Letter #10 Investing Tips I follow: India
Quick Tips and Rules of Thumb I follow for managing my personal finance in India
I had tweeted about this, and it got more attention that I expected, hence sharing on email as well.
Some tips I follow to manage my personal finance in India (Tweet Thread)
If someone suggest insurance+ investment combo opportunity …RUN:
NEVER EVER mix insurance and investments. It makes no financial sense. So many of us are stuck paying premiums for junk polices like Jeevan Anand, just because our neighbourhood uncle convinced our parents that it is a good deal.
Should we start a “Jeevan Anand Peedit Sammelan”
Whenever someone talks about “great returns” always benchmark it against its peer. Eg in last one NIFTY 50 gave 42% returns. Almost everything did well post the covid market crash. I am pretty sure some agents are trying to sell you policies quoting an awesome 20% return last year . Ideally ignore the last year anyways
Fee only financial planners ONLY .
Avoid your bank’s wealth managers at all costs. The incentive of anyone who makes money via your investing is not aligned. More often than not they would try and sell you what gets them maximum commission rather than be beneficial to you.
Direct mutual funds only: There is no real advantage of giving commission to the brokerage. Direct mutual funds not only give better returns, they are now super accessible. Just go open an account with Zerodha (referral link) and start investing there. I liquidated all my MF holdings after they crossed the threshold of exit load and moved to Zerodha
No point buying an apartment:
I personally see no point plonking in a huge sum of money into an apartment, especially in places like Bangalore.
– The rise in real estate is more or less correlated with stock market growth
– Rental yield is just 2-3%.
– The houses you want to stay would not have the same EMI as rent ( as some ppl claim). You just end up paying “Rent” to the banks, and its super expensive and you are locked in
– There is also cost of non mobility
The only reason to buy a house is emotional which obviously cannot be priced in. If owning a house helps you feel good and has a positive effect on your self image, thats your call. To me at the moment it makes no sense. I may eventually buy when I have enough spare.
Book I recommend
I typically recommend Lets Talk money by Monika Halan . It is simple, and good enough for most people. Personal finance should be simple, you are not managing a hedge fund