Posts in category "financial-planning" - page 5
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Property Tax Inflation
It has been slightly over 10 years since we moved to the home we currently reside in. So I thought we should have enough information to calculate the property tax inflation. Why not write a short post about it? In the past I have written a few articles covering inflation of various material goods we posses. This is one more of them. Remember that calculating inflation of individual items like this does not make much sense unless the expense is a major part of your annual expense. For example, if the inflation of the price of a pen is 20% but the price of the pen is Rs. 20, it does not matter how big or small the inflation is, it will not affect your total inflation (for a long time) because Rs. 20 is such a small amount compared to your annual expense. I am calculating inflation just as a fun exercise.
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Should You Be Worried About Inflation
For the past few months we have been hearing about the increasing inflation in the US. Is it possible that the same could happen in India and should we be worried? First lets try to understand the severity of inflation in the US. The inflation number in the US used to hover around 2% for the longest time. But it has shot up to as high as 7.9% in February 2022. That is almost 4 times as high as the average! That does hurt. It is a number not seen in 40 years! In India, the inflation is still not that high, so we don’t have to worry as much as our friends over on the other side of the world. Still, it is always useful to do a thought experiment and see if it is a topic of concern.
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Does Insurance Increase Risk?
Just a few days ago I wrote a post on risk and consequences in a philosophical tone. But then I came across this TED talk and realized there is a physiological aspect to it as well. Well, the talk was really about the “counterintuitive psychology of insurance”, but it seems like insurance and risk are sort of interrelated. When I say risk, I will use the Wikipedia’s definition so we are all on the same page because risk has different definitions when used in different contexts and may even mean different things to different people.
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Downside Risks And Consequences
For every decision we make, there is a possibility of some upside and downside risk. Take for example the decision to eat that yummy cake. Well, the downside risk is clogged arteries and heart attack perhaps. Or may be there is an increased chance of becoming diabetic. These are all long term risks right? So who cares. What about the upside? Well you get to enjoy the food and put your mind in a blissful state and you are in good mood perhaps for the rest of day at best. The upside is really short term. Now the question is whether I should have the cake or not. How do we go about it? One way is to consider the short term and long term consequences. But is so hard to visualize something that will happen far into the future. Why can’t I enjoy now? May be I won’t live that long to see the ill effects of my actions. That is one aspect of risk.
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What Is With The Index Fund NFOs?
Have you seen the number of NFOs being launched my mutual fund houses in the recent past? What happened? I am not really sure why, but in the last few days my inbox has been receiving all kinds of emails about a new fund offer (NFO) all of which were are for index funds or ETFs. Seems like passive investment is the vogue these days. How did it come into fashion all of a sudden? May be the fund houses think that active funds will not perform well and want to launch some passive funds. Perhaps they wanted to help investors make money. I am just kidding of course.
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Our Children's Future Will Be Different From Ours
As parents, we always want the best for our kids. Almost every parent thinks this way irrespective of their background. But how far into the future can we see and make a good enough prediction for our children? After all, our predictions will be based on our experiences which is basically something that happened in the past. How much does the past experience help in predicting the future outcomes? Every generation has a disconnect with the next generation in terms of how they see the world and how they perceive the future. That is very strange given that we all share the same world. How is it possible for the next generation to see the world differently from us?
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The Market Scare
There is a lot of talk about how markets are crumbling all over the world. I have no idea what they are talking about. We barely corrected 10% from the peak if you take Sensex into account. That is a normal drop one would expect from the markets in any given year. I don’t understand what the excitement is all about. A 10% drop is peanuts in my opinion. But more importantly why would one look at the drop from the recent peak? Isn’t investing in equity all about the long term view? What happened then? These very same people don’t seem to be too concerned when the markets were moving up by 20-30% in a short duration. All this confuses me quite a bit.
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Budget 2022 And How It Affects Me
Like last year, here is a quick overview of how the 2022 budget affects me. This is not an analysis or highlights of the budget. I am sure you can find many articles on those topics. This post is more specifically on how the budget affects my financial planning. This year’s budget has absolutely no affect on my financial planning. It is one of the shorter budget speeches. There were a lot of expectations from everyone and I wrote a post on that. Just as predicted, nothing happened. Every year, right before budget there is a lot of noise and anticipation. Budget day comes and goes and everyone is back to their routine :).
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Budget 2022 Expectations
As we draw closer to the budget for a financial year, people start to make random predictions about what might come from it. And then there are others who have expectations (wants) from the budget. This is a standard routine every year. It is such an useless exercise, but people and news media always like to do it every year without fail. During such times, I dread to open my news app because there is nothing much other than predictions and wants. No actual news. I wouldn’t do justice if I too did not join the bandwagon and produce crap news. So here is one of them.
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Difficulties Of Predicting The Stock Market
Every time we talk about the stock market, we either say it is overvalued or undervalued or fairly valued. The valuation may depend on many macro economic factors. One of them is GDP. Normally one would expect market value to be inline with GDP. So if GDP is up, market cap will be up, which basically means stock market is up. However, that is rarely true. Either the market is running ahead of GDP or the GDP is ahead of the market. And the worst part is that it is extremely difficult to predict when the trends will reverse.
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