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Tax Efficiency
Tax efficiency of a financial decision is the degree to which tax burden is reduced vis-à-vis the alternative structures, aiming for the same outcome. It is indicative of potential of savings by prudent choice of investing option & is as significant to ‘return on investment’ & ‘wealth creation’ as the investment selection & asset allocation are. Tax efficiency can be achieved by understanding how income tax rules are framed vis-à-vis investments & using it to minimize the tax burden. The financial affairs…
Keep readingAsset Allocation
Financial history has been a witness to an investment yielding huge gains for individuals who bought & held it for a long-generation-long period as well as how these very assets have had a deep & painful correction. An asset class (including Equity) can possibly go on underperforming other asset classes for a very long time & an investor may not have sufficient time to recover from the drawdown. Too volatility equity can be as counter-productive to the cause as is the bond’s…
Keep readingAre you feeling it?!?
Inflation is the most popular word in the dictionary at the moment, for it intimately affects every household & by association the political & economic stability of a country. Caronavirus triggered the process with some serious money supply but the inflation ball has now got kicked far & beyond by Russian war on Ukraine. At the moment, Sri Lanka, Russia, Pakistan & 30 other countries are in throes of instability due to this factor. It is cost-push & demand-pull in all its…
Keep readingCompounding in Real Life
Would you care to guess? How much do savings of Rs. 10,000/- per month &/or weekly expenses of Rs. 500/-, affect your wealth creation over your working life (say 30 years)? How deeply is your post-retirement life shaped by wealth that you create in early stages of working life? Ever wonder? Why don’t people with same financial resources & opportunities, end up with same wealth outcome? Why do certain people get rich while others don’t? Luck may have a little bit to…
Keep readingTracking Progress to Freedom
A Danish politician once said “It is difficult to make predictions, especially about the future.” The remark may have been a tongue-in-cheek one but it does highlight the peril of making financial projections in a dynamic & complex environment, more so when assumptions have to be made for all the knowable & unknowable variables in the mix. A financial projection is only as good as the quality of data & the underlying assumptions. The challenge is even greater if time period under…
Keep readingYou won’t get wealthy, unless…
Wealth Creation is no rocket science. It is possible for anybody & everybody – irrespective of how little resources one is starting out with. Yet, very few succeed at what is simple & achievable. The abysmally low success rate of wealth creation is not without reason. Desire for wealth is not getting followed up by action necessary to fulfil it. The disconnect needs to be addressed. The solution is to emphasize this ultimate financial goal in each of the numerous daily decisions…
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