Sun outage and its effect on stock exchanges.

A sun outage is an interruption in or distortion of geostationary satellite signals caused by interference from solar radiation. The effect is due to the sun's radiation overwhelming the satellite signal. Generally, sun outages occur in February, March, September and October, that is, around the time of the equinoxes. At these times, the apparent path of the sun across the sky takes it directly behind the line of sight between an earth station and a satellite. As the sun radiates strongly at the microwave frequencies used to communicate with satellites (C-band and Ku-band) the sun swamps the signal from the satellite. The effects of a sun outage can include partial degradation, that is, an increase in the error rate, or total destruction of the signal.

Effect on Indian Stock Exchanges
In India, the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) use VSATs (Very Small Aperture Terminal) for members to connect to their trading systems. VSATs depend upon satellites for connectivity between the terminals/systems. Hence these exchanges are affected due to the sun outage. These exchanges normally remain closed from 11:45 to 12:30 during 'sun outages', but times vary depending on the scientific factors. The interference in satellite signals disturbs smooth transmission of data of online transactions, hence these share markets remain closed for the duration of sun outages. Due to these outages, the trading sessions are normally extended in the same day to compensate for the lost time. In September 2006, however, only the NSE intended to shut down during the sun outage; the BSE did not. The reason for which is unknown.
(Source: Wikipedia)

Myths and realities of MUTUAL FUND investing

A lower NAV is no guarantee that you are getting a better deal
Hemant Rustagi

MUTUAL funds have redefined the financial landscape of the investing community, and are fast emerging as an ideal option for investors with diverse risk profiles and time horizons. Their appeal lies in the fact they allow people to invest without having to choose individual securities or understand the finer points of financial markets. More importantly, mutual funds offer accessibility in two ways.
First, through mutual funds, retail investors have access to investment opportunities that would otherwise be unavailable to them, because of their limited resources.
Secondly, mutual funds themselves are accessible to investors of varying income levels.

However, like any other industry, this one, too, is the subject of popular and enduring myths and misconceptions. The sooner investors shed such notions, the more likely they are to get the best out of mutual funds. Below, we have tackled a few of these:

An ideal way to invest in mutual funds is to opt for schemes that have a consistent track record over the longer term. Needless to say, a scheme with a long-term track record will have a higher net asset value (NAV) than newer funds. Unfortunately, many investors seek to avoid a high NAV, and settle for funds with low NAVs. In the process, they completely ignore the quality and suitability of the funds—both important ingredients in the decision-making process.
A common fear among investors is the likely impact of a high NAV on a fund’s future prospects, both in terms of appreciation as well as dividend payment. The fact, however, is that the price at which you buy units of a scheme, say, Rs 10 or Rs 50, has no bearing on returns. The NAV grows in percentage terms. For example, an investor who invests Rs 1 lakh in a fund with an NAV of Rs 50 will get 2000 units, while someone investing in a fund with a Rs 10 NAV will get 10,000 units for the same amount. If the two funds are similar, and assuming NAVs grow by 20%, the current value would be the same for both the funds. And the fund with the better portfolio and track record is likely to grow faster, thus benefitting investors in spite of the higher NAV. So it makes sense to focus on the factors that can make the NAV grow faster, such as portfolio quality, segment-wise exposure (that is, large-, mid-, and small-caps), and the investment philosophy of the fund.

Another myth is that a high NAV affects the dividend. The truth is that the fund usually decides the dividend percentage based on current NAV, the gap between dividend payments, and its philosophy with regard to dividend payments. Let’s take two hypothetical funds called A and B. Fund A has an NAV of Rs 12, and Fund B, Rs 60. It is wrong to assume both will declare the same dividend. It is more likely that the Fund A may pay Re 1 per unit, while Fund B pays Rs 10. So an investor with 2000 units of Fund B will get a dividend of Rs 20,000, as against a dividend of Rs 10,000 for an investor who has 10,000 units of Fund A.

This brings us to another myth: the fund that pays high and frequent dividends is doing well. The truth is that an old fund with even a mediocre performance can afford to pay very high and frequent dividends. Surprisingly, the same investors who hesitate to invest in high-NAV funds are dazzled by high and frequent dividends, and happily invest in such funds. Unfortunately, they often end up parking their money in the slush of mediocrity. And certainly there are examples of funds that deliberately employ the strategy of declaring frequent dividends to divert investors’ attention from their shabby performance, and to attract fresh money.

The mother of all myths is the belief that it’s smart to invest in an equity fund right before dividend time. This attracts many investors because of the percentage of the dividend, as well as its tax-free. Those who follow this strategy, or intend to follow it, should be aware of a few things. Firstly, if a fund declares a 100% dividend, it is paid on the face value—usually Rs 10—and not on the NAV. Secondly, the NAV of the fund goes down by the dividend amount, after the dividend is paid.For example, if the NAV of a fund paying 100% dividend is Rs 50 on the record date, the NAV will come down by the face value (Rs 10) to Rs 40 after the payout. To further clarify, let’s consider a situation in which someone invests Rs 1 lakh in this fund on the record date. She would receive Rs 20,000 as dividend, and the current value of her investment would come down to Rs 80,000. In other words, she would get a part of her own capital back in the form of dividend, and not as a gain, as is commonly perceived. The moral of the story: equity investments are for building capital over time. Any attempt to take short cuts can hurt future growth prospects. Hemant Rustagi is CEO, Wiseinvest Advisors
(Source: TOI, Mumbai 25th Sept,Your Money)

Lower interest rates, cheaper dollars—what does all this have to do with us?

Madhu T
THREE events stood out in financial market events last week.

First, the US Federal Reserve’s cut the Fed Fund Target rate by 50 basis points to 4.75%, saying the action was “intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.” Predictably, financial markets worldwide greeted the news happily, registering gains. India’s favourite market barometer, the BSE Sensex, was no exception, providing the second highlight of the week.

The market benchmark posted its largest single-day gain of 653 points to zoom past the psychologically-significant 16,000 mark.

And thirdly, the rupee breached the Rs 40 per dollar mark, its highest level in nine years.

As you probably reckoned, the first development has implications for the interest rate scenario worldwide, including India. The second development is directly linked to all our long-term investments in stocks. And the third one, the rise in the rupee, will have different effects on different sectors of the economy: exporters will feel the most pain, while importers and those who travel abroad will save. “These events clearly demonstrate how interlinked the global economy is. A rate reduction in the US had a huge impact on the global financial market, including our country, which is still largely considered a closed economy. And look what robust foreign inflows have done to the rupee—it is appreciating in value every passing day,” says a senior banker. “This shows that investors need to be aware not only of domestic events, but also of major developments abroad,” he adds. Let’s look at the past week in a little more detail, and consider what impact it might have on your investments and borrowings. Interest rates With the US central bank cutting its interest rate after nearly four years, will the RBI also follow suit? Journalist Sujit Raj, who had hesitated to take a home loan a year and a half ago because interest rates were rising, wants to know just one thing: “Will the interest rates on housing loans come down?” Now, he wants a loan as soon as interest rates come down, because there is no other way he can afford to buy a home. “I don’t think the real estate prices will come down drastically, especially in Mumbai. Prices have declined a bit, and seem more or less stable. Now I don’t want to wait anymore; I want to buy a house this year,” he adds. Says a money market analyst, “I don’t think the Reserve Bank is going to follow suit anytime soon. It is still concerned about robust growth in some areas, like retail loans and real estate prices. That means asset prices continue to be a problem.” He adds: “Also, since industry is growing at 9%, it wouldn’t want to slash rates. You have to remember that there is not much of a drop in the credit offtake from banks, and also asset prices haven’t fallen as much as the RBI would like. Real estate prices are a case in point.” Aravind Chari, fund manager, fixed income, Quantum Mutual Fund, feels it is “way too early to even think of a benchmark interest rate cut. The growth is strong, credit off-take is picking up, and concerns remain on inflation. Depending on the liquidity and credit off-take situation, the RBI has the leg room to alter the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) in the coming months.” That means if Sujit Raj waits until rates drop before buying house, he may still be a tenant for quite a while. However, experts advise first-time home buyers against timing the market: since you are buying a house to live in, price appreciation or depreciation shouldn’t be your primary concern. Of course, if you’re buying a house for investment purposes, it makes sense to buy at the right time. Stock market That brings us to our second question: what is in store for stock market investors? Actually, it looks as though the market has already answered that one. “The market is going to go up further,” says a mutual fund manager. “A slew of good news is pushing it to new highs. I think the uptrend would continue for a long time, say, at least five years.” “Apart from the Fed, the government approval of Reliance’s gas pricing has sent a positive signal to the market,” says Kisan R Choksey, chairman, KR Choksey Shares and Securities. “Now you know what it takes to set up power plant or a fertiliser factory. It cleared up a lot of uncertainty about the government policy. This is clearly reflected in the huge gains made by all the Reliance group shares.” Experts expect foreign fund inflows to continue to be robust, as the economy looks set for continued growth at a strong pace. Says Choksey, “Going by company order books, it is evident that domestic demand is strong. Now, the only question is whether these companies have the scalability to meet the demand. If the monsoon is normal, I don’t think we have much reason to worry about the growth of the economy.” And what words of advice do the pundits have for the average investor? “Stay invested. The whole world is bullish about the Indian economy. So have faith that the economy will deliver goods,” says the fund manager. “The Indian economy is going to grow at a great pace for the next eight to 10 years. Invest in good companies and you can earn handsome returns,” says Choksey.

(Source: TOI Mumbai, Your Money, 25th Sept.2007)

Some myths which often mislead investors

KIRIT S SANGHVI
Myths have an enchanting quality. No wonder, many have quietly entered and taken complete control of our lives it without our knowledge. They follow us to the stock markets, too. Here are a few myths people nurse about stock markets.

Myth 1: Day-trading will give more profit:
Those who wish to get rich without investing a single penny believe day-trading is the answer. Sometimes they succeed too. However, studies carried out abroad indicate that such people end up incurring huge transaction costs like brokerage, security transaction tax and other charges recovered by the broker. Timothy Vick, the author of a book on Buffettan theory of stock picking, shows how much more return you have to generate to compensate for the transaction costs, for you should remember that transaction costs bring down the effective return on your investment.

Myth 2: Keep your portfolio diversified:
This is not really a myth, but its overplaying is a myth. People believe it is advisable to hold a portfolio as large as possible. According to them, this will provide safety in case of volatility, for all stocks in the portfolio will not move in the same direction. True, all stocks do not move in the same direction. However, this may prove counterproductive to making investment, which is to earn returns. A highly diversified portfolio may at times off set gains that have legitimately accrued in respect of a stock. The correct rule is that a portfolio should be diversified to optimum level—not the same thing as saying it should accommodate as many shares as it can. Quality of portfolio diversification is not decided by companies whose shares comprise the portfolio; rather, it is decided by the kind of shares that comprise the portfolio. Thus, you should pay attention not to the number of companies whose shares you hold, but to the judiciousness of your portfolio. And remember, it makes no sense to keep two stocks in a portfolio that always move in the opposite direction, for it amounts to holding no shares.

Myth 3: Cheaper shares have more potential to rise:
Many believe that a stock traded at 50 paisa is more likely to rise to Rs 2, giving a return of 300%. It happens but only sometimes. Most such shares immediately fall back to their original levels, and if they don’t, you hardly get a chance to liquidate your holding, for, though there is a high price for the time being, there is hardly any buyer at that level. What should matter is not the price of a share, but the company’s capacity to generate return on its equity.

Myth 4: Shares with a particular PE are good or bad:
There are many who pay attention to PE ratio more than it deserves. Some believe a low PE ratio means that the stock may rise, whereas others believe that a high PE ratio indicates the faith of the market in the share, and therefore, according to them, it is a good investment. What should matter is neither the PE ratio nor EPS, but return on equity (ROE). (The author is a chartered accountant)
(Source: TOI Mumbai, 24th Sept, Page 21)

Vertical limit: Don’t fear D-street’s dizzying heights

Instead of bothering about milestones, concentrate on your strategy to earn handsome returns from the market
Sherna D’mello TNN
Last Tuesday’s US Federal Reserve rate cut was just the push the markets needed. The sensex had been hovering around its life-time high of 15,869 for over a week when the Fed action on September 18 saw it shoot past the 16K milestone. And it hasn’t looked back since then, with the benchmark index closing the week at 16,564—a 6.4% gain over last Friday. So is this time for investors to think about booking profit or is there more money to be made in this bull run? It’s a tough call with experts clearly divided on the future outlook of the markets. A section of market experts believe the 50 basis point cut (100 basis points = %) bps rate cut by the US Fed was ahead of expectation and thus a positive surprise. This prompt action has allayed concerns about a slowdown and will be positive for equities across the world including India. It translates into movement of more money to the emerg-ing markets. The rate cut might also prompt the Reserve Bank to cut rates, which would be positive for cyclical and interest rate sensitive sectors such as banks, autos, metals. A rate cut by the central bank would also boost earnings growth in financial year 2009. “Investors should buy into frontline, blue-chip stocks such as RIL and SBI even at the current levels. The India story is strong and there is an average 15-20% growth year-on-year in these stocks,” says Dawnay Day A V Securities director, stock broking, Seshadri Bharathan. This is a good move for a long-term investor looking to make fresh investments. However, other players feel the market is overbought and valuations are stretched. The sudden upsurge in the sensex after the Fed cut its rates by 0.5% instead of 0.25% as expected was euphoric. It’s hard to tell how long that uphoria will last. Reading between the lines, the 50 basis point cut is a preemptive move on the part of the Fed. The cut is intended not just to reduce disruptions in the financial markets, but also to ward off a recession in the US markets. Crude prices, at over $80 a barrel, are rising to record highs. On the domestic front as well political undercurrents are uneasy with a possibility of elections ahead of schedule. Further, the latest set of IIP numbers has revived the talk of a possible slow down in the industrial growth going forward. “In essence, what we are saying is that, whereas directionally there is nothing much to worry as far as the way forward is concerned and, the markets shall continue their northward journey. However, intermittent blips cannot be ruled out,” said Religare portfolio management services CIO Kunj Bansal. In this scenario, a short-term investor might want to book some profit at this level, especially if he has met his investment target. And if you want to enter the market the smartest move would be to buy on dips. When the market goes into an intermediate correction, that’s a great opportunity to pick up high growth stocks. If all the information seems contradictory and you’re still unsure, there’s another option for investors who want to get a piece of the action in the markets. Just leave it to the experts. When investing in the stock markets the right exit from a stock is as important as the entry. The best opportunities right now can probably be found in the midcap and small cap segment, where share prices are quoting at 16 to 19 times of the average earnings per share. But for small investors, it’s a big challenge to pick the right companies to invest. Therefore, it is advisable to invest in the market only through mutual funds. There are a host of funds to choose from and you can pick one that suits your needs. A good pick would be a diversified equity fund. It’s a good idea to study the track record of a fund before investing in it and compare it to other funds in the same category. Don’t make your choice simply based on the returns when the markets were moving up-during a bull phase most mutual funds will make money. The real test is to see how the fund performed when the markets were going down and trading was volatile. If it didn’t perform too badly in these phases you may have a winner.

Earning well but can’t save for investments? Here’s help...

SRIKALA BHASHYAM
Choosing the right investment product may be a challenge, but only for some. For many, many others, the toughest part is mobilising the funds itself. A number of readers have repeatedly written in, complaining that their biggest problem is generating a surplus amount from their incomes. Those who complain, while typically young, do have an annual income that is capable of generating surplus funds. So what’s the problem? Now there may be various factors for zero savings. But I’ve found that the most common reason is the absence of any financial discipline. It’s no wonder then that only those who are focused on saving regularly – look for investment options. So it all boils down to having a disciplined approach to create savings. Here are some tips to help you start saving money:

KNOW WHAT YOU SPEND
While everyone knows their earning, the same awareness may be missing when it comes to expenses. There are many who have no idea about their expenses and, as a result, investment is not a familiar word for them. So the best way to get started with savings is to work out an income and expenditure table. Do it for three months and you will know whether you generate a surplus, or you are in the same boat as the Government of India – living on deficit!

IDENTIFY YOUR GOALS Now the question is: Why bother about savings and investments when there is a regular cash flow? Unfortunately, we can’t be earning as long as we live, whether we are salaried professionals or self-employed. With life-expectancy improving, most of us are likely to spend two, or even three decades without any regular source of income. So savings and investments are necessary evils (if you think so!) as long as we are alive. And the best way to go about it is to prepare for the long haul.

NOT JUST FOR RETIREMENT Post-retirement life is only one part of the story. During our journey to retirement, there are a number of expenses which are likely to prop up. These include a car or property purchase, medical expenses, children’s education and marriage, etc. And for those who want to add little more colour to life, the list can get even bigger in terms of exotic holidays, a second property or regularly changing cars every 3-5 years! Now, to achieve all this, you would definitely need to plan monetarily, and it has to start as early as possible.

CLASSIFY YOUR GOALS One of the best options would be to classify your goals into short-term and long-term and allocate your savings accordingly. For instance, long-term financial needs – such as retirement planning and children’s education – can be financed through longterm products, and allocation towards them can be small for the time being. A good example is a monthly saving of just Rs 1,000 through an SIP in an equity fund which is good enough for a 25-yearold professional because he has at least another 25 years on hand to build the corpus. On the other hand, short-term events like a car purchase or a holiday requires a greater allocation in terms of savings. In the end, remember that while putting aside a portion of income on a monthly basis may not look exciting, it will surely be rewarding in the long-term and will keep you away from those huge credit card bills or a debt trap! (The author is a Bangalore-based investment consultant. She is the managing partner of RS Investment Consultants.
(Mumbai Mirror, 23rd Sept, Page 22)

Re now 39.90 to a $

LIFE BELOW 40: WHAT IT MEANS FOR YOU
Re now 39.90 to a $
Best In A Decade, Good News For Overseas Tourists, Students
Ten years ago, every time Indians travelled abroad it was common practice to stash away some dollars for the next trip or for the children’s overseas education. As the rupee touched an alltime low of 49.06 against the dollar in May 2002, this strategy seemed to make sense. The rupee was surely going to fall all the way to 60 against the dollar, and then all those dollars that had been hoarded would prove to be a fabulous investment. Today, that doesn’t seem like such a smart idea. The rupee on Thursday appreciated to its highest level in almost a decade. A dollar can now be bought for less than Rs 40, the first time that’s happened since May 13, 1998 when the fallout from the Pokhran II nuclear tests drove the exchange rate below that mark. When the forex markets closed for the day, the dollar was at Rs 39.89, leaving importers celebrating and exporters worried about shrinking margins. Other people too will cheer or jeer depending on their situation. If you are planning to travel abroad, you are probably grinning at this news as you will have to pay less to buy the same number of dollars. It’ll allow you to do some extra shopping. It’s good news too for consumers of imported goods—but only if the savings are passed on. Students too will have to shell out less for studying abroad. But it’s not such good news for NRIs like Sunita Williams who are touchingbase with their home country—they’ll pay more every time they swipe an international credit card. It also hits families who are sent money by kin from abroad—the same number of dollars will now fetch them fewer rupees.Conversely, if the rupee continues to gain against the dollar, foreign institutional investors (FIIs) will find investing in India even more attractive as their dollar returns will keep rising even with steady rupee returns. The strengthening rupee is especially good news for oil companies, which had been facing escalating international crude prices—now above $80 per barrel—and a government that was unlikely to let them hike prices domestically with elections anticipated in a few months. Like the oil companies, importers of gold too will be pleased that domestic prices are holding relatively stable at a time when the global price of the yellow metal is hitting all-time highs. On the flip side, software export firms face an erosion in already thinning margins as the number of rupees they earn for every dollar worth of software exported keeps dropping. Textiles, garments and leather exporters are other major losers from the strengthening rupee as global competition prevents them hiking their dollar prices too much, which means lower and lower rupee earnings as the rupee gains against the American currency. Why rupee is appreciating? Dollar inflows have been rising in recent years. Earlier, RBI made sure this did not lead to rapid appreciation of the rupee, since that could hurt exporters. With inflation now a serious worry, RBI has gone easy on buying up these dollars since that would pump more rupees into the system and fuel prices What will be cheaper? Anything imported. But that’s only if those importing decide to pass on the lower rupee prices to their consumers. Things like cellphones and PCs should see a cut in prices if the trend continues FIIs, FDI flows propelled Re surge The strengthening rupee may have cheered up Indians planning foreign tours and oil companies, but it’s not great news for exporters. What explains this surge in the rupee’s value against the greenback? Actually, it’s not been sudden at all. The rupee had been straining at the leash for some years now as dollar inflows kept moving up. The increase was driven partly by growing software exports, but more importantly by FIIs flocking to cash in on the ‘India growth story’, NRI deposits lured by interest rates better than they could get in their country of residence and also higher FDI flows. Normally, simple demand and supply forces would have ensured that the rupee strengthened against the dollar. The RBI, however, ensured that this did not happen by buying up dollars as fast as they came in and building up reserves, which are now at more than $200 billion. That’s changed in recent months, with the central bank forced to view inflation as a more serious threat to the economy than a rising rupee. The problem was that the strategy of mopping up dollars meant pumping equivalent sums of Indian rupees into the market, thereby increasing money supply. Higher money supply means more rupees chasing the same amount of physical goods, and the same forces of demand and supply then ensure that the price of goods goes up. Thus, the RBI has had to go slow on mopping up dollars. As a result, the rupee has been threatening to breach the Rs 40 mark for several months, having moved rapidly from Rs 44 to the dollar in March to below Rs 41 by June. Thursday’s milestone was really a matter of when rather than if. The interest rate cut by the US Federal Reserve ended up accelerating the trend, as India’s interest rate became even more attractive in relative terms. In the last two days, the dollar dropped from Rs 40.43 to Rs 39.89, a 54 paise fall. Where do things go from here? Classical theory would suggest that as export earnings drop and imports surge, the demand for dollars will start outstripping supply and hence act as a check against runaway appreciation of the rupee. That, however, is the economists’ idealised world of perfect markets responding only to demand and supply. In the real world, markets are neither perfect nor fully informed. The reality may, therefore, turn out quite different. Also, if foreign investors—FIIs and FDI—continue to see India as the place to be, widening trade deficits may do little to dampen the inflow of dollars.

Mind your (body) language

It isn’t only ‘what’ you do; it’s ‘how’ you do it that helps doctors reach verdicts about your health. Read on, to know how many of your pains and ailments may be related to your body language
Body language can be a very accurate indicator of your health — most people don't realise how much they give away, just by the way they hold their body or move. As a doctor, I'm trained to look for external signs of health problems that even the patient isn't aware of. Here are some signs to look out for...

CRADLING BABY ON YOUR RIGHT

Health issue: Post-natal depression How a mum holds her baby gives clues to her mental health. Mums cradling with their right arm — whether they're right or left-handed — can mean they are more likely to suffer from stress, which could develop into postnatal depression.

WHAT YOU CAN DO? Watch out for difficulty coping, crying, anxiety, guilt, inadequacy, irritability and panic attacks. If at all worried, see a doctor.

SLEEPING ON YOUR BACK

Hidden issue: Indigestion How you sleep is a good indicator of hidden digestive problems. He says people who sleep on their front tend to have good digestion, but people who lie on their back often suffer from indigestion, heartburn and disturbed sleep.

WHAT YOU CAN DO? The best position for sleep is on your front or your left side. These positions help digestion as they encourage undigested food and acids to stay in your stomach and not travel back up your oesophagus. Sleeping on the right side can make it worse.

WALKING WITH A WIGGLE

Hidden issue: Twisted pelvis Sure it might look sexy to walk with a Marilyn Monroe-style swing, but it can be a sign that your pelvis is twisted. The pelvis is the foundation of the whole skeleton. When out of proper alignment it can trigger knee and ankle problems and lower back pain. And, because more weight is placed on one hip, it causes greater 'wear and tear', and could result in the need for a hip replacement later in life.

WHAT YOU CAN DO? A twisted pelvis can be caused during birth, in an accident or simply by sitting or sleeping in a 'bad' position for a long time. The most effective way to treat a twisted pelvis is to see an osteopath or chiropractor. To prevent the problem returning, try yoga, Pilates or Alexander technique classes to keep your joints supple and properly aligned. HUNCHING

YOUR SHOULDERS

Hidden issue: Osteoporosis If a woman has even a mild shoulder hunch check for osteoporosis — it's a telltale sign. Osteoporosis reduces bone density, leading to hip, spine and wrist fractures. WHAT YOU CAN DO? Weight-bearing exercises like walking, jogging, and tennis may prevent or slow osteoporosis. Reduce salt (it's linked to weaker bones) and increase calcium by eating more dairy, dried apricots, nuts and seeds, spinach and tinned salmon. A calcium supplement is also good.

LICKING YOUR LIPS

Hidden health issue: Candida Constant lip licking can be a sign of infection —candida, also known as oral thrush, is by far the most common. This yeast infection often takes hold at the edges of the mouth, causing cracks in the corners, which feel dry and itchy and make you want to lick your lips more often.

WHAT YOU CAN DO? It's the same bug that causes vaginal thrush and is treated with similar anti-fungal medication — usually by tablet or mouthwash. To stop it returning, experts suggest eating live yoghurt daily, as its active bacteria can help restore your mouth's natural balance.

CROSSING YOUR LEGS

Hidden issue: Constipation Constant leg crossing can indicate stomach problems, especially in kids. If a child came into my surgery and was crossing his or her legs a lot, then it is constipation. WHAT YOU CAN DO? It's normal to suffer sometimes and it's usually caused by poor diet. Increase your intake of high-fibre foods such as wholegrain bread, bran, fruit and veg, and drink plenty of water all day. Exercise is also key - a daily 30-minute brisk walk should banish the problem.

FROWNING

Hidden issue: Eye problems Not only does constant frowning or squinting make you look stressed and create wrinkles, it's often the first sign your eyes aren't functioning as well as they should. This may indicate an underlying sight problem or eye infection and can lead to eyestrain, headaches and cause problems driving.

WHAT YOU CAN DO? Get your eyes tested by an optician. If you use a computer at work, your company is obliged to pay for a yearly eye test. Always wear sunglasses in bright sunlight and if you have prescription lenses, don't let vanity stop you wearing them.

YOU CAN'T KEEP STILL

Hidden issue: Restless leg syndrome RLS causes uncomfortable sensations in your legs and an overwhelming urge to move them. It tends to be worse at night, disturbing sleep and putting a strain on relationships by preventing your partner from sleeping, too.

WHAT YOU CAN DO? Avoid stimulants such as caffeine, cigarettes and alcohol for three hours before bedtime and exercise regularly, but only in the morning. Lack of iron can cause RLS. Iron is essential for the production of dopamine — the chemical that relaxes the body and brain. — Daily Mirror

(Source: Mumbai Mirror, 19th Sept,Page 34)

Now, more free office software

   Free software got a major boost Monday when IBM announced it would start offering free word processing and other office software, in another challenge to Microsoft’s core Office suite of products.
   IBM said it would offer document, spreadsheet and presentation software in a group of tools called Lotus Symphony.
   In another announcement, Google expanded its online suite of office software to include a business presentation tool similar to Microsoft’s popular PowerPoint.
   The new program will be included in Google’s free online software bundle, called Docs. The company will also sell a souped-up version to businesses, universities and government agencies.
   As PowerPoint does, Google’s new software enables users to create a series of slides with a mixture of text and graphics on each.
   Google’s software suite already includes word processing, spreadsheet and calendar management programs. AGENCIES

(Source: Mumbai Mirroe, Mumbai, 19^th Sept 2007, Page 30)

Brokers load it over

COAXING TRADER, HIDDEN CHARGES
Shailesh Menon MUMBAI
AMOD Patil (name changed) recently took to trading in stocks. At the end of the settlement period for a particular trade, his broker handed out a contract bill which had names of securities and quantity traded. Apart from brokerage charges, Mr Patil also had to pay a certain amount under the heading ‘other charges’, which included service tax, stamp duty, Sebi charges, investor protection fund (IPF) charges and transaction charges. Ideally, it is the broker who has to foot Sebi charges (also known as turnover fee) and charges towards IPF. But most broking houses pass on these charges to their clients. More so, if the client has bargained too hard on brokerage fees. This is just one instance how a broker can make you foot the bill that he is obliged to pay. There are also instances where broking houses do not give the break-up of charges billed to the client, and club most of it under ‘other charges’. This despite the fact that according to stock exchange regulations, brokers have to explicitly state the components of net brokerage charge. The broker can charge brokerage fees (as agreed upon by the client and the broker), penalties arising on specific default on behalf of his client, service tax, securities transaction tax (STT) as applicable, stamp duty and transaction charges (paid to exchanges). And it is not just amateur investors like Amod Patil who are being short changed by broking firms, some of the seasoned traders too complain that many broking firms are not transparent about charges they levy. Then there is also the case of omission of ‘minor details’ in contract notes such as order number, order time, margin status. These irregularities are committed mostly by smaller broking firms. “Sometimes we find contract notes are not stamped, signed or duly acknowledged by the client. We have also come across tampering of serial numbers by brokers. The regulator has been trying vigorously to arrest operational flaws like non-maintenance of client registration forms and relevant trade documents and delay in issuing contract notes,” said a Mumbai-based investor association member. Rules stipulate that contract notes have to be issued within the stipulated time. In case of electronic issuance of contract notes by brokers, the client ensures the same is digitally signed. It is the contract note or the sale note (confirmation memo) that gives rise to contractual rights and obligations of parties of the trade. Hence, investors should insist on a contract note from stockbrokers, market experts say. There are more than 8,000 Sebi-registered brokers and sub-brokers, all providing the similar service of buying and selling securities. Given this large number, it is difficult for a lay investor to find the right broker. “If a broker hands out an irregular bill, 90% chance is that the trade has not been done through stock exchanges. This happens more in the case of propriety trading where family members or acquaintances of brokers set off a trade in mutual agreement. Many a time, even clients approach brokers to give dummy bills to evade tax,” said a broker on condition of anonymity. Though, exchanges conduct regular scrutiny (once or twice in a year) into the trading pattern of all brokerages, there is no easy way to spot such irregularities. shailesh.menon@timesgroup.com

(Source:The Economic Times, Mumbai, 18th September 2007, Page 20)

LIC likely to double equity exposure on ULIP demand

Gone are the days when LIC, at the behest of the government, used to anchor troubled stock markets. Today, the life insurer has a mandate from ULIP investors to buy shares. Life Insurance Corporation of India has already purchased equity shares worth Rs 12,000 crore in the markets this fiscal, with 80% of its new business premium coming from unit-linked insurance products (ULIPs). “Our investment in equity has been Rs 12,000 crore this fiscal and Rs 32,000 crore in debt as on August 31, 2007,” LIC chairman TS Vijayan said on Friday after presenting the bonus and financials for 2006-07. Birla Sun Life Insurance pioneered ULIPs in India just four years ago and LIC’s first ULIP product was introduced in early 2005. Driven by ULIPs, LIC’s investment in equity markets is set to double this fiscal if the current demand continues. Meanwhile, the total purchases of LIC in the stock market this year had already touched Rs 19,700 crore compared with Rs 24,000 crore in 2006-07. Besides total ULIPs fund investment of Rs 14,000 crore in market this fiscal, another Rs 5,700- crore exposure in markets represented traditional products. Under ULIPs up to 80% fund gathered by LIC could have exposure to equity markets in contrast to only 8-10% exposure taken for traditional products. LIC’s total investment in the capital market as on March 31 stood at Rs 1,24,643 crore. ULIPs unlike traditional products offer the option of investment under four different funds that take exposure in bond and equity market as per the risk appetite of an individual. The policy holder has the option to choose any one of the four funds called bond, secured, balanced and growth funds. Mr Vijayan said, “LIC was planning to give a strong push to its traditional products too”.
(Source:The Economic Times, Mumbai, 17th September, Page 17)

How to retire healthy, wealthy & wise

In the jet age of Twenty20 cricket and instant coffees, everything is expected to happen at the snap of a finger. Why not retire at an early age, individuals with jet-setting career life are now asking. For an average person, building a kitty of Rs 2-4 crore should help sustain his lifestyle post-retirement, say Vidyalaxmi & Muthukumar K
IT sounds a little odd. Thirty-year-old Rajesh Thakur is yet to get a receding hairline, but is already talking of retiring. Just five years ago, he did his post graduation from a reputed B-school in India, and is already a vice-president in a large entertainment company. He has had a successful career till date, earning a seven-digit salary. Now, he is planning to throttle his career life even more for he doesn’t see himself working after the age of 50. For that’s the time he is planning to pursue his life-time passion of wildlife photography. Rajesh Thakur is not the only one who aspires to retire early. But could that be a reality for Mr Thakur and many other people? While the idea of a retired life could be a permanent good bye to all the work-related stress, the fear is of outliving your savings. Financial planners, therefore, advices a proper retirement plan to target a kitty that could earn enough income to sustain one’s lifestyle. Take the case of Mr Thakur who is planning to retire at the age of 50. And the life expectancy say is 70 years. Which means he needs income for 20 more years after retiring. Our analysis shows that anywhere from Rs 1-4 crore is needed to be build as a retirement kitty to earn an income of Rs 5-10 lakhs post-retirement for individuals aged between 25 and 40. And these income levels have been adjusted for inflation. And to earn that kitty, monthly investments of Rs 6,000 upwards is needed. So, for a 25-year-old, who has 25 years more to invest and build a kitty of Rs 1.9 crore to sustain income for 20 years, monthly investments required would be Rs 6,613 for 25 years. This is to target a kitty of an annual income of Rs 5 lakhs. For Mr Thakur, to earn Rs 10 lakhs annually, he would need to invest Rs 21,526 on a monthly basis for 20 years. The expected investment return on portfolio has been assumed to be different (in the range of 8-15% pa) due to a varied investment horizon. As a thumb rule, as the age increases, expected investment return has been reduced. Early beginner advantage When you turn 25, you have least financial responsibilities. The chances are that you are staying with your parents. That saves you from paying rent. Also, it is likely that either or both your parents are still working. So they are not dependent on your income. That leaves you with huge surplus income to invest. Once you near the age of 30, you may think of buying a house. That brings the EMI component to your monthly outgo. Then, as your responsibility increases — like a family, car, children’s education and their upbringing, there is limited scope for you to save, say financial planners. Certified financial planner and wealth advisor Gaurav Mashruwala points out that an investor shows a higher risk appetite when he is young and kicking. He explains: “The fact that an investor doesn’t have too much of financial responsibilities on his/her shoulder, influences him to look at riskier investments. The fear of losing the capital is often muted by the possible higher gains he/she may make in future. But this risk-prone behaviour subsides with increasing age and responsibilities.” Facts and figures you must know The decision to retire early has to be viewed from two sides. One is the willingness to retire and another is the ability to retire. When you start saving early, you see large chunks of money, hence, savings — which make you believe that you can afford to retire early. But when you pass through the age band of 24 to 45 years, you can’t foresee many contingencies. If you have contingencies coming your way, it necessitates building some buffers into your financial plan to retire at 45. Today, life expectancy has gone up because of medical advancements. Medical costs too have gone up. Inflation is on the rise. So if you plan to retire at 45, you have to build a huge corpus to retire rich. Now, this corpus depends on what you want to do after the retirement. It should be Rs 2-4 crore or upwards to have a basic living, especially if you decide to stay in a metro city. How inflation impacts your finances To put it simply, say you want to earn an annual income of Rs 5,00,000 after 25 years. In that case, you should actually be earning an income of Rs 17,00,000 after 25 years. This is after adjusted for inflation of 5% annual inflation. One of the main reason why a youngster should target a larger kitty than otherwise. Live more for future than present If you plan an early retirement, then you are left with no option but to live for the future than live in the present. You need to make significant trade-offs in existing lifestyle to ensure a good retired plan, says Akhilesh Tilotia, a certified-financial planner and director of Park Financial Advisors. At the current life expectancy level, if you plan to retire at 45, your working life may work out to 20 years and life after retirement is likely to span over 30 years. Another aspect you cannot ignore is that most important milestones in your life, including children’s education and their marriage will hit you when you are at mid 50. That implies you have to save even more as the Rs 2 crore to Rs 4-crore corpus is just enough to meet your monthly expenses. But the most important component of your investment portfolio is the healthcare-cover. Mr Tilotia adds, “This is especially relevant for today’s generation who want to retire early on account of mounting healthcare costs. Life expectancy has also gone up significantly, which means that you may frequent the hospitals/medical centres in case of any health complaints. You can save on this cost with a comprehensive health cover.” In this story, one should note that the monthly investment requirement is just an indicative figure and, in fact, it comes down to the extent one has already invested. The idea is to target a kitty post retirement and work diligently towards getting it.

vidyalaxmi.v@timesgroup.com

(Source: The Economic Times, Mumbai, 17th September Page 17)

Why we cannot tolerate criticism

(Source: Economic Times, Mumbai, 13th Sept, Page 14)

A LADY came to me complaining that she is hurt by even small criticisms coming from others. She said she was very sensitive.
I asked her to stop using that word. I said, ‘You are not sensitive. A really sensitive person will be porous; she will allow the words to pass through her. Only arrogant people get hurt. If you are hurt, please understand that you are arrogant. You are strong like a stone, which is why words come and hit you.’
A sensitive person would have allowed the words pass through her; she will never suffer. Even if someone is deliberately rude, a sensitive person understands where such a person is coming from and is not defensive.
Suffering is always from arrogance, never from sensitivity. A person who is sensitive will never suffer. A sensitive person will suffer on account of another person in distress, not for oneself.
You suffer from words when you stop them, when you resist them, when you create your own meaning out of them. When we do not create our own meanings out of words, we do not suffer. We play with words. We always choose nice words to support our ego. We do not say, ‘I am hurt because I am arrogant.’ We always use polished words such as, ‘I am hurt because I am sensitive.’ Please don’t cheat yourself with words. Let your words be unfiltered by your ego.
Let me tell you a small story:
Once, a contractor wanted to donate a sports car to an official. The official refused, saying, “I am an honest person and I cannot think of accepting this gift.” The contractor asked him, “In that case how would it be if I sell you this car for Rs 10?’ The official replied immediately, ‘In that case, I will have two cars!’
When an untruth is wrapped in gift packing, you forget you have a problem. You accept it without a murmur. However, when truth is presented bare, you do protest. Presented bare, truth hurts; ego cannot tolerate truth easily.
We are so concerned about politically and socially correct statements, it seems no longer acceptable for anyone to speak the truth. But it seems to be perfectly acceptable to lie in a politically correct manner.
Ramakrishna says beautifully, ‘Let your words and mind be straightened.’ Whatever is, let it be offered straight without filtering. Learn to accept truth bare. At least you will know you have a problem that you can solve.

An SMS can save you from unscrupulous brokers

(Source: Economic Times, Mumbai, 12th Sept 2007, Page 19)

Since September 1, NSDL and CDSL have introduced free SMS alert facility to apprise equity investors of any shuffle in their demat share holdings. This alert facility could put an end to probable mischief in the hands of the brokers, says Gaurav Pai

GOOD times are in for equity investors. NSDL and CDSL (organisations that keep a record of all stock holdings in dematerialised form) are pitching in to alert investors of transactions in demat accounts through a simple SMS. In short, the move could put an end to probable mischief in the hands of unscrupulous brokers. Every time a single share in your demat account has a shuffle, a SMS would be posted to you. While brokers previously gave this facility, the service from these third party organisations actually brings Chinese walls and safety quotient into your equity trading. And all this at no cost.

Why is this service important?

FOR starters, this service is sheer convenience. Also, some brokers are also known to play around with your idle shares. Say, for instance, you own 100 shares of Reliance Industries in your demat account. There is a chance that a broker may use these shares for speculative trading as in buying or selling for a short term on the back of expectation of a company declaring some news. He may use it in a margin account — where some other investor can borrow money from your brokerage account to purchase securities. If you use the SMS facility, every time your broker touches a single share in your demat account — your cell phone will start buzzing.

What’s new?

EVER since cell phones became the rage in the country, many brokerages have been offering these services to some of their clients. However, these customers were either high networth individuals (HNIs) or those who did large transactions. Again, sending SMS from a broker itself didn’t rule out the possibility of it being fudged. But such alert services from a NSDL or a CDSL could actually be an useful one.
Sending out SMSs and other forms of communication are simply uneconomical for smaller transactions, was the common complaint. However, with the depositories (those bodies that have all the details about the shares in the demat form) making it mandatory for all brokers and banks to provide SMSs after share transactions, investors should heave a high of relief.

How do you apply?

THIS facility is available to investors who request for such a facility and provide their mobile numbers to the DPs, i.e. the broker or the banker. They in turn will have to capture the numbers in the computer system and tick the SMS flag in their system. In case mobile numbers already given have changed, investors will just need to inform their DPs by way of written requests. But this facility will not be available to investors who have numbers originating outside India.

What are the benefits of this facility?

UNDER this facility, investors will be able to receive alerts for the debits (in case you have sold shares) or credits (where one has bought shares) that have taken place in their demat accounts, a day after the transaction has actually taken place. All this and not having to pay anything.
The obvious shortfall is that you won’t get to know as and when the transaction has been executed but only on the next day. Next day alerts are limited up to five ISINs in a day. However, in case there have been more than five debits in a day, NSDL will send an alert to the investor, asking him/her to contact the nearest DP in order to verify his/her transaction in order to prevent any instances of fraud.

Ways to track your share account

IT makes sense to keep abreast with your demat account — lest your broker takes you for a ride. One of the best ways you can do this is by going on the internet. Both NSDL and CDSL offer you these facilities.
gaurav.pai@timesgroup.com

Slow and Steady

Remember the story about the hare who took a nap because he was so sure he could run faster than the tortoise and lost the race? Financial advisors say late starters will find it increasingly difficult with each advancing year to catch up with someone who started earlier. “People are often amazed when I show them how much a small amount invested early in life can yield,” says a financial advisor. “You would not have the same corpus even if you put in double or triple the amount of money as someone who started 10 years earlier.” Want to see it in concrete numbers? Let’s assume you start investing Rs 500 per month when you are 20, and go on investing for the next 40 years With an 8% annual return, you would have built a corpus of Rs 17.45 lakh by the time you are 60 years old. Now let’s assume you start in vesting at 30, and the amount is double, that is, Rs 1,000 per month. When you are 60, you would have only Rs 14.90 lakh. If you wait till age 40 to start investing, even if you put in Rs 2,500 per month for the next 20 years, you will have only Rs 14.72 lakh at age 60—not a very safe situation. And if you started the process merely five years before turning 60, with Rs 20,000 per month, you would build a corpus of only Rs 14.69 lakh.

(Source: Your Money, The Times of India, Mumbai 11th Sept 2007)

Own a dream home and save on taxes as well

(Source: Economic Times, Mumbai, 10th September)

Preeti Bhatnagar and Dinesh Daga (Ernst & Young)

AGAINST the backdrop of rising property prices and interest rates, borrowers need to be aware of the tax benefits from home loans. Tax breaks can be availed of on both components of the loan installment — principal and interest. Tax benefits, in respect of repayment of the principal amount and interest payments, are provided under Section 80C and Section 24 of the Income Tax Act, 1961, respectively. For claiming a deduction of the principal amount, the loan can be taken for purchase or construction of the house property and from specified lenders, such as central or state governments or any bank. Further, deduction for interest can be claimed not only on loans taken for purchase or construction of house property, but also for repair, renewal or reconstruction of the existing house property. Let us illustrate: Abhishek Sen takes a bank loan of Rs 18 lakh for construction of residential house property on November 1, 2006. For the sake of simplicity, let us assume that he is required to repay this loan in monthly instalments of Rs 25,000 (Rs 15,000 of principal amount+Rs 10,000 of interest) over a period of 10 years. The construction of the property is to be completed on September 30, 2009. Principal: The borrower can claim a deduction of the principal sum and stamp duty, registration fee and other specified expenses incurred for the purpose of transfer of the house property to him. The deduction can be availed of, starting from the financial year in which the house property is purchased or the construction thereof is completed, up to a maximum limit of Rs 1 lakh per year. Therefore, from FY09-10 onwards, Abhishek can claim deduction for the actual principal payment or Rs 1 lakh per year, whichever is lower. Interest: The borrower can also claim a deduction for the interest due on the housing loan starting from the financial year in which the purchase, construction or the repair, renovation, etc, takes place. In case of self-occupied property, the borrower can claim interest up to Rs 1.5 lakh per year on loan taken on or after April 1, 1999, for acquisition or construction of the property, provided the acquisition or construction is completed within three years from the end of the financial year in which the loan was taken. For loans taken before April 1, 1999, the deduction is Rs 30,000 per year. In case of let-out property, the borrower can claim interest on actual basis. Further, interest incurred for the pre-acquisition or pre-construction period can be claimed equally for 5 financial years starting from the year in which the property is acquired or construction is completed. However, the total interest deduction cannot exceed Rs 1.5 lakh per year. In Abhishek’s case, deduction for the interest of Rs 1.2 lakh per year can be claimed from FY09-10 onwards. The interest for the preconstruction period being Rs 2.9 lakh (Rs 10,000 per month for 29 months) can be claimed as a deduction in five equal instalments of Rs 58,000 per year from FY09-10 onwards, subject to aggregate limit of Rs 1.5 lakh per year. How to claim: The above deductions can be claimed by the borrower on the basis of a certificate issued by the lending institution, stating the principal amount paid and the interest amount due for that particular financial year. Other aspects: A few other points which a borrower should keep in mind are: • Sale of property: If the property is sold before 5 years from the end of the financial year in which possession of such property is obtained, the deduction allowable for principal amount will no longer be available and deduction allowed in earlier years for the principal sums will be considered as the borrower’s income of the financial year in which the property is sold. • Pre-payment of loan: In case of complete or partial pre-payment of loan, the above provisions would continue to apply up to the year the loan is alive; once the loan is entirely paid, no tax benefits can be claimed in subsequent years. • Property under construction: Principal amount repaid before construction is not eligible for deduction; however, pre-construction interest can be claimed in the period after completion of construction.

Soon, 30,000 movies in one tiny gadget

Soon, 30,000 movies in one tiny gadget
Chicago: Imagine cramming 30,000 full-length movies into a gadget the size of an iPod. Scientists at IBM said on Thursday they had moved closer to such a feat by learning how to steer single atoms in a way that could create building blocks for ultra-tiny storage devices. Understanding and manipulating the behaviour of atoms is critical to harnessing the power of nanotechnology, which deals with particles tens of thousands of times smaller than the width of a human hair. “One of the most basic properties that every atom has is that it behaves like a little magnet,” said Cyrus Hirjibehedin, a scientist at International Business Machines Corp’s Almaden Research Center in San Jose, California. “If you can keep that magnetic orientation stable over time, then you can use that to store information. That is how your hard drive works,” Hirjibehedin said. “What we are trying to understand is how this fundamental property works for a single atom.” Hirjibehedin and colleague Andreas Heinrich studied this property — known as magnetic anisotropy — in individual iron atoms using a special microscope developed at IBM. “What we’ve been able to do is to look at an iron atom on a copper surface and to move that magnetic orientation around,” Heinrich said. Now they are looking for an atom that remains stable over a long time. IBM colleagues in Zurich, Switzerland, meanwhile, have stumbled on a way to manipulate molecules to switch on and off, a basic function needed in computer logic. They had been studying the vibration of a molecule when they noticed it had distinct switching capabilities. Heinrich, who is familiar with the work, said the find is especially important because the switching action did not alter the molecules’ framework. REUTERS

NANO-TECH PROMISE: An atomic-sized image resulting from scientific work at IBM’s labs

We’ll make the future happen

(Source: Times of India, Mumbai, 31st Aug, Page 2)

February 29, 1992 marked the beginning of India’s economic liberalisation. Here, then finance minister Manmohan Singh lays out the roadmap in that year’s Budget speech.
To realise our development potential, we have to unshackle the human spirit of creativity, idealism, adventure and enterprise that our people possess in abundant measure. We have to harness all our latent resources for a second industrial revolution and a second agriculture revolution. Our economy, polity and society have to be extraordinarily resilient and alert if we are to take full advantage of the opportunities and to minimise the risks associated with the increasing globalisation of economic processes. We have to accept the need for restructuring and reform if we are to avoid an increasing marginalisation of India in the evolving world economy. The economic policy changes brought about by our government under the inspiring leadership of prime minister Narasimha Rao in the last eight months are inspired by this vision. Our party is an inheritor of great traditions of national service. True to this heritage, we commit ourselves to providing a firm and purposeful sense of direction to the reform process so that this ancient land of India regains its glory and rightful place in the comity of nations. This budget represents a contribution to the successful implementation of this great national enterprise, of building an India free of war, want and exploitation, an India worthy of the dreams of the founding fathers of our republic. We shall pay any price, bear any burden, make any sacrifice to realise those dreams. India is on the move again. We shall make the future happen.

The 9Cs which make a leader stand out from the crowd

(Source: Times of India,Mumbai,31st Aug, Page 2)


by LEE IACOCCA FORMER CEO, CHRYSLER

I’ve never been commander-in-chief, but I’ve been a CEO. I understand a few things about leadership at the top. I’ve figured out nine points — not 10 (I don’t want people accusing me of thinking I’m Moses). I call them the Nine Cs of Leadership. They’re not fancy or complicated. Just clear, obvious qualities that a true leader should have.
So, here’s my C list:
A leader has to show Curiosity. He has to listen to people outside the ‘Yes, sir’ crowd. He has to read voraciously, because the world is a complicated place. George W Bush brags about never reading a newspaper. ‘‘I just scan the headlines,” he says. Am I hearing this right? He’s the President of the US and he never reads a newspaper? Thomas Jefferson once said, ‘‘Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate for a moment to prefer the latter.’’
A leader has to be Creative, go out on a limb, be willing to try something different. You know, think outside the box. George Bush prides himself on never changing, even as the world around him is spinning out of control. God forbid someone should accuse him of flip-flopping. There’s a disturbingly messianic fervour to his certainty. Leadership is all about managing change — whether you’re leading a company or leading a country. Things change, and you get creative. You adapt.
A leader has to Communicate. I’m not talking about running off at the mouth or spouting sound bites. I’m talking about facing reality and telling the truth. Communication has to start with telling the truth, even when it may be painful.
A leader has to be a person of Character — knowing the difference between right and wrong and having the guts to do the right thing. Abraham Lincoln once said, ‘‘If you want to test a man’s character, give him power.”
A leader must have Courage. Swagger isn’t courage. Tough talk isn’t courage. Courage in the twenty-first century doesn’t mean posturing and bravado. Courage is a commitment to sit down at the negotiating table and talk. If you’re a politician, courage means taking a position even when you know it will cost you votes.
To be a leader you’ve got to have Conviction — a fire in your belly. You’ve got to have passion. You’ve got to really want to get something done.
A leader should have Charisma. Charisma is the quality that makes people want to follow you. It’s the ability to inspire. People follow a leader because they trust him. That’s my definition of charisma.
A leader has to be Competent. You’ve got to know what you’re doing. More importantly, you’ve got to surround yourself with people who know what
they’re doing.
You can’t be a leader if you don’t have Common Sense. I call this Charlie Beacham’s rule. When I was a young guy just starting out in the car business, one of my first jobs was as Ford’s zone manager in Wilkes-Barre, Pennsylvania. My boss was a guy named Charlie Beacham, who was the East Coast regional manager. Charlie used to tell me, “Remember, Lee, the only thing you’ve got going for you as a human being is your ability to reason and your common sense. If you don’t know a dip of horseshit from a dip of vanilla ice cream, you’ll never make it.”

Mobile Mail for Free!!!

(Source: Times of India, Mumbai, 30^th August, Page 23)

Check Gmail, Hotmail, Yahoo! And Other Web Mail On Your Handset Free Of Cost

Nimish Dubey

Email on the mobile has been around for a few years now and generally associated with the highly mobile professional with deep pockets. But it seems push mail—the revolutionary mobile mail service pioneered by BlackBerry—could finally be going mainstream. And the reason for this is simple: some companies are offering the service free of cost.

Push mail magic…

For the uninitiated push mail is a service that allows users to get mail delivered directly (‘pushed’) to their mobile devices. In simple English, one gets a mail on one’s mobile device the moment it arrives in the inbox—just as one would using an e-mail client (such as Outlook Express) on a desktop.
The moment a new mail comes, one gets an indication—whether in the form of a chime or a vibration—on one’s PDA or cellphone. Needless to say, this service was immensely popular among executives on the move, as they could keep in touch with their email without having to bother about lugging about a notebook with a wireless internet connection.
The catch (there always is one!) was that this service inevitably came with a price tag. Whether you used BlackBerry’s push mail service or the ones provided by other cellular service providers (such as Hutch and Airtel), you ended up paying for the facility.
What’s more, push mail was limited to a few devices—generally high-end smartphones. It was therefore hardly surprising that for most people, it remained an ‘enterprise app’ rather than one meant for the common mobile user.

…goes mainstream!

But that seems set to change. Thanks to initiatives from some developers, such as Consilient (www.consilient.com), users can now get push mail on their handsets free of cost—all one needs is a handset that can access the internet. And unlike other push mail services, this one works with almost all mid-segment phones.
One just needs to do is register and give one’s email ID and phone number at the developer’s website, and then download the application. That’s it—the application keeps checking your mail server for any new mails and notifies you the moment any new mail comes in.
You can not only check your office mail on it but also use it to keep track of your webmail such as Yahoo! Mail and Google.
Most of the free push mail applications are pretty powerful.
They allow you to compose, reply and delete mails and even view attachments (provided your handset supports the attachment format—you will not, for example, be able to view an MS Office file on a phone that does not support MS Office formats!).
In the case of Consilient, one can even use the application as a plain email client. Instead of keeping it running all the time, one can just use it to check or compose mails. And as far as efficiency is concerned, the free solutions give the likes of BlackBerry a run for its money—we got a mail the moment it arrived using Consilient just a fraction after a colleague got it on her BlackBerry.

Not perfect, but hey, it’s free!

Of course, there are still a few niggles to be sorted out. Free push mail servers sometimes seem to take forever to retrieve new mail.
And there are also whispers about just how secure they are, although nothing concrete has come to light as yet and the likes of Consilient and Emoze insist that they take every conceivable care to protect their users.
And while the service itself is free, users might end up having to shell out a fair bit for the data transferred over their GPRS connections, unless they have an unlimited internet access plan.
Finally, keeping a free push mail application running in the background can drain a cellphone’s battery—not only does the phone’s processor have to work to keep the application running but battery is also expended when the phone remains connected to the internet!
But all these are minor niggles if one considers the benefit these applications offer—the ability to access and respond to email on the move without any extra expenditure.
Push mail’s days of being a niche service seem all set to end.

Free push mail services Consilient: www.consilient.com Emoze: www.emoze.com Morange: www.morange.com Cortado: www.cortado.com

Erase CVV number from your credit card to check misuse

(Source: Economic Times, Mumbai, 30^th August 2007, Page 19)

The best way to protect your debit or credit card from fraudulent use is to memorise the credit verification value & then put a small opaque sticker on it, says SP Ketkar

 

   MR A, young call centre executive had just obtained his first credit card, when another bank’s DSA (Direct Sales Agent) approached him and explained the benefits of carrying two cards. The new card was for ‘free’ and the only document required was a photocopy of the first credit card. Mr A felt proud for the power of his first card and in his enthusiasm to quickly get another one in his wallet, he photocopied both sides of his card and handed over to the DSA executive. At around same time, Mr B, who teaches history at the city college, was impressed by the tele brand advertisements on TV and recently obtained an ATM-cum-debit card to be used for mail and telephonic orders. A few successful transactions later, he found one of his orders was not getting accepted even after repeatedly punching of the numbers as guided by the voice prompt. After making few attempts, he nearly gave up, before he realised that it was the last day to avail of the ‘best offer’. He, therefore, decided to take the help of a tele agent and read out to her the card number, validity date and the last three digits on the signature panel of the card for urgent processing of his order.
   Prima facie, both the above stories sound mundane, which none of our friends above found anything disturbing either. However, Mr A and B were all shocked to see what they found in account statements of their cards the following month. They found their card had been misused and found items of online shopping transactions, which they never did.
   As on date, transactions in CNP (Card-Not-Present with the merchant) environment such as online ticket booking, utility bill payments, purchase of books or any Internet, telephone or mail orders, merely require the users to enter their card number, card validity month/year and a code called CVV (Credit Verification Value) or CVC (Card Validation Code) that is available on the card itself.
   CVV is a three-digit code typically imprinted at the end of signature panel on the reverse of the card (or a four-digit code little above the end of card number on front side) and is meant to serve as authorising code for CNP transactions. In short, CVV number in CNP transactions is a key to your card account, just the way the ATM PIN is for accessing your bank account. However, unlike the PIN for ATM use, CVV code is printed on the card itself and is rarely protected by the users. This exposes all credit and debit card users to the risk of their cards being misused for online shopping.
   Banks, when contacted, remind you of the standard terms and conditions for issue of cards and say you are advised to protect your cards all the time. You must ensure that your card is swiped strictly in your presence and no one is making a note of your CVV for fraudulent online usage. They further tell you, in case you suspect that your card details are exposed, you must get a fresh card issued with new CVV and then protect that card well. Under these circumstances, the only way to protect your debit or credit card from fraudulent CNP transactions is to memorise the CVV and then put a small opaque sticker on it or simply erase it from the card.
   (The author is an alumnus of IIMB. Views expressed in the article are personal)

 

GAMES financial advisors PLAY

Source:Your Money, Times of India, Mumbai,28^th August, Page 37.

Learn the rules thoroughly to ensure that charlatans don’t play roulette with your hard-earned money

 

Shilpa Nayak

 

   BACK in the good old days, you had investment advice thrust upon you only if you were born great or achieved greatness. But that is no longer true; the financial services industry has cottoned on to the great Indian middle class, and is going all out to woo the customer—any customer. Banks, brokerage houses, investment advisors, and insurance agents are all making a beeline to your house or office. What do they want to sell, you ask? Good heavens, nothing! Of course they wouldn’t dream of trying to peddle something you don’t need. They’re Relationship Managers, or Investment Consultants, or Portfolio Advisors. They go by many names these days. And they all profess to have your best interest at heart. They promise to help you manage your wealth, allocate your assets, and invest wisely.
   There’s no denying that investors can always use good advice. Despite having an excellent savings record, Indians are at the bottom of the heap when it comes to financial planning. Left to ourselves, many of us would let our money languish in the solitary confinement of a dingy savings account.
   But today, it’s also true that banks and broking firms offer advisory services. These give the Indian investor a good shot at planning for the future. They can help you evaluate your capacity for risk and identify your investment goals, and then advise you on the investment that best suits your needs. You can get help to properly plan asset allocation based on where you are in your life cycle, as well as get suggestions on regular rebalancing.
   Banks have long offered such services to clients who are high networth individuals (HNIs). Now they offer them to a much larger client base. Over the past few years, Indian brokerages, too, have started offering all kinds of products under their banner as they scaled up distribution. This has introduced many Indian investors to the concept of financial planning, asset allocation and regular investments. So far, so good. Well, then, why the alarmist headline, you’re probably wondering.

Simon says...

The problem is that, as banks and brokerages expand their branches and sales force, they are adding fixed overheads. To break even, they need to increase turnover and generate higher commissions. Financial services is a target-driven industry. And while it’s understandably an imperative for a company’s survival, it also puts its interests at odds with those of its clients. What’s good for the investor may be bad for the advisor, who has targets to meet, and maybe quarterly results to announce. It can lead to unhealthy practices, usually at the cost of the investor.
   Let’s look at the experience of a typical client who’s looking to invest in equities. The relationship manager recommends mutual funds as per the client’s requirements. A few months later, the relationship manager has a new monthly target. This may impel him to get the client to switch to a new mutual fund. He may justify the switch to his client even if it hurts the client’s interests. Many industry insiders admit that this practice is widespread. Some of the biggest banks generate sizeable commissions by churning their clients’ portfolio, often unnecessarily.

Musical chairs    

Long-term evidence shows that an investor is well advised to stay invested for a long period in a good mutual fund. Constant switching is expensive due to the entry/exit loads and the impossibility of chasing returns. But sticking to a mutual fund goes against the advisor’s interests, as a long-term investor yields low commissions of 0.5% per year, as against a new investment, which fetches the advisor 2%. And two switches a year means the advisor makes 4%. Tempting, isn’t it?
   Add to this the fact that new fund offers (NFOs) pay more than 4% as commission. Some go as high as 6%. Little wonder, then, that so-called advisors regularly incorporate a few NFOs into their advice. Investors are to blame, too, due to their infatuation with an NAV (net asset value) of Rs 10. An industry that feeds off this infatuation is hardly likely to educate the investor, or hold his hand and guide him down the path of judicious investing.
   It’s not just equity investors who get the short end of the stick. Debt investors, too, see their interests sacrificed in the race to meet targets. Mutual funds are a tax-efficient route to investing in debt, due to a significantly lower dividend distribution tax, as compared to, say, fixed deposits. But relationship managers at banks have their targets for fixed deposits (FDs), and will try to push investors towards their own bank’s FDs, even though these yield relatively low post-tax returns. Only corporates and HNIs take advantage of debt mutual funds. Many investors don’t even know they exist.

Blind man’s buff    

Another lucrative area for socalled advisors is insurance. For historical reasons, insurance is popularly viewed in India as investment and not as, well, insurance. Indians are over-invested in insurance, but, oddly enough, heavily underinsured. Despite the appearance of new private players on the scene, insurance continues to be sold as an investment product. Hardly surprising, given that commissions are ten times those in the mutual fund industry. For the seller, it’s even sweeter because every policy sold brings an assured recurring income—the investor pays yearly premiums, and cannot withdraw.
   Unfortunately, all the above are standard practices. Industry leaders and regulators should curb these malpractices. But with the large-scale expansions in the industry, and the consequent jump in fixed costs, the pressure to meet targets isn’t about to abate.

Be the referee, not a spectator    

The best way to protect yourself is to educate yourself. You could also get fee-based advice, meaning that your advisor charges a fixed fee to help you structure your portfolio. To be even more cautious, you could actually do business through a different route, so there is no conflict of interest on the part of your advisor.
   Some investors will find it difficult to pay a fee for financial advice, and may have to settle for one of the relationship managers discussed above. Consider that this is likely to prove more expensive in the long run. The best plan of action is to talk with your relationship manager and take his broad advice on structuring your portfolio—and then stop taking his calls. Now, that’s cricket.

IF YOUR ADVISOR...

suggests switching from current mutual fund investments to other schemes
hypes new fund offers as big investment opportunities
insists on building insurance products into your investment plan ...then you may need to look for another consultant!

 

Why buy a HOME when you can RENT ONE?

Source: Your Money,Times of India, Mumbai, 28^th August 2007, Page 40.

Renting can actually leave you with a bigger corpus twenty years down the line

 

Suresh Sadagopan

 

   IT’S OBVIOUS, isn’t it—if you pay rent for years, you’ll have nothing to show for it in the end, but if you used that money to pay home loan instalments instead, you would be creating an asset. This was the question Tarun Banerjee was pondering. But he couldn’t shake off the suspicion that the truth may be more complicated. Tarun, aged 37, is a senior-level financial services professional, married with two kids. He’s had his eye on a threebedroom flat in Kandivli, costing Rs 60 lakh. He would need to pay Rs 10 lakh up front, and borrow the remaining Rs 50 lakh. The 20-year equated monthly instalment (EMI) for the loan worked out to Rs 51,610 per month. Tarun wasn’t worried about the EMI, though—he could afford it. But he wanted to do a spot of number crunching. So we did a comparison of how Tarun would fare if he bought the flat, and if he rented it.

The buying scenario    

Most people consider buying a house because of the tax breaks: the interest component of the EMI, up to Rs 1.5 lakh, is exempt from income tax. The maximum you can save in the highest income tax bracket (33.99%) is Rs 51,000. As for the principal, the tax benefit under Section 80C of the Income Tax Act is lost if, like Tarun, you pay the principal from your Provident Fund and insurance. Also, since Tarun would take a loan of Rs 50 lakh, he would need life insurance, to protect his family from liability in case anything happened to him. We suggest two term insurance plans of Rs 25 lakh each, for which he would pay an annual premium of Rs 9,000 for each. Why two policies? Because 15 years into the loan period, the amount pending repayment would be Rs 25 lakh. If he bought a policy each of 14 and 20 years’ duration, he would need only one policy from the 15th year.
   The net cash flow (tax savings on the Rs 1.5 lakh deduction, minus insurance charges) would be invested in diversified equity mutual funds, and would grow to Rs 26.78 lakh in 20 years, assuming the mutual funds give a tax-free return at a compounded annual growth rate (CAGR) of 12% (a reasonable assumption, as equity has given 16% returns over a 26-year period, and the future looks even better).
   I assumed a year-on-year growth of about eight per cent in the property value. Tarun was shocked: “Doesn’t it grow by 30-40% year on year?” I explained my reasoning. If property grew at that rate, this property would be worth Rs 2.23 crore in just five years! Now, if you want to sell, there should be buyers, right? If someone was going to rely on loans to buy property, they may have to borrow Rs 2 crore, and fork out an EMI of Rs 2 lakh. Not many people can afford that. Salaries are growing on an average at the rate of 10-15% a year, so rising incomes cannot take care of that. Sure, there are people who can afford EMIs of Rs 2 lakh, but they are not the class of people that shops in Kandivli for a 1,150 square-foot flat with a carpet area of 782 square feet. The explosive growth of the past three or four years is unlikely to occur again in the future. Some exceptional mutual funds have given returns of 800-1000% over a five-year period, but that, too, is going to be difficult to replicate (this is why I reckon a 12% CAGR for mutual funds). Historically, too, property has grown at a sedate, single-digit rate. An 8% return thus seems realistic over a 20-year period. In fact, after deducting 0.5% for society charges, property tax, and so on, net growth would be around 7.5%. The property is likely to be worth Rs 2.55 crore after 20 years. The total corpus then would be Rs 2.82 crore. Tarun was underwhelmed.

The rent scenario    

What if he were to rent the same flat? The rental norm for prime residential property is 6% per year of the property value, so let’s assume that figure throughout the 20-year period, although it’s more likely to be less than 6%. Anyhow, we reckon Tarun would pay Rs 3.6 lakh as rent in the first year, with 5% annual increases in subsequent years. Since he could afford an EMI of Rs 51,640, he can easily afford this rent. The amount available after rent is invested in a mutual fund. At 12% CAGR, this would yield Rs 97 lakh in 20 years. Plus, we would put the Rs 10 lakh that Tarun would have paid up front to buy the flat in a mutual fund. This would grow to Rs 96.46 lakh after 20 years. Add to this the tax saving that Tarun would claim on rent. The tax-exempt amount would follow the one-inthree formula: either 50% of the basic rent declared by Tarun’s employer, or 10% of rent above the basic, or the actual house rent allowance. It is reasonable to assume Tarun would claim a deduction of 75% of total rent paid. The tax saved would also be invested in a mutual fund, and would amount to Rs.1.03 crore in 20 years. So the total cash flow is Rs 2.96 crore.

The comparison

The final corpus in both cases is not too different, right? Renting would leave Tarun with Rs 14 lakh more than buying his own place. Now, some might argue that comparing a cash flow with real estate is like comparing apples and oranges. So let’s see what happens if the whole corpus is converted to cash. If he bought the flat, Tarun would pay Rs 10 lakh as long-term capital gains tax. If he rented, he would pay not tax. So renting actually leaves him with Rs 24 lakh more. If we tweaked some numbers, the situation would still not be vastly different.
The last I heard from Tarun’s wife, he was still looking at properties—to rent!
Suresh Sadagopan is Chief Financial
Planner, Ladder 7 Financial Advisories