Financial Management for a Startup Firm

Himanshu would like me to be his first Guest Blogger and write some stuff on Finance.The reason, Himanshu says, is many people like him are techie guys but they are not so much aware about Finance.

Is it important for a startup to understand corporate financial information, evaluate corporate financial performance and understand the language of accounting and finance?

I feel that the idea of a startup is a romantic and sexy one till you start the start up. Once you are confident of your idea and think it’s time to make it happen, it’s time to do some reality checks.

Let us ask the “bringing back to Earth” questions with a financial angle. In fact the business plan of a startup firm should incorporate the source and application of funds, projected cash flows, Sales forecast, ROI, Breakeven analysis etc.

1. How much money is needed to launch the project? What are the short term working capital needs? Here you try to understand your capital requirements.
2. What return on investment can the business bring? This is the first question a VC would ask. You have to work on the ROI that your business can bring.
3. What could be the possible source of funds? Friends, relatives, VC or a Bank?
4. What are the projected Sales forecast and the likely expenses? You may do well to build a projected cash flow statement for the next 1-3 years.
5. When do you look to cover your initial costs? In other words, when do you break even?
6. Can you build a projected balance sheet for your business?

Difficult questions? Maybe yes, but if you are not prepared to answer them or face them, the startup may remain just a pipe dream.

If success was easy it would no longer be success. Admittedly, though finding the answers is not like rocket science, it looks entirely geeky to many of us.

There are no ready made answers. It follows after you are able to define your business, review your competitive environment and do a SWOT analysis for yourself.

And tools? Start with a pen and a paper, quickly graduate to Excel sheet or any other spreadsheet and you are on your way!! Getting started is all you need to worry about!! haven't we heard Goethe's couplet: Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.

Instruments of Monetary Policy in India

I have been trying to understand the Annual Monetary Policy and made my first attempts by asking what factors went into the policy. I asked myself two questions and attempted to put my own answers there. More I try to learn about the policy, the less I seem to understand. But I'm determined.

Actually this monetary policy is nothing but controlling the supply of Money. The big Daddy, I mean the RBI takes a look at the present levels and also takes a call on what should be the desired level to promote growth, bring stability of price(low inflation) and foreign exchange. The factors that decide the desired levels were discussed in my last post.

This brings me to my third question:
What are the instruments of this monetary policy that the RBI has and can use?

We hear of repo rate, reverse repo, CRR in the papers. Are they the only weapons RBI has? No, I found abook on Macro Economics by DN Dwivedi which lists out the following:
A. Quantitative measures:

1. Open Market operations: Here, the RBI enters into sale and purchase of government securities and treasury bills. So the RBI can pump money into circulation by buying back the securities and vice versa. In absence of an independent security market (all Banks are state owned), this is not really effective in India.
2. Bank rate policy: Popularly known as repo rate and reverse repo rate, it is the rate at which the RBI and the Banks buy or exchange money. This resuts into the flow of bank credit and thus effects the money supply.
3. Cash Reserve ratio (CRR): This is the percentage of total deposits that the banks have to keep with RBI. And this instrument can change the money supply overnight.
4. Statutory Liquidity Requirement (SLR): This is the proportion of deposits which Banks have to keep liquid in addition to CRR. This also has a bearing on money supply.

B. Qualitative measures:

1. Credit rationing: Imposing limits and charging higher/lower rates of interests in selective sectors is what you see is being done by RBI.
2. Change in lending margins: Or is the risk weightage assigned for the various lendings.??
3. Moral suasion: We hear of RBI's directive of priority lending in Agriculture sector. Seems more of a directive rather than persuasion!!

I'm beginning to make sense of the jargons I get to read in the papers. Do you have a question? And if you're still confused about the whole thing and wonder what's the fuss all about, take a break! (I'm taking one, too!!!)

Annual Monetary Policy for Dummies: By a Dummy

I'm having nasty nightmares again. Last time it was because I was trying to understand our Union Budget. This time it's because of the annual monetary policy by RBI. Read this:

RBI kept key rates and its monetary stance unchanged while maintaining a
cautious outlook, and reitirated that inflation continued to be a downside risk,
retaining elbow room for further intervention if and when required. Phew!!

The only thing I could make out is that the Governor should take training with a Superman. So many things to do!! This takes me to the beginning of my many questions. Two of them are in this post.

1. What is the RBI's role?
I mean that the Indian Government is responsible for the economic progress of India. So, why is the role given to RBI for the monetary policy? And, what else does RBI do?

Apart from inflation control, RBI also has to regulate the banks, print money, regulate the Government Bonds market, decide on Foreign exchange regulations, etc. And to achieve whatever they want to, they have one tool: The Monetary policy! (head on to Ajay Shah's blog for an expert's view)

2. What are the factors that influence the policy?
We are bombarded with jargons like SLR, CRR, Exchange rate, Repo rate, etc. To understand what they mean, we should first understand the factors that influence the above rates decisions. Yes, inflation is one of them.

• Manufacturing and Industrial growth: Earlier we needed to increase growth (popularly known as GDP growth) by our monetary policy. Presently we need to maintain them.
• Foreign Trade: The policy should take a look at the present exports and imports and specially the Oil imports. The exchange rates have a huge bearing on the export/imports.
• Credit growth: RBI has to worry about high growth in non-food credit. It has a bearing on the money supply.
• Inflation: Yes,inflation too! Infact this was the only thing I knew much before getting into this thing.

So now when you hear that RBI has changed the repo rate or the reverse repo rate, we know the factors that influenced the decision. Maybe this will help us in understanding the rates decisions better. Bring on the SLRs, CRRs, Repo, Reverse repo!! That will have to wait for another post.

Ambush Marketing in India

Ambush marketing...rare in India but then Mr.Mallya is known for his out of the box ways !! This one rocks!!

Another one is:
We fly to London direct...
and right below it
They are flying to London...

Free BroadBand in India

BroadBand to be Free in two years, ET reports today. Sounds too good to be true.

But this is technology. You can leapfrog into the future. Hopefully this is not just wishful planning and concrete steps are taken to implement it.

Rajiv Dingra has details on the topic.

Your Behaviour is based on Economics

My curiosity for Economics continues. I discovered this amazing 10 part series by Walter Williams and I promise that once you go through the pages, you'll find Economics real fun.

In part 3, for example, he describes three aspects of economic behaviour ( production, consumption and exchange) and touches on "exploitation". The excerpts:

Say you offer me a wage of $2 an hour. I’m free to either accept or reject
your offer. So what can be concluded if I’m seen working for you at $2 an hour?
One clear conclusion is that I must have seen myself as being better off taking
your offer than my next best alternative. All other alternatives were less
valuable, or else why would I have accepted the $2 offer? How appropriate is it
to say that you’re exploiting me when you’ve given me my best offer? Rather than
using the term “exploitation,” you might say you wish I had more desirable
alternatives.

By no means do I suggest that you purge your vocabulary of the term
“exploitation.” It’s an emotionally valuable term to use to trick others, but in
the process of tricking others, one need not trick himself. I’m reminded of
charges of exploitation Mrs. Williams used to make early on in our 44-year
marriage. She’d charge, “Walter, you’re using me!” I’d respond by saying,
“Honey, sure, I’m using you. If I had no use for you, I wouldn’t have married
you in the first place.” How many of us would marry a person for whom we had no
use? As a matter of fact, the problem of the lonely hearts among us is that they
can’t find someone to use them.

Self Introspection on Blogging

Time for self introspection!!



Want to take a break and have a good laugh. Click Here

Economics for Dummies: By A Dummy

I am both intrigued and fascinated by Economics. Maybe because Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing. Or is it that Economists get to do it with Models!!

So even though I'm a dummy with Economics, I've been busy reading and trying to fathom some aspects. Honestly, my interests have soared high after I discovered a treasure trove of Economics in the form of a friendly blog by Ajay Shah

To start with I'll atempt to ask and answer three basic questions about economics: Why, What and Where?

Why? : Economics provide a framework for taking decisions by the Goverments and the Management of firms. While it studies the production, distribution and consumption of products and services, Economics also studies human behaviour to address issues of demand and supply. To me, this makes Economics an important subject to get serious about. Despite the horrible jargons and graphs. Incidentally, I don't have any problems with the curves!!! :))

What? : Economics can be analysed in two ways, Micro Economics and Macro Economics. The macro-economic environment ( tax, monetory and fiscal policies, etc ) defines the setting within which the firms operate. The micro-economic environment(eg. cost analysis, marginal analysis, etc) provides the conceptual underpinning for the tools of financial decision making. Simple, no?

Where? : This one is easy. Just head to Ajay Shah's Blog (some gems: 1, 2, 3, 4, 5) , the Indian Economy Blog or Alex Thomas's Blog. You'll learn much more from them rather than any thing else because there you don't find the intimidating mumbo jumbo of Economics. And I found this amazing series on Economics for the citizen, which is very useful.

Enough for a day. I'll come back with more on this "interest"-ing subject!!

Overview of Merger and Acquisitions

I did not know anything about the Mergers & Acquisitions untill a week ago when our Prof at the Exec. MBA asked us to do a small project on M&A and present it before the class. This was to be a part of the internal assessment for our Business Environment project.

This M&A is really picking up speed. As against M&A deals of arounf $20 billion in 2006, Indian companies have already notched up M&A deals worth $37 billion in two months of 2007. And it's just the beginning. The Investment Bankers are going to have a great time.

The Union budget has visualised setting up an IFC in Mumbai. Read the details in Ajay Shah's Blog. Some reports say that Financial services is going to be the next growth driver for the Indian Economy.

So don't you want to see what M&A is all about. Here's an overview:

Strategic Management in ITC Ltd.

This is the project on Strategic Management that we did on ITC ltd. for our Executive MBA. I'll be delighted with feedback and comments.

Do You have the Right Strategy?

I like the word "strategy". Sounds good, no! Whenever I'm doing nothing at office and want to feel smart, I start "strategising on my options to leverage the resources at hand". Roughly translated it means, "I'm taking a nap".

Jokes apart, this is what I read in dailies:

• The total value of M&A involving Indian companies was about $37 billion (Rs 160000 crore) in two months of 2007 as against $20 billion (Rs 86000 crore) in the whole of 2006. Is there some grand strategy there?


• LIC, the Insurance behemoth, is in the process of carving two separate entities for its "Credit Card venture" and "pension business". Why is LIC diversifying into credit cards?


• Jet and Sahara have finally decided to merge after 10 month of battle. Is there value in the deal?


• Tata outbids CSN in the Corus deal? Did they pay too much?

I often wonder at the strategy behind the decisions. Unfortunately, I don't learn much from the media. Maybe because they are much more focussed on the strategy to cover the Aishwarya Abhishek marriage to the max detail rather than covering such mundane topics.

I start from the basics. What is strategy? Wiki says, A strategy is a long term plan of action designed to achieve a particular goal, most often "winning". Isn't this simply means what is good for me on the long run should be my strategy. Only handicap is we don't know what's good for us!! For example, we may try to maximise sales without looking at the profitability of sales and thereby hurt the bottomline of our Company.

Let's take a look at an overview of the Strategic management process. The process of Strategic Management exercise starts with the Company's Mission statement where the business of the company is identified. Defining the business would mean figuring out the product/service, the segment of customers and also the delivery channel.

After we identify where we want to reach, we should also be able to assess our situation and decide whether we are capable of reaching our goals and that our goals are not just wishful thinking. In management parlance, you need to do a SWOT analysis or do the Company Profiling. As part of the profiling, we should also try to figure out the PESTs ( Political, Economics, Social, Technological environment), also known as External Environment.

Once you are done with the above three ( Mission, Company profiling and External environment), you may be feeling that you are through. But it gets murkier when the Management Gurus shout over each other selling you there ready made Dosa mixes, err,.. their matrices. Three popular matrices that comes to our help with strategic analysis and choice are:

1. BCG Matrix: This matrix created by the Boston Consulting group base their strategies on the basis of market growth and market share where we can categorize its business units as "Stars", "Cash Cows", "Question Marks", and "Dogs", and then allocate cash accordingly


2. GE Matrix: It is amore complex version of BCG matrix where one axis comprises industry attractiveness measures, such as Market Profitability, Fit with Core Skills etc. and the other axis comprises business strength measures, such as Price, Service Levels etc.


3. Ansoff's Matrix: The Ansoff Product-Market Growth Matrix is a marketing tool which allows marketers to consider ways to grow the business on the basis of four possible product/market combinations. The matrix consists of four strategies which are market penetration, product development, market development and diversification.

Armed with the jargons, I feel smug and confident. Untill my missus called up to enquire what I was doing at office. "Strategy session going on", I tried to sound important and busy. "Then you can come early, and please buy some भाजी on your way back".Unfortunately my wife does not fathom "strategy" (but uses a lot of them, eh)

I'll go now and strategise on buying the best भाजी (value for money, guys!) .I'll come back with more bhaaji sessions, oops.., strategy sessions. I will simplify the meaning of long term objectives, operating strategies, institutionalisation of strategy, et al. Stay tuned.

The Best 21 Functional Blogs

I am honoured to be listed in "Best of India Blogs" and the joy is multiplied since it is done by Amit Agarwal, the poster boy of Indian Blogging.

The list is categorised in 18 sub headings and Amit has really done some hard work there. Special thanks to him for adding a Finance category. Even our famed Indibloggies do not have the Business/Finance category for their awards.

This sets me on the question why Business/Functional blogs have not yet taken India by storm compared to "Personalised" blogs. True, we have Gautam Ghosh, who is recognised as the Father of Business Blogging in India. But he is outnumbered by bloggers who have a personalised web log and are hugely popular.

I am 6 months old when it comes to blogging and I may be wrong. But I'll make a small start by listing the bloggers who have functional content. And the 5 categories are Business Management, HR/OD, Finance/Personal Finance, Technology, Marketing

Business Management

• Rashmi Bansal


• Rajesh Jain


• Amit Ranjan

HR/OD

• Gautam Ghosh

Finance/Personal Finance

• Ramit Sethi


• Rajeev Mundra


• Avinash MB


• Personal Finance for Beginners


• The Indian Investor


• Tax Query

Business Technology

• Digital Inspiration


• Anand Srinivasan


• Aji Isaac Mathew


• Wat Blog


• Ajay's TechTites


• Rishi Mac

Marketing/ Entrepreneurship

• Seth Godin


• Guy Kawasaki


• Sidin Vadukut


• Himanshu Sheth


• Startups in India

So there's my list of 21, to start with. I would love to add more and more to that list. Help. I would specially request for Finance blogs that I should be knowing but am not aware of.

Become a Crorepati in 30 months

Gaurav's post on the 30 things he wanted to do before he's 30 was a brave one. I wondered at his bravery and wished him all the best only to land up in trouble myself :) He wants a way to build a Networth of 1 Crore before he's 30 and now wants me to find it. :(

Gaurav's target of becoming a crorepati is brave but also bordering on being foolhardy, I think. To top it, he wants to start with a seed capital of only Rs 2 lacs and a monthly infusion of Rs 20000! This way he will need to grow his money at an outstanding rate of 200% annually!!

Impossible. Or could be there some way? Legal, ofcourse.

Very recently I read a book, The Big Idea, which ends with the following Goethe's couplet: Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.

Here in this blog I have been talking about Mutual Funds, Real estate, Bonds, ULIPs and ETFs. All of them do not pass muster when it comes to giving a return Gaurav wants. What about stocks? Yes, there are stocks that have given that kind of return in the past. But how to identify those stocks who would do the same in the next 30 months? Nobody knows those stocks. So is there still a way?

Now Gaurav says that he has avery high risk appetite. That should essentially mean that when he has invested in shares that he expects will zoom and those share prices drop 30% soon after he buys them, he will average his cost by buying more. Letus assume that he is willing to take the volatility for the desired growth and he is confident of his decisions.

Moving on that assumption, Stocks can give you that growth. But since we cannot identify the 5-6 stocks that will give a growth of 150-200% over a period of 30 months, we need to ride the waves on the stock market.

The first magic happened today morning when I looked at a blog/site that I had been avoiding (Because I understood little of that). It's EagleEyeTrade by Rajeev Mundra.

Talking to Rajeev who runs a Technical Trading seminar too, I did some number crunching. Assuming a challenging but realistic goal of 10% growth every month, a starting amount of Rs 6,25,000 will become Rs 1.09 crore after 30 months. Vow!!!

Atleast, theoretically it's possible. Ofcourse it will take a lot of guts (time & energy too). It depends on Gaurav's risk appetite. And Rajeev's expert guidance. If you ask me, the guys can do it. I wish them Good Luck.

For the first time I'm putting a disclaimer. Here it is: Ideas posted on the blog are educative in nature and must not in any way be construed as advice or recommendations. Investing/Trading in financial instruments is risky. This blog cannot be held liable in anyway for losses incurred.

Ride the market wave to grow your money

I have been following the EagleEyeTrade blog and even though I don't understand technical analysis, I find this blog very credible. I am delighted that Rajiv found time to answer some of my doubts/questions which have been reproduced below:

Technical analysis is the study of the trading history to attempt to predict future prices. What qualifications make you confident of doing that?

• The only qualification which works in Stock Markets is real life experience. A college degree, BTech or on MBA all are helpless unless one can think for himself and be able to risk money. The experience does not comes easy and coupled with the fact that normal human "good" qualities and emotions tend to hamper rather than achieve good results in technical trading.

Do you have a detailed training kit for beginners. Tell us more about that.

• We donot have a detailed kit for beginners. What we sometimes do conduct seminars which are for focused traders.The trader should be familiar with markets for sometime and have some trading experience to benefit from our seminar.Our focus in seminar is to establish new lines of thinking or to give the trader new ways of looking at things. We focus on Elliott Wave, Classical technical analysis, risk management and position sizing. All of which are important pillars of technical trading.We also talk a little about using fundamental scanning for swing trading.

What is Elliott wave analysis? What benefits it brings?

• Elliott Wave is a method to analyze market movements. It shows how market movements are related to each other and how here is pattern in chaos.Its a unique theory which gives the user insights which no other technical theory does. Its is vast and deep and any trader wishing to use this needs 1-2 years of experience to be able to use it effectively.

Critics of technical analysis include well known fundamental analysts. Warren Buffett has exclaimed, "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer" What do you say?

• I am a fan of Warren.Probably Warren is right about Classical technical analysis, I also find it useless.But Elliott wave is a different class and is very useful.Having said that, i would add that technical analysis of any kind are short term tools, while fundamental analysis is much more long term.

The time and energy required is very high. Dou you agree/disagree? Why

• Time is required to excel in anything.

You provide the knowledge/information/calls. How much time do you expect your clients to put in?

• We expect clients to read carefully what we write. This may take 15 mins to 30 mins.Also before they take a trade, they should commit to memory the entry exit stops and other things we say about a trade.

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

• Equity will offer the best returns always in long term. The simple reason being that it is companies which move the world and it is companies which earn the money which flows into everything else. Thus other asset classes which depends upon money generated by companies cannot outperform the companies itself. Like say you want to buy a gold ring, thus you send gold prices up. But how did you get the money to buy the gold ring?Some company you work for, or your own company made the profit from which you paid for the ring. Thus stocks would always lead by a far margin in long term
• Greed and fear is the axis around which stock market rotates and its a dangerous axis to rotate around unless well prepared.Action motivated by greed and fear will result in losses always and the way the market works though greed and fear it makes sure most people remain on the loosing side.

Unless you're working full-time in the financial world, you don't have the skills, tools, information, time or interest in playing the market. Comment.

• This is not always true. Long term investment is relatively easy. An index fund and term insurance would help most people.The more short term oriented you become, to try to extract the most profits, the more tools you need to make sense of the madness and more is the time consumed.

What is the average monthly return an investor can expect from your trade calls?

• I try to generate 10% returns a month for myself. In this 75% of trades are in cash and 25% in futures and options.While this is a high target to achieve every month, we have done that in most months.

I found the answers insightful and reassuring. What do you say? Check out EagleEyeTrade

Mergers & Acquisitions: A Presentation

We have to make a presentation for one of our MBA subject and the topic given to us is Mergers & Acquisitions. The attempt till now has worked as under and it's an overview of the topic with an Indian perspective. Your comments will make it better and win brownie points for us. Don't be selfish, please. I'm the one here:)

What do you think about thinking?

Thinking is the most fundamental skill and where we lack because of lack of any training at school. Well this the premise on which Edward De Bono writes an amazing book on "Teach Yourself to Think"

The book puts forward a mightily detailed framework for thinking. And I thought you don't have to do anything to think!! The five stage thinking process are TO, LO, PO, SO, GO and the details is as under:

1. TO stage: The objective of thinking. Where do I want to end up.
2. LO stage: Current situation, information available and required.
3. PO stage: The possibilities, alternatives, new ideas.
4. SO stage: So what? choosing among the possibilities.
5. GO stage: Going ahead and implementing.

Looks easy. Wait till you get to the book which has amazing details on all the stages. That's when you go crazy about thinking!!

Cricket केवल एक खेल ही तो है

Cricket पर कितना कुछ लिखा जा चुका है । शायद यह भी एक कारण है हमारी हार का! हम अपने खिलाडियों पर इतना pressure और जीत कि expectations डाल देते है कि वे बेचारे भी क्या करें!

पर चर्चाओ का तो अंत नहीं है। आज चर्चा थी हमारे खिलाड़ियों और दूसरी teams की ।

आस्ट्रेलिया और साऊथ अफ्रीका के players तो ६ और ४ रन मारते है।

हमारी team के खिलाडी स्टाइल मारते हैं।

और पाकिस्तान तो अपने कोच को .........

Priceless Investment Advice from Warren Buffett

It's far better to buy a wonderful company at a fair price than a fair company
at a wonderful price: Warren Buffett

During the period from 1980 to 2003, the stock portfolio of Berkshire Hathaway beat the S&P 500 index in 20 out of 24 years. During that same period, Berkshire Hathaway's average annual return from its stock portfolio outperformed the index by 12.24 percentage points. The efficient market theory predicts this is impossible, but the theory is clearly wrong in this case.

The genius of Warren Buffett lies in his simplicity. See this article in Fool.com

You can also have an insight into his mind by reading his letters he writes every year to his shareholders. Go to this wonderful investment advice mine

But it is easy to intellectualize about his wisdom. Hard to follow them even though they look so simple. The trouble is that we consider investment to be rocket science. Which, it is not.

How to Publish Thoughts and Poems in Hindi

अब ब्लोग्गिंग हिंदी मे भी !! The official Google blog announces "Now you can blog in Hindi"

मैंने पहले हिंदी मे लिखने की कोशिश की थी पर हर बार एक line लिखने के बाद हवा निकल जाती थी । गूगल का यह प्रयास बहुत यूज़र फ़्रेंडली (user friendly) है।

Just type as you would naturally do, in your own style, and let Google read your mind :) Well, not really, but close। We realised that everybody has their own unique way of spelling Hindi words in English -- so we have a personalization mechanism in place that enables us to remember your writing style. Correct once, and get the word right every time after that!

वाह!! क्या बात है!!

इस feature को चालू करने के लिए , Settings Basics पर जा कर transliteration option मे "हाँ"। सेलेक्ट करें. This setting will affect all blogs on your account, similar to the Compose Mode setting.

अधिक जानकारी के लिए इस लिंक पर जाएँ। http://help.blogger.com/bin/answer.py?answer=58226

अब हो जाईये शुरू । धन्यवाद गूगल।
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Economists do it with Interest and with Models

• Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing.
• Economists can supply it on demand.
• You can talk about money without every having to make any.
• You get to say "trickle down" with a straight face.
• When you are in the unemployment line, at least you will know why you are there.
• If you rearrange the letters in "ECONOMICS", you get "COMIC NOSE".
• Although ethics teaches that virtue is its own reward, in economics we get taught that reward is its own virtue.
• When you get drunk, you can tell everyone that you are just researching the law of diminishing marginal utility.

This one takes the cake (and eat it too!) : "Economists do it with models"

Read more jokes on Economists

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Reviews, Tips, Calculators with an Indian perspective.

Personal Finance for Beginners

Did I tell you about my other blog where I focus on Personal Finance. Here's what I wrote about "Finance" there.

Finance looks daunting. For me too.

I was in Rishikesh a few years back in the winters and one old resident told me, “The water is warm when the Sun has not risen. Try it”, with a straight face. Next morning, it was pretty dark when I waded into the “warm waters” of Ganga. Boy, Oh Boy! I did not expect the old man to be so cruel!! :)

But I had the bath of my life. It was invigorating and real fun! I came back and thanked the old man who had tricked me into that chilled out experience.

What’s that experience to do with Finance, you’ll say. Well, I’m an old man by some standards. (This should also mean that I’m young by other standards:). And I want you to have fun with Finance.

Let’s take a look at what Finance means and I’m sure you will find it Fun, Interesting, Nasty, gives an Advantage, Not Precise, Creative and Exciting.

Finance itself has a very wide meaning and it encompasses Business Finance, Personal Finance and Government Finance in general. Here we will focus on Personal Finance only.

Your questions in personal finance would revolve around the following:

• How much money will be needed by you at various points in the future?
• Where will this money come from (e.g. savings or borrowing)?
• How can you protect yourself against unforeseen events in your lives, and risk in financial markets?
• How can family assets be best transferred across generations (bequests and inheritance)?
• How do taxes (tax subsidies or penalties) affect personal financial decisions?

Your Personal financial decisions will involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement. Personal financial decisions may also involve paying for a loan.

Phew! Are you prepared to wade into the”warm’ waters of Personal Finance? Welcome. Why don’t you subscribe by Email or Feeds We can travel and have fun together.

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Reviews, Tips, Calculators with an Indian perspective.

Help Teach my Son about Sex

I need help. And this is nothing to do with Business or Finance. I need help to be a better father to my only son. No, it's not that I have been a bad father. Not that there is anything life threatening or emotional about it. It's more serious. I need help to teach my son about sex.

Last year I was driving with my son for company when a bike zipped across with the gal clinging on to the guy. "I hate girls", quipped my 11 year old son. "They do not let the guys drive properly and they end up with accidents", he said to my question Why? Let him learn his own way, I thought priding myself to be on the "papa don't preach" brigade.

I always think that we have to learn it ourselves. The hard way.

Contemplating on my life situation recently, I felt pretty happy about it. I have ongoing battles with things like anger, conceit, etc but I feel that I have taken "pole" position in my race against them.

Smug and happy, I was not ready for a question popped up by my son some days back, "What is sex?"

I squirmed. "Aren't you listening to me?", my son demanded after I refused to react for many moments. My mind was working furiously. I can't tell him that he's too young. He might get worse information from his friends. Can't he ask somebody else. Who?

"Well...., err......, it's something done between a boy and a girl...", I muttered aloud weakly. My son nodded understandingly trying to hide a wicked smile. Thankfully, he did not probe further!!

My son will be a teenager next year. He tells me that I am his friend.

But will he ask and discuss sensitive matters? Could the generation gap between him and me been putting him off? What if I had a daughter? Maybe my wife would have taken care of her. But wouldn't I be more worried in case of a daughter?

What answers do I have? What is the best answer? Am I capable of giving the right answers?

Or am I bothered about something which would solve itself? I should not worry as it is not a big issue?

I looked around on the net. Got some answers here and here. But I guess translating theory into practical advice, as in my case, I have a lot of work to do.

Growing up is a never ending thing, it seems, and the learning process never ends. We jump to conclusions and somewhere conclusions jump on us.

Life rebegins at 39. Or is it that life rebegins every year? Maybe every moment!!

Meanwhile do let me know with ideas on how to go about giving sex education to my son. Thanks.


Reviews, Tips, Calculators with an Indian perspective.

Do It Yourself Tools for Personal Finance

Personal Finance is a thing which we keep on postponing. I’m already feeling like a poet out catching people to hear my poem. And being a person who hardly understands poems, I can understand the yawning souynds people make when I try to tell about personal finance.

I’m persistent. But this time I’ll not rant on any theory and give you a download option where you can do all your personal finance yourself.
So you are about to make a poem yourself. :)

The worksheet has the following sheets. Download it here.
1. Networth
2. Budgeting
3. Planning for Child's education
4. Advantage of starting early
5. Tax Calculator
6. Retirement Planning
7. Mutual Fund Portfolio
8. Insurance details
9. Other Portfolio
10. When you will be a crorepati
11. Calendar2007

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Reviews, Tips, Calculators with an Indian perspective.

Do You Have the Big Idea?

The Big Idea by Stephen D Strauss is an amazing read. It profiles dozens of creators who have gone ahead with launching their own innovation like remote control, Viagra, Tupperware, Barbie dolls, etc.

One of the profiles was on CocaCola. Coke is the no.1 brand in the world.Back in 1985, after facing tremendous competition from Pepsi, Coke took a bold and considered decision. It changed the formulation of its 100 year old flagship product.

No, it was not just a knee jerk reaction to competition from Pepsi and because Pepsi was winning all the taste tests. Coke carried out an elaborate $4 Million research and after the R&D team brewed a new formula that beat Pepsi handsomely, the Coke management launched the new Coke. During the launch, the Coke President thundered, "It's the surest move ever made".

New Coke bombed. And two months later, Coke was wise enough to reintroduce the Old Coke.

What were the mistakes that Coke made? One, people liked the new coke but the interview process did not expose them to the fact that the Old Coke would no longer be available.

Two, Coke estimated that only 10-12% Cola drinkers would be upset. But this 10-12% was sufficient to stir mass discontent!

Three, such a big brand has immense ownership. To the point that it is being owned by the public rather than the management! You can't tamper with their whims and fancies. It's similar to our Indian cricketers!! They are owned by the people rather than themselves. Look what Sachin has to face despite being a legend like that.

We digress. The Coke story does not end here. No heads rolled despite the massive mistake/blunder by the top management. No, it's not the lack of accountability. In fact the blunder helped Coke to understand their customers better and reinforced their brand in a powerful manner. Also the fact that the top management took responsibility for the mistake and rectified it fast, within two months!!

My takeaways? Always lookout for improvement. You may take a bad decision. But if you accept your mistakes and make corrections, the blunder would make you stronger.

Back to some real gems from the book which teaches us to innovate- and grow richer.

1. Think of things that never were and ask, "Why Not?"
2. The power of One: You can make a difference.
3. Keep it Simple, Stupid. (KISS)
4. First is Best.
5. Try, Try again.
6. Risky business brings out the best in you. It is more exciting, crazy, fun, exasperating, rewarding, frightening and challenging.
7. Synergy is necessary. 1+1 = 11!!

The book ends with Goethe's couplet: Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.

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Reviews, Tips, Calculators with an Indian perspective.

Warm Welcome to my 100th Subscriber

The day when I have migrated to a custom domain also happens to be a day when I had my 100th subscriber (89 Email and 12 Feeds). I am very happy.

Talking about Business and Finance appears drab and unglamorous on the Blogosphere. The Blogs audience, I guess, revels in saucy private voyeurism, personal rants and celebrity bashing/idolising. But there are blogs, as I've mentioned here, which makes me go on. Enjoying what I do and not trying to be like somebody else. fact is I have learnt many new things and have met (virtually) many fabulous people.

So you have my thoughts on topics like these: Budgeting (11) , Business Finance (47) , Calculators (4) , Derivatives (6) , Economics (19) , Entrepreneurship (5) , Equity (45) , ETF (10)
Insurance (22) , Investing gyaan (50) , Mutual Fund (30) , Presentations (5) , Sensex review (11) and more....

Do take a look at this brand new blog I've created. Here I'll focus on Personal Finance 1.0. I have also created a community for discussing Personal Finance issues . Take a look at this community and join it too.

FINANCE looks daunting. For me too. But now, I'm comfortable with the concept and find it Fun, Interesting, Nasty, gives an Advantage, Not Precise, Creative and Exciting.

Your comments are more than welcome. And please tell your friends too.

Reviews, Tips, Calculators with an Indian perspective.

Welcome to RanjanBlog.com

I should not have worried. But I guess you can only say this when it's over. :)

So I have migrated to a personalised domain. Custom domain, Google says. I set up the migration on 2nd April and have chewed off my nails in anticipation of the crossover. But obviously I've been a moron with the migration setup and did not do things properly. Rang up the Rediff fellows who did it correctly, two days back. Still no success!! Today morning, I put the www prefix to the custom domain and voila, the migration is now successful. Mightily relieved today.

In the meanwhile, I was also experimenting with wordpress and they are amazing. Take a look at this brand new blog I've created. Here I'll focus on Personal Finance 1.0. I mean the basics.

I have also created a community for discussing Personal Finance issues and it is powered by PHPBB. Take a look at this community and join it too, please.

Reviews, Tips, Calculators with an Indian perspective.

ETF is Smarter than the Smart Fund Managers

Nilanjan Dey has a useful and informative article on Index funds in Business Line. He writes about ETFs and how they have outperformed actively managed funds in the last fiscal year. He asks some very relevant questions about investing. Go to the article

Even though the actively managed funds have done better on a 3/5 year scale, the net difference would be lower or non existent because of the higher cost. The active funds charge you 2-2.5% while the ETFs charge around 0.5% only. The extra Fund management charges will even out the difference, I guess.

I wonder why a good product like index funds does not sell like hot cakes. Comparatively an expensive product like ULIP is selling like hot cakes even though it is much more expensive than the MFs??!!

I guess it boils down to lack of knowledge/information and that the agents have no interest in selling them.

Reviews, Tips, Calculators with an Indian perspective.

SWOT Analysis for Dummies Like Me

SWOT anal-ysis is an important management term used by all and sundry to sound intelligent. My problem is after I utter the word, I have difficulty in taking it forward. Strength looks weakness and Opportunity looks like Threat to me. Every time I end up being jumbled and more confused.

But wait. I have found a remedy for myself. Let me know if it helps you too. Here's SWOT explained.

• Strength: My wife.
• Weakness: My neighbour's wife.
• Opportunity: When my neighbour's away.
• Threat: When I am away.

Reviews, Tips, Calculators with an Indian perspective.