Every financial expert, every financial blog talks about the importance of an emergency fund. That will cover expenses like unexpected repairs, medical bills for minor illnesses, travel, etc. The fund should also be large enough to cover living expenses in case of a job loss till you find a new job, or if a family member has to move in with you for any reason, or if your roommate(s) moves out and you have to pay the entire rent till you can find either a new house or a new roommate.
The size of the fund should be atleast 6 months of the fixed living expenses, if you have no children or dependents. If you do, I think 10 months is required. The fund should be larger the further away from family or friends you live. I strongly believe that this fund (atleast 3 months worth of expenses when you have just started earning) should be built before investing money anywhere. Then you can build up both your investments as well as the emergency fund.
Most of the emergency money should be in a savings account that you can access anytime, and yet gives a high interest should you not touch it at all. But some of it has to be kept as cash. Think of it this way: what if there is an emergency and you cannot go to an ATM? As someone who used to not have even Rs. 500 cash most of the times, I have often borrowed cash from family, friends and roommates to cover trivial expenses.. Specially those living alone need to have cash with them at all times.
Tuesday, February 12, 2008
Buying gold…Investment or not???
One of my closest friends spoke very excitedly about how her ‘investment’ in gold jewellery is appreciating. She bought a pair of bangles in November 2005 for Rs 14 K and now the same weight of gold costs Rs. 22 K. She thinks that she has ‘earned’ a return of 57.1 %.
This certainly looks like a wonderful return. Besides gold will never go out of value. So why do I still not look at gold as an investment? The reason is: if she needs money, is she going to sell her bangles? These are bangles that she wears every single day, not some unseen pieces lying in a bank locker. I really doubt that even if the price of gold sky rockets they will be sold. There is an emotional barrier towards selling gold jewellery. It is the last resort for any individual or family. Investments are not about emotional attachment. You simply reclaim them for practical reasons.
Secondly, even if she decides to sell the bangles, whom will she sell them to? Banks are not authorized to buy back gold, neither are any financial institutions. I very much doubt that the branded jewellery stores buy gold this way. So she will have to take them to local jewellery shops. The less said about those the better. I doubt they will give the 22K.
So if at all one wants to invest in gold, it’s better to buy some gold funds or some other such instruments which can be redeemed as pure investments and nothing more.
This certainly looks like a wonderful return. Besides gold will never go out of value. So why do I still not look at gold as an investment? The reason is: if she needs money, is she going to sell her bangles? These are bangles that she wears every single day, not some unseen pieces lying in a bank locker. I really doubt that even if the price of gold sky rockets they will be sold. There is an emotional barrier towards selling gold jewellery. It is the last resort for any individual or family. Investments are not about emotional attachment. You simply reclaim them for practical reasons.
Secondly, even if she decides to sell the bangles, whom will she sell them to? Banks are not authorized to buy back gold, neither are any financial institutions. I very much doubt that the branded jewellery stores buy gold this way. So she will have to take them to local jewellery shops. The less said about those the better. I doubt they will give the 22K.
So if at all one wants to invest in gold, it’s better to buy some gold funds or some other such instruments which can be redeemed as pure investments and nothing more.
My impending job change
Hi all. I am back from a very long break from blogging. The main reason being that I am in the middle of a job change: interviews, juggling my present job while taking time off for attending the interviews, deciding between offers and resignation. End of this month, I will be out of my present company and in a new company.
I have got a 60% hike J, way more than I expected. That combined with the fact that my commute will be cut in half, will lead to a pretty tidy saving per month. My work load will be way more, but I have promised myself a less strenuous job after my next change (not before 4 years, if everything goes well). So that will be just as well.
And the learning opportunities are immense here. I had another offer, which would have paid more, because I would be onsite for a long time. But then it would be the same work that I have been doing all this while. So I opted for the former offer.
The only expense of the job change is going to be the transport costs for attending interviews all over Bangalore and going to office on weekends to make up for my time off. I also plan to buy some formal work clothes. All in all, I plan to spend Rs.10 K. So I hope to see a real cool increase in my net worth by this year end.
I have got a 60% hike J, way more than I expected. That combined with the fact that my commute will be cut in half, will lead to a pretty tidy saving per month. My work load will be way more, but I have promised myself a less strenuous job after my next change (not before 4 years, if everything goes well). So that will be just as well.
And the learning opportunities are immense here. I had another offer, which would have paid more, because I would be onsite for a long time. But then it would be the same work that I have been doing all this while. So I opted for the former offer.
The only expense of the job change is going to be the transport costs for attending interviews all over Bangalore and going to office on weekends to make up for my time off. I also plan to buy some formal work clothes. All in all, I plan to spend Rs.10 K. So I hope to see a real cool increase in my net worth by this year end.
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