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Monthly Archives: December 2010

The block called money

Posted on December 22, 2010 by monikahalan
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Expense Account, Mint

We like to deal with money as a block and are loath to break it up into smaller bits that will do different things. The same pot of money can do a variety of things if put in different products, but we would rather take a neat decision of swinging the whole pot at one problem. Splitting up the money would make more rational economic sense, but we end up not doing that. But luckily financial planning is about the human being at the centre of the problem and cold logic need not always win. And that is what happened last week. Sitting with a friend and working out if he should repay the home loan or invest the money in something, again brought me face to face with this problem. He had enough money to pay off the loan but was attracted to the rising market and wondered if he should invest it instead. His key worry was the servicing of the equated monthly instalment (EMI) in the months that his consulting income was not enough. He heard me out as I drew diagrams to explain how periods of high inflation work to the advantage of the borrower and how he, with his steady practice, an existing pool of paid-for real estate assets and fairly large (though irregular) inflows could more than sustain the loan. But when I asked him to create a pool with six months worth of EMIs to de-risk this income variation and invest the rest, he hesitated. He wanted to get rid of the whole amount and did not want to break it up.

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Posted in Expense Account | Tagged financial planning, money, Personal Finance, Smart Money | Leave a reply

Why we save but do not invest

Posted on December 15, 2010 by monikahalan
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Expense Account, Mint

My teenager is sick of me. Nothing new in the history of teenage issues with parents, but she has a unique problem. It is not the usual teenage gripe about how-dumb-can-you-be or the will-you-just-get-off-my-case grunt or even how-did-you-get-so-far-with-so-little-brain eye roll. No. It’s a totally new one that will put books on managing teenagers off track. She’s fed up of me “talking money” wherever I go. Any amount of telling her that I do not initiate such conversations cuts no ice. Things got dangerous when the hair cutting lady began discussing her financial life. While daughter made retching, gagging noises, I tried to hear what the lady with the scissors said over the whine of the hair dryer. I learnt my lesson from Calvin (brother to Hobbes) who advises that it is always good to be nice to the person who holds something sharp near your neck. So I chose to answer hairdresser questions and dealt with the mutant teenager later.

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Posted in Expense Account | Tagged #investing, financial planning, Mint, Personal Finance, planning, Saving, teenager | Leave a reply

Lynch mobs. Louis L’Amour. And Us

Posted on December 8, 2010 by monikahalan
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Expense Account, Mint

Introduced to Westerns some 15 years ago, they are now my best de-stress read. Among them the stack of Louis L’Amour books takes up an entire bookshelf. While at one level the books are about guns and fights, read as a series, it is one giant story of the settlement of a continent and the transformation of a nation from nomadic tribal to settled institutional. Such times of transition throw up the worst and the best. L’Amour heroes were the best who fought with some of the worst greasy gun slingers who wore their guns tied down low and… Right. Let me get back to the column.

Many stories talked of lawless towns with no marshal where justice was done through the lynch mob. Like a pack, led by the worst of the rabble-rousers, aided by the otherwise decent daytime crowd, the mob looked for the next person to string up the nearest cottonwood tree. Public opinion based on some quick information thrown together was enough evidence for the mob to turn into a lynch pack baying for blood.
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Posted in Expense Account | Tagged degrowth, Lynch mobs, Personal Finance, rbi wealth management | Leave a reply

Boodle in real estate and how honesty hurts

Posted on December 1, 2010 by monikahalan
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Expense Account, Mint

We know that graft (boodle, pay-offs, corruption) raises prices for the final consumer. There are enough studies out there that prove it and give numbers for it. And if you pay 50 paise more every time you cross a toll bridge that may or may not be the cost of graft, you are unlikely to really worry given that urban mass affluent lives are torn apart by work, family and the fight to maintain the urban bubble existence—the presentation is due tomorrow. Shoot, I forgot that new water bill. The kid has a sports day coming up. The inverter needs a new battery. And that darn storm water drain is overflowing again. But the one time the cost of graft (or boodle as it was called in turn of the 20th century New York, when the US looked pretty much like India does today…but that is another story) hurts is in a real estate deal.

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Posted in Expense Account | Tagged corruption, Expense Account, monika, Personal Finance | Leave a reply

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