This is a guest post by Niharika Arun, a finance enthusiast.
SCARED OF THE ECONOMIC TIMES? DOUBT THAT YOU WILL EVER UNDERSTAND THE FINANCIAL WORLD? Don’t be …….
My grandfather, a very principled and systematic person he was, started out with no great fortune, but his discipline, vigilance and interest in the stock markets is evident even today through his investments. He used to send me finance related newspaper cuttings every now and then to encourage me. He is my inspiration.
A few years ago he bought for me some shares of Infosys. I was thrilled, although not actively interested at the time. Then I realized - another few years and I’d be earning for myself, managing my own portfolio, and perhaps not just my own but those of my parents as well. It gave me a sense of pride, of course, but it made me nervous at the same time.
Hard earned money must be steered into right channels. There is also the question of making the decision as to where to channelize it. I believe ‘only you can know your money best' and so I decided to start that very day itself. I decided to track my Infosys shares for a start, but taking the initiative wasn’t easy.
I started going through 'money' magazines and looking out for different options which would be available and applicable to me when I started earning. I began to get the hang of many financial terms and procedures; not all in one go, but one by one. There were times when I couldn’t understand a single sentence in an article. I would get discouraged and wonder how anyone could manage to understand this jargon. And now there are times when my acquaintances wonder how I manage to understand things which they find daunting! I have acquired useful knowledge through persistence.
I continue to read the ‘personal finance’ pages of The Economic Times regularly. It is fun to ‘experiment’ with the idea of `my own’ money. However, despite my sincere intentions, I cannot maintain regularity due to my studies, office and other pressures. (I understand it happens with all new ideas in life.) Yet I have learnt a lot and am more confident today.
It is not just the matter of acquiring knowledge; I also want to apply all that I have learnt. With the help of different concepts and formulae I am learning in my course of studies, I have started chalking out plans for my future. Whenever I feel like taking a break, I look for paper and pen and write down things I see for myself in the coming years like say a car…… YES! A classy big black car (let me pamper myself ). I must take its current cost to the future (say 10 years ahead) and then calculate the savings and analyze the options required as of today to make the car mine after 10 years. This is so exciting and motivating!
This is how I have reasoned:
The expected cost of the car is Rs.12,50,000 and to meet this capital expenditure at the end of 10 years, I would be wise to start saving right from this day onwards. Hence I would have to save Rs.5,440 monthly (assuming rate of return of 12% p.a) to buy the car at the end of 10th year. I should ensure to invest my savings in some suitable financial instrument like SIPs, Mutual Funds, MIPs etc. or their combination so that my savings should continue to earn for me.
I would then have 3 options at the end of 10 yrs:
1) Buy the car against outright cash payment using the accumulated fund created by judicial saving and investments over the past 10 years.
2) Approach a financial institution for a vehicle loan of Rs. 12.50 lacs (the whole cost) at the end of 10 years, and divert the income generated from the corpus towards installment repayment.
3) Take the car loan for the partial cost at the end of 10 years such that the remaining cost can be directly met by the accumulated funds and rest repaid in comfortable installments (the decision as to the amount of loan to be at my discretion depending on circumstances).
I can already see (in my mind’s eye) that shiny new big black car standing at my doorstep, and sense the wonderful feel of those keys in my hand. Ah! What a great feeling!
Do you have a dream of your own? Give your dream a chance. Study the world of finance around you and make it work to achieve your dream.
My message is especially for those who are as I was a few years ago. It’s a harsh truth that most girls are less aware than boys about the financial world. Things like the stock market and financial institutions seem so mysterious and daunting. But this CAN be changed. All it requires is a dream that motivates.
I strongly believe – ‘take the initial step and keep moving, the rest will follow’, after all MONEY MATTERS.
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Tags: Personal Finance