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The Time I Wished I Was Working
In the 4 odd years since I retired, I never felt like I was missing out on my salary, except for during this period. The stock markets are falling and RBI has started hiking interest rates. Which means that NAV of both debt mutual funds and equity mutual funds are falling. That only means one thing – invest more! Unfortunately since I don’t get salary or any other income anymore, I have to sell some mutual funds and buy another. Normally I do this by selling the mutual funds that are gaining and buying the mutual funds that are falling. Here I am not talking about individual funds. I am talking about the type or category of mutual funds.
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How Is Your Portfolio Doing?
When ever the market falls, people are curious about my portfolio. They want to know how my portfolio is handling the crash (according to them). I shrug my shoulders and reply “same old”. Yes, that is pretty much my attitude whether the market is going up or down or under. The portfolio is doing exactly what it is supposed to do. Actually, to tell you the truth, the market is certainly not crashing. It is just a correction, at least so far. May be if it falls a lot more from here, I may call it a crash.
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Impact Of Repo Rate Hike
In the previous post we discussed about inflation and how it can be tamed by central banks. One of the ways to reduce inflation is by reducing the amount of money people spend. This can be done by increasing the rate of interests on loans or by making safe investments so attractive that people will save money in banks instead of spending on things. Think of it this way – if your home loan EMI increases, you will have less to spend on other things right? Alternatively, suppose you don’t have any loans, but you are a saver. Then if the FD interest rate went up from 5% to 6%, you might save more instead of spending and causing inflation. That was a very simplified explanation of course, but lets just go with it.
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The Curious Case Of Inflation
RBI has finally increased the repo rate after inflation has been stubbornly high for more than three quarters. I was expecting this to have happened sooner, and yet they were faster than the US central bank. Inflation in the US has been out of control for a very long time now and yet the Fed has not taken any action. Their reasoning for the longest time has been that the inflation is transitory and will eventually come down without any rate action. Why is it transitory? The explanation was that the inflation was due to decrease in supply and not due to increase in demand and when the supply catches up with the demand the inflation should disappear. So far at least that was not the case and Fed has been printing money and keeping the interest rate low. What a mess.
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TV Inflation
It is the season of inflation. Lately we have been hearing a lot about inflation and I have been writing a lot about it too. Still if you thought that wasn’t enough, here is one more for you :). Normally I don’t calculate inflation of anything unless I have at least 10 years worth of data. As I look back, I have as much data on my TVs, so why not calculate the inflation of a TV? Remember that inflation should be looked at holistically. Knowing inflation of one device like TV or laptop does not really makes sense, but all these inflations add up to your final inflation number. It is just a fun exercise and lets keep it that way.
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Changes After Retirement
It is interesting how things change after you have achieved some goals. Take for example my goal of early retirement. When I was still in the journey of accumulating wealth to eventually retire, I was hell bent on learning everything about investments and stocks. At the time I started with the basics like having adequate insurance and emergency funds etc. Then I taught myself about asset classes, asset allocation and rebalancing. Next I moved on to learning about macro economics, market cycles and behavioral economics taking several classes on Coursera, EdX and Udacity. Eventually took a class in accounting and finance as well. The hope was that I will eventually be able to analyze businesses and invest in stocks directly.
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How Much Do You Need To Retire At 45
A few days ago, I read an article where the reader wanted to know how much corpus they need to retire by 45. I thought it was interesting and wanted to use my own calculators to see what numbers I would arrive at. I was surprised at how very close my number was, compared to what the advisor in that article gave. But do remember that for the exact same question different people will give different answers based on their own past experience and their biases. Anytime you take financial advice, do keep that in mind. No one has the perfect right answer. They are just approximations to lead you in the right direction. In the end, you need to figure out what the right advice for you is.
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What Type Of An Investor Are You?
Sensex is where it was some 7 months ago. We have escalating war on one side and growing inflation on the other side as no nation is immune to the ill effects of loose monetary policy and facing the after effects of stringent COVID restrictions. Sri Lanka is defaulting on its external debt. A nation default on its debt obligation is such a bad news. None of these are good signs and yet the stock market is happily moving forward. What should an investor to do in this situation? The answer may not be quite as exciting as one would think. It is quite boring and you probably already know what I am going to say. Just stay the course, follow your goals, maintain your asset allocation blah blah.
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Saving Strategy Of A Minimalist
The normal advice you hear from people is that you need to pay yourself first. Basically what it means is that as soon as you get your salary or other income, you need to save up for your goals first and then only spend what is remaining. Save up for your goals basically entails paying SIPs for each of your goals according to your plan. The advice is sound indeed. Otherwise some people may not be able to save enough to reach their goals. If they spend first and invest last then their expenses might eat up into the savings.
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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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