Paisa Sherpa - Personal finance and investment guide

Introduction Just imagine that you are living happily with a stable job and family life. You bought the dream home recently. You are soon going to become a first time parent. Life couldn't get better. And suddenly the future that you saw yourself building suddenly crashes to a halt. Your company announces layoffs and you are one of the unfortunate people in the "list". As the only earning member, how do you service the home loan EMI? How do you cover all the baby expenses that are only weeks away? What if it takes you 3-4 months to find a new job? Well, you have a healthy emergency fund for precisely such times and you thank your first boss who advised you to start saving for emergencies all those years ago.  How Much Should You Save? An emergency fund, like the name suggests, is to take care of the essential expenses during times of peril. A general rule of thumb is that the fund should be able to cover anywhere between 6-9 months of monthly expenses. But this depends on...

Are you chasing the so-called "best performing fund"? Are you switching an existing SIP because your current fund(s) are not in the top 5 list? Then read on. You are having coffee with your colleagues and the financially savvy person in the group says he does SIPs through the direct plans instead of regular plans to save on intermediary commissions. "It is so easy," he says, with the digital platforms – there is a lot of information available. A good intermediary – and by good we mean someone who generates consistent, goal-oriented returns and regular reviews; but more importantly gives the emotional and psychological guidance to avoid costly decisions – will generate better returns than an investor doing their own investments in majority of cases. However, in this post, we are trying to highlight a totally different aspect of the investment process – the selection of the fund or scheme. How to Analyze Performance Ranking of Funds? If one looks at the past 10...

I recently saw two siblings - a boy and his elder sister boasting about their piggy banks recently when I'd visited their home for a social occasion. The boy had an electronic piggy bank with a passcode to open it. After about 5 minutes of counting the sister said, victoriously "You have only Rs. 620 in your bank, I have a lot more!". She added "620 mei to ek bhi accha toy nahi milega, kuch bhi accha nahi milega".   My mind immediately went to SIPs, I wished I could explain to them just how rewarding a small amount of Rs. 500 can be. One can easily whip up an excel sheet and find out how much a Rs. 500 SIP started in the early 20s will be worth after 15 or 20 years, but returns rarely follow the excel formulae. What is more important is to be aware of the power that an SIP has.   So what exactly is an SIP? How does an SIP work? What is the minimum investment required in an SIP? Let's find out.  What is an SIP? As the name suggests SIP is a System...