Category: Finance

SALT stands for State And Local Taxes. It’s basically state and local income taxes and property tax. The 2017 Trump tax law capped the tax deduction for SALT at $10,000. If you paid more than $10,000 in state and local taxes, the amount above the $10,000 cap wasn’t deductible.

The SALT cap primarily affected high earners in high-tax states. Legislators from those states had been demanding that the SALT cap be raised or repealed. The 2025 Trump tax law — One Big Beautiful Bill Act — finally raised the SALT cap for the next few years.

Temporary SALT Cap Increase

The SALT cap goes from $10,000 to $40,000 in 2025 (one-half for married filing separately). The cap will further increase by 1% a year until 2029. Then it returns to $10,000 in 2030.

Year	SALT Cap
2025	$40,000
2026	$40,400
2027	$40,804
2028	$41,212
2029	$41,624
2030	$10,000

I pay more than $10,000 in state income tax and property tax. With the SALT cap increase, my SALT deduction will be uncapped because it’s less than $40,000. Does this mean my total deductions will increase now?

Stay In Standard Deduction

Nearly 90% of taxpayers take the standard deduction. That percentage will drop slightly after the SALT cap increase, but it’s expected that over 80% of taxpayers will still take the standard deduction.

I’m in this camp. I took the standard deduction when the SALT cap was $10,000. I will continue to take the standard deduction even though I pay more than the old cap in state and local taxes. This is because when I add my other itemizable deductions (mortgage interest, charity donations, …) to the total state and local taxes I pay, it’s still lower than the standard deduction.

You will get no increase in your deductions from the SALT cap increase if you took the standard deduction under the old cap, and you’ll still take the standard deduction under the new cap (except for the rise in the standard deduction itself, unrelated to the SALT cap).

Bunching

Bunching means shifting the timing of payments to put two years’ worth of state income tax or property tax into one calendar year. You can do it with charity donations, too.

The tax deduction on the federal tax return goes by the actual date of the SALT payments, not which tax year those payments are for. If you can shift a December payment to January or a January payment to December, you may have enough SALT payments in one calendar year to push you over the hurdle of the standard deduction. Then you will alternate between itemizing in one year and taking the standard deduction next year, as opposed to taking the standard deduction in both years.

Switch to Itemizing

You will get a partial increase if you took the standard deduction before, and you will switch to itemizing after the SALT cap increase.

You get a partial increase because you must pass the hurdle of the standard deduction first. Taking the standard deduction gives you an allowance of free deductions. It’s free because everyone gets the standard deduction; you don’t have to do anything to get it. Switching from the standard deduction to itemized deductions means now you must pay for the allowance that used to be free with a part of your itemized deductions. Your deductions will increase only by what remains after you pay for the free allowance.

For example, suppose you have $5,000 in non-SALT itemizable deductions. You have $15,000 in total itemizable deductions under the old SALT cap, and the standard deduction is $31,500 for married filing jointly. You grab the $16,500 free allowance when you take the standard deduction. Suppose now your total itemized deductions under the new SALT cap are $45,000. Your SALT cap increases by $45,000 – $15,000 = $30,000, but your total deductions only increase by $45,000 – $31,500 = $13,500. You must use $16,500 from your $30,000 increase to pay for the allowance that used to be free.

Continue Itemizing

You will get the full increase if you were already itemizing deductions, and you’ll continue to do so. An increase in the SALT cap increases your SALT deduction to the amount you paid in state and local taxes, up to the new cap. This increase adds to your itemized deductions dollar for dollar.

Income-Based Phaseout

However, the new cap isn’t $40,000 for some high earners, because it has an income-based phaseout. The SALT cap drops by 30% of the Modified Adjusted Gross Income (MAGI) above $500,000. When the MAGI reaches $600,000, the SALT cap is back to the old $10,000.

The MAGI for the phaseout is the AGI for most people. It doesn’t add back untaxed Social Security or tax-free muni bond interest. The “modified” part is only for foreign earned income exclusion and residents in Puerto Rico, Guam, American Samoa, and the Northern Mariana Islands.

The table below shows how the SALT cap is phased out with income. Interpolate for an income between two rows in this table.

2025 MAGI	SALT Cap
$500,000 or less	$40,000
$510,000	$37,000
$520,000	$34,000
$530,000	$31,000
$540,000	$28,000
$550,000	$25,000
$560,000	$22,000
$570,000	$19,000
$580,000	$16,000
$590,000	$13,000
$600,000 or more	$10,000

The starting point for the phaseout also increases by 1% a year through 2029. There’s no phaseout in 2030 when the SALT cap goes back to $10,000.

Year	Phaseout Starts At
2025	$500,000
2026	$505,000
2027	$510,050
2028	$515,151
2029	$520,302
2030	No phaseout

Marriage Penalty

The $500,000 income threshold for the phaseout is the same for both single and married filing jointly. It carries a huge marriage penalty. Two single persons, each earning $400,000, can deduct up to $80,000 between the two of them. A married couple earning $800,000 is phased out to a $10,000 cap. Married filing separately doesn’t help because both the phaseout threshold and the cap are cut in half.

Higher Marginal Tax Rate

The SALT cap phaseout also increases the marginal tax rate in the phaseout income range. The tax bracket in that income range is normally 32% or 35%. Because a $10,000 increase in the phaseout income range also reduces the SALT cap by $3,000, the marginal tax rate becomes 32% * 1.3 = 41.6% or 35% * 1.3 = 45.5% when the SALT paid is limited by the cap.

High-earners in the phaseout income range should do all-out pre-tax contributions to lower their AGI.

Calculator

I created a calculator to show whether you’ll see no increase, a partial increase, or a full increase from the new SALT cap. The calculator takes into account both the standard deduction and the SALT cap phaseout at higher incomes. It calculates the federal income tax before and after the SALT cap increase to show the tax savings.

The calculated tax does not include the Net Investment Income Tax (NIIT).

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Most people will see no benefit from the SALT cap increase because they will continue to take the standard deduction. Some will see a partial increase in their deductions when they start itemizing. Only people who were already itemizing deductions before will see the full increase, unless they get phased out.

You’ll find more deep dives on recent changes from the 2025 Trump tax law in the full OBBBA series.

Starting August 1, 2025, the National Payments Corporation of India (NPCI) has rolled out a set of new rules for UPI Transaction Charges to enhance transaction efficiency, reduce system load, and improve user security. Whether you’re a frequent user of Google Pay, PhonePe, Paytm, or BHIM, these updates will impact your daily UPI experience.

Here’s everything you need to know about the latest UPI changes.

Why These Changes?

With over 12 billion monthly transactions, UPI is India’s most preferred payment system. However, growing traffic has put pressure on banking APIs and raised concerns over payment delays, system overload, and fraud. The new rules aim to:

• Reduce stress on the backend systems
• Enhance transaction transparency
• Improve payment security
• Streamline auto-debits and balance checks

UPI Transaction Charges Rule Changes from August 1, 2025

Limit on Balance Checks

You can now check your bank balance only 50 times per day per UPI app (e.g., GPay, PhonePe, Paytm).
Why? This reduces overload on banking APIs.
What if I exceed the limit? You’ll be blocked from checking your balance on that app for 24 hours.

Auto-Balance Display After Each Transaction

Now, after every successful UPI transaction, your updated account balance will automatically be shown.

This reduces the need to manually check your balance.

Cap on Bank Account Linking

You can link up to 25 bank accounts per day via a UPI app using mobile number/account fetch options.

This prevents misuse through excessive account linking attempts.

Limit on Checking Transaction Status

For pending UPI transactions, you can now check the status only 3 times per transaction — with a minimum 90-second gap between each attempt.

This ensures system stability and deters API abuse.

Auto-Debit Processing Time

Auto-debits for EMIs, SIPs, subscriptions, etc., will be processed only during non-peak hours:

• Before 10:00 AM
• After 9:30 PM

This ensures faster processing and better system performance.

Payee Name Display for Transparency

Before confirming a UPI transfer, apps would show the recipient’s registered bank name along with the payee name.

This reduces the risk of fraud or wrong transfers.

UPI Transaction Limits in 2025

The NPCI has set general UPI transfer limits, but individual banks can define their own within these guidelines.

Transaction Type	Limit
Standard UPI transfers	₹1,00,000/day
Capital markets, insurance, remittances	₹2,00,000/day
Tax payments, education, IPOs, hospitals	₹5,00,000/day

Bank-level limits vary. For instance:

• SBI, HDFC, Axis, ICICI: ₹1,00,000/day
• PNB: ₹50,000/day
• Union Bank: ₹2,00,000/day
• ICICI on Google Pay: ₹10,000–₹25,000

Some banks also set weekly or monthly limits.
For example:

• IDFC Bank – Weekly: ₹1,00,000 | Monthly: ₹30,00,000

New Interchange Fee Rules for Wallet-Based UPI Payments

If you use wallets like PhonePe Wallet, Paytm Wallet, Amazon Pay, etc., to make UPI payments above ₹2,000, interchange fees now apply — but only to merchants.

What is an Interchange Fee?

It’s a small fee (0.5%–1.1%) charged to merchants, not customers, when payments are made via Prepaid Payment Instruments (PPIs).

Merchant Category	Interchange Fee
Fuel	0.5%
Telecom, Utilities, Education	0.7%
Supermarkets	0.9%
Insurance, Mutual Funds, Govt, Railways	1.0%
Others (Above ₹2,000 via Wallets)	Up to 1.1%

Customers are not affected—only merchants pay this fee.

Who Pays the Wallet Loading Fee?

When users recharge wallets with more than ₹2,000, the wallet issuer (e.g., PhonePe or Gpay or such others) pays 0.15% as a wallet loading service charge to the user’s bank.

You don’t pay anything extra.

Are UPI Transactions Still Free?

YES.
All personal UPI payments (Peer-to-Peer and Peer-to-Merchant via bank accounts) remain free for users, even above ₹2,000.
Only wallet-based PPI merchant transactions above ₹2,000 attract interchange fees—and even then, merchants pay, not customers.

Summary of What Changes for You

Feature	Old Rule	New Rule (Aug 1, 2025)
Balance Check	Unlimited	50/day per app
Auto Balance Display	Manual	Auto after every transaction
Account Linking	Unlimited	Max 25 accounts/day per app
Pending Txn Status Check	Unlimited	Max 3 times with 90-sec gap
Auto-Debits	Anytime	Only before 10 AM/after 9:30 PM
Wallet-based UPI Fee	Free	Interchange fee on PPI > ₹2,000

Final Thoughts

The new UPI rules are user-centric, aiming to enhance reliability, transparency, and digital security. As a user, you still enjoy zero-fee UPI transfers for personal use, while the backend gets smarter and more streamlined.

So, continue enjoying seamless payments—just be mindful of the new usage caps and wallet-based fee structures (if you’re a merchant).

Is Gold Jewellery a Good Investment? Learn how wastage, making charges & GST silently eat up to 30% of your money — plus smarter ways to invest in gold.

Gold holds a special place in every Indian household — whether it’s for a wedding, a festival, or simply an investment for tough times. We Indians love buying gold, especially as jewellery. But have you ever wondered how much of your hard-earned money goes waste when you buy a gold chain, ring, or bangle?

Most people think, “Gold is gold — it will always hold value!” But the reality is quite different. When you buy gold jewellery, you don’t just pay for the gold. You also pay for wastage, making charges, and taxes — all of which quietly eat away at your investment.

In this post, I will explain, in simple words, how much you actually lose when buying gold ornaments — with real examples, calculations, and tips to save yourself from unnecessary losses.

Is Gold Jewellery a Good Investment? Beware 30% Hidden Loss!

What Determines the Cost of Gold Jewellery?

When you walk into a jewellery shop and ask for a gold chain, you pay more than just the gold’s market price. Your final bill includes:

Gold Price: Based on current market rate for pure gold (24K).
Purity: Jewellery is usually 22K or lower, not pure 24K.
Wastage: Extra gold lost in making the ornament, so you pay for it too.
Making Charges: Labour cost to design, cut, polish, and finish the piece.
GST: 3% tax on the entire amount.

How Purity Affects Your Gold’s Value

Pure gold is 24 Karat (99.9% pure). But ornaments are rarely made in 24K because pure gold is too soft.

Most Indian jewellery is 22K (91.6% pure) or 18K (75% pure). So, when you buy 10 grams of 22K gold, it only contains 9.16 grams of pure gold. This already means a small portion of your money goes towards other metals mixed to make the gold durable.

The Hidden Cost of Wastage

Jewellers often mention a “wastage charge”. Why? When they melt, cut, or polish gold, tiny amounts are lost. Traditionally, they charge 5% to 10% as wastage, though modern technology makes real wastage minimal.

For simple, machine-made jewellery, wastage might be 3%–5%. For handcrafted, delicate designs, it can go up to 15%.

This wastage is added to your bill — you pay for gold that you don’t even get to keep!

Making Charges: The Labour Fee You Never Get Back

Making charges can vary widely:

• Machine-made chains or bangles: 8%–12% of gold value.
• Intricate handmade jewellery: 15%–25%.

This cost is non-refundable. If you ever sell the ornament, no jeweller will pay you for making charges.

Buying Price vs Selling Price Difference — The Hidden Shock

Many gold buyers assume that when they sell back their gold jewellery to a jeweller, they will get the same prevailing gold rate per gram. Unfortunately, that’s far from reality.

Jewellers usually buy back old jewellery at a discounted rate compared to the day’s market price. For example:

• They may deduct 2% to 5% from the prevailing gold rate as their margin.
• Some jewellers may also reduce the rate further if the ornament is damaged, stones are missing, or it’s an outdated design.
• On top of this, the making charges and wastage charges you paid while buying are never refunded — they’re gone forever.

Example –

Suppose the market price of 22K gold today is Rs.1,000 per gram.

• When you buy, you pay Rs.1,000/g + making charges + wastage + GST.
• When you sell, the jeweller may buy it back at only Rs.950–Rs.980 per gram, depending on purity, deductions, and policy.

So, not only do you lose on making and wastage, but you also lose on the lower buyback rate — adding another 2–5% hit to your pocket.

GST: The Tax You Forget

When you buy jewellery, 3% GST is charged on the total — gold value + wastage + making charges.

Again, this tax is not recoverable when you sell the gold later.

Real Example: How Much You Actually Lose

Let’s take a simple, practical example:

• Market price for pure gold (24K): Rs.1,000 per gram (hypothetical)
• You buy a 10 gram 22K gold chain

Your bill:

Component	Amount
Gold value (10g)	Rs.10,000
Wastage 10%	Rs.1,000
Making charges 10%	Rs.1,000
Subtotal	Rs.12,000
GST 3%	Rs.360
Total paid	Rs.12,360

So, you pay Rs.12,360 for an ornament with only 9.16 grams of pure gold in it.

Now, Let’s See What Happens When You Sell It Back!!

After a few years, you decide to sell your gold jewellery. For simplicity, let’s assume the market gold price stays the same at Rs.1,000 per gram. (Yes, I know prices don’t freeze — but this helps explain the hidden loss).

• The jeweller checks the purity and net weight: 9.16 grams
• Current market rate: Rs.1,000 per gram
• But jeweller’s buyback rate is usually 2% lower ? so they offer you Rs.980 per gram
• Gross value: 9.16g × Rs.980 = Rs.8,977
• Less melting & assay charges (around 3%): Rs.270
• Final amount you actually receive: ~ Rs.8,707

What Did You Really Lose?

• Amount paid when you bought: Rs.12,360
• Amount you got back: Rs.8,707
• Loss: Rs.3,653
• Percentage loss: ~30%

So, you lose nearly 30% of your money, even if gold prices don’t drop.

This is where most buyers get shocked — you pay the full price + making charges + wastage + GST, but when selling, you:

• Don’t get back any making or wastage charges
• Lose 2–5% on the buyback rate
• Pay melting and purity check deductions

Net result: A big chunk of your so-called “investment” simply vanishes!

What annual growth is needed to break even the LOSS?

We use CAGR (Compounded Annual Growth Rate):

Formula:
Final Amount = Initial Amount × (1 + r)^n

Where:

• Final Amount = Rs.10,000 (break even)
• Initial Resale Value = Rs.7,000 (after costs)
• n = holding period (years)
• r = annual growth rate

So,

10,000 = 7,000 × (1 + r)^n

(1 + r)^n = 10,000 / 7,000 = 1.4286

Required CAGR to break even the loss

5 Years holding period – ~7.36% per year

10 years holding period – ~3.63% per year

15 years holding period – ~2.36% per year

20 years holding period – ~1.79% per year

So, if you hold jewellery for:

• 5 years, gold must appreciate ~7.4% per year just to get your money back.
• 10 years, you still need ~3.6% annual growth to break even.
• 15 years, about ~2.4% annual growth needed.
• 20 years, about ~1.8% annual growth needed.

But wait — does gold beat inflation?

India’s long-term inflation is 5–6% per year. So, to actually grow your wealth above inflation, gold must appreciate by:

• Inflation (5–6%) + break-even CAGR

So for a 5-year holding, gold must grow at about 7.4% + 6% = 13–14% per year just to beat inflation and recover wastage losses.
For 10 years, it must grow at about 3.6% + 6% = 9–10% per year to actually deliver real returns.

What does history say?

Over the long term (20–30 years), gold in India has averaged 8–10% annual return, but:

• This includes periods of huge spikes (crisis years)
• For long stretches, gold barely moves in price (early 90s, early 2000s)
• Jewellery always loses to pure investment gold because of the wastage/making

(Note – Refer my articles on Gold where I have proved with around 45 years of data that even after holding for the long term, there is no guarantee that it will even beat inflation.)

Coins vs Ornaments — Which is Better?

What about gold coins or bars? They’re slightly better:

• Coins are usually 24K.
• Wastage is minimal (1%–2%).
• Making charges are lower (1%–3%).
• You still pay GST.

So, the resale loss for coins is around 5%–10%, much lower than for ornaments.

But you must sell them back to the same jeweller to get a better rate. Otherwise, new jewellers will deduct assay and melting charges again.

Best Ways to Invest in Gold Without Wastage

If your goal is investment — not jewellery for wearing — there are better options than buying physical gold:

Sovereign Gold Bonds (SGBs)
Issued by the RBI, these bonds are linked to gold’s market price. Even though new issues are not available, you can buy the old issues through the secondary market.

• You get the gold price at maturity.
• Earn 2.5% annual interest (extra return).
• No GST, making, or wastage.
• Maturity proceeds are tax-free.
  Perfect for long-term investors.

Gold ETFs (Exchange Traded Funds)
These are digital units linked to gold prices.

• You hold gold in Demat form.
• You pay a small expense ratio (~0.5%).
• No physical storage worries.

Gold Mutual Funds

• They invest in Gold ETFs.
• No headache of having a Demat Account.
• Selling and buying are easy directly with Mutual Fund Companies.
• Bit expensive in terms of cost if you compare it with the Gold ETF. But hassle-free investment.

Tips to Reduce Loss When Buying Gold Jewellery

Always buy BIS-hallmarked jewellery (certified purity).
Choose simple designs with low wastage.
Negotiate making charges — bigger shops often reduce them for good customers.
Keep the bill safe — needed for resale.
Sell to the same jeweller who sold you the piece.

Key Takeaway

Buying gold jewellery is a cultural joy — but never treat it as an investment. If you buy a gold chain today for Rs.1,00,000, understand that about Rs.25,000–Rs.30,000 will never come back. You pay for design, wastage, and taxes — all of which have no resale value.

So, next time you step into a jewellery shop, think carefully: Do you want jewellery for wearing or gold for investing?

For wearing, ornaments are fine, but for investing, Sovereign Gold Bonds, Gold ETFs, or gold mutual funds are smarter options that preserve your money’s value better.

Gold will always shine in our culture, but your money shouldn’t get wasted for no reason. Understand how jewellers price your ornaments, check the purity, negotiate making charges, and know your options.

As I mentioned above, if your reason for purchasing gold jewellery is as a commodity, then buy physical gold jewellery. But buying gold jewellery as an investment for your future requirement is a loss of money and a risk of safekeeping.

Beer guys shouldn’t date girls.

The party was out of my league. For the champagne girl, it was likely beneath her. Even though I knew this, I still approached her and struck up a conversation. In retrospect, I should have seen the car wreck coming 100 miles away, but there is something about beer guys like me not being able to resist champagne girls. I left with her phone number and a date for the next week.

The problem with dating a champagne girl is that I always feel that I have to move up to her level, but since that level is usually way out of my financial league, I pretend by moving up a few levels closer than where I really am. This just makes the disaster all the more complete because I assume that since I’ve made an effort, the champagne girl will also make the effort and meet me half way and lower her level. It never happens. Champagne girls don’t compromise like that.

The Date

I should have just taken her to the local Chilis. She would have hated it, but she would have hated it for a whole lot less money. Instead, I picked a nice restaurant several levels above where I would normally go to.

It was obvious that she wasn’t impressed with my restaurant choice from the start. I saw the signs, and I should have just called it off right then and there. Instead, we ordered. She picked the most expensive appetizer to be followed by the most expensive entree on the menu. She crinkled her face when I ordered a wine that didn’t come to three figures even though it was worth enough cases of beer to last me several months.

When the appetizer arrived, she didn’t touch it. She continued with small talk and I noticed that she hadn’t touched her wine as well. When the waiter arrived with the main dish to see the appetizer hadn’t been touched, you could see the look of concern on his face:

“Is everything all right?” he questioned.

“Yes, perfect,” she smiled. “I’m finished, thank you,” and handed him the untouched plate to take back and throw away.

The main meal progressed the same way. She chatted lightly but the food never left the plate. The waiter raised his eyebrow again at the untouched plate. “Is there something wrong with the meal?” he questioned again.

“No, everything was wonderful. I’m finished, thank you,” she said indicating he could take her plate away.

That’s when I couldn’t hold it back any longer and said, “could you please wrap the meal so we can take it home.”

You would have thought I was clubbing baby seals right in front of her from the look she shot at me. “No, there is no need for that,” she said back to the waiter.

“Yes, there is a need for that,” I said. “We’d like it to go.” Her look indicated that I was not only clubbing baby seals, but also chopping off the feet of baby bunny rabbits to make good luck charms.

“No, that really won’t be necessary,” she said in a firm voice.

“Oh, yes it will be,” I replied. “If she doesn’t want it, then I will eat it. Thank you.”

As the waiter left, champagne girl was not at all happy with me. “That was my meal. If you insist on taking that meal out of this restaurant, then this date is over,” she stated as if this was even an issue at this point.

“I think that has already been well established,” I said. When the waiter returned with the meal, champagne girl said she wanted to be taken home right away.

“You can leave anytime you want. I’m sure the front desk can get you a taxi.”

Champagne girl stuttered. “But I don’t have any money on me.”

I pushed her wrapped meal in front of her. “Well, then you may want to eat this so you have enough energy to walk home” I said and left.

I Failed The Champagne Girl Money Test

I later learned that I failed the champagne girl money test. Apparently, one way that champagne girls determine whether you have enough money to date them is to order the most expensive meal on the menu and not touch it. If the guy makes any mention about it, then he doesn’t have enough money to date them. Lesson learned.

Over the years, I’ve learned that I’m a beer guy and realizing that has saved me a ton of money. I’d love to be suave and have a ton of money so that I could sweep champagne girls off their feet, but I know that even if I do become wealthy in the future, I’ll still be a beer guy. It took a long time, but I’ve realized trying to be something I’m not is a great way for me to spend a lot of money achieving nothing. I can accept who I am even if it isn’t the perfect TV image I’d like and this has allowed me to conquer one of the most expensive habits that I ever had — trying to make myself appear better in other people’s eyes than I really am.

Now if you know a champagne girl that enjoys BBQ wings and beer, let me know so I can get her my number.

(Photo courtesy of Tom Williamson)

When I started my first blog in 2004, I was in my early 20s.

I’m now in my mid-forties. And while my first blog no longer exists, I still remember a lot of the posts I’d written (and I can always peek into the Wayback Machine if I forget, you can too… enjoy!).

Over the last twenty years, my life has changed a lot.

I got married, we started a family, we bought our forever home, we got a wonderful dog, etc.

My thinking about money has changed too.

Here how:

Table of Contents

1. Age & finances play a big role
2. It’s OK to slow down
3. Money is a tool for improving quality of life
4. Becoming comfortable with investment losses
5. Stop playing the game when you’ve won
6. I am getting better at spending
7. What hasn’t changed?

Age & finances play a big role

Before we get into how my thinking has changed, the reason it’s changed has a lot to do with age, life experiences, and the improvement of our finances. When you have more money, your approach to money will change. In fact, it has to change.

When I was 23, I had exactly $8,745.69 to my name (and that wasn’t even taking into account $35,000 of student loans, which I didn’t record in my net worth spreadsheet). And $4,519.44 of that was in a Roth IRA.

What you do when you have $4,226.25 is different when you have $422,625. Or more.

It’s natural that my approach to money would change and evolve.

Also, the considerations and maturity of a 20-year-old are vastly different than that of a 40-year-old.

So I attribute much of these changes to better finances and getting older.

“What got me here won’t get me there” – evolving is necessary.

It’s OK to slow down

Do you remember the movie In Time?

It was a science fiction movie starring Justin Timberlake in which people stopped physically aging once they hit 25 years old. They are given a year of life that they use as currency. Once you run out of time, you die.

I enjoyed science fiction because you’re asked to accept an absurd premise and then think about the implications of that premise. The premise isn’t all that absurd and the implications are not unlike real life.

“Poor” people in that world have limited time and rush through everything. They eat faster, they run everywhere, and they rush through things because in that world, time is literally money. And when you run out of time, you die.

In our world, when you’re young, you’re often rushing through things too. You want to get to the next thing. You’re eager to achieve as much as you can, as quickly as you can.

As you age and as your savings and investments grow, you realize that the things you do have a smaller and smaller impact on your finances.

If you’ve been diligently saving $500 a month for 10 years (8% annual return compounded monthly), you now have ~$91,500 in savings on total contributions of just $60,000.

Do it for 15 years and now you’re at ~$173,000.

20 years = $294,500 and 30 years = $745,000.

At some point, if you’re diligent, your money makes more money than you do. There’s no need to rush because compounding is rushing for you.

I grew up in a middle class family that was financially stable but we were not rich.

We were frugal by choice. We saved money because it was expensive to fly back to Taiwan. We would go back about once every four years. We also saved because for some time we were the only ones in our family to be in the United States. It was our safety net.

The best analogy I can think of is that we slept with sweaters on but were never worried we wouldn’t have heat. I was never concerned where my next meal was but we rarely went out to eat.

When I was in my twenties, I remained frugal because that’s how I was raised. I saved a high percentage of my income because my expenses were low. I still went out with friends and had fun but didn’t make many major purchases. Cars were used and apartments were rented with a roommate – frugal but my expenses were not cut to the bone.

As I’ve gotten older and built up a larger financial cushion, I’ve been able to loosen up the purse strings a bit. We pay for things that I could do myself, but the time savings lets us do another things. Money is now a tool that we can use, rather than a resource that we need to hoard.

I still get annoyed at waste (yes, I turn off our LED lights knowing full well I’m saving mere fractions of cents!), something I doubt I will ever surrender, but spending money to make our lives a little easier is something I’m comfortable doing.

Becoming comfortable with investment losses

My first foray into investing was during the dot com bubble and I lost a (relative) ton of money. My portfolio was just a couple thousand dollars but I lost a big chunk in companies that I thought were the future (I was not a good predictor of the future.. and everyone lost money on JDS Uniphase).

In the more recent market volatility (during the pandemic and also this most recent inflation/Recession fearing market), we’ve “lost” the equivalent of houses. These are paper losses and only if you consider market highs as “ours” (which it isn’t). But we also got them back as paper gains once the market recovered.

In these instances, I don’t lose my mind because we’ve gone through these ups and downs before. When the market is soaring, the money isn’t “ours.” When the market is sinking, the money isn’t “ours.” It’s only ours when we sell and as long as we keep our financial house in order, we won’t need to sell.

Stop playing the game when you’ve won

When you’re 20, an aggressive asset allocation makes sense. You have nothing but time on your side and the volatility won’t break you.

Even at 40, you still have plenty of time but the amount of time is getting shorter. In the future, there will be years in which I’ll want to adjust my allocation so it’s less aggressive.

There’s also the issue of whether it makes sense to take on risk when you’ve already won. Our finances are stable.

I avoid speculation completely. That means I missed all the booms and busts of cryptocurrency. I didn’t invest in individual high flying companies like Tesla (though I am a shareholder now that they’re in the S&P 500 index!). It’s just not a game I’m willing to play because I don’t need to play it.

Doubling a small sum of money might be exciting but it doesn’t impact our life. Losing it would most certainly impact my mood. No upside, all downside… why bother?

I am getting better at spending

My friend Ramit Sethi says that spending is a skill. I agree.

My frugal upbringing was rooted in the idea that being frugal was a positive character trait. I still believe it is.

But it’s not the only character trait I possess.

And my ability to grow and evolve is one of them and one that I want to cultivate more than frugality.

And part of that process is learning how to spend money wisely. Money is a precious resource that shouldn’t be squandered but that doesn’t mean you should be looking to spend as little as possible.

By spending money in the areas that you care about, you’re improving your quality of life. And quality of life is the whole ball game!

When I’m on my deathbed, I won’t care about what’s in my bank account. While I’m not ready to Die with Zero, I appreciate the message and the sentiment.

What hasn’t changed?

The basics of personal finance are pretty much the same.

Harold Pollack summarized it on an index card:

1. Max your 401(k) or equivalent employee contribution.

2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds.

3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.

4. Save 20% of your money.

5. Pay your credit card balance in full every month.

6. Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts.

7. Pay attention to fees. Avoid actively managed funds.

8. Make financial advisors commit to the fiduciary standard.

9. Promote social insurance programs to help people when things go wrong.

I think the index card still applies but needs a few additions.

It’s always important keep an eye on costs, especially if it impacts something as important as compounding. When you can get an index fund and pay a 0.03% expense ratio each year, why pay more?

While I don’t price check every single purchase we make, I still comparison shop when it comes to big expenses. It’s less about cutting costs and more about not letting someone else take advantage of us. I’m OK with spending my time there.

The basics are still the basics, but everything around it has evolved.

How have your finances evolved as you aged?

The new 2025 Trump tax law includes provisions for “No Tax on Tips” and “No Tax on Overtime.” I covered “No Tax on Tips” in a different post. Let’s look into “No Tax on Overtime” now. If you earn both tips and overtime pay, you can benefit from both!

Non-Exempt W-2 Employees

In general, only W-2 employees are entitled to overtime pay. Independent contractors paid by a 1099 don’t qualify for overtime. Nor do self-employed business owners.

Among W-2 employees, for the most part, only hourly (“non-exempt”) employees are entitled to overtime pay. Most salaried (“exempt”) employees don’t receive overtime pay, regardless of the number of hours they work in a week.

Some salaried employees aren’t paid high enough to qualify as exempt employees. They’re still classified as non-exempt and are entitled to overtime pay.

Exempt and non-exempt refer to the requirements mandated by the Fair Labor Standards Act of 1938. Being exempt means that the employer isn’t required to follow those requirements in its employment relationship with you. Your employer will tell you whether you’re exempt or non-exempt if you’re not sure.

If you’re currently a salaried exempt employee, it’s unlikely that your employer is willing to re-classify you as non-exempt and give you the advantage of “No Tax on Overtime.” Having you as a non-exempt employee would subject the employer to many requirements from the Fair Labor Standards Act. An employer wants to find every reason to make an employee exempt from those requirements.

If you’re an exempt employee and your employer voluntarily pays you extra for extra work, it still doesn’t count. The new tax law limits “No Tax on Overtime” to compensation “required under section 7 of the Fair Labor Standards Act of 1938.” The extra pay doesn’t count because exempt employees aren’t required to be paid for overtime.

Not What You Think

The Fair Labor Standards Act requires that overtime must be paid at least 1-1/2 times the regular hourly wage (“time-and-a-half”). Some state laws and union contracts require double time in some scenarios. Some employers voluntarily pay double time for holidays.

Suppose your regular hourly rate is $30/hour and you’re paid $45/hour for overtime. You receive $450 in gross overtime pay when you work 10 overtime hours in a week. You would think that “No Tax on Overtime” means you don’t pay tax on that $450, but that’s not how it works.

“No Tax on Overtime” covers only the pay premium over and above your regular hourly rate. The “No Tax” part applies to $150 out of the $450 gross overtime pay for those 10 hours. You still pay taxes as usual on $300 earned at your regular $30/hour rate for the overtime hours.

As a result, if your overtime hours are paid time-and-a-half, you’ll have no tax on only 1/3 of your gross overtime pay. If you’re paid double time, you’ll have no tax on 1/2 of the gross overtime pay.

Temporary Window

As is the case with several other provisions in the 2025 Trump tax law affecting individual taxpayers, “No Tax on Overtime” is only effective between 2025 and 2028 (inclusive). It expires at the end of 2028.

Tax Withholding

“No Tax” refers only to the federal income tax. It doesn’t change the Social Security and Medicare taxes withheld from your paychecks. It doesn’t reduce your state taxes.

The IRS will make changes to payroll tax withholding to treat overtime pay differently, but the changes won’t start until 2026. You won’t see any change in your paychecks in 2025 unless you change your tax withholding with your employer.

Tax Deduction

The IRS will add a place on the W-2 form for employers to break out the overtime pay premium. Until then, your employer can report to you outside the W-2. You will have a new tax deduction for your overtime pay premium when you file your tax return. You’ll get a higher tax refund if the tax withholding was too high.

This deduction is available whether you take the standard deduction or itemize your deductions. However, it doesn’t lower your AGI. 100% of your overtime pay will still be included in your AGI. It doesn’t make it easier for you to qualify for other tax benefits, such as the Child Tax Credit.

Dollar Cap

You may not be allowed to deduct all your overtime pay premiums. There’s a $12,500 cap ($25,000 for married filing jointly). You don’t get this tax deduction if you’re married filing separately.

Because most people are paid time-and-a-half for overtime, a $12,500 cap for the premium portion of the overtime pay translates into $25,000 at the regular hourly rate for the overtime hours. If your regular hourly rate is $25/hour, it means you can work 1,000 overtime hours in a year before you hit the cap. That’s like working 60 hours per week every week of the year.

If you’re married filing jointly, and only one of you has overtime pay, your cap is twice as high as that for a single person.

Income Phaseout

The dollar cap drops slowly as your income increases above $150,000 ($300,000 for married filing jointly). It decreases by $100 for every $1,000 of income above the threshold. The cap drops to zero when your income reaches $275,000 ($550,000 for married filing jointly).

Most people won’t be affected by the income phaseout because both the dollar cap and the phaseout threshold are set sufficiently high.

Both Overtime and Tips

“No Tax on Overtime” and “No Tax on Tips” are independent of each other. You qualify for both if you receive both overtime pay and tips (or one person in a married couple gets overtime and the other gets tips). If you’re 65 or older, you also qualify for the Senior Deduction.

Calculator

I made a calculator to help you estimate your federal income tax before and after “No Tax on Overtime” and “No Tax on Tips.” Use the calculator to see how much you’ll benefit. Leave the tips field at 0 if you don’t receive tips. [Email readers: The calculator doesn’t work in emails. Please go to the website to try the calculator.]

If you’re married filing jointly, please include income from both of you.

The calculator estimates taxes using basic assumptions. It assumes the overtime hours are paid time-and-a-half. Your taxes may be different if you have a more complex scenario.

***

You’ll find more deep dives on recent changes from the 2025 Trump tax law in the full OBBBA series.

Making smart investment choices has become more important than ever. With rising prices, changing markets, and new investment options, it’s not enough to simply invest—you need a clear plan to grow and protect your money.  That’s where portfolio management helps. It focuses on building a mix of investments that match your financial goals, time frame, and comfort with risk. Whether you’re just starting out or already investing, understanding the objectives of portfolio management will help you make better decisions. 

In this blog, we’ll explain the key goals of portfolio management and how expert support through portfolio management services and PMS services can guide you in creating a well-balanced, goal-focused investment portfolio.

What Is Portfolio Management?

Portfolio management is the art and science of selecting and overseeing a group of investments that meet an investor’s long-term financial goals and risk tolerance. It involves strategic asset allocation, investment selection, performance monitoring, and rebalancing to keep your investments aligned with changing life situations and market conditions.

Whether you’re managing your portfolio independently or through professional portfolio management services, the ultimate goal remains the same: to grow wealth sustainably while managing risk effectively.

Why Do You Need Portfolio Management Today?

India’s growing investor base, fueled by increased financial literacy, digital platforms, and rising disposable incomes, demands a more disciplined approach to investing. In a scenario where asset classes such as equities, mutual funds, bonds, ETFs, and alternative investments are available at the click of a button, the need for professional management has never been more evident.

Let’s discuss the key objectives of portfolio management that every investor must be aware:

1. Achieving Capital Appreciation Over Time

One of the most fundamental objectives of portfolio management is capital appreciation — the increase in the value of your investments over time. This objective focuses on generating wealth in the long term by investing in growth-oriented assets like equities, diversified mutual funds, and hybrid investment products.

Smart portfolio management involves spotting growth opportunities across asset classes and taking calculated exposure based on individual risk profiles.

How PMS Services Help: Professional PMS services often provide tailored equity and multi-asset strategies designed for capital appreciation. These are managed actively by experienced fund managers who track market movements, economic shifts, and sector trends to help your portfolio grow.

2. Risk Optimization Through Diversification

All investments carry some level of risk, but one of the objectives of portfolio management is to manage and optimize this risk — not eliminate it completely. A well-structured portfolio ensures that your capital isn’t tied to a single sector, company, or asset class.

Diversification ensures that even if one investment underperforms, others can potentially balance the impact. Today’s portfolios may include a mix of domestic and international equities, government and corporate bonds, gold ETFs, REITs, and more.

Current Relevance: In uncertain times — be it geopolitical conflicts, inflationary pressure, or interest rate hikes — diversification becomes your shield. With a strategic spread, your portfolio remains resilient and aligned with your long-term goals.

3. Maintaining Liquidity for Emergency and Opportunity

Liquidity refers to how quickly your investments can be converted into cash without significant loss. A robust portfolio strikes the right balance between high-return but low-liquidity assets (like real estate or long-term bonds) and highly liquid assets like short-term debt funds or savings instruments.

Objective: Ensuring sufficient liquidity to meet unexpected expenses, emergencies, or take advantage of sudden investment opportunities.

Pro Tip: Don’t overlook liquidity while chasing high returns. Professional portfolio management services include liquidity planning as a core element, helping you stay financially agile.

4. Customizing Portfolio Based on Life Goals

A cookie-cutter investment plan doesn’t work for everyone. Whether you’re planning for a child’s education, a second home, or retirement, your investment portfolio should reflect your personal goals, timelines, and risk appetite.

Modern portfolio management services follow a goal-based approach where each investment is aligned with a specific life goal. This brings structure, purpose, and accountability to your investment strategy.

Example: If you plan to retire in 20 years, your portfolio manager might allocate a higher percentage to equities early on and gradually shift to debt and fixed-income products for capital preservation as retirement nears.

5. Hedging Against Inflation

Inflation silently erodes the purchasing power of your money. One of the often-overlooked objectives of portfolio management is to ensure inflation-adjusted returns. This means your portfolio must grow at a rate that outpaces inflation.

Why It Matters Today: With inflation fluctuating due to global supply chain issues and macroeconomic uncertainties, strategic investment in real assets like gold, inflation-indexed bonds, and equities becomes essential.

6. Ensuring Tax Efficiency

Tax planning is an integral component of effective portfolio management. Whether it’s capital gains, dividend taxation, or Section 80C deductions, smart investing also means smart tax-saving.

A professionally managed portfolio considers the post-tax return on each asset class and makes adjustments to enhance overall tax efficiency.

PMS Services Insight: The best portfolio management services often tailor strategies that balance growth with minimal tax liability, using long-term investing, tax-loss harvesting, and selective instruments like ELSS (Equity Linked Saving Schemes).

7. Strategic Rebalancing

Market dynamics are constantly shifting. What worked a year ago may not be relevant today. Regular portfolio rebalancing ensures your asset allocation remains aligned with your risk profile and financial goals.

For instance, if equities outperform and start occupying 80% of your portfolio (when your risk tolerance allows for only 60%), rebalancing brings it back to balance by reallocating into debt or hybrid instruments.

Today’s Context: With AI-driven advisory models, algorithmic strategies, and goal-based PMS services available, timely rebalancing has become more precise and responsive than ever.

8. Transparency and Control

Investors today demand more transparency, control, and access over their portfolios. One of the emerging objectives of portfolio management is to provide real-time tracking, performance analytics, and portfolio insights — all while giving clients the freedom to modify their strategies when needed.

Thanks to digital wealth platforms, even retail investors can now enjoy features once available only to HNIs through PMS services.

9. Emotional Discipline and Behavioral Coaching

Human emotions — fear, greed, anxiety — are the biggest disruptors of successful investing. Portfolio management offers structure and discipline, especially during market highs and lows.

Objective: Help investors stay invested, avoid knee-jerk decisions, and stick to the long-term plan.

Professional portfolio management services provide behavioral insights and financial coaching, guiding investors to avoid costly mistakes like panic selling or chasing trends.

10. Legacy and Succession Planning

As wealth accumulates, passing it on effectively becomes important. Modern portfolio management integrates legacy planning, ensuring your assets are transferred efficiently, with minimal legal and tax hassles.

Today’s Importance: Many PMS services in India now offer family office solutions, HUF management, and nominee planning to help investors leave behind a secure and structured legacy.

How to Get Started with Portfolio Management

If you’re serious about meeting your financial goals while minimizing risk and complexity, consider working with a trusted portfolio management service provider. Look for:

• A goal-oriented investment philosophy
• Proven track record and market credibility
• Digital access to performance dashboards
• Personalized advisory from certified professionals
• Regulatory compliance with SEBI guidelines

The best portfolio management services in India offer tailored strategies based on your income, goals, investment horizon, and risk profile — making wealth creation more focused and efficient.

Conclusion

The objectives of portfolio management go beyond just making returns. From risk mitigation and tax efficiency to behavioral discipline and legacy planning, a well-managed portfolio supports every aspect of your financial journey.

In an increasingly complex investment world, having expert guidance can make a significant difference. Professional portfolio management services combine technology, strategy, and human expertise to create a financial ecosystem that adapts and evolves with your life.

So, whether you’re a salaried professional, a business owner, or a first-time investor, it’s time to align your portfolio with these objectives and set the foundation for long-term financial well-being.

TruCap default reveals risks of high yield bonds in India. Know why blindly trusting online bond platforms for high returns can cost investors.

Recently, many retail investors were shocked when TruCap Finance, a non-banking finance company (NBFC), defaulted on its bond payments. According to Mint, the company failed to pay interest and principal due on some listed non-convertible debentures (NCDs). Many common investors are now stuck, not knowing when or if they will get their money back.

But this is not just about TruCap. This is about a dangerous trend — chasing high yields on bonds without understanding the risks, often lured by flashy online bond platforms that showcase tempting returns.

Let’s break this down in simple language.

TruCap Bond Default: The Hidden Risk of High Yield Bonds

How Online Bond Platforms Lure Retail Investors

Today, investing in bonds is just a click away. Many new-age platforms advertise bonds with 8%, 10%, or even 12% annual returns — far higher than your bank fixed deposit (FD) rates of 6-7%. They highlight these high coupon rates in bold letters. For many retail investors, especially those who want “safe” investments, this looks very attractive.

But here’s the catch: higher return always comes with higher risk. Many investors don’t realise that bonds are basically loans you give to a company — and if that company is financially weak, it might not pay you back.

Just because these platforms are SEBI registered does not mean the bonds offered from such platforms are safe. They are just the platform providers, and for that, they are registered with SEBI, but not to provide you the best possible guaranteed returns.

A few days ago, I created a YouTube short after I noticed many people were asking me about such platforms. You can refer to it here.

What Went Wrong with TruCap?

TruCap Finance Ltd is an NBFC that lends money to small businesses and offers gold loans. To raise funds for its lending business, TruCap issued non-convertible debentures (NCDs) — basically bonds — to the public.

• Coupon (interest rate): 13% to 13.5% — very attractive when compared to normal FD rates of 6–7%.
• Credit rating: Initially BBB, which is just investment grade.
• Who sold these bonds? Online bond platforms like BondsIndia, GoldenPi, Grip, and Northern Arc (Altifi) offered them to retail investors.

Many investors thought: “Better than an FD, safe enough, great returns!”

But the reality turned out to be very different.

What went wrong?

In simple words:

1. TruCap had weak financial health.
2. It promised high returns (13%+) to attract investors.
3. When bad loans rose, its credit rating fell.
4. By bond rules, a sharp downgrade forced early repayments — which the company didn’t have money for.
5. The Marwadi group’s promised rescue funds were delayed.
6. Result: Default.

How much money stuck?

• Investors put money in different bond series, like ISIN INE615R07042, INE615R07091, etc.
• Amounts range from Rs.2 crore to over Rs.23 crore.
• Interest unpaid is lakhs per bond series.
• The total stuck is about Rs.55 crore.

This means common investors — retirees, salaried people, even small HNIs — are now helplessly waiting for some resolution.

Why Did So Many Investors Get Trapped?

The biggest reason: High returns looked too good to resist.

Online bond platforms show these bonds as if they are better versions of FDs — “Earn 13% safely!”

But they often do not explain enough about:

• The credit rating’s true meaning.
• The company’s financial stress.
• What happens if the company defaults — unlike an FD, there is no insurance.

Many investors do not read the fine print — they trust big words like “listed”, “trustee”, “secured”, or “NBFC”. They assume these make it safe. But remember — the company still has to earn money to pay you.

Why Chasing Yield Blindly is Risky

Many investors think “higher interest is always better”. But they forget that in bonds, return is directly linked to risk.

Here’s why:

1. No guarantee like FDs: Bonds issued by companies do not have deposit insurance. If the company fails, your money is stuck.
2. Low-rated companies pay more: Safer companies like RBI, Government of India, or top-rated PSUs raise money at lower rates (6-7%) because lenders trust them. Riskier companies pay higher interest to attract buyers.
3. Defaults are real: Defaults are not rare. DHFL, IL&FS, Yes Bank AT1 bonds, SREI Infrastructure, Reliance Home Finance — the list of defaults or near-defaults is long. Each time, thousands of retail investors got trapped chasing high returns.
4. Liquidity is tricky: Unlike stocks, selling bonds mid-way is not always easy. Many corporate bonds have very low trading volumes. So if you want to exit early, finding a buyer can be hard.
5. Hidden risks: Many investors do not read the credit rating or the company’s financials. They just see the yield. Even credit ratings can fail — IL&FS was rated AAA before its massive default! NEVER TRUST A CURRENT HIGH RATING WILL REMAIN THE SAME FOREVER YOUR INVESTMENT PERIOD.

How Online Platforms Add to the Problem

Many online platforms present bonds like an “FD with better returns”. They showcase the coupon rate boldly, but the risk factors are often hidden in footnotes.

Some don’t explain:

• Who the issuer is
• How strong its balance sheet is
• What the bond’s credit rating means
• Whether the bond is secured or unsecured
• Whether there’s collateral backing the debt

Some platforms even promote low-rated or unrated bonds aggressively because they get higher commissions from issuers.

This makes the retail investor think they are buying something “safe” — when in reality, they are lending money to companies that even big banks might avoid!

Valid Sources That Warn the Same

SEBI, India’s market regulator, has repeatedly cautioned retail investors about blindly investing in debt instruments. For example, in its investor education initiatives, SEBI explains that corporate bonds, especially those with lower credit ratings, can carry significant credit risk.

RBI, too, through its financial literacy programs, reminds people that corporate bonds are not risk-free like government securities.

AMFI (Association of Mutual Funds in India) also says that retail investors who want debt exposure should ideally stick to well-diversified debt mutual funds or government bonds instead of putting large sums in a single company’s bond.

How to Be a Smart Bond Investor

1. Understand credit ratings: AAA means highest safety (like SBI or Indian Railways bonds). Anything below AA needs careful study. B or C means high risk. Assume that the current rating is AA; then it does not mean that the rating will remain the same throughout your investment period. If there are any changes in the financial status of the issuing company, then the same rating agencies either may downgrade or upgrade the rating.

2. Check the issuer: Is the company fundamentally strong? Does it have profits? How is its past repayment record?

3. Diversify: Never put all your money into one bond. Spread your debt investments across multiple bonds or choose mutual funds that do it for you. If you are in the accumulation phase, then debt mutual funds are far better than exposing yourself to a few bonds and creating a huge concentrated risk.

4. Check if secured: Secured bonds have collateral — unsecured ones don’t. If things go wrong, secured bond investors have some claim on company assets.

5. Stay within your risk appetite: If you can’t handle delays or defaults, stick to Government of India bonds, RBI bonds, or top-rated PSU bonds.

6. Don’t trust only platforms: Platforms are intermediaries. They may not take responsibility if the company defaults.

Final Words: If it looks too good to be true, it probably is

Bond investing is not the same as keeping money in an FD. The TruCap incident is a reminder that yield chasing can backfire badly.

Always remember: “Higher risk, higher return” is not just a saying — it’s reality. And when the risk materialises, the losses can hurt.

So, next time an online bond ad flashes “12% secure bond”, take a step back. Ask: “Why is this company paying me double the bank rate? Is it worth the risk?”

If you can’t answer these questions, talk to a trusted fee-only financial advisor. Or stick to safe options.

Stay informed, stay safe

Bonds are powerful tools, but they need caution and understanding. Don’t be blinded by big numbers. Be wise, read the fine print, and invest smartly.

Budgeting apps are everywhere, and for good reason. They promise to help you track spending, reduce waste, and gain control over your finances. But what most users don’t realize is that many of these tools have a business model that doesn’t rely on your subscription fee. It relies on you. Or more specifically, your data.

From your purchase habits to your financial goals, budget apps collect a surprisingly intimate profile of your life. And in many cases, they turn around and sell that information to advertisers, data brokers, or even financial institutions looking to target you.

1. Mint: Convenience at the Cost of Privacy

Once a leader in the budget app world, Mint was a go-to for millions of users until it shut down in 2024 and urged users to switch to Credit Karma, another Intuit-owned platform. But even before that, privacy experts had flagged Mint for its data practices.

Mint links directly to your bank accounts, categorizing your transactions with impressive ease. But all that data fed a much larger machine. Intuit used the information to power marketing strategies, product development, and data sales. Many users didn’t realize that their budgeting behavior was helping Intuit sell them financial products, like loans, credit cards, and insurance.

2. Rocket Money: Your Subscriptions Aren’t the Only Thing Being Tracked

Rocket Money (formerly Truebill) gained popularity by offering to cancel unused subscriptions, track spending, and even negotiate bills. But buried in its privacy policy is language that allows the app to collect and share information with third parties for “marketing purposes.”

This includes transaction data, bill payment history, and your interactions with partner services. Some users have reported an uptick in financial product ads shortly after linking their bank accounts to Rocket Money—a red flag that suggests your data is doing more than just budgeting behind the scenes.

3. EveryDollar: Clean Interface, Cloudy Data Practices

Created by the Ramsey Solutions brand, EveryDollar is marketed as a faith-based, common-sense budgeting solution. While its paid version offers more robust features and less data sharing, the free version may still collect data that can be used for marketing.

Because the app’s terms of service allow for the collection of “non-personal” usage data, you could still be feeding a profile that advertisers can use to find people just like you. Even anonymized data has become valuable to marketers who want to target by income range, financial goals, or spending behaviors.

4. Goodbudget: Envelope Budgeting with a Side of Tracking

Goodbudget is based on the traditional envelope method—assigning portions of your income to specific spending categories. It’s a useful tool for discipline-focused savers, and it has a loyal following.

But even simple apps have fine print. While Goodbudget isn’t as aggressive in data sales as some others, it still collects metadata, app usage behavior, and device information. That may seem harmless—until you realize how easily it can be used to infer income, lifestyle, and even political leanings based on spending patterns. And because it integrates with your browser and email for syncing, your data footprint might be larger than expected.

5. Simplifi by Quicken: Premium Pricing Doesn’t Guarantee Privacy

You’d think a paid app like Simplifi would have less incentive to sell your data. After all, you’re the paying customer—shouldn’t that mean your data is safe?

Unfortunately, that’s not always true. Simplifi’s terms of service allow the use of financial data for internal marketing and product development. While they claim not to sell personally identifiable information, the app may still use your behavior to fine-tune ads or promotions from third-party partners. This creates a murky line between “internal use” and profiling that benefits advertisers.

6. YNAB (You Need A Budget): Better Than Most, But Not Perfect

YNAB is often praised for its privacy-first approach. It doesn’t sell data, its business model is based on subscriptions, and it has clear, user-friendly privacy policies. But even here, there are a few things to be aware of.

Like most digital tools, YNAB uses cookies and third-party services for analytics. This includes Google Analytics and marketing pixels that track how you interact with the site and app. While this is less invasive than financial data sharing, it still contributes to an advertising ecosystem where your behavior is observed and potentially monetized.

Why These Apps Are So Hungry for Data

Budgeting apps, especially free ones, often rely on data monetization to stay afloat. This includes selling:

• Spending trends in banks and retailers

• Credit behavior to financial advertisers

• Demographic targeting for political campaigns or insurance companies

Because financial data is especially revealing, it’s incredibly valuable. Advertisers will pay a premium to reach someone who’s actively budgeting, managing debt, or saving for a home. The apps don’t have to sell your name. They just have to sell access to “people like you.” And once you’ve linked your bank accounts or credit cards, the app has a complete picture of your habits, priorities, and struggles.

What You Can Do to Protect Yourself

If you’re already using one of these apps, don’t panic, but don’t stay passive either. Here are a few ways to take control:

• Read the privacy policy (yes, the whole thing)

• Opt out of marketing and data sharing when possible

• Use anonymized or read-only versions of your financial data where available

• Consider paid services with strong privacy commitments

• Regularly review your app permissions in both iOS and Android

You might also consider budgeting the old-fashioned way, using a spreadsheet or an offline tool. No app can sell what it doesn’t know.

Free Budgeting Isn’t Really Free

In a world where your personal data is more valuable than ever, free budgeting apps often come with invisible price tags. From selling your spending habits to profiling your lifestyle, these tools can compromise your financial privacy in subtle but significant ways.

The apps listed here aren’t inherently bad, but they’re part of a digital economy that profits from your behavior. And the more financially vulnerable or budget-conscious you are, the more appealing your data becomes to advertisers.

Have you ever caught an app sharing more than it should? What’s your go-to budgeting method now?

Read More:

7 Popular Apps That Are Still Selling Senior Data

8 Places Your Personal Data Is Sold Without You Knowing

Ever wonder why everything is sold as a monthly payment? It’s not an accident.

Marketers have realized that if you take a big price and break it down into a series of smaller, more palatable payments, we are more likely to buy something. It’s called the Monthly Money Trap.

Depending on where you live, a house can be anywhere from a few hundred thousands dollars to several million. The median sales price of a home sold in the United States is $416,900.

That’s why a real estate agent will say that after a 10% down payment and a 30 year loan of 6.5%, the monthly payment is less than $3,000. (assumes $3,000 in property taxes and an annual $1,500 home insurance premium)

A $416,900 home with a 30 year mortgage? That’s scary.

But a $3,000 monthly payment? That’s doable. And that’s the trick.

But it’s also where the trap comes in.

Reframing total cost makes expensive things feel affordable.

It’s called the monthly money trap.

The Psychology Behind Monthly Payments

The monthly money trap is how we break down total cost into a monthly payment and then convince ourselves we can afford it. Or someone else convinces us we can afford it.

This is how the trap works. The human brain is bad at long term planning. We can imagine how life will be in a week. It’s pretty good at imagining what it’ll be like in a year. But extrapolate it out beyond that and it’s hard.

What will life be like in five years? Ten? If you had asked 20-year-old Jim what life would be like at 30, he would’ve gotten it wrong. At 40? Forget it.

Salespeople understand this. So you take a very big purchase, break it down into easy to digest monthly payments, and you can better understand how it fits in your budget.

In reality, we should look at the total cost of ownership and assess what that does to our finances.

On its own, this is not bad. This breakdown can help with planning, but only if you zoom out.

But you don’t stop with the monthly cost and make a decision based on that.

If you do, you can be convinced to spend more in total because the monthly payment is OK. You can play with the purchase, adjusting different factors, but the monthly cost only goes up a little bit.

How Car Dealerships Use This Trap

Car dealerships are famous for this. Ignore the sticker price, ignore the total cost of ownership, ignore the fuel efficiency, and just look at the monthly payment.

In fact, they will play games with all the different loan terms to get to a monthly payment you will accept. They adjust the length of the loan, the interest rate, the amount of your trade-in or down-payment, and even throw in incentives… all to get you to say yes.

If you can afford to pay $750 a month on a car, here’s how the loan term affects the price you can pay with a 5% APR loan:

As you can see, you can afford more vehicle the longer the loan, but you pay more in interest as well.

Also, remember that’s just the sticker price. This doesn’t consider other costs like insurance, fuel, routine maintenance, etc. For that, Kelley Blue Book and other resources are good for figuring that out for your target vehicle.

How Do You Avoid This?

You must recognize the tactic when someone uses it on you. Just like how you need to recognize someone trying to use scare tactics and scarcity (time is running out! It’s the last one! etc.), the monthly trap is a tactic too.

Always look at the total cost first. With the car example above, we can see that all three loan terms were supported by a $750 monthly payment.

The question you need to ask yourself is whether you want to pay all that interest to get into a higher priced car. If your plan is to switch cars every five years, getting a five year loan may not be the best idea for you. By the time you’ve paid off the loan, the value of the car will have fallen very far from $39,750.

KBB says new cars depreciate 30% over the first two years and then 8-12% each year after that. Assuming it only depreciates 8% a year after the first two years, your $39,750 car is worth only $21,667 – a loss of value of $18,083.

If you plan on driving the car into the ground, which could take 15 years, then depreciation isn’t an issue. The $48,385 spread across 15 years which makes it a mere $3,225 a year or $268 a month. Even when you add in the other variable costs (insurance, fuel, etc.), it still makes sense.

So the next time someone tries to sell you on a purchase with the monthly cost, you’re prepared.

Your monthly payment is just one piece of the puzzle. Before you commit, ask yourself what the purchase really costs and whether it’s something you want in your future plans.