Should i Invest or Prepay Loan?

Prepay Loan

Should i Invest or Prepay Loan? is the classic dilemma faced by the borrowers. This catch 22 situation arises when a borrower receives a lump sum amount. The most common sources are an annual bonus, the maturity of deposits, a gift from parents/relatives or inheritance. Normally i don't suggest to prepay loan especially Home Loan from any amount received through inheritance or gifts from parents / relatives. The only exception is if you have signed proper gift deed or family settlement agreement to safeguard your financial interests. If you prepay loan from gifted/inherited  money then it may lead to some legal complications in future. You should prepay loan only from your own sources of fund in such cases. The decision making to prepay loan or to invest is more difficult in the case of Loans like Home Loan. Reason being, the borrower is availing Home Loan Tax Deductions. In other cases like the personal loan or consumer loan, the convenience of EMI is another key consideration. … [Read more...]

Can you rely on your job?


Can you rely on your job? i posed this question to one of my clients. We were discussing the job stability part for Home Loan planning. Based on my experience with my clients, I receive "NO" as an answer from 8 out of 10 clients in their 30's. The ratio is much better for clients in 20's. 70% of the young workforce is assured of their job stability. One of the reason is that young workforce is lower down the corporate ladder and at much lower salary therefore Job Stability is very much assured. As i mention in my previous posts related to the career that an employee is on the radar of an employer once salary exceeds 1 lac per month. This range vary from industry to industry but 1 lac is ballpark for new age sectors like IT, E-Commerce etc. Though i listed this post in Views category but it is relevant from Personal Finance perspective as the Job Stability index help to take a lot of personal and financial decisions in life. There is a famous quote that "Either change yourself with a … [Read more...]

How to identify best Trading Stocks?

Trading Stocks

To identify good Trading Stocks is one of the Hot Topics in Stock Market. Trading stocks are bought from short-term investment perspective or day trading. Let me clarify that i am not into day trading, but i do buy trading stocks with a horizon of up to 1 month. The objective to buy trading stocks is to make some quick money by identifying the upward trend or momentum in some stocks. Trading stocks may or may not perform well in the long run for investment purpose. Most of the times, the reasons for upward movements are not known. Traders can check the cues available in the market. The criterion to identify investment stocks and trading stocks is completely different. Short term trading is riskier compared to investment. You should know when to enter and when to exit. Also, it is critical to know what is the buzz in the Stock. A very recent example is of Essar Oil, the buzz was de-listing of the stock. Short term traders identified this stock at 150 levels and booked the profit at 190 … [Read more...]

Stock Portfolio – Competition among Stocks

stock portfolio

How do you manage your Stock Portfolio? was one of the queries in my mailbox which caught my attention. After i started "Stocks" section on my blog, i am receiving a lot of queries on my Stock Portfolio. Off late i was not able to update my post on "My Stock Portfolio" due to very hectic schedule. I promised myself that from now onwards, i will update it once a week as i am aggressively churning my stock portfolio. Obviously, the main reason is volatility and fast changing dynamics of the stock market. On top of it, i personally believe that you should always search for best stocks for your stock portfolio. A recent example is of DCB Bank, this bank was darling of investors and there was unanimous "BUY" rating from stock analysts. The bad Q1 results and concerns on asset quality turned the tables for this stock. The stock market is unforgiving. The harsh reality is that winners take it all. IndusInd Bank has replaced DCB Bank as a 2nd choice after strong numbers. The 1st choice is Axis … [Read more...]

Project Delay – What a Buyer Should Do?

Project Delay

Due to the slowdown in Real Estate Market, Project Delay is very common these days. Completing a project on time is a big achievement. I saw one of the builders in Pune advertising heavily that he completed one of the projects on time. Project delay has huge financial implication for the buyer both in terms of Home Loan Interest Outflow and Opportunity Loss. Opportunity loss is potential rent received/saved in case of let out/self-occupation of a property. On an average, a project delay may cost you Rs 25,000 per month. In my post, Why Under Construction Projects get Delayed? i highlighted the reasons of project delay. Reputed builders try to complete the project on time or within 6 months grace period which is acceptable. They are conscious of their reputation and brand name in the market. Project Delay is common phenomena among mid and small builders. In most of the cases i observed that Project Delay is intentional due to fund crunch. At the time of purchase, builder assures the … [Read more...]

Income Tax – 51 Important Points


Last date of Income Tax Return filing is approaching. All taxpayers have a lot of doubts and queries related to income tax. Though each query is different and unique but there are some common points which are useful for all taxpayers. Over last 10 years, the return filing process has simplified. Once it was unthinkable to file the return on your own. I used to pay Rs 4,000 for return filing in Mumbai. TRP was 1st major reform and max fees of a TRP was capped. Online tax filing turned the table upside down and completely simplified the entire process. In case, you have income only from salary, you don't require any professional help to file the return. I still believe that there is a long way to go. The entire taxation process should be simplified. One of the solutions is to do away with deductions and allowances. Tax at lower rate 5% should be charged on Gross income. Another solution is to tax cash transactions which will bring more people in the tax net. The biggest problem in India … [Read more...]

7 Blunders of Equity Investment

Equity Investment

Direct Equity Investment is riskier compared to Mutual Funds investment. At the same time if you would like to beat the returns of Nifty then only Equity Investment is the way out. You can create your own portfolio by selecting 7-8 good stocks which can help you to beat the returns of index comprehensively. The Nifty return should be considered as the the benchmark to judge the performance of your portfolio. If you can't beat Nifty returns then the best way is to buy NIFTY ETF. It will deliver returns of Nifty. Secondly, you need to decide whether you are an investor or a trader. As a trader, you should be on toes and identify momentum stocks for trading. The stock strategy is completely different for trading and investment. This post is relevant only for investors i.e. for medium to long term investment. For successful Equity Investment, it is critical to select Right Stocks. As a thumb rule, i always suggest that you should invest only in assets with basic understanding and … [Read more...]

Mobile Wallet – Convenience or Inconvenience

Mobile Wallet

Mobile Wallet is the new buzzword in the technology and payment space. The success of Mobile Wallet will depend on how it is being projected to end users. Recently i used various Mobile Wallet services and thought of sharing my experience with my readers. I am always in for adoption of new technology but as i always mention that one shoe doesn't fit all. Mobile Wallet may be useful & convenient for one set of users but not for all. In India, it is popularized after the entry of the most popular service i.e. paytm. Some of the players already existed in the market but with not much success. I am not going by the opinion of media or analysts in this regard. I will share my experience as a layman or end user. Currently, Mobile Wallet service is following the same trajectory as followed by the e-commerce players. In this whole ball game, the customer is the king as he/she is getting unbelievable discounts on making payments through Mobile Wallet. Recently, i recharged my DTH for Rs … [Read more...]

How To Destroy Your Wealth?


Wealth is an abundance of valuable Assets, Possessions or Money. To become rich, you have to build a wealth at a rate higher than the rate of depletion. The risk reward of building a wealth is equally balanced. Higher the probability of wealth creation more is the risk of losing it. As an investor, you have to adopt the method to build a wealth in which risk reward is more favorable for investors. For example, currently any investment in Real Estate is not favorable to build a Wealth. Investors who bought property in 2013 or 2014 are in loss. The loss will increase manifold if we consider the Home Loan interest paid as a cost. A property in Delhi costing 1.20 Cr is now available for 1 Cr. In short, the investor has destroyed the wealth by investing in Real Estate. It is not a universal truth but depend on case to case basis. In this post, we will discuss the points which can potentially destroy your wealth.How To Destroy Your Wealth? 1. Herd Mentality: In my opinion, Herd … [Read more...]

Why it is Imp to Book Profits in Stock Market?

Book Profits

"Book Profits immediately", i told my father few days back. He told me that he is a long-term investor in the stock market. I replied that you can have a long-term investment strategy, but the long-term investment is an opportunity loss. There is a difference between Long Term Investment Strategy and Long Term Investment. As i shared in my previous posts on Stocks that It is imp to Book Profits at regular intervals keeping the long term investment strategy intact. The reason for the suggestion to book profits to my father was a news on Greece Crisis. When we invest in the stock market it is very critical that we should be aware of all the factors which impact the movement of stock market. Besides this, we should be aware of factors which impact our stock holding. If we book profits at regular intervals then we can increase our returns manifold. Moreover, most of the stock investors told me that on the net basis they lost in the stock market instead of making any gains. The key reason … [Read more...]