Are you on a Right Track?

Investment is when you purchase goods with a certain amount of money for gaining a substantial future wealth.

It may sound like a simple term but it actually involves complex calculations, where you select an optimum scheme that suits your investment options, understand the conditions that apply to that scheme and then carefully invest. It does not end there; you need to keep a close eye on your investment from time to time to see if your asset is in good hands. If you see your investment is deteriorating due to market conditions then withdraw your assets and invest it in a scheme where it is lucrative. The ultimate goal of your investment is to know if “you are on the right track”

You need to be vigilant with regards to the market conditions as they might affect your investment to a great extent. One must also understand that there are various ways of investing money, and you can always have a backup plan. So in case your original plan fails, you have a plan B ready to be executed at the appropriate time. Every little step needs to be measured and calculated with time. No one understands your wealth more than you do and hence choose a scheme that suits you best; more importantly suit your monetary needs. In order to be a ‘Smart Investor’ you should always allocate your wealth wisely.

Are you hungry...for returns?

You crave for food when you are hungry and you crave for returns when you are hungry for revenue. This happens when you have a very high expectations with your investments and you urge for more. Investment can be done only when you have that right amount of fund implemented at right place with proper understanding of it. The hunger for returns will get fulfilled only when you are convinced. If you are not convinced with the returns you are getting, that means either you have invested at wrong place or you are dreaming more than you actually should.

 

When you are hungry, you like whatever is kept on your plate and you easily eat it. But when you are done with it, you quite dislike the same thing you liked few minutes back. Same is with investment. When you are hungry for returns, whatever investment source is been displayed, you tend to accept it and invest. Later you realize it is not as good as other source. This happens only when you have not analyzed and understood about it. Later you repent.

The right way to fulfill your hunger is eat slow, eat fresh and eat by knowing the fact that you will soon find it less pleasurable. Whatever you have got, you have got it as per your investment and market conditions at that time. Hence if you want to fulfill your hunger, chose a right strategy and think of future, Ans if this is not possible, let us know.

Word of the Day: Futures Contract

Explanation : It is an agreement to buy or sell a standard quantity of a commodity or a security - such as gold, $US or bank bills of exchange - on a specific future date at an agreed price determined at the time the contract is traded on the futures exchange.

It is a binding contract, enforceable at law. Futures contracts are traded by open outcry on the floors of most futures exchanges, although the computer age has seen the spread of screen trading.

When does a multi-currency card help you?

Ever traveled to another country and found that you’ve run out of foreign exchange, or had the misfortune of having had your traveler’s cheques stolen?
In such times of instant cash, the multi-currency card might just be the right thing to have.

What is a multi currency card?

This is a card that works like plastic money, where you can make purchases with a quick swipe, just as you would with your credit card. You can use it at ATMs and recognized VISA enabled points of sale, is prepaid in nature and can be loaded with dollars, euros or pounds, but can be used in the local currency of any country you visit.

Advantages of multi currency card:

1.Convenience: It allows you to pay in the currency, with which you are most familiar, which means your shopping experience is positive from a financial aspect.
2.No surprises: There are no surprises with the multi currency card - what you pay for on your travels, is what is reflected in your card statement, exactly.
3.No transaction Fee: unlike the credit card, there is no transaction fee associated with any transfer, exchange, or purchase.
4.Fixed rate of exchange: With credit cards, the rate of exchange applied is the day’s rate, which might not be favorable. With the multi currency card, the rate of exchange is fixed the day you purchase the card.

Photo : http://www.travel-to-china.org/wp-content/uploads/travel-to-china.jpg

The new face of Private Equity

Forbes India’s latest issue talks about private equity and gives an in-depth analysis on how experienced independent PE heavyweights are branching out on their own, and how it might work this time around.

The latest issue of Forbes India explores the reshaping of the Private Equity (PE) industry by independent expert players. Fifteen years back, a bunch of private equity guys quit their jobs and started their own funds. Things didn’t work out as they planned and they burnt their fingers. Today, another slew of PE heavyweights are branching out on their own.
And they are creating their own path, away from the way they used to operate at their previous jobs at bigger firms. They include veterans like Ajay Relan (formerly of Citigroup), Renuka Ramnath (ex-ICICI Ventures), and Rajesh Khanna (former Warburg Pincus). This time around, the article argues, the environment may just be right.

Source : Adgully.com

Word of the Day :Real Interest Rates

Explanation: An interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower, and the real yield to the lender. The real interest rate of an investment is calculated as the amount by which the nominal interest rate is higher than the inflation rate.

Another concept attached to Real Interest Rate is Negative real interest rate.

When inflation is higher than the interest rate, the real interest rate becomes negative. Example: If the one year interest rate is 8% and average inflation over this period is 10% then the real interest rate is negative by 2%.

How did some survive the storm?

Ever wondered, How did some countries with similar financial systems & regulations remain unaffected than others in the recent global financial crisis?

If we had to look into the reasons, we would come across many of them as time goes by. But one that is increasingly finding weightage with the decision makers is simply “Better Supervision”.

A recent IMF paper has highlighted some points on what makes your supervision better and how can countries identify them at the right time?

1. Supervision is indiscreet: Supervision is something which cannot be outsourced or judged upon from looking at the offsite analysis only. Supervisors should not be looked at as remote observers; instead their presence should be continuously made felt.
2. Good supervision is proactive: Supervisors must question even in good times, the industry’s actions and directions, as it helps draw a clear picture on the future steps that need to be adopted.
3. Good supervision is comprehensive: Even while recognizing the limitations of their scope, supervisors should be constantly updated about the happenings so that they are aware of threats, risks which may have key implications.
4. Good supervision is Adaptive: Financial sector is constantly evolving and innovating, it becomes very important for the supervisors to be exploring the new markets, new services etc so that the risks can be understood and responded to appropriately.

The two most critical elements that support great supervision are the ability and the will to act with a sense of deep understanding of the financial markets, in terms of operational independence, accountability and healthy relationship with the industry.

Source: Economic Times

A ready reckoner of global finance market!

If you are keen on reading and exploring the financial markets in the most simplified and detailed manner, Here are some top financial blogs you can read through:

1. Mish's Global Economic Trend Analysis: Mish uses observations made by those in major media, so-called experts and government officials and serves up analysis based on his impression of their relevance and validity.

2. Footnoted.org : The blog's author, Michelle Leder, digs through SEC filings and comes up with some of the best insights about the "hidden" comments found in 8Ks, 10Qs, and other government filings. This is one of the oldest financial blogs founded in 2003.

3. Bill Cara's Cara Community : this blog analyzes the capital markets, stock movements, and the economy with an eye to technical guides including volatility, cash flows, trading volume, and price performance and is prolific almost beyond comparison.

4. Infectious Greed: Blogger, Paul Kedrosky, is considered one the preeminent financial market pundits. His site reflects the perspective of a former technology analyst, institutional money manager, and venture capitalist.

5. Bespoke Invest: It is also known as "Think Big" (6,112 links), is the blog for a money management and research firm.

6. Bear: This piece is the product of half dozen Ph.D economists, an historian, and financial professionals. The writers provide individual perspectives on broad sectors of the economy based on their unique.

Photo: http://www.tutor2u.net/blog/images/uploads/blog-blogging.jpg

Word of the Day: Stocks

Explanation: A stock is simply a paper document or a certificate that shows, you own a small part or percentage of a particular company. These stocks are bought and sold through stock exchanges such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE).

The BSE and the NSE are the two main stock exchanges in India and most of the stock trading activity in the country happens through these two exchanges. Any company can raise capital by issuing stocks in the public domain. For a company to be able to issue stocks, they must be a publicly listed company, registered with any recognized stock exchange, besides other listing requirements.

A Man whose work speaks for itself!

Mr. Swapnil Pawar, (Head – HNI services) at Karvy Private Wealth was mentioned in the Business India Magazine under the prestigious column ‘Frontrunners’. Here’s a short introduction of a man whose work speaks for itself.

With a graduate degree in Aerospace Engineering from IIT Bombay and an MBA from IIM Ahmedabad, Swapnil Pawar’s work experience includes, the Boston Consulting Group, where he advised clients across the financial services, banking, engineering and technology sectors on business strategy and execution. Later, an entrepreneurial streak saw him co-found PARK Financial Advisors, a wealth management venture, which was later acquired by KARVY group.

Currently Swapnil holds the post of head, HNI services for Karvy Private Wealth. This includes developing teams in leading cities of India and setting up a robust and scalable process of providing central support to wealth advisor. He oversees the products platform and leads the definition of investment strategy of the company. In his free time he pursues subjects like macroeconomics, science fiction and cosmology.

Source: Business India Magazine

Popular Move by the US Treasury - Broke Back Mountain for the Indian IT!

The US Senate has raised a Bill which proposes to double the H1, L1 Visa Fees. It is been estimated by Nasscom that the move to hike visa fees will raise costs for Indian IT firms. The cost estimate is based on the assumption that the increase in fees is $4,500 (on top of the existing fee of $2,500 for H1 visas) and the fact that India uses approximately 50,000 H1 and L1 visas a year.

This move would significantly impact the India IT industry when there’s actually a need for the markets to open and make companies more competitive from a global perspective. One of the key impacts on this could also be on the stock market prices of the leading IT companies.

Source: Times of India
Photo : topnews.in

Word of the Day – Hedge

Explanation: Hedge or hedging simply means making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

Example: An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.

Investors use this strategy when they are unsure of what the market will do. A perfect hedge reduces your risk to nothing (except for the cost of the hedge).

Word of the Day : Sensex

Full form: Sensitive Index

What does it mean basically: It is a value weighted index of the performance of 30 most actively traded stocks in the Bombay Stock Exchange (BSE).

Why is it so important: It is known as the pulse of the Indian stock market. The 30 companies included in the index comprise of around 50% of the market capitalisation at BSE (Bombay Stock Exchange). The companies included in the Sensex reflect the current market conditions.

As of 26th Feb, 2010, the lists of the companies included in the Sensex with respect to weightages are as follows:

- Reliance Industries – Oil and Gas
- Infosys – IT
- ICICI Bank – Finance
- Larsen and Toubro – Capital Goods
- HDFC – Finance
- HDFC Bank – Finance
- ITC Ltd – FMCG
- State Bank of India – Finance
- ONGC – Oil and Gas
- Tata Consultancy and Services – IT
- BHEL – Capital Goods
- Bharti Airtel – Telecom
- Tata Steel – Metal, Metal Products and Mining
- Sterlite Industries – Metal, Metal Products and Mining
- Hindustan Lever Ltd. – FMCG
- NIIT Technologies – IT
- NTPC - Power
- NIIT – IT
- Hindalco – Metals, Metal Products and Mining
- Mahindra & Mahindra Limited - Transport Equipments
- Maruti Suzuki – Transport Equipments
- Tata Motors - Transport Equipments
- Tata Power – Power
- Wipro – IT
- Grasim Industries – Diversified
- Hero Honda Motors Ltd. - Transport Equipments
- Jaiprakash Associates - Housing Related
- Reliance Infrastructure – Power
- Sun Pharmaceutical Industries - Healthcare
- DLF Universal Limited - Housing Related
- Reliance Communications – Telecom
- ACC - Housing Related

Source: BSE

RBI unveils norms for credit default swaps for corp bonds!

Shrugging off the worries raised by credit derivatives in the global financial crisis, the Reserve Bank of India (RBI) has announced the draft report on credit default swaps (CDS) stipulating that CDS should be allowed only for corporate bonds as “reference obligation” with strict entry norms for players — both market makers and users. During the 2008-09 financial crisis, the global CDS market was a big concern to regulators due to the lack of transparency in the trillion dollar market and the related systemic risk.

“While the reference entities are required to be rated, no minimum rating is stipulated. The participants in CDS market may be categorised as — Market-makers who are permitted to both buy and sell protection and users who are not permitted to sell protection but are permitted only to hedge the underlying risk by buying protection,” the report prepared by an Internal Group of the RBI said.

Source :Indian Express

Word of the Day:Arbitrage

Explanation: The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.

For example:
Shares of ABC Ltd. May be quoted at Rs.100 in the cash market, whereas it may be quoted at Rs.103 in the futures market. This deviation gives rise to an arbitrage opportunity, which traders tend to capitalize upon.