10 doctrines to wise retirement planning

Let’s begin on planning finance for retirement:

It is usual for many of us to aspire for a financially secure and happy retired life. However being financially prepared to meet the demands of retired life by saving and investing requires considering and following the 10 doctrines of wise retirement planning.

A look at the 10 doctrines to wise retirement planning:


1) Provide for contingencies:


Most of us tend to underestimate our retirement needs. Provision for medical emergencies with inadequacy of medical insurance in old age requires financial provision. Lack of government social security schemes and retirement benefits to self-employed and private sector employees creates requirement for more provision for contingencies after retirement.


2) Think that you will live long:


This is true with increased life expectancy. Now you will have more years of life after retirement. Thanks to medical advancements. So it is better to plan for the additional years and avoid living frugally in old age.


3) Plan that you will retire early:


It is wise to provide for contingencies arising that require you to retire early. You could suffer ill health, lose your job, or need to care for a sick or elderly member of the family. Women may have to opt voluntarily to look after the family needs. All this requires more savings for retirement needs.


4) Beat the inflation before it beats you:


Inflation affects the personal finance needs of the working class, but pay rises could help them resolve it to a certain extent. However the retired have to save more to reduce the impact of inflation. Investing in modes that give you extra returns could help greatly.

Investors come to me and say “I would like to accumulate 2 crores and retire”. But when we really work out the inflation adjusted retirement corpus, the 2 crores would not be sufficient for him to have comfortable retirement. 2 crores may feed you enough in the first year after your retirement. The returns from the same 2 crores will not be sufficient for you take care of all your needs on the 10th year after your retirement because of the skyrocketing inflation figures.


5) Provision for increased medical expenses after retirement:


Most of us underestimate medical expenses after retirement, with these expenses being inevitable in old age. Hence more provision for medical insurance helps. A consideration of your family’s general health, family history of certain genetic disorders, and the class of hospital you get treated would help in proper estimation for medical insurance.


6) Provide for your spouse and dependents who may outlive you:


It is inevitable that this need should not be overlooked. Your spouse and dependents need to live a secure financial life after your lifetime. Taking up insurance policies during your working life and well thought out retirement planning will take care of your dependents and spouse financially.


7) Realize you need to be vigilant about sources of retirement income:


Sometimes we may be ignorant of benefits on retirement like provident fund, gratuity and other benefits. In India the lack of social security schemes after retirement makes it necessary to invest more in good income generating sources for steady flow of retirement income. The advice of investment consultants, along with financial education and information contributes to good financial standing after retirement.


8) Educate yourself about retirement savings plan management:


When the majority is relying on the pension schemes in the form of ulips offered by various public and private insurance companies, as a smart investor you need to understand the hidden charges of these pension policies. These policies are all heavily front loaded.

So you need to evaluate various investment options available for retirement. You need to accumulate sufficient knowledge in this regard. In addition learning to keep track of them with professional help makes these saving plans work for you.


9) Plan for an income for life:


Your retirement plans need to be financial plans to make income last you a lifetime. Pensions or annuities providing best income need to be safeguarded, as withdrawing large sums from them could end you in financial insufficiency in the final years of your life.


10) Take professional investment advice that works:


Many do realize the importance of financial advice from professional financial advisors, but in practice seek it from family, friends and colleagues. A right financial advisor could give you good investment advice to have financially secured retirement ife.

A final note:

I am sure you want to emerge financially secure for your retired life and will follow these 10 financial tenets to wise retirement planning.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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SWEET AVAL / VELLA AVAL / SWEET POHA (SWEETENED BEATEN RICE FLAKES)

SWEET AVAL / VELLA AVAL / SWEET POHA (SWEETENED BEATEN RICE FLAKES)
BEATEN RICE 
Flattened rice (also called beaten rice) is a dehusked rice which is flattened into flat light dry flakes. These flakes of rice swell when added to liquid, whether hot or cold, as they absorb water, milk or any other liquids. The thicknesses of these flakes vary between almost translucently thin (the more expensive varieties) to nearly four times thicker than a normal rice grain.
This easily digestible form of raw rice is very popular across Nepal, North East India and Bangladesh, and is normally used to prepare snacks or light and easy fast food in a variety of Indian cuisine styles, some even for long-term consumption of a week or more. It is known by a variety of names: Poha or Pauwa in Hindi, Baji in Newari, Pohe in Marathi, Chindé in Bengali, Chira in Assamese, Phovu in Konkani, Chudaa in Oriya and parts of Bihar and Jharkhand, Atukulu in Telugu, Bajeel or Bajil in Tulu, Chudwey in Urdu(Dakkani), Aval in Malayalam and Tamil, Avalakki in Kannada, Pauaa/Paunva in Gujarati, and Chiura in Nepali, Bhojpuri and Chhattisgarhi.
Flattened rice is also a convenience food and very similar to instant mashed potatoes in uses and spirit.
(Info courtesy – Wikipedia)

SWEET AVAL / VELLA AVAL / SWEET POHA (SWEETENED BEATEN RICE FLAKES)
This dish is usually prepared for Krishna Jayanti as Lord Krishna loves Aval (Beaten rice) and Vellam(Jaggery). Since my daughter has a sweet tooth and keeps asking for something sweet once in a while I decided to make the Vella Aval. Personally Iam partial to the savory versions of Aval.

Close up of the Sweet Aval

Ingredients
Poha (Beaten Rice flakes) – 1 ½ cup
Jaggery – 1 cup or 6-7 cubes
Cardamom powder – 1 tsp
Freshly grated Coconut - 2 to 3 tbsp, grated
Ghee - 1 tsp (optional)
Method
I have used the thick slightly reddish Aval in my recipe. Check for husks or stones if any and remove them from the Aval. Put the Aval in a colander and rinse it thoroughly. Let it rest for about 15-20 minutes. The aval becomes soft, keep aside.
Meanwhile crush the jaggery with a mortar and pestle. In a wok, add the crushed jaggery and ½ cup of water. You will notice theat the jaggery starts to melt. Add the cardamom powder to the jaggery and when the jaggery completely melts and starts to froth. Add the aval to the jaggery mixture and mix the aval with it properly. Add a teaspoon of ghee. Close with a lid and cook on a low flame. The steam that builds up slowly aids in cooking the aval further. Cook for about 10 minutes on a low flame. Keep opening the lid and stirring every now and then so that it doesn’t get burnt. Finally add the freshly grated coconut. Switch off the gas. Put the lid on the wok and keep closed for 5 minutes. Serve hot. Enjoy the sweet Aval.

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8 Financial Blunders And How To Fix Them

How to become better at managing money? The best way to start is to avoid making costly mistakes that will be pulling you down and taking months or even years to recover. Many financial blunders are easy enough to avoid once you know what to watch out for.


1. Decision Paralysis


Today there are so many choices, so many financial products and so many offers. It all bundled with financial jargons. It becomes really difficult for one to understand. Also there is plenty of information available on the web, on the media and on the neighbourhood. This makes decision making much more complex. All these things coupled with the fear of making a wrong financial decision lead us to the DECISION PARALYSIS. We don’t take any decision and start postponing it.


2. Ignoring Personal Finance


Most of us think that we need to work hard to make money and build wealth. I agree that you need to work hard but that is not enough. You work hard for money. How the hard earned money can be left idle? If you could focus on your personal finance, your money will start generating passive income with which you can achieve your financial goals with comparatively less effort.


3. Peer Pressure


Peer pressure plays a notorious role in taking wrong investment decision. One feels very safe when he takes the decision, which everyone around him/her has taken. But a product suitable for your colleague or your cousin need not be suitable for you.


4. Too early to plan retirement


You may be saying ‘who me? I am too young to be thinking about retirement”. It is not so! Rethink. You should have started thinking about it yesterday. Because time flies quickly. If you were smart, and planned for retirement when you are young, your retirement years will be really those “Golden years”. If not you need to compromise and you need to work longer and retire later than others.


5. Trying to make quick buck


Risk-Return Tradeoff Principle is a very basic and profound investment principle. Low level of risk is associated with low potential returns, whereas high level of risk is associated with high potential returns. So as to generate high returns one need to tolerate high risks. If you are comfortable only with low risks, you can expect only low returns.

No one can defy this basic principle. A scheme cannot deliver high returns with low risk. There were no such schemes in the past. There are no such schemes in the present. There will not be such schemes in the future too.
Finance company deposits which assured high interest rates have defaulted. One of the latest examples would be the ponzi scheme by Madoff.
Whenever you hear about such schemes with low risks and high returns, you understand it is an illusion. It is better to ask more questions and get it clarified, instead of making assumptions.


6. Investing in things you don’t understand


If you are choosing to invest in a scheme which you don’t understand then you will also not understand what type of returns to expect.
Do you understand the Highest NAV Guaranteed Schemes? Who gives the guarantee and what is guaranteed?

Do you understand Futures and options completely? Ultimately from where does money come if you are profiting and where does the money go if you lose?


7. Investing in what is hot


If you are investing in what is hot, then you are following the crowd. If you follow the crowd, you will get what others are getting. You will not get anything more. You need to be fearful when others are greedy and you need to be greedy when others are fearful. So don’t go by the market trend or the hot pick of the month. Think like a contrarian and follow value investing.


8. Too many cooks


If you have different agents or advisors for different investment products (insurance, mutual funds, stocks…….), then none of them will know your complete picture. Their advice will be very limited and biased towards their products only. Too many cooks spoil the soup.


How to fix these financial blunders?


Give priority to your personal finance and spend some quality time on that. We all work for money. So we need to efficiently manage our money to secure our future.

Set your financial goals like kid’s higher education, buying a home or retirement with more details. Work out a personalised comprehensive financial plan to achieve the goals. Then create an action plan for the year in sync with the comprehensive financial plan. Be committed to your financial plan.

Obtain assistance from a professional financial planner who has knowledge and access to all financial products in the market. Ask the right questions and understand the plan and products before proceeding on the same.
These tips will refrain yourself from making those financial blunders and managing your money better.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Ko Movie Review - A Refreshing Entertainer

The first word that comes to your mind after you walk out of the theatre watching "Ko" is brilliant. Brilliant in the sense that the movie is different in terms of its storyline and it has got the right mix of elements be it romance, glamour, revenge etc. K V Anand after his blockbuster "Ayan" has directed this "Ko" which is truly a winner at the box-office. The main stream actors right from Jeeva, Ajmal, Pia Bajpai, Debutant Karthika, Kota Sreenivasa Rao and Prakash Raj have all given a note worthy performance which makes this movie a power house of acting.

The plot is different which cannot be revealed for the obvious reason that it would be a complete spoiler to the efforts of the "Ko" team. There are two stories which run parallel to each other in the triangular love angle between Jeeva, Pia and Karthika while on the other side its the dynamic political scenario that unfolds before an election in the state.

The twist in the tale is not unfolded till the fag end of the movie but that doesn't bring down the entertainment quotient of the film. But when the twist is thrown open, it comes as a rude shock to the viewers on how can a story be so clean and well knitted and to be honest no sequence in the film is predictable. The end again is compromised for the heroism but a worthy ending considering the way the sequence were mounted that ends in an intriguing climax.

The film runs for 160 minutes and except for the song immediately after the interval none of the sequences seem irrelevant. The flashback sequence is also crisply handled which is a huge bonus for the pace of the film.

In terms of acting, one can say it is flawless from everyone including the debutant Karthika who shows lot of promise like her mother Radha. Jeeva and Ajmal have strolled on a powerful platform and are brilliant in their roles. Pia Bajpai shows little glamour and at the same time her characterization is well structured. Veterans Prakash Raj and Kota Sreenivasa Rao have had a stroll in the park when it comes to their acting.

K V Anand has deftly handled a powerful script to perfection. Music is a let down except for the "Ennamo Yedho" song. Cinematogrpahy by Richard M Nathan is the next star of the film with scenes shot at difficult camera angles that are a treat to the eyes.

"Ko" a must watch clean entertainer.

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Zokkomon

Director           Satyajit Bhatkal

Cast                 Darsheel Safary, Manjari Fadnis, Anupam Kher, Akhil Mishra, Tinu Anand, Jai Vyas, Gargi

Year                2011

Genre              Action

He is here!!! India's first "young" super hero. He is 4 ft tall, all of 10 years old (probably) and uses the marvels of science that Magic Uncle (Anupam Kher) dishes out to him that make him fly and levitate in a cloud of smoke and disappear within the blink of an eye into the same cloud of smoke. He throws paint / ink balls at the enemies of society (children in particular) and also sends a pair of boomerangs flying through the air as and when required (with no proof of their coming back ... er did I burst someone's bubble). He wears red and black and also an eye band of sorts that defines his persona and makes his eyes glow orange (like a fire) in the dark. He is not your regular superhero. He is a phenomenon. He is the hope that lives inside the heart of every child. He is the manifestation of what every oppressed child in the world wants to be. He is Kunal aka ZOKKOMON!!!

Kunal has been wronged not only by his blood relatives but also by God who snatched away his parents at a tender age leaving him in a boarding school where he is well taken care of but doesn't have a family anymore. His chacha (paternal uncle) goes by the name of Deshraj (Anupam Kher) - a slimy old man who wears wig and spends most of his time pocketing money from various government grants for his school. Deshraj is also his sole gaurdian currently and decides all of a sudden that Kunal cannot study in boarding school but must do so @ his village Jhunjhunmakastama. A village of the living dead of sorts - people who apparently are alive but live under the morbid fear of the local god man and a bhoot bangla (ghost house). They are superstitious to the core - a fact which is only fuelled further by Deshraj through the Dhongi Baba (god man). Deshraj goes to the extent of "losing" Kunal @ Esselworld and then pronouncing his dead so as to claim the 75 lacs that Kunal would get rightfully when he turns 18. However, Kunal makes his way back to the village with some help from Kitto Didi (Manjari Fadnis) only to find himself back @ the Bhoot Bangla where he meets famed scientist Vivek Rai aka Magic Uncle. Together they decide to take on Deshraj and his cronies and ensure that they put an end to the pain that the kids are going through.

What is disappointing about Zokkomon is that Disney hasn't paid any attention to detail like it normally would. Just because its a Bollywood movie doesn't warrant you exposing Darsheel Safary's complete lack of basketball playing skills. I mean he makes SRK and Rani Mukherjee look good (GAWD!!!) at the game. First time director Satyajit Bhatkal doesn't leave much of a mark and one can only hope that he gets better with experience. But he is definitely made to look good by the entire cast which has given a solid effort. Notable performances would include child artistes Gargi &  Jai Vyas who play Kunal's friends in the village with a name that can barely be remembered. Manjari Fadnis is at her bubbly best and a tad over the top as always. That she is pretty makes up for her lack of acting talent. Disney has smartly left enough open for a sequel/s but will need to put more effort in the finishing department to come up with a good movie. This one is a 5 on 10 in my books. A definite hit with the kids though. Parents beware - Zokkomon will very soon burn a hole in ur pockets just like he did with Deshraj's pants. Loads of revenue forecasted for Disney through merchandise. Cheerios friends till the next time.

Watch the trailer at http://www.imdb.com/video/screenplay/vi1491311897/

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Dum Maro Dum

Director           Rohan Sippy

Cast                 Abhishekh Bachchan, Rana Daggubatti, Bipasha Basu, Pratiek Babbar, Govind Namdeo, Anaitha Nair, Aditya Panscholi, Bugs Bhargava, Vidya Balan, Gulshan Devaiya

Year                2011

Genre              Action

That Abhishek Bachchan will live in the shadow of Yuva for the rest of his life and continue to try and benchmark himself to that level is a foregone conculsion in any of his movies.  But to his credit this time around, he does give you some glimpses of the intensity that he showed in his best performance to date.  Hope Floats for all your fans of the Jr. B (count me out of that list for the time being).  After Game I thought it was all over folks.  It was definitely time to get the fat lady in.

What makes his performance look better than what it actually is the sheer presence of John Abraham’s ex who has this innate capability of making anyone look better on screen.  If there was a plastic meter for performances on screen then Bipasha Basu would have scored 12 on 10.  And then you also wonder what Rohan Sippy was thinking when he cast Aditya Panscholi.  Definitely a case of the ex Mr. Zareena Wahab (whats with these exes?) having put in money into the production.

And then there is rest of the cast led by Tollywood hero Rana Daggubatti who manages to hold his own in his Bollywood debut.  Pratiek (without the Babbar) is sincere, but as always seems to have tried really hard to make things look as real has he possibly can.  The saving grace in the acting department is however the natural, ice cold performance from Govind Namdeo who comes out on tops once again. 

Dum Maro Dum revolves around the elusive Michael Barbossa aka Vincent Vega aka Colin Coutinhon aka Tobby Follet who is the savior of the drug mafia in Goa.  Whenever the narcotics business in Goa starts to take a beating, Barbossa or one of his avatars comes in to save business which is primarily led by Lorsa Biscuita (Aditya Panscholi).  But Barbossa’s days are about to be numbered when the Home Minster Ponda (Bugs Bharagava) calls on ex-cop ACP Vishnu Kamat (Jr. B) to clean up the state.  In his previous assignments related to narcotics, ACP Kamat was notorious for maximizing his personal wealth.  But he loses it when his family dies in a car crash.  Poetic justice because the drivers of the other car were high on drugs.  He picks his own team – Rane (Govind Namdeo) and Mercy (Gulshan Devaiya) to help him.  His first breakthrough happens when he manages to foil Lawrence Eduardo Gomes aka Lorry (Pratiek) who is forced to become a carrier to pay his fees for a US University.  All poor Lorry wanted to do was to be with his girl, Tani (Anaitha Nair) who gets through to the same uni with a 100% scholarship.  Lorry’s close friend Joaquim aka DJ Joki (Rana) tries to convince him to come clean and even manages to strike a deal with ACP Kamath but Lorry chickens out and Joki’s only chance to get back @ Biscuita goes abegging.  You see Biscuita has stolen Joki’s girl i.e. Zoe (Bipasha Basu) in the same manner as Lorry manages to get himself into jail. All these characters try to solve the big mystery – Who is Barbossa???

Poorly written dialogues are the bane of DMD which could have been a much better movie than it turned out.  Lines such as “Moscow ke DJ tyaon tyaon aur pussycats meow meow.  Live FTV no censor” and “Barbossa ka pata chahiye.  Baaki sab ke liye google hai” and “MC ya BC? Middle Class ya Business Class”.  I mean what was Rohan Sippy thinking? He didn’t have Rajanikant to carry these lines off right?  Pritam’s music continues to be heavily and now obviously “inspired” and inspid. Rohan Sippy still tries his best to keep the movie racy enough for you not to get bored.  Would have expected better coz this one doesn’t come upto the previous mark he set with Bluff Master.  The random use of Konkani words fall flat.  As a good friend says, “That’s the magic of it all.  You aren’t Goan till you are Goin man”. Overall a below average effort.  4 on 10 is my final verdict.  Was tempted to give it a point more but nah.  Not happening. 

Watch the trailer on http://www.imdb.com/video/screenplay/vi2560597273/

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How to Save More by Spending Smarter?

The willingness and the ability to save money is the secret of building wealth. So as to save money, you need to spend less than you actually earn. Though it looks very simple when you say, it is really difficult to implement. There are plenty of ways to help you start saving money even on the very tight budget. Saving money or spending less is all about the personality, belief system, values of a family.

Spending less and saving more are lifelong living skills that need time to develop. Unless and otherwise, you have a written financial goals, you will lose your focus and go after consumerism and materialism.

To save more, obviously you need to spend smarter. To spend smarter, you need to understand you own spending patterns. Consciously you need to track all your expenses on a daily or weekly basis. So that you will be able to find out what influences your spending pattern.

Spending money has got so many influencing factors. But all these influencers can be classified into five broad spending influencers.


1) Emotions:


Your emotions play an important role in your spending pattern. The positive feelings like happy, fun, joy can influence you to spend more on entertainments and gifts. The negative feelings like envy, jealous, shame, stress, depression, frustration can influence you to spend more on smoking, drinking, buying things you actually don’t need, relaxation and healthcare.


2) Traditional Thought:

This is because of you belief system and your thought process. I need to buy a silk saree every year for my wedding anniversary. I have to bust crackers for diwali. These are all the classic examples of how your traditional thoughts will influence your spending pattern.


3) Society:

Society in which you live will have more influence on your spending. You have to buy a car as all your colleagues are coming to office in their own car. On the occasion of your kid’s birthday, you need to arrange gifts for all the classmates of your kid. You should be watching this movie, on a first day first show.

This influencer is caused by friends, colleagues, neighbours, relatives, and club members. Even at times, the advertisements and promotional offers like a discount sale can make you to spend more.


4) Habits:


Habits formed when you are growing up can make us spend impulsively. Generally this will be for our sensual pleasures. Spending on movies, music, eating out, smoking, drinking are the best examples for this influencer.


5) Commitments:

This includes paying off your debts and loans, commitments towards family like school fees, buying groceries and other provisions, paying rent, paying for medical insurance. You are committed to pay these expenses earlier.

By tracking and analyzing your each and every expense, you will be able to identify the influencers which made you to spend. Here are some strategies to overcome these influencers and spend smarter:


Control Your Emotions:

Instead of spending money, you can control your emotions by doing something else like doing yoga or meditation, watching comedy shows on TV, going to temple or beach. You need to solve the root of the emotion. You have to do introspection and need to keep a balanced mind always. Balanced mind is a key for spending smarter.


Self Talk:

You need to consciously change your thought patterns to come out of traditional thinking. “I don’t really need a saree for every wedding anniversary”. “I am not a kid; so I need not bust crackers on diwali”. These kinds of auto suggestions will change your thought process and you will be able to really prioritize things on which you spend.


You are unique:


You were born original. Please don’t die a copy. There is no need to feel bad if you don’t get to spend or buy things like your friends or people around you. You are unique and special in your own way. You need to discuss with your family and friends about “How to live happily by achieving compromised spending patterns?”


Learn and unlearn Habits:

The unwanted habits which make you spend more can be unlearned. Good habits which make you spend smarter can be learned. Habits can be learned and unlearned. But you need to know it is not a quick fix. It involves a process and a commitment.

A habit is an intersection of knowledge, skill, and desire. Knowledge is ‘what to do and the why’. That is we need to spend less to save more and become richer. Skill is ‘How to do’. That is ‘how we spend less and what are all the strategies to be applied for spending less’. Desire is the motivation, the want to do. What are we trying to achieve by spending less? How that is more important to us than spending more. In order to make something a habit in our lives, we have to have all three.


Unwanted Commitments:

You can’t avoid certain commitments like groceries, schools fees. But definitely you can discontinue unwanted commitments like the club membership in which you are not actively participating and not getting any actual use out of it; the chits impulsively you have enrolled with a jewelry shop.

Money not spent is saved. These above strategies will only work if you truly have a desire for future financial success. You need to be disciplined and persistent in the course of implementing these strategies. The more you practice smart spending, wealthier you become.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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How to make paper planes

Flight is always amazing to watch. When we can make our own planes, what can be better? Here are 12 different paper plane designs for the real kids and the kids in you.

 

 

 

 

Article adopted from http://www.mediadump.com/hosted-id188-how-to-build-the-world039s-best-paper-airplanes.html

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A Personal Finance Checklist for Newlyweds

Getting married is one of the most important events in your life. There is so much to consider—the flowers, the jewel, the dress, the venue, the photography—the list goes on. Once you are back from the honeymoon, the daily life of marriage begins and also begins the challenges of managing the finances of a new household with your spouse.

In recent studies, many couples ranked financial matters as one of the most essential factors when it comes to happiness in a marriage. It is one of the key factors causing marital stress.


Money Compatibility


First thing to do is to check how compatible you and your spouse in money management. You may be conservative and your spouse may be aggressive. You may think that the best place to invest is stock market and your spouse may think bank FDs.

You should communicate your money management style to your spouse as well as you need to understand the money management style of your spouse. Both of you need to analyse the merits and demerits of money management style of each other and their own. Then you need to create a mutually agreed combined money management style.

This will be vital to you both throughout your married life to help minimise stress from disagreements about money.


Update Your Records


• Change of Address: You could have shifted to your in law’s place or both of you could have shifted to a new place. So you need to make necessary change of address requests to your bank accounts, demat accounts, mutual fund accounts and so on.
• Change of Name: Generally the women change their initial or the last name after their marriage. This need to be updated in all the accounts.
• Change of Nominee/Beneficiary: You may like to change the nominee to your spouse for the investments, accounts, insurance policies which you have taken before marriage.
• Changes in Will: You also need to create a will if you have not created one so far. If you have already a will, then you need to revisit your will now.


Assign Financial Responsibilities

You need to decide, who is going to take care of day to day money management i.e. paying bills, monitoring investments and the like.


Develop a Family Budget

You need to create a workable budget for your family that gives extra money and life. This budget should take into account both of your income, the individual expenses and family expenses.


Create an Emergency Fund

You need to accrue savings for some surprise situations like loss of job, break in job or sudden expenses like a major repair to your car or house. Generally the emergency fund need to be in the range of 3 to 6 month of family expenses.


Insurance Coverage

So far, you may not be having any dependents or less number of dependents. You could not have considered life insurance or take for a less coverage. This is the time to look at life insurance seriously. When I say life insurance, I am talking about only term insurance and not the ULIPs. Ulips have been rejected by the market for its heavy front loaded charges.


Debt Payoff Plan

Suppose, if you are already on debt, you need to create a debt payoff plan. This plan will help you in getting out of debt and staying out of debt.


Spend Smarter and Save More

Spending habits will be different from individual to individual. Both of you need to align your spending pattern and learn how to spend smarter and save more.

When both are working and not having kids yet is the stage you have more income, especially more disposable income. Couples need to be careful and avoid overspending and save as much as possible during this stage. This will ease you out when you have more expenses at the later stage of your life.


Set Combined Financial Goals

Both of you need to spend some quality time discussing about the financial goals like buying a home, international vacation and the like. This is the right time to plan your retirement.


Chalk out a Financial Plan

Once you have set the combined financial goals, then you need to chalk out a financial plan to achieve these goals. You need to take into account growth rate of your income, inflation on your expenses, time set to achieve various goals, rate of return expected from various investment options.

This is slightly a complicated procedure and this plan need to be review periodically. That is why it is better to outsource it. You may seek assistance from a professional financial planner.

To financially succeed, it needs teamwork from both the partners. As a newly married couple, you have enough time and plenty of opportunity. I am sure that with this checklist and the guidance from financial planner, you will reach your life goals together.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Superfast Superbus: The 23-seater bus can travel at 250kmph

A design team from TU Delft University has unveiled a 15-feet-long , six-wheeled Superbus. The aerodynamic and luxurious Superbus, which on the first glance looks like a cross between the Batmobile and a very stretched limousine, can carry 23 passengers and travel at a speed of 250kmph.

The team, including former Dutch astronaut Wubbo Ockels, hopes their streamlined electric vehicle will bring fast, comfortable and sustainable public transport a step closer.

FAST AND FLEXIBLE

The Superbus travel concept combines high-speed travel with the flexibility of a car. The vehicle is similar to an average bus in length and breadth, but its low ground clearance and aerodynamic design make it extremely energy efficient.

This is helped by the chassis and bodywork of lightweight carbon fibre: the electric vehicle uses as much energy to travel at 250kmph as a normal bus travelling at 100kmph.

The Superbus also has two pairs of rear wheels that can turn independently , thereby reducing its turning radius.

"The strength to the concept is that the Superbus can drive everywhere where a normal bus can drive," the Daily Mail quoted Ockels as saying. "It has adjustable height, rear-wheel steering and a turning circle of roughly 10metres," he added.

FEELS LIKE A LIMOUSINE

The Superbus has a spacious, comfortable interior with extremely luxurious seating, so passengers have the sensation of being driven in a stretch limousine sportscar.

The sixteen gull-wing doors mean people can get in and out without disturbing their fellow passengers.

Passengers can order the bus via internet or text message. They then travel together with passengers who share more or less the same starting place and/or destination.

SUPERTRACK FOR A SUPERBUS

The Superbus is designed to use the normal road system and has no trouble coping with roundabouts. On motorways a seperate supertrack can be used to enable the bus to reach its high speeds.

Dynamic barriers allow the bus to enter or exit the supertrack every twenty kilometres.

The bus battery has a range of 200 kilometres and batteries can be exchanged in the special pitstops.

The Dutch Ministry of Transport compared the performance of the Superbus to those of a high-speed train and a Maglev train.

Their study showed that the Superbus is most popular among passengers and has the least environmental burden, as well as scoring highest in a cost-benefit analysis.

The project began in 2004 and has so far cost around 11.5 million pounds.

Article adopted from http://articles.economictimes.indiatimes.com/2011-04-15/news/29421896_1_passengers-high-speed-train-electric-vehicle

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Portfolio Management Scheme: A unique investment opportunity

What is Portfolio Management Scheme?


Portfolio management scheme popularly known as PMS are specialized investment vehicle for lump sum investments. The portfolio manager invests the money in shares and other securities and manages the portfolio on behalf of the client.

One can invest fresh money in Portfolio Management Scheme and the portfolio manager will construct a portfolio by deploying that money. Also one can transfer his existing share portfolio to the Portfolio Management Scheme provider. In that case, the portfolio manager will revamp the portfolio in sync with his investment philosophy and strategy.

Once the Portfolio Management Scheme account is opened, the client will be given with a web access to his portfolio. The client can look at where the portfolio manager is investing client’s money. Also one will be able to generate reports like Investment Summary, Portfolio Transaction List, Performance Analysis, Portfolio Statement and Quarterly capital gain report.

As a result, Portfolio Management Scheme relieves investors from all the administrative hassles of investments.


Portfolio Management Scheme Vs Direct Stock Market investment:



One can directly invest in stock market. Then what is the advantage of investing in the stock market through a Portfolio Management Scheme. Investing in share market demands knowledge, right mindset, time, and continuous monitoring. It is difficult for an individual investor to meet all these demands. But a Portfolio Management Scheme meets these demands easily. The Portfolio Management Scheme will be managed by an experienced professional.

It saves the time and effort of the individual investors. Hence it is advisable to outsource the stock market investment to a sound Portfolio Management Scheme operator instead of managing it on our own.
Portfolio Management Scheme VS Mutual Funds:

Mutual fund is also a good investment vehicle. It should also form part of your total equity investment. But mutual funds are mass products. So they will be conservative by nature. As per SEBI regulation, mutual funds have some investment restrictions. There is a maximum limit on the percentage of amount invested in an individual stock. Also there is some maximum cap on the exposure in a particular sector.

Once the fund manager reaches the maximum limit prescribed by SEBI, he is forced to invest in some other stock or some other sector. That is why we see a large number of stocks in a mutual fund portfolio. Where as a Portfolio Management Scheme will invest in 15 to 20 stocks. This concentration makes it more attractive and aggressive. Managing a 25 lakhs Portfolio Management Scheme portfolio will be more flexible when compared to managing a 2000 crores mutual fund portfolio.

Portfolio Management Schemes relatively have more flexibility to move in and out of cash as and when required depending on the stock market outlook.
Basically the conservative portion of your equity investment can go into mutual funds. The aggressive portion can go into Portfolio Management Scheme.


How to choose a best Portfolio Management Scheme?



There are so many Portfolio Management Schemes in the industry. So it is really very difficult to choose a good Portfolio Management Scheme provider. Here are some factors to be considered before choosing a Portfolio Management Scheme.


1) Yardstick for Performance:


One should not just go by the past performance alone. Making an analysis on various Portfolio Management Schemes in the industry with their past performance along with the risk adjusted return and the consistency of performance will be useful in selecting the best Portfolio Management Scheme.


2) Minimum Investment Criteria:



Investors need to avoid Portfolio Management Schemes where the minimum investment is less than 25 lacs. Even there are Portfolio Management Scheme operators who keep minimum investment for their schemes as low as 5 lacs. But these kinds of Portfolio Management Scheme operators will have more number of PMS accounts. When the quantity (the number of PMS A\cs) goes up the quality (the performance) may relatively come down.

Therefore it is better to choose a Portfolio Management Scheme where the minimum investment is 25 lacs or more. So that our PMS A\c will be directly handled and managed by the top level portfolio manager and not managed by the juniors and analysts. If you are planning to invest less than 25 lacs, then the ideal investment product for you would be mutual funds.


3) Conflict of interest:



Portfolio Management Schemes have been run by some stock broking companies as well as investment management companies. There is a conflict of interest in Portfolio Management Schemes run by share broking companies. The main business of a share broking company is to earn commission income by facilitating the share market transactions.

Portfolio Management Scheme is an additional business for them. It is not their core business. Hence there may not be enough focus on the Portfolio Management Scheme business. Also they may indulge in doing undue and unnecessary churning of the clients’ portfolio to earn more commission income. This will cause additional expenses and short term capital gain tax to the client.

The core business of investment management companies is managing the investments of their clients to earn management fees. So, with the Portfolio Management Schemes run by investment management companies, there is no conflict of interest or vested interest. Therefore it is always advisable to choose a Portfolio Management Scheme offered by investment management companies.


4) Role of Professional Financial Planners:



A professional financial advisor or financial planner will study and analyse the Portfolio Management Schemes run by various stock broking companies as well as investment management companies. If we approach them, they will guide us in choosing the right Portfolio Management Scheme depending upon our requirements and other factors.

Also a professional financial advisor will continuously monitor the performance of various Portfolio Management Schemes and advice the client on a regular basis on the performance of the Portfolio Management Scheme where the client has invested vis a vis the other PMS schemes in the industry. After a certain period, if necessary he may advice you to move from one Portfolio Management Scheme operator to the other.


ESOPs and Portfolio Management Scheme:



ESOPs are provided by the companies to its employees based on their service. Most of the employees are of the opinion of keeping the ESOPs as it is forever because it is their company shares. But logically it is too riskier to invest in a company to whom you work for. Because, your employment income as well as investment income will depend on the performance of a single company.

So it is not advisable to keep your investments in a company where you actually work. So it is at all times advisable to transfer your ESOPs to a Portfolio Management Scheme. They will revamp it to construct a well diversified portfolio.

Portfolio Management Scheme is an aggressive investment product and really suitable for those investors

• Who have a share portfolio and find it difficult to manage.
• Who have enough exposure in Mutual funds and looking for a different and good investment option
• Who have sizable ESOPs.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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TN Polls – some useful info

Now that the TN Assembly elections are around the corner, here is some useful information published by the TN Election Commission.

 

Assembly Elections 2011

Breakup of Electors (AC / District Wise) - as Published on 10.01.2011

District Election Officer - Contact List

Returning Officer - Contact List

District Control Room - Toll Free Numbers

General Observers for TNLA 2011 - Contact Numbers

Expenditure Observers for TNLA 2011 - Contact Numbers

Police Observers for TNLA 2011 - Contact Numbers

Constituency Map - Tamilnadu

Constituency Map (Black&White) - Tamilnadu

Webcamera - Layout in Polling Station

List of Polling Stations

Forms - Elections to the Tamil Nadu Legilative Assembly (Nomination Paper, Affidavits, etc.,)

Affidavits filed by the Candidates

List of Star Campaigners

Public Holiday(13.04.2011) - Notification

Contesting Candidates - TNLA 2011 - Details

List of Contesting Candidates - Form 7A -English

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3 simple steps to become richer in just 365 days

You have got complete 365 days in your hands. It is up to you to do whatever you want. Why don’t you chalk out a plan to become richer in a year , that is exactly in the next 365 days. No one in this world is born with the knowledge on how to save or invest. Every successful investor begins with the basics explained in this article. Almost always, the simplest are the most profound. Some simple reorganization in your personal finance management could make you richer. To be financially successful, the following three steps are important.


1) Make a Financial Plan:


This is the first and foremost important step to become financially successful. It is not your income, but your wealth that counts. People with high income like Michel Jackson died with a lot of debts. So a careful personal finance management is more important than how much you earn. To have an effective personal finance management system in place for you, you need to have a personalized well written financial plan.

What are the things you want to save and invest for? It may be for buying a home, buying a car, children’s higher education, retirement planning. Decide how many years from now you need to achieve each and every goal. Because you need to take into consideration the inflation for all those years and also you need to choose investment options based on the timeframe for investments.

You need to create your own list of financial goals. If you don’t know where you are going, you may end up somewhere you don’t want to be. To end up where you want to be, you’ll need a roadmap, a financial plan.

So create a financial plan for you and your family. There is a lot of help available for you online to create a financial plan in various websites with financial calculators. But if you want to create a more workable financial plan, you may seek assistance from professional financial planners.


2) Pay off all high interest debts:


You need to create a plan to come out your high interest debts like personal loan, credit card outstanding, car loan and the like. Credit cards can make it seem easy to buy expensive things when you don’t have enough cash. But it is not free money. To come out of debt, you need to have specific strategies that can work in your own situation. There are 11 ways to get out of debt and stay out of debt. You can choose one or a few ways from this to become debt free.

If you are not giving enough attention to your debt, then it can sink your financial ship. So take some time on this to list down all your borrowings and make out a plan to come out.


3) Start Saving and Investing:


As soon as you have paid off all your high interest debts, you need to start saving and investing for your financial goals. To save more either you need to spend less or you need to earn more. So you check up what are all the ways and means available for you to spend less and earn more.

If you are spending more than your income or all your income and you don’t have any money left to save or invest, you need to look for ways to cut back on your expenses. When you check where you are spending your money, you will be surprised to know how everyday petty expenses that you can do without add up over a year. You need to understand what makes us spend more and strategies to have self control with money to spend smart and save more.

When you started saving money, you need to convert your savings into investments. When you are choosing your investment option you need to take into account, the timeframe for investments, risk you can afford to take, inflation and your financial goals. Also you need to be careful in avoiding the biggest investment mistake. That is to choose a scheme in sync with basic investment principle. Make sure that you are not violating any investment principle. Don’t fall for speculative gains, ponzi schemes and get rich quick schemes.

If you follow these simple but authentic steps, by next 365 days you will be richer than what you are today. Celebrate this year with much more confidence and peace of mind by following these simple steps for financial success.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Thank You

Director                       Anees Bazmi

Cast                             Akshay Kumar, Irrfan Khan, Suniel Shetty, Bobby Deol, Sonam Kapoor, Celina Jaitley, Rimi Sen, Vidya Balan, Mallika Sherawat, Chahat Khanna

Genre                          RomCom

Year of Release           2011

He should probably thank his stars that he has a reasonable fan following in this country – enough and more morons who will walk into an AK movie just because its an AK movie.  But that’s what we do to stars.  Glorify them.  Make temples for them. But even the extreme madness that this country has for Bollywood will not be able to save AK this time around.  His acting talent or screen presence or whatever you want to call it has definitely reached it’s Nadir.  AK – you cannot get worse than this.  If you look at it positively, anywhere you go to from here will only be better.  Or touch base quickly with Mannapuram Gold Loan – I am sure they will extend your contract for another year or so. I am quite certain that Akshay Kumar’s career with a major cinema house has ended successfully.  For any future releases, he will have to trust his own funds or maybe depend on some rich relatives.  Maybe Thank You was a test run – partially produced by Twinkle Khanna as per credits.

Thank You is a movie made in extreme bad taste.  It once again endorses the concept of a cheating husband and in fact goes one step further by glorifying him.  But then again, I guess there are enough and more women in this world who do not mind going back to husbands who have cheated on them.  So why not capitalize on the movement (in a manner of speaking). The characters of… or should I say characterless – Raj (Bobby Deol), Yogi (Suniel Shetty) and Vikram (Irrfan Khan) run a business of selling yachts.  And if one can describe the word “Tharki” (sex maniac), they would be the ideal examples.  The epitomes.  Raj’s wife Sanjana (Sonam Kapoor) believes in blind faith and obviously the husband takes as much advantage of that as possible.  The other two are married to Maya (Celina Jaitley) and Shivani (Rimi Sen).  Maya has already caught Yogi cheating on her and is getting back at him by treating him like a slave – which doesn’t seem to matter much to Yogi as such.  And Vikram dominates Shivani as if there is no tomorrow.  Things are about to get nasty for the promiscuous trio though thanks to the entry of Kishan (Akshay Kumar) who was responsible for Yogi getting caught.

If you liked the senselessness of the likes of No Entry and No Problem which seem to be reflective of Anees Bazmee’s favourite topic – cheating husbands – then Thank You is exactly the kind of movie that you would like to watch.  If you are the more sensible kinds who believes in the concept of true cinema then please do not waste your money on this work that doesn’t have any semblance of direction, acting, screenplay, cinematography, editing and any of the other departments that are required to make a movie.  The only one that continues to be worse than this is that sob story that spent a decade in a canister called Milenge Milenge.  Thank You comes really close to being a case study at any Film Institute about what a movie should not be.  I do wonder what people like Irrfan Khan were doing in this movie.  And was definitely disappointed at how Sonam Kapoor crash landed from a curve that was showing signs of going North.  As of now her stock has gone south.  Maybe she should put the A back in her name. It may just about help. The rest of the cast has anyways not been worth mentioning and will not be.  The miracle of course was the Rimi Sen did not speak in Bengali in this movie.  The 1 additional point in the score for the movie comes for that and the fact that there are a couple of tracks that are definitely going to be doing their rounds in discos across the country.  2 on 10.

Watch the trailer on http://www.imdb.com/video/imdb/vi226729241/

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Just Go With It

Director           Denis Dugan

Cast                 Adam Sandler, Jennifer Aniston, Nicole Kidman, Nick Swardson, Brooklyn Decker, Bailee Madison, Griffin Gluck, Dave Matthews,

Year                2011

Genre              RomCom

Denis Dugan does it yet again.  This is the second movie with the Adam Sandler – Denis Dugan combination that I am reviewing and I must say that there has been no improvement whatsoever.  It could be a case of the director and actor have built a familiarity and there is no scope for further improvement. I would hazard a more drastic thought that they are probably the same person and that Dugan is just a front that Sandler and eventually gives us a movie that HE wants us to see.  For the fifth time, Sandler and Dugan get together and give us a movie that is just about par for the course.  In an adaptation of the 1969 classic Cactus Flower that starred Walter Mathau and was also the debut movie for Goldie Hawn.  The only difference being that Cactus Flower was extremely tastefully made and is still remembered fondly in most circles.  Just Go With It will be forgotten in a few moments after you move out of the hall.

Danny (Adam Sandler) is studying to be a doctor and is therefore a great catch for his would be wife.  And the only reason the wife to be is willing to compromise on his horrendous looks (a really massive nose) is that he is a secure investment.  And before I forget, she is as promiscuous as can be and has a romp in the sack with her ex boyfriend, the night before the wedding.  Unfortunately for her, Danny over hears a conversation that she is having with her friends and is distraught to say the least.  But things are about to change for the ugly Danny who decides to drown his sorrows in alcohol at the local bar and gets lucky… really lucky if you know what I mean.  At this pivotal moment in his life, the medical student decides to keep his wedding ring and put up a front as being an unhappily married man thanks to an atrocious wife. He also chooses his area of specialization – Plastic Surgery – an extremely lucrative career in the developed world.  And the wedding rings ensures that our good doctor continues to get his regular doses in the sack.  Needless to say, he gets his nose also fixed soon enough to ensure that he doesn’t have any drawbacks whatsoever.  This keeps going on for a few years but soon enough he finds himself not only attracted to but very much falling for Palmer (Brooklyn Decker).  But his wedding ring gets him into trouble this time around and to bail himself out, he seeks the help of his very average looking but extremely committed secretary, Katherine (Jennifer Aniston).

If you have seen Cactus Flower you will find JGWI to be a travesty to say the least.  If you haven’t seen it, I would strongly recommend that you watch it sooner than later because it is a wonderful movie.  Adam Sandler, cannot, is not and will not be a patch on Walter Mathau, a fact that would be endorsed by several people. The same can be said of the rest of the cast also.  I would guess that the only difference between Goldie Hawn and Brooklyn Decker would be that on a hotness quotient, Brooklyn is ahead by a country mile and a half.  But if it is a question of class, then everyone in Cactus Flower is miles ahead.  Now don’t misunderstand me when I say this.  I am a genuine fan of remakes but they should be done in the right manner and tastefully.  After JGWI, I am compelled to make a request for an organization that screens these remakes before the release.  A just about average movie at best.  4.5 on 10 is what I would give it.  Watch it on DVD if you have nothing else to do.

Watch the trailer at http://www.imdb.com/video/imdb/vi1443666457/

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Amazing Spine

A fascinating demo of how our spine affects our bodies.... 
Click on link and then move your mouse over back bones and see the parts that are affected!

http://www.chiroone.net/AskTheDoctor/index.html

“Roll your mouse over any of the vertebrae in the human spine below to learn how each vertebrae is connected to certain areas and functions of your body, and how a subluxation of that vertebrae can cause you health problems if not treated with chiropractic care“

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Spot yourself in TN Electoral Rolls

Search your name and check your details in the TN Electoral rolls before the elections.

 

http://www.elections.tn.gov.in/eroll/

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Reserve Bank of India launched 150 Rupee Coin

India celebrating the Rabindranath Tagore's 150th birth anniversary. On this celebration Reserve Bank of India launched the 150 Rupee coin in the memory of Nobel Winner Sir Rabindranath Tagore. Newly launched 150 Rupee coin is about 40 mm in diameter and It's weighs is about 35 grams. The coin of 150 Rupee contain Rabindranath Tagore image on one side and on another side it will contain the image of Ashok Stambha.

 

 

 

Both Side of Indian 150 Rupee Coin

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Skype brings knowledge to Schools in rural India

The electricity keeps cutting out, the Internet connection is crackly and the speakers don't always work, but Santosh Kumar knows that 20 pupils far away in eastern India are relying on him.

Once a week, Kumar uses Skype to teach maths to children in Chamanpura, a poor village in Bihar, 970 kilometres from his two-storey house in the suburbs of New Delhi.

The free Internet service allows the class to see, via a projector, Kumar's tutorial which includes an animated tale about a greedy priest and a wily countryman to teach the students about numbers and the concept of infinity. "The first time I did this, they were really excited by the technology, now they don't care," Kumar said. "It's normal to them." Kumar, a successful 34-year-old engineer, grew up in Chamanpura village before battling his way to a place at the prestigious Indian Institute of Technology. "It's an uphill task to bring education to villages," he said.

 Chamanpura has no mains electricity, or by the refusal of experienced teachers to travel to Bihar, Kumar's cousin Chandrakant Singh approached his friends for donations to fund the Chaitanya Gurukul school. He installed two power generators and organised training for 16 local teachers before hitting on the idea of using Skype to connect students with professionals across India.

The school opened its doors in April 2010, offering admission to 500 students. The Skype lessons take place in the evenings after the day's regular classes and at weekends.

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Barefoot College

Established in 1972, the Barefoot College is a non-government organisation that has been providing basic services and solutions to problems in rural communities, with the objective of making them self-sufficient and sustainable. These ‘Barefoot solutions’ can be broadly categorised into solar energy, water, education, health care, rural handicrafts, people’s action, communication, women’s empowerment and wasteland development.

The College believes that for any rural development activity to be successful and sustainable, it must be based in the village as well as managed and owned by those whom it serves. Therefore, all Barefoot initiatives whether social, political or economic, are planned and implemented by a network of rural men and women who are known as ‘Barefoot Professionals’.

Rural men and women irrespective of age, who are barely literate or not at all, and have no hope of getting even the lowest government job, are being trained to work as day and night school teachers, doctors, midwives, dentists, health workers, balsevikas, solar engineers, solar cooker engineers, water drillers, hand pump mechanics, architects, artisans, designers, masons, communicators, water testers, phone operators, blacksmiths, carpenters, computer instructors, accountants and kabaad-se-jugaad professionals.

With little guidance, encouragement and space to grow and exhibit their talent and abilities, people who have been considered ‘very ordinary’ and written off by society, are doing extraordinary things that defy description.

http://www.barefootcollege.org/

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Get Richer by avoiding this Money Mistake

Mental Accounting is one such money mistake even smart people are committing. Understanding this mistake and avoiding this could make us richer. Behavioral Finance experts say that mental accounting works this way: Let us say you have bought a Rs.200 ticket to a movie. When you show up at the entrance of the theatre and realize you have lost your ticket, do you buy another ticket?

If you are like most people, you would probably think twice. You may still drop down the money, but you will now feel that you paid Rs.400 for a Rs.200 movie.
But let's construct the scenario differently. Let’s say you hadn’t bought the ticket yet, and you show up at the entrance to buy your ticket. Unfortunately, you realized you’ve lost Rs200 in cash since you walked from the parking place. But fortunately, you still have enough in your wallet to cover the cost of the ticket. Do you buy the ticket? Again, if you are like most people, you may feel upset about the lost money, but it probably won't affect your decision to buy the ticket. Why?

Behavioural Finance experts conducted similar experiments. They found that 46% of those who lost the ticket were willing to buy a replacement ticket. On the other side 88% of those who lost an equivalent amount of cash were willing to buy a ticket.
Both scenarios are a loss of Rs.200. However, in the second scenario you separate the loss of the Rs. 200 from the purchasing of the ticket. In the first you consider the cost of the movie as a total of Rs.400 and suffer at the high cost.

It is because of the psychological phenomenon known as mental accounting. One of the fundamental concepts in Economics says that wealth in general and money in particular, should be fungible. Fungibility, in a nutshell, means that Rs.100 in lottery winning, Rs.100 in salary and Rs.100 tax refund should have the same significance and value to you since each Rs.100 has the same purchasing power at the market. But do you treat them in a similar way?

Mental accounting has enormous consequences in your daily life. It affects how you spend money and how you save. It influences how you deal with losses and windfall gains.
How Does Mental Accounting Affect You?

1) The source of the money affects how it is spent.

You tend to dine lavishly with the “gift meal vouchers” given by your company. But you will be dining consciously if you are paying out of your salary.

You are most likely to spend more with credit cards than with cash.

You may consider Tax refund as“free money”. In actual terms it is your own money. You will not spend tax refunds, birthday gift money or lottery winnings on essential things like utility bills, school fees, paying off your credit card debt. But you will be more than happy to spend the same money on discretionary items such as vacations or a trendy mobile phone.

2) Don’t be a victim of ‘Relative cost’.

Assume you are going to a super market to buy a laptop. The price is Rs.40000. But you get to know that there is another branch of the supermarket, a ten minutes walk away, in which the same laptop is sold for Rs.39950. Will you walk down to the other branch?
Let us say instead of buying a laptop you have planned to buy a memory card. The price at the supermarket is Rs.100 and at the other branch is Rs.50. Where will you buy the card?

Most of us will make a trip to the other branch for the memory card but not for the laptop. Because we think that the Rs.50 saved on a Rs.100 item is better than the same amount saved on a Rs.40000 item. But both the situation is same. You save Rs.50 by making 10 minutes walk to the other branch. Remember that money is money. Rs.50 saved on Rs.40000 laptop is not less money than Rs. 50 saved on Rs.100 memory card.

How to face Mental Accounting and spend consciously?

You can use mental accounting to your advantage by spending money out of your salary. Immediately invest the “free money” like Tax refunds, gifted money or any other windfall gains.

Imagine that all income is earned income.

Use the free meal vouchers and other gift vouchers to buy essential items.

Pretend you don’t have a credit card. I am not telling you not to use credit cards. I am saying you should stop and think: would I buy this if I was using cash?

A Successful Practical Strategy:

You can have two bank accounts. One for the purpose of savings and the other one for spending. Every month you need to set aside some amount for expenses as per your budget or previous experience. That amount you need to transfer to your spending account. Balance amount you need to keep it in savings account.

You need to meet all your expenses including your credit card payment from the spending account. You should not spend from your savings account.
In between, if you receive any cash gifts or windfall gains, deposit them in your savings account. If you receive gift vouchers, then transfer the money equivalent of that voucher from your spending account to your saving account. That is your spending limit will not go up by just receiving the gift voucher. So that you will not use it lavishly and use it only on pre-planned things.

When it comes to money your mind unconsciously plays this trick of mental accounting. You have understood that today. So hereafter, you can avoid this mistake and you become richer day by day.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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