Engineer's Finance

I was asked a question regarding is it worth to buy insurance products coupled with the investment option. My answer was and is “NO”. I don’t like the idea of combining products. I prefer either to have insurance or investment and not both. I was thinking over this for a long time and here is my analysis towards it.

Insurance is a tool to leverage your risk and investment is a method of making your money work hard for you and it is risky you all know that. Now combining both the products means you are actually leveraging your risk by putting your money at risk. How can that happen? Does it make any sense? Most of them think it makes sense but according to me it is not a good option at all. Continue reading →

I accidently hit upon this article and it was simply superb. Read it.

http://www.vanityfair.com/culture/features/2006/05/grafter200605?currentPage=all

In this article you will find that an average salesperson who sells peelers makes huge amount of money that he lives in one of the posh apartments in Park Avenue. I always wanted to build a house in Park Avenue in Monopoly game since it gave me the highest rent. I can imagine if one lives in a 3 bedroom apartment in Park Avenue how much money he should be making. Continue reading →

Insurance is a very powerful tool used to leverage the risk. It is a very good approach to always insure against unforeseen conditions.

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium.

Insurance is a very simple tool and one has to give importance to it. I was thinking about it lately due to my friend, as he was telling me that it was good for him since he had a health insurance which covered him and his parents and when his mom was ill it helped him. There are various insurances for the needs of the people. I am not getting into the details of it. All that I want to emphasize is that it is good to have one and to make you think in those lines as to why insurance is needed or is it really worth it? Continue reading →

I was thinking over the usage of Credit Cards. It is really a wonderful tool if we use it to our advantage. Since we screw up most of the things in life, Credit Cards adds to the woes. I would like to suggest few things about its usage and certain precautions of using it. Here it goes:

1. I would advice “You” to have at least two credit cards. The limit of credit should be equal to your current salary and other card should be less than double your salary. Ensure that both your cards does not have any annual charges or some other hidden charges. These should be free.

2. When applying for Credit cards, ensure that you get at least 50 – 70% of your credit in Cash. That means, if your credit limit is Rs. 20,000 then you should get at least Rs.10, 000 as cash from the bank’s ATM or branch.
Continue reading →