10 | March | 2011 | wealthymatters

5 Financial Homilies To Reconsider

March 10, 2011 1 Comment

Financial advice always needs to be nuanced.What is good for one person in a certain situation many not be so good for another in a different situation. Unfortunately people are always looking for simple advice and rules of thumb.If we over-generalize on generally sane financial advice we can come to a sorry pass.

Here are some common homilies that need some reconsideration:

1. A house is always a good investment:A house is a tangible investment that you could potentially live in.You could rent it out and make some money.Maybe it will help you save tax.Maybe you could invest in one to save for retirement.Generally saving for a house to live in is good in that it gets a family to start saving.But at the time of buying a house it’s important to remember that you are buying a house and not a home.So do not go sentimental and over pay.Buying a house requires a deal of legwork and hard-headed thinking.Overpay and you will have to worry about the fluctuation in market prices.Try to buy an encumbrance-free house at a discount.It adds a greater measure of safety to your investment.Buy when the markets are down to safeguard yourself.Next how you pay for the house makes a big difference.Try to put down a large payment to save on the total interest you will pay.Shop around for a good loan if you need one.Read the fine print.Check if there is a penalty on prepayment.Lower rates matter.Also check if the interest is calculated on a declining balance.Check for hidden costs starting from the processing fee,the lawyer’s fee and structural engineer’s fee and insurance.When you consider the EMI you want to pay, don’t be too optimistic.Pay increments and bonuses might not come on time.Remember that over longer periods something is bound to go wrong.It’s the way of life.Also if you pay too much of your income into house payments you will not have any money left over to diversify into other assets and derisk your investments. Read more of this post

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MBA in Entrepreneurship

March 10, 2011 2 Comments

Here is an article I came across yesterday while surfing.The original is available here:http://entrepreneur-website.biz/entrepreneur/can-entrepreneurship-really-be-taught-at-b-%e2%80%93-schools-transition/ .The author has a poor opinion of the value of an MBA for entrepreneurs.Do read through the following article and tell me whether you think entrepreneurship can be taught?Can it be taught in an MBA class?Is it learnt by doing?Will the entrepreneurship cells the author calls for in colleges do the trick?If entrepreneurship can be taught what in your opinion is the best way to do so?Do write to me, tell me about your experiencesI would love to hear about them.

Entrepreneurship has been the most abused word around according to me. Each and everyone seemingly want to start their own venture. Each and everyone thinks making business plans is as easy as writing a mail. Each and everyone thinks that getting the funds for the same will be pretty easy. Each and everyone wants to be his / her own boss.

But is it really so easy? Is entrepreneurship just about starting new businesses day in or day out? What kind of people become entrepreneurs? How does one make the right business plans? Which kinds of industries and sectors one can enter? How does one get the right ideas and opportunities? There are some of the hundreds or thousands of questions which one has to consider before getting a business plan ready for a VC. Read more of this post

Filed under Entrepreneurship Tagged with B- Schools, business plan, Family Business Program, funds, IIMS, ISB, MBA, MBA in Entrepreneurship, SP Jain, teach entrepreneurship, VC

Life of a Solopreneur

March 10, 2011 Leave a comment

This post was originally posted here :http://www.pluggd.in/ekla-chalo-re-story-of-a-single-founder-solopreneur-297/.It gives a good idea of what it is like to be a solopreneur and do an Ekla Chalo Re.I like the idea of starting off immediately by onself without waiting for a perfect launch.After all, a lot of ventures fail but if you never start you can never fail much less succeed.Just contain the downside risk and maximize the upside potential and begin!But do read the story of Sumeet of Kreeo before you begin.

As an entrepreneur one must be focused on being successful whether as a team or single! What is most important is starting up and getting into execution mode rather than waiting for a perfect situation (team, funds, prototype, and customers). None of your dreams will come true if you just keep dreaming and planning. You can’t learn swimming without getting into water.

Coming to the dilemma of starting up as a team (one of the most important factor for getting funding also) or a single entrepreneur. I think it has no impact on the success of your venture. You will need a leadership team for sure but it’s not important to have it in place right from the start (VCs will tell you otherwise), a team can be formed as you move on (only if you don’t need VC money). Read more of this post