Property ( Real Estate ) and Power IPOs

There have been a line of power IPOs this year and real estate IPOs are also lined up. This week we have JSW energy and Godrej properties opening up for public subscription.

Both these sectors( power and reality) come up with huge premiums on IPOs which are not justified by any means and they project 20XX- 20YY earnings to justify their valuations. The PE or institutional investors pressure to get their money out of the company may be the reason for over pricing of these issues.
Whatever may be the case and irrespective of the recommendations given by stock anlyast, we should try and stay away from these issues.
Reviewing what happened to the IPOs of real estate companies ( DLF, omaxe, purvankara, brigade ,etc), Power ( reliance power, adani power, PSU- nhpc,etc) , we can easily see how these sectors are mis-sold. May be in the long run these stocks may give reasonable returns but they should be bought when the valuations are sane enough.
There are various other stocks with good valuation stocks which our money can chase . So let's try and avoid the sectoral temptation of power and real estate.

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Real Estate Burst Again!!

The Dubai financial crisis has popped up. We all need to learn a lesson or two from the same. Irrespective of once income levels , one should always be cautious on debt and never over borrow.
Over the last decade, more and more people are committing to huge EMIs and consider their flats as an asset class that is going to fetch huge returns. Indian laws that do not regulate real estate and the black money that is available have so far been able to keep up this myth to a great extent.

But I think we are at a point where such growth without any fundamentals get burst.Most of the real estate stocks are trading at almost 1/3 rd of their IPO value also reflect a gloomy trend ahead. Although the demand of housing is genuinely high, the sky high prices keep away the mass buyers.

The real estate players should learn a lesson or two from their global counter parts or else they might be in a bad state very shortly!!

3rd Blog Anniversary

Easycrafts blog and Personal Finance blog celebrates its 3rd blog anniversary today. With a little less than 250 craft projects and about 265 articles on managing your finances, we thank you for your continued support extended towards these two blogs...

Here is a small cupcake in crochet to celebrate the occassion-

Telecom- the fall of tariff and stock prices

Reliance's "50 paisa for all calls" announcement and TRAI's per second tariff suggestion have brought down all the telecom stocks . The leader Bharti is down almost 23% in 3 days and idea is trading below it's issue price. So, is it an end of all situation for the telecom world?.
Telecom has the widest reach of customers and no one can beat them in reach ( bottom of pyramid). There is a lot of rural penetration left . 3G, Net usage over phone are in their intial years. Banking opportunities are also foreseen for the telecom operators in rural areas ( may be in urban India too).
Tariff war, reduction in ARPU and more competition waiting to jump in are definitely negative factors. But some how I see a great future for telecom.
With reduction in tariff over the years, my bill has never come down and Internet usage over telephone network is going up. So, I see a huge opportunity in these big falls of telecom stocks.
In the long run these companies ought to bounce back strongly. Let's keep our fingers crossed till then . Such chaos mostly provide great opportunities.
should I buy bhart, rcom, idea, MTNL, BSNL at this level? is it a good buy. what returns will telecom give

Active vs Index (Passive) Investing

Index Investing is a passive way of investing . Having a bunch of stocks in portfolio exactly mirroring a stock in an index is a passive way of investing. This can be done by purchasing stocks mirroring an index and tracking the weight and readjusting the portfolio whenever the constituents or weightage in the index changes. Better is to buy an Index fund. This ensures that you get returns close to index.

Example if you bought an index fund of sensex when sensex was at 10,000 , it would have appreciated 70% when sensex is around 17,000. ( Returns would be exactly similar to the index minus tracking error , of a fund or an investor).

If someone believes that actively choosing stocks from the wide range of stocks available, invests in them then it is active investing.

In India most equity funds are actively managed funds. The index funds generally involves a lesser cost. Actively managed funds have managed to beat indices (on an avg.) many a times, excepting 2005-07 period.

Investing in either of the type of funds should be made by an investor after understanding the nature of products clearly.It's also not a bad idea to diversify your investments between active and passive funds.

Looking back! Investing is so simple.

When we look back at the last six months , the markets have moved from strength to strength. Experts have started predicting the upward trend for Sensex and Nifty. The same guys were extremely pessimistic six months back is another story.

Those who have been left out have started cribbing and are planning to join the band wagon now!!

On a personal note, I saw many of my friends stop investing last year and many even stopped their SIPs. This period of volatility has practically emphasised two things.

1. Do not try to time the market.
2. Be a regular investor .( what better than SIP in equity funds for regular investment).

By following this you may not get great returns but at least you can ensure that you get around 15-20% p.a ..and that too tax free ( as of now).

When investing in SIP its important to spread across the installments for a good period and stay invested for a longer period ( min 5 years), so that you can achieve this.

This is as easy as filling up a form ( Mutual fund SIP investment form -Equity fund) and do nothing for years.No need to track your stocks day by day, watch the business news channel or read a economic daily for stock tips.
This way you get to own a piece of corporate India and make all those corporates work for you!!!!

Sounds very simple isn't it? But we are used to complicating things in life more than necessary.!!

Retail Participation in Equity IPO

OIL IPO closed today with QIB portion oversubscribed 53.83 times, NII 10.477 times, Retail 1.7642 and Employee reservation 0.267 times.
Despite a great response from QIBs, retail participation is very minimal. When we were at the peak of bull run, any IPO was getting over subscribed heavily by retail investors too. In fact, lot of demat accounts got opened before the Reliance Power issue.
This shows that Retail investors just put in their money in IPOs only based on sentiments and mostly for short term benefits.
Can we infer that retail investors are just behaving as traders based on sentiments and are yet to mature as investors?

oil allotment ratio grey market premium listing price listing date subscription

L&T Finance NCD issue open till Sep 4

L&T Finance NCD issue is open till 4th September. This should be a good investment option considering the fact Bank FD yields are coming down.
There are four options that are available in this NCD issue.

OIL equity IPO which opens up on Sep 7 seems to be a good investment oppurtunity.

Shriram Transport NCD issue

Shriram Transport NCD issue - offering good interest is a great option to invest in, this issue has already been oversubscribed.

Details of shriram transport issue can be found in following link :-

The other IPO that is open now for subscription is
Adani Power
10 FV
Price Range: 90 - 100
Date open :-28-Jul-09 31-Jul-09 . The company would take a long time before it starts making profits . But the issue is already over subscribed.

NHPC IPO is als0 up to come up next week which is worth considering for investment

open date :- 07-Aug-09 11-Aug-09

Tough times do not last.

These volatile times in the stock market may look turbulent for traders and short term investors, but for long term investors this should not be much of a botheration. With a favourable demographic profile and being a developing economy, India has great prospects of growth . Even if you consider all the negatives, a return of 12-15% per annum over next 10 years seems very much possible.
We should understand that time in the market is more important than timing the market. A regular and systematic investment will definitely help good returns over the long term.
Investing regularly for long run and not tracking the markets on a day to day basis would help your investments generate good returns and a good night's sleep too.

Good large cap funds to start SIP

Of late, we have been receiving a lot of queries about some good large cap funds in which SIP can be started. We recommend a few based on our experience.(investors are advised to do their own due diligence before they start investing)
1. Reliance Vision
2. HDFC Equity/ Top 200
3. Birla Sun Life Equity
4. DSP BR Equity/ Top 100
5. Kotak 30
6. Sundaram Select Focus
7. ICICI prudential Dynamic
These are some of the funds in which an investor can start his/her SIP. A longer time horizon ( say 5 years ) increases the probability of a higher return. please mail us in case you have any questions. You can also drop a comment with your choice of large cap funds.

EPF rate still @ 8.5% (2009-10)

EPFO has maintained the interest rate for 2009-10 on EPF funds at 8.5%. ( EPF- Employee Provident Fund - normal 12% deducted from basic + 12% employers contribution)
If you are a person who looks at stocks as very volatile and are looking for good fixed income returns, increase your EPF contribution ( Voluntary contribution which most of the employers allow). This would ensure that your money earns a tax free return of 8.5%. With the declining Fixed deposit rates , this seems to be a good option. Fixed deposit returns have almost come down below 8% (with a slightly downward potential). Again , your Fixed deposit interest is not tax free. PPF with 8% tax free return would be the next best option to consider for , if you are not keen /able to increase your EPF contribution. Both of these investments (EPF/PPF) can get you deductions under 80C ( upto 1 lakh) and generate a handsome tax free return.

No entry load on Mutual fund investments

Now MFs cannot charge entry load even if you make investment through a distributor.( Directive of SEBI -- news ). This is definitely a good news for investor. But there would be lesser motivation for the distributors to promote mutual fund investments.
If the investments are made through distributors or through online trading sites ( that have this facility), no entry load would be payable. But the continuation of such services by distributors or service portals without any commission needs to be seen.
This is definitely a good news for the retail investors.

Momentum is back

May has been a month of momentum for stock markets. It all seems exciting now. But as usual market may be over-reacting now and making the stocks go above their value. The indices are definitely going to move up in the long run because of the advantages that India seems to have but the short term euphoria need to be watched for carefully.
Its definitely time to heave a sign of relief but caution should also be the buzz word. For regular investors through SIP route , it's going to be business as usual!

The New Pension System (NPS):

Welcome to the new world of investing for the future.
Till now the unorganized sector did not have any pension plans, to enable them to save for the future. Why there was no social security system of savings out of salaries/trading income and even Provident fund scheme remained a distant dream for them. Going with the PPF , it is only organized and white collar employees had invested in PPF.

PFRDA - Looks like a great start , Good option for all

PFRDA would be good scheme for everyone to enrol. The option to invest in equity is a win-win situation. It can potentially increase the equity penetration in India which is very low and the investor may benefit from the higher earning potential of equity. This is definitely a BIG first step. All of us must seriously consider this. With exemption for investment available under 80c and governtment planning to exempt the returns from tax ( like PPF,EPF and GPF), this seems an attractive option.
News - Source ET "The pension fund regulator, which is extending the new pension scheme (NPS) to everyone in the country on Friday, will review the 50% Monitor your financial healthAchieve fin goals with proper planning limit on investing people’s savings in equities a year from now.
The Pension Fund Regulatory Development Authority (PFRDA) has now stipulated that only half of an individual’s savings can go into equities even if he opts for a high-risk high-return investment. The auto (default) choice for persons who do not make an investment choice also caps the equity exposure at half of the savings.
A committee chaired by HDFC chairman Deepak Parekh that advised PFRDA in framing the investment norms had recommended that risk-hungry subscribers should have the freedom to invest all their savings in equities. It had also recommended a 65% equity exposure for auto choice. Investment in stocks is considered appropriate for long-term investments such as pension plans.
PFRDA chairman D Swarup told ET that the equity exposure limit was reduced based on the recommendations of the board of trustees of the NPS and the advice of the government. “This cap would be reviewed after a year. The Deepak Parekh panel had also recommended a review of the investment pattern after one year,” he said. Besides, the world over, pension plans do not allow 100% equity investments. In the US, equity exposure is allowed in the range of 50-70%."
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News of SIP taking a hit

"SIPs take a hard knock on market volatility
BS Reporter / Mumbai April 28, 2009, 0:41 IST
Once the most selling product in the mutual fund industry, systematic investment plans (SIPs) are now taking the hit as investors pull out, fearing that adverse market conditions are going to continue."
This news shows the lack of awareness of the investors regarding SIP investments. SIP in Equity funds is essentially to avoid timing the market. If someone is able to identify the market trends in advance accurately, he can afford to investment in the market by timing it. Unfortunately , there is no one person who knows the future graph of the indices.
When the market was moving up, everyone were happy to enroll in SIP as they could see their investment grow month on month. Continuing to SIP in a bull market is a tough proposition , but you will reap huge benefits , if you continue with your investment in a bear / volatile market.
SIP in Equity should be done with the following in mind
2. Only funds that are not required in the long run( at least 5 years ) is invested in equity.
If you are understand out 1 and 2 , you wouldn't be an investor who stops his/her SIP in a volatile market.
Know the power of SIP !! and use it to the fullest to make you rich.

RBI has changed the method by which banks calculate the 3.5 % interest rate they charge on savings bank deposits

This shall be applicable with effect from April 1, 2010.
This note comments on a point in the credit policy that has not got the attention it deserves. The RBI has changed the method by which banks calculate the 3.5 % interest rate they charge on savings bank deposits. This seemingly innocuous change has far reaching ramifications for bank bottom lines. Bank bottom lines will fall by as much as Rs 18000 crores because of this.
>From paying the interest on the lowest balance recorded from the 10th to the 30th of the month, banks will have to pay daily interest on the daily balances at 3.5%. This will result in a 25 to 50 basis point increase in the cost of savings bank funds according to the chairman of the Canara Bank.
Consider the simple example that follows:
I open an SB account with Rs 100 on January 1. Then I deposit Rs 100,000 on January 2 as I need to make (say) a mutual fund investment. The amount stays in my account till January 25, then leaves to go to the mutual fund. That leaves Rs 100 in my account on January 26. Previously I earned interest on this Rs 100 as that was the lowest amount in my bank account in the period from Jan 10 to Jan 31. Now the bank will have to pay me interest on Rs 100,000 for the period from Jan 2 to Jan 25. !!!
As mentioned, this will result in a 25 to 50 basis point increase in the cost of funds in savings banks, according to the chairman of the Canara Bank. Now there are 36 LAKH CRORES in savings accounts in India according to the RBI.
That means banks net interest margins (and consequently profits) will reduce by Rs 9000 crores EVEN if we take the impact at the lower 25 basis points. At 50 bps, the impact is 18000 crores.
Savers benefit by this amount and banks lose by this amount.

Sites offering tips for money

I see lot of advertisements offering trading tips in shares, future and options and commodities,etc. Many of them sell such tips for money and quote returns from the past like 100%,200%,etc .
If the sites that offer are confident about their recommendations, then they can very well make use of their own tips to multiply the money they have. There would not be any need for them to sell such tips for such meagre money.
Investors should always follow time tested methods and shouldn't fall to such cheap shortcuts to make money.
A realistic expectation, well understood investment and a patient approach would help any one make money over the long run through equity.

Future of IT?

With severe recession in the west affecting the earnings of most of Indian companies, they have started announcing pay cuts or lesser increments and variable pay.When the west starts stabilising,will the trend reverse is a big question?.
The next big problem would be exchange rate.The dollar may start weakening in a couple of years getting back to the trend it was a year ago.If this happens it will start having an impact on the revenues again.IT stock were multi-baggers in the late 90s and earlier part of this decade.
Unless these companies re-invent themselves and make a big innovative breakthrough in their business models, such stellar performance of the past is almost impossible to replicate in the future.

Back to Savings habit in US!!

Lof of articles on savings and investment ( sample ) have started popping up in yahoo finance, msn finance,etc. These articles are more in the US context .

Consumerism has just started in India and we still maintain a great savings culture. But a part of working class esp . young urbans who started of with great salary in the last couple of years , need to realise the value of living within the means. Value for money is not something that we should look for in a tough time. But it should be practiced all the time so that it becomes a shared nature. Buying any liabilities in the name of assets paying huge EMIs should also be avoided.

At least a part of the money earned should be made to work for future by investing appropriately.On the contrary consuming tomorrow's money for today need to be avoided.

The age old thoughts of being frugal, saving and investing would always help tide any economic or financial crisis.

SIP - to be discontinued now???

The author of the following article clear asserts out why it is important to continue your SIP in Equity funds. The author highlighted even though the 5 year SIPs are in red , it should be no reason to discontinue the SIPs.

It may take a couple of years for economies to come on track. Funds will start automatically flowing into markets then. So, if you wait for a perfect day to invest you might loose the bus.

So continue your SIP for long term investment goals and reap the benefit.

Tap the midcap potential

Midcap stocks normally offer huge opportunities for growth. In a bear market they are prone to more downside too. But risk is always proportionate to return.
Of late, I have seen a lot of advises to ride mainly on large cap stocks to avoid great losses. Large caps are definitely safe bets. But for those who want to take that extra bit of risk, midcaps offer a great opportunity. Not all midcaps grow to become large caps .So it's better to invest through a midcap fund for diversification and use the research of fund houses. It's also a good idea to invest directly in mid cap stocks based on the portfolio of some good mid caps fund with a great track record.
BSE midcap is currently trading at a P/E of around 8 when compared to BSE Sensex P/E of around 11 .( Check BSEINIDA site for online data). BSE midcap index has fallen to almost 2600 levels from peak level of 10000. i.e almost 75% fall from the peak. This shows that there is a limited downside while there is huge potential upside in the long run.
Reliance growth, Sundaram Select Mid cap, Birla Mid cap, Kotak opportunities are some good midcap funds where an investor may start investing systematically to reap the benefit in a 5-7 year horizon. Alternatively one can also start accumulating ETFs like Juniorbees directly through DMAT account with a long term investment perspective.

India Elections 2009- Participate now!!

Golden time to start an SIP

If you have been waiting for a long time to start your equity investment, This should be the right time to do that. Equity markets throughout the globe are going through a rough patch.
The bottom of the markets are not yet visible yet. But no one can say when the markets will bottom out.
If you are having a investment plan spanning more than 5 years, you should start your SIP ( Systematic Investment Plan) in an equity fund. As the valuations are looking attractive when the market reverses its direction , you can definitely benefit hugely.. Alternatively, if you have basic stock picking skills you can start accumulating some good blue chip stocks.
Stock markets start recovering swiftly after the economy bottoms out . It is practically impossible for anyone to enter the market when it is exactly at the bottom. So the best way to gain is to start investing systematically . This will help one gain during the recovery phase (Taking an example of US market -Since 1932, the S&P 500 has gained an average of 46 percent in the year after stocks have hit a bottom)

Reality Talk

As I took a quick evening walk around DLF phase V this evening, I could see a lot of flats under construction. I also saw a lot of new flats that are ready to get occupied but still vacant and quite a few unoccupied shopping complexes. I had started noticing such huge construction activities which I felt was definitely an oversupply ( @ the prices quoted) a couple of months ago in many parts of Bangalore too. Almost everything around the world including commodity prices, stock markets, real estate have fallen sharply. But still I feel the Real estate sector in India is still being kept afloat. The no: of transactions of buying/ selling has come down in reality sector but the reduction in prices is not very visible yet. ( Although some 20% correction is seen / reported in some places)
I am not sure about the reasons as to how the prices have'nt fallen sharply. Is that because of Indians sentiment towards owning a home? or because of the political and black money nexus with real estate or because of a lack of transparent pricing visible to the public.
Even in premium areas the return from house in terms of rentals is just 4%. I am not sure who likes to own all these houses. These things still remain a mystery for me.
The stock prices of most of the real estate companies have corrected by almost 90%, but an equivalent correction has not happened in the real prices. The real estate companies may manage to survive by the killing profits that they have made over the last 3-4 years , but how long can they continue to hold these prices is the question.
But one thing is for sure, that the prices may remain flat for 4-5 years from now unless a dramatic boom revives the Indian economy. But till the time we have the salaried class who are ready to shell out 50% or more of their salary as EMI for 15-20 years, the developers would try to take an advantage.
I think the match between developers and buyers is in a tie breaker situation now. (My thought that prices would fall in India like a pack of cards hasn't come true yet.) I am keen to see who wins the match from hereon!!

Should we invest in TATA capital non-convertible secured debentures

"Tata Capital, a wholly owned subsidiary of Tata Sons has floated its public issue of Non Convertible Debentures (NCD). The size of the issue, alongwith oversubscription, is 1500 crores and has a tenor of 5 years. Allotment would be made on a first-come-first-served basis.
Tata Capital is a Non-Deposit taking Non Banking Financial Company (NBFC). It encompasses several areas of operations like Personal/Auto Loans, SME/Infrastructure Finance, Wealth Management, Investment Banking, Private Equity and Treasury Advisory. This enables it to get fund and fee based income.
Attractive Interest Rates : 11% for the monthly option, 11.25% for the quarterly option and 12% for the annual or cumulative option.
The interest rate looks attractive compared to Bank FDs. When interest rates are decreasing, investors looking for a relatively secure return of 12% p.a. can look at this option. Issue closes on 24 Feb 2009.
Online subscription option available in ICICIdirect.India infoline to come up with an online application facility shortly.

At these turbulent times…..Focus on Cost *

* Kadirvan T - (Guest Author)

With the current economic scenario where layoffs are the front page news everyday, we should focus on cutting costs and ensuring we have sufficient cash backup for meeting contingencies.

Well, How do we do it?
There are many ways to do it. One good way is through Microsoft Money Plus (Deluxe). MS Money is an excellent software to manage your personal finances. One amazing feature it provides is the cash flow forecast for your bank account. The forecast would be based on your recurring deposits (for a salaried person, it would most probably be only the monthly salary) and all the recurring expenses.

Fig: A sample Cash flow Forecast

How it helps?
Once you start tracking your day-to-day financial transactions in MS Money and also setup your Recurring Deposits and Expenses, you will be easily able to answer ALL the below questions through the Cash flow Forecast feature.

1) Will I have sufficient Money for my sister’s Marriage in January, 2010?
2) What if I get a salary decrease of 10%, would I still be able to sustain my increasing house rent?
3) How much money would I have saved in June 2010 considering I pay Rs.1000 less on my home loan EMI starting this month?
4) How much of monthly expense should I reduce to afford an additional Car EMI?

and lot more…

Well, Isn’t that a lot of time and effort tracking? Is it all really worthwhile???
All its takes is just10 mins everyday to track your expenses. What you get? You get to understand your finances and have it under YOUR control.

Is that all that MS Money has to offer? No!

MS Money also allows you to
1) Understand how much money you have in all your accounts inclusive.
2) Understand where all your hard-earned money is going through user-friendly reports like Expenses by Category/Payee etc…

Fig: A Sample Spending by Category (Pie-Chart)

3) You can easily understand why you have spent Rs.12,500 on Dining Out this month. Just double-click on the category and get the break-up. If you need to change it, change it there itself.

4) Budget your expenses and get alerted whenever your expenses go over-budget.

Fig: A Sample Budget chart

5) Get alerted of the pending Bill Payments.

Fig: A Sample Bills and Deposits Chart (Also get reminders when you start your PC)

6) Get your monthly Income and Expense Statements and also a month-wise Comparative analysis. You can also calculate your Net Worth just through a button click

Other than these, there are loads of other easy to use features. Just go ahead, explore and have fun!!!

Download the 60 day trial version from the below link:


of late,PPF has been the most popular search term to land to this site . This is quite understandable considering this is the time when everyone scouts around for tax saving investments. Although the interest from PPF is 8% , the interest earned and paid from this account is also tax free. This makes PPF more attractive. Till the EEE policy on PPF remains, PPF would continue to draw money. (EEE- Exempt on investing, accrual and payout of interest).
With the stock markets lying low, tax saving MFs have gone a bit out of fashion.
POMIS ( Post office monthly income scheme) has also been included as an investment option. Lock in is 6 years and a effective yield of 8.9%. But interest earned and bonus (5%) given at the end of the term is taxable in the hands of investor.
PPF inspite of having a longer 15 year lock in term remains attractive beacuse of the tax free interest when compared to POMIS. So an investment decision for tax exemption in these schemes would also depend on the income tax bracket that the investor.
All said and done, If you are ready to lockin money for > 5 years anyway, my vote goes to SIP (Systematic investment plan) in ELSS ( Equity linked savings schemes in Mutual Fund)schemes as you would get a much higher return ( again tax free) as equities are supposed to outperform other asset classes in a longer investment horizon.

An interesting read

At the time of crisis everyone tends to get back to the basics. The following article on businessweek is a nice read and must read for all.
Top 20 do's and dont's of personal finance.

Sensex Prediction

When I read the following article in 2005, I thought it was a complete bluff. As 18000 was a figure that was predicted for sensex in 2010. I had book marked this article and somehow lost it when my machine was formatted.

However, this article was fresh in my memory when sensex actually crossed 18k and 20k in 2007. I badly searched for the article I had read, but couldn't spot it. After a long fight ( may be my Internet searching skills are poor), I got the link back.

Here's the link

You may find it an interesting read!!! One of the rare things that happened..a prediction come true in the stock market!!! hope the author is not a professional analyst!.

US dollar - the way ahead

If you have been one among those like me wondering why Dollar is gaining strength in spite of all the crisis in the US, you may find the following article on msn interesting.
It talks about the strength gained by US dollar due to confidence lost in other asset classes and emerging markets during the crisis and the possibility of dollar weakening once the crisis starts seeing an end.
Future of US dollar exchange rates need to be kept in mind while you invest heavily in import/export oriented companies.

Income tax investment not an year end exercise

Starting December , the salaried class suddenly wakes up to the reality of taxes and realises investment need to be made to save tax. Looking for funds and making a hasty decision while investing is almost a second habit of most of the salaried class. Many tax saving products are bought without looking at options or weighing at the advantages of each of the option.
Mushrooming tax planning stalls at offices and malls try to sell whatever products they have and lot of people buy "investment plans" in a hurry without even understanding where their money goes. For example , a friend of mine invested in a Equity linked ULIP for saving tax . This friend is wary of equity but didn't realise where his money was being invested after charging 30% commission on his initial premium.
So options like NSC, PPF, FDs, ELSS , etc need to be considered at the beginning of the year. One should start investing regularly to save tax from April, May time frame. This helps in
1) Making wise decisions as you are in no hurry to submit proofs to your employer at the beginning of the year.
2) Makes investment a planned activity and helps avoid with huge burdening of investing at the year end.
3) Your money starts working for you a couple of months earlier as you start investing in the early part of the year.
If you have not taken any new year resolution, you can resolve to make planned investments for saving taxes from the next financial year...if you have not been doing this till now.

2000 vs 2008

Dot com bubble burst in 2000 and a recessionary trend was seen for almost a year. This was primarily excess growth expectation that was expected in IT that burst. In 2008 however the fundamentals of US economy is hurt. With so many financial institutions going bankrupt, house prices dropping and credit crunch deepening, the problem seems to be more fundamental.
The recovery time may be longer than expected this time as it will take time for us to reach the peak of crisis and then start evening out.
We had lot of small and mid size IT companies going bust in India in 2000. But the IT boom had lasted only for a couple of years then and it had'nt pumped much money in India. Now we have a IT major in a deep trouble state and lot of the future money consumed ( by way of loans) stands at stake.
All those employed would do better ..if they try to keep in cash a minimum of 3 months to 6 months expenses so that they can avoid any panic. Reduction of expenses and spending prudently even if it means switching down lifestyle a bit would help an individual enormously. ( Although this may not help the economy).
Seemingly tough time ahead after we had seen too much of optimism in the past couple of years .

Should we invest in stocks at all??

Many ask this question now," Should we invest in stocks at all"??. Exactly an year before we were in big euphoria....remember the Reliance power IPO for which 1000s of demat accounts were opened.
First was the sub prime crisis leading to global economic slow down, then the raising commodity prices ( which cooled down ultimately), latest to the story is the Satyam fiasco. So, should we restrain from the stock markets because of all these reasons. I would say "no". Ups and downs are a part of life . One off events do happen in all walks of life. We don't restrain from taking a road because it is prone to accidents. Similarly we cant avoid investing since one or two companies go bust. But we have to do it with precaution. By choosing to invest a right part of your portfolio in stocks and investing in a diversified and systematic fashion.
History repeats itself and if you look at history, the markets have overcome many such bad years. To overcome these bad patches one needs absolute patience. " Time and patience cures everything ( including your losses :-)). Definitely equity investment is a long term game and patience is key to any investor.

Money and happiness

"pleasures (such as beautiful scenery or an evening with friends) and comforts (such as a fancy car or the latest gizmo). You tire of comforts but never of pleasures"
If the correlation between money and happiness is an area of interest to you , you may find this article on livemint real interesting.
Money is definitely vital for those who are in need of basic necessities of life and beyond a point it's irrelevant for happiness. This is very nicely highlighted in the article.

Simple Indian Food - Feel @home ( Best veg food blog )

" A Ship is safe when it is in Harbour, but the ship was not built for that"


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