense to invest if the profits that you make on your investments are lesser than the interests that you pay on your debts. For example, if your returns are 12% and you’re paying 14% as interest on your previous debt, then overall you’re in a loss. Here, instead of investing, it will be better to use that money to pay back and become debt-free.

Before you start investing, try to minimize or eliminate debt, especially high-interest debts and your credit card debt. These interests can kill your investment profits.

4. Take a health Insurance

When people are in the best of their physical health, an obvious question among them is why should they invest in health insurance? Paying a premium plan for ensuring health may seem an unnecessary expenditure.

However, accidents or health issues may come up anytime unexpectedly which can put a lot of financial and mental pressure. Further, it is a fact that, as you grow older, health issues come along with it. And hence, it is highly necessary to incorporate healthcare planning within the budget of your family financial planning.

Before you start investing, make sure to take health insurance first. Being medically insured can help you avoid facing financial instability in the future and enables you to get the best health treatment.

Also read: 6 Reasons Why You Should Get Health Insurance

5. Define your goals and make plans

One of the most critical things to do before you start investing is to define your investment goals/priorities and making plans to reach them. Here, you need to know why you are investing. It will keep you motivated and ‘on-track’ to achieve your goals.

Now, by definition, an investment goal is a realistic expectation to meet the returns by investing predefined money for a fixed time frame. The keywords to note here are ‘realistic expectations’ and ‘timeframe’.

Before you put your money in any investment options, set your short-term and long term goals and make plans for how you’re gonna achieve them. The goal can be person-specific like planning for children education, retirement fund, buying a new house or even financial independence. Once you’ve set your goal, you can choose the best investment options that can help you reach these goals in your defined time horizon.

Also read:How to Invest in Share Market? A Beginner’s guide

6. Evaluate your risk tolerance profile

Everyone has a different risk tolerance level depending on their age, financial situation, priorities, etc.

If you are young and have a stable job, you might be willing to invest in more unusual ‘high risk, high return’ options. However, as you grow old/retire, you might not have a job or primary source of income and hence you might depend on your retirement fund for meeting your expenses. Here, you may not be willing to take a higher risk and choose safer investment options.

Before investing, you need to define your risk sensitivity i.e. whether you’ve are high, moderate or low-risk tolerance profile.

As different investment options have different degrees of risks, you can choose your investment options depending on your profile. For example, if you have a high-risk tolerance, you may invest in stocks, mutual funds, real estate, etc. On the other hand, if risky investments keep you sleepless at nights, better to choose low-risk investment options like fixed deposits, PPF, bonds, etc.

Also read:

7. Understand the investing basics

Don’t dive in deep water if you don’t know swimming basics. Similarly, do not start investing your money, if you do not understand the elementary concepts.

Before starting your investment journey, make sure that you understand what is meant by stocks, bonds, mutual funds, diversification, liquidity, volatility, and other investing basics. Here, you do not need to become a finance geek or an accountant. However, you should have good enough knowledge of the industry to make intelligent decisions.

Closing Thoughts

These days, anyone can open their demat and trading account with minutes and start investing in stocks, mutual funds, etc. However, it is not advised to do so until you have met the basic requirements and completed a few other essential tasks. In this post, we discussed how 7 must things to do before you start investing. This included budgeting, planning, knowing your risk tolerance, and moreover, learning the basics.

That’s all for this post. I hope it was useful for you. Besides, if you are ready to get an education, here’s an amazing course on stock market investing for beginners that you should check out. Happy Investing.

what is ponzi scheme meaning concept etc

What is Ponzi Scheme? And How to Protect Yourself from it?

Understanding what is Ponzi Scheme and how to safeguard yourself from this plague: Frauds and scams are part of our lives for a very long time. From corporate frauds, government official frauds to individual scams, our society has witnessed all. Time and again we have heard of big scams like Indian Coal Allocation Scam 2012 – Rs 1,86,000 Crore, 2G Spectrum Scam 2008 – Rs 1,76,000 Crore, Commonwealth Games Scam 2010 – Rs 70,000 Crore, Satyam Scam 2009 – Rs 14,000 Crore, etc.

However, one such scam which is quite common but never came in a lot of notice or fame for the retail people is “Ponzi Schemes”. Although a lot of people have lost lakhs of rupees in these schemes, however, most of our population still do not understand what exactly are these and how they work. In this article, we are going to demystify this fraud and discuss what is Ponzi scheme, it’s history, some infamous Ponzi Schemes and how investors and common people can safeguard themselves from such fraudulent tricks. Let’s get started.

What is Ponzi Scheme?

A Ponzi scheme is an investment scam where returns are paid to existing investors from funds contributed by new investors. In a Ponzi scheme, investors are duped by being promised high returns with little or no risk on their investments. The scammers then rely on cash flow from recent investors to provide returns to older investors. The scam runs along the lines of ‘Robbing Peter to pay Paul’.

Here the investors have no idea from where their returns come from. They are misled to believe that the returns are being generated from the success of a business opportunity or the superior skills of a portfolio manager. At the initial stages, if an investor wishes to withdraw money, the scammers ensure that this is done promptly in order to gain the investors’ trust. The liquidity coupled with the superior returns results in a social feedback loop where current investors amazed by the returns suggests it to their friends and relatives.

A Ponzi scheme, however, can only exist as long as new investors keep entering the scheme as their money is used to provide returns to the older investors. If at any time a huge number of investors demand their money back at once or if new investors stop coming in, the scheme stops functioning and the scam is unraveled. India too has had an ugly history with Ponzi schemes. 978 Ponzi schemes have been identified in India, 326 of them being from Bengal alone.

History of Ponzi Schemes

The scheme is named after a man called Charles Ponzi, an Italian who committed the fraud a century ago. He promised to pay investors a 50% profit within 45 days or 100% profit in 90 days. He claimed that he was able to raise the profits by acquiring Postal Reply Coupons from countries where it was cheaper and sell these coupons in countries where they were being sold at a higher.

However, using arbitrage could never generate such magnitude of profits in order to generate 100% returns in 90 days. The investors, however, did receive their returns initially but what Ponzi did here was just take investments that were coming in from newer investors and pay off the older investors.

As investors kept pouring in, Ponzi opened a new office and hired agents to create an aura of trust and further scale the fraud. Ponzi was soon raking in a million a per day within a year. Ponzi during this period lived a luxurious lifestyle further investing in a macaroni and wine company. The scheme eventually got too big and failed to bring in new investors.

History of Ponzi Schemes

At this point, the scam began unraveling. Investors lost close to $20 million (approx 193 million in 2019). Investors were able to recover only 30 cents to a dollar they had invested. The scam also brought down 6 banks in The United States.

How is the Ponzi Scheme different from a Pyramid scheme?

A Ponzi scheme may at times be confused with a Pyramid. A Ponzi scheme promises a high rate of return and the source of these returns is hidden from the investors (which is actually from the investments of new investors).

In a Pyramid scheme, it is made clear to investors that in order to gain returns they have to recruit new investors. The new investors further have to do the same after the initial investment and so on. In addition to this investors at times are also given a right to sell a product in exchange for a commission which also turns a pyramid scheme into a marketing and sales campaign. 

Some Other Infamous Ponzi Schemes.

— Bernie Madoff

The phrase ‘ Give the devil his due’ suits no one better than Bernie Madoff and his Ponzi Scheme. This is due to the size, period, and the ruse implemented by Bernie Madoff. Bernie Madoff was a pioneer in the investing world as he brought forward the advent of trading using electronic systems, and hence NASDAQ. He was also looked up to as he served as the non- executive chairman of the NASDAQ for 3 terms( 1990-93).

Bernie Madoff ponzi scheme

Bernie Madoff was convicted in 2009 which came as a shock to the investing world. But what is even more shocking is that he was only caught in 2008 for a scam investigators believe he started as early as 1964. Bernie Madoff had been described as a very charismatic individual which definitely helped in attracting naive investors towards his scam. 

We notice his brilliance as unlike other Ponzi schemes, not everyone was even allowed to invest in his scam. Madoff allowed investors to invest only if they were vouched for. This made it seem like an exclusive club and a privilege to have your money handled by Madoffs investment firms. But what enabled Madoff to sustain the scheme for so long was that unlike other Ponzi Schemes Bernie offered his clients returns of only 10%. This made it look like a conservative investment. In addition to this, he also had a backroom team that created fictitious financial statements and periodical reports to further deceive the investors.

Bernie Madoff fraud

The Bernie Madoff scheme unraveled in 2009 thanks to the housing crisis. A total of $36 billion was invested into the scam, of which $18 billion was recovered. 

— Crypto Ponzi

The success of cryptocurrencies took the world by storm due to the success of Bitcoin and Ethereum. But scamsters somehow have always have managed to be a step ahead adapting to cutting edge innovations. Cryptocurrencies too have not been free from scams as con-artists take advantage of investors who evidently have lesser knowledge of the working of cryptocurrencies. 

Plustoken a crypto from China received investments of $2 billion. They did this by marketing themselves as a crypto wallet service. Here the investors were promised higher returns if they exchanged Bitcoin or Ehereum in exchange for Plustoken’s own crypto. This scheme was just another Ponzi were over 3 million investors were cheated.

Plustoken scammers managed to cash out $185 million worth of bitcoin before they were caught. They even tried to cover their tracks by making 24000 transfers using 71000 different bitcoin addresses. 

How do you protect yourself from Ponzi Schemes?

1. High investment returns with little or no risk

25 din mey paisey double

Any investment opportunity that says this is a major flag that actually says you are never getting your money back. It is best to apply one of the basic rules of investing here that only with greater risk comes with greater reward. Low risk is accompanied by lower returns. Investors should also beware of words like ‘ everyone else is doing it and profiting’ as these create a fear of missing out. 

2. Overly consistent returns

Investments react to market trends barring a few outliers from time to time. If you are given proof or notice that the investments are able to generate consistent returns regardless of the market going through extended bearish periods, then it is another red flag. Bernie Madoff’s investment firm delivered consistent returns of 8-10% every year regardless of market trends. This was a major red flag that investors missed.

3. Secretive or complex strategies

When you receive investment opportunities it is best to try and understand how the business or investment opportunity works.

Scammers in the crypto world have made use of this obliviousness that investors had towards the working of a cryptocurrency.

Also read: Pump and Dump- The Infamous and Endless Stock Market Scam!

4. Believe numbers and data over individuals

“Man Lie, Woman Lie, Numbers Don’t Lie!” – Flloyd Mayweather Jr.

Scammers generally have charismatic qualities that attract people towards them. Bernie Madoff was always seen as the most genuine individual until the scam broke out. He was described as a person always reachable by phone. Investors have even claimed that he attended funerals when one of their loved ones passed away as a sign of support. This quality allowed Bernie to gain the trust of potential investors at the synagogues he prayed in and the country clubs he hung out in.

But Accountant Harry M. Markopolos claims that when he was shown Bernie Madoff’s investment firm’s data as an investment opportunity it took him 5 minutes to realize it was a fraud. Accountant Harry M. Markopolos is known as the whistle-blower to the Madoff scam. He claims that when he was shown Bernie Madoff’s investment firm’s data it took him 5 minutes to realize it was a fraud. Unfortunately, no one paid heed to his words due to Bernie Madoff’s influence in the investment world.  

5. Background Checks

ponzi scheme duck

It is always best to perform background checks when we are presented by investment opportunities by individuals. This can be done by verifying the firm’s registration numbers.

 And Finally, a lot of time going with your gut feeling can also help…

3 Amazing Books to Read for a Successful Investing Mindset cover 2

3 Must Read Books to Build a Successful Investing Mindset

Books to Read for a Successful Investing Mindset: Hello Readers! Today we are going to discuss something different from my usual posts. In the past few years, since I started investing, I met a number of people who asked me why I started investing in stocks so early on my own. Why do I put so much efforts and time when someone else to learn investing?

While I try to demonstrate the importance of managing our own financials, I find it a little difficult to explain to a few people. This is not because of the lack of education or their academic background in different industries/sectors. Many of my friends with similar qualifications as of me are ignorant of their own financial situation.

The main reason for these people having such struggles is an unhealthy or unwilling mindset towards investing. Their mind is not trained towards the importance of investing and the wonders it can do in wealth creation.

Therefore, today I am going to suggest three amazing books to read for a successful investing mindset. These books will guide you, motivate you and open your eyes to a healthy mindset for investing. I personally recommend you to buy all of these books as the principles & lessons described in them can help you a lot to tackle financial problems throughout your lifetime.

3 Must Read Books to Build a Successful Investing Mindset

1. Think and Grow Rich

think and grow rich by napoleon hill

Think and grow rich is a 1930’s classic that is still the best selling in 2017. The lessons from this book proved out to be time-tested i.e. applicable all the time. This book was written by Napoleon Hill on the suggestion of Andrew Carnegie. The first edition of this book was originally published in 1937.

Andrew Carnegie proposed Napoleon Hill to interview 500 greatest men in the 20th century who were rich and successful in their industry. Carnegie offered to provide the fund for traveling and meeting these personalities in exchange for Hill’s time. He wanted Napoleon to study the common traits among all these rich and successful peoples.

It took Napoleon Hill almost 20 years to interview all the 500 people. He interviewed Henry Ford, JP Morgan, Alexander graham bell, Thomas Edison, Theodore Roosevelt, and many other famous personalities. He finally summarised his studies from the interview in the book- ‘Think and grow rich’.

In this book, the author Napolean Hill educates 13 principles required in a person in order to become RICH.

Thirteen Principles: The Power of thought, Desire, Faith, Auto-suggestion, Specialized knowledge, Imagination, Organized planning, Decision, Persistence, the Power of the mastermind, the Mystery of sex transmutation, the Subconscious mind, and the Sixth sense.

Let me cover the two principles described in the book here. I won’t be covering all as it will kill the fun of reading it:

1. The Power of Thought

power of thought

In this section, Napoleon Hill describes how your thought can help you achieve what so ever you want in your life.

To explain this, he gave an example of Edwin Barnes, who wanted to do a partnership with Thomas Edition. Let me be clear here. He wanted to do partnership- not ‘work for’ Thomas edition.

When the thought originally generated in his mind, he didn’t knew Edison. He lived miles away from where Edison lived. He didn’t have money or resource to meet Edison. However, his thoughts were so persistent that even after facing a number of obstacles, several years later, he became partners with Thomas Edison. He did a partnership in Edison’s dictating machine as a distributor.

In short, Barnes’s thoughts provoked him to achieve what he truly wanted in his life.

2. Burning Desire

burning desireNapoleon Hill considers this trait as the most important of all to become rich and successful. A burning desire is not just wishing, it is about wanting. A wish might not get fulfilled, however, if you want something passionately, you will find a way to get it.

In this section, Hill conveys the readers to ensure that the ‘want’ becomes ‘desire’.

Here, Hill proposes to develop a clear and concise statement of desire – What do you want and when you want it. If you want money, then be specific about the amount that you want and time frame when you want it. For example, if you want to become a millionaire, be specific that you want to earn one million by 1st January 2025. You need to revisit the desire often to imprint it in your mind. Read the statement twice daily, in the morning and in the evening.

In addition, you need to create a specific plan to reach your goal and you need to start taking steps immediately. Besides, if you want to meet your desire, you have to sacrifice something. This might be your time, money, fun with friends or anything worthy.

TEMPLATE
I want to earn ____________ by ______________ and for that I am will to _________________.

In short, create a burning desire for what you want if you want to become successful.

These are the two out of thirteen principles taught in the ‘Think & Grow Rich’. Apart, there are many important lessons in the book that will help you to develop your mindset for a successful life ahead.

2. The Richest Man in Babylon

The Richest Man in Babylon is one of the best classic personal finance books that I have ever read. The lessons in this book are pretty simple and effective. This book consists of different stories from the Babylonian days. A few stories from the collection are- The richest man in Babylon, Goddess of good luck, The gold lender of Babylon, The camel trader of Babylon, etc.

The one story that I particularly liked was the story of a Babylonian slave who was extremely poor with lots of debt. He later learned the rules of gold and with the newly acquired wisdom, he turned out to be one of the richest men in Babylon. Further, here are three of my favorite lessons learned from this book:

1. Pay yourself first

growth vs dividend fund 2

Save at least 10% of what you earn. You have earned the money from your hard work and it’s your right to keep it for your self. Pay yourself first, and then you give the remaining to anyone you want to, like your landlord, your maid, restaurant owner, laundry guy, etc. This is the rule no one of money.

Here is an abstract from the book about this rule:

“’I found the road to wealth when I decided that a part of all I earned was mine to keep.’ – The teacher said.

‘But all I earn is mine to keep, is it not?’, I demanded.

‘Far from it,’ the teacher replied.  ‘Do you not pay the garment-maker?  Do you not pay the sandal-maker?  And Do you not pay for the things you eat?  Can you live in Babylon without spending?  What have you to show for your earnings of the past month?  What for the past year?  Fool!  You pay to everyone but yourself.  Dullard, you labor for others.  As well be a slave and work for what your master gives you to eat and wear.  If you did keep for yourself one-tenth of all you earn, how much would you have in ten years?’ “

2. Only seek advice from those that are wise and knowledgeable in the subject.

Take the counsel of the better men and learn from their mistakes. Here is an abstract about this rule from the book:

“Counsel with wise men.  Seek the advice of men whose daily work is handling money.  Let them save you from such an error as I myself made in entrusting my money in the judgment of Azmur, the brickmaker.  A small return and a safe one is far more desirable than risk.”

3. “Better a Little Caution Than a Great Regret.”

A little caution with the money can stop you from lots of trouble in the future. This rule advocates the readers to invest intelligently as it’s no good regretting later.

In addition, the book also describes the laws of gold, which like the law of gravity is applicable everywhere and in every time period. Here are the seven simple rules of money:
  1. Start thy purse to fattening: Save money.
  2. Control thy expenditures: Live under your means. Do not overspend.
  3. Make thy gold multiply: Invest intelligently.
  4. Guard thy treasures from loss: Avoid bad investments.
  5. Make of thy dwelling a profitable investment: Own the property/house you live in.
  6. Ensure a future income: Have insurances.
  7. Improve thy ability to earn: Keep developing. Become wiser and knowledgable

Also read: 10 Must Read Books For Stock Market Investors.

All the lessons learned in this book are effective and easily implementable. I have read this book a number of times and is my personal favorite personal finance book. I definitely recommend you read this book. You can check out more about ‘The Richest Man In Babylon’ by George S. Clason on Amazon here.

3. Rich Dad Poor Dad

This is the first mind-opening book that I read during my freshmen year in college. The book is a life-changer. It made me realize the importance of financial education and how I have been ignoring this all my life.

The book describes the lack of financial education given to the kids. The problem with financial education is that it isn’t taught in school. Hence, the family/parents have the responsibility to teach it. However, the trouble is that unless your parents are in the top 1% (income-wise), they are going to teach you to be poor. This is not because the poor don’t love their kids. It’s because they don’t know how to be rich and what exactly to teach.

In the book, the author has two fathers. First, his original father, who was a highly educated government officer yet poor. And the other was his friend’s father, who was not much academically educated but rich. Kiyosaki describes how the lessons given by both his fathers were completely contrasting.

rich people

At a very young age, Robert Kiyosaki decided to listen to his RICH dad instead of his profoundly educated POOR dad. A few of the important lessons learned by Kiyosaki from his rich dad were:

1. Always invest in assets

You should increase your assets and reduce liabilities. According to Robert Kiyosaki

  • An asset is anything that puts money in your pocket.
  • A liability is anything that takes money out from your pocket.

Assets can be a business, real estate, paper assets like stocks, bonds, etc. Whereas liabilities can be your expensive car, the big house bought on the mortgage, iPhone, etc.

2. Poor work for money and Rich make their money work for them.

According to the author Robert Kiyoaki, Poor people have a job and they work for money. Here, they exchange their time and efforts for an income source (job). On the other hand, Rich people make their money work for them. Instead of working a 9-to-5 job, they have a business or invest in other businesses. That’s why they can make money even if they are not (directly) working.

rich-dad-cashflow-quadrant-robert-kiyosaki

3. Poor only have expenses, middle-class people buy liabilities and rich invests in assets.

In the section, Robert Kiyosaki also explained why “The rich get richer and the poor get poorer”. This is because of their spending habits. Poor people do not buy any assets and spend all their earnings as expenses. Middle-class people spend the majority of their money in liabilities. However, the rich spend their money in assets which help them create more wealth over time.

RICH DAD POOR DAD BOOK REVIEW

Related Post: Rich Dad Poor Dad Summary- Lessons by Robert Kiyosaki

Summary

All the three books mentioned in this post is classic and time-tested. They will open your eye towards personal finance and help you to create a successful investing mindset. I highly recommend you grab a copy of each one of them and start reading.

That’s all for today. I hope this post on “3 Amazing Books to Read for a Successful Investing Mindset” is useful to the readers. Do comment below which one is your favorite personal finance/ self-help book?

Is Debt the New Working Capital for Millennials cover

Is Debt the New Working Capital for Millennials?

Millennials Debt – The New Working Capital: The need for capital is the need of the hour; from growth to survival, money has become a vital non-natural resource. From an individuals’ need for basic necessities to running a business, the one-stop solution is capital. So what solves this need of capital? Either earn or borrow. Yes, ‘Debt’ is the easiest and the quickest way to fulfill the demand for money that exists in the economy.

The demand for money is a never-ending phenomenon and its mismanagement has been the root cause of some major financial debacles in history. Like the Bank’s NPA crisis, where hefty loans were distributed without measuring the exposure to the risk in a systematic way which made them bad loans leading to default in repayment. The NPA crisis in India started with NBFC’s, which was followed by the liquidity crisis, damping the economic growth of the country.

History has always given us a lesson and one must learn from it. Is the current debt-scenario of the new rising population of ‘Millennials’ in jeopardy? Let’s find out in this read.

The current scenario of ‘Debt’ among Millennials

Of the total population in India, Millennials account for almost 35%. As per a recent survey by CIBIL, it was found that, of the total loans sanctioned in India in the year 2018, around 39% of the loans were sanctioned to the Millennials group and these are increasing by every passing year.

As per CIBIL’s study, almost 72% of loans are for credit cards, personal loans, and consumer durables, and these come under the category of unsecured loans. While secured loans for two-wheeler and auto loans contribute 9% of the total loans.

Why are Millennials taking more and more loans?

The generation of Millennials is building a new spending culture and their rate of expenditure is on the rise. Where India is known for its saving culture, a new change in people’s lifestyle is pushing them towards a spending spree.

millenial loan - why are millennial taking more and more loan

Millennials (aging between 18 to 35 Years) need for a loan and the rising burden of their debt is majorly driven due to the following-

— Education Fees and Related Expenses

Education is every individual’s right. But this basic right costs too much. Higher education standards have substantially risen due to more and more private universities entering the industry with better quality and demanding a hefty fee against it.

Further studying abroad has become a new trend among the youth and hence calls for money demand. The education industry doesn’t just stop at institutes but also includes coaching classes, which prepare the students for competitive exams. The importance of education can never be debated and hence no matter what, one will always look forward towards fulfilling this need. This adds to the need for an education loan.

— Vehicle Loans

In today’s modern world social status plays a very important role and it has become important among individuals to keep up with their social status. Having a self-owned car or a bike is one such way of giving meaning to social status.

— Marriage and Related Expenses

This is another industry that has shown an exponential rise over the last decade. Bollywood has always had a huge impact on its viewers. Movies showcasing high budget destination weddings, designer outfits, jewelry, party, etc. have had a huge impact on its audience leading to rising marriage loans.

— Travel and Leisure

Travel is another industry, which is surging. This includes a major chunk of the population attracted to foreign travels like Europe, America, Islands, etc. These trips cost huge and again add to the demand for money ultimately influencing people to borrow more.

Leisure activities like frequently going out for movies, parties, concerts, etc. have become an integral part of one’s busy life and are a stress buster, which further adds to the need for money.

— Ease of Borrowing

Technology has become a pillar of our lives. It has influenced our lives for good. Traditional lending platforms i.e. banks are now being accompanied by some new lending platforms like P2P (Peer-to-Peer) players such as IndiaLends, i2i Lending Lenden, RupeeCircle, CASHe, etc. These platforms have made borrowing easy by reducing the paperwork hassle and making everything online and at lower borrowing costs.

Additionally, these platforms also provide a loan with very small ticket size like of Rs.500, etc. and for a short duration like a month or a fortnight, which makes them much more attractive.

— Other Factors

Medical, Housing loans, Personal loans, etc. are a few other requirements shaping the demand for loans.

Also read: Good Debt vs Bad Debt: What You Need to Know?

Is the rising Debt Burden on Millennials Good or Bad?

‘Debt’ has always had a negative image on the financial minds. This is one of the major reasons, which causes panic. Hence millennials’ rising dependency on loan is an issue that needs to be addressed.

In order to understand the risk associated with millennials’ debt, one needs to understand whether they have financial literacy and awareness with respect to this.

As per the data given by CIBIL, millennials who have a CIBIL credit score of less than 700 have improved it by an average of 65 points within six months of checking their scores. Further, the data also revealed that self-monitoring millennials have an average score of more than 740, which is higher than the non-millennials average score of 734.

An increased dependency on easy credit has made our lives simple but are we aware of the consequences if things go south. The lending platforms and banks over the past few years have been engaged in awareness activities of the customers in order to make them financially literate and conscious of the risks associated with borrowing and its defaults.

The data given by CIBIL directs us towards the fact that currently the debt-scenario among the millennials is under control and hasn’t shown any signs of another bubble ready to burst. But the question is for how long?

The new wave of digital borrowing and banks becoming more inclined towards retail loans are both changing the basic nature of India as a ‘Saving Economy’ towards a ‘Debt-Driven Economy’.

The past financial crisis like the 1929-30’s Great Depression, 1980 Savings and Loan Crisis, 1995 Dot Com Bubble, 2008 Financial Crisis and many have impacted the world economy but the Indian economy’s saving culture has saved us from all of them by absorbing the loss. The saving culture has always provided a thick cushion and protected people. Having savings reduces the financial dependency on institutions and government thereby reducing the exposure of the crisis.

Closing Thoughts

The world is advancing towards new technologies and new means of living but compromising on the old ways might cost us heavily in the next financial crisis. Nowadays the banks are selling loans rather than emphasizing the deposits as such. Household debt in India is more than the household savings. We must think twice about how much are we saving to keep our future secure and financially sound.

One of the biggest rules in finance is to manage the risk and so we should stay a step ahead in analyzing this new debt-culture and how can it be managed in order to downside the risk and avoid another crisis.

11 Best Passive Ways to Make Money While You Sleep cover

11 Best Passive Ways to Make Money While You Sleep

Passive ways to make money in India: Passive income” certainly sounds like an interesting and appealing idea, but making money while you sleep is certainly not that easy. The majority of passive income ideas won’t really work (either limited or minimal financial returns or will need a great degree of effort from your side), certainly not like making money while you sleep.

So, the question is what really works? What are the ideas that can actually get the money ball rolling for you? Here are some top picks that can help you leverage some real basic factors for that continuous stream of passive income.

#11 Best Passive Ways to Make Money While You Sleep

1. Sell your art

painter

You might be a skilled designer, a graphics expert or someone who just picks up the paint-brush as a hobby. But what if those raw pieces of your art can ensure you a continuous flow of money. There are several websites like Etsy, Zazzle, etc. that will pay you a nice amount of money for sharing your artworks with them.

These websites use your artworks to create patterns for their branded t-shirts, mobile covers, posters, mugs etc. Whenever these products are sold, you will be given a fair share of commission from the product price.  

2. Express your skills via video channels [Youtube]

guitar

Got some special dance moves, singing skills, the art of mimicry, stand-in comedy or detailed workout sessions? Showcase your talent to the world using YouTube videos from your own channel. YouTube is an immensely popular and exciting medium for earning a decent flow of passive income for yourself.  

You will be paid higher as per the number of views, likes, subscriptions, and popularity that your channel will get across different user groups.

Bdw, you can subscribe to Trade Brains youtube channel here.

3. Online educational courses

courses online

Since the introduction of the digital age, online learning platforms and resources have gained a lot of popularity. There are certain web portals like Udemy, Coursera, Edx that offer digital certifications and classes to students across the globe. If you have specialization in any academic, technical or non-technical subject then you can structure your own educational courses on these websites. You will be paid for every subscription or registration that a user makes for your course.

Also read: #11 Simple Ways to make money online in India [No spam/surveys]

4. Sell-Stock Photos

stock photos

Are you someone who is amazing with a camera in his hands? If yes, then there is a good scope for earning a decent flow of money with your stock photos. There are several websites like Shutterstock, Alamy or iStockPhoto that need photography enthusiasts or experts who can deliver some really amazing and high-quality images from different niches.

5. Rent your vacant property

house

Renting your own vacant property can also be a good way to earn some easy passive bucks. Some working professions even prefer moving in shared apartments and houses in order to save their hard earned money.

6. Start your own blog

blog

Got some really exciting cooking recipes, life hacks, astrology tips or interesting hacks to share with others? Just go on and set up your web-blog. Once your blog gains popularity, you can use services like Google Adsense or AdWords to earn a considerable amount of money by displaying corporate or business advertisements on your blogs. Additionally, you can also set subscription fees for the users who want premium access to your content. 

There are a number of bloggers who are making tons of money enjoying their life on a beach or travelling by setting passive ways to make money on their blog.

Note: If you are new to blogging and planning to launch your blog soon, we’ll recommend getting a hosting from “HOSTPAPA”. They offer most affordable hosting plans starting at just Rs 99/month. Here’s a quick link to get started. Cheers!

7. Sell your Ebooks

ebook

Fond of writing? Great! This can be one big opportunity for you to earn. Convert your passion for writing into some easy money. You can fetch 5-10$ easily with short write-ups of 70-80 pages, but make sure you choose the trending titles and themes. To sell your ebooks, you can choose various platforms, Amazon and iBook are two of the best once.

Market Investment Ways to Make Passive Income

8. Mutual Funds

mutual funds

What if you can earn regular income on your basic savings?

Mutual funds are the best passive ways to make money in India. You do not need to spend much time, knowledge or even money to start investing in mutual funds. These funds are managed by professional fund managers and there are several low-risk investment schemes that offer high returns compared to the interest amount that banks pay for your deposits with them. Nevertheless, you will need to select the mutual fund smartly to reduce the risk of financial loses.

Learn more about mutual funds here: What is Mutual Fund? Definition, Type, Benefits & More.

9. Stock Market Investing

stocks

If you are willing to invest some time, then investing directly in the stocks offers the highest returns and can easily be considered the best passive ways to make money with even limited investments. You can make money in stocks through capital appreciation and dividends. If you have a good working knowledge of stock market and shares, then it can ensure high returns for your basic investments, but such investments are always subjected to risks of market fluctuations.

New to stocks? Want to learn how to invest in Indian stock market from scratch? Here is an amazing online course: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your share market journey today.

10. Real estate Investments

real estate

Investing in the Real-estate market is another way of ensuring a continuous income stream on a part-time basis. You can either buy a rental property to ensure a monthly fixed amount or look for those perfect deals at the perfect time (when you purchase properties at a low price and then sell the same when the market hits a high.) In both the cases, you will be getting a decent amount of income on regular basis with minimal efforts.

11. E-commerce service outsourcing

eCommerce

An e-commerce portal that bridges the gap between the local retailers and customers can be a handy way of earning a continuous stream of passive income. Your e-commerce portal, website or app can be structured to serve the requirements of a locality, zone, town or a whole city.

Who knows it might develop into a fully-fledged business venture in future?

Good Debt vs Bad Debt - What You Need to Know?

Good Debt vs Bad Debt: What You Need to Know?

Good Debt vs Bad Debt: What You Need to Know?: A common misconception among most of the working population is that all debts are bad, and hence they should avoid debts at any cost. Now, it is possible that you may never take any debt/obligation throughout your lifetime. However, this is not a very smart move.

Many times, taking debts to reach your goals can be a wise action and can help people succeed in the long term. As a matter of fact, all those who run a business or have a winning mindset know that – “Not all debts are bad!

Although buying luxury goods through debt on your credit card should definitely be considered as a bad debt, however, sometimes, it is okay to take a debt to start a business, buy your new house, for getting a higher education, etc when the possible returns in future are higher compared to the interests paid.

In this article, we are going to discuss good debt vs bad debt. By the end of this post, you’ll completely understand what good debts, bad debts, their characteristics, examples, and more are. Let us start with Good debts.

Good Debt vs Bad Debt

1) Good debts

house loan good debt example

There is a common saying in the business world– “Money makes money.” In other words, it means that you need money to make more money.

Concerning good debt vs bad debt, if you can use your debt to generate more money/value or simply increase your net worth, then it can be considered as good debt.

In general, these debts have lower interest rates than the potential returns and, therefore, treated as an investment for the future.

For example, if you’re starting a business, it is not necessary that you should have enough savings to get it off the ground. Here, if the future growth potential and expected returns from your business are high, you can take a business loan. The business loan can be considered as a good debt (on the condition that your business is fruitful).

Here are a few other common examples of good debts:

— Education loans:

“The more you learn, the more you can earn.”

If taking a degree can increase your earning potential as an employee (or an employer), it’s okay to go for that debt. You are more likely to be better paid if you have higher knowledge and degree. Always be ready to “Invest in yourself,” and hence, taking a student/college debt can be considered good debt.

Anyways, please note that an education loan may turn out to be bad debt if you do not get employment as per your developed skills after graduation. Therefore, always choose the degree/program carefully because if there’s no substantial earning potential after you have completed the education, it may not be a good debt.

— Business loan:

If taking a business loan can increase sales, earnings, and improve your company’s financial health in the future, it can be a good debt. Moreover, having a balance in the account can also reduce the financial stress of owners as they do not have to worry about running out of cash constantly. And therefore, they can make better decisions for their business.

With time, the owners can slowly pay down the debt when their business becomes profitable and moreover stable. Anyways, a business loan can also become a bad debt if the businessman is blindly taking money for a risky business idea.

— Mortgages:

Mortgages for buying a house or real estate debts for property ownership can be considered as good debt.

Generally, buying a house or property involves a massive upfront cost. If you do not have saved a lot of money to invest in a house/property, but the potential earnings that you can make from your real estate investment are way high, then taking a loan may be a good idea.

Here, you can buy the property, live in it for years, save money on rent, and also sell it in the future for making money. Else, you can buy the property and rent it out to make money as rental income. As you are taking a loan to build an asset that increases in value, mortgages can be considered as good debts in the long run.

Also read: What are Assets and Liabilities? A simple explanation.

The Risks of Good Debt:

Although good debts may sound like a viable option for a better future, however, they are always dependent on a lot of assumptions. There’s no guarantee that the future will turn out to be the same as planned. For example:

  • You can get a college degree from your education loan but may have no job offer.
  • Your business loan may be a waste if your business/startup fails
  • You may be paying high mortgages for your house and may be left with no savings for the future.

Even for good debts, there are a lot of risks involved as people are forecasting the future based on their assumptions. Therefore, before taking an obligation, carefully assess the risks and rewards.

For example, if you are planning to get an education loan, choose to take the loan for a degree/program that you’re confident to be fruitful. Know the expected salary after graduation so that you can plan to pay the money back.

Besides, considering the worst-case scenario may also help here as you can even plan for it. Overall, always act smartly as a good debt may not always be right for everyone.

2) Bad debts

car loan bad debt example

Bad debts are the money that is borrowed to purchase depreciating assets or liabilities. In other words, if the value of assets doesn’t go up or generates income in the future, you should not buy it by borrowing money as they are bad debts.

In general, bad debts have a higher interest rate, and people can prevent taking these debts by making smart use of money. Here are a few examples of bad debts:

— Debts to buy fancy cars:

Cars cost a lot. While having a vehicle can be a necessity as it saves money and time, however, taking debt to buy an expensive car is never a good idea. The value of a vehicle depreciates over time, i.e. becomes less than what you paid for in the future. And hence, borrowing money to buy fancy cars can be considered as bad debt.

— Debts to buy luxuries:

Taking consumer/personal loans to purchase luxuries like expensive watches, clothes, dining in fancy restaurants, services, etc. are again bad debts. Personal loans have incredibly high-interest rates and are usually caused by living beyond one’s means. The money spent on these goods/services could have been used somewhere else.

— Credit Card debts:

Credit card debt is the worst form of bad debt. The interest paid on credit card debts is significantly higher than the rates on consumer loans. Moreover, as the outstanding amount accumulates each month, it makes it easy for the people to fall behind and become prey to the credit card companies.

Mixed/Special Cases of Good Debt vs Bad Debt:

The world is not just ‘Black’ and ‘White’. There’s also ‘Grey’!

Similarly, a debt cannot always be classified as good debt or bad debt. Sometimes, it can be both. It depends on your financial situation and preference. Here are a few examples:

— Borrowing to invest:

If you are getting money at a lower interest rate and making more money by investing it, then it can be considered as good debt. In the trading world, this is called leveraging, and it can help the traders to make a lot of profits using other people’s money.

Anyways, if the interest rate on the borrowed money is way high and the profits earned from your investment is low, then this money can be considered as a bad debt.

Overall, there’s a risk involved in borrowing money to invest. Until and unless, you’re trained and experienced to do so, this approach can be dangerous.

— Credit card rewards:

Although relying too much on credit cards be harmful, however, they are also a lot of benefits of using credit cards. Most of these cards come with amazing rewards like free airline tickets, movie tickets, cashback, etc. If you can use the credit cards efficiently, it can be considered as good debt.

— Consolidation loan:

In finance, consolidation occurs when someone pays off several smaller loans with one more jumbo loan. Here, the individual gets this loan at a lower rate to pay off the higher interest rate loans. In general, it can be considered a good idea to get rid of high-interest debts. However, the problem arises when the individual is not able to pay off the bigger loan or when the debts pile up.

Also read: 11 Best Passive Ways to Make Money While You Sleep.

Summary

Let us quickly summarize what we discussed about Good Debt vs Bad Debt in this article.

Good debt is a debt for getting product/service that has the potential to increase its value with time. As a thumb rule, if it increases your net-worth or value, it is good debt. The right amount of good debt can increase your net worth, value, and help you get the things that you want in your life without taking unnecessary risks.

On the other hand, if you are borrowing money to spend over depreciating assets or liabilities, it is bad debt. Bad debt tries to lure people for instant gratification. However, they do not create any significant long-term value. Try to avoid getting bad debs for luxury products/services or borrowing high-interest rate money.

Finally, there’s no fixed boundary for defining good and bad debts. A good debt for one can be bad for another, depending on their financial situations.

15 Must Know Tax Saving Tips in India cover

15 Must Know Tax Saving Tips in India

15 Must Know Tax Saving Tips in India: If you are an Indian resident, you are required to pay tax on your income (if it crosses the minimum taxable limit) to the Indian Government. Do you ever feel like you are paying an excessive tax? Have you ever thought of saving some tax from your taxable income?

The Income Tax Act, 1961 is a complicated statute in itself. If you are looking to carry out your personal tax planning, you might it find it a real tough job to accomplish.

In this article, we shall talk about the various ways which you can adopt to save your taxes.

15 Must-Know Tax Saving Tips in India

Let us first talk about the tax deductions you can claim by investing in some financial instruments specified u/s 80C. The maximum tax benefit allowed under this section is Rs 1.5 lakh.

1. Public Provident Fund

Investment in PPF (Public Provident Fund) is subjected to EEE tax exemption status. It is a savings scheme established by the Government which comes with a maturity period of 15 years. You can invest in it by visiting any bank or post office in India. Currently, the rate of interest offered on PPF is 8% every year.

2. Employees’ Provident Fund

If you are a salaried individual, you can claim a tax deduction on the contributions you make in your EPF account. The maturity amount and the interest income on EPF have also been exempted from Income Tax provided you have completed 5 years of service.

3. Five-year tax-saver Fixed Deposits

You can invest in 5-year tax-saver FDs to claim a tax deduction in a Financial Year up to Rs 1.5 lakh. These instruments carry a fixed rate of interest varying from 7 to 8% p.a.

4. National Saving Certificate (NSC)

NSC is having a lock-in period of 5 years and offers interest at a fixed rate. At present, the interest rate is 8% p.a. You can get tax benefits on both investments made and interests received.

5. Equity Linked Saving Schemes (ELSS)

ELSS funds invest a minimum of 4/5th of their assets in Equities. They have a lock-in period of 3 years. If your long term capital gain exceeds Rs 1 lakh during redemption, then such gains are subjected to tax @10%.

6. Life Insurance Policies

You can claim a tax deduction for the premiums you pay for various types of life insurance policies which include endowment plan, term plan, and ULIP. But, for availing this tax benefit, the sum assured (insurance cover) must be a minimum of 10 times the amount of premium which you pay.

7. Interests on home loans

When you repay your home loan (procured for acquiring or constructing a house), the principal portion of the same is deductible under Income Tax. The interests that you pay are eligible for tax deduction u/s 24(b) of the said Act while computing income from house property.

8. Senior Citizen Saving Schemes (SCSS)

The contributions made to an SCSS are eligible for a tax deduction. SCSS is having a tenure of 5 years. It is available for investments for those who are above 60 years. The rate of return offered by an SCSS is currently 8.7% per annum which is higher than a bank FD.

(Image credits: Paisabazaar)

Apart from section 80C, there are various other sections in the Income Tax Act of India which provides you with tax benefits.

9. National Pension Scheme (NPS)

Whatever contribution you make in your NPS account, you are eligible to obtain tax benefit up to Rs 1.5 lakh under section 80C. An additional tax deduction to the maximum of Rs 50k u/s 80CCD(1B) is available on your contributions in your NPS account. Investing in NPS lets you invest in both equities and debts at the same time and build a significant retirement corpus.

Also read:

10. Medical Insurance Premiums

You can avail tax deduction up to Rs 25k on medical insurance premiums paid u/s 80D. This tax benefit is allowed to you and your family. For senior citizens, this limit changes to Rs 50k. Again, if you are paying health insurance premiums for yourself and/or your family and senior citizen parents, the maximum combined deduction available is Rs 75k in a Financial Year.

11. House Rent Allowance (HRA)

If you are a salaried employee getting House Rent Allowance (HRA), you can enjoy tax exemption on the same if you stay in a rented house. But, if you don’t get HRA from your job but staying in rented accommodation, you can still claim tax deduction u/s 80GG to the maximum of Rs 60,000 p.a.

12. Home loan for constructing a house property

If you have raised a home loan for acquiring or constructing a house property, the interest payable on the same is tax deductible u/s 24 up to a limit of Rs 2 lakh per year. But, the interesting thing is that, instead of a self-occupied property, if you have given the house on rent, there is no upper limit for it. But, the total loss that you can claim on the head of income from house property is limited to Rs 2 lakh.

13. Partial benefits on Saving Account Interests

The interests that you receive on your Savings Bank Account are tax-free to a limit of Rs 10,000 per year u/s 80TTA. But, if you are a senior citizen, the tax deduction on interests received on both FD and savings account is allowed up to Rs 50,000 u/s 80TTB.

14. Disabled Assessee Deductions

If you are an Assessee suffering from any disability, you can claim tax deduction u/s 80U for yourself. Under this section, the maximum deduction from your taxable income allowed is Rs 1, 25,000.

15. Disabled dependent deductions

You can enjoy tax benefit u/s 80DD if there is any disabled person in your family who is dependent on you for his/her living. This section allows you to claim a deduction of Rs 1.25 lakhs from your taxable income.

Bonus: Donation or relief funds

If you make a donation to any relief fund or charitable institution, the limit of the tax deduction is 50% of your donated amount. Some entities allow 100% tax benefits on the donations made, subject to a maximum of 10% of the adjusted total income. There are some organizations where 100% of your donations are allowed as tax deductions without any conditions.

Closing Thoughts

In this article, we have provided you with some common tax saving tips. If you could follow our guidance, it would help you to plan your personal taxes better. The Income Tax Law of India is itself a huge one. Further, many amendments come every year in the form of a new budget (Finance Act), circulars, notifications, and case laws.

Therefore, we would like to warn you that you should not rely only on our stated tax saving strategies. For managing your tax compliances in the most effective manner, it is recommended that you consult any tax consultant like a Lawyer or a practicing Chartered Accountant.

We wish you all the best for your personal tax planning.

How much does a wedding cost in India?

How much does a Wedding cost in India? (For Average Indians)

An overview of Wedding cost in India for Average Indians: Weddings are a dream come true event for most couples. It is the single most awaited occurrence in your life. You want it to be extravagant and lavish to whatever extremes possible and while that is absolutely normal for you to expect, the ever-increasing cost of living and inflation has always been a major factor in the decision making of the entire wedding budget. The wedding cost in India is written in brief below.

Vital factors for deciding Wedding cost in India

No two weddings in India will ever cost the same amount because of the different variables involved. The wedding cost in India may vary depending upon vital factors such as:

  1. Guest count
  2. Number of functions
  3. Traditional activities
  4. Venue location
  5. Food expenses

Today, we will help you understand the various costs that you would have to incur while planning a wedding in India. Right from basic costs up to larger costs, we will try to cover all aspects of a traditional Indian wedding. Since the requirements of every religion differ from one another, the budget will differ too. However, we will give you a stable idea of the expenses incurred in a wedding for average Indians in Pune

We pick Pune since it is a metro area and expenses are higher in such areas. Remember, it is always better to assume an upper limit rather than a lower one so that when you save money from your budget, you feel ecstatic.

1. Venue

A wedding venue can cost anywhere from thousands to lakhs and some even crores of rupees! But for an average Indian, the wedding venue must be one of the most time and resource-intensive decisions he has to take for wedding planning. In Pune, an average wedding venue for around 1000-1500 people should cost you anywhere around INR  1,00,000 to INR 3,00,000. This may be subject to change depending upon the number of guests, the location of the venue and the extravagance of it as well.

2. Decoration

A big business in the wedding industry is the venue decoration business. A mediocre wedding decoration set up (depending upon the venue size) can cost you anywhere between INR 70,000 up to INR 30,00,000. However, for average Indians, this cost can be approximately INR 1,50,000 for a simple yet elegant venue set up with flowers and other attractive accessories.

3. Catering

Catering is one of the major wedding costs in India and goes complimentary with the venue location decision. Like we Indians always say, “no one will remember anything about a wedding but the food!” So it is always good to research your options well before you go for any particular caterer. Again the costs will vary from vegetarian to non-vegetarian options. A vegetarian plate should cost you around INR 600 per plate and a non-vegetarian plate should cost you around INR 1,000 per plate or more.

4. Bridal/Grooms Attire

A bride has a thousand expectations for the ideal wedding attire. Her lehenga will cost her anything between INR 25,000 to INR 1, 00, 000. An average Indian girl shall have to bear a cost of INR 40, 000 for the ideal lehenga along with the jewelry that goes with it for around INR 30, 000 extra. If gold jewelry is in the picture, for every tola of gold that you wear, INR 40, 000 shall increase in your list. Make up for the bride can cost INR 15,000 for basic bridal makeup and hairdo. Various bridal dresses from the Haldi, sangeet, and wedding and up to the reception could cost around INR 1, 00, 000.

Similarly, a groom’s sherwani would cost INR 40,000 (averagely priced) along with his other attire requirements such as juttis, turban, etc. 

indian wedding cost

5. Wedding Invitations

Again,  planning the wedding cost in India is incomplete without a good and attractive wedding invitation card. A wedding invitation card will cost you anywhere between INR 50 – 100 per card. If you want to for more graphically created content, the cost may go up by thousands per card. So depending upon the number of invitees and your choice of content, the cost of your invitation cards can be decided.

6. Photography and Videography

Photography and videography are extremely important for any wedding. When you look back at your wedding, there are tons of precious memories captured through these photos and video creations. Thus, employing a good photographer will cost you around INR 40, 000 per day and videographer will cost you around INR 50, 000 per day.

Go for a packaged deal of photo and videography as a bundle. You will definitely save more money by doing this and you will also get both the facilities from one vendor.

7. Accommodation

Accommodation for guests traveling from outside locations (most weddings have at least some guests coming from outside) can be an added expense for a wedding. This can range from INR 1,000 per room on a twin or triple sharing basis and upwards to any amount depending upon the budget. Based on the number of guests and the number of rooms required, this cost will add up to your final wedding expense list.

8. Miscellaneous expenses

A dozen things pop up out of the blue when the wedding cost in India is ongoing. Therefore it is important for families to keep a small amount of money aside for the same. Last-minute supplies, transportation costs of paying drivers, caterers, etc., or something that you have forgotten to add initially can be covered under this allowance. Additionally, if a DJ is hired for the Sangeet, his fees should be included however this is just an additional expense whereas others are bound to happen. 

Also read: Renting vs buying a home- Which one is better?

Bottom line

Here is a rough summary of the different expenses involved in an Indian wedding:

  • Venue: INR  1,00, 000 to INR 3,00,000
  • Decoration: INR 1,50,000 to INR 3,00,000
  • Catering: INR 600- 1,000 Per Plate 
  • Bridal/Groom’s attire: INR 50,000 – 1,00,000
  • Wedding Invitation: Rs 50-100 per card
  • Photography: INR 50,000 per day
  • Accommodation: INR 1,000 per room

Overall, the average wedding in India may cost somewhere between INR 8-10 lakhs, if you are being thrifty. However, this is just an approximation of the wedding cost. Multiple factors will affect your budget and your requirements. Thus, do a thorough check and research extensively for all the above particulars stated in the above list.

Most importantly, do not over-do it. Your wedding should be as per your capability and not to show off to anyone. Be smart and be responsible with your finances. Good luck!

100 Minus Your Age Rule - The Easiest Asset Allocation Method cover

100 Minus Your Age Rule – The Easiest Asset Allocation Method!

100 minus your age rule: It’s always tricky to decide how much you should save and how much you should invest. Especially in riskier investment options like stocks or mutual funds. This is because the answer varies on different factors like the age, geography, or financial situation of the person. Moreover, the investing strategy of a 22-year-old need not be the same as that of a 60-year old. But, how much you should actually invest in different assets at the particular stage of your life?

There is no single correct answer to this question, and there can be multiple answers. However, it this post we are going to discuss one of the most popular allocation methods, known as the 100 minus your age rule.

What is 100 Minus Age Asset Allocation?

The 100 Minus Age Asset Allocation Rule is one of the earliest and elementary methods of Asset Allocation, which proffers a rational procedure to determine the distribution of equity and debt in the portfolio.

This rule is devised on the vital axiom of curtailing risks as we gradually turn old. It also interprets the Asset Allocation which is completely based on the stage of your life. Over time, various theories and models have been devised in an endeavor to lend advice about this crucial decision. The 100 Minus Age Asset Allocation Rule provides extensive assistance to decide the ratio of our investment in debt and equity.

The 100 Minus Age Asset Allocation Rule which states that we should take 100 as the minuend and our age as the subtrahend.  The enumerated difference is the percentage of our network that we should be designating in stocks as of today, i.e. at our current age.

Examples of 100 Minus Age Asset Allocation Rule

At first, we will decode the definition by taking a person belonging to the younger age bracket.

AGE OF AN INDIVIDUAL: 22 YEARS

As per the definition, we will subtract it from 100.

(100-22) Years  = 78 Years  = 78/100*100= 78 %

Thus, according to the rule, he/she should keep 78% of his/her portfolio in equities. The rest of the portion should include high-grade bondsgovernment debt, fixed deposits, and other relatively safer assets. On the other hand, when he/she reaches the age of  80,  he/she would diminish his/her allocation to stocks to just  20%.

asset allocation

Now, we will explain the definition by taking a  person belonging to the older age bracket.

AGE OF AN INDIVIDUAL: 67 YEARS

As per the definition, we will subtract it from 100.

(100-67) Years  = 33 Years  = 33/100*100= 33 %

Thus, according to the rule, he/she should keep 33% of his/her portfolio in stocks or riskier investment options. The rest of the portion should include high-grade bondsgovernment debt, fixed deposits, and other relatively safer assets.

How does the 100 Minus Age Rule work?

The logic is simple. When you are old, you will have a lot more responsibilities and expenses compared to when you’re young. For example, if you’re at 58, you might be worried about the retirement fund, retirement home, higher education of your kids, the marriage of your daughter/son, etc. On the contrary, when you are young, you do not have much expenses or responsibility. That’s why it is considered wise to take more risks and invest in high risk, high return investment opportunities when you are young.

In professional vocabulary, this is  attributed  as a “Declining Equity Glide Path.” Every year or, at an interval of a few years, we would have to decline our share in equities which in turn will diminish the volatility and level of uncertainty of our investment portfolio.

As we get older, one of the most essential guidelines of investing is to eventually scale down our risk level since retired personnel get no scope for second chances in reference to the revival of the market after a sharp plunge. Therefore, this example depicts the simple perception behind the 100 Minus Age Asset Allocation Rule that strives to conclude that lesser the age, higher the risk-withstanding capacity &  more the age, lesser the competency to combat the storm of the stock market and vice versa.

Drawbacks of the 100 Minus Age Rule

100 Minus Age Asset Allocation Method comprises of several loopholes. Let us analyze each of them in a detailed discussion.

1. Presumption of the fact that the process of financial planning is similar for everybody

The ultimate truth is that the procedure of financial planning varies from person to person where everyone has their exclusive preference and needs for  Asset  Allocation.

2. Inconsiderate about the basic factors for asset allocation

Asset Allocation requires a well-defined consideration of diversified factors like financial situation, preferences, risk-taking ability, time horizon, goals, and investors’ psychology.

However, the recognized path to asset allocation is to elaborate our risk profile at the very first stage. Assessing our risk profile will aid us to contemplate the approximate risk we are ready to undertake for the investment.

The second thing that needs to be taken into account is the time horizon for the purpose of investment. On the basis of the analyzed risk profile and time horizon, the decision regarding the asset class is executed!

For example, if you are an aggressive risk pursuer and have a long term time horizon for investment then you can allocate a major portion of your asset to equities. The percentage can be 80 % or,  90% to stocks and rest into debts. In exceptional cases, if you are someone having a supreme risk appetite, you can even invest 100 % of your assets. On the contrary, if you have a short time horizon in your mind, then it always recommended investing in a debt fund despite being an aggressive risk-taker.

3. Inconsiderate about the change in Life Expectancy

Over the past few decades, there has been an unwavering increment in life expectancy around the globe. The hike is driven mainly by improvements in medical facilities and infrastructure. However, as the majority of the people have started surviving longer than before, many financial advisors feel that there is a dire need for amendment in the rule.

According to experts, the modified figures should be closer to 110 minus the age or, 120 minus the age. There is another aspect that has been absolutely overlooked by the 100 Minus Age Asset Allocation Method. On average, women live nearly four to five years longer than men and thus, required corrections definitely need to be made in the rule to cater to the investment needs of women population.

4. Inconsistent results in reference to market fluctuations

Academicians and researchers had commenced a project to test the accuracy and performance of the 100 Minus Age Asset Allocation Method aka Declining Equity Glide Path in different market cycles. Intensive research reports display that in bear cycles or, during poor market conditions, this method has delivered distressing outcomes. In reference to the market happenings of 1966, if somebody retired during that year, they would have run out of money 30 years after retirement.

The same experiment was also applied to a bull cycle or, in strong market conditions. During the booming period, the 100 Minus Age Asset Allocation Method generated good results with the strongest ending account values. However, it is not possible to predict or foresee future market performances at the time of an individual’s retirement. Thus, it would be wise to chalk out a sound allocation method that sails through the crests and troughs of the stock market.

Conclusion

The 100 minus your age is a simple, yet effective way to easily allocate assets depending on the stage of your life. This age rule is based on the principle of minimizing risks as you grow old and hence, simplifies the asset allocation. However, this rule also has a lot of drawbacks and hence while deciding the asset allocation, you should keep in mind your priorities and financial situation.

Also read: How to Invest in Share Market? A Complete Beginner’s Guide

That’s all. I hope it post is useful to the readers. Happy Investing.

10 Best Personal Finance Books Of All Time Cover

10 Best Personal Finance Books Of All Time!

10 Best Personal Finance Books Of All Time!

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”  -Dave Ramsey

These wise words of David Ramsey reflect the necessity of everyday lives, that is, learning about healthy spending habits and better ways of investment to lead a financially sound life.

Today in this world of never-ending expansion of economies, rise in prices, and increasing demands, individuals suffer from financial problems like debts, losses and increasing expenditure. To understand more about better ways of budgeting and inculcation of financially sound habits in order to overcome these problems, you should read books on personal finance where you can learn all about your personal income, expenditure, and savings.

10 Best Personal Finance Books Of All Time

Given below are the top ten books on personal finance which can shape your mind towards the same.

1. Rich Dad Poor Dad by Robert T. Kiyosaki

rich dad poor dad by robert kiyosaki What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki- You should always start with the best and the consistently number one ranked book on personal finance has undoubtedly been this Kiyosaki’s masterpiece.

The book talks about two different dads living two different lives altogether. One dad is rich and the other is comparatively poor. The book busts the misconception of relating highly educated to being rich and vice-versa. The book beautifully explores the utility of investment and how you can save money by working for it to make the money work for you later. The lucidity of the book makes it easy to read and understand. It definitely helps in improving your financial intelligence.

2. The Millionaire Next Door by Thomas J. Stanley & William D. Danko

the millionaire next door

This book is great for beginners who have just entered the realm of personal financing. The book is simple and easy to understand. It talks about the rudimentary concepts and instructions that should be followed and kept in mind while learning about personal finance. The author talks about establishing a healthy relationship between you and your money. Establishing goals are very important. You should choose your aim wisely and work for it.

3. The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

the total money makeover

Well, we started this article by quoting David Ramsey and there is no reason as to why he should not be making it to this list. He has written one of the finest financial works for especially the young lot who wants to start investing and make money. Total Money Makeover talks in length about creating a well-toned budget by employing healthy money habits.

He talks about flabby expenses that are unhealthy and can push you into unending debt cycles. According to him, to be financially fit, you need to cut out those extra expenses carbs and stick to fat-free savings to get a total money makeover!

Also read: 7 Best Value Investing Books That You Cannot Afford to Miss.

4. The Money Book for the Young, Fabulous, & Broke by Suze Orman

The Money Book for the Young, Fabulous, & Broke by Suze Orman

This book on personal finance is written by a financial expert whose main focus is on the present generation who are suffering the so-called “Generation Debt”.

According to Suze, this Generation Debts accounts for people in their 20s and 30s who are graduating from their colleges with a heavy load of education loans and other student loans. They are stuck in a financial environment where the money is not generated easily, employment is not for all and therefore, they should do something to take the matters into their own hands to secure their future and make money. This book is known worldwide for its relevance and the present problem it touches that is faced by young people.

5. Think and Grow Rich by Napoleon Hill

Think and Grow Rich by Napoleon Hill

This book is very inspirational for those who want to take up their lives to new heights, those who are not afraid to act to further their lives and reaching the goals they had set. Despite the old age of the book, it contains highly relevant lessons for each one of us. It talks about the way in which you can acquire wealth.

The author highlights the importance of planning and budgeting in order to amass wealth. Book also mentions a number of achievers and their success stories. The author also talks about the need for persistence which makes all the difference between a success and a failure and most importantly, the emphasis on knowledge acquisition before wealth acquisition which is truly marvelous to read!

6. Thinking, Fast and Slow by Daniel Kahneman

Thinking, Fast and Slow by Daniel Kahneman

Daniel Kahneman who has been a recipient of the Nobel Prize has worked on this book as a reflection of his own life. This book talks about the decision making processes taken p by our mind. He talks about the capabilities of a human being when it comes to thinking. He differentiates this human mind into two systems where one is fast but emotional and the other is slow but more logical.

Through his book, Daniel tries to balance these two systems and bring about a synthesis which is better judgment and decisions. He talks about the benefits of slow thinking and how it helps in reaching to better and more reliable decisions. Lastly, he tries to cover the importance of harvesting distinct personal and professional lives and safeguarding of both.

Also read: 10 Best Mutual Fund Books Of All Time!

7. Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by T. Harv Eker

Secrets of the Millionaire Mind- Mastering the Inner Game of Wealth by T. Harv Eker

This book by Eker acts as the bridge between aiming at success and achieving it. It is for those who believe in doing rather than just saying. This book explores mind-boggling questions like why some people become rich easily while others struggle to reach their level. Is there something different in their education or skills or training or work habits? Or is it just good luck for them? Such questions will really trigger your mind into thinking.

Eker talks about achieving success by using the blueprints of your personal money in your subconscious minds. It is these blueprints that will determine anybody’s financial lives. If your blueprint does not aim at making high levels of success, you will never be able to earn big money. It is that simple! Similar such ideas have been touched upon.

8. The Wealthy Gardener: Life Lessons on Prosperity between Father and Son by John Soforic

The Wealthy Gardener- Life Lessons on Prosperity between Father and Son by John Soforic

Do you know why this book is special? This book is special because it was written by a financially independent father for his financially dependent son. It will give you a glimpse of their lives where the father is educating his son on how to pursue his goals and further his interests.

The book talks about amassing wealth by earning excess money and saving. It talks about the ways in which one can overcome any hurdle that can land him inside a debt trap and wage slavery. He describes ways in which you can transform your financial weakness to strengths and how you should sense each opportunities and troubles before they come knocking your door.

9. The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon by George S. Clason

This is a classic book when it comes to books on personal finance. This book has been appreciated by millions. The author extensively talks about the ways in which you can accomplish personal wealth. He talks about personal financial planning. The language is simple and easy to grasp.

This book is more like a guide that tries to address the present-day financial problems that you may be suffering which is offsetting you from the path of success and accomplishment. Going through the Babylonian time and Babylonian stories of rages to riches will definitely boost you up and make you your best financer to solve all the related problems. These solutions will stay with your forever and guide you throughout your path to prosperity.

10. Psych Yourself Rich: Get the Mindset and Discipline You Need to Build Your Financial Life by Farnoosh Torabi

Psych Yourself Rich- Get the Mindset and Discipline You Need to Build Your Financial Life by Farnoosh Torabi

This book comes to you by the well known personal finance star, Torabi. She talks about the importance of money and why it should be earned. The best part of Farnoosh’s work is that she extensively talks about the application of ways and methods she has discussed in order to gain wealth and success. It is more practical and handy.

According to the author, developing healthy habits, disciplined life, and a focused mindset are some of the most important essentials required to achieve your goals. A disciplined attitude can only help you grow as a financial well being. You should live in the present thinking about your future. Future planning is very important. You should work harder to earn big and thus, make every money of your count.

Also read: 3 Amazing Books to Read for a Successful Investing Mindset.

Closing Thoughts

The above-mentioned books will definitely help in building up your repository of financial knowledge. These books are not just meant for those who come from a finance background but for everyone who wants to succeed in their lives, those who want to earn and make it big.

5 Most common money myths you need to avoid cover-min

5 Most Common Money Myths You Need to Avoid

When you start earning, then a lot of people will tell you a ton of things to follow. Do you know why? Because when you are making more than people will be jealous of you and rather than being the motivation in your life, they will try to bring you down. But since they can’t hurt you in any way, they will create myths inside your head. These money myths are common and are happened to believe by a lot of people out there. Even the educated part of your society believes in it.

What are these money myths?

Well, these are common money myths which are needed to be avoided at any cost because they eat up your brain and does turn inside it. They are usually really harmless, but they come with a lot of misconception about earning. For instance, it does not harm you to believe in them, but them surely takes up a lot of time in your thoughts. For example, you might have heard your family members saying this and that when you are earning. And at some point in your life, you have believed in them. Well, these are just common, and they are random myths.

5 Common money myths to avoid right now

Here are the most common money myths you need to avoid right now.

Myth #1: You have to be rich to invest

Money myth - you have to be rich to invest

You want to make investment, but you have to be rich enough for them. You might laugh at this myth right now, but this is true, and a lot of people believes in it. And You don’t have to be costly for your investment. Investment can be done by a lot of people and especially if you want to have a secured future for yourself.

Finance is the part where you draw your own money, and there is always a risk to it. But you don’t have to be rich enough to do it. There are a number of investment options available which require very minimum monthly commitment like investing in ETFs, Mutual Funds, Index funds, direct equity investment etc. Moreover, Investment is the best way to grow your wealth. Believe it or not. We have seen people increase their wealth with the source of small systematic financing alone.

Myth #2: Savings cannot be done enough if you don’t earn enough

Money myth - savings cant be done if you do not earn enough

Savings are always a crucial part of your life. You don’t have to earn enough for that. If you want to save, then you can do it even if you are making 2k per month. It does not depend on what you make, but it solely depends on how much you are willing to think about your future.

Do you know that if you save at least 5% of your income in your bank, then it will amount to a lot more than what you can think of? Your savings are an integral part of your life, and you should never believe in this myth at all. If you save, then you are doing a favor for yourself and your family too.

If you are struggling with your budgeting, a simple rule that you can follow is 50/20/30 principle. According to 50/20/30 strategy, you should allocate 50% of your monthly income on ‘Needs’ (like rent, food etc), 20% of your monthly income on ‘Savings’ (like your retirement fund, investments etc) and the remaining 30% of your monthly income on your ‘Wants’ (like traveling, dining out etc). You can read more about 50/20/30 principle here.

Myth #3: You should leave your money management to hired experts

Money myth - you should leave your money management to hired experts

Don’t leave your money management on your financially educated partner or your family member or to a high priced financial advisor. If you are earning, then you should handle by on your own. It’s just a myth that you need to hire someone to manage your money. Always remember that whatever you are winning belongs to you and only you. And that’s why managing your own money efficiently is an important skill that everyone should learn.

For example, if you’re trading in equities or commodities from your earnings, always make sure to trade only that much money which does not affect your family even if you lose a bit. Similarly, if you’re actively involved in an online slot game, make sure to read everything possible about the game, have a strong strategy and a certain budget decided upon. This way you can manage your financials better without depending on anyone.

Myth #4: Investing in gold is always safe and better

Money myth invest in gold is safe and better

Always if you earn more, then you have to invest in gold. That is an absurd myth, and a lot of people believes and invests in gold. A large proportion of the Indian population considers Gold as one of the best options to invest in India. Here, gold is not only treated as a satisfactory long term wealth creator but also auspicious and a symbol of social status.

Anyways, Gold is a long term investment option and not suitable for earning short term gains. Moreover, the prices of Gold fluctuate in a cyclical manner. Therefore, one cannot expect Gold to perform well all the time. Overall, if you are seeking a regular source of income through your investments, Gold may never serve this purpose. However, if you want to hedge your existing investments in Equities and Bonds, you should consider investing in Gold.

Myth #5: Buying a home rather renting a place

Money myth buying a home rather than renting a place

You should hire a home, and you should not rent one is one of the most common myths which you will hear. A lot of people out there will explain this absurd point to you. Well, buying a home gives you better security, an area which is there for you and where you can count your name in.

But the decision of buying vs renting a home is not going to be the same for every individual. Whether you want to buy a house property or take it on rental, it totally depends on your financial situation. If buying accommodation suits my financial situation, it may not suit yours. Moreover, both the options are having their own perks and shortcomings.

Money myths are pervasive

Yes, myths regarding money are prevalent. Make sure that you are earning better and doing the best thing for yourself as well. If you are drawing and spending, then you are no useful than the rest of these people. You need to save your cash for future purpose, invest in options where you see that there is a built-in potential for you. Once you have found out your subject, it will be good enough for you.

And if you are afraid of spending cash a lot more to what you need, then you can opt-in for the credit card usage as well. Credit cards are right for you, and they help you to manage your budget and even stops you from overspending. Nonetheless, whatever be your situation, always try to avoid the money myths discussed in this article.

What is Complexity bias? And how can you deal with it?

What is Complexity bias? And how can you deal with it?

Complexity bias means that the complex concepts in our lives are better than the ones which are more straightforward. It is a way through which our brain is hardwired to think that using the source of complexity bias in our lives, and we can have a productive ordeal. It is a logical fallacy that leads us to believe that the complex problems are better and they are happening. The whole term of complexity bias denotes that people are instead devoted to their time on these kinds of approaches rather simpler, faster, and easier to solve.

Examples of Complexity Bias

Simple things made Complicated... Here are some of the most common examples of complexity bias.

1. The use of Jargon in everyday life states the fact that complexity bias is a part of us and how we use the source of complex behavior management to get. When you are trying to talk out of something or trying to evade a type of argument that is going among you and other people, then you will tend to think that using long and big words can help you to keep out of the trouble and the mess. It can keep you safe, as well.

2. Coming to the source of mathematics, let me prone an example here. When you were a kid or let us take an example of when you were in high school, did you think that the complex mathematical problems are accurate? This means that people often tend to believe that if a problem is harder to conceive, then it can say that there is a valuable quantitative insight into that problem, and it needs to have a better approach towards the whole solving issue. This is how our brain presents us with the same.

3. Another example here is the use of the software. When it comes to the management and the use of software, then you can check to see that the complex ones are the ones that you tend to like. Do you know why? Because this is a product of complexity bias as well. If we think that software is sophisticated, then our mind races into thinking that the use of the software can be kept and put together into different means. It will yield fruitful results just because the software has a complex nature and approach.

How can complexity bias be a problem for you?

Well, if you cannot asses the problem now, then let me tell you, a complexity bias into your behavior can tend to do a lot more damage than you think. Do you know why? Because with the use and sourcing of our mind into thinking that a complex behavior will help us to change routes, we tend to do things and tend to adhere to those things which can only show and procreate as complex in front of us. It can be wrong because it can cause a lot of problems later as well.

Regularisation is a fundamental concept which happens and takes place in our mind. For example, when we see people who are taking care of their management and business and doing the things they love, then we do tend to extend our behavior with respect to do. The same happens when we set our goals in life. If we have a more straightforward nature and a way of accomplishing those goals, then we tend to overthink and realize that they are not really what we want.

For example, if you are earning right now, then you might tend to of your taxes at the same time. Well, if you have the complexity bias, then your mind will fool you into thinking that the bigger the problem, the better will be your answer. A lot of people do believe that their goal can only be achieved with the use of sophisticated means, and this entirely happens to the inner sane that we create within us. The same happens and takes place with the source of complexity bias here. With the use of this terminology, people tend to think that the complex their life problems are, the better they can thrive towards their goals.

How to stop complexity bias from protruding your life?

If complexity bias is a constant problem in your life, then don’t worry because you are not the only one here. In a famous survey, it was found that around 56% of the people tend to have complexity bias based on the behavior that they possess. They think that the complex problem will yield them more, and they tend to move towards the one which is harder to solve.

The same happens when you are a kid. If you think that severe problems should be solved first because they are more rewarding than others, then there is where you are wrong. The source of complexity bias is that it blinds our senses into thinking that everything in life, which is simple and healthy, can yield better choices and results too. We tend to feel the same because our brain is wired in that way.

Have you ever been in a situation where you have felt that the complicated situation is, and it will be easier for you to get out? What was your final solution? Did you get out eventually? Well, around 10 out of every 15 people who have the source of building complexity bias don’t actually get out of a problem. They tend to think that they will do, but then they get stuck.

Take this as an example. A Couple has borrowed money from one man, and they think that they can use the money and borrow another loan from someplace in a shorter time to pay to the man. This is when the couple starts to borrow loans from everyone, and instead of choosing to pay them off, they begin to fall into a loan loop. This is because the couple does have a source and tendency to show complexity bias.

It is better to get a bird’s eye view:

birds eye view

Have you ever thought of getting the bird’s eye view to solve your complexity bias issue? Well, if you have not, then it is your time. With the help of the bird’s eye view, you can see everything that you want. When you are doing something, then they are ‘bound to affect the people who are around you. If you are taking a loan, then your partner is bound to be affected by the same. It is essential that you get a 360 angle and view up from the sky.

As a source writer, I am often presented with a ton of complex ideas and contents to finish. But the ones which are simpler is easier to be done. When I do get the miscellaneous items, trust me, I think that they are useful because they are technical, and they can yield me more value than the others. But what I don’t asses and realize at the same time is, the complex my topics are, the harder it gets for me to understand and how to write on them. And the harder it gets for me to formulate a story in a simple language so that I can tell it to anyone or the readers who read it.

This is when I need to approach and look at the whole problem into the source of the bird-eye view and point here. With the use of the bird’s eye view, I can calculate the origin and function, which can be yield with the use of the simple articles which are collected at my place. It might be simple for me to write, but at the same time, they can yield me many more views too.

Here is how you can do the needful and get the thing I am talking about.

  1. When something is presented right in front of you, don’t procrastinate with it. You need to understand how and why you need to do it so that you can maintain the source of your work.
  2. Write it all down on a piece of paper if you want. If you want to have a good time and keep yourself away from your complexity bias, then writing down everything in a piece of paper will save you from the troubles later.
  3. And the third thing you need to do is rule out the negative that you have got. If you have negatives in your line of business, then you need to understand how you can work through it. You cannot rule out the images for you, but what you can do is, help yourself out from keeping them away from you.
  4. Get a perspective that can help you and the ones who are staying with you. You need to have a proper outlook over the items that are holding you down for the source of your complexity bias. This can only be done with the use of the full point of view that is being talked out.

Also read:

Ask yourself the right questions when you are divulging

Another type of source and problem that can be laid and help you out with your complexity bias is to ask yourself the right kind of the issues that you have. If you don’t ask and question yourself, then you are never going to get things moving in your life. You need to have a proactive session with yourself and understand that the rights and the wrongs depend on your view and the perspective. It is entirely on you.

Here are some questions you can divulge in.

  1. Ask yourself that if this is the right thing that you are doing or not?
  2. Make sure that you keep your time out on the following and understand the source of complexity bias in your life. You need to dive in deep, and this way, you can find a cause or a means through which to get out of your complexity bias-based behavior.
  3. Ask yourself that the complex problems that you intend in your life will yield you something or not?
  4. Ask yourself the general questions like the assessment of the work and how it can be managed for you? You need to look out for you, and this can only be done with the source of you questioning all the details and the intricate source of your life.
  5. Ask yourself that these complex problems that you are undertaking for yourself won’t cause you damage or not?

You need to think before you act, and this is the prime solution for getting over your complexity bias. It can help you to manage the best, and in the right way, these top questions will help you to get over the type of behavior which you generally possess.

Conclusion

Always have an excellent tactic when you are asking yourself some questions. Always remember that people, when they have complexity bias, they tend to over-complicate even the simplest of things. It is better that you ask for a piece of needed advice from your peers if they are sorted out. Or, if you want, then you can look for professional help if the simple things are not yielding much into your life. The more you indulge in these, the more the behavior will grow on you and which can later yield to something complicated to eradicate.

37 All-time Best Quotes on Money trade brains

37 All-time Best Quotes on Money!

37 All-time Best Quotes on Money: Everyone wants money. No matter what the critics may say, money is the means to buy comforts and almost everything. From purchasing luxurious cars, dream house, fancy clothes to traveling to your fantasy lands, one can get all of these if they have a lot of money. Moreover, when you take care of your money, it takes care of your life too. 

In this article, we are going to share 37 of the best quotes on money that will motive you to earn, save and invest more money. So, buckle up and get ready to enter the money-land.

37 All-time Best Quotes on Money

Save Money Quotes

1) “Spend not where you may save; spare not where you must spend.” – John Ray

2) “Save a little money each month and at the end of the year you’ll be surprised at how little you have.” – Ernest Haskins

3) “If you can count your money, you don’t have a billion dollars.” – J. Paul Getty

4) “A man is usually more careful of his money than he is of his principles.” – Ralph Waldo Emerson

5) “Saving requires us to not get things now so that we can get bigger ones later.” – Jean Chatzky

6) “The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.”— T.T. Munger

7) “If you would be wealthy, think of saving as well as getting.” —Benjamin Franklin

8) “A simple fact that is hard to learn is that the time to save money is when you have some.” —Joe Moore

9) “If you’re saving, you’re succeeding.”― Steve Burkholder

10) “The safest way to double your money is to fold it over and put it in your pocket.” – Kin Hubbard. 

Also read: 3 Amazing Books to Read for a Successful Investing Mindset.

Managing Money Quotes

11) “Waste your money and you’re only out of money, but waste your time and you’ve lost a part of your life.”— Michael Leboeuf.

12)  “Every time you borrow money, you’re robbing your future self.” – Nathan W. Morris

13) “If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.” —Edmund Burke

14) “The more your money works for you, the less you have to work for money.”― Idowu Koyenikan,

15) “Money is power, freedom, a cushion, the root of all evil, the sum of blessings.”— Carl Sandburg

16) Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”Ayn Rand

17) “Money often costs too much.” – Ralph Waldo Emerson

18) “There is a gigantic difference between earning a great deal of money and being rich.”— Marlene Dietrich

19) “I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.”— Robert Bosch

20) “Many folks think they aren’t good at earning money when what they don’t know is how to use it.” —Frank A. Clark

21) “Never spend your money before you have earned it.” —Thomas Jefferson

Money Mindset

22) “Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” —Johann Wolfgang von Goethe

23) “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.” – William A. Ward

24) “The more you learn, the more you earn.” – Frank Clark

25) “Do what you love and the money will follow.”— Marsha Sinetar

26) “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” -Benjamin Franklin

27) “Money is like love; it kills slowly and painfully the one who withholds it, and enlivens the other who turns it on his fellow human.” – Kahlil Gibran

28) “Money is a terrible master but an excellent servant.” —P.T. Barnum

29) “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” —James W. Frick

Make Money Quotes

30) “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”— Robert Kiyosaki

31) “The money you make is a symbol of the value you create.” ― Idowu Koyenikan.

32) “Money is always eager and ready to work for anyone who is ready to employ it.”― Idowu Koyenikan

33) “We live by the Golden Rule. Those who have the gold make the rules.” ~Buzzie Bavasi. 

Invest Money Quotes:

34) “An investment in knowledge pays the best dividends.”-Benjamin Franklin

35) “In investing, what is comfortable is rarely profitable.” – Robert Arnott

36) “I would not pre-pay. I would invest instead and let the investments cover it.” – Dave Ramsey. 

37) “October: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August, and February.” – Mark Twain.

Also read:31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

That’s all folks. Let us know which one is your favorite quote on money in the comment section below. Cheers!

How to plan your passive income the right way?

How to Plan Your Passive Income The Right Way?

How to Plan Your Passive Income The Right Way?

Hello readers! Today, we at TradeBrains, are covering a topic that might stir up a lot of interest and intrigue within our community. In recent years, we have been seeing a lot of interest among our readers to generate a second source of passive income to meet their financial goals. While stock investors do manage to achieve this when their portfolio companies shell out dividends, the reality is that for most individuals passive income requires conscious planning and periodic review.

Today’s post should help answer some of your questions and perhaps guide you on your financial journey going forward. So let’s get started.

What is passive income?

In the most general sense of the phrase, passive income usually refers to consistent and periodic income you may gain without dedicating large amounts of your time. Some people would even go so far as to say that passive income is the “income you gain while you are asleep”. 

A prudent investor would, however, understand that even though the statement puts across the idea of passive income bluntly, one would have to live in a fool’s paradise to assume that passive income actually requires no work (it requires less work, not zero work). However, by making some smart moves anyone can create a source of income to add more teeth to their financial firepower.

Why do people try to create a passive income source?

In the simplest language, passive income reduces the dependence of your lifestyle on a single income source. In other words, you ensure that you do not put all your eggs in a single basket.

Again here quite a few people may argue that the real benefit of substantial passive income is realized when one does not feel pressured for working extra hours at work to earn a meager overtime pay during uncertain times. When things go haywire in life, which happens more often than not, a second income does indeed come as a relief especially when you carry a financial burden like an enormous EMI on your housing loan.

Another reason which might have some sense is that a passive income usually acts as a force multiplier in your financial journey. You could get additional fire-power for your monthly SIPs or you could buy assets that get you even more side income all the while riding on the power of compounding to grow your wealth over time.

The motivation for generating income could also differ according to a person’s age or situation in life as well. Individuals working in senior management in private sector companies that do not pay pension might actively scout for an income post-retirement than a younger person.

What are the sources of second income?

And a comparison of skill-based and investment based sources of income.

For quite a large section of the society, the main sources of passive income are either in the form of interest gained from bank deposits or rental income from a real estate asset. However, things have changed in the last decade or so, the fixed deposit interest rates are being lowered every year and the real estate prices continue to break a new ceiling in most cities. These two powerful macro trends have rendered conventional sources quite inefficient in developing a passive income source for a young person who has just started earning.

Looking at the other options available, your second income could be either skill/service-based or investment-based. You could sell your existing skills to provide services or advice as a consultant for other people or companies that might need them. Another option could be to collect royalty income from intellectual property or any other creative services. 

But, to play the devil’s advocate, even though selling skill is rewarding, it would still require some time and effort on a consistent basis to generate a steady income. Hence, an investment based income would be more ideal if you are not able to put in lots of time or effort for any reason.

Investment based ideas could include dividend investing, fixed deposits, rental/lease income from real estate, peer to peer lending, etc. In most cases, the metric used to judge an investment based income source would be the interest rate or the yield. Although seemingly easy to execute, an investment base income strategy would require portfolio adjustments based on a periodic review of risk and reward of the portfolio.

For a list of ideas you could refer to another of our articles:

passive income quotes

How to plan your passive income portfolio?

The most important thing to consider while planning your passive income portfolio is time, the time you can invest and also the time you would be willing to wait for your portfolio to build up in value. However, prudence doesn’t hurt and it would be advisable to look at qualitative factors like repeatability and consistency while deciding on your chosen method for generating a passive income. If your passive source also happens to be scalable, then who knows? Maybe one day it might lead you to new and exciting business ventures.

The lazy way to start building a portfolio for most people with significant day time commitments would be to focus on generating steady interest income every month. Although savings schemes and fixed deposit plans have been the conventional go-to strategies, in recent times the rise in web and mobile technology adoption rates have facilitated the feasibility and importance of peer to peer lending platforms as another significant source for earning interest income.

Some people may prefer to keep a mix of side hustles and investment-based income in starting their portfolio, while others may look for only investment based avenues. Although there is no single right way, keeping repeatability and consistency as a priority would really go a long way in helping anyone build a process for growing their passive income.

6 Steps to create a passive income source

Creating a passive income is going to be tough, a lot of time will have to be spent on researching new investment sources, gaining new skills and performing tasks which can be monetized. The whole journey could be a whole lot simpler if we were to follow a process-driven approach. We, at TradeBrains, have compiled a list of things anyone could start doing right away to begin their own passive income portfolio.

1. Evaluate your time

The most important asset you have is your time so it is only reasonable to find out whether a particular side hustle is worth your time or not. In case you do not have too many hours to spare it is perfectly fine to start only on investment based income strategies.

2. Save until it hurts

Be thrifty, pay your EMIs and get out of debt as soon as possible. Try to cut corners wherever possible to get extra cash. Try cooking your own food instead of ordering every time. Only buy things you need from e-commerce websites.

3. Learn about income-generating assets and focus on buying them

Dividend stocks, REITs, government bonds, savings deposits, you name it, anything that provides you income on a regular basis should be included in this list

4. Calculate how much passive income you would need

It’s important to have a figure you can aim to act as a compass else it is possible for you to get lost and even lose motivation towards achieving your goals. A good goal is to try and generate enough alternate income to cover for your rent, food and monthly running expenses

If your annual expenses are around 6lakhs then divide the number by your expected return to get the capital you may need to save up. So if you are expecting a return of 10% from your investments, then having a capital base of 60lakhs would suffice for you to cover your expenses.

5. Grow multiple streams over time, Be diversified

Given the uncertainty of the world we live in, we simply can’t underscore the importance of diversification of income streams. Capital preservation is simply underrated in our daily conversations about money that a lot of the times we even pretend like money cannot be lost in investments. 

If we were to look back into history, after the burst of the dot-com bubble it took roughly 10 years for Nasdaq investors to just break even. Your passive income portfolio should be diversified to absorb any impact in your life in case one single income source stops churning out cash for you.

6. Be patient and don’t give up

All the above steps would amount to nothing if it is not given time to grow. Compounding works and it gives astounding results over large spans of time. Sure the wait to building wealth is always slow and long but it is definitely worth the wait.

buying a car vs Ola or Uber ride

Buying a car vs Ola or Uber ride – Which is cheaper?

When you ask anyone – ‘Which is cheaper? Buying a car vs Ola or Uber ride?’, most of the people will have a different opinion. In this article, we have shared our thoughts.

At a press conference which happened in the last Tuesday, Finance Minister Nirmala Sitharam said that the millennial prefer to go through Uber and Ola rather than buying their Car. This is because the option is much cheaper and affordable for the current generation. 

According to the finance minister, it was said that the youth today would rather spend a load of cash on booking an Uber or an Ola other than paying long term EMIs for buying their vehicle. And this statement has created an uproar among the working individuals and even the mentioned names of the automobile/transporting service system since they reportedly said that they have nothing to do with the slowdown in the current industry’s plans.  

According to recent reports, it has been said that the makers and the top-level managers of the Maruti Suzuki have noted that the existence of the Ola and Uber has been there for the past seven years. During the peak time, there was no such slowdown in the current condition of the automobile business. They have said that they do not think that these services are responsible for the slowdown in the industry in any other way.  

A personal opinion shared by the people who use ridesharing plus a car

But have you given it a thought? Is it true that traveling via Ola or Uber will help you to cut down your costs more than paying the personal loan for your Car? As the service of Ola and Uber is growing in the market, some are wondering which might be easier to hail. Getting a car of your own is undoubtedly a cherry on the top, but somehow you have to understand that getting a vehicle is not the final thing that happens here. 

You have to take care of the loan and the EMI budget of your Car so that it can be done at the right time and paid off. It will help you to ease off your burden. This complex question is rising in the minds of the millennial, but we might help you to get an insight into the matter and take it sincerely. 

Owning a car is better for long term rides, sharing a ride will be good for the short term. It is a golden rule that you should learn from this article. 

Here is the main deal. If you have a car of your own, then you can take it for a ride at any time of the day that you want. Primarily they are needed when you want to travel and cover the long term.

Car ownerships might be affordable for people who drive typically medium to long-distance or about 20km. Whereas, the ride-sharing apps like Ola or Uber happens when you want to cover a short span of about 7 km. However, these findings are based on some back details as well.

The cost of the Car that you have depends on the on-road price of that car that you have bought, the fuel price that you have to pay for it. The maintenance charges are even varied here.

To explore this part of the question, take for example that Datsun Go is for Rs 3,50,000 – 5,20,000 and it takes about a 5-year car loan with a whopping amount of 10% of the rate of interest. Over that, you need to have six years of maintenance for that Car when the full cost is covered onto the same. There are some potential car issues which can happen here as well.

For the medium or long trips-owning, a car wins

buying a car vs Ola or Uber ride

For an individual who trips on the basis of the medium or the long trip wins here. We ‘have also found the fact that owning a car is about 44% cheaper than sharing a ride if you cover the long-distance or even the mediocre ones.

Short trip rides- the cabs win

buying a car vs Ola or Uber ride

Rideshare is in for short trips. We have found out that typically people who take journeys of about or less than 10 km wins on the Rideshare here. It becomes 24% cheaper for them. If your twice-daily rides are about for 7 km, which means one ride will time up for 15 minutes, the Rideshare or the app cab will win here. Due to the lower distance of your trip, the 5-year cost plan for your Car decreases by a rate of about 25%, and it can save a lot on the fuel consumption here.

However, in the current period, the cost of an Uber or Ola is becoming cheaper by 56%. It illustrates the fact of how you use it and how much consumption is made from your side.

Also read: How much does a Wedding cost in India? (For Average Indians)

Is Rideshare the right replacement for you?

The final verdict says that Rideshare is only a feasible replacement, for the people who want to have a shorter distance of their ride. If you are a typical short distance traveler, then the Rideshare will be a viable option for you. Of course, the cost consideration which is charged varies on your location and even the individual who is paying for the same.

If you have your Car, you can take it out on a trip if you want. You can even cover the longer distance if you wish to so with the help of your Car here. Of course, there are parking tickets you have to pay, regular maintenance of your vehicle, take your vehicle to the car wish, etc. But it will be an excellent option to invest in if you are an avid traveler.

Mainly if your place of work is situated far away from where you live, it is essential that you get a car of your own. If you use the Rideshare each and every day here, it will cost you a lot.

Additionally, you can even supplement ride sharing to motorbike ride-sharing apps like Rapido. They will cost you less. And also purchasing your motorcycle is a much cheaper option for vehicle ownership.

Image of Best UPI Apps in India

5 Best UPI Apps in India in 2020 (For Android Users)

With the return of PM Modi 2.0, digital India has continued to make new progress. And UPI payments have played a big role in this movement. In this article, we will discuss the best UPI Apps in India for easy and fast transactions. But, before we start, let’s first understand what exactly is a UPI?

UPI means Unified Payments Interface. UPI payments have taken a substantial march ahead and nowadays, the mobile app store is flooded with new and innovative UPI apps in India. Briefing about UPI, it is an instant real-time payment system developed by NPCI which stands for National Payments Corporation of India which helps in inter-bank transactions by instantly transferring funds between two bank accounts on a mobile or web platform. As of 2019, a total of 142 banks are active on UPI with a monthly volume of over 799.5 million transactions. And, this has resulted in a total transaction value of ₹1.33 trillion as of March 2019 which in increasing day after day.

Because of this advancement in UPI payments, money can now be sent to anyone across the nation within no time.

Anyways, not all apps listed on the play store are equally good for making UPI payments. Many times, the interface of some of these UPI apps in India may be hard to understand initially. Therefore, in this post, we have handpicked the best UPI apps in India that are easiest to use and definitely worth checking out.

Best 5 UPI apps in India:

1. PhonePe – UPI Payments, Recharges & Money Transfer

UPI Apps in India- PhonePe

PhonePe stands first in our list of best UPI apps in India. It is a revolutionary app which made the Indian population start trusting and moreover making online mobile payments. PhonePe not only helps in making UPI payments but users can also recharge, make online bill payments, order food, shop, etc. all in just one app.

PhonePe also provides various offers, rewards, and cash back to its customers. Having one of the simplest interfaces with the safest and fastest online payment experience in India, PhonePe is definitely better than most of the other UPI payment apps or internet banking services.

Google Play Store Rating: 4.5/5 with a total of 33,89,149 reviews

Here’s a direct invite link to download PhonePe.

2. Google Pay (Tez) – A simple and secure payment app

UPI Apps in India- Google pay

Google Pay, formerly known as Tez App, stands second in our list of best UPI apps in India. This app has accumulated a huge customer base in a very small time. And obviously, having a big brand name of ‘Google’ has helped this app to build trust among the new and existing customers.

Using Google Pay, users can send money to friends, pay their bills, shop online, recharge, or pay at the nearby café, etc. through the secure payment by Google.

Another most enjoyable part of using Google Pay is the “Scratch cards”. Whenever the users make a new transaction, they are awarded a gift card in the form of the scratch card. After scratching the card, users can earn a gift in the form of money which directly gets credited into the registered bank account. Anyways, you won’t earn a Scratch card on every transaction as there are a minimum value and number of transactions predefined by the app. However, if you’re lucky, you may get a reward of up to Rs 1 lakh.

Google Play Store Rating: 4.4/5 with a total of 27,76,391 reviews

Here’s a direct invite link to download PhonePe.

3. Paytm – BHIM UPI, Money Transfer & Mobile Recharge

UPI Apps in India - Paytm

Paytm is a quite well-known mobile payments app in India. Along with Paytm Mall, it also offers Paytm Wallet and Paytm UPI (was introduced in the year 2017). In simple words, we can call it a mega store due to the variety of products and services provided by this app.

Paytm users can perform almost each and every activity related to online payments on its app. And that’s why it is certainly the most used payments app and is third in our list of best UPI apps in India.

From making online Payments to buying household items, groceries, IRCTC train ticket booking, bus & flight booking, movie tickets, LIC premium payment, metro card recharge, buying gold, making loan payments, paying e-challans & more, everything can be done on this app.

Google Play Store Rating: 4.5/5 with a total of 61,27,939 reviews

Also Read : 7 Best Mutual Fund Apps for Direct Investment

4. Freecharge – Recharges & Bills, UPI, Mutual Funds

freecharge UPI App

Freecharge is another online payment mobile app in India which provides features like Mobile Recharges, bill payments, sending or receiving money through UPI– after creating BHIM UPI ID & linking the bank account. Moreover, because of its simple interface, everything seems quite easy for making UPI payments.

Besides, Freecharge app also provides the facility to invest in Mutual Funds, making investments with SIPs, booking movies tickets, buying food, shopping, purchasing travel tickets, etc and that too with an additional cashback and discounts.

Google Play Store Rating: 4.1/5 with a total of 11,21,313 reviews

Also Read: 7 Best Stock Market Apps that Makes Stock Research 10x Easier

5. PayZapp – Recharge, Pay Bills & Shop

PayZapp UPI App

HDFC Bank PayZapp is the fifth app in our list of best UPI payment apps in India. It is a complete payment solution giving you the power to pay in just One Click.

PayZapp is used to make online Recharge, Bill Payments, BharatQR Payments, booking travel tickets, Shopping, obtaining movie tickets, buy groceries and more. It supports payment by mVisa QR, MasterPass QR, and Rupay QR and is available to customers of all banks. Overall, PayZapp is convenient, fast and secure UPI payments apps in India and definitely worth checking out.

Google Play Store Rating: 4.0/5 – with a total of 2,82,240 reviews

5 best upi apps in India

Bonus: A few additional UPI apps in India

  • MobiKwik – Recharge, Bill Payment, Instant Loan, UPI, Insurance

    Google Play Store Rating: 4.4
    With a total of 12,03,032 reviews

  • BHIM SBI Pay: UPI, Recharges, Bill Payments, Food

    Google Play Store Rating: 4.4
    With a total of 2,63,337 reviews

  • Kotak – 811 & Mobile Banking

    Google Play Store Rating: 4.4
    With a total of 4,58,209 reviews

  • Pockets ICICI -UPI, Wallet, Bharat QR

    Google Play Store Rating: 4.1
    With a total of 1,47,135 reviews

  • JioMoney Wallet

    Google Play Store Rating: 4.3
    With a total of 1,86,001 reviews

That’s all for this post. Let us know which one is your favorite UPI payment app in India in the comment section below. Cheers!

List of 10 Richest Person in India cover picture

Top 10 Richest Person in India in 2019

Top 10 Richest Person in India (Updated: Sept 2019):

India is widely known for its culture and diversity. With a population of around 1.33 Billion, India has set a high standard for itself in the world with its rising economy and annual growth rate. The fields of imports and exports have let India maintain stability in the market over the years.

Stemming from such fruitful opportunities, India is home to many millionaires as well as some billionaires who have put India on the world map as a fast-paced and rapidly progressing nation. These people have not only created a wide window for profitability but they have also helped the nation raise the bar for total GDP growth. They are in the list of richest person in India as well as in the world.

Here, we take a look at the top 10 richest person in India:

1. Mukesh Ambani:

Mukesh Ambani's Image - Richest Person in India

This name needs no introduction in India. Known by everyone, Mukesh Ambani is India’s largest business tycoon with a penchant for constant improvement. Mukesh Ambani stands 1st on the list of Richest person in India. He is the son of Dhirubhai Ambani and Kokilaben Ambani. He is also the Chairman and Managing Director of the Reliance Industries Limited which is one of the Fortune 500 companies in the world.

Mukesh Ambani’s net worth for the year 2019 was estimated around US $50 Billion and has been ranked number 13th on the Forbes World’s Billionaire list. His innovative ideas with regards to the Indian Telecommunications Sector (Reliance Jio Infocomm Limited) along with his other business prospects such as Reliance Industries Limited (Oil and Gas) have helped him attain the highest spot in our list.

2. Azim Premji:

Azim premji's image - Richest Person in India

Second on the list of the Richest Person in India is Azim Premji. He is known as one of the most generous philanthropists in India. He is the founder of Wipro (Western India Products Limited) which is one of the major outsourcing companies in India.

As of 2019, Azim Premji’s net worth is estimated to be around US $22.6 Billion. With the most recent development in their business with Alight Solutions of Illinois whose deal is worth US $1.6 Billion, Wipro has quickly improved its number and credibility over the years.

3. Shiv Nadar:

shiv nadar's image - Richest Person in India

Shiv Nadar comes from a humble background from Tamil Nadu but he has a made a big name for himself being the founder of HCL Technologies.

His net worth for the year 2019 has amounted US $16.4 Billion. HCL Technologies is the 4th largest software provider company in India and thus, it has created a credible name for India in the world market. His education endeavors such as Shiv Nadar University which provides quality education, are his ways to improve the Indian education system.

Also read: Top 10 Companies in India by Market Capitalization.

4. Lakshmi Mittal:

Lakshmi Mittal's image - Richest Person in India

One of the most well-renowned names in the steel industry is the name and fame of Lakshmi Mittal.

With net worth amounting US $13.6 Billion, Lakshmi Mittal has catapulted his company Mittal Steels to the top of the trade along with a profitable merger with Arcelor (France) in the year 2006. Now, ArcelorMittal has now started acquiring businesses that have failed or been bankrupted, in order to improve business prospects for themselves and other companies as well.

5. Uday Kotak:

Uday Kotak's image - Richest Person in India

Another prominent name in the richest Indians list includes the name of Uday Kotak. He is the Managing Director of one of the largest customer banks in India – Kotak Mahindra Bank.

His net worth is valued at US $11.8 Billion with constant mergers for improved profitability. His acquisition of ING Bank’s Indian operations in the year 2014 opened newer horizons for profit-making for the bank and for Uday Kotak himself.

6. Kumar Mangalam Birla and Radhakrishna Damani:

Kumar Mangalam Birla and Radhakrishna Damani's image - Richest Person in India

Although into separate business lines, these two have taken the Indian business world by storm through their profitable mergers and acquisitions over the years.

K M Birla has been with the Aditya Birla group for a while now and his unparalleled business sense has valued his net worth at a whopping US $ 11.1 Billion.

Radhakrishna Damani, the founder of D-Mart stores, has been an active investor in numerous ventures such as VST Industries (tobacco relevant), United Breweries (beer relevant) amongst many others with the same net worth as K M Birla at US $11.1 Billion.

Also Read: D-Mart Founder- RK Damani Success Story [Bio, Facts, Net worth & More]

7. Cyrus Poonawala:

Cyrus-Poonawalla's image - Richest Person in India

One of the most environment friendly philanthropists in India and his company Serum Institute of India is one of the largest creators of vaccines in the world.

His net worth is valued at US $ 9.5 Billion and he ranks No. 7 in our list. His company is known to produce around 1.5 Billion vaccines doses for a number of diseases. His son’s CSR venture, Adar Poonawala Clean City Initiative in Pune, has won a ton of appreciation from various business leaders.

8. Gautam Adani:

Gautam Adani's image - Richest Person in India

Being the chairman of Adani Group, he holds a rightful spot in our richest Indians list.

Gautam Adani has a net worth of US $ 8.7 Billion and his vast empire includes absolute control of one of India’s most vital ports, the Mundra Port along with investments in other fields such as power generation, real estate, the commodities market, etc.

Also Read: 3 Insanely Successful Stock Market Investors in India that you need to Know.

9. Dilip Shangvi:

Richest Person in India - Dilip Sanghvi's image

The pharmaceuticals industry is one of the most profitable in India. Therefore, Dilip Shangvi, founder of Sun Pharmas, deserves a mention in our list. His net worth is US $ 7.6 Billion which contributes to the ownership of India’s most reliable pharmaceutical companies.

10. Nusli Wadia:

Nusli Wadia's image - Richest Person in India

Lastly, the name Nusli Wadia is infamous in India. With him being the Chairman of Wadia Group, his net worth has been estimated to be around US $ 6.4 Billion. His company includes powerful and highly profitable names such as Britannia Industries (FMCG), GoAir (Airlines), amongst others. 

Bonus: Infographic on top 10 richest person in India

10 richest people in India

Feel free to share/embed the above infographic. Just give the credits to Trade Brains. Cheers!! 

tax saving ELSS Equity linked saving scheme

Should you invest in multiple Equity Linked Saving Schemes (ELSS)?

Equity Linked Saving Schemes or ELSS Fund is a variety of Equity Mutual Fund where the majority of the corpus is invested in equities and equity-oriented instruments. It is a tax saving Mutual Fund where your investments are locked in for 3 years.

ELSS are multi-cap equity funds which invest at least 4/5th of their assets in equities. Such stocks could be small-caps, large-caps, or mid-caps. ELSS funds can invest in the companies of any sizes. Apart from investing in the stocks of private companies, these funds also invest in the Government undertakings to a significant extent.

Note: If you are new to ELSS, you can read our previously published article here.

ELSS: A tax saving instrument

Previously people used to find FD, NPS, PPF, and ULIP as effective tax saving schemes. Nowadays, the taxpayers are feeling more interested in investing their savings in ELSS funds for availing tax benefit.

ELSS is not only having the lowest lock-in period but it also yields higher returns than the other conventional tax-saving instruments. If you are going to redeem your ELSS investments after 3 years, your capital gain will be taxed @ 10% if it crosses Rs 1 lakh.

As per section 80C of the Income Tax Act, 1961, you can get the benefit of tax deduction in a financial year up to Rs 1.5 lakhs. ELSS or Equity Linked Saving Scheme is a prescribed instrument under the said section. So, you can easily save your tax liability up to Rs 46, 800 (Tax plus Cess on such Tax).

Investing in ELSS for generating long-term wealth

If you are looking to create long-term wealth but willing to accept the risk, let me tell you that equities or equity-oriented funds are the best for you. Equities can fetch you substantial returns if you are willing to stay invested for the long term.

You can choose any form of Mutual Fund i.e. a small-cap fund, large-cap fund or a mid-cap fund. But, neither of the funds can provide you with tax benefits which ELSS can give. Moreover, if the markets seem to be bearish or moving sideways in the short run, you might feel like redeeming your units immediately.

If you have invested in ELSS, you can’t withdraw your investments before the expiry of three years. In that way, investing in ELSS ensures that you stay invested for a long-term irrespective of short-term volatility. So, if you are interested in staying invested for a considerably long period of time, ELSS is definitely an ideal investment option for you.

Should you go for only one ELSS or multiple?

In an ELSS fund, the underlying portfolio consists of around 70 to 100 stocks. Around 5,000 stocks are listed in the Indian markets. Out of such stocks, the top 250 of them contributes towards 90% of the total market capitalization. So, if you are investing in 6 ELSS funds, it means you are indirectly investing in around 600 stocks. This implies that you will end up investing in the stock market as a whole. Therefore, you are virtually removing all possibilities to beat the stock market.

Investing in excessive ELSS funds means you are indirectly looking to form a market portfolio. So, if you are looking to earn what a market index earns, you can opt for such a portfolio. It is highly probable that you won’t earn more than what the market earns but you are also not going to earn less than the same.

There is another limitation of investing in too many ELSS funds. Investing in an excessive number of ELSS will lead to portfolio overlapping. It means that you will be investing in the same stocks through multiple schemes. This would unnecessarily increase your expense ratio instead of yielding the benefit of diversification.

Well, if you are simply looking to invest in the market portfolio, you should consider investing in an Index Mutual Fund or an Index ETF. Through the passive funds, you will be investing in the market indices at a lower cost.

Let us discuss how the situation might look like if your portfolio consists of a single ELSS. If you own only one ELSS fund, it indicates that you have not diversified your investments at all. It seems to be a risky portfolio as you will be exposing it to the risk of underperformance of the Fund Manager. It is of no doubt that you have a higher chance of beating the market if the underlying assets of your scheme consist of top-performing stocks. But, if the market witnesses a downfall, your portfolio will crash down at a higher rate.

An ideal number of ELSS funds for your portfolio

Now, if you ask how many ELSS funds you should have in your portfolio, the ideal number could be either two or three. An ELSS fund is a multi-cap equity fund. Therefore, if you have chosen two to three ELSS funds in your portfolio, you can certainly form a strong portfolio in all possible ways.

Through a single ELSS fund, it is not possible for you to cover a substantial number of top equities. The likeliness increases if you add one or two more ELSS funds in your armory. If your investments can be spread across a good number of profitable stocks, you are going to make significant returns in the days to come. Although your portfolio expenses in the form of equity ratio will go up, the returns are high enough to cover the same comfortably.

We have discussed earlier that too many funds would lead to portfolio overlapping. But, you would not experience the same if you create your portfolio with two to three funds. Investment in a limited number of schemes is not going to capture the major portion of market capitalization. Therefore, you are not forming a portfolio which can replicate the market. So, whatever you will be earning will supposedly beat the market.

Also read:

Closing thoughts

No assurance can be given whether a portfolio consisting of two to three ELSS funds can alone serve all your wealth generation and tax-saving requirements. Forming a portfolio for an individual is dependent on several factors. If you are an investor with a high-risk appetite you can team up a small-cap equity fund with a ULIP. On the other hand, if you are highly risk-averse, you can go for a debt fund with a PPF.

Through this article, we have tried to give you a general idea regarding the number of ELSS funds which should be there in your portfolio. If you are seeking an investment option which combines wealth creation and tax saving, ELSS is your answer. Otherwise, if you have any specific requirements with respect to profitability, liquidity, and tax benefit, you are free to create your own portfolio accordingly.

3 Uncommon Alternative Investments Option in 2019 cover

3 Uncommon Alternative Investment Options in 2020

It is no secret that diversifying is the key to success for investing and as humans we love our options! Many investors assume diversifying means investing in different types of securities like bonds, stocks, and options. However, the top investors take the term in their most exclusive form and invest in truly diversified assets. This brings us to alternative investments.

What are alternative investments?

Outside stocks and bonds, there is a world of investments that we can choose from. Alternative investments are those investments that vary from the traditional forms of investing in terms of liquidity, how they are regulated and the way they are managed. Having a mixed basket of investments is very beneficial for an investor especially during a downturn. People who have experienced a recession or inflation will tell you that investing in only one type of asset will result in great losses.

A few examples of alternative investments include venture capital, real estate investments and even gold efts. These assets are usually more illiquid than traditional investments and have little to no correlation with stocks and bonds. However, alternative investments are less regulated than traditional stocks which are under the control of organizations such as FINRA, SEC in the U.S or SEBI in India. On the flip side, although they are not controlled investments, the performance of alternative investments is difficult to measure. This is because, unlike stocks, there is limited information available on alternative investments, making them difficult to assess.

Types of alternative investments

Alternative investments is a mindset approach to investing rather than a specific investment. There are various alternative investments out there and investors can choose the ones that best suit their management style. A few investments include:

1. Private equity

Investing in the stock market is great but not all companies are listed on the exchange. There are more private companies than public companies and the companies often take on an investor to help fund their growth. Private equity is the broad term to describe the spectrum of investors in the private market. The funds raised by the private equity firms will be invested in private companies, many of which include promising startups. The capital raised is used for organic and inorganic growth of the company. The amount invested is then returned back to the investors during an exit event such as the private firm issuing an IPO to go public or an acquisition or merger.

To assess the performance of this alternative investment, many investors use the internal rate of return (IRR) however this does not take into consideration the interim or negative cash flows. In recent years, this formula evolved to the Modified IRR which is a more holistic approach to analyze the performance of a private equity investment.

2. Collectibles

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Collectibles is the broad term used to describe items such as cars, antiques, paintings and various vintage items. In other words, they are items that have a low intrinsic value. Many people place a high value on these items, but unlike stock and bonds that can generate profits and income, the value of the collectibles is based on the speculations of buyers and sellers. An investment into collectibles can help diversify your portfolio but you need to have a good understanding of the items you are collecting to reduce risks.

One of the best ways to invest in collectibles is to have a personal interest in what you are collecting. This will help you develop an interest in the market and gain expertise on the items you are investing in. Items collected this way will give the collector personal satisfaction of the items they own whether or not they receive the expected return.

It is important for investors to remember that collectible items have a long holding period. While stocks and shares can be sold at a whim, depending on market conditions, collectibles, on the other hand, need to be ‘held’ by the owner for an extended period of time. This is because collectibles tend to gain value over time and selling them too quickly can only result in high transaction costs.

While collectibles can help diversify your portfolio, an investor requires extensive knowledge in the market to make the right decisions. But collectible investing is great because not only is it an alternative investment but it is also a hobby for many!

3. Hedge funds

A hedge fund isn’t a single investment but rather a pooled investment that is managed by an investment advisor. A hedge fund raises money from investors and uses the money to buy up entire businesses, either through a takeover or by investing in the business to improve operations. There are also hedge funds that specialize in real estate or other assets such as patents and trademarks.

Investing in hedge funds can help an investor diversify their portfolios because hedge fund managers used a variety of strategies when investing. This includes arbitrage, distressed assets, and macro-trends. They also take a Leveraged approach to investment which is using borrowed money for investment.

Hedge Funds vary from private equity investments because they invest in public companies, thereby providing more liquidity and making it easier for investors to take out their money if required. A report by the World Economic Forum states that in the U.S investments in hedge funds represent 40% of total alternative investments.

Also read: What is a Hedge Fund? And How do they operate?

Closing Thoughts

Diversification is the mantra when it comes to earning high returns on your investments. While the stock market allows investors to assess the performance of their stocks and provides liquidity, it is not always the safest investment as the markets are constantly volatile. This has led to an increase in the popularity of alternative investments in the last couple of years.

Historically, however, alternative investments are more popular among high net-worth individuals as they require a large initial investment and cannot be converted to cash quickly. Nevertheless, alternative investments have numerous advantages such as portfolio diversity and active management of funds.

Alternative investments are now an option for all classes of investors and not just the wealthy ones. But these investments requires a lot of research and study and investing in them without a thorough assessment can be incredibly risky.

What is National Pension Scheme (NPS)? Advantages, Tax Benefits & More cover

What is National Pension Scheme (NPS)? Advantages, Tax Benefits & More

NPS or National Pension Scheme is a pension plan which was initiated by the Indian Government in January 2004. It was primarily introduced for those Government employees those who joined employments in 2004 and onwards.

Subsequently, the Government of India wanted to develop the habit of savings among the salaried Indians, specifically for retirement. Therefore, from the month of May in 2009, NPS was made available for all employed Indians. PFRDA (Pension Fund Regulatory and Development Authority) is the regulator of NPS in India.

How can you start NPS?

If you are a salaried Indian resident, aged between 18 to 60 years, you are eligible to invest in NPS. You can open your NPS account with any entity called the Point of Presence (POP). POPs mostly include banks and other financial institutions. The authorized branches of a POP are called Point of Presence Service Providers (POP-SPs). POP-SP acts as the collector of its POP.

In order to enroll in an NPS account, at first you have to make an application in a prescribed form. Next, you have to furnish the documents required for complying KYC norms. Once your application is processed, the Central Record-keeping Agency (CRA) will send you your PRAN. After that, you have to pay the minimum account opening fee along with the management fee to activate your NPS account.

Various types of Accounts in NPS

There are two types of accounts in NPS, which are Tier I account and Tier II account.

Tier I account is mandatory for all subscribers of NPS. If you are a Government employee, you are required to contribute 10% of your Basic Salary plus D.A. in NPS. The Government of India also contributes an equal amount in the same account. A minimum of Rs 500 per month is required to be contributed in your NPS account, i.e. Rs 6000 in a year.

In case you are a private employee, you get the option of choosing between NPS and EPF. If you choose NPS, you have to contribute an amount equal to 10% of the sum of your Basic Salary and DA. Your employer will also contribute an equal amount in your account. You can find your employer’s contributions towards your NPS account in Form 16.

Tier II account of NPS is a savings account and you can withdraw money from it anytime. Neither your employer contributes any amount in this account nor do you get any tax exemption on such contribution made. You have to pay Rs 1,000 to open this account. In your subsequent contributions, you have to pay a minimum of Rs 250 on each occasion. Further, every year end, your balance in this account should be at least Rs 2,000 to keep your account operation.

How does NPS work?

An NPS invests in Equities, Corporate Debts, and Government Securities. You can choose any from the Active, Auto or Default plan. In Active plan, maximum 50% of your investments can be allocated to Equities.

In the Auto plan, until you reach 35 years of age, maximum investments that can be made in Equities and Corporate Debts would be 50 and 30%, respectively. After that, in the next 20 years, the investments in Equities and Corporate Debts go down every year by 2 and 1%, respectively.

In the Default plan, maximum 55% in Government Securities, 40% in Corporate Debts, 15% in Equities, and 5% in Money markets can be invested out of the contributions made. If you are a Government employee, please note that you can only opt for the Default option.

The financial assets of your NPS account are managed by an established Fund Management Company. You can choose your fund manager from any of the following:

  1. ICICI Prudential Pension Fund.
  2. LIC Pension Fund.
  3. Kotak Mahindra Pension Fund.
  4. Reliance Capital Pension Fund.
  5. SBI Pension Fund.
  6. UTI Retirement Solutions Pension Fund.
  7. HDFC Pension Management Company.
  8. DSP BlackRock Pension Fund.

How your NPS account provides you with pensions?

When you subscribe to an NPS scheme, you are provided with a Permanent Retirement Account Number (PRAN). While you work, NPS accumulates your savings in your Permanent Retirement Account (PRA).

When you retire, your savings in the PRA will be used for providing you with pensions throughout your retired life. When you retire from your job after reaching a certain age, NPS allows you in withdrawing up to 40% of the corpus in your PRA. The balance corpus continues generating pension amounts for you annually.

You should also keep this in mind that you can only withdraw from your NPS account after three years from your subscription date have been completed. You can withdraw funds only to the maximum of 25% of the amount contributed by you. Furthermore, you are allowed to withdraw to the maximum of three times during your subscription tenure.

Also read:

Benefits of investing in NPS

When it comes to investment management, NPS provides you with a certain amount of flexibility. Your savings in NPS is operated and managed by a private investment entity. If you are dissatisfied with your chosen fund manager, you can shift to another Fund Management Company.

Apart from that, NPS is a safe investment as it is regulated by PFRDA, a statutory body of the Indian Government. NPS has been in India for around 15 years and it has consistently yielded between 8 to 10% returns every year.

One of the greatest perks of investing in NPS is that it provides huge tax benefits to its subscribers. Whatever you contribute to your NPS account is eligible for tax benefit up to Rs 1.5 lakh u/s 80C of Income Tax Act, 1961 for every Financial Year.

Further, a tax benefit of extra Rs 50k out of your employer’s contributions is allowed u/s 80CCD1B for every Financial Year. NPS has an EET status like PPF. This means the investments, returns, and redemptions are all eligible for tax benefits. You can read more on taxation of NPS in this blog.

Closing Thoughts

You must have heard that one should not put all the eggs in a single basket. Diversification is the key to success in the financial market. Diversifying your corpus is difficult if you directly invest in the market. This is because you would require a huge amount of money to create a well-diversified portfolio.

Investing in Mutual Funds can sort this problem to a huge extent. But, it is not going to be of much help to you if you lack the knowledge of picking the right Mutual Fund scheme for your financial needs.

NPS overcomes this shortcoming of Mutual Fund. Here, you don’t need to analyze a plethora of schemes by yourself. You just require picking your desired fund manager who would handle all your investments as per your chosen NPS plan. The beauty of investing in NPS is that you don’t need to possess any practical knowledge of the stock market.