Tag Archives: personalfinance

6 easy ways to get broke

Haha.. We have all discussed ways to make Money, how to save Money. secure your future, and live with Financial Independence.

While we continue to grow, and spread Financial Literacy, todays topic is off the grid, stating 6 easy ways to get broke, so you can avoid them all. 😉 If you wish.

1 . Getting Involved in a Get Rich Quick Scheme

Yes, while your intentions might not be wrong, creating wealth is not an overnight game, not for most! Being part of a Ponzi or Pyramid scheme, where you get money if you recruit people can be your way towards not just wasting away your life savings money, but also the time & effort. Not to mention the legal repercussions that one might face. Want to read more about them click here.

2 . Winning a Lottery

Though it sounds great, those happy hormones ain’t gonna last long. Yes you heard us correct, according to a study more than 50% of Lottery winners end up broke within five years. So next time you play that game, remember its just a game with rules not in your favor. Wanna read more, this is an interesting read I found.

3 . Addiction

Whether its an Addiction to Drugs, or Video Game; Addiction can leave a pretty deep hole in your pocket. Take the Cocaine addiction for example, people start small but with time they end up buying several grams a day, doing that for just a year if you have an average household Income can leave you broke, and not to mention the side effects of it on Health. If you thought, drugs were worse, then gaming addiction is even worst, gamers often neglect aspects of real life, including their finances and job. From being late on a job, to spending recklessly on virtual artifacts like skin, coin, life etc, to getting fired from a job, gamer may lose it all for their virtual life & pleasure.

4 . Buying on Credit Card

If left unnoticed, excessive buying on Credit Card with no full payment by end of every month, can definitely leave you in debt trap. People can easily get from 1 to 5 credit cards, with a limit of around 5000 dollars, thinking they have enough money to buy that extra refrigerator, or that big TV on sale, without realizing the Interest they would be charged if they don’t pay back their credit. Well, gradually this Interest piles up (not to mention some credit cards can charge you up to 25%) leaving you broke!

Now I am not saying its not good to have Credit Card, off course credit card has some great perks but you have to know how to use it. If you want to know more about some benefits read here.

5 . Investing in Penny Stocks

Now you might be wondering, but Salrite you say Invest, Invest, Invest!, well I do!, but not in just random penny stock…

Investing has risk, and in Penny stocks the risk is akin to gambling. With no proper financials to check, not so transparent Business practices, no proper corporate governance, Penny stocks can lead you broke in just few months!

6 . Look Good, Feel Good

All that Glitter is not Gold, all that Plastic Surgery is not worth. Well, its one thing to be in shape, and take good care of your body, and completely other thing to have a cosmetic surgery just to appeal to the larger audience!, or buy that Lambo, designer clothes, that Gucci scarf, those shoes, that no one except you care about! The complete show off.

Thank you for reading. If you want to know What the Rich way truly is, check out – The Rich Way. Have a great day.

Cheers for index!

Hello Riters, its been a long time out there, getting ready for Winter in Northern Hemisphere?

Today lets discuss why Invest in Index ETF and why avoid Mutual fund, lets dive in.

  1. In long Market always rise, thats not me saying, the likes of legendary investor Warren Buffet himself believe so. So, lets say if market always rise what is the best way to be on winning side?, of course buy into overall market low cost index fund like VTI
  2. On average 90% of actively managed mutual funds have underperformed benchmark indexes over a preceding 15 years period.
  3. If your Mutual fund have 2% of fees (expense ratio, portfolio fees, handling charges and other hidden fees), than that can eat 61% of your portfolio growth in long run. Shocked? No?, let me explain, suppose you have invested $10,000 and kept it for 50 years in Stock market just assuming a return of 7% (ideally returns are above 9%), your portfolio will grow to a lump sum of $294,600 by end of 50 years, now if it was a Mutual Fund with charges of 2%, then you only avail benefit of 5% CAGR, leaving your portfolio to grow to $114,700 (61% lesser or 39% of $294,600 market returns) read more here.
  4. Still not convinced? Lets say recession hits you in that case your portfolio will likely decrease in value but at the same time you will be charged the fees (the so called Active fund managers will still win this game).
  5. Expense ratio of Index fund is very low and there is no hidden charges, for example – VTI has an expense ratio of around 0.03% and If you are in India checkout ICICINIFTY with expense ratio of just 0.05% (let me know if you find something better in comments below, the likes of VTI is missing in Indian market)

Don’t take my words for it, always do your due diligence before investing. If you want to read more grab your copy of ‘Common Sense Investing’ the book by the founder of Vanguard Group.

Bonus Content – what to do in current stock market scenario? (for retail investors)

  • Stay Invested, don’t sell value stocks so as to be able to avail the benefit of further highs
  • Sell the stocks that lacks value & strong fundamentals and are up just in the Bull due to investor sentiment.
  • Don’t invest a lump sum new investment amount, as the market is still prone to volatility due to Covid.
  • Remember you have to buy in dips, sell in highs.

To read more on mistakes to avoid in Stock market check this. And if you are worried if Stock Market can crash in 2021 read this, click here.

Don’t let them take your hard earned money, get control of your money now! Be Financially aware, be financial literate.

Have a great weekend, happy investing! Happy Holidays… Stay Invested, stay safe, stay positive.

The Initial step to Freedom

Everybody wants to be financially free, but a few knows the way and a very few actually puts in the effort.

Welcome to riteFinance – the pathway to Financial Freedom! Today we will discuss how to create wealth.

The very first step to wealth creation is to know your spending aka track your expenses. To track your expenses you can use a simple excel sheet or a more suitable tool like mint. Whatever you choose the process is very simple, you need to list down all your expenses from day 1 of every month to the last day. And you need to do this for at least 3 months to get an average. If this Average is more than 100% of your Income, then you need to either A. Cut down your expenses, or B. Increase your Income, though an Increase is always advisable but cutting down the expenses is the first thing you should do. Remember ‘Live below your means’, buy only what you can afford not what your credit card can afford.

Once we know how much we spend, the next step is to create an Emergency Fund, i.e. set aside 3 to 6 months (6 recommended) of cash reserved, only to be used for Emergency. If you need to know more about the same, we already have blogged regarding the same here.

Now, if you have the above two steps taken. The next question is ‘How to create Wealth?‘. Yes, we haven’t yet discussed that. The above steps won’t help you create wealth, but it will give enough peace to progress towards Financial Freedom.

To begin your journey, you must know how much of the Income is your expenditure (again if your expenditure is more than or equal 100% we urge you to increase income or cut the expenses). Calculate %Expense of Income, for example if your Income is 100 INR
(or for that matter any currency), and your expense is 75 INR than it becomes 75%.

One thumb rule to manage your Finances especially if you are beginner is to follow 75-15-10 rule i.e. Spend 75% of your Income, Invest 15% and Save 10%. Later on as you get better grasp of your finances and is able to cut more on expenses / increase your income then one should progress to 50-30-20 Rule, 50-30-20 rule can also be called as the Ultimate lifetime Money Plan. It simply means one should Spend 50% of the Income, Invest 30% and save the remaining 20%. And in case your expenses are less than 50%, great you can invest the remaining. You can read more on Investing here.

Remember the you need to Invest like crazy to be Wealthy, while if you Spend like crazy you just end up looking Rich. Choice is Yours.

Tip – Donate a small amount from your earnings to a Charity, and you will start feeling Abundance & Positivity surrounds you, fueling in more wealth and adding a sense of purpose to your life. The more you give the more you will be in a position to receive. Give it a try!

Thank you for reading. For more such Financial Tips, do follow us @ritefinance. Together let’s build Wealth. Happy Learning…

Covid happened, what does it mean for Personal Finance?

Spend less, Save more and hope for the best. Well, yes but not exactly. Covid has left many Businesses and firms bankrupt, leaving millions of employees jobless.  News of Recession and Economic downturn is all around. And no one knows, how long the Economy is going to take to recover or will it even further go down! While we agree its a tough time, nevertheless every tough situation has some thing important to teach us.

One thing Covid teaches us is the Importance of Emergency Fund. It echoes clearly that Emergency Fund is a must. So What is Emergency Fund?, Why everyone should have it?, and How?.

What is Emergency Fund?

As the name suggest it’s a fund set aside only to be used in an Emergency. So can you use it to buy the next new iPhone?, or that fancy Car down the road? The answer is obviously not! It’s the amount only to be used when you have no other source of Income coming in. When you can’t manage your expenses, and is being laid off or became victim of a crisis like Covid.

Why everyone should have it?

Yes, you heard it correct. Not just Individuals, even a Business needs to have some sort of Emergency fund to safeguard its employees and help the Business survive the Crisis by being able to pay off all the basic minimum expenditure. That is not to say, Business shouldn’t look for alternative or cut costs. A healthy Business is the one who is capable of doing it all. Surviving a Crisis is not easy especially if you are operating in a sector that is being hit hard (for example – ‘Theatres’, ‘Cinema Halls’, ‘Gyms’ and ‘Restaurants’ in current Covid19), but having the reserve cash set aside to meet the basic minimum of your operational cost and other expenditures for a period of 3 to 6 months gives you enough time to think with clarity and plan for better handling of Crisis or even turn it into an Opportunity.

For Individuals ‘especially’ keeping aside the Cash can keep their Stress at check, and help them be better prepared to cope with Crisis. Emergency fund won’t  give you a lavish lifestyle or won’t guarantee you funding for the period till the Crisis resolve, you will still have to think of alternative, but it will give you enough Mental Peace to be able to focus on the next steps.

How to have it?

Now that we have established the importance of Emergency fund/Reserved cash for Crisis, you may be wondering how can one have it? Well the answer is pretty obvious Save 3 to 6 months of personal expenditure in a separate account that you can’t touch unless until its an Emergency! Yes, there is no secret sauce to it. You need to, you must Save, Save before you Spend, Save before you Invest, In fact don’t start Investing unless you have the Emergency Fund setup. After all Money is a tool and if it can’t get you peace, it is useless.

All the fancy items can be bought back later, first you need to live below your means and get the Fund setup. It is an essential first step towards your Financial Freedom. And if you already spend more than you earn than by all means either Earn more or Spend less!

Thanks you for Reading. For more such Financial Tips, follow riteFinance. Happy Saving

Invest your Money

Money affects every aspect of our Life. But oftentimes we forget that it is just a tool. A tool to help us live better, not the sole purpose of life. It is not the only thing that should matter, but yes its a major thing in Life.

If you are broke, no one will shelter you. If you are broke, sure your life becomes a hell. That is why we need to understand how to not let Money destroy our Happiness, how to not let Money stress us, how to not let us be consumed and work tirelessly for Money without caring about health or stuff that matters,“how to be financially free”!

One Important aspect to Financial Freedom is INVESTING. ‘To Let Money grow Money’. But before you Invest, you need to know

5 To Dos of INVESTING

1. Only INVEST in things you understand. Not just listen to any random advice, Do your own due diligence before Investing. Because Investing comes with risk and you are never guaranteed to make Money, you may lose all.

2. INVEST for the Long term. By Investing for long term you can stay away from seasonal risk and short term market fluctuations, hence reducing the risk and letting your capital grow over the time. This is the way to reap all the benefits of Compounding.

3. Diversify your Investments. Like the saying goes don’t put all your eggs in one basket. The same is true for Investment, one should not put all their Money on a single asset.

4. Only INVEST the Money you don’t need for the next 1 to 3 years at-least. Well apart from Investing you need to make sure you have a saving cushion, and some cash to be used in case of emergency.

5. INVEST on Self. Now this is the thing many of us forget, well its equally important if not more to Invest back on self i.e. education, learning, personal grooming, health etc in order to reap all the benefits and even further grow your Investments.

Further links to refer

That’s all for now ‘Happy Investing‘. For more such Personal Finance related tips and knowledge do follow riteFinance, ‘because Money Matters’.