Monday, 17 July 2017

Art of building wealth ...

Good evening

In my last blog I touched upon financial security and planning.
Today I would like to share my experiences on the art of creating wealth.
At a young age when you have just gone through your campus interview and got your dream job, you are excited and the urge to indulge in lavish spend is hard to resist. It goes without saying  that starting out on your first ever work assignment in a new work place and receiving that first ever monthly cheque gives one a strong sense of mental independence and freedom.
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But once you reach there you have to be ready to handle your responsibilities which many of the young adults even are apprehensive of discussing, leave aside the planning part. It will be totally incorrect on my part to blame anyone of you but it is people like us who should take the lead and educate their children about this very important phase of life without thrusting our views on them. I always believe that today's generation is much more enlightened but need help and guidance to channelize their energy and creativity.

This is the phase when one makes important life choices, not only in personal life but in matters relating to finances too. These choices involve various desires; to be rich, to buy a car, to buy a house, to start a family, travel to exotic places around the world, safety of the family and yourself, children's education & marriage, to do something for your parents, to have a comfortable  retired life without compromising on lifestyle etc.

Some of these needs may seem too far fetched right now, but sooner or later you will be compelled to start thinking of them which is inevitable. And the sooner you finalize them the better it will be for you in future.

Always remember your desires are end goals and to achieve these there are some basic principles which must be followed.
* Needs and desires:
1. Write down your financial goals, take help if need be.
2. Include factors which may impact on it, like how much and where you are going to invest, the investment time horizon, the risks you can afford to take etc.
3. Specify action plan for each goal.
4. Get it concurred by those who know about it and matter to you
5. Implement in Toto
6. Follow up and review
7. Introduce corrective measures if required
8. Resist immediate gratification as it never pays in the long run
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* Go from the day you start earning with long term perspective:
The earlier you start, less is the amount required to earn better returns. For example, you are 25 years old and start investing Rs.  10000 every month, at 12% average yearly rate of return, At 55, you could land up with a Rs. 3.5 crore corpus. Now if you had started 10 years later, that is at 35 years of age, at 55, your corpus will nearly be Rs. 1 crore. Your corpus shrinks by two - third just because you missed those 10 golden years of investing.
This is because of compounding of your investment. .

* Always start with insurance first :
As I said earlier this has to be  the most important part of your portfolio. Gone are the days when people in this field used to talk about death, some still do, but it's now life we refer to in insurance.
 This also includes health insurance apart from mandatory vehicle insurance.You need to enjoy your investments and live life king size as long as you live.
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* No amount is too small :
You can always make a beginning by investing as little as Rs. 500 in a mutual fund, which works as a great tool for investing into asset classes like stocks, bonds and gold. And the most important aspect is that you develop a  habit of saving and investing consistently, and discipline in the long run.
One must not forget that there is always a need to move on from 'investing what is left after spending' mindset to 'spending whatever is left after investing'. This philosophy will certainly ensure long term wealth creation. And never forget that as your income grows, start allocating more money towards achieving your goals.
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* Risk management :
It is always advisable not to park your money only in one or two instruments. Always  invest in different financial instruments which allows  your risks to spread across the risk return spectrum. This will also help you to get a chance to understand various instruments and also gradually increase your returns by concentrating on the allocation. Remember, the advantage of being young is that you can take on maximum risks considering you don't have many dependents in most of the cases. But it's equally important to have the appetite for it. Homepage Deep Link
* Learn from experience of others
You being a young and excited investor are bound to make mistakes and learning from such mistakes is a continuous process. It always helps to join a group of  like minded people with similar financial position and aspiration where you can use the platform to share and learn from each other's mistakes.
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* Shamelessly seek help :
Great people on this planet earth have never been shy of asking for help from anybody and everybody which pays without an iota of doubt. Why should we ? Never shy away from asking for help, especially when it comes to investing for your future. If you are busy with your job or unable to do time management or don't have enough information to plan your finances, take the help of a qualified financial adviser to do so.
There are many experienced brains to provide help and guidance.

* Trust yourself :
And, last but not the least, trust yourself once you have accepted the philosophy. Don't get deterred by obstacles which are bound to be there during the journey, as long as your goals are well defined and you never loose sight of them.
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* Extent of information :
          Now let me share a case study to throw more light on the subject.
Two competing explanations as to why consumers have trouble with financial decisions are gaining momentum day by day. One is that people are financially illiterate, lack understanding of simple economic concepts a cannot carry out simple exercises such as computing compound interest leading to sub optimal financial decisions. That is, some people persistently choose immediate gratification, instead of taking advantage of larger long term payoffs. This is because it has never been taught anywhere in school or college and you are suddenly up against the challenges at a young age.
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Experiments show that the measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions.
A study was made on the behavior of a bunch of MBA students in managing a small endowment portfolio that invested in a simulated financial market, in two mutual funds, under a set of pre-decided rules. Before the game began, one had to choose how often he would like to receive information about performance of the fund i.e.every moth, every year or five years. And  then only he could change the allocation.

After 25 years of simulation, those who got performance information every five years earned more than twice than who got monthly feedback. The answer lied partly in the nature of the two funds money was invested. The one which invested in bonds, had low average rate of return but also a much higher variance, losing money in 40 of the months in five years. In the long run, the best returns resulted from investing all of the money in the stock fund, since the higher return made up for the losses.

This fund rarely had a losing year and never had a losing five year stretch. People who got monthly feedback, got a lot of information but it was short term information that was not representative of the true, long term pattern of performance for the two funds. The short term information created an illusion of knowledge that the equity fund was too risky. More information may have led to less understanding for the investors.

* What Young Adults Should Know ?
1. Where does your money come from ?
2.Where does your money go ?
3.Learning the difference between needs and demands
4.How to budget with the money you have ?
5.Save some money for a rainy day
6. Difference between saving and investing
7. How compounding works ?
8. Why taxes matter ?
9. 30-70  mantra - Save 30% of your earning consistently come what may happen and manage lifestyle with 70%. Remember it is your money.
10. Plan for your retirement the day you start earning

Wishing you all a great beginning on achieving financial freedom...

My blogs are available on
My blogs @ SK 1955 on FB
@skumar272010 on Twitter

Friday, 7 July 2017

Financial Security and Planning ....


It has been a few days now since I wrote my last blog.
This is because God has given me another opportunity to share my real life experiences with my learned readers and I will be extremely happy if I can help a few people in securing  their financial needs.

A few days back I received a call from a very reputed organisation in India to work with them as their Financial Adviser which I accepted. I have undergone the formal training and also cleared a mandatory  examination conducted by a government institution. I am now a licensed Financial Adviser and hope to be of service to people to the best of my ability.

And this is what has led to slight delay in posting this blog of mine.
So toady I would like to share my experiences on financial security and planning.

The best way to define financial security is that it is the peace of mind we feel when we are not worried about our income being enough to meet our expenses. It also means that we have enough money saved to cover emergencies and our future financial goals.
It is the economic security, the condition of having the resources to support a standard of living now and in the foreseeable future.
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Financial planning is a process to identify our goals; assets net worth; estimating future financial needs; and working towards meeting those needs. Goals are short term ( buying a TV, family vacation etc) , medium term (buying a car, house etc ) and long term( Children's education, their marriage,post retirement needs etc).
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* Economic life cycle - It has 3 phases :
- Student phase : This is pre job phase where one is getting ready for earning phase.
- Working phase : This phase starts around 20 to 25 years of age and lasts for 35 to 40 years.
- Retirement phase : This phase is one where one has stopped working
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* Individual life cycle - 
- Learner, till the age of 25 : This is the learning phase of an individual
- Earner, 25 onwards : This is the phase when one starts earning
- Partner, 28 to 30 years : This is the phase when one gets married
- Parent, 30 to 35 years : This is the phase when one moves towards parenting
- Provider, 35 to 55 years : This is the phase when parents have to fulfill children's needs
- Empty Nester, 55 to 65 years : This is the phase when children get married
- Retirement, 60 years onwards : This is the phase when one gets retired and there is no regular source of income. Health also starts deteriorating.
* Individual needs 
- Enabling future transactions - making provision for future transactions such as education, marriage etc.
- Meeting contingencies - keeping money for unforeseen events like unemployment, hospitalisatiom, death etc.
- Wealth accumulation - this is done for increasing value of money

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The basics of financial planning is already understood by all of us but what really happens is that most of us have our savings and investments here and there which needs to be structured scientifically to give it the correct shape.
The following needs to be understood :
1. Start saving for your retirement the day you start earning:
It was my good fortune that I met someone way back in the year 1979 when I started earning who explained to me financial planning with major thrust on requirement at different stages of life and retirement needs. I was able to understand it and followed it throughout my professional career.
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In fact I followed the principle of saving 30% of my earning on a consistent basis from the very beginning. Subsequently, I learnt that percentage savings should be equal to your age which means that if you are 40 years old, you save 40%, for 50 years 50% and so on and so forth. It needs lot of determination and nothing short of taking self pledge to achieve it but it pays rich dividends in the end.
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2. Save for a rainy day
This can be an interesting goal such as our dream car, vacation, new furniture, renovation of house, a new house, marriage, children's education etc. We should save regularly in suitable funds or plans so that we are always ready to meet the requirement rather than being forced to shelve huge some of money on due dates from our bank balance.
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3. Be prepared for an emergency
We generally like to think  that nothing bad will happen to us but it is always better to be ready for any eventuality. This will safeguard the lives of our families if they are partially or fully dependent upon us. Even the best conceived plans can go awry by the requirement of an unforeseen expenditure.
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Insurance is the basic need of every individual so that our lives are protected along with long term savings. This can be broadly classified as 
   a.  Life insurance
   b. Health insurance
   c. Vehicle insurance
though there are other insurance requirement also in corporate or business or any other work field.
Insurance refers to protection against an event that might happen whereas Assurance refers to protection against an event that will happen.

   d. Emergency fund is the one which allows us to meet our financial commitments for any unforeseen situation.

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Before I end let me also remind you about a few more valuable considerations :
1. Life expectancy is going up and many of us would be living close to 85 to 90 years in next 2 to 3 decades
2. With disintegration of joint family and resultant modern day nucleus family, more and more people are forced to work post retirement
3. Inflation is something which we all understand and does not need any explanation here.

Hence financial planning is the need of the hour and sooner we understand and implement for ourselves, better for the mankind.


My blogs can be viewed on
My blogs @ SK1955 on FB
@skumar272010 on Twitter

Friday, 23 June 2017

Engineering final year ...

Good evening

Today I continue to talk about my final year of engineering course which in fact got extended into 5th year because of the political movement about which I made a reference in my last blog. In fact our session was disrupted midway and it took a few months before normalcy could be restored. This meant that we had literally lost one precious year but this was something over which we didn't have any control and so accepted it. Perhaps God had different plans for us and of course better ones.

One usually takes time to adjust to the food that is normally provided in hostels. You like it in the beginning because it's different to what you are used to at your respective places but you gradually start looking for a change as the hostel food is repetitive having the same menu and taste time and again. I am not blaming anybody but that's a hard fact of hostel life.
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That's why there were occasions when we dined out and skipped the hostel food. But what we did in the last 02 years was that we decided to run our own mess as it was allowed and the institution was providing all the utensils free of any charge.
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The rules we framed for the 8 of us of Octet group were quite different to what was prevalent during those days. We were able to hire a good cook of our choice. We also decided that our mess will be closed on every Sunday evening and the management will be changed in rotation at the same time. This allowed us to dine out every Sunday evening.  And we really enjoyed this system as the food was of our choice and cooked with great love ❤️ and care.

This apart we used to go for evening walk for about an hour every day, took a cup of tea, recharge our batteries and get down to study thereafter. This brought us closer even more. We would discuss on different subjects ranging from job, films, politics, family etc  while we were walking. Life was really worth it during those days.

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Time passed by and we all were putting in our best efforts to do well at the final examination.
We also knew that we would be separating physically once the exams were over and wanted the enjoy the remaining days like anything. But we never did it at the cost of our studies. Fortunately, all the 8 of us came from middle class families and more or less were of studious type but not bookworms.

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Another important and interesting part of engineering courses which possibly is prevalent even now in some institutions that the final result was declared considering certain percentages of the marks obtained in each year. In our case it was 25% of first year, 50% of 2nd year and 100% each of 3rd and 4th years. This could be one reason why some students do not concentrate fully in 1st and 2nd years.

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I kept on telling myself that I must prove myself to myself and this is what I did. I did very well at the examination and was confident to secure a good percentage. My joy knew no bounds when the results were declared and I passed out in first class with Distinction. You needed to score a minimum of 70% for getting 1st division and minimum 75% to be awarded the Distinction. I can't say whether such a system exists now, possibly no.

Biba CPS I was naturally delighted with my achievement and wanted to inform my parents then and there but the fastest communication system was through STD calls during those days. And you had to wait after booking the call. It's not that you could simply dial and get connected. You could not depend upon Telegrams or Phonograms as their delivery used to be erratic at times.

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We did not have any nearby STD booth and traveled some distance to find one. I informed my parents and could realize that they were literally in tears. And above all I was the first ever engineer from our family.

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 Now of course there are  lots of engineers, doctors and lawyers in our family but the satisfaction of being the first engineer continues to be fresh even till today.

So to sum up and refresh about what I wrote in my few blogs in the beginning that I was witness to a bridge being constructed in 1960s which happened to be located behind my primary school. I was overawed by watching the manner in which the workforce  used to deliver. I saw one engineer literally running on steel beams at that height without any proper barricading fearlessly and that is when I decided that I also wanted to be one of them.

And rest is history....

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Friday, 16 June 2017

Engineering 4th year...


Today I would like to share my journey of 4th year of engineering course.
It should have been the final year but was not to be.
Bestsellers at! Upon declaration of result of 3rd year, all of us were asked to move to another hostel as per the rules of the institution and I always enjoyed such changes. It's my basic nature to look for changes, new things, explore the world and keep on learning every minute. Life is the greatest teacher.
Our classes began and I concentrated hard on my studies. But there was something going to happen which was totally unexpected and unimaginable. Our session got disrupted due to one very famous political movement  at that time, details of which I would not like to share here as it will not be correct on my part to do so.
The end result was that our session got delayed by a year and we were left high and dry. To tell you very frankly I was planning for my future life post engineering course before this movement happened which changed so many lives.
I don't have any grudge against the movement because I was also supporting it. But there was one thing which was hurting my conscience; I didn't want to trouble my father any more for bearing the expenses for one extra year.
Zivame IN He was taking care of all his five sons during those days all of whom were studying. In fact I had my eldest sister and brother next to her whom I never saw because they left this world even before I was born; the dreaded incurable brain fever at that time took them away from us. My mother used to tell us about them and I remember each and every word of her.
In fact I wanted to complete my studies and do something for my parents. They sacrifices to give us the best of the world are inconceivable and incomparable. It's a different matter altogether that state government granted my scholarship for this one extra year also but the money came quite late while I was in corporate life.
1mg CPA IN It's also not that my father could not support us well; no, not at all. He was a very famous lawyer and one would like to emulate what he achieved in life but it was just one of those things that I wanted to do something for my parents.
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In my excitement I possibly forgot that he was in the midst of some important discussions with his clients but I just went inside. The happiness and tears in his eyes said it all. INT Another such instance which I remember fondly is when I presented a silk sari to my mother, again out of my scholarship costing Rupees 109 at that time, a cream colored sari with red border and she was overjoyed. Words need not be spoken to express your sentiments on such occasions because it is felt from heart.
HepFly Mobil [iOS&Android,non-incent,TR] I am sure all of us must have undergone such experience at some point in our respective lives especially when we are not earning but managing to show our love and affection to our dear ones. And the dear ones in our younger days will invariably be our parents. They are no more in this world but  I remember them every day and will continue to do so till my last day.
PractoOrder CPS These are unforgettable moments in my life. Such instances flash before my eyes many a times especially when I am gradually catching up with my age and leading a somewhat lonely life because you do need sometime to adapt to post retirement life as compared to hectic 36 years of corporate world.
Firstcry IN But my wife is always there to support me. She is the greatest source of strength and inspiration to me. To me she is the most beautiful woman in true sense on this planet earth; a great friend, a great mother; a great human being and what not. I keep on learning so many things from her. And above all my grand daughter is the one who gives me tremendous happiness 24 x 7. Also I do not have any complaints with what I have today because God has always been very kind to me and he continues to be so.
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Till then..


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Please view my blogs on
My blogs @ SK1955 on FB
@skumar272010 on Twitter

Art of building wealth ...

Good evening In my last blog I touched upon financial security and planning. Today I would like to share my experiences on the art of cr...