5 smart money moves in your 40s

5 smart money moves in your 40s


It’s never too late to get smarter! If you feel like you’ve fallen behind financially, your 40s might be the ideal time to catch up. Consider these moves:


Buy a house, if you don’t own one already. The housing market is healthy again and you still have plenty of time to build equity—which you’ll need in retirement. By the time you’re in your 40s, odds are your family isn’t growing any more and you won’t need to upsize in a few years. And the more you earn, the more you’ll appreciate the mortgage-interest tax deduction.


Learn how to fix stuff. It will make home ownership a bit less costly if you can repair leaks, install light fixtures, patch walls and do other basic jobs yourself. There are online instructional videos for many such projects. I’ve gone as far as fixing appliances with no special knowledge or tools.


Hold onto that aging car. A few years without car payments will free up money for your house, which is a better thing to spend it on. If your house doesn’t need anything, pump extra cash into your retirement fund and resist the urge to keep up with your neighbors’ wasteful spending on luxury automobiles.


Gamble on a few investments. Most of your savings should be invested conservatively, according to sound guidelines for retirement planning. But using a small portion of your savings to trade stocks or ETFs will help you learn about markets and get a lot smarter about money. Once you lose a few bucks, you’ll suddenly get determined never to make that mistake again. But never put more than 5% of your savings at risk.


Go into business with your kids. I loaned my son a couple hundred bucks to get started on a sneaker-trading business during the summer. He paid me back and earned a profit. I got to help him learn a little bit about money, while I learned something about sneakers—and my son. That was money well-invested—even though I didn’t charge him interest.


Happy Investing
Source:Moneycontrol.com

4 Signs That You Are Not Millionaire Material

4 Signs That You Are Not Millionaire Material


Fact: Nobody gets a million bucks by accident or by luck. Every person that can call themselves a millionaire is only able to do so because they worked hard at it, or at the very least regularly invested in lottery tickets. It goes without saying that the road to becoming a millionaire is paved with a lot of hard-work and if you really dream of making that million, you're probably going to have to throw work-life balance out the window.


So if your main mission and goal in life to is to be a millionaire and nothing else, then maybe these 4 reasons GET.com has rounded up might change your mind a little bit.


4 Signs That You Are Not Millionaire Material


1. You Aren't Willing To Work Every Hour Of Every Day

Whether you start your own business or work for somebody else, getting to where you can (hopefully) earn serious money will cost you a lot of time. 

The reality is, some of us already have a family and kids to take care off. Even if you're not married, or if you don't have kids, you probably still have your parents to care for. And some of our loved ones that need special care require our time and energy on top of monetary support. 

If this is you, or if you have other things to tend to (that money can't solve) then don't be so hard on yourself. You're not alone. 



2. You Are Not Willing To Sacrifice Everything

We always hear it, if you want something bad enough, you will sacrifice everything to get it. But is it worth sacrificing and ruining a relationship for the sake of money? The answer might be a yes, but it might also be a no. 

Either way, there has to be some form of sacrifice in order for you to do what it takes to earn a million bucks. If your lifestyle just doesn't allow for that, then you can either try to make changes to it or just be content with what you already have.


3. You Focus Too Much On The Future

If you're getting too caught up in planning what your life is going to look like 10 years down the road, (more like fantasising) then you're getting way too ahead of yourself. 

Don't get me wrong, being forward thinking is a good thing, but thinking too much about your future and not doing something about it now may very well lead to the downfall of those millionaire dreams. 

If the future seems too daunting for you, then all the more reason why you should shift your focus on the present and conquer your hurdles one at a time. After all, it's the little victories that lead us to bigger breakthroughs.


4. You Are Not Saving Enough

You know what they say, the road to being a millionaire starts with saving (said no one ever). But there is some truth in it, you have to admit. 

Everyone knows that just saving is not going to be enough to make you a millionaire. You have to grow your money, whether that's in the form of buying a property or investing. 

But of course before you can even start investing you need to have some savings first. If you're not saving enough in the first place, your journey to becoming a millionaire has gotten off on the wrong foot.


Still Think You Are Cut Out To Be A Millionaire? 
The truth is most of us are never going to be millionaires and that's okay. At the end of the day, money really isn't everything and there's so much more in life that money cannot buy. 

Life is too short to want to be a foolish millionaire wannabe. Live your life within your means and count your blessings. You'll start to realise that you really don't need to be a millionaire to be happy.


Happy Investing
Source:Moneycontrol.com

8 Tips Make Yourself More Productive If You Work From Home

8 Tips Make Yourself More Productive If You Work From Home

Working from home is more popular than ever. In the UK, more than four million of us do it and with more companies offering flexible working and more people going self-employed, that number looks like it’s only going up.

But working from home is not all lay-ins and taking conference calls in your pyjamas. To earn your living from your living room, you need to be on your game, and it’s easy to get distracted when the TV is just there and no one else is around.

Here are some top tips to make you the master of the home office:

1. Dedicate some space for your home office



Not all of us who work from home have the luxury of a spare bedroom we can turn into an office, but that doesn’t mean it’s impossible to create a dedicated space to work in. “There are lots of great ideas for handy solutions,” says Rachel Doran, who founded artisan gift boutique Elsie & Fleur.

She suggests fitting a desk into an alcove. “If you can’t find a desk that fits, fix battens to the wall and attach a piece of wood to create the desk space you need,” she suggests. “If you have a built-in floor to ceiling cupboard that would suit, or a wardrobe, then it’s time to colonise it. It’s perfect for an office solution as you can just shut the doors on it once you’ve finished your day’s work.”

2. Create a workspace that you *actually* want to be in

The beauty of having a home office is that you are the only person that has to like it, so you can make as suited to your own tastes as you want. As Declan Curran, who runs property development company Empire Holdings, says, “Give the space what it needs to reflect your personality and make you feel welcome and at ease every time you enter – you’ll find the room much more productive.”

But when it comes to choosing furniture, go for comfort and function over style. For example, he says, pick a chair with good armrests, proper wheels, adjustable height and lumbar support. “You may not look forward to working in it, but you shouldn’t dread sitting in it.”

3. Get distractions out of the way



It’s easy to get sidetracked by household chores when you work from home. Hannah Martin, founder of the Talented Ladies Club for self-employed women, recommends doing little jobs, like putting on washing or clearing some dishes, in the morning before you start work, so it doesn’t bother you later.

“Not only will it remove any potential excuses for putting aside a tricky work task (it’s amazing how attractive washing up can suddenly become), but it’s much more pleasant to work in a clean and tidy home,” she says. 

4. Behave like you would going to an office



That means dress like you would for the office, sticking to office hours, and taking a lunch break. “Always get up and dressed; don’t go straight to your desk in your PJs,” says Yorkshire-based freelance journalist Hannah Doyle. “And try to leave work at the end of the day, too (turn off the laptop, shut the office door.) I try to have a walk at the start and end of the day, and ideally at lunchtime. Get a dog.”

Kelly Rose Bradford, also a freelance journalist, says it’s important that your friends and family know to treat you like you’re at work. “And no, they can no more ‘just pop in’ than they would if they were ‘just passing’ your office block,” she says.

5. Be strict about time management



Make a plan a stick to it – might be boring, but it’s the advice that seasoned freelancers come back to again and again. “Map out your day the night before, with slots for various projects/pieces. Add in set times for checking/responding to emails and social media. Put in lunch/gym/tea/stretch breaks. Stick to religiously. Works a treat,” says Jane Alexander, journalist and author of Mindfulness & Wellbeing and The Overload Solution.

 Happy Investing
Source:Moneycontrol.com

Seven reasons why you should buy a home while you're young

Seven reasons why you should buy a home while you're young

Buying a home early in life helps home buyers.

 

There are lots of arguments for and against buying a home early in life, but the rationale for doing so is, in fact, the strongest and most convincing.

1. In the first place, the longer the tenure of a home loan, the lower the EMIs are. EMIs are calculated on the basis of the loan amount and how long the borrower can logically repay the home loan. In India, the retirement age is 60, and banks will consider this as the age by which the borrower must under any case close the home loan if he or she has not done so already. The longer one defers the decision to avail of a home loan to buy a property, the bigger the EMIs become.

Also, it is easiest to get approved for a home loan when one is young. Lenders are eager to provide home loans to young people because they are at the beginning of their careers, and will doubtlessly grow in them over the ensuing years. Their financial viability - and therefore their future ability to service a home loan - is therefore at its highest point.

2. In fact, the eligibility for a home loan is even higher for young married couples taking out a joint home loan. This is by far the most desirable lending scenario for banks. They are assured that two instead of only one income stream will back the home loan proposal, and the fact that two instead of one borrower are involved decreases their risk. Taking a joint home loan also helps a couple to close down the financial commitment of a home loan much faster, allowing them to focus on other investments earlier in life.

3. Another advantage of purchasing a home early in life is that it becomes easier to pay off the outstanding amount on a home loan with accumulated savings later in life. This opens up the opportunity to upgrade to a bigger, better-located home is the future - which is what most Indians aspire to do at some point.

4. Today, many newly-married couples are deferring their plans to have children until they have had a chance to enjoy some unfettered years together. Such a decision also works very well for such couples from the point of view of home purchase. It means that they can make a big down payment on their home before children and their education become an additional financial responsibility. A bigger down payment reduces the EMI burden, meaning that they can close their home loans faster.

5. It is also important to note that the earlier one buys a home, the longer it has to appreciate in value. Given that the annual appreciation of a well-located residential property can be to the tune of 15-20%. This results in a huge incremental increase of the investment value of such an asset.

6. It also makes much more sense to invest one's hard-earned money in an appreciating asset rather than pay monthly rentals for which there are no returns at all. Repayment of a home loan also brings with it the financial advantage of income tax breaks. These are an added benefit which the Indian Government has provided with the express purpose of encouraging young citizens to invest in self-owned homes and thereby safeguard their and their children's future.

7. Finally, it makes much more sense to pay monthly EMIs on a home loan, into an investment-grade asset, rather than pay monthly rent which is nothing but an expense with absolutely no returns on investment.

The above reasons should present a convincing argument for making the important decision of buying a home early in life. The New Age 'logic' that it is better to live on rent simply does not hold water if one considers the multi-faceted advantages of investing in a self-owned home while one is young. It is true that it requires financial discipline to service a home loan, but this very desirable quality can never come too early.

Happy Investing

Source:Moneycontrol.com

Financial planning ... free classes

Financial Planning ... Free Classes


Limited offer on first come basis only 10 seats

Mega merger: How an Indian oil behemoth compares with global cos

Mega merger: How an Indian oil behemoth compares with global cos

If the government were to merge the six major Indian upstream and downstream oil companies, as is being speculated by some reports, how would the behemoth compare to global peers in terms of market value? Respectable but not spectacular.

The Indian government is considering merging all its major upstream and downstream companies, including Indian Oil, HPCL, BPCL, ONGC, Oil India and GAIL to create a behemoth that would rival its global peers in size and scale.

After all, most major economies of the world are home to at least one oil giants that produce millions of barrels of oil per day and are integrated vertically till the level of retailing: US has ExxonMobil and Chevron, UK has BP and Shell, Russia has Gazprom and Rosneft, Brazil has Petrobras while China has PetroChina and China Petroleum (parent of Sinopec).

A mega major of major Indian firms will have several benefits. Not only there would be synergies as well as a natural hedge against commodity swings (a weak oil market benefits refiners and retailers while high prices are good for producers), its sheer size would allow it to hunt for expansionary global projects their constituents may not be able to undertake alone. (Some analysts have also said such an oil giant may become unwieldy to manage.)

However, when it comes to market capitalization, an oil behemoth comprising the six Indian majors along with Madras Refinery and Chennai Petroleum would compare respectably to some its global peers but it would still be behind several others.

Below is the chart of the world's major oil & gas giants and their respective market capitalizations (Source: Google Finance, Yahoo Finance) in billion USD dollars.

While the Indian companies' combined marketcap moves the needle at about USD 81 billion, the world's largest listed oil firm ExxonMobil of the US is valued at a steep USD 384 billion.

Note that this list does not include unlisted oil majors in the Gulf region such as Saudi Aramco, Kuwait Petroleum or National Iranian Oil Company, which may each be more valued than Exxon.

For instance, recently there were reports that Aramco may be listed and the reported valuation being considered was more than USD 2 trillion, or more than five times the current size of Exxon.

Within Indian companies, the USD 81 billion m-cap is contributed majorly by ONGC and Indian Oil, followed by the others (See infographic below. Data source: Capitaline)

Happy investing

Source:Moneycontrol.com

The essential checklist for investing in an upcoming area

The essential checklist for investing in an upcoming area

Rapid urbanisation has led to the emergence of new suburbs and peripheral areas around metropolitan cities. These newly-created residential markets have their own set of development types (apartments, row houses, villas and plots), price R

Rapid urbanisation has led to the emergence of new suburbs and peripheral areas around metropolitan cities. These newly-created residential markets have their own set of development types (apartments, row houses, villas and plots), price points (affordable, mid, premium and luxury) and buyer-investor categories. However, the moot question is whether these new destinations offer a safe option for property investment.

The biggest advantage of buying a house in an upcoming residential destination, is the relatively affordable price of units, points out Ashish Anand, managing director of Neo Developers, a Gurgaon-based development firm. “Often, apartment projects in an upcoming region, come with inaugural discounts to lure early investors. Prospective buyers can strike a good bargain here,” he explains. However, investing in such locations also has its own set of risks.

Negligible appreciation for a few years An upcoming area is likely to lack certain necessary basic infrastructure. Hence, appreciation in property prices may be zero or negligible for several years, cautions Anand. There could be multiple reasons for this, such as delay in the construction of a connecting road or surrounding infrastructure.

Case in point is Faridabad.

In early 2008, upcoming projects along the Neharpar area were charging a certain premium on account of the proposed connectivity in the region. However, as the laying of proper road infrastructure got delayed, a number of investors and buyers exited the projects, resulting in a drop in prices. Another such region in the NCR, is Yamuna Expressway, which has a number of announced projects. However, the rates have not moved much in the last four years.

“It is a big risk for those putting in their money. Usually, it is advisable to put money into established properties and localities,” advises a consultant at Realistic Realtors, a New Delhi-based real estate consultancy, requesting anonymity.

Construction hassles and habitability

An upcoming region where a number of developers are constructing their projects, may not be habitable for several years. While apartments may be ready, constant movement of heavy construction vehicles, dust and poor road conditions, may make such areas inhabitable. Mitin Raj Singh bought a flat in Noida Extension area but plans to shift only after a year due to these problems, even though his flat is ready. “While a few towers in the project are ready for possession, towers and projects nearby, are still under-construction. I will prefer to live on rent for a year or so,” he explains.

Out of the 50-odd developers in the Noida Extension region, just two developers have offered possession to buyers. According to real estate brokers in the region, the area will take around 4-5 years to have quality basic infrastructure, similar to Noida.

What should you do? While there are risks and challenges, there is a price advantage when it comes to making a real estate investment in an upcoming locality. If you are undertaking a property search, weigh your options before investing in an upcoming suburb that is far away from established localities. While the house may cost less, you may have to spend more on your daily commute.

Also, check the proximity to amenities and other developed localities. Localities that have a supermarket, a school, access to a major expressway or a train line, and local shops within a four-five kilometer radius, are likely to become future hubs for home owners.

Happy investing

Source:Moneycontrol.com

A home that smells good, feels good…

A home that smells good, feels good…

Pleasant fragrances not only help to create a positive ambience, but can also be therapeutic and help the brain to relax. Aromatherapy is the practice of using fragrant oils or essence of plants, to R

Pleasant fragrances not only help to create a positive ambience, but can also be therapeutic and help the brain to relax. Aromatherapy is the practice of using fragrant oils or essence of plants, to aid good health.

“A home that smells fresh, makes its occupants and guests feel good. Smells are linked directly with emotions. A pleasant smell can enhance and uplift one’s mood, after a hard day at work,” points out Manita Bajaj, founder and CEO of Sattva Life. There are many ways to make a home fragrant with reed diffusers, air freshening sprays, candles and potpourri.

“Although air sprays can be used to freshen up fabrics and the house, they are made of chemicals and may not be good for the health. Instead, one can light a non-scented candle and let it burn for a few minutes, until some molten wax forms. Then, add a few drops of essential oil of your choice and the aroma will spread around the room. This is an affordable and healthier way to have aroma at home,” suggests Bajaj.

Aromas for various purposes Diffusers, which heat essential oils and allow their molecules to be released into the air, can also be used. Essential oils can freshen up and cleanse one’s home, adds aroma therapist, Dr Blossom Kochhar, chairperson of the Blossom Kochhar Group of Companies. “Some essential oils can have a relaxing effect. Some oils can be uplifting and stimulating, while others even have aphrodisiac properties,” explains Kochhar. Sandalwood has a pleasant, woody smell that instils a sense of inner peace and helps meditation. Jasmine is a subtle and evocative fragrance, which acts as a stimulant, anti-depressant, anti-spasmodic and antiseptic.

“Jasmine generates a good feel, while revitalising and restoring one’s energy. Lavender has calming properties, which help the body and mind to relax and helps fight insomnia and headaches. Ylang Ylang (extracted from a star-shaped yellow flower) oil is ideal for the bedroom. Its aroma peps you up, acts as an aphrodisiac and also helps reduce fatigue and stress. When the flu is in air, add a few drops of eucalyptus essential oil to a diffuser, to prevent coughs and respiratory problems,” adds Kochhar.

Medicinal properties “The fragrance of essential oils, can alter your mood, help concentration and rid the area of airborne bacteria,” adds Bajaj. The aroma of lotus (which is used in religious offerings), has medicinal properties and creates a spiritual ambience. The fragrance of the sacred plant Basil (Tulsi), has cleansing properties and strengthens the immune system. Lemon promotes purification and love, refreshes the mind and soothes one’s nerves, Bajaj elaborates.

Meena Patil, a home maker from Pune, who is fond of essential oils, shares “When my kids have their exams, I use aromatic oils at home. Rose oil eases stress and anxiety, while rosemary oil increases focus and concentration. Neroli oil (made from the flowers of the bitter orange tree) is a stress buster and relieves mental exhaustion.”

Tips to use essential oils at home For your drawers and closets, place cotton balls with a few drops of lavender oil. You can buy readymade potpourri or make it at home, by using dried rose petals and orange slices, mint, cinnamon and clove. Place the potpourri in corridors or on side tables. To clean kitchen counters, use tea tree and lavender essential oils, as these have antibacterial properties. For wiping floors, add few drops of lemongrass essential oil to a bucket of water. Lemongrass oil wards off insects. You can also freshen the bathroom, by adding a few drops of lemongrass oil into the toilet bowl. To rid clothes of a musty smell, put a few drops of lavender oil in a small spray bottle and spray it on the clothes, before ironing it. Using peppermint essential oil in a diffuser, helps to ward off red ants and cockroaches. Approximate prices of products: Aroma oils (10 ml): Rs 250 Herbal incense sticks (pack of 12): Rs 275 Fresheners (350 ml): Rs 525 Reed diffusers: Rs 700 – Rs 2,000 Sandalwood oil (20 ml): Rs 600 Lavender oil (20 ml): Rs 275 Rose oil (20 ml): Rs 400By: Housing.com/news

Happy investing

Source:Moneycontrol.com

Taxation on sale of inherited property

Taxation on sale of inherited property

There is considerable confusion over the taxes applicable on the sale of an inherited property. While many think that the money received on sale of an inherited house is fully tax exempt, others feel R

There is considerable confusion over the taxes applicable on the sale of an inherited property. While many think that the money received on sale of an inherited house is fully tax exempt, others feel that it is fully taxable.

In reality, there is no tax liability at the incidence of inheritance. However, any profits made on the sale of an inherited house, are taxable as capital gains.

Computation of capital gains

A capital gain may either be short term, or long term, depending on the period for which the asset was held. If the inherited house is held for more than 36 months, it is treated as a long term asset. This period of 36 months includes not only the period for which you held the house, but also the period for which it was held by the previous owner/s who had paid for it.

For a holding period of less than 36 months, the actual cost of acquisition and any cost of improvement are deducted and the balance amount is treated as short term gains and taxed at the slab rate applicable to you. If the combined holding period exceeds 36 months, you get the right to deduct the cost of acquisition and the cost of improvement as enhanced by the cost inflation index multiplier. The cost inflation multiplier is calculated, based on the cost inflation index of the year of purchase and the year of sale.

The cost of acquisition will be the amount paid by any of the previous owners, towards the purchase of the house. For example, consider a scenario, where you inherited a house from your father and he had inherited it from his father. If your grandfather had purchased the house for Rs 50,000, your cost of acquisition for capital gains purposes shall be Rs 50,000. Moreover, in case the house was inherited before 1st April 1981, you may substitute the fair market value of the property as on 1st April 1981 for the ‘cost of acquisition’ and apply the cost inflation index multiplier on that value.

In case the asset is inherited by you after 1st April 1981, you will have to consider Rs 50,000 as the cost of acquisition. As per strict reading of the income tax provisions, you can claim the benefit of indexation with reference to the year in which you inherited the property only and not earlier. However, high courts in Mumbai, Delhi and Gujarat have taken the view that for inherited property, in case the asset is acquired after 1st April 1981, the tax payer can claim indexation benefits from the year in which the previous owner who had paid for it had acquired it.

In any case, even if the asset was purchased before 1st April 1981, you can substitute the market value as on 1st April 1981 for the ‘cost of acquisition and get the indexation benefits from 1st April 1981, even if you may have inherited it later on.

Exemption from long term capital gains

For a long-term asset, you have two options to save taxes. You can either invest the capital gains on the purchase of one house within two years or construct one house within three years. Alternatively and/or additionally, you can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual.

Happy investing

Source:Moneycontrol.com

Suzlon Energy ... News/Views

Suzlon Energy ... News/Views

SUZLON ENERGY- CMP- 18.20

Nine reason - why Suzlon will touch Rs.100 in one year.

1. RE power which was bleeding Suzlon has been sold.
2. Debt from Rs.21000 Crores has been reduced to Rs.9000 cores.
3. Interest cost is being reduced through low cost debt swaps.
4. Wind mills with higher load factor of 40% (earlier 20%) have been introduced which are viable on their own without any fiscal support (Without accelerated depreciation)-this will improve order position and sales.
5. Solar plants are being installed at the wind mill sites-saving on cost of land and grid connection.
6. Qualitative management joining hands-Sun Pharma promoters having a stake of 20%.
7. Government announcement regarding wind and solar farms -The main objective of the policy is to provide a framework for promotion of large grid connected wind-solar PV system for optimal and efficient utilisation of transmission infrastructure and land, reducing the variability in renewable power generation, thus, achieving better grid stability.
8. India has set an ambitious target of reaching 175 GW of installed capacity from renewable energy sources including 100 GW from solar and 60 GW from wind by 2022. Various policy initiatives have been taken to achieve this target. The country has already crossed a mark 26.8 GW of wind and 7.6 GW of solar power installed capacity during May 2016.
9. Bull run in the stock market.



Suzlon Group has bagged an order for 58.80 MW wind power project to be set up in Dewas district of Madhya Pradesh.

Suzlon Group has won a repeat order from leading Independent Power Producer (IPP) for a 58.80 MW capacity wind power project in Madhya Pradesh,Suzlon said in a statement.

According to the statement, the project comprises 28 units of S97-120 m hybrid towers with rated capacity of 2.1 MW each and is scheduled for completion by March 2017.
Suzlon will be responsible for the entire project lifecycle which includes wind turbine supply, construction and commissioning as well as operations, maintenance and services of the project for a period of 12 years.

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The project is capable of powering 32,000 households and reducing 0.12 million tonnes of CO2 emissions per annum.

We are custodians of over 9.5 GW wind assets in India and this industry experience is unparallelled. Over two decades of experience, pan-India presence, robust technology, innovative and reliable products and massive service capabilities give us the confidence to further enhance our market share in India, Suzlon Group CEO JP Chalasani said.

Suzlon Group is one of the leading renewable energy solutions providers in the world with an international presence across 19 countries in Asia, Australia, Europe, Africa and North and South America.


Share price of Suzlon Energy gained nearly 3 percent intraday Thursday as it has won repeat order from leading independent power producer (IPP) for 58.80 MW capacity wind power project in Madhya Pradesh, India. The project includes 28 units of S97-120 m hybrid towers with rated capacity of 2.1 MW each and is scheduled to be completed by March 2017. The project is capable of powering around 32000 households and reducing approximately 0.12 million tonnes of C02 emissions per annum. The company will be responsible for the entire project lifecycle which includes wind turbine supply, construction and commissioning as well as operations, maintenance and services of the project for a period of 12 years. At 10:51 hrs Suzlon Energy was quoting at Rs 18.40, up Rs 0.20, or 1.10 percent on the BSE.


Happy Investing

Source:Moneycontrol.com

Creating wealth with residential real estate investment

Creating wealth with residential real estate investment

Among other things, in order to mitigate most of the investment risk, one should restrict one’s residential property investment to Tier 1 and select Tier 2 cities.

Effective investment in residential property requires the chosen location to meet certain parameters. Fundamentally, the area should have good social infrastructure, availability of adequate public transport and sufficient economic activity to sustain development and growth. These parameters apply equally to investment in NA-certified land approved for residential development and flats in a residential project.

In order to mitigate most of the investment risk, one should restrict one’s residential property investment to Tier 1 and select Tier 2 cities. It is also most prudent to invest in properties where the price tag falls between Rs. 2500-5000/sq.ft., since such a price tag provides downside protection against any capital value erosion. Simply put, the cost of construction and minimum cost of land literally makes this price segment safe, and almost guarantees capital appreciation.

Further Guidelines:

• The property cycle needs to be understood so as to identify the best entry point

• Leasehold titles issued by the government must be fathomed

• The investor needs to have a clear comprehension of unearned increase or capital gain and the consequently higher stamp duty implication at the time of conveyance from the developer

• The quality of the development is important, because depressed markets often result in poor design and construction quality

• Availability of the project’s development plans and all statutory approvals is de rigueur. If approvals are not yet in place, the investor should monitor them closely during the investment cycle

• The developer’s arrangement for all the finances for completion of the project must be verified

• The title’s due diligence by a qualified and reputed legal firm is now a given. One can no longer rely solely on the due diligence of home loan firms, as they have targets just like developers

• The size and dimensions of the plot and the apartment need to be understood; small plots or apartments may cost less, but they are also often difficult to resell

• The location of the development may be important, but so is the location of the plot or apartment within the complex. Investors should avoid buying flats on the top floors of high-rise buildings, as these artificially add to the cost due to floor-rise concepts

• The credibility and track record of the developer need to be researched, since even the best ones have failed to deliver under the current market conditions

• The price band of the development should be lower than the last highest peak in 2008 (exceptions can and should be made for quality, delivery date and location)

• The time of conveyance of land and delivery (possession) must be explicitly clear

• The penalties in case of delay must be well understood; not everyone can fight legal battles.

• The investor must clearly understand the delta between soft launch, launch and current price of the developer (the resale of existing ready projects may be actually cheaper)

• The investor must understand the sale agreement along with the transfer charges in case he wishes to sell the apartment during construction or prior to registration. He should establish whether the agreement captures within the official cost all the amenities, parking, etc. that the developer promised at the time of sale, or whether these are mentioned separately

• The investor should employ usable carpet area vis-à-vis chargeable area as the price benchmark vis-à-vis other projects Finally, the investor should keep an eye on the market and sell the residential property at the right time in order to multiply wealth. If all the above precautions have been taken, the property should have appreciated at a consistent rate of 15% per annum for three years. It is important to remember that one can almost never sell at the peak, just as it is impossible to always catch the lowest price. Best cities for residential property investment Some of the markets that currently show the highest residential property investment potential:

• North India: NCR, Lucknow, Chandigarh and Jaipur, Dehradun

• East India: Bhubaneswar, Kolkata and Guwahati, Ranchi

• West India: Ahmedabad, Mumbai, Pune and Nasik, Nagpur

• South India: Hyderabad, Bangalore and Chennai, Coimbatore, Vijaywada



Within these cities lie the opportunities for a higher delta of capital value appreciation, depending on the demand and supply dynamics of their micro markets and also the quality of the development, reputation of the developer, strategic value of the location and timely completion of projects.

Happy investing

Source:Moneycontrol.com

Shouldn't My Father And I Invest in Different Sets Of Mutual Funds?

Community Question - Shouldn't My Father And I Invest in Different Sets Of Mutual Funds?

Question: My dad and I both invest with Scripbox. We both are offered the same set of four funds which seems odd because our investment goals are fundamentally different. He is probably looking to boost his retirement fund with something safe while I am more open to risk. Why do we both have to go with the same set of options?

Answer: We believe that, before you start to look at specific funds, you need to determine which category (asset class) you should be putting your money in. That determination is based on your needs.

Here are the three primary categories of funds that we provide and that we believe most individuals will need.

1. Equity Funds are for long term investment of more than 5 years. Historically, equity mutual funds have provided annualised returns of 14% to 16% in the long term.

2. Debt funds are for short term investment with low risk - best suited if you are investing for less than 5 years. Historically debt funds have provided annualised returns of 8% to 9% in the long term. More information here

3. Tax saving funds provide income tax savings under sec 80C. They have the dual advantage of Tax benefit and investing in Equity Mutual funds. Any investment done in Tax saving funds will have a lock-in period of 3 years.

Please note that while the income tax department may define your lock in as 3 years, these are still equity funds and your money invested here should have the same horizon. More information here

All your money doesn’t have to be (and should not be) in the same category.

The portion of your money you need in the next few years should go in debt funds, whereas your long term money should go into equity funds.

The money allocated to different categories by you and your father would be different. We believe that the risk you have to take is dependent on the financial goals you have.

The risk your father might want to take is not about his age as much as it is about his goals. If his goal is security of capital, or generating an income flow, then Debt Funds make more sense as his investment horizon is likely to be shorter than yours.

If, however, the money is really meant for creating an inheritance, it could be in equity funds.

Similarly for you. You too may need debt funds, if you have financial goals with a shorter timeline and can’t be exposed to volatility then debt funds are your tool of choice.

You and your father, therefore, should choose that combination of fund categories which fulfill your specific needs. The portfolios of funds within those categories are designed to replicate the characteristics of those categories.

What about the fact that you are willing to ‘take more risk’?

It is our belief that investors should focus on category (asset class) return and category (asset class) risk rather than specific products.

Risk here has to be understood as applicable to a portfolio. When you invest in a single stock, you run the risk of losing 100% of capital but when you invest in a mutual fund, you are investing in a diversified portfolio and you are likely to experience the same ups and downs as the broader market.

So when investing in Equity, you should be looking at the return you can obtain from a diversified portfolio relative to the broader market. This is the objective of Scripbox’ equity funds portfolio selection. The objective of the debt fund portfolio selection is to obtain fixed income return with a portfolio that has low credit risk.

 Happy investing

Source:Scripbox.com

5 Financial Checks To Do Before You Enter Your 30s

5 Financial Checks To Do Before You Enter Your 30s

A checklist helps us avoid mistakes and be ready for the unexpected. Here is a checklist that you should use on your 30th birthday to find out your state of financial readiness before entering an important stage of life.

Happy Investing

Source:Scripbox.com

6 Steps to Explore Best Stocks for Investment

6 Steps to Explore Best Stocks for Investment

Below are the 6 Important Steps to Explore Best Stocks for Investment

Step-1: Find out how the company makes money

Step-2: Do a Sector Analysis of the Company

Step-3: Examine the recent & historical performance of the Stock

Step-4: Perform competitive analysis of the firm with its Competitors

Step-5: Read and evaluate company’s Financial statements

Step-6: Buy or Sell

Step-1: Find out how the company makes money

Before you decide to invest in a company’s stock, find out how the company makes money. This is probably the easiest of all the steps. Read company’s annual and quarterly reports, newspapers and business magazines to understand the various revenue streams of the firm. Stock price reflects the firm’s ability to generate consistent or above expectation profits/earnings from its ongoing/core operations. Any income from unrelated activities should not affect the stock price. Investors will pay for its earnings from its core operations, which is its strength and stable operation, and not from unrelated activities. Thus, you need to find out which operations of the firm are generating revenues and profits. If you do not know that you are bound to get a hit in future.

Warren Buffet once said that “if you do not understand how a company makes money, do not buy its stock- you will always end up loosing money”. He never invested even a single penny in technology stocks and yet made billions and billions of dollars both during tech bubble and bust.

Step-2: Do a Sector Analysis of the Company

First is to figure out which sector the stock is in. Then, figure out what all factors affect the performance of the sector. For example, Infosys is in IT services sector, NTPC is in Power sector and DLF is in Real Estate sector. Half of what a stock does is totally dependent on its sector. Simple rule-Good factors help stocks while bad factors hurt stocks.

Let’s take an example of airlines industry. The factors that affect it are fuel prices, growth in air traffic and competition. If fuel prices are high, tickets would be expensive and hence fewer people will fly. This will hurt the airlines sectors and firms equally. This would make the sector less attractive because there would be less scope for growth of the firms.

The idea is to find out the good and bad factors for the sectors and figure out how much they will affect the stock and how. What we are really looking at are reasons that will make stock price good or bad or a company look more or less valuable, even though nothing about the company changes. This will give you a broader view whether the stocks will do well or poorly in the future.

Step-3: Examine the recent & historical performance of the Stock

By performance we mean both operational and financial performance of the company. Take out some time to find out how the company has done in its business over the years. Were there issues with its operations such as labor strike, frequent breakdowns, higher attrition or lagging deadlines? If any company has a history of serious problems, it does not make a good buy because chances are high it may have similar problems again. History is a good predictor of future! It is also extremely important to find out the historical financial performance of the company – growth in revenues, profits (earnings), profit margins, stock price movements etc.

Step-4: Perform competitive analysis of the firm with its Competitors

This is most important step in analyzing a stock. Unfortunately, most of the retail investors do not bother to do this. It takes time to do this step but it worth trying if you don’t want to loose your money. Many investors buy a stock because they have heard about the company or used the products or think companies have excellent technologies. However, if you do not evaluate or compare those features of the company with other similar firms, how will you figure out whether the firm is utilizing them effectively or is better/worse than others? We also need to find out whether company is growing rapidly or slowly or has no growth. We would like to cover couple of financial ratios here in brief and explain how to use them to figure out a good stock.

P/E: Price-to-earnings ratio is the most widely used ratio in stock valuation. It means how much investors are paying more for each unit of income. It is calculated as Market Price of Stock / Earnings per share. A stock with a high P/E ratio suggests that investors are expecting higher earnings growth in the future compared to the overall market, as investors are paying more for today's earnings in anticipation of future earnings growth. Hence, as a generalization, stocks with this characteristic are considered to be growth stocks. However, P/E alone may not tell you the whole story as you see it varies from one company to another because of different growth rates. Hence, another ratio, PEG (P/E divided by Earnings Growth rate) gives a better comparative understanding of the stock.

PEG = Stocks P/E / Growth Rate

We do not want to go into the calculation part as values for P/E are available on internet for most of the companies.

A PEG of less than 1 makes an excellent buy if the company is fundamentally strong. If it is above 2, it is a sell. If PEG for all the stocks are not very different, one with lowest P/E value would be a great BUY.

Step-5: Read and evaluate company’s Financial statements

This is the most difficult part of this process. It is generally used by sophisticated finance professionals, mostly fund managers who can understand different financial statements. However, there are few things that even you should keep in mind. There are three different financial statement- balance sheet, income statement and cash flow statement. You should focus only on balance sheet and cash flow statement.

Balance Sheet: It summarizes a company’s assets, liabilities (debt) and shareholders’ equity at a specific point in time. A typical Indian firm’s balance sheet has following line items:

• Gross block

• Capital work in progress

• Investments

• Inventory

• Other current assets

• Equity Share capital

• Reserves

• Total debt

Gross block: Gross block is the sum total of all assets of the company valued at their cost of acquisition. This is inclusive of the depreciation that is to be charged on each asset.

Net block is the gross block less accumulated depreciation on assets. Net block is actually what the asset is worth to the company.

Capital work in progress: Capital work in progress sometimes at the end of the financial year, there is some construction or installation going on in the company, which is not complete, such installation is recorded in the books as capital work in progress because it is asset for the business.

Investments: If the company has made some investments out of its free cash, it is recorded under it.

Inventory: Inventory is the stock of goods that a company has at any point of time.

Receivables include the debtors of the company, i.e., it includes all those accounts which are to give money back to the company.

Other current assets: Other current assets include all the assets, which can be converted into cash within a very short period of time like cash in bank etc.

Equity Share capital: Equity Share capital is the owner\'s equity. It is the most permanent source of finance for the company.

Reserves: Reserves include the free reserves of the company which are built out of the genuine profits of the company. Together they are known as net worth of the company.

Total debt: Total debt includes the long term and the short debt of the company. Long term is for a longer duration, usually for a period more than 3 years like debentures. Short term debt is for a lesser duration, usually for less than a year like bank finance for working capital.

One need to ask-How much debt does the company have? How much debt does it have the current year? Find out debt to equity ratio. If this ratio is greater than 2, the company has a high risk of default on the interest payments. Also, find out whether the firm is generating enough cash to pay for its working capital or debt. If total liabilities are greater than total assets, sell the stock as the firm is heading for disaster. This debt to equity ratio is extremely important for a company to survive in bad economy. What is happening now-a-days should make this extremely important. Companies having higher debt ratio have got hammered in the stock market. Look at real estate companies- their stocks are down by almost 90% from all time highs made in 2007 - 2008. This is because they have high debt level which means higher interest payments. In case of liquidity crisis and global slowdown, it would be extremely difficult for such companies to survive. Remember, a weak balance sheet makes a company vulnerable to bankruptcy!

Step-6: Buy or Sell

Follow all the steps from 1 to 5 religiously. It will take time but worth doing it. If you do it, you won’t have to see a situation where you loose more than 50% of stock value in a week! Buying or selling will depend on how your stock(s) perform on the above analysis.

Happy investing

Source:Saralgyan.com

How To Find Multi-Bagger Micro-Cap Stocks

How To Find Multi-Bagger Micro-Cap Stocks: Expert Explains

Novice investors like you and me suffer from the misconception that micro and small-cap stocks are risky and dangerous investment propositions. This is why we have been investing our funds in blue-chip behemoth stocks.

However, we have paid a steep price for this because while the blue-chip behemoths are still lumbering in the hanger, the micro and small-cap stocks have taken off like rockets and are soaring in the stratosphere, giving multi-bagger gains to their investors.

We must also bear in mind that almost all of our favourite stock wizards such as Dolly Khanna, Vijay Kedia, Anil Kumar Goel, Brahmal Vasudevan etc have made a fortune for themselves by investing in top-quality small and micro-cap stocks. These wizards don’t touch large-cap behemoth stocks even with a barge pole.

We must also bear in mind the timely advice offered by Shankar Sharma to “Forget Large-Cap Stocks. Micro-Cap Stocks Will Give Upto 300% Gains”. Shankar also went out of his way to spoon-feed us with two micro-cap stocks, both of which have delivered mega gains to their shareholders.

However, Shankar also issued the chilling warning that the entire micro and small-cap sector is a “mine field” and that if we place our feet wrongly, we will have our heads blown off and suffer permanent loss of capital.

Fortunately, Peter Rabover, the fund manager of Artko Capital LP, with a proven track record for finding winning stocks, has provided valuable guidance which will help us navigate the mine field. He has prepared acheck-list of five non-negotiable qualities that a micro or small-cap stock should have for it to qualify for investment consideration:

(i) The company must have high Returns on Invested Capital (ROIC):

Peter Rabover quotes from Charlie Munger’s timeless wisdom that “Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6 percent on capital over 40 years, you’re not going to make much different than a 6-percent return – even if you originally buy it at a huge discount. Conversely, if a business earns 18 percent on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result. So the trick is getting into better businesses. If you can find a fairly priced great company and buy it and sit, that tends to work out very, very well indeed.”

Peter Rabover advises that we must find good businesses that have consistent high returns on capital. A high ROIC generally goes hand-in-hand with a company with high competitive moats that allow the company to continue to earn outsized returns, he adds.

(ii) The company must have Quality Earnings and Consistent Cash Flow:

Peter Rabover emphasizes that over the long term, companies that can deliver consistent growth and low volatility in their earnings tend to not only perform well in the down markets but also command higher relative valuations in the up markets. He points out that quality-earnings companies tend to also have a consistent cash flow conversion rate in that they do not resort to accounting gimmicks such as pension accruals, “Big Bath” writeoffs, aggressive acquisition accounting or revenue recognition tricks.

(iii) The company must have a Clean Balance Sheet:

The third non-negotiable condition is that the company must have a low debt:equity ratio. While a little bit of debt in the capital structure is healthy and gives room to grow opportunistically, a lot of debt can lead to a lot of health issues.

Peter Rabover cautions that in addition to debt levels, we must also screen for hidden liabilities such as lawsuits, environmental or counterparty commitments etc.

(iv) The management must have high ownership of the stock:

Peter Rabover emphasizes that we must make sure that the management of the company is highly incentivized to create value. This will happen either when they own a significant ownership or when their compensation is structured toward creating value.

(v) The business model must be simple:

“Complexity breeds risk” Rabover says. He gives the example of a finance company packaging derivatives on obscure assets which is likelier to have black holes in its business model than a grocery retailer. We must be able to understand and explain what a company does in under a few minutes, he adds.

Now, the million dollar question that we have to work on is which are the micro and small-cap stocks that fulfill Peter Rabover’s description of winning stocks and which can give us multi-bagger gains?

Happy investing

Source: RJ's FanClub

4 Reasons Why Money Really Isn’t Everything

4 Reasons Why Money Really Isn’t Everything

When we talk about money in Singapore, we immediately think about working and the sacrifices that we make at work in order to earn that money. Some of us put in the extra hours of work to score points with our boss and keep our employability level high, which is fine as long as we don't overdo and end up completely neglecting to spend time with our friends, family or loved ones.

Don't get me wrong, money is undeniably an important aspect in our lives, but is it really worth putting it on a pedestal and letting everything else come second? If you're someone that seems to always be putting money first, we at GET.com, are going to show you 4 reasons why money really isn't everything.

1. Money Has Its Limits

This is probably the most scientific and well-thought out reason out there. Yes, contrary to how we always feel like we need more, money does have its limit. There will come a point in your life where money just stops giving you the happiness you expect it to.

Let me get a little cheem here. Plenty of research has been conducted to prove the theory of a "hedonic treadmill", which is basically just human beings going back to feeling comfortable despite a positive or negative change that occurs in their life.

In this case, regardless of how much extra cash you earn, even though it might make you happy during the first few months, you will always fall back into the same sense of comfort that you were bored of in the first place. This ability to "climatise" according to how much money you have is always going to get you addicted to wanting more.

2. Your Health Is More Important

It always starts with the sniffles in the morning, and you don't think much about it. Then you start to have a headache on the way to work, and by the time it's 2pm you realise you're having a full blown fever. But you're still stubbornly seated on your desk, refusing to go to the doctor because, "it's very expensive". I know, I've been there.

Skimping on my health all in the name of saving money - we're all guilty of it. But we need to realise that our health and our bodies, above all need the most taking care of, regardless of the price that comes with it because we're only ever going to have one body.

If we don't take care of it, or let it heal (even if it's "just" a fever), we're going to end up damaging ourselves in worse ways in years to come. If you don't believe in a work-life balance, then maybe these 5 reasons why you need a better work-life balance might change your mind.

3. Experiences Are More Valuable

Okay, so you've saved up all of this money, which is great! But what are you going to do with it? Spend it on the latest iPhone? Or buy a new car? Or maybe you're planning to just keep it locked up in the bank, untouched.

If you think about it, keeping the money in there isn't going to do anything to improve your quality of life - unless of course, you're actually investing your money and making it work for you. But if you're not investing and the money is just sitting there, you could think of using some of that money to "buy" experiences. I've always believed that travelling is the best way to spend your money because the kind of life experience that you acquire when you're in a foreign country is simply priceless.

Instead of looking at money as a commodity that makes you happy, use it as a medium to search for happiness in things that money can't buy instead.

If you're looking for ideas of places to visit, take a look at our travel guides to find the must-go travel destinations for Singaporeans.

4. Relationships In Life Matter More

Yes, I know you've probably heard this a hundred times before, but I'm going to tell you again. Money isn't everything because there are people in your life that matter more. The only thing that you have between you and the people in your life is your relationship with them. Some people in their pursuit to be the richest, end up burning bridges just to climb on top (aka job promotion).

Sometimes when you have tunnel vision and all you see is money, it's hard to remind yourself that intangible things like a good time with your friends and family, sometimes are the only things you need to feel "rich". There are many ways that money can ruin a relationship, but if you can remind yourself that there's more to life than the paper chase, don't you think that life will have a lot more meaning to it?

Happy Investing

Source:Get.com