Conviction of Mind

MBS - Mortgage Backed Securities

2012-02-04T10:48:00.000-08:00

Securitisation is a process of liquidizing the assets held with financial institutions. If there are many auto loans given by a bank and instead of raising money through deposits and giving further loans, Banks can also do the following to increase its profits.

- Bundle all the auto loans and form a security.
- Raise the money through prospective clients with the help of other financial institutions.

The risk lies with the bank and this gives more liquidity to the bank and the money generated through this process can be availed in giving further loans.

In India, Securitisation has been there for long. Please visit this site for more details.

Consider the Home loans now. Banks have done the due diligence and have approved home loans for 20 people for 1 crore. The mortgage would be the home for the bank.

Now, If I am a person A thinking having very less money but ready to lend money for a prospective buyer who buys home and wants my part of interest back. Say, I have only Rs. 20000/- and want the interest for that alone to come to me.

Banks think, my whole 20 crores is locked up in the home loans. I also want the liquidity. This way, Investment banks created a security out of the mortgages in the bank and sold in the market and people like Person A bought it. The things that are not bought will remain with bank and investment bank. This gives more returns than FD and Person A is happy in taking the risk. Bank is happy in getting more money and Investment bank is happy on making its commission on forming the product.

Market Zooming to 6000

2012-02-03T13:11:00.000-08:00

Okay. Nice title to keep most of them interested.

Its very hard to time the Stock market and in fact, one can't predict the market move. If you want to know whether the market will zoom to 6000, the answer is YES.
But the real question is when?

One cannot really predict the market and it always gives surprises. There will always be some positive news and negative news around and market will hear the part of it and behave in the bullish trend even when there is a bear around the corner.

Simply, to get good returns,
Put a SIP and invest more during the bearish period in a good equity Mutual fund like DSP Blackrock Top 100.

If you are a good stock picker and want to beat the market, do the fundamental analysis and have patience. Its just the buy and hold strategy. Book profits when your target is hit.

To summarize, one cannot really predict the market at any time. One can wildly guess the way market movement and he can just be lucky in guessing. There is no denying the fact that returns in market is superior than any other means for long periods (>5 years)

By the way, I don't think market would be reaching 6000 by June-2012 for sure.

Leverage - Analysis

2012-01-22T09:06:00.000-08:00

Leveraging in simply increasing your exposure in something with some money that you don't have and thereby inherently increasing the risk.

Typical example for a normal common man would be 'Buying a house' - Where most of the money is given as a loan by the bank and he is thus said to be leveraged.

For a equity investor, few of the other examples would include Stock Futures, Options and Margin Intraday trading.

Without the money in hand, only the risk will be increased in each of the case and typically Leveraging is the concept where you will be get high returns along with high risk.

For example, Reliance is at Rs. 800/- now. you think, it will go Rs. 860/- in next 3 days.

You have Rs. 5000/- in hand, which you can afford to lose. Remember, you shouldn't be taking risk on a capital that is required next day for your need.

Option 1:
Buy 6 shares
- 6 * 800 - Rs.4800 spent.

Profit
- 60 * 6 - Rs. 360/-

Option 2:
Buy 60 shares
- 60 * 800 - Rs. 48000 spent (Rs. 43000 in margin)

Profit
- 60 * 60 - Rs. 3600/-

You can clearly see that Leveraging gives you a greater benefit in rewarding. But it goes without saying that it has higher risk. What if, Reliance goes down?

If you have bought only 6 shares, you can afford to hold it. But if you have bought in margin you are locked. You have to book losses and the losses would be heavy as well.

So, Leveraging would help in having high risk and give high rewards.

Liquidity - Analysis

2012-01-22T03:58:00.000-08:00

An asset is said to be more liquid if it can be converted to cash quickly, without changing much of its value. Gold, Cash, good blue-chip Stocks are excellent examples of liquid assets.

Liquidity

Real estate, PPF, ULIPs and other complex products are excellent examples of illiquid assets.
PPF is safe but illiquid as it has a lock-in period.

So, why does it really matter to me?
It is important to have some emergency fund in liquid form. If your expenses for a month is around Rs. X/-, you need to have Rs. 6X/- as contingency emergency fund in liquid form.

How does it affect a bank or investment bank?
Bank lends money based on the documents and collateral. If the collateral is a illiquid asset, the risk is more. They might not be able to get the money on time.

Investment banks and Hedge funds also creates complex products to help banks in creating more money to lend more. If the underlying asset is illiquid, the risk would be more.

The risk is actually, we might not able to sell the asset at the right price at the right time and cannot generate the cash-flow required at the stipulated time. So, automatically we have to bend to reduce our price for the asset which could be valued more if it could be sold without any hurry.

To generate more returns on the personal front for the contingency fund and to have it in liquid form, we can have some part in savings bank, some part in liquid fund and some more in sweep-in FD/index fund. What do you think?

Where do you keep your contingency funds?

Happy New Year 2012

2011-12-31T07:16:00.000-08:00

Wish you all a very happy new year 2012.

Have a good health and may all your wishes come true.

Always have a goal and work towards it. It should be specific and also measurable. Otherwise, it becomes a wish.

Goals for 2012:
(1) Maintain personal health.
(2) Learn new things in varied topics through khanacademy, wikipedia and investopedia.
(3) Spend enough time with the family.
(4) Manage time more effectively.

What are your goals for the year 2012?

De-regulation of Savings Bank interest rate

2011-12-23T21:56:00.000-08:00

RBI has de-regulated the savings bank interest rates. It really means that now any bank can give any interest rate in the savings bank account.

Because of this, banks are reacting in different ways. Using this in positive manner and giving more interest for the customers to attract more depositors and others increasing the rates to avoid people moving away from them and few others doing nothing.

Yes Bank - Raised the interest rate from 4% to 6% and recently to 7% now.
For those having amount less than 1 Lakh, it is 6% and more than that it is 7%.

Kotak Bank - Raised the interest rate from 4% to 6%
For those having amount less than 1 Lakh it is 5.5% and more than that it is 6%. They also have the sweep in account, which is nothing to do with this RBI step.

HDFC Bank - Introduced many charges. Particularly Rs. 500/- for closing down your account.

Most other banks (ICICI, Axis, SBI) - Hasn't done anything. Remains with the 4%.

First, It is not recommended to just move your savings bank account for few higher basis points interest. It just doesn't make any sense. Also, I don't find any reason for people having large amount of money sitting idle in the savings bank, except if its absolute need in the short term and you don't think of the interest rates at that time.

Already, the FD rates are de-regulated and almost all banks are having close rates. The scenario here will be no different soon. Also, you don't have any clue on when the raised interest rates on the banks will be reduced again. They have the right!

Given almost all banks also have the sweep-in account (automatically moves part of the savings bank account above a threshold automatically into a FD), it is of little importance that these interest rates are de-regulated.

New Pension Scheme - More details

2011-12-06T08:53:00.000-08:00

To know what is NPS and basic introductory details on the same, go to the previous post using the link given here.

Okay. I will be getting more than (at least risk-free?) 8% always right?
Simply, What are the benefits and returns in NPS?
Short Answer. No. There are many Pension Fund Management companies which will be managing your money on your behalf to get you returns for your Pension. It is again your choice to select the Pension Fund Management Companies. Based on the choice of the fund (Auto-Choice/Active Choice),
the returns has historically varied from 4% -26%.

But this cannot guarantee this will always give positive returns, as it have some equity exposure (for Active Choice, Asset Class E). But in the long run certainly, equities tend to outperform the debt and is always better.

Charges:
Remember this rule: If you invest more in NPS, you will end up having less charges as the charges are more or less static per year and the Fund Management charge is very less.

Charges - NPS

Compare the Fund Management charge with the index fund's Fund Management charge of 1.35%.

The Maintenance cost is similar to the demat account maintenance cost. In addition to above, demat charges will be applicable.

You can choose to have the 80% of the complete amount as the annuity and 20% in the fund as the lump-sum amount at the end of 60 or 70 as per your choice. The last year can be extended after due consideration and it is 70 years as of writing this article.

If you are not able to pay the minimum in any of the year, you have to pay an additional Rs.100/- as penalty to renew the account and the account becomes dormant otherwise.

The above details are completely for the Tier-I NPS account. This is the primary pension account introduced by NPS. This is of course illiquid.

If one has Active Tier-I NPS account and want to use the NPS account for the short term as well, he can use the Tier-II NPS account.

For opening Tier-II NPS account, there should be Tier-I active NPS account.

Minimum while opening: Rs. 1000/-

Minimum per instance: Rs. 250/-

Minimum Account Balance at the end of FY: Rs. 2000/-

At-least one contributions in a year.

This Tier-II is a voluntary savings attached with Tier-I and not mandatory.

New Pension Scheme

2011-12-03T02:13:00.001-08:00

New Pension Scheme is introduced by the Govt. of India to provide pension for all the salaried and self-employed citizens of India. This has several useful features and benefits backed by the Government of India.

How to open an NPS Account? What is the procedure?
Simple.
There are many POPs (Point of Presence). Almost all the public banks and some of the private banks are involved in here. You can ask the procedure through the toll free number before going there. All the State Banks, Muthoot and private banks like Axis bank, ICICI bank are some of the famous POPs available.

Go to the nearest POP.
Get your address proof and Id proof along with you. (PAN card and Ration card works best)
If ration card is not available, get your telephone bill.
Minimum Investment: Rs.6000 in a year. In installments, at least Rs. 500/- in a month.

What are the advantages of NPS?
* Primarily to have the planning for your retirement pension, if you are salaried/self-employed.
* Good lock-in period. You will be able to touch it only at 60 years. (Is it an advantage? sometimes, it might work against you. After all, you are saving for your future and you need this!)
* Very less charges and good tax benefits.

How is my money allocated in NPS?
Okay. All is fine. I am going to get it only after 20-30 years. Where will my money get invested...
NPS provides two approaches to the amount invested in it. They are .,

Active Choice
Auto Choice - Lifecycle Fund

If you are not choosing anything, automatically your investment will fall under the Auto Choice. Auto Choice will have reduce the equity exposure as the age increases and at the age of 60, there will be almost zero equity exposure.

The returns for the past two years are in the range from 4% - 26% according to the fund selected. Following funds are available for selection. It also depends on what choice you make (How much equity exposure and how is the market at that time)

Max. equity exposure allowed is only 50% at any point of time and it would also track only the index fund of BSE or NSE according to the fund selected.

Next post will have some more details of NPS.

One Minute Manager - Sharing and Review

2011-12-03T01:44:00.001-08:00

One Minute Manager is all about finding the manager with perfect managing and leading skills and the 'secrets' behind his managing style in his own words.

The first and important secret:
- Setting Goals - One Minute Goals
It is important to know what the person really is behind to know whether he is performing well. In the marketing world, it is targets set. In the programming world, it is the success of the project or the component that the client want within the deadline. It is important to set the goals upfront in all the means in a broad way to understand what are the requirements of him/her in this role as a responsibility.

The Second and Third Secret go hand in hand.
- One Minute Praising (Second Secret)
This involves catching people doing something RIGHT towards their assigned task. Once they find, praise them honestly and give your opinion as how important he is to your organization. This praising re-assure him to do well in future. Make sure not to praise him for the same achievement again. This will make him do more to get the praising from the manager he is trying to emulate.

- One Minute Reprimand (Third Secret)
So, what would you do when you find something going wrong. Analyse the situation and identify the root cause of the problem. After solving the hot problem in front, Reprimand the person who caused the situation. Being honest with people around you accept this behavior and wouldn't want to be a person to be reprimanded next time. Reprimanding is a skill and it is best understood only if you practice well. It should be done immediately after the issue and the person involved in it (instead of waiting for the review, which happens once/twice a year) and assure him about his importance in the company and what you think of him in the end. The final assurance is to make sure that you are against his behavior (which caused this issue) and not him as a person. The final assurance should also be in a such a way that he should trust his skills and make sure that kind of issue shouldn't happen again.

A review of the same book can be seen here as well.

This is one of the best management books available and is well worth the read.

Action Month and more..

2011-08-30T12:05:00.000-07:00

Jagoinvestor has come up with 'Action Month', for making real difference in your financial life. This will be really beneficial if you are procrastinating something for long. Just do it and clear the financial mess around you and be happy.

You can do either one or all of the following:

- Start an SIP with one or more Mutual funds (according to your requirement) (I did it, I already had one)

- Create a new Term life insurance. - I already have one and plan to increase it next year.

- Create a new health insurance - I have it already

- Surrender useless policies - I checked the policies that I have but none of them have to be surrendered.

- Organize your financial life - I have all of the financial documents in digital format.

This will certainly help your financial life and don't forget to register for Action month in Jagoinvestor website.

There is very nice article on Stop loss in Understanding the Stop loss. Its a very good read and this explains how to give stop loss and when to exit a position by keeping trailing stop losses. This will make sure that you will come out when the market don't like a particular stock even if you really don't track the share with the complete news flow.

Why is Health Insurance important?

2011-08-09T10:05:00.000-07:00

we saw the importance and benefits of Health insurance here.

Now, we will see practical examples and for whom it will save their life.

Scenario 1:

Person A depends on his daily income for his living. He saves around 2 lakhs in 3 years and goes in a two-wheeler to his office daily. He is a acting driver and his aim to become a owner of his vehicle and run it under a call taxi company for the next few years before starting a company like that (probably). But, all of a sudden, he met with a road accident, when he was driving his two wheeler and his hospital bill came to 1.8 Lakhs.

The worst part he didn't have any health insurance but had bike insurance which covered his bike and his bike was covered in his insurance and he had lot of ENDOWMENT policies from LIC.

If he had term insurance policies, he would have used the some part of money towards health insurance and remaining money towards mutual funds.

Scenario 2:

Person B is working in a private concern. He is a consultant there and doesn't usually get any coverage. Person C is a student and their parents are ill all of a sudden. Person B's mother had to undergo a costly operation immediately, which costed her more than Rs.1 lakh, which costed him not only pain in the heart but also the financial pain.

If he was financially aware of these things, he could have easily averted the above case.

The above scenarios are really true scenarios happening around the world in our day-to-day lives.

Have you met similar scenarios in your life. Did you find Health insurance important at any point of time? Have you advised anyone to take it?

Let me know your comments.

Why investing in Mutual funds is better?

2011-05-29T12:08:00.000-07:00

Investing is the best way to tackle inflation and get good returns with passive investment style is Mutual funds. Mutual funds gives you instant diversification with ZERO entry load. There are numerous types of mutual funds according to each and everyone's requirements and one can choose which one choose their investment style best.

Best site to choose the Mutual funds is: http://valueresearchonline.com/

one can choose a good rated fund from value research online and invest according to their asset allocation style. As Mutual funds gives instant diversification, risk is diversified and one needn't have to worry about putting all eggs in single basket. Also, it will be maintained by a financial professional, a fund manager and he would involve himself in getting good returns to the fund.

This would mean certainly, Mutual funds are less riskier than direct investment in Stocks. SIP (Systematic Investment Planning), Keeping yourself invested in every month in the fund with small amounts of money, thereby present in the market all the times, is one of the best strategy one can follow along with investment in Mutual fund to get good returns.

Example 1:

You can put Rs.50,000/- as one shot in HDFC Top 200 Mutual fund. (When the market is high, at this point, you may well lose your opportunity to get units at lesser price)

So, its always better to be always present in the market all the time with the help of SIP as mentioned in Example 2.

Example 2:

You can put Rs.5000/- every month in HDFC Top 200 Mutual fund. (This way, you remain invested at all times of the market, irrespective of the market conditions)

Its hard to time the market. And I would prefer Example 2 for starters in the Stock marketing world. If you can time the market, well go ahead with Example 1.

What do you prefer?

Chennai are Champions again

2011-05-29T11:56:00.000-07:00

Its yellow everywhere. And its Dhoni magic working so well these days!

This year's IPL was not so encouraging for many people around India. Reasons being,

(1) Players shifting from one team to another team

(2) Too much cricket

(3) Cricket Fans Fatigue (Yeah!! We too are tired)

Probably, Because of the amount of turnout for watching Sachin and Dhoni in all the matches they are playing, they are asked to play even if they are tired. Now, they are expected to take rest in the upcoming WI series, giving way to the youngsters.

Yes! Dhoni has the golden charm to do it again and has repeated it for Chennai. Good to see them win all their 8 matches this time and coming good this convincingly this year.

Happy for Chennai :)

Top 5 ELSS Funds in India

2011-04-10T12:12:00.000-07:00

ELSS is Equity Linked Savings Scheme and is tax-saving mutual fund that invests in equity and equity-related products. These schemes directly involve in investing in stock markets and carry a inherent amount of risk and can give handsome returns as well.

Top 5 ELSS funds

The above is the screenshot from the http://valueresearchonline.com/ for analysing all type of mutual funds. I took up a look on the currently available ELSS funds in the market and did some analysis to get this list. This is based on their past performance and this can be well be a probable indication of their future but not their future.

To quote the top 5 ELSS funds for this FY 2011-2012,

1. Fidelity Tax Advantage

2. Canara Robeco Equity Tax Saver

3. Tauras Tax Shield

4. HDFC Tax Saver

5. Sahara Tax Gain

In the case of ELSS, you get up to 30% returns (because of saving tax) before hand and even if you get 2-3% less after 3 years, it would have beaten any well managed fund by leaps and bounds. So, its always better to put your remaining amount after your PF into ELSS if you want better returns.

Be aware that ELSS doesn't give any assured returns. If anyone says that you will get 16% assured returns every year, they are fooling you around, and its better you walk two steps ahead them, so them you don't hear them. There won't be any assured returns if you see any market, stock, unit-linked kind of words in front of you. Have fun.

Disclose the investments for this FY

2011-04-10T11:16:00.000-07:00

And its April and yet another start of the new financial year. If you are a salaried employee of a company, you all would have come across this every year and this is nothing very new. Even if you are not salaried, it is better to have your investments planned before hand for this Financial year before hand and plan accordingly.

Why is disclosing the investments important in the month of April?

Its nothing to do with the month of April. But its better to disclose in the month of April itself to get the full advantage. For the salaried class of people, who worry about the tax, this marks an important event. This is because TDS (Tax deduction at Source) is based on the investments disclosed and better to disclose the right figure to get the proper cash flow right from the beginning.

How I can make this disclosure to my benefit?

Understand each and every section that has to be disclosed and the advantages and dis-advantages in detail.

Section 80C:

Identify how much is already covered by your PF. Your contribution towards your PF, comes under this section.

12% of your basic. - Already accounted in.

Max. that you can account in is Rs. 1,00,000.

If you want good returns, invest in ELSS and for secure returns, I would recommend PPF. Don't ever invest solely for the purpose of saving tax.

Infrastructure Bonds(Section 80CCF)

Max. of Rs.20,000/- applicable for FY2011-2012.

Medical Re-imbursement - Rs.15,000/-

Section 80D - Medical Insurance Premium -

Rs. 35,000/- (only if, one of your parent is above 60years.) or

Rs.30,000/-(should cover your parents as well)

Leave Travel Allowance

Within India, two times in the block of 2011-2014.

And perks and loans according to the company's terms and conditions.

Pick the best that suits you and feel free to leave the other things behind.

Most of the companies don't support 80G bills (Donations to charity). The best that can be done here is to increase the disclosure in some of the other investments to match the 80G investment, so that the cash flow for each month will remain constant.

Should I continue my SIP now?

2011-04-04T11:09:00.000-07:00

This is a universal question that can be answered with a simple answer: YES and a detailed answer below.

SIP is Systematic Investment Planning and it is designed for people who want to be involved in market during all the time, thereby minimizing the risk involved in the volatility of the market. There are many mutual funds currently providing with SIP for the investors and almost all the funds have either the online agents or the agents directly collecting the cheques from your doorstep for investing in your favored fund. Check out Are agents your friends? before deciding and investing on their suggestions. There are no entry load for most of the mutual funds now but still all the agents would still get the Trial commissions which would differ from each fund house to fund house. So, its better to be aware rather to cry later.

Coming back to the SIP fundas, You invest a constant sum of amount irrespective of the market condition. It works best for the equity mutual fund and I am going to take an example of the equity diversified mutual fund.

Say, If you put Rs.10000/- every month on to a mutual fund and this mutual fund's NAV differs according to the market conditions, you get the number of units according to the current NAV.

NAV No. of Units

April 2011 55.66 179.66

May 2011 61.21 163.21

June 2011 58.27 171.61

July 2011 65.66 152.3

From the four months data itself, it can be clearly seen than, As the NAV increases, the no. of units you buy decreases and when the market is down (NAV decreases) and you buy a lot more for the same money and the no. of units increases. So, you already know, when the market goes down, you want to buy more and when it goes up, you want to buy less and you are doing exactly that with SIP.

This works best when you are invested for extremely long time and you might say, I can invest the whole Rs. 20000/- during the month of June 2011 after April 2011 instead of May 2011. Its extremely hard to time the market and what would you do if the market turns its head and ran towards 63 NAV. And if you are a long term investor, its best to remain invested in the market and continue your SIP for a long time to come.

And never forget to get out of your equity exposure at the right time (just before the requirement for your goal, say 13 years from now, if you are planning for your retirement at 55 and your current age is 40) and move all your funds to safety to the debt level so that you are in never a position to sell all your holdings at a loss.

Why are Indians primarily savers?

2011-04-04T10:49:00.000-07:00

Indians are primarily more on the saving side because of the environment surrounding it. They see everyone around them are saving and are doing the same! There is a big difference between Saving and investing and it will be a hard fought truth.

Setting a goal and standing by it is pretty hard. The commitment is easy to come by if you are working and set by your peers and your managers (some of them don't get it even under the supervision of strong managers.. :-) ) and its also the inherent nature of the entrepreneur and he has it in his veins. But, to see through a goal that is set as a part of retirement or getting a house is very hard to come by and its hard to come even for an entrepreneur.

Let us see a simple example. You need a house. First house. Absolute need. Alteration for rent. Everything. Fine. It should be understood that how much you are currently having in hand and how much you need as a loan and it should be a neatly laid out plan. How many of them who have bought the first/second house recently has plan and bought the house recently after this plan. This really hurts the whole economy. Because, without absolute need and plan, some people are ready to buy the real estate at whatever prices the agent is quoting and are happy at the price they bought just because they were saving this long and they are going to INVEST in a property for the long term! This again beats my thinking. You are investing in a highly illiquid asset class, which has a good scope of growth but not excellent but given the nature of the leveraged investment made in the real estate, the returns will be below par to that of the savings account at least till that of 20 years. And, if it was your absolute need, just forget about what we are talking about here and think you have bought something for your child or nice thing for something in your wardrobe for your absolute need and don't even think of getting any return out of this instrument.

So, you ask is SAVING bad?

No.. Not at all.. Saving is the first step towards Investing. As I was describing here, you need to spend less than what you earn and get your saving right on track before you think on your investment track.

After you start saving, make sure to invest in towards your financial goals that are well set and are tracked. If you can't track it properly, its time you hire a financial planner and there are many available in market to do that.

Dhoni and the golden urn

2011-04-03T12:00:00.001-07:00

It seems Dhoni has a special feeling towards the golden urn. Suddenly, all is well when it ends well.

Dhoni had a dream run in World T20 to secure that he has world renowned leadership and the nerve within him to secure the gold. And then, much fame came to him as a captain of CSK (Chennai Super Kings) in IPL 3 and it moved leaps and bounds within India and won the cup for CSK against Sachin. People even accepted it with a smile.

Then, even in Champions League gold followed him. Now, he was in with much renowned batting line-up as the favorites for the world cup 2011 and everyone chipped in bits and parts at some part of the game to MAKE IT HAPPEN. In the league games, there were some hiccups and they proved themselves champions after they beat all the much famed teams in Quarters to Finals.

Some of the decisions were breath-taking and has to be taken at that level. Dhoni knows what he is doing when he took three seamers against Pakistan and Sri Lanka in Semi Finals and Finals of such a big tournament, which can really back fire, given that your strength is spin. Dhoni would say the opposition strength also lies in playing spin and I wouldn't feed them with getting my spinner. Dhoni proved how he is right against Sri Lanka, by playing out Muralidharan and Randiv without giving a wicket to them. But it was a different case against Pakistan, Afridi was given many a chance with Sachin, but their fielders were never up to mark to catch it and Dhoni felt bad for not reading the pitch correctly. Having this kind of side and getting that kind of fielding performance would be because of the coach and certainly captain would have a role to play.

And, last but not the least, he came and performed in the finals of the world cup tournament, when it really mattered and was there till the very end. Not to forget the poor start by the famed opening pair and things were really going good for sri lanka. Coming in at the right time and playing a captain's innings you got to have IT in you and Dhoni has IT. Its official now. Dhoni is now the successful captain of Team India and its not the luck factor alone that has favoured him. He was not like Kamran dropping catches like anything and giving some facial expressions.

Sri Lanka were having few odds favouring them. Side playing first won 9 out of 11 games in a world cup final and its really hard to chase down a total. The highest total that was chased down in a world cup final match previously was never this high. Also, Sri Lanka and India have faced 6 times before in World cup matches and only 2 times India have been able to beat them. Dhoni was always playing completely different for the past one year and completely out of form. Even during this tournament before the final, his highest score in the tournament was only 30 or so. May be, it was because he didn't get a chance to play in some of the matches and in some, he was not good enough. Also, he has created a new kind of shots other than helicopter shot like dancing down the track and defending shot - A peculiar shot played really well by dhoni. Only the spectator will be kept gazing whether he will be IN the very next ball.

But will all the above odds favoring Sri Lanka and with those two quick wickets of those great gems, it would have been a cake walk for Sri Lanka except for this man in the middle. DHONI getting his form back right in the slot. He has the urge for the golden urn for the team, specially for Sachin. Sachin, what a man he has been this long for the country and he really deserves this cup for sure. Dhoni and his boys were a pleasure to watch all along.

Cheers India. Congratulations Team India and Dhoni. Continue your journey.

Tendulkar and India

2011-04-03T11:45:00.001-07:00

Not very long back, It was Tendulkar who took India on his shoulders right through for more than 20 years. There was some days when Opposition team will get control over team India completely once Sachin Tendulkar gets out. But its never the case anymore. It doesn't mean we don't need the master anymore in our team. We do need him for his strokes and occasional mastery words. But our batting order has reached more resilient with him and looks good even without him as well. Its good for the future of the Indian cricket.

Is it the time for Sachin to retire?

Its never the time to retire for the master unless he himself calls it for. Its not for the media or Greg Chappell to predict but leave it to the great man. Let him play until he enjoys playing and he will call it a day when he think its right!

Tendulkar has been part of 33 winnning matches in his 48 centuries. Even though, one would say, 13 on 48 centuries were on the losing cause, it was for establishing pride for the country against some good teams and conditions, that are never easy for batting. Never to forget those nervous 90's that has sailed India home about few years back.

For those stats savvy people, there was a post I recently came across from a blog that I follow and I couldn't do more justice than the one given below,

Tendulkar Stats - How often India wins when Sachin hits century

Let me know your comments.

The cup that counts...

2011-04-03T11:39:00.000-07:00

As predicted in my last post, India came out good and performed well in all its final three stages of the World Cup tournament. It was great to watch all of them chipping in at the right time and contributing for the success of the team.

Even though the stats was against you when you were playing against Australia and Sri Lanka, it was really very important to be calm and composed and hit the right chords at the right time. Everyone came good and the best team exhibiting good command over all the other teams won the WORLD CUP that really counts...

Happy for TEAM INDIA and proud to be an Indian.

WC2011 and India - Predictor

2011-03-18T13:18:00.000-07:00

In WC 2011, Just finished watching Sri Lanka Vs NewZealand and Srilanka was all over Newzealand and they were never in the game. Even though, Most of them expect Pakistan and Australia to be a close contest, I don't think it would be one. Lets wait and watch. By the way, I want to predict the results of WC 2011 Quarters-

Group A

Australia

Sri Lanka

NewZealand

Pakistan

England had all their nail-biting close matches and managed to pull off a draw against the mighty (:)) ) Indians and win against WI and SA and lost against two minnows they faced.

Group B

South Africa

India

England

West Indies

Results - India would win against West Indies. South Africa would win against Bangladesh.

So, Now into the Quarter results to identify the Semi-Finalists.

Australia vs WestIndies - Australia

India Vs Newzealand - India

England Vs Sri Lanka - Sri Lanka

South Africa Vs Pakistan - South Africa

Now the Semi-Finals to identify the Finalists.

Australia Vs India - India (Of course, I am an Indian :) )

Sri Lanka vs South Africa - South Africa.

And the finals,

South Africa vs India - India (The revenge game :-))

India gets the cup this time anyway!! :)

Ohh!! There will be no India vs Pakistan match this World cup!!

UPDATE

The above prediction just got missed and still we have only few teams left. This all started with Australia losing to Pakistan and ended up at the third place in Group B waiting to face the mighty Indians.

1st Semi-finals: India Vs Pakistan (India will win this one)

2nd Semi-Finals: Sri Lanka Vs NewZealand (Sri Lanka would win this game)

WC2011 Grand final: India vs Sri Lanka (India would win and get the cup that really counts!!!)

I have 2 Lakhs. How to get it doubled in a year?

2011-03-18T13:00:00.000-07:00

Its a catchy title to click on the contents of the post. If you have 2 Laks, Great! Already you have double of 1 Lak :)

Okay, coming to the point, you are expecting 100% returns in a year. I have few important questions to ask you!?

(1) How much risk averse are you? Do you know risk and returns join hand in hand?

(2) If you are willing to take risk, Are you sure "You will not feel anything if you completely lose this 2 Laks"

In the order of High returns, if you are great at trading and making returns.

(1) Derivatives (Options and Futures) - Highest risk - You can lose all your money in one day as well. Gain the same in one day as well.

(2) Intraday - High risk - you will lose comparably less money. But trading will lead to lose all your 5 days profit in the 6th day. Do you really want that. If you know what you do and confident doing that, and have the stomach for doing that, please carry on with it.

(3) Equity - High risk - you will lose comparably less money. Again depends on whether you are an investor or trader. Many people have a doubt whether they are really a investor or trader themselves. If you have a doubt, then its highly likely that you are a short term investor cum trader. This is a new role that I have given people who are not actively trading, but when they do trade they do it only in short, they don't have proper goals.

(4) Equity Mutual Funds - Medium to High risk - This is comparably the best option to park the money if you are risk averse and if you want only around 15% returns in the long term.

(5) Debt Mutual Funds - Low to Medium risk - This depends on your risk profile - Around 8% return

(6) Fixed Deposit - No Risk - Now-a-days you get 10% returns in here (Before tax)

(7) PPF, NSC, POMIS - NO Risk - 6-8% - Debt Government bonds and PFs

If you are knowledgeable, you can go with direct equity and opt for the high risk equity and park some remaining money in Equity mutual funds. If you have some more stomach and great knowledge, move one or two steps ahead and do intraday trading and derivatives to achieve your goal faster. But remember, in the meantime, it is highly likely that you may lose your money as well.

Also, Equity markets give returns over 200% in a year and negative returns in another whole year. So, it is where you are and whom you believe.

Real estate regulation - Need for the day

2011-03-18T12:20:00.000-07:00

Real Estate - General Perception:

An asset that always appreciates in value.

Demand will always be there as land is of limited availability.

Rental Income is like interest to your principal and Land appreciation is capital appreciation.

Real Estate - My thoughts:

An asset that can appreciate in value, but not always. People are not selling in loss. Remember, if it stands at the same price for over an year, you are at loss.

The demand and supply nature of real estate is for those who are usually dealing with it and who are well versed with it.

Its a very big investment and your first house is not your asset as it doesn't give you income and you don't see it in the investment perspective

Its a very illiquid instrument and its very hard to find the client to sell the asset at the desired price at the required time.

When you are investing in real estate, most of the people are highly leveraged, and boosting their returns. You know that its a risky investment and if you are ready to invest with high leverage, you are going to get high returns. In the year 2010, Real estate was at the boom and land prices increased @165% and please don't expect it to happen year after year.

There is a saying in Tamil which can be translated to English as "Built a House and see; Do a marriage and see." Literal meaning is "Doing a marriage and building a house is really hard"

But now-a-days, people easily fall prey to many builders (reliable and unreliable by their name) to their cheesy words and give their hard-earned money to them and delve into their work caring less about their home.

And builder makes a great fuss out of it and people who buy it may be forced to face either

(i) wait for few more months for possession

(ii) Agree on what was already built

(iii) Pay extra for unnecessary things that might not be used/non-agreeable terms

And many more... and gets frustrated about this later.

So you say all the above will be applicable only when you buy a flat and not when you buy a plot and you built it. Yes, thats when all the problems lie right on your head. You will hire a contractor and you will be at the mercy of the contractor. If you don't know him already and if he is handling many projects at the same time, you are screwed. Forget about the money, you will always end up paying more, you will not be finishing the project on time if you are not following up.

This following up is really a big key in real estate, when ever you building a flat or building in plot. Even when you are getting a loan for your house, you need to follow up.

Wouldn't it all be better if we had some rules and regulations in here. Complaints and solutions in common place. I don't think it would give solution to all the problems. At least it will give some regulation in the real estate market , what SEBI did to capital markets, and investors can freely get the assistance of them after SALES.

Remember, if you are sold the flats, and after a year you are facing a problem and you find the flat promoter in other name sitting pretty well in another place. What can you do today. File a case. It will run for years. He would have changed his name the very next year several times :)

And still the case will be running and such is our judiciary. This is where Regulation of Real estate would help us all.

TATA HOUSING has recently proposed the real estate regulation and I don't think it will come anytime soon though.

Recharge with rechargeitnow.com

2010-02-04T08:34:00.000-08:00

I was looking for a good site to recharge my mobile online for some time now and finally I found one. Basically, you can recharge your mobile anywhere, for any amount (based on the operator) through this site and you don't have to pay any extra charge for this. Isn't that cool?

The best part is you have the luxury of recharging your mobile sitting in your place, even if its something like reliance, which currently doesn't have any such option in its website.
Here is the link for those who are eagerly waiting for it. You have to register any way and believe me they don't send any spam messages.

There are few other sites which do support online recharging for pre-paid mobiles, but the issue with them is they either charge more or doesn't support it completely. Comment if you find some good site for recharging pre-paid mobiles similar to rechargeitnow.com.

Health Insurance - Importance and Benefits

2010-01-21T09:35:00.000-08:00

Health insurance has become a need of the hour and everybody is really taking it next to Life Insurance, knowing the importance of it or without knowing it!

But, What I found mostly is everyone who is working in the corporate sector are covered already by the company by a Group Mediclaim Policy by the Company itself and they are not interested in taking up another policy and they find it waste of money. Their question is why should I take the policy outside as I am already covered by my company?

The value of taking a separate mediclaim policy lies in the following factors :
(1) when you shift your company often
(2) To support all the people in your family
(3) In this era, no amount you can say is enough for your health coverage. May be you can apply for a separate mediclaim for higher coverage.

Many of the companies are now giving Health Insurance and some of the companies like Apollo DKV is giving coverage till the lifetime, which can be availed off. Some of the companies give the coverage for the maternity but some doesn't. Even if they cover for the maternity, they would have the cap of Rs. 50,000/-.

So, Its better to judge before to get the health insurance plan and its the need of the hour after the life insurance.

IPL becomes SIPL

2009-05-24T00:04:00.000-07:00

Yeah!!! Indian Premier League (IPL 2009) has become South Indian Premier League (SIPL 2009) with the loss of Delhi Daredevils in the first semi-final. An innings like that of Gilchrist is always going to be a match winning one against any team in any terms. Now, with the end of the second semi-final the finalists of IPL 2009 are decided.

The Grand final is going to be between Royal Challengers Bangalore Vs Deccan Chargers. The first semi-final was made one-sided by Gilchrist's innings. The second semi-final was made one-sided by Dhoni's innings. We are yet to see a hamdinger in the big stage.

Gilchrist scored 85 runs in 35 deliveries and the other captain's innings was 28 runs from 30 deliveries. This tells the complete tale.

The best team performing today will be the winners. The teams that got the semi-final berth in the last league matches have entered into the finals. Last year, these two teams got to the last two places in the points table. Now its going to be exactly reverse. My vote would be for Bangalore Royal challengers for the champs this year. We will see today :)

Let me know your comments on this year's IPL.

Ant - Class org.apache.tools.ant.taskdefs.ConditionTask doesn't support the "else" attribute.

2009-04-23T08:58:00.000-07:00

This post is all about this error and on how to resolve this error.

Just to give some background:
Apache Ant is a Java-based build tool. For more information on Apache Ant, you can visit Apache Ant. The recent version is Apache Ant is Ant 1.71 and can be downloaded from here.
We can add a else attribute in the conditionTask for making a choice.

Coming back to the error that you have encountered:
Class org.apache.tools.ant.taskdefs.ConditionTask doesn't support the "else" attribute.

This can happen if you have Apache ant with a version less than 1.65
So, Make sure to update your ant to a version more than 1.65. Recent version, as I mentioned is, 1.71.

Does this fix the problem that you encountered with ant?
If yes, Great.

No, then continue reading. We have other fix available for Class org.apache.tools.ant.taskdefs.ConditionTask doesn't support the "else" attribute.

If you get this error even though you have the ant 1.65 or more, then the following information may be helpful.
-> Check whether the file is marked executable.
You can check the permissions of the file using "ls -l /ant"
->when you don't have execute permissions, mark the file as executable for you/your group.
->Then continue to run. It should run now.

you can mark the file as executable by executing the command,
"chmod 777 \ant" - "rwxrwxrwx" - universal writable.
or
"chmod 775 \ant" - "rwxrwxr-x" - only owner and the group can write.

Avail the benefits of Exchange Traded Funds (ETF)

2009-04-08T02:11:00.000-07:00

We have many mutual funds in the industry with varied products and options. There is no doubt you can be in a dilemma on what to choose and what not to and there are so many sites to guide on that front. This post is not meant for that.

This is about Exchange Traded Funds (ETF) that gives you the advantages of mutual funds with the liquidity of the market.

one kind of product given by Mutual funds is Index Fund and it tracks the index closely. The Annual Maintenance Charge for such a fund will be as low as 0.75% (compared to 2.25% in all other mutual fund products). Other than that there will be few more charges. ETFs can be compared to these products in Mutual fund arena.

Exchange Traded Funds are the mutual funds traded in the exchange (ex., Nifty Stock Exchange (NSE)) and it gives you the following benefits on availing it.

Absolutely no Annual maintenance fee.
Great liquidity.
No Exit fees or lock-in period.

There is absolutely no AMC for these mutual funds. It is considered more like a stock where you need to pay your brokerage and can buy or sell at any point of time.

NIFTY BEES is a particular ETF from Benchmark Mutual fund and it is actually tracking NIFTY so closely with its own automatic algorithm. So, If you think Nifty is going to go high, then you can put in your money and buy NIFTY BEES. This has the benefits of mutual fund as the risk is distributed across all the sectors that NIFTY consists of.

There is one ETF called LIQUID BEES and it is also a product from Benchmark Mutual fund. This is actually a debt fund that invests in various debt opportunities available and gives about 5-6% returns. It will be credited to you as shares and the share price remains the same. Each share costs Rs. 1000/- now and you can buy / sell at any point of time. This was introduced to get interest on the money which is left without being invested for the short term but present with the brokerage firm.

But there is something you need to look for while buying LIQUID BEES. Some brokerage houses don't charge any brokerage for it and only then it is beneficial for you. The advantage is it gains interest for you even for two days. Please have a chat with brokerage house and find out whether they really don't charge any brokerage for buying LIQUID BEES. For one, I know, Sharekhan does charge brokerage for this LIQUID BEES. Then its worthless to consider those 5-6% p.a interest for brokerage percentage and its better to avoid this in that case.

There are many Exchange traded funds coming in the market and its due to get popular among the masses inspite of its various advantages.

Are agents your friends?

2009-03-02T02:49:00.000-08:00

Now-a-days I am able to see agents for everything. we will see about the finance agents here. Certainly, they will get some commission for being an agent, because they have knowledge.

From 1% for PPF account to big fat percentage of your premium amount in insurance policies. The maximum percentage is given for opening an ULIP account, if I am not wrong.

I have money. I want to save tax. The deadline is nearing and I get a call from *tax saving* agent. I am saved. Are you really saved?? -- Read on.
He explains about the benefits of the most *Hot* plan in the market and I am certainly excited to give the money to him in no-minute. I'd tell the *Hot* plan is *Hot* in the market, not because it is a great product, but because it is a great marketable product.

A great marketable product will have one or all of the following properties:
(1) A good percentage for agents every year(Most of the cases)
Why should one give you his valuable time/money for lesser gains? Think!!
(2) Alluring returns
You can easily see that this comes with high risks or only in paper.
(3) Extreme safety with less returns
Great stress on safety to such extent that you are contended with very small percentage of returns without any risk.

Lets see what you'd do if you were a agent. You know how much is my commission for every product. You know what are advantages and dis-advantages in each product. (Most of them actually doesn't even care about the products that they don't want to sell but are supposed to sell). So, you'd explain the great benefits of a marketable product which gives high commission rather than high returns to the investor.

There would be relatives and friends immediately after you joining the company. Just spend few minutes before you invest for years. Search about the product and your real requirement in the Internet (great source of information, Believe me!!!) and what ever you finalize, you put it through the agent/friend.

One more thing, now there is no Agent commission to be given by you, if you invest your money directly in any of the mutual fund company. Do you think your agent will ever tell this to you?

HRA - House Rent Allowance - Demystified

2009-02-15T05:23:00.000-08:00

If you are a salaried person, you'd have seen a HRA component in your salary.
Also, you'd have known that you can save tax on whatever rent you pay.

Once you have the rental receipts from your house owner, you can fill in the following excel sheet to know how much you can exempt tax from your income.

Please edit only those in the yellow color and you can find the other details getting modified automatically.

If you enter your basic, your HRA is also modified for the first time. This is because most of the time the basic and HRA are inter related. It is mostly 40% of your basic pay.

In the example shown above, the basic pay is Rs. 8000/- and Rent paid is Rs. 5000/-
But, It is not worth showing more than Rs.4000/- as it doesn't affect your tax exemption in any way. Also, you will be eligible for exemption only if you pay rent for more than Rs.800/- in this case. In this case, the tax excluded is 3200/-, in which case, you save the tax on that amount based on your tax slab.

You just enter your basic, HRA and Rent paid and see the modification in other places.
If you are living with your family and want to claim HRA, you can do so by putting the house owner as your father or your mother. Most of the companies just ask for 3 month rental receipt.

The IPOD story

2009-02-11T02:25:00.000-08:00

Kotak Securities had announced a referral scheme during the October 2008. I was a customer with Kotak then and they sent a mail to me as well about the referral scheme.

Actually, at that time, two of my friends were also interested in opening a brokerage account and I helped them in getting one in Kotak. There was a big hurdle for one of them while opening, but still managed to open the accounts successfully during the period mentioned in the mail.

As per the mail sent to me, I was supposed to receive a IPOD for referring two friends. But I got a call recently confirming my gift is packed and sent to my address and they say my gift is 'Ferrari RED perfume' (How funny!!).

On further enquiry, I found that they didn't include the second person's referral because his initial opening amount was Rs.20550/- and not above 50000. This came as a surprise to me and I found that they have included this clause after sending a mail to the kotak account holders to refer.

My perspective:
I have helped two of friends during their referral scheme period in opening an account with them. I have the perquisite to demand the IPOD from them.

Hope, this would be their perspective:
Modify the Terms and conditions if it doesn't favor us (them). This was the reason why they introduced the Rs.50000/- clause, which was not there when they send a mail to me.

So, Always keep an eye on the TERMS and CONDITIONS clause when you are eligible for the offers.

Introduction to Options

2008-11-20T09:47:00.000-08:00

There are two fruits, say banana and apple, in a basket. If you were given an OPTION to take one of the fruit, which one will you take?
Notice the word OPTION in the above sentence. You are given a choice between two fruits.

Say, now a security is at Rs.5000/-. You think it will go to Rs.5500/- in a month.
If you have Rs.20000/- for trading, you can buy only 4 now and sell it after a month. If you opt for OPTIONS, you can buy at a lesser price and gain more. For Rs.20000, you could get an option for buying 80 (approx.) securities (each Rs.5000/-).

CASE I:
-----------
After a month, if the security price is Rs.5500/-,
You would gain => (5500 - 5000) * 80 = 40000.
But you have already given 20000 to get the option.

So, your profit would be Rs. 20000/- => 100% return in just a month :-)

CASE II:
------------
After a month, if the security price is Rs.4000/-
you have already spent Rs.20000/- on getting the option.

Total Loss: Rs. 20000/-
(Already spent on getting option. You will not execute this one.)

You will be given an option to execute it. You will execute only in the case of CASE I and not CASE II.

If you are executing the options, you will end up paying brokerages for buying and selling the securities.

Coming to the JARGONS of Options.
------------------------------------------

(1) CALL - Right to buy.
(2) PUT - Right to sell.

If you think, the security is going to go down, you can BUY PUT.
If you think, the security is going to go up, you can BUY CALL.

Let me tell you, the OPTIONS are always riskier. Most of them will be illiquid.
One of the highly liquid instrument is NIFTY Options.

When you BUY CALL, to get out of options before the date of expiry, what should you do?
If your answer was BUY PUT, Please don't try trading options. You should WRITE/SELL CALL.

Brokerages on Options:
------------------------------

Buying/Selling an option - Rs. 100/- or 1% (whichever is higher)
While exercising an option - Intra-day brokerage charges. (vary depending on the customer and brokerage houses.)

The real advantage of OPTIONS, you can gain more from less money. Even 100% Return on Investment is easily possible (Beware, the reverse is also possible :-P)
There is a cap on the downside but there is no cap on the upside.

Make the train journey more delightful

2008-11-05T06:50:00.000-08:00

For those who are new to booking ticket in IRCTC, take a look at my previous post.

There is some good news for the IRCTC users. You are in no need to search for your ID card while booking your ticket. Also, you can take the print-out of the mail sent to you and travel with that.

The only thing is at least one person mentioned in the booked ticket should have his ID card to show it to the TTE/TTR.

These are the recent set of instructions for e-Ticket bookers in IRCTC

There is a introduction of "Side Middle" in few of the trains and it does improve the revenue for the government. But it puzzles even frequent travellers!!
More puzzle comes on the way when you booked a upper birth and got a side middle birth. Sometimes TTEs rectify this and sometimes they don't.

Even if the ticket say S5 35/ UB, you will be alloted Side Middle. Can you spot out why?
When you booked the ticket the system was programmed to have 8 births / compartment. Now, after the introduction of Side Middle birth, it is 9 births / compartment.

Reminder for 35/8 => 3, which is the upper birth in the compartment of 8.
Reminder for 35/9 => 8, which is the side middle in the compartment of 9.

Each and every one will have some comfort while travelling on a specific birth and ask for a specific birth while booking the tickets. He is annoyed on seeing the TTEs response when he is of second type (not resolving the issue in the proper way).

They end up compromising or swapping their seats with the fellow-passengers.

This is acceptable for a limited period, in the interim, of course. But that period doesn't seem to end even after 3 months. The train journey is always more safe and comfortable than any other journey. It will be even more delightful if the peers look and fix these kind of issues as soon as possible.

Points to Ponder - IRCTC

2008-09-16T03:52:00.000-07:00

Computers are ubiquitous and it hasn't left Indian Railways behind. IRCTC is a site for booking train tickets online.

Unlike the booking of air tickets, IRCTC accept your debit cards as well. So, those who don't like credit cards (for any matter), can use this site to book tickets online without any fuss. Even now, I can see so many people standing in a long queue to book their tickets! If you know how to create a e-mail online, then you can book a train ticket as well.

It will take about 5 minutes to book a ticket online when you have all the other information handy. You can use many other sites to check for the availability and then carry on to this site to book the ticket online.

Better use e-ticket option
There are two options in the site. one is i-ticket and the other e-ticket. When you choose i-ticket, the ticket booked will be delivered at your doorstep. When you choose e-ticket, the ticket will be instantly delivered through your printer! Even if you don't have a printer, go to the nearest xerox shop which takes print-out, and take one. This does saves time and you needn't have to wait to get your ticket.

Booking Wait listed tickets - Beware!!
Now, IRCTC has come up with an option for booking wait listed tickets as well as e-ticket. But, If you book the wait listed ticket and it is not confirmed on time, you will considered ticket less.
So, Have this in mind while booking the wait listed tickets.

Can I take a print-out of the ticket from my mail?
IRCTC does a good job in making a secure connection gateway with various banks and books your ticket online. It also sends an email to you regarding the ticket booked.
If you want to take the print-out of the ticket, Go to the booked tickets and enter your ID no and take the print out. Don't ever take the print-out of the mail sent by IRCTC.
I saw few people in train having the print-out taken from the mail sent by IRCTC. TTR was completely against that and asked for the fine. More than the fine, the horrifying time that you spend in there will make you miserable.
The problem is actually, the mail doesn't contain the ID (License,Passport etc.,) number and TTR is supposed to check the ID number for confirmation.
If you are booking tickets for your friends/relatives and you are not traveling, Please make sure to copy the needed print-out in some format and attach that in your mail to them. Don't ever just forward the mail sent by IRCTC. This will make the journey more merrier without any hassle with the TTR.

Money lost while booking ticket - This will not happen
Sometimes, when you are booking the ticket through IRCTC, money will be taken from your account but the browser says there was some problem while booking the ticket. Don't worry. This happens once-in-a-while in IRCTC and they reverse the money taken from your account in couple of days.
But before you try to book the same ticket, please check if the ticket is booked under the Booked tickets. If this is the case, you might end up booking the same ticket twice and there will be no refund.

For these things, the service charge is around Rs.10/- per ticket per person. you can book for max. 6 persons at a time (one of them should carry ID with them) and for each person added, the service charge of Rs.5/- will be added.
If you have a bigger group, you can book in a group of 6.
Other than this there will be service charge from the bank/card as well.
But considering the advantages we get by booking tickets from home, it clearly outweighs booking tickets through counter on all cases.

Why Avoid ULIP?

2008-09-11T08:36:00.000-07:00

I will demystify the ULIP plan, which is widely used everywhere now-a-days!

To state it fast and simple, it is a plan with both Investment and Insurance with Tax benefit. Sounds cool? But it isn't really. Lets see how.

ULIP is Unit Linked Insurance Plan, which means they are going to invest in shares (similar to mutual fund) and also give insurance in the meantime as well. There are charges (hidden) everywhere. There are Fund Management charge, Mortality charge, Allocation charge etc., for a ULIP plan and this will be more in the first few years based on the plan.

Usually, based on the plan,
I year - 15% to 65%
II year - 3% to 15%
III year - 3% to 15%

There is not much charges from the third year in plans offered by few companies out there. So, where these high charges go? Do they really need this much for managing your fund?

1. There should be some amount for giving you insurance and this can't and shouldn't be invested. So, it constitutes fair percentage based on your age. As your age increases, the amount to insure you also increase naturally.

2. For managing your money. Proper allocation of funds in shares by analysts.

3. Fees for agent. Agent may be your friend/cousin. He will get a big share when you invest in ULIP under his guidance.

4. Other charges based on the fund you are choosing.

Does it provide ample insurance?
If you think it provides ample insurance for you, then the amount going to investment will be less and vice versa. Finally, I have seen many thinking of ULIP as a investment opportunity. Even the agents, who has to clarify these things, are making things more complicated by projecting huge returns at the end of 3 years. I can assure you that this will not be the case. There are stories in the net showing how they even lost their money in spite of market moving up at the same time.

Take this case.
John invests Rs. 1 Lakh in ULIP plan every year for 3 years. He takes an insurance for 1 Lakh.

We will see how much will get invested in share market as his share.

Commissions from 15000 to 65000. For 1 Lakh, Mortality charges will be Rs. 150/-
S0, totally Rs.35000 to Rs.85000 gets invested and he gets shares worth it under him.
If you see the average of commissions in ULIP plans, it comes to around 50% in the first year. Thus, we will take Rs.49850/- as his share to market in the first year.

I year -> Rs. 49850/-

Commissions from 3000 to 15000 in the second year. On an average, it is around 5% in the second year. Mortality charges would have increased in the second year. So, let us take it as Rs.175/-

II year -> 94825/-

Commission from 3000 to 15000 in the third year. on an average, it is around 4% in the third year. Mortality charges would have increased and let us take it as Rs.200/-

III year -> 95800/-

Most of them are investing in ULIP for tax saving purpose and want money after 3 years. This is because the minimum lock-in period in case of tax-saving instruments is 3 years.

If we consider a secure investment like PPF, it gives 8% interest in a secure manner. Considering Share market also gives the same interest (for the sake of discussion), John may end up losing Rs.43644/- after 3 years without considering any profit on his principal.

When will I get at least the amount I put in?
Here, John has invested 3 Lakhs (A lakh every year). To get back 3 Lakhs at the end of 3 years, Stock market should have performed really well to give 40% return every year. Sometimes, the stock market may give 40% in a year. But it won't be consistent.
At the end of 3 years, even your principal is not returned to you in full!!

If I consider 8% secure return on my principal amount, I need to get a return of 55% in the stock market every year, which is almost impossible.

I can hear you saying, I get insurance coverage during this period. For getting insurance coverage, please use a Term Insurance. To see the advantages of having Term insurance, you can see this post.
Even if you consider this insurance taken as term insurance, you need to either get 35% return to find no return on your capital or 50% to get 8% return on your capital.

The best one to choose among the lot for tax saving is
PPF - For secure returns without insurance.
ELSS - For high returns with risk without insurance. (This is a mutual fund)
Term insurance - For insurance

Don't combine both insurance and investment. They are different and are meant to be different.

Google Chrome - First Look

2008-09-05T23:38:00.000-07:00

I downloaded Google chrome and using it for the past few days.

Google chrome is the new browser just released by Google, which is going to compete against the giants Microsoft's Internet Explorer and Mozilla Firefox.
Recently released Firefox 3.0 made records in downloads.
Google chrome released its BETA version recently as a open source only for WINDOWS Operating system to get some quick feedback.

A quick snapshot of Google chrome is here.

Really Good things about Google Chrome:

(1) No Browser Crash Anymore :
When you open many sites in the browser, it might cause it to act slow or crash sometimes. The crash sometimes happen when it downloads some data recursively or some large data or for numerous other reasons. Yesterday, I was using Google chrome. I opened a page which had some flash page running and it was actually crashed! But it didn't crash the whole browser. Yeay!!! I love it...
Actually, it displayed that there was something crashed in all the other windows without crashing the whole browser.

(2) Google Touch :
There is a Google touch in here. A browser from web developer's cabin. It shows Loading page at the bottom.

(3) Get the cached page :
Sometimes the site you are looking may be down. The world's best search engine would have caught it just before it was down and it will give you that cached page from Google.

(4) Great Look :
I should rather say, Different look. The new page shows the snapshot of frequently opened pages. It also shows 'Recently closed pages' and 'Recently Bookmarked Pages'. Also, the tabs are opened at the top of the page. The new tabs are opened just near the page unlike Firefox which is worthwhile to mention here.

Few Enhancements I would really like to see:

(1) Much faster loading of the page. We don't compromise on speed any time and this doesn't mean it is slower than its counterparts.
(2) Error Console for debugging. This would be of great help to Web developers. I think its getting ready for the release.
(3) Beware, when you close the window with many tabs in it, it just closes it without any word. May be a word of caution would do good.
(4) There is no Menu bar. This may affect those who are used to Menus!

It is great move from Google to get the browser with so many products.
Want to get this browser right now - Click here

Finally, I am writing my first post using 'Google Chrome' Browser!

Nokia E51 WLAN Settings

2008-08-28T08:45:00.000-07:00

Nokia E51 is a smart phone with almost all the features available in it. It looks really slim and comes in three colors. It has loads of features and highlight of them all is the connection through the Internet through WLAN.

You can get a Internet connection from the service provider and ask for the wi-fi router. With the wi-fi router, you can connect to the Internet through various other devices like Laptop, Nokia E51 etc., You will be provided with the password for the WLAN connection and only if you enter the password correctly you will be connected to the Internet through that WLAN. As you may expect, this password will be asked only when you connect to Internet through this WLAN for the very first time.

In Laptop/Computer, you have Network settings to identify and modify the settings if wrongly entered. But this is somewhat tricky in case of Nokia E51!

In Nokia E51, You have the option of Browse WLAN right at the home page for you. If you have customized for something different, use Menu -> connectivity -> WLAN Wizard.
This will give you presently available networks (if any) around you to connect.

If you did everything right in the first time, you are well placed. But there could be settings in some WLAN where the password will be changed every month. Here, you are forced to change the password even you entered the password right the first time.

You will not be allowed to access the network until you define the access point. So, automatically it will ask for the access point when you try to connect. In E51, you can enter the access point (other name for password) for the second time in two ways.

Go to Menu -> Connectivity -> conn. mgr. -> Available WLAN networks.
Find the network to define access point.
Click on Options -> Define access point
You are done.

Check now whether it works?
No. It doesn't! This seems to be a small bug in Nokia E51.

How to solve it?

Go to Menu -> Tools -> Settings -> Connection -> Access Points
You can find as many access points added for each network.
Say, If you are seeing for network A, there will be A,A(1),A(2) and so on.
Delete all of them.
Try to connect to the network as if you are connecting for the first time.
It will ask for the access point, give the access point and you're done!

WLAN is one of a very cool feature available in Nokia E51. Enjoy Browsing through your phone. The browsing experience with the speed of your DSL in mobile is great!

Olympics Vs Cricket (applicable only in India)

2008-08-23T04:45:00.000-07:00

The final day of the Olympics fever has come and one of the famous topic debated among the sport freaks is this one OLYMPICS Vs CRICKET especially in India.

One of the big reasons for this debate in question is Cricket is not included in Olympics. Otherwise, certainly Cricket should have been a part of a very big event called Olympics.
In India, When you consider the athletes known to people well, you will end up seeing more number of cricketers in it and because of this, cricketers get one of the biggest remuneration in India. There cannot be anyone who knows Bindra and not Sachin but the reverse can still be true. That is the mass following for cricket in India.

Certainly, Olympics is at a bigger stage compared to cricket. Olympics contains many games in it and cannot be certainly compared as such with Cricket in any other country other than India.

The other reason for the significance of Cricket over Olympics in India is the PERFORMANCE of cricket over olympics. This doesn't mean India is performing really well in cricket but really not that well in olympics. Enjoy all the jock's performance, be it on any sport.

Axis Bank - IRCTC Offer

2008-08-22T08:05:00.000-07:00

There are many offers always available worldwide but not always useful (with most of them eye-catching discounts at perfectly wrong time)

Coming to the offer of discussion, Axis bank has come up with an offer for increasing the awareness of its VISA debit card in doing transactions online (buying and selling goods). It is not linked with IRCTC but giving Rs.50/- on the first successful transaction made on the VISA debit card (with registration between July 1st to August 31st). This amount will be remitted to your account only after a month.

Even if you are a infrequent traveler in train, you can use this IRCTC site to book tickets right at your desk. These things are of great convenience with the increase in the pace of technology. Also, You can book tickets 3 months in advance. For those riders who prefer to make the decision at the end, there is TATKAL which opens 5 days before the journey date and you can book these tickets as well in IRCTC

Here comes the funny part.
For those who are customers of AXIS bank for more than 2 years (it was called UTI Bank then), you would have got a VISA debit card without a CVV number. For those who doesn't know what is CVV, it is Card Verification Value code and it is the last 3 numbers in the back of the card. This offer requires you to book using the credit card gateways given in the IRCTC site. This credit card gateway requires CVV number, which is not available with the AXIS bank customers who were loyal for more than 2 years. This offer is not valid for those people and they have to get a new debit card from AXIS bank to avail this offer.

Finally, it's campaign ends up with AXIS bank customers who are less than 2 years old.

Bindra, Sushil, Vijendar - Is there more?

2008-08-20T23:08:00.000-07:00

A great news for all those Indians in the world.

The above three people has made us proud by winning medals in OLYMPICS 2008 in Beijing.
Shooting - Gold - Abinav Bindra - Really a Great performance.
Wrestling - Bronze - Sushil - A great news for all the wrestling fans watching TEN Sports in night ;)
Boxing - Silver or Gold - Vijendar - Again a great performance from the youngster.
Did anyone ever imagine we would get 3 (or more) medals in this Olympics? Certainly, there was no expectations from the people of India as they are used to Olympics news every four years.

This three medals for India (though beyond expectation) is considerably very less compared to the whole population of 110 million people.

There are so many youngsters waiting to be groomed and waiting to make our coutry proud. We should try and give training to those people and groom those young talent.

Kudos to those who have made our country proud by winning a medal in Olympics. Let us expect our people to win more medals in forthcoming olympics.

JAI HIND.

How to give my Igate shares to the Company @ Rs.410/-

2008-04-29T07:03:00.000-07:00

This is the question that is in the mind of everyone who is having some Igate shares in his hand. I have been getting this query for the past few days from many sides.

First, to make it clear, If you are selling it to the company @ the exit price, you are not going to pay STT (Service Transaction Tax) and there will be huge tax applicable.

Case 1:
If you are holding the shares for more than a year (Long term capital gains) - 20% on the profit as tax.

Case 2:
If you are holding the shares for less that a year (Short term capital gains) - 30% on the profit as tax.

The better option is to sell directly in the market @ current market price. If you are selling directly in the market, the tax would be zero (Long term) or 15% (Short term). Note there might not be any brokerage if you are selling directly to the company but if you sell in the market there will be brokerage and STT.

For those, who don't want/like to sell in the market for different reasons (Illiquidity, more profit), You will be getting a form from Igate within 6 months asking you to fill the number of shares. Fill the form with the details and the company will send the check worth the amount 410*No. of shares.

You people can be happy as the stock didn't decrease in the recent downturn because of the intrinsic price known to the whole crowd. :-)

Disclosure: I sold the shares in the market when it was around 400.

Happy Investing!!

What's in store for a Salaried Employee in Budget 2008 - 2009

2008-02-29T00:17:00.000-08:00

Good News finally from the Budget of this year. our FM has reduced the tax we are paying by Rs.44000/- for people earning above Rs.5 Lakhs.

The snippet on Income tax ..,

I propose to make some changes in the slabs for personal income tax. I propose to increase the threshold limit of exemption:

In the case of all assesses, from Rs. 1,10,000 to Rs. 1,50,000, thus giving every assessee a relief at a minimum of Rs.4000/- Consequently, the four slabs and rates will be as follows:
Upto Rs.1,50,000 - NIL
1,50,000 to 3,00,000 - 10% tax
3,00,000 to 5,00,000 - 20% tax
Above 5,00,000 - 30% tax.
Women Assessee - 1,45,000 to 1,80,000 -Minimum slab.
Senior citizen - 1,85,000 to 2,25,000 - Minimum slab.

The Income tax for almost everyone has been decreased at least to some extent after the budget.

Here comes the bad news for short term traders/Speculators.(Investors?)

Dividends that are distributed attract a tax of 15%. Short term capital gains attract a tax of 10% under Section111A. There is merit in equating the rates and hence I propose to increase the rate of tax on short term capital gains under section 111A and section 115AD to 15%. This will also encourage investors to stay invested for a longer term.

Simply put, The short term capital gains tax is increased from 10% to 15%.
Also, dividends attract a tax of 15%. Can we say no to dividend giving companies? :-)

There is no change on Long term capital gains tax (which is NIL, of course)

He has also increased the Mediclaim premium that can be paid under 80D by 15000/-
Is there any change on the 80C limit of 1Lakh? No.

Complete Budget speech is available at MoneyControl

Over all, the Income tax is reduced a lot when compared with the last year.

Exit price of Igate at 410.

2007-12-04T05:53:00.000-08:00

Today, company has announced the exit price to be at Rs.410/-
You can tender your shares even if you have not bidded before before 6 months.

The CMP is Rs.395/- and it is about 3% profit in less than a month. But there are many traders/investors out there who could make more money than this and getting out of this stock now.

Even if you have bidded above the exit price, wait for your shares to come back to your DP and then sell it to the company at exit price.

What will happen when you dont want to sell the shares?
You needn't have to sell it but it will get delisted from the exchanges. Then you are eligible to get the dividends that the company announces from time to time.

Cheers!!!

IGate - Delisting - Part III

2007-11-27T01:57:00.000-08:00

Currently, the market price is going up as the delisting process is going on.The buyback will occur only at the price in which Igate can get 90% of the holdings. So, it will be quite high if some of them do not bid or put some high price. So, Putting a high price/Not bidding are almost the same. The CMP is at around Rs 392/- now.

When you are putting a high price, the exit price will be lower than your price and then you can tender your shares at the exit price at later point of time. But instead, if you prefer not to bid also, it is the same case, you can directly sell the shares to the company at the exit price. So, both of them are same...

But what happens when you are bidding at a lower price, you are actually getting down the exit price and it affects all of us. So, If you aren't sure how much it is worth it, you can see the current status of the buyback @ Buyback-Igate

So, stay out of bidding if you are in the view of bidding less. I can see some 25 shares (very meagre amount .0001%) tendered at Rs.288.90 (base price), I guess this one is from the employee of Igate to lower the exit price. So, Retail investors can just be out of the game of de-listing and you can anyway render your shares back at the exit price decided after Dec. 4.

If you haven't received your bid forms, you can ask the nearest Karvy office and the address is available in the internet at both BSE and NSE.

You should have to transfer your Igate shares to Karvy account before bidding and then you can bid directly going to the nearest Karvy centre. As said before, if you are going to bid less, don't bid at all. You will get more exit price because of that. But this is not going to change the exit price that much, if you are having very less shares. I am sure you will get more price than at least Rs.430/-.
There are some bids at Rs.600/- too :)).

Cheers!!! Enjoy minting profit in Igate.

Igate delisting - Is it worth the bet? - Part II

2007-11-20T06:15:00.000-08:00

I said it is worth the bet in my previous post.

For delisting, the owner should atleast have 90% of the company's share. This is not the case with Igate which has only 80.1% currently.
But it can continue with delisting process as it is approved by the shareholders.

The floor price for the delisting process is set at Rs. 288.90/- , which is the 26 day average of high and low price. The current market price is Rs. 374/-.
As I said before, there is no ceiling price and one can bid at whatever price he likes!

The price will be decided after the Reverse book building process and it is decided by the price quoted by majority of the people much similar to IPO book building.

The management then decided to carry on or cancel the de-listing process at will after the exit price is known. If the exit price is approved, then that price will be the price at which the management buy back all the shares.

If the price you quoted is greater than exit price then yours will not be bought by the company. Any way, you can sell those shares at the exit price within 6 months to the company. If you miss that bus also, your share is less valued than a normal paper!!

If you quoted less price than the exit price, yours will also be taken at the exit price. The management can play around to get lower exit price (what you will do if you were in the management side). For this, they have exercised ESOPs, Employee shares and distributed to the employees at less than 250 according to the grades. They will be more than willing to sell at the management's disposal, say Rs. 300/-.

There will be people, who will bid way higher price as they dont want to sell igate shares and it will in turn increase the exit price. The best price is certainly above Rs. 400/- and I would expect the exit price to be greater than that mark.

You can see what is the current status during the book building process itself in NSE and then decide upon your final price as each and everyone's price matter here, but not that much.

If you have not bidded but have shares, you can also sell at exit price within 6 months.

Cheers!!! Get Ahead for Igate.

Igate Delisting - Is it worth the bet? - Part I

2007-11-20T05:59:00.000-08:00

Igate solutions has come up with a delisting plan and the market reacted with a surge of 10% on the same day. Current market price is Rs.373/-

It is going to get de-listed by the 1st week of December. Is it worth the bet to buy now?

I will give you more insight on this deal. The company's profit is moving up every year starting from 2004 when it reported negative EPS. Because of the management change, it has come up to buy back all the shares from the Indian share market. It would continue to be traded on NYSE though.

As it is a IT company, the current rupee Vs dollar issue certainly affects the revenue. But still the chairperson of IGate has announced that the buy back price will certainly be higher and he is happy about it :)
If we keep P/E as 15, then the price at FY08 will certainly be around Rs. 435/- . If P/E is kept at the price would be around Rs.415/- . The buy back price is expected to above Rs.400/-.

Igate is going to buy back its shares by a process called Reverse Book Building process and it is expected to start on November 26th. It is going to end on November 29th. The preference is given to people having their shares in demat account.

Reverse Book Building process is similar to Book Building process that occurs during IPO. Essentially, all the people who have shares have the right to offer at what ever price they expect from the company. The floor price will alone be set unlike IPO book building where there will be ceiling price also. The process is visible to all people and one can see the current status before bidding.

With the current market price at 374 and with the expected buy back price at more than Rs. 400/-, it is certainly worth the risk. You are getting >10% returns in less than a month. Is it not a good deal?

Introduction to shares

2007-07-03T23:57:00.000-07:00

Shares are given by companies as part of their ownership. The ownership will be divided into many parts and a part will be said as a share. For example, If you buy a share in a company which has given out 1 Lakh shares, you are the owner of 1/1 Lakh of that company.

If you are new to share market, you would have seen many giving recommendations in TV and also from your friends and many other websites. These are just recommendations. Just think this way, If they know the price before, they can easily make large amount of money in the market. Always believe in you and make decision for yourself or blame yourself. Don't ever try to simulate others. Try to do your own research before investing.

How can I get a share of a company?

You can get a share of the company, when it releases IPO (Initial Public Offering) or directly in the secondary market.

Save money by doing Research

2007-06-21T22:08:00.000-07:00

It is the *mobile* world and wherever you go you can see people speaking in their mobile, even while driving!! There are many service providers in India,

Hutch (I prefer this one, cos of its low cost)
Airtel (Better coverage all over India next to BSNL)
BSNL (Public)
Reliance and Tata Indicom (Using CDMA Technology)

You can get your monthly rental amount from net and according to your usage there are many plans available. For this you have to do a great research in finding the lowest rent. For example, Recently Hutch announced OneIndia plan (Re. 1 all over India) for Rs. 125/-, if you go to retailer every month. But When I asked for the same to be taken from my balance they are charging the double of it. What will you choose here? (If you are really in need of taking oneIndia plan)

I have also seen Hutch giving me Full Talktime for specific recharges with validity (Ex. Rs.875/- recharge, where I will get 6 months validity and 787/- as talktime.) They use two different words like Full Talktime for which they will take only the service charge of 12% and Complete Talktime for those which you will get the complete talktime without any service charge.

Go for Postpaid or Prepaid?

There are advantages in both the schemes. But do a high research. Dont lose your money by having unnecessary offers/plans which cost you high. Compare it with your usage and choose the best plan available with your service provider.

There is a refundable deposit in the case of postpaid, which you should have to pay even before getting a connection.
My friend has a postpaid connection and used to say they have charged for a missed call. I cant find any truth in that. But he showed the detailed billing where he was charged for some calls with call duration of 0.01 minutes.
In postpaid, the only advantage I can see is, you can pay your bills at the end of every month or once in a month, where you know your exact expense for your mobile phone per month.
The sim card charges apply for both prepaid and postpaid.
In prepaid you have to go and recharge everytime, anywhere (through Internet, ATM and also a dealer shop)

In Airtel, there will be some offers at the end of every validity which will be applicable for only those two days or so and only to you. It is like catch the offer soon!.

How I lost Rs. 70/- during recharge?

Two days before, I was talking to my sister at about 10 PM and my balance got over. Then I went to the nearest ATM and recharged my mobile for Rs. 550/-. There is a reason for this recharge. I had validity and I wanted only talktime and I had received many Complete Talktime offers from Hutch. I thought Rs. 550/- also is having complete talktime offer. Alas! , I got only Rs. 478/- . I enquired Hutch care to find that the offer of complete talktime is valid only for Rs.222/- , Rs. 333/- , Rs.555/- and Rs. 777/- and this is where my research failed.

If I had called Hutch care before (not possible,I was in the mood of continuing my talk with my sister that day), I would have got the information.

My advice is, either recharge it before your talktime ends after doing much research or go to the dealer whenever you recharge, so that you can recharge with what amount you need.

As always, Do a good research in finding which plan suits you and go with that plan. Keep you eye open in seeing any new offers to shift. Take my word. It is easy to shift if you are using GSM prepaid providers.

Term Insurance - Advantages

2007-06-08T09:18:00.000-07:00

In my last post, I advised all to go to Term Insurance. This post is elaborate the same.

First of all, on the safer side, you would have chosen to take insurance. Thats right. But what insurance plan to take. There are many insurance plans available in the market. Which to take?.. Thinking.. Here is the solution.

You should remember that Insurance agent or Financial advisor has their own family and they also have to look for more money. so, they will also go with the company's plan that gives them more income.. Accept it? There are more companies offering insurance and some of them are,
LIC, Kotak, ICICI, etc.,. You can check out the premium for each plan from their website.

Dont take a decision to put your money into LIC or any other as someone told you to do so. Take your own decision after analying all the companies.

Two things you should have to keep in mind.
With Term insurance,

1. you will not get anything back in your life time.
2. Only the nominees will be getting the money, if at all, something happens to you.

It is the perfect plan if you want only insurance, nothing else.

If you analyze all the other plans offered by insurance companies, it will be like, part of the money you invest (actually this is not investing, its spending) towards the plan, goes to insuring you and the other part will be going to get you the returns you want after the term of the plan.

Take this example,

Case 1:
If you invest, say 15000, in some endowment plan(one of the plan, which gives returns at the end of the tenure),

part of the money, say 5000, will be going to insure you.
The other part will be going to get the assured money back to you.

Case 2:
If you spend, say 5000, for the same sum assured in Term assurance and invest the other part in PPF (for secure returns) or ELSS(for high returns with risk), you will be getting more money in the end rather than this endowment plan.

As insurance companies gains are secure, we can compare it with PPF returns. Note here, you are spending only 15ooo in both cases and getting the returns only after 15 - 16 years and for the same sum assured. If you consider ULIP, consider it with returns from ELSS and term insurance at the mean time as it involves risk.

We will get the real time data into work here..

Case 1:
For 5Lakhs, endowment plan in LIC, just use this to calculate your premium
I just calculated and found the yearly premium to be Rs.33,096. (age in 20's, 5 Lakhs, 15 years)

The returns will be upto 5-6% in case of LIC. we will take the upper 6% to calculate the bonus at the end of 15 years.

Use this calculator to calculate the returns after 15 years. It is Rs. 8,16,562/-

Case 2:
For 5 Laksh, Term Insurance plan in LIC, use the same calculator to calculate your premium.
It will be Rs. 1208 (Isn't it very less ?) (For the same age, tenure etc.,)

Now we will assume the amount (33,096-1208) is kept inPPF every year. Let us see the difference in the returns after 15 years here.

Use the same calculator, to find 31,888 invested inPPF every year. It is Rs. 9,35,093/-

Saw the difference? It is planning that makes the difference. Even though you have the same money, where you put it matters. If the tenure is further increased, the difference will be massive. Also, we have taken the upper percentage from LIC, which will be less most of the times. So always the case 2 here wins.

The other advantages of Term Insurance

Very less premium for sum assured.
we can stop at any point of time, if we dont have money at that point and dont need insurance but in the other insurance plans you have given more money and you will be losing your money.
we can insure ourselves more as the premium is very less.
Thats it!..

Just do the research now and find which suits you best from all the available insurance companies.

Keep investing!!!

Going to save tax - Read this first

2007-05-25T09:56:00.000-07:00

Most of them would have come across this phase of 'saving tax' during their first year of working (entering into a professional world). They need help on where to invest to get higher returns and how much to insure themselves. This is to help you in making a decision, so that you needn't have to invest in something/somewhere without proper knowledge and regret for it later. (I have seen many doing this)

How much can I save and where can I save/invest?
How much should I insure?
Have I insured enough?

These are the questions that comes to you and the answers depend upon the returns you want and the risk appetite you have.

The maximum one can save now(2007) as per law is 1Lakh. This also includes your PF. So, exclude that and calculate. You can additionally save a max. of 10,000 from tax, if you are going to buy Mediclaim for your relatives or for you. And also, there are many ways to exclude tax by spending!

Insuring is always a best practise. You can insure yourself for atleast your annual income!. But I am not saying you shouldn't insure more. Actually you should. For insurance, I will write a separate post. The only thing, I will ask you to do is,

"Always go for Plain Term Insurance Plan" -

You can checkout the premium online on all of the insurance company websites. Please do your own research to find out which company offers the lowest. The term insurance plan is with everyone and you needn't have to think to go for any other plan, even your advisor says you to do so. More on this, on the next post.

Let me come back to How much and where to save/invest?

I said this depends on your risk. If you do not want to take any risk,
Try these, (for saving tax)
1. PPF
- Most effective return of 8% compounded annually
- 15-16 years of lock-in period.
- you can take out the money as loan after the third year
- 500-70,000 premium range / annum (Its really wide range)
- The income coming from it is not taxable.
2. Insurance Premium - According to the period and plan you have chosen.

There are many more plans withour rish like (NSC certificate( less returns post tax), Many small savings plan(returns are less than PPF), FD - 5 years(Remember there will be tax to the returns according to your tax slab)

I will recommend only these two for those who do not want to take any risk.

For those who are willing to take risks, but want higher returns,
1. Insurance Premium
2. ELSS - Equity Linked Savings Scheme
- 3 years of Lock-in Period
- Mutual funds - market risk.
- Investing in Equity - Risk is more.

There is also one thing called ULIP - Unit Linked Insurance Plan. What they say is they will combine 1 and 2 with risk above. I wouldn't recommend this. The point is, they also have 3 years lock-in period. But the percentage that they take as the amount for managing the fund in the first year is very high - like 50% or atleast 30%, then some 6-8% for the next two years and it does differ according to plans, while Mutual Funds are managing it with just 2-2.5% according to the plans. There are many Tax saving schemes available and you can see their NAV - Net Asset Value everyday in the internet.

NAV is just he price you pay to get a part of mutual fund on that particular day. The similar NAV will be available for ULIP but not updated everyday and also not easily accessible. So, I would recommend ELSS for getting higher returns (with risk) and Insurance - Term Insurance.

Its quite a long post, I know. If you want anymore information, just give a comment.

Begin Investing

2007-05-21T04:33:00.000-07:00

There are various ways to get money and equally more ways to spend it. The question, most of them ask, is "Where to put in my extra money to get higher returns?"

This involves many factors like,
1. How much time you are going to remain invested? - Time span.
2. How much risk you are willing to take? - Risk
3. How often and when do you need money? - Liquidity

The banks give interest for the money you have saved with them in SB account. Surely, I will not call this as investment. You may have wondered, how come they are able to give some more money as interest. This is the time factor that comes to play here.

The thing you buy today at Rs. 100/- will not be the same after, say, 10 years. For example, The price of Gold before 20 years would be very less compared to what it is today. This is due to inflation. Inflation rate is the rise of prices in every year. It is something between 4-8% in India. Now, it is almost 6%. So, What does this mean?

If you are saving in a bank, the return what you get will not even cross the inflation rate. The rate of return in a year by a bank for deposits in Savings Account is almost 3.5% and it is far lesser than the inflation rate. Actually, you are losing the money over the period here.

If you invest some 10,000 in bank for a year. You can buy some furnitures worth 10,000 with this money, at the same time (just for the sake). The return after a year would be Rs. 10000 + 350 (3.5% interest (Roughly)) and you can buy for 10350 after a year. Now, the same furniture will be costing you (10,000 + 600 (6% inflation rate). So, your money has actually has depreciated in value. Don't believe it still?

Also, there will be tax for the money you get as interests. It would be according to your tax slab.
So, it will still be reduced. There is very high liquidity with very less risk and the rate of return will also be less. So, you should not lock the money by keeping it in the locker or putting in the bank for the sake of saving. Invest it wisely.

According to the risk, time and liquidity, you can invest in many ways and there are many ways to attain the same. Also, you shouldn't invest all the money that you have and go into credit for living your life. Always, set aside some cash for emergency. Even though, this money is not growing and beating inflation, this is for your safety. No one can predict what happens the next day and it is always better to be 0n the safe side.

Always try to make money out of your extra money. According to the risk profile, the instrument to make more money differs!

Begin Investing sooner than later. Also do your own research before investing.

Saving and Spending

2007-05-20T08:46:00.000-07:00

One should always think on investing if he has more money left after spending for his needs. Actually, what does that mean? His 'cash flow' must be positive.

Cash flow is the net amount with you after you spend for your expenses from your earnings. Roughly, calculate it this way,

How much are you getting every month (if you are a salaried person, its your salary)? - A
How much you are spending every month (It includes everything like food, clothing and every other needs) - B

Strictly speaking, (A-B) is your cash flow. Simple, isn't it?

Apart from paying for your expenses, you should also have to save for the future expenses. Also, there is a high possiblity that you have some financial goals in your life, like,

1. Buying a car, house, etc.,
2. Do marraige for you sister or son or daughter.
3. Financially free over the years to come.
4. Plan to retire soon...
5. Anything that the money can get you, that you can think of!

For all the above said things, you will be eagerly waiting for increasing your 'cash flow'.

To increase the cash flow, you can either increase your monthly income or decrease your extra expense. Note here, its "extra expense". You can have numerous ways to increase your monthly income, doing more work for incentives and/or creating a new side business.

How to cut short your expenses? First of all, have a pocket diary or something of that sort, to have all your expenses accounted. Anyway, you need to have this for finding the value of B, that was said before in cash flow. Then find, which of them is extra expense. you will be able to find it easily. Of course, whenever need/necessity comes you should have to spend for it.

You will be thinking where to put the 'extra money' to get higher returns, so that, it will be helpful in fulfilling your financial goals/needs. This will be the next post.

Life is a Game

2007-05-20T08:02:00.000-07:00

I have been waiting to write a blog for quite some time. Time has come now. I have started this blog.Trying with some philosophies.

You should have to live happily and that lies in your heart and mind. There are many things that money cannot buy and that should also be kept in mind.

Life is always a Game. you can win and lose and thats part of life. Always try to be happy and have a smile in your face, that will give a boost to you.

This post will contain information about my home country (India) - But the concepts hold good all around the world. Its the funda that makes you think in the end.I am also a new investor in shares and also new to making money. I will share my experiences here and will be grateful to see your comments.

Happy saving and investing!