Droplet Wealth

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 limit...

                         Most of us fail to understand the fundamental purpose of life insurance. We are made to believe that insurance is saving or worse in most cases an investment. However, the whole idea of insurance is to cover the  risk of  loss. In simple terms, insurance is a financial backup for the family highly dependent on their breadwinner. To make it even simpler, let me give you an example as to how insurance should be looked at - You buy a two-wheeler or car and get it insured - what happens here? Your car is insured for a specific amount and in case of any loss/damage to your vehicle; the insurer will pay you, post the inspection and only for the quantum of damage . Wonder how would you feel if anybody asks you - "What is the return I will get for the premium I paid on my motor vehicle ". Won't it sound ridiculous?              The more we talk to people...

        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 ...

A lot of us might be thinking about making part payments against our home loans. We suggest you look at the below table of savings before you take any such decisions -  For those not adept with numbers/tables, lets us clarify in simple sentences.  1. If we prepay 1 lac of our home loan at the beginning of each year for 5 years. Our Total "Interest Savings" come to about INR 5 lacs for a period of 15 years. 2. If instead of prepaying the home loan, we choose to invest the same in an equity mutual fund, then a fund returning 12.5% per annum, would help us create a corpus of 20 lacs. 3. If instead of prepaying the home loan, we choose to invest the same in an equity mutual fund, then a fund returning 10% per annum, would help us create a corpus of 15 lacs. Before we complete - here are the few reasons why r ecommend delaying the Pre-Payment of the home loan - 1. The Prepayment can be used to create your retirement corpus. 2. Locking up your savings...

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...

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...

We have seen 4 of them, A IT Company, A Paint Company, A Electronics company, A Bank.What is next? Droplets said let's get into your kitchens. Kitchen? Is wealth there too? Wealth says I'm there too as long as you want to create me. How magnanimous? Recently, there was a book published about how this company became a 6,500 Crore company. Imagine our selves just holding .1% of this company. How much is that going to be? Well, that will be a cool sum of 6.5 Crores. That is the power of equities and Power of Compounding .  What company is that? As usual, there is a clue in there.  A Small History of the Company -  It was incorporated as a private limited company on October 22, 1955, in Madras  It is known for its innovative marketing strategy, be it distributing pamphlet from a helicopter in the fifties or introducing the exchange scheme Became a deemed public company on June 15th, 1988. (Meaning available for public investment) Announces land...