Post Office Investment Schemes.

Why Post Office schemes are one of the best way to Invest. I can give you many reasons to prove my point and few of them are mention below,

*  All schemes are offered by the Government of India.
*  Anyone can invest directly without any mediator.
*  Safe, Secure, and risk free investment options.
*  No Tax deduction at Source (TDS).
*  Nomination facility is available.
*  Nomination can be change at any time.
*  The Investments are transferable free of cost at any Post office anywhere in India.
*  Attractive rate of Interest
*  Pure transparency in all schemes.
*  No need to pay any commission to any agent.
 

Post Office Savings in Details

How to begin financial planning. First steps.

How does one begin financial planning? Though a lot of advice on investing and planning is available in the media and on the Internet, where does one actually start? What should be the first step? The question is basic, but like all fundamental ones, it's an interesting query to answer. While planning your finances, the first step should be the assessment of various risks to your income.

 

Financial planning, at its core, is about managing one's income across a period of time. Sometimes, we set aside today's income for tomorrow; at other times, we spend tomorrow's income today. Even if we use it to build an asset, we hope to use it in the future, if there is a need. So, the obvious first step is to ask how secure your income is and the risks it can be exposed to.

During the early stages of life, the focus is on securing income, which is why career plans emphasise on earning one. When we encourage a student working at a call centre to consider higher education, we are persuading him to invest in the human asset to enhance future earnings. When my driver chooses to educate his son in an English-medium school, he is keen to secure his son's future income.

Every investor should determine the potential risks to his income and begin the financial planning process accordingly. For a film star or a sports star, a short period of high income is a risk. Building assets that replace his professional income when he retires early should be his primary strategy. Building a second career could be another one.

A salaried investor would identify retirement as a source of risk and set aside his current income to build a corpus that would replace regular income after he stops working. For an entrepreneur, whose life's earnings are invested in his business, the risks are tied too closely to those of the business venture. The assets he builds outside his business will have to consider this threat. Even a corporate treasurer aims to build other income that will de-risk the main source of income for the business.

The two key elements of managing risk are insurance and investment. To insure is to secure the income from unexpected events, such as poor health and death. To invest is to augment, or in the best case, replace the regular source of income with that from investments.

The third element is more tactical and involves using leverage or borrowings. It involves building assets using borrowed funds, so that the benefit of the asset over and above the borrowing cost, goes towards augmenting the income. The risk in this strategy is the possible fluctuation in the value of the asset and the possibility that it drops below the outstanding loan. Day trading with margin funds is a high-risk, income-generating tactic, if the cost of funds exceeds the income generated.

Risks to income can also come routinely if it is ill-matched to your needs or simply inadequate. Illness in the family can push an uninsured, low-income family into indebtedness. Family functions, expenses on durables, renovation, educational expenses are all lump-sum requirements for money that cannot be met by regular income. Financial planning is about providing for such large outlays, either through savings and investments, or through borrowings and staggered repayment. 

How a household manages the routine and expected charges on income, and the ad hoc and unexpected demands on it, determines how financially healthy it is. Routine borrowings reduce the future income and ability to spend and save, while regular savings cushion possible shocks to the future income. As risks to future income drop, households tend to spend more and save less. Ability and willingness to borrow also moves up with increased confidence about the future income.

Hence, financial planning cannot be described narrowly as a disciplined and frugal exercise of setting money aside for your needs. As long as it is aligned well to the expected future income and realistically considers the risks, it is a step in the right direction.

Source: Economic Times

Comparison of Reliance Monthly Income Plan (MIP) with other products.

I found this paper cutting, which compared and explained in a nice way the Reliance Monthly Income Plan with Post office MIP, Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and Bank FD.

Click on the picture to make it large.

What are different types of Insurance policies

Are you among the ones who think that “Insurance” is the safest haven to invest, then read on…

The fact of the matter is, the terms Insurance and Investment are contradictory. The very nature of Insurance is to alleviate risk and the very nature of Investment is to take on a comfortable degree of risk to generate commensurate returns. However, lack of awareness, captivating advertising promising eternal happiness and eager Insurance agents aggressively promoting products with terminologies that defy our understanding have left us mystic eyed. We hope that when we sign that illustration pamphlet giving us that 6 percent and 10 percent return benchmark our actual returns would be somewhere in the middle to leave us satisfied with our decision.

The truth is that Insurance is not like an OTC, Over the counter, drug purchased based on the recommendation of an Insurance salesman, who by the way gets a commission for his recommendation. It is rather a customized and prescribed for you solution and should be done after a thorough evaluation of your needs by yourself or by an experienced financial adviser.

The first modification in our thought process should be to avoid keeping our Insurance purchase till the last minute to fill in our 80C tax benefit. The right purchase of Insurance involves a thorough analysis on your current status and lifestyle your future plans and obligations, financial safety of your dependants in your absence etc. While tax saving is an added benefit, the very purpose for buying insurance should be safeguarding yourself, your dependants and your assets against risk.

Insurance companies today offer a plethora of products to suit various needs. The sheer variety can be intimidating. But if you take a moment to understand you own needs then fitting the right product in would not be very difficult. Let us take a look at some of the types of Insurance that suit our various needs.

Term Insurance

This is the purest and simplest form of Insurance. It provides a life cover for a fixed period of time at the lowest possible premium. If the Insured dies within that term, then his beneficiary gets the sum assured. However, if the Insured survives the term then there is no payout. Essentially they are pure protection plans and are highly beneficial for young people with dependants. Since in the early stages of your career, the assets you build up are low and there are dependants to take care of, a term insurance plan is a suitable option to provide for your dependants in your absence.

As far as insurance amount is concerned one size does not fit all. It is advisable to sit with a pen and paper and chalk out your needs while deciding the value of term insurance you would need. Take a stock of your current assets be it income, investments, real estate, gold etc. and then account for your monthly expenses, future obligations like child's education, marriage etc, your current obligations like mortgages, personal loans etc. Take the help of an insurance advisor to arrive at a suitable value and purchase the right product at the lowest possible cost.

ULIPS– Read the fine print.

The SEBI-IRDA tiff has brought ULIPs into the forefront of controversy lately. Let us take a look on the product which is aggressively marketed and generates maximum revenues for the Life Insurance Industry.

ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides combination of risk cover and investment. Since the investments are linked to the capital markets, their performances have a direct bearing on the performance of the ULIPs. The Investment Risk in a ULIP is bourne by the Investor. Depending on your risk appetite you can invest your money in equity, fixed income and or bonds, money market or in a balanced fund. You have an option of switching between funds. Read Understanding ULIPs for a complete analysis of ULIPs.

Endowment and Money Back Plans

Endowment Insurance plans are designed for a fixed period which can range from 10 to 30 years. The face value along with bonus or guaranteed additions is made after the expiry of the fixed period to the Insured or to his beneficiary in case of the Insureds dies before that period. For someone who is just starting off in life, has an assured income stream for a number of years and is not willing to assume investment risk which comes along with mutual finds, ulips etc endowment policies are good life stage planning options. But beware that that endowment policies are not transparent at all. Do not be mislead by some smooth talking agent into believing that which ULIPs have charges, just because they are declared, endowment policies do not have any charges at all! Remember there is no free lunch! A portion of the premium goes towards the insureds death cover, another portion goes towards the administrative expenses of the insured and a third portion is invested by the insurance company on behalf of the policy holder.

The return on the investments is distributed as bonus annually by the policy holder. However this annual bonus is accumulated yearly and paid out only at the end of the term. Also note, that the bonus declared does not compound yearly and since the investments are made in relatively safe debt securities your over all return will rarely go beyond 5-6 percent. Money Back plans help you meet specific objectives such as children’s education, their marriage or any other specific event occurring at fixed intervals. Unlike endowment insurance plans where the maturity benefit is paid only at the end of the endowment period, a money back policy provides for period payments during the term of the policy. Take for e.g. A 20 year Money Back policy will pay 20 percent if the maturity amount each after 5, 10, 15 and 20 years and the balance of 40 percent and the accrued bonus if applicable is paid on the completion of the 20th year. An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full sum assured.

Like in endowment policies, as the investment is not linked to the capital markets, the returns are guaranteed and there is no investment risk involved. However the rate of return is low compared to ULIPs as the investment is mostly in the debt market. The advantages offered are guaranteed returns and periodic liquidity in case of a money back plan. The guaranteed nature of the product helps in the life stage planning process. They are a costly option for life insurance compared to term. Compared to ULIPs they lack transparency and flexibility. 

Things you should know

15 day free look period

All Insurance products come with an IRDA mandated 15 day free look period calculated from the date of policy receipt. If within this period you are not satisfied with the product you can contact the Insurance Company and are eligible for a full refund of the premium. Please read your policy documents for further details.

Tax benefits

All life Insurance plans offer tax benefits under Section 80C and Section 10 , 10D, of the Income tax Act, 1961. Under Section 80C, premiums up to Rs 1,00,000 are allowed as a deduction from your taxable income each year. Under Section 10, 10D, the benefits you receive from this plan are exempt from tax, subject to mentioned exclusions. Please note that tax benefit under Section 10, 10D is available only if the premium payable in any year is not more than 20 percent of Sum Assured.

In a nutshell,

1.It is best to keep Insurance and Investments separate. Clubbing them together will not do justice to either of them.

2.Avoid waiting till its March and tax planning time to make a hurried Insurance purchase. You may not have enough time to evaluate your needs and assess which product is best suited for you.

3.Term insurance plans are ideal in most cases where protection of your family in the event of your death is the main goal. However the inherent assumption while taking a term plan versus other Insurance, investment plans is that you will have the discipline to invest the differential premium, Ulip and or Endowment premium– term premium, in different investment vehicles to generate adequate return. So if you are among those who do not wish to spend time researching other investment vehicles and have a specific objective such a childrens education and marriage or retirement in mind then ULIPs offer you good flexibility and returns to meet your objectives

Source: sify.com

Business plan

                                  
A business plan is nothing but a estimated assessment of the changing economics of your business, your business plan will provide a useful roadmap as well as a financing tools, but if you have miscalculated the potential, then your business plan could become a roadmap leading to faliure.


I am also failed two times in starting and operating a business because, I choose a plan which I got from internet while I was surfing on that subject.


Search engines, libraries and book stores provide sources that sell ready-made plans for specific businesses, but it is my personnel recommendation that you  must write out the plan yourself in your own words.


Keep in mind that creating a business plan is an essential step for any prudent entrepreneur to take, regardless of the size of the business.

The 7 factor you must include in your business plan

1. A Good Business Concept:

The single most common mistake made by entrepreneurs is not selecting the right business initially. The best way to learn about your prospective business is to work for someone else in that business before beginning your own. There can be a huge gap between your concept of a fine business and reality.

2. Understand of Your Market:

A good way to test your understanding is to test market your product or service before your start. You think you have a great kite that will capture the imagination of kite fliers throughout the world? Then craft some of them and try selling them first.

3. A Healthy, Growing and Stable Industry:

Remember that some of the great inventions of all time, like airplanes and cars, did not result in economic benefit for many of those who tried to exploit these great advances. Success comes to those who find businesses with great economics and not necessarily great inventions or advances to mankind.

4. Capable Management:

Look for people you like and admire, who have good ethical values, have complementary skills and are smarter than you. Plan to hire people who have the skills that you lack. Define your unique ability and seek out others who turn your weaknesses into strengths.

5. Able Financial Control:

You will learn later the importance of becoming qualified in accounting, computer software and cash flow management. Most entrepreneurs do not come from accounting backgrounds and must go back to school to learn these skills. Would you bet your savings in a game where you don't know how to keep score? People mistakenly do it in business all the time.

6. A Consistent Business Focus:

As a rule, people who specialize in a product or service will do better than people who do not specialize. Focus your efforts on something that you can do so well that you will not be competing solely on the basis of price.

7. A Mind set to Anticipate Change:

Don't commit yourself too early. Your first plan should be written in pencil, not in ink. Keep a fluid mind set and be aggressive in making revisions as warranted by changing circumstances and expanding knowledge.

What is Business.

                                
What is Business.
As Harvey McKay a great author said,
"Business is something that you will enjoy doing". Find something you love to do and you'll never have to work for a single day in your life. Also if you are doing something you love. you're much more likely to stick with it through thick and thin times.
Before start any type of business you need three things,

(a) Guts : Guts means you must have an entrepreneurial instinct, which is an overwhelming desire to have your own business. You must have the guts and dedication to be completely devoted to your goal.

(b) Brains : You should have a working knowledge about the business you plan to start before you start it. Common sense combined with appropriate experience.

(c) Capital : Every business needs money of your own plus sufficent cash to maintain a positive cash flow for at least a year. Many businesses can be started on a very small scale with small investments.

Once you are satisfied that you have the qualities and charecteristics of a sucessful entrepreneur and that you definitely want to be in business, then you must decide which business is best for you and where to locate that business. Also have to decide that you want to operate business full-time or moonlight.

If you have not yet decided on a business, then try this

On the top of a blank sheet of paper, write an activity you like to perform (make this heading). Do a seperate page for each activity or interest you have.
On those same sheets list as many business you can think of that are related to that activity.
On the same sheets, list all the products or services you can think of that activity. Use your imagination and think of every possible products or service you could perform.

cont-

House is an Asset or Liability

HOUSE IS NOT AN ASSET.

If you start surfing internet than you will find thousands of article regarding this topic. Mostly people gave refrence of Robert Kiyosaki the innocent guy and author of the famous book "Rich Dad Poor Dad".


These Intellectual Idiots even don't know, what exactly the Asset is. Asset is not just a simple defination to explain that "anything which generate a cash flow and put into your pocket is called an Asset and anything which take out money from your pocket is called Liability.
If it so than, It means your wife is also a Libality. She also took money out from your pocket and your Childrens, they also fall in the category of Libality, what about your parents brothers & sisters.
If the Robert Kiyosaki say so in his book then he also said in his book that one must be get out of Liability as soon as he can. So what should we do now. Leave our parents, our childrens, our brothers & sisters........
One thing I forget to mention, we the human beings I mean our body. Our body also took out money from our pockets for their need to nurishment at least three times a day, so it is also a Liability. What we do " do sucide".
all Bullshit !!!

I am not so genius as Robert Kiyosaki or anyone else but one thing I know very well and quit sure about that and you also OPEN YOUR EYES AND EARS and note this thing," that 
"House is neither an Asset nor a Liability it is a basic need of all the human beings".
Not only the human beings, Animals and birds are also follow this. They also make Shelters and Nests when they need it.
So don't even thought that your house is your liability. Yes it's very much true that your house cost you little amount each month for their maintainance but it doesn't mean that it is liability.


In another case, if you are living in a rented house and dreaming about your own house and want to apply or already applied for a home loan, go for it without hesitation. But first try to generate a passive income which can afford the EMIs of your home loan, because it is not the home which is liability, it the loan amount and EMIs which are actually liabilities. Home is your basic need same as you eat food, drink water and breath air.
My request to all the Intellectual idots, those who already wrote in their articles and blogs that " Home is not an Asset", Please don't try to fool peoples.
Home or House is a basic need of human beings that every person in this world must have their own, under which you can live peacefully and plan more efficently your financial goals and it does't matter how big or small it is.

AFTER ALL IT'S YOUR OWN HOUSE. live happily

Assets

In simple words the term "Assets" means, anything which generate money automatically or put cash in your pocket is called Assets such as Real estate, Mutal funds, Bonds, Savings, Gold, Diamonds, Business, Income from royalties etc.

All these assets we mention above are man made assets, created by a man, but the biggest and one of the most valueable assets which is provided by god to every single human being on this earth is TIME.
I repeated so many time in my articles that it is the TIME which make things valuable.
So, when you invest somewhere always give some time to your investments to grow and give you better returns.

             INVESTMENT x TIME = VALUABLE ASSET CLASS

The golden rule of investment is that the more assets you have, the more liabilities you can afford

Let's we take an example of Deepak.
Deepak is working in Marketing company and getting salary Rs 25,000. He did not have any kind of asset but after savings of last five years he can able to accumulate Rs 5 Lakhs in his saving account. Now he decided to buy a car. He have two options, either he buys the car cash from his savings or he go for some car loan from bank with nice interest rate. We analysis both cases

In Case 1 :  If he buy a car cash from his saving than he lost all his saving which he accumulate in last five years after working very hard.

In case 2 : If he go for a car loan than he have to pay Rs 5000 (approx) monthly installment which he have to deduct from his salary and have to survive with Rs 20,000 for next five years.

But here Deepak choose the third option after getting advice from good financial consultant.

He decided to buy a piece of land of 2000 sq ft for Rs 5 Lakhs and decided to keep this land for 10 years. As we know the population of world is increasing day by day and the demand of all basic needs are also growing, so he should expect a good returns ( approx increase of 25% to 30% annualy ) of his investment which he had it made today.

But if he is a smart investor and he invest the same amount to buy an apartment or a building which he can be able to give on rent of Rs 3000 to Rs 5000 monthly than he should earn a extra income from his investment and after a period of 10 years also expect the same returns mention above.

Now Deepak can be able to buy a car. He can go for a loan from any bank and pay the loan EMIs from the rented income which he is getting from his investment on real estate. Now he have a car and also have an asset which can grow day by day and also provide a steadily passive income for him. 

After five years when he clear all the amount of car loan he can go for another loan to create another assets.    

The above calculation is just for an example. One can also buy a land and construct a building on that, depends on individual.
But the idea behind all this, to divert the loan amount EMIs to your rent income which you generate from your investment in real estate.

How saving account earn extra money for you.

                          


It doesn't matter that how much you are earning. But it is very important to keep a certain amount of your income for savings. Weather you earn more or you earn less, you should do your best to save for unexpected expenses. But have you ever figure out that "how" and "where" you shall put your savings. Of-course in bank saving account, but have you chosen a certain bank where you shall open saving account you want to have or you already have saving account in some bank.


Today we discuss how to earn extra money from the cash lying in the saving account of your bank.


Generally any bank as per the guidelines of RBI ( Reserve Bank of India ) gives you only the 3 to 4% of interest on your savings, but if you enables the "Auto sweep" facility than you can earn upto 8% of interest on your savings same as bank FDs.


What is Auto Sweep Account.


"Auto Sweep" is a facility which provides, the combined benefits of a Saving Bank account and Fixed deposits. Auto sweep facility interlink your saving account with a deposit account and make sure any extra amount lying in your saving bank account above a threshold limit is automatically transferred to fixed deposits and you earn better interest on your saving money.


How Auto Sweep works.

*  You decided the maximum amount that you want in your account. This is called threshold limit.
*  You decide the amount on which the FD needs to be created.
*  You decided the tenure of these FDs

Let's take an example,

The threshold limit of Rs 10,000 for which the FDs need to be created of Rs 5000 and the tenure of the FDs is 6 months,
Suppose Mr Deepak have the balance in their account is Rs 12,000 and he deposit his salary of Rs 17,000 in the saving account,
Now the total balance becomes Rs 12,000 + Rs 17,000 = Rs 29,000.

At this time when the amount balance of Deepak is above Rs 15,000, (Rs 10,000 threshold limit & Rs 5000 per FD), the bank's computer automatically create 3 FDs of Rs 5000 each.

Thus, Mr Deepak have 3 FDs of Rs 5000 each and balance amount of Rs 14,000.

Now, if Deepak withdraw Rs 3000 for household expenses from ATM and the account balance reduce to Rs 11,000 + 3 FDs of Rs 5000 each.
Then Deepak also write a cheque of Rs 2000 to pay his car EMI, as soon as this cheque clears the account balance reduces to Rs 9000, which is below the threshold limit of Rs 10,000.

Then, the bank's computer automatically breaks 1 FD of Rs 5000 and deposit that amount in your account.

Thus, now Deepak have in their account Rs 9000 + Rs 5000 ( 1 FD broke ) = Rs 14,000 and 2 FDs of Rs 5000 each.

Interest rate :

The interest rate offered on these auto sweep FDs is the same as rate offered on regular FDs of that duration. It means you can earn returns in the range of 8% to 9%.

The auto sweep facility is offered at no extra cost by most bank. You can operate the account exactly like a regular bank account. If the amount you want to withdraw through ATM or cheque is more than the threshold limit than one of the FD would be broken immidately ( all this happen automatically ).

And the best thing offered by most bank is that, most bank follow the FILO ( First In Last Out ) approach for breaking the FDs. Thus, if an FD has to be broken to provide for a withdrwal, the most recent FD is broken first and there is no penality for breaking these FDs.

Almost all the modern banks offer this facility but it can be called by different names like

* HDFC Bank - Super saver facility
* IDBI Bank - Sweep in saving account
* Axis Bank - Encash 24
* Union Bank - Union flexi deposit
* State Bank of India - Multi option Deposit scheme
* Bank of India - BOI Saving Plus Scheme
* Oriental Bank of Commerce - Flexi Fixed Deposit Scheme
* Allahabad Bank - Flexi Fix Deposit
* Corporation Bank - Money Flex
* Bank of Maharashtra - Mixie Deposit Scheme
* United Bank of India - United Bonanza Saving Scheme.

Term Insurance

Term Insurance

It is a life insurance policy that provides for a certain period of time or a specific "term" of years, and if the insured person dies during the time period mentioned in policy and the term insurance policy is active than a Death benifit (amount mentioned in policy) will be paid.


Term insurance is much less expensive as compared to permanent life insurance. Like most types of permanent insurance, term insurance has also no cash value. 


If you have family and dependents than term insurance is a must. No other policy in any part of the globe will offer you as much value for money as this one.

Let's say you bought a term insurance policy for Rs 25 lakhs ( 2.5 million ). The term of the policy is for 20 years if you pass away during this period, you family or dependents will richer by Rs 25 lakhs. But if you outlive your policy, all the money you pay to the insurance company to maintain your policy would have gone down the drain.


Term insurance works like a betting game. For example

You are willing to bet that you would die this year and cough up, say Rs 2000


The insurance company bets that you will not die and they are willing to pay your family Rs 1 million ( Rs 1000,000 ) if you die.


If you survive you lose the bet and the insurance company takes away Rs 2000 and if you win the bet you better know what happen.

The bet goes on over a period of 5, 10, 15, 20 whatever number of years that both you and the insurance company have agree to. 


But don't give up so quickly !!!!

Questions you must ask before you take term insurance from any insurer.


Riders :

This are optional add-ons which can be attatched to the main insurance policy for an additional premium. This additional premium is added to the main premium and has to be paid along with it. Different companies offer different riders. Have a look at some of them.

AD ( Accidental Death ) : 

The Policy pays you additional sum assured in case of death happens due to accident.

CI ( Critical Illness ) :

On contracting a specified illness such as cancer, kidney faliure, heart attack etc the insurance company will pay the insured amount.
You can choose the amount you want to be insured for. Generally, critical illness riders have a maximum limit of Rs 10 lakhs ( 1 million ).

DA ( Accidental Disability rider ) :

If you become permanently disabled and are unable to support yourself or your family, the insurance company steps in. It provides an income upto specified amounts till the end of the term of your policy. Generally it is an annual payment.

WP ( Wavier of Premium ) :

This rider makes sure that incase you are not able to pay the future premium due to disability or income loss, the future premiums are wavied off, but your policy is still in force like always.


Have a look on below chart you would have got a fair idea about the term insurance plans from different insurer

Don't put your all eggs in one basket.

                       

 "Don't put all your eggs in one baskest". This is the common piece of advice that I am sure you've all heard before. And it is best applicable on term "Investment". Always try to diversify your investments, for example

If you have Rs 10,000 spare every month, so dont invest the whole amount in one investment product. Diversified it.

 40%          -  Equity Mutual funds
 20%          -  PPF
 20%          -  Gold
 10%          -  Pure Term Insurance
 10%          -  Health Insurance for family

( Note : Above example is best for the peoples of age between 20 to 35 years. For different age group the diversification of portfolio must be different )

The best investment combination in India is,

        PPF + Equity mutual funds + Term Insurance

and I always recomend to everyone that they must add this three investment products in their portfolios weather you are salaried or self employed.

How to plan your financial life

Well this is one of the most common question now a days, not only from young peoples but also by older that "How I plan my financial life".

Many of you are probably excited about the prospects of investing, but one of the most important aspects of sucessful investing involves the step you need to take before you start investing.

                     


 Step 1. Think Long-term


If you want to be rich some day than always keep in mind TIME. It is not the investment or amount which makes peoples rich but it is the time period of investment which make peoples rich and ultra rich. Any type of investment which is invest for Long-term gaves you better results.


I want to tell you a small story. In the year 1626, the Red Indians in the east coast of USA sold Manhattan city to a group of immigrants for $24. As per the tax records entire real estate of Manhattan was worth near about 4 Trillion in 1990.

Now what is your opinion did you think that Red Indians made a blunder mistake. And if they want to buy back that entire Manhattan, is it possible.

Now assume that If the Red Indians able to invest that $24 into an 8% compounded rate of return than they have grown to $30 Trillion from 1626 to 1990.
They just dont buy back the entire Manhattan, they can also be able to buy entire Newyork and Mexico.

That is the power of compound interest and time is the most powerful asset.

The first step a successful investor should take is to learn what it means to invest. Many young people feel that investing is similar to gambling or playing the lottery.
You have to accept the fact that investing is a long term process, not a short term gamble. Once you accept this, you are ready for next step.


Step 2. Pay off all your debt

You should't be consider investing if you are in debt. It is always a better idea to pay off your all debts before you start investing. The forms of debt are financial aid, car payments, credit cards and bank loans. Credit cards seems to be the biggest problem young investors face on the road to financial stability. My advice is to be get rid of those credit cards or use them only as a convenience and pay off the balance every month. It may be hard to do, it will be one of the best financial decesions you'll ever make.


Step 3. Make sure you are insured properly

You must have proper insurance in place before starting to invest. This includes adequate auto insurance, home owner insurance ( If you own your home ), health insurance, disability insurance ( If you are the main source of income in your family).

The more income you generate, the more you will need the protection insurance provides. Investing your money without adequate insurance is just like riding a motorcycle without helmet.
You never need it, but if you do, you'll be glad you had it.

Step 4. Set up an Emergency fund

Most financial planners suggest that you should have approx 6 months salary saved up in liquid account such as chekings, savings, or money market. This means if you make Rs 300,000 a year than you should have Rs 150,000 that you can get fairly quickly.
Perhaps one of the greatest benifits of an emergency fund is that it helps prevent you from withdrawing out of your retirement accounts, thus preventing withdrwal penalties.

Gold is not an Investment.

Gold is not an Investment, but it is a great hedge against Inflation.

                                       
Gold is technically not an Investment. It is a commodity. An investment is somethimg that can produce a cashflow or it has a potential to produce a cashflow in the future. Mutual funds or stock can pay dividends, Bonds pay interest, Real estate can be rented out for a monthly rent payments, starting your own business can give you earning from your revenues BUT GOLD DOES NOTHING. It is an inanimate object.


But mostly Indians are emotionally attatched with this commodity. Allmost every family in India wants to buy more and more Gold as much as they can but they are not willing to accepts that Gold is not an investment it is simply a purchase. It is not real investment. It's value goes up and down, but it does not produce a stream of income for you.
If you happen to buy gold when it is relatively cheap and then sell when it is expensive, you have made a captial gain. That is trading, more of a speculation than an investment and it is based on luck rather than skill.


 In the long run, Gold has not given investors much returns beyond inflation. But since it produce no income, that is how it should be. It should keep up with inflation. Theoretically, in long run the real return (return minus inflation) should be equal to zero.


Now the question arises, if Gold is not an investment than why should one invest in this commodity. The answer is " Gold is a excellent hedge against inflation. The best thing is in this commodity is that a Gold can easily beat inflation in a long run.


Few days ago, one person ask me a question through mail that he has Rs 15 lacs in his bank account and he want to invest this money somewhere in such a manner that he can spend this amount on his daughter marriage but after 20 years.

So here comes the inflation factor, If we assume the inflation rate of 5%, after 20 years the value of today's Rs 15 lacs will be approx just Rs 560,000 of today. So he needs to be save almost 40 lacs today, so that this Rs 40 lacs of today will have value of todays Rs 15 lacs after 20 years.

But if this person buy a pure gold ( not in the form of ornaments ) in physical form of the whole amount of Rs 15 lacs than he easily beat the inflation in a long run of 20 years.

So, I adviced him to buy a pure gold in physical form and I am very much sure that he can achieve his goal.

Money Vs Currency

There is too much confusion between Money and Currency.

                     

Now, there is two Concept exists that must be understood and that is

1.      Money is unreal, meaning imaginary, intangible.

2.      Currency is NOT Money, but merely represents Money

Money is unreal and Imaginary

It is absolutely imperative that you understand that money exists only in the human mind. You cannot hold money in your hand, not you not anyone. Money exists as an unreal concept to enable us to run our economy easier.

Some analogies from our every day life will help to explain concepts. Let’s consider 3 Apples. The Apples are real, but 3 is unreal. Instead of saying Apple, Apple, Apple we can say 3 Apples. That is convenient. We are using an unreal idea to make communication easier.

In our school days, in Algebra we learned that ‘x’ could be equal to something we needed to find. That ‘x’ is certainly unreal, but it is useful in finding an unreal number that can be attached to something real. In Algebra we use something unreal to find real and it works well to our benefit.

Than we learned about negative numbers. They are appropriately called imaginary and minus. Negative numbers can exists only in human minds, but they are handy to use to find other numbers and to represent an absence. A negative amount of money can mean how much we must dig up to pay our bills.

If you continued in Math, you learned about i, the square root of minus one. It does not exist and cannot be changed to real number. But its concept is handy to use in finding other numbers.

For those who don’t like Math’s, let’s take a look at literature. There is fiction, which means unreal, and there is non-fiction which means real. Fiction is a story that never was real. Non-fiction is a story that once was real.

Now, apply that idea to Currency and Money. Currency is something real that we use to represent something unreal money. This is convenient. We cannot hold unreal money in our hands, but we can grasp and trade real currency that represents our unreal money.

Currency is not money. It merely represents money:

Since money is unreal, we need something we can get our hands on to use in our daily lives. So, we use our human mind and invented printed currency to represent money. Now we have something real that we can hold in our hands and used to exchange value. And that is where we get into a heap of economic trouble. People get to think that printing currency is printing money, but that is far from the truth. Printing currency is just that simply printing ink on paper.

     

    Currency is printed on paper or minted from cheap metal

                      

                   Money is created, Not Printed.

           

             We can’t print something that is imaginary

When you apply for a loan in any bank, bankers create money by making an entry in a ledger, usually in a computer. Then he enters that amount in your checking account and poof! That money is created out of nothing, just like that. Then you can start writing checks. That banker created that money out of nothing, and now you must pay him interest for it.

Well, now, let’s stop to think about for a while. If money is created by making an entry in a ledger, then that money must be imaginary. Indeed money is totally unreal. The real paper and metal that we hold in our hands is currency that only represents unreal money.

But important fact is

The amount of currency we have depends on the amount of money in the economy. If we are short on money, we run short on currency.

How to Set up a Company in India

How to set up a Company in India

                                           

How to set up a company in India without having a visit of any Government office.


It sound's great !! isn't it.


Yes, Its true now anyone can register a Company in India and in the entire process of setting up a Company can be done without having a single visit to any of the Government office.


We must appreciate and thanks to Ministry of Corporate affairs ( MCA ) for making the entire process so simple and online.


Just follow the below steps and you are on your way to incorporating a company.


 1. Get a DIN :

The first thing you must do is to apply for a Director Identification Number ( DIN ). This can be done through this link


           http://www.mca.gov.in/MCA21/dca/din/DIN.html


You need to fill the DIN application form online, pay the fees of Rs 100 and print out the form. On payment of the fees, a temporary DIN is generated along with a Service Request Number ( SRN ). The printed form than will then have to be posted to MCA Delhi office along with attested identification proof and address proof. Within about 3-4 days of receipt of the application by MCA you will receive an email confirmation of allotment of DIN followed by the DIN allotment letter via post.
( Note : DIN will have to acquired for all the persons to be mentioned in Form 1A as proposed promoters) 






2. Get a DSC :

While the DIN application is under process, you should apply for a Digital Signature Certificate ( DSC ). The authorities who provide a DSC as approved by the MCA can be found on this page,


     http://www.mca.gov.in/MCA21/dca/common/certifying-new.html


You can apply for a digital signature to any of the vendor listed. The cost will depends upon the level of the security you choose for the DSC and the number of years of validity. Again, the form can be filled online at the respective vendor's website, make the payment online and then print the form and submit with your attested identification and address proof. Most vendors will deliver the DSC to you via email itself with instruction as to how to activate it.


( Note : DSC can be acquired for only one of the Director's who will be authorised to make submission to ROC/MCA on behalf of the promoters )




3. Apply for the name of the Company :

Once you have been allotted a DIN and you have a functional DSC, you can apply to MCA to check the availability of the name of the Companyyou want to register. This is done using Form 1A.
This can be downloaded from,


 http://www.mca.gov.in/MCA21/dca/downloadeforms/Download_eForm_choose.html  


Once you fill in the DINs of the promoters of the company, lot of the cells get filled by the auto complete features in the form. This form requires you to fill in any 6 names in order of priority which you would like to keep as the name of the Company. Before short listing the names, you should check if any other Company exists with the same name /similar sounding name ( in same business ) as such names will be out rightly rejected. This can be done at,


 http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mode=16


Give the names is good thought, so that you can avoid having to make multiple applications. It also requires you to fill in the proposed Authorised Capital, which can be increased while filling for incorporation of the company but cannot be reduced.


Once the form is filled, it must be signed using the digital signature of one of the promoters and than it is ready for submission. You must then register yourself with MCA by creating your username at
                 http://www.mca.gov.in/MCA21/index.html


Login with username and submit the form online. You will have to pay the application fees of Rs 500 for the form. The site will generate a Service Request Number ( SRN ) which can be used to track the status of  the application.


4. Name Approval : 

The name of the Company is approved or rejected within the 7 days of the application. You will recieve an email confirmation for the same which will be followed by the letter of allotment of the name by post.
You have now 60 days within which you will have to file for incorporation of the Company. If unable to do so, you can file for an extension of maximum another 30 days.
With the name of the Company approved, the next step is filling for incorporation of the Company which is done by filling the Form 1. 18, and 32.


( Note : Till now only the name of the Company is approved and the Company is still not in existence )




5. Preparing for Filling of Incorporation of the Company : 

Filling up the three forms requires some attachment to be submitted along with the Form. So you must first get the below attachments ready.


(i) Memorandum of Association (MoA) : MoA is the most important document of the company as it states what the company can do. If you are qualified enough you can search on internet for samples MoAs and modify the same to suit your requirments otherwise best would be to hire a professional to do it for you.


(ii) Article of Association (AoA) : The AoA states the rules which govern how the Company is run. One can either adopt table A of the Companies Act or make an AoA. Again the AoA can be found on the internet but it is advisable to use the service of a professional to avoid any problem in future.


(iii) Power of Attorney : All the promoters of the Company will have to execute a Power of Attorney on the name of any one of the Promoters authorising him to make all submissions and do all the necessary to incorporate the Company. This document will have to be executed on a Rs100 stamp paper.


(iv) No Objection Certificate : In case of the promoters who filed for approval of the name of the Company in Form 1A are different from the ones filling the Form 1, than an NOC will have to obtained from the orignal promoters that they have no objection in the new promoters incorporating the Company.




Form 1 :

All the four attatchments mention above will have to be attached in Form 1. Form 1 requires you to fill the Authorised capital of the company. Based on that stamp duty payable on Form 1, the MoA and the AoA is automatically calculated by the Form 1. One need not to get the MoA and AoA stamped like the older days as MCA provides a facility of payment of the stamp duty online. Utilise this facility to make things simpler and faster for yourself. The completed form with all the attachments will have to be signed (using digital signature) by the authorised promoter as per the Power of Attorney to apply to ROC (Registrar of Companies) for incorporating the Company.


Form 18 :

This Form mention the registered address of the Company. One will need to mention the address of the Police Station under whose jurisdiction the registered office of the Comapny is situated. The Form will then have to be signed (using digital signature) by the authorised promoter. After the promoter signs the form, it should be signed by a practicing CA/CWA/CS using his/her digital signature.


Form 32 :

This Form requires the details of the Director's, MD, Manager, Secretary etc of the Company. Filling in the DIN automatically fills in most of the Form. If the Director's are required to take qualification shares, then the declaration by the Director's that they acquire the qualification shares and evidence of payment of stamp duty will have to attached in this Form. The Form will then have to be signed (using digital signature) by the authorised promoter. After the promoter signs the Form should be signed by a practicing CA/CWA/CS using his/her signatures.




Filling of Incorporation of the company :

Once all the three forms are ready with all their attachments, you must login to MCA website using your earlier created username and submit all the three forms.
While submitting the forms you will be required to pay the stamp duty and the filing fees. ( Higher the authorised capital as per the MoA, Higher the stamp duty and the filing fees). You are given the option to deposit the amounts in the authorised collection banks.
     
                     ( http://www.mca.gov.in/MCA21/dca/banks/banks_new.html )
Or the fees can be paid by promoter director by using his credit card. I would suggest using the credit card option payment is done immediately. Paying the fees in any of the authorised banks involves visiting the bank, which are very few in numbers, and visiting the bank again to collect the reciept of the amounts deposited. And the bank also takes a day or two to credit the fees to the account of MCA.

With the form submitted and the fees credited to MCA, you will have to wait till your forms are under process. Again you can use the SRN generated on submitting these forms to keep a track of your application.
ROC generally takes 7 working days to process your forms and if the forms are found complete in all respects, you will recieve the Certificate of Incorporation by email. This will be followed up with the signed copy of the Certificate of Incorporation by post. From the date of Incorporation mentioned in the Certificate, the company is a separate legal entity and if it is a Private Limited Company you can commence business operations immediately. Public Limited Companies need to apply for the Certificate of commencement of Business seperately.

If you just follows the entire process mention above, you can incorporate a Company from the comfort of your home or office without having to visit any of the Government offices even ONCE $$$.

FOR ANY QUERY PLEASE DONT HESITATE TO ASK ME.

How to open PPF account.

Open PPF account in easy 5 steps

1. Visit any branch of SBI bank, nationalised bank or Post office.

2. Keep the any one of following orignal documents with two recent passport size photographs.
       * Passport
       * Pan Card
       * Voter ID
       * Ration Card
       * Driving Lisence
      ( Note : If you dont have Pan card than you have to submit the attested copy of your Voter Id, Ration card or Passport )

3. Ask for a PPF opening Form or download it from this link  http://www.indiapost.gov.in/pdfForms/PPFActOpening.pdf

4. It will takes ony 3 to 5 minutes to fill the form. Paste the photograph on it, Choose a nominee and get a witness signature.

5. A pay-in slip needs to be filled and the initial subscription needs to be credited into your account. A PPF passbook which is similar to a Saving passbook will be issued with your photo affixed and the nominee's name mentioned. PPF Rules and regulations can be found on the back of the passbook.

That's all, Your PPF account is opened now.

Things to Remember while opening PPF account

1. You can have only one PPF account on your name. If any point it is detected that you have more than one accounts, the another accounts you have opened will be closed immidately and you will be refunded only the principal amount, not the interest earned.

2. You cannot open a joint account with other individual. The account can only be opened in one person's name.

3. You are free to nominate one or more individuals. On the death of account holders, nominees cannot keep the account going by making contributions. If there are no nominees than the legal heirs gets the money.

4. An individual can open one account and others for his/her children or minor of whom he/she is the guardian. But in case of his/her death, the minors or childrens cannot make any additional contribution.

5. Non-resident Indians earning an income in India and wanting to take advantage of the rebate can also open an account. Subscription  however, will have to made from their NRO ( Non Resident Ordinary ) account on a non repatriable basis.