Posts

Union Budget - 2020

Image
We were worried as financial advisers about the budget. Of course the Union Budget because if the budget was perceived to the be good then the markets would rally and our investors will not get discounts on their Investments. Discounts are always good, Who knows it better than you guys! The fact is good business shall always thrive irrespective of the budget and when we choose to invest in equities we invest in businesses that will do well in future. Note that we have used the word "Perceived". Again most of the govt policies being good or bad are perceptions of the people. A good businessman would identify each of them as an opportunity. A classic example is Titan which when was forced to import Gold due to "Govt Policies", it started Tanisq and today Tanisq is one of the largest contributor to Titan's Profits. 

So now lets look at the Budget from the view it would affect us. 
1. As a (Citizen) Owner of the Country and 
2. As a (investor) Owner of the Companies. 

Budget 2020

Image
We just put up a whats app status and One of the replies inspired us to make that into a blog. 




Of course, like with all things @ Droplet, this one is not related to Superficial things like Budget/macro economics. So if you want to know our feedback on this year's budget, here it is - 


---N-----O-------C-----O-------M------M--------E---------N---------T-------S---
It is that. Because, in our fiefdom of Personal Finance, such things do not matter. Well then, let us use this opportune time to turn your attention to a more important budget, that is your Personal budget
Below are a few simple things that you should deliver on if you are want to make your country (ie., Family) Rich, Prosperous & Wealthy. 
1. Earnings - Make sure you have an active Income and work to increase that income by 10% every year. Improve you skill sets, shift jobs, start a part time venture, do anything (legal) and try to increase your income by 10% year on year. 
2. The Holy Grail - Income - Savings = Expense…

Paying Minimum Balance on Credit Cards ?

Image
Why minimum balance payment on credit card is the worst thing?
Of late credit card penetration in India has increased multi-fold. A decade back 1 in 10 would have a credit card. Today 9 in 10 have 3 credit cards each. A ratio of 1:27. All these are mostly owned by salaried people, because they are the ones who pay off at any cost and are easy targets. I myself had six credit cards until 2017. And today I have two, closed the other 4. Stopped using it much. 


A recent statistics reveals that there are approximately 50 million credit cards. Of which 25 million are active cards meaning at least one transactions happens every month.
The whole purpose of getting a credit card is for emergency needs and/or cashback points. However we start using it for LUXURY WANTS! This is where our financials would go for a toss. 
While applying for a credit card, we look out for offers, interest free credit period (as if we will pay it on time), cash withdrawal limits, annual fee and so on. And fail to note t…

Happy New Year 20-20

Image
As we beckon a new year, Droplet recommends 20 things that will help you turn a new page in your financial life.

1.  Have a monthly budget in place. 2.  Earn. Save. Spend. - Start early. Start immediately.  3.  Buy a term insurance covering 20 times of your salary. Helps your dependents largely during your absence. 4.  Have adequate medical insurance in place. You don't have to shell out cash in case of medical emergencies. 5.  Do not mix insurance with investments. 6.  Have atleast six months of your monthly expenses as contingency fund. 7.  Have a plan in place before buying a property. Such as location, accessibility, resources, so on. 8.  Don't buy a property due to peer pressure or societal pressure or for status. Buy only when you are ready and it is absolutely necessary. 9.   Buy real estate only if you have 30% cash for down payment. 10. Buy real estate only if you are confident that you would stay there for next 20 years. 11. Plan and pay off your home loan in first 7 year…

Do you really need a FINANCIAL ADVISOR?!

Image
Do I need someone to help me with something? Ideally, the answer would be yes until or otherwise you are an expert at something. Even an expert was a beginner at some point in time, experience/passion in the field would have made him an expert over time. For instance. 
What would you do if you fall sick?What would you do if you want to build six pack abs?What would you do if you wanted to be a world class bowler/batsman? In the world of internet, it may seem to be an easy task to get things done without an expert at all. But is it that easy to do so? If yes, then everyone out there will be excelling in everything with ease. Internet is a source of information with different views/opinions from people around the world. But does it really provide a solution to me? Certainly NOT, it just gives opinions.

Like all the above, even personal finance or investment seems to be an easy task. Yes, personal finance is not rocket science. If so, why only a handful of people succeed, and the majority f…

Chasing Returns

Image
People are so obsessed with returns. Generally, we look at equities as a lottery ticket to get rich overnight. Which is the precise reason why most of us fail and run away from equities and advise others that the stock market is sheer gambling!     

In Order to get rich overnight, people keep chase returns by jumping from one Investment to another or from One Fund to another. Alas, only to miss the bus of returns in most of the cases. 

Let us now look at a few examples of what happens if you chase returns. We have taken 2 funds of ICICI Prudential Mutual fund company - Large-cap Fund & Mid-Cap Fund. 

Assume Mr. Investor starts investing in 2010 and based on the previous returns he chooses the mid-cap fund. 3 years later he reviews his portfolio and sees that large-cap fund has given a better return than mid-cap fund - 
So he jumps from Mid-cap fund to Large-cap fund and continues to invest for 3 years. Look what happens now - 
Oh wow! he made 17% returns, that's…

How Much Insurance should one Buy ?

Image
In our previous blog, we gave an example where the assumed gentlemen had taken an Insurance of 1 crore. It is natural that most of would think why such an H U G E amount of insurance? Because most of us think of Insurance as "sum that will be paid to you by LIC on Maturity" and hence think such huge amount is only for ultra-rich people. Through this blog, we would like to clarify on this erroneous thinking. Also, let our readers know how much they should cover themselves with? 

The Maths  - 

This is how the average financial scorecard of Middle class looks like  -



Part A - Sum of all the loans that we have comes to about 50 lacs. 

Part B - If we assume that "with no loans" & "an Own house", Rs 25k monthly is fair enough to maintain and run life on good standard of living. If we want this income for the next 20 Years (time taken for your kid to grow and contribute to expenses.), then we need to make a one-time investment of 60 lacs. 

In Total - This amounts…