Cox & Kings Listing Strategy

As recommended Cox & Kings to buy in IPO hasn't disappointed us.

Cox & Kings listed at 344 on BSE one can book partial profits at 385+ and hold remaining for long term. Partial profit booking will help us average out buying price and hence act as cushion of safety.

Happy Investing!

Cox and Kings

Cox and Kings:
IPO Opens: 18th Nov 2009
Closes: 20th Nov 2009
Rating: ****

Recommendation: Subscribe
Fairly valued IPO after long time

Issue details below:
The company will raise more than Rs 610 crore from the issue, out of which it will get over Rs 509 crore and the rest will be given to shareholders.

CARE has assigned a 'CARE IPO GRADE 4' to the proposed IPO. CARE IPO Grade 4 indicates above average fundamentals.

The equity shares are proposed to be listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.

The objects of the fresh issue are to provide funding for repayment of loans; acquisitions and other strategic initiatives; investment in overseas subsidiaries and investment in corporate office & upgrading our existing operations.

Link for prospectus: http://www.nseindia.com/content/ipo/RHP_CNK.zip

Updates on Indian Hotel

Target 1 Achieved, move stop loss to just below 85 and hold on for T2 and T3

Indian Hotels / 3i Info

Buy call on both CMP 85.50
Stop Loss: just below 80
Target Indian Hotel: T1: 90, T2: 94 T3: 99
Target 3i Info: T1: 89, T2: 94, T3:99

Putting Money to Work, an Introspection?

One of the reasons (not the only reason) that we work almost 9-10 hours a day is to earn money and livelihood for a better and secure future. One of the biggest ironies of life is though we work for Money yet we don’t dedicate enough time in understanding utilization of the Money. This is more like we are slaves of money, working for it, rather than make money work for us.

Try and introspect your inner self if we have ever thought of putting ‘Money to work’? Most probably yes, who wouldn’t like to have an assistant as strong as ‘Money’ to work for us? But having introspected have we really worked toward building such an infrastructure / environment around us to make this happen, most of us haven’t. Have we ever delved into why we haven’t yet started doing it, in 90% of cases its due fear of unknown (lack of knowledge in personal finance domain). Thus though we have an inclination towards creating wealth and future for ourselves most of us don’t really plan out the implementation / productive utilization of money.

I personally know lots of individuals who end up buying financial products that really is not in line with what/when/how they need to reach major goals in life. Majority of people that I have known don’t even know what financial product they have bought and what it means and how it will deliver etc. The single most common aim with which it was bought was for tax saving and/or just because a person (probably a close relative/ friend) has recommended it because he/she made some money and/or he/she is a financial product reseller.

Just think of it, we invest almost 300 hrs a month working to earn money, can’t we dedicate few hours in understanding underlying principle / fundamental of personal finance. I mean about couple of hours a week. This isn’t a big ask considering a third of our life (8/24 hrs a day) is invested in working for money. The source of information on personal finance is abundant. There are many good personal finance blogs on the web and many books available in market dedicated to personal finance. There is almost one article every day on personal finance every day in leading news papers.

One of the aims of starting this blog is to create awareness on personal finance front and I have already written quite a few articles in very simple and understandable language right from basics. And continue to do so...

Updates on Market Fall 27-28 Oct 2009

The stock markets in past two days have taken a down turn and become quite volatile in Indian capital markets. This was more accentuated by the fact that our market are nearing expiry and also credit policy announcement was a bit negative in the sentiments. Some of the most crucial support levels like 4950 and 4850 have broken down next crucial level on Nifty is 4730. In case if 4730 is also broken on closing basis be prepared for roller coaster ride and steep corrections to 4400 levels. I have updated my QuickPick Tracker following the fall in the markets over past couple of days.

For long term investment investors can start adding good quality companies at 4730-4750 Nifty levels to their portfolio. Some recommendations by FinWin would be to add: (Not all but selective 3-4 companies of your likes / sector which you understand better)

Larsen & Tubro / BHEL in Captial Goods

Reliance / Petronet LNG / Guj. Gas (Oil & Gas)

LIC Housing Finance / HDFC (Finance: Housing)

3i Infotech / Rolta India / Micro Tech (Midcap IT)

Axis Bank / SBI / ICICI Bank (Banking)

Nifty Bees (Index ETF)

JP Associates / GMR Infra (Infra and construction)

IDFC / Power Finance / Reliance Capital (NBFC)
TV 18 / UTV Software / Reliance Media Works (Media)

Other stock mentioned in the blogs Value Pick section

Just one suggestion is buy in staggered fashion such that on further fall more can be added.

Binani Cement Ltd.

Binani Cement a part of Braj Binani Group. The Braj Binani Group is a well-diversified industrial house with a 138-year history behind it. Today, the group is actively working in the core sectors of Cement, Zinc, Glass Fibre and Downstream Composite Products.

Binani Cement Limited is the flagship subsidiary of Binani Industries Limited (BIL), the Braj Binani Group. It?s a cement manufacturer with an asset value of Rs. 1779 crores and a turnover of Rs.1960 crores, with subsidiaries in Dubai, China and expanding by the day. Binani Cement has established itself as one of the top companies in the industry in terms of efficiency and performance.

3 Yr CAGR Sales (%) : 45
3 Yr CAGR Profit (%) : 25
Promoter Shareholding (%) : 64.91
FII Shareholding (%) : 2.39
Return on Equity (%) : 28.24
MCap.(Rs. in Cr.) : 1299
P/E (x) : 5.75
TTM EPS (Rs.) : 11.64
BV (Rs.) : 24.59
Div. Yield (%) : 5.3
FV (Rs.) : 10
Industry P/E: 9.x

Binani has come out with stellar set of back to back quarterly result with earlier quarter at EPS 5.25 and current Quater at 4.98i.e end Sep-09 for Half year EPS is already 10.23 with CMP at Rs. 67 is a bargain buy. Given 3 yr. CAGR profit and slaes growth at 25 and 45% it is a reccomended value pick. Besides in long run cement industry is expected to be one of the key beneficiaries of Infra Growth story.

Given past P/E ratio assigned to Binani Industry of around 8 for trailing earnings stock can be expected to touch 93 - 100 in short term 6 - 9 months i.e arround 50% appreciation from current price.

Reliance Media Works

Buy Reliance Media Works (Foremer Adlabs) at CMP 328 with Stop Loss at 310 for Target of T1 360, T2 376. T3 392 in next 1-3 Months.

Fell of 8-9% yesterday due to weak global cues, bounce back expected today following good quarterly results.

Trigger: Good results declared after market closing yesterday. Possible Rights issue in near future.

Disclaimer:
Please note that the stocks in Quick Pick segment can give a POP of +/- 10-15 % and is purely speculative in nature. This is reccomendation for a person with High Risk appetite.

Access your CIBIL Report

You can now access your Credit Information Report (CIR) directly from CIBIL. As you may be aware, your CIBIL CIR is a factual record of your credit payment history compiled from information received from credit grantors. The purpose is to help credit grantors make informed lending decisions - quickly and objectively, and enable faster processing of your credit applications to help provide you speedier access to credit at better terms.

You can request for a copy of your CIBIL CIR in three quick steps through Email, Mail, Telephone or Fax:
Email: myreport@cibil.com
1. Email the CIR Request Form duly filled in
2. Mail self attested hardcopies of you lastest Identity Proof1and Address Proof2 documents and Fees3 to P.O.BOX 17, Millennium Business Park, Navi Mumbai- 400710
3. Once CIBIL receives the documents and Fees3, your request will be processed and copy of your CIR will be dispatched to you.
Letter: Address*
1. Write to CIBIL with the CIR Request Form duly filled in
2. Also mail self attested hardcopies of your Identity Proof1 and lastest Address Proof2 documents and Fees3 to P.O.BOX 17, Millennium Business Park, Navi Mumbai- 400710
3. Once CIBIL receives the documents and Fees3, your request will be processed and copy of your CIR will be dispatched to you.
Telephone: 022-61404300
1. Fax CIBIL the CIR Request Form duly filled in
2. Mail duly filled in CIR request form and self attested hardcopies of your Identity Proof1 and latest Address Proof2 documents and Fees3 to P.O. BOX 17, Millennium Business Park, Navi Mumbai - 400710
3. Once CIBIL receives the documents and Fees3, your request will be processed and a copy of your CIR will be dispatched to you.
Fax: 022-40789007
1. Fax CIBIL the CIR Request Form duly filled in
2. Mail self attested hardcopies of your Identity Proof1 and latest Address Proof2 documents and Fees3 to P.O.Box 17, Millennium Business Park, Navi Mumbai 400710
3. Once CIBIL receives the documents and Fees3, your request will be processed and a copy of your CIR will be dispatched to you.

1. Valid Identity Proof: PAN Card/ Passport/ Voters ID (Mail self attested hard copy of any one of these Identity Proofs)
2. Valid Address Proof: Bank Account Statement/ Electricity Bill/ Telephone bill (Mail self attested hard copy of any one of these Address Proofs)
3. Payment terms: Demand Draft (DD) of Rs 142/- (inclusive of all taxes and express delivery charge), in favour of Credit Information Bureau (India) Limited payable at Mumbai
Please note that the fee once paid is non-refundable.  

Download Request Form
CIBIL has no authorised agents. Please do not contact anyone other than CIBIL in order to gain access to a copy of your Credit Information Report.
Your CIBIL CIR will be presented to you in a simple and easy to understand format. However, on receiving your CIBIL CIR, if you require any explanation/clarification, you can email us at consumerqueries@cibil.com or call us on 022-61404300.
CIBIL is always at your service to assist you.
 

* Credit Information Bureau (India) Limited
P.O Box 17,
Millennium Business Park,
Navi Mumbai- 400710

 

Source: www.cibil.com

QuickPick Tracker

Updates on XPRO India Ltd.

FinWin is recommends buy on XPRO India Limited as a Quick Pick for short term this stock can also be held for long term perspective, click for details on XPRO India for report published earlier as value pick
Short Synopsis:

MCap.(Rs. in Cr.)	26		YTD Sales Growth	10 - 20 %
BV (Rs.)	97.65		YTD Profit Growth	50%
Div. Yield (%)	4.16		Share Capital	11 Cr
EPS (Rs.)	0.75		Reserves and Surplus	96.41 Cr
P/BV	0.325		CMP	31.80

Buy at CMP preferable at dips with stop loss at Rs. 27.50/-
Risk reward ratio 1: 2.5
TGT: 15 - 20 % in next 1-3 months time horizon
T1: 36, T2: 38, T3: 42

Current Trigger: Positive breakout above 52 week high level with very huge volumes (almost 10 times 2 week average in just 2 hrs of trading today morning)
QuickPick Tracker
Disclaimer:
Please note that the stocks in Quick Pick segment can give a POP of +/- 10-15 % and is purely speculative in nature. This is reccomendation for a person with High Risk appetite.

Updates on Jindal Saw Ltd.

CMP:822

T1: Target 1 800 achieved (appreciation 8% from recommended price)
Approaching T2: Target 2 (11% appreciation)

Strategy book partial profit around T2 level and hold rest with stop loss at 789

QuickPick Tracker
Cheers!
FinWin

Historical returns on Sensex since 1979

In this article I am analyzing Historical Returns generated by Sensex since its inception and logical conclusion derived on basis of the facts and figures.

In one of the earlier post FinWin recommended investment into Index ETF mentioning that one doesn't need to invest time, follow or track the underlying constituent  for performance if a person has long term investment horizon i.e. 10+ years. Also in articles on Financial Independence, I have mentioned about 'Power of Compounding' where calculations are based on 10% CAGR effect over long period of time. Having said that FinWin has recommended investment option as equities to get 10% or more CAGR returns. 

The base year for sensex was 1978-79 at base index value of 100 which has now grown to 17000+ in 30.52 years since then growing at 18.36% CAGR .which is quite exceptional returns. The article highlight three key indicators namely 'Probability of Loss' , 'Average returns' and 'Deviation from Average' across different time slices of 1 yr, 3 yrs, 5 yrs, 7 yrs, 12 yrs, 15 yrs, 20 yrs and 30.52 years.
As it is quite evident from the data 'Probability of Loss' in short term is 50% to 9% with 'Average Return' ranging from 18% to 11% and 'Deviation from Average' from 30% to 7.5% points for investment time frame of 1 year to 7 year period. However with time horizon of investment more than 10 year to 30 years you will see that 'Probability of Loss' is NIL with returns averaging from 10% to 20% and deviation from average of around 4.75% to 2.5%.

Thus based on the facts and figures as presented below the conclusion derived is that investment in Index in short to medium term provides return  of   11%-18% CAGR with deviation of around +/-7 to 30 with Probability of capital erosion of around 9%-50% hence proving very volatile with risk to the capital invested. But if a person is invested over long term i.e. 10+ years than 'Probability of Loss' or 'Capital Erosion' is virtually NIL providing a return of 10% - 20% CAGR with average deviation of +/- 2 to 5 points.

Click here

High Return Corporate Fixed Deposit Scheme - KCP Ltd.

KCP Limited a part of KCP group offers lucrative fixed deposit scheme:
Highlights:
Non-Cumulative Deposit
Tenure: 1 to 3 years
Rate of Returns: 10 to 10.5 % p.a.
Min. Investment: INR 21000/- and thereafter in multiple of 1000
Payout: Quarterly
Risk: Credit rating from Credit rating agency not known (check website for more details)

Cumulative Fixed Deposit
Tenure: 1 to 3 years
Rate of Returns: 10 to 11% CAGR
Payout: On Maturity
Risk: Credit rating from Credit rating agency not known (check website for more details)

At the look of it the fixed deposit scheme looks quite attractive from a good company, but before taking an investment decision ensure to read all terms and conditions, risk factors etc. I am not sure if the scheme has sought any credit ratings for the instrument from 3rd Party Credit Rating agencies like ICRA, CRISIL or any others.
Click here for more detail or alternate link

Jindal Saw Limited

FinWin is recommending buy on Jindal Saw Limited as a Quick Pick for Short Term.

I will post more detailed analysis soon.

Short Synopsis:
CMP: 741
EPS: 58
P/E Ratio: 13
BV: 532
P/Book: 1.4
3 Yr CAGR Sales Growth (%) : 30.x
3Yr CAGR Profit Growth (%) : 50

Buy at CMP with stop loss of Rs. 700*
Risk reward ratio: 1:3
TGT: 15 - 20 % in next 1-3 months time horizon
T1: 800, T2: 825, T3: 850

*By oversight I didn't put stop loss in the morning, fortunately trade did go our way, since it has now closed at 789 you can move stop loss to recommended buy level / purchase price this will help you protect the capital going ahead.
Disclaimer:
Please note that the stocks in Quick Pick segment can give a POP of +/- 10-15 % and is purely speculative in nature. This is reccomendation for a person with High Risk appetite and its very risky proposition.

Top Three Investment Ideas this Diwali

One of the reader of my blog posted me a query asking me What would be Top Three Investment Ideas this Diwali?
The said reader of my blog needs investment idea for this Diwali under the below mentioned constraint 
1. Neither he has enough time to research and keep track of Equity / Company performance NOR enough knowledge to do value picks.
2. Wants to remain invested and put in regular sum, per month for next 10-15 years.
3. The amount he plans to invest every month is over and above his allocation for short to medium term goals
4. He want returns better than what Debt / Medium risk instruments provide.
5. Instrument Liquidity should be quiet reasonable.
6. Amount he plans to invest per month is Rs. 10000/-

Well given the constraints I evaluated options; the only option that I could narrow down on was equity investment. Basically Equity investment provides high returns over 10+ years with fair amount of liquidity. Guess what? Yes you figured out this doesn't sound likely satisfying requirement of "lack of time to do research". 

Yes it is true that Direct Equity Investment does need some knowledge of picking good value stocks and will also consume time for keeping track of the company performance. But there is a smart way to put your money to work without really investing time.

I am recommending following three Investment Ideas for this Diwali and many more Diwali's to come. The options provided below are good even for investments at regular intervals for long term goals.

I. Gold ETF:
Most of us (who can afford) do buy gold during Dushera / Diwali (Dhanteras) which apparently happens to be tomorrow. Gold as asset provides very good returns over long term and also acts as hedge against inflation. Please read my article on Gold ETF on this blog for more details. As you are / must be well aware there isn't any need to track gold prices and/or related performance criteria.
FinWin suggests allocating 15 - 20% of funds towards buying Gold ETF regularly every month.

II. Diversified Equity Mutual Fund
An indirect way of exposure to Equity Markets (Capital Markets) is through Mutual Fund schemes. This is simplest form of investment into equity where an investor doesn't really need to put in time. The advantage here is given fund has dedicated fund manager and skilled financial analyst to do research and identify good growth oriented companies with good fundamentals. For more please read article on Equity Oriented funds.
FinWin has short listed few funds to create a Systematic Investment Plan as per list below the list provided below isn't exhaustive, you can also see some good web site like easymf / valueresearchonline that provides ranking to mutual funds and select Diversified Equity fund with 4-5 star ratings
1. Reliance RSF Equity Growth Fund
2. Sundaram BNP Paribas Select Focus Growth
3. DSP Black ROck Top 100 - Growth option
4. HDFC Top 200 - Growth option
5. Birla Sun Life Fronline Equity - Growth option
Please note that in every fund I have proposed Growth option because that is what we need is growth over long term its unadvisable to take dividend option because overall cost and growth.
Select any three diversified equity funds create monthly SIP allocation of 20% to each fund’s over next 10 -15 years.

III. Index ETF

Index Exchange Traded Funds are essentially Index Funds that are listed and traded on capital markets (exchanges) like equities. An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a Mutual fund that you can buy and sell in real-time at a price that change throughout the day.
Index ETF doesn't need time to be invested in research of underlying stocks and as such is passively managed funds. They provide returns of 12-18% CAGR over long term. For more details read Index ETF article on this blog.
FinWin suggest allocating remaining 20-25% of the fund into Index ETF every month.

The above three ideas overcomes all the constraints of the reader and provides return comparable to returns provided by equity over long period of time without actually investing time. In short the idea is to put your money to work from Diwali to Diwali for years to come.

Happy Investing

Ratio Analysis

One of the most intriguing aspects of investing is investing in equities. Equities are high risk high reward vehicles of investments. Given their high risk nature one should scientifically approach this investment alternative. Equities can be dealt with directly i.e. investing directly in the stock market or through a mutual fund where experts manage our funds. A small amount of equity exposure is always good as it would help us understand how the market functions and leads us to wise decision making even while choosing a mutual fund.

Equity investment decisions need to be researched and thought through thoroughly to earn high rewards. We need to understand that analyzing investing in equity is analyzing a business which is a going concern. Over the lifetime of an organization, it will traverse through phases and will have different outlook towards business. All these need to be captured quantitatively in one form or another to reach a sound decision on investment.

Ratio analysis helps us in this area of equity research. Absolute numbers though important fail to provide a complete picture of an organization. For example, we can say that two competing firms A and B are profitable and have earned Rs. 50,000/- and Rs. 75,000/- as profit respectively but to get a clear idea about which firm is better we need to understand the amount they invested to earn the profits. This is exactly where ratio analysis helps us to understand things in a better fashion.

Ratio analysis can be defined as study of financial position of a company through various ratios derived from the financial statement s of the company.

Ratios are categorized into sections, these are
a) Liquidity Ratios
b) Activity Ratios
c) Debt Ratios
d) Profitability Ratios
e) Market Ratios

Liquidity ratios

Liquidity ratios inform us about the capacity of the company to service its debts with the assets that the company has at its disposal. Two of the most popular ratios in this category are current ratio and quick ratio.

Activity ratios

Activity ratio tells us about the firm’s ability to convert its non-cash assets into cash assets. This in turn means that this ratio tells how efficient an organization is, when it comes to managing its inventories. It’s a common knowledge that managing inventory efficiently is a hallmark of a good organization.

Debt ratios

Long term debts need to be secured. Ratios in this category are indicators of an organizations ability to service its long term debt. Debt ratios are also known as leverage ratios and these ratios tell us the extent of debt in an organizations capital structure.

Profitability ratios

An organizations aim is to generate profit for its investors. Profitability ratios are indicators of the efficiency of an organization in terms of using its assets to generate profit for the shareholders. These ratios tell us the trends of an organization like if a company is doing better than previous year, or is its profitability declining.

Market Ratios

A shareholder invests in an organization with a view of earning profit on the investment. These ratios are particularly helpful in analyzing if an organization has rewarded shareholders in terms of return on their investment in the organization. These ratios along with the profit ratios are important in analyzing an organizations ability to enrich its investors. Price to earnings ratio is a popular ratio which falls under this category.

Going ahead, we will see each of these ratio categories in detail.

Just for Gag! Stock Market Humour

Bull Market - A random market movement causing an investor to mistake himself for a financial genius.
Bear Market - A 6 to 18-month period when the kids get no allowance and the wife gets no jewelery
Momentum Investing - The fine art of buying high and selling low.
Value Investing - The art of buying low and selling lower.
P/E ratio - The percentage of investors wetting their pants as the Market keeps crashing
Standard & Poor - Your life in a nutshell
Stock Analyst - Idiot who just downgraded your stock
Stock split - When your ex-wife and her lawyer split all your assets equally between themselves

Institutional Investor - Past year investor who's now locked up in a nut house
Market Correction - The day after you buy stocks

Bounce Back Rally - The day after you sell stocks
Cash Flow - The movement your money makes as it disappears down the Toilet.
Call Option - Something people used to do with a telephone in ancient times before e-mail
Day Trader - Someone who is disloyal from 9-5

Profit - Religious guy who talks to God.
Alan Greenspan - God
Bill Gates - Where God goes for a loan

Indices : BSE Sensex - The Barometer of Indian Capital Markets

SENSEX, first compiled in 1986, was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. 

SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology. The "free-float market capitalization-weighted" methodology is a widely followed index construction methodology on which majority of global equity indices are based; all major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the free-float methodology.

The growth of the equity market in India has been phenomenal in the present decade. Right from early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs. One can identify the booms and busts of the Indian equity market through SENSEX. As the oldest index in the country, it provides the time series data over a fairly long period of time (from 1979 onwards). No wonder, the SENSEX has become one of the most prominent brands in the country.

Current list of sensex constituents is as below:

source: www.bseindia.com

High Return Corporate Fixed Deposit Scheme

Jaiprakash Associate Limited a part of Jaypee group offers lucrative fixed deposit scheme:

Highlights:
Non-Cumulative Deposit
Tenure: 1 to 3 years
Rate of Returns: 11 to 12 % p.a.
Min. Investment: INR 10000/- to INR 15000 depending on payout terms
Payout: Monthly and Quarterly

Risk: Credit rating from Credit rating agency not known (check website for more details)

Cumulative Fixed Deposit

Tenure: 6 month to 3 years
Rate of Returns: 11 to 13% CAGR
Payout: On Maturity
Risk: Credit rating from Credit rating agency not known (check website for more details)

At the look of it the fixed deposit scheme looks quite attractive from a good company, but before taking an investment decision ensure to read all terms and conditions, risk factors etc. I am not sure if the scheme has sought any credit ratings for the instrument from 3rd Party Credit Rating agencies like ICRA, CRISIL or any others.

Click here for more details or
Alternate link for more details

Disclaimer: This isn't a recommendation but just an information of investment avenues available and an investor should do due diligence before investing. I myself might put some investment in this instrument due to its tenure and return profile with all the risk involved

Investment in Debt - III

Debt Oriented Mutual Funds

In my earlier article we have discussed about Equity Oriented Mutual Funds. Basically Mutual Funds instruments are actively managed by professional fund managers. As such this is one of the best method to take exposure to various asset classes specially for new investors. These funds are available in many flavors and individual needs to find best suited funds as per his requirements like equities, fixed income, hybrid funds which are mix of both and / or funds with different exposure rates to equities / fixed income fund, capital protector fund so on and so forth.

Why invest in Mutual Funds?

As stated earlier Mutual funds and investment instruments managed by professional fund managers. If you are a person who doesn't have inclination, great understanding of financial markets, lack disciplined approach towards equity markets, or lack skill to invest directly into equity markets. Or maybe you need to get exposure to some of the investment instruments that you as an individual cannot participate directly. Or you are looking to achieve risk diversification / appropriate asset allocation then Mutual Funds would be the most preferred route.

Debt Mutual Funds have many flavors like:

Capital Protection funds:

The objective of such fund is to protect the capital at the same time try and achieve growth through investing a small portion into the equity markets. The major investment (80-90 %) in such funds are in fixed tenure and fixed returns instruments like PSU / corporate bonds, government securities etc. The income derived from such investment and / or fixed portion of assets under management are invested into equities of high growth companies.. Thus achieve both capital protection and capital appreciation. This funds are best suited for investors with low risk appetite. Besides a person who is nearing to his long term goals in next couple of years can also seek to invest in such funds after switching out of long term investments that he had created for the respective goals.

Returns though not guaranteed they achieve better returns than what a bank fixed deposit provides.  Options available are getting regular payouts by way of dividend or to select growth options as the need maybe. Liquidity is provided by the funds by buying back the fund at the prevailing asset value of the fund.

Floating Rate Funds

This concept came into lime light came into lime light couple of years back with interest rates going up the investors who had invested in fixed rate securities felt left out in the rally of interest rates. Thus fund managers came out with Floating Rate Fund (FRF) concept. The FRF invest in floating rate debt securities and some exposure to fixed rate debt instruments. Floating rates are linked to a benchmark rate for debt securities for e.g MIBOR The basic objective of fund is to generate income at current rate and provide capital protection as well.

Returns from these funds is better than usual Bank fixed deposits as such investments are safe gaurd against short term rate fluctuations. The fund would perform well in rising interest rate scenarios. These funds are typically suitable for short term investment horizon and needless to say for person with low risk appetite.

Gilt Fund

Gilt funds, as they are conveniently called, are mutual fund schemes floated by asset management companies with exclusive investments in government securities. GILT funds are best suited for those who are looking for parking their investment in safe and secured instruments. Since the investment is made purely in government securities which carry zero default risk and provide high liquidity. These funds are for person with low risk appetite with medium to long term investment horizon.

Monthly Income Plans

Monthly Income Plan (MIP) are funds with objective to generate regular income and capital appreciation. In order to achieve these objective the funds collected is invested debt, money market instrument as well as equity or equity oriented instruments. Usually quite a few funds have higher exposure to equity in order to generate higher returns. So before investing in MIP one must carefully examine mandate of the fund for asset allocations. In short term the returns may be volatile.


The fund is is for a person with balanced risk appetite and one who needs income at regular intervals. Rate of return usually outstrips returns provided by Bank FD/ Pure debt funds on either side due to inherent risk exposure in short term.

Pension funds

Under these funds fund manager has mandate to seek capital appreciation in long haul. Thus equity exposure in such funds is usually quite high. But many pension funds offer varying asset allocation based on risk profile of an investor like Aggressive fund (High exposure to Equity), Balanced fund (50-65% in Equity), Capital Protector fund (low exposure to equity instruments). Investment in these fund are very tax efficient and provides tax benefit at the time of entry and also acts as annuity  providing regular returns post retirement. Pension funds has found quite a favor amongst investors due to its tax benefits and returns provided over long term.


These funds are ideally suited for regular disciplined investors who wants to create corpus for post retirement goals. A must investment recommended by FinWin in every portfolio if you don't have one go out today and buy one and ensure regular contribution to such funds for your retirement planning. Standard disclaimer applies

Investment in Debt - II

Company Fixed Deposits:

Company Fixed deposits are similar to bank fixed deposits which earns you a fixed returns over a fixed tenure. Though similar in nature bank fixed deposits are much secure than company fixed deposits which usually gets set-off by bit higher interest rate.

Due to its unsecured form, Co. fixed deposits it becomes important to be selective in company in which you are planning to have fixed deposit exposure. Also need to check credit ratings assigned by credit rating agencies it is prudent to put deposits in company whose FD's are rated AA or above.

As mentioned earlier rate of returns on Company fixed deposits offered are much higher given the risk factor. Remember higher is the risk for higher returns so only getting higher returns should be base criteria for selecting co. fixed deposits. Thus do the homework for selecting company like credit rating assigned to the instrument please avoid any unrated FD schemes. Next should be the returns provided, unless needed shouldn't opt for regular payouts instead go in for cumulative deposits. Keep tenure of deposits into focus depending on your time to achieve short term goals.

Some of the current ongoing Company fixed deposit schemes are

ICICI home finance. Besides regular payout they offer Cumulative income plan have tenure ranging from 20 months to 84 Months and rate of returns ranging from 7.15 % p.a. to 8.5 % p.a.

Credit Rating:  AAA by CARE and MAAA by ICRA.

Click here for more details

Mahindra Finance Cumulative scheme offers tenure from 12 months to 36 months with Interest rates from 8% p.a. to 9% p.a.

Credit Rating: FAA

Click here for more details

to be continued

Updates on Electrosteel Castings

In the past quarter the stock had hit a 52-week high of Rs 45.85 on 17 September 2009. The stock had outperformed the market in past one quarter, jumping 29.62% as against 9.47% rise in the Nifty 50 index.
The mid-cap steel casting maker had an equity capital of Rs 28.73 crore which grew to 31.27 crore at June end to 32.67 as of now. Face value per share is Rs 1.
The company is planning for QIP placement in near future which is meant to augment the long- term resources, including working capital requirement, and to develop iron-ore mines, coking and non-coking coal mines. Part of the proceeds will also be used to build a war chest for future opportunities, reports suggest.
Promoters have raised their stake in the company over past quarter to 47.90 % against earlier 45% through conversion of warrants. Recent lapse of warrant conversion of shares (convertible at Rs. 68 and Rs.81) due to steep discounted share prices in markets has added 48 paise per share. Sucessful closure QIP issue at around CMP 44 - 45 plus level will provide good support to share prices. In recent past the stock prices have consolidated at 44 - 45 level through in past 15 days shares haven't been able to breach 45 - 46 level it has challenged those level almost every alternate trading session on good volume. Breakout over 46 on closing basis will take stock to new 52 week high of around Rs 51-55. I expect stock to trade at 50+ levels in next quarter and 60-65 level in next 6 -9 months period.

Looking at the above recommendations is to hold / accumulate at every fall in prices.

Updates on QIP
Electrosteel Castings Ltd has informed BSE that the Board of Directors of the Company at its meeting held on September 15, 2009, has approved composite QIP issue for an amount upto Rs. 6000 Million. The composite QIP issue consists of issue of Equity Shares and Non Convertible Debentures (NCDs) with warrants. This two-pronged strategy would enable the Company to derive maximum value from the fund raising process. The Equity issuance is expected to be of about Rs. 1000 - 1500 Million, and the NCDs size would be of about INR2000 Million. The NCDs shall also have the option to subscribe for the convertible warrants into Equity Shares for an amount upto Rs. 2000 Million. The warrant holder shall have an option to convert the same into Equity Shares between a period of 3 - 5 years. The issue price or Equity Shares and warrant would be determined in consultation with the Merchant banker based on the SEBI regulations. 

The Company would now seek the approval of the Shareholders.

Other significant updates on warrant conversion:
The promoters stake has gone up to 47.90 on enhanced equity capital by addition of approx. 1.40 crore shares on conversion of warrants.
Meanwhile, the ECL board has cancelled the warrants issued in March last year. The company had allotted 87 lakh warrants convertible at Rs 68 per share to a foreign entity on 11 March 2008. The company had also received Rs 5.91 crore representing 10% of the total consideration towards the allotment of the warrants. The warrants were convertible within 18 months from the date of allotment, and the last date of conversion was 11 September 2009. However, the applicant did not opt for the conversion as the ruling market price was at a steep discount to the conversion price. As a consequence, the entire amount received has been forfeited and the warrants cancelled.
Electrosteel Castings Ltd has informed BSE that subsequent to the approval of the shareholders in its meeting dated January 25, 2008, the Board of Directors on March 24, 2008 allotted 12137146 convertible warrants issued for cash of Rs. 81/- per share to a Foreign Company. As per provisions of SEBI (DIP) Guidelines, the Company had also received Rs. 983.11 Lakhs representing 10% of the total consideration towards allotment of said warrants. In terms of SEBI (DIP) Guidelines, the said warrants were convertible within 18 months from the date of allotment and the last date of conversion was September 24, 2009. As the applicant did not opted for conversion of said warrants within the permissible time of 18 months, the entire amount received thereon from the applicant stands forfeited and accordingly, all 12137146 convertible warrants stands canceled.

Based on lapse of warrants issued by the company and forfeiture of amount Rs. 15.74 crore. This work out to around 48 paise per share on equity capital of 32.67 crore.

Investment in Debt

Why invest in Debt?

Debt instruments in India typically include company bond, fixed deposits, debt mutual funds, government securities, small saving schemes like  like National Saving Certificates (NSC), Kisan Vikas Patra (KVP) etc. Debt are comparatively far less riskier than equities and suitable for person with low risk tolerance instruments, good and much safer for shorty term investment, fixed returns (usually not always).

Debt typically are for persons with low risk appetite. Usually in debt instruments there is relative safety of principal amount and mostly predictable rate of returns.

Need of Debt Instrument:
As discussed in run up to creation of financial plan, asset allocation, ris profile, goals etc. Investment in equity forms just a part of plan for long term investments usually for 10+ years of investment horizon. But what about short term goals, exigency funds etc. which are of shorter duration. Debt is where you can park your exigency funds, investments to meet short term goals. Debt are low risk instruments, usually with fixed maturity value and fixed term.

Bank Deposits:
Bank deposits have been India's traditional investment instruments as they are of low risk and offers security of principal amount. Deposits upto Rs. 1 lakh in any bank is protected under deposit guarantee scheme. Deposits offers fixed returns and can provide quick liquidity by pre mature withdrawal facility. Now a days banks have come out with variation on deposit scheme like auto-sweep facility to convert additional cash in your account into deposits which garners more interest than saving bank account offers, flexi-deposits, recurring deposits etc.

As said bank deposits are low risk instrument and hence offers low returns. Deposits can offer returns from 6-8 % p.a. based on type and term of deposits.

Tax benefits are also available under section 80c for fixed deposits with 5 year lock in.On fixed deposits with lock in  period.

Government of India (GoI) Securities
GoI Securities in another kind of debt instruments of low risk grade. Usually GoI bond are issued to Banks, Financial Institutions, Mutual Funds, Pension Funds, Insurance companies, corporates etc. We as individual can take exposure to such instruments by investing in above mentioned institutions.

Some example of GoI securities are Central Govt. bonds, T-bills, State Govt. securities etc.

Rate of returns are usually bit higher than fixed deposits.

PSU Bonds / Infrastructure Bonds / Capital tax saving bonds:

The above mentioned bond are typically for medium to long term investments for tenure of 5 - 10 years. They are usually issued by Public Sector Undertakings, Banks, Financial Institutes etc. These bonds could be floating rate or fixed rate, deep discount bonds, or zero coupon bonds.

They are generally issued by way of private placement with institutional investors, or offered to public. As an individual investor they can be bought at the time of issue in the market. Such bond usuall have a credit rating provided by third party credit rating agencies like ICRA, CRISIL, CARE etc.. This ratings help us understand associated risk with the respective bond issues.

Bond usually have a fixed rate of returns and interest can be received in form of payouts at regular interval or cumulative bonds. Most f the bond get listed on security exchanges and can be traded in market. This provides liquidity to the bonds but prices will be market driven based on current value with time decay etc. taken into considerations. Some of these bond also provide tax benefits like investment Infrastructure bonds can be availed as tax benefits under section 80c or Capital Gains tax bond can provide for set off against short term or long term capital gains tax payable.

Returns on bond tend to be usually higher than traditional fixed deposits and are less riskier when compared to fixed deposit instruments of private corporates.

to be continued in my next post :)

Buy One Rupee at 80 paise only - DCM Shriram Consolidated Limited (DSCL)

Company background:

DSCL is an integrated business entity, with extensive and growing presence across the entire Agri-rural value chain and Chloro-Vinyl industry. The Company has added innovative value- added businesses in these domains. With a large base of captive power produced at a competitive cost, the Company aims at maximizing value creation in its Chloro-Vinyl businesses. The high-value and knowledge based business being incubated by DSCL include Hariyali Kisaan Bazaar, Fenesta Building Systems and Hybrid Seeds.

Promoters are holding more than 55% of the equity and other significant shareholders are DII and corporate bodies, see shareholders details as of Jun-09.

Major Shareholders	%
Promoter	55.26
Life Insurance Corporation of India	8.06
Stepan Holdings Ltd	4.27
Reliance Growth Fund	3.30
Ristana Services Ltd	2.90
New India Assurance Company Ltd	1.20
Sundram BNP Paribas Select Midcap	1.13
	76.12

Snapshot:

DSCL has built a diversified set of revenues streams, DSCL is in a good position to ride any variability in the operating environment. With major expansions complete and stability across various businesses, I believe that DSCL is in sound operating and financial health to be able to report continued progress in the future. The company has completed all its major capex plans in FY09. It plans to consolidate operations and deploy cash surpluses to strengthen its balance sheet in FY10.

DSCL has strong presence in diverse sectors – agri-rural businesses and Chloro-Vinyl businesses – with multiple revenue streams and swing capabilities enabled DSCL to optimize earnings and face the volatility much better in FY09 and Q1FY10. In Q1FY10, DSCL reported revenue of Rs. 893.6 cr, 12.6% higher y-o-y. The revenue growth was largely contributed by Sugar, Agri Inputs and Hariyali Kisaan Bazaar businesses.

Given the current focus of the government in raising the rural spend and thrust on rural economic through various government scheme may augur well for DSCL. At current market price of  Rs. 61.70 it available at discount to book value of Rs 75. In short I can say by investing in this stock you will get Re. 1 at only 80 paise which in itself is value buy. Besides this companies varies lines of business gives diversification to Chemicals, Plastic, Agri segment, Sugar, Cement and Retail (rural segment). Though its difficult to project earning in such a diversified company, its a good bet on domestic consumption sectors. I expect this stock deserves to be re-rated as analysts look for value picks as Sensex is already at price earning multiple of 21x, whereas this stock is available at price earning ratio of 8.71, and price to book of 0.83. I expect target of Rs. 77/- followed by Rs. 93/- in next 6 to 12 months i.e. a rise of 50% from Current Market Price and rate it as an out performer.

Click this link for detailed report

Valuation Parameters:

Portfolio Management Services (PMS)

PMS are services provided by banks, financial institution for individual investor wherein they will act as a guide for an investor at some pre-determined charges to provide active research and management of investment amount in various asset classes.  They can provide customized solutions in  investments specially created to meet needs that cannot be met from the standard financial instruments available in the market.  PMS provides investment avenues in form of exposure to traditional and non - traditional investment across different asset classes. In equity PMS it can provide investment idea into listed / unlisted equities.

Returns can be equivalent or superior to direct equity investment depending on asset allocation to equity. There maybe lock-in period, PMS can be advise / research and recommendation based  and flexible or rigid with authority lying with fund manager to take decision on clients behalf. Minimum investment criteria may be applicable. Fee can be performance based with some minimum asset management charges. This is suitable for investor with high risk appetite and high net worth individuals.

Index - Exchange Traded Funds (ETF)

Index Exchange Traded Funds are essentially Index Funds that are listed and traded on capital markets (exchanges) like equities. An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a Mutual Fund that you can buy and sell in real-time at a price that changes throughout the day.

ETF are kind of passively managed fund as it doesn't really need to have a  dedicated fund manager , or financial analysts as its job is to replicate investment as per weight-age of underlying security. / index Liquidity is provided by listing on the capital markets. Rtturns provided are quite high and can be in range of 12-18% CAGR over 10+years period and comparatively much safer than Direct Equity Investment, more cost effective than actively managed funds. In my future post I will try and explain what does Index means and provide historical analysis of kind returns provided by index over past 30 years of its existence in India.

Nifty BEES by Benmark mutual fund is an example of index ETF. There are some similar ETF from UTI, Kotak etc. In near future we may see launch of Index funds with underlying securities of Hong Kong Stock Exchange (Hang Seng), MSCI Index etc.

Equity Linked Saving Schemes (ELSS)

ELSS is nothing but Equity Mutual Funds having tax benefit at time of investment but with lock-in period of 3 years. To start investment in equity by a new investor like Mutual fund . ELSS should be first choice in case investor hasn't taken complete income tax benefit under section 80c. See my earlier post on tax implications for more details. Returns provided and cost will be more or less similar to actively managed fund with benefit in terms of tax at maximum slab applicable at time of investment (max 33%).

Thus giving immediate returns / savings at the time of investment and returns at 10 to 15 % CAGR returns over period 10+ years. ELSS can be bought through fund houses directly or through financial advisor / mutual fund agents at cost of nominal advisory fees.

Equity Oriented Mutual Funds

A new investor into equities can and should start by investing in Equity Markets (Capital Markets) through Mutual Fund schemes. This is simplest form of investment into equity.

The advantage here is given fund has dedicated fund manager and skilled financial analyst to do research and identify good growth oriented companies with good fundamentals. Thus taking out the risk of lack of knowledge on financial parameters. Hence they become comparatively less riskier instruments than direct equity investments. Besides by buying a single fund it will provide exposure to various companies at a time on pro-rata basis against fund size thus providing diversification and cutting risk of having exposure to a single company. The returns provided may be bit lesser than direct equity investment as operational charges like asset management charges, admin charges etc recovered from the returns earned.

There are various flavor available in Equity Mutual Funds like sectoral funds, diversified funds, balanced funds, hybrid fund, index funds etc. In future post I will try to cover some of these flavors and their overall objectives etc.

Mutual Funds are also known as actively managed funds run under supervision of fund managers. Mutual funds can be bought or sold through fund houses / asset management companies directly or through agents. Returns provide will be in range of 10 - 15% CAGR over 10+ years, less riskier than direct equity investment but cost inefficient when compared to direct equity / passively managed funds.

Direct Equity Investments

Taking direct exposure to equities means buying equity of companies directly from equity market. As mentioned earlier investment in equities is riskier. Besides this form of investment needs knowledge of various valuation parameters, understanding of company fundamentals, ability to read and understand company balance sheets, P&L accounts, important ratios etc. Thus investment through direct equity tends to be more time consuming, riskier in terms of lack of adequate knowledge etc. 

Having said that with risk also comes rewards. Direct Equity nvestment is high risk - high reward instrument. Direct equity investments provides superior returns than all other forms of  iquity investment but are much riskier and time consuming. Direct equity exposure should be taken by those individuals who are experienced investors, having adequate understanding of underlying fundamentals.  Needless to say the investor needs to have high risk appetite and long term investment horizon.

In my future post I will provide what some of the important ratios a shareholders should be aware of how it is calculated, its importance in determining valuations etc.

Investment in Equities

Why invest in Equities?

When compared to all other asset class, investing in equity is riskier. However as a well known saying goes "higher the risk, higher are the returns". Investing in equities world over has been far more rewarding than one can imagine. Across the world and in India equity investments have outperformed almost every other asset class in the long run.

What investing in Equities means:

As an equity investor of  a company is becoming a shareholder of the company i.e. as an equity investor you are kind of part owner of the company. Thus as a shareholder you can partake in the growth opportunities of your company and reap the benefits in long run. Good companies with good management offers superior returns by tapping growth opportunities and overcoming any hindrances and making company grow many times over in the long term . Being a shareholder in such companies gets your investment in equity provide as many times returns. For equity investment in basket of good companies provide around 15-18% CAGR growth for holding over 10+ years, besides providing good returns annually/regularly in form of profit distribution.

How to select right companies to invest in?

Identifying right company involves bit  of efforts on part of investor in form of its valuation parameters. Valuation parameters includes understanding past track record of the company in term of growth in sales, profitability, return on equity etc. This parameter should indicate if company has been growing consistently and profitably and providing superior returns on such value parameter (ideally 20+ %). Having identified and invested in such companies let the power of compounding work for you. Ideal investment time frame should be 10+ years or at least five years. As famous adage goes Time is money, thus there's always a waiting period before the returns start getting reflected on your equity holding. In short term 6 month to 1 year returns may look lumpy either on positive side or on negative side. Since in short term equity markets are largely driven by factors like liquidity, sentiments etc. However in longer run fundamental do catch and adequate return starts getting reflected.

Some of the instruments available to take exposure to equity

• Direct Equity Investment
• Equity Mutual Funds
• Equity Linked Saving Schemes
  
• Exchange Traded Fund
• Portfolio Management Services

There are lots of myth about investment in equities, I will spend some time later in detailing those myths and fact on equities in my future blogs.

Asset Allocation and Risk Profile

Asset allocation and Risk profile forms most important part of any financial plan. Like we have discussed earlier that we need to first determine our goal and than break it up into logical smaller financial goals by determining the needs based on time scale to achieve them. Next segregated /group our short term (3-5 years), medium term (5-10 years) and long term (10+ years)  goals into three different buckets.

Based on time horizon we would first allocate investments in different asset classes after allocating funds for exigency.

While making an asset allocation one's risk profile needs to be taken into considerations. If you are a person with low risk appetite then major allocation should ideally be more towards debt/liquid instruments and higher the risk appetite higher can be allocation to riskier assets/instruments like equities etc. There is no such benchmark as what percentages to should be allocated to each of the instruments as its depended on risk appetite. However thumb rule to do asset allocation is 100 minus age. So far a person of age 25, 75% exposure can be taken into riskier intruments like equities, equity mutual funds etc. and for say a senior citizen risk appetite might be very low thus investments should be in more safer assets.

The simple logic behind the above rule is allocation based on life cycle. Younger a person is age being on his side more funds can be allocated to riskier assets as over long term tas hey tend to exploit power of compouding to give higher returns. But as age goes up risk appetite starts to reduce and thus asset allocation needs to keep pace with age. Hence its important to revisit financial plan at least once a year to see if there is any deviation in goals, tweak asset allocation on need basis. For example if you are approaching towards a particular milestone / financial goals in next 2 -3 years there's need to shift appropiate amounts towards debt/liquid instrument to de-risk any volatility in returns / value.

In my upcoming articles 'll write about different asset classes.

Wealth Creating Assets and Goals

Till now we have seen how to list down goals, assets, liability cash flows to create a structure for financial plan followed by understanding concepts like 'Power of compounding', 'Rule of 72', understanding different wealth creating assets and different instruments for investment and tax implication.

While creating financial plan we discussed about breaking up our goals into short term, medium term and long term goals. Now we will look at how to align our goals and selecting various wealth creating assets. First and most important aspect of any financial plan is to put aside a contingency fund required to finance any immediate / unforeseen expenditure. Ideally we should have liquid cash equivalent to our 6 month expenses / earnings. This money can be kept in bank savings account / liquid funds to provide for any immediate need for funds. Similarly next is to align our other goals with investment in to other wealth creating instruments. A sample table with respect to short to long term goals and ideal investment instrument is listed below for your ready reference.

Click here to open table as a web page

Wealth Creating Assets

Well in my earlier post I have written about investing in wealth creating or growing assets. So obvious question is what are various avenues of wealth creating instruments.

Wealth creation assets can be broadly classified into asset classes as mentioned below:

• Equity
• Debt
• Intangible assets like Insurance e.g. term cover, medical etc.
• Real Estate
• Gold
• Others e.g. art, mints etc.
  

Appended below if brief outline on each of the above classes going forward I will go into details of each asset classes some of its flavors, returns expected from them, risk-reward ratios, pros and cons etc.

Equities:

When compared to all other asset class, investing in equity is riskier. However as a well known saying goes "higher the risk, higher are the returns".  Investing in equities world over has been far more rewarding than one can imagine. Across the world and in India equity investments have outperformed almost every other asset class in the long run.

Debt:

Debt instruments in India typically include company bond, fixed deposits, debt mutual funds, government securities, small saving schemes like  like National Saving Certificates, Kisan Vikas Patra etc. Debt are comparatively far less riskier than equities and suitable for person with low risk tolerance instruments, good and much safer for shorty term investment, fixed returns (usually not always).

Insurance:

Insurance is typically to cover for risks, liabilities created during earning years, to take care of  old age or retirement, pensions etc. Usually lay man gets confused between Investment and Insurance. Generally its a good practice to keep both of them separate. Insurance should be looked upon as an instrument to cover for liabilities or as a risk mitigation plan for unforeseen circumstances. They are lots of different instrument within Insurance products like ULIP, Pure risk cover, health insurance, group insurance, pensions etc.

Real Estate:

Real estate is an attractive avenue to park fund for long term. Though it has inherent risks like huge investment, still an unorganized sector for small investor or largely under developed market in India though Financial Institutions are coming out with REIT, Real Estate Mutual fund etc. but ticket size of investment are quite huge, inefficient tax benefits on returns, low liquidity etc. Can act as a source of regular income, hedge against inflation, portfolio diversification etc.

Gold:

One of the most liked commodity for investment in India. Age old tradition as safe bet against calamity, inflation war etc. Gold is universally accepted commodity, its kind of international currency .Gold provides good and must diversification required in ones portfolio. One of safest avenues of investment with good returns over long period of time.

Others:

Other investment avenues include investment in Art, Mints, Stamps, Antiques, Private Equity etc.

Compounded Annual Growth Rate (CAGR) Calculator

Click here to view /download Compounded Annual Growth Rate (CAGR) calculator.

This is an important utility for calculating compounded annual growth rate (CAGR) given initial investment, period (in yrs) and targeted return OR calculating returns based on initial amount, period and CAGR OR to determine number of years needed to reach certain amount at a given initial investment and CAGR.

In case you face any issues to download or save the spreadsheet mail me at vivek.ruparel@gmail.com

See sample below:

Instruments for investments and tax implications

As discussed in my earlier post on financial independence I have listed down few instruments for savings / creation of growing assets its indicative returns and tax implications. Hope this helps. If you have any queries or doubts please post it in comments section I will try and resolve those queries.

Cheers!

Click here to open above table as web page

Gold Exchange Traded Fund

Gold is one of the most preferred way of investing for Indian more so because it has got huge emotional quotient (EQ) in our hearts. Gold gives a feeling of financial security. Besides Gold is the best and age old hedge against inflation. most liquid form of investment, universal acceptance. We Indians do tend to weigh our financial status with how gold we own.

But with that EQ also comes question of storing gold securely, purity checks, implication of wealth tax, income tax implication by way capital gains etc. Now with introduction of Exchange traded fund for golds since past couple of year this issue can be handled more efficiently. Yes by having gold in DEMAT (Dematerialize) form through Gold Exchange traded fund

Gold exchange traded fund offers investors an innovative, cost-efficient and secure way to access the gold market. Gold ETF is intended to offer investors a means of participating in the gold bullion market without taking physical delivery of gold,and to buy and sell on National Stock Exchange (NSE).

Gold ETF usually provide returns that closely correspond to the returns provided by domestic price of gold through physical gold

• Low cost way of investing in gold
• Excellent Diversification for Portfolio
• Quick and Convenient Dealing for investors
• No Storage & Security Issues
• Transparent Pricing
• Taxation of a Mutual Fund
• Listed and traded on NSE just like a stock-Easy