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Old 13th April 2010, 17:01   #46
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I too saved right from the day I started my job as well and inspite of having a decent lifestyle and not being stingy with my money, I have managed to save enough.
On top I have never invested money in stocks till today.

So to put argee's comment to work, indeed I can live on the money I have for a couple of years (atleast) if I leave my job today.

The key to that above statement is that I have no credit cards (only used the one I had till last year for significant purchases/online tickets etc), no home or car loans as of now. Although I am contemplating buying a new car though so that might not hold for long :0

So I guess once your loans are paid off you will see a big surge in your savings.
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Old 13th April 2010, 17:40   #47
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Quote:
Originally Posted by pramodkumar View Post
I was never able to tell the difference between a recreational drinker and a habitual one
Pradip is right. Pramod, pls don't take my words offensive; for people who stay in control on CC is a boon. Over 4 years with ABN Amro's CC (also I've 1 from ICIC & HDFC which I've used only once in last 3 years) I've accumulated so many points that I can convert them 1 point = 1 Re for travel & accomodation. Put it this way, I'll be able to take a free round trip from Chennai to Delhi at any point in flight OR round trip of our entire family by 3rd A/C train. Like Pradip says, I pay my bill on time for over 13 years & have defaulted only twice & that's when I was in US. Upon request, the bank had reversed the charges too.

@Starvegabond - Sir you continue to inspire me. Your theory is simply fantastic. No wonder you're flourishing

Quote:
Originally Posted by mobike008 View Post
2. Started a PO savings of Rs.11000/Month in Feb'10 which paid for 72 months will fetch me Rs.10 Lakhs + cash at end of 72 month-period. Paid for 1st year in complete in advance so got a 5% discount. Means, more savings.
Beg to differ here, if you're talking about PORD, then the number of months is 60 & not 72. Also, if you deposit all the 132000 in bank for an year you get 6% return while you only get 5% discount with PO

Quote:
Originally Posted by Abhay View Post
So I guess once your loans are paid off you will see a big surge in your savings.
More than true

Many people view here CC's as a bad mode of payment; I would say that, if one can stay in control, use it right, its a very good instrument than cash.
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Old 13th April 2010, 18:11   #48
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I am using CC since last 4 years. I have never been defaulted. Key is to spend as much as you can digest. I have never spent more than 9K in a single month on the CC. I generally pay the CC bill as soon as I get the salary to avoid last minute surprises.

Even when I put in stocks I make sure out of 100% amount, I put 65% in safe stocks and 35% in small and mid term stocks. The riskier the investment the maximum the return. So out of this 35%, I buy 2-3 stocks, so even if one fails the other 2 can gain as a whole. Also the 65% safe stocks returns more than bank FD.

Guys any idea on how to maximize the returns? I have some lung sum amount with me. Dont want to risk too much but then want returns more than bank FDs.

Last edited by neoonwheels : 13th April 2010 at 18:14.
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Old 13th April 2010, 18:14   #49
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Default What a bunch here!?!

I thought people here were nuts about cars..

Going these posts (all posted within the last six hours) disproves the very reason why I signed up

My 2 cents -

There is no 'ONE SIZE FITS ALL' in financial planning / saving.

Some members have given very good options / cues, but I would suggest each one to take a day off, sit alone and do your math. Jumping in and burning your fingers as well as getting off to a roaring start and dying with a whimper is not going help anyone.


Quote:
Originally Posted by praful View Post
At present I'm not doing much apart from just investing LIC policies and ELSS. Plan to start investing a little towards stocks too.

An investment advisor once told me, that I should have atleast 75% of CTC as liquid savings. My expression was just a state of shock, as of today I'm not even at 20%.
Praful, that is a good way to start saving. It helps you build some discipline. If you opt for payment through your salary / direct debit, then you don't even have the hassle of keeping a track of the due date. Don't worry about being liquid - there are more ways of raising money than you know!!

A tip here - the amount of life cover should be more than your liabilities. It is always better to have a 'pure life' cover. Money back policies are not helpful in the long run.


Quote:
Originally Posted by Blue_V View Post
Whats happening with the insurance ULIP controversy? Can someone explain in simpler terms? Is it to do with the market linked Life insurance?

ULIP is diffferent from SIP?

All i could understand is:
1. 20% of the amt invested would go towards the commission
2. There is no clear management and clarity where the amt is invested
SEBI has jumped into the fray by stating that Insurance Companies were selling mutual fund type plans dressed up as insurance policies, and being the market regulator the insurance companies have to obtain their approval.

IRDA does seem willing to taken on SEBI. Today, FM has given the go ahead to insurance companies to continue with the premium collections.

In a regular insurance policy, the company decides on how to invest the premium. And what you get is a life cover plus the bonus declared by the company from time to time.

In respect of Unit Linked Insurance, the premium is invested in a certain defined manner. Some plans have a flexibility to switch between the various investment options. Here, a portion of the premium is paid towards life cover, and a certain amount is towards administrative expenses (from where the agents get their commission - which is where the trouble has started)

SIP = System(at)ic Investment Plan. Here you plan to investm some amount at a certain frequency - monthly, quarterly, half-yearly etc. Here the benefit is (a) you need not put up lump sum amount & (b) you can even out the up / down cycle in investments.

I am sorry, Blue_V, I don't know what is market linked Life Insurance.


Quote:
Originally Posted by clevermax View Post
I started saving from Day 1 of my career, which was more than 10 years back. This is one good habit I inherited from my dad. Having said that, I never compromised on my living standard. As many folks wrote already, it's all about training yourself to have that financial discipline.

Just add up all that interest one's paying! My approach is, accumulate as much wealth as you can, and then spend for your bigger financial needs like a house or car for example. As far as possible, stay away from loans. I won't even buy the tax saving argument if you have a home loan.

If you have EMIs to pay, you're bound to your job for the monthly income - unless you have strong financial support from someone.
clevermax, you are clever with your words and finance as with the camera!!

Yes, you have hit the nail on the head - learn from others and start early. Don't do the same mistakes which others have done.

I have a small deviation on the interest part - if you pay interest for consumption (like credit card bill dues, some fancy electronic gizmo which you can do without etc.) - then you loose a lot.

But, when it comes to creating an asset - like investing in a house - then there is no harm in paying interest. But make sure that the appreciation in future will take care of the interest you have paid, and the loan repayment is comfortably within your budget.

As regards buying a car - with or without loan - that topic is taboo :-). Better we start a separate thread.

Last edited by Eddy : 14th April 2010 at 22:40. Reason: Please refer to the PM.
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Old 13th April 2010, 18:20   #50
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Folks, Really enjoyed reading this whole thread. Lots of lessons to be learnt.

Only points I have seen is that many folks fight tooth and nail to save a paisa and let rupees go down the drain.

How many times we must have fought with an auto wallah for 10 rupees and then ended up at a hotel and splurged on a lunch worth 500! I am not saying don't do it. But just be aware of it.

Another point I have seen is that once folks have finished their home loan, they think their liabilities are over. One should note that the trick is to always have that equation of [liquid/long term investment/expense/short-term investmen] be consistent. If a home loan is done then start something else. But always be in that consistency of the savings/expense equation.
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Old 13th April 2010, 18:21   #51
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The most basic aspect about savings is writing down the expenditure. Each and every rupee.

The moment you do this, you become conscious of it.

Over a period of time, instead of looking at how much money is left to spend, one would start looking at how much has already been spent.

Quote:
Originally Posted by chennai-indian View Post
However, I will try to stick to the basics here.
Excellent post.


Let me add one more investment idea - that of STP.

1. Let us say a lump sum amount available (say 3K-6K per month).
2. At the beginning of the month, move the money to cash management fund. CMF's are debt instruments, linked to RBI bonds, AAA funds etc. They are very safe, and provide a return in region of 4-6%.
3. Have a standing instruction to transfer a fixed amount (as low as RS.100/-) every day from the cash management fund to a hybrid/balanced mutual fund (like HDFC Prudence which I would say is a brilliant performer since last 10+ years).

Advantages of transferring every day are : benefit rupee cost averaging and economin fluctuations taken into account.

Why to move to CMF? Returns are better than savings bank. SIP allows only monthly investment. Not daily. STP allows daily investment.
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Old 13th April 2010, 19:05   #52
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I think the discussion has deviated in a couple posts, anyway, going back to the original point, living on the edge is a tendency that can not change whether you 10K PM or 10L PM.

This is one thing I feel good about recession because it has helped people understand the point of view of people like mine who spend based on needs, not on affordability. Advocating frugal living 2 years back wold have been subjected to laughter and disgust.

I think the most important factor in this is what we as children see in our family. You will see that regardless of how much kmoney they earn, most people who come from humble and conservative backgrounds do not indulge as much. It's difficult to say no to my son for a new fancy toy when I know I can afford 10s of them and when he is making the cutest faces, but if I buy it, it's going to have a long term undesirable psychological effect on him.
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Old 13th April 2010, 19:16   #53
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The best way to earn a lumpsum is to do a reverse planning
Say if you need 20L in 5 years, you need to save about 33333 per month for 60 months. But if you're doing a small saving (P+I) of about 28K per month accounts to about 20.4L at the end of 5 years including interest.
Principle =28000 * 12 * 5 = 1680000
Interest = 360920
Total = 2040920

However saving 28K per month may not be affordable every month due to other expenses. So, there're 2 choices, either reduce the monthly expenses to meet the committed 28K or reduce the target amount from 20L to say 10L that would force to save about 14K per month. Now do the math if 14K is also not affordable every month. Small saving is the considered less risky than other investments, so, if you're little bit apprehensive on losing the capital, you can start this way.

The moment you get the pay cheque, pay off this amount & then allot the money for other expenses. This way you stand committed on your savings & expenses.

Last edited by aargee : 13th April 2010 at 19:27.
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Old 13th April 2010, 21:47   #54
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Quote:
Originally Posted by aargee View Post
Beg to differ here, if you're talking about PORD, then the number of months is 60 & not 72. Also, if you deposit all the 132000 in bank for an year you get 6% return while you only get 5% discount with PO
Its not Post Office Recurring Deposit. Its a new scheme which is for 72 months and not 60 months ( AFAIK, let me recheck on that again).

Also, does the bank give you 6% in advance? Whereas, I paid the entire amount--minus--the discounted money. So which is a better deal?
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Old 13th April 2010, 22:59   #55
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Great topic.

I am no expert on the subject. But, there is one article that I read some time back. I'd like to share with you guys.

Its titled "Everything You Ever Really Needed to Know About Personal Finance On Just One Page".

The document says it is legal to put it up on any website (and freely shared), that's why I uploaded it.
Attached Thumbnails
Are most of us living on the edge? time to plan up things for the future.-pages-onepage.jpg  

Attached Files
File Type: pdf OnePage.pdf (732.3 KB, 182 views)
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Old 14th April 2010, 16:10   #56
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Quote:
Originally Posted by clevermax View Post
I have no loans as of now, (ad a car loan which is closed now) and it feels good to be in this state. I cannot even imagine the state of some guys where they end up having to pay about 35K EMIs for 15 or 20 years for the 55 Lakhs apartment which they bought.

Just add up all that interest one's paying! My approach is, accumulate as much wealth as you can, and then spend for your bigger financial needs like a house or car for example. As far as possible, stay away from loans. I won't even buy the tax saving argument if you have a home loan.
No offense friend, but you are missing a key point in your analysis.
EMIs is not just for saving tax or getting on a loan as such. It is for buying that property *NOW*.

If you think of accumulating 55 L and then buying that flat - looking at a loan tenure of 10 to 15 years (assuming you take that much time to save that amount), how much do you think that very same flat will cost you, 15 years from now ? It would be twice or thrice of its current value.

Its like going around in circles

Do a reverse analysis to help you understand this better. A property of 55 Lacs - how much did that same property cost 15 yrs back ? It should be more like 10 Lacs.

This should give you a more proper perspective on how to look at the whole housing loan thing.

Albeit, it should be done with proper planning and self analysis.

Quote:
If you have EMIs to pay, you're bound to your job for the monthly income - unless you have strong financial support from someone. I remember the time when recession hit IT industry, the most worried people among my friends were those paying hefty EMIs.

Honestly I don't want EMIs to be my driving factor to carry on with my job.
True EMIs should not dictate your choice of job or career, but it will atleast be a serious motivation to KEEP EARNING
Else, it can get easy to get Complacent here (on earning/saving) with no fixed liabilities.

Quote:
Originally Posted by pradipk View Post
What I see it as a facility and how you use (or misuse) it. I prefer using them with the following 2 rules:

1. Never miss payments (don't go for partial payments, always do full payments on time)
2. Never use them as Credit = Loan. Always use them in limit which one can repay (bot the eligible limit that you have) in next billing cycle.
Considering all other advantages/disadvantages, I look them as good option.

Thanks,
Pradip.
Very valid 2 points here. However, its just that it is EASY to spend if you do it with a credit card at your disposal. Even if you are within your credit limits.

It is human psychology. Am sure everyone has experienced this. The same expense being done using HARD CASH will surely make you think twice, as compared to swiping a card.

Last edited by jigbarai : 14th April 2010 at 16:24.
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Old 14th April 2010, 17:18   #57
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Quote:
Originally Posted by pramodkumar View Post
I drive a 10 year old Lancer, Please pour in your suggestions.

Pramod

Mods please merge if thread already exists.
Great Intiative Pramod. I am sure all of us can benefit from each others' experience. At the end of the day, this community is of like minded people who want to help eachother in sharing their passion and love for cars and also share and support each other on other aspects of like.

Thanks a ton! Appreciate it.

Regards,-Rishi
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Old 14th April 2010, 18:18   #58
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I treat my credit card like a debit card, I always pay full when the bill comes. In other words, I never spend on credit card more than I can pay at the end of the month.

I have been doing this since 18 years. Credit card is a great convenience, just don't treat it like an instant loan.
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Old 14th April 2010, 18:54   #59
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We are discussing money and let me put a real-world question here.
I have a car loan and the principal outstanding is 1.6+lakh. 30 EMIs of Rs. 6670 pending. Rate of interest: 12%
Now, I have the money with me to foreclose this loan today and be debt free.
What is the most sensible thing should I do, close the loan now or invest the amount somewhere to try and make more than what I would pay as EMI?
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Old 14th April 2010, 19:58   #60
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Quote:
Originally Posted by Jaguar View Post
We are discussing money and let me put a real-world question here.
I have a car loan and the principal outstanding is 1.6+lakh. 30 EMIs of Rs. 6670 pending. Rate of interest: 12%
Now, I have the money with me to foreclose this loan today and be debt free.
What is the most sensible thing should I do, close the loan now or invest the amount somewhere to try and make more than what I would pay as EMI?
1. You did not mention the tenure of the loan. If its 60 months then you have already paid around 80% of your interest. You have to pay fine on outstanding amount (3-5%).

2. If the tenure is 36 months then I would recommend foreclosure. 12% interest paid is more than what banks offer as interest on FDs. You have to earn more than 12% to make it profitable. Equity can get you that but at a risk.
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