Author: Chillmaadi Admin

Years ago when I was starting my first job out of school, I got the worst piece of money advice from my boss.

“Charge something big on your credit card to motivate you to make your sales quota.”

Horrible advice!

It was great for my boss because it meant that I made her more money, but worthless to me because it meant that instead of making money I was just breaking even because my income would go right to paying off my credit card.

I didn’t take her advice. But I remember a girl who took it and ran with it.

Her first week on the job, she bought a $4000 purse. That’s 20% of a decent down payment on a home and she spent it on a PURSE!

She sat in the cubicle next to me and I can remember how desperate she sounded talking to potential clients. Desperate to land a big client in the hopes of paying off her useless debt. Clients don’t respond to desperation and the less they responded to her, the more she pestered them.

She never did make her sales quota and was let go within two months. The only thing she gained from that job was stress of having to pay back her debt.

This is an example on a small scale, but a problem I see with new college graduates. They get their first job and go from make $8 an hour at a part-time job to $40,000 a year and go crazy! They rent expensive apartments, buy new cars and max out their credit cards.

With the ‘last in, first out’ lay-off approach and our economy the way it is, new grads are usually the first to go and they’re left with consumer debt they piled on assuming they’d have this job for a few years.

Some are smart enough to sell some of their new purchases (at a loss) to pay off their debt, but most are now used to living beyond their means and…

The life of debt is born.

I made these mistakes myself. The more money I made, the more I spent attempting to keep up a lifestyle rather than plan for the future and ended up with a $34,00 debt and very little to show for it .

If I could go back, here’s what I would do to save more money as a new grad:

1. Live at home for another year or two

We all want our freedom when we get our first jobs, but the ones who are most free are the ones who continue to live at home at almost no cost for a few more years and save their money so that when they are ready to move out, they’re not strangled by debt.

2. Start an emergency fund

Lay offs, accidents and all kinds of unexpected things happen all the time.  I didn’t start an emergency fund until I was 30 and I regret this. Even if I had saved $100 a month when I was 25, it would have turned into $6000 by 30.

3. Start paying student loans ASAP

I have friends who are paying their student loans into their late 30′s because they’ve been making tiny payments or deferred them as long as they can. By this age, they have mortgages, insurance and kids to pay for. Why include a student loan as well?

Some suggest not paying your student loan and investing instead. I disagree. You don’t know what will happen with your investments. You could easily lose most of that money.

4. Don’t use more than one credit card

This is the time that most people acquire credit card debt. Using 3 or 4 credit cards and paying the minimum on each is a sure way to create a nightmare. Instead, stick to one card and pay it off every month.

5. Save, save, save

This is the easiest time to save money, especially if you’re living at home. Saving money now doesn’t only create excellent money habits, but it prepares you for a much better life in the future. If you’re living at home and making a decent income, there’s no reason not to save half of your monthly income.

These days, it seems like it’s getting worse and students are piling on debt even before graduation. In 2005, 69% of first year students had no debt, today that number is less than 15%.

Based on my own experience and what I see new grads do, I know we’re not adequately prepared upon graduation. We’re taught how to find jobs and identify careers we’d like to pursue, but not how to manage money and as a result, most of us start out with pesky debt.

What did you do right or wrong as a new grad?

We all want to save money but our tight budget and too many expenses are not allowing us to do but once you have started to take action in the right direction, you can save a good amount of money each day. Yes! Righty heard you can save money daily.

You don’t need to take bold actions for that but all you have to do look carefully your daily money outflow and start managing or cutting down expenses.

I have some money-saving tips which will surely help you to save money from your day to day activities, they all are incredibly simple to follow and if you start implementing few of the tips from these, you will see a good difference:

1. Set Saving Goals: One can achieve something once he makes a goal. Thinking about saving is a part of our life but setting goals to set aside a small amount actually in a day will help you to achieve your goal. For instance, if you can save let say Rs. 500 per day, then you have a saving of Rs. 15,000 in a month and approx Rs. 1,80,000 in a year.

Wait, the saving is not ending here. Now, think to double it. Yes, invest your savings now in FDs, SIPs, etc. This will ultimately help you to save a good amount of money.

2. Benefit of Cash backs and discounts: Before making any purchase, compare the prices of different sites, look for the benefit of maximum cashback every month you can avail. For making bills payments also, there are various sites like Paytm, Freecharge, Phonepay, etc.which gives you discounts on every month’s payments and additional cashback also.

Similarly, if you use a credit card then you can avail the benefit of Interest-Free EMI also when some companies offer zero interest EMI in the peak shopping season.

3. Investment plans: Investment in different instruments is one of the best alternatives to invest and save your money along with getting a good return. It’s always good to diversify your investments with higher return plans.

People generally limit their investment in saving account and Insurance-linked plans but there are other options which give you much higher return when you distribute your money in Fixed Deposits, PPF, Bonds, ELSS, Mutual Funds and Equity Market.

4. Curbing your spending: Cutting off your expenditure is a mostly heard option to save money which is possible with a good financial budget only, but we are too lazy to spend our time in making a budget and free enough to spend without thinking about savings.

You just need to keep a track of daily expenses like rent, travel, education, shopping, Bills, etc. and start cutting off your unnecessary spending. Next month again you can use the same revised budget.

5. Prepayment of Loans: Mostly families are under the debt of personal or home loans, which is a financial burden on them to repay. Prepayment of loans can help you to save a huge amount of interest. Prepayment will only give you the benefit of early disposing of your loan but also various tax saving options.

Make a good plan with the help of your lender to repay your loan and take advantage of saving interest.

6. High-Interest Savings Accounts: Having a saving account is common for each individual now but having an account offering higher interest and other benefits is still a lack of understanding for a few people.

Most people look about the minimum balance or zero balance saving accounts but they offer low interest. It is recommendable to compare the interest rates while opening a bank account as various banks offer a good rate of interest.

We all are aware that saving money is a priority rather than spending it but failed to get good ways to save money to secure our future or to deal with some emergencies. On average a person can save 25% of their earnings without disturbing their routine life. Now, it’s your time to check how much you can save by following the above simple and practical ways.

In the era of technology, if we talk about social media, academic, personal development, young people are well prepared in advance, but what about financially?

Are they fit and prepared financially for securing their life in the future or after retirement? We all know about the day to day expenses to be incurred, it can be college fees, education loans, or how can someone forget about online shopping and Entertainment?

Yes, I’m talking about personal Finance responsibility. It’s your turn to secure your future by making yourself financially independent while taking other duties.

Now, the question arises from where you can get all the excellent advice when it comes to your finance so that you don’t end up with the middle age.

Here is some best financial advice for young people to follow to become financially independent without relying on anyone else.

1. Keep money inflow and outflow track: People don’t like to keep records of their earning and spending but keep looking for the options to save money. You must be aware where you are spending your money and is it worth to spend it or save it?

For keeping a track, monthly budgets are always recommendable. Everyone is addicted to smartphones now, and you can take benefit of creating a checklist of daily expenses and Income by using any app. It will also generate interest and encouragement when you start saving form your salary.

2. Start Investing: Following Investing advice at a young age is the best advice. If you haven’t yet started to invest, you are making the biggest mistake of life. Only the problem is people afraid to take the risk, but this risk is worthy of taking at a young age. Investment is something creating money out of your own money without making efforts.

Depending upon your choice, you can invest in the long term, medium or short term plans to diversify your investment for availing the maximum benefit.

There are many investment plans like Mutual Funds, SIPs, Equity instruments (stock), etc. which will help them again to manage their finance and the get maximum benefits not only in terms of money but also availing many other offers of discounts, higher rate interest benefits, tax saving, etc.

3. Buying a Home: At your young age, you can make a plan to buy your home and avoid paying higher rents and shifting from one locality to another. Surveys also revealed that 15% of the young generation said buying house is the best financial decision they have ever taken.

It is also the best investment plan as renting out a part of the property can bring an extra source of income. Investing in real estate now and sell it in the future will let you enjoy an unbelievable amount of profits.

4. Earn extra with the Internet: Risky !! One should be aware while earning the income online as there is no doubt that scams held, but a proper research about making from online can surely help you to earn and learn more like with the help of freelancing work, selling an E-books, Teaching online, etc are few of the reliable work you can do to earn extra income in your idle time.
5. Take care of Health: You must have heard “Health is Wealth” but how many of you are taking care of it? The fact is that taking care of your physical health will help to save you a lot of money over time. You won’t have to pay high premiums on your health and life insurance.
6. Retirement Savings: Make sure to have enough savings to live your life after retirement. After a stage, you are somehow not much capable of earning as much as you are earning now. You need to prepare your retirement in advance.
7. Prepare Emergency Fund: The future is unsustainable, so the emergencies are! It’s always a good idea to have an emergency fund for some medical issues or sudden huge expenditures than to run for a loan and create a financial burden of paying EMIs. An emergency fund will help you to come out of the problems smoothly without being stuck in a bad situation for a long time.

Property agents review listings frequently to learn about brand-new real estate for sale. Usually, they all begin to appear alike, apart from a few variable details. A vibrant listing makes use of original language to produce a tempting mental photo of the property.

Find out exactly how to leave weary cliches behind as well as resonate with prospective purchasers. Make use of these savvy suggestions to create local property listings that obtain discovered and motivate people to take action.

Comply With the Fundamental Listing Format

The first step is to recognize the pattern every listing follows, regardless of the web content. Each listing should have a fundamental layout that consists of:

• a compelling heading developed to get focus as well as make the viewers wish to know more;
• an opening statement that provides a clear summary of what the property advertisement is about;
• a comprehensive description of the features that make the property preferable and special; and also
• a conclusive contact us to activity that discusses why viewers must act now and exactly how to contact you.

Each aspect calls for a focus on information and also using descriptive language. Keep a synonym replacement tool useful and utilize apps to assist with punctuation, grammar, as well as syntax. Precision reveals an agent is capable, focused, and trustworthy.

Home is Where the Heart Is

Plenty of listings make claims such as “stunning sights” and also “upgraded cooking area.” Neither of these descriptions motivates imagery in the reader’s mind. Instill each description with emotion. Tell a story regarding the house as well as what makes it interesting to live there. Rather than stating beautiful sights, set a beautiful scene. “Wake up to marvelous sunup over attractive Smith Bay.

Absorb the sounds of washing water and singing seabirds while you drink your early morning coffee.” Elaborate on a statement such as “upgraded kitchen area.” As an example, “Prepare gourmet dishes in your modern-day kitchen area with clever state-of-the-art devices as well as a roomy kitchen to save all your key active ingredients.” Verify to the viewers why the home is their desire home.

Interest Their Practical Side

Once the listing pulls on a viewers’ heartstrings, it’s time to appeal to their functional side. People intend to be comfortable in a home that fits their everyday needs. While a spa bathtub and in-ground swimming pool are offering factors, remember to note the practical functions of a house.

Allow possible buyers to understand the home has an assigned washing area with an energy-efficient washing machine and dryer. State the all-season area that can double as a den, office, playroom or added a living room. Envision you are a buyer and display the attributes that help make life very easy.

A Beautiful Day in Your Area

Customers always need to know more regarding the space of a residential or commercial property. Provide truths concerning the surroundings, such as “located in the historic location of the village,” or “located near institutions, shopping, and also transportation.”

Most real estate agencies are including neighborhood pages to their web sites, offering details regarding certain towns as well as what they use. Web link to these neighborhood pages within the listing. These web links supply beneficial local information to possible customers and drive even more targeted website traffic to the site.

Sprinkle Localized Keywords Into the Content

With site website traffic in mind, know search engine optimization opportunities to assist draw in more purchasers to the listing. Make a decision which key phrases would certainly fit best into the listing description.

Include short and long-tail search phrases that pertain to your home and also its area. Add these search phrases normally into the web content. If a keyword phrase does not fit, search for one that does. A selection of cost-free and also paid tools exist to execute basic keyword study.

Consist of these search phrases in the listing as well as articles is advertising it, such as a tweet or Facebook upgrade. Make sure all the online listings are on mobile-friendly platforms, so they are easily obtainable via smartphones.

Optimum Exposure

It takes more than one or two advertising and marketing approaches and sources to offer a house quickly. Give every listing maximum direct exposure. Listings need to show up on MLS, the firm website, as well as all of the firm’s social media sites accounts.

Offer to send out prospective customers the current listings by means of e-mail and also sms message. Release listings in cost-free as well as paid local magazines. Schedule an open house occasion as well as advertise it via local news sources. Develop a separate web site or touchdown page for high-profile listings.

Create a blog write-up regarding the listing and what makes it one-of-a-kind. Include sharing switches on all your online blog posts and also motivate visitors to share the listing. The goal is to get as numerous eyes on the listing as possible.

Captivating Strategies

Go beyond words to make a listing compelling as well as remarkable. Add professional photographs of every space to the listing. Offer an online tour of the property to draw in busy customers and also out-of-state investors.

Harness ingenious technologies, such as drone photography as well as 360 video clips, to offer buyers a complete photo of the residential property. Concentrate on distinctive components, such as colorful gardens, shining wood floors, as well as modern-day appliances.

Capture the home’s most phenomenal functions on film then share them on websites such as Pinterest, YouTube, as well as Instagram. Take a streaming video clip of the initial trip of your home to share survive Facebook. Discuss the property as if you are revealing it to buyers in-person. Bring them into the home virtually, so they intend to see extra.

Include An Incentive

A well-crafted listing highlighting the most useful facets of a home acts as a soft call to action. Add a time-sensitive declaration to the end of the listing, such as, “be the first to see this desire home and make an offer now.” Consider including a reward, such as, “reduced closing costs for a minimal time just.” Get people to act prior to they browse away to an additional listing.

Usage creativity and also good sense to write tempting local real estate listings that get noticed. Prove your worth to sellers quickly by developing a professional, well-written listing summary. Enter the customer’s footwear and provide all the information required to get them to act currently.

About the Author:  Antonio is just one of the most experienced realty advertising and marketing consultants on-line today. He runs the Real Estate Marketing Headquarters website where he develops the most effective of the most effective web content for those that are looking to dominate online. 18 years of realty investing as well as advertising and marketing is been shared with those who prepare to come to be # 1 in any kind of offered market.

Dealing with a salary cut off or losing a job or Living a good lifestyle are some common reasons for developing the second source of Income. These incomes are usually known as Passive Income also. While the earning from your job or self business is known as active Income.

How will the second source of Income help you?

• Helps you to increase your savings.
• Losing a job or pay cutoff situations can be managed easily.
• No need to worry, you can earn it even after retirement.

Let’s move further where many of us think that we have to bind for another part-time job to earn as a second source, but it’s not that much true. You can devote time as per your convenience, daily or weekly and still make a handsome income.

Now in the era of the Internet, it is simple to generate a second source of Income, you need a Laptop or Mobile phone and a Good Internet connection.

So, here I’m sharing with you the best sources, which I’m also using to develop another source of income besides my active income.

1. Freelancing: Freelancing is the most recommendable stream for the second source of Income. It merely means devoting your few hours in a day to earn by using your skills, hobbies. Here, you need to complete short term projects, and once you complete it, you will get paid. Many websites are there like Fiverr, which allow you to connect with people who will hire you for work and pay.

You can take freelancing writing work, software development, website designing, App development, SEO services, etc.

2. Online Tutoring: The education sector is a broader sector where you can teach someone at home, can associate with some institutes to teach or even the most suitable which parents prefer is to teach online. Online teaching demand is not limited to foreign country’s students but highly increasing in India as well. You can devote 3-4 hours daily or weekly and earn on per hour basis.

Apart from this, you can also create an online course or content which can be sold through the online platforms Udemy.com, Lynda.com or skillshare.com. You can make an insane amount of money by selling courses.

3. Blogging: You must have heard about Blogging, if not. Then let me tell you in simple language blogging mean writing about something. It could be anything like health, lifestyle, food and many more. However, one should have good writing skills and patience to earn a good income through blogging. Many people also opt for it as their full-time career and now earning lakhs of rupees in a month.

Not sure, how to start? Contact bloggers or content development companies, they hire you for work from home-based even and pay a good amount of money for your quality articles.

Moreover, those who are thinking to start it from your website, here’s the idea, if you can consistently create a lot of value for people with your blogs, and you can generate an unbelievable amount of passive income. Continuous posting of blogs will start bringing in traffic whether you devote any additional time or not.

4. Affiliate Marketing: This is an excellent way to earn passive income who has a website or blogs. Through an affiliate program, you can promote amazon, eBay, Clickbank products wherein case of every sale through your site; you will earn a fixed amount of commission.

It’s always best to sale those products you are either very interested in or one which is highly relevant to your website. This will genuinely help to build trust in the product.

5. Online Business: There is no doubt the tradition of buying and selling things on a store has been gone, and E-commerce has taken its place. Now, with the help of various E-commerce platforms like Shopify, eBay, Amazon, Flipkart, you can quickly start your business with little investment and earn a handsome side income along with your active income.
6. Write an E-Book: Higher efforts in your free time will result from you with higher income. Once you have written an excellent trendy e-book, you can publish and sell it on your website or at Amazon, kindly (highly recommendable platforms) and earn a recurring income for many years.

You can choose any of the alternatives depending upon your skills to generate a second source of Income. Opportunities are everywhere; you need to grab it before your competitor. Proper planning and experience of different types of passive income streams will never let you down at the time of recession.

Title Insurance, should you get it or not? Title Insurance is a type of insurance that most homeowners get when they purchase their home. It’s quite different from homeowner insurance or life insurance. Title Insurance protects the ownership of your home for as long as you own your home.

Why is Title Insurance important?

There have been many situations where individuals have lost their title due to theft. Here’s how it works. Let’s say you own your home, and your identity was stolen. Identity theft is when one person pretends to be someone else by assuming that person’s identity. This is most often done to obtain credit in that person’s name. Your identity can be stolen in several different ways. Some of the ways are a lost wallet with all your identification and your credit cards, unshredded mail, and inputting personal information on a fraudulent website.

Check out Susan’s story. What happened to Susan is very unfortunate. Her identity was stolen, and her title for her home was taken without her knowledge. This can happen to anyone. Here are some tips on how to protect yourself:

• Check your title annually to make sure no changes have been made – a real estate lawyer can check this for you
• Check your credit bureau periodically, you can obtain one free credit report at Equifax or Transunion. Look for any inaccuracies. If you discover you are a victim of identity theft, report it to the authorities immediately and to the credit bureaus to add a fraud alert on your file. Also, contact your banks and credit card companies
• Get Title Insurance with identity theft protection

First Canadian Title is one of the more popular title insurance companies in Canada. The price varies depending on the province, value and type of home.

First Canadian Title’s price includes the following:

• Fraud and forgery – protection against fraudulently registered mortgages against your title
• Duty to defend – the legal fees associated with resolving insured title issues will be covered
• Building permit coverage – coverage for renovations completed without a permit that result in a loss
• Zoning coverage – protection should a property not meet municipal zoning requirements
• Competing interests – protection in the case of someone claiming an interest in your land; for example, an easement for a driveway or a builder’s lien
• Problem-solving/facilitates closings – First Canadian Title will frequently provide coverage for known defects such as encroachments, delays in registration and zoning violations (these are directly from FCT’s website)

Title fraud can be a nightmare to deal with if you’re not protected. It is a shame that we have to think of protecting the title to our home. Whatever happened to just buying a home legally and assuming that the house is yours. I guess those days are over.

One of the things I feel guilty about is my wardrobe. Sometimes I feel like I am not “girly” enough because my clothing pile is very slim-especially now. If I were to examine all my shirts, I am pretty sure that almost half of them would be filled with holes. I am almost afraid to go into my closet right now because of what I might find. Despite this, I find myself feeling bad every time I think about clothing shopping. Maybe it’s because of the constrained budget I have just recently been under. Perhaps it’s my newly adopted minimalism. Maybe its because I have been feeling cheap lately. Whatever the reason, buying clothes has not been at the top of my list.

I used to be really into clothes. Never to an insane degree, but I remember being super excited to go shopping at least once a month or so. I would buy earrings, necklaces, fashionable tops, skirts, whatever I thought was cute and usually on sale. As old as the story goes, I look back on it as now as a way of trying to fit, especially in those all too important high school years. It all seems so silly now. There was more than one time where I felt like I had wasted good money buying things that I didn’t even like the next day or didn’t even wear. Looking at all that wasted money, it became one of the reasons for the catalyst for me being more careful with cash.

I think lately, though, I have been a little too over careful with spending money at least on spending on clothes. As referenced before, my closet has been looking rather sad lately, and I really can’t justify not getting some new stuff. My boyfriend has been experiencing the same thing as well. We both are looking rather raggedy these days. I think I am going to take my next paycheck and spend it on some much-needed clothes for us. With the credit card debt finally paid off, I need to put some effort into getting some much-needed clothing. Although I have resolved to do this, I feel this sense of guilt. It irks me a little bit that I feel like this when it is something I really need. I am going to have to get over it.

Have you ever felt guilty getting something that you needed? Have you ever felt like you needed to put it off even more?

I decided to write about something that has been on my mind a lot lately: charity giving. It is something fundamental to me, but it is something hard to do when you are on a budget. I wish I could donate hundreds of dollars each year to different charities that I like, but the truth is that it is just not possible. Right now, I give money to a few causes where I can. I know that I can donate more once my debt is erased, but until then, it is tricky.

My favorite charities are the ones that deal with helping animals or helping people get back on their feet after a tough situation (job loss, disability, etc.). I had also tried to donate my time, such as to the animal shelter when we fostered dogs. These things make me feel good, but I honestly wish I could do more. I guess it will just provide more motivation for me to kick this debt in the face and move on with my life.

We are still waiting to hear back from the new job for my boyfriend. He is going to call the owner of the company to see what is going on today, so fingers crossed. He has been getting steadily busier with the job he has now, so at least there is that.

We even had the chance to sell a few things over this past week. These things include some old appliances and an extra iPod we had leftover from our house (currently being rented). All in all, these items will help us clear another $600, which will go right into our savings account, of course.

Is your charity giving costing you?

I don’t know if other people get this, but lately, I have been feeling a little frustrated with the rate we are paying down debt. I know it took time for us to accumulate it, but it can be a bit disturbing at the time when I see that we have been working so hard, and there is still much to be done. I am trying to work on this.

I have been dying to take a trip to New York, but I know we must wait until the credit card is paid off. Maybe I will write a post about these nagging little feelings later. It does help to write it out. Anyways, we are going to a friend’s house tonight, which will be a helpful, inexpensive way to relax and socialize. Maybe that is what I need more than anything.

Market Capitalisation based index and its wide adoption as the proxy for the market has been controversial for several decades now. The opponents are right in saying that the market cap index keeps overweighting past winners and underweighting past losers. Yes, that’s the biggest drawback of a cap-weighted index. It is nothing but the aggregation of all the active bets in the market.

Buying a market-cap-weighted index is akin to purchasing the most significant bets placed in the market. If a particular stock increases in value, the market cap index assigns more weight to that stock hoping it would go even higher and when it does, it further increases the weight of the stock expecting it to go even higher and so on.

A straightforward consequence of that is the occasional huge drawdowns. In the US, the Energy sector was the largest in S&P 500 precisely at the start of the gulf oil crisis; the IT sector was the largest in S&P 500 precisely at the beginning of the dot-com bubble burst; the Finance sector was the largest in S&P 500 exactly before the 2008 Financial crisis and as of today, it is all about the FAANGs and IT again – I am not speculating here; just saying the mechanics of how a market cap index works.

If it is that bad, then why is it considered the benchmark and why is it so difficult to beat such a stupid benchmark by some of the smartest intellectuals on the planet? Well, to be regarded as a proxy for the market, any portfolio must be capable of accommodating every single investor in the universe. All individuals, institutions – everyone should be able to hold the same portfolio at the same time.

A cap-weighted portfolio is the closest that can hopefully accommodate such a hypothetical situation and no other portfolio comes even remotely near-universal holding. For instance, every investor in the world can’t hold an Equal Weighted portfolio. In other words, despite all its drawbacks, the market-cap-weighted portfolio is the only macro-consistent benchmark available today.

Why is it difficult to beat? Let’s see. If we take every single security in the market and cap-weight them, we get the market index. Similarly, if we aggregate every single active bet in the market or every single active manager in the market (passive managers are already the market) by the size of their outstanding values (AUM), we should get the market. In other words, an average active manager (includes active managers, individual stock pickers, entrepreneurs, everyone who is not passive) should produce zero alpha. That’s not bad. I am not choosing an average active manager, but a smart one; extraordinary; above-average one.

Here is the catch.

A mediocre manager produces zero alpha before trading costs and management fees. Once all the management fees and expenses are accounted for, an average active manager underperforms the market precisely by the average prices and costs. The probability of finding a good manager is no longer 50-50 but significantly less. It is still not zero, though. You can even find some managers beating the market, and I am confident many of you can come up with several names.

However, studying long track records of the active managers, finding a consistently outperforming active manager for the long term is minuscule. So many researchers have documented this. So keeping track of whether your supposedly good manager is still good is a massive headache and introduces an additional problem – Manager Selection.

Once again, there has been documented evidence, the even sophisticated institutional investors are terrible at manager selection. There is a high probability of committing Type I (false positives – hiring a bad manager) and Type II (false negatives – firing a good manager) errors.

What about those small-cap funds that were consistently beating the small-cap index? The consensus is that for large-cap exposure – indexing is the best, but for small-cap exposure as there is still some alpha left in that space and active managers are doing well consistently. How are we so sure? Let me introduce you to the world of factor investing and address the second biggest criticism of the cap-weighted indices.

Ever since the introduction CAPM (single market factor model – I am sure most members of AIFW must be aware of it given the frequency of the model being used by Pattu sir in his videos), there have been well-documented anomalies in the market. A specific set of factors (Small-cap, Value, Momentum, Low Volatility, Quality) produce CAPM alpha over a very long term. These market anomalies once considered as market mispricings were so persistent and pervasive and led researchers to take a risk-based approach.

It was proposed that Equity risk is not solely consistent with Market risk but these additional risk factors and so the extra returns are merely compensations for these extra risks. It is still a widely debated subject lacking broad consensus. However, one interesting study by Ang et al., 2009 on Norwegian Pension Fund found that the exposures can explain all the CAPM alpha (good and bad) of the active managers to these additional risk factors. Thus born a new industry called factor investing. A very cost-effective systematic way of exploiting these extra risk factors became so popular in the Developed World with the number of ETFs on track to exceed the number of stocks shortly.

Why am I saying these?

When we say active small-cap managers comfortably beat the benchmark, do we have some evidence whether is it skill based alpha or is its exposure to these documented additional factors? Small-cap fund manager with a Value tilt or momentum or Low Vol tilt could outperform a plain vanilla small-cap index. If that’s the case whether the 2% fees is justified?

Has anyone or any study attempted to answer this question?

It is a genuine question out of curiosity. I don’t know much about the Indian AMC industry.

If you haven’t fallen asleep by now, please give your comments – supporting or opposing – it doesn’t matter – just please be polite and respectful.

Having your own home is the most expensive purchase and in the ordinary person’s life, it is usual to take a loan for the funding your home. However, there could be the chances that one might get stuck somewhere due to the shortage of funds and not able to pay EMIs of Home loan. There could be several financial crises including loss of job, illness, some medical emergency, etc.

“But if you continue in defaulting to pay EMIs, Bank would seize your home and auction it in the market” This statement creates tension and make you panic because the reality is you are legally bound to pay off your loan.

So, No one wants to let such situations arise. Although, if you treat such situation carefully, it might never arise.

Now, the question is how to treat with the situation when you can’t pay your home loan EMI?

Don’t worry! Here I’m going to share with you the practical options available to come out from this problem, all you have to do is to take initiative:

1. Negotiate with your lender: Your lender is the first option to help you. Yes, Contact them, arrange a meeting and explain your genuine situation that why are you not able to pay EMIs. Take the active step before the issue arises. It would be beneficial if you could take your all loan documents to show them that you have a good past record.

As a genuine borrower, you will be able to convince them to pay your loan as soon as you can as were paying earlier EMIs on time, there are high chances that lender will allow you some time to pay EMI.

2. Restructure your loan: Sometimes situations arise when EMI is too high, due to an increase in interest rates or might be some other temporary financial problems and you are not able to pay such a huge amount of EMI.

In such cases, you have an option to restructure/reschedule your loan. Here, the bank reduces the amount of EMI and increase the tenure of the loan period. You just need to approach the bank with the relevant documents and convince them that the problem is temporary and would be resolved soon.

3. Grace Period: When you are in shortage of money for some time like you have lost your job but sure enough to get another one within few months and will be able to repay your EMIs again time, you can approach your bank for deferral of your payments.

Bank will help you to grant some relief by allowing you a grace period and you can start repaying your EMIs after some time as discussed with the lender. However, it should be noted that with the deferred payments you need to pay late payment penalties (Delayed payment charges).

4. Lump-sum settlement: If the crisis is too deep and you feel that there are no chances of any improvement in your financial status in the near future, you could go for a Lumpsum (one-time) settlement.

Here, you have to negotiate with the bank and the bank settled the case by taking the lump-sum amount from a borrower but, for this to happen, you will have to negotiate with the bank and convinced them.

However, you should be careful that settling your loan would get reflected in your credit report and could create in the problem while looking for another loan in the future.

5. Liquidating your Investments: In case you are not able to negotiate with the lender or the cash inflow problem is regular, you have the option to liquidate your investments such as Fixed Deposits, Mutual funds, etc. which will help you to pay your EMIs and save you home.

Conclusion: You are not the single person who faces the challenge of paying EMIs on the due date and the bank knows well how to help you out when you stuck in such financial problems. Therefore, banks are always with you to deal with it but you have to take a step before the situations get worse. So, they were few effective ways to deal with a problem of not able to pay EMIs, which eventually bank allows.