Magazine subscriptions and the fault in our reasoning

A rupee today is worth more than a rupee tomorrow (or at any point in the future) This is the first, most fundamental lesson you learn as a student of finance. Called Time Value of Money, the idea that any money you have today can earn interest or returns in other forms making it worth more than the same amount of money at a later point in time, is a core principle of finance. Another way to look at the above statement is that inflation is constantly reducing what a fixed amount of money can buy. Hence you hear statements like “When I

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Three questions that could determine your financial future

Try this quick quiz: Question 1: Suppose you had ₹100 in your savings account today and the interest rate is 8% per year. After five years, how much do you think you would have in the account if you left the money untouched? A] More than ₹108                    B] Exactly ₹108                  C] Less than ₹108 Question 2: Imagine that the interest rate on your savings account was 8% per year and inflation was 9% per year. After one year, how much would you be able to buy with the

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Introduction to equity investing

At a glance ‘Inflation’ is the persistent rise in price of goods and services It is a ‘normal’ and ever-present economic phenomenon that results in loss of purchasing power Rs 100 in India in 2014 would only be able to buy 40% of goods it would have been able to buy in 2004, losing close to 60% value in ten years We therefore need to invest to counter the corrosive effect of inflation on our savings “Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars’ worth of groceries. Today, a five-year old can do

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