Wednesday, May 27, 2015

Common myths

Women are bad drivers:

Women may be bad drivers but that is not because of gender or something. It is purely due to lack of practice. Sample this: A man daily goes to office by his car so has ample practice. However, women generally prefer office bus and hence no practice of the driving. So essentially, it is the practice which makes the difference and not the gender. I can say this because I have a colleague who drives a SUV, daily to office. Instead of driving a SUV in Mumbai, I can prefer to bicycle from Punjab to Nagaland and walk back to Mumbai. She does this effortlessly and that too without uttering a single cuss word throughout the journey. On the other side, I also know a lady who broke her car's head light by bumping her car to a pillar in her society which was located right in front of the windsheild glass. On probing further, she is a housewife. Rarely drives. Kids go to school by school bus. Only on rare occasions where she is forced to drive. She knows her limitations  and she drives by the speed of 20-30. Husband is aware of her situation too. So whenever she has such adventures, he simply says 'Thats Ok' and goes to garage for fixing it. While I completely agree that such driving is extremely risky and dangerous, I am simply against of tagging it under 'Women'. It has nothing to do with sex

Men are better in finance than women:
Again this sexual differentiation is wrong. I am living example of other way round. My wife is much more financially sound than me. Most of the time, the plain truth is women are not allowed to take financial decisions. This is related to exposure rather than sex.

Onshore in IT:
In IT sector, a person who has not visited foreign country is dumb ass. On the reality, it is a matter of luck, skill and how close you are to your manager (the priority is in the listed order). Few years back, I happen to visit a foreign country despite being on notice period.  This was given the circumstance that I was new to the skill for which I was sent AND I had no more than once a monthly communication with my manager. So effectively, this was pure luck working for me.

Promotion in IT:
In IT sector, a person has to stay in same position for atleast 2-3 years before being promoted. Complete lie. I have seen people getting promoted in every 6 months or yearly. This was sorely on their skill, visibility and their closeness with their manager (priority is random and not as listed).

Pay scale in IT is huge:
In IT sector, pay scales are huge. This was true only during pre 2009 era. Things have completely changed now. I do not know which sector is better. However, from the study that I did, almost all sectors like telecommunication, production, banking (BFSI) and IT have similar wages with few exceptional cases. In fact, banking (BFSI) has huge variations when it comes to wages. The customer facing guy, sitting in bank and handling customer queries (and their rage) gets paid low as compared to guys sitting in underwriting arena. This is due to the importance of work done by respective guys.

Mumbai has lot of job openings for IT sector:
This comes from my cousins who belong to some other regions of Maharashtra and ask me for job openings. I simply tell them to login into Naurki or Monster and check openings sorted by region. Clearly: Bangalore, Hyderabad and Pune (in that order) are the locations where there is hiring process happening. For Mumbai, it is just replacement of some guys with other guys. Completely, based on project requirement and not organizational level recruitment.

Infrastructure in Mumbai is good:
This must be a cruel joke or day dreaming. If you are a tourist and travel between 12 to 5 pm, then yes, there are lot of options available which can make the journey comfortable. The question is, how many of us are tourists? We travel to work. So the timings are typically 8-11 in the morning and 6-10 in the night. I can challenge anybody to board a rickshaw from Malad west to mindspace, Vikhroli to powoi, from Powoi to any location in world, from Bhandup to any location and so on.
It is amazing how people simply compare flyovers or number of trains. I have this friend from Kolhapur who said that infra is good in Mumbai (than Kolhapur) because Mumbai has X number of flyovers. Common, compare the flyovers with respect to cars and people living. This is true picture.

Younger generation does not love Mumbai as compared to the older generation:
Big fat lie. We (provided 28 is considered as younger generation) love Mumbai as much as our forefathers loved. Surely, we hate the poor infra, frequent light cuts, water scarcity. So we simply hate the facilities available here and not the place. I know of one girl who said 'only Mumbai' location as a condition in her matrmonial site. Even though we hate the infra, we are completely aware that this is due to the population explosion and we ourselves electing wrong people. Example: the traffic that we face at 8 in the morning on the toll nakas is due to the fact that more people are using their vehicles to commute rather than using public transport.

Cricket is an outdoor game:
Sure, this is true in all parts of the world except Mumbai. Legendary author P.L. Deshpande has highlighted how the so called game which was supposed to play in a a proper ground is being played in 5 by 10 feet roads. However, point to note is, 90% of the people here who speak about cricket have not held a cricket bat throughout their life. These same guys can literally advice Sachin Tendulkar on playing straight drive.

Mumbai people are busy and are not helpful:
Shitty people say this. Sure, if you ask an office going person to chit chat with you for half an hour in the morning, you will get hands down rude looks from him. However, the same person takes leave without pay when a person from neighbouring building is in hospital and needs somebody to talk to doctors and buy medicine from the shops. It is all about priorities, here in Mumbai.

You are not patriotic if you do not know Hindi.
WTF. How is hindi as a language (even if it is national language) related to one's love with his country. There are many non metro guys from Maharashtra and South India in navy, army and air-force. When these premier institutions do not discriminate on the basis of language, how can we people do it. If a person does not know hindi, the only meaning is - he does not know hindi. Thats it. However, people tend to infer that if a person does not know hindi, it means he does not love India. Going by that logic, if a person does not know everything about Tiger should also be declared as a person who does not love his country. And further, tiger hunters should be declared as anti-nationals and convicted under 'criminal activities against a nation and war against a nation'.

Smart phone makes you look smart. No elaboration required.

Mumbai wala is rich:
People in rural Maharashtra think that those who live in Mumbai are ridiculously rich, rude and delicate as flower. However, I suspect, they also think that Mumbaikars wear their underpants on their trousers (just like Superman does) to show off (either underwear or money, I do not know). Whenever, I happen to visit interior Maharashtra, I happen to face this. If I ask a shop keeper 'how much' he says 'it cheap for Mumbaikars'. If I ask 'how long will it take me', the answer is, 'oh don't walk, you Mumbaikars get tired easily'. My relatives over there have this peculiar habit of not pronouncing words clearly and if I ask to repeat the question - 'why Mumbaikars don't pay attention'. I have no clue who sows these seeds. However, they are pre dominant and there to face.

Monday, May 25, 2015

Rikshawala and me

Last week, I happen to travel by rikshaw twice with my wife.

First, it was an auto from my place to station and second time was when we were coming back in the evening - from station to home.

On the first occasion, the meter read 43 rupees. I gave him 45 rupees. He said he does not have change. I said - OK and walked away. In the second instance, the meter read 38. I gave 40 to autowala and again he said that he did not have the change. Again, I said - OK and walked away.

My wife was surprised by this behaviour. She asked me, "how can a kanjoos like you, walk away without talking back 4 rupees".

Here is what I told her.

4 rupees are offcourse important to me. However, I do not let go money on daily basis. Actually, I rarely take an auto. I actually hate autowalas because of there attitude rather than because of their over-running meter. If any of the reader has any sympathy for autowalas, go to powoi and try to catch auto for ANY location. Better, go to Malad west and try boarding an auto for Mind Space.

In rare cases, when I do take auto, it will be when I have some company. It is absurd to pay auto when you are all alone. Especially, in Mumbai, where we have good bus facility. The minimum fare of 17 rupees is for first 1.5 km. And this increases exponentially, as the km increases. BEST will charge only 8 rupees for this much amount of travel. However, when you are 2 people travelling, BEST fare would be 16. In this case, it makes sense to pay 17 rupees to auto for the additional comfort and guarantee of a seat.

I can quarrel and get my 2 rupees back. However, that will ruin my mood. This may affect the work for which I was originally travelling.

And while returning too, I could have quarrelled and got my 2 rupees back. However, that will again ruin my mood. I will unnecessary be hyper and increase my blood flow for 2 rupees. I will carry this bad mood to home and most likely, will pick up a fight with somebody at home.

Another important point to note is, I did not have exact change to give it to him. Offcourse, we can argue that how can we give 38 rupees change. But that will not change the fact that we did not have the change.

So forgetting about the 4 rupees and moving on was the best decision for me. Sometimes, it is better for us to think beyond money.

On a lighter note: Life will not always give you change. You have to bring change, from home, specially, if you are travelling by an auto :-)

Saturday, May 23, 2015

When to exit from Mutual Fund

We all find various theories on when to redeem your mutual fund units. There is no right  or wrong way. There is always a personal way because its personal finance. If you google on when to redeem mutual funds, there would be below reasons:

  • When you need money (pretty obvious)
  • When you are 3-4 years away from your goal AND market is high
  • When the mandate of the fund changes. Example: you started to invest in this fund for its large cap behaviour. Over a period of time, it got into mid and small cap. However, you already have specific funds which invest in mid and small cap. So what do you do? Get rid of the overlapping fund which changed mandate

Here is my story: why I redeemed my mutual fund units:

Long back i.e. in 2010 I was completely unaware of financial products. I was not even in taxable bracket. Since my friend bought some tax saving mutual fund, I thought even I should buy something to save tax. How stupid of me!!!

I called one of my relative who was a mutual fund distributor. I told him that I want some good tax saving mutual fund to invest. He suggested Reliance Tax Saver and HDFC Long Term advantage. I bought both of them. Yahoooo, my first equity purchase. I was happy that I could save tax. At that time, I was in a very small company with 200 people from India. During the end of financial year, I went to concerned person in my company and told him about my investment. He asked me if I know what is my tax liability. I said no but whatever it may be, I have tax saving investment. And then came the punch, "Viren, your income does not cross the taxable bracket". I was disappointed because my investment logic was wrong AND I was not even in the taxable bracket.

The good thing was the agent did not take any advantage of my lack of knowledge. He gave me a decent fund and that too with a dividend pay out option (I wish it was growth option). Thank God it was not dividend re-invest. Cos that re-invest would be locked in for 3 more years.

All these years, I simply ignored that fund. This was not out of the logic that equity funds are for long term or something. I was not aware of what is equity, what is mutual fund or what should be my holding period. I simply let it lie there because I did not need that money any time soon. So I simply choose to check it occasionally and be content that at least it is more than what I had paid for. I had absolutely no idea what to expect from the equity funds.

From last 2 years or so, I started taking investments seriously. I started reading blogs, books and magazines about investments. Over the period of time, I came to know that the funds that I have are not so bad after all.

Today, I think, I have 1% of the required knowledge in investments. My expectation from equity is in range of 10-12%. I am aware that I cannot buy and sell stocks at right time, consistently. Hence, I have chosen the ordinary path of mutual funds. Slowly, I also mapped my holdings in a free portal to check what are my returns. I chose perfios. No reason to choose this.

In perfios, I got to know that my HDFC long term advantage is giving me 15% XIRR. See below snapshot.

This was above my expectation. Still I was not very happy with it.

There was something not right. It took me good amount of days to answer my self why I was not comfortable to see long term advantage in my folio. The answer was it was a dividend pay out option. I want my portfolio of growth funds. The reason is I do not want to eat children of my investments. This is exactly what I did all along. The dividend paid out was promptly consumed without guilt. Had the same money be in market, it could have earned me a decent 10-12% return. Here, I ate the children of my investment. This was not what I wanted to do. If my horizon is 15 years, why have dividend pay out option and eat their children. Get into growth mode was my next plan. When I checked, I found that one cannot change from dividend pay out to growth. There were only 2 options then, either have dividend reinvest (which I hate anyways) or switch to HDFC long term advantage growth option. I found no good reason to buy growth option. Since this fund anyways overlaps with some other funds that  I have chosen. So I was left with only one option and that was redeem it. Since this fund was not at all attached to any goal and given the fact that I had no urgent requirement of the redeemed money, I just switched the units from HDFC long term to HDFC Balanced fund (Read how to select a Balanced Fund here).

Next plan of action is to redeem Reliance tax saver too. In this week, promise.

Saturday, May 9, 2015

Sacrificing today, for a better tomorrow

In frugal living, we always say that procrastinate your expenses till they become absolute necessary. There are various day to day expenses that cannot be avoided. They can definitely be minimized but cannot be avoided. However, there are various other expenses that are good to have and can be post pone for tomorrow and tomorrow and tomorrow. The expenses in this list can be like buying a high end car, upgrading your furniture, building jacuzzi in your bathroom, tours and travels, expensive gadgets and so on.

Out of this, tours and travels finds special mention.

Nainital Lake (credit: my own camera)

Over the period of time, I have started believing that this (travel) expense should not be post pone infinitely or till retirement. I have tried to list the reasons for this thinking below:

Your place to visit depends entirely on your age. Today, I may want to go to Disney Land. However, at the age of 40, I may not have liking to visit place like an amusement park. So at that point in time, I will regret not going to Disney Land when I had the urge.

Most people retire by 55 or 60. If they defer all their travel plans till 55, they will have a huge list of places to travel. At that time, it would not be physically possible to travel so much.

Age takes a toll on your body. By the age of 55, you can no longer trek like an 30 year old. So off goes trekking.

Age takes a toll on your mind too. You may appreciate a beautiful garden at 30 years of age. However, the same garden will not be appealing to you at 55.

The money that lies in your account may influence your decision. So at 55, Mahabaleshwar is no longer interesting. Switzerland is the place to visit.

At 55, your children are in late teens. So they will influence your decision. If you want, Kashmir, be prepared for Singapore.

At 55, you are less likely to explore the places. The tours would be branded tours and all the places would be visited like 'touch and go'. In your 30s, you are more likely to plan your vacations on your own. You will spend more time on places you loved and less likely to roam around. Example: My wife and myself went to Nainital. Out of 5 days, we spent 3 days in Nainital city and market. Both of us have no interest in seeing wild animals. So Jungle safari around the same area was out of question. This was planned by us and hence we had liberty of choosing where we are going.

At 55, your social status too would come into play. Frankly, I do not care where my friends or family go for vacations. Today, if I can afford X place, I go there, if not, NO. Simple. However, things may get complicated till the time you reach 55. Friends and peers will influence your decision. "Sale itne saal baad jaa raha hian, Australia to banta hian". At that time, you cannot say, "bhai, maine abhi tak Ambernath nahi dekha".

Only a hard core (vegetarian) foodie like me will appreciate this point: At 55, you cannot have anything and everything that the place has to offer. Example: When we had been to Udaipur, the hotelwala guy asked me, "thodi mirchi dalun kya, muh khul jayega". My response, "Han bhai, de do". At 55, you will have to think before saying yes. Your BP, diabetics or something else will not allow you to enjoy the food. Dal-Bati-Churma was amazing and must have.

You may exhaust your savings on your offspring's marriage or education. Nothing wrong or right. It is just that you will not have money for travel. Or you may have to compromise on the location.

Psychologically, you will need a break. You cannot keep on working without taking leaves. These days, the company will not allow to carry forward certain amount of leaves after a threshold. So instead of wasting leaves, plan some trips. If money does not permit Kashmir, so what? Plan for Mahabaleshwar, Matheran, Konkan, Goa or some other nearby places applicable to you.

Travel allows you to meet new people, explore places, taste their food, wear their culture, appreciate their living, appreciate what you have in your own life when you see poverty, capture snaps, capture moments, re-live those moments after X number of years and have fun.

On a special note: I am not paid by makemytrip or Veena or Sachin travels to encourage travel. It is upto you, as always :)