Three ways to retire before 60
August 10, 2015
Repaying loans early, moving to cheaper cities and using tax breaks can help you retire early. Can you retire before 60? Well, the answer depends on your ability to live on your passive income. Passive income is any income earned without working. This could be interest income, portfolio income, dividend or rent. Here are a few strategies to get there. Repay your loans faster Most people carry their home loans and other loans for the full repayment period, usually 15 or 20 years. However, if you are smart and have the motivation to retire earlier, commit to put 50 per cent of your annual bonus amount as pre-payment of your home loan. Of course, bonuses are subject to business results
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Portfolio Ideas: When should you go for FDs?
August 10, 2015
If your income flows aren’t stable, you may not be able to take more risk. Invest in FDs then Bank fixed deposits have finite maturity and pay fixed interest. This safety also means lower returns and thus fixed deposits may not always help you achieve your goals. For instance, you will need a lumpsum investment of Rs 36.89 lakh today to accumulate Rs. 1 crore in 10 years, if you invest 75 per cent in equity and 25 per cent in deposits. On the other hand, you need Rs. 48.69 lakh to accumulate Rs. 1 crore if you invest 75 per cent in bank deposits and 25 per cent in equity. That works out to 30 per cent more in
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Why we need a new Nifty (and Sensex)
August 10, 2015
It has taken years of coaxing, cajoling and haranguing to get India’s pension monies to trickle into its stock markets. Recently the elephantine Employees Provident Fund Organisation has promised to put Rs. 5,000 crore out of its annual mop-up of Rs.1 lakh crore into domestic equities. Recent tax breaks are also making the National Pension Scheme, which invests up to half its corpus in equities, a hit with retail savers. All this suggests that a lot of retirement money belonging to Indian savers, in line with global ‘best practices’, is soon likely to find its way into index funds. As Nifty and Sensex ETFs (exchange traded funds) dominate this space, a flash-flood of pension money might rush into the Sensex
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In no man’s land
August 7, 2015
Buying land has been a favourite proxy to investing in real estate, thanks to the lower investment requirement and scope for higher returns compared with a constructed property. Many sellers are now offering land on monthly instalments with promotional gifts thrown in, to attract buyers. If you are lured by these schemes, remember that they are unregulated and are hence a risky proposition for buyers. Little protection for buyers The schemes let you purchase a plot of land by paying a fixed sum every month, over a period of two-five years. The land owner and the buyer enter into an agreement stating the terms, such as specifications of the plot, payment terms and penalty clauses. The buyer makes monthly payments
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Lowering interest rates is not a good idea
August 7, 2015
The Reserve Bank (RBI), on June 10, yielded to pressures of Centre and business community and reduced the repo rate by 0.25 per cent from 7.50 per cent to 7.25 per cent, keeping monetary variables like CRR and Bank Rate constant. This was to please the various actors in the economy. There has been a cry for long, particularly since the regime of DV Subbarao (Raghuram Rajan’s predecesssor) to reduce the repo rate (interest rates). Interest rate are closely related not only with higher demand for quantity of money and cost to company, but also to many other factors. For instance, given the quantity of real goods production and services, a decline in interest rate augments the demand for funds,
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