Archive for June, 2009
Best Of Both Worlds?
June 30th, 2009
Mukesh Dedhia
The rising industrial usage of silver as well as a rebound in investment demand portrays a positive scenario in the long term. However, due to its positive correlation with copper price volatility could continue
SINCE mid-2008, silver expereinced a huge dip of –57% while its precious metal counterpart, gold, remained resilient at –26% during the global commodity selling frenzy. The reason: a rising correlation of the white metal with base metals like copper — which declined by 67% during the period — and a rise in the industrial use of silver in the last couple of years. The premise held true for the subsequent run in the price of silver since December 2008. Against a gain of 31% in gold, silver appreciated 58%, almost tracking an over 70% rise in copper. The behaviour ofsilver highlights a pattern of following the price trend in gold, however, with increased price swings due to its correlation with copper. This is clear from the first chart that shows the average monthly price range as a percentage of the previous month’s closing price for benchmark silver, gold and copper prices since 1999. The price rangeis the difference between the monthly high and low prices for the metals. A comparison of the price range with the previous close indicates the monthly pace of change in the prices. As is obvious, the price range of silver follows the directive moves of the price range in gold whileits value is closer to that of copper.
COST OF MONEY
June 29th, 2009
Mukesh Dedhia
Food inflation is still closer to double digits, though the overall inflation is negative.This is a big threat to India’s economic recovery, given low consumption demand and end of an easy monetary policy
THE next time the RBI honchos get in a huddle with policy makers in the North Block, they have one hot topic to take stock: rising food prices. Food price inflation is currently in double digits though that based on the wholsale price index has retreated into the negative terrain, largely because of the high statistical base for June 2008.
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Should You Refinance Your Mortgage When Interest Rates Drop?
June 25th, 2009
Mukesh Dedhia
It’s not a bad idea to consider refinancing your mortgage when interest rates are low. Since the interest paid on a mortgage is one of a homeowner’s biggest expenses, it makes sense to look for ways to reduce it. But there are some ups and downs to refinancing a mortgage in a low-interest climate, and even some special refinancing programs that can be particularly beneficial for those who qualify.
Should You Consider It?
Low interest rates can create a refinancing frenzy in the marketplace, but consider the details of your unique situation to determine if a refinance makes sense for you.
How Much Risk Should You Take?
June 24th, 2009
Mukesh Dedhia
Do bumps in Sensex send you into sweats, or to the trading room floor? An understanding of your risk tolerance is an important step in managing a healthy portfolio. Most investor’s I’ve encountered concentrate solely on investment returns and ignore investment risk. Because the level of investment risk primarily determines investment returns, we need to apply a more rational approach to determining the appropriate level of investment risk in our investment portfolios.
One size doesn’t fit all - Large cap, mid cap and small cap stocks
June 23rd, 2009
Mukesh Dedhia
This article talks about the categorization of stocks into large cap, mid cap and small caps. It also describes the characteristics of each class, and guides readers about investing in each.
In the financial press and on business TV channels, we often hear terms like market capitalization (market cap), and also references to companies as large cap, mid cap or small cap.
Let’s understand what these terms mean, and what each class of stocks has to offer you.
Taxation Regimes - EEE EET ETE TEE – What do these mean?
June 22nd, 2009
Mukesh Dedhia
There are different systems for tax exemption / deduction of investments, and for taxation of the income earned from it, like Exempt – Exempt - Exempt (EEE) or Exempt – Exempt -Taxed (EET). What do these terms mean? What impact does it have on you? Read on.
We often hear about different taxation systems in the media. For example, there is a debate currently going on between the Exempt – Exempt - Exempt (EEE) and Exempt – Exempt -Taxed (EET) systems.
What do these three-letter combinations mean? And why are there three letters? Let’s find out.
Mobile Banking
June 18th, 2009
Mukesh Dedhia
When it comes to banking, one immediately thinks of long queues, signing cheque books and ATMs not functioning — irritants that make banking a tedious task. Not any more. Why go all the way to the bank when you can complete your transactions with the click of a button — on your mobile phone. The mobile telephony market in India has seen unprecedented growth from 0.2 million subscribers in 1996 to 362.30 million as of January 2009. And with the number of cellphone users expected to grow at about 8 million per month, mobile banking may soon be the only possible way. “Over the next five years we except to see at least 90 percent of all banking customers using mobile banking in one form or the other,” says Sai Narain, General Manager, Transaction Banking at Standard Chartered Bank.
Are Money Back Policies productive?
June 16th, 2009
Mukesh Dedhia
Save a little money each month and at the end of the year, you will be surprised at how little you have’ – Ernest Haskins Confused??? Aren’t you….. Time and again, financial advisors have propagated the rewards one can reap by saving little by little. And here, we are contemplating otherwise!!! Well, you need not be Ernest Haskins to believe the truth behind this aphorism. Simply analyse the returns likely to accrue from the money back (insurance) policy you have invested in, and the above adage would flash like a golden truth, literally.
Money back policies are one of the most traditional insurance cum investment policies and have been widely promoted and distributed by the insurance companies. Unlike a regular endowment plan, where the policy amount (sum assured) is receivable either on death or at the end of the policy term, money back policies ensure that the survivor receives a certain percentage of sum assured regularly during the term of the policy. This ensures periodic cash inflows in the hands of the survivor to meet various financial needs that might crop up with time.
What the IPL taught us about investing
June 12th, 2009
Mukesh Dedhia
Cricket is often a great metaphor for life. And we like this newest format of the game, T20, because it can teach us a lot about how to manage our investments. Here are 10 things we have learned from the IPL about investing.
1) Start early: T20 does not reward late starters - teams must start putting runs early in their innings. Otherwise, it can get too late and the batsmen are always playing catch up. Similarly, we must also start investing and saving early.
This allows us to benefit from compounding of capital, as well as allows us to “keep the scoreboard ticking” in order to move closer to our goals. Additionally, we have seen how batting sides take advantage of fielding restrictions early in the innings.
Similarly, early in our innings during our youth we must also take advantage of the freedom to do things that we might not be able to later in life. One of these freedoms is to start building our financial resources when we have very few other financial obligations
What you need to know about taxes, gifts and love?
June 11th, 2009
Mukesh Dedhia
We can’t tell you much about love, but we can surely tell you about taxes and gifts to your loved ones.
What are the tax benefits for a gift to a spouse or fiancé?
If you make a gift in kind or cash to your spouse then it is not taxable in their hands. However, any income generated by the gift in kind or cash shall be treated as your income.
What if you give a gift to your fiancé? The good news is that if you make a gift in kind to your fiancé, then there is no tax implication. However, if you make a cash gift then restrict your gift to Rs.50,000. If the amount exceeds this limit, then the entire amount shall be added to the income of your fiancé.