Give more thought to fixed income
Fixed income dominates your lives, but gets the least amount of time from you. It's time to change — and benefit from it.
Remember, your life is dominated by interest rates. You will have to understand the fixed income market if you want to evaluate options on home loans, vehicle loans, personal loans and credit card overdrafts.
You will have to have a view on direction of interest rates while allocating your investments to Public Provident Fund and other small savings instruments such as post office savings schemes and National Savings Certificates.
Investing in bank fixed deposits, company fixed deposits and NCDs (non-convertible debentures) floated by public and private companies requires a basic knowledge of fixed income. Chit funds and local kitties also require you to understand interest rates.
Investments in fixed income schemes run by mutual funds entails knowing the fixed income market. Infrastructure bonds and tax free bonds that are being retailed out carry interest rate and credit risk, which you should know about.
A large part of your liabilities is related to interest rates. Movements in interest rates affect your home loan instalments and tenures. Accessibility and availability of loans depend on central bank policies. Inflation can play havoc on your finances with liability payments going up. Interest on your savings may not commensurate the rise in inflation leading to a negative real interest rates.
Your consumption patterns, too, will change based on movements in interest rates. Lower interest rates will induce you to buy more goods on credit while high interest rates will make you put off purchases, which are deemed unnecessary. Your banker will start asking more questions on your ability to repay when liquidity is tight and banks become credit risk averse. Low interest rate regime changing to high interest rate regime can make you change your lifestyle.
Unknowingly, the way you lead your life is largely dependent on fixed income markets.
In Greece, Italy, Ireland, Spain and Portugal, people are seeing their traditional ways of life disturbed by austerity measures imposed on them by their governments. The reason for austerity measures is the fixed income market.
Closer home, the government running inflationary policies, including spending more than it can afford impacts your lifestyle. Well, this is due to the fixed income markets.
There is no better time than now to learn about fixed income and once you get a basic grasp on interest rates and credits, you will find that you are able to handle your personal finance much better.
Fixed income dominates your lives, but gets the least amount of time from you. It's time to change — and benefit from it.
Remember, your life is dominated by interest rates. You will have to understand the fixed income market if you want to evaluate options on home loans, vehicle loans, personal loans and credit card overdrafts.
You will have to have a view on direction of interest rates while allocating your investments to Public Provident Fund and other small savings instruments such as post office savings schemes and National Savings Certificates.
Investing in bank fixed deposits, company fixed deposits and NCDs (non-convertible debentures) floated by public and private companies requires a basic knowledge of fixed income. Chit funds and local kitties also require you to understand interest rates.
Investments in fixed income schemes run by mutual funds entails knowing the fixed income market. Infrastructure bonds and tax free bonds that are being retailed out carry interest rate and credit risk, which you should know about.
A large part of your liabilities is related to interest rates. Movements in interest rates affect your home loan instalments and tenures. Accessibility and availability of loans depend on central bank policies. Inflation can play havoc on your finances with liability payments going up. Interest on your savings may not commensurate the rise in inflation leading to a negative real interest rates.
Your consumption patterns, too, will change based on movements in interest rates. Lower interest rates will induce you to buy more goods on credit while high interest rates will make you put off purchases, which are deemed unnecessary. Your banker will start asking more questions on your ability to repay when liquidity is tight and banks become credit risk averse. Low interest rate regime changing to high interest rate regime can make you change your lifestyle.
Unknowingly, the way you lead your life is largely dependent on fixed income markets.
In Greece, Italy, Ireland, Spain and Portugal, people are seeing their traditional ways of life disturbed by austerity measures imposed on them by their governments. The reason for austerity measures is the fixed income market.
Closer home, the government running inflationary policies, including spending more than it can afford impacts your lifestyle. Well, this is due to the fixed income markets.
There is no better time than now to learn about fixed income and once you get a basic grasp on interest rates and credits, you will find that you are able to handle your personal finance much better.
No comments:
Post a Comment