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Complete Financial Plan for a 35-year-old working professional Indian middle-class adult.
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
Some assumptions ~
🔹Since he has been working for > 5 years, he must have saved enough to cover his emergency needs. (approx. 6 months’ salary equivalent amount in FD)
🔹He must be married & have kids by now.
🔹He must have availed housing loan.
🔹Since he has been working for > 5 years, he must have saved enough to cover his emergency needs. (approx. 6 months’ salary equivalent amount in FD)
🔹He must be married & have kids by now.
🔹He must have availed housing loan.
1. STUDY YOUR INCOME & EXPENSES
This is the 1st step in starting your financial journey.
Study your expenses.
Where does your salary gets spend? Enlist them in a table under headings like -
EMI
groceries
eating out
clothing
utility bills
SIPs
policy premiums etc
This is the 1st step in starting your financial journey.
Study your expenses.
Where does your salary gets spend? Enlist them in a table under headings like -
EMI
groceries
eating out
clothing
utility bills
SIPs
policy premiums etc
Complete Financial plan for a 25-year-old working Indian urban youth.
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
1. EMERGENCY CORPUS
As soon as u starts earning, start planning to build for an emergency corpus. This may be in the range of your 6-12 months’ salary.
What to do?
Start a recurring deposit in your bank a/c for 20% of your salary.
As soon as u starts earning, start planning to build for an emergency corpus. This may be in the range of your 6-12 months’ salary.
What to do?
Start a recurring deposit in your bank a/c for 20% of your salary.
Eg. If your salary is Rs 25K pm, start an RD of Rs 5K pm for a period of 27 months. It will accumulate around Rs 1.5 lacs (6 months equivalent salary).
Once corpus is built deposit that money in bank FDs & do not touch it apart from emergencies. (Define your emergency needs).
Once corpus is built deposit that money in bank FDs & do not touch it apart from emergencies. (Define your emergency needs).
📖OPTIONS KI PAATHSHAALA📖
Thread on ~
📍 Option Price & its Components 📍
#threadbytradersushma
#OptionsTrading
#StockMarketindia
Thread on ~
📍 Option Price & its Components 📍
#threadbytradersushma
#OptionsTrading
#StockMarketindia
The price of an options contract is known as the option PREMIUM, which is the amount of money that the buyer of an option pays to the seller for the right, but not the obligation, to exercise the option.
(src:investopedia)
(src:investopedia)
Option Price or Premium comprises of two components:
1. Intrinsic Value &
2. Extrinsic Value or Time Value or Time Premium
1. Intrinsic Value &
2. Extrinsic Value or Time Value or Time Premium
Biases That Affect How You Trade Your System
(curated from "Trade your way to Financial Freedom" by Van Tharp)
1. Gambler’s Fallacy Bias
People assume that the probability goes up for a win after a long losing streak or up for a loss after a long winning streak.
(curated from "Trade your way to Financial Freedom" by Van Tharp)
1. Gambler’s Fallacy Bias
People assume that the probability goes up for a win after a long losing streak or up for a loss after a long winning streak.
2. Conservative-with-profits-and-risky-with-losses Bias
People want to take profits quickly & give their losses some room. This gives them the illusion of being right, but what they are really doing is cutting their profits short and letting their losses run.
People want to take profits quickly & give their losses some room. This gives them the illusion of being right, but what they are really doing is cutting their profits short and letting their losses run.
3. My-current-trade-or-investment-must-be-a-winner Bias
This bias may be at the root of all other biases. Yet being right has little to do with making money.
This bias may be at the root of all other biases. Yet being right has little to do with making money.
📖 OPTION TRADING KI PAATHSHAALA 📖
A Thread on
📍 OPEN INTEREST 📍
#threadbytradersushma
#OptionsTrading
#StockMarketindia
A Thread on
📍 OPEN INTEREST 📍
#threadbytradersushma
#OptionsTrading
#StockMarketindia
OI is the total number of o/s F&O contracts that have not been settled yet.
OI indicates that contracts have been traded but not yet liquidated by an offsetting trade or exercise.
OI indicates that contracts have been traded but not yet liquidated by an offsetting trade or exercise.
Some pointers ~
♦️ It indicates how many open positions are there in the market.
♦️ It is useful in understanding the liquidity of the market. Bigger the OI more liquid is the market.
♦️ If u add up all long & short positions, it should be 0 always.
♦️ It indicates how many open positions are there in the market.
♦️ It is useful in understanding the liquidity of the market. Bigger the OI more liquid is the market.
♦️ If u add up all long & short positions, it should be 0 always.
U r a high income earner but unable to escape your corporate shackles in spite of actively working > 20yrs.
WHY?
Lets delve deep & do some introspection.
#threadbytradersushma
#financialfreedom
#booktwt
WHY?
Lets delve deep & do some introspection.
#threadbytradersushma
#financialfreedom
#booktwt
Here's list of 25 questions u can ask yourself to actually know what went wrong in your financial planning. Answers to these might open doors to financial awakening!
Curated from the book “The Millionaire Next Door"
Curated from the book “The Millionaire Next Door"
The dark side of Total Expense Ratio in Mutual Fund industry
A Thread 🧵
#threadbytradersushma
#mutualfunds #investing #StockMarket
@1PageFinance
1/21
A Thread 🧵
#threadbytradersushma
#mutualfunds #investing #StockMarket
@1PageFinance
1/21
What is Total Expense Ratio (TER)?
It is the ratio of total expenses incurred by an AMC divided by its total asset under management. It represents per unit expense of an AMC. 2/21
It is the ratio of total expenses incurred by an AMC divided by its total asset under management. It represents per unit expense of an AMC. 2/21
Eg.
If TER of a MF scheme is 2%, it means that 2% of investment corpus (AUM) is utilised by AMC to fund its expenses like operating cost, management fees, advertising costs etc. 3/21
If TER of a MF scheme is 2%, it means that 2% of investment corpus (AUM) is utilised by AMC to fund its expenses like operating cost, management fees, advertising costs etc. 3/21
There’s a person who has a respectable corporate job, decent earnings, nice family & some good savings kitty parked in FD which he wants to invest in equities now. But he's lacking in financial knowledge & has no time for market research.
Then there’s a full-time trader. All his working hours are dedicated to equity market research, trading & investing. He daily monitors the market, news flow & has good technical & fundamental know how.
Are these two same kinds of investor?
Should they have the same investing behaviour?
Will the style of investment be same for them?
NO, obviously!
Should they have the same investing behaviour?
Will the style of investment be same for them?
NO, obviously!
How I learnt Personal Finance by myself?
A Thread🧵
#threadbytradersushma
#personalfinance #financialeducation #weekendreads
A Thread🧵
#threadbytradersushma
#personalfinance #financialeducation #weekendreads
I got introduced to Personal Finance by ET Wealth in 2012. It was a special magazine issued by Economic Times on Wednesdays dedicated specially to this topic. It created such an interest in me that I could not wait for the next edition.
After a long hiatus I bumped into this marvellous book called "Let’s Talk Money" by @monikahalan in 2019. This book is specially dedicated for Indian investors & a must read on money & finance. It contains some eye-opening facts about insurance products.
⚡️ Full Time Trading vs Corporate job ⚡️
A Mathematical investigation!
I see lot of fintwit debating over full time trading vs job. Let me dive deeper to this topic & present u some facts & figures over this issue.
A Thread🧵
#threadbytradersushma
1/11
A Mathematical investigation!
I see lot of fintwit debating over full time trading vs job. Let me dive deeper to this topic & present u some facts & figures over this issue.
A Thread🧵
#threadbytradersushma
1/11
2/11
Some assumptions before we go ahead ~
🔹50-30-20 rule of home budgeting followed here. It means 80% of your salary is expenditure while 20% is savings.
🔹The same expenses is assumed to have taken place when trading is pursued.
Some assumptions before we go ahead ~
🔹50-30-20 rule of home budgeting followed here. It means 80% of your salary is expenditure while 20% is savings.
🔹The same expenses is assumed to have taken place when trading is pursued.
3/11
🔹Profession switch takes place at 40 yrs age after fulfilling the following criteria.
🔹Profession switch takes place at 40 yrs age after fulfilling the following criteria.
⚡️DIVIDENDS KI PATHSHALA⚡️
Compilation of all threads on dividend investing series posted by @tradersushma
#goodweekendread
#threadbytradersushma
Compilation of all threads on dividend investing series posted by @tradersushma
#goodweekendread
#threadbytradersushma
Basics of Dividend
FAQs on Dividends
Ratios to study while selecting stocks for Dividend-Investing.
✨DIVIDEND PAYOUT RATIO
✨DIVIDEND YIELD RATIO
A Thread🧵
#threadbytradersushma
#dividendinvestingseries
1/20
✨DIVIDEND PAYOUT RATIO
✨DIVIDEND YIELD RATIO
A Thread🧵
#threadbytradersushma
#dividendinvestingseries
1/20
2/20
DIVIDEND PAYOUT RATIO & RETENTION RATIO
The dividend payout ratio (DPR) is the ratio of total amt of dividends paid out to shareholders relative to the net income (earnings after tax & interest) of the company.
It is % of earnings paid to shareholders via dividends.
DIVIDEND PAYOUT RATIO & RETENTION RATIO
The dividend payout ratio (DPR) is the ratio of total amt of dividends paid out to shareholders relative to the net income (earnings after tax & interest) of the company.
It is % of earnings paid to shareholders via dividends.
3/20
Total earnings of a company comprise of 2 parts ~
🔹Dividend payout ratio (the dividend it pays) &
🔹Retention Ratio (the amount it retains for re-investing in the business).
Eg.
Total earnings of a company comprise of 2 parts ~
🔹Dividend payout ratio (the dividend it pays) &
🔹Retention Ratio (the amount it retains for re-investing in the business).
Eg.
2/13
Why does companies pay Dividends?
✅To attract investors & increase the value of their stock.
✅To reassure investors about the companies financial health.
✅To increase the investors’ confidence in the companies ability to generate earnings.
Why does companies pay Dividends?
✅To attract investors & increase the value of their stock.
✅To reassure investors about the companies financial health.
✅To increase the investors’ confidence in the companies ability to generate earnings.
3/13
✅To increase the demand for the stock as many investors seek regular income in the form of dividends & they would buy more of such dividend distributing cos.
✅To increase the demand for the stock as many investors seek regular income in the form of dividends & they would buy more of such dividend distributing cos.
Is Positive Expectancy of a System sufficient data to determine whether the system is successful or not ?
What else to check besides the expectancy of a system ???
A Thread🧵
#threadbytradersushma
#trading
1/18
What else to check besides the expectancy of a system ???
A Thread🧵
#threadbytradersushma
#trading
1/18
2/
WHAT IS EXPECTANCY?
Expectancy represents the average amount of money we make for every Rupee we risk.
It is an average gain in terms of the initial risk taken i.e. R.
WHAT IS EXPECTANCY?
Expectancy represents the average amount of money we make for every Rupee we risk.
It is an average gain in terms of the initial risk taken i.e. R.
3/
In simple terms,
Expectancy is the average amount one can expect to win (or loose) per trade with their system, when a large number of trades are taken.
In simple terms,
Expectancy is the average amount one can expect to win (or loose) per trade with their system, when a large number of trades are taken.
🧵A Thread solely on Trader’s Psychology🧵
WHY DO TRADERS CUT THEIR PROFIT SHORT & LET THEIR LOSSES RUN?
A detailed analysis ~
#threadbytradersushma #trading #investing
1/18
WHY DO TRADERS CUT THEIR PROFIT SHORT & LET THEIR LOSSES RUN?
A detailed analysis ~
#threadbytradersushma #trading #investing
1/18
2/18
The two basic mantra of successful trading is ~
🔹Let your profits grow big.
🔹Keep your losses small.
These two postulates though so simple is so very difficult to follow.
Why is it so?
The two basic mantra of successful trading is ~
🔹Let your profits grow big.
🔹Keep your losses small.
These two postulates though so simple is so very difficult to follow.
Why is it so?
3/18
There are two main problems with human mind when it comes to investing decisions:
1.Need to be right
2.Classifying profit as good & loss as bad thing.
There are two main problems with human mind when it comes to investing decisions:
1.Need to be right
2.Classifying profit as good & loss as bad thing.
🌻 HOW TO CLOSE ALL YOUR LOANS USING PAYOFF PRIORITY TECHNIQUE 🌻
A Thread🧵
#threadbytradersushma
#FinancialFreedom
#financialliteracy
1/n
A Thread🧵
#threadbytradersushma
#FinancialFreedom
#financialliteracy
1/n
Payoff Priority Technique (PPT) is a unique & exceptionally good method to make all your loans disappear from your life.
I came through this technique while reading this extraordinary book called
“Safe Strategies for Financial Freedom” by Van K Thorpe.
2/n
I came through this technique while reading this extraordinary book called
“Safe Strategies for Financial Freedom” by Van K Thorpe.
2/n
Loans & EMIs have become an integral part of our life. Our salary payments are already pre-defined towards the debt obligations each month. In case our incoming cash flow gets disturbed, the EMIs will pile up each month & it might even lead to default.
3/n
3/n
Announcing DIWALI #freebookgiveaway
My 2nd #freebookgiveaway is here!
I shall be giving a copy of the following book as free Giveaway gift.
"RICH DAD POOR DAD"
The most iconic, talked about & read book on Financial Freedom ever written.
@theRealKiyosaki
My 2nd #freebookgiveaway is here!
I shall be giving a copy of the following book as free Giveaway gift.
"RICH DAD POOR DAD"
The most iconic, talked about & read book on Financial Freedom ever written.
@theRealKiyosaki
🔸Offers starts today & ends on 6th Nov.
🔸India only
🔸Previous winners not to be included in lottery.
To participate -
1. Retweet the 1st post of this #freebookgiveaway &
2. Go through my timeline & retweet any of my threads which u liked the most.
🔸India only
🔸Previous winners not to be included in lottery.
To participate -
1. Retweet the 1st post of this #freebookgiveaway &
2. Go through my timeline & retweet any of my threads which u liked the most.
🔸U can search my threads here #threadbytradersushma
🔸U can also use the advanced search option to find all my threads in one click.
🔸U can also use the advanced search option to find all my threads in one click.
2/
What is Financial Freedom?
FF is a stage in your financial journey of life where your Passive Income exceeds your living expenses. In other words, you don’t need to pursue active job to afford your expenses.
What is Financial Freedom?
FF is a stage in your financial journey of life where your Passive Income exceeds your living expenses. In other words, you don’t need to pursue active job to afford your expenses.
3/
“Financial Freedom is the ability to quit your job so that u never have to work again”.
-Van K Tharp
“Financial Freedom is the ability to quit your job so that u never have to work again”.
-Van K Tharp
👍The 4% Rule of Thumb for Withdrawals from Retirement Fund👍
A Thread🧵
#threadbytradersushma
#financialplanning
1/
A Thread🧵
#threadbytradersushma
#financialplanning
1/
Generally when people plan for their retirement their main focus is to find out how much corpus is sufficient for a decent retirement life. The spending part is usually ignored.
The 4% rule is one such plan which talks of the spending phase.
2/
The 4% rule is one such plan which talks of the spending phase.
2/
The 4% rule tells us about how much a retiree should withdraw from his retirement a/c each year which shall continue to provide him a steady source of income without depleting his retirement corpus.
3/
3/
🧵MASTER THREAD ON ETF INVESTING - A COMPLETE GUIDE🧵
#threadbytradersushma
#etfseriesbytradersushma
I have compiled all the posts on ETF series in this thread of threads.
Go through all these threads to know each & every aspects of ETFs in detail.
#threadbytradersushma
#etfseriesbytradersushma
I have compiled all the posts on ETF series in this thread of threads.
Go through all these threads to know each & every aspects of ETFs in detail.
BASICS OF ETF & its ADVANTAGES
BASIC DYNAMICS OF ETF
One more topic on ETF chapter.
This is my 5th post in this series & here I'll describe the Taxation aspects of ETFs. Follow my earlier posts here👇
2/
This is my 5th post in this series & here I'll describe the Taxation aspects of ETFs. Follow my earlier posts here👇
2/
There are two avenues by which an investor can earn money in equity ETFs.
⭐️One is Dividend.
⭐️Other is Capital gain.
3/
⭐️One is Dividend.
⭐️Other is Capital gain.
3/
CRITICAL ASPECTS OF ETF & its DISADVANTAGES
A THREAD 🧵
#threadbytradersushma
#etfseriesbytradersushma
1/
A THREAD 🧵
#threadbytradersushma
#etfseriesbytradersushma
1/
This is the 3rd post in the series of ETF education. Here I'll explain some negative aspects & disadvantages of ETFs. Much on basics & workings has been covered in previous threads. U may check the same with hashtag
#etfseriesbytradersushma
2/
#etfseriesbytradersushma
2/
Let us start with disadvantages of ETFs.
🛑 FLASH CRASH
A flash crash is rapid fall in prices of stock or any other securities, due to a sudden withdrawal of orders, with quickly recovery, usually within the same trading day.
3/
🛑 FLASH CRASH
A flash crash is rapid fall in prices of stock or any other securities, due to a sudden withdrawal of orders, with quickly recovery, usually within the same trading day.
3/
A Thread on🧵
BASICS of ETFs
(INDEX INVESTING)
#threadbytradersushma
#etfseriesbytradersushma
#passiveinvesting
BASICS of ETFs
(INDEX INVESTING)
#threadbytradersushma
#etfseriesbytradersushma
#passiveinvesting
ETFs are the most talked about investing products in recent times. As simple as it sounds, it is quite complicated & risky if not understood properly. ETFs & Index Funds are the two main financial products of passive investing or indexing.
ETF is a vast topic to understand. Single post is not enough to cover all its aspects. So I'll post a series of threads on this subject. This is the 1st one in the series so I’ll stick only to the basics.
1/16
I am starting an FAQ series on topics related to #Trading, #Investing & #Personal Finance.
This is the 1st post in this series. Today’s topic is
🍁TRADING AS A CAREER OPTION🍁
A Thread🧵
#threadbytradersushma
#faqbytradersushma
I am starting an FAQ series on topics related to #Trading, #Investing & #Personal Finance.
This is the 1st post in this series. Today’s topic is
🍁TRADING AS A CAREER OPTION🍁
A Thread🧵
#threadbytradersushma
#faqbytradersushma
2/16
Is Trading really a career option?
YES
Trading is still not acceptable career choice in our societal structure but nevertheless it definitely is one option. You can find numerous full time successful traders who earn their bread & butter by trading.
Is Trading really a career option?
YES
Trading is still not acceptable career choice in our societal structure but nevertheless it definitely is one option. You can find numerous full time successful traders who earn their bread & butter by trading.
3/16
Is Trading a Legal Profession?
YES
It is one of the most common doubts among many Indian people- whether trading is legal even!
Mostly trading is considered similar to gambling hence this doubt.
Is Trading a Legal Profession?
YES
It is one of the most common doubts among many Indian people- whether trading is legal even!
Mostly trading is considered similar to gambling hence this doubt.
