Harry's Tech Space

Read my experience with different products and technologies.

Things to read for this weekend

Self Development:

  • On being Discovered – Seth Godin – Article helps you in throwing out the fallacy of being discovered and sets you on the path of being sought after.
  • “But we needed the eggs” – Seth Godin – Article tells about various types of addictions we have, and tells about addictions which are productive.

Personal Finance:

  • Stick to the plan – Cognicrafting – Indraneil’s take on what is worth doing in raging bull market. Only those who view things in terms of opportunity costs can be at ease in the bull markets.
  • Shareholder Value Creating – Subramoney – An article on joke called “Shareholder Value Creation”. BFSI plays this practical joke often. Newbie’s would get the idea of loot that happens in BFSI space.

my opinion on Toilet: ek prem katha

ALERT: This post is not a review of Toilet: ek prem katha, which I went to watch yesterday, but about peak at chain reactions launched by that movie in my brain. The movie is story of lady who fights hard to get toilet at her husband’s house despite opposition of her FIL( expanded as father in law). For a guy who was reading “Thinking Fast and Slow”, this movie launches you in flight path covering cognitive biases.

History of toilet

Since the movie is on toilets, and sanitation, its better to begin with its history. Since humans are also animals, they feed and and create by product called “sandaas” which nothing but the food which couldn’t be digested. In case of animals , they shit every where they want. Since they are lesser in number compared to humans, they are not capable of creating sanitation troubles.

Once humans got settled, they  started with idea of having a common place for shitting. Normally it was besides some stream. When stream option didn’t exist, the concept of private toilets took hold. The person who cleaned these private toilets are today’s version of shudras. In case of ghandhiji, he had this rotation of cleaning works in his society in South Africa. He even forced kasturba to do the cleaning works. This putting everyone on same plane later aided immensely during freedom struggle.

In the meanwhile, when the so called shudra’s revolted against oppression of toilet cleaning, 2 ideas gained immense traction. One was in considering the toilets as a filthy place, you get to see this cue in movie a lot of time. The other idea was of jugaad system of open air toilets. People would take their ‘lota’ and walk to far away place to shit. then cover the shit in mud like cats do. Though the idea of open air toilet was logical continuation when tasked with toilet crisis, the first one was, blatant mistake. The misconception of toilets being filthy place (in fact they are cleanest place in house, due to regular cleaning) gave more runway to open air ones, more than needed.

bias of taking easy route by system 1

if you have completed atlest 20% of Thinking Fast and Slow by Daniel Kahneman, you would have come across loads of biases human mind has. One of the relevant bias shown in the movie is of taking easy route to a difficult problem. In case of toilets, when private toilets were expensive thing, the easy route taken was going to fields. Where as another genius took the difficult route and invented S – pipe which is even used today as its most effective airtight seal to keep the bad odor away.

Though the idea of easy route ‘jugaad’ can get things done (India is functional because of this thing) but its not appropriate all the time and leads to other problems. Jugaad of open air leads to problem of viruses strains getting stronger.

When band-aids of easy routes stack up, it becomes very difficult to change course. Personal Finance is one such field.

havoc of easy route in personal finances

Toilets, biases and its play in personal financesLike toilets, the field of personal finance has lots of chronicles of people taking easy route to repent badly. Many take equities because of its tax free status after 1 yr, an easy route but totally ineffective. Other one is buying endowment life insurance and calling it as investment. Similarly putting in truck loads of money in small cap equities during market peaks. Putting all the money in FDs and playing victim card when FD rates fall. Not writing a will and leaving the things to succession law for division of assets (normally happens after a fight between siblings). Jumping the ship when there is temporary sign of trouble. buying a house at exorbitant price in posh established locality, with an exorbitant EMI’s. Relying solely on employer based health insurance cover and calling it as a right.

All these are various forms of easy routes one takes in personal finances and all of them are going to get one in trouble.

Challenges faced by neha while selling her cook stoves

Leaving aside the history of toilets and getting to present, we do have this overt resistance to change tendency still now. The picture beside is of clean cook stove that works on firewood. If one has read though interviews of Neha, one of the founders of this company, you would have gotten a glimpse of difficulty they faced convincing villagers to buy these stoves.

Initially they tried to to sell it on the product’s low pollution credentials and they couldn’t succeed. The when they tried selling it, it will reduce darkening of walls and also result in quicker preparation of food, it was successful.

In movie akshay too tried initially to bring awareness from outside by shamming people and other techniques. All these fell flat.  Change came through when the grandma falls and then they learn the importance of having toilet in house.

Similarly demand gets generated from within. I learned importance asset allocation when I had to book losses in equities. The lesson here is that importance of a thing is learnt when hard times comes. The lessons of keeping book clean for banks came when RR started swacch bharat of bank balance sheets. Need to have clean air came to Political class of Delhi when thick smog surrounded the city.

opinions on acting in Toilet: ek prem katha

In simple words, this movie is simply good. It succeeds in bringing awareness about having toilet in household. Restraint shown by both actors fits well and there is no over acting or under acting ( have seen quiet a lot now a days). Akshay portrays guy of 28-35 age well. Bhomi’s character of strong willed, firebrand and loyal women reminded me Neha.

what next might happen, deprival tantrums thrown by brain

Though movie ended with positive note by wife going back to her husband. Many will have trouble changing course. When sudden changes happen our mind gets in deprival mode and starts throwing tantrums to get back to old system.  This deprival tantrums is built in to all of us. Hence it becomes necessary to make habit of changed thing. That habit can be like my habit of buying stocks at their 52w lows just to avoid deprival reaction thrown by my own brain when a stock is making new highs. Writing investment diary so that reason for selecting a stock is etched permanently. learning knife skills to etch cooking skills permanently.

As the core of movie was about “soch badlo”, I should add “soch badlo aur uski aadat bano”. 🙂

Things to read for this weekend

Personal Finance:

  • Investors and worrying – Subramoney – Article tells about “worrying” that is inherent in short term market punters. Glad that markets obliged these worrying folks and decided to go down. 😉

Management, Marketing:

  • Greed isn’t good – A VC – Fed Wilson’s take on managing greed, the thing that manifested recently in breaking up of bitcoin.
  • The taxi or the cruise ship? – Seth Godin – The basic decision one needs to make in businesses. To be small volume differentiator or large scale operator.
  • How to decide which task to delegate – HBR – Some tips for delegation. 6 types of tasks that can be effortlessly delegated.
  • How to become the expert in Your Niche – Quick Sprout – Neil patel explains the path one needs to build expertise in field of interest and grow quickly in it.
  • How Successful People Think – Gary Vaynerchuk – Though sounds like boasting, contains the essence of what to do when you cant set a path for greatness. The 2nd route is called continuous improvisation. The CI approach very thing this piece is about.

Things to read for this weekend

Happiness:

  • Pursuit of Happiness – Subramoney – Some tips to help you prioritize your life. I deal read for those who are always on a run.

Marketing:

Investing:

Analytics:

Social Media:

Things to read for this weekend

Personal Finance:

  • Why I Don’t Talk About My Stocks Publicly, And Why You Shouldn’t Either – Safal Niveshak – Tells about how the fallacy of taking a public stand leads to ruin for investor. The public stand doesn’t allow one to change his mind when the facts of investments change (which can happen in weeks/days time too!!!!).
  • Money Management: Where to Start and How to Start – Free Fincal – Asks one core questions that leads to successful financial life. This post distills core essence of goal based investing. This post exactly where you should start your journey of personal finances.
  • Latticework of Mental Models: Echo Chamber Effect – Safal Niveshak – The problems that arise from not having contrarian views in our friend circle. The reason American media couldn’t understand rise of Donald Trump was because of their own echo chamber. It does have significant bearing on investor too.

Marketing and Analytics:

Management:

Things to read for this weekend

Personal Finances and Investing

  • Investing in shares HURT badly – Subramoney – Explains the churning one must go through to be an equity investor. The pain one encounters in holding off and selling equities. Remember in equities no pain means no gain.
  • Women wake up! – Subramoney – Article focuses on what all needs to be done by other half of personal finances. This covers the basic ground of what needs to be taken care by men as well as women when planning for their finances (PS: Its applicable for both.).
  • What You Need to Succeed in Investing (Hint: It’s Not Genius Brain) – Safal Niveshak – A discussion kind of setup to explain basics of investing. Explains why investing is a marathon not a sprint.

Mythology

  • Why do Hindus prefer birth anniversaries to death anniversaries? – Devdutt Pattanaik – It tells about religious underpinnings why birth matter more than death. the memory of death inhibits progress, and idea of moving on, hence death is considered as inauspicious. The auspicious direction is the east (purva) from where the sun rises. The auspicious orientation is the north (uttar) where stands the still and permanent Pole Star.

Analytics, Social Media, Marketing

SEO

Social Media Marketing: The Art of guerrilla selling

Social Media Marketing: Guerrilla Selling

We come across people trying to sell us various things. Since every organization survives on its goods being sold, marketing and sales become very important parts of an organization. As sales become important for survival, it also poses a moral hazard. The hazard is of people trying to sell the products at any cost. Here in the dark part of marketing too comes into picture. This article is my attempt at focusing on dark part of social media marketing I encountered recently.

As the social media is ubiquitous, a marketer would be tempted bring brand awareness about client by posing in as a normal customer asking questions just to find loophole to slip in his product recommendation. I call this as guerrilla selling(term coined by me) because It uses trust posed by fellow members on the marketer. This mild cheating tactic of social media marketing is used to build awareness and is not for getting a conversion.

Marketing: What it is?

3 Things are important in measuring effectiveness of Marketing campaigns. They are reach, engagement and conversion. So a company based on its campaign goals tries to maximize one of the above 3 things. If a company wants awareness to be built it will focus on maximizing reach and engagement. If sales is important then conversion process is made smooth, and reach and engagement are made to feed into conversion. So in totality its the campaign goal that defines even the medium for campaign and what needs to be done.

After the goal is set, the medium comes into play. It can take the form of Social Media Marketing Campaigns, or Search Engine Marketing Campaigns, Display Advertising Campaign etc..All these campaigns have different characteristics making them suitable for different goals. Guerrilla Selling is dark part of social media marketing campaign.

(See Also: What is guerrilla marketing – wikipedia.)

Bad Social Media Marketing:

The guerrilla selling is part of unethical practices of marketing. This tactic leverages the trust placed on members to misuse them for promotions. For example, Deliberately asking questions on ULIPs in personal finance groups when intention is to bring awareness about the product.

Leveraging the Trust Dynamics

In social media groups formed with particular themes, there will be a captive audience receptive to particular message. In case of personal finance groups it will be receptive to financial products. The marketer deliberately asks questions so as elicit views from the members about the particular problem. Once views starts pouring in, the marketer will go though it engaging the members and slowly planting the seeds of message he needs to put.

Since the members when sharing the view consider other person as another member and give honest reccos. Whereas marketer in member clothing is more interested planting seeds of his message. This leads to conflict of interest as the marketer is expected to be unbiased.

The bright side:

Since marketer is posing in member clothing, if he is not caught out he will be able bring awareness about the product at much cheaper costs compared to costly advertising practices. Also due to involvement of members it leads to increased engagement. This marketing mechanism treads the path of unethical behavior hence keeping the cover intact is important. The intact cover also helps in increasing the reach as members may view message at later point of time.

The Prey:

The idea of planting message without cover being blown is very old tactic and also reason behind growth of religions around the world. The major shield for the victim will be his own awareness about the thing. With Internet being wide and big, its better to increase the awareness constantly with the help of it. Its also better to build pipeline to feed oneself with conflict of interest free knowledge to guard against newer threats.

The next line of defense to protect him will be in the company of real “conflict of interest” free experts. The experts will guard the person from smaller ignorances he might be harboring. So as a human, our best advise is to spend in th “society” of experts. If a marketer does DNS Poisoning kind of moves in social media, this society of experts will call the bluff quickly to thwart the attack.

Hope you enjoyed the article. Stay safe by investing in your own awareness.

The dawn of new era in SKDRDP website

SKDRDP Logo

Change is only constant in this world. Till 19th April 2017 the SKDRDP site was in its fresher university graduate version with HTML structure. The only professional feature in was that it was built on Twitter’s bootstrap framework to give proper mobile and tablet optimized view. Compared to its predecessor website this one didn’t set meta viewport with fixed width. The viewport sets the width of the web page it is supposed to be rendered. Since viewport is not set the site can ask width from the browser and render itself according that dimensions. This along with HTML 5 tech made the site much more bearable than its previous ones as it rendered according to device. Despite the major professional feature, the site still felt lacking more power. Also I hated the idea of using FTP client to push the local draft to the server every time a change was made.

(Read moreHow I built SKDRDP site from scratch. A Chronicle on bootstrap version of site.)

The site due to its professional bootstrap framework helped me in running it from Diwali of 2014 till April without much hiccups. Unlike codecademy course that tipped me in building it, this time it was sites of our subsidiary Jana Jagruthi and Bhajana Kammata that blazed the path for the CMS powered site. Also my personal experience in running my own WordPress site and SKDRDP’s blogs gave me an idea about what to expect from the CMS’s. Compared to HTML I did  find these CMS’s to be more restrictive, but they also opened the world of plugins and widgets which could accomplish complex things effortlessly without requiring extra coding knowledge.

For me the site’s journey can be split in 3 time zones. The prologue gave important learning which has lots of bearing on the current site. The present chronicles the capabilities of the site, and current trends. The future projects the trend to tell where the site should go.

1. The prologue:

Every site has 3 levers that control it. The first one is its domain panel where you set parameters regarding name servers, domain records and other domain management things. The 2nd lever is site’s cPanel. This one manages server’s hosting environment. The 3rd lever is of site’s CMS system. If it doesn’t have CMS then it will be FTP controls.

In the initial years due to my own inexperience the cPanel and domain controls were not accorded much importance. With building of website of Bhajana Kammata in  month’s time, I came to know what all can be done if one controls all the 3 things. Domain controls security aspects of site too, as one needs to order for Static IP for SSL certificate from here only. cPanel is place where one installs certificate after its issued. After these 2 only one can enable SSL on his CMS. Similarly lot of things like CDN, Caching require one to use these 3 things excessively.

(Read moreThe levers that control your website. Explanation of above concept.)

1.1 Website’s Data Era: Analytics

The next thing after taking control is setting up of monitoring systems. The monitoring system of site visitors is called as Analytics. Google is one of the famous provider of that service. Analytics helps webmasters like me to  understand visitor dynamics over various metrics and dimensions. In short metrics are numbers like bounce rates, visitors, time on site etc… Whereas dimensions are context specific and shows based on report. In case of geography report various dimensions will be different countries a visitor belongs too. In case of traffic source report dimensions will be referrals, social, search, direct etc.. Analytics requires one to place the tracking codes on each page of the site. Since CMS have powers to create pages on the fly, plugins are needed to make this easier.

(Read moreDecision Making and Google Analytics. Explains various features of this profound tool)

1.2 Social Era: Building Social Media Infrastructure

Once analytics is set up and running properly the next one to come is communities and followers of the website. For this a social media strategy needs to be in place. For that website content need to be made shareable. Which  means images must be of higher quality. There has to be compelling headline and some excerpt accompanying article, which would display on social media sites and search engines. And not to mention role of share buttons play in this regard. This sets basic social infrastructure on the website.

The social media picks image called featured image for display on their sites. This image is the representative image for the article, hence it has to be appropriate. One can use high quality stock images too for this featured image. Since its featured image, the resolution and quality of image cannot be skimped at all. In an article, first impression is always made by image featured and the title of story. This quality constraint of website means images shared on whats app or ones pasted in word document will always become low quality images to be featured images. This also results  click not happening at all despite compelling headline and excerpt.

After the image and headline it will be excerpt that decides whether user wants to read or not. Hence its worth while to get the first impression right by featuring a high quality image, a compelling headline and a custom drafted excerpt for the article. Note that Yoast SEO plugin allows custom excerpts for the different networks like Facebook, Twitter and Search Engines. Once can write custom excerpts for article by using excerpt dialog box in WordPress. if its not displaying then use screen options drop-down in new article window to display this box.

2. The present:

As described in previous sections. The major learning were controlling 3 levers, analytics and sharing friendliness. All these things were present in past site too. The presence of above 3 factors aided in brand building of SKDRDP. The current site now shows off a full sized images, sharing is easy for blog articles and success stories. All these things have some underpinning for being there. Without further ado lets dive into rationale for larger images, call to actions etc..

2.1 Role of Websites and Analytics

Many companies view website as dummy information source, a white elephant, expense center. But in reality, its an asset in social terms. If a company needs to build its credibility its expected to have its own up to date website. In internet world website is the face of the company. Social Media add digital marketing arm to a company along with website. Websites having blogs are considered as engaged in content marketing, and shows off soft-skills a company has.

Since website is part of marketing campaign, like every marketing campaigns it should be tracked for effectiveness. And in tracking the things that play important role are the campaign reach, campaign engagement and campaign conversion. Likewise a grand purpose every campaign has relative importance given to reach, engagement and conversion metrics. For example, if campaign wants online sales to be maximized it needs to focus on conversion numbers. If building awareness about the company is important then reach has to be higher. The tool used for measuring these is analytics package. But the first thing is defining problem statement – what you want to achieve.
In case of SKDRDP website, It was set way back in March 2014 to increase the reach.

Reach of website and that of company grows only if it gets visibility in mediums that have larger audiences. The mediums can be paid mediums, owned mediums or influencing mediums. Example of paid medium is advertising medium. Owned medium can be blogs, news letters etc… Social media is type of influencing medium, even search is another influencing mediums. Apart from medium it needs to be focused that awareness building requires retention of the user on the site. So the analytics is used to make things friction free for the user.

2.2 the game of Images, CTA’s

Analytics can help you tell about friction points in user experience. But there is one such thing which is always visible and done very badly by novices. That mistakes happen in images and call to action aspects. In a quest to reduce image sizes novices reduce the resolution to such an extent that microscope is needed to view the image. Also novices totally ignore the Call to Actions on images which is the thing that generates all the engagement on the site.

apple website

If one observes all the big websites be it of apple, or amazon or others. The first thing they see is a large image covering the face of website. The image contains a small Call to action to get the person act on it. This CTA and large images have set themselves as standards for websites. If an image is too small, it will look ugly and pixelated on larger screens. Images sent from whats app and MS word suffer from this problem. To manage the size of images, these programs chop off the quality. The site image must not fall below Full HD resolution i.e. 1920 x 1080 which is impossible to get on apps like whats app, MS word.

2.2.1 Image thumb rules:

To aid people here is list of thumb rules to be observed with images:

The images sent has to be directly taken from camera and editing must be done by person supposed to post it to the site or his team.

The person taking image must only ensure image being taken is not shaken up badly making restoration of it difficult. This rule doesn’t apply for professional photographer.

Images are better shared to the web manager via dropbox, google drive or by mail attachments. Things like Facebook, Whats App, MS Word should not be used at all. Internal company tools for sharing are most preferred if they don’t alter the images.

Facebook, whats app, flickr, google photos,twitter are better mediums to reach end consumers of images and data.

Whenever images goes thorough a conversion it always loses some quality. hence its best to avoid conversion of image into other forms in inner works and transfers. Some image conversions are – image file to website image, image file to printed photo, image file to whats app photo(highest loss of quality), printed photo to scanned image.

2.2.2 Call to Action (CTA):

The CTA is also an integral part of website. It can be used to inform the visitor, or make him buy your product on your site, and many more. Every professional website has it, and every novice website doesn’t have it. If site is for information purpose then CTA will normally be embedded in the image itself. If site wants to drive an action on the site itself, then the CTA will be separate from the image and highlighted – to make the user conduct the action. And as quoted earlier the CTA to put comes from what one wants to achieve with the site i.e. vision statement.

3. The future:

In the previous section I explained about role images, CTA and analytics play in the website. These things lay a solid foundation for engaging the visitors of the site. But often times we want our site to advertise and sell our products too. The roles of advertising and e-commerce will bring out additional complexities in site design. The pre-requisite for e-commerce is HTTPS being enabled by default. It also helps in getting the site being HTTP 2 compliant leading to faster site. Advertising and e-commerce being more important branches, even analytics focus on these aspects too. The Goal tracking is an analytics feature which is used for digging deeper into e-commerce sales funnel.

3.1 The advertising play:

The advertising has 3 players in the fray. The Advertiser, The Publisher and Ad Network. In case of company blogs they do not carry advertising but they might be keen to host images of products of their on their sites side bars and related content etc.. to boost visibility. So in case of company blogs, the advertiser and publisher will be the same, hence they wont be needing an external ad network. If the above 2 are different then only ad network is needed. One such example of ad network is Google Ads. Under Google’s Adsense program a publisher can allow google ads on his site. Google in that case will manage ads on that site by displaying ads of advertisers who have signed up on it ad network via its AdWords program. Similarly sites like Bing, Facebook, Twitter too have their own ad networks to manage ads.

The billing of of ad networks also varies a lot. Some charge for every click received on the ad called as Pay Per Click (PPC) model. Some bill based on impressions i.e. displaying of the ad. Its called as PPM – Pay Per 1000 Impressions. M in PPM is based on roman letter for the number 1000. Since these ads require one to pay for acquiring the customers this falls under purview of Paid Media. Also this paid media which is accessed by an ad network also has really good click through rates, making it ideal for e-commerce sellers. Ads on these networks are categorized as Text ads and Display ads(image ads). Normally text ads have PPC billing and Display ads have PPM billing.

Normally companies advised to be signed up as advertiser on ad networks despite having their in-house content marketing platforms. Its so because the digital advertising provides a much better click though rates.

3.2 The commerce on internet – e-Commerce:

Before beginning on e-commerce, its important for the sites to implement a robust security infrastructure for the website as it involves real money being used in transaction. Its recommended for e-Commerce sites to have HSTS and HTTPS enabled to prevent troubles. HSTS stands for HTTP Strict Transport Security which enhances security level of HTTPS protocol. The word HTTPS stands for Hyper Text Transfer Protocol Secure. With these 2 implemented, an e-commerce seller could go knocking on doors of payment gateway.

(Read More: Website loading: Basics of Authentication and Encryption – Part 2. Explains about security)

The work of payment gateway is to link the e-commerce seller to the customer’s bank. And this entire process of making 1 transaction happen is a series of handshakes, and the entire transaction would fail if one of handshake fails. To visualize this process, when a customer enters his bank details and checks out the seller first sends the bank details to payment gateway. Then payment gateway redirects customer to bank’s server for customer to log in. After logging in transaction processing server processes the transaction and gives transaction confirmation message which is passed all the way back to the seller. If one has experienced e-commerce transaction he would know a timeout or error any 1 of this step would lead to entire transactions being failed. For this service the PG’s charge money for transactions routed by them to sellers.

3.2.1 Goals and conversions:

Since the transaction process happens on external websites, analytics will focus a lot on check out and thank you pages for goal tracking. These pages mark the end of sales funnel and carry a monetary value for each transactions. Its also considered as successful conversion as session which started by logging in to the website ended in converting into sales. In this regards analytics packages help one to identify hard and soft conversions.

When a user is supposed to be made aware of product in marketing terminology its called as generation of lead. soft conversions measure these leads. Events or URL tracking can used for soft conversions. Its also ideal to assign a value for soft conversion called as goal value. Some soft goals can be signing up for news letter, using a promotional voucher etc…

A hard conversion is like actual sales which is supposed to have a direct financial impact. In case of banks this goal will be of closing loan account by paying off last EMI rather than loan disbursal. In case of e-commerce seller it will be thank you page which is loaded after transaction is completed. The value attached to successful sales is normally set to be the sales amount of transaction. Also a hard conversion can have a sales funnel to track how users are proceeding with the sales process. In this each step of the process will have a goal attached to it.

Conclusion:

In this we read about making sites mobile friendly, analytics, role of social media, the game of images,CTA, advertising, and e-commerce. All these are considered as basic building blocks of a site. Unfortunately these things are not part of university curriculum. Hope you enjoyed reading through this huge article which gives the bird’s eye view on the world of websites.

AIFW Personal Finance Planning Steps

Here is Personal Finance Planning steps that would help you in managing your finances. These Personal Finance Planning Steps are from the Personal Finance Guru Ashal himself.
————————————————————————————————————-

How many of you do agree that your personal finance life is cluttered, complex, aimless?
Answer in only one word.Either Yes or No.
Thanks to everyone who answered.
Congratulations to all who answered ‘NO’. You people are having control of your financial life. Congratulations to all, who answered ‘YES’. Thanks for accepting that you need to take actions to control your financial life.
Action plan. Here it goes. It’s not only for YES, even NO can fine tune their lives. Now here are steps to get control of your finances.

  1. Make a list of all your investment and assets and liabilities. Once it’s done, reply in your own YES.
  2. Step 1 was about knowing, where do you stand today in terms of your assets , investments and liabilities. Are you having a positive net worth or a negative net worth?
    Here goes, Step 2.
    If not listed already, list down all your bank accounts and decide to cut down your total no. of Bank accounts. Once identified, mark the activity as 2. Done.
  3. Here comes the step no. 3. Identify your emergency corpus is in place or you are working on it with a plan. Say having 6-9-12 months’ expenses equal money to be kept as Emergency corpus. Mark your step as 3.
  4. Here comes step no. 4. Write down all your future goals. Put them in different time frames say, 0-2Y, 3-5Y, 5-10Y, 10Y and beyond. Put value for each goal, assuming if this goal is yo be done in 2017. Compare the combined number of all goals with your net worth, calculated in step 1.
    Now inflate your numbers for actual consumption years like 2020, 22, 25, 30 & so on.
    Mark this activity as step 4.
  5. From the comparison of your net worth and current cost as well as future cost of goals, you are aware now that there is a shortfall of money. This short fall is to be filled by your Term Plan. Identify your term plan need and purchase adequate term plan, if not done already. Marked your step as 5.
  6. Here comes the next step. Step no. 6. Please identify your health insurance need and make sure your personal policy(ies) covering you, your family and parents is(are) in place. If not purchased already, sort out your insurer today and purchase. Mark it as 6.
  7. Here comes Step no. 7. Go back to your goals counted in step 3, calculate, how much do you need to invest on monthly basis for each individual goal, at different rates. Say 4% rate for a 0-2Y goal. 5-6% rate for 3-5Y goal. 6-8% rate for 5-10Y goals and 8-10% rate for 10+Y goals. Mark your step as 7.
  8. Now moving to Step 8. Based upon your goals, decide your asset allocation between Debt, Eq and cash. Select investment instruments accordingly. Mark your step as 8.
  9. Here is the step no. 9. Write down your Will. Mark it as 9. Done.

So here is list of steps you can take to plan your personal finances.

For any instrument safety is determined by knowledge of underlying risk.

-Pattu Sir, Freefincal

Headlamp types and Portfolio Types

Portfolio Types like Headlamp Types

(Image Credits: Team BHP)

The headlamps of vehicles come in 2 varieties, one is reflector types and other one is projector type. In reflector type the reflector reflects light falling on it, by light source. The light source is infront of it, and reflector arrangement is nothing but concave mirrors sitting behind the light source. They reflect light falling onto road, giving illumination for the rider. In case of projector beams they instead of reflecting, concentrate the beam onto road. Here instead of mirror a lens is used. The lens makes it important for the light source to be behind it. These 2 are major lighting techs we have.  Similar to these lighting types we do have portfolio types mimicking them. You can call these as diversified folio and other as concentrated folio.

Portfolio Types: Diversified Folio

Like the name suggests, In diversified type portfolio each stock you select has bearing on performance of the folio. Like reflectors which is nothing but set of mirrors aligned in particular fashion, each selected stock has its impact on folio.  In reflectors placement of mirrors has bearing on where light will fall. Similarly individual weights matters in diversified folio. The diversified folio places too much emphasis on selecting a stock and weight assigned to it. If one is able to get good set of stocks and able to assign proper amount of weights to it, he will be able to get decent gains from this folio. Failing it – will make a subject of mimic in office. Most investors normally fall in this category, and fail it too. And by far this is very difficult thing to do also as one needs to keep a close eye on weights of all the stocks.

Portfolio Types: Concentrated Folio

In this folio, you select the universe/market/index first. In a projection beam its the light source which is chosen first. Once the universe is chosen, you run a formula on it based on your criteria. In a projection beam where it is focused matters most. Similarly what kind of theme you are focusing matters most for the formula. If the lens is small, and shortlisting criteria is too tight, then lesser light is coming out, hence lesser stocks to invest is coming out. If lens is too large, then out coming light is spread too thinly. Similarly if formula is too lenient, it will throw out a large number of stocks, which wont have any meaningful concentration in portfolio performance.

A simple thumb rule to know folio type is, if you are able to define theme of a portfolio with ease, then the folio constructed by you is concentrated one. For example, if one is constructing folio on faster growth sectors of past 2 years then that list will not include HDFC Bank, as banking sector has lots of duds which bring its performance down compared to other 4 growth sectors namely FMCG, Auto, Pharma and IT (PS: Sectors referred here are lifted from Nifty Growth Sector Index, which is an index which focuses on fastest growing sectoral indices and picks top 4 sectors).

Conclusion:

Here I have explained to you the 2 broad ways to select stocks. The thing with both is, they are mutually exclusive. If you are picking stocks individually then your folio is a diversified one, if you are using screener with a formula then your folio is a concentrated theme based folio. Failed diversified folio are called as Dhobi list folios. Failed concentrated folio ca be called as burnt theme. Hope you have done proper homework while investing otherwise you can share your investment experience on AIFW, serving as reminder of being a pig.

How to wolf down a laddoo and financial emergency.

Financial Emergency and Laddoo

(credits: Manjula’s Kitchen)

Financial Emergency is like a laddoo, if swallowed like a novice, its going to be your undoing. Thats why you normally get gyany responses like “bite only as much as you can chew” etc.. To get rid of half gyan you have accumulated through the years this post tells you “how to wolf down a laddoo”. The principles are applicable for financial emergencies too 😉 .

Steps to wolf down laddoo and financial emergency:

First, be aware of your limitations. If you dont have large mouth, then you cant wolf down a whole laddoo. Similarly if you dont have large emergency corpus, you cannot say “Its clobbering time!!!” to a financial emergency. There will be numerous thumb rules on this,  Some will be stating  3 month income, some may tell based on health insurance covers etc.. After all people have multiple thumbs then their thumb rules is expected to be plural. Hence the factors to follow will be. Bigger the corpus is better. Life experience determines the size of corpus.

Your life experience determines the size of your emergency corpus.

Second, Swallow it whole if you can. If the laddoo is smaller than than area available in your mouth, you can swallow it whole, if bigger then you need to chew a part of it. One of the caveat here is that a laddoo cannot occupy the whole space available in your mouth, that would not leave any room for it to be crushed. Same way go for a credit if financial emergency is bigger than your emergency corpus, otherwise swallow it whole. The thing to be noted here is that, minimum balance restrictions should not get broken in process of doing so.

Third, Crush it. Many people often get into josh and leave the laddoo as it is, and try swallowing. A whole laddoo is bigger than food pipe hence it does cause trouble if left as it is. So  go and crush it with impunity.  Similarly a financial emergency should be crushed into smaller chunks.

Finally, slowly digest it over the course of time. Once laddoo is crushed in mouth you can slowly relish it. Similarly after financial emergency is over, the corpus too needs to be restored back into shape.

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