Blog Posts by P V Subramanyam

Some of the kids I know are going to hate me for this article…sorry guys n gals but you have really inspired me to write this. Honestly this is dedicated to you.

Here it goes!

1. Your cheques bounce: Oh, not regularly but four times in a year. This could be because your salary came late, you forgot to transfer from salary account to EMI account, your wife withdrew money without telling you, but the fact is four cheques out of 36 (3 EMIS per month you see – car, house, motorbike)

2. Last year out of 12 EMIs for your educational loan, 3 were paid for by your dad. Not because of love, but because he did not want your credit rating to slip below default category

3. You cannot live for 6 months without your job and without your girl friend/ wife. Safety net?

4. You are afraid of losing your job which you completely hate. You have no choice but to stay on in this job and listen to your boss. Sadly your pregnant wife is in a similar situation.

5. You always pay slightly more than the minimum

Read More »from Signs you are living beyond your means!

You often hear the saying ‘The Rich are getting Richer….’ have you wondered why?

Five main reasons:

a. The power of compounding
b. Income far, far greater than expenditure
c. Understanding the Wealth Virtuous Cycle
d. Ability to take risk
e. Deep wealth buckets ensuring no asset class is ever reduced to zero

In the real world the word Rich and wealthy are used interchangeably, so in that context I will use the word rich here to mean and include the wealthy too.

a. The power of compounding: When the real rich invest they can let each asset class compound
without touching them for real long periods of time. If you had invested Rs 100 in the Sensex in 1979 it would be worth about Rs 20,000 today – 200 times in 33 years – amazing by any standards. However, if you were not really wealthy all the gyrations in the Sensex would have worried/bothered / scared you. That may have sent you running to the broker to liquidate. However, if you were really rich you could have invested a portion of your assets

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Ok if you are reading this, it means you are young! Not sure how young, but let me assume that you are really young. It means you are still wondering who will pay for your higher education.

You have just graduated and are wondering whether your parents can / should pay for your higher education. If you think it is their duty, you are wrong. If you think they are doing you a favor, you are right.

Here are some tips to handle money:

1. Paying for college education: College education really helps, and you should go. In fact it makes sense to do a good MBA (I mean in the top 10 MBA schools of India – or even Ivy League if you can afford it). However expect your parents to pay only for a portion of the costs. It is amazingly good to pay for your education, books, etc. In life you will NEVER ever regret this piece of advice. Sure, if your parents cannot afford it, you will be FORCED to find ways to fund it. Even if your parents can afford, it will give you a great feeling of paying partly

Read More »from How to manage money in your early twenties

Today all websites tell you that you are just not competent to manage your own money. This is followed by a corollary saying ‘therefore you need a financial planner’.

Be that as it may, assuming you have a financial planner, what are the questions that you should be asking him and then hope that he answers them straight?

1. Why are you in this business / profession?:

Does he say ‘just like that’ or does he say ‘I did not get any other job’ or is he there because he wants to help people go towards their life goals?

2. What is your qualification to do this business?

Learn a little about the various qualifications, please remember most of the titles are self taken! CA, MBA and CFP are relevant.

Caveat: I know planners without these three qualifications and who do a good job. I also know people with some of these qualifications who do a bad job.

3. What other professional training / courses have you done?

4. How many years experience do you have?

It is not to say the longer the better, but you

Read More »from 9 questions you must ask your financial planner

So are you one of those new investors, wary of the fluctuations and unpredictability of the stock markets, considering the Mutual Fund (MF) route?

MFs are no doubt a better option for new and risk-averse investors, who are not well-versed with the functioning of the stock markets. As most of us may be aware, an asset management company (AMC) or a MF house typically functions by accumulating the funds of investors, and employing their expertise for investing in diverse securities, in accordance with the investment philosophy and objectives of the fund house.

Now the big question that would arise in the mind of the investors is, “How to choose the right fund?” An ideal fund would be the one which offers you a decent return in the long run, without losing much of its value. The checklist below will help you select the ideal fund that caters to your financial needs and objectives.

Investment Goals:

Setting up investment goals, is the first and foremost step. Your entire effort to choose the

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Recently a friend was discussing his day to day expenses with his brother. The questions were:

How is your electricity bill half of mine?

Your total expenses on entertainment is almost 40% of mine!

Why is your grocery bill less than mine even though you have 2 children, and I have one?

Why have you not taken a foreign vacation at all?

Why are you still using your HONDA CITY which is 5 years old? Why are you not upgrading?

I do not like to compare, and would never have allowed 2 people to see each others numbers and comment. However these were brothers who came together without their spouses, and did not mind sharing their numbers. To me these questions were very funny, because some of the questions were answering some other questions!

One brother was very involved in the family budget and knew what was happening. The other brother was surprised at his expenses – and he was not sure about its accuracy. However when I reconciled his life earnings, and his current networth, his expenses

Read More »from How to live an inexpensive life

What Warren Buffet says about basic investing, spending, savings are so true. Most of us know it, however too many of us do not live it.

If it does make a change in your life, thank HIM (I mean God) because this is common sense. WB said it once, I am just reproducing it.

1. On Earning:

Do not depend on a single income. Invest and create a second/ third source of income:

This means when you are young your first task should be saving and investing. By creating a second source of income you are quickly reducing your dependence on your job. This could help you to set out on your own one day. The quicker you can do it, the better.

2. On Spending:

If you buy things that you do not need, you may soon have to sell things you need:

It kind of summarizes Gen X’s reaction towards ‘luxuries’. As a part of Gen X we were perhaps criticised for some of our expenses, so it could be a generational thing even for WB. However, having goals and knowing where you are going, and not spending just to ‘show off’

Read More »from The teachings of Warren Buffet

To every problem there is a solution, but what if this solution becomes a problem?

Let us look at some things which were heralded as a fantastic solution for a problem. Then we will see how these have now become problems and not a solution as it should have been.

Insurance, Home loan, car loan, educational loan, derivatives, leverage, credit cards…

Look at business Insurance. It is a brilliant risk spreading mechanism. If one man makes a genuine loss, it makes sense to spread the loss amongst all the businessmen. However once people started cheating by making false claims, and companies were no longer ‘Mutual’ (i.e. the owners and the policy holders were divorced) there were too many issues. Then the insurance companies became too big, life insurance became complicated with Variable Insurance, Viaticals became a big business……

Home Loan: In the 1960s Mumbai had a thriving co-operative movement. Minimum of 7 people got together, bought a plot of land and constructed a house. Then

Read More »from When solutions become the problem