wealthymatters

The Dam Analogy

May 21, 2012 Leave a comment

wealthymatters.com A river and a dam across it is a nice way of visualizing one’s finances.A source of income is like a river.To save a bit of it is like building a dam across the income stream.

In real life dams are used to impound water in times of plenty so that it can be used when water is scarce.Deducting money from a salary cheque to fund one’s pension or investing regularly in a mutual fund via a SIP , is like holding back water in the time of plenty to use when water is scarce.If a person comes by a windfall,say, by selling a business/ winning a lottery/receiving an inheritance etc. and saves/invests the money safely,it is akin to storing rainwater from a freak shower for use later. Read more of this post

Filed under Tidbits Tagged with annuities, assets, cashflow, corpus, inheritance, Investing, Mutual fund SIP, pension, postaday, saving, selling a business, time hard work and patience, trusts, windfall gains, winning the lottery

Investing In Urban Residential Real Estate In India

May 20, 2012 22 Comments

wealthymatters

The travails of the Western world might put a question mark on the expression “as safe as houses”. but in India, urban real estate continues to make sense as an investment option.

Here are the reasons:-

First:In the US, the average members in a household are 2.6. In India, there is an estimated shortage of 21 million housing units and unless there is a dramatic increase in supply, the shortage is not likely to come down because there is a sizeable young population adding to the demand .Also Indians will continue to migrate to cities and 50% of the country will be urbanized by 2044.As families often resort to step-migration many TierII towns will do as well as the major cities as investment destinations.

Second:The high rates of inflation and wage rises are bound to make houses more expensive to build in future.So residential real estate investments are bound to hold their value and possibly continue to give good capital gains. Read more of this post

Filed under Tool Kit Tagged with housing shortfall, Inflation, Investing in real estate, migration, postaday, residential real eatate, section 24, section 80C, wage rise

NHB RESIDEX

May 20, 2012 2 Comments

Sooner or later everyone in India has to come to terms with the price of houses.Perhaps the person might be thinking of buying a house outright or on EMI for use by himself/herself or family.Perhaps it is a second home for convenience.Maybe the person is planning on buying a house as an investment or even trying to fund a retirement by a reverse mortgage.

A house is a a pretty big purchase and is bound to affect one’s net worth and cash flow in a pretty big way.One place to get some decent and neutral information on real estate price movements is here: http://www.nhb.org.in/Residex/Data&Graphs.php

Filed under Tool Kit Tagged with NHB, postaday, real estate, real estate investment, RESIDEX

Strategies To Make Money In The Stock Market

May 20, 2012 Leave a comment

First, remember Benjamin Graham’s mantra “The essence of portfolio management is the management of RISKS, not the management of RETURNS. Well-managed portfolios start with this precept.”

Second,remember what Baron Rothschild said – “I never buy at the bottom and I always sell too soon.” Trying to squeeze the last drop of profit from every deal might not be such a great idea.

Third,consider doing what Bernard Baruch used to do. Some 70 years ago, he would research a stock, buy it, and then each time the stock rose 10% from his purchase price, buy an additional amount equal to his first purchase. If the stock began declining he would sell everything he had bought when the drop equaled 10% of its top price.

Filed under Paper Assets, Theory, Tool Kit Tagged with Baron Rothschild, Benjamin Graham, Bernard Baruch, investing in shares, investing in stocks, investing in the share bazzar, postaday, share, stocks

On What Do India’s Wealthy Spend Their Money?

May 13, 2012 1 Comment

wealthymatters What do India’s wealthy like to buy with their buckets of money?

Customized holiday packages, luxury watches, diamonds and jewelry, and home electronics (including fancy mobiles and high-end cameras) — in that order.They buy luxury cars, too, but not Ferraris and Lamborghinis as one would expect. More like Honda and Toyota, according to the study conducted by Kotak Wealth Management and rating and research firm Crisil Ltd.The wealthy here are defined as households with a minimum average net worth of 250 million rupees ($5.6 million) for the financial year ended March 31, 2011.

Researchers interviewed 150 super-wealthy individuals in India’s major cities of Mumbai, Delhi and Bangalore, and others like Hyderabad, Ahmedabad and Chennai to put together the study. Senior personnel at major global luxury brands, art gallery owners, product dealers and industry body representatives were also interviewed. Read more of this post