Warren buffet's execellent Quotes

ON EARNINGS          :  Never depend on single source of income.Make  investment to create a second source of income.

ON SPENDING          : If you buy things you don't need, soon you will have to sell things you need.

ON SAVINGS             : Don't save what is left after spending,but spend what is left after saving.

ON TAKING RISK      : Never test depth of the river with both the feet.

ON INVESTMENT      : Don't put all eggs in one basket.

ON EXPECTATIONS  : Honesty is very expensive gift. Do not expect it from cheap people.

Power of Compounding- An interesting story

There was  once a poet who fell upon such hard times...
that he was no longer able to feed his family. Hearing that the king greatly encouraged talent and was famed for his generosity,the poet set off for the Royal Palace. When brought before the king,he bowed low and asked that he may recite a poem. On hearing his recitation,the king,well pleased,asked him to name his reward.

The poet,pointing to a finely wrought chess board before the king said "Your highness,if you place just one grain of rice on the first square of this chess board, and double it for every square,I will consider it myself well rewarded. "Are you sure?" asked the king,greatly surprised. "Just grains of rice,not gold? "yes,your highness" affirmed the humble poet.

"So it shall be" ordered the king and his courtiers started placing the grain on the chess board. One grain on the first square, 2 on the second, 4 on the third,8 on the fourth and so on. By the time they came to the 10th square they had to place 512 grains of rice. The number swelled to 5,24,288 grains on the 20th square. When they came to the half way mark,the 32nd square,the grain count was 214,74,83,648-that is over 214 crores! Soon the count increased to lakhs of crores and eventually the hapless king had to hand over his entire kingdom to the clever poet. And it all began with just one grain of rice!

Moral of the story : Never underestimate the power of compounding. If you stay invested long enough,it'll work for you. A small sum invested every month from the beginning of your work-life can lead to a very impressive amount at the time of your retirement.

Hedge Fund- Now new alternative investment oppertunity for HNI's.

Hedge funds are known for the spectacular gains and losses that they make. Now Regulation of SEBI (securities & Exchange board of india) is allowing hedge funds to operate in india under Alternative Investments Funds (AIF) structure of category 111.  With this  the HNI investors will have access to the missing financial products in  india. In general terms hedge fund can be described as an investment program in which managers or investment partners seek absolute returns by exploiting investment opportunities at the same time protecting principal investments from potential financial risks. These are private partnerships in which the manager or partner got major personal stake in the fund and they are free to operate in a variety of markets and to utilize investments and strategies with variable long or short exposures and degrees of leverage.

The general perception of hedge funds can be termed as high risk-high return initiatives, only a small percentage fit this profile. Hedge funds generate returns based entirely on particular or concentrated risk by hedging away systematic risk. A hedge fund cannot truly be considered separate asset classes as the funds do not have a predictable rate of return over time nor do they as a group respond in a predictable way to distinct economic events. Hedge funds are structured in many innovative ways in order to meet regulatory and tax needs of the manager. The structure basically depends on where it is domiciled-onshore or offshore. Based on this factor the structure is that of limited partnerships or corporations. Also the fund structure could vary depending on the fund being open or close ended. Fund structure could be based on the fee structure which could be performance based or otherwise to the hedge fund managers. The structure can also depend on minimum permissible investment. Moreover, hedge funds have a higher degree of flexibility in the instruments that the fund can invest in. Many but not all hedge funds invest in derivatives-instruments that derive from an underlying security. The diversity of strategies and instruments utilized by hedge funds result in the low correlation to typical equity market benchmarks. This is the basis of forming a hedge fund structure that performance has more to do with superior stock selection than market direction. Hedge funds are generally less liquid than traditional investment vehicles. Some hedge funds have longer lock up periods, so that they can properly implement their trading strategy without concern for fluctuations in assets.

A well diversified & constructed portfolio of different fund strategies in order to ensure both individual fund manager level and the systemic level risks are minimized. The different hedge fund strategies are exposed to different systemic risks, and returns will therefore change with changes in the market environment. These different risk or return profiles provide almost endless possibilities for creating value through active portfolio allocation, where strategies interplay to generate consistent absolute returns. A number of hedge fund strategies invest in more than one asset class, therby diversifying the return generation, but not necessarily reducing the total risk exposure. The risks can be measured both as standard deviation and as value at risk.

The hedge fund investing requires specialized skills, such as an understanding of complex security instruments, extensive industry knowledge, and analytical ability. The fund structure rests on strategy that the fund adopts that range from relatively conservative to basically speculative. The fund managers own securities that they consider to offer distinct investment value and they can take advantage of overpricing of securities not just by underweighting them relative to a benchmark but also by explicitly betting, by shorting that such securities will underperform. Hedge funds can take both long and short positions, make concentrated investments, use leverage, use derivatives, and invest in many markets. Most hedge fund managers commit a portion of their wealth to the funds in order to align their interest with that of investors. Thus the objectives of managers and investors are the same.

Disclaimer: The information given above are the result of personal readings of related genuine magazines and personal understanding of the subject matter. This is written to make the readers understand, how the very new alternative investment opportunity can be explored by HNI’s at present scenario in India. However, this blog is not responsible for any error or inaccuracy in the same.

Real Estate investment- Myths involved

People in general strongly beleive that land sold by Government bodies is always safe. But this is not the case. For instance, Noida Extension was one of the few locations where people of middle income budget could buy a two bed-room flat in an under-construction project for around 30 lakh. The ruling by the Honourable supreme court of india last year in the matter of Devender kumar v/s State of UP, ruled against the acquisition of land by the Greater Noida Industrial Development Authority(GNIDA).

The Farmers calimed that the land was acquired from them for industrial purpose by paying stipulated compensation and later status of the same had been changed to commercial and sold to land developers to the highest prices. The farmers also claimed that higher compensation would have been paid to them if the land was accquired directly from farmers for commercial purposes. So the Honourable court quashed the acquisition of 156 hectares of land by GNIDA of shahbari village. Simlar ruling had been given by the Honourable Allahabad High court for one patwari village too.

As a result Construction of apartments in Noida Extension was stopped and the investors got into the real trouble. The loans were sanctioned and the  EMI's were being paid for the flats that might never be constructed, apart from paying rent as usual. So instead of beleiveing in Myth " LAND SOLD BY GOVERNMENT BODIES IS SAFE" its good to stick to land whose ownership is not divided when one want to buy a piece of land that are being newly develpoed. Also consulting a good lawyer to ensure that all the paper work,clearences and use conversions are in order.

Most of the home buyers think that banks and housing finance corporations do proper due diligence before lending to buyers. But the realty is banks and HFCs play safe role by slipping in a clause in the loan contract that finally pass the responsibility of repaying the loan on the borrower, irrespective of whatever happens to the property. Its always safe to do a thorough due diligence by the investors themselves. Its safe to check if the developer has a clear title on the land & ncessary approvals. If there is recent conversion the history of the same needs to be checked too.

  

Mobile Banking

Now it is old style to avail  banking services through making use of Credit and debit Cards. In case of  lost of these cards there is a possibility of misusing the same. Now its possible to avail banking services without using  these cards as mobile banking is getting more and more popular these days. In mobile banking not only  summary of account can be viewed but also Fund transfer from one bank to other, bill payments etc..can also be done.

The fund transfer limit in the savings account is being  increased to 50000 rupees in a day. The Icici bank has already started giving this service to about eighty lakh customers, whereas state bank of india has registered about 50,000 customers under this service. Realizing the importance of this service other banks too coming forward to provide mobile banking services to their customers.

                                      BEWARE OF FAKE MAILS OR MESSAGES

Spam is known thing for regular internet users. Sometimes spam mails can be seen in the inbox also. Those spam mails usually comes in the name of noted banks exactly like as if it is sent by bank officers from their official email id. Spam mail contents generally highlight the reasons like  net banking password update, account number update or it is in the form of enquiring the account status. These kinds of mails are undoubtedly spam  and it should be understood that someone is trying to grab the details of account holder. It is always better to put these mails to spam and delete the same permanently.

No bank asks any detial or updates relating to their customers account  through email. More importantly no bank asks their account holders to change their net banking  password through email. The password given to the net banking customers is the most confidential which is sent through two different couriers companies. The customer should always treat password as case sensitive and confidential and the same should not be disclosed to anyone under whatever circumstances it may be.

The bank transaction  runs not always only on trust but also based on confidentiality and private.The transaction happens between the customer and the authorized person of the bank, whether it is net banking, mobile banking the transaction runs confidential and private. So it is always good to be on  alert about the mails receives in the name of bank. If required and feel doubted of any such mails respective branch of the bank can be contacted to keep them informed. walk-in to the respective branches often and clearing the doubts is a healthy habit. Registering for SMS services, verifying transaction through ATM's mini statement at least twice a month etc., helps checking any unauthorized transactions if happened.

 Lastly wishing the readers of this article "happy mobile banking"   

   

CURRENCY EXCHANGE RATE- 12-06-2012

"Right Time to Transfer Pension Fund From uk To India as Pounds Increased over Rupee To Good Extent"

Currency	Rupee	US $	Euro €	UK £	Aus $	Japanese ¥	Singapore $	Renminbi	Taiwan $
1 Rupee  =	1	0.0179	0.0144	0.0115	0.0181	1.4237	0.0230	0.1142	0.5366
1 US $ =	55.8000	1	0.8012	0.6426	1.0082	79.4400	1.2839	6.3703	29.9430
1 Euro € =	69.6455	1.2481	1	0.8020	1.2380	99.1513	1.6025	7.9509	37.3727
1 UK £ =	86.8347	1.5562	1.2468	1	1.5436	123.6228	1.9980	9.9133	46.5966
1 Aus $ =	55.3480	0.9919	0.7947	0.6374	1	78.7965	1.2735	6.3187	29.7005
1 Japanese ¥ =	0.7024	0.0126	0.0101	0.0081	0.0125	1	0.0162	0.0802	0.3769
1 Singapore $ =	43.4613	0.7789	0.6240	0.5005	0.7726	61.8740	1	4.9617	23.3219
1 Renminbi =	8.7594	0.1570	0.1258	0.1009	0.1557	12.4704	0.2015	1	4.7004
1 Taiwan $ =	1.8635	0.0334	0.0268	0.0215	0.0331	2.6530	0.0429	0.2127	1

Debt Management

It is even not easy to just imagine buying a home without taking a home loan. Now a days it is common to come across that one's significant part of their earnings goes towards a home loan repayment. They are able to build an asset early in life through soft credit and reapaying the same in the long run, yet enjoy the asset right away. On the other hand, one can also come across defaulters who are chased by the collection agents to settle their dues on loans taken for varied purposes. To make the most of the debt it is important to understand the value of it and acts in a discplined manner.

 Eventhough one can make the most of the debt by using the same smartly, it does not come free and there is a cost associated with it. Changing demographics has led to a shift from save and buy to borrrow and buy. Debt can be differentiated as good and bad debt. For instance home loan to buy a house is a good debt. However, a loan for revolving credit on the credit card is undoubtedly bad debt. In fact, such debt gets one into a debt trap that can go on into the endless cycle. Moreover, good debt is relatively low interest bearing and usually it is raised to acquire productive long live assets also good debt got the potential of capital appreciation and income generation in the long run. In contrast, bad debt is consumption led and is mostly used to obtain assets that goes down in value and does not build any form of physical asset. For instance a car purchased through loan is only a fraction of that loan by the time it is completely paid for.

 The good debt can produce cash flows over time and be tax effecient whereas the bad debt consume resources leading one's towards debt trap. So its important to to know what exactly a debt trap cycle is. A debt cycle starts with expenses exceeding income, which results in shortage of cash. Then one starts getting into borrowing cycle to bridge the gap with the existing loan. The real worry starts probably having no end to the same. The prime reason for mounting debt is the interest component. The interest never stops as long as the loan repayment is on. Those who have come out of a debt travel will endorse the view that interest is a friend who is worse than the worst enemy that one can come across.

 One should understand that addressing the debt problem should not merely be seen as a legal obligation but also one's moral responsibility to repay the same. There are few strategies that can work in reducing and clearing the debt if it is implemented sincerley. Cutting unnecessary expenses to meet the current debt obligations, developing the personal budget to make a assessment of how much money one can bring in and how much money can be spent. The objective is to manage and keep an eye on spendng patterns, identifying necessities, prioritizing wants and trimming down discretionary expenses. There is no doubt assets can be built with the help of debt,  provided if the same is used prudently, at the same time it can also lead us into the debt trap which is a new friend worse than the worst enemy one can come across in life.