DhuDDu

I came across this essay titled “Democracy in Corporate America” by John Bogle while blog hopping. In this essay, Bogle puts across the following points:

1. Shareholder interests are rarely served by companies these days.
2. Boards are not independent but loyal to managers.
3. Managers have become all-powerful and are misusing their power by fudging earnings and rewarding themselves disproportionately large bonuses.
4. Managerial thinking is more short-term.
5. States and the federal goverment have not come out with rules to help this situation.

And this is the state in one of the most developed countries in the world !!

This got me thinking about the situation in India, especially about the big soap opera that the Reliance split was. For the uninitiated, Reliance industries is a Fortune 500 company and is also India’s largest private sector company. It was started by Dhirubhai Ambani and his two sons, Mukesh and Anil, inherited it. Sibling rivalry led to the split of the company into two in 2005 and this deal was brokered by their mother, Kokilaben.

And the best thing about this - everyone, and I mean EVERYONE, went along with this. There was no noise from shareholders about this issue. The split ended up giving all energy related businesses to Mukesh and financial/telecom businesses to Anil. 

The problem: Mukesh was the telecom visionary but his long term strategies were now lost to that business.

Since this was a huge conglomerate and had been split into two, there was a major unlocking of value and the stock price shot up for both companies. That made the average stock holder who preferred short term gains over long term strength happy. And it sickened long term investors like me who now have to study two separate companies while making investment decisions :(

I have now realized that making companies accountable is a problem everywhere in the world and it also tough to get governments to help out with this issue. Being a shareholder in both India and USA, hopefully I can help educate investors in both countries about this problem.

Tags: Indian stock market, Investing by zzz
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Once I decided to take control of my finances, the easiest way for me to track accounts, manage expenses and calculate networth was to use personal finance software. I will be reviewing some popular and not so popular money management products that I have used.

In each review, I will also be rating the software on some parameters that are important for me:

a) Price (Free/Ouch) - I prefer free software. Yes, this means losing out on good systems like Quicken and Microsoft Money. It also means that the replacements may sometimes not be fully featured and may lack customer support. An open source alternative like GnuCash does not have a 1-800 number you can call for questions. However, the price makes it perfect for me and I do not mind haunting support forums and googling for answers.

b) Platform (Online/Desktop) - I am still ambiguous as to which platform i prefer. Any decision will be based on

• Security - Restricting my software to the desktop takes care of security issues. But I also use online bank accounts and the standary security practices like 128 bit SSL encryption are generally safe, notwithstanding the high profile data breaches one hears about.
• Flexibility - If my accounts are online, I can access information even when i am at work. Or on vacation. But beware : At one point, my homemade excel sheets were residing in Google docs and I ended up on vacation to a place with no internet access. Go figure My solution these days : Have a daily backup/sync routine between the desktop and ipod. Wherever I am, my ipod is with me and as long as the computer has a USB port (which is a standard issue these days), I am all set to access my data.

c) Budgeting (Yes/No) - I do not budget to the last dollar. What I have are spending categories and I know how much i generally spend in each category. Some like rent are constant and I don’t track them each month. However, i track my groceries a lot as the amount can vary wildly from month to month, depending on whether i have a carbohydrate craving or have jumped on the eat natural bandwagon. Any software i look at should allow me to set up my own spending categories. Mint has finally added the budget feature and is now in my list of software to try out.

d) Complete Picture - If I am a starving college student, the total of my bank balances would be enough for me. All I would need to know : You have less than 5$ in the bank - so DO NOT buy that latte. Now that I have 401K, Roth IRA and investment accounts spread across two continents, any number shown to me must include the latest information on all these accounts. And yeah, that number needs to be displayed in atleast 2 currencies Most of the products out there work well for investments in USA but suffer if you get out of the country.

e) Fancy Schmanzy - This is all those graphs and charts which should always show that my networth is increasing and I have no debt (crossing fingers ) . Achieving this in a home grown system is not impossible but I have realized that I will never know all the features of Microsoft Excel and in fact, do not want to. So pictures are in and any software that can do that with my numbers gets a vote.

f) Setup / Maintenance Time - Since I need to work on this blog (a lot !), software that has a great degree of automation built in helps. Setup time needs to be low. I need software to automatically connect to my accounts, download information and refresh all my balances. My maintenance activities should be restricted to looking at reports and updating my budgets. 

Finally, these are the things i can live without in my software:

1. Social whatever - I prefer reading personal finance blogs for saving and investment tips. Being a compulsive reader, I know that the quality of advice and interaction in the blogosphere is greater than any other single website can give me.
2. Email/SMS notification - SMS is very costly and I hate reading stuff in small screens. And since I am connected to the internet 24*7 and battling with information overload, I would prefer one less email in my inbox.
3. Latest and greatest - I still haven’t understood why many popular software products are updated every year. I can understand fixing of security bugs but at what point do you realize that it is software and NOT BLOATWARE? It is ok for me if the IRA contribution limit for the current year is not there. I can get the information online and I can update the value manually.

Tags: personal finance software by zzz
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Yes, this is yet another personal finance blog. So why should you include this in your reading list?

A few reasons why this blog may help you:

•  You are not in debt upto your eyeballs on credit cards and pay day loans. Paying your balance off each month comes naturally and any further debt you take on will only be for “good” things like buying a house or student loans. I will be discussing strategies and issues surrounding these loans as I am currently evaluating going for an MBA and also have plans to buy a house in the next five years.
• A portion of your finances is tied to India. This could be because you are an India, will be living in India for some time, plan to retire there or would like to know more about investing in India.
• You deal with dollars. I am currently a resident alien in USA and will be for the next few years. I have learnt a lot about spending, saving and investing in this country and would like to share that with you.
• You are a nerd and are interested in a systematic approach to your personal finances. I have used difference financial software and will be reviewing them. I also have elaborate systems constructed to invest and save and will be blogging about them too.
• You are a woman and are sick and tired of every financial guru talking down to you, not giving you facts in plain English but attacking your emotions/feelings on money.

Mostly, with this blog, I will not be addressing issues like “ohmigod, i have credit card debt because i spent and spent and do not know what to do”. I hold “Spending less than you make” and “Pay yourself first” as self-evident truths and will try to go beyond them.

Here’s hoping you have as much fun as I am going to :)

Cheers,

zzz

Tags: dhuddu.com by zzz
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