Setting Goals


Hi….so you got a Surplus or a Shortfall….!!!

Assuming you got a Surplus this Is the amount which you will want to invest in different instruments, asset classes, investment options.

But wait a minute…do you know why you are investing ?

No right….so before that we need to know the why of what we do..isn’t that so true even in our lives ?

So let’s do an interesting exercise of setting a purpose, aim, goal, objective of investing….

We will set a goal….a SMART Goal…you know what is a SMART goal ?

SMART is an acronym for :

Specific : Son’s education
Measurable : Amount : Rs 10 lakhs
Attainable : Have started investing about 2 years ago
Relevant : Have started preparatory work
Time Bound : Son’s education funding required by 2016

So the goal would read as : I would need app Rs 10 in today’s value by end of 2016 and have started investing about 2 years ago.

Goal setting is am important method of:
– Deciding what’s important for you to achieve.
– Motivating yourself.
– Building self-confidence.

Some of the common Life Goals are :

Child’s Education
Child’s Marriage
Expanding business
Home Purchase
Estate Planning – leaving a Legacy for the next generation

Hence, it is important to prioritize which goal should come in which order so that you can make your Financial Plan accordingly to the timelines of the events.

It becomes exciting to set goals and then work towards it. There is a lot of clarity which sets in once the goals have been set. You can sit and set these goals with your spouse / family member so that they also get involved. For example, if it is a child’s education, you can give him some insights so that he knows how much efforts and money is being channelized for his education. It would make him value and perform better.

Any of the goals if done properly, there is no last minute panic or distress situation.

So happy goal setting ….remember the surplus still has to be invested….

Catch you next time……


How do I get a surplus ?


Hello Friends,

Did you manage to do the exercise on the worksheet to find out your Networth ? Hope you have.

Ok, now that we know our Networth, its important to know our surplus. From our surplus, we will go about deciding where we can invest our capital.

So 1st things 1st. What is a Surplus ? It is an excess of Income over expenditure over a given period.

Let us understand what is Income ?

Money received in form of a salary, remuneration, earnings, commission, interest or dividend income, rental or return on any investments made or for any services provided.

A lot of this income is received on a regular basis.

What is an expense ?

Expenses maybe payouts like salaries, costs and other costs incurred to get a return or get some earnings.

Under Income and Expenses statement, there are different heads and the expenses and income are grouped under each head.

A typical Income and Expense Statement looks like this :

Your Primary Income
Your Spouse’s Income
Child Support or Alimony
Social Security Income
Disability Income
Pension Income
Investment Income
Real Estate Investment Income
Business Income
Other Income
Total Income
Necessary Expenses:
Payroll Taxes
Other income deductions
Rent or Mortgage
Property Taxes
Gas & Electric
Auto Insurance
Auto repairs
Food & Groceries (not dining out)
Clothing (necessary)
Telephone (not mobile phone)
Home Insurance
Healthcare or Insurance Costs
Dental Care or Insurance Costs
Life Insurance Costs
Student Loans
Home Repairs
Home supplies
Dry cleaning
Investment Real Estate Expenses
Business Income Expenses
Child & Baby Expenses
Other dependent expenses
Total Necessary Expenses
Discretionary Expenses:
Credit Card Bills
Auto Loan (s)
Cable or Satellite TV
Mobile Phone (s)
Home Improvement
Home Security
Garden Supplies
Entertainment (not dining out)
Dining Out
Travel & Vacation
Pets, Pet Care and Pet Food
Clothing (above what’s needed)
Internet Access
Computer Costs
Gym membership
Beer & Alcohol
Cigarettes & Tobacco
Total Discretionary Expenses

As you can see from the sample above, these are the various Heads of Income and expenses.

Expenses are deducted from income and the surplus which remains is what is left for investing.

So will you prepare a Income and Expenses Statement for yourself ? Its so easy….

More next time….


How do you know your Net worth ?


Your net worth to the world is usually determined by what remains after your bad habits are subtracted from your good ones.

Benjamin Franklin

 Your Networth is important to know where you stand. It is like looking at a mirror. Do you know how much you are worth today ?
We think we know in our minds….that’s what we feel. But actually when we put pen to paper we realise that there are lot of loose gaps which we don’t account for.
1st what is Net Worth ?
The amount by which assets exceed liabilities.
Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth..
A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by decrease in asset values relative to liabilities.
Hence, for an individual what is he or she worth  on any given day in relation to the assets he / she possesses….
Net worth = Assets – Liabilities
The aim is to have a positive and an increasing networth year on year.
It is an important financial tool to aid you to keep a check on your finances.
It helps to review your financial status in a snapshot. It also tells you what are the areas in which some investments maybe heavily concentrated and some may require re-alignment.
The format is as under which you can use for ready reference or you can make yours as per your requirement :
Review your Networth
Assets Liabilities
Personal Items Previous Period Current Period Loan Balances Previous Period Current Period
Home Home loan
Vehicles Personal loan
Furniture Car loans
Artwork Credit Card Dues
Jewellery Student loans
Electronics Other loans
Cash or Cash Equivalent
Mutual Funds – liquid
Savings account
Insurance (non term)
Bank Fixed Deposits
Bonds / Debentures
Mutual funds
Real estate other than self occupied home
Public Provident Fund
Employee Provident Fund
Super Annuation fund
Assets Total Liabilities Total
Net Worth: Previous Period 0
Net Worth: Current Period 0
If you use this template and fill in actual figures, and keep tracking it on a periodic basis, then you would get to know your Networth. Is your Networth going up or down ?
So please find out your Net Worth …..and post it back if you like more feedback on this matter…
Cheers till next time…..

Investment Basics


Investment Basics

What is Inflation ?

Have you heard of this killer called Inflation ? Everybody is talking of price rise and how things are becoming so difficult to sustain for the common man.

1st let us understand what do we mean by inflation ?

You may say it means everything is expensive or the price of goods and services are increasing.

  • “An increase in the price you pay or a decline in the purchasing power of money”

It may be caused by an increase in the volume of paper money issued or when the supply of goods fails to meet the demand.

For example : if you had Rs 100 and you could buy 5 kilos of tomatoes then after a certain period ,let’s say about 2 years later with the same Rs 100 you would be able to buy about 3-4 kilos of tomatoes.

So what has happened in 2 years ?  The value of the rupee has diminished.

This will happen year on year and would mean you would have to spend more on the same goods and services which you bought 2 years ago.

There are 2 types of inflation prevailing in the Indian market :

  1. WPI – Wholesale Price Index

Definition: Wholesale Price Index (WPI) represents the price of goods at a wholesale stage i.e. goods that are sold in bulk and traded between organizations instead of consumers. WPI is used as a measure of inflation in some economies.

WPI is an easy and convenient method to calculate inflation. Inflation rate is the difference between WPI calculated at the beginning and the end of a year. The percentage increase in WPI over a year gives the rate of inflation for that year.

Source : Economic Times

  1. CPI  : Consumer Price Index

Definition: A comprehensive measure used for estimation of price changes in a basket of goods and services representative of consumption expenditure in an economy is called consumer price index.

Inflation is measured using CPI. The percentage change in this index over a period of time gives the amount of inflation over that specific period, i.e. the increase in prices of a representative basket of goods consumed.

Source : Economic Times

We are affected as consumers so if the CPI keeps on increasing it directly affects us at various levels – as investors, as employees and employers and finally as citizens who are tax payers in some form or the other.

We will see next time what has been the trend in the last 2 years or in the recent past….so on that basis we can see what the near future holds for us and our next  generation.

Till then…..