The Financial Book

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Wally: A simple way to manage your money

We don’t think once to spend money on anything or everything, admit it! We barely keep track of our monthly expenses. When we get our pay-check at the beginning of the month, without thinking twice we over spend at by the month end we are on debt and the important part is we don’t even remember on what product or services we spend our money. We all been going through this situation, but with advancement of technology and simple discipline we can easily overcome this situation. Things we need to keep track is after we received our pay-check, we note it down & they stared spending on our bills, essentials thereafter. We need to track our spending on a daily basis. Make a habit to note every spending in your day to day life, this will not only help you track your money but also you can save a lot. After you make a very good habit of tracking your money, next time you can see your notes that how much balance you left and how may days to go for next pay-check. This way you can lead a better life & as well as peace of mind. This is what we call “Spending Tracker”.

Now you can also argue that who has time in our busy schedule to note down every thing we spent daily, we have lot others work to do. But let me tell you some facts on a daily basis an average person stare on their phone screens for 4-6 hrs, So I hope you can manage few seconds here & there if you are really wanted to save some bit of money. There are many Spending tracker app you can find on App Store or Google Play store. But the app I would like to recommend is Wally. Its available on both Apple App Store & Google Play Store. Real simple to use & it’s a very minimalist app. Just put your amount & select the category your done, you can also review your monthly overview of your spending. Its present you with even pie chart format for better understanding. Some sample screenshot is given below. You can also visit our YouTube Channel to watch the full demo & usability of the Wally app.

Disclaimer: Recommendation of the app is not sponsored. This is my personal experience sharing with you all.

Android: https://apk.support/download-app/me.wallynext.android

iPhone: https://apps.apple.com/us/app/wally-smart-personal-finance/id1178011327

YouTube: https://youtu.be/Kqxw1J5oYJU

Featured

Want to be Wealthy?: Start investing early!

Hello, everyone today I am going teach you how to become rich as early as possible in your life. There is no magic formula. Everybody wants to be filthy rich in their life, but nobody seems to know how? What is the way? Some would say work hard, other would say work smart! But what exactly should be done! So before moving forward I would like to give you a brief introduction about “Investment”.

A common person does his/her savings from the monthly income but never invest and sometimes they would end up with an excuse that they are unable to save as their expenses increased. The common formula of savings, we all know:

(Income- Expenses)= Savings/Investment

But after reading this articles one should try to apply this in a different way:

(Income- Savings/Investment) = Expenses

So, I would suggest try this from now. A common man could see the difference instantaneously in their life & are able to save more than previous and can see how they have also cut down their expenses. So how is saving money is different from investing money, and how it is important in our life. “One of the main reasons investing money is important is that it helps to create more money, as opposed to just saving money in a bank account”.

Now that everyone have understood what is investment, let me speak about how investing from an early stage will help to create wealth more and more than ever before. Hence I would give some reason how early investment can help:

Time allows you to take risk: Typically, when it comes to investing, ventures that are more volatile yield the highest return on investment. Investors, who have the time to recover if something were to go wrong, have the opportunity to make riskier moves. Those who begin to invest late in life are often inherently more cautious with how they invest their money.

Compound interest will make the difference: Essentially, compound interest is the interest earned on interest. By continuously reinvesting your earnings, you are exponentially increasing your return on investment, continuously reinvesting your earnings, you are exponentially increasing your return on investment. Let us understand the power of compounding with a simple example:

See the difference both are of same age, one started early and the other delayed. Ram who started investing early has a retirement value of 9cr and Sham who started investing at his later stage has a retirement value of 2.5cr. This the power of compounding.

Your spending habits will improve: Investing early allows you to develop disciplined spending habits by focusing on your budget and cutting expenses when needed. The goal here is to earn money by saving money.

Be a step ahead: Compared to your counterparts, who may have chosen to invest later in life, over time you will be able to afford things that others can’t.

Your quality of life will improve: Early investment will reduce the risk that you’ll be forced to make reckless choices to secure a stable retirement.

Hence start investing early to get retirement benefits early.

Telehealth care Industry: Reincarnation of Healthcare

The Corona Virus pandemic has changed the life we used to live. Things are not similar anymore. Several industries and companies have been drastically impacted. Companies and industries have been trying to cope up with various business models to sustain in this economy. Industries like Airlines, Restaurant, and hotels industry have suffered the most due to new norms of living of social distancing and cross-country restrictions. But the industry which is under huge pressure to serve under these new-normal conditions is Healthcare. This industry has gone through a lot of changes. US Healthcare system has acquired new ways to treat patients with proper medical facilities. At the beginning of this pandemic, the US Healthcare system was at its break, we even saw new headline Hospitals shutting their doors as they were unable to treat the huge number of patient footfalls in hospitals and other small clinics. Doctors are finding new alternatives to treat their patients. People are still falling sick not only due to Covid-19 but also due to various other diseases or injuries. Doctors are now broadly using Telehealth care/ Telemedicine services to treat their patients. This term can be defined as “Use of electronic communications and software to monitor and treat patients without patient’s visit”.

According to IBIS World research suggested that the Telehealth services had grown 34.7% annually from the period of 2014-2019. The market size in 2019 was $45B and it is projected to grow by $175B by 2026. Despite an increase in revenue in this segment Americans were not quite using the service until the novel coronavirus pandemic hit in early 2020. But now doctors suggest more patients visit the telehealth care services more, for example, if 20 patients are visiting the clinic, 50-60 patients are taking the telehealth care service. So, we see a major change in consumer mindset where social distancing is a new norm of our normal life. Patients are more willing to opt for the telehealth service and Hospitals and Healthcare companies are adopting this service which is making changes in their way of treating and monitoring the patients and ensuring the safety measures.

US Government is also encouraging the service as in March it decided that users can opt for this service without any extra cost and private health insurers also have to settle in full. This gives a boost to this industry as well. Major tech companies are partnering with various healthcare companies to provide necessary services to both users and companies eventually boosting this industry. There are various companies which can get benefited from all these factors, this is a major shift in the Healthcare industry, and companies benefitting the most are Teladoc (NYSE: TDOC); American Well (Amwell) Healthcare company.

Teladoc Healthcare, Inc

Teladoc Health, Inc. provides virtual healthcare services on a business-to-business basis in the United States and internationally. It covers various clinical conditions, including non-critical, episodic care, chronic, and complicated cases like cancer and congestive heart failure, as well as offers telehealth solutions, expert medical services, behavioral health solutions, guidance and support, and platform and program services. The company’s platform enables patients and providers to have an integrated smart user experience through mobile, Web, and phone-based accessed points. The company revenue has grown quite significantly over the past few years, which is shown below:

Though the company is still not making its profits yet there is huge potential to grow, seeing the revenue growth. The company’s EBDITA has also improved form ($62,848) in 2016 to ($35,490) in 2019, we could see the company reporting its profit by end of the year 2021. We are expecting the company to perform well given the current situation and the change in our mindsets. We except the stock to perform well as soon the company starts making profits, so we may see a huge upside rally. An investor can buy this stock for the long term with Buy and Hold strategy. [Credit Suisse has given a good rating in its reports Top Ten Companies to invest in 2020].

American Well (AMWELL) Healthcare

Similar to Teladoc, Amwell is also is into telehealth services. It is a privately held telemedicine company based in Boston. The company operates in all 50 U.S. states and works with 55 health plans, which support over 36,000 employers and collectively represent more than 80 million covered lives. Amwell raised $500M till now and is planning to raise $560M through IPO. According to S-1 filing with the SEC (Securities and Exchange Commission), the company aims to sell 35 million shares with a price band of $14-$16 per share which will bring gross proceeds of $490-$560M. In the first half of 2019, Amwell’s revenue was $69 million, and that jumped 77% to $122 million in the first half of 2020. Though the company is in a loss like Teladoc we expect IPO could also have a major listing gain and investors can hold the stock for the long-term.

Source:

https://www.sec.gov/Archives/edgar/data/1393584/000119312520228478/d943395ds1.htm

https://www.fiercehealthcare.com/tech/amwell-prices-ipo-at-up-to-560m

https://www.ibisworld.com/industry-insider/analyst-insights/the-current-state-of-the-telehealth-services-industry

https://en.wikipedia.org/wiki/Amwell_(company)

https://in.finance.yahoo.com/

https://www.cnbc.com/world/?region=world

Netflix & Chill!!!

Entertainment industry has undergone huge transformation since last decade and NETFLIX’s success is the proof of this evolution. NETFLIX has become very common in North America; consumers are ditching their DTH services and subscribing to NETFLIX. But surprisingly, majority of subscription of Netflix is not from North America. It has subscriber strength of 58.5 million in U.S whereas 78.6 million in rest of the world. Netflix revenue for the quarter ending December 31, 2018 was $4.187B, a 27.42% increase year-over-year. The net income for the twelve months ending December 31, 2018 was $1.211B, a 116.71% increase year-over-year but the quarterly net income declined 27.8% on year-over-year basis.

The company has gained enormous publicity worldwide(expanded over 190+ countries) but the North American giant NETFLIX is facing difficulties to get foothold in India. As per analysts India’s video streaming services market is expected to grow at $2.3 billion by 2023. But Netflix is not getting their piece of pie in this market. This is largely due to local competition and pricing issue over the other video streaming services.

Both Netflix and Amazon Prime video were launched in India in 2016. Thanks to the drastic drop in wireless data prices, these video streaming companies have grown faster in India than expected. Streaming services which were considered as luxury suddenly became more appealing to Indians. India is the second largest internet market after China that’s the reason more than 180+ video streaming services have launched in India over the past few years.

Hotstar, which streams everything from local channels to exclusives shows like Games of Thrones, is leading the market with 70% market share. Sony Liv holds 13%, Voot holds around 10%, Amazon Prime Video holds 5%(which also gives access to Amazon Prime music and Amazon Prime customer facilities), and international star Netflix has earned 1.4% share only.

Major hurdle is price sensitivity of Indian market. Hotstar offers its premium service at Rs 99/month, Amazon Prime video is offering at Rs 129/month whereas Netflix is offering at Rs 500-625/month. Hotstar also holds streaming rights of majority of IPL tournaments. Facebook had also offered $600 million to get digital rights of IPL but lost the bid to Star Network (parent company of Hotstar). Indian consumer has hunger for local content which Netflix fails to offer such local content. Netflix cameto India with a big bang, streaming their most popular exclusive shows like House of Cards & Narcos(Home production of Netflix) but failed to win the hearts of Indian consumers, but recently Netflix has brought local exclusive contents like Sacred Games, Ghoul, etc which were a big hit and this has increased their paid subscriber base in India.

But even with good quarterly result (Q4 2018), Netflix could not impress the investors and shares were down by 4% after announcement of results. Investors were expecting more than strong subscription upside. The company expects domestic and international paid subscriber addition of 1.6 million and 7.3 million in first quarter of 2019. We see 20% upside over next 12 months using a long term earnings valuation framework and subscriptions are expected to reach around 300 million by 2026 end. So the market price can be estimated around $700 by 2025(Current Market Price on 13 February $359.97). Netflix’s growth story is incomplete without its viewers and its future depends only on Consumers’ gratification.

IPO: How to apply?

Continuing inflationary pressure has surged the equity market investment as equity shares deliver higher rate of return as compared to other havens. However, the investors have faced many complexities in understanding the equity market. We have tried to make the concept of equity shares a cakewalk through our YouTube videos, just click on the link to get the elementary knowledge of Equity market:

What is a Share? Why should we invest? (link)

Benefits of owning a share!! (link)

In order to be able to invest in share market in India, the following procedure is need to be followed.

Investor has a choice of timing for investment in equity shares, firstly when the shares are issued to the public to raise capital and secondly when these shares are traded on the stock exchange. The primary objective of investing is to buy the shares at low price and sell at a higher price. If a stock promises potential future growth and is under-priced in comparison to it’s book value during its Initial Public Offering (IPO), then it is most profitable time to buy the stock.

A common investor can apply for an IPO of a company in following procedure:

The first step is to choose the IPO that applicant wishes to apply for. One can find the list of upcoming IPOs on Securities and Exchange Board of India’s (SEBI’s) website. The best way to decide is by going through the companies’ prospectus available on SEBI’s site. The prospectus gives a fair idea about the company’s business plan and its purpose.
After the selection of desired IPO, investor has to ensure sufficient funds in his or her account.
A Demat account is a prerequisite to apply for an IPO. A Demat account is nothing but a facility to store your stocks and financial securities electronically. The account can be opened by submitting your PAN card, Aadhaar card, address and identity proofs.
Now, IPO can be applied through Trading or bank account. Sometimes trading, demat and bank accounts are clubbed together by the banks for better facilities. Applicant needs to bid while applying for shares, as per the lot size mentioned in the prospectus. Lot size is the minimum number of shares applicant has to apply during an IPO.
The company usually sets a price band. The upper limit is known as the cap price while the lower is called floor price. Applicant has to bid for shares in this price range.
When this application is submitted, applicant’s account doesn’t get debited until shares are allotted to him or her. During the IPO process banks are authorized to block the amount of application in applicant’s account as per ASBA (Applications Supported by Blocked Amount, a process developed by the India’s Stock Market Regulator SEBI for applying to IPO).
If the applicant gets full allotment then he will receive a Confirmatory Allotment Note (CAN) within six working days after closure of the IPO process. On the other hand if the applicant gets fewer shares than he had applied for or fails to get allotment then bank will unlock the bid money (in part or full).
Final step is to wait for the listing of shares on stock exchanges, which is done within seven days from the finalization of issue. After the listing investor can either sell the shares (partly or fully) or keep his money invested in that company.

US Markets Falls when Economy is at its Peak, Why? Is it a good time to invest?

In recent times, we have seen biggest correction in the U.S. market since November 2016. On 3^rd Oct 2018, Dow Jones made a life-time high of 26,952 which was appreciated by the President Donald J. Trump in his tweet, “The Stock Market just reached an All-Time High during my Administration for the 102nd Time, a presidential record, by far, for less than two years. So much potential as Trade and Military Deals are completed.” But index couldn’t digest this hike and within a month of its life time high, on 29^th Oct 2018 its slipped more than 11% & made a record low of 24,122. Same goes with other major indices Nasdaq composite and S&P 500. As the market went down, numerous reasons came into lime light, rising bond yields, fears of escalating tensions with China over trade and third time rate hike by Fed. All these factors come into the picture after the incident has taken place. These are news driven factors but what about the economic conditions of the country?

On contrary to the blood bath in the market, the US economic data had shown strong set of numbers during this quarter. Corporate earnings were good, US quarterly GDP growth rate made a high at 3.5%, Unemployment rate was also at its all-time low of 3.7% and Inflation was around 2.3% and the US currency also became strong. This leaves common investor wondering, if the economy is doing well then stock market should also follow the suit. No, not necessarily, before explaining this point we would like to point out that there are two types of information available in the market:

The information for the masses
The information for the classes

For investing in stock market, we need to follow information for the classes, not for the masses. Media will always try to show you the bad picture of everything & will always try to confuse you. “The masses” believe that “if the economy is doing better, so the stock market should also do better too.” But learned investors say “An ‘economist’ is a trained professional paid to guess wrong about the economy.” The Oracle of Omaha, Warren Buffet doesn’t think about the economic numbers while investing in stocks, he always looks for the company growth rates & earnings. There is no correlation between the economy and stock market because former is macro concept and latter is micro. Peter Lynch, famous stock market investor & money manager has said; “If you spend 13 minutes thinking about economic forecast, you’ve wasted 10 minutes.” Now let’s look out the crash of 2008.

In the above chart you can see that in 2008, when market crashed, US economic data showed that economy was doing really well. But in reality, it was in a bubble situation, & finally the bubble burst. After that in 2009, the market was trading at all-time low. There was blood all over wall street, no one wanted to invest in stock market. The Great Recession spread depression & pain among the investors which forced them to dump their stocks. Unemployment came at its highest level and suddenly just after a year of good economic data economy was doing worse. GDP growth rate fell to record low.

But to everyone’s surprise the market went up by 60% in the end of that year itself. Who was buying stocks at that point of time and why? The Insiders were buying at that time, the people who follow information for the classes not for the masses. They are the big shots investors, institutions like Goldman Sachs, J.P. Morgan Chase etc. It’s a fact that only 20 large funds do the world’s 80% trading. They have between 50-100 billion USD under management. These institutions employ the smartest people in the world to analyse the future economic trend because stock market is forward looking and we can anticipate the upcoming economic scenario with stock market reaction. The moment any data is released, the market has already reacted to it. That is why investors like Warren Buffet are always ahead in the game. Hence, the best time to invest in stocks market is when everything is bad. When nobody wants to buy, they buy & vice versa because at that time you can get the shares of really profitable companies at discounted prices. Always remember what the American Oil tycoon, John D. Rockefeller had said, “The way to make money is to buy when blood is running on the streets.”

Research work done by Soham Sharma & Sweta Sharma, Founding members of The Financial Book.

Editor: Sweta Sharma, writer & Editor in Chief of The Financial Book.

Data Source: Bloomberg, Investing, CNBC Network.

Fixed Deposits Or Fixed Income: Choose wisely !!!

Debt Market: India

There are two kinds of investors in the market one is risk-taker & other is risk-avoider. The Risk-taker (Aggressive Investor) always makes investment in risky instruments like equity for instance & end up making either huge profits or huge losses. But those who are risk avoiders (Conservative Investors) always choose an option which is least risky. India is a risk averse country especially when it comes to investment and hence most of the investors park their funds in Fixed Deposits due to its least risk feature. But there are various debt instruments which Conservative Investors can opt for, to earn higher returns than FDs.

Before proceeding further let us explain; “What are Debt instruments?”; Debt Instruments are obligation of issuer of such instrument as regards to certain future cash flow representing Interest & Principal, which the issuer would pay to the legal owner of the Instrument. Today let’s discuss debt investment opportunities prevailing in India:

Bonds: It is a debt instrument which is simply called “IOU”- I Owe You, in which an investor agrees to lend money to a company or government for a particular period of time in exchange of pre-determined interest rate. Various types of bonds issued in the market are – Government Bonds, Municipal Bonds, Institution Bonds, Corporate Bonds. Each bond has different risk & return involved in it. For example, Government bonds having sovereign rating (backed by Government) have the lowest risk & lowest return. On the other hand, there are corporate bonds which may vary in terms of risk return depending upon financial health of company.
Debentures: These are similar to bonds but they are mostly unsecured loans unlike bonds which are secured & backed by assets of the company. Simply put, debenture is a long-term debt instruments used by Government or large companies to obtain funds which are not secured by the any asset. These instruments are little riskier than bonds as they are not backed by any lien of assets. There are some more differences between bonds & debenture which you can read from our earlier blog; https://financialbook.in/2017/05/09/bonds-vs-debentures-whats-the-difference/
Commercial Papers (CP): CPs are also unsecured money market instruments which are issued in form of promissory notes. These were introduced in India in 1990s & are used for short term borrowings by the companies. Investment is done in denomination of 5 lakhs or more for a duration ranging between 15 to 365 days.
Certificate of Deposits(CD): CDs are financial products usually issued by banks, institutions or Credit Unions. These are regular term deposits often for 3 months, 6 months,1 year & 5 years having fixed interest rates which are usually higher than the rate offered by banks on Fixed deposits.
Government Securities: Commonly these instruments are known as G-secs which are issued by RBI on behalf of Government of India. These include Central G-sec, State G-sec, Treasury Bills. These are mostly issued in face value & do not carry default risk as they are sovereign rated. Maturity ranges from 2 years to 30 years. There is no TDS as well.
National Savings Certificate: NSC is a fixed income long-term investment. It is issued by authorized post offices with a rate of return of 8% for maturity period of 6 years. It needs minimum investment of 500 and there is no maximum limit. Its also qualifies for deduction u/s 80C. There is no TDS also.

These points have already highlighted that investment in debt market is much better than the fixed deposits. So rather than going for FDs investors must evaluate the profits that can be earned from debt instruments without using aggressive investment techniques.

IL&FS: A tale of Bankruptcy & Reincarnation

Another detrimental incident took place in Indian Financial market on Aug 28th when IL&FS, an infrastructure project finance company, defaults on repaying a few hundred crores on their commercial paper but manages to pay the same after 2 days, but later again on month of Sep IL&FS which has borrowed ₹91,000 crores earlier had defaulted in repaying debt on maturity. Speculation of illiquidity created tremendous panic resulting in continuous fall of Indian Indices. Surprisingly, a major loop hole of credit ratings came under scanner of Government as debt instruments of IL&FS were rated as AAA, AA+ etc. in the past couple of months. IL&FS filed an application with the NCLT (National Company Law Tribunal) seeking insolvency cover for itself and 40 other group of companies which was later approved as per Sec 230, Companies Act which will help IL&FS to raise capital from the market & to sell some of its assets for debt repayment. On 30^th Sep 2018, a board meeting took place in IL&FS where Mr Hari Sankaran, VC & MD, IL&FS mentioned few points mentioned below:

Outlines of group restructuring plan in a comprehensive manner.
Appointment of a specialist agency to take the plan forward
To implement asset monetisation plan.

On 1^st Oct 2018, the government took over the control of IL&FS after getting approval from Insolvency & Bankruptcy court in Mumbai. NCLT allowed government to form a new board & asked for a plan to be submitted by 15^th Oct 2018 to get out of the debt trap.

Today, On 4^th Oct 2018, the new board was formed which will be headed by Uday Kotak (CEO & MD of Kotak Mahindra Bank) as Non-executive Chairman, along with five others Girish Chandra Chaturvedi (ICICI Bank Chairman), GN Bajpai (former head of SEBI), Vineet Nayyar (Chief of Tech Mahindra) & Malini Shankar & Nanda Kishore (former IAS Officers). The new board members positions are given below,

Source: Bloomberg

The new board has shown concern over the complexity of 348 IL&FS entities. The quantum of debt obligations by the company is enormous; the board is looking into to all the secured, unsecured and even off-balance sheet financing raised by the company. This will be the first private company to be rescued by the Government since Satyam Computers in 2009. Meanwhile Mr. Kotak has addressed the press:

“We will be talking to shareholders at an appropriate time. The current focus today was much more about operating under NCLT process. At the same time taking more immediate steps which needed urgent attention of a board with an open mind”. – Uday Kotak, Non- Executive Chairman, IL&FS

Revival plan for IL&FS, India’s giant project finance company are on its way by the new board members & we have positive expectations for that.

Source:Bloomberg, Moneycontrol

Musk’s Tweet cost $40 million to Tesla

Tesla, an automotive brand, manufacturing electric vehicles (EVs) enlisted itself in the list of top most automakers within few years of its debut. Surprisingly, this Silicon-Valley based company became competitor to big fat companies like GM, Toyota, Honda, Ferrari and Lamborghini. Though its last year’s sale of 101,312 cars was almost equal to the single car model sales of Toyota, it created much hype with just few car models in the market through a completely different perception of Electric Vehicles by manufacturing high prices & smart models of E.Vs.

Recently, GM, Ford, Cadillac have come up with good number of EV models with timely delivery to customers unlike Tesla which is having issues in such competitive condition. In such problematic scenario CEO of Tesla Elon Musk landed himself and company in trouble with his tweet, “Am considering Tesla private at $420. Funding secured.” Tesla shares jumped by 7% on the day after the tweet.

The genius who is revolutionizing human transportation was sued by SEC (U.S. Securities and Exchange) for manipulating the stock market. His unprofessional and unethical behavior instigated SEC to bar him from serving as an officer or director of a public company. Replacing Musk would have been nightmare to the company since it does not have the next generations of managers and operators to carry on the business which means the new CEO had to be completely outsider. The Board could not take such a huge risk since market cap fell by 14%, or $7.8 billion, following news that the SEC had launched a civil fraud case against Musk and any change in the Board would have been addition to this bad news.

So, Musk had reached a settlement with the SEC that will require him and Tesla to pay a $20 million fine each, step down as chairman for three years and appoint two new independent directors, but allow him to remain CEO. The stock price surged on Monday after the news and the investors are hopeful that settlement will bring about significant improvements in the company’s corporate governance practices. It has met targets for quarterly car production a huge relief at Chief Executive Elon Musk’s settling of a lawsuit with regulators.

We are still bullish on Elon Musk & his Tesla to continue doing great progress in future.

Buying your dream Home? Just Wait….

In this world, every working individual would like a have their dream home one day. They work hard in their life to buy a house in their life & they say “this is my biggest asset”, Well somewhat they are true. But ever wonder if it’s really worth it or not. So, let me start with the definition of an asset- “Something valuable that an entity owns, benefits from, or has use of generating income.” Ask yourself, does it fulfill the definition of your home?

Is your home a valuable entity or the land? because the value of land will appreciate overtime not your home!

What benefits do you get form your house other than shelter, which you can easily rent out at much lower cost than your monthly EMIs. Still you don’t have to lose out from your life savings for the down payment of your home?

Is your own home generating any income? Unless you are renting it out! Which most people don’t. But apart from paying your big buck EMIs, you pay taxes for your property, repair & maintenance every now & then.

So, your biggest asset now seems to be your liability?

Study suggested that almost 70% of millennial regret after buying their house. Here is what expert says: “Millennial are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face,” says Ryan Bailey, head of Bank of the West’s retail banking.

Reason behind the regrets:

Reason 1: Overspending on down payments of the house. The survey found one in three millennials dipped into their retirement accounts to pay for their homes.

Reason 2: Underestimating going cost. When you buy a home, the expenses don’t stop once you move in, Millennials understand basic costs, such heating and electric bills, insurance etc. Also, when you’re a homeowner, you can’t call your landlord to fix things, so you want to make sure you have a little extra cash in the bank.

Reason 3: Settling for something that you don’t like. Most common is when a home buyer buys a house far from the city reach just have an own house because buying house in posh locality will cost more so they settle far away. This regrets a lot because daily commuting would not be easy.

Hence, buying a house always seems pleasant but be aware of the facts & consequences. Happy buying houses!!

Source: CNBC, Bank of the West,

Global Oil Prices are skyrocketing! Why so?

Last time, when the oil prices are such high was on 2013-2014. But why again the oil prices are high? Let’s break it down from the beginning. For the past few years we are seeing something rare in the oil industry, a boom in oil productions. This is due to large part of that The United States of America has find out a new way to extract oil from the earth. Due to this analyst started predicting that U.S will leave behind Saudi Arabia as the largest oil exporter by 2020. This also lead to several other major oil exporter increases their productions, The Organization of Petroleum Exporting Countries (OPEC) increase their production by 3 million barrels per day, mostly coming from Iran, Iraq & Saudi Arabia. This was all in the period (Nov 2104-2016). Suddenly Petrol & Diesel have became cheap in 2016. Things started to change when OPEC teamed up with Russia & agreed to reduce global supply of oil. Today hike in oil prices are due to political instability in the global markets. Like Venezuela slow economic collapse hit the oil productions in that country eventually effecting the global supply of oil. In 2104 Venezuela produce 2.5 billion barrels per day, since then it falls to less than 1.3 million barrels per day. Also, military clashes in Libya disrupted the oil productions drastically. The major reason behind this would be Donald J. Trump who withdraw the nuclear deal with Iran, also some of his policy changes to various countries lead to trade war. The Trump administration seems to very aggressive in these situations from the beginning which indirectly leads to such high oil prices. This means the oil producer will charge more from us. From the economic point of view, we have just entered the 10^th year after the last recession happened in 2008. In general, these recessions happen when the oil prices have gone high. It also happened in 1981. What does it mean will there be another recession in the market? Well it’s very soon to comment.