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Independence Day India obtained its independence from British Rule on 15th August 1947. India became independent and wants to develop and prosper with its own decisions. Constitution Though we are independent, we were not having our own constitution. Without constitution it is difficult to take the right decisions for growth. So we needed our own constitution which will be the principles and guidelines, based on which we will be able to take the right decisions at the right time. Constitution also deals with the procedures and methodology of taking decisions. Republic Day The Constitution of India came into effect on 26th Jan 1950 which we call it as Republic Day. Since 1950 we were able to continuously grow with the guidance from our Constitution. Without an effective constitution, this exponential growth could have become impossible. Amendments So far we have made 96 amendments in our constitution in the last 62 years. Amendments make the constitution more dynamic and ...

From M. V. Ramana Murthy (via E-mail), Incident 1 It happened few months back.  We were travelling and I and my family were waiting in the A/C waiting room at Secunderabad Station. The attached bathroom was not clean and was giving bad smell. Added to this discomfiture, the bathroom door was not closing tight, and I also observed that shutter was not closing tight because of faulty door closer. I complained to the attendant. I also sent an SMS “The bathroom of A/C waiting room o­n platform No 1 of Secunderabad Station is dirty and stinking. Please arrange cleaning. Also the door is not closing properly". After few minutes we left the waiting room as our train arrival was announced. Within few minutes I received text reply from Railways,   giving an ID No and that action will be taken. After few hours I received a message that the bathroom has been cleaned. After ten days I received another message that the faulty door has been repaired and thanking me. Incide...

In what promises to be an action packed thriller, this "Vettai" (Hunt) delivers very little in reality. The story line is nothing but old wine in a new bottle stuff, whilst its screenplay isn't that great which further dampens the spirit. Lingusamy though has done something different in this film by virtue of the scene composition in which Arya and Sameera Reddy lock horns which gives a feeling that these two are the budding lovers in the storyline which later turns out to be not. The movie begins when the brothers Thirumoorthy (Madhavan) and Gurumoorthy (Arya) are young kids who grow sans their mothers under the supervision of their father. Like all films, the young kids grow up within the wink of an eye and continue in the same vein they were during their younger days. Thirumoorthy due to family circumstances takes up the job of a Sub Inspector while Gurumoorthy just whiles away his time doing nothing. Vasanthi (Sameera Reddy) and Jayanthi (Amala Paul) on the other hand...

Whenever people have surplus money, they want to invest. When they invest, they just want to act or execute. They don’t want to spend time on understanding the product and various investment strategies. They would like to take investment decisions without doing any homework. There is no plan of action. Their attitude is “I have surplus money; just tell me where to invest”. Misselling: These kinds of investment decision making will make you fall prey for misselling. As you are not interested in doing the homework and if someone comes with a long chart and calculations for 20 years, then you may find it interesting and end up buying products like ULIPs. When you realize that you have invested in a mediocre product, you will blame the agent or broker and not yourself and your wrong decision making approach. Market Moods: When you just want to act, your investment decisions will swing based on the market moods. If the stock markets are highly volatile and it is comes down day by d...

Most of today’s problems are yesterday’s challenges overlooked. It is always considered a wise thing to perceive problems before they arise and attend to them at the earliest. By doing so, you will be spared from the trouble you may have to undergo in the later stages. Here are few pointers to assist you in identifying the problems related to your spending and saving patterns. Potential problems related to your spending habits You are finding it difficult to repay your debts. Potential Problem: You decided to splurge in on your salary and went ahead purchasing everything you ever wanted on monthly installments and did rest of the shopping on your credit card. A few months later, you come to terms with reality not being able to service all your debts. Possible Solution: You must take into consideration the fact that all your loans combined should not go beyond 30-40% of your salary. It is imperative that you bore this fact in your mind before taking any new debt. You find your...

A Financial Planning experience with a client: It was just another day that a new client came to us for financial planning. He wanted to know if he had planned well for his family financial goals. As a general procedure, I suggested that a study would help me come out with a comprehensive financial planning to meet his goals. Explaining the Financial Planning Concept: I told him that financial planning lies in addressing 4 important areas namely, risk management, wealth creation, wealth preservation and wealth transfer. It is an ongoing process throughout life. Financial spring cleaning done regularly helped to stay focused and keep track of your finances. It is best to understand that financial spring cleaning involves collecting and assimilating data. This included various investments, present financial situation of the client. Then an appropriate plan was prepared and reviewed regularly considering changes. It is best to get a financial plan prepared by a certified finan...

As we are coming to an end of 2011, this is the time to reflect on the year gone by and the time to look forward for the New Year. You may use this chance to review your financial scorecard for the last year and need to make necessary changes and create an action plan to improvise the score for 2012. Here’s the list of financial resolution for 2012. You may pick and choose a few among these and implement to improvise your personal finance management system. 1) Would you like to prepare a workable budget for the year 2012? You may choose to create a workable budget for 2012 by projecting your income and expenses. Also consider investments committed earlier like insurance premiums, SIPs and other commitments like EMIs. Is there any other financial goal you are going to meet this year like buying a car or buying a property? Have you made the provision for down payments? 2) Would you like to do a portfolio rebalance? 2010 ended with a sensex of 20509. This year it is trading arou...

A few decades ago, there was confusion with what sales and marketing are. People thought they are one and the same. But it is to be understood that sales is just an important ingredient of the functions of marketing. Sales lies in persuading and convincing a person to buy a product that is suitable. Marketing involves all the activities right from the conception of the product, to branding, advertising and retailing. It is an all pervasive function from the product being ready to reach the market and ultimately to being sold to the customer. Today here prevails a similar confusion with who is an investment advisor and who is the financial planner. It is quite common to find these terms used interchangeably, but it is necessary to understand that an investment advisor and a financial planner have the similar and vast differences as between sales and marketing. Why is this confusion? There is a real confusion among the investors regarding who a financial planner is and who is a...

A resale property: Who does not wish to live in a house of their own? Buying a new flat will take a long time, so some of us may wish to settle for buying a resale property. However buying a resale property could involve many legal and other procedural requirements. It is prudent to first understand the various procedures and safety measures for buying resale property to avoid hassles in future. Buying Resale Property –A Guide Consult Experts: It may be ideal to engage a good real estate agent to locate a resale property. He would be in a position to locate sellers as well as guide you regarding the price of such properties in different localities. They would also be in a position to tell you about the seller of the property. Most real estate agents charge a fee and also help with registration, payment of stamp duty and other paper work involved in the purchase of resale property. In addition, taking the help of a good lawyer would also help to make sure that things are clear legally...

Paper Towel - 2-4 weeks Banana Peel - 3-4 weeks Paper Bag - 1 month Newspaper - 1.5 months Apple Core - 2 months Cardboard - 2 months Cotton Glove - 3 months Orange peels - 6 months Plywood - 1-3 years Wool Sock - 1-5 years Milk Cartons - 5 years Cigarette Butts - 10-12 years Leather shoes - 25-40 years Tinned Steel Can - 50 years Foamed Plastic Cups - 50 years Rubber-Boot Sole - 50-80 years Plastic containers - 50-80 years Aluminum Can - 200-500 years Plastic Bottles - 450 years Disposable Diapers - 550 years Monofilament Fishing Line - 600 years Plastic Bags - 200-1000 years

Planning for contingencies like death and hospitalization also forms an important part of financial planning. Buying life insurance provides for the living expenses of bread earners family in his absence on death. Let me debunk a few insurance myths today so that you will be able to take better financial and investment decisions. Myths about insurance: MYTH 1: LIFE INSURANCE IS A WASTE OF MONEY Life insurance is bought to protect ourselves from the contingency of untimely death. It would take care of the living expenses of your family if you die young. Life insurance is an investment that is more of a safety mechanism; it is to provide financial security to the dependants. Term policies that cover the risk of untimely death are cheap and most ideal for providing life coverage. MYTH 2: LIFE INSURANCE IS FOR SAVING TAXES This could probably be a selling point for agents. But tax-saving is one of the many benefits life insurance offers. The main benefit is the provision of financ...

What is reverse mortgage? Increased life expectancy has lead to the increase in the costs of living and medical expenses. This makes it difficult for many senior citizens that lack a regular income to live a life of dignity. Reverse mortgage is the solution introduced by the Union Government of India in 2007 helps senior citizens. Understanding the concept of reverse mortgage better: Reverse mortgage is the opposite of a conventional housing loan that needs to be paid back with interest over a period of time. Reverse mortgage helps senior citizens having a residential property to receive a regular income against its mortgage. The borrower and his/her spouse are allowed to stay in the place of residence until both die, aiding the living of a dignified life by senior citizens. Workings of reverse mortgage: A senior citizen couple should necessarily own a flat or house. Then they can pledge the property for a monetary value agreed upon by the bank. The value is generally fixe...

Stories of financial infidelity: Mahesh, a successful upcoming software engineer’s life was in a real mess; it is good he realized it at least now. He had come to meet me for financial advice and plan. He started doing online trade after learning that his colleagues were making a lot of money. But he had lost heavily due to his ill-luck, inexperience and lack of knowledge. He indulged in tactics of taking loan from one to repay the other and taking loans from another to repay the earlier loan. Mahesh was in debt to the extent of 20 lacs, and his creditors were pressurizing him to pay back loans given. So far he has not disclosed all these things to his young loving wife, Lekha. Mahesh believed that Lekha was no good at finances and was just home bound. He also believed that he had to support her, but had no moral obligation to reveal anything else to her. Lekha was shocked to know that Mahesh was deep in debt. She was sensible and thrifty and thought they would soon lead a comfort...

Just start the financial check-up: Noel Whittaker said, “Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it”. This meaningful quotation made me realize that we need to make regular financial check-ups to ensure that we have enough to meet our financial goals in life. Planning for financial goals require taking into consideration the present rates of earnings on investments, future earnings and rate of inflation that would affect our lifestyle and financial goals. It is vital that we all realize that regular reviewing our finances according to our changing dreams, needs and aspirations and making necessary changes would help meet our financial goals. Marriage and a merger of personal finance: Marriage could be the first circumstance that call...

“Models work when they are appropriate for the particular circumstance, but some of the best investment judgments over time have come when people recognized that models derived in other periods were broken or not directly relevant.” Abby Joseph Cohen Investing in mutual funds seems interesting, with number of websites, TV and other finance and wealth magazines publishing various information. However it is a challenging task and involves knowledge regarding the shares and securities market and various laws that govern mutual funds is necessary before investing in them. Understanding the principle of mutual funds; the investment of the money of a large number of investors in stocks, bonds and money market instruments that are managed by managers makes one feel relieved. However it is best for you as an investor to make a right choice of the mutual fund that suits your need. Choosing right MF: Investment Objective & Time Horizon The objective of the fund or the use to wh...

Let’s start the useful exercise: Finance may mean different things for different people. Some assume that they need no financial planning as they have very little finances. Still others believe that once they have invested their savings for future their task is over. In addition some pre-conceived notions that company we work for, pays our medical and hospitalization expenses so we need no reserve, combined with the notion that a life insurance policy takes care of death, disability and accidents. The need for no financial planning is complemented with the myth especially among the young that their retirement is far away and they could easily plan for it just a few years in advance. To further complement this myth that our ancestors would leave behind estate and property for us to enjoy with a will. Well dear friends financial planning can never be overlooked as finances invested well today could provide for good financial resources in future. It is true that a person who helps h...

Happy Diwali; let us discuss fireworks, Diwali and great financial planning. As we start our festivities of Diwali 2011, my mind went to the powerful lessons that Diwali taught us all. These thoughts gathered momentum when I started thinking about the similarities of Diwali and financial planning. It made me realize that financial planning lessons were so simple, yet enlightening that even a 12 year old could master its principles and start financial planning for a lifetime. Fireworks and Diwali I have always enjoyed fireworks, both as a child as well as a parent and found that mine as well as my children’s safety and comfort lay in obeyed certain rules while handling fireworks. This included avoiding loose and flowing clothes and wearing appropriate footwear, goggles and protection for the ears. Next noisy crackers caused hearing, ENT and nervous problems, with smoke causing ENT and allergic problems. This made me come to the conclusion that we need to enjoy crackers and firewor...

Buying insurance for protection and wealth creation has always been a very complicated task involving careful analyzes. The analysis involves the amount of coverage, reason for coverage and the term/time that the cover is required. Term policies taken for a specified period of time like 5, 10, 15, 20, or even 30 years helps to look after family’s financial commitments like education and marriage of our children and the day to day expenses for a reasonable standard of living. Term insurance policies that resemble motor/house insurance are not subject to the law of indemnity as damage due to human life cannot be measured. Taken for a specified period when financial obligations have to be met, no money is generally paid back if death does not occur in the period. A bird’s eye view of term insurance policies would tell you: Term policies are cheaper as they cover only the risk of death happening within a specified period. In addition the premium charged depending on the age of the p...

"Someone's sitting in the shade today because someone planted a tree a long time ago." Warren Buffet This quotation, it made me think that this is what children that were taught to be financially smart turned out as adults. This next made me feel that it was just not important to send children to school to learn how to count and write, but as parents to teach them about the value of certain aspects in life. With consumerism overtaking the economy even in developing countries of the world like India, many youngsters are having easy accessibility to credit cards and EMI’s, making our children realize the difference between a real want and need would make them financially smart for a lifetime. Hence smart parents should assume a vital role to render useful lessons of financial management to their children. Smart parents would not only render useful finance lessons, but would also be a prominent example and take effective feedback by making their children a partner in th...

In the last 10 years, sensex gas grown at 17.79% CAGR. That means, if someone could have invested Rs. 1 lac 10 years back, it could have grown to 5.14 lacs. In the last 10 years one third of diversified equity mutual funds have delivered a CAGR of more than 25%. That means if someone could have invested 10 years back in these mutual funds Rs.1lac, it could have grown to Rs.9.31 Lacs. But how many investors have REALLY got these kinds of returns…? In this context knowing about the study conducted by Dalbar to determine how the investment behavior and decisions impacted the overall investment performance would be advisable. Dalbar, Inc. is a US based leading financial services market research firm. They have done comparative study on the returns of S&P 500 Index and the returns of the investors for a 20 year period ending 31-12-10. The study revealed the following two important facts. • The average return of the S&P 500 during this 20 year period is 9.14%. • The average...

IPO’s or initial public offering is best understood as the first public offering of shares by a private limited company before listing in a stock market. Looking down IPO’s history of success and failure stories, you would be smart to first fully understand the various aspects behind such offerings and makes the right choice to invest or not in IPO’s. It is advisable to understand that investing in IPO’s could prove risky with unfavorable market situations and sentiments and when the fundamentals of the company and industry are weak. It is best to go by facts, avoid being influenced by rumors and have a closer look at the past performances also. Understanding the concept of investing in IPO does require a clear look into these factors:  It is not wise to believe rumors and success stories of IPO’s at face value, for investing in IPO’s is not easily learnt and there could be some misconceptions. So it is best to venture into IPO’s only after you have learnt the art of investing...