Droplet Wealth

A friend of mine asked - How can someone buy things without debt? How is that even possible? Life is impossible without debt is what he said. This conversation kindled me to write this. Can everyone be debt free? Is it really possible? No, everyone cannot be. It's  like asking can everyone be play for Indian cricket team. Nope, only those who work hard and have the determination to play will end up playing (let keep aside the politics). Frankly speaking, it's highly impossible to be debt free in your life.  In some way or the other we will be forced towards debt at some point in time. There could be some unforseen events like health issues for which we might go for debt if not covered with adequeat health insuranse. Whereas in all other cases we are forced to take loans, and that force is not external. We look around the society and force ourselves to buy things what is not needed at all.  There is no harm in taking debt to buy a house where you will live in f...

My Partner called me and told me that we are no different from laymen who know that Short term Interest rates are going to fall. We both know the same and hence we are the same. Yes I would say but only for the sake of that knowledge.                            The 1 Year FD in SBI in 2012 would have fetched a interest of 9.25% per annum but today it fetches only 6.25% and this is of course a grave matter for Fixed deposit holders. Because if they had known the interest rate would fall, they would have bought 10 Year FDs which would have paid the same 9.25 % today instead of ending up getting a measly 6.25 % today. So simple.  Now it is expected that Interest rates can fall further - what do we do? Buy 10 Year FDs and lock the "assumed" higher interest today or Wait for the Interest rates to go up?   Speculate. Speculate. Speculate.  This is where a good financial planner...

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...

        So we promised we will suggest a different (better) way of Direct equity investing in our previous blog . Here we are with our simple thoughts. Read on Build your Capital  1. Give yourself an 8 year time period. Well, the obvious question then would be "Don't stock markets make people rich in quick time?" Not really. One would have "made" the money in one year but by staying invested for decades. 2. In that 8 year period build your capital by saving in products that are exposed to stock markets. aka Equity Mutual funds. 3. Why Equity Funds and not something else? That is because, this will give the experience of "Market Volatility" + compound your capital at a better rate.  That's only about capital. So how about the knowledge?  Built your Knowledge 4. During this 8 year period, Start reading books relating to investing.  5. Based on what you read, Pick the Stocks and make a note of the reasons for your buying ...

Read this interesting  article last week and thought of sharing it with all our readers. A client shared this story with us: It started at the grocery store. Every time we were shopping, my older son, then eight years old, would bug me to buy him a certain cereal he’d seen advertised on morning TV. The same thing would happen when we passed a toy store. He’d beg me for highly advertised action figures.  I realized it was time to teach him about how businesses work and decided that the stock market might be a fun way to do that.  We started small. I told him he could buy the stock of any company he wanted—so long as he paid with his allowance or with money received as a gift. I’d match his funds.   Of course, he was drawn to companies he could relate to: computer stocks, Manchester United, and the like. When we ate in a restaurant he liked, he started asking if it had stock, and if so, how we could invest.  Our stock market game not only t...

Click here to read the article in Tamil   Start early.  Be it be health or wealth start early. It does not matter whether you run a full marathon or talk a small walk around the park. Starting early only matters. Likewise, start saving right away, Even Rs 500 is Okay. Avoid excessive calories & fat for a peaceful healthy life. Likewise, avoid debt. Understand the importance of compounding in life. Have a long-term mind set. Be consistent in whatever you do. Let it be gyming, Saving or investing. Only then you will achieve your desired results. Everything in life would take time. You have to believe in the process. Six packs do not appear in a month and neither does wealth. Continue the process and it would happen for sure. Have a plan in place and measure the progress at regular intervals. So you will understand where you are and what needs to be done to reach the destination on time. Understand the significance of diversification. You don't eat the same ...

There are a set of genuine standard questions shot at us from people whoever we have met so far -  Will my capital be safe? Will I seriously make money? How do you say I will make money if I stay invested for a long period? My money in a fixed deposit or LIC is always safe or at least my capital is protected.   Mutual funds are risky. So... WILL I LOSE ALL MY MONEY? This clearly indicates how fearful people are towards equity-related products. We are so tired of answering them with all the possible answers to ensure that they understand it better. Yet, the fear has not moved away. So we thought of writing a blog with an object of making everyone know what will happen to his or her money and whether MF is risky or not! Point 1 - Never put your money anywhere for a period of 20 to 25 years with the intention of protecting your capital alone.  Point 2 - By doing so, you are forcing your money to lose its value.  Point 3 - You have inve...

Everything is associated with Risk. Even NPS does. What matters the most is how long you stay invested. We read an interesting article about NPS and thought of sharing it with our readers. Read on -  Pension funds have marginal exposure to the distressed firm - Many debt funds with the mandate to invest in corporate debt securities have been left saddled with bonds issued by the indebted IL&FS and Essel group companies, resulting in a sharp erosion in their net asset values (NAVs).  While the exposure of mutual funds has been making headlines, the holdings of other investment vehicles have been largely been under the radar. A  BusinessLine  analysis shows that pension funds under the National Pension Scheme (NPS) and Atal Pension Yojana also hold these stressed assets, albeit to a smaller extent.  Scheme-C of the National Pension Scheme invests primarily in the fixed income securities issued by corporates. The portfolios of the ‘Scheme-C’ from the tier...

You need money to make money. Alternatively, you need a disruptive idea to make money for yourself and others. Not everyone would become an entrepreneur like Steve Jobs, Gates or Zuckerberg and hence let us say one needs money to make money. That is the critical resource more than anything is for those who aspire to retire and follow your passion or live a decent life post retirement. This is the reason why we say make your money work for you the moment you start earning!                 A millennial approached us for investment with an expectation of 15% risk free returns. We said, there is risk associated with it and you should invest quite long time (5 to 7 years) and should be OK to adjust for a year or two in case of any uncertainty. And we asked, do you have any savings? NO. Any loans? YES. End of the conversation the millennial said, will get back. After a month the millennial called us and said I'm not ready to take r...

Earlier, we wrote a blog  about investing 30K and earning an income of 50K every month. Most of them might have thought that they need such a huge amount to start investing. Nothing so! At Droplet, our wish is to be all-inclusive and that constant endeavor has resulted in this blog.  I think it is relatively safe to assume that an average middle-class earner can save 5K monthly. Now next we are trying to secure this Middle-class earner's future. In the Financial world, the future is always and always 15 years after . Hence we will plan with 15 years in our mind -  Droplet Team advises that a saver should split his investments into 2 parts one. One for Security and another for Savings.  Part One - Security-   As long as you are alive your family will live in your shade. But, God forbid, Something happens to you? Who would the family lean on? That's why Droplet recommends that the breadwinner's 1t "Investment" should be in " protecting his life...

SURRENDER YOUR CREDIT CARD. Period.  We can go about talking and talking about financial Independence, but if you have not surrendered your credit card, we would still be only talking.  For financial planning and investment related queries, write to us at  dropletadvisory@gmail.com  or call us at  9962399924  /  9551373455 .  

Now, those of you who read the title and thought you already knew this and hence you are right, you are wrong. Those of you who think the title is wrong, you are still wrong. So what is right then? You have come this far, so read on...   We were meeting one of our clients and they were really excited about getting their financial planning in place. With usual questions of what would happen to their money in case the Markets fall among others, the meeting went well. We thought we did a good job of enlightening this couple. Just then the bomb dropped- the bomb being a Question -  "What if I suddenly want to take my money out?"  All the enlightenment down the drain it went...  The first time investors, please note that in case you are investing in markets thinking that you will be rich overnight. Forget it, cos If you were that lucky, You would have been already married to Isha! But you are only as lucky as reading this blog ;)  Below is the check...

    Click here to read the article in Tamil                                     Karma is a boomerang, we are sure we have to repay for the lie that the title of this blog is. But don't they also say - "Dharamam Thalai kaakkam" Lets hope when Karma boomerangs, our Duty will save our heads.  Now that we have told the title of the blog is a lie, Let's now try and make it true, Why let Karma boomerang in the first place?                                    If you have followed us, you would realize that we are obsessed with just 2 things - "Savings" & "Compounding". We will make it rhetoric until we are sure each of our readers has understood it clearly. That's "Dharma" performed. Alright then!  1. Savings - A quick check of  candidates a ged 4 0+ tell us that most of...

                Investing is simple but not easy. Meaning, anyone can step into a broking firm open a demat account and start investing. However, in reality not all those who have a demat account or someone professionally qualified have succeed dramatically in the equities market. If knowledge is the only required criteria then all the chartered accountants & finance professionals would have been millionaires and minting money on their investments.                When asked about investments & knowledge, Warren Buffet candidly replied – “If book knowledge made great investors, then the librarians would be all rich”. Ideally, it is the behavior, which differentiates successful investor from the rest of the world.                               ...