Saving/ Investing early

Investment should be the first expense that we do every month. A sound investment made is going to multiply itself and work for us in the long run. So, the strategy of earn, invest and then spend should save us during the rainy days.
Financial independence can be easily achieved only if we start this habit early.On the contrary , if we get into the habit of taking loans for our lifestyle shift/wants early on and start living on EMIs , your finances may be strained in the long run.
In the article Power of postponing consumption this was illustrated with some example.

Last week I happened to bump into a person who had cultivated the habit of investing regularly during his early years. He had been investing in a fund through SIP and this was long back in 97-00 before he left to US. When he came back in 2007 ,he didn't bother even to check the money in that folio (leave aside the question of withdrawing!!). When he wanted to upgrade his car this month, he thought of checking his portfolio and decided to sell his MF units.

The market is down now and most equity fund NAVs have fallen by 30% since Jan'08. But when this guy decided to sell, he could finance his car fully by selling 70% of his units and the value of remaining units was almost 3 lakhs. He was surprised by considering the fact that he had invested only 1/10 th of the current value during the investment period.
This awesome performance of equity may or may not get repeated in future again.But it is definitely worth investing and reaping the benefits manifold rather than just thriving on EMIs.
This guy got a car ( worth almost 7 Lakhs) out of just 70,000 which he invested a decade ago and left with some good money too!!On the contrary lets look at a person who buys a car on EMI. he pays almost 15% as interest. By making money work for you tend to gain in the long run. But this rquires tremendous patience and a systematic approach.

Insurance with SIP

Recently found this post on one of the blogs.
Great job by the blogger on SIP+ Insurance. A thorough analysis of the latest available options wrt MF/SIP+ Insurance.

10 % on FDs

Raising interest rates are a pain for new loan seekers and those who are paying home loans ( variable interest schemes). But for those who are thriving on interest income, interest rate increase is a good news.
10% interest is offered by many banks on specified time periods.( 0.5% extra for senior citizens). Although the interest rate is lesser than the inflation rates, it atleast bridges the gap between inflation and returns.
With a very volatile stock market and immediate future of economy not auguring so positive, FDs would definitely come back into the portfolio of the middle class investors.
( TDS would be made if your interest earned per branch, per bank, per financial year exceeds Rs10,000 per annum. Appropriate forms need to be submitted at your branch to avoid TDS, if your overall income is below the taxable limit )

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Equity NFO watch

Scheme ( Category Open Date Close Date Offer Price (Rs) Min Investment (Rs)

Sahara Banking and Financial Services Fund (Equity - Sector Fund Jul 28, 08 Aug 26, 08 10 5,000 )

JM Multi Strategy Fund (Equity - Diversified Jul 31, 08 Aug 29, 08 10 5,000 )

JPMorgan India Alpha Fund (Equity - Diversified Jul 31, 08 Aug 29, 08 10 5,000 )

Some small step from IRDA

The Insurance Regulatory and Development Authority ( IRDA) wants insurance companies to go slow on ULIPs ( Unit Linked Insurance products), especially semi-urban and rural areas. The immediate trigger for IRDA' s action emanates from public complaints , which stated the distributors had been mis-selling these products.Many unsophisticated investors were lured with offers of 30 percent - plus returns.- Source BW.
IRDA , at last has come with some step against the ULIPs. Ulips are a products are definitely costly products and not the best of the breed investment tool as such. Many plans were sold as 'top performing ULIPs' by showing the returns generated during the bull run. Still equity inflows into markets through ULIPs are sizeable when compared to investment through SIP in equity MFs. This is primarily because of the lack of awareness among the investors about the costs involved with ULIPS. Hope IRDA tightens it act further and frees the innocent public from the clutches of mis-selling insurance agents.
If you are planning to invest in ULIPs , Please take your time to read these articles ~ ULIP

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These are just opinions/ ideas exchanged. No one can claim us responsible for any investment failures /losses based on the ideas expressed here.

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