S SIVAPRASAD's yak pad சி.சிவ பிரசாத்

Sunday, January 27, 2008

Investment for Children


Ideal Mix: investment for Children
Traditional Insurance plans: 30%
Unit Linked plans: 15%
Children mutual funds: 20%
Diversified equity funds:(in the name of children) : 10%
Direct equity: 15%
Commodities: 10%


Sourced from: http://personalfinance.moneycontrol.com/mccode/news/article/news_article.php?autono=172033

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Monday, January 21, 2008

Low-Down on ULIPs


Sourced from: Indiwo.com > For the Indian woman > Low-Down on ULIPs > Money Plus
How Things Could Have Been Better?


Mr. Singh could have been told that Rs 20,000 was the minimum premium payable and given that he had about Rs 3 lakh to invest the balance Rs. 2.8 lakh could have been deployed into the policy as a top-up.

On the basis of this arrangement, he would be charged 20%
on his annual premium of Rs 20,000 i.e. Rs 4,000 and
1% on his top-up of Rs 2.8 lakh i.e. Rs. 2800.
The total charges in this case would have been Rs 6,800.

Against this, he was charged Rs 54,000 because the entire amount was taken to be his premium instead of splitting the amount as premium of Rs 20,000 and top-up of Rs 2.8 lakh.

Mr. Singh would have saved Rs. 47,200 (i.e. difference between Rs.
54,000 and Rs. 6,800). If Mr. Singh then invested this Rs. 47,200 for
28 years i.e. upto his age of retirement and if he earned say 15%
returns (as he is an equity investor) he would have gained a wealth of
Rs. 24 lakh approximately.


Now if you are the proud owner of a ULIP – go back and check the
premium you pay and find out the minimum premium that is payable for
your policy. If your advisor tells you that you have done the right
thing and that you just need to pay the premium for three years so on
and so forth – be warned your charges are very high, the stock markets
may crash – your policy can become worthless and because you will not
pay the premiums post three years the policy can also lapse in years to
come. Three years of premium payment is a marketing tool for advisors
to entice you to commit for just three years and they laugh all the way
to the bank. It is far better to pay the minimum premium for a minimum
of three years and ideally pay it for about 10-15 years – thereafter
chances are that you will not need to worry with respect to your
insurance benefit.



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Thursday, January 17, 2008

MAIN SUB-PRIME LOSSES in US



MAIN SUB-PRIME LOSSES SO FAR





Citigroup: $18bn



UBS: $13.5bn



Morgan Stanley $9.4bn



Merrill Lynch: $8bn



HSBC: $3.4bn



Bear Stearns: $3.2bn



Deutsche Bank: $3.2bn



Bank of America: $3bn



Barclays: $2.6bn



Royal Bank of Scotland: $2.6bn



Freddie Mac: $2bn



Credit Suisse: $1bn



Wachovia: $1.1bn



IKB: $2.6bn



Paribas: $197m

Source: http://news.bbc.co.uk/2/hi/business/7188909.stm



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Work

Work

I did my work, I did my company's work, I did my family work, all in the same spirit. All together, you see. I did not compartmentalize my life. When I went on tour, I also did my spiritual work. Work (should be treated) as work to be done. That is enough. I never worshiped my work. Sometimes, I despised it, but I still did it. Work is to be done... You see, that is how a teacher should be. Teach you to be happy, joyful, and a good worker.

Taken from What is Sahaj Marg, vol. 2, p. 173-174 –Rev. Chariji

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Saturday, January 12, 2008

Inflation ( Purchasing power of Money) Cycle

Inflation - Purchasing power of Money, Time value of Money
Interest - Opportunity Cost

Power of Compounding

One of the basic premises of investing is that your
money multiplies manifold over time. And this multiplication of money
is normally referred to as the "Power of Compounding".

The 'Rule of 72' is an easy way to find out in how many years your money will double at a given interest rate. Lost?

Suppose the interest rate is 15%,
then your money will double in 72/15=
4.8 years.

In case, the interest rate is 20%, then the money will
double in 3.6 years.



When Inflation rises, Borrower and Investor have a distinct advantage.


  • Borrower rushes to borrow more to spend now
  • while Investor smells higher profit from its business.
  • Saver knows that he is at the receiving end and insists on higher Interest Rate, reestablishing the balance.


Inflation is detrimental to Saver but favourable to Borrower and Investor.

Saver
demands interest for postponing his consumption while BorrowerInvestor have to pay up Interest for using Saver's surplus.


Save for a rainy day. But what follows, as a natural corollary is that to protect your savings against inflation you must invest it in some asset that will earn you returns. Be they shares, debentures, bonds, gold or even real estate.


  1. # Savings is the difference between Income and Expenditure
  2. # You must save for a rainy day
  3. # Savings have no 'form' and must be protected from Inflation
  4. # When you invest your savings it has morphed into Risk Capital
  5. # Risk Capital can be eroded
  6. # Risk can be minimized by choosing to invest in low risk investments
  7. # The risk associated with each investment changes with time, and must be monitored carefully.

Due to Risk and Inflation, a rupee today is worth more than a rupee tomorrow on the time line.

It simply means that the LONGER you stay invested the MORE you make.




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Monday, January 07, 2008

Self-effort

Remember, what you do not earn you cannot keep, whether it is respect,
whether it is money, whether it is the position, whether it is power, whether it
is the grace of God Himself. Babuji Maharaj said, I can give but I can also take
it back, whereas if you earn by your own self-effort, even God cannot take it
away from you. That is the value of self-effort, dedicated self-effort, knowing
self-effort, knowing that I am doing, I am the beneficiary of my work, whether
it is my thought, my word or my deed.

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