Not just a brick in the wall. See the whole wall

We just don’t get the big picture. The more I talk to people about money, the clearer it is that we compartmentalize our money lives so tightly that we totally fail to see the big picture. Every conversation with whoever I meet now swings around to money. People share their stories, their worries and their fears. They share the power equation within home that money causes. While housewives have always shared stories of the skewed power money equation, working women have equally scary stories. That’s because those who earn more than men have a triple burden—to manage work, home and the male ego. But most often the usual story is the fuzziness about how we think about money and how we simply are not able to see the whole money story.

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Money With Monika Season 2, Episode 1: Mutual funds guide for beginners

 

Why mutual funds? That’s the question personal finance expert Monika Halan, consulting editor of Mint and author of ‘Let’s Talk Money’, answers in this episode of ‘Money with Monika’.Mutual fund investments do come with risks, she says, but it’s a gamble worth making for a diverse, and more lucrative, investment portfolio—be it for a seasoned investor or a beginner taking her first steps in financial planning. See mutual funds as a buffet, Monika Halan says, and invest as per your taste.For more videos from Money With Monika series, click here >>

https://www.livemint.com/Multimedia/dwNmm2LQQrFQG0vXHHjDKP/Money-With-Monika-Mutual-funds-guide-for-beginners.html

or here:

 

 

Mutual Funds with Monika on Livemint

Episode One: What is a SIP?

https://www.livemint.com/Multimedia/AM4OklzoAQ22ZY40rHzTrM/Mutual-Funds-with-Monika-What-is-SIP.html

Episode Two: What is a mutual fund?

https://www.livemint.com/Multimedia/TlWww9Rvv1rCrq8Ixxrb9K/Simplifying-Mutual-Funds.html

Episode Three: Are mutual funds safe?

https://www.livemint.com/Multimedia/SUOTYaJ8TQcZBComlzyn4M/Are-mutual-funds-safe.html

 

 

 

 

4%

This is the new inflation target for the Reserve Bank of India (RBI), with a floor of 2% and a ceiling of 6%. Remember that one of the reasons for inflation, or a rise in the prices, is that governments borrow too much to fund expenses.

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Why the Wells Fargo story matters to us

We fined Wells Fargo a historic $100 million for the illegal practice of secretly opening hundreds of thousands of unauthorised deposit and credit card accounts.”

Log in to the home page of the US watchdog Consumer Financial Protection Bureau (CFPB)http://www.consumerfinance.gov/ , a government agency set up to ensure that consumers of financial products are treated fairly by banks and other lenders, and you see this as the top featured story.

What’s the Wells Fargo story and why is it relevant to us? Wells Fargo is one of the biggest banks in the US, and is known to be an aggressive cross-seller of financial products. Cross-selling is something we’re all familiar with—you have a savings account with a bank and it pushes other products at you: loans, funds, insurance, cards.

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Buying mediclaim is hard but harder is to know if it is any good

Quick, do the math. If it takes you two hours to read one policy brochure and there are 65 brochures, how much time will you spend reading? 130 hours, or a 16 eight-hour days. What, you have a day job and need to work? Skip your TV and workout and spend two hours a day reading them and you need 65 days. By which time there will be another few products in the market and your attempt to be a literate consumer who looks at disclosure statements and reads the policy documents before buying a medical insurance plan will remain undone. If you had other products to buy, such as life insurance, investment plans, home loans, you should pretty much leave everything else and just reach for the brochures.

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No hot tips. 2016 is about building a money box

We don’t do tips. We don’t do ‘best bets’. We don’t tell you ‘winning’ stocks or how to multiply your money overnight. In short, we don’t do bulls and bears or what comes out of them. We don’t insult your intellect by giving you the winning tip this year. Look at the data in the chart below (Each year has a new winner); there is no consistent winner in different asset classes year on year. If gold outperformed equity, debt and cash in 2011, it was the turn of equity to be the winner in 2014. Chasing last year’s winner is a strategy that we don’t follow. Predicting next year’s ‘winner’ is a job we leave to the speculators and traders in the market to worry about.

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In search of rule of law. But who will make the new laws?

An average middle class family in an Indian metro runs its own mini infrastructure to maintain the bubble created to run mass affluent lives. To get clean water we use reverse osmosis machines or trust that the bottles of branded water that we stick upside down on a water dispenser are actually not just tap water. We run inverters for power back-up. We don’t like the government schools so we send our kids to private schools. We don’t trust the government medical services so we use the private ones. Public transport is yet not fully connecting all the dots so we have our own cars. We can safely add at least 10-15% to our monthly budgets as maintenance cost for the bubble existence.

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Court takes a hard stand on insurance mis-selling

The way life insurance is manufactured and sold in India is much like a trap, with regulators, companies, sellers and ombudsmen all colluding to defraud households of their money. The trap works like this: you have a bank that you’ve banked with for years. There is trust. The bank has a relationship manager. This manager pitches a product to you. He may do so because he sees a balance that is investible or a sudden inflow of retirement money or a bonus or some other lump sum. But a product is pitched. The pitch is verbal. The merits of buying this product are explained in great detail. Brochures are shown, numbers are circled, final return values are discussed. Words like ‘mutual fund with free insurance’ and ‘guarantee’ are commonly used. You trust your bank. You believe the manager and say yes. Thirty seconds later the money is transferred to the product—the paperwork will happen. We’ll fill the forms and you just sign. Because you trust your bank, you agree. The policy documents come after the money has been invested, you try and read, but they are so complicated that you get on with your life. It was your banker who sold you the product and he said, ‘We’re there for you. Don’t worry.’ You believed him.

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What ‘Ashani Sanket’ and Bob Shiller have in common

Expense Account, Mint

The date is 5 October, 2011. Bob Shiller arrives 15 minutes late to class. He’s teaching his signature Behavioural Economics course and it’s the Fall Semester at Yale. I’m sitting in the class as one of the several World Fellows who’ve taken the course as part of our work during the semester we spend at the University.

The buzz about him that year was that he was up for the Nobel prize in economics—it took him two more years to win it, sharing it with Eugene Fama and Lars Peter Hansen—and I must admit I was a bit intimidated the first day I’d entered the lecture theatre a month earlier. I was course shopping then and had been in some classes of extreme alpha professors who ensured that the whole class knew it. It’s possible that all the sabre rattling impresses young undergrads, but mid-career such antics are just irritating. So it was a delight to find Shiller, the quintessential academic, with the air of being not always there, the last minute rush into class with dishevelled hair, the uncoordinated hunt for the mike, the look of perplexed anxiety when the slides wouldn’t come alive when they should. So he’s late. He complains about having a late morning. About not having enough self control to finish what he should have done the evening before. And then links it to the irrationality of human beings and the course that he teaches where ‘animal sprits’ matter more than equations that bind the world in rigid models. Models that, we’ve found, fail. More importantly, for me, Shiller was a reaffirmation about my views on finance. That finance’s role was to facilitate the workings of the world and not the other way around.

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