Beware the returns

You think your have made a killing at the stock market?
You are gloating over a return of 24%?
The newspapers tell you that if you had invested in shares you would more than double your money in 3 years. Or whatever.
But have you taken inflation into account?
Yes inflation. The factor that eats away your real money.

Here, read all about it in a short blog entry.

Invest wisely and have a happy new year.

Money Management Article on WSJ

The Wall Street Journal has started a couple of columns that deal with investment and insurance. From the few articles I read, they are level headed and seem to make sense.
Here is the links:

WSJ - India, Home Page
An article under the column Maximum Money
Another article on Insurance under the column India Article


Let me know your views on these.

Invest in shares

I am sticking my neck out here.
I do not invest in equity - at least not directly.
So it is kind of stupid to give advice on share markets.
But here goes anyways ...

1) I believe that the world economy will recover, sooner or later. It has to.
2) The share market will also, therefore, climb.
3) If you are young, have some money to spare, and have the risk appetite buy shares in sectors that was doing well before the financial meltdown and is now performing poorly only because of financial meltdown. In other words, if the financial meltdown hadn't happened, would you expect these sectors to continue doing well? If yes, this is the sector you should go for.
4) Most people look to make quick money from share market. For what my understanding is worth, I do not think so. You may hit a jack pot once in a while, but most shares give good returns only in about 3-5 years time.

What do you say? Do you agree with me?

Rich Attitude

Take that Auto-Driver; or that panwala who sits round that corner near your house.

How much do you think he earns?
Never thought of it, eh?
By the most conservative estimates, I would say an auto-rickshaw driver takes home anything between Rs. 1500 to Rs. 3000 a day. And he pays no taxes.

Make no mistake, his income is more than yours.
Yes, he might have a neat little house tucked in some corner of the city.

Why, then, doesn't his life style reflect his income?

A rich life style is an attitude.
And this attitude is a learnt behaviour.
You pick it up from your parents, your surroundings or your idols.
And, perhaps, from blogs like this.

The Secret behind Google's success can be yours

In the 2009 list of Fortune 500, Google is ranked 117. It has a revenue of $21,795.6 million.

Wow!
That is big money!
But what is even more mind-boggling is the fact that much of this fortune comes from the clicks on the internet advertisements that generate a few cents worth of revenue per click.
This truly is a case of drops filling up an ocean.

Think about it the next time you spend money casually.

Lost Opportunities

The thing about opportunity is that you will know about it only when it passes you by. The gate opens now but what will happen if you enter (or if you choose not to enter) can be known only post-facto. That is how the life unfolds and there is nothing you can do about it.

But what you can do is spread your risk.
First, figure out your risk appetite.
Then enter every window of 'opportunity' that opens up within your risk band.
Some will click and some will not.
But you would have tried.

For a person who is as risk averse as I am, the goal to shoot for would be: preserve my initial investment + 14% return.

What is your goal?

That little drop

Yesterday I got a call from a sales girl who pushed to sell me a membership card for a chain of hotel. The chain offered a host of discounts. Of course, you have to spend to get those discounts - that being the whole idea. I hesitated. Did not want to spend Rs. 6000 on something I did not need desperately. The girl persisted. "It is only Rs. 16 per day, sir," she said.

She is right. Less than Rs. 16.50 per day for an entire year would be around Rs. 6000.

The funny thing is that the reverse is also true.
If I save Rs. 16 per day I would save Rs 6000 per year.
That's the crux of saving.
You only need to save a little every day.
Just a little.
Every day.