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I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.
-Rudyard Kipling
The Six Horses
- How do I get started on personal finance?
- Where can I find personal finance resources and a spending plan?
- Why doesn't everybody manage their money well? And Why should we care?
- Who is a good financial advisor?
- What is the best financial products?
- When is the best time to start managing my money?
How do I get started on personal finance?
By visiting this page, you have already made a start. Congrats.
Start off with a SIP in an equity diversified Mutual Fund. I'll recommend a SIP in HDFC Top 200, HDFC Prudence, Sundaram Select Midcap, UTI Opportunities Fund or SBI MAgnum Global Fund that I invest in myself.
To get started, You need to assess your risk appetite. After understanding your risk profile, decide on your asset allocation policy. The asset allocation decision looks at two asset classes: debt and equity. At age less than 35, you can go for 100% equity and invest in equity Mutual Funds.
You can also start tracking your expenses and judge for yourself what expenses need to be minimized/optimized.
To set up a good financial plan, take some time to list out your financial goals. Does this help?
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Where can I find personal finance resources and a spending plan?
Check out India's first personal finance search engine and the ask engine
To my mind, a spending plan should be like this
Fixed expenses: 55-60%
Savings /Investments: 25-30%
Emergency Funbds: 5-10%
Discretionary expenses (pocket money to splurge): 5-10%
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Why doesn't everybody manage their money well?
Personal finance literacy is highly overrated. It’s actually just common sense. But there are reasons why people avoid personal finance.
One, financial services providers use a lot of jargon to obfuscate and confuse. Two, the sellers know more than the buyers (especially the commission involved). Three, because of our own emotions like fear and greed that leads to irrational behaviours and bad financial decisions.
But why should we care?
I have been working with a PSU for 20 long years and had I been saving regularly right from 1990 when I joined work and investing them properly, I would be having a networth of approximately Rs 23-24 lacs The assumptions are very simple. I invest 25% of my income every year and get a return of 10% annually. The investments are made every year and not every month. Every month investment will lead to a much higher figure! But, the actual Networth (excluding my House/Ancestral Property) is not even half of that. That means that my less than ideal money management has resulted in a loss of over Rs 10 lacs. Yes, that’s a million rupee mistake! Source
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Who is a good financial advisor?
Any person who can help you set financial goals, setup a financial plan, understands all the financial products and can give after sales service should be your preferred financial advisor.
And he should be working full time into it too!That's why You can exclude me!
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What is the best financial products?
This is tough. One man's meat is another man's poison. And personal finance decisions are anyway "personal".
But we give high weightage for simplicity of products. And that's why you can read the 88% solution. It gives out the best financial products that'll work for 88% of people.
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When is the best time to start managing my money?
Today. Infact, right NOW
The market cannot be timed. But you can tame the market and make your investments a success by being an informed and disciplined investor