Need for Equities

                                      

                                                                      [Imagesource : eurobankequities.gr]

“Necessity is the mother of invention” but in money terms “Equity is the mother of wealth creation”. Truly nothing can beat the way equities had delivered over the years.

Many would have heard that our parents had grown financially by creating Recurring Deposits. Just as they say that Change is inevitable, those RD’s too had to be changed. The falling interest rates which were once around 15 had consistently dropped below 9. So RD’s were a yesteryear icon for many Indian’s like RD Burman and the evergreen star has always been Equities.

The FD, RD, KVC, corporate FD’s were all safer but the returns are taxable based on the tax slab of the person, which makes them unattractive. Further even without tax the return of around 9% is lesser considering inflation around 6 to 8% for the last 5 years are so. Therefore after the maturity you will be richer by a mere 2 or 3 %.Even over the long term say around 15 years or more the return from these deposits will not be sufficient for retirement or for child education etc.

Gold does not lose its shine any time but considering the history of returns it has delivered; it is around 8 to 9%, which is lesser than the best performing mutual funds or stocks in the market and with the fear of theft. Real estate is a physical asset, but there is higher transaction cost and fear of intrusion is always there.

Equities had always delivered consistently more than all the asset classes and over the long term this is the best bet. Returns had delivered more than 13% in the broader index.

Enjoy the current Bull Run and stay invested to reach pinnacles, who doesn’t wishes to see their money growing, it’s Your Money…Keep growing

Rich gets Richer, it isn’t that way!

                                                    

We would have heard this saying, probably a thousand times that “Rich gets richer & poor becoming poorer”, but I wonder how many have tried to change this saying or thought!. India recorded 2^nd highest rise in HNI’s in the last couple of years, no need to envy all those, even you can be a millionaire with proper investing.

In Financial literacy none of us can literally get through pass mark. Right from school education we were advised to get good grades and get a secured job, but no part of education taught us how to earn money, after all the primary purpose of education is to get a sound analytical and thinking ability. But none of us are interested in understanding the simple concept of savings and investments through the knowledge we get through education.

Save part of your income and spend the left over, but are we following this concept which has been followed in our country. We are forced to buy whatever we want or we are lured into this act of impulse which we never regret. Credit cards has made life easy in many ways by getting things we want so easily at the touch on a phone or a click over the mouse, but it depletes our savings account as we need to pay for the things purchased from our savings account.

Easy money and easy attitude had made many of our investment decisions wrong. The only thing which we still follow is following the investment advice of our fathers and fore fathers i.e. investing in insurance which is completely wrong in modern economic situation or exhausting our taxable savings income.

Money compounding is a simple formula, we all knew the Einstein’s 3^rd law by heart, “For every action, there is an equal and opposite reaction”, this law applies to money compounding. For every penny you invest, it compounds and grows over a period of time.

In Einstein word’s, “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

Rain drops makes a mighty ocean, power of compounding is as simple as that, you can dream of becoming a crorepati, but if you aren’t thinking or planning to invest in equities, it will be a dream forever.

Start small and earn big. Discuss about the investment avenues available with your peers and those who know should impart the knowledge of making money to others.

Mutual fund is simple and easy tool to make money; it is highly regulated by AMFI and SEBI.

Rule of 72

The Most exciting feature of financial market is doubling or tripling your money and the reason for many of us getting fooled in no time is because of this trap. We are very much excited when someone says double your money in no time, but here after say 

“Hey stop, you can’t or it won’t get doubled by the Rule of 72”

Rule of 72 s nothing but the time required to double your money based on the available interest rates. It was derived by Luca Pacioli (translated in English), “In wanting to know of any capital, at a given yearly percentage, in how many years it will double adding the interest to the capital, keep as a rule [the number] 72 in mind, which you will always divide by the interest, and what results, in that many years it will be doubled. Example: When the interest is 6 percent per year, I say that one divides 72 by 6; 12 results, and in 12 years the capital will be doubled.”

Going by the inflation rate in the past years we need effective financial instrument to beat it and give superior returns. Bank deposit rates and inflation rates were more or less same in the last five years, therefore the money invested in bank deposit will make you purchase the same product in the next year and it will not be sufficient for the other lifestyle expenses.

Another feature that can be determined is Money’s buying power in the future, Thus at 6% inflation using the rule of 70, it should take approximately 70/6 = 12 years for the value of a unit of currency to halve.

If your bank deposit returns and inflation rate are same, based on this rule your money will double in 12 years and the value of the same money will also be halved in the same time.  Thus we need effective investment avenues to enjoy superior returns, Mutual funds are the best schemes regulated by SEBI and AMFI. Enjoy the returns based on your risk taking ability. Returns will always beat bank deposit rates if you had consulted your proper financialadvisor before investing.

Double your money in a proper way and enjoy a happy, stress free financial life.

Rule of 72 Calculator:

<strong><a title=" Rule of 72 Calculator " href=" http://www.moneychimp.com/features/rule72.htm" target="_blank"> Rule of 72 Calculator </a></strong>

Online will registration

                                       

Will plays an important when there is a dispute arises due to the sudden death of owners to settle the property amicably as mentioned in the will. Now and then we had numerous property disputes among the sons and daughters of great business men. It can be written to provide a clear picture of who gets what among the beneficiaries. If the person dies without writing the succession plan in will all the family members will get equal distribution of wealth. Will ensures that his beneficiary gets the exact amount during their absence.

Who can write Will

Anybody who wishes to distribute his wealth among his children and loved ones may write a will. All movable as well as immovable assets including Real Estate, Fixed Deposits, Money in Bank Account(s) Securities, Bonds, proceeds of Insurance Policies, Retirement benefits, Art, precious metals (Gold, Silver etc.), Brands, Goodwill, digital assets (photographs, sketches, blogs, websites, email accounts such as gmail, yahoo etc. and with social websites such as Facebook, Twitter etc.) and Intellectual Property Rights etc. including what they are and the method and manner of their storage, can be covered under the Will.

                   

 [imagesource : ezeewill.com]

Will registration in India

Will registration has become easy in India with the introduction Ezee will services by NSDL along with Warmond trustees in Mumbai, India. Everything has been made easy and all the process can be completed in online. You can complete online registration by

   1)    Enrolling and completing a questionnaire

   2)    Review, submit and making payment

   3)    Legal Will in your hand

All these are done with a payment of 4000 only and any iteration to review will cost extra 250. When you approach a lawyer it will easily cost you a minimum of 20000. Try this https://www.ezeewill.com/ be secure about who gets your wealth. It is also offered by HDFC.

Demat Account

                                           [Image source : kotaksecurities.com]

In India Shares and securities are held electronically in Demat account instead of holding it in physical form. It can be opened with any investment broker for the purpose of transacting shares. You will not be allowed to trade in India without this Demat account.

Why Demat?

Any physical securities as held earlier may be lost if you are a wait and watch investor, Demat has made life easy for all the investors. You can control your account online with id and password. All transactions will be recorded in your account and any transaction will be automatically added or deleted in your account. In India went to this paperless trading from 1996 in NSE.

Benefits of Demat

·        Easy and convenient way to hold securities

·        Immediate transfer of securities

·        No stamp duty on transfer of securities

·        Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. are mostly eliminated)

·        Reduced paperwork for transfer of securities

·        Reduced transaction cost

·        No "odd lot" problem: even one share can be sold

·        Change in address recorded with a DP gets registered with all companies in which investor holds securities eliminating the need to correspond with each of them separately.

·        Transmission of securities is done by DP, eliminating the need for notifying companies.

·        Automatic credit into demat account for shares arising out of bonus/split, consolidation/merger, etc.

·        A single demat account can hold investments in both equity and debt instruments.

·        Traders can work from anywhere (e.g. even from home).

[source : Wikipedia]

Fees Involved in Demat opening

Account opening fees depend upon the brokers such as Axis Bank, SBI bank, Karvy consultants, Suhil finance etc. Some offer Demat account for free for the first year and from second year they start charging.

Apart from this account opening fees there are fees charged for transacting in our demat account, they are brokerage charges. Once you open you need to trade or else you will end up paying yearly fees as maintenance charges.

Disadvantages

If the shares are illiquid it is impossible to close your demat account as you are holding it. Even on Dormant account DP’s charge fees so everybody should make sure that they close the account after liquidating all the shares and mutual funds held in Demat form.

Have you checked your score

CIBIL

                                                 

                                                                             [Image source : flame.org.in]

Most of you would have heard about CIBIL only during your loan rejection. The reason may be a loan pending for a long time or the loan which is not properly closed. We can say that this is formed to protect the banks and loan processing companies to protect from defaulters. You will not entitled to get any loan once you are recorded as a defaulter and score goes less than 750. Credit score of 750 and above ensures that you are a good customer with good track record of paying everything on time.

CIBIL History

Credit Information Bureau India Limited was formed in 2000 in India. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and credit institutions, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to credit institutions in order to help evaluate and approve loan applications. CIBIL was created to play a critical role in India’s financial system, helping loan providers manage their business and helping consumers secure credit quicker and on better terms.

Objective of CIBIL

Credit Information report and CIBIL score plays an important during your loan approval. Loan eligibility basically means the applicants ability to take additional debt and repay additional outflows given their current commitments. Now based on credit score they are loan lenders are able to decide easily.

Standard of CIBIL

CIBIL is ISO 27001:2005 certified- the most recognized security standard in the world. CIBIL is one of the 1000 companies in the world, which have achieved ISO 27001 certification, and one of the first few in India. TransUnion International- a leading global credit bureau with presence in over 30 countries is the major shareholder in India with 55%.

How to get my score

                          

[Image source : bemoneyaware.com]

You can login to CIBIL https://www.cibil.com/ and get your credit score instantly over online. Maintain a score of 750+ to get any loan approvals.