PRUDENT FINANCIAL DECISIONS IN LIFE

HOW TO TAKE PRUDENT FINANCIAL DECISIONS IN LIFE?

By Pannvalan

S No	Rules to be followed	Explanation
1	It is prudent to keep a fair amount of liquid cash with oneself always.	Apart from liquid cash, amount kept with banks is also very useful at times of need.
2	Limit your expenditure, within your income.	Lead a life that is free from debts as far as possible. Avoid all wasteful expenditure.
3	Never venture to spend, in anticipation of some receipt in the near future.	Spending before earning is a very bad habit. Suppose the anticipated amount does not arrive in time, you may have to resort to borrowing.
4	Save some amount in proportion to every Rupee spent.	Usually, we try to fix our savings as a percentage of our income.  But, it may not work out as desired always, for everyone. So, you may save 5 paise or 10 paise, as per your convenience, for every Rupee you spend. This is a forced savings that will become a large amount in due course and will be of great help, in case of an emergency.
5	Recurring Deposit is a very wise investment option.	Since we pay small amounts every month so as to receive a lump sum on maturity, RD in a bank is a very wise and attractive investment option for every one of us.  Nowadays, most of the banks offer flexible RD accounts, where the monthly installment is not kept constant and is left to the convenience of the individual depositors.
6	In Savings, the safety of money is the most important criterion.	Be sure that you get back your Principal amount intact, after the period of investment is over.  Aiming at higher returns, you shall not lose the Principal.  It is the foremost guiding factor in an investment decision.
7	If inevitable, borrow from an institution, not from an individual.	Borrowing money from an individual will strain the relationship and may lead to bitter disputes too. So, be careful.
8	A loan is not a simple transaction like receiving and returning money. A loan has many strings attached to it.	Before borrowing, cost of borrowing and one’s ability to repay within the period stipulated by the lender are to be studied in depth.  Besides, the lender may stipulate many other conditions too. So, please think if you can fulfill all those conditions.
9	It is not necessary to borrow always.	Most of us get tempted by getting some lump sum which can be repaid in convenient installments later.  But, unless there is a need to borrow, never borrow. Further, you shall never borrow more amount than what you actually require.
10	Borrowing merely for the purpose of savings/investment is not advisable.	Some people argue that they do not have any surplus money left, so that they can save. So, if they borrow and invest the loan amount, it will be a forced investment for them, they say.  Here, the return on investment and the cost of borrowing are to be compared and if the differential is wide, such a step is risky and preposterous.
11	You must borrow only that amount which you are capable of repaying within a specific time frame.	You must be conscious of your additional resources or any future receipt, to repay the loans taken. Please note that ‘capability’ is different from ‘confidence’.  Here, a dispassionate and realistic assessment must be made, to ascertain your capability.
S No	Rules to be followed	Explanation
12	To the extent possible, invest your loan amount in education and fixed assets.	Do not take loans merely for the purpose of consumption.   Investment in education will give everlasting benefits that are immeasurable. Investment in children’s education will benefit all the future generations. Immovable properties will appreciate in value gradually, but movable assets will slowly lose their value in course of time.  Liquid assets are an exception.  They may or may not appreciate in value, but do not depreciate under normal circumstances.
13	Your EMI for all loans put together shall not exceed 40% of your net income per month.	In case of Housing Loan, you may relax this condition and pay EMI up to 50% of your net monthly income.  The objective of this rule is to ensure that you are left with sufficient surplus money in your hands, to meet your regular needs.
14	A loan must get repaid at the earliest.	Even if there is a longer period available to repay a loan, it is prudent to repay it as early as possible. While small amounts must be repaid within a year, many other loans shall be repaid within 3 to 5 years.  However, in case of a Housing Loan, its repayment may stretch up to 20 or at the most 25 years.
15	If ‘Step up EMI’ option is available for a long term loan taken, you may exercise it.	Those who are very confident of earning progressively higher income in the future years, may exercise their option for ‘Step up EMI’ facility, if such facility is offered by the lender.  This facility will lessen the burden in the initial years of repayment.   One must be sure of linking the EMI to the anticipated income, if steady growth in yearly income is guaranteed.
16	Sacrifices cannot be forever or for a very long period.	You may initially sacrifice some of your basic needs, for certain other commitments towards education or repayment of loans etc.  But if you are unable to meet your regular and basic necessities continuously for a long time, your financial position may go haywire and then collapse ultimately.  Please be cautious.
17	All commitments must end before one reaches the age of 55 years.	It is very important to plan the post retirement life from the age of 55 years.
18	Please remember that as one grows older, one’s expenditure on health and other unforeseen items will keep increasing.	It is very essential to save some substantial amount for the post retirement life.  The basic rule is, we must learn to live from the interest/returns from our savings/investments.  Unless there is some serious need, the principal amount shall not be touched.  It is foolish to make further investments, that for a long term, after 60 years, unless one is left with huge surplus. In our post retirement life, the amount of liquid cash and bank balances must add up to a minimum of our 6 months expenditure.

Date: 24-01-2016                                                                                                                   pannvalan

Appointment Of Executive Directors For Public Sector banks

The Appointments Committee of the Cabinet (ACC) has approved the proposal of the Department of Financial Services for appointment of ten General Managers as Executive Directors in the banks mentioned against their names.

 Mayank K Mehta, General Manager at Union Bank of India has been appointed as Executive Director in Bank of Baroda

Dina Bandhu Mohapatra, General Manager at Bank of India has been posted at Canara Bank.

Vinod Kumar Kathuria and R. Subramania Kumar, both GMs at Punjab National Bank have been appointed as ED at Union Bank of India and Indian Bank 

A S Rajeev (Vijaya Bank) has been appointed as another ED at Indian Bank.

Nageswara Rao Y (Vijaya Bank) has been promoted to ED in the same bank.

Rajkiran Rai G (Central Bank of India) has been appointed as ED, Oriental Bank of Commerce

Ramesh S Singh (Central Bank of India) has been appointed as ED, Dena Bank.

G Subramania lyer (Canara Bank) will move to UCO Bank from February 1