Financial Boat - Sail Smoothly with a Smile

Financial Boat - Sail Smoothly with a Smile

Hi Dear Every one..

Arrange Your Life Jackets; 

Wear your life Jackets to start sailing in a Boat with some thrilling rides & deep dive into the knowledge of managing finances....

** A thoughtfully curated books on Business, Science, Technology & AI- Buy from Amazon

How to maintain your financials?

This is the time to share my experience w.r.t to money, maintain your financials, well I would like to clarify that i am not a financial advisor or do not recommend to adopt the outcomes of this blog or any financial view of mine in to your life and i do not recommend copying what is written in my blog and to adopt it to your life. 

Earn, Spend, Invest, Donate

I am just here to share my experience about the money you earn, spend, Invest and donate and how it is making a difference to your life each day as the day passes by. I can see that people are more cautious about spending money, some spends lavishly, and some spends moderately, and some do not want to spend and happy about the basic amenities of life such as food, clothing, shelter. They have a simple life. Well, we can see two types of people, one- who are really simple and another- who are trying to be simple but are really wealthy. I have seen people who do not have immovable properties such as townhouses, villas, flat, land etc. but they are the owners or shareholders of many businesses. Their belief is to maximize their returns and they believe the only thing is the equity which can maximize their returns. 

Volatility in the Market

On the other hand, few people believe that only investment in properties and gold have long terms returns and they do not believe in highly volatile share market and do not own a single portion of shares in any company but on the other hand they do invest in the mutual funds which is in fact indirectly gets their money invested in shares, but it is done by the fund managers. For their own belief they do not invest directly into the share but still exposed to the market conditions. There are third category of people who neither invest in shares nor in properties or mutual funds but keep fixed deposits in the banks or financial institutions or corporate fixed deposits.

28/05/2024

** A thoughtfully curated books on Business, Science, Technology & AI- Buy from Amazon

Maximum Return on Investments (ROI)

In today's world everyone wants to maximize their profits to the highest level and willing to take risk of loss of principal inorder to get more returns within a short span of time, I mean that they would like to put their capital at risk by booking higher interest rates and grow their portion of investments, wanted to play a big game which can be life changing, a good capital growth, or it can lead to loss of capital. Some always wanted to play a game of 10/20/30/30/10 employing their capital to various assets classes such as total savings divides them into 10% into Bitcoin, 20% in Equity, 30% in Insurance, 30% in Real Estate and 10% in Government bonds, Fixed deposits. There are people who actually do not consider the real estate expenses from their saving and it is a big chunk of amount which goes into their real estates. Everyone has their own level of savings and contribute in different assets at different levels. Infact Age is an important factor for savings. If you start saving in your early age you will reap the benefits of your investments. In this 21st century, the use of internet and vlogs, podcasts provides you tips on how to save smartly but you must not fall into any recommendations by any one you must do your own research before you invest your money, even if your investable amount is a penny however small it is, i mean even if it is 1 USD it has the potential to make you a millionaire. Hence every penny matters hence "If you respect and value the 'value' it becomes valuable".   

15/06/2024

Teachings on Personal Finance

I believe that you as a reader would agree with me that in schools teachers don't teach students about the habit of saving and how to achieve financial freedom or how to effectively use money. I believe there are some exceptional teachers who would say to save but no body teaches early savings, which is more beneficial provided where you put your money. There are no suggestions to put in lucrative deals which may turn out to be a scam leading to principal loss with no returns,  if you put your money  in safe deposits like FD's, government bonds, gold, real estate then i think it will reap benefits over the years hence the effective mantra or suggestion would be to put your money in safe assets in your early ages and watch them growing. Also do not think this as your emergency fund. To keep emergency fund, you need to maintain a separate corpus which can cater your needs, also people should do their own research and decide how they want their money to grow, of course you are free to set your goals but at least with 10,15 or 20 years horizon, a meaningful time frame.  The last explained paragraph is only for the people who want to safeguard their money even if the returns are lower or average and they are happy about it.

Multi fold in X Returns

If you are the person willing to take risk and wanted to grow your money in highly volatile market which can go grow or shrink your money with plus and minuses. This could be a dangerous bet but again without pain no gain, or no pain no gain, or you think its not a life changing thing, and wanted to dream big and willing to take big risks in life and you think that this is the only way out to become rich then there are financial instruments in the market such as stocks, equities, crypto currencies they are highly volatile and has the potential to grow your money in multi fold into x returns, there are good and bad sides of this market it can make you very happy or very sad. Hence it is extremely important to do full research before any major investments after all it is your hard earned money you are putting it to flow in the market and thinking it will grow. 

Diversification and Mitigation of Risk

I have seen people who take calculative risk and diversify their savings by injecting funds into different asset classes. which in fact lowers the risk and still make money but not at the same pace but with slighly lower returns but still happy with their decisions.  

Currency and Country wise diversification :

For investors, maintaining a long-term investment horizon is crucial. Prioritizing lower short-term gains for higher long-term returns, especially due to the compounding effect, can significantly build wealth. However, investment priorities ultimately depend on the individual. Some investors seek consistent, regular dividends, while others prefer capital appreciation. A blended approach might also be desired.

I believe individuals in any country should hold investments in their local currency. However, if their local currency is not strong against the U.S. Dollar, it is prudent to also hold investments in USD. For instance, consider the USD versus the Indian Rupee over time. If, in 2025, 1 USD equals INR 85, and an Indian investor invests INR 10,000 (equivalent to USD 118) in a mutual fund or equity scheme. If this investment grows to INR 20,000 by 2035 and if 1 USD reaches INR 102, then INR 20,000 would be USD 196.08 (20000 / 102). In this scenario, the investor would experience a real loss in capital value when measured in USD, there is a depreciation in value of the Indian Rupee due to several factors like inflation, country's economy.

Therefore, it is essential to consider currency value appreciation over time, alongside stock movements. If an investor has some exposure to the U.S. stock market or other international blue-chip or well-performing stocks, they can benefit from both currency value appreciation and capital appreciation in equity over a period of time. No body can time the market, but timely investment in small portion is possible through systematic Investment Plan (SIP), this will enable cost average to the investors portfolio and would lead to better wealth creation. Also would like to re-iterate consistency matters be in health and fitness or be it investment or be it work :-)

 

21 May 2025

Naming it as Financial Boat

Some of you reading my blog must be wondering why I chose "The Financial Boat" as the heading. Any guesses? If so, hold onto your thoughts and compare them with my answer, which I'll reveal shortly. If not, I'm about to unveil it anyway!

"The Financial Boat" represents the vessel in which you are sailing, which is essentially the money you are managing. The time it takes to travel from the starting shore to the final destination is your age. The winds and currents you encounter represent market volatility and inflation. The tools you use to sail and keep the boat moving are your qualifications and the job you hold. The end of the shore signifies your retirement, I mean your second innings of your happy life.

The challenge lies in reaching your destination with no "wrecks" on the boat, meaning you haven't lost anything. If your boat is in 100% good condition upon arrival, you are then qualified to "buy a yacht." I got a reason for you to smile. In other words, you can lead a successful life, having achieved the goal of financial independence.

One more thing: the speed at which you reach your destination reflects your Return on Investment (ROI). Let's assume this ROI is substantial, enough to cover your cost of living and ensure a comfortable life. I hope this brings a smile to your face, knowing you've reached FIRE — Financial Independence, Retire Early!

The definition of success is deeply personal. For some, financial achievement defines success, while for others, it's a collection of life's various aspects. A powerful position might be a major achievement for some, just as fame and the limelight are for others. There are also those who find success in contentment with what they have, free from complaints. Financial freedom is merely one component of success; happiness, however, is a major one. Health is paramount, and maintaining it often requires investing time in preventive care and fitness.

Earn while you live and then pass on to...

Even in the years when we are working and earning, we keep trying to grow our savings and investments so we can be ready for retirement and inflation is also another challenge. The money we invest may not be sufficient enough to meet the future expenses. The results we get from many investments depends on the market conditions which we cannot influence and it is beyond our control. We can put our funds into fixed-return plans that come from well-known corporations or banks. Today even bank fails due to non performing assets (NPA's) which is another long topic for discussions.

It is difficult to keep wealth safe and giving it to others as inheritance is another challenge. I rarely see many individuals giving to Trust or Non-profit organizations and I think that is truly admirable. Generally, people try to care for their families while they are alive and then leave their money to their children or grandchildren.

Health Insurance helps us in important ways. Although policy costs have gone up over the years, having Health insurance is crucial since it shields people from huge hospital bills. It is the price we pay for risks, unexpected events and things we can’t manage and which is not in our control. Having insurance means you won’t have to handle all of the costs of large medical bills by yourself but only a small portion to be paid and it purely depends on the terms of the insurance policy. Also if you can allocate money for the premium for two years or more in that way you may save again 5 to 7% of the premium cost and then you may also benefit of tax liability that may rise in next year and you are fully covered with the policy which you have taken for upto 2 years.. 

To be continued..

Happy reading. 

** A thoughtfully curated books on Business, Science, Technology & AI- Buy from Amazon