Are Social Networks Diverging Culturally?

One thing that makes social networking a unique and unpredictable topic within the tech world is that, in a more direct way than other computing products, they reflect the influence of their users. The infrastructure and design behind them maybe draws a certain type of user more than others to begin with, but they quickly develop a culture or cultures of their own.

To take a now-outdated example, LiveJournal, structured as it was around the metaphor of a diary, became associated culturally with a certain mode of discourse. People spilled their emotional feelings, perhaps to excess, and LiveJournal became caricatured, fairly or not, as a haven for oversharing, rumor-mongering emo teenage girls.

The recent explosion of interest in Pinterest, if you’ll pardon the rhyme, has been more gendered still, with the front page at any given time resembling a women’s magazine. Whether this reflects something about the “pinboard” format or is merely a historical coincidence of crowd behavior is hard to untangle. On the other end of the spectrum, Reddit, Digg, and especially Slashdot cater to a primarily male audience of hardcore technology enthusiasts. LinkedIn is obviously the most gender-neutral, with a notable lack of personality that is quintessentially corporate: everyone needs a job.

The most successful social networking sites, Twitter and (especially) Facebook, have created the perception that they are each a permanent phenomenon with universal appeal. But is this so? We saw this anxiety play out in a big way surrounding the Facebook IPO: not only concerns about the company’s advertising model, and thus revenue stream, but this idea of, will the crowd move on, as it did with Myspace?

There is a certain element that social networking sites will always share in common with other social phenomena like fashion, parties, trends, which don’t stand still but move with the

Facebook has gone, in my short lifetime, from a substitute dorm-room where we could all reminisce about last night’s vodka shots, to a vast, family-friendly site that attempts to encompass all potential users from child to grandma, and thereby has risked alienating the original early adopters, students, who flocked there from Friendster and Myspace.

Twitter has picked up some of the slack in this regard. Its content and users noticeably hipper, snarkier, and more “plugged-in” than Facebook. Anecdotally speaking, many of the most trend-setting people I know have long ago dropped square old Facebook for snappy, fast-paced Twitter.

For those of us who think strategically about such things, it’s important to monitor the intangible differences of flavor that have cropped up within the cornucopia of social networking options. Most normal people simply do not have the time to make a sustained commitment to 17 different social sites at once, and so as they choose what “scene” attracts them, we’re bound to see this evolution continue.

This is a guest post by Aniya Wells. Aniya Wells is one of the most passionate writers you’ll ever meet. Though her writing interests run the gamut—from personal finance to health to current events and more—her primary interest is modern higher education. She serves as a reliable online degree guide for students considering taking advantage of the conveniences inherent in distance learning. Don’t hesitate to contact Aniya for questions or comments at aniyawells@gmail.com.

Are you eligible for debt consolidation with bad credit?

Are you struggling to manage your multiple credit card debts? Maintaining multiple cards all with different fees and varying interest rates can be difficult to manage. You might default on your payment and incur insurmountable amount of debt. Therefore, in this situation debt consolidation can help you consolidate your multiple credit card debts with a single affordable monthly payment. You can consolidate your high interest credit card debts in to a low interest single monthly payment. But if you have poor credit then your consolidation loan application might get disapproved. So here are a few points that will help you get consolidation loan despite your poor credit:

1. Prepare a stringent budget plan so that you can overcome your catastrophic financial situation. You need to accept the fact that will not be easily to come out of debt. Therefore, following a monthly budget can help you pay off the debt in an organized way. Make sure that you keep track of your expenses so that your expenses do not exceed your income.

2. Review your financial situation and decide whether you need help of a credit counseling agency or professional debt arbitrator to manage your current financial situation. Make sure you find a reliable debt relief agency with a Better Business Bureau accreditation to manage your financial owes.

3. You can approach your bank or credit union to apply for new loan to consolidate your debts. If you have an account with the bank then you can apply for a personal or signature loan to consolidate multiple payments. But you might not be able to get a loan if your credit score is low. Traditional lenders and banks will check your credit report before approving your loan application. If you have poor credit score then you can apply for secured consolidation loan. You are required to keep security against the loan amount.

4. If you attend college then you can be eligible for financial aid that can be used for paying off your tuition fees, hostel expenses etc. This grant money can be used for paying off your student loan debt as well as other debts. If you want to acquire more information then you need to contact the school’s Financial Aid Office.

Therefore, if you follow these four points then you can get a consolidation loan despite your poor credit. Once you pay off the debts then you can work on repairing your credit report.

5 Reasons to Stick with Facebook

I can’t begin to tell you the number of complaints I’ve seen from Facebook users who hate the new features in the news feed. While I can certainly relate with some of what I’ve seen said (that ticker in the sidebar annoys me to no end), I’m sort of surprised by the threats to leave and the general amount of complaints.

Change is, after all, inevitable.

And that’s just it. Facebook has changed dozens of times in the past. These most recent changes, once you get used to seeing them on your screen, are just like the others. They become part of the Facebook experience and no longer bother you. Still, there are plenty of reasons you should stick with Facebook despite their seeming desire to compete with every other social networking platform in existence. Here are some to consider.

 

Privacy Issues Exist Everywhere

One of the hugest complaints I see about Facebook is the changes they’re making to your privacy settings. OK, so a few things may have changed and left you feeling a bit more exposed than you were before, but Facebook did NOT take away your control over the situation. It would be to your benefit to learn a bit about the changes, figure out what you need to do to increase your security (or decrease it), and then share that knowledge with others.

Social Media is Here to Stay

While Facebook is just one of many social media sites, we already know that social media is a pretty permanent fixture in the internet world and it has a huge presence. A few angry people jumping over to the next new media platform will not change Facebook’s popularity. This means you’ll have a harder time networking on other sites than you would if you simply stuck around to learn how the new features really work.

Facebook Does Hear You

Have you seen a new group pop up called “We Hate the New News Feed” or “Click if You Love the New Timeline?” Facebook actually sees these groups when they’re created and, believe it or not, they are watching to see what people are saying about the changes. They may not change everything – or anything – back to the way it was, but they might offer solutions and future upgrades that address your concerns and make things easier for you to use. Of course, they may simply apologize for upsetting you and move on. But, really – could you expect any different from any social media platform?

Your Business Depends on Facebook

Edison Research recently released a study that showed that approximately 41% of the people living in the United States use Facebook. That’s a huge percentage and that’s just the United States. If you have a local business, consider that 41% of those in your local municipality are on Facebook at any given time. If you have an online business, you have the potential to reach a rather large global audience. The reality of the situation is that a large number of your family members, friends, customers, and potential customers are using Facebook regularly. And the odds of them jumping ship are pretty slim.

More Change is on the Horizon

Like I said before, change is inevitable. Facebook announced even more changes in the coming weeks (some of which actually look pretty cool). What makes you think Google+, LinkedIn, Twitter, Tumblr, and all of the other sites you use won’t change as well. Fact. They will. Eventually. And you’ll probably hate those changes just as much in the beginning as you hate these.

It’s a waste of time to jump ship simply because of a little bit of change. It is a part of life. You’ve built a huge network and if you’re in business or have any sort of public reputation you simply don’t have the time to start over. Embrace the changes you’re seeing and learn to use them properly. You may be surprised at how easy they are to adapt to. And (shhhh – don’t tell), you may even end up liking them.

About the Author: Patty Kleen is a full-time writer and blogger with a passion for social media and personal finance. She enjoys writing about social media tools, online business marketing, credit repair, bad credit loans, and money saving techniques for those with poor credit histories. 

This post is part of our I’m Inquisitive too initiative, which encourages readers to participate with interesting, inquisitive insights from their end. If you would like to participate please do drop me an email at me[at]melvinpereira.com with I’m Inquisitive too in the subject.

Is Facebook struggling to keep up with its competitors?

Facebook has been implemented a number of changes to its services in the past few months. And with the growing popularity of social media services like Twitter and Google+, it begs the question of whether the social networking giant feels the need to establish a new edge among its competitors. Some people even question whether Facebook is copying its competitors to some extent.  Let’s investigate some of Facebook’s recent changes and see how they compare to features on other social media services.

Facebook Messenger

One of the more ponderous additions to Facebook’s networking arsenal, the Facebook Messenger mobile app joins the ranks of countless other messaging services offered for smartphones as an alternative to traditional texting. The application is especially curious considering Facebook’s chat capabilities for the regular Facebook mobile app. While this app doesn’t directly compete with Twitter or Google+ (unless you count Google’s GChat), it certainly signals a move from Facebook to expand beyond the typical boundaries on the social networking website.

Improved Friend’s List

Facebook recently announced a retooled version of the Friend’s list on a user’s Facebook page. Although users have had the ability to create lists, before it was a laborious task rarely used by people on Facebook. Now Facebook has “smart lists” that automatically categorize your friends and family based on your shared data. You can choose to share information with people on your lists while keeping it from your other contacts—that way embarrassing pictures of you don’t make it to your Facebooking family members. The smart lists also help determine what information you see on your newsfeed, phasing out information from users who you’re more unfamiliar with. While this is an undeniably helpful feature for Facebook users, whether you’re tired of over sharing your information or seeing too much information from mere acquaintances, it feels an awful lot like Google+’s “circles” feature. Some people see the smart lists as a too-little-too-late move from Facebook, but its success with users has yet to be determined.

Subscribe Feature

Another recent announcement from Facebook unveiled a new “subscribe” feature. If a Facebook user allows to do so in their privacy settings, you can choose to follow them by clicking a subscribe button next to their profile. This way you can receive updates from a Facebook user without having to formally “friend” them, the idea being that you can subscribe to the profile’s of individuals who might not otherwise friend you. What’s more, you can alter a subscription to only notify you of worthwhile updates: uploaded pictures yes, status updates no, and so on. People have compared this new item to Twitter’s “following” feature, and while they’re similar, so too are numerous other features on other websites that allow you to follow or subscribe to web content.

Conclusion

Facebook’s changes could be read as copycat maneuvers taken from its competitors, but I think that the company is just trying to keep up with the rampant change in social media. Messaging and subscribing, it’s all an effort to stay relevant. Facebook isn’t in any danger of going out of business soon, its users still well exceed those of Twitter and Google+ combined—so any claims that they are being outmatched by competitors are premature at best. Like it or not, Facebook (and its recent changes) are here to stay.

This Post is a Guest Post by Mariana Ashley. Mariana Ashley is a freelance writer who particularly enjoys writing about online colleges. She loves receiving reader feedback, which can be directed to mariana.ashley031 @gmail.com. If you would like to contribute to the Inquisitive Minds, please write to us at me@melvinpereira.com

Get Richer by avoiding Mental Accounting

The Inquisitive Minds, features guest authors who are interested to contribute to the readers of this blog and the author of this article is Ramalingam Kan MBA (Finance) and Certified Financial PlannerHe is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.  He has been a regular on this blog for a while now. If you would like to contribute something then please let us know on guest [at] melvinpereira.com.

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.

Eight Simple Ways to Plan your Taxes.

The Inquisitive Minds, features guest authors who are interested to contribute to the readers of this blog and the author of this article is Ramalingam Kan MBA (Finance) and Certified Financial PlannerHe is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.  He has been a regular on this blog for a while now. If you would like to contribute something then please let us know on guest [at] melvinpereira.com.

You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan?

1)     Proper Allocation of Annual compensation

Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

v  Transport allowance to the extend of Rs.800 is exempt

v  Medical expenses which are reimbursed by the employer are exempt to the tune of Rs.15000

v  Food coupons like sodexo or ticket restaurant are exempt from tax up to Rs.60000

v  Individuals who are all living in a rented accommodation can include House Rent Allowance ( HRA ) as a part of their salary

v  Leave Travel Allowance (LTA) can be part of your salary as this can be claimed twice in a block of 4 years.

2)     Effective Utilization of Tax Exemption

As far as possible utilize the maximum exemptions available under section 80 C, 80 CCF and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children’s education.

Under Section 80 CCF, you can invest up to Rs.20000 in infrastructure bonds.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extend of Rs.15000.

3)     Properly Structure your Housing Loan

The Principal repayment of a housing loan is eligible for a deduction up to Rs.100000. The interest paid on a housing loan is eligible for a deduction up to Rs.150000. If the housing loan is for a sizeable amount, then it is possible that the principal repayment and interest may exceed the specified tax exemption limit. To utilise the maximum tax benefit, an individual can consider going for a joint home loan with his/her spouse or parent or sibling. This will make sure that both the co-owners can claim tax deductions in the proportion of their holding in the loan.

 4)     Tax Plan in Sync with Overall Financial Plan

You should not do your tax plan in isolation. You need to do it in sync with your overall financial plan. So a tax plan is not only to just save taxes and also it should assist you in achieving your other financial goals like children’s higher education, buying a home or retirement.

5)     Avoid Last Minute Rush

In fact the right time to do the tax plan is the beginning of the financial year. If you postpone your tax planning even now and do it in the last minute, then you will not be able to choose the right investment. In the last minute rush, you will be forced to choose a scheme which gives the proof immediately. Is the investment sound and profitable? Is there any other better options? You will not be able to choose the best scheme and you may settle with a mediocre one.

6)     Invest Some Quality Time

Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations.

7)     Check for Future Commitments

Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, Ulips need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

8)     Changed Your Job; Redo your Tax Plan

Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS. Otherwise you may need to pay extra tax at the end of the financial year.

Whenever you change your job, you need to have a sitting with your financial planner or tax advisor. So that the required changes in your tax plan can be done proactively. With proper tax planning you can reduce your tax liability; save more; invest better and become wealthier.

Real Estate Investments Made Simple

The Inquisitive Minds, features guest authors who are interested to contribute to the readers of this blog and the author of this article is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.  He has been a regular on this blog for a while now. If you would like to contribute something then please let us know on guest [at] melvinpereira.com.

Gold and Real estate are very traditional investment avenues. Gold has evolved from its traditional investing and found its place in the modern sophisticated investment world via Gold ETFs. Similarly Real estate is also emerging as an investor friendly avenue with less hassle via PMS route or private equity route. Have you ever thought of investing in real estate will one day be as simple as investing in mutual funds? If no please read on….

Real Estate as an Investment:

 Buying a dream house or flat to reside ourselves is basically not a real estate investment. Buying real estate with a view to generate income and capital appreciation is considered as Real Estate investments.  Real Estate investments can be further classified into residential, farm house, commercial, retail, leisure. Leisure is a relaxation place where one can spend their free time or vacation.

Depends upon his/her risk tolerance and time horizon one can invest in real estate at different risk levels. It can be at the time of converting a rural land to urban land, or at the time of building development stage or in already developed city area.

Real Estate and Risk:

Most often investors assume real estate prices will not fall down and they only go up year after year. It is not so.  During the mid 2009 some of the real estate investments were quoting below 30% to 40% from their 2007 prices. Real Estate investments are also prone for price fluctuations.

Real estate Vs Stock market:

Real Estate is a complex and complicated investment when compared to stock market.

Non-transparent: There is no transparency in the price. It is not easy for a buyer or seller of real estate to identify the last transacted price in the same locality. There is no price discovery mechanism.

Illiquid Asset: Selling a real estate is a time consuming process. It is not liquidable easily. There is no organized market for the buyers and sellers to meet.

Impact Cost: Stamp duty and registration charges are really very heavy when compared to the other investment products.

No Regulator: There is no regulator for the real estate participants and intermediaries. Anyone can become a builder. Technical qualification is not mandatory. Also anyone can become a real estate intermediary or advisor. There is no certification or training to be completed before practicing.  As there is no qualification requirement for participants as well as the intermediaries, it is very difficult to see best business practices.

Real Estate hassles:

The other hassles with reference to real estate investment are documentation, maintaining the asset without any encumbrances, and genuineness of the title deed.

There are some practical problems with diversification. Normally an investor invests in a real estate in his own locality. It is very rare to find someone in Chennai investing in the real estate properties located at Mumbai, Delhi or Kolkata.  Affordability also limits diversification. An investor may not be able to diversify his investments across various cities with Rs.25 lacs or 50 lacs.

It may not be possible for an individual investor to buy a land and develop a viable project in that land and sell it in the market. Managing the project development need some kind of expertise.  Even if an individual is able to do it, he will be doing it in his limited ways and means.

Is there a solution for this? Of late yes.

There are some collective investment vehicles. These investment vehicles will be promoted by an investment management company. The investment management companies collect money from investors. Being professionals, they will identify good projects and do joint venture with the project developers. They will be able to diversify across various cities as well as various types of real estate investments such as housing, commercial, hospitality and the like. These investment management companies charge a reasonable management fees.

At times they collect money via PMS route and at times via private equity route.  The minimum investment ranges from 10 lacs to 25 lacs. This amount needs to be invested over a period of 3 years. That is they will collect money from investors in 4 or 5 installments. After 3rd year whenever they exit from a project they will repay the principal employed in the project as well as the profit generated out of that project. End of 6th year or 7th year, the investment management company will exit from all the projects.

The advantages of this collective investment vehicle are

  • One can invest into real estate without any hassles. All the hassles will be managed by the professional investment management companies.
  • One can invest in various real estate projects at a time.
  • One can geographically diversify his investments across India.
  • One will be able to apportion his total investment into small sums in large projects like township development, Technology Park, industrial estate, health city…
  • Cost advantage because of economies of large scale operation

This is really an investor friendly investment vehicle. Apart from the regular stocks, mutual funds and fixed deposit investments investors can consider investing in these real estate products also. This will give better diversification to your overall portfolio. Also Investors need to be careful in choosing such investment options. Background of the investment management company and their transparency levels are more important. Investors can seek the advice of the professional financial planners before investing.

This investment vehicle is in its primitive form only. It still needs to go a long way. As of now there are only a very few companies in India which specializes in promoting collective real estate investment products. But in a few years time these kinds of products will be available from various investment management companies and in different varieties like our present mutual fund schemes.

A step by step guide to first financial plan

A financial help guest post again this week from our regular guest blogger Mr. Ramalingam; The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

If you would like to contribute to ‘Inquisitive Minds’ with your article you can get in touch with us and we will provide you with the relevant guidelines for the same. Please send in your email to me [at] melvinpereira.com.

A step by step guide to first financial plan

Prabu was a college student till yesterday. Today he has got a job. He has changed his costume from T-shirt and jeans to a formal wear with a tie. When he got his first pay cheque, his father advised him to save, his girl friend asked him to take her out on a date, and his friends wanted a party. Prabu was totally confused what to do with his first salary. What are all his actual priorities? Let us help him by laying out a step by step initial financial plan for him.

Get a PAN Card:

PAN Card is an ID card issued by income tax department.  This card is useful in filing your Income Tax returns. Apart from this, the PAN card is very much useful in opening a bank a\c, demat a\c, investing in mutual funds and the like. The required documents for getting a PAN card is a passport size photo, address proof and an identification proof. You need to apply with either UTI or NSDL. They are the two approved agencies by income tax department for issuing PAN card.

Personal Accident and Disability Insurance:

Almost every day you can find a news column about road accident. It may be your colleague, your distant relative, your neighbour, your friend, your classmate. The stories of such incidents give us a reminder that the accidents can happen to anyone. The impact of these accidents on ones working life could be huge. Some accidents could reduce our employability temporarily or permanently. Personal accident and disability insurance policies will cover the financial losses arising out of accident and disability.

You need to decide the coverage amount of this policy based on the estimated loss you may suffer because of accident. That is how much loss you may incur from employment temporarily or permanently because of the accident. This will cost you approximately Rs.1500 p.a for a coverage of Rs.10 lakhs.

Health Insurance:

Most people don’t think about health insurance very often.  But it comes to mind first when a loved one is sick.  Under health insurance, the insurance company pays the medical bills if the insured person becomes sick and hospitalized. Health insurance can protect a family from financial damage in case of severe and serious illness.

If you have a health insurance from your employer, that may not be sufficient. Employer may cover the employee and not his family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage. It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.

The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.

Term Insurance:

Generally as a beginner, there will not be any requirement for any life insurance. But if your parents are financially depending on you, then you need to cover yourself with life insurance. As a breadwinner, today you are there for your family to provide a lifestyle. In case of any mishappening to you, your family members should not compromise on their lifestyle. That is why it is advisable to cover yourself with life insurance if you have dependents.

But don’t fall prey for ulips. Go for a pure term insurance policy. These policies give you a high coverage with low premium. The premium for a sum assured of Rs.10 lakhs will cost a 25 year old only Rs.2500 p.a. approximately.

Emergency Reserve:

Once you have completed the above obligations, you need to build an emergency reserve or contingency fund. One aspect of financial planning involves planning for situations where there could be a temporary break in one’s professional income. This could happen, amongst other reasons, due to ill health or could even be self opted. Such planning requires creation of contingency fund. The size of a contingency fund is linked to one’s estimate of what could be the maximum duration of such a break. For instance some people plan for the possibility of a 3 months break, others for 6 months.

This emergency fund gives a psychological security to you. In case you need to quit you r present job and need to search a new one, you can do that comfortably and confidently as you have an emergency fund for the intermediate period. You need not panic. If you have created a contingency fund, in the event of any emergency you need not pre-close your other investments and hence you avoid paying penalty or booking losses.

Tax Planning:

You can save under section 80 C up to Rs.120000. Out of this Rs.20000 need to be invested in the infrastructure bonds and the balance Rs.100000 can be invested in NSC, PPF, insurance premium, and ELSS mutual funds., You can give maximum allocation to ELSS mutual funds, as you are so young and in the beginning of your career.

Other goals:

You may have other goals like buying a laptop, higher studies, and vacation. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon. How much risk you are afford to take and psychologically comfortable in taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.

Plan out your work and work out your plan. Normally we don’t plan to fail, but we fail to plan.If you work on your financial plan, when your friends are partying and taking their girlfriends out, you will be definitely going to be retired richer than your friends.

11 ways to Get out and Stay out of Debt

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

In spite of steady, regular income there are so many individuals who live paycheque to paycheque, carry their credit card outstanding, and fail to save anything for retirement. If you are one of them, now is the right time to take action to come out of debt and stay out of debt. It is not only possible; it is unbelievably achievable.

1. List down all your debts

You need to take stock of all your loans. It could be credit card due, personal loan, car loan, housing loan, education loan, loan from FD, loan from insurance policies, loan from your employer, hand loan and so on. For each and every loan you need to note down how much you owe, the present interest rate, EMI, Number of months to be paid.

2. Negotiate for lower interest rates

If you could negotiate the interest rate and bring it down then you can come out of debt faster. Most of the credit card companies come forward for negotiation if you really show interest in repaying. They need not run after you to collect the debt. It will reduce their expenses. So they will be happy to negotiate. Balance transfer offers from credit cards are also a way to reduce your interest rate.

3. Refinancing and consolidation

Replacing a loan with another is known as Refinancing. By doing a refinance it should reduce your interest rate and it should bring down the time you are in debt. But most often people go for refinance that provide them lower EMI but increasing the time they stay in debt.

4. Categorize your debt

Housing loan can increase your net worth over a period of time. Housing loan gives you tax benefit also. For a business man car loan provides some tax benefit. Based on these factors a debt needs to be categorized. This will help us in comparing different loans.

5. Prioritize your debts

After sorting out various loans, now we can comfortably prioritize the loans. Obviously this will be based on the interest rates and tax benefits. At times paying off a small loan first can give you a lot of motivation to get out of debt.

6. Creating and Executing a Debt payoff plan

You need to create a debt pay off plan with different scenarios. So that you can find out how some more savings or a different repayment order will help you to get out of debt faster. When creating a plan, you need to choose one which is comfortable to your attitude. Otherwise, you may not execute it properly.

7. Refrain yourselves from applying for fresh loans

You need to make a vow that you will not be adding any fresh loans, till you come out of all your debts completely. Think for a moment, how you will feel when you become debt free. This will give you a lot of positive energy to come out and stay out of debt.

8. Postpone buying major assets

Buying a property or any other assets need to be postponed till you get out of debt. With your new ownership comes the new, probably large and unpredictable expense. This can make you deviate from your debt pay off plans and at times the consequences could be uncontrollable.

9. You stop using your credit card

There are two groups. One group of people uses the credit cards responsibly. That is they will repay the credit card dues in full when they receive the bill. The other group will pay the minimum amount due and carry forward the balance amount due. If you belong to the second group, you need to stop using credit cards temporarily. Take out and keep your credit cards in the locker. Once your financial situation and buying habits improve, then you can start using your credit cards again.

10. Change your spending habits.

Being in debt obviously means that you have been living beyond your means. The solution is very simple. Spend less than you earn and you will get out of debt soon. You need to change your spending habits. Then only this simple solution will be achievable. If you buy things you don’t need, you’ll soon sell things you need. Don’t save what is left after spending; spend what is left after saving.

11. Involve all your family members

You need to inform all your family members and dependents about your debt status. Then you will be able to take decisions with much more clarity. Moreover, if your family members know about your debt, they will also change their spending habits and support you in getting out of debt faster.

Consider the postage stamp: Its usefulness consists in the ability to stick to one thing till it gets there. Similarly, you need to stick to your debt pay off plan till you get out of it.

10 Things To Do Before You Retire

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in. If you want to write for us please send an email to me [at ] melvinpereira.com or get in touch with us at the contact page.

Don’t put off today what you can’t afford to do tomorrow. In spite of the world wide pension crisis and a growing acceptance that we must plan and save for our retirement, the harsh reality is we are actually not saving enough. Research reports reveal that only 15% of the individuals are saving sufficiently for their retired life. Here are a few tips on things to do before you retire so that your retired life is more comfortable and enjoyable.

Get Rid of All Your Debts

If you are taking a housing loan, personal loan, car loan or any other loan make sure that you will be repaying them on or before your retirement. You need to choose the term of the loan in accordance with your retirement age. You can enjoy your retired life when you have 100% financial freedom, not when you have to repay your loans.

Protect Your Emergency fund

Emergency expenses can happen any time. But the possibility goes up during the old age. So we need to enhance the emergency reserve year on year based on the inflation and change in your expense levels. Emergency fund will give you a sense of security and also you need not touch your other investments during emergency where you need to pay pre-closure penalty. Also don’t forget to refill the emergency fund once you met an expense out of emergency fund.

Establish a Retirement Budget

You need to visualize your retired life well in advance and need to create a budget for your retirement. That is you will not be going to office. So the expenses on transport and clothes may come down. Also you will have more time to spend. You may need to spend more on leisure travel and health care.

 

Examine Your Cash Flow

Take a close look at your cash inflow as well as outflow. Is there going to be any income after retirement? Like rent, royalty…. Would there be any unwanted outflow during retired life? Like paying life insurance, or SIP. At times during your beginning of the career , you could have taken a policy where you need to pay premium up to the age of 60. But now you may plan to retire at 55 itself. So you need to realign your existing policy and other investments in sync with your retirement age.

 

Grow Your Retirement Corpus

Find out how much corpus you need to have when you retire so that you will be having complete financial freedom. A professional financial planner will of great assistance to you in this regard.

 

Develop a withdrawal strategy

How are you planning to withdraw your cash outflow during retirement from the retirement corpus? Monthly, quarterly, half yearly or annually? Through Sytematic Withdrawal plan in mutual funds or by way of dividend or interest. All these will have a great impact on the corpus you need to accumulate. So you need to decide in advance.

 

Minimize taxes

Your retirement corpus and retirement income need to be tax efficient. You need to pay taxes as and when the fixed deposits matures irrespective of that you withdraw interest or reinvest under a cumulative option. But you need to pay interest only when you withdraw from the mutual funds. Careful selection of investment vehicle can reduce your tax during the retired life.

 

Get Sufficient Mediclaim coverage

The moment you retire, your employer will stop covering you under the group mediclaim. So you need to plan for your individual medical cover well in advance. At old age the medical expenses are inevitable. If you have not planned it properly the all your retirement plan will become a mess.

Consider Inflation adjusted annuities

The monthly income you need when you retire is not going to be the same even after 5 years of your retirement. Inflation will increase your retirement expenses year after year. So year after year your retirement income needs to go up.

Oversee estate planning

How your fixed assets and financial assets need to be distributed to your legal heirs? Create a WILL. You can avoid creating relationship problems to your next generation because of your left out wealth.

Three Awesome Google Logos that Distracted the World

This is a guest post by Nadia Jones who blogs at online college about education, college, student, teacher, money saving, movie related topics. You can reach her at nadia.jones5 @ gmail.com. If you would like to contribute an article to the Inquisitive Mind, please get in touch at the contact page. I will be more than happy to add in the relevant post on the blog.

In today’s society, life is about speed and productivity. With the evolution of new technologies and the internet, we expect instant gratification for any query we might stumble upon. While things in internet-land are constantly moving and changing, one site and enterprise that has remained ever steady is Google. Google is like the god of the internet. It seems as though they can do nothing wrong. With a beautiful search engine, great emailing capabilities, and even a very useful browser, Google has perfected the art of speed and productivity. While Google has certainly made our lives run a lot more smoothly in many ways, it has also caused an internet traffic jam on more than one occasion. The Google logo is one of the most recognized logos throughout the world. Since 1998, Google has been doing Google Doodles with the highly recognized logo. These three Google Doodles are believed to have cost the world a significant amount of money for the time wasted by internet users (awesome).

Les Paul Google Doodle

1. Les Paul Logo: On June 9th 2011, Google celebrated the 96th birthday of Les Paul by displaying an interactive electric guitar doodle as the logo. The doodle is one of the only Google Doodles that is interactive. This logo was displayed worldwide and was a huge hit in the United States. Users could hold their cursers over the strings of the doodle to strum the guitar. You could also activate the keyboard to strum the guitar. In the United States, users could record their strumming for thirty seconds and then a URL is created for your recording. This Google Doodle is possibly one of the coolest yet. With users around the world creating tunes on their browsers, there are rumors that the Les Paul logo alone cost the U.S. millions of dollars in productivity for the two days that it was displayed.

Pacman Google Doodle

2. Pac-Man Logo: On May 21st 2010, Google celebrated the 30th anniversary of the arcade game Pac-Man by displaying an interactive logo of the game itself. This was the first interactive logo that Google had ever unveiled and was a huge success worldwide. Anyone who visited the site could play Pac-Man on the logo. The logo mimicked the exact features of the original game with ghosts, dots, and all of the classic sounds. Visitors could play Ms. Pac-Man as well by pressing the “Insert Coin” button twice. In this instance, two Pac-Man games show on the screen, allowing two people to play at once. The Pac-Man logo was one of the most popular Google tricks and now has an entire site dedicated to it (linked above).

3. Jules Verne’s 183rd Birthday Logo: On February 8th 2011, Google celebrated the birthday of French author Jules Gabriel Verne. Verne pioneered the genre of science-fiction and is best known for novels such as Twenty Thousand Leagues Under the Sea and A Journey to the Center of the Earth. Google changed their logo to an interactive submarine exploration. The word “Google” was spelled out to look like the windows of a submarine. The user can control the submarine by moving a lever up and down or right and left. See tropical fish, deep sea divers, sharks, and monsters on your exploration. As a beautiful tribute to a fantastic writer, Google’s imagination shines as much as Verne’s.

 

Guest Post – Instruction Manual for Investment

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in. If you want to write for Inquisitive Minds, please send us an email with details at the contact page.

Instruction Manual for Investing

Let’s open the manual:

Every gadget you buy in the market comes with an instruction manual or user’s manual. But your salary, savings…retirement don’t come with an instruction manual.  So we don’t know how to handle these and we end up mishandling. The result is poor investment choices and unhappy retirement. This article is an effort to draft an instruction manual for our investments.

Investment forms an integral part of our work life, with many wanting to save and invest to meet our long-term financial needs. We would all agree that just living from paycheque to paycheque would leave us in a bad financial state making us incapable of meeting our family’s financial commitments and our expenses after retirement.

Don’t Fly Blind; Have a Financial Plan

It is vital to chalk out a financial plan at the very beginning of our career. This plan would tell us how much we should save and invest. This plan also ensures that our long-term financial needs are met. It may prove difficult and sometimes costly in the long run if we chalk out a financial plan on our own. So it is better to engage a professional financial planner, who would be in the right position to advice us on the investments to meet our long-term objectives in life.

Generally investment advisors or financial planners ensure that we invest in the right type of investments that are relatively safe and tax efficient. They ensure that our investments do not divert away from the set financial goal. The advisors or planners who charge a fee, can be expected to act in the best interest of us; their clients. But we will not be in a position to trust those who live out of the commissions earned from selling insurance policies or mutual funds or stock broking.

However, it is best for you also to be cautious and not allowed to be fooled by flattery. Since it is your money you need to be cautious and vigilant.

Do control what you can:

The first thing that we can control is unnecessary expense on investment. It is in our interest to try to minimize or avoid investment expenses like entry load, exit load, fund management fees, commissions for buying and selling stocks, account maintenance fees,  allocation charges, administration charges, surrender charges, and other overheads. Small drops make a mighty ocean. Similarly these small amounts of cost cutting will definitely pay us in the long run.

The second control is over the diversification of your investment. You also need to ensure that at all times your investments are done over a wider variety of assets. This will ensure that you do not suffer large losses in one type of investment. The losses in one would then be offset by the gains in the other and you will be financially safe at all times.

The third control is the maintenance of our asset allocation to reach our financial goal. We need to keep a check over the asset allocation or ratio of equity to debt and to other things in your portfolio with the help of a professional financial planner. This will help us ensure that we are not taking more risk than what we want or can possibly handle.

Do pay as little attention as possible to the financial media.

It is best not to be influenced too much by the media to buy and sell investments. Investing is not a competitive sport. Buying and selling stock frantically by being influenced by the media is counter productive to your financial objectives.

It is best to understand that our conscious investment is for long-term wealth appreciation. So we should not be distracted by the investment shows that run 24 hrs a day, investment column they publish 365 days a year. Media doesn’t understand your requirements. So it is difficult to get a customized solution for your personal finance.

Don’t fall into “Invest and Ignore”

We have invested your precious savings, so do not be careless and sleep over it. Though our investment advisor would make sure that our investment grows, it is better that we too are vigilant and keep track of market conditions. It is our precious savings that we have invested. So if we lose it, we would be losing not only money but also our peace of mind.

Don’t fall into “HNI Trap”

Being a high net worth person exposes us to being influenced to invest in dubious projects that may bring down your financial status. This is true because the financial industry are on the look out for people that have a lot of money and are of a high status. They try to influence them to invest in dubious projects appealing to their status and vanity.

Being a HNI doesn’t mean that you need a completely different set of investments. They try to pack something and will say “This is a HNI product”, just to massage your ego and get business. Many HNIs would be lot richer, if they could have bypassed their private banking department and just invested in an index and a very few diversified equity funds.

A final thought:

The instructions in the user’s manual need to be used to get the maximum benefit and long life of the gadget. Similarly, having read the set of instructions to make wise investment decisions, it is up to you to follow them strictly or leave it and go back to your routine life.

If you decide to follow these instructions, you will definitely see a lot of positive changes and financial prosperity in the long run. So today is going to be the first day for rest of your life.