Friday, August 28, 2015

Financial Porn revisited

In my last article, we saw an example of financial porn. Read it here. In this post,  let us see the relationship and why financial porn is so called.

Imagine, you are watching a porn movie. What is your second reaction (first reaction is highly subjective and hence we jump to second reaction). Let me guess - "Wow, how did they manage it?". You get super excited due to both the reactions. However, the problem is you cannot implement it. Rather, you cannot recreate the scene yourself. The reasons could be:
  • The actor's motivation and energy is fueled by monitory benefits
  • The actor is helped by steroids
  • There are various cuts and edits before you see the final movie.

Tuesday, August 25, 2015

Help on financial situation

After reading few of my money related posts, my friend asked me to talk to his uncle. When I inquired, he said he needs some planning and hence I should meet him and help him. My immediate reaction was - wrong number. I am not the right person for financial planning. I said that I can arrange for the names of fee only planners. Pattu has collated that list and is available on his site. However, his uncle was not ready to meet any professionals and pay them. My friend again requested to meet his uncle. I had to relent, finally.

The uncle belongs to low income group. His monthly earnings are around 15k from a job. He is extremely frugal and it felt really nice meeting him. As per him, his financial status is comfortable. My friend felt otherwise and hence the meeting request. I met his uncle few times to discuss about his goals and cash flow.

Monday, August 17, 2015

Maid in India

Unlike US, India does not have any Social Security concept (although, Americans doubt about timely usefulness about SS). The US Government encourages (in form of tax sops) its people to have IRA i.e. Individual Retirement Account. Moreover, the employer then matches the employee’s contribution (similar to our EPF). However, they still have the mental cushion of the SS.

This is not the case in India. The salaried middle class saves part of their salaries for important goals. Since middle class people generally tend to be educated, they manage to save some amount from their salaries. However, this is not the case for lower income group people like maids (in India).  They do not have any mandatory deductions. They want (may be need) all their money in-hand. For them, CTC is the salary.

Most of the maids are not well educated and hence they are doing daily chores for others. Moreover, they also tend to blow away all the money they get. Major part (if not all) is spent on necessities while some part is spent on the wants.

Tuesday, August 4, 2015

Savings Bank account is not yet dead

In one of the forum, there was this query – “I have 10 lakh rupees available. I wish to consume this in a month. So please suggest an investment vehicle for 3-4 weeks maximum”.

Answer to this question varies and depends upon the end user and advisor’s recent experiences and rarely on the exact requirements.
The more convenient answer to this question would be “keep it as cash in your pocket” or “in Saving Bank account”. However, people do not want to hear these answers.