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Raag Vamdatt is another personal finance blogger who is actively trying to build financial awareness through his website Financial Planning Demystified. I asked him 10 questions on the financial awareness levels in India and was happy to see his insights. Here they are:
1. Why is it that generally people avoid or have a fear of financial planning? What is the fundamental problem? Is it specific to India or is it a global phenomenon.
I am not sure at the international level, but I can talk about India. There are two things that go here.
First is our obsession with saving income tax and all instruments that help in achieving this. This means that most of the time, we end up “investing” just to save income tax instead of following a well planned path. Thus, the concept of financial planning itself is quite alien to us.
Secondly, we are used to getting free “advise”. Be it from TV, newspapers or from the so called insurance and MF investment advisors, we have been getting it free. Most of these people drive clients towards what is beneficial to them (read: fat commissions), which tempting them with things like saving income tax!
2. What are the various options available for investments? What would be your recommendations?
There are quite a few options – equities, real estate, gold, and of course, fixed income instruments.
My personal favourite is equities. India is on a long term growth trajectory – and I am talking in terms of the economy. This would of course reflect in the stock market as well. This is a great time to invest and ride the growth curve.
3. Can you give a brief overview of how should one’s portfolio be at different ages.. Eg at 25 years, 35 years, 45 years etc.
The traditional belief is that you should take more risks when you are young, and less when you are older. So, traditional advice says: more equities in 20s, more debt in 40s, 50s and 60s.
I agree and disagree. It depends not just on the age, but also on the risk taking capacity of the individual and the time frame. So, if someone is in his 50s, but has no liabilities, has good cash flows, and can set aside the money for 8-10 years, why not invest in equities??
4. Is it advisable to have a personal finance consultant who maintains ones portfolio? Are there people who do this? If so how much do they charge? Are they really helpful in the first place?
Nope. Investment advise and investment management has an inherent conflict of interest, and should be kept separate as far as possible. And a financial planner should definitely not handle your investments.
5. Are there some online resources that you would recommend for readers to handle their money?
We do not have too many such resources in India.
Outside India, these are websites where you can consolidate all your incomes, expenses at one place – automatically. The website collects all your data from your bank account, credit cards, etc. So, tracking expenses, categorizing them and budgeting based on them becomes very easy.
We lack such a service in India – maybe its an opportunity waiting to be tapped?
6. Do you visualize a growing use of personal finance software to track and manage money in India?
Yes, definitely. With increase in incomes, awareness towards money is also increasing. So, I definitely see a push towards personal finance software.
7. The Regulators are cracking the whip on Asset Management Companies and Insurers. What’s your wish list from the Regulators?
They are doing an awesome job – I just wish that the stick that is applied to MF agents is also applied to insurance agents.
8. What prompted you to start your Blog? What motivates you to keep on blogging?
I realized that the people working with me in my job were earning good amounts, but did not know how to invest it. They had no idea about the various investment options. They also lacked awareness about income tax rules and tax saving avenues.
These are the people who could have excellent financial stability in their life, or could be living hand to mouth – depending on the investment choices they made.
Since I have a keen interest in personal finance, and am also well qualified in the field of finance, I thought why not help everyone, while doing something that I am passionate about? That how www.RaagVamdatt.com was born!
And it’s the same driving force – helping people understand various investment options and make right investment choices – that keeps me going even today.
9. What are your three best blog posts?
It is really difficult to arrive at just 3 good posts. Here are a few that I consider helpful to readers:
Goal Based Investing
Want to own a company? Buy stock!
Saving Income Tax – Understanding Section 80C Deductions
Your Personal Net Worth – Importance & Calculation
Start saving early and gain from Compounding – Early bird gets the worm
Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage
10. What would be the three blog posts of other Bloggers that you would like to share?
How much emergency cash
Where to Invest
Income Clubbing Provisions
Thanks Raag. Keep the good work going.
I edit Personal Finance Online Resources, deliver Financial Awareness Workshops and have built a desktop RupeeManager.
Invite me for a talk. Email me on ranjan@ranjanvarma.com or Call me on +919867755615
@Raag and Ranjan,
Both of you are doing great work in improving the financial literacy by your relentless efforts. It’s such a pleasure to see this kind of bonhomie and collaboration. May your caravan grow