Why do you need to Invest?

Why do you need to Invest?

  Investing is essentially the process of building a corpus that can help cut down and eventually eliminate our dependence on our monthly pay-checks as the primary source of income By Indranil Guha, Co-founder - Finpeg.com Unless you forefathers have left you a large kitty to last you a lifetime, most of us working class folks (the proverbial “aam aadmi”) have two ways of meeting our monthly expenses – either we slog it out at work to earn enough money to get by in a month or we build a kitty over time…Continue reading →

Starting early versus starting big

If you want to be sure about achieving your financial goals, start early. Don’t be deterred even if the start is small. It’s far more important to start early than to start big. If you have time on your side, you have a secret sauce that can turn even small amounts into gigantic sums over time. It’s called COMPOUNDING By Indranil Guha   I was recently chatting up with two of my ex-colleagues, who finally woke up to the fact that they haven’t really started saving up for their golden years in any…Continue reading →

A quick introduction to the concept of asset classes

My uncle recently bought some units of Government bonds with an average maturity of over 15 years. I casually asked – “you do know the risks involved in this investment?”. His answer left me a bit unnerved! He thought that it was a completely risk-free investment since Government never defaults. Wrong! Even if we assume that Government will never default (actually they could), the investment is risk free only if it is held till maturity. And here we are talking about a maturity of over 15 years. Unknowingly, my uncle had taken a…Continue reading →

Different types of investment risks and factors that drive them

The simplest (and yet the most powerful) definition of risk is the chance that an investment’s actual return will be different than the expected return (explained in detail here). The factors that drive this risk also help us categorise it into various buckets. Throughout this article, we will use 3 different types of investment option to illustrate investment risks – shares of an automobile manufacturer (AM), bonds of an infrastructure company (IC), a house in suburbs of Mumbai purchased for investment purpose (RE). While there are various types of investment risks, for the…Continue reading →

Understanding the Risk-Return tradeoff and how it can help you invest wisely

Rahul had been pleading with his father for over a month to revise his pocket money. Finally, his father decided to use this as an opportunity to teach him an important investing lesson. He called Rahul and told him that he was ready to reconsider his pocket money. He gave him 2 options to choose from: Option A: I will increase your pocket money by 20% if you score above 90% in your upcoming exams. However, if you score below 90%, you pocket money will be reduced by 15%. Option B: Your pocket…Continue reading →