Good Financial advice

POSTED BY Ganesh ON February 18, 2013 9:43 pm COMMENTS (5)

Hi, all.

New here but not new to the personal finance area. I have been passionate about personal finance since I first started to work.

Read this excellent advice by Scott Adams in the ET today and thought this beautifully encapsulates the core concepts of avoiding personal finance disaster. Have added some text in underline to make it relevant to the Indian context. I am sure if someone wanted to, they could point to relevant links within jagoinvestor but I thought I would let it be simple for now.

Hope this helps someone out there!

According to Scott Adams, Do these steps in the order shown…


1. Make a will

 2. Pay off your credit cards

 3. Get term life insurance if you have a family to support – e.g. LIC Jeevan Anmol, online term plans

 4. Fund your 401k to the maximum – i.e. Put money into EPF and track it as you change companies

 5. Fund your IRA to the maximum – Max out the 80C tax limit with tax MFs

 6. Buy a house if you want to live in a house and can afford it – i.e. A good rule of thumb is EMI < 30 to 40% of family income and rental yield of 4%.

 7. Put six months worth of expenses in a money-market account – e.g. HDFC liquid fund

 8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement

 9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio. Alternatively, the good folks at jagoinvestor will help out out!



5 replies on this article “Good Financial advice”

  1. bharat shah says:

    the finance planning advice by ganesh and inputs from ffc make nice KISS finance planning. thank you both of you.

  2. Ramesh says:

    If one follows these, where will the bragging rights go. 😉

  3. Ganesh says:

    Thanks for your input – Agree on both counts.

    Indian index funds do not yet do 0.09% AMC (As does Vanguard). I debated whether I should add something to point 8 – Take a good balanced fund like HDFC Prudence which would do a rough 70-30 allocation and you would be all-right for the most part. There is no limit to how sophisticated you want to get with your asset allocation but I like balanced funds for most first timers in the market.

    As for professional advice, nothing beats it as long as you get in touch with the right planner 🙂

  4. Parts of 8 doesn’t work for India as of now as index funds are still quite expensive here. Many actively managed funds outshine index funds with relatively marginal expenses. Besides very few individuals have only one goal in life. Everybody has something going.

    So don’t agree with 9. Asking specific questions in a forum is one thing and seeking free portfolio makeover is quite another. There are only two choices: either see a planner regularly to get it done and pay a fee or do it yourself by investing time and effort throughout your life.

    No forum can help anyone design a financial plan free. All that anyone can do here is provide perspective and direction. Tonnes of work left to do.

    These are just thumb rules. It is PERSONAL finance and not personal FINANCE.

  5. Dear Ganesh, thanks for making the Indian version of an US advice.



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