[sridhga]

Originally Posted by ampere

A simple rule to follow can be :

Of the 100 rupees you earn:
- Keep 20 for long term (housing loan, Retirements plans, child policy etc).
- Keep 20 for short term (MF/Stocks/SIP etc)
- Another 20 for personal expenditure
- Keep 40 as liquid (FD and not it savings bank)

,

Do not know where you got this break-up. But it is too rigid and is not practicable across age groups. I personally would like to see some % towards charity as well.

[ampere]

Originally Posted by sridhga

Do not know where you got this break-up. But it is too rigid and is not practicable across age groups. I personally would like to see some % towards charity as well.

That is why immediately after that listing, I had mentioned, its a very crude break-up and can change
depending on time and situation.

My main point was that, all the ingredients should be taken into account at all the stages of life.
Just because if home loan is over, does not mean a long term investment stops there.

The percentages of the break-up would change, new ones can/may get added.
But at least the basic elements should continue to be there always.

[akhil_007]

Hello Friends,

I have been a silent participant to this discussion. I might have gone through the thread 100's of times and everytime single time, I feel like WOW! going through the suggestions given here

I m 25 and just finished my Masters. Joined an S/W copmany .Was on Probation and got confirmation recently(The money earned through probation was spent on Parties, Gifts and satisfying my materialistic cravings, which was on back-burner since I joined Masters ).

I had made a plan during my probation period on how I should manage my salary and things seem to be falling in place. However my planning was very limited, which I came to know after going through this thread.

Here is the rough breakup of what I have done and the figures correspond to contributions from Monthly Take Home salary

• I have taken a Insurance-cum-Retirement Plan= 12%
  
• My Contribution for Construction of House that we are building= 40%
  
• Savings(which I intend to keep in Bank, mostly FD/SB)= 35%
  
• My Expenses+ My Bike expenses + Other Miscellaneous Expenses= 11 %
  
• Charity/Helping the Needy(I sponsor to a limited extent, the education of a few boys,whom I know well)= 2%
  

This break-up does NOT include the PF contribution.

I m not sure if this is the best way to do it. I would like to know from my fellow BHP'ians if there is any way I can invest the money more intelligently and reap the benefits.

Thanks in Advance...

PS: I dont have any idea about stocks, shares etc

[Saanil]

Originally Posted by akhil_007

I m not sure if this is the best way to do it. I would like to know from my fellow BHP'ians if there is any way I can invest the money more intelligently and reap the benefits.

Thanks in Advance...

PS: I dont have any idea about stocks, shares etc

Welcome to the Planning club man! I can understand how you are feeling. Do not worry if you do not understand the stock markets. Even I did not understand it earlier but I made my first investment in the stock market just last week!

I think for beginners FD is the most suitable option - I made an FD of 1 year as my first step in the planning process. In the meantime think/research about what other avenues can you get. Ask your parents/relatives/friends about what you should do. Think about what you want in future - in short what is the objective of you doing investment? How much return do you want on your investment? I know it is not easy but you will have to ask people around. I think that is the best thing to do. One question - Are you married?

[vivekiny2k]

Originally Posted by sridhga

Do not know where you got this break-up. But it is too rigid and is not practicable across age groups. I personally would like to see some % towards charity as well.

Now that you brought up charity, Here is a question. Should the charity %age dependent upon the needs of the receiver or the capacity of the giver?

I agree the breakup is too simple.

[ampere]

Originally Posted by vivekiny2k

I agree the breakup is too simple.

Vivek.

I did mention on #435, about the break-up just as an example and not as a final line.
Thats why even I had termed it as a crude break-up.

But the point to put forward was to make such a break-up, according to one's situation and continue to abide by one's plan.

[akhil_007]

Originally Posted by Saanil

Welcome to the Planning club man!

I think for beginners FD is the most suitable option - I made an FD of 1 year as my first step in the planning process.

Already made one FD for 1 year... I dont want to have more FD's

In the meantime think/research about what other avenues can you get. Ask your parents/relatives/friends about what you should do.

Precisely what I m doing here Asking friends on t-bhp for suggestions

Think about what you want in future - in short what is the objective of you doing investment? How much return do you want on your investment?

Well, I can say my short-term goal is to buy a Sedan, mostly it will be Hyundai Verna


One question - Are you married?

lol.. I just turned 25. I m not married and its not on the cards now

I m a bit apprehensive about investing in stocks because I cant spare time for that on a daily basis. Few friends suggested me to invest in Infrastructure Bonds are they are less prone to risk and also provide some tax benefit. I do not know much about it though.

I have half a mind to invest on gold but after going through the discussions here, I m not sure if its a good idea.

So, that's my dilemma.. Waiting for suggestions and advice

[ampere]

Originally Posted by akhil_007

So, that's my dilemma.. Waiting for suggestions and advice

As long as you dont hit up a good idea of how to plan it, at least keep allocating regular money for monthly
savings and keep adding it to an FD. Treat this as if it does not exist.

[ontheroad]

Myself recently did a coaching program in financial planning and these were the take aways in nutshell.
1) 4 months expense in emergency fund. 50% of emergency fund can be in a liquid fund, 25% in swipe in FD and remaining 25% in savings account.
2) Take a term insurance plan ( strictly no endowment or money back policies) depending on your risks and liabilities.
3) Take health and accident disability insurance.
4) Open a PPF account and invest in that for tax benefit.
5) For retirement planning, child education, child marriage etc have to invest in MF as SIPs. SIP amount depend on your goal amount. One Goal=One SIP. He recommeded HDFC prudence, HDFC equity and DSPBR balanced for me. We should not have more than 5 MFs SIPs in our portfolio.
6) Evaluate performance of MFs atleast once a year
7) End

Note: He don't think investing in real estate as a good idea in long term due to risk and liquidity issues. Were am I? Surrendered all endowments, ulips etc, took term and health insurance, accumulated 50% of target emergency fund and started 50% of all SIPs requirred.

[sumeethaldankar]

Hey guys,wanted to know the process of opening a PPF account.Is it possible to do online anyways ?


thanks

[S_U_N]

Thank you for sharing your learnings.

Originally Posted by ontheroad

Myself recently did a coaching program in financial planning and these were the take aways in nutshell.
1) 4 months expense in emergency fund. 50% of emergency fund can be in a liquid fund, 25% in swipe in FD and remaining 25% in savings account.

What is the difference between liquid fund and savings account?
Does liquid fund mean having cash at home. If my monthly expenses are 50K, are you suggesting that I should keep 1 lac as cash at home?

..... One Goal=One SIP. He recommeded HDFC prudence, HDFC equity and DSPBR balanced for me. We should not have more than 5 MFs SIPs in our portfolio..

Can you elaborate on the goal part as well? What are typical goals for you? (if that is not too personal a question)

[Warwithwheels]

Originally Posted by sumeethaldankar

Hey guys,wanted to know the process of opening a PPF account.Is it possible to do online anyways ?

There is no option to open it online. You need to visit any main branch of SBI or other select nationalised banks. It can also be open thru most of the head post offices.

Btw... PPF is one of the most preferred investment options if you are looking at it in the long turn. There is no other tax saving tool that would exempt your income from tax, in the stage of investment and maturity as well.

[ontheroad]

Originally Posted by sumeethaldankar

Hey guys,wanted to know the process of opening a PPF account.Is it possible to do online anyways ?

thanks

Myself opened a ppf account in SBI a couple of months back. Just walk into main branch in your district with an address proof in original and a photostat and two photos. Though you cannot open an account online, i think you can put money in that online. Hope i answered your query. It is not compulsory that you have to open a savings bank account there.

Originally Posted by S_U_N

Thank you for sharing your learnings.

What is the difference between liquid fund and savings account?
Does liquid fund mean having cash at home. If my monthly expenses are 50K, are you suggesting that I should keep 1 lac as cash at home?

Can you elaborate on the goal part as well? What are typical goals for you? (if that is not too personal a question)

A liquid fund is basically a mutual fund without entry or exit fee. Mostly they give more returns than a savings account interest rate, though investment is not the objective to put money there.

My main goals were a retirement corpous of about a crore in todays money value, after 30 years, higher education expense (20l in todays value) for my daughter after 18 years, her marriage expenses after about 20 years etc.

[supremeBaleno]

Originally Posted by akhil_007

Here is the rough breakup of what I have done and the figures correspond to contributions from Monthly Take Home salary
- Savings(which I intend to keep in Bank, mostly FD/SB)= 35%

Since you are at a stage where you have just started earning, RD (Recurring deposits) would be a better option than FD + they inculcate a disciplined approach to savings & provide you the same interest as FDs. Currently interest rates are pretty good and indications are they might not go up much (infact might come down) - so lock on to a good return RD for a few years. FedBank, SBT etc have good rates for RDs, but do your research online. BTW, there are 5-year lock-in tax-saving FDs available which is a good option too.

Originally Posted by akhil_007

Few friends suggested me to invest in Infrastructure Bonds are they are less prone to risk and also provide some tax benefit. I do not know much about it though.

Infra bonds do provide tax-savings, but rate-of-interest is low and duration is high. So, this is beneficial if it helps you save on taxes.

Originally Posted by sumeethaldankar

wanted to know the process of opening a PPF account.Is it possible to do online anyways ?

Like couple others mentioned, not possible to open online. But there are options to remit into the a/c online, once the a/c is opened.

Originally Posted by Warwithwheels

Btw... PPF is one of the most preferred investment options if you are looking at it in the long turn. There is no other tax saving tool that would exempt your income from tax, in the stage of investment and maturity as well.

Indeed. And the earlier you start, the better. BTW, from FY2012, you can invest 1lakh annually in PPF (till now it is 70K). Think of it as a nest-egg for the future and squirrel away whatever you can annually into it, enabling savings, tax-breaks and ofcourse the power of compounding will ensure good returns.

[sushantr5]

This is just a thinking which is written by my friend. In today's life where we live on the edge and really miss the exact point of making money. Today we drive good cars and live in the well furnished house and assume that we have attained really big in our life. Which in fact is nothing and that does not make you rich. So I thought I would share this about how to make money.

Source: http://tycoonreport.tycoonresearch.c...rich-in--years

The modern-day yardstick of wealth is an illusion perpetuated and encouraged by the marketing departments of the world's luxury-goods makers. The luxury brands have done a remarkably good job at convincing poor people to act like rich people by buying their products. The thing is, though, truly rich people fuel their consumption from their investment income. In other words, they would never dream of tapping into their principal wealth to fund their lifestyle. So I want to tell you here and now, I don't care how much money you make -- and I know some people make a lot of money -- if your investments are not throwing off cash flow that is equivalent to at least your current expenses, then you are poor. You are just one flip of the coin away from living on the street.

What does it mean to be Wealthy?
Being wealthy has nothing to do with a set of amount or what car you drive or which labels you sport. If the income and/or returns of your investments are more than twice the amount of your annual living costs, then you, my friend, are wealthy. If you own a business and make millions of rupees, but the business will fail if you are not in it, then all you have is a very highly paid job. Real wealth is about securing a stream of income for yourself that consistently throws off returns that are at least double your annual living expenses.

A Big Salary Doesn't Automatically Make You Rich
Getting rich takes a lot more than just securing a big income. Many who aspire to be multimillionaires stumble at this point. They work hard, get promoted or build their businesses and start earning large amounts of money. but these "would-be" millionaires fail to fulfill their true wealth-building potential at this point. You see, they get seduced by the illusions of wealth as portrayed by the aforementioned luxury-goods marketing machine that they see in magazines and on television. Don't get me wrong; if you have a large income, you have a huge leg up over the person earning an average income. But if the odds hold true, then you are could blow that big advantage by overspending.
Are You an Aspirational Spender?
Aspirationalspenders are above-average-income earners who yearn to possess the lifestyle of the truly wealthy but do not earn enough money to do so. Instead, they employ credit card and home equity loan debt to acquire the trappings of wealth -- fancy cars, vacation homes, designer purses, designer suits etc… They actively pretend (self-delude is a better word) that they are rich. This becomes an all-consuming pantomime of self-delusion, as more and more money is required to fuel this facade of wealth. The asprational spender typically earns between Rs.500,000 and Rs.750,000 per year. This is 2 1/2 to 4 times greater than the national average income. In fact, it is more than enough of an income to get wealthy on within a 10-15 year period.

But these people never do develop real wealth.
Their incomes continue to grow, and they make terrific employees and are usually very good at their jobs, but their desires are always one step ahead of their income.


The Key to Developing Real Wealth
In year 1999, I read a book titled "The Richest Man in Babylon" by George S. Clason. In that book, I learned that I would never be able to satiate every single material desire that I have. So, instead of trying to fulfill as many of my "wants" as possible, I started getting very picky about which "wants" I chose to indulge ... which "wants" I chose to postpone and which "wants" I chose to abandon. Once I fully accepted that I'll never have every single thing that I may wish to possess, it was like a great weight was lifted off my shoulders; it was very freeing. It also allowed me to better appreciate what I already possessed. But the most important thing it did was get me off the spending carousel and onto the road to living beneath my means ... and start saving and investing, which is the real route to obtaining large-scale sustainable wealth.

Your Desired Future is Just a Decade Away]
Wealth can be created from any starting level; it is not income-dependent. However, in this article I want to highlight how much easier it is to get rich if you already have a large income. It really doesn't matter which vehicle you use to create your wealth -- whether it be real estate, stocks, commodities, options or your own business. Any success that you find in any investment endeavor will be meaningless if you continue to spend more than you earn. It is only when you start living beneath your means that you will truly be on the road to real wealth-creation. If you earn over Rs.600,000 a year, you have absolutely no excuse for not being rich!
What's the secret? All you have to do is live on 50% of your gross income and invest the rest.

Your 15-Year Plan to a Lifetime of Riches
At Rs.600,000, assuming the income tax, your take-home pay would be a shade under Rs.550,000. If you want to get rich, start by simply living on Rs.300,000 and investing the other Rs.250,000. Do that for 10-15 years and you will be rich, period. If you can average just a 12% compounded annual growth rate over 10 years, you'll have a shade under a crores of rupees. Over 15 years, you'll have over Rs.25 - 40 lakhs that is growing at 12% per year is more than enough money to last a lifetime. That's it; pretty simple right?

Are You Ready to Sacrifice What You Want Now for What You'll Need Later?
So, what is the real way to measure personal wealth? The yardstick is whether our investment income covers our living expenses. If it does, then you are well-off. If your investment income is 2x or more greater than your annual income, then you are well and truly rich! I know I have now lost 99% of you. The thought of the relative deprivation that such living would require is probably too difficult for many of you to face squarely. And that's OK; not everyone possesses the necessary discipline that it takes to acquire true wealth. Don't beat yourself up about it. But, by the same token, don't fool yourself into thinking that you are rich just because you have a big salary, a shiny Car. We both know you are one pink slip away from financial Armageddon.
I'm here to tell you that you don't have to live that way anymore.
Downsizing is only painful when you are not emotionally prepared for it. Once you make the decision to be "for real" rich instead of "pretend" rich, the decision to downsize instead of "super-size" will be an easy one.


Downsizing Your Spending = Super-Sizing Your Wealth
Don't squander the opportunity that you've been given by being blessed with the ability to earn a large income. You have a huge edge over every other person earning less than you. You blow that edge when you over-spend and under-save. Remember -- even if you win the lottery or increase your income dramatically, but refuse to spend less than you earn and refuse to save and invest surplus capital -- you will never be rich. You will never experience true financial freedom, and you will always be at the mercy of your spending habits, your employer and the economy. It's always a good time to re-evaluate your financial plan, but especially with the dawn of a new decade just around the corner, there's no time like the present to plan to become a millionaire. You'll thank yourself in 2020!