Tell me Your Financial Problems, Questions & Concerns. I want to write more about Your problems & Help You with solutions.

In recent times, I have been making conscious efforts to write more on topics which are useful for readers and not just for me. And I get numerous mails from readers asking me to help them out with following issues:
  • How (& why) to switch from safe FDs to Mutual funds?
  • How to get rid of complex insurance products and what to do next?
  • What is the best combination of safe savings (FDs, NSCs) and risky investments (Stocks, MFs)?
  • Should I buy a house or continue staying on rent?
  • Should I invest in MF when my time horizon is less than 5 years or even 3 years?
  • I have just started earning. How should I manage my cashflows?
  • Should I pay my loans and invest simultaneously?
  • Why do I end up with no money at the end of every month?
  • How to rationalize my portfolio of 30+ mutual fund schemes!
And that’s not all. I even get questions like these:

Now its really tough to reply to each one of these mails individually. There are just too many and each and every one requires, a lot more information about the individual’s finances, before anything can be said.
So I have decided to do something, which is better for all of us.
I am floating a small survey, where you can share your financial problems / questions / confusions. I will then collate all these points and start writing about as many of them as possible.
This will serve two purposes:
  • I will do the research and try to come up with a solution to the problem. I will do a post about the issue. It will help me, as well as you in getting a different perspective (if not the final solution).
  • Once the post is published, the approach can be questioned / debated and streamlined basis feedbacks and comments received from other readers.
So go ahead and click the button below. Don’t worry…it’s a short 2-5 minute survey. And it will also help you in gauging your financial fitness.

Note – You can choose not to disclose your identity if you feel like.
If the survey does not open on clicking the button above, please click here.

I plan to write on all the topics which I can gather from the requests I receive. So please share as many queries and questions as possible.

Answer to the BIG question – “Why Am I Not Getting Richer?”

Didn’t you always have this question? 

That even after earning so much, why are you are not getting any richer?

I guess you must have felt like this before. In a post I did some time back, a person earning more than Rs 1 lac every month was barely able to make his ends meet; but that is before he took matters in his own hands and retired at a young age of 37.

What does it mean?

This simply means that there is something fundamentally wrong about the way we manage our incomes and more importantly, expenditures. But all is not lost. If you are ready to take care of some really simple but critical factors while managing your finances, then chances of you getting richer are bound to rise.

So here are the 5 less-discussed but really important ways to help you become rich.

Reinvest your profits
I have seen people making the mistake of not reinvesting their profits many times (to be precise, 19 times out of 20). Don’t be tempted to spend your profits. If you reinvest profits from your investments, then you would be helping yourself in the long run as you would be contributing to the magic of compounding. And don’t worry if the profit is small. In the long run, compounding takes care of converting small amounts into very large ones.

Control small expenses
Be obsessive over controlling small but wasteful expenditures. For example, just because one of your colleagues has got himself a new phone, you decide to buy a newer one to satisfy your ego. Agreed that such expenditures can give you pleasure & satisfaction. But these would be short lived. And such useless expenditures also dent the process of long term wealth creation. Exercising vigilance over small expenses can help you divert funds from going towards unnecessary expenditures towards better investment (profit) opportunities.

Limit What You Borrow
It is simple common sense. Living on credit card and loans won’t make you rich. Period. It is only when you are debt-free that you can think of saving and investing to become rich. If you are not debt free, then most of your time would be devoted in servicing the EMIs and Credit Card Bills. Think about it.

Assess The Risk
Just because a family member or a good friend introduced you to something which looks-too-profitable-to-be-true does not mean that you should blindly do what you are being told. Asking ‘and then what’ can help you see all possible consequences and risks involved when making the final decision.

Be Willing To Be Different
Just because it did not work for somebody else does not mean it won’t work for you. But more importantly and similarly…just because it worked for somebody else does not mean that it would also work for you. Remember this and assess the risk provided by every opportunity. It’s always possible that life is offering you something unique to benefit from; and which was never offered to anybody else. So be ready and be capable of recognising such opportunities.
Warren Buffett Richest Man
To be rich (& not poor) is glorious and glamorous | 🙂
Note – Most of these 5 points/ways are based on Warren Buffett’s philosophy. Hence the picture above.


The Wealth Grid – A New Way To Track Your Money

Wealth Grid, as the name suggests is a matrix of your wealth. But before I get into the details, I would first like to tell you about the origin of this concept.

Why Wealth Grid?

In past, I have been fortunate enough to have worked in a highly process oriented industry. (Read more about me and my past in an interview here). And I have a strong belief that no matter who you are OR where you are OR what you do, nothing worthwhile can be achieved without following a structured approach which has proper well defined systems in place.

In financial terms, for some people, something worthwhile might mean becoming rich and being counted in some club of Crorepatis. For me it might mean something far less materialistic. In past too, I have been a proponent of following a structured approach like the Core-Satellite approach to build one’s long term stock portfolio. Now when you think of a grid, the very first image which comes to mind is something like the one given below –
Plain Blank Grid
A grid is a collection of cells, where each and every cell has a proper well-defined place according to some pre-defined logic. And each and every cell has some or the other relation with cells adjacent to it.
How Does Wealth Grid Help?

Now the question comes that how can we use this wealth grid? Now, to be honest here, I am still developing this concept, which may eventually spread out and encompass use of multiple grids for different purposes. But this current grid structure, which I will explain in just a little while from now, simply helps in identification of asset classes. Once identified, it aims to map these asset classes to their respective (correct) time horizons, depending on the end use.
What Exactly is Wealth Grid?

Now on the very first glance, it might not be easy to think of your wealth in a grid like structure as detailed below. But once you clearly understand the concept being tracked on x-axis and y-axis, you will realize that this is quite a helpful structure which allows one to view their wealth on a simple timeline in accordance with the end use of the money.

Wealth Grid Manage Money
A Basic Wealth Grid
As you can see in this very basic Wealth Grid, the columns are used to track the purpose of that asset class, i.e. short term, medium term or long term. The rows are used to track liquidity of these asset classes. This is important because a mismatch here can be disastrous. Suppose you intend to pay for your child’s college fee in next few months, and for that you have bought stocks of some good Indian companies. But unfortunately at time of fee payment, stock markets crash and shares of companies you have bought also go down with them. Now how will you pay the fees? You are in a fix. You might have to borrow some money from your close relatives or take personal / education loan from the bank. I hope you are realizing the gravity of such a situation…

But if the same money was parked in Cash / Fixed Deposits / Recurring Deposits to be used later, then the possibility of any such crisis happening would have been eliminated. Why? Because the correct asset class (non-risky one) was being used to fund a short term expense.

Eventually, it is all about understanding when to save and when to invest (and mind you, there is a difference between the two).

And if you observe closely, I have marked Wealth Grid as [Beta], as I am still working on this concept. It is still not complete. This grid only gives a snapshot of the asset side of your finances. But another important component of our financial lives is debt or loans. Going forward, I would be incorporating the loan and other aspects as well in this Wealth Grid. Rest assured, I will keep you guys updated about the developments.

I will leave you all with a sample (real life) Wealth Grid, which can be used to track one’s wealth. As you can see below, one can get a very comprehensive picture if the Wealth Grid is properly maintained:
Comprehensive Wealth Grid
Sample of Real Life Wealth Grid || Click to enlarge
In the meantime, if you all have any suggestions to improve this grid, please share it with me by means of comments or you can email me directly at stableinve…


Some People Are Making More Money than You & Me Because…

There is not always an apparent rhyme and reason to the pay scale attached to certain jobs. You may become fire fighter because it seems glamorous and profitable, only to learn that a beach lifeguard who appears to be more of a beach guy makes almost twice of what you do!! Firefighters may be required to log volunteer hours and do it for the joy and prestige, whereas lifeguards on certain beaches with regular high waves, rip tides, and white water make local fires seem infrequent and manageable.

Some jobs that require creativity and artistry are pegged as low payers, when in reality the average wine steward, makes slightly more than an account manager. Pairing wine with meals may take as much logic and skill as crunching numbers and analyzing profits and loss, or one may be simply valued over the other for unfathomable reasons.

So before you invest time and money in educating yourself, you should explore the realities of a professional field in order to determine the return on your investment. Of course, factors beyond pay come into play here, and it is up to you to weigh them out. 

Laying the groundwork for profit means exploring a number of factors that are not immediately obvious, whether you are choosing a profession or investing the money you earn from that profession.

Below is an interesting infographic to get your mental juices flowing.. 🙂

Surprisingly these people make more money than you!