Money and Financial Business

rediff has this interesting article on how investment in art will have fantastic returns over a period of time. You can read the article below - here is a small quote and a link

Art as an investment is an increasing area of interest for many financial institutions, high net worth individuals and even connoisseurs of art.

[Via rediff: Personal Finance]
Also in the economic times, I read the headline yesterday that investor wealth jumped by something like 18K crore due to the current boom in the market - obviously we indians have a lot of disposable money now and so we have a unique problem - where do we wisely invest our money? Thus avenues such as art start appearing as investment options. Is this good or bad? Only time will tell.

I have had a very strong view on putting money in fixed deposits(FDs) - CDs for you Americans :-) and why should we go about doing them. FDs in India has been the first love of retail investor for a long time. They have appear in so many shapes and forms to satisfy the investor's palette - all the way from automatic credit from your savings accounts to FDs to large and small companies themselves offering fixed deposits albeit at a higher rate. The big buffet of options exists I believe simply because fixed deposits are the apple of the eye for the retail investor. So let me take my stand here - I don't like fixed deposits! Why ? Today's interest rates are in the 5-6% range, The returns are 100% taxable since the days of section 80CCC are gone. Every paise that the institution pays you is taxable and so they will eventually have TDS before you lay your hands on the money. So effective return would be in the 3-4% rate. This is obviously less than today's inflation so net result, your money is slowly decaying away. So how do you handle this one may ask? The answer is basically many fold but the underlying philosophy for FDs which I am elaborating below should be your checklist for FD creation.

• Philosophy 1: Quick access to money for emergencies : One of the key principles of creating an FD is the fact that we need quick access to money for emergencies. So much of money does one need for quick access? If you have a formula for it, great otherwise a 3 month salary would be a good yardstick to use. Anything beyond that in a FD would be underutilized funds.


• Philosophy 2: Safe and secure returns : This is a bit of a misnomer. If you had followed the logic in the first paragraph, there is no " real return" from a FD post inflation. At best you can feel that your money has not vanished but it is still around. A lot of people found out this is not true during the days when companies that offered fixed deposit vanished overnight.


• philosophy 3: Temporary parking space of excess cash:A lot of people park excess cash in FDs for short periods as a temporary parking space until they find better investment opportunities. This is a good practice since the returns from a savings account is a lot less than what at 3 - 6 month FD can give you. Interestingly there are new and better avenues to park cash.

Now that we have reviewed what the primary goals for having an FD are, let us explore what are the options available to satisfy these goals to better manage our money.

• Philosophy 1: Quick access to money for emergencies : To have quick access to cash (< 8 hours), there are very few options available in the market other than a fixed deposit linked savings account. Most banks have such accounts where the money is transparently swept into a FD from the savings account until you attempt to withdraw the money. At that point in time the FDs are "broken" to handle the request. Having said that FDs are the traditional option here, there are a few other options that one can look at to get better benefit. Credit cards provide access to reasonably large sum of money without physically having money available until the next billing cycle. Thus make your emergency payment through a credit card and then when it is time to pay those credit card bills (typically within the month) you access your funds from other sources and pay the card off.


• Philosophy 2:Safe and Secure Returns : In today's world this is hard to come by but there are various options out there that can provide this option for your money with reasonably higher return than the FD. The post office monthly income scheme (POMIS) is a good option here - it is guaranteed by the government so it is as safe as it can be. it pays 8% returns with 10% additional maturity bonus thus a higher effective rate than the average FD. In terms of liquidity, it does not score well - it does allow encashment after 1 year but the penalty clause of 5% of principal is pretty high. Investors have to wait for 3 years if they wish to close without penalty.
  Investors who are able to digest slightly higher risks can look at debt mutual funds. They provide good liquidity and sometimes very good returns but these instruments are fundamentally more risky than a government backed investment schemes


• Philosophy 3: Temporary parking of excess cash : If you are one of those fortunate souls that has excess money that should be temporarily parked, you should explore the following options - Liquid mutual funds with their typically better returns than FDs will offer a good parking space for cash. They are highly liquid (you will get your money in a couple of days) and unlike a few FDs, there wont by any clauses for sudden exit. They thrive on the ability to provide parking space for large amounts of cash.

With this we have explored various options for money management beyond Fixed deposits. Hope you folks get into active money management beyond FDs through the various routes mentioned here. Do send in comments and feedback if you have other means/options of managing your funds.

Aaron Dickinson named “2005 Super Real Estate Agent” by Minneapolis.St.Paul Magazine and Twin Cities Business Monthly.  Up to 108,000 members of the Twin Cities (including home buyers & sellers, mortgage & title companies, and other real estate agents) have the opportunity to submit nominations, which are then screened against the Department of Commerce database, and then reviewed by a panel of real estate experts and final winners are chosen.  In 2005, just over 800 agents, or less than 5% of the agents in Minnesota, were selected as “2005 Super Real Estate Agents!”

I received a note from my credit card provider that they would be reporting credit history to an RBI appointed agency for tracking my performance. That is the good part. Further they said they would also share the data with any agency that they thought would be deemed fit. That I have a problem with. In a country like India where both privacy and information security are relegated to secondary levels of importance before roti, kapda aur makhan, I think getting a letter from the credit card company was in itself a positive note unfortunately their practice of sharing to who they see fit is a problem. The good thing is that they have given me an option to raise a redflag if I want to and I have done that today. Let us see what the response would be.

personal finance in india

Minneapolis named “Top Tech City” in the USA by Popular Science!

Having successfully purchased your piece of the world, it is time to complete the final formalities. We have to make sure that the final leg of the journey is successful. The steps are easy. So let us go ahead and do it

1. Get an encumberence certificate : If you get an EC after a week of registration, it will typically contain your name on it. That is a good indication that you own the property :) .


2. Get a Patta : The patta is another significant document that will reinforce the fact that the ownership of the property is registered in your name. You can typically get a patta in Tamil Nadu in 2-3 months. I suggest you apply for one soon.

Thats all there is to it. Good luck with property buying!

With the dramatic weather change we saw with the Memorial Day weekend, I would not be surprised if the housing market warmed up a little more.  The average number of days a house is on the market has dropped from 70 days to 60 days in the last month.  Interest rates have also fallen, with recent quotes on a 30-year fixed rate mortgage down to 5.5%.  This is within about .25% of record lows that we saw in 2003.  The lower interest rates have baffled even Federal Reserve Chairman Alan Greenspan and while there’s some debate about when they will go back up, everyone agrees that mortgage interest rates will go up and could rise dramatically once they start.

For more data on the current housing market, please see the Minneapolis Area Association of Realtors Weekly Activity Report.  For more current information, or for information specific to your area, feel free to call me anytime at 612-251-5599.

Santhosh at IndexNeXus has an interesting approach to investing in stocks using google. Here is a quick excerpt - you can read the full article at his site (URL below).

Many of us trade in stocks becos our friends told us to do so or found the recommendation on some business channel or trade magazine. But this is not an intelligent investment. The Internet so full of information that you can at-least do some basic research there and back up your decision with info you have researched

I am not into stocks. I am not a stock savvy person. So dont treat this as a very serious advice. But this way of gathering information is just another way of cross-verification and company profile research.

I have used Google for in genereal web search and Google News for finding the latest information from various news sources around the world. The other most important tool is the company website itself, from where you will get the pointers what to search ?

[Via IndusNeXus.com (beta) - Free Social & Business Networking | Community Blogging | India ]