Sunday, December 30, 2012
Monday, December 24, 2012
Merry Christmas and a Happy New Year!!!!!
Dear All,
Merry Christmas and a happy new year to all my friends, clients, students,teachers, family, critics and everyone who has supported me in life. Its been a brilliant journey so far in wealth management for all of you as well as teaching the students about the intricate details of money management and achieving financial freedom in life.
Its a commitment like always to be able to bring about a change in people's financial lives. I shall strive to do my best and make sure that I help you in your goal of wealth creation which has been my motto throughout. I have always maintained my stance that to do well and be happy in life, you need to focus on 2 things:- 1)Building Relationships and 2) Creating Wealth. If one is able to achieve these 2 goals in life, there is no stopping him or her from leading a happy and blissful life.
Have a great new year and let us commit to ourselves to take the country forward. If each one of us can display passion and sincerity in the way we work and conduct our lives, we can bring about the change that we want in this country.
All the best!!!! Cheers!!!!!
Your Friend,
Vivek
Merry Christmas and a happy new year to all my friends, clients, students,teachers, family, critics and everyone who has supported me in life. Its been a brilliant journey so far in wealth management for all of you as well as teaching the students about the intricate details of money management and achieving financial freedom in life.
Its a commitment like always to be able to bring about a change in people's financial lives. I shall strive to do my best and make sure that I help you in your goal of wealth creation which has been my motto throughout. I have always maintained my stance that to do well and be happy in life, you need to focus on 2 things:- 1)Building Relationships and 2) Creating Wealth. If one is able to achieve these 2 goals in life, there is no stopping him or her from leading a happy and blissful life.
Have a great new year and let us commit to ourselves to take the country forward. If each one of us can display passion and sincerity in the way we work and conduct our lives, we can bring about the change that we want in this country.
All the best!!!! Cheers!!!!!
Your Friend,
Vivek
Sunday, December 2, 2012
How many stocks should you have in your portfolio?
Hi Friends,
A lot of people tell me that they have a lot of stocks in their portfolio. When I ask them how much they had initially invested, they are clueless and say that they have been investing for a long time. The demat account is huge and their homes are flooded with random annual reports of companies whose very look and tone speak volumes about the unprofessionalism and their bleak future.
These are the very people who complain about stock markets not giving adequate returns. My reply to them is simple and curt: If you are going to buy crap, you should expect crap in return.
Warren Buffett had once famously quoted, "When people overdiversify a lot, they are not diversifying their risk but they are diversifying their ignorance."
So, how many companies should you have in your portfolio?
The answer is very simple: "Have as many companies in your portfolio which you can manage for efficient returns and which are established names. To put it simply, one should not have more than 15-20 companies in his/her portfolio." Choose the sector which you feel is going to be the breakout sector in the near future, analyse the top 3 companies in that sector and buy only one company from that sector.... I repeat "Buy only one company from the sector which you feel is a great sector and a great company to be in." If you are having Tata Steel, Jindal Steel and JSW Steel in your portfolio and you feel that you are a proud shareholder of 3 great companies, its time to reflect on the blunder that you have made. If there is a slowdown in the metals sector, all the 3 companies will take a knock.
Hence it is very important to choose one company from a sector which you think can weather the storms of adversity or financial meltdowns and stick to it through thick and thin, if you are planning to invest long term. Always remember that the stock market is not a casino. If you are expecting a return of 50-100% return in a year in stocks, they would shut down the casinos.
A little bit of this and a little bit of that will do nothing but will confuse you totally. So if you have a great company like L&T in your portfolio along with a losing stock, the gains that you make from a blue chip would be offset by the losses in a company with bad fundamentals.
Hope this article helps all of you who are scared of analysing your portfolios due to the junk that has been bought. Have a concentrated portfolio just like the Warren Buffets or the Rakesh Jhunjhunwalas. All the rich investors worldwide have a concentrated portfolio.
Your Friend,
Vivek
A lot of people tell me that they have a lot of stocks in their portfolio. When I ask them how much they had initially invested, they are clueless and say that they have been investing for a long time. The demat account is huge and their homes are flooded with random annual reports of companies whose very look and tone speak volumes about the unprofessionalism and their bleak future.
These are the very people who complain about stock markets not giving adequate returns. My reply to them is simple and curt: If you are going to buy crap, you should expect crap in return.
Warren Buffett had once famously quoted, "When people overdiversify a lot, they are not diversifying their risk but they are diversifying their ignorance."
So, how many companies should you have in your portfolio?
The answer is very simple: "Have as many companies in your portfolio which you can manage for efficient returns and which are established names. To put it simply, one should not have more than 15-20 companies in his/her portfolio." Choose the sector which you feel is going to be the breakout sector in the near future, analyse the top 3 companies in that sector and buy only one company from that sector.... I repeat "Buy only one company from the sector which you feel is a great sector and a great company to be in." If you are having Tata Steel, Jindal Steel and JSW Steel in your portfolio and you feel that you are a proud shareholder of 3 great companies, its time to reflect on the blunder that you have made. If there is a slowdown in the metals sector, all the 3 companies will take a knock.
Hence it is very important to choose one company from a sector which you think can weather the storms of adversity or financial meltdowns and stick to it through thick and thin, if you are planning to invest long term. Always remember that the stock market is not a casino. If you are expecting a return of 50-100% return in a year in stocks, they would shut down the casinos.
A little bit of this and a little bit of that will do nothing but will confuse you totally. So if you have a great company like L&T in your portfolio along with a losing stock, the gains that you make from a blue chip would be offset by the losses in a company with bad fundamentals.
Hope this article helps all of you who are scared of analysing your portfolios due to the junk that has been bought. Have a concentrated portfolio just like the Warren Buffets or the Rakesh Jhunjhunwalas. All the rich investors worldwide have a concentrated portfolio.
Your Friend,
Vivek
Thursday, November 15, 2012
Sunday, November 4, 2012
Bima Bachat- Pay once, enjoy for 15 years
Hi,
For all those people who feel that paying premiums every year proves to be a burden on the cash flows, Bima Bachat is the answer to your problem. Invest once, get regular money back and be covered for a duration of upto 15 years.
Some of the features of Bima Bachat policy are as follows:-
a) Money back equal to 15% of the Sum Assured every 3 years.
b) Maturity benefit equal to full premium paid (excluding extra, if any) with loyalty addition
c) Full Insurance cover till maturity.
d) High liquidity (immediate loan), no medical test, high risk cover, highest return
Eligibility:
Age at entry- 15 years to 66 years
Maximum Maturity Age- 75 years
Policy term- 9 years, 12 years and 15 years
Sum Assured- Minimum 20000
Maximum- No limit
For all those people who feel that paying premiums every year proves to be a burden on the cash flows, Bima Bachat is the answer to your problem. Invest once, get regular money back and be covered for a duration of upto 15 years.
Some of the features of Bima Bachat policy are as follows:-
a) Money back equal to 15% of the Sum Assured every 3 years.
b) Maturity benefit equal to full premium paid (excluding extra, if any) with loyalty addition
c) Full Insurance cover till maturity.
d) High liquidity (immediate loan), no medical test, high risk cover, highest return
Eligibility:
Age at entry- 15 years to 66 years
Maximum Maturity Age- 75 years
Policy term- 9 years, 12 years and 15 years
Sum Assured- Minimum 20000
Maximum- No limit
Saturday, October 20, 2012
Reforms in the pipeline which will keep India's growth story intact
The last month saw a good rally in the bourses on the back of some important announcements:-
- Diesel price hiked by Rs 5.
- Capping of subsidised LPG cooking gas cylinders to six a year per household.
- FDI in multi brand retail of upto 51%, 49% in aviation and 75% in some broadcasting services.
- With-holding tax liability reduced to 5% from 20%
- Approval of a debt relief package for the state power distribution companies.
- Approval of sale of minority stakes in 4 public sector undertakings raising upto Rs 15000 crores.
Recently the Union Cabinet approved FDI of upto 49% in pension and insurance. This would result in companies raising capital without creating additional debt and ensure higher returns along with the safety of principal and the facility of withdrawal as per convenience. This is already evident in the new plans introduced by LIC namely Jeevan Saral, New Bima Gold and Jeevan Ankur.
The Banking Law Amendment Bill was introduced in 2011. This will help in raising capital especially for PSU banks. This will remove the ceiling of Rs 3000 crore on the amount of authorised capital that the nationalised banks must hold. This would also allow the nationalised banks to come out with bonus issue. The RBI would also have the power to remove directors if they are proved to be working against the interests of depositors.
The Companies Bill will provide for a tighter control by shareholders over the management decisions. The National Company Law Tribunal will be entitled to direct an investigation into the companies by the Government. Merchant bankers, lawyers etc will be pulled up for mis-statements in the prospectus.
The DTC (Direct Tax Code) Act will widen the income tax slabs and increase the disposable incomes. It will bring down corporate tax rate to 25% from 34%.The GST (Goods and Services Tax) Act will treat the whole of India as one territory. It will divide the tax burden equitably between manufacturing and services.
There are a lot of positives amidst all the gloom that has been projected by the media. India is one of the 4 countries which had a GDP growth rate of more than 5% last year inspite of Coal-G, 2G, CWG etc. The economy is on the path of growth and investors in the markets should not panic on the basis of "Breaking News" and sensationalism.
Wednesday, October 3, 2012
2nd batch of Financial Freedom!!!!
Dear Friends,
I am proud to announce that the 1st batch went off pretty well at iLead. I shall be commencing the 2nd batch on Financial Freedom in the month of November (the date shall be finalised by 27th Oct)as promised earlier. All the people who are not aware as to what the course is all about can go through the poster of the 1st batch that I have pasted below.
All the interested students can call me @9831476200 or mail me at vivekshah83ster@gmail.com for further details.
The fees would be Rs 4500 only as was with the first batch.
Your Friend,
Vivek
I am proud to announce that the 1st batch went off pretty well at iLead. I shall be commencing the 2nd batch on Financial Freedom in the month of November (the date shall be finalised by 27th Oct)as promised earlier. All the people who are not aware as to what the course is all about can go through the poster of the 1st batch that I have pasted below.
All the interested students can call me @9831476200 or mail me at vivekshah83ster@gmail.com for further details.
The fees would be Rs 4500 only as was with the first batch.
Your Friend,
Vivek
Tuesday, October 2, 2012
Tuesday, September 11, 2012
Money Back Policy- Use it to your advantage
Hi,
A lot of people have been complaining over the ages about the fact that money back policy is nothing but a policy wherein money is repaid at regular intervals and the returns are meagre.
One thing that needs to be understood is that insurance is supposed to be done for life cover 1st and then one should compute the returns if he or she chooses an Endowment or a Money Back Policy. Most of the people use the money back policy to pay future premiums which is the biggest mistake that one can make.
Money Back Policy is best suited for businessmen and professionals who will have a steady income in the future. The money that the insurance company pays you on account of survival benefit should be used to invest in an asset class which gives you a higher rate of return (eg Equity or Real Estate). If one is using the money back policy to pay the future premiums then his Internal Rate of return would be close to 5 or 6% which is not very high. But if the survival benefit is invested in an asset class which gives good returns, this is a great policy.
The following are some of the other advantages of opting for a money-back policy:-
1) Full sum assured is payable at death of the life assured within the term, without any deduction of earlier survival benefits.
2) Bonus is computed on the sum assured and for the entire term of the policy.
3) The only policy which takes care of your youth as well as middle and old age.
Hope this article is helpful....
Your Friend,
Vivek
A lot of people have been complaining over the ages about the fact that money back policy is nothing but a policy wherein money is repaid at regular intervals and the returns are meagre.
One thing that needs to be understood is that insurance is supposed to be done for life cover 1st and then one should compute the returns if he or she chooses an Endowment or a Money Back Policy. Most of the people use the money back policy to pay future premiums which is the biggest mistake that one can make.
Money Back Policy is best suited for businessmen and professionals who will have a steady income in the future. The money that the insurance company pays you on account of survival benefit should be used to invest in an asset class which gives you a higher rate of return (eg Equity or Real Estate). If one is using the money back policy to pay the future premiums then his Internal Rate of return would be close to 5 or 6% which is not very high. But if the survival benefit is invested in an asset class which gives good returns, this is a great policy.
The following are some of the other advantages of opting for a money-back policy:-
1) Full sum assured is payable at death of the life assured within the term, without any deduction of earlier survival benefits.
2) Bonus is computed on the sum assured and for the entire term of the policy.
3) The only policy which takes care of your youth as well as middle and old age.
Hope this article is helpful....
Your Friend,
Vivek
Saturday, September 1, 2012
Targets and Stop Losses- Sure shot way of losing money
Breaking News:
Buy Co. X @ 105, Target 110, Stop Loss 100.
As a financial planner, it saddens me when people ask me the target price of a particular stock when they buy it. The biggest irony is when people ask me to suggest any stock for intraday trades.
Let us understand 2 things:-
Whenever an "analyst" suggests that the target is Y (say Rs 110 in the above case), he is doing so to create a demand for the stock which he can offload. Assume that I were that analyst and I have bought 1000000 shares of lets say Dabur @100. Now it is apparent that I cannot sell 1000000 shares at Rs 105 if I did not initiate that call. This is because when I want to sell 1000000 shares there have to be that many buyers as well. So in such a scenario if I am an analyst who appears regularly on TV, I could easily give a buy call on Dabur. This would make people jump on to the stock in the hope of making a quick buck. This would make it possible for me to sell my shares because of a hike in demand. I make Rs 5 per share on that transaction. I laugh all the way to the bank.
Now if Dabur touches Rs 110, the news channel would flash it as Target Achieved. And if it were to drop to 100 then they would flash Stop Loss Triggered. In either case the so called analyst has made his money. The people who have bought at 105 have taken the risk. If it touches Rs 110 , then the analyst becomes popular. If it touches Rs 100, people would abuse the analyst for maybe an hour or so and then forget about it because public memory is short lived. Even the analyst would not mind it because he has made his money and his next "tip" has a 50% probability of clicking.
So, what I would suggest is whenever you are buying any stock, please buy it for holding it for a short term. In case it shoots up on the same day, then you can book your intraday profit. If it does not then you are in no hurry to sell it because you have bought it out of your own money and not the broker's funds.
I hope this post helps you to avoid losing money. Looking forward to your feedback. In case of any queries please send them to vivekshah83ster@gmail.com. The whole objective of all the posts in the blog is to help each one of us to become money smart and not make ourselves financially vulnerable.
Have a great weekend!!!!
Your friend,
Vivek
Buy Co. X @ 105, Target 110, Stop Loss 100.
As a financial planner, it saddens me when people ask me the target price of a particular stock when they buy it. The biggest irony is when people ask me to suggest any stock for intraday trades.
Let us understand 2 things:-
Whenever an "analyst" suggests that the target is Y (say Rs 110 in the above case), he is doing so to create a demand for the stock which he can offload. Assume that I were that analyst and I have bought 1000000 shares of lets say Dabur @100. Now it is apparent that I cannot sell 1000000 shares at Rs 105 if I did not initiate that call. This is because when I want to sell 1000000 shares there have to be that many buyers as well. So in such a scenario if I am an analyst who appears regularly on TV, I could easily give a buy call on Dabur. This would make people jump on to the stock in the hope of making a quick buck. This would make it possible for me to sell my shares because of a hike in demand. I make Rs 5 per share on that transaction. I laugh all the way to the bank.
Now if Dabur touches Rs 110, the news channel would flash it as Target Achieved. And if it were to drop to 100 then they would flash Stop Loss Triggered. In either case the so called analyst has made his money. The people who have bought at 105 have taken the risk. If it touches Rs 110 , then the analyst becomes popular. If it touches Rs 100, people would abuse the analyst for maybe an hour or so and then forget about it because public memory is short lived. Even the analyst would not mind it because he has made his money and his next "tip" has a 50% probability of clicking.
So, what I would suggest is whenever you are buying any stock, please buy it for holding it for a short term. In case it shoots up on the same day, then you can book your intraday profit. If it does not then you are in no hurry to sell it because you have bought it out of your own money and not the broker's funds.
I hope this post helps you to avoid losing money. Looking forward to your feedback. In case of any queries please send them to vivekshah83ster@gmail.com. The whole objective of all the posts in the blog is to help each one of us to become money smart and not make ourselves financially vulnerable.
Have a great weekend!!!!
Your friend,
Vivek
Friday, August 24, 2012
2nd batch of Financial Freedom Classes @iLead
Dear Friends,
I feel honoured to be able to contribute to your life with my limited means. Teaching was a dream since my school days and the dream was fulfilled @iLead. Throughout school and college life, I always dreamt of an education system which was not meant for marks, coming 1st in class or learning by rote. It simply instilled fear within us. Getting anything below 90% in board examinations was considered to be a sign of mediocrity. The education system did not encourage creativity. All of us had big dreams during childhood but the competition took away the zeal to learn.
I always dreamt of an education system where learning was fun, practical and did not put any pressure on the student. Hence I decided to conduct classes on Financial Freedom where the objective is to learn stuff related to personal finance which is very important to have a great life ahead. Financial freedom ensures creativity and progress in your life without deadlines, targets and the other constraints that come along with rat race and unhealthy competition.
Due to the terrific response to the 2 orientations and the 2 sessions that I have conducted for my 1st batch so far, I am proud to announce that the 2nd batch will commence shortly. For those of you who are interested, you can kindly enrol by calling @9830015201/02.
For people who would want to know more about the course before deciding to enrol, kindly contact me @9831476200. You can also send me an email. My email address is vivekshah83ster@gmail.com.
Your friend,
Vivek
I feel honoured to be able to contribute to your life with my limited means. Teaching was a dream since my school days and the dream was fulfilled @iLead. Throughout school and college life, I always dreamt of an education system which was not meant for marks, coming 1st in class or learning by rote. It simply instilled fear within us. Getting anything below 90% in board examinations was considered to be a sign of mediocrity. The education system did not encourage creativity. All of us had big dreams during childhood but the competition took away the zeal to learn.
I always dreamt of an education system where learning was fun, practical and did not put any pressure on the student. Hence I decided to conduct classes on Financial Freedom where the objective is to learn stuff related to personal finance which is very important to have a great life ahead. Financial freedom ensures creativity and progress in your life without deadlines, targets and the other constraints that come along with rat race and unhealthy competition.
Due to the terrific response to the 2 orientations and the 2 sessions that I have conducted for my 1st batch so far, I am proud to announce that the 2nd batch will commence shortly. For those of you who are interested, you can kindly enrol by calling @9830015201/02.
For people who would want to know more about the course before deciding to enrol, kindly contact me @9831476200. You can also send me an email. My email address is vivekshah83ster@gmail.com.
Your friend,
Vivek
Monday, August 6, 2012
Trading Portfolio vs Investment Portfolio
A lot of times people tell me that all their shares are kept with the broker with whom they have opened a trading account. These people are long term investors cum traders.
It is for this reason I decided to share my insights regarding this. First of all, there is a differnce between trading and investment portfolio. Trading portfolio is the list of stocks that you are holding for the purpose of trading. You take advantage of the movement in the market to make short term profits as well as intra day gains. Investment portfolio is for your long term needs. A person does not generally trade in this. This investment is made for buying a car, a house, for marriage, higher education etc. Investment portfolio comprises of stocks which one buys and forgets for atleast 5 years if not more.
Hence it is very important that the shares which one purchases for long term should be kept in a separate demat account away from the broker with whom you have opened a trading account. Only trading portfolio should be kept with him/her. The investment portfolio should be kept in a separate demat account which is not linked with the trading account . In simple words, your broker should not have access to your long term investments. Trading portfolio should ideally be kept with a broker because one continuously trades in them. If these shares are kept in a separate demat account, a lot of charges would be incurred every time a person sells some shares. So if a person sells shares of 5 different companies, he/she would have to incur an additional transaction charge per company for 5 companies.
I hope this post is helpful.
Your friend,
Vivek
It is for this reason I decided to share my insights regarding this. First of all, there is a differnce between trading and investment portfolio. Trading portfolio is the list of stocks that you are holding for the purpose of trading. You take advantage of the movement in the market to make short term profits as well as intra day gains. Investment portfolio is for your long term needs. A person does not generally trade in this. This investment is made for buying a car, a house, for marriage, higher education etc. Investment portfolio comprises of stocks which one buys and forgets for atleast 5 years if not more.
Hence it is very important that the shares which one purchases for long term should be kept in a separate demat account away from the broker with whom you have opened a trading account. Only trading portfolio should be kept with him/her. The investment portfolio should be kept in a separate demat account which is not linked with the trading account . In simple words, your broker should not have access to your long term investments. Trading portfolio should ideally be kept with a broker because one continuously trades in them. If these shares are kept in a separate demat account, a lot of charges would be incurred every time a person sells some shares. So if a person sells shares of 5 different companies, he/she would have to incur an additional transaction charge per company for 5 companies.
I hope this post is helpful.
Your friend,
Vivek
Sunday, July 29, 2012
Become a Champion in Finance irrespective of your profession!!!!
Hi,
A lot of you missed the orientation on the 24th of July and hence are not aware of what the classes will be on.
My focus in the classes would be to impart in the most simple manner how easy it is to be in charge of your finances and not be burdened by debt which a lot of people are under thanks to the many financial institutions. It would focus on the different asset classes and how by keeping things simple you can work wonders for yourself. This is probably the only financial course which will not focus on too much Mathematics and people who have the phobia of Maths need not worry. The toughest calculation would be something like 70 divided by 210 multiplied by 100. The course has been designed for all streams (commerce, science, arts, engineering, mass communication etc ). Utmost care has been taken to make it very easy to grasp and remember and it is for any person who knows how to read and write.
My aim is to ensure that all of us acquire assets in life. Most people in life acquire a lot of liabilities and think it is an asset. Robert Kiyosaki states that an asset is something which puts money into your pocket and a liability is something which takes out money from your pocket.
A lot of financial products are available in the market and the lay man is bound to get confused. You can avail of a credit card just by clicking your mouse. Home loans, car loans sound very cool. We purchase a car and a house because it enhances the quality of our life. But does it actually improve the quality of our life if the EMI monster knocks at the door every month?
There are only 2 asset classes that create wealth in the actual sense of the word. a) Stocks b) Real Estate. The other asset classes are for safety of capital (Fixed Deposits, Recurring Deposits etc) and risk cover (Insurance).
Consider this.... Why does the Government of any country offer tax breaks on home loans or repayment of interest on home loan? This is because the interest on such loans is an income to the financial institution which has given the loan. Banks and financial institutions spend a lot of money on political campaigns. In return the Government It is for this reason that you hardly get tax benefits on savings account, fixed and recurring deposits since that is an expense for the bank.
Most people do an MBA thinking only about placements. I always thought that MBA means Master of Business Administration. Why keep on slogging for 25-30 years of your life for a company and worry about the next recession that is about to happen or the next layoff that would happen? We are living in the Information Age where it is possible to become a multi millionaire by working smartly rather than working very hard.
Think about this.... People say that you get life just once.Live it king size. How many people who are working under a boss enjoy life 24*7 and have great financial freedom. As per one of the statistics in a magazine, 90% of the employees just enjoy one day of the week "Saturday". It means that 6/7th of your life is spent cribbing. I always thought that school was enough for that kind of a mundane lifestyle and fear psychosis. Business teaches you to be fearless in life and enjoy every second of your life.
Please refer to the poster that I have attached below to get a brief idea of what will be covered in the classes. I shall try my level best to incorporate all the concepts that can help you to achieve the dreams that we had nurtured during childhood and which most of us have forgotten because we have got involved in the rat race.
My aim is not to focus on theory. Schools and universities have taken care of that. If you can sacrifice one economy class ticket (assuming it to be Rs 4500) for the course, I can ensure a lot of business class flights for you in the future.
Your friend,
Vivek
A lot of you missed the orientation on the 24th of July and hence are not aware of what the classes will be on.
My focus in the classes would be to impart in the most simple manner how easy it is to be in charge of your finances and not be burdened by debt which a lot of people are under thanks to the many financial institutions. It would focus on the different asset classes and how by keeping things simple you can work wonders for yourself. This is probably the only financial course which will not focus on too much Mathematics and people who have the phobia of Maths need not worry. The toughest calculation would be something like 70 divided by 210 multiplied by 100. The course has been designed for all streams (commerce, science, arts, engineering, mass communication etc ). Utmost care has been taken to make it very easy to grasp and remember and it is for any person who knows how to read and write.
My aim is to ensure that all of us acquire assets in life. Most people in life acquire a lot of liabilities and think it is an asset. Robert Kiyosaki states that an asset is something which puts money into your pocket and a liability is something which takes out money from your pocket.
A lot of financial products are available in the market and the lay man is bound to get confused. You can avail of a credit card just by clicking your mouse. Home loans, car loans sound very cool. We purchase a car and a house because it enhances the quality of our life. But does it actually improve the quality of our life if the EMI monster knocks at the door every month?
There are only 2 asset classes that create wealth in the actual sense of the word. a) Stocks b) Real Estate. The other asset classes are for safety of capital (Fixed Deposits, Recurring Deposits etc) and risk cover (Insurance).
Consider this.... Why does the Government of any country offer tax breaks on home loans or repayment of interest on home loan? This is because the interest on such loans is an income to the financial institution which has given the loan. Banks and financial institutions spend a lot of money on political campaigns. In return the Government It is for this reason that you hardly get tax benefits on savings account, fixed and recurring deposits since that is an expense for the bank.
Most people do an MBA thinking only about placements. I always thought that MBA means Master of Business Administration. Why keep on slogging for 25-30 years of your life for a company and worry about the next recession that is about to happen or the next layoff that would happen? We are living in the Information Age where it is possible to become a multi millionaire by working smartly rather than working very hard.
Think about this.... People say that you get life just once.Live it king size. How many people who are working under a boss enjoy life 24*7 and have great financial freedom. As per one of the statistics in a magazine, 90% of the employees just enjoy one day of the week "Saturday". It means that 6/7th of your life is spent cribbing. I always thought that school was enough for that kind of a mundane lifestyle and fear psychosis. Business teaches you to be fearless in life and enjoy every second of your life.
Please refer to the poster that I have attached below to get a brief idea of what will be covered in the classes. I shall try my level best to incorporate all the concepts that can help you to achieve the dreams that we had nurtured during childhood and which most of us have forgotten because we have got involved in the rat race.
My aim is not to focus on theory. Schools and universities have taken care of that. If you can sacrifice one economy class ticket (assuming it to be Rs 4500) for the course, I can ensure a lot of business class flights for you in the future.
Your friend,
Vivek
Saturday, July 28, 2012
Reasons why most people lose money in the stock markets
Hi friends,
The world is full of people who will discourage you from doing what they themselves could not do in life. Stock market investing is one of these fields where a majority of the people have burnt their fingers. As a result of this they discourage people who want to take it up as a career.
Since the time I have started my career, I have been jotting down the points as to why people are so scared of the stock markets. Everyone talks about diversifying the portfolio into a mix of debt and equity. But then they forget the last word that they mentioned - "Equity"
For this reason I have made a small list as to why most people lose money in the stock markets:-
a) Greed and Panic- These 2 emotions have ruined the lives of many people. Please understand that the market is not a casino or a place where you can multiply money overnight. At worst, you should expect a return of GDP rate + Inflation rate over a long term (at least 10 years). So in case of India it would be around 15%.
b) Choosing a broker just on the basis of brokerage- A lot of people run after different brokers just because they offer the lowest brokerages. But the only criteria should be whether he is generating profits for you or not. If he cannot manage your portfolio properly and does not understand your financial goals, he is not worth his salt.
c) Herd Mentality- There is a saying " When the masses are asses there is a majority." Only wolves hunt in packs, tigers prowl on their own. It is high time to invest in the biggest gift that God has given to each of us i.e. "Brain" Most of the people do not use their creative faculties and as Boman Irani said in 3 Idiots " Unused brains fetch the highest price", that is why most people do not bother to use it.
d) Multibagger and Penny stocks - Multibaggers and penny stocks are like trying your luck in a horse race. Its better to go to Macau and try your luck. Chances are the same and even if you lose, the experience would be better.
e) Following stock reports updated in magazines and newspapers blindly- The great companies will never be multibaggers. A Sun Pharma or a Colgate would never be recommended as a multibagger because you will make money. There is a joke in stock market parlance multibagger is a company which ensures Multiple Beggars.
Looking forward to your comments and criticism. Its an open forum. If you feel something is incorrect do point out. Feedback is welcome.
Your friend,
Vivek
The world is full of people who will discourage you from doing what they themselves could not do in life. Stock market investing is one of these fields where a majority of the people have burnt their fingers. As a result of this they discourage people who want to take it up as a career.
Since the time I have started my career, I have been jotting down the points as to why people are so scared of the stock markets. Everyone talks about diversifying the portfolio into a mix of debt and equity. But then they forget the last word that they mentioned - "Equity"
For this reason I have made a small list as to why most people lose money in the stock markets:-
a) Greed and Panic- These 2 emotions have ruined the lives of many people. Please understand that the market is not a casino or a place where you can multiply money overnight. At worst, you should expect a return of GDP rate + Inflation rate over a long term (at least 10 years). So in case of India it would be around 15%.
b) Choosing a broker just on the basis of brokerage- A lot of people run after different brokers just because they offer the lowest brokerages. But the only criteria should be whether he is generating profits for you or not. If he cannot manage your portfolio properly and does not understand your financial goals, he is not worth his salt.
c) Herd Mentality- There is a saying " When the masses are asses there is a majority." Only wolves hunt in packs, tigers prowl on their own. It is high time to invest in the biggest gift that God has given to each of us i.e. "Brain" Most of the people do not use their creative faculties and as Boman Irani said in 3 Idiots " Unused brains fetch the highest price", that is why most people do not bother to use it.
d) Multibagger and Penny stocks - Multibaggers and penny stocks are like trying your luck in a horse race. Its better to go to Macau and try your luck. Chances are the same and even if you lose, the experience would be better.
e) Following stock reports updated in magazines and newspapers blindly- The great companies will never be multibaggers. A Sun Pharma or a Colgate would never be recommended as a multibagger because you will make money. There is a joke in stock market parlance multibagger is a company which ensures Multiple Beggars.
Looking forward to your comments and criticism. Its an open forum. If you feel something is incorrect do point out. Feedback is welcome.
Your friend,
Vivek
Thursday, July 26, 2012
Financial Freedom in 10 days from the 18th of August....
Hi Friends,
I am proud to announce the 1st of its kind course on Financial Freedom from the 1st of August. All those who are interested can register themselves at the above mentioned venue before 17th of August.
Kindly carry 3 documents:-
a)2 pp size photos
b) One ID proof
c) Fees to be paid either in cash or cheque. If cheque it would be in the name of "iLead Foundation."
Your friend,
Vivek
Tuesday, July 24, 2012
Classes on Personal Finance
Hi Friends,
Due to the overwhelming response, I am conducting classes on Personal Finance at iLead from 1st August 2012. The details of the course are given on:
https://www.facebook.com/?ref=tn_tnmn#!/events/417652844937768/
I can assure you that this is going to be a life changing course at a nominal fee of Rs 4500 for the course. Hope to see you there.
Your friend forever,
Vivek
Due to the overwhelming response, I am conducting classes on Personal Finance at iLead from 1st August 2012. The details of the course are given on:
https://www.facebook.com/?ref=tn_tnmn#!/events/417652844937768/
I can assure you that this is going to be a life changing course at a nominal fee of Rs 4500 for the course. Hope to see you there.
Your friend forever,
Vivek
Sunday, July 22, 2012
Financial simplicity leads to Magic!!!!
There is an oft repeated saying "Prevention is better than cure." Yet we find that whenever it comes to personal finance people have this habit of first burning their fingers and then trying to heal it after it is too late. In my daily life I hear people saying things like "This friend of mine suggested me to buy shares of XYZ company. He said he knows the management of the company. It should double in 3 months. It is a future multibagger." I often wonder had this been true, people would have stopped going to the Casinos and tried their luck at the bourses instead.
There are a lot of such stories which I get to hear everyday. It is for this reason that I have designed a set of points for each and every individual:-
1) Say bye-bye to Instant Gratification- The world will know you for the assets that you have created and not for whether you have IPad 2 or the latest version of the Blackberry phone that you have purchased. Instead that money could be used to invest in a great company as a long term investment which will provide dividends and will offer you the advantage of capital appreciation. Buy Now, Pay Later is a virus that is attacking the youth of the country like never before.
2) Realistic Expectations - The best thing about India which people often forget is that this country offers one of the best risk free returns in the world. However no one wants to settle for anything less than 30-35% year on year. 10% risk free is nothing short of an abuse. Safety of capital is as essential as capital appreciation. An imbalanced asset allocation is one of the primary causes of unhappiness among the people. Hence it is important to understand that the portfolio should be a healthy mix of debt and equity. There are only 3 objectives behind investing and all 3 objectives should be fulfilled at all times:- a) Safety of capital b) Capital Appreciation c) Life and health cover. It has to be a healthy combination of Equity, Real Estate, Fixed Deposits, Recurring Deposits, Insurance and PPF.
3) Buying products from close ones - There are a lot of people who just do not know how to say a NO. A lot of times I hear some say "Mere Bhaiya is field mein bahut din se hai. Woh galat nahi ho sakte." On further investigation, it is found that he is a 3rd cousin with whom this guy has probably just met once. Please note that "The business of business is to do business."
4) Do not buy Liabilities thinking that they are assets- The biggest reason for stress is not because the boss makes an employee work overtime, it is the dreaded four letter word DEBT. Many people have sleepless nights not because of the work pressure, but due to the credit card bills and the EMI's that are due next month (car, gizmos, gadgets, bigger house than required). What is the point of earning 1 lakh a month if the real income turns to be 20000 a month.
5) Herd Mentality- God has given us a brilliant brain but some people keep it absolutely intact and fragile. They handle it with so much care that they forget to use it. Instead they rely on rumours, get-rich-quick schemes and imaginary rags to riches stories of non-existent people (so called cousin chacha of an acquaintance). Henry Ford had once said "Thinking is the hardest work there is, which is the probable reason why so few engage in it."
These are the basic points which people should keep in mind if they want to make their financial journey happy and smooth.
Hope you find this article useful.
Your Friend,
Vivek
There are a lot of such stories which I get to hear everyday. It is for this reason that I have designed a set of points for each and every individual:-
1) Say bye-bye to Instant Gratification- The world will know you for the assets that you have created and not for whether you have IPad 2 or the latest version of the Blackberry phone that you have purchased. Instead that money could be used to invest in a great company as a long term investment which will provide dividends and will offer you the advantage of capital appreciation. Buy Now, Pay Later is a virus that is attacking the youth of the country like never before.
2) Realistic Expectations - The best thing about India which people often forget is that this country offers one of the best risk free returns in the world. However no one wants to settle for anything less than 30-35% year on year. 10% risk free is nothing short of an abuse. Safety of capital is as essential as capital appreciation. An imbalanced asset allocation is one of the primary causes of unhappiness among the people. Hence it is important to understand that the portfolio should be a healthy mix of debt and equity. There are only 3 objectives behind investing and all 3 objectives should be fulfilled at all times:- a) Safety of capital b) Capital Appreciation c) Life and health cover. It has to be a healthy combination of Equity, Real Estate, Fixed Deposits, Recurring Deposits, Insurance and PPF.
3) Buying products from close ones - There are a lot of people who just do not know how to say a NO. A lot of times I hear some say "Mere Bhaiya is field mein bahut din se hai. Woh galat nahi ho sakte." On further investigation, it is found that he is a 3rd cousin with whom this guy has probably just met once. Please note that "The business of business is to do business."
4) Do not buy Liabilities thinking that they are assets- The biggest reason for stress is not because the boss makes an employee work overtime, it is the dreaded four letter word DEBT. Many people have sleepless nights not because of the work pressure, but due to the credit card bills and the EMI's that are due next month (car, gizmos, gadgets, bigger house than required). What is the point of earning 1 lakh a month if the real income turns to be 20000 a month.
5) Herd Mentality- God has given us a brilliant brain but some people keep it absolutely intact and fragile. They handle it with so much care that they forget to use it. Instead they rely on rumours, get-rich-quick schemes and imaginary rags to riches stories of non-existent people (so called cousin chacha of an acquaintance). Henry Ford had once said "Thinking is the hardest work there is, which is the probable reason why so few engage in it."
These are the basic points which people should keep in mind if they want to make their financial journey happy and smooth.
Hope you find this article useful.
Your Friend,
Vivek
Friday, July 13, 2012
Saturday, June 30, 2012
Jeevan Saral by LIC makes your life "ultra saral"....
Jeevan Saral from LIC (Table no 165) is one of the best plans by the LIC which takes care of all the requirements that an investor needs in life. It takes care of the safety of capital, life cover, capital appreciation and liquidity. It has been correctly termed as LIC ki RD cum PPF.
The 2 biggest advantages of this plan by LIC are:-
1) It gives you the same death cover irrespective of the age and the term.
2) Policy period is extended after 10 years and you can withdraw your money anytime without any extra charges or extend the policy like a PPF
The following are some of the features of Jeevan Saral:-
Please go through the attached images for a vivid understanding of the policy.
Looking forward to your comments.
Your friend,
Vivek
The 2 biggest advantages of this plan by LIC are:-
1) It gives you the same death cover irrespective of the age and the term.
2) Policy period is extended after 10 years and you can withdraw your money anytime without any extra charges or extend the policy like a PPF
The following are some of the features of Jeevan Saral:-
- High life risk cover at very low premium
- Guaranteed Surrender Value after policy being in force at least for 3 years
- Liquidity & a lot of flexibility
- Death cover is same irrespective of age at entry and term
- 100% of Maturity Sum Assured in case of surrender after 5 years
- Death Benefits is 250 times of monthly premium + Total premium paid, less 1st year's premium & Extra premium paid + Loyalty Addition if any payable in lump sum.
- Withdrawal of money after 10 years with full maturity benefits plus loyalty additions, if any or you can get guaranteed surrender value before maturity if policy has been in force at least for 3 years.
Please go through the attached images for a vivid understanding of the policy.
Looking forward to your comments.
Your friend,
Vivek
Saturday, June 23, 2012
What are the different Insurance products?
Hi Friends,
Due to the numerous insurance companies today, there is a lot of confusion about the main insurance products that are available in the markets today. Different companies have different names for the same product. Hence the customer sometimes gets confused.
The simplest definition of Insurance is:- It is a contract between the insurance company (insurer) and the policyholder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the insured on the happening of a specific event.
The insurance market is divided into two categories- life insurance and non-life insurance. Life insurance covers risks related to human lives. All other risks are covered under non life insurance or general insurance.
I searched on google as to the different insurance products that are available in the markets today. For a lay man, it is all the more confusing. Hence I am listing down the main insurance products that are covered under Life Insurance as well as the different sub-categories under which non life insurance can be divided into.
Non life insurance market can be subdivided into the following:-
1) Fire Insurance 2) Marine Insurance 3) Miscellaneous
Miscellaneous includes Motor Insurance, Property Insurance, Liability Insurance, Health Insurance and Travel Insurance.
The main life insurance products are:-
1) Term Insurance Plans
2) Endowment Insurance Plans
3) Whole Life Insurance Plans
4) Pension and Savings Plan
5) Unit Linked Insurance plans(ULIPs)
Hence it is very important to understand what kind of insurance is needed by an individual. Risk appetite, wealth, age, health, marital status, number of dependants, nature of work, etc are some of the different parameters that need to be considered before purchasing a policy.
Your Friend,
Vivek
Due to the numerous insurance companies today, there is a lot of confusion about the main insurance products that are available in the markets today. Different companies have different names for the same product. Hence the customer sometimes gets confused.
The simplest definition of Insurance is:- It is a contract between the insurance company (insurer) and the policyholder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the insured on the happening of a specific event.
The insurance market is divided into two categories- life insurance and non-life insurance. Life insurance covers risks related to human lives. All other risks are covered under non life insurance or general insurance.
I searched on google as to the different insurance products that are available in the markets today. For a lay man, it is all the more confusing. Hence I am listing down the main insurance products that are covered under Life Insurance as well as the different sub-categories under which non life insurance can be divided into.
Non life insurance market can be subdivided into the following:-
1) Fire Insurance 2) Marine Insurance 3) Miscellaneous
Miscellaneous includes Motor Insurance, Property Insurance, Liability Insurance, Health Insurance and Travel Insurance.
The main life insurance products are:-
1) Term Insurance Plans
2) Endowment Insurance Plans
3) Whole Life Insurance Plans
4) Pension and Savings Plan
5) Unit Linked Insurance plans(ULIPs)
Hence it is very important to understand what kind of insurance is needed by an individual. Risk appetite, wealth, age, health, marital status, number of dependants, nature of work, etc are some of the different parameters that need to be considered before purchasing a policy.
Your Friend,
Vivek
Tuesday, June 19, 2012
Learn to like a falling market!!!
Hi Friends,
Today I shall discuss how one should take advantage of a falling market. The concept is pretty simple. It is known as rupee cost averaging.
We often hear people saying something like "Today I bought 1000 shares of Reliance@ 800. It has already come down from 1200 to 800 and it can't go down any further." Now timing the market is foolish, time consuming and almost impossible. Timing the market is an area where most investors are prone to go wrong.
Under rupee cost averaging one does not have to worry when and how much to invest. Periodic investing is done irrespective of the market conditions. Let us assume that a person had Rs 10000 today and he wanted to invest in a company A which is trading at Rs 20. He would have been able to buy 500 shares. (Scenario 1)
Instead of one time purchase if the same person were to invest Rs 1000 per month for the next 10 months, the scenario would be something like:-(Scenario 2)
Time(mths) Fixed amt invested Price per share Shares Purchased
1 1000 20 50
2 1000 21 48
3 1000 24 42
4 1000 19 53
5 1000 16 63
6 1000 17 59
7 1000 14 71
8 1000 23 43
9 1000 18 56
10 1000 22 45
Total 10,000 18.86 530
Thus we see that in case of Scenario 2, he has purchased 30 more shares than Scenario 1 and that too at a lower cost i.e. 18.86 vis-a-vis 20. Plus the worrying bit was not there.
P.S: This should be done with a great company. If rupee cost averaging is done in case of a stock like SKS Microfinance or Koutons, you will keep on averaging and you will start posting negative feedback on my blog.
Hope this helps,
Vivek
Today I shall discuss how one should take advantage of a falling market. The concept is pretty simple. It is known as rupee cost averaging.
We often hear people saying something like "Today I bought 1000 shares of Reliance@ 800. It has already come down from 1200 to 800 and it can't go down any further." Now timing the market is foolish, time consuming and almost impossible. Timing the market is an area where most investors are prone to go wrong.
Under rupee cost averaging one does not have to worry when and how much to invest. Periodic investing is done irrespective of the market conditions. Let us assume that a person had Rs 10000 today and he wanted to invest in a company A which is trading at Rs 20. He would have been able to buy 500 shares. (Scenario 1)
Instead of one time purchase if the same person were to invest Rs 1000 per month for the next 10 months, the scenario would be something like:-(Scenario 2)
Time(mths) Fixed amt invested Price per share Shares Purchased
1 1000 20 50
2 1000 21 48
3 1000 24 42
4 1000 19 53
5 1000 16 63
6 1000 17 59
7 1000 14 71
8 1000 23 43
9 1000 18 56
10 1000 22 45
Total 10,000 18.86 530
Thus we see that in case of Scenario 2, he has purchased 30 more shares than Scenario 1 and that too at a lower cost i.e. 18.86 vis-a-vis 20. Plus the worrying bit was not there.
P.S: This should be done with a great company. If rupee cost averaging is done in case of a stock like SKS Microfinance or Koutons, you will keep on averaging and you will start posting negative feedback on my blog.
Hope this helps,
Vivek
Saturday, June 16, 2012
Does a 3-in-1 savings account make sense?
Hi Friends,
Due to the positive feedback that I have received, I have decided to write my 2nd article. It is your support that has given me the confidence to go ahead with my 2nd article "Does a 3-in-one account make sense?"
A 3 in 1 savings account combines features of a savings account, online trading and a demat facility. As per SEBI guidelines, the shares are needed to be kept in electronic form in a demat account for buying and selling.This is one of the facilities which is extended by banks so that the transfer and trading of shares is almost seamless with minimal waste of time during the movement of your funds and shares. Even the orders are placed electronically so that the proceeds are instantly available since it is connected to your savings account.
Sounds amazing isn't it?
Let's analyse some facts:-
1) Brokerage is a fee which the broker charges on buying and selling of securities. Its a broker's income. So when you have a 3 in 1 savings account your brokerage plus the Securities Transaction tax, Service tax, Stamp Duty and Transaction charges comes to around 0.9%. Hence say you buy one share of State bank of India (Let us assume the CMP to be 2000 for simplicity), the total cost comes to around 2018 (2000+2000*.9/100). Now with a broker who is not a bank, let us assume the total cost apart from the CP is 0.5% . So in this case that share would cost 2010 (2000*.5/100+2000=2010). The difference in cost would be Rs 8 which might not sound quite high. But in case you buy around 100 shares of SBI you would have to pay Rs 800(8*100) extra. We are assuming that you would have a 3-in-1 savings account with a private bank where the Average Quarterly Balance is a minimum of Rs 10000. So just because you have an account with a bank, you are paying Rs 800 extra for 1 trade. Let us assume that on a day when Nifty shoots up you execute 5 such trades, then you pay up Rs 4000 extra.
These days all the brokers (which are not banks) have NEFT facility which allow pay-in and pay out of funds by directly connecting with your bank. So just for the namesake that you have a trading account with XYZ Bank and not XYZ Securities Ltd, are you willing to botch up Rs 4000 extra just because the Nifty has moved up by 100 points? Most of the times the banks don't divulge that they have tied up with a broker only to fleece the customers. The customers feel that if it is bank, it is more secure. Think about it!!!!
2) There are 2 kinds of investments in stocks. One which is for your daily and short term trading and the other which is for your long term investments. Now when you have your long term investments in your demat account where you have your trading account, chances are that you might sell a stock when it moves up 10% since it is very much visible and tempting and also because it is "seamless". You buy long term investments for your future (10 -15 years) but just because it is lying in a bank, your RM will make atleast 20 phone calls to you saying that Greece is about to default, S&P might downgrade India, UPA 2 is not functioning properly or FDI in retail has been put on the backburner. Since you would be doing something important, you might ask him to sell it to avoid getting harassed. His money is in and your long term investment has been converted to a short term profit or loss because of a Black Swan which has or hasn't yet happened.
To put things simply, make sure your long term investments are in a separate demat account away from your broker. Forget about them. They should be treated like your LIC policies or your PPF Account where you invest and forget. You would not mind filling up a delivery instruction slip to sell your shares once in 5 or 10 years if your long term investment remains a long term investment just like you need to surrender your LIC policy.It would more or less be "seamless." As Warren Buffett says I buy my long term investments on the assumption that they could shut the market for 10 years and I could forget about them.
Moreover these shares should be frozen in your demat account. Shares can only come into your demat account but for going out, you need to make a written application to your depository participant.
I hope you all like this article!!!! Looking forward to the comments and feedback on it.... Have a great weekend!!!!
Thank You!!!!!!!
Your friend forever,
Vivek
Due to the positive feedback that I have received, I have decided to write my 2nd article. It is your support that has given me the confidence to go ahead with my 2nd article "Does a 3-in-one account make sense?"
A 3 in 1 savings account combines features of a savings account, online trading and a demat facility. As per SEBI guidelines, the shares are needed to be kept in electronic form in a demat account for buying and selling.This is one of the facilities which is extended by banks so that the transfer and trading of shares is almost seamless with minimal waste of time during the movement of your funds and shares. Even the orders are placed electronically so that the proceeds are instantly available since it is connected to your savings account.
Sounds amazing isn't it?
Let's analyse some facts:-
1) Brokerage is a fee which the broker charges on buying and selling of securities. Its a broker's income. So when you have a 3 in 1 savings account your brokerage plus the Securities Transaction tax, Service tax, Stamp Duty and Transaction charges comes to around 0.9%. Hence say you buy one share of State bank of India (Let us assume the CMP to be 2000 for simplicity), the total cost comes to around 2018 (2000+2000*.9/100). Now with a broker who is not a bank, let us assume the total cost apart from the CP is 0.5% . So in this case that share would cost 2010 (2000*.5/100+2000=2010). The difference in cost would be Rs 8 which might not sound quite high. But in case you buy around 100 shares of SBI you would have to pay Rs 800(8*100) extra. We are assuming that you would have a 3-in-1 savings account with a private bank where the Average Quarterly Balance is a minimum of Rs 10000. So just because you have an account with a bank, you are paying Rs 800 extra for 1 trade. Let us assume that on a day when Nifty shoots up you execute 5 such trades, then you pay up Rs 4000 extra.
These days all the brokers (which are not banks) have NEFT facility which allow pay-in and pay out of funds by directly connecting with your bank. So just for the namesake that you have a trading account with XYZ Bank and not XYZ Securities Ltd, are you willing to botch up Rs 4000 extra just because the Nifty has moved up by 100 points? Most of the times the banks don't divulge that they have tied up with a broker only to fleece the customers. The customers feel that if it is bank, it is more secure. Think about it!!!!
2) There are 2 kinds of investments in stocks. One which is for your daily and short term trading and the other which is for your long term investments. Now when you have your long term investments in your demat account where you have your trading account, chances are that you might sell a stock when it moves up 10% since it is very much visible and tempting and also because it is "seamless". You buy long term investments for your future (10 -15 years) but just because it is lying in a bank, your RM will make atleast 20 phone calls to you saying that Greece is about to default, S&P might downgrade India, UPA 2 is not functioning properly or FDI in retail has been put on the backburner. Since you would be doing something important, you might ask him to sell it to avoid getting harassed. His money is in and your long term investment has been converted to a short term profit or loss because of a Black Swan which has or hasn't yet happened.
To put things simply, make sure your long term investments are in a separate demat account away from your broker. Forget about them. They should be treated like your LIC policies or your PPF Account where you invest and forget. You would not mind filling up a delivery instruction slip to sell your shares once in 5 or 10 years if your long term investment remains a long term investment just like you need to surrender your LIC policy.It would more or less be "seamless." As Warren Buffett says I buy my long term investments on the assumption that they could shut the market for 10 years and I could forget about them.
Moreover these shares should be frozen in your demat account. Shares can only come into your demat account but for going out, you need to make a written application to your depository participant.
I hope you all like this article!!!! Looking forward to the comments and feedback on it.... Have a great weekend!!!!
Thank You!!!!!!!
Your friend forever,
Vivek
Friday, June 15, 2012
Financial Freedom gives you back your childhood days!!!
If you are doing business only for yourself, you will be the only customer!!!!
Honesty comes from keeping things simple. Simplicity leads to success. Success leads to honesty.
 |
| Financial Freedom is the biggest gift of life!!! If you achieve it you will never miss your childhood days. |
Thursday, June 14, 2012
Beware of lock in periods and guarantees!!!!
Hi Friends,
On the insistence of my 2 great friends, Udayan Chattopadhyay and Shraddha Jhunjhunwala Todi, I have finally decided to start a blog actively.I shall comment on financial issues which should be at the back of a person's mind at all times. As Einstein had said, "The world is a dangerous place; not because of the people who are evil, but because of the people who don't do anything about it." Thus it is of prime importance that one needs to be responsible for himself and take actions in such a manner that one does not have to run from pillar to post just because one has been taken for a ride by some greedy and unethical people.
It is for this reason that I have chosen a very simple but a very important area which proves to be a pain for many. Some days back, I went to a financial institution where they told me, "We have this offer where you can invest a minimum of 25 lakhs with us and expect a guaranteed return of 24% y-o-y." The lock in period is 5 years which means that I cannot withdraw from the money that I have invested with them for 5 years or else there will be a hefty charge of around 10-15% of the initial amount that I had invested.
Please read the above line very carefully once again. Now what does it say?
Lock in period of 5 years basically means that if I withdraw the invested money within 5 years (let us assume it to be Rs 1 crore for simplicity), I would have to pay a heavy penalty. So if I would have invested money with them, it would mean that for 5 years I need to forget about the money. An important thing to be noted here is that the money is managed by commission hungry salespeople who have been changing jobs as frequently as their clothes and who have stringent targets to meet. So by the time 5 years comes to an end, no one is actually answerable for your money. It is like handing over money to someone whom you supposedly trust on the assumption that he would generate a 24% return for you. Most of the times what happens is that the 1 crore has been converted into peanuts and the guarantee has gone for a toss because " Investments are subject to market fluctuations and one has not read the offer document carefully".
Friends, the objective is not to scare the living daylights out of you. It is just one of the important insights that I wished to share with you. As the saying goes "Prevention is better than cure." In my further posts I shall cover the various aspects of finance that a professional from every field should know at the back of his hand so that he can lead a life to prosperity without having to bother about things which are beyond his circle of competence. The objective is to help people achieve financial freedom so that the dreams that were nurtured during childhood come back to life which might have been kept in the backburner for long due to the stress, pressures and speed of the day to day life.
You can also follow me on my page: www.facebook.com/stocksbmawealth or email me at vivekshah83ster@gmail.com with your feedback and queries. Thank You each and everyone!!!!!! Have a great life and career ahead.
Regards,
Vivek Shah
On the insistence of my 2 great friends, Udayan Chattopadhyay and Shraddha Jhunjhunwala Todi, I have finally decided to start a blog actively.I shall comment on financial issues which should be at the back of a person's mind at all times. As Einstein had said, "The world is a dangerous place; not because of the people who are evil, but because of the people who don't do anything about it." Thus it is of prime importance that one needs to be responsible for himself and take actions in such a manner that one does not have to run from pillar to post just because one has been taken for a ride by some greedy and unethical people.
It is for this reason that I have chosen a very simple but a very important area which proves to be a pain for many. Some days back, I went to a financial institution where they told me, "We have this offer where you can invest a minimum of 25 lakhs with us and expect a guaranteed return of 24% y-o-y." The lock in period is 5 years which means that I cannot withdraw from the money that I have invested with them for 5 years or else there will be a hefty charge of around 10-15% of the initial amount that I had invested.
Please read the above line very carefully once again. Now what does it say?
Lock in period of 5 years basically means that if I withdraw the invested money within 5 years (let us assume it to be Rs 1 crore for simplicity), I would have to pay a heavy penalty. So if I would have invested money with them, it would mean that for 5 years I need to forget about the money. An important thing to be noted here is that the money is managed by commission hungry salespeople who have been changing jobs as frequently as their clothes and who have stringent targets to meet. So by the time 5 years comes to an end, no one is actually answerable for your money. It is like handing over money to someone whom you supposedly trust on the assumption that he would generate a 24% return for you. Most of the times what happens is that the 1 crore has been converted into peanuts and the guarantee has gone for a toss because " Investments are subject to market fluctuations and one has not read the offer document carefully".
Friends, the objective is not to scare the living daylights out of you. It is just one of the important insights that I wished to share with you. As the saying goes "Prevention is better than cure." In my further posts I shall cover the various aspects of finance that a professional from every field should know at the back of his hand so that he can lead a life to prosperity without having to bother about things which are beyond his circle of competence. The objective is to help people achieve financial freedom so that the dreams that were nurtured during childhood come back to life which might have been kept in the backburner for long due to the stress, pressures and speed of the day to day life.
You can also follow me on my page: www.facebook.com/stocksbmawealth or email me at vivekshah83ster@gmail.com with your feedback and queries. Thank You each and everyone!!!!!! Have a great life and career ahead.
Regards,
Vivek Shah
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