Wednesday, February 28, 2007

India Budget 2007: Playing It Safe

This is my fourth post in three days on India's Budget 2007. I started with a review of the last years budget, postulated my own "anal"-ysis on budget & cricket the next day and gave a running commentary as it unfolded today.

So it is befitting that I run the victory lap for myself (I'm so proud of my achievements/learning a new thing). I mean I have the right to review the budget too! :)

Tomorrow's paper will be full of reviews by learned and not so learned people. Political parties prepare well in advance. They have a review template much before the budget and they could have easily reviewed the whole thing yesterday or the day before!

But seriously, here's what I could make out after putting my brain/kidney into some storm.

  • The fiscal deficit has been pegged at 3.3% from 3.8% last year even though the projected expenditure has been raised from Rs 5.63 lac crore to Rs 6.82 lac crore. This means that revenues will grow by a bigger margin without taxing the common man.
  • I also applaud the E-Governance allocation growth from Rs.395 to Rs.719 crore.
  • Tax rates have largely been left alone even though there is duty rate reduction from 12.5% to 10%. FM is playing it safe for sure.
  • The dampner was ofcourse Dividend distribution tax being raised from 12.5 to 15 per cent and ESOPs being brought under FBT.
  • I stand vindicated for my feeling that Agriculture will be a thrust area in the Budget. There are a lot of incentives and schemes announced for the sector.
  • But I did not see any out of box thinking to manage inflation and also some vision to bring about the desired change in the Infrastructure woes of the country.
  • I expected some visionary thinking on the part of our honourable FM and PM and was disappointed. The budget was just another budget.

Ofcourse it is easier said than done. I feel that the Government has a limited role in building the economy. The real builders are the people of the country. I think it's time to excite and educate the youth of the country to think creatively and build on the vast opportunities available. Time to take responsibility instead of cribbing on the Government's inefficiency and inabilities.

Entrepreneurship is one area where the FM and the PM can work to create an encouraging atmosphere. There is an Entrepreneurship Week being celebrated. Entrepreneurship Week India is being run concurrently with Entrepreneurship Week US that has been sanctioned by the US House of Representatives, and initiated by the Kauffman Foundation, the New York Times and Inc. magazine.

Could there be a political will supporting the climate for entrepreneurship in India?

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Entrepreneurship Week India: Feb24-Mar 03, 2007

Held for the first time, Entrepreneurship Week India will celebrate today’s opportunities and work to improve the ecosystem for entrepreneurs and entrepreneurial people through activities and awareness campaigns.

Entrepreneurship Week India will be run concurrently with Entrepreneurship Week US that has been sanctioned by the US House of Representatives, and initiated by the Kauffman Foundation, the New York Times and Inc. magazine.

To be truly successful, this initiative has to become a nationwide movement. Spread the word around and participate. Visit their blog and their site

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Live India Budget 2007-08

Union Budget as it unfolds. Some key jottings. If you have questions, please let me know.

Fiscal deficit for 2007-08 pegged at 3.3 per cent of GDP at Rs.1,50,948 crore. Revenue deficit at Rs.72,478 crore which will be 1.5 per cent. Total expenditure during 2006-07 estimated at Rs.6,80,521 crore

Personal income tax: Token relief to the taxpayers. Exemption limit increased to Rs 110,000, for women Rs 145,000 and for senior citizens up at Rs 195,000. Deduction: Medical insurance to be increased to Rs 15,000; and for senior citizens Rs 20,000. Dividend distribution tax rate raised to 15%. ESOP under FBT.

Indirect Taxes: Peak customs duty rate cut to 10%; Central Sales Tax rate to be reduced to 3%

A high-powered committee report aimed at making Mumbai a world class financial centre submitted.

E-governance allocation to be increased from Rs.395 to Rs.719 crore.

Now you can own foreign stocks through Indian mutual funds: The finance minister says that Indian investors to be allowed investment in overseas capital markets through mutual funds. Mutual funds to set up Infrastructure Fund schemes.

Insurance companies to launch a senior citizens scheme in 2007-08. Reverse mortgage scheme for senior citizens.

Bonds worth Rs 5,000 crore to augment NABARD to be issued, says FM. These bonds will enjoy tax benefits.

FM announces package for agriculture:
National Agricultural Insurance Scheme to be continued for Kharif and Rabi this year.
Duty on lift irrigation, agricultural sprinklers and food processing equipment reduced from 7.5 per cent to five per cent.
Special Purpose Tea Fund to rejuvenate tea production:
Food mixes to be fully exempted from excise duty.
Rs. 100 crore allocated for National Rainfed Area Authority.
One hundred per cent subsidy for small farmers and 50 per cent for other farmers for water recharging scheme.
World Bank signed agreement for revival of 5,763 waterbodies in Tamil Nadu, Loan component Rs 2,182 crore. To have a command area of four lakh hectares.
Similar agreement with Andhra Pradesh in March for recharge of 2,000 bodies, Command area 2.5 lakh hectares
Farmers' credit likely to reach Rs.1,90,000 crore as against the targeted Rs.1,75,000 crore during 2006-07

As part of a full-fledged war on rising prices, futures trading on staples wheat and rice have been suspended in all commodity exchanges with immediate effect.

Saving rate of 32.4 per cent, investment rate of 33.8 per cent will continue, says the FM.

Read the detailed highlights on Rediff. But I did not see any initiatives on Infrastructure!
Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

More Disclosures Wanted from Mutual Funds in India

Open letter to SEBI by, a financial planning initiative. It can be reached at I have their permission to reproduce the article.

Dear Mr. Chairman:

The fact sheet of a mutual fund scheme that is released by its Asset Management Company (AMC) is a vital source of information for investors. However, in our view, the information provided by AMCs in these fact sheets is often inadequate and/or incoherent.

At Personalfn, we have always championed the cause of investors. To that end, we present a wish list for disclosure of information in mutual fund fact sheets.

1. Expense ratio The ratio represents the expenses charged by the AMC to the mutual fund for various purposes like investment fees, marketing and selling expenses including agents’ commission and transaction costs among others. These expenses eat into the returns clocked by the investor; expenses in fact have a very significant impact on long-term returns of the scheme. Given its importance, the expense ratio should be published in the fact sheet every month. At present only a handful of AMCs follow such a disclosure policy.

2. Portfolio turnover ratio The portfolio turnover ratio is a measure of how frequently stocks have been bought and sold by the fund manager. The same can offer investors an insight into the fund manager’s investment style. Of course, a higher ‘churn’ also has an implication on the expense ratio. There is a need to ensure that AMCs disclose portfolio turnover ratios in the monthly fact sheet. More importantly, the same needs to be computed in a standard manner. Among the AMCs that choose to reveal portfolio turnover ratios, some make use of a rolling 12-Mth period for the computation, while others consider the financial year as the starting point.

3. Average portfolio maturity It is common to find debt fund fact sheets mentioning the portfolio’s average maturity. As the name suggests, the figure denotes the time to maturity for all the debt instruments in the fund’s portfolio expressed as an average. Conversely, there are others which simply mention the duration (the unit for which is a time period i.e. days/months as well). However, duration (albeit vital) is a distinct measure from the average portfolio maturity. Duration is the tenure for which a portfolio of bonds or a bond must be held, for the investor to be immune to interest rate changes. There is a need to ensure that all debt funds disclose both their average maturities and durations in their fact sheets. Also a standard computation method must be followed so that investors can conduct a meaningful comparison between like schemes across fund houses.

4. Fund manager profile The fact sheets should unambiguously declare the fund manager responsible for every mutual fund scheme along with his profile. Similarly, the period for which he has been managing the given scheme should be mentioned as well. This will prove particularly relevant in situations wherein a successful fund manager, who was responsible for an impressive performance, has been replaced by another fund manager. Investors who are about to get invested in the scheme based on its track record, should be made aware that a new fund manager is now in charge.

5. Is the fund manager invested in the scheme? It is always comforting for consumers to know that the “cook eats his own cooking”. Similarly, a fund manager investing in a fund managed by him can be source of confidence for investors. The monthly fact sheet should have a disclosure in terms of whether or not the fund manager is invested in the scheme.

6. Unambiguous investment objectives Investment objectives like “to achieve log-term capital appreciation” are commonplace in the mutual funds segment. Such objectives are inconclusive and offer no aid to a prospective investor who is contemplating investing in the fund. An ideal investment objective must be unambiguous and comprehensive.
For example, the objective could read, “a growth-styled fund, the fund aims to achieve long-term capital appreciation by investing predominantly (at least 70% of assets) in stocks from the large cap segment. Long-term being defined as at least 5 years and companies with a market capitalisation of over Rs 50 bn (Rs 5,000 crores) at the time of investment qualifying as the large cap segment. The fund can also invest upto 30% of its assets in debt/money market instruments for defensive considerations”.

A rigidly defined investment objective ensures that the investor is decidedly aware of the investment proposition offered by the fund and can make an informed investment decision. The regulator should make this mandatory. Furthermore, the Board of Trustees can at preset time intervals (say semi-annually) offer their comments on the AMC’s adherence/success in achieving the stated investment objective.

7. Portfolio disclosure AMCs have increasingly stopped disclosing entire portfolios in their fact sheets (the printed versions, which are sent to investors). For example, in the case of equity funds most fact sheets simply reveal the top 10 stock holdings. So the fact sheet for an equity fund which holds say 50% of net assets in the top 10 stock holdings doesn’t reveal half the portfolio. Similarly there is also a case for more meaningful disclosure. Related sector holdings can be clubbed to reveal the true diversification levels in the fund’s portfolio. For example, holdings in related sectors like Auto and Auto Ancillaries can be clubbed and shown under a common heading i.e. Auto.

The regulator should make it mandatory for schemes to disclose their complete portfolios and also to follow a standardised classification of companies into sectors.

We believe that the inclusion of the aforementioned disclosure norms will go a long way in furthering the cause of investor empowerment.
Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Tuesday, February 27, 2007

India Budget 2007: The GDP Angle

After some efforts, I'm beginning to understand the Union Budget jargon. One of the oft repeated term used is GDP. For example all the growth is measured in terms of GDP growth. Fiscal deficit targets are measured in percentage terms of GDP (target for 2006-07 was 3.8%) Gross Domestic Product, we all know. But I'll probe a bit further to understand the budget better.

GDP is the monetary value of all the finished goods and services produced within a country in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. In a simple formula representation, GDP = Consumption+ Government Expenditure + Investments+ Net Exports. But it does not include Black money and that is why the existence of a parallel economy!

Now I was trying to relate my newly gained knowledge as a layman and I found it similar to the game of cricket. The game has its components of batting, fielding, bowling and a certain attitude. Likewise the GDP has its components as mentioned above and is measured by relating to various sectors like Industry, Infrastructure, Services and Agriculture.

So while we are famed for our batting (services), have a positive attitude (Industry) and are improving our bowling (Infrastructure), fielding (Agriculture) is an area of concern. There is a deceleration of agricultural growth in our country and while the other sectors are growing faster, agriculture with 2.7% growth drags us down.

I would expect the FM to boost the agriculture sector (Fielding) and allied sectors like horticulture, food processing, fisheries, etc (Running, diving, running between the wickets). I would also expect him to bolster the bowling attack ( I mean the Infrastructure sector) where we have much scope of improvement.

Not to forget on building on our strengths too!

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Monday, February 26, 2007

India Union Budget 2007-08: A Preview

I am not one of the millions of Indians who enjoy the ritual of the Indian Union Budget on 28th Feb every year. But this year I was determined to discover what the hulla boola is all about.

So I scanned the daily papers and the mid year review of Budget 2006-07, Guidelines to prepare the Outcome Budget 2007-08 and was left high and dry. But being a determined person, I made a second attempt at going through all the jargon and decided to sleep over it ( A daily claimed that when you sleep over a problem, it gets solved)

But I woke up in the middle of the night with my wife giving her comforting and annoyed smile. "Things will be OK, don't worry and go to sleep" and let me sleep too!

"Imagine if I earned Rs 4.15 lacs and spent Rs 5.63 lacs in a year, how will you react?", I said. Now my wife got afraid that I had got into some trouble/bad company and was wide awake.

But when I told her that it's our nation who is doing that, she went back to sleep.

But this is what was planned in the Union Budget 2006-07. An planned income of Rs 4.15 lac crore and Expenditure of Rs 5.63 lac crore. And this has been happening for quite some time now, I guess. It's called Fiscal deficit.

But I'm told there are whole bunch of nations doing that. And US have the largest fiscal deficit($319 Billion in 2005!)

Wait. I'm also told that fiscal deficit is not all that bad. Infact the extra expenditure by the Government generates aggregated demand in the economy, with the result that economic objectives of price stability, full employment and economic growth is achieved. Amazing!

The budget means a lot of things to a lot of people. Every industry looks forward for incentives, schemes and fair taxation laws. I think I'll spread the posts on Budget to make it easy for me to understand it. After all I'm doing it for the first time!

In the meanwhile read about my thoughts on FRBM Act

One of the most incisive budget commentary for the last year came from a guy who says,"My father is (was, he is retired as of March 1) a professor of Economics at IIMC and my mother is a Masters in Economics from the University of Rochester." So read his budget mysteries and learn. I enjoyed reading it.
Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Sunday, February 25, 2007

Ask a Question

Send in your questions about Personal Finance as well as Business Finance in India.
Personal Finance is all about managing your money while Business Finance is all about managing the finances of a company. Then there is Government Finance too where the whole process of Budgets, Fiscal policies and Monetary poilicies comes in!

I feel that there is so much to share, inform and learn. Your questions will help me learn as well as share my knowledge.

Mail me across at ranjanvarma(at)gmail(dot)com.


Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Blog of the Day award

These people were kind enough to post my blog as the blog of the day. Do I hv to tell that I nominated myself!!

Blog Of The Day Awards Winner

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Saturday, February 24, 2007

Carnival of Money and Finance

Welcome to the February 24, 2007 edition of carnival of money & finance. It was really a great learning experience for me to read the posts froma round the globe.

Some of the posts which I really enjoyed is as under:

Paul presents Spending Money posted at ExtremePerspective.

Deepak Shenoy presents Exchange Traded Funds (ETFs) posted at The Indian Investor's Blog.
Praveen presents My Simple Trading System: My Stock Trading System posted at My Simple Trading System.

Dennis presents 20 Questions to Change Your Life posted at A Pile of Coins.

Read on!

Craig S. Higdon presents How To Purchase Underperforming Properties With Construction Loans posted at Investment Property Insider.

Jimmy Atkinson presents Top 100 Personal Finance Blogs posted at Ask the Advisor.

Millennium Mommy presents Priscilla Ortiz - Journal to Prosperity, Path to Freedom Inc.: Moneyville? posted at Priscilla Ortiz - Journal to Prosperity, Path to Freedom Inc..

Bill presents Thinking Outside The Box posted at Ask Uncle Bill.

Sam presents A Living Trust Preserves Wealth for Your Family. posted at Surfer Sam and Friends, saying, "A Living Trust Preserves Wealth for Your Family, But Not Everyone Needs It. Planning Can Avoid Probate.
Sometimes we avoid estate planning, because we hope to live forever. But you may want to hedge your bet against the actuarial tables with some financial strategies for estate planning."

Larry Russell presents Financial science drives industry product development, but not necessarily toward the best interests of individuals posted at THE SKILLED INVESTOR Blog, saying, "Personal financial decisions seem to have become very complicated. To add to the confusion, the financial services industry develops an unending array of supposedly innovative new products. However, a large part of the complexity that individuals face results from the proliferation of repetitive financial products in a myriad of flavors with different features and different financial trade-offs. What is "best" and "right" for individuals easily gets lost in the ensuing confusion."

Maureen presents 3 Steps To Retirement Income Planning · Empty Nest posted at Empty Nest, saying, "3 easy steps to understand how much money you need to retire"

Tracy Coenen presents Bank of America now has a credit card for illegal immigrants posted at FRAUDfiles.

Jimmy Atkinson presents A Banking Revolution: The Top People-to-People Microlenders Reviewed posted at Ask the Advisor.


Phil B. presents The Problem with Sales Tax « Phil for Humanity posted at Phil for Humanity, saying, "Taxes and more taxes"

Amy Allen Clark presents Personal Finance Corner: Creating & Meeting Financial Goals posted at MomAdvice.

Anco presents Daily Expenses Sheet Template posted at Tipskey - Unlock Practicality, saying, "Although recording down daily expenses is a little troublesome and you may think that it is not that important, but it does help in financial planning and budgeting."

Madeleine Begun Kane presents Ode To Prosperity posted at Mad Kane's Humor Blog.

Andrea Dickson presents Former Pop Princess Figures Out Frugal? Go Bald! posted at Wisebread, saying, "I tackle the only important news story of the week - Britney's new hairdo, from a personal finance perspective."

David presents 10 Simple Ideas to Save Thousands of Dollars per Year posted at Worldwide Success.

Business Finance

Sean Hackbarth presents Private Equity Firms Getting Attention They Don?t Want posted at TAM Money and Finance.

Alan presents Do we reject money? - Keys to Unlock your Inner Potential posted at Made to Be Great.

Dennis presents 20 Questions to Change Your Life posted at A Pile of Coins, saying, "(Re-)evaluate your work-related goals and achievements"

Murad Ali presents Dell Transforms Company posted at The New Business World.

Murad Ali presents The American Economy on a Slow Drive posted at The New Business World.

Financial Planning

Paul presents Spending Money posted at ExtremePerspective.

Bryan C. Fleming presents Week 6: Interest Paid – Million-Dollar Savings Club posted at Bryan C. Fleming.

Derek Ostrowski presents Getting Out of Debt (Part 1) posted at Verve Coaching, saying, "Adopt the practices and disciplines that lead to debt reduction to create a solid foundation for building wealth."

makingourway presents January 2007 Net Worth Update + $37,438.72 posted at makingourway, saying, "Every month I track the results of my investments and spending and summarizing the change in my networth. January 2007 was the best ever -- up $37k. Future months won't be as good, but there is promise. I'd like to share the results and elicit advice from readers."

Steve Faber presents How Not to Get All Your Tax Refund posted at DebtBlog.

Wenchypoo presents War on the War on the Middle Class posted at Wisdom From Wenchypoo's Mental Wastebasket.

Steve Faber presents Can You Be Your Own Private Bank?? posted at DebtBlog.

Bryan C. Fleming presents How to Open Your Online Savings Account posted at Bryan C. Fleming.

Sagar Satapathy presents Make Money with Balance Transfer Arbitrage posted at Credit Card Lowdown.

almomento presents Open Call For Project MastermindX posted at BurstCreativity.

Paul Smith presents Tax changes cause concern for some shares posted at Investing using Fundamentals on the Aussie StockMarket, saying, "The article investigates how to find a profitable situation out of recent tax changes to investments in agricultural investments."

H.S. Ayoub presents Follow Along with Dr. Frost and Invest in Continucare posted at BioHealth Investor.

Big Cajun Man presents Einstein: The Rule of 72 posted at Canadian Financial Stuff, saying, "Einstein's greatest gift was not the a-bomb, but the rule of 72!"

Trent presents What Financial Statements Must Companies File? posted at Financial Education.

Murad Ali presents The Importance of Retirement Investment posted at The New Business World.

The Israeli Speculator presents Fools of prophecy posted at Israeli Speculator, saying, "This post is about things that I things you did not consider when you go about your investment strategies."

Silicon Valley Blogger presents 20 Typical Reasons To Sell Your Stock Or Mutual Fund posted at The Digerati Life.

Big Cajun Man presents DRIP: How's that again? posted at Canadian Financial Stuff, saying, "A quick tutorial on Dividend Reinvestment programs and their advantages"

TJP presents Top Foreign Banks: Barclays PLC (BCS) posted at Investor Trip.

Mutual Funds

Deepak Shenoy presents Exchange Traded Funds (ETFs) posted at The Indian Investor's Blog, saying, "A post about Exchange Traded Funds in India."

That concludes this edition. Submit your blog article to the next edition of
carnival of money & finance
using our
carnival submission form.
Past posts and future hosts can be found on our

blog carnival index page

Technorati tags:

, .

Friday, February 23, 2007

Blogging with Focus and Attitude

As soon as I became a blogger, a TOI journo talked about bloggers as failed writers, half wits and generally slammed bloggers right and left. But then I met (virtually, ofcourse) bloggers like Amit Agarwal, Amit Varma, Gautam Ghosh, Rashmi Bansal, Amit Ranjan and I started looking up to them and wanted to be like them in my own way. Other than the above bloggers who provide focussed insights, there are bloggers like Sakshi, Melody, IdeaSmith, who sparkle with their amazing attitude

Amit Varma does not deny that the image of hanging a journalist upside down just above a vat of boiling oil gives him great glee!. Read his full take here

Penelope Trunk's take on blogging makes a lot of sense. He (Update: oops...... She) talks about blogging as a great training and also a tool to network.

But of course I'm talking about blogs with some focus and a certain attitude and not all and sundry. And I am not talking about blogs where they try to pontificate over national issues and also talk about their dogs having fever!

As for me I'm in the learning phase. I am ashamed of some of my posts which have been a CCP job. In my enthusiasm to make people read whatever I had written, I have also spammed (Very few guys, I promise,....will not repeat,err..I'm not promising anything here!)Have been fiddling with the title, template of my blog and have learnt many new things in the area of my blog focus.

Portals of India on Business

We Indians rue about the lack of governance and political will, lazy bureaucracy in our country. Maybe rightly so. But let's not crib and take a look at some amazing websites coming out of the NIC stable

  • National Portal of India : A project under National e-governance plan, the site is amazingly colourful and has tons of information on India.
  • Ministry of Company Affairs: On September 16, 2006, the process of statutory filings under the Companies Act, 1956 cross the digital divide with all future transactions being in the electronic mode only. This is a major step to move seamlessly into a new transparent, hassle-free, e-Governance environment, full of exciting possibilities
  • India in Business: It is the website of the Investment and Trade Promotion Division of the Ministry of External Affairs and is loaded with information about business in India.

    Investing Gyan
    Reviews, Tips, Calculators with an Indian perspective.

Thursday, February 22, 2007

Housing Finance Satisfaction survey for Indian HFCs

The following is an attempt to form a questionnaire for a Satisfaction survey for the Housing Finance companies in India.

Investing Gyan

Discussion on Buying a Mutual Fund

This is a repost of an interesting discussion between a group of people(unknown to each other) who got the same mail from a mutual fund advisor regarding a closed ended new fund offer(NFO)

Nirmala Mani started the discussion by saying, " I am trying to get an idea of how many people in this mailing list were interested in investing in the fund" He wanted to know, "I am taking advantage of this mailing list to find out how many of you were going for the fund"

Sridhar responded by saying, "I am going for it purely on raghu’s recommendation"

I had the following to say on the issue, "My own small research on the issue says that Mutual Funds have their own hidden agenda today. With SEBI allowing them to charge upto 6% as entry load in closed ended funds and the facility to amortise the expenses over the period of the fund, NFOs have become fashionable. They come backed by a huge ad spend and collect thousands of crores from unsuspecting consumers who don't know the difference between open ended and closed ended fund. They are blasted with financial jargon and a well researched advertisement on the print and visual media backed by the persistent agent into succumbing into signing the cheque"

Nirmala responded by saying, "I have simple calculations.

Let us take SBI Magnum Global ... I can now get it in the market @ Rs43+ ... Say in a year it goes to Rs.55 +,
With all the hidden agenda that Reliance Long Term Equity Fund has ... I will get it at par @ Rs 10 ... Say in a year it goes to Rs. 20 in a year. Would I not have doubled the money in a year (tentatively) if I had put my money on RLTEF versus SBI Magnum (since it is already at premium).
You see where I am going ? What would you say in that case.

I again responded with the following:

What I've learned from experts in Mutual Funds (and one of those also happen to be my brother in law and officials working with MFs ) is that we must understand that in case of mutual funds schemes, lower or higher NAVs of similar type schemes of different mutual funds have no relevance.

Investors should choose a scheme based on its merit considering performance track record of the mutual fund , service standards, professional management, etc

Moreover as you must have read in my blogs that these closed ended NFOs are allowed to have upto 6% entry load amortised over the no. of years. This expense of yours goes into marketing, advertising and commission to agents....

In open ended funds u can measure the past performance of the fund managers. In NFOs, u don't know that.

To be fair enough, past performance is not guaranteed in future.

What is your take?

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Wednesday, February 21, 2007

GOD: A Case study on Branding

The other day we were discussing brand building. We discussed Xerox where the company is synonymous of the product. We say Xerox kara do or when we talk of Insurance we say LIC karaya ya nahin? These are powerful brands and have been built over a period.

But when it comes to the biggest brand of all time, I would say that it's GOD. Real or not, the brand of god exists very strongly in people's minds and hearts.

True there are firm atheists in droves. But I guess we are outnumbered and/or the minority fashion.

Let us for a moment accept GOD as a brand and take a look at His skills in being the No.1 brand.

Logo: He has customised logo for different markets. So HE has churches, temples and mosques in different parts of the world.

People: The Pujaris, Priests, Fathers, Sisters, Maulvis are fiercely loyal to the cause of their Leader, ie, GOD. And they beleive in HIM, come what may!

Product/Services: The product or service that is being sold is Peace & Happiness. It has a everlasting demand with hardly any supply!

Price: Free! but if you really want the peace & happiness, you have to pay with time, meditation and loose a lot of freedom. Hidden costs, eh!

Place: Like the internet and mobiles, HE is everywhere.

Promotion: Like HIM, HIS representatives (People above) are everywhere

Endnote: There are beleivers and atheists. But in any case the concept of GOD evokes strong feelings in both of them. What is my locus standi? I don't really know but here's a long winded attempt:

There are strong product/service companies who offer free services apart from the premium services where they ask you to cough up some dough. Examples: AVG Antivirus, Google adsense, Blogger, Feedblitz , FreeWebs, etc. I have registered myself for the free services and not the premium ones.

That's what I'll do for GOD for now!

Disclaimer: Have referred to God as Him without bias towards women. Moreover if He was She,He/She would not have burdened women with periods and pregnancy.
Investing Gyan

Gold Exchange Traded Funds

PersonalFn guys have a detailed review of Gold ETF which has been launched by Benchmark MF and being launched by UTI MF in March,2007 See their detailed review here

Some facts extracted from the review about gold:

Gold as an investment avenue has in some sense failed to deliver over the long-term. In fact, over the last 17 years, gold has appreciated by only 8.6% CAGR - Compounded Annualised Growth Rate. This compares not so well with other investment avenues like the stock markets (the return from the BSE Sensex over the same period is about two times more than what gold has delivered).

Gold is considered to be a safeguard against inflation. The reason for this is that the factors that affect the price of gold are usually different from factors that impact prices of financial assets like stock markets and bonds. So in times when financial assets are in turmoil due to inflation or any other development, the price of gold will tend to move in the other direction and money flows into 'safe' assets like gold. In a portfolio, gold brings in much needed stability over the long-term.

Given the relatively high entry load(1.5%) charged by the fund house during the NFO period, investors, who intend investing in gold, should avoid Gold BeES during the NFO period. They can consider investing in the ETF after the NFO period when it gets listed in the stock exchange (broker charges 0.5%).
Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Tuesday, February 20, 2007

The Cow Theory of Business & Finance

Got to this link via Rajesh Jain

Mark Gilbert writes on Bloomberg: If Hedge Funds Kept Cows, Your Milk Would Go Sour. He builds on the famous cow theory on political systems. In communism, for example, you have two cows, your commune seizes them and charges you for milk. In a democracy, you have two cows, the cows outvote you 2-1 to ban all meat and dairy products, and you go bankrupt and starve to death.

Similarly, the cow theory can be applied to business & finance. Read his take on Buyouts, derivatives, currency markets, bond markets here. Enjoy. Just one example quoted down below.

Google Inc.
You have no cows. You slap advertisements on everyone else's cows. The milk floods in. You use the proceeds to reinvent the cow.

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Financial Planning is Life Planning

Reproduced below is a post featured on Desicritics, titled, Investing Gyaan;Financial Planning steps.

I have always been smug with my assumption that a sophisticated finance professional will take care of all my wealth creation needs. But the day my over friendly and over smart advisor came, I was more confused when he left than when he had entered!! He talked about sophisticated jargons, terms, options, technology, software, analysis and at the end of it asked me to decide on my own risk appetite. Damn it, if I have to do my own analysis what the heck was he doing, sitting smugly on my sofa while I looked like a sheep in my own house.

To be fair to my financial advisor, he helped me understand that one must take responsibility for oneself. And he logged me on to the fascinating world of finance and investing. As part of the learning process I have built this e-scratch pad and have really enjoyed the process.

My initial findings - investing is no rocket science and can be easily understood by a layman.

There are very interesting tools and calculators available which even a child can use and play with.

It's easy to be overwhelmed with the investment options. 650 odd Mutual Funds, More than 2000 scrips to choose from, options, futures, commodities, real estate, deposits, insurance, tax saving schemes and bonds like PF, NSC, KVP, Infrastructure bonds, et al....... At times I feel the importance of the proverb: " Ignorance is bliss"

Apart from the overwhelming options, you are faced with finance jargon, terminologies, irrational behaviour of the stock markets and smug finance professionals.

Wait a minute. It's critical to be responsible for your wealth and as I said in the beginning, it's pretty interesting too! Here's a indicative list of what you should know for a start and I promise I'll take them one at a time.

1. Why to Invest, Golden rules of investing, Your Financial planning steps.
2. Introduction to stocks, derivatives, options.
3. Introduction to Mutual Funds
4. Introduction to Insurance
5. Product review.
6. Sensex review.
7. Asset allocation, Time, Value of money, etc....

Let's start with the first financial planning steps:

Failing to plan is planning to fail. It is very true for personal finance. Personal finance looks at how your money and future is managed. Personal Finance is financial planning for individuals. Generally, it involves analyzing their current financial position, predicting short-term and long-term needs, and recommending a financial strategy. This may involve advice on retirement planning or pensions, wealth creation through stocks and mutual funds, children's education, home loans, life insurance, and other investments.

Financial planning is a dynamic process that requires regular monitoring and reevaluation. In general, it has five steps:

1. Assessment: One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, home loan). A personal cash flow statement lists personal income and expenses.

2. Setting goals: Setting financial goals helps direct financial planning. Examples of financial goals are: "To retire at age 50 with a personal net worth of Rs 5000000", or "To buy a house in 3 years paying a monthly mortgage servicing cost that is no more than 25% of my gross income". It is not uncommon to have several goals, some short term, and some long term.

3. Creating a plan: The financial plan details how to accomplish your goals. It could include for example, reducing unnecessary expenses, increasing your employment income, or investing in the stock market.

4. Execution: Execution of one's personal financial plan often requires discipline and perseverance, and many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.

5. Monitoring and reassessment: As time passes, one's personal financial plan must be monitored for possible adjustments or reassessments.

It may appear a daunting exercise for many and many more may feel that it is too late for them. It is said that you are young at any age if you are planning for tomorrow. And there are so many tools that are easily available and still easier to use which you can search here.

For example, a simple MS Excel sheet can help find out your monthly withdrawal between the planned retirement and a particular age, say 80, when you plan to invest a particular amount every month. Fill in with the variables like your monthly investment, preferred age of retirement, expected rate of return and you get your withdrawal amount. Toggle around with the figures and you can arrive at setting goals for yourself. Write to me at for the Excel sheet.

Read an article on how to become a crorepati in Mutual Fund Insight (Value research publication, July-Aug, 06). It says that if you invest Rs 20000 per month in a systematic investment plan of one of the top ten mutual fund for ten years, the value of your investment will range from 1.05 crore to 2.06 crore. A simple strategy, but a lot of discipline, mental strength, and self control is required

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Sunday, February 18, 2007

Selling is Not Telling the Whole Truth

Gautam Ghosh participated in a panel discussion at the Media Pulse conference organized by ISBM Pune. The topic was "There is nothing to tell but lots to sell". Read Gautam's musings on the discussion

Here are some random jottings by Gautam that I noticed; see his entire post thro' the above link:
Selling is about shouting louder"; A quote by Sam Walton "The customer wants something more important than the product"; "A brand is not independent from the product" ; "We believe we can take consumers for a ride".

I had posted my thoughts on the irresponsibility of big financial product companies in telling and selling here.

We bloggers are also selling our information and ideas and I look as myself as a budding "infopreneur" via the medium of this blog. Blogs look to me as a powerful media where u can participate in conversations. What do you think?

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Review of a Unit Linked Insurance Policy in India

Unit linked insurance plans (ULIP) is a bestseller today. Life Insurance companies are falling over each other to introduce and market their ULIPs. Backed by aggressive selling by agents and the booming stock market, the sales figures they have notched up is mind blowing.

Birla SunLife Insurance has introduced Supreme Life, again a ULIP. Visit their site and they have the following superior benefits to talk about:

The plan is a unit linked non participating plan. It offers a choice of 6 investment fund options to invest your premiums into, depending on your risk profile. Additionally you have the flexibility to allocate the premiums (including top ups) in varying proportions into the different funds to create your own fund option. The opportunity to top up your Fund Value whenever you have additional savings. High liquidity in the form of partial withdrawals and surrender benefitsA choice of 2 death benefits to opt from based on the benefits you would like your nominees to receive. An Accidental Total Permanent Disability benefit in the event of Total Permanent Disability (TPD) caused by accident, injury or illness.

I was interested in the charges for which the details are as under:

Premium Allocation charge (as a percentage of Policy Premium (excluding underwriting extra, Top-up premium) is 5% for the first year and 2% from 2nd year onwards.

The Premium Allocation Charge on Top up and Underwriting Extra (if any) is 2%.

Other charges are: The Mortality Charge of the Life Insurance Coverage , Fund Management Charge not exceeding 1.5 % per annum of the Fund Value, Policy Administration Charges for the Life Insurance Coverage, a Sum Assured charge, Surrender charges(applicable in case of surrenders only)

So take a decision on buying a ULIP after you get the entire information from your advisor.

Tips on Insurance Cover in India

Today I was talking to a friend who was telling me about his Insurance cover. He is a 32 year old guy and has a cover of Rs 7 lacs and pays a premium of approx. Rs 50000. When I told him that I'm covered for Rs 35 lacs with only Rs 20000 premium, he did not beleive me at the first instance.

If you haven't started a family, an Insurance cover is the least of your priorities. But even though it's not that cool to be insured, it sure is smart when there are people who depend on you.

A very simple way of looking at your economic value towards your family is as follows. Imagine a monthly income of Rs 20000 and the net income provided to the family is Rs 18000 after deducting Rs 2000 for personal expenses. Thus the annual income provided to yr family is Rs 226000. The amount of money which will earn Rs 226000 pa at 8% interest rate is Rs 28,25,000. This is only a representation of the value of HLV. It is not the exact way of calculating yr HLV.

Right now you can go to this page to calculate your HLV, Page to calculate yr HLV or this link Insurance. The future income growth, yr income generating assets, liabilities, spouse income, children'seducation, etc are also to be factored in.

Ask your agents about the term assurance plans and he would definitely discourage you from taking one. After all there's little commission he's getting there since the premium is so low.

The point is that Insurance is NOT Investment.

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Saturday, February 17, 2007

Blog Mela of Money & Finance

We invite you to a Blog Carnival on Money & Finance. It will be up on 24th February, 2007 and you can take time to find really good blog posts on the above topic. In the meanwhile, you can submit your post on the value of money and finance in your life here.

I think blog carnivals are a great way for bloggers to recognize each other's efforts, organize blog posts around important topics, and improve the overall level of conversation in the blogosphere.

Submit your posts here

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Tips on Financial Planning & Budgeting

My following article on "Handy Tips of Financial Planning" was featured in Desicritics

Getting rich is in your hands, nobody else's . So get started with working hard or smart (depends on you again), adding to your finance knowledge and generally taking responsibility for yourself. Get Rich Or Die Trying.

If Financial decisions look like rocket science to you and Investing is even more daunting, here are some baby steps for you.

This one is from Deborah Fowles, Guide to Financial Planning in Seems very elementary but I doubt how many people are scoring more than 5/10. Here it goes, the top ten:

1. Get Paid What You're Worth and Spend Less Than You Earn : Hey, I get less than what I deserve and so do you!! And I've not done any budgeting so that I may be sure of the second part.

2. Stick to a Budget : I'm ashamed, no budgeting exercise for myself, not to speak of sticking to one.

3. Pay Off Credit Card Debt: Thank God, I finally get a score on this one. I've managed to stay clear though I've had to suffer with the agonising interest calculations earlier.

4. Contribute to a Retirement Plan: I do have a pension plan but I've never cared to figure out whether it is sufficient! Will give 1/2 for that one to me.

5. Have a Savings Plan: Yeah ,I'll be partial to myself and give some score here too! I do save about 15% of my income though it's a recent phenomena. Better late than never!

6. Invest! : Pretty straight forward. But few people manage to find an hour for that in a week. They'll rather watch TV(Big Boss is on these days!)

7. Maximize Your Employment Benefits : A meeting with your HR guy!! Brace yourself. I have no hope with my guys.

8. Review Your Insurance Coverages: Putting a finger on that is important from the family point of view. Those of you without that responsibility can breathe easy on that count. But I get full marks here!

9. Update Your Will: Never thought about that up till now. Bless Ms Fowles.

10. Keep Good Records: I will, as part of my New Year resolutions. But I've yet to get started on that. Next Monday, I promise.

Phew!, I score about 4/10!! So much potential to improve!!

But before I sign off, for guys who suddenly want to get started with their budgeting exercise, here are percentages of major spending categories from the US Bureau of Labor Statistics (2003) Consumer Expenditure Survey. May not apply to you and me but it's an interesting statistic anyway. Gives you an idea where you stand and where you can increase/decrease your expenses.

Food at home 7.7%
Food away from home 5.4%
Alcoholic beverages 1.0%
Total food and drink 14.1%
Housing 32.9%
Apparel and services 4.0%
Vehicles 9.1%
Gasoline and motor oil 3.3%
Other transportation 6.7%
Healthcare 5.9%
Entertainment 5.0%
Personal care products and services 1.3%
Reading .3%
Education 1.9%
Tobacco products and smoking supplies .7%
Miscellaneous 1.5%
Cash contributions 3.4%
Personal insurance and pensions 9.9%

Work on your Budget sheet for two hours and it'll tell you a lot about yourself. Look at it as a personality test!!

Download the worksheets

And yes, Taxquery wonders how any financial planning can be successful without tax planning. He's dead right. Go to his wonderful blog for tons of info on Taxes

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Friday, February 16, 2007

Getting Started on your Investment Journey

The first step of our investment journey is the toughest. The biggest step is getting started.

Let's try to learn financial planning and investment principles, plan retirement & employee benefits here. I promise a lot of resources here without trying to teach. Actually it's a journey for me and any feedback will definitely help.

Here are some of the topics on which I want to talk about which can help us reach our financial goals:

  • Financial planning
  • Retirement planning
  • Insurance needs
  • Stocks and Mutual Funds
  • Asset allocation and investment advice
  • Financial seminars for employees or organizations

Start with downloading this Excel worksheet where you can start your budgeting, planning and controlling your finances.

Claimer/Disclaimer: One thing that separates this blog from other resources on the net is my independence. I do not accept fees, commissions, products or services from any financial service firm or investment manager to write or review their products. On the other hand, I am not offering any financial planning services.

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

India Moving Up The Value Chain: BPO to KPO

In a special report titled, "What's next for India: Beyond the Back Office", experts from Wharton and BCG take a look at India's move up the value chain from BPO to KPO as well as global manufacturing.

It's time to build on our strengths of a vast domestic market and low cost and skilled labour force. But time also to look at our weaknesses of power and infrastructure and remedy them asap.

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Thursday, February 15, 2007

What Women Really Want?

This is copied shamelessly but it's worth sharing. I got this from AjiNIMC who is the moderator at Inferno, the Blogger hunt festival at AIMK

Here's an amazing story I read at AIMK by AjiNIMC

King Arthur was ambushed and imprisoned by the monarch of a neighboring kingdom. The monarch could have killed him but was moved by Arthur’s youth and ideals. So, the monarch offered him his freedom, as long as he could answer a very difficult question. Arthur would have a year to figure out the answer and, if after a year, he still had no answer, he would be put to death.

The question was: What do women really want?

What women wants?

Such a question would perplex even the most knowledgeable man, and to young Arthur, it seemed an impossible query. But, since it was better than death, he accepted the monarch’s proposition to have an answer by year’s end. He returned to his kingdom and began to poll everyone:the princess, the priests, the wise men, and even the court jester. He spoke with everyone, but no one could give him a satisfactory answer. Many people advised him to consult the old witch, for only she would have the answer. But the price would be high as the witch was famous throughout the kingdom for the exorbitant prices she charged.

The last day of the year arrived and Arthur had no choice but to talk to the witch. She agreed to answer the question, but he would have to agree to her price first. The old witch wanted to marry Sir Lancelot, the most noble of the Knights of the Round Table, and Arthur’s closest friend! Young Arthur was horrified. She was hunchbacked and hideous, had only one tooth, smelled like sewage, made obscene noises, etc. He had never encountered such a repugnant creature in all his life. He refused to force his friend to marry her and endure such a terrible burden, but Lancelot, learning of the proposal, spoke with Arthur. He said nothing was too big a sacrifice compared to Arthur’s life and the preservation of the Round Table. Hence, a wedding was proclaimed and the witch answered Arthur’s question thus: “What a woman really wants,” she said, “is to be in charge of her own life.”

Everyone in the kingdom instantly knew that the witch had uttered a great truth and that Arthur’s life would be spared. And so it was, the neighboring monarch granted Arthur his freedom and Lancelot and the witch had a wonderful wedding. The honeymoon hour approached and Lancelot, steeling himself for a horrific experience, entered the bedroom. But, what a sight awaited him. The most beautiful woman he had ever seen, lay before him on the bed. The astounded Lancelot asked what had happened. The beauty replied that since he had been so kind to her when she appeared as a witch, she would henceforth be her horrible deformed self only half the time and the beautiful maiden the other half. "Which would you prefer?" she asked him. "Beautiful during the day … or at night?"

Lancelot pondered the predicament. During the day he could have a beautiful woman to show off to his friends, but at night, in the privacy of his castle, an old witch! Or, would he prefer having a hideous witch during the day, but by night a beautiful woman for him to enjoy wondrous, intimate moments with? If you are a man reading this …) What would YOUR choice be? (If you are a woman reading this ..) What would YOUR MAN’S choice be? What Lancelot chose is below. BUT … make YOUR choice before you scroll down below. OKAY?

(Scroll down)

(Scroll down)

(Scroll down)

(Scroll down)

Noble Lancelot, knowing the answer the witch gave Arthur to his question, said that he would allow HER to make the choice herself. Upon hearing this, she announced that she would be beautiful all the time because he had respected her enough to let her be in charge of her own life. Now … what is the moral to this story?

The moral is

* If you don’t let a woman have her own way, things are going to get ugly.
* There is a witch in every woman no matter how beautiful she is!!

Investing Gyan

Wednesday, February 14, 2007

Carnival of Personal Finance

2Million hosted the 87th edition of the carnival of personal finance and my post was featured on it. My post lets you download ten excel sheets where you can budget, plan and control your finances. The carnival itself is a rich source of information on Personal Finance.

Btw, I forgot linking back on another Carnival I participated some time back. I'm sorry, Cecilia Green, who has the carnival hosted here

Go, take a look. And yes, I'm hosting a carnival on Money and Finance. Waiting to see your posts.

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Plan for your Valentines Today

Not even at 39! But this looks inviting.

Afterall it's Valentine Day today. This day will be forever! Plan for it!!

Yes, all plans are useless, but planning can be useful!!

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Monday, February 12, 2007

SEZs in India

Here's a small ppt on the Special Economic Zones (SEZ) in India. I feel that there is some more research required. What do u think?

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Sunday, February 11, 2007

Man is Stupider than Animals

De Bono says that Man may be smarter than animals ONLY because he is stupider.

The paradox is that Man may be able to go much further in his thinking than animals only because his basic thinking process is less precise.

Amazing! Guess the idea should be KISS( Keep it simple, stupid)

While on De Bono, here's DeBono's 2nd law: Proof is often no more than lack of imagination in providing an alternate explanation.

DeBono's a genius!

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Saturday, February 10, 2007

The Power of Internet in India

This is a small presentation on the growing influence of Internet in India. Love it or hate it, you can't ignore it. Recently Times magazine has selected You and Me as the "Person of the year" because we have the power to change things at an individual level because of the power of Internet.

Investing Gyan
Reviews, Tips, Calculators, with an Indian perspective.

The 60 second guide from TOI

Click on the image to make it large. Eh don't get any other idea!

Investing Gyan
Reviews, Tips, Calculators, Sensex, Insurance, Real Estate, Mutual Funds with an Indian perspective.

Friday, February 9, 2007

Fido Dido is my Idol

BrandLine features an interview of Joanna Ferrone, the creator of Fido, the 7 Up brand icon and she has the following to say about his philosophy.

His philosophy is "Fido is for Fido. Fido is against noone. Fido is youth. Fido has no age. Fido sees everything. Fido judges nothing. Fido is innocent. Fido is powerful. Fido comes from the past. Fido is the future.

Looks like I have found my idol!

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

Momentum in the Infrastructure Sector in India

These days everybody is talking about Infrastructure projects. The award of ultra mega power projects and privatisation of airports demonstrates a committment at the highest level. So the momentum to build up roads, ports and urban infrastructure is building up for sure.

The JawaharLal Nehru Mational Urban Renewal Mission (JNNURM) initiative in 63 cities and urban transport projects will also drive up Investments in Infrastructure. Water Supply projects and sewerage projects would be part of the JNNURM.

There are three major stocks in the Infrastructure sector which is worth talking about. 1. Nagarjuna Construction (NJCC) 2. IVRCL and 3. HCC

Remember, do not go by the order book size alone, which is what many people do without understanding the intricacies. We need to understand the execution period of the order book, and the kind of margins that the company would make, given the kind of raw material prices at which it has booked these orders.

Even though it may look daunting, a lil bit of research helps you in understanding the stocks as well as improving your general knowledge.

NJCC, with its diversified order book is projected to grow it's revenue and earnings by 38% and 45% CAGR respectively. It has a land bank spread over eight different locations.

IVRCL has a well established franchise in water and irrigation projects and is now participating in increasing number og Road projects. The company is planning to list its Real Estate Division which could result in unlocking of value for investors.

HCC has focussed on large and complex projects and has a higher margin than its peers. With the Bandra-Worli sea link back in progress, its valuation should be on the up.

Construction companies should continue to grow at a rapid pace. But some companies can fool you with all the hype in the sector. I mean be careful with their order book projection and take a look at their margins.

Therefore, we need to do our homework before investing in such stocks. Of course, this applies to stocks from all sectors

Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.

BCG Matrix for ITC Ltd.

I made the following presentation as part of the project given to us (Executive MBA course) for our "marketing Strategies" elective. Feedback and comments are very welcome.

Investing Gyan
Reviews, Tips, Calculators, Sensex, Insurance, Real Estate, Mutual Funds with an Indian perspective.

Thursday, February 8, 2007

Start sharing your Slides

Slideshare is a wonderful way of sharing your slides and powerpoint presentations. It is a place to share and discover slideshows. You can embed the slideshows in your blog, tag, comment and have fun.

I have embedded a presentation I have made on "Taking responsibility for your finances"

Waiting eagerly for comments.

Investing Gyan
Reviews, Tips, Calculators, Sensex, Insurance, Real Estate, Mutual Funds with an Indian perspective.

Wednesday, February 7, 2007

WorkSheets on Budgeting, Planning and Control

I'm amazed at myself. My 200th post and it's hardly four months since I've fallen(err..or risen to) for this blog thing!!

I have been writing a lot of theory(crap;?) on going about your financial decisions. Sounds fine but how do you actually do it? Have been working a while on some worksheets and here is the result of my efforts. Download this Worksheet on Excel

The entire worksheet has eleven spreadsheets and they are:

1. Networth Statement: Start with calculating your Networth. The sheet also gives you an idea of the weightage of each asset and liability.

2. Budgeting: The sheet gives you an idea of planning your expenses vis a vis your income. The idea is that when you start measuring it, you can manage or control it and then improve upon.

3. Children Education Planner: Gives you an idea of what amount you need to invest and for how long so that the desired level of money is available for your children.

4. Starting Early: The worksheet compares between two scenarios where in one you start early and in the other where you start late. See the difference.

5. Tax Calculator: You can enter your monthly income and the total tax can be seen. Well this is according to Indian Tax laws. If any of you want the template for the Tax returns, do let me know.

6. Retirement Planner: This sheet will help you in arriving at the amount to be invested monthly for desired retirement pool. Toggle around with the figures.

7,8,9. Gives you a sheet where you can enter your Mutual Funds portfolio, Insurance and Other Investments.

10. Crorepati?: It calculates the Future Value of your investments and tells you when will you be able to become a crorepati!!

11. Calendar 2007 : A desktop and soft copy of Caledar on Excel.

I'm proud of my effort. But this should not stop you from telling me what improvements I can make. Infact that will be hugely appreciated. I'm also looking for somebody who can make it better. Also guys who can convert this into some other platform like odp or anything better.

Investing Gyan
Reviews, Tips, Calculators, Sensex, Insurance, Real Estate, Mutual Funds with an Indian perspective.

Carnival of Entrepreneurship & Wealth Accumulation

I participated in my first Blog Carnivals hosted by MakingYourWay and The Carnival of Entrepreneurship hosted by Laura Young .

Laura says, "Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. So what keeps the dreamy eyed entrepreneur going? What makes an entrepreneur? Ranjan presents Freedom & Responsibility of Working on your idea"

In the carnival for 30s and 40s Personal Finance(Wealth Accumulation) , my following post was featured in the Budgeting section:

Budgeting is for Sissies;Millionaires do not Budget! MYW remarks that I discuss key tips on budgeting – even if I don’t believe in it! But it's not like that. I did not believe in that earlier but am not averse to giving it a try!!

Thanks Laura & MYW.

Investing Gyan
Reviews, Tips, Calculators, Sensex, Insurance, Real Estate, Mutual Funds with an Indian perspective.

Luck, Fortune Favors the Brave

As an asset class, Equity stocks offer the best returns. But so many of us have burnt our fingers in the process?

How is it that very few investors can make real profits, grow their networth and consistently beat the market? That's because it often takes one or more of the following rare traits...

  • The vision to identify breakthrough products, leaders, and brands
  • The knowledge to spot an undervalued gem in a sea of glass
  • The courage to buy and hold when others are running scared

Occasionally, you'll come across an investor with one of these valuable characteristics. And it's likely that person does quite well. But I can't imagine a person who can offer all three.

That would take two very different and even contradictory approaches...

Sounds scary? But fortune favors the brave only!!

Tuesday, February 6, 2007


In this four month journey of blogging, the biggest help has been some critics who did not like something and actually told me about it. I have made an effort to improve the blog and I am pretty happy about it. But I would like to have more feedback. Will you take some time to do that?

Select an option:

Bad Layout
Good Layout
Just OK


Thanks a million

My Blogosphere is becoming Amitsphere!

For me the blogosphere is turning into Amitsphere! First Amit Agarwal, then Amit Varma and now Amit Ranjan . My favorite finance blog is by Ramit who has "amit" embedded!!

Amit has started a blog, WebYantra, which is dedicated to profiling innovative Indian web products and internet services. It’s a platform for Indian web startups, ecommerce websites and internet based businesses to showcase their products & services to Indian internet users. To see what Webyantra looks like, go here.

Amit Ranjan says, "The majority of the web content that I see everyday in the Indian internet space fails to inspire me. Most of the contemporary Indian web products, internet services, web applications etc seem amateurish, are poorly designed, lack real innovation or are copied unimaginatively from successful western product concepts. As an Indian, this hurts me somewhere deep in my heart." So instead of cribbing more, he has started this WebYantra.

Amit Ranjan is a techie turned marketer turned entrepreneur. He heads the Delhi office of Uzanto (a Silicon Valley startup), where he drives the product strategy for MindCanvas (think games meet online surveys). He tracks emerging trends in the Indian consumer internet space.

More power to guys like that.

Monday, February 5, 2007

Research on Money Matters and Attitudes

Flexo points out to an article in MSN Money which says:

Money may not be the root of all evil, but studies reveal that those with money
on their minds tend to be indifferent to helping or even interacting with

Maybe, but let's not jump to any conclusions right away. I think attitude towards money matters can be both good and bad.

After all, money is a bad master but a good servant too!

Grow your Money

Rishi Raj sends me this link which is an article by Richard Jenkins , editor-in-chief of MSN Money .

Turn $1 into $67815 !!

Looks amazing. But how often people can translate that theory in practice. I can't, for one.

I have taken a home loan on a floating rate which is increasing very fast. I took it at 7.25% and now it has reached 9.75%. I have the option of transferring it to my employers account which offers a lower rate but I'm postponing it for six months now.:(

I'm being a big fool.:(

Sunday, February 4, 2007

Ranjan's Web Search

Thanks to Gautam for pointing this Google customised search out to me.

Ten Stupid Questions

10 most stupid questions' people usually ask in obvious situations :

1. At the movies: When you meet acquaintances/friends...Stupid Question:- Hey, what are you doing here?Answer:- Dont u know, I sell tickets in black over here..

2. In the bus: A heavy lady wearing pointed high-heeled shoes steps onyour feet...Stupid Question:- Sorry, did that hurt?Answer:-No, not at all, I'm on local anesthesia.....why don't you tryagain.

3. At a funeral: One of the teary-eyed people ask...Stupid Question:- Why, why him, of all people.Answer:- Why? Would it rather have been you?

4. At a restaurant: When you ask the waiter...Stupid Question:- Is the "Butter Paneer Masala" dish good??Answer:- No, its terrible and made of adulterated cement. Weoccassionaly also spit in it.

5. At a family get-together: When some distant aunt meets you afteryearsStupid Question:- Munna,Chickoo, you've become so big !!Answer:- Well you haven't particularly shrunk yourself.

6. When a friend announces her wedding, and you ask...Stupid Question:- Is the guy you're marrying good?Answer:- No,he's a miserable wife-beating ,insensitive'sjust the money.

7. When you get woken up at midnight by a phone call...Stupid Question:- Sorry. were you sleeping?Answer:- No. I was doing research on whether the Zulu tribes in Africamarry or not. You thought I was sleeping.... you dumb witted moron !!

8. When you see a friend/colleague with evidently shorter hair...Stupid Question:- Hey have you had a haircut?Answer:- No, its autumn and I'm shedding......

9. At the dentist when he's sticking pointed objects in your mouth...Stupid Question:- Tell me if it hurts?Answer:- No it wont. It will just bleed.

10. You are smoking a cigarette and a cute woman in your office asks...Stupid Question:- Oh, so you smoke ?Answer:- Gosh, it's a miracle was a piece of chalk and

Indian Hotel Industry on a Party Spree

The Indian hotel industry is increasingly becoming more attractive for investors the world over. This is mainly because of the fact that in most of the major cities a huge demand-supply gap continued, which has resulted in an excellent growth in occupancies and Average Room Revenues.

With 4.4 m visitors arriving in the country for the year 2006, all the hotel chains have witnessed robust growth. As India emerges as one of the world’s fastest growing tourism markets, the party of the hotel industry will continue in the coming years too.

EIH Ltd, ITC Hotels, Hotel LEELAVENTURE, IND Hotels, ORIENTAL Hotels and TAJ GVK Hotels are some top scrips in the sector. ITC Hotels is not listed separately and is part of the ITC scrip.

To assess the performance of players in this sector, the following are the key performance indicators:Occupancy rates, Average Room Rent (ARR), RevPAR (revenue per available room, Operating margins

EIH is a member of the Oberoi Group that runs and manages luxury hotels in India and abroad. It operates under ‘The Oberoi’ and ‘Trident‘ brands. EIH has presence in key gateway cities like Mumbai, Delhi, Chennai and Bangalore where occupancy rates and ARR’s continue to remain robust. While the company's topline registered a growth of 19.6% YoY, net profits rose by 168% YoY (if one excludes the extraordinary income received in 3QFY06).

Indian Hotels (IHCL), the owners of the Taj chain of hotels, is India's largest hotel chain with an estimated room inventory share of 25% in top seven cities in the luxury segment (room inventory share is the share of Indian Hotels of the total rooms available). On a consolidated basis, including properties under the management control, the total inventory in FY06 stood at a little over 9,256 rooms.

Like its peers, ITC too benefited from the strong tourist inflow into the country during 2006. This division recorded a growth of 29% YoY for the quarter backed by 37% YoY growth in its RevPAR (revenue per available room).

Asian Hotels, the owners of the Hyatt Regency chain of hotels has also posted a rise in operating profits

Today, India is one of the most exciting emerging markets in the world. According to recent estimates of the WTTC, Indian tourism demand will grow at 8.8% (CAGR) over the next ten years (from 2005-15), which would place India as the second most rapidly growing tourism market in the world.

The tourist arrival will touch new heights fuelled by the low cost airlines, growing infrastructure thrust by the government and India’s emergence as an outsourcing hub.

Based on the forecasted growth in demand it is expected that another 100,000 to 125,000 rooms will be needed in the next five years, to be able to meet the demand. Till then, the party for the hotel majors will continue.

Saturday, February 3, 2007

Budgeting is for Sissies; Millionaires Don't Need Budgeting

True, I believe that Budgeting is for Sissies and Millionaires don't need to do Budgeting. But I could be wrong(hard to accept that but I guess I can win some brownie points for being flexible:).

Now even though I lay no claims on being a sissy [:)] as well as a millionaire($) [:(], here are some thoughts on Budgeting:

FMF says that Millionaires become millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way. Yes, you can make all the money in the world, but if you spend all the money in the world plus $1, you have a negative net worth. Budgeting and controlling expenses hold the key to wealth.

The country has a budget. Every well run organisation has to have a budget.

It is said that if you want to improve on anything, first you should be able to measure it. Budgeting provides the measuring scales for your finances.

So if you have come around to giving Budgeting a try, here are five keys to developing a successful budget from Crosswalk:
1. Teamwork: Get your spouse into it too. एक से दो भले!
2. Learn what your true income is: Accept it, even though it is less than what you deserve:).
3. Do your budget on a monthly basis: Get started atleast.
4. Do your budget in written form!!! : No mind games!
5. Prepare your budget in order of priority: What priority I don't know. Maybe when I understand it fully, I'll share.

Happy Budgeting!!

Improved Profitability Due to Increased Operating Efficiencies

CRISIL has conducted a study on the operating performance of about 5000 Indian companies in nine key manufacturing industries. The study indicates that these companies have been able to improve their profitability because of increased operating efficiencies.

So while the Net Sales grew between 2001-02 and 2005-06 by 15.13%, the operating profits rose by a higher 22.39% despite rising prices.

During the period under consideration (2001-02 to 2005-06) there has been a substantial increase in prices of critical input materials like crude oil, natural gas, steel and base metals resulting in an increase in prices of derivatives products, which are raw materials (RMs) for all major manufacturing companies.

The companies studied have not only been able to offset the impact of rising RM prices on their operating margins, they have actually expanded the operating margins by increases in end product prices and operating efficiency.

However, going forward, the ability to increase end product prices may be limited. Hence, to expand margins companies will have to rely largely on operating efficiency.

CRISIL believes that this commentary will be of interest to you. They will be glad to receive your views and comments on this commentary at And me too!

Improved efficiency also means a lean, fit and competetive organisation. That is why we are increasingly showing our presence in the International market.