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!