Plan your finances step by step
August 26, 2015
Defining each goal will help you figure out how and where to invest You need to design a framework both at the macro-level and micro-level to effectively manage your investments. For instance, we recently explained how to convert your investments into cash as you near the end of your investment horizon. These are the micro-level tools. In this article, we discuss six steps to creating a macro-level personal finance framework. Fulfilling your goal The first step is to create protective assets. Protecting your family’s existing standard of living comes before trying to improve the financial wellness. Protective assets include an emergency fund and life and medical insurance, for you and your family members. You should not start your investment process
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Balancing risks and rewards
August 26, 2015
The only way to build wealth is to save a part of your income and invest wisely High-risk and high-reward are most often used to encourage investment in equities and other risky investments. Not many investors understand that this can easily mean high-risk and high-loss too. The confusion is because investors do not understand what risk is. If high risk necessarily results in high reward, then where is the risk? In investment, risk means the risk of losing your investment, which may occur as a result of downward spiralling of the value of the investment. However, in financial jargon, risk is a measure of uncertainty of return on investment. This means, an asset whose returns fluctuate year-on-year is riskier than
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Take note of the longevity factor
August 26, 2015
You must have enough money to sustain a long post-retirement life Saving for retirement is a challenge for various reasons. For one, it is difficult to balance meeting near-term and intermediate goals and saving for retirement, which may be years away. Two, how much you save for retirement is a function of your life expectancy, which is uncertain. In this article, we address the risks associated with your life expectancy and post-retirement living. This risk, called longevity risk, is an increasing concern for retirees. We discuss the reason for this concern and how to moderate longevity risk. Longevity risk You depend primarily on passive income to sustain your post-retirement lifestyle. Passive income refers to income that you earn from your
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On the NRI investment trail – Prefers NRI accounts
August 26, 2015
Non-Resident Indians (NRIs) earn in dollars, euros or rials, and can invest anywhere in the world. But Meera Siva finds that many of them prefer to invest a large part of their savings in India Durga Iyer, 32, is a management consultant in Boston, US. She says the family has not decided on the country in which they want to settle down and has therefore split the investments equally between India and the US. The savings are for long-term goals, such as retirement and her child’s education. So, she has made long-term investments, such as real estate, and a combination of debt and equity funds. She believes in doing the research herself but takes guidance from her parents, who are
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On the NRI investment trail – 80 per cent invested in India
August 26, 2015
Non-Resident Indians (NRIs) earn in dollars, euros or rials, and can invest anywhere in the world. But Meera Siva finds that many of them prefer to invest a large part of their savings in India Abhishek Dubey, 34, has an MBA from IIM Ahmedabad and is working as Senior Marketing Manager at Johnson and Johnson Consumer, Singapore. His wife is also an IIM-Ahmedabad alumnus and the couple have two young kids. Dubey says he strongly believes in the India growth story. “Almost 80 per cent of my investments are in India with only enough liquidity to cover the cost of living and exigencies here in Singapore. The interest rates in developed markets are low. It doesn’t make sense to have
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