Posts Tagged ‘money’

Take Control Of Your Golden Years Financial Planning Final Part:)

Continuing the final part 🙂

Sumit’s colleague, Ankit, who is 30 years old, commences his retirement planning at the same time. Given that he also aims to retire at the age of 60 years, he has an investment horizon of 30 years. Assuming, like Sumit, he invests Rs 50,000 every month @ 10% per annum, he will accumulate Rs 11.30 crore at retirement. On the same lines, Piyush, Sumit’s other colleague, commences investing at the age of 35 with an investment horizon of 25 years to accumulate Rs 6.63 crore at the age of 60 years (at Rs 50,000 per month @ 10% per annum).

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Given that all three of them have the same monthly investment (Rs 50,000), which is invested at the same rate (10% per annum), the difference can be attributed completely to Sumit’s early start vis-Ă -vis his colleagues. Ankit who has an investment tenure that is lower than Sumit’s by only 5 years accumulates a corpus that is nearly 40% lower than Sumit’s. Piyush, whose investment tenure is lower than Sumit’s by 10 years, accumulates approx 65% lower than him on retirement. A 5-Yr delay in retirement planning sounds like a small difference, but the power of compounding magnifies it to gigantic proportions.

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CHALK OUT YOUR CORPUS 🙂

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You’ll have to keep a realistic goal that you can realise in the time you have. Don’t expect that the zeroes will multiply automatically in your savings. See how much you can afford to save every month. Of course, if you start at a late age you will have to increase your savings substantially, so cut down on any superfluous expenses.

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Prepare a budget which lists what you spend on necessities so that you know how much your monthly/annual expenditure will be in the future. Account for inflation too. Keep a rough estimate of 7-8% inflation every year. Also, consider expenses that are bound to increase, such as medical and transport expenses. Then again, calculate the expenses that may cease to exist, such as your children’s education.

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DON’T TOUCH THOSE SAVINGS

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More often than not, people have combined savings, that is, they save money for all their financial goals together— retirement, children’s education, their marriage, buying a home, etc. Invariably, you spend more on your initial financial goal and end up depleting your savings. By the time you retire, you have barely any money left. Overcome this obstacle.

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Build your retirement corpus separately, and do not touch it. It’s always better to earmark the time period for your goals and make separate portfolios for each of these goals. For instance, your children’s education may be a short-term goal (compared with retirement, that is). Since retirement is a long-term goal, if you are starting early you can afford to take risks and invest primarily in equities. But if retirement is a short-term goal, that is, only 5 years away, you won’t be able to take any risks. You’ll be more concerned about security. In that case, invest primarily in debt instruments.

MAKE A PLAN

Before you embark on saving for retirement, you must have a plan in place. While a plan may sound fancy and even intimidating, rest assured it is not all that complicated. Your retirement plan is simply your wish list of how you wish to spend your twilight years. Among other expenses, when you plan for retirement, you must make it a point to set aside money for medical expenses and contingencies, as any retirement plan without them is incomplete.

While you have to decide how you wish to lead your life in retirement, your financial planner will help  you translate that dream in numbers. He will put a number to everything i.e. your dream house, vehicle, post-retirement income, medical expenses and contingencies among other inputs. He will tell you how much you need to save and where to invest your savings so as to achieve your retirement corpus. In other words, he will outline a roadmap and more importantly, will implement the same for you.

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TRACK AND REVIEW YOUR PLAN

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Once the plan is outlined and implemented you have to still ensure that you are on track at all times to meet your targeted return at the desired level of risk. This calls for a periodic review of your investment plan. Over time as you approach retirement; reduce allocation to risky assets like stocks and/or equity funds in favour of more conservative avenues like fixed deposits.

The future is closer than you think. Pick targets early and give them the right kind of support to take control of those golden years.

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For any financial planning queries, email us at financialplanning@smcwealth.com

Govt Not to Impose Restrictions on Foreign Borrowings

Govt Not to Impose Restrictions on Foreign Borrowings

 

The government ruled out limiting companies from borrowing money from overseas market stating that the rise in foreign money is not a matter of concern at present and there is no such proposal.

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However, companies are permitted to raise $500 million annually under the automatic route while infrastructure firms under the approval route can remit up to $100 million for rupee expenditure and for other companies the cap on approval route remittance is set at $50 million.

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Meanwhile, capital inflows reached record levels as investors borrow cheap from advanced countries and invest in high-yielding assets in developing countries while this led to speculations that government may put in place a system of auctioning ECBs.

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In India, foreign inflows through foreign institutional investors (FIIs), ECBs and foreign currency convertible bonds (FCCBs) have been on the rise, while FDI is not picking up as fast.

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On the other hand, on a quarterly basis, the funds raised through ECBs and FCCBs increased by 70% in the September quarter to $4.61 billion while FIIs have put in a record over Rs 71,900 crore in the equities market.

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RBI Emphasizes on Managing the Economic Recovery, For Now :)

RBI emphasizes more on Managing economic Recovery

 

The Reserve Bank of India, country”s Central bank, has said that managing economic recovery is now its focus area and the first phase of monetary tightening will arrest inflation without hurting growth.

RBI Executive Director Deepak Mohanty was found quoting  that at present, the focus around the world and also in India has shifted from managing the crisis to managing the recovery.

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He said that withdrawing soft monetary policy, which was initiated to weather the financial crisis is the key challenge.

“The key challenge relates to the exit strategy that needs to be designed, considering that the recovery is as yet fragile but there is an uptick in inflation, though largely from the supply side, which could engender inflationary expectations,” he said.

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Besides this, Mohanty said that the first phase of exit has been initiated by RBI in its monetary policy review in October 2009.

That was done mainly by withdrawal of unconventional measures taken during the crisis.

RBI, in its monetary review in October has raised the requirement for banks to hold portion of the deposits in cash, gold and government securities to 25 per cent.

Moreover, it had also done away with special liquidity provision for banks to provide money to mutual funds and others.

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Points to Remember while Selling Stocks – Part 2

Hello Friends here we come up with an extension of our previous blog, “Points to Remember while Selling Stocks Part 1”.

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Points to Remember while Selling Stocks

Points to Remember while Selling Stocks

In previous Blog we had touched upon few points related to selling stock tips.

In this blog lets get to know more of valuable points in this regard.:)

Major points when to sell your stocks ( starting from 4th..three already being discussed in Blog 1)

4. Stock is Over Valued:

During bull market, high quality stocks appreciate value.

But more importantly, with so much hype around the stock, they are often set up for a fall.

Therefore, investor may use the strategy of selling them first and buy at lower price.

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5. Need Some Cash-

Certain unexpected circumstances may affect the time when to sell stock.

It is not wrong to sell stock to solve your financial emergency, especially the underperforming one.

However, it is advisable to have some emergency cash funds.

After all, basic investing rules is to start investing if you have enough money.

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6. A Change in Monetary Policy-

The Central Bank, RBI changes monetary policy if it perceives that inflation is heating up.

By raising interest rates, it contracts the money supply and slows down the financial system.

It is generally seen that stocks normally react negatively against the action, and some time markets become more volatile.

If you are not happy with this type of risk then you should move a portion of your portfolio into stocks that will not be as affected with such changes.

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7. A Company Suddenly Cuts Dividends or Lower Income Estimates-

This event should be investigated carefully before making any judgment to sell.

For good reason, the board of directors might want to retain more of their earnings for internal growth, rather than paying them out in dividends.

Sell a company’s stock if the performance is down.

Investors must never sell the stock of a fine company if its price goes either ways significantly – up or down.

Falling earnings margins and slowing earnings must be treated as a warning signal.

Lastly, I would like to say that always do your homework (Research) well while selling a company’s stock; you can use either the top-down approach or the bottom-up approach.

Markets are often full of rumors. You cannot make money in the market by acting on market rumors.

Always listen to the stories, but remember you should do your own research–and do it thoroughly.

Make your buy or sell decision based on your analysis of the company, not on what others tell you to do.

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Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

RBI, Monetary Projections And Indian Economy

Hello Friends,

Just an extension of our previous blog ”RBI And Its Policies – Part 1″.

RBI, Monetary Projections And Indian Economy

RBI, Monetary Projections And Indian Economy

In this Blog we would touch upon the aspects as that of Monetary projection from RBI, assessment of economy scenario at present and relevance of RBI policy on economy.

Monetary projection:

For policy purposes, money supply (M3) growth for 2009-10 is placed at 17.0 per cent, down from 18.0 per cent projected in the Annual Policy Statement.

Consistent with this, aggregate deposits of scheduled commercial banks are projected to grow by 18.0 per cent.

The growth in adjusted nonfood credit, including investment in bonds/debentures/shares of public sector undertakings and private corporate sector and Commercial Papers (CPs), has been revised downwards at 18.0 per cent as in the Annual Policy Statement.

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Economy:

Since the last review in July 2009, there has been a discernable improvement in the global economy.

The recovery is underpinned by output expansion in emerging market economies, particularly in Asia.

World output has improved in the second quarter, manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning.

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A sharp recovery in equity markets has enabled banks to raise capital to repair their balance sheets.

If we talk about the home country then there are definitive indications of the economy attaining the ‘escape velocity‘ and reverting to the growth track.

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The performance of the industrial sector has improved markedly in recent months.

Domestic and external financing conditions are on the upturn.

Capital inflows have revived.

Moreover activity in the primary capital market has picked up and funding from non-bank domestic sources has eased.

Liquidity conditions have remained easy and interest rates have softened in the money and credit markets.

Growth projection for GDP for 2009-10 on current assessment is placed at 6.0% with an upward bias, the same as the previous policy review.

But some darker parts also persist.

There are clear signs of rising inflation stemming largely from the supply side, particularly from food prices.

Private consumption demand is yet to pick up.

Agricultural production is expected to decline.

Services sector growth remains below trend.

Bank credit growth continues to be sluggish.

The central bank has warned of possible asset price bubbles, raised banks’ provisioning requirements for commercial real estate loans and lifted inflation forecast.

WPI inflation for end-March 2010 is projected at 6.5 per cent with an upward bias.

This is once again higher than the projection of 5.0 per cent made in the Annual Policy Statement in July 2009.

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Stay Tuned for more on the topic.

We would look into Monetary Policy stance, more facts about economic indicators and Analysis from the Analyst from monetary point of view.

Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

Coming ‘Diwali’ – Gold Prices Set to Reach Over, Rs 16,000 level :)

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

After taking a brief consolidation, gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before ‘Diwali’.

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According to experts, gold prices have declined for a short period last week as the precious metal dipped following a counter rally taken by the dollar.

However, the US dollar index has again started showing weakness and today dipped by 0.6 per cent at 76.54 level, which will be positive for the gold price, SMC Global’s Rajesh Jain said.

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He said gold is likely to reach 1,020 dollar an ounce (28.34 grams) level in the international markets before ‘Diwali’.

However, in the domestic market the rising trend is likely to be capped with strengthening of Rupee against the US dollar, he added.

In the domestic market the prices are likely to be slightly over Rs 16,000 per 10 grams level, Jain said.

He said, the Rupee will keep on strengthening as the equity markets are performing well, which will encourage the Foreign Institutional Investors (FIIs) to bring in more money.

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Today, the gold was trading at Rs 15,585 per 10 grams, while in the global markets it was at $1,001 an ounce.

Meanwhile, independent analysts have remarked that the bull run in gold will continue as the various monetary and fiscal stimulus programs have failed to boost the world economy, feeding through to a dis-inflationary conditions.

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The US dollar, which is considered a safe haven, softens due to the weakening economic condition.

As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.

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BULLION TURNING TO BILLION

Gold has always been one of the favorite avenues for investors to put their money during any economic uncertainty. We’re into a new phase of this bull market that’s been going on since 2004. Factors like the credit crisis, ups and downs in the global economy, the response of the governments and the monetary authorities set up a very positive environment for gold, not only in the near term, but many years to come.
On the contrary,jewelry demand, however, has fallen off a cliff—it’s almost non-existing right now and a lot of scrap is coming into the market due to very high prices. This is also one of the reasons for which we had witnessed some range bound moves in gold prices in past few months. (Two dynamics in the gold market were pulling against each other as strong investment demand and very weak jewelry demand.
Gold is up by roughly 250% since 1999 and approx. 25% from Sept. 2008 till date as we’re seeing money coming into the gold sector. I think the gold market is out of crisis mode. It has been recognized as an alternative, as a safe haven hedge. Sentiment among investors, especially individuals, is very positive. It’s mainly high net worth individuals who are buying the stuff up with a long-term view. Over the period of time we have also seen that investors are putting more and more money into gold as an investment. However, this increase in investment has come from tiny levels. Retail investment in gold remains tiny comparative to investments in equity and bond markets. Also, the physical gold market is such a tiny market comparative to equity, bond, currency and derivative markets that even small flows from these massively larger markets can result in outsize moves up in the gold price in future.

Gold has always been one of the favorite avenues for investors to put their money during any economic uncertainty.
Gold Coin

We’re into a new phase of this bull market that’s been going on since 2004. Factors like the credit crisis, ups and downs in the global economy, the response of the governments and the monetary authorities set up a very positive environment for gold, not only in the near term, but many years to come.

On the contrary,jewelry demand, however, has fallen off a cliff—it’s almost non-existing right now and a lot of scrap is coming into the market due to very high prices. This is also one of the reasons for which we had witnessed some range bound moves in gold prices in past few months. (Two dynamics in the gold market were pulling against each other as strong investment demand and very weak jewelry demand.

Gold is up by roughly 250% since 1999 and approx. 25% from Sept. 2008 till date as we’re seeing money coming into the gold sector. I think the gold market is out of crisis mode. It has been recognized as an alternative, as a safe haven hedge. Sentiment among investors, especially individuals, is very positive. It’s mainly high net worth individuals who are buying the stuff up with a long-term view. Over the period of time we have also seen that investors are putting more and more money into gold as an investment.

However, this increase in investment has come from tiny levels. Retail investment in gold remains tiny comparative to investments in equity and bond markets. Also, the physical gold market is such a tiny market comparative to equity, bond, currency and derivative markets that even small flows from these massively larger markets can result in outsize moves up in the gold price in future.