Vijay Basrur

Financial Management update

So its been over a month since we promised ourselves that we would track our expenses. And lo and behold! we have been successful.

Ofcourse you may argue that its been just a month and that its no big deal. Well we think its a small step indeed but a big reason enough to celebrate! We are actually feeling happy about having been successful at being disciplined about something, albeit a small thing.

So have there been any learnings? Well not something we didn’t know. We seem to be buying groceries more regularly than we could imagine. I think there is scope for some planning to make the buying process more efficient, if not the expenses.

The satisfaction of seeing a detail expense sheet at the end of the month is indeed priceless. We hope this will continue and I’ll try and update the status in a few months with learnings, if any.

PS: Thanks Dada for pushing us into this.

Financial Management Woes

I have always been on the opposite end when it came to managing finances. And opposite of the side to prudent financial management. I have always seen my Dad, and then my brother, on that end.

My brother takes on from my Dad in being very meticulous not only about day to day finances (my Dad wrote daily expenses for years) but also about investments (Dad kept records of every FD and every share he purchased. Not only that he used to record dates of dividend payouts as well). My brother has been doing, if not as much as Dad, quite a bit of it himself as well.

I have always been of the opinion that “look at the overall picture” should be fine with the financial planning. I would occasionaly whip up a budget for myself (inflows, outflows etc.), get a rough idea how much I would end up with moolah in the bank and that would be it. I wouldn’t even bother to save the excel file. I did pretty OK.  Infact I still do. The only thing I keep a track of regularly is my equity investments (Thanks to ICICI Direct). I have tried my hand at a few thingies like MS Money, Buxfer, Mint etc. but never got down to being disciplined about it.

So a few weeks back my Mom poked me about how bad I am at keeping records (I am bad at filing bills/receipts etc. too) and lauded my brother (which was expected), I decided to check with my brother on how he manages to do that. Turns out he has a simple excel file that does the trick. Ofcourse this one only tracks daily expenses but gives an overview about your bank balances etc. He has a complicated one to manage his investments. The most amazing thing about tracking one’s expenses is that you can figure where you are spending money uselessly and the ones which are necessary (but you tend to forget).

Since the times are looking grim and I think it will be wise to make every penny count, I am going to give it a shot too. What better day to start than the start of the financial year.

Ironically its April Fools’ day too. Hope I don’t end up making a joke of this. Watch this space for more updates

Markets are going downhill

I am just wondering how much more downhill will it go? My colleague is quite bullish on the bounce back. Only time will tell if the bounce back will happen sooner or later.

I bought a few Ranbaxy today and they bounced back pretty well today.

Blood on the dance floor

Well not exactly the Micheal Jackson song but it is blood on the stock markets all over. Its scary how deep the sub prime crisis has been and the impact it has had on global markets has been devastating to say the least.

My personal portfolio has been wiped out by over 45% and it is easy to panic. I dived into the markets thrice. Once when the Sensex was at 14000, then at 20500 and then again at 14500. Since now we are down to 12500 the math is very simple to arrive at how much I am in the red.

This morning, while driving to office I was chatting with my colleague (in these tough times it makes a lot of sense to car pool) and he was advocating to jump out right now since there are rumours the market will go to 9000 levels. Will it? Who knows? But its difficult to jump out right now. My logic is how much more will it hurt? Not much considering I am already 45% down. But I think I come from a school of thought, which a lot of folks still advocate, which is invest for the long term. But looking at the market conditions the long term is getting longer than ever.

So I guess it boils down to the fact that in these tough times if you want to make your money grow, you will have to work harder at doing so. You will have to be glued to the screen for a decent part of your day and keep monitoring your portfolio. Junk whats not adding value and load up the ones which are looking good. But then if you start doing it you might end up getting sucked into it. So what do we do?

As for me I think the first thing is to reduce expectations from the stock market. I don’t think it will give huge returns for quite a few years. Deep wounds take a while to heal. The fall to 12500 (or maybe even lower) will take a long time to recoup. Second is to keep looking for value buys and reduce the size of investment into the market. Don’t expose yourself to more than what you can afford to lose. Be it 2000 bucks or be it 50000. This way you won’t feel bad. Third don’t go on hearsay. Fourth is to look for investments in businesses you understand. When the markets were at 20500 I invested in Jhagadia Copper based on a tip without having a clue on what they do. My investment has tanked so badly that I have written it off. Fifth is to keeping nibbling at the SIP. I think it makes a lot more sense now due to volatility. And lastly before this ends up being a long list, remember that cash is king. Use FD’s or RD’s to beat the inflation impact on your cash. After all if the market does go to 9000 you’d be grinning if you have a decent bank balance to dive into the market

PS: This is only 2 cents on how to go about it. Considering my track records I am no expert but hindsight usually has lot to offer for the future.

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