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.

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

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

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