Personal Finance – Intro

I really don’t know when such a thing happened to me. My only hobby now seems to be ‘Personal finance’ if you could leave anything related to cricket. I have gone to such an extent that I am able to easily advice others in this. But this hobby is helping me in my life very much. But the only person who is affected because of it is my wife. Whenever I understand something new, I never forget to explain it to my wife and she is the only person who will be willing to hear such things and try to understand as much as possible. In the end she would say, “I don’t need to worry anything related to money.” I started it because I could not help being surprised by one Mr.Iyer Vidhyashankaran’s knowledge on tax. He was also like any other employee of Honeywell, but somehow he seemed to know far ahead of others related to tax and savings. Then I started to read about it all during my after-work hours and slowly I began to understand that it was not that difficult. And after quite some study that included anything related to personal finance from PPF to mutual funds, investing in shares to trend trading, credit cards to portfolio allocation and diversifaction, gold funds, MMFs, realty funds, Pure term insurance cover’s advantage etc, I was able to spot mistakes in what Iyer was saying.
The best application of my knowledge came when I decided to take life cover. I approached LIC agent and he came up with an impressive PDF with my name in it and all the schemes that he wanted me to be involved. It also quoted how much I would receive at the end of 5 yrs, 10 yrs, 15,16, etc. I was thoroughly impressed and decided to shell out 3300 Rupees monthly (Close to 40k per year) on it. Then in only of my evening classes in personal finance I came upon the drawbacks of putting lot of money in insurance and of using insurance as a saving mechanism. So i went ahead and opted for a endowment plan where I needed to spend only 12K per annum and i would get the money that I put in at the end of the term. That seemed ok and so I signed the deal with the agent. After just only a few days, I learnt that in Life insurance the best is the ‘Term Policy’ where you get insured for a high value for a very less annual payment, but you forgo all your money if you were to stay alive. I called my agent and asked him to change my policy to pure term policy. As expected he did not approve of it (as he will not get a good commission out of term policies). Still I asked him to go with it and so I ended up with a life cover of 10 Lakhs for just 2800 per year. I later learnt that atleast one third of my first year’s payment goes to the agent and that is why he was pushing me for a 40k per year scheme.
Tasting the first success, I evalutated how much putting the remaining money that I saved in PPF will give me and I was startled at what I learnt, The money was cooly double of what I would have got if I  had gone with LIC. Such a difference with just a little thought (we all know PPF is very safe an investment). Only then I learnt that I had not even known of PPF a year before that. That left me with a thought to ponder. We work day-in and day-out for our monthly salary of X rupees, but give no thoughts on where to put it for investment. A simple mistake means for the full term of say 25 years we are going to lose half of that money. Something like earning X/2 in the place of X. Terrible!!! and then I understood that there is no regular classes or anything like that to educate people on personal finance. Then I started looking more carefully and found that many were dealing with problems of credit card debts and were trying to save for Tax. What would have been left unnoticed by me a year ago seeemed like utter stupidity now. Then I felt lot of gratitude to the guys who had taken steps to put such articles on the web. I felt that as a benefactor, I should do something to help others. So with the help of a website, I created the Tax Planner for 2005-2006. I have it with me and if someone needs it he/she can mail to simon.peter@rediffmail.com. I am also obliged to give the website address that have helped me to uncover many personal finance mysteries.
icicidirect.com
rediff.com – getahead – money
smartmoney.com – tradecraft
personalfn.com
pruicici.com – university
myiris.com
equitymaster.com
to name a few. If there is any query you can also contact me at my mail address. I will do my best to give an answer.