2011 in review

The WordPress.com stats helper monkeys prepared a 2011 annual report for Samapan.

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 19,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 7 sold-out performances for that many people to see it.

Click here to see the complete report.

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10 Family Budgeting Misconceptions demystified

Let’s put on our thinking cap!

Depositing our pay cheques in bank and using the credit and ATM card for spending seems easy. However keeping the track of your income and expenses, to get full value for your money is possible only with budgeting. Budgeting helps most of us to keep track of our income and spending and not overspend.

In practice 10 budgeting myths retard the savings of a lifetime. They are:

I earn a lot and need not budget:

This requires a change of perspective. Michel Jackson lived like a king but died awash in $400 million debt.  Budgeting by watching your spending pattern helps trace unnecessary     expenses on clothes or eating out, and help you save for a future or for a much wanted dream holiday.  So how much you earn has got less relevance. What is more important is budgeting. Proper budgeting can make a low income earner to retire richer and overspending can make a high income earner a pauper.

I hold a secure job and see no reason to save:

This does not hold well today with large corporations going in for labor layoff to save costs during recession. Small corporations also put you at a risk with the death of the owner or the company going into losses.

This insecurity demands caution to save for spending during such periods when you are caught unaware, with an emergency fund coming handy.

I am poor in calculations and cannot budget:

With useful tools like spreadsheet that help account for expenses and income earned make the budgeting much easier.  A look at the spending helps avoid unnecessary expenses to budget and save in future. If you are interested one can easily learn budgeting. So if you say ‘I don’t know how to make a budget’, it shows your level of interest and willingness to save for a secured future.

I am lucky; I will never be short of money:

However your ability in meeting high bills and other unpredictable expensive events like life threatening accidents, or a major surgery without experiencing shortage of money may not be always true.

So better save and be prepared to face unpredicted contingencies and then use the savings for something else that you may consider desirable.

I pay my bills promptly and do not need budgeting:

Congratulations I appreciate your credit worthiness, but going into negative balance is also quite easy. You may be self disciplined. It doesn’t mean that you need not make a budget. Preparing a budget makes you much more disciplined and spend consciously. So budgeting with saving helps avoid going into negative balance or overdraft.

Budgeting could lead to deprivation:

Budgeting is not frugal living and foregoing all pleasures like a movie a month and eating out once a week, but it just not allowing your earnings to be not overtaken by your expense.

Everyone is planning to save, planning to invest, but do we have a well thought out plan for spending. A smart spending plan only can lead you to save more.

There is no need to feel deprived with budgeting; it just means saving a percentage of your income spent unnecessarily to have a secured future.

I have small wants and find no need to save:

This need not be a stable attitude in human nature, with you wanting to take advantage of certain financial trends in the market like buying house or land at cheaper rates, or investing at higher rates towards building a bigger retirement corpus.  Hence budgeting helps to save when you do not want money for a time when you could profitably use it.

Your wants may be small but basic needs like food, shelter, and clothing are becoming costlier with inflation. Also you need to take into account your health care needs of the future.

I get rises, bonus and tax refunds and find no need to budget:

I think you have been lucky all these years, however these benefits are highly unpredictable and placing ones hopes fully on them is futile. It is better to budget and save than depend on unpredictable benefits like bonus, raise and tax refunds. The recent recession has taught us a lesson to all of us which we should not forget easily.

Budgeting and your future

Take charge of your future now. Budgeting is the first step towards controlling your financial destiny. Don’t let your unconscious spending habits decide your financial destiny.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.
Views expressed on this website are of individual writers and NOT of the website/blog-owner. Individuals are advised to exercise personal judgement before responding, using or contacting to any post/writer/organization.

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How to Get out and Stay out of Debt?

11 ways to get out of debt and stay out of debt!

Guest Column: Expert-Speak

In spite of steady, regular income there are so many individuals who live pay cheque to pay cheque, carry their credit card outstanding, and fail to save anything for retirement. If you are one of them, now is the right time to take action to come out of debt and stay out of debt. It is not only possible; it is unbelievably achievable.

  1. List down all your debts

    You need to take stock of all your loans. It could be credit card due, personal loan, car loan, housing loan, education loan, loan from FD, loan from insurance policies, loan from your employer and so on. For each and every loan you need to note down how much you owe, the present interest rate, EMI, Number of months to be paid.
  2. Negotiate for lower interest rates

    If you could negotiate the interest rate and bring it down then you can come out of debt faster. Most of the credit card companies come forward for negotiation if you really show interest in repaying. They need not run after you to collect the debt. It will reduce their expenses. So they will be happy to negotiate. Balance transfer offers from credit cards are also a way to reduce your interest rate.
  3. Refinancing and consolidation

    Replacing a loan with another is known as Refinancing. The option of  refinance should reduce your interest rate and it should bring down the time you are in debt. But most often people go for refinance that provides them lower EMI by increasing the time they stay in debt.
  4. Categorise your debt

    Housing loan can increase your net worth over a period of time. Housing loan gives you tax benefit too. For a business man car loan provides some tax benefit. Based on these factors a debt needs to be categorized. This will help us in comparing different loans.
  5. Prioritize your debts

    After sorting out various loans, now we can comfortably prioritize the loans. Obviously this will be based on the interest rates and tax benefits. At times paying off a small loan first can give you a lot of motivation to get out of debt.
  6. Creating and Executing a Debt payoff plan

    You need to create a debt payoff plan with different scenarios. So that you can find out how some more savings or a different repayment order will help you to get out of debt faster. When creating a plan, you need to choose one which is comfortable to your attitude. Otherwise, you may not execute it properly.
  7. Refrain yourselves from applying for fresh loans

    You need to make a vow that you will not be adding any fresh loans, till you come out of all your debts completely. Think for a moment, how you will feel when you become debt free. This will provide you a lot of motivation to come out and stay out of debt.
  8. Postpone buying major assets

    Buying a property or any other assets needs to be postponed till you get out of debt. With your new ownership comes the new, probably large and unpredictable expense. This can make you deviate from your debt payoff plans and at times the consequences could be uncontrollable.
  9. You stop using your credit card

    There are two groups. One group of people uses the credit cards responsibly. That is they will repay the credit card dues in full when they receive the bill. The other group will pay the minimum amount due and carry forward the balance amount due. If you belong to the second group, you need to stop using credit cards temporarily. Take out and keep your credit cards in the locker. Once your financial situation and buying habits improve, then you can start using your credit cards again.
  10. Change your spending habits.

    Being in debt obviously means that you have been living beyond your means. The solution is very simple. Spend less than you earn and you will get out of debt soon. You need to change your spending habits. Then only this simple solution will be achievable. If you buy things you don’t need, you’ll soon sell things you need. Don’t save what is left after spending; spend what is left after saving.
  11. Involve all your family members

    You need to inform all your family members and dependents about your debt status. Then you will be able to take decisions with much more clarity. Moreover, if your family members know about your debt, they will also change their spending habits and support you in getting out of debt faster.

Consider the postage stamp: Its usefulness consists in the ability to stick to one thing till it gets there. Similarly, you need to stick to your debt pay off plan till you get out of it.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners(www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.
Views expressed on this website are of individual writers and NOT of the website/blog-owner. Individuals are advised to exercise personal judgement before responding, using or contacting to any post/writer/organization.

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10 Commandments of Successful Investing

Guest Column: Expert-Speak

Let me unveil the 10 commandments of successful investing today. These commandments strictly followed can make you a successful investor; make you richer. The successful legendary investors like Benjamin Graham, Warren Buffet have followed these principles. So why not you?

1. Decide your investment strategy and stick to it: 

An investor may invest in SIP and when the market continues to fall he will discontinue his SIP. But market crash is the right time to continue your SIP. Because, during the market crash you will get more number of units and the averaging works out in your favour.

Another investor may decide 50:50 as his debt:equity asset allocation ratio. When the market goes up he may want to invest more in equity and hence he may change his asset allocation to 30:70. Actually when the market goes up one needs to reduce his equity exposure to bring the portfolio back to his predetermined asset allocation ratio.

Don’t change your strategies midway. You know what is best for you and this applies to deciding with foresight the ideal investment strategy for you. Once the strategy is set, do not fluctuate in your decision each time you decide to invest. This would only mean losses instead of profits.

2. Conduct your own research on stocks: 

It is not advisable to just depend on hear say and decisions of your neighbor, friend, relative or tips from the media or your stock broker and invest in stocks. It may seem easy but could amount to gamble. Being an informed investor, investing your hard-earned money needs you to ensure if the investment would meet your financial goal. This could be done through research from various sources.

3. Learn to overlook short-term fluctuations:

If you want to be a successful investor, you need to understand that it is futile to be affected by short-term fluctuations of the stock market. Investing in good and reputed portfolio ensures good quality of your investment and capital appreciation in the long run. The short-term volatility of the share market has nothing to do with the long-term performance of your investments and achieving your financial goals.

4. Resist investing in penny stock:

Some investors have a common misconception that it is better to invest in penny stock than in high value stocks. This is wrong as whether you buy stock at Rs.5 or 5000, you need to check the background of the company before looking at the price of the share.

5. Discard the losers and pamper the winners:

There is a tendency among investors to sell off appreciated stock and to hold on to depreciated stock in the hope that it would rise. It is wrong, as it is possible that the shares which are not doing well may continue to underperform and the shares that are doing well may continue to perform well in the future.

It is better to acknowledge you went wrong, swallow your pride and discard the loser stocks and lessen your losses. Your decision lies in deciding to suffer a one-time loss for future long-term gains.

6. Look before you leap:

Even good company shares bought at the wrong price can be a poor investment choice. So devise some strategies like SIP, asset allocation to avoid this mistake.

7. Adopt an open-minded investment strategy:

It may be advisable to consider investing in good companies, however it is wrong to overlook the point that small start-up companies can make profits as well. Even such companies with good strategies and growth plans could contribute to long-term capital appreciation. Always have an open mind in taking your investment decisions.

8. Base your investment strategy on the future: 

Investment decisions based on past happenings may not always be right. It is better to consider the happenings, but give more importance to the present and future prospects of the investment. An informed decision based on the fundamentals and mission of the company helps in long-term wealth creation.

9. Consider tax friendly investments:

Making investment decisions based on tax considerations may prove counter-productive. However minimizing taxes and maximizing returns after taxation would help. The long-term capital gain tax is nil. So if you invest for a time horizon of more than one year you will have better post tax return.

10. Adopt a long-term perspective:

Adopting a long-term prospective is advisable if you want to be a successful investor. If you want to get short-term results, then you will be able to cultivate only coriander leaves. If you want to grow a large banyan tree then you need to wait for years. So if you really want to be richer and create wealth, you need to be a long-term investor.

You could have seen a lot of success stories of people, who bought a good stock 10 or 15 years back and accumulated a good amount of wealth now because of the appreciation of those scripts. But have you ever heard of a person accumulating wealth by trading in the stock market or moving in and moving out of the market?

By trading in market you may make profits in a few transactions, but you will not be able to make profits forever. There is a lot of difference between making profit in a single transaction and being a successful investor forever.

Knowing Vs Doing

There is a huge difference between knowing what we should do and actually doing it. The knowledge piece appears quite sexy; being interested, learning something new, coming up with that cool idea. The doing part sounds comparatively like routine work, no matter how easy this work may be to do or how obvious that it should be done. Don’t fall into that “Knowing Vs Doing gap”.

Now you know the 10 commandments to successful investing; put it into practice to become richer.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.
Views expressed on this website are of individual writers and NOT of the website/blog-owner. Individuals are advised to exercise personal judgement before responding, using or contacting to any post/writer/organization.

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Jan Lokpal : The Beginning of an End

I agree I have my reservations about individuals being given credit of a group’s achievement. It’s like you boss being accredited for all the hard work you put in. You break your back all round the year for a meager hike and your manager goes for a all expenses paid trip to Pataya!

Anna Hazare

What exactly did Anna Hazare do get so much credit after all?  Is it all just because of the 98 hour fast of this 71-year old ex-army man?

For a layman like me:

  • He united both, the people who sit in boardrooms and crib about corruption and the people who hang on footboard of train everyday and crib about the same.
  • He made the statesmen wake up and realize that the same herd that they drive every five years can be driven by someone else.
  • He made things move so much for the first time in over 60 years on this account.

People from all walks of life came out on the streets to say that they had enough. It wasn’t just the educated and elite from the metros but people from smaller towns like Kochi, Patna, Nashik, Asansol, Ranchi as well who came out to register their protest against corruption. The protest spilled well over the borders and we saw Indians in USA also joining in with fasts and candle light vigils. New York City witnessed 300-400 NRIs and Indian expatriates converge on New York’s iconic Times Square at noon on April 9 in support of Hazare’s crusade, other groups held meetings in Los Angeles, San Francisco and Seattle. This wasn’t one of the forums of Arundhati Roys and Mahesh Bhatts of India who come out to cry their heart out in favor of naxalites. This is a movement of the common man and we saw the common man on the street.

The government which claims to be the government of the “Common Man” did a complete U-turn within a span of 10-12 hours. Starting from a no negotiation mode to issuing a Gazette, the government not only made it look like they were against masses, they also lost face on account of nominating members on the drafting committee. The instance of Sharad Pawar “quitting” the Group of Ministers (GoM) panel on corruption after reservations made by Anna Hazare and the failed counter-attack by Pawar’s party.

From Prime Minister Manmohan Singh’s initial expression of “deep disappointment” when Hazare confirmed his decision to go on a fast from April 5 and called upon the nation to join in, to issue of the notification. What made this happen. Taking cue from the fast catching up public unrest, Law Minister Veerappa Moily made recommendations to the government.

For four days, the UPA government was adamant on not yielding to the demands for a new draft of the Lokpal Bill. The government’s perspective changed dramatically yesterday afternoon — after Prime Minister Manmohan Singh received a letter from Law Minister M Veerappa Moily.

Moily told the PM that Anna Hazare’s fast unto death was fast catching the imagination of the people, and favoured an immediate resolution of the issue, sources said.

Many senior government functionaries were against the idea of having an activist as either the chairman or co-chairman of the proposed joint committee to draft the new Bill. But Moily was learnt to have suggested that the government should agree to a former Chief Justice of India as chairman of the committee. Chairmanship of the committee, he was learnt to have argued, must not be turned into a prestige issue.

Source: IndianExpress

The support of people was key to the whole movement and surely made the government think. Now the government has issued an official Gazette and the Drafting committee formed to draft the Bill to be tabled in the Monsoon Session. The committee has been asked to submit the draft by June 30, 2011.

Here is the text of the Gazette issued by government:

The Joint Drafting Committee shall consist of five nominee ministers of the Government of India and five nominees of Shri Anna Hazare (including himself).

The five nominee Ministers of the Government of India are as under:

Pranab Mukherjee, Union Minister of Finance, P Chidambaram, Union Minister of Home Affairs, M Veerappa Moily, Union Minister of Law and Justice, Kapil Sibal, Union Minister of Human Resource and Development and Minister of Communication and Information Technology and Salman Khursheed, Union Minister of Water Resources and Minister of Minority Affairs.

The five nominees of Anna Hazare (including himself) are as under:

Anna Hazare, Justice N Santosh Hegde, Shanti Bhushan, Senior Advocate, Prashan Bhushan, Advocate and Arvind Kejriwal.

The Chairperson of the Joint Drafting Committee shall be Pranab Mukherjee.

The Co-Chairperson of the Joint Drafting Committee shall be Shanti Bhushan.

The Convenor of the Join Drafting Committee shall be M Veerappa Moily.

The Joint Drafting Committee shall commence its work forthwith and evolve its own procedure to prepare the proposed legislation.

The Joint Drafting Committee shall complete its work latest by 30th June, 2011.

Source: Hindu

The Gazette can be accessed here: lawmin.nic

Now what remains to be seen is how serious is the government about allowing the civil society have its say in the drafting of the bill and how serious is the government in actually executing a tough law. Going by the track record it has established in last few months in the way the case of Adarsh ScamA Raja and Suresh Kalmadi, people like me still have a reason to be skeptical. At the same time if the civil society which is the common people like me, keep the tempo up, I see no reason why this tough act can’t be instituted and acted upon.

The coming few weeks will decide how this war will end. Anna has already indicated that this is a long battle and people should be ready for it.

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