Sunday, July 20, 2014

Personal Finance

Ashal hits the target with 100% accuracy when he says that personal finance is personal.

To some people, this may sound like some marketing line "Personal finance is personal" or some may say that "even we understand english words, whats next?" 

This line has more in-depth meaning, than it looks on the face.

What it actually means is that: copy-paste rarely works in personal finance. What may be a brilliant advice to a person X would not necessarily be brilliant (even, good advice) to a person Y. Irritated? Let me explain with few examples.

1. Few days back, my friend told me to compare various online term plans. I gave him "this post" and compared on the basis of parameters that I thought were important. He told me that, I did not compare on other factors like customer satisfaction, number of outlets in city, etc. Although, his factors are good enough to consider, they are not the one which I thought would influence the decision. Here, you can understand that the personal choice matters. 
For me LIC premium of 13k would be a turn-off however, some person may be eager to ink with LIC for their 97% CSR. So again, it is personal.

2. By nature, I am a frugal person. Like, I don't mind walking 15 minutes instead of taking an auto or bus (given that, I have time in my hand). Co-incidentally, I rubbed this frugality on my friend (I never intended to do anything). He started doing less shopping on ebay, myntra and other online websites. All this unknowingly to both of us. He went for a holiday to his sister's place for 1 week. After returning, he started giving me advice on living life. As any other human, I was not really very interested in listening to other's uncalled advice. 
When I heard the whole story, I got amused and little angry too (angry, because I was being blamed for his money saving habits. WTF). And amused because his sister gave him an awesome advice to living a happy life. To cut the story short, he went to his sister's place and his sister noticed his frugality. The lady scolded him for being cheap and advised him to live life king size. She told that instead of living within our means, we should focus on increasing our means. 
Brilliant advice but to a wrong person and at wrong time. This advice would have been wonderful for a person who is already living within his means and now you are encouraging him to increase his means. No, I am not yet mad, there is a fine line here. This advice to a person who saves say 50% of his income would mean he increases his income by say x% and sub-subsequently, increases his saving by around x%. The lady in the story did exactly the opposite. Now, my friend is  hell bent on spending everything and advises me to leave my cheap habits and live my life.
Do I care? Off-course not.

3. "Suggest me one best mutual fund", is the line that we can see on all the financial portals. This question is incomplete. The real question could be: "Suggest me a mutual fund to invest considering, my equity to debt ratio is X and my current investments are into this fund with their percentages (or even actual values) are Y". Unless and until someone discloses his current investment funds, it is almost next to impossible to give any advice. This is personal finance and it varies person to person. I may have enough large cap exposure and may think that mid-cap is what I need. However, telling others to invest in some mid-cap without knowing his current investments will not be a good thing to do.

4. One of my friend is crazy on bikes. He has one bullet for daily commute and other spare bike when his bullet is in service center. To some this may sound foolish. This is not. He spends money on things which gives him happiness and cuts spending mercilessly on the things which are not important. Please do not get this point in contradiction with #2. The guy in #2 was spending everything. This chap earns good, saves lot, is frugal and spends only on things which makes him happy and that too in a limit.

The whole point of this post is when I answer your question on best MF as "I do not know", I really mean that I do not know which is the best MF for you. I can only point you to the websites or posts which can help you decide the fund which is suitable for you. If you insist, I may give names of few good funds in random. Does that suit you? Yes and No, both. Happy investing.


  1. 'Personal' finance is about 'YOU', the person. So it's time to 'personalized' your finance. Some people get it early and some late and some not at all. That's life.



    1. Ashal bhai, you summed up my complete post in 2 lines :)