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September 2016

From a financial point of view there are four kinds of people in this world

  • The first kind are the ones who are only concerned about fulfilling their basic needs. The ones which we will call “with limited means” or in simple terms “poor”
  • The second kind are the hard working / earning ones who are busy buying stuff sometimes even beyond their pay cheque. They are the ones who are busy paying bills of all kinds: medical, electricity, house rent, house EMI, credit card etc. which seem never ending in nature. At the end of the month virtually nothing is left when it comes to savings.
  • The third kind are those who become super rich all of a sudden but don’t know how to utilize their wealth find themselves in a mess financially. Michael Jackson and Mike Tyson are examples of such “Rags to Riches and Back to Rags” stories
  • The fourth kind are what we would say, “Wealth creators”, “Smart investors” or the ones who do not have to worry about money being not enough. They might be born poor, born rich, born in a hard working family or might someday become rich over night. But what differentiates them is that they know how to “GROW” their money.

The only way to multiply your money is by proper Investment or Financial Planning. As Warren Buffett says – “Never get dependent on one source of income, make Investment to create second source”. The need of financial planning is in preserving ones money and converting it into wealth. Financial planning basically means determining ones current financial situation, setting goals and targets and devising methods in order to achieve these set goals and targets.Posted below are some tips which would help in planning your Financial Planning.

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Financial Planning in Tough Times

banner-financial-planning

Tough times can never be avoided. It is said that tough times don’t last, but tough people do. Financial market is a mixture of tough and good times. Even those who are experts in the financial world will face tough times. Financial planningwill help us in reducing the depth of loss and to convert the loss into profit. In this scenario, it is important we should not get carried away by the group…

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banner-financial-planning

Tough times can never be avoided. It is said that tough times don’t last, but tough people do. Financial market is a mixture of tough and good times. Even those who are experts in the financial world will face tough times. Financial planning will help us in reducing the depth of loss and to convert the loss into profit. In this scenario, it is important we should not get carried away by the group mentality. During tough times, we should follow some basic financial steps to make sure that we have our financial plan in place and follow the same carefully to gain its benefits throughout our future life. The word financial planning can be defined in a number of ways. The objective of financial planning is very simple that a person must not run out of money whenever a present or future requirement occurring to him or his family. In India, especially middle class families are not well conscious about the benefits and importance of a good financial planning. This will put them in trouble once if they don’t have sufficient income to manage their needs.

Types of People

Under financial planning context, we can divide people into three major categories such as;

  • Those who let it happen
  • Those who make it happen
  • Those who wonder what happened

The first category “those who let it happen” don’t bother about their future, they just let their life to go without any planning. The second category “those who make it happen” are really hard working and by their proper planning, they will make their future bright. Third category “those who wonder what happened” want to make their future joyful and happy but don’t want to plan. This category of people will always worry after losing an opportunity.

Out of these three categories of people, the second category of people will be always successful. The hard work and determination makes them to achieve great goals in life.

Process of Financial Planning

Accurate financial planning is not a single or simple process. Instead, it involves 3 major phases such as :

  • Self Assessment
  • Planning
  • Execution.

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Frequently asked questions on Home Insurance

home_insurance_policy

Home is the most valuable possession you own. You have worked hard, collected money and built your dream apartment. You know the risks to your house and have decided to avail a Householder’s package policy. This policy protects the structure of your house, as well as the contents of your house. Duty to your house done? Think Again. Ask these questions before you avail home insurance.

My apartment…

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home_insurance_policy

Home is the most valuable possession you own. You have worked hard, collected money and built your dream apartment. You know the risks to your house and have decided to avail a Householder’s package policy. This policy protects the structure of your house, as well as the contents of your house. Duty to your house done? Think Again. Ask these questions before you avail home insurance.

My apartment is on the Fifth Floor of the building. Does my home insurance premium increase?

In the case of your apartment, the home insurance plan calculates the premium, by multiplying the carpet area (area within the walls of your apartment), with the cost of construction in the city your apartment is located. Whether you reside on the 5th floor or the 1st floor, does not matter. The cost of construction remains the same. Your apartment might be in a housing society. The housing society avails a common home insurance cover for all the apartments in the building. This is a basic fire and allied perils home insurance. The basic home insurance availed by your housing society, does not cover the contents of your house. You need to avail a separate home content insurance, to cover for the loss/damages to the contents of your home.

You and your friends stay together in your apartment. Can you avail home content insurance for the contents of your house?

The apartment is yours and you can avail home insurance for protection against damage to the structure of the apartment. You can also avail home content insurance, for the contents of the apartment which belong to you. Your friends can avail separate home content insurance for their contents. However the Insurer can deny you coverage for the contents of your apartment, if it is difficult to segregate your contents from your friend’s contents.

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Stock Investment with Diversified Portfolio

portfolio

If you are a budding investor, got some spare money and thinking of investing in stock markets and for the first time you walk into broker’s office, tell your broker about your interest. The first thing that broker would be telling is “diversification or portfolio construction”. If you know the word its well and good, but if you don’t have any idea about it then you will be puzzled. You would…

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portfolio

If you are a budding investor, got some spare money and thinking of investing in stock markets and for the first time you walk into broker’s office, tell your broker about your interest. The first thing that broker would be telling is “diversification or portfolio construction”. If you know the word its well and good, but if you don’t have any idea about it then you will be puzzled. You would have read that shares of your favourite company (e.g.: Infosys, Reliance or TCS) are trading well, so you tell your broker that you want to put all your money into stocks of that company. For a moment your stock broker will look at you as if you have fallen from sky, it’s because people living at the stock markets believe that if you don’t diversify then there are very less chances of you surviving in the market. Now, is it always necessary to have a diversified portfolio…..??? If yes then how much should an investor diversify? Are there any side effects of this so called diversification?

Being an investor you must have heard this particular word more than thousand times and I’m also sure that you would have read a lot on this topic, but most of the times the investors do not get the full meaning of portfolio diversification. If you ask what’s diversification most of the answers would be “having shares of many companies” or if he is an investor with bit of knowledge he would say “not putting all your eggs in one basket”. I would agree with the second person to some extent, but if asked to elaborate he will switch over to the first definition, which is incomplete. Diversification does not only refer to holding shares of different companies but holding the securities of many companies, fixed income securities, money market instruments etc, in what proportion we allocate or invest in these avenues depends on our risk taking ability, knowledge to analyse the economic conditions, companies etc.

Advantages of diversifying the Portfolio

Let’s have a look at some of the advantages of diversifying your portfolio
• By diversifying you will be able to hedge (evade) the risk (systematic and unsystematic).
• Even though there are fluctuations in the prices of the stocks in the market, you will have fixed returns.
• Diversification is very helpful for an investor who is looking out for investing in the companies for a long term. The reason is that he will be having a variety of securities in his portfolio and even if one company is going through a lean patch, other securities will be doing well.
• Diversification of portfolio helps during the worst times of the market, when the market has crashed.

For More Information on Tips on Investing in Mutual Funds Stock Investment with Diversified Portfolio Click Here

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Tips on Investing in Mutual Funds

mutualfunds7_505_041714094352

Millions of investors have come to rely on mutual funds as their primary investments. If you are thinking of investing in a mutual fund, you should remember that they are only one of the many types of investments and that, as with any investment, you should know and understand the nature and risks of mutual funds and options available to you before you invest any of your money.

You can earn money…

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mutualfunds7_505_041714094352

Millions of investors have come to rely on mutual funds as their primary investments. If you are thinking of investing in a mutual fund, you should remember that they are only one of the many types of investments and that, as with any investment, you should know and understand the nature and risks of mutual funds and options available to you before you invest any of your money.

You can earn money out of a fund in basically three ways. First, a fund may receive income in the form of dividends and interest on the securities it owns which it pays to its shareholders in the form of dividends. Second, the price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, most funds distribute these capital gains (minus any capital losses) to investors. Third, if a fund does not sell but holds on to securities that have increased in price, the value of its shares (NAV) increases.

But before you invest it is better to do some background work. The following are some of the tips which are to be followed while investing in mutual funds :

Know Yourself :

Before you invest, decide whether the goals and risks of any fund you are considering are a good fit for you. You take risks when you invest in any mutual fund. You may lose some or all of the money you invest (your principal) because the securities held by a fund go up and down in value. What you earn on your investment also may go up or down.

Establish Your Benchmarks :

Be clear in how you will measure the performance of the fund. If it is a dedicated fund like say pharma, FMCG etc. then its performance can be measured only against those particular indices. A small cap fund’s performance cannot be measured against the BSE Sensex performance. So be clear what is the profile of the fund and what will its performance be compared to.

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Should one Take a Gold Loan in India? What is the Eligibility to Avail it?

gol

One has surely faced a situation where funds are needed in an emergency and there is a shortfall of cash. It is in such a situation that one remembers the family gold ornaments. This is not a situation anyone would want to be in but desperate needs call for desperate measures. There have been cases when many successful businessmen especially in the construction business have had to mortgage the…

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