Are you hunting high and low for the best personal finance books by Indian authors to manage finance better?
Then you are in the right place. Here we will offer you the 7 best personal finance books by Indian authors that you must read to manage personal finance the best plausible way to achieve financial inclusion.
Let’s dive into it.
7 Best Personal Finance Books by Indian Authors
Your age and your income per month do not matter. If you do not have proper financial education then you will barely achieve financial freedom. These 7 books will not only help you to learn every nook and corner of the personal finance universe but also assist you to prepare a strategy to achieve financial inclusion.
‘Retire, Rich, Invest – ₹40/- a Day’ by PV Subramanian
Have you ever calculated with what amount you should start investing in right now for financial inclusion no matter what your current age is?
The bitter truth is a majority of Indians aren’t aware of the importance of financial planning, or retirement planning. The author of this book gives a detailed snapshot of the importance of early retirement planning, and the pitfalls of not doing any financial planning. Plus, this book discloses by following what steps you can achieve financial inclusion and what sacrifices will help you to build a retirement corpus.
The biggest takeaway of this book is that it reveals what amount of money is acceptable when it’s time to decide for retirement. Here are a few questions that an individual must consider for retirement planning:
- Exactly what amount of money you have in your account right now.
- At what age you want to retire.
- The lifestyle you want to carry out.
- Your current liabilities.
- The amount of money sufficient to carry out the expenses post-retirement.
- The safe amount that you can withdraw each month to carry out the household and medical expenses.
- If there are any dependents you have other than your spouse.
- What amount of money you will leave for your children.
Do remember all the answers to the above-mentioned questions are prone to alter as per an individual’s perspective.
To prepare a retirement fund what amount should I invest a month?
A majority of the individual investor have a common perception that to create a retirement fund, they need to invest a copious sum especially when they start investing in the stock market since the stock market is the best plausible option when it’s time to invest in the long run.
But it isn’t true. The author has shown that when you are investing only ₹40 a day, the chances are higher that you have a copious amount of money in your bank account at your retirement.
Let’s make it clear with the following graph.
From the above graph, it’s as clear as the sky is blue when you start investing ₹40 a day at the age of 25 then your investment portfolio will be worth ₹1 crore and 35 lakh assuming 15% CAGR at the age of 60. On the flip side, if you step up the investment amount by 10% yearly, then your investment portfolio will be worth of whopping ₹2 crores and 85 lakh.
An added bonus, in this book the author not only teaches how to calculate the exact retirement corpus an individual should have in the bank account but also has given a detailed snapshot of various asset classes where you can invest to retire. Plus, by reading this book you will learn what is an annuity plan, how an annuity works, what annuity options an individual can avail, and many more to lead a happy retirement life without woes.
Besides annuity, the author has tried to find the best plausible answer about what type of insurance you should buy, what is the right insured amount, what financial planning mistakes you should avoid to make a happy retirement come into reality, etc.
‘16 Personal Finance Principles Every Investor Should Know’ by Manish Chouhan
Are you being tired of reading various financial books that share about financial products that will increase only the knowledge, but the findings do not really matter anymore?
This book changes your perception of complex money management. It will help a retail investor to take a decision when it’s time to decide in which asset class you should start investing to secure your financials.
What’s the secret of wealth creation?
The first chapter of this book reveals what is the secret of wealth creation that allows you to achieve financial inclusion. Here the author has given a snapshot of why you should start investing ASAP.
Let’s make it clear with an example.
The author has shown when you start investing early with a few thousand rupees via the SIP route, then you can easily reach your investment goal of lakhs or crores.
Plus, there’s a table that helps you to find what will be the worth of the portfolio if you invest an identical amount for a few upcoming years at different rates of return i.e. 6%, 8%, 10%, 12%, and 15%.
For example when you start investing ₹4000 a month for 30 years then your investment portfolio will be worth ₹56 lakh assuming an 8% return. But a 12% return will turn your investment portfolio worth ₹1.23 crore.
An added bonus, the author throws light on the effect of cutting the investment amount at the end of the investment horizon when you have chosen a SIP route.
For example, an investment of ₹4000 a month for 30 years makes a portfolio that is worth ₹2.2 crores assuming 15% CAGR. On the contrary, if you stop the SIP at the 20th year then your investment worth will be ₹2.14 crore at the end of the period of 30 years assuming 15% CAGR.
What does this magic make possible?
The answer is compounding. As you have started investing early and have given enough time to grow the money, compounding makes this happen.
So don’t waste your precious time and start investing right now to reap the benefits of compounding in the long run.
Should you buy life or term insurance?
Have you ever thought what will happen to your family and how they will make a living when you are the only bread earner?
This book will help you to calculate not only what will be the insured amount following your lifestyle and family expenses for a month but also how long the insured amount will last assuming the expenses of the current month.
How to set up a goal and eventually achieve it?
No goal can be achieved without proper planning, be it shopping in the supermarket, or reducing 25kg of weight within a year. Similarly, when your target is to build a portfolio of ₹1 crore in the upcoming 25 years then all you need to do is to save ₹200 a day or ₹6000 a month and start investing in the equity market. By assuming a 12% CAGR, the chances are higher that your portfolio will be worth ₹1 crore after 25 years. Simply put, to achieve any financial goal take small, but achievable steps.
Is the stock market risky and the debt market is safe?
In this chapter, the author bursts the two common myths that the debt market is safe, but the stock market is risky. After analyzing the returns delivered by the stock market and debt between the time frame 1980 and 2010, it’s clear that the stock market is safe if you stay invested for the long run but risky for a short period. On the contrary, the debt asset class isn’t safe in respect of raising inflation. As a good rule of thumb, prepare a proper asset allocation strategy to create a portfolio as per your time horizon.
10-point checklist to achieve financial inclusion
The author of this book has given a 10-point checklist that will help an individual to achieve financial goals. Here is an overview of the 10-point checklist.
- Don’t invest in the ELSS Funds only to save taxes.
- As a rule of thumb, save at least 10% of your salary and cap the household expenses to a maximum limit of 90%.
- Don’t spend on buying stuff that you don’t even need.
- Diversify your investment portfolio across various asset classes.
- Prepare an investment portfolio following the time horizon and review the performance once a year.
- Don’t fall sick to the instant achievement of your financial goal.
- Instruct your spouse and children about capital or money.
- Stop procrastinating, take small but steady action.
- Calculate the priority spending from the monthly budget.
- Pay attention to real value or return, be it a financial product or other than a financial product.
‘The Richest Engineer’ by Abhishek Kumar
What strategies do only a few percentages of the workforce enable to get rich easily contrary to the majority of the population struggling to manage the finances on the track all their lives? Is it the education qualification that allows them to grab a high five salary a month? Have they found undervalued stocks that started a bull run by leaps and bounds? Are they the luckier ones?
The answer is No.
The author, the ex-employee of the Axis Bank after analyzing the upbringings, qualifications, lifestyle of the members of the board of directors of the large companies in India, has found that all they have applied identical strategies when it comes to money. After analyzing the profile of the members of the board of directors for the two years, he has found that they all followed the few basic principles that allowed them to get rich. No matter what your current financial position is, all you have to do is to follow the same basic principles.
By bringing the two characters namely Ajay, and Vinay, the author in his maiden novel, reveals how one individual can become a millionaire and manage the finances in the best plausible way.
The author discusses the common flaws of our educations system and how this education system lacks the basic principles of real-life personal finance. The bitter truth is where engineers can code onerous algorithms, doctors can save lives, accountants can read and analyze complex financial reports of billion-dollar companies, but they fail to manage personal finance. As a result, neither the engineers nor the doctors teach their children about real-life economics and their children remain ignorant about money generation by generation. This is the primary reason why the rich get richer, the poor get poorer and the middle-class always struggle, but can’t find the secret formula to become rich and live a worry-free life.
This book reveals not only how reputation and goodwill allow you to set up a successful venture but also how various businesses make money, be it a sweet shop or film industry.
‘You can be Rich too’ by PV Subramanian and M Pattabiraman
Do you find managing money is as clear as mud and a hard nut to crack? Or are you hunting high and low for the best investment plan and choosing a financial product to achieve your financial goal? Or are you on edge about making both ends meet in respect of the future financial needs of your family?
If any one of the above-mentioned questions stumbles in your head then you must read this book. In this book the authors have delivered upside-down insights that will help an individual to achieve financial inclusion.
What’s your current financial position?
When you are preparing a plan to achieve your financial goal, take a pen and calculator to calculate:
The Net Worth – The end result of assets [including FD, RD, PPF, stock portfolio, etc.] minus liabilities [including credit card bills, car loans, home loans, personal loans, etc.] is the net worth.
Income and Expenses – What are your earnings and expenses?
Cash Flow – What’s your earnings in a month or a financial year and how much you spend on household expenses, insurance premiums, and investments.
Financial Goal – What’s your desired corpus at retirement?
What are your short-term goals and long-term goals?
A majority of the Indians don’t have their own goals. Their goals are generally society goals such as buying a 4-wheeler, or 3BHK flat, by 27 getting married and by 30 having a kid, etc.
The first thing you need to do is to prepare your own financial goal and to achieve financial goals be it a short-term goal or long-term goal differentiate between them and start investing.
How to prepare an asset allocation strategy?
After differentiating the goals as per short term horizon or long term horizon, start investing money in the various asset classes i.e. debt, equity, gold, etc. Invest in debt asset class if your time horizon is anywhere between 3 years and 7 years since the stock market is volatile in the short run.
On the contrary, if you are investing money for your retirement fund or buying a house then start investing in the stock market since historically stock market yields better returns in the long run when compared to other asset classes. When you are investing in the stock market, don’t panic with short-term market volatility, but invest more after a sharp market correction. The market correction allows a retail investor to buy stocks at an attractive valuation.
What mistakes should you avoid while investing to achieve your goal?
In the closing chapter, the author has given a detailed snapshot of what investing mistakes he made himself and what mistakes other people make. Plus, the author treats this as one of the worst crimes that you can commit if you listen to the investing advice when your parents’ investing world is restricted to PPF, LIC, Bank FD, etc.
An added bonus, if you fail to understand what the financial product or insurance product is or its purposes, and who is the regulating authority of the insurance or financial product, then in all cases the answer will be a big NO. A ‘NO’ reply will help you to achieve financial inclusion.
- Get You can be Rich too from Amazon.
‘From the Rat Race to Financial Freedom’ by Manoj Arora
Though the disposable income of the Indians is increasing by leaps and bounds, the financial literacy is at the lowest level. The book ‘From the Rat Race to Financial Freedom’ isn’t a book, but a financial journey of the author where he shares how he attained financial freedom and how anyone can achieve financial inclusion without an MBA degree.
The book is divided into 8 broad sections where the author has not only busted money or investment myths but also given detailed insights from the FDs to the stocks and commodities that allow an investor to take a more informed decision.
Let’s dive into the key takeaways of this book.
What are the technical concepts that you need to know?
In the path of financial freedom, the author has discussed various terminologies and concepts namely Rule of 72, Dollar-cost Averaging that a retail investor should know. Plus, in this section, you will find the calculation of returns as per different scenarios.
What are the best investing opportunities an individual can choose from?
The author discusses various investment opportunities namely PF, PPF, VPF, equity, gold, real estate, etc. with the pros and cons of each investment option.
The author has advised that it’s not a good idea to invest all of the capital in one basket. This attracts heavy tax obligations. Instead, diversify your investment basket across various options.
What are the principles of wealth accumulation?
When you are hunting high and low for the strategies then you must follow the author’s advice that is mentioned in this book. A few of the principles are hereunder:
- Start investing ASAP.
- When you have started investing don’t stop the SIP, and stay invested.
- Throw away the credit cards.
How to prepare financial planning that allows you to achieve financial inclusion?
The author has given an 8-step formula to achieve financial freedom.
Step #1. Calculate the cash flow that includes either the salary credited in your bank account or business profit and the expenses in a month.
Step #2. Calculate your net worth by taking into account your current assets [bank balance, jewelry, equity shares, EPF balance, etc.] and current liabilities [Car loan, house loan, credit card bills, personal loan, etc.].
Step #3. Calculate the corpus that you are dreaming of at the retirement and ensure it is sufficient to run all the expenses in the post-retirement life. When it’s done, start investing NOW to achieve the financial goal.
Step #4. When you have calculated the retirement corpus, calculate what monthly investment allows you to achieve the financial goal.
Step #5. Once you have finished what amount you should invest a month, start investing RIGHT NOW and diversify your portfolio across various asset classes following risk appetite and time horizon.
Step #6. Track the progress at a regular interval to make sure you are on the right path.
Step #7. You are free to rebalance your portfolio across various asset classes as per your time horizon and risk appetite. But don’t invest 100% on equity since equity delivers robust returns as compared to debt. Invest your savings as per your risk appetite and time horizon. For example, if your target is to buy a 4-wheeler within the next 5 years then as an intelligent investor, invest in debt. But if you are preparing your retirement fund then it’s a good idea to invest in the equity market.
Step #8. Enjoy with your family members and family friends whenever you have achieved a milestone.
How to save income tax?
No matter how intelligent you are, when you have no idea about what are the deductions and exemptions available under chapter VI-A of the income tax act, taxes will take a significant portion of your income. In this book, the author has given an overview of how an individual can save taxes by availing the deductions that are allowed under the chapter VI-A of the income tax act, 1961.
This is a must-read book. The author has delivered the steps by following which any individual can achieve financial freedom and has also assisted how to decide whether you have achieved your financial goal and it’s the RIGHT time to retire from your 9-to-5 job.
‘Moneywise – The Aam Aadmi’s Guide to Wealth & Financial Freedom’ by Sharath Komarraju
Do you belong to that section of the audience who is at sixes and sevens when their mind stumbles with various questions namely how governments print money or why ‘Gold Reserves’ are so important, and counting?
Then this is the must-read book for you. In this book the author has delivered a simple, accessible guide without any financial jargon. By reading this book you will find what are the different types of asset classes that exist in this investing universe namely bonds, stock, real estate, gold, etc., and what role they play not only in the economy of the country but also in the lives of John Doe.
Your profession is not a matter, be it a lawyer, or a doctor, or a stock market trader, by reading this book you will learn some positive lessons that will allow you to take baby steps towards managing your wealth in the best plausible way.
Plus, this book is a gold mine when you are searching that by investing in which asset classes your capital will multiply over a period of time that allows you to lead a worry-free post-retirement life.
In the last chapter, the author has coined the term ‘The Permanent Portfolio’ where he shares his secret strategies that allow a retail investor to build a stock portfolio that is shock-proof.
After reading various investing and personal finance books I have found that the world of personal finance is filled with books that offer a ‘fit-for-all’ formula to achieve financial inclusion. All the authors and publishers target the broader audience under one roof. But after reading ‘Money Wise’ I have found this is a must-read book for an individual. This book offers various strategies regarding how to pay off the debt and how an individual can manage the wealth in the best plausible way.
‘Let’s Talk Money’ by Monika Halan
Are you looking for a personal finance book that will cover not only salary management but also retirement planning?
Then there’s no reason to read this book at least once since there aren’t ample numbers of books that cover every nook and corner of personal finance.
What to do after the salary is credited to the bank account?
A majority of the workforce who lives from paycheck to paycheck has common psychology that the money lying in the saving account is free for spending. To start saving, the author has offered a strategy that will allow you to manage the finances in the best plausible way.
The first and foremost strategy cite by the author is that create the three different pockets for different purposes namely income, spending, and investment account. When your salary is credited to your account transfer the capital in respective pockets ASAP.
After creating the three pockets, divide the salary into three segments namely living cost, EMIs, and savings. In accordance with the 50/30/20 rule, your salary segmentation should be like this: 50% on household expenses, 30% on wish lists such as EMIs of goods or services, and 20% on savings. Your primary goal should be to transfer 20% of the salary into the investing pocket.
After the segmentation, it’s high time to create an emergency fund to cover the expenses owing to unforeseen or unavoidable expenses.
But what amount of money should you put in the emergency fund?
If you are a sole bread earner without any dependent then reserve 6 months of expenses including household expenses, utility bills, even the Netflix subscription, etc.
If you are a sole bread earner, but has dependent parents then at least 1-year of expenses.
If you and any one of your parents is earning with no dependents then 3 months of expenses is more than enough.
It’s a good idea to invest the capital in short-term debt funds or ultra-short-term liquid funds that not only allows you an overnight withdrawal but also retains the purchasing power by beating inflation.
Why should you buy an insurance policy?
A majority of the workforce thinks that the insurance offered by their company is sufficient, but this isn’t true. Have you ever thought about what will happen when you will be fired from the job?
Opt a family floater health insurance for your family ASAP. As a good rule of thumb if you belong to small towns then 3 lakhs is satisfactory but for metro cities, it’s 15 lakh.
Your next move will be to buy a term insurance plan for you if you are the sole bread earner of the family. As a rule of thumb, the insured amount should be anywhere between 8 and 10 times of your annual salary.
How to start investing?
Since the investing world has various asset classes namely equity, debt, real estate, gold, and counting that can lead a retail investor into decision paralysis. In this book, the author has given a detailed snapshot of all the asset classes. The author has cited when your time horizon is anywhere between 3 and 5 years, then it’s short-term investing and anything exceeds 5 years is long-term investing. When investing for the short-term such as buying a car then you should invest in liquid funds or ultra short-term funds. But if you are investing for your retirement then you should start investing in the equity with as low as 1000.
What’s the ideal ratio of investing across various asset classes?
The ideal ratio to investing in equity is [100 – Your current age]. If your current age is 25 then you should invest 75% in equities since the equity market is a voting machine in the short run, but a weighing machine in the long run.
How much is enough for a happy retirement?
As a good rule of thumb, when you are 40 years old then you should have 3 times your annual income, at 50 it’s 6 times and at 60 it’s 8 times of income in a financial year.
Long story short, this book helps an individual to not only understand the basics of personal finance but also prepare actionable strategies to achieve financial goals.
Hope this article helps you to find the best Indian books on personal finance. If you have found this post helpful do share this post and let your friends learn the basics of personal finance and manage their finance best plausible way.
- Read also: Best Personal Finance Books for College Graduates
- Read also: Best Stock Market Books by Indian Authors
Have I missed any best personal finance books by Indian authors? Make a comment, so that I can add the best selling personal finance books by Indian authors ASAP.