Sunday, February 22, 2009

Pimping my new Blog:

I have a new web space: I have transferred some content from this blog and intend to make that place as my main blog.

When I started blogging, the space was to be my notebook and perhaps to share some information too. Along the way, there were a few posts that could provide some value to readers and a number of posts that I wasn't proud of.

At, I will try to think through before hitting the "publish" button. This space will continue to have tidbits of information on personal finance.

And if you ask me the uncomfortable question as to why I'm having two blogs where one could do, here are my answers:
  1. I don't really know!
  2. The url was available and it doesn't hurt my ego to have a webspace for my name.
  3. Even though this blog works fine, if you accidently go to (without the www), the site shows under construction. The Rediff guys haven't helped me with the technical issues.
  4. I can't just delete this blog. Emotional value, you know.
  5. I still don't know!
If you want to subscribe to the new blog, here's the links: Email and/or RSS

My Other Blog

India's first online weekly on Personal Finance

Friday, February 20, 2009

Thursday, February 19, 2009

Quantum Gold Fund Gives 29.7% Return

Since its listing on 28th February 2008), Quantum Gold Fund has returned 25% vis-à-vis the domestic price of gold which has returned 26% (as on 18th February 2009). Quantum Gold Fund has also acted as an "Effective Portfolio Insurance" by minimizing your losses, if any, from the stock markets.


Quantum Gold Fund

BSE Sensex

Since Inception of Quantum Gold Fund (22nd Feb 2008 - 18th Feb 2009)


-48 %


  • Backed by Gold of 0.995 fineness
  • Available on NSE symbol - QGOLDHALF
  • Buy through any NSE broker-member
  • Save on making charges and premiums
  • Gold holdings secured and insured
  • Low recurring expenses
  • No Wealth Tax
  • Concessional Long Term Capital Gains Tax after 1 year
  • One unit equals approximately half gram Gold

Wednesday, February 18, 2009

Options to Plan your Pension Coming Soon

From April 1, 2009, you will have a choice of investment options to plan for pension. The new pension system (NPS), open to the entire workforce of the country, offer three options, with varying degrees of risks and returns, for you to invest your pension money, including one that will put your entire pension fund in equities if you so desire.
The Deepak Parekh-led panel, set up by the Pension Fund Regulatory and Development Authority (PFRDA) to suggest investment norms for NPS, has recommended a highly flexible investment canvas that will also offer the lowrisk extreme of 100 per cent investment in debt instruments, including central government securities and fixed deposits of scheduled commercial banks.

The panel has suggested three investment choices, christened 'E', 'G' and 'C' options, depending on the risk appetite of the subscriber. Contributors will have the option to decide how much they wish to invest in the three classes with no limits, or what fraction of their investment in any of the asset choices. However, the sum of their active investments must add up to 100 per cent of their contribution.

Ticking on the 'E' option for the entire subscription will mean that the full corpus will be invested in equities among select stocks belonging to the Nifty-50 index.

"We have selected Nifty-50 as it provides one of the most comprehensive list of companies," Parekh, who is also chairman of HDFC, said at a press conference to release the details of the report.

However, pension fund managers (PFMs) will be permitted a larger option of equities outside the Nifty50 stocks as NPS rolls on.

"As we go along, we may increase the number of companies for the fund manager to choose from," Prithvi Haldea, chairman and managing director of Prime Database and a member of the panel, said.

Under the investment guidelines proposed, subscribers will have the option to spread their investments in a pre-determined manner over the three options available. INSTRUMENTS under the 'G' choice provide a high degree of safety. These include all central government securities, liquid funds of Sebi-regulated mutual funds with assets under management (AUM) of at least Rs 5,000 crore in the past six months, all assets that are permitted for investment into liquid funds by Sebi and fixed deposits of scheduled commercial banks.

As per prudential guidelines, funds invested by a PFM in a liquid fund or a fixed deposit should be under 10 per cent of the total 'G' funds held by the manager. The total NPS funds invested in any single AMC has to be under 5 per cent of the total AUM of the AMC.

Under the 'C' choice the instruments available will include, among others, state government bonds, credit rated bonds/ securities public financial institutions, public sector companies and municipal bodies/ infrastructure funds bonds that are rated by a credit rating agency.
For investment by PFM in such bonds, the issuing company has to be listed on a stock exchange, been traded for at least three years and has a market capitalisation of over Rs 5,000 crore as on March 31.

For investors who are unable to make an active choice, the panel has provided an 'auto choice' option where investment will be made in a life-cycle fund. Under this, a portion of subscribers' funds will be invested across the three asset classes determined by a pre-defined portfolio.

At the lowest age entry, the auto choice will start at 65 per cent in 'E' class, 10 per cent in 'G' class and 25 per cent in 'C' class. This will remain fixed for all contributions until the participant reaches the age of 36. From 36 onwards, the weight in 'E' and 'C' asset class will decrease annually and the weight in 'G' class increase till it reaches 10 per cent in 'E', 10 per cent in 'C' and 80 per cent in 'G'.

The PFRDA chairman, D Swarup, said the authority was in talks with the government to alter the taxation norms for pensions so that the entire period of investment, accumulation and payout were tax-exempt. Presently, the last stage of payout is taxable.

Swarup said premature withdrawal would be allowed only for meeting expenditure on critical illness and purchase of one residential house. The minimum age for entering NPS is 18 years, and the maximum 55 years. While the minimum investment by the subscriber has not yet been determined, Swarup said that it would be around Rs 6,000 per annum.

NPS will mainly target the country's huge unorganised sector workforce for participation. However, those in the organised sector who are beneficiaries of other old-age income options such as provident fund can also subscribe to the schemes on offer by PFMs.

Swarup said studies suggested that in the next three to five years, NPS would have 80 million subscribers with AUM reaching $425 billion (Rs 2,12,500 crore) in 15 to 20 years.

Saturday, February 7, 2009

Financial Fate: Bringing Clarity to the Future

After going through the demo of FinancialFate software, I am completely bowled over. Here is a software which doesn't stop at monthly budgeting or organizing your portfolio and it actually helps you forecast and plan for the future.

This makes sense to me as financial planning is a dynamic exercise and it's important to visualise the various "what-if" scenarios. For example, if I enter a big amount for my entertainment expenses, there's this immediate warning that I'd go bankrupt after "n" years. The choice is mine, of course!!

The software is intelligent. After I entered my stocks portfolio, the software suggested an asset allocation plan based on my risk profile that I entered earlier!!

My wishlist for Monty would be a customized version for Indian users with Indian currency and customized to Indian tax laws.

Monty Hothersall, Co-Founder, Financial Fate, took out time to answer some of my questions. Here are Monty's answers:

1. What is FinancialFate?

Financial Fate is in-depth, long-range financial planning software designed for the do-it-yourselfer. It enables people to forecast and plan their personal finances and long-term cash flow projections.

2. People generally avoid Personal finance. What makes you think they will take to cash flow management and scenario mapping?

Eleanor Roosevelt once said, "It takes as much energy to wish as it does to plan." The problem is people had much rather plan a vacation than plan for retirement and college expenses. But a certain segment of the population, such as people that read your blog, are much more inclined to realize the importance of planning in order to achieve goals and spot problems on the horizon so they can be managed. People are always told to "crunch their numbers" or "do the math" when it comes to planning, but without a quality tool that provides realistic results, this extremely important advice is difficult for people to follow. And since cash flow is the lifeblood of personal finance, we created Financial Fate.

3. Everybody needs financial planning. What are your targets for the software downloads?

We expect hundreds of thousands of downloads over the next year or two. We might not get there, but it really helps when bloggers such as yourself are interested.

4. The software is Free! How do you make money? By providing financial education?

The software is free and will remain free for the consumer. Financial Fate will eventually generate revenue through three sources: an online version that is ad-supported, an online version that we co-brand with financial institutions, and a desktop version that we sell to financial planners. These revenue plans are scheduled to start around 2010.

5. What will it take to customize it for Indian tax framework?

Financial Fate's default assumptions are set using the U.S. tax code and the U.S. Social Security & Medicare programs. However, the user can adjust these assumptions in the software to closer resemble their own country's rules and regulations. It will not be perfect, but the user can view the output reports and make adjustments as needed. And eventually we plan to develop versions for other markets around the world.

6. What is the technology that you have used for this software?

The software is Java based which will give us the flexibility to create future online and desktop versions.

7. What are your strategies to reach out to the US consumer?

Public Relations. People are more likely to download software if a trusted blogger, journalist, professor, or employer tells them it's a relevant product and it's a need-to-have vs. a nice-to-have. In addition, many financial planners are currently using Financial Fate to help their clients plan. As for the future, we hope to distribute through co-branded platforms with banks and other financial institutions.

8. Do you plan an international version too?

Yes. An international version will require changes to the assumptions and currencies as well as some structural changes regarding the tax codes. These initiatives are slated for the 2010-2011 period.

9. Will you add more features like recording your portfolio, calculators in the software?

Definitely. We will add features that our customers desire. For instance, many have already requested more graphs to compliment the data reports. We appreciate this feedback and have it on our list of future enhancements.

10. You talk about financial education as means to achieve your goals. How do you propose to do that?

We will continuously improve Financial Fate's intuitiveness and ease of use. But we recognize that users will always need more regarding financial education and advice. We think online user forums may be one of the best ways to accomplish this.

All the very best, Monty.

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