Friday, October 24, 2014

Compute EFFECTIVE Interest Rate in excel instantly

What does it exactly mean when we say that a bank fixed deposit, or say any investment, gives 10% interest?

It means that if I invest Rs.1000 in this scheme, I will get an interest income of Rs.100 after one year.

Now suppose there is another scheme, which also offers 10% interest... with only one small difference... it pays out interest after every 3 months. In other words, I now get Rs.25 after every 3 months. So in a year, I again receive a total interest income of Rs.100.

Even though I earn same money from both schemes, 2nd scheme is naturally a better one. Why?

Wednesday, October 22, 2014

Are you financially FIT or FAT, check out now!

Nowadays, far too many people suffer from food and debt overindulgence. Obesity, both physical and financial, has assumed epidemic proportions. While excessive fat is bad for your physical health, excessive debt is bad for your financial health.

When you are physically obese...
... extra fat in your body quickly saps your energy and you feel tired too soon
... risk of hypertension, heart trouble, diabetes etc. increase manifold

Tuesday, October 21, 2014

Now your Will too can be made online

After banking, insurance, investing, shopping, ticketing and many more things that you can nowadays do online, even writing your Will goes electronic. A couple of companies have recently launched online Will-preparing facility.

Many people in India are still ignorant of the fact that nomination is not a Will. Therefore, once they have completed the nomination formalities for the various assets that they own, such as property, fixed deposits, insurance policies, shares, mutual funds, etc., they believe that their job is done.

Given the importance of Will in ensuring that your loved ones do not face any serious difficulties and delays in your absence, you must write one... immediately. 


Monday, October 20, 2014

Why do rich have zero money in bank accounts?

You will find practically no money in the bank accounts of most millionaires and billionaires. Strange. Isn't it?

Bank is probably one of the lousiest places to keep your money. Unbelievable. Isn't it?

However, reasons for this are quite plain and obvious.

First, you get so little interest on your bank deposits that it almost sounds like a cruel joke.


Friday, October 17, 2014

Don't buy Gold this Diwali

Be a non-conformist. Break the tradition. This Diwali don't land up at your jewellers' shop with loads of cash.

Two reasons, why I make this apparently shocking suggestion.

One, of course, is "doubtful" ability of gold to deliver "meaningful" returns over long-term. Over the last 2-3 decades, average returns from gold investment have been around 6-7% p.a. [In comparison, long term equity investors have gained around 16-17% p.a. But let's not get into equity vs gold debate. I have already discussed why Indians love gold.]

Thursday, October 16, 2014

Simple trick to calculate SIP returns in excel

Systematic Investment Planning (SIP) is by far the best way to invest in mutual funds... especially equity mutual funds.

However, many investors often get confused when it comes to calculating how much they have actually earned from their SIP investment.

Simply dividing the total gains by the total investment is incorrect. It does not account for the different no. of days that each SIP amount has been invested for.

However, using excel sheet and a very simple strategy — known as Weighted Average Method — you can calculate the exact returns of your SIPs in just a matter of minutes.

Tuesday, October 14, 2014

Recent personal finance news items you make like to note

Some new developments w.r.t. to our day-to-day money matters that may be of interest to you, are listed below.

Number of free ATM transactions
I had earlier warned that henceforth you must count your ATM visits or else pay for it.

Sometime back RBI had announced reduction in the no. of free transactions at the ATMs. With effect from Nov 1, 2014, customers in the six metros cities viz. Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad can make only three free transactions at "other bank ATMs". This no. of five earlier.

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