Personal Finance Management

In the past the only reliable information was in the form of press or television, but today we have different media and sources to choose from. These days online tools have become handy for people for personal finanace management.

We live in an information age where a lot of technologies including internet, mobile and media provide us with a lot of information on different areas – such as entertainment, finance, sports, education, etc.

Given the choice of different sources of information, we can get information or data from one source and also cross check from a second or third source to check its authenticity or to get a second opinion.

Personal Finance Management maybe tricky and cumbersome. But it gives you a sense of control and freedom to manage your wealth with care.

The Information Maze

The saying “Information is wealth” is very try whether one is a saver, investor or trader. Any investor (large or small) has to know the right sources to look for different pieces of information.

For instance if you want to know about the company’s financial performance, the best source would be the company website or the stock exchange.

However, if you want to know what analysts feel about the performance in the current quarter, you have to look at financial portals or websites.

So remember that you may not get all the valuable information in one place. This is one of the reasons why there are thousands of analysts who work day in and day out tracking various companies or sectors and come up with their detailed research and recommendations.

I will try to discuss each piece of information in the following paragraphs, and give you some suggestions. However, these are not necessarily the best sources, instead they are good sources as per my view. You are free to look at other resources and share some in the comments below for the benefit of other readers as well.

Disclaimer: This website as well as the author are not necessarily commenting on the quality of information sources, but only giving suggestions on where to look for certain information.

Company’s Financial Statements

Company’s financial statements are important for personal finance management. This is one of the key areas that investors, analysts and market watchers closely look at.

This is available on several websites, stock exchanges, etc. The key financial statements would be profit and loss account (income statement), balance sheet and cash flow statement.

The best place to refer would be the company’s website where you will find audited and unaudited results. Alternatively you can also get this from stock exchanges (NSE and BSE) through their websites.

For example if you are looking for financial statements about HDFC Bank you can either

• Visit HDFC
• NSEIndia or BSEIndia

Analysis of Financial Performance

From the above you have financial statements which give you some insight. How do you know about how good or bad the company has performed? There are different ways to do this:-

1. You do the analysis on your own: This requires a lot of time, effort and research. Although its not difficult per se, this may not be sufficient or as good as professional analyst reports or commentaries.
2. You look at the commentary or findings or other analysis: This will give you reliable information from a professional which would be far better than your own research. Lot of analysts visit the company, attend conference calls, take the opinion of industry leaders, etc, which is completely different from pure desk research that lay people like us do.
3. Combine 1 & 2: In this case you do some research on your own and also take inputs from professional sources. This is a good way to learn about investing though practical exposure.

For example if you are looking at how well Infosys Technologies have performed in the recent quarter you can look at the financial statements and compare the current quarter with previous quarter or with the same quarter last year and draw your conclusions.

If you don’t have the time or energy or interest to do your own analysis you can look at sources such as moneycontrol, valuenotes and other sources. Even if you are good at research you can look at these sources to get a second opinion or cross verify your analysis with what other Analysts/Experts’ opinions.

Recent Developments in the Company

This is an area which is quite interesting, because traders and investors look for that hot news to capitalize on the next trade or move. The news could be positive or negative.

For instance good news could include a takeover, new product launch, records sales numbers, new contract worth several billions, increase in the price of a commodity, gaining market share, etc. These can lead to a positive sentiment.

On the other hand news about a product failure, a criminal enquiry, scrutiny by tax authorities, loss of a contract, unfavorable market conditions, lower sales, etc can drag performance and bring down stock prices.

The main source of this news is once again from the company, particularly its press releases. Since it is virtually not possible to check each company’s website one can rely on either the stock exchanges (NSE or BSE) or newspapers or media.

NSE and BSE has a section covering corporate announcements (BSEIndia). The link provided covers corporate announcements of companies listed on BSE.

For news on a particular company you can use the ‘Company Search’ option. If you want to look for a particular type of information then you can use the ‘Category Option’ where you have choices like board meeting, results, insider trading, etc.

Valuation of a Stock (whether it is overvalued or undervalued)

In many cases this is not evident in a straight forward manner. In many cases what is overvalued or undervalued is highly subjective and differs according to the situation or context. There is no standard scale for valuation, however certain tools or ratios such as price earnings (PE) multiple, price to book (PB) multiple, etc can give some indication on this aspect.

There are several portals and financial magazines or news papers where you find information on valuation and some recommendations from analysts. Some of the sources I would recommend are:-

• valuenotes : Here you will get the basic valuation metrics such as PE, PB, as well as other ratios such as Return on Capital Employed, Debt-Equity ratio, etc.
• indiainfoline : This is a brokerage portal which provides some analysis and metrics as discussed above.
• Magazines/Newspapers: Economic Times, Investor World (ET supplement), Dalal Street, Capital Market, etc.

You can check out a mix of these to get different perspectives to help with your personal finance management. These are not necessarily the best sources, but some reliable sources providing quality information at no cost.

Personal Finance  Management – Advice or Tips

In the recent few years there has been tremendous growth in the number of personal finance management websites. I’m not qualified enough to rate the best or worst. A few portals which specialize in this space include onemint,  personalfn, investmentyogi, rupeetimes,  bankbazaar, etc.

There are a few other generic or finance portals which have a personal finance management section. Some of them include:-

• Moneycontrol
• Rediff (personal finance is part of Get Ahead as well as Rediff Money)
• Economic Times Wealth

There are several newspapers, magazines which have their publications as well as websites covering personal finance management.

Some leading magazines in personal finance management space include Outlook Money, Money Today, etc. Depending on the nature of information or advise you can pick and choose the right source. For people looking purely at stock markets Capital Market or Dalal Street will be sufficient.

If you are looking at various products such as mutual funds, insurance, FDs and generic investment advice, you can consider using personal finance magazines or portals discussed above.

Move towards Successful Investing

If you want to become successful at investing without putting efforts probably you should think once again. How did people like Warren Buffet, Benjamin Graham, George Soros, etc achieve success?

They come with a mix of knowledge, hard work, smart decision making and other positive traits. When planning Personal finance management the individual would consider the suitability to his or her needs of a range of banking products.

We may or may not become successful gurus like them but we can aspire to become successful in our own way. If you want to atleast become a millionaire in rupee terms to lead a comfortable life in future you need to be well informed and smart enough to spot wrong news or information, take calculated risk and identify investment opportunities that yield good returns in the long run.

Holistic Analysis of Information – See the Bigger Picture on Personal Finance Management

Qualitative and quantitative aspects have to be seen holistically. For instance if you purely go by a low PE ratio criteria most of the blue chip companies/stocks will not be on your radar.

You need to find good companies that have a significant market share in one or more industries, have quality management team, good financial performance, sound financial management practice, good governance, etc.

This is almost like choosing a life partner where you may look for different aspects such as looks, personality, sense of humour, likes/dislikes, lifestyle, behavior, habits, etc. You may also look for factors like employment, financial status, family relationships, etc. After analyzing on various aspects you come to a conclusion.

Personal finance management tools actually change peoples behaviour. They have better control of their finances, saving more money and also paying less in late fees.

The process of selecting is conceptually similar to that although the finer analysis would be different. Warren Buffet used to say that “the best holding period for a share is, forever”. Although we may not hold the stock forever, if we choose stocks based on this philosophy the chances of making mistakes or taking risks will be minimal.

The best blue chip stocks are those which you hold for decades and plan to pass on to the next generation. Although we talked more about equities or stocks, personal finance management habits also need to be passed to the next generation, which will be a valuable gift that lasts until their lifetime.

Personal finance management can prove to be beneficial when it comes to cutting down debt, access records smoothly and also ward off any kind of financial jam.