Tuesday, 29 September, 2009

When Will You Have Money?

In the twenties, you either couldn't care, or didn't have enough. Investment. Savings. Putting something aside. All these were for someone else. Definitely someone older. The reasons being:
1. Not now.
2. I'll start saving/investing later.
3. I don't have money now.
4. You earn so much more than me, that's why you can think about all this.
5. Some other stuff that you thought of, because the above were all my excuses.

As I came into the thirties, I realised that, oh yeah, I wasn't going to get any pension. Therefore I had to provide for myself, by making money work for me, and not work for money.

So what about savings? Being brand conscious meant that savings were barely matching the minimum required to keep my savings bank account active. And keeping up with the Joshis meant that I had to have all that and more.

The PF contribution from my salary, for the first few years didn't amount to much as the base salary was so low.

It is only recently that I have realised that the oft repeated mantra - start early - is so important.
And what does it take? Rs 2000 for a simple SIP with a mutual fund. 6 years will give you a savings of at least Rs 144000, or more, assuming the fund performs.

Or a few thousand rupees in shares. All it takes is a an investment every month on a few shares and then forgetting about it as you keep on building your portfolio. No one keeps track of the daily ups and downs of the sensex as one might think. It doesn't make sense either. Every six months or a quarter is all that is required. But study the market you must.

And what do you invest in? Initially, till you have extra money to play with, and till your confidence grows, start with defensive stocks. And later, when you can, cyclical stocks. Defensive stocks won't be star performers on the bourses, but they won't play roller coaster with your heart beat. They will give steady dividends and grow steadily too. Cyclical stocks will be the stars who add to your profit booking.

And should you have a heart attack because you invested your life's saving in the markets and saw the market plunge? No. Go out and buy the A-list stocks for cheap.
The market plunges for a day, a month, or a few months, but sooner or later the markets are sure to bounce back and grow. After all, the richest man in the world is not an entrepreneur, dotcom owner or a member of the European royalty. Just someone who started early, in his teens, and invested wisely, and rode all the ups and downs of the markets with aplomb.

This part of your investments should be about 5% of your wealth. And of the 5%, you can split it into safe stocks and slightly risky stocks. So by an off chance, something seriously goes wrong, you still have your 95% safe.

I suppose everything going bust is a rare event. Like in 2008. Property valuations bottoming out are hard to digest if you are a speculator in the market, but if you are worried that the house that you are currently occupying has halved in value, forget it. It is notional value anyway. That value is of no use to you. So is the wealth on paper with your shares. Till you decide to sell it, the shares are just something to objectively look at and for your chartered accountant to remind you of at the end of the year tax returns.

So what next?

Pay off all your loans, ideally by the time you are 55. Hopefully you have invested in property, gold, PPF, Bonds, Fixed Deposits and 6 month's expenses worth of savings in your account. Calculate the number of years till you reach 55. Figure out your 5% that you can spare in a year to be invested in shares and mutual funds. Read up on the best performing funds and the SENSEX / NIFTY 50 and A-List stocks that you can invest in. Ignore all thoughts of becoming suddenly, stupendously rich on a penny stock that someone gave you a hot tip about.

Open a Demat account and a trading account linked to your savings bank account. And start today.

With Rs 2000 to 5000 as a monthly investment in shares, it is not longer about 'I will do it when I have money', but rather, 'I will invest now SO THAT I have money' at a later date.

Friday, 25 September, 2009

HDFC Securities - Shares As An SIP

HDFC Securities has launched something called Do It Yourself SIP. The difference being that instead of buying mutual funds in a systematic investment plan, you can buy shares on the 7th of the month worth a minimum of Rs 5,000, as an SIP.
The second good thing is that instead of buying shares via mutual funds and earning dividend through them, where they get to keep some of the earnings, you buy shares directly on your own name. And keep the dividend earned, which is tax free.
Now, there isn't an entry load on buying mutual funds, but there is an exit load. Here with HDFC Securities you buy shares, and there isn't any load, except a small yearly charge.
Plus, you can choose which shares to buy, or use the advice from HDFC Securities to decide.
The only clarity I haven't got is, after you sign some papers with HDFC Securities, is there a possibility to not buy anything in a month, say when the Sensex or Nifty are breaching dizzying heights?

Wednesday, 23 September, 2009

Personal Finance Ideas

It is a good thing if you can distribute your investments among the various asset classes. Liquid Cash, Equity, Land and Property, Gold, Debt and so on. In your 20s and 30s, you can put aside up to 50% of your money to invest in property, as it appreciates over the long term. Up to 30% in equities and mutual funds, to reap the high returns they promise over the long term. 10% in long-term bonds and debentures will yield a fixed return over a period of time. Liquidity is as important, so about 5% in gold, fixed deposits and 5% in cash. And as you grow older, the ratio of long term investments should come down and liquid instruments and channels should go up.

It is necessary to plan your life and safeguard against risks too. So therefore you have to take care of pure risks through insurance as well as use insurance to generate wealth.

Now-a-days, the top Mutual Funds list out their portfolio - stocks that the funds themselves have invested in. It could be a great indicator of what top fund managers prefer to put all our money into, including a peek at the total holding, percentage across sectors, returns from each sector and so on.

And if we compare 3-4 consistently performing 5 star rated funds with their overall returns (45% - 50%) over five years, it is easy to see which Equity stocks have commonly contributed to the returns.

Though this is no way saying that you should replace your Mutual Fund investments with Equity, as we are not professionals, the list of stocks that the MFs hold is a great answer to the eternal question: "What should I buy, without taking a big risk." Here apart from the Nifty 50s and the BSE Sensex stocks, you are sure to find a few surprises.

Piqued by F1 'Decisions'

Somebody tell me the logic why F1 drivers are let off every time, as if they are not privy to the goings on in a small, highly charged group like an F1 team in the race paddocks.

Michael Schumacher (as much as I love that man), did everything to win his 7 World Championships, including deliberately crashing his machine and got off with barely a frown. We have the 2007 Mercedes Vs Ferrari spying scandal. Here purportedly, only the race engineers were involved. Lewis Hamilton and Fernando Alonso happily cooperated and were absolved of any knowledge. And Mercedes was fined $100 million.

And now this.

Renault's Flavio Briatore and his Director of Engineering Pat Symonds co-opt (if that is the term) Nelson Piquet Jr. the son of a former F1 champion by the same name. The rookie is not performing too well, as the second to double World Champion Fernando Alonso.

Supposedly under pressure that he might lose his seat, he agrees to the devious plan. He crashes his Renault F1 machine on turn 13 of lap 17, a pre-decided location, his foot on the accelerator, as opposed to the high performance carbon fibre brakes. What that does is, after the horrific crash, young Nelson runs across the track, rather dangerously, as the safety car gets out, towards the pits, having perfectly executed the plan.

Smartly enough, the location chosen to crash the car did not have access to tractors and hydraulics to pull the crashed machine out of the race track quickly enough. This allowed Fernando Alonso to pull into the pits for a quick stop to refuel, et al. With this 'revised' one stop strategy, he goes on to win the 2008 Singapore GP.

So Nelson waited for ten months for his conscience to gnaw at his good heart? Or was the reality that without having scored a point in 2009, his seat was in serious jeopardy, yet again. So he, with his father's nod, and back end support with friend Bernie and Max, spilled the beans. If by chance, he had done decently enough as a second to Fernando Alonso, we would never have known.

As lead driver, and double World Champion, Fernando didn't know the race strategy? As a race driver, wasn't he as desperate to win as his manager and team principal? Or was he fed a race strategy right from qualifying to race day that had him carry low fuel, right tires, just enough to last till the crash was scheduled, and never questioned how a 2 or 3 stop strategy was going to help him win the race?

I guess, in the economic times of today, FIA can't afford to fine Renault a similar or more fine, and watch another constructor team walk away from the championship.

How many more scandals are never going to see the light of day? As many as the number of competing teams, I suppose.

Sunday, 13 September, 2009

Matryoshka Gets A Makeover

To celebrate the tenth anniversary of Vogue Russia, Aliona Doletskaya decided to honor the famous Russian Matryoshka. They took the traditional wooden doll shape and turned it into a carved female body.

Standing 50cm tall, these beauties doesn’t confirm to the perfect 90×60x90 model proportions.

Commissioned to some of the world’s greatest designers to create tailor-made and exclusive outfits, the best Russian craftmen have hand-painted and dressed the dolls according to the designers sketches. Installation, sculpture, object of art, you can call it however you wish.

If you have 5000 Euros…you’ll have the opportunity to buy one of these babies for your living room.

The article and the rest of the 30 are here: http://www.gugazine.com/2009/08/31-stylized-matryoshka-dolls-by-vogue/

Hail Obama!

U.S. National Debt: From 1789 through 2008 = $10.7 trillion. Obama's plan adds $9.3 trillion more!

22.08.09: Oops! They just found another $2 trillion of red ink! This means that Obama will generate more U.S. debt in 10 years than the other 43 presidents did in 220 years!

U.S. 2009 GDP = $14.2 Trillion
Obama's 1st Budget = $3.55 Trillion ( 25% of GDP)

US 2010 Proposed Budget: Requests $100 million in budget cuts and proposes to spend $3.69 trillion!

Courtesy: www.commonsensejunction.com and www.factreal.wordpress.com

Friday, 11 September, 2009

Ukraine's (Definitely) Got Talent

Kseniya Simonova makes sand-doodling an eye-popping art form.
Here she tells the story of the Jewish holocaust, the 1945 liberation and how 2 lovers are finally reunited. All with a backlit screen, a bit of sand and her fingers.


Thursday, 10 September, 2009

Iraq Withdrawal

The US is to move 31 million items from Iraq as the 2011 deadline nears. In the inventory are 100,000 vehicles, some bound for Afghanistan.


The venerable B-52 Stratofortress, or Big Ugly Fat Fella (BUFF), with 55 years of operational service, has 30 years of airframe life left!

A few movies with the big daddy of bombers:
Bombers B-52 (1957),
A Gathering of Eagles (1963),
Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb
and By Dawn's Early Light (1990).