Let’s Talk Money is an advisory for everyone interested in personal finance centred on Indian markets. Because personal financial books are hard to come by in India.
Monika Halan’s goal is to guarantee that all participants in India’s retail banking business have a fair playing field. She is hired as a Consulting Editor by Mint, India’s second-largest business daily. The term CFP stands for Certified Financial Planner. . If you are interested in finance management then it is impossible that you haven’t heard her name. you can also download Let’s Talk Money pdf
|Book||Let’s Talk Money: You’ve Worked Hard for It, Now Make It Work for You|
Summary of Let’s Talk Money: You’ve Worked Hard for It, Now Make It Work for You
The Money Box in Its Rightful Place: The amount spent on expenses, after which there is little left to save, is one of the most basic obstacles to saving. To understand this, we must first understand the psychology behind it, which is that our brain perceives money in a bank account as free money that may be spent. As a consequence, we need a system in place before we can start saving.
Monika’s first piece of advice is to create three separate accounts: one for income, one for spending, and one for investing. The account’s purpose is as implied by its name. Money is received to the salary account monthly, and it is then sent to the appropriate accounts within 30 minutes.
You could get a call from the connection urging you not to transfer money from your bank account too quickly since they have deposit goals to meet. Begin keeping track of your monthly expenses using a selection of money management software.
Boosting Financial Safety: A large number of the population see insurance products as investments rather than life insurance, which is contrary to the purpose of insurance. The majority of Indians feel their employer’s coverage for health insurance is acceptable, yet this is a common misconception. If you depart from your job, you will no longer be covered by your employer’s medical insurance.
Always have insurance to protect your finances; medical expenses vary depending on the facility’s design and the number of rooms filled. According to the author, 3 lakhs is a good starting point for small towns with limited facilities, while 15 lakhs is a good starting point for metro areas with exquisite amenities.
When deciding how much money to set aside, an effective thumb rule is to set aside 8 to 10 times your monthly take-home pay. You should purchase this insurance if you have dependents or if the opportunity arises. Find out what to consider while purchasing insurance.
Fundamentals of Investing: The majority of you are cautious to make long-term investments because you want to maintain some cash on hand in case of an emergency. People may be hesitant to invest due to immature financial management skills. The majority of people see the stock market as a kind of gambling, thinking that it requires a large sum of money to begin investing and that it is better to put off investing until later. A little investment might start as low as Rs 1000.
Many people invest, despite the fact that they are victims of inefficiencies, low returns, and high expenses. The first and most important step is to understand investing and set investment goals around it. Understanding financial jargon is an important part of avoiding misunderstandings. The less information you have, the more likely you are to be misled.
Any planned expenditure that will occur within the next 3-5 years is referred to be a short-term investment. A long-term investment is something that lasts more than five years. Different Types of Investment Funds to Recognize
Mutual Funds– A mutual fund is an asset management company (AMC) with specialists that research the stock market on a regular basis and aim to earn money for the investor in return for a fee. These asset management companies (AMCs) create their own mutual fund portfolios.
Debt Mutual Money — A business need capital for both short- and long-term purposes. It’s a bond-issuing corporation. A bond will pay the lender interest monthly and subsequently refund the principal when the bond matures. Bonds come in all kinds of shapes and sizes, depending on how long the money is borrowed for. Investing in a number of funds is referred to as risk diversification. We reduce our risk by increasing the number of goods we possess.
Liquid Funds – Liquid funds are bonds that are held for a brief period of time. As a consequence, you must deposit money into a liquid fund that you will require at any instant of time. Funds that invest in assets for a short period of time are known as ultra-short funds.
A gold fund is a mutual fund that invests in gold. They gather genuine gold and have full information about the price. The product (ETF) is known as a gold exchange-traded fund (ETF). We’ll get into ETFs in a minute, but for now, know that you may buy gold through a mutual fund via a gold ETF rather than buying physical gold.
Putting the Money Box Together: Let’s Talk Money includes a section on how to build a basic portfolio towards the end of the book. When purchasing an investment product, keep the cost of acquisition in mind. When you buy anything, the salesperson can earn a 42 percent commission. The next stage is to look for administrative expenditures or a spending ratio that might eat into your investment earnings.
Remember that even if the funds lose money due to the expense ratio, the fund manager gets paid. The cost of withdrawing money from a mutual fund and completing the associated paperwork is known as the exit load. If you leave money at the facility on occasion, you will be severely fined.
Always compare your returns to a bank FD when calculating them. Always compare outcomes with others in the category over a period of 3,5,10 years. Avoid things that offer 100% returns – you’ll end up with Rs 5 lakhs if you spend Rs 1 lakh. This seems to be a five-fold return, but when you consider the time period, the annual return is just 5.5 per cent.
Fiscal policy – Short-term capital gains and long-term capital gains are two kinds of taxes that apply to mutual funds. If you sell your shares within a year, you’ll have to pay a 15% tax on your short-term capital gain. A ten per cent long-term tax is applied.
Diversify your assets on a regular basis to reduce risk. When the question is about investment in equity and debt, a good thumb rule is to subtract 100 from your age, e.g., 100 – 30 (if your age is 30), then invest 70% in equity and 30% in debt, gradually increasing debt and decreasing inequity as you become older.
Investing in the author’s terminology is as follows: a two-to-three-year holding period Stocks account for 25% of the portfolio, while bonds account for the remaining 75%. The time horizon for short-term debt funds and conservative hybrid mutual funds is 5-7 years.
Retirement: At twenty-five, you should set aside 25% of your post-tax income, and at thirty, you should set aside 30% of your post-tax income. At forty, you should set aside 40% of your earnings. Even if you haven’t put any money aside for retirement, this technique will work. use a simple future value calculator to determine your expenses today.
You should have eighteen to thirty-five times your monthly spending saved up for retirement by the age of sixty. You’re using a multiplier of roughly twenty-six in this case, or somewhere between eighteen and thirty-five.