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Recurring Deposits


wealthymatters.comA Recurring Deposit(RD) is a type of term deposit account opened by a person/persons with a bank or a post office wherein the investor or investors deposit a fixed amount of money every month for a fixed tenure . This scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum at the end of the tenure. The interest on RDs normally offered by banks is one percent below Fixed  Deposit(FD) rates compounded quarterly.Often there is nothing extra by way of  interest offered for senior citizens.Otherwise the rules for operating a RD account are the same as that for a FD account.The PO offers a fixed 7.5% interest compounded quarterly for a 5 year term.

RDs are great for people to develop the savings habit.It is especially useful to teach kids to save especially the Post Office Recurring Deposit (PORD) which has a minimum deposit of 10 rupees per month.Often banks package RDs as schemes to become or to make your child a lakhpati,millionaire etc or as schemes to build the down-payment on a house or vehicle.  Read more of this post

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Human Life Value Calculator


Wealthymatters.comIn case of our demise we would all love to have provided well for our near and dear ones. A Human Life Value Calculator is a nice place to begin planning how to do so.A very enthusiastic insurance agent might tell you that various insurance products are the best way to provide for all these needs.This is strictly not so.Think if you want to provide for a child’s college education you do not need to buy an expensive children’s education plan but can for example use a plain term deposits.Here is a link to a fairly comprehensive Human Life Value Calculator: http://www.personalfn.com/tools-and-resources/financial-calculators/hlv-calculator.aspx .Remember to put in future values of the goals of your dependents.

Learn Wealth Building From The Millionaire Next Door


wealthymatters.comDo you want to be a millionaire? Then perhaps you should start by studying the habits of millionaires….. And this book is just the right place to start.

If you check lists of the best financial books of all time,  you’re bound to find several that include The Millionaire Next Door: Surprising Secrets of America’s Wealthy. Written in 1996 by professors William Danko and Thomas Stanley, its main premise is that people who look rich may not  be wealthy; they overspend — often on symbols of wealth — but actually have modest portfolios and, sometimes, big debts. On the other hand, many actual millionaires tend to live in middle-income neighbourhoods, drive economical cars, wear inexpensive watches, and buy suits off the rack.

Following are some of the gems of wisdom found in the book that the authors Danko and Stanley have gleaned from their thousands of surveys of millionaires.

#1: Income Does Not Equal Wealth
Yes, higher-income households tend to have more wealth than lower- and middle-income households. But the size of a paycheck explains only approximately 30% of the variation of wealth among households. What really matters is how much of the income is invested. On average, millionaires invest nearly 20% of their income.

Danko and Stanley even offer a “simple rule of thumb” formula for determining whether you have a net worth that is commensurate with your income:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by 10. This, less any inherited wealth, is what your net worth should be.

Those in the top quartile of wealth accumulation are prodigious accumulators of wealth (PAWs), according to Danko and Stanley. Those in the bottom quartile are under accumulators of wealth (UAWs).This formula also helps in sorting out the millionaires/millionaires-to-be(PAWs) and the millionaire-lookalikes(UAWs).Here is a calculator to do this calculation easily:http://wealthymatters.com/2011/01/17/am-i-wealthy-calculator/

#2: Work That Budget Read more of this post

Target Crorepati — Goal Setter


wealthymatters.com

To be a dollar millionaire we need about 4.6 crores in assets, excluding the value of our primary residence.If the goal seems so far away why not aim for one crore first ? Here is a calculator to help set your goals. http://www.religaremf.com/crorepati.aspx .

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