As the new financial year begins I am setting some goals for myself to get better with money. Here are a few things I aim to get better at this year:
Mutual Funds - So far I just invested my money in 4-5 schemes which I started back in 2019 without any goal. Over the last year I redeemed a chunk of it and this has given me an opportunity to start over from scratch. I am aiming to reduce the number of schemes and invest with a specific goal. Which schemes do you invest in?
FD - Just for a safety net, I plan to park some money here for near future requirements. Do you have an FD? How much % of your net worth is parked here?
Credit card - I never really believed in taking one but took Axis Vistara card last year just for lounge access. I still don’t use it completely to the max limit and do not plan to either. What are your thoughts on credit cards? I am not a big fan.
@Anirudha is a credit card & personal finance geek and I would love to know your thoughts on this.
IMO passive funds that track index directly may be better - simple, low cost and match benchmark returns closely.
I don’t have any FDs. Have you looked into Bonds as an alternative to FDs?
I am using credit cards since 2007. See it as an interest-free credit for about 50 days. There are some side benefits like reward / cash backs, paper less loans, lounge access etc. As long as one is able to pay back the credit on time it is great. Just make sure the credit stretch is not beyond your means. Also if you do need more time to pay back the credit better to convert the outstanding to EMI to reduce cost.
Trade my way to financial freedom has always been the goal
I have recently started investing in Index ETFs with Dhan. Initially I started with lumpsum and for this year I am planning to begin a SIP in ETF.
Apart from Mutual Funds & ETFs I have been using FD as a Contingency Fund holder where I do not care about the returns but the goal is to be cash ready in emergency (Here I am happy with 5-6% returns)
Thats all about investing!
About expenses…I have thought of focusing more on needs rather than wants.
So that hopefully I end up investing more
Credit Cards - Definitely a yes but only for those with control abilities.
Pros -
Amazing rewards like sbi cashback card (5% cb on all online spends excluding few categories), axis ace (5% upto 500 on bill payments and 1.5% on other online & offline) categories. These 2 cards are insane. Undoubtedly the best in industry.
cc are great for lounge access but now most cards have made spend based conditions to access lounge in next month/quarter. you may see indusind & idfc Ltf cards for lounge.
Just make sure never do cash withdrawal, rent payments, jewellery purchase, fuel purchase, etc.
fuel maybe ok only with few fuel specialised cards that too with certain restrictions. so better to use cash / upi for fuel.
Cons
cc are 2 edged swords since it doesnt make the feel of money going out and lets you spend more than what u have in bank, never fall in the trap. use it wisely. never use it for interest free period only. pay before hand or even immediately. bcz charges are very high on default. etc etc
My SIP’s are majorly invested in large cap and midcaps between 65-70%, rest are invested in debt funds like bharat bond FOF.
Emergency funds are saved in FD’s as I would need them immediately in case if anything urgent. FD is limited to the expenses upto 1 year which is 10-15% of the net worth.
If you have control over the spends, then credit cards are a great thing to have. I use rupay credit cards for my day 2 day expenses and earn rewards on the spends as well. I have all my spends in control via CC so they never were a risk for me. With the rewards I earn from credit cards, I can do an extra SIP for a month. That way, credit cards help me in a good way by earning rewards, keeping my bank account clean and also earning extra interest on the funds in the bank account.
SUGGESTION :-
Request Dhan to launch a feature of creating customised goals and link our existing investment in stocks and mutual funds to that particular goals. IndMoney is already having this feature but would like Dhan to launch this which enables users to plan their finances well. @PravinJ
As a trader, before any trade my initial step is to establish expected returns, ranging from 18% to 22% annually (IMO 18% to 22% is the decent return you can expect from the market. If market has potential to give, it also has potential to take away). Approximately 7% of these returns is sourced from investments in G-Secs which I use as collateral, leaving the market-generated returns in the range of 11% to 15%.
I generally deploy long term LEAPS and straightforward strategies (CC and CSP), I rarely watch market on a daily basis. In my view, as capital grows, prioritizing risk management becomes crucial. Adhering to disciplined trading or investing practices significantly contributes to long-term success.
With this discipline, I also trade on borrowed funds (credit lines) which I do not recommend to anyone
For investments, I personally take care of my Fixed Income Portfolio which mainly includes SBI (AT1) Bonds, NCDs of IFCI, Tata Capital, NHPC, JNPT, Spread out G-Secs from 2036 to 2073 Maturity and SGBs.
I have recently started using Credit Cards a lot - primarily reason being the discount and reward points. I recently purchased an AC for which via EMI option I had to pay 4k less than by paying the entire amount upfront!
Increase my liquidity and invest more in equities. Usually, my whole corpus was in trading income only, without investing in any other instruments. I realized last year that I had a huge drawdown.
I haven’t particularly used credit cards much, as I didn’t particularly need them. Though I have doubts, it would be really helpful if someone could share their thoughts. Is there any particular limit credit card companies give for traders? Do they consider trading as a legitimate profession and can they give a higher limit?
If the Dhan team knows about this or community members know about this, your guidance will be helpful.
Credit Card companies will check your eligibility to issue the cards based on the salary slip if salaried and ITR if business or self-employed.
If you disclose that you are a trader and you are applying the credit card for trading purposes, then there are good chances that they may reject your credit card application.
While I’ve previously written about my investments in detail, here are my thoughts:
MF: Continue with index investing - primarily for retirement.
FD: Do not have any FDs, primarily use savings account for very short-term and medium-term, however willing to explore better alternatives for parking money for the medium-term (eg. goals more than a year away)
Credit cards - While credit cards are definitely useful for folks who are extremely diligent and prudent with their money habits (for example, transferring the amount to your credit card company immediately after every swipe), I only recommend it if there is a genuine need for it. Even my goals are reducing the cards I have so that I have to keep track of lesser number of bills to pay.
