Facts about Gold. ( source: world gold council 2009-2010 numbers)

India is the largest market for gold jewellery in the world, representing a staggering 440 tonnes of gold in 2009. All evidence suggests that 2010 will exceed that figure.

Indian consumers are actively engaged in considering their next piece; 75% of women say they are constantly searching for new designs. Whilst over 50% of gold jewellery is bought for weddings, the wedding anniversary has now become the most aspirational occasion for receiving gold today, extending a couple’s relationship with gold beyond the marriage ceremony.

The festival of Dhanteras, the most auspicious day in the calendar just before Diwali, has traditionally created a strong seasonal surge in sales. However, the strategic development of the Akshaya Tritiya festival in May, together with leading trade partners, has seen phenomenal recent success; sales during that period grew over 28% in the last year.

India’s culture and mythology embrace gold. And India’s traditions of unparalleled craftsmanship and skill are exemplified by the country’s gold jewellery manufacturing, with the majority of pieces still made meticulously by hand. Each region’s symbols and designs are reinterpreted in gold which is overwhelmingly high in caratage.

I Earn, I Spend, I cant Save...

I earn I spend I can’t save. It’s true for most of us. India as a country is in its best growth phase, the country having the demographic advantage. More youngsters making big money that their parents couldn’t dream off, buying cars in their late twenties, buying home in their 30’s, exotic foreign trips. But the sad part is most of us (not all) are not happy. Even when driving the new car, sitting in the balcony of apartment there is something haunting our mind. The biggest “Satan” is the EMI commitment for next month. Then comes the credit card bill, have been paying minimum due for last few months credit card company is happy so are we. We use top notch brand products, let it be perfumes, there are many like Hugo boss or Davidoff with a price tag of 3k plus. Even underwear people has become brand conscious. Nothing less than a jockey is considered cheap.

Is this for good? The answer is everything is good as far as it doesn’t put you in a debt trap.  Irrespective of the income let it be 5000INR or 500000 INR a month it’s not difficult to spend.  The urge for spending more than your income is due to the phenomenon called “instant gratification”.

Gratification can be explained as “the pleasurable emotional reaction of happiness in response to a fulfilment of a desire or goal”. And instant gratification is what we want; we want right now not ready to wait. It is human tendency and it is very difficult to control instant gratification. When we go to shopping mall or any big retail outlet we tend to buy more than what is required, with lot of discount sale. For buying 1 shirt we end up buying 3 by paying for 2. Good deal. Was there a need for the 2^nd shirt?? We ourselves don’t know why we bought it. Another good example, once we get a job with few payslips in hand we are ready to buy our first car, why? because everyone  around us are doing the same. Get some money borrowed from parents or if the pay cheque is fat enough use that to fund 10% of on road price of car.. rest is simple, sign few documents within hours the loan will be disbursed by your banker.

Now let us look into a different scenario, what if you could delay your gratification. Preparing a proper plan and budget before shopping. Instead of buying the car immediately make investments for 3 years or so to build a corpus to fund the first car. Even 10% of income channelized to the right investment avenues like mutual fund in a systematic way can make wonders. The power of compounding can do wonders. Few things that you need to keep in mind to ensure u not making a hole in your wallet.

• ·         Just because credit is easily assessable don’t leverage too much

"Start Writing your family budget" A Good article by STEVEN FERNANDES in fpgindia.org

Start Writing your Family Budget

by STEVEN FERNANDES on APRIL 5, 2011

Shreekant & Geeta had been married for 5 years now and from the constant franctic calls that I had started getting recently from Shreekant, I figured out that something was amiss on the personal financial front. Both had decent salaried jobs and nearly a year back they purchased a home in the distant suburb of Mira road, near Mumbai, by availing a home loan of around 20 lakhs. They had a kid who was just 3 years old and was being looked after by a full time maid.

I felt that it would be better to meet this couple at the earliest and conveyed the same to them. Both Shreekant and Geeta met me on a Saturday evening at my office with all their personal financial papers.

After the initial discussion and on further probing, I realized that this couple did not have any form of budget in place. They could tell me how much net income they earned but could not figure out how the entire income got exhausted month after month, sometimes forcing them to use their credit cards excessively to meet  the shortfall.

I suggested them to prepare a simple cash flow statement which contained Income on the left hand column and expenses on the right hand column. Expenses were further broken into Fixed and variable. I explained them that expenses such as Home loan EMI, Car loan Emi, rent, school fees, maid salary, etc are fixed expenses where the amounts did not change month on month, while groceries, utility bills, petrol/ travel, medical, etc would form the variable expenses since these amounts would change every month.

I could see the couple sweating it out to figure out the various expenses since they had never taken the trouble to make a note of it on a day to day basis. After nearly half an hour they were able to fill the monthly expenses details.  I further suggested them to break up all the one time annual or half yearly expenses such as Insurance payments, vacation etc into monthly so we could get an idea of the exact monthly outgo.

After some debating and arguing between the couple they were able to write down the complete monthly expense breakup.  Now things were clearer and we were able to figure out the exact monthly expenses.  It was now time to do a simple subtraction of expenses from income and surprisingly we discovered that there seemed to be some surplus too. But we figured out that due to non budgeting of expenses and frequent use of credit card, most of the time the minimum balance on credit card was being paid which resulted in the card issuing bank charging them high interest and thereby leaving them with no surplus at all. A few months of monitoring of the expenses would help them to arrive at the exact figures and enable them to plan better.

Shreekant shared with me that when he was a kid; he remembered his father would hand over a sum of money from his monthly salary to his mother who being a housewife would manage the entire household expenses within the money provided and in spite of the fact that there was only one earning member in the house, still all the basic requirements of the family were met comfortable. Today things which were luxuries earlier have become necessities and there are so many expense heads which if not tracked and monitored, would land a majority of the couples in a similar situation as of Shreekant and Geeta.

Geeta realized the importance of the above simple exercise and promised me that both of them will commit themselves to writing their monthly budget from here on.  They also understood that it was more prudent to withdraw the required budgeted cash from the savings account in the beginning of the month, thereby avoiding frequent and unmanaged withdrawals during the entire month.

Though Budgeting is a not a very exciting activity but it is the most basic step of financial planning. It is also advisable to review your budget on a regular basis to make sure you are on the right track. So like Shreekant and Geeta, let the budgeting begin!

Budget sample

Items	Per Month	Per Annum
	Rs.	Rs.
Salary {Net)
Mr	40000	480000
Mrs.	20000	240000
Total Income	60000	720000
Fixed Expenses
Home loan EMI	20000	240000
Any other EMI	0	0
Kids School fees and school bus	1500	18000
Life Insurance Premium	6667	80000
Health Insurance {Cancer Policy}	833	10000
Scooter insurance	100	1200
Total Fixed Expenses	29100	349200
Variable Expenses
Food & Groceries	7000	84000
Clothing / Personal Care	833	10000
Electricity Bill	1200	14400
Cell & Telephone Expenses	1500	18000
House Maid/ServantsExpenses	2000	24000
Cookiing Gas Charges	400	4800
Cable Charges	475	5700
Dependent parents	0	0
Medical Expenses	1000	12000
Basic Traveling Expenses	2000	24000
House(Society) Maintenance Expenses	1500	18000
Vehicle/ White goods repairs	500	6000
Vacation	2500	30000
Entertainment	1500	18000
Miscellaneous	2000	24000
Total Variable Expenses	24408	292900
Total Expenses	53508	642100
Surplus	6492	77900

Who is your nominee

Whenever we fill up application form for any thing related with money there will be a space for filling up the details of nominee.Most of the time our brain will be interested more with number crunching with respect to expected returns from the investment than thinking about what to fill in the nominee space.Sometimes the person who is selling the product will ask you who to nominate and fill it up by himself or sometimes the place is left blank. Do not forget to nominate your near and dear for all your investments. The nominee has the rights to accept   the proceedings from your investments in case of your demise. The next question is who can i nominate? the answer is simple you can nominate any person you like. Even your friend can be your nominee.

                            Lets take an example Mr X who is married  has an investment in SBI fixed deposit and he nominated his friend Mr.A in the application. Mr X met with an accident and died. Who will be eligible for the money in the bank, Mr A or Mrs X???. Most of us believe that Mr A being the nominee has rights in the money, but the reality is as per law even though Mr A being the nominee has no rights in the proceedings from the bank. He has got right only to accept the proceedings. If their are legal heirs, only they can claim for the money. The nominee has got only rights to accept the proceedings but cant use it if their is a legal heir. In case of dispute the matter will be taken to court and if the heirs submit legal heir certificate the proceeds will go to legal heirs and not to the nominee in this case friend of Mr X.

Few tips while filling the application form.

• Never forget to fill in the nominee details
• Its better to nominate your legal heir
• In case of minors a benificeiry has to be appointed.
• Change the nomination to spouse from mother once you married if required.
• If you have to nominate more than one person you can add more by defining the percentage of share for each nominee.

its always good to be optimistic, in case god forbid something happens to me, my family must not suffer because of me being careless. Better i fill the nomination details and keep it updated. One more important thing, its my responsibility to inform the nominee about the investment and ask the nominee to safe guard the investment documents.

Unrest In Middle East what to expect in GOD's Own Country "Prevention is better than Cure".

Kingdoms are vanishing in recent times, unrest in middle east as a result what will happen to Kerala. Many people will not show keen interest in talking about Kerala at this juncture. But the reality is far different.  Is gulf country depending on Kerala? Or Kerala depending on Middle East?  The answer is obvious Kerala depends on gulf. Now the competition is stiff, there are plenty of qualified personnel available from across the globe to work in Middle East.  The sad part the Benz,  BMW,AUDI, Jaguar and what not that runs in Kerala roads is fuelled by gulf money. The flats with all facilities including a facility for landing a helicopter (still can’t justify myself how in palazhi calicut people come home by helicopter.)

Back to basics. Few do's and do not's 

• Maintain an emergency fund which will help you to meet at least 3 months expenses. If not maintaining start saving today for creating the fund
• Spend after you earn. It sounds silly but in the present world of plastic money irrespective of earnings we spend. Maintain savings of at least 30% of your income.
• One task that you need to do now itself is go and check all your investment documents you have made so far. Maintain a folder for your investments. Try to understand the products. Research proves that 90% of insurance and mutual funds investors are not aware of the product in which they invest.
• If time is a concern select a qualified financial planner who can help you out.
• Understand what you are investing for, keep end in mind or else it does not make sense. its like you in railway station without knowing where to go.. So any train is ok for u... u may end up reaching Mumbai or may be trivandrum. 
• Keep your spouse informed about the investments you make.
• Do not buy things that you do not understand. There are smart sales people around who can sell anything by confusing you.
•  Do not invest just by looking at name. Most of the children plan is not meant for children. Do not fall into Jargon trap and emotional selling.

Even though we started with gulf crisis nothing more on that is discussed here. The idea is to make readers understand the importance of financial planning. If you plan properly irrespective of the economic conditions crisis or recession you will be safe and secured.Your comments are valuable do share your views.

on a lighter side.. Fun and financial planning

Suze orman youtube posting . 156962 views. Just go through the comments