wealthymatters.comNormally,for fixed income instruments , the interest rates corresponding to longer terms are higher than those for shorter terms.However,locking in money for longer periods is not always an option.One way of ensuring a greater degree of liquidity while taking advantage of the higher rates offered for the longer tenures is laddering.

If you want to create a 5 year ladder you could buy a 1year, 2year, 3year,4year and 5year instrument .Then after the first year,renew the matured 1 year instrument for a term of 5 years.Then the following year do the same with the matured 2year instrument.Continue the process.

Laddering ensures that at least some of the higher interest rates are locked in and that the average rate is higher than the rates at the lowest point in the interest rate cycle.

If you are drawing an income from your fixed income instruments say to pay or part pay you a pension,your EMIs,a tution fee or get some passive income,laddering smoothes out the variations.

Laddering is possible with bonds,NCDs,FDs,CDs etc.

Indian Philanthropy

wealthymatters.comHere are some major features of Indian Philanthropy as enumerated by eminent Indian businesspeople.They are perspectives that were articulated in response to the Gates-Buffett ‘the Giving Pledge’

1.”India has a very old culture of giving, since the time of Buddha. The concept of philanthropy is not new to us.”—-Rahul Bajaj, chairman, Bajaj Group.

2.”Philanthropy in the first world and in the third world are two different things. In the first world people donate to build a baseball stadium. In India, we have to decide for ourselves what we want out of philanthropy. It is not for the Americans to tell us.”

“shareholders have done more charity than Gates and Buffett put together. How? By allowing Cipla to export drugs for $100 million to Africa, which could have fetched $4 billion if they were exported to the US”—-Yusuf Hamied, chairman & managing director, Cipla Read more of this post

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:

#2: Work That Budget Read more of this post

Global Rich List Calculator

wealthymatters.comWealth is a somewhat relative term. And the people we compare ourselves with to decide how wealthy we are ,are often those who surround us. The world however is a much bigger place, and  knowing where we are placed in this world depending can really surprise us.

To find out where you stand worldwide on the basis of your income, use the nifty calculator here :  Link 

Of course income hardly equals wealth, there are expenses to be considered and then there is the question of what we do with our surplus income—blow it ,save it, invest it or acquire liabilities, which go to determine our wealth position. And then again, money buys different levels of access to the good things in life in different places. So enter the location of your primary residence and total up your assets in the currency you most prefer and you can work out just how wealthy you are.

Do reflect on the different figures that the income and wealth calculator throw up. They reflect your privilege that translate to head-starts and lifelong gains. Also your profligacy that reduces your advantages in life.

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