Perfect plan for child

Becoming a parent may be one of the most glorious feelings in the world, but it doesn't last forever. It's an adventure that needs to be well planned. With tuition fees shooting through the roof, raising a child is not as basic as it used to be. Add to that the aspiration for your child to be the perfect all-rounder-the tennis, music and karate classes-and the costs are likely to burn a fairly large hole in your pocket.

This is where insurance plays a significant role as not only does the market understand these needs, if done the right way, it also ensures you optimize your wealth, secure your child's future and sail through a major part of your parental responsibilities.

As per my knowledge goes around 30% to 40% of the people surveyed wanted to invest in their children. That is because people who traditionally invest in safer options such as fixed deposits and gold tend to ignore the fact that these investments don't come with tax benefits and seldom survive inflation.

It is also found that more than half the people who wanted to invest for their children opted for higher education plans. It is not surprising as, the costs of higher education have risen phenomenally in the past few years.

From IITs and IIMs to private colleges offering diplomas in professional courses and overseas universities, education is no longer affordable. Studies say that the investment in children's plans has grown at twice the speed in the past few years.

While there are many plans such as marriage endowment that parents can choose from, the most sensible and relevant are education based plans. These plans usually offer a money-back policy and include both, the investment and insurance aspects. There are broadly two types of investment plans that parents can opt for.

Unit linked insurance plans

A unit linked insurance plan (ULIP) gives you the option of investing across various schemes such as diversified equity funds, balanced funds and debt funds. The returns in a ULIP depend upon the performance of the fund in the capital market. It is usually the investor who bears the risk in such plans. While investing in a ULIP is a good option, it is not always cheap.

One needs to understand the costs that are involved. Even the amount of money invested is higher than that of a traditional plan. The approximate costs of a children's ULIP is between Rs 20,000 and 30,000 a year. The advantage of investing in ULIPs is that they are regulated by the government. But they are only advisable for people who have a higher propensity to take risks.

ULIPs have certain limitations of how much you can withdraw at what time. The problem parents often face while investing in such plans is that they are unable to predict what their child's future holds. To overcome this challenge, the best way is to take the middle road. Don't keep a conventional three or a five year course in mind. Plan for a course that will last for four years. The maturity benefits will then take care of the goals that you have set for your children. They might even cover costs of post graduation.

Traditional plans

Traditional children's plans, unlike ULIPs, offer money back and endowment policies, which are a safer bet. They are also more basic in nature as they often work as an alternative for bank deposits. But the returns of such policies are relatively low and they do not cover inflation costs as well as ULIPs do.

Traditional plans are best for parents who are not too financially savvy. The risk is far lower as there is no direct investment in the market. There are added advantages to traditional plans as insurance companies also give you the option of bearing the cost of the plan till the date of maturity in case the parent paying the premium dies.

However for parents who don't mind spending their time understanding the pros and cons of all available options, and have the money to spend, the best investment for their children is to build a security basket with investments in different plans such as equities, mutual funds, fixed deposits as well as a ULIP or a traditional plan.

A varied portfolio of this nature comes in handy at a later stage. Like most other investments, children's plans also give you best returns if you start investing early. To me the ideal age to start is by the child's fifth year. Leaving it for later will raise the cost of investment significantly.

Late investment increases costs as the gap between the child's age and college decreases. So you're essentially losing time.

Start planning your child's future and let the joys of parenting take over the stress.

Scrap-and-scrape agenda - New CM needs to axe an order and then raise resources

If Mamata Banerjee wants to spend on anything other than salaries, pension and reimbursements after stepping into Writers’ Buildings on Friday, she will have to pass an order overruling one the Buddhadeb Bhattacharjee government had issued on April 6. Amid the financial crisis, the state government had passed the order — signed by joint secretary (finance) A.K. Chakraborty — as part of austerity measures that had banned clearing of funds except for payment of salaries, wages, honoraria, stipends, office phone and electricity bills and medical reimbursements till June 30 this year. “I don’t know if a new government can run with such restrictions,” wondered a senior state government official. “One of the first things that Mamata will have to do once she comes to Writers’ is issue an order overruling the present one on financial embargo.” While she can revoke the order in one stroke, marshalling the resources to keep the government running will be easier said than done. Back-of-the-envelope calculations reveal that the state government will require around Rs 4,100 crore over the next 45 days — including Rs 3,000 crore as salaries and pensions for the month of May — but it has a reserve of only around Rs 1,198 crore. Mamata will have a tough time borrowing from the markets as the state has already borrowed over 50 per cent of its annual ceiling of Rs 15,390.64 crore in the first month, leaving only Rs 8148.64 crore for the next 11 months. It has also hit the ceiling of Rs 1,494 crore in ways and means advances from the Reserve Bank of India. Every year, the RBI stipulates the amount the states can borrow from the apex bank to tackle mismatches in its earnings and expenditure. “Revenue collection from taxes, excise and other duties, the primary source of revenue for the government, is yet to take off as it is only halfway through the first quarter of the ongoing financial year,” a senior finance department official said. With the other borrowing avenues drying up, the only option left for Mamata is to seek a bailout package from the Centre to tide over the crisis. “We have heard that the new chief minister has already spoken to the Union finance minister about this. Let’s see what deal she gets from the Centre,” an official said. Unless Mamata manages to get some funds, it will not be possible for her to deliver on her primary promise — sushashon or good governance. The state government has 24 departments and while preparing the budget, the finance minister allocates funds for each of these wings. Although outgoing finance minister Asim Dasgupta had earmarked funds for these departments, the delivery of services was suffering because of the austerity measures that began around seven months before the April 6 order was passed. Finance department insiders told The Telegraph that senior officials had been making phone calls to treasury officers in state government offices across Bengal since last September, delivering instructions to rein in expenses. All this while, the government kept borrowing to pay salaries. “The Left Front government had become almost non-functional in the last two years and they could afford to pass such absurd orders. But Mamata will have to deliver on so many promises,” said a senior PWD official. The government’s cash crunch has hit the PWD and its projects as it has over Rs 390 crore pending from the finance department and several of its projects are stuck midway. “Departments like panchayat, municipal affairs, urban development and backward classes welfare need over Rs 500 crore within the next 30-45 days for carrying on with pending work,” a finance department official said. As the plan for reviving Bengal — reeling under a debt burden of Rs 2 lakh crore — will not be launched before an actual assessment of the fiscal position of the state, the finance department officials are working overtime to prepare a status report for Mamata. Finance secretary C.M. Bachhawat has been holding regular meetings with secretaries and other officials of the 24 departments at the Writers’ in a “stocktaking exercise”. “Bachhawat is trying to prepare an exhaustive status report so that the new cabinet knows what it has to deal with at the very start,” said an official from the backward classes welfare department. The department needs around Rs 65 crore for paying scholarships to underprivileged tribal students in districts like Bankura, Purulia, West and East Midnapore, Birbhum, Murshidabad and Jalpaiguri. Courtesy- The Telegraph, Kolkata, 19/05/2011

Savings bank rate hike have a diverse impact

The recent 50-basis-point increase in the savings bank rate to 4 per cent will hit Punjab National Bank — India’s second largest state-owned bank — and the country’s largest commercial bank, the State Bank of India, the hardest.

The savings bank (SB) rate hike will hurt these banks most as they have the highest proportion of savings bank deposits vis-a-vis their total deposits, thereby raising their costs and impacting their margins.

It is estimated that PNB’s margins could be crimped by as much as 13 basis points, while the SBI could take a hit of 12 basis points.

The share of savings bank deposits in the total deposits of PNB, based on data for 2009-10, is 31.2 per cent and that of SBI is around 32 per cent. Both these banks have a very high share of low-cost current and savings bank accounts (CASA).

Other banks that could suffer include United Bank of India (13 basis points), Dena Bank (12 basis points) and Allahabad Bank (12 basis points).

A report put out by the brokerage today, titled “Savings Bank Deregulation - Back to Basics’’, which also analyzed the impact of a possible deregulation of the only administered interest rate in the banking industry, said the SBI group as a whole would suffer a 10-basis-point hit on margins.

It is known that Every 50 basis point savings bank rate hike (all else remaining constant), negatively impacts margins by around 8 basis points. The PSU banks generally get more impacted because of their higher exposure to savings bank accounts compared to larger private bank peers.

.The study shows IDBI Bank and Yes Bank will be least affected by the hike since their proportion of savings bank deposits are low. But this also means that these two banks could potentially emerge as the biggest rate warriors if the Reserve Bank of India decides to deregulate savings bank interest rates any time soon. The RBI had floated a discussion paper on the subject recently.

IDBI Bank, which had a low CASA ratio of 14.6 per cent in 2009-10, has of late been aggressive on the liabilities (deposit-taking) front. It has announced various steps to boost deposits. Last year, the bank removed various charges applicable to SB and current account holders.

On the other hand, Yes Bank has welcomed any move to deregulate the savings bank rate.

New arrangement in LIC management

The government today appointed Rakesh Singh, additional secretary in the department of financial services, as the acting chairman of the Life Insurance Corporation, while demoting incumbent T.S. Vijayan to the post of managing director.

The move follows the cash-for-loans scam, which engulfed LIC’s housing finance arm in November. This is for the first time that any LIC chairman has been asked to work as the managing director.

Vijayan has been LIC’s chairman since 2006. He was eligible for an extension till his superannuation age of 60 in 2013, but the government decided to appoint a bureaucrat as an interim head.

His demotion comes within weeks of the finance ministry setting up a committee under former RBI deputy governor Vepa Kamesam to probe the investments made by the LIC in the last three years.

The committee is expected to make recommendations on the governance standards and investment guidelines of the country’s largest financial institution. The LIC manages assets of about Rs 12 lakh crore.

The CBI had arrested LIC Housing CEO R.R. Nair and several others for allegedly sanctioning loans after taking bribes.

Singh, a 1978 IAS batch officer, will be in charge for three months or till the time a full-time chairman is appointed, sources said.

Priority to repo rate

The Reserve Bank of India has decided to make the repo rate the centerpiece of its monetary policy even as it raised the key benchmark rate by a higher-than-expected 50 basis points to 7.25 per cent as part of an aggressive inflation-busting strategy.

Governor Duvvuri Subbarao seemed to abandon the earlier nuanced position of carefully balancing the compulsions of quelling raging inflation through rate increases with the imperatives of accelerating the pace of growth in the world’s second-fastest economy.

The task of bringing down inflation should take precedence “even at the cost of some growth in the short term”, the RBI said in its latest monetary policy statement.

“The objective is to bring down inflation to somewhere between 4 per cent and 4.5 per cent. In the medium term, we would like to take it down to 3 per cent,” he said.

The RBI governor forecast a GDP growth of 8 per cent for this fiscal with inflation projected at 6 per cent with an upside bias.

The 8 per cent GDP forecast casts doubts on the government’s projections of 9 per cent this year. Moreover, the 8 per cent growth forecast assumes a normal monsoon and global crude oil prices at $110 a barrel.

The sharp 50-basis-point increase in the repo rate seemed to catch bankers and the markets off guard. “If you are referring to 25 basis points as a baby step, then yes, this is no longer a baby step,” Subbarao said in response to a question raised at a press conference later in the day.

The mandarins of Mint Road showed unexpected alacrity in overhauling the monetary policy template by picking up several elements from the report of a working group headed by RBI executive director Deepak Mohanty that was submitted less than 50 days ago.

Governor Subbarao accepted the Mohanty panel’s suggestion that the repo should be the only rate-signalling device of the monetary policy.

“The transition to a single independently varying policy rate is expected to more accurately signal the monetary policy stance,” the RBI said.

It also decided to fix the reverse repo rate at 100 basis points below the repo at 6.25 per cent. This makes the repo the only variable rate in the monetary policy. The reverse repo will move in tandem with it and will always rule 100 basis points below it.

The spread between the repo and reverse repo narrowed to 100 basis points on September 16 last year from 125 basis points earlier.

The Mohanty panel — which was set up in September to suggest ways to overhaul the process of monetary policy formulation — had recommended that the moribund bank rate should be reactivated as a discount rate and could form the “upper bound in the rate corridor”.

The bank rate has been stuck at 6 per cent since March 2004.

The Mohanty committee had suggested a rate corridor of 150 basis points with the bank rate ruling 50 basis points higher than the repo.

The RBI widened the corridor to 200 basis points by creating a new marginal standing facility (MSF). This will give banks a new window from which they can borrow overnight funds up to 1 per cent of their net demand and time liabilities. The Mohanty panel had suggested something very similar and had called it an exceptional standing facility.

The MSF rate has been fixed at 100 basis points above the repo rate at 8.25 per cent.

Subbarao said there were some problems with refashioning the bank rate as a discount rate.

“There are legal problems and some other interest rates are linked to the bank rate. One option is to resolve the legal issues and delink the interest rates,” he added. “The bank rate will stay for now and later we will link it to something else.”

The central bank also said the weighted average overnight call money rate would be the operating target of the monetary policy. This rate currently hovers at 6.44 per cent.

Tighter provisioning

The biggest beef for bankers was over the sudden decision to tighten provisioning norms for certain categories of advances. Last December, the banks were advised to achieve a provisioning coverage ratio of 70 per cent — which had upset banks such as the SBI.

The RBI has now said that advances classified as sub-standard assets will attract a provision of 15 per cent against 10 per cent earlier. The unsecured exposure of a sub-standard asset will attract an additional provision of 10 per cent. This means the total exposure on these assets will rise to 25 per cent from 20 per cent earlier.

Advances in the doubtful category up to one year will attract a provision of 25 per cent (20 per cent earlier).

The secured portion of advances which have been in the doubtful category for more than one year and up to three years will attract a provision of 40 per cent against 30 per cent earlier.

Restructured accounts classified as standard advances will attract a provision of 2 per cent in the first two years from the date of the restructuring.

The first-quarter monetary policy review is scheduled on July 26. 

Mutual Funds brace for outflow

Mutual funds may have to take a hit of around Rs 35,000-40,000 crore over the next six months.

The Reserve Bank has restricted banks from investing more than 10 per cent of their net worth as at the end of the previous financial year in the liquid/money market funds of mutual funds.

Banks that have investments over and above this cap are allowed to bring them down to the prescribed limit in the next six months.

At the end of March 2011, liquid/money market schemes of mutual funds had Rs 73,666 crore of assets under management.

Clearly, banks are going to pull their investments out of liquid funds over the next six months which could lead to an outflow of Rs 35,000-40,000 crore from liquid funds.

In my opinion banks have investments in almost all mutual funds and, therefore, most funds will suffer from this directive of the RBI. However, since banks comprise only a part of the institutional business of asset management companies, the effect of the outflow will be only partial and we would like to compensate this by getting in more corporate clients, NBFCs and insurance companies.

In the monetary policy announcement, the RBI governor said this measure was taken “to prevent systematic risk in times of liquidity crunch”.

Such a crisis had emerged in September-October 2008 after the sub-prime crisis came to light and Lehman Brothers fell in the US. There was a massive redemption pressure on mutual funds, and they had to stop payment to investors because of liquidity constraints. Banks were directed to extend additional liquidity support to mutual funds to help them handle the crisis.

Subsequently, market regulator Sebi revised the valuation norms for debt securities held by mutual funds, and from July 1, 2010 it had been mandatory for funds to mark to market (traded value) debt and money market securities with residual maturity of 91 days.

Following this, the debt schemes, particularly the short-term ones, became volatile in terms of NAV. This change in valuation norms also witnessed a large outflow of investment by institutional investors from liquid and ultra-liquid schemes. AUM of liquid funds, which stood at Rs 73,666 crore as at the end of March 2011, was Rs 78,094 crore at the end of March last year and Rs 90,594 at the end of March 2009. 

How ELSS can be a wealth generator

Most of the tax saving instruments under Section 80C are savings oriented instruments with returns after adjusting for inflation either in the negative or slightly positive. The exceptions to this are the ULIPs (Life and Pension Funds) and the ELSS Mutual Funds. The advantage with ELSS compared to the ULIPs is the frequency (mostly a single investment or a monthly investment for a year) and term for investment, for getting good returns.

Does ELSS diversify?

An ELSS (Equity Linked Savings Scheme) is a mutual fund that has to invest a minimum of 80% in Equity Shares. The balance 20% can be in debt, money market instruments, cash or even more equity. There is a 3 year lock-in period for the ELSS mutual funds. Post the 36 months, the funds remain invested and work like any other open-ended mutual fund.

Why an ELSS?

It has been an established fact that in the long run equity gives a much higher inflation adjusted returns when compared to any other investment except for maybe real estate. The top 5 ELSS funds have given returns from 22% to 26% compounded annually over the past 5 years. This is again higher than the market (Nifty) returns over the past 5 years which is at 19%.

ELSS is part of the Section 80C instruments which are cumulatively eligible for a deduction from income up to Rs.1L . This gives the tax payers benefits from 10% to 30% (excluding the educational cess) based on their current tax slab.

The return (maturity and the dividend [(if opted for]) from the ELSS is also tax free under the present EEE (Exempt - Exempt - Exempt) regime.  However, with the DTC regime tax benefits could be phased out and is under debate.

The 3 year lock-in period makes sure one stays invested. Otherwise in a normal mutual fund one tends to withdraw in case of any monetary requirement. The lock-in period also helps the fund managers to plan their investments better and also to hold on to valuable investments as they do not have to worry about sudden redemption pressures. The above logic is proved in the higher returns achieved by the ELSS funds when compared to the market returns. Wealth creation because of this is much better than most of the other mutual funds. Only some sector based mutual funds have given better returns than the ELSS fund in the past 5 years.

Options with the ELSS

Salaried people with a tight budget can opt for a monthly investment (SIP using ECS). The automatic investment from the bank through ECS makes it an easy way to invest.

Those who want an income in between can opt for the dividend option. This is particularly suitable for senior citizens. Also, the ELSS gives a tax free return compared to a bank or company deposit, which is taxable.

Limitations with ELSS

The investment in an ELSS cannot be switched or closed before the 3 years are completed form the date of investment. During market downturns, this becomes a limitation as one can only sit and watch the funds go down. One has the option of averaging when the market goes down, but an investment to save tax may not be required in the year in which the market is going down.

The lock-in works negatively also for the monthly investment because the lock-in is calculated from the date of the investment and not from the date the scheme was started. This means that the 12th month's investment can be withdrawn only on the 48th month. This is a disadvantage compared to ULIPs, where the lock-in is from the date of start of the scheme.

In summary

Most fund houses start an ELSS regular investment at Rs.500/- per month. Single investments start generally at Rs.5000/-. This makes ELSS accessible to all tax payers. With the compulsory lock-in giving better returns than other investments, even the most risk averse can look at an exposure to the ELSS fund for their tax benefits.

Children’s Education Plan:-

It’s that time of the year again when your kids are excited about going to a new class with a new set of books and a new syllabus. Every new academic session, however, also brings with it higher tuition fees.


 As parents, if you are oblivious to the inflation in education cost and do not have enough savings, your dreams of sending your kids to a good university for higher studies may remain unfulfilled. For example, if a university course costs Rs 3 lakh now, it will cost nearly Rs 9.5 lakh after 12 years.

Parents should no longer postpone the planning for their children’s higher education till they pass out of schools. You should start saving early so that your investments get enough time to grow to be able to meet future liabilities. The earlier you start saving for your children’s future education, the less you need to save each month.

Parents need to spend more once their children start their higher secondary education. A student passes Class X at the age of 15. So, you have 15 years since the time your child is born to save for his/her education. Now, given the time horizon, the second important question is what the instruments one should invest in are.

Product spread

Recently, a number of life insurance companies as well as mutual fund houses have come out with children’s education plans. Let us first examine these products on offer.

When it comes to children’s education plans, life insurance companies are more aggressive than mutual funds in their product offerings. Life insurance companies offer children’s education plans in traditional as well as unit-linked (Ulip) platforms.

The traditional plans are money-back schemes that offer annual payouts at specified periods of time during the policy term. These payouts are guaranteed.

Every insurer has on its respective website a premium calculator corresponding to different products illustrating the benefits a policyholder will get during the term of a policy. So, you can compare the costs and benefits of different traditional plans for children’s education of various life insurers.

However, there are better options that give a guaranteed return as well as tax benefits similar to a traditional life insurance plan.

Think of the ubiquitous Public Provident Fund. It gives a guaranteed return of 8 per cent per annum which is fully tax-exempt.

Let us compare the return from a PPF account with that of a traditional education plan from a life insurance company. For this, we will consider the Young Scholar Secure plan of Aviva Life Insurance Company.

The premium calculator and the benefit illustration of the insurance plan shows if you are 30-years-old and have a new born baby, by buying this plan you can get a life cover of Rs 14,03,500 for an annual premium payment of Rs 50,515. You will have to pay the premium for 13 years. When you kid becomes 13, he/she will get an annual payout of Rs 20,000 for five years. On attaining the age of 18, the child will get a lump sum Rs 1 lakh and a guaranteed maturity amount of Rs 12,03,500 at the age of 21.

Now, consider investment in a PPF account. An annual investment of Rs 45,000 in a PPF will give you a maturity amount of Rs 13,19,593 after 15 years when your kid is about to join Class XI. You may ask why we suggested an investment of Rs 45,000 every year instead of Rs 50,515 in PPF?

With an annual premium of Rs 5,530 you can buy a term life insurance of Rs 35 lakh for 20 years that will give you a 2.5 times higher life cover than you get in Aviva Young Scholar Secure.

With this combo investment plan you can ensure that if anything happens to you anytime before your kid turns 20, your family as well as your kid’s higher education are well protected.

After using Rs 19,593 for tuition fee, if you keep the remaining PPF proceed of Rs 13 lakh in a fixed deposit account earning a 6 per cent annual interest for 5 years, you will still get an annual interest income of Rs 78,000. So, under this combo investment plan, your payouts will be Rs 19,593 in the 15th year and Rs 78,000 each year for the next five years and at the end of the 21st year you get the principal deposit of Rs 13 lakh back.

This way you can earn Rs 5 lakh more in terms of survival payouts than buying the Aviva plan.

Emergency situation

Now what happens if you die within these 21 years. Under the Aviva plan, your nominee will get Rs 14,03,500 (the sum assured) in addition to all payouts already made if you die any time between the 12th and 21st year. Unpaid premium if any will be waived off.

However, if you die in the first year of the policy, your nominee will get a lump sum payment of Rs 20,03,500 immediately and the annual payouts at specified intervals. The unpaid premium will also be waived off. The death benefit, however, will decline by Rs 50,000 with every year.

In the combo investment plan, your nominee will get Rs 35 lakh on your death during the policy term — Rs 15 lakh more than the maximum death benefit payable under the Aviva plan.

The return on this Rs 15 lakh when invested in a fixed deposit earning an annual interest of 6 per cent can take care of the annual PPF subscription amount and your family can still have Rs 40,000 annual interest income from the fixed deposit.

This shows that there are better investment opportunities in the assured return space than traditional insurance plans for children’s education. Guaranteed NAV products of insurance companies are also not better products compared with a PPF-term life combo plan.

In fact, assured income products are also not advisable if you are planning a long-term investment.

The greatest risk to a long-term investment is inflation and not capital loss. So, if you choose a fixed income asset for long-term investment, you carry a higher risk of inflation eating into your return. You can gain more by investing in equities than in fixed income instruments.

When it comes to equity investment, the two popular avenues are Ulips of life insurance companies and equity mutual funds. After the September regulations on Ulips, these products have become more attractive and at times better than equity mutual funds.

When it comes to your child’s future, there is no room for hasty decisions. Measure the pros and cons while selecting a plan as it can go a long way in deciding your child’s life.

Investing where? Gold or silver?

It is really important for an investor to first understand the economy and the financial systems prevalent in the market before he decides what to invest in. With the cost of crude oil having increased considerably per barrel, the GOI has also acted by increasing the price of petrol and diesel severely.


Should an investor buy more gold or silver?

Precious metals were the best performing assets for the second consecutive year and also for the fourth time in the last five years. Investors enjoyed a 42% return by investing in precious metals in 2010. Silver performed much better than other precious metals in the market in 2010 with prices rising by an astounding 80% which is two and half times the rise in price of gold (29%).

Along with being deemed a safe investment, the relatively low supply of the metal as compared to the high demand has also contributed to the steady increase in price. In the first two months of 2011, silver's price has increased at a steady 9.3%.

Judging by the present market scenario, investing in precious metals will be a very wise decision. And it will make more sense to invest in silver than in gold….at least now!

Some parameters one should consider before investing in gold or silver?

One of the main reasons investors prefer investing in these two metals is the stability witnessed in the market. Liquefaction is also an easy process for gold or silver bars and coins. However, purity of the mineral is of utmost priority and should be given due importance.

Another important factor governing the decision on whether to invest in gold or silver is the price. Though the variation in the price of gold or silver is not as unpredictable as that of shares and equities, there still is a noticeable difference on a daily basis. But when you are investing a large sum of money then this can make a lot of difference. Hence, one should study the market carefully and invest when the price is relatively low.

Choosing the right vendor is also very important. If carefully observed then the price variations with wholesalers, retailers and commercial banks can be clearly observed. So one should watch out for the purest gold available at a comparatively low price. For a regular investor, it makes sense to invest at regular intervals. This way one can take advantage of the market volatility. Investing in both gold and silver makes sense for a regular investor as he can diversify and can have a steady return irrespective of market fluctuations.

Different forms of investing in gold and silver:-



Bar: One of the most traditional ways, dealing with bars is very simple too.

Coins: This sort of investment depends on the weight of the gold or silver coins.

Accounts: Swiss banks provide a Gold-account option which aids in transactions involving the precious metal.

Gold Exchange Trade Funds: This method helps gold transactions through the stock exchange.

Spread betting: This involves predicting the rise and fall in the price of gold or silver before investing in it.

Investing with mining companies: This is just like investing in the stock exchange. The only difference is that here one deals with shares from mining companies.

When is the right time to sell gold or silver?

With the current financial slump, people are selling their gold and silver as a means to make some extra cash. But with the price of the two precious metals having reached an all-time high, it would probably be wise to hold on to it and see how far the prices soar and then cash in at the opportune moment.

There are two factors that govern the decision of the timing of a transaction involving gold or silver. The value of the US Dollar at that moment and the investor's financial situation. Usually, the price of gold is inversely proportional to that of the US dollar. But most investors don't have pure gold lying around in large quantities. So unless you are investing or speculating on a really large amount of gold or silver, the drop in the US Dollar's value will not matter.

How to pay off your education loan

Many young people have a serious problem on their hands today - they have a degree which does not help them get a nice job. They have taken a loan to get that degree, and they have no place to stay in a big city.


Welcome to the American lifestyle. Children who have left their houses to go to a bigger city to get a degree - quite likely an MBA are wondering what to do. The actual scenario may be a little different from case to case, but it is somewhat like this:

Here is a boy or girl from a not-very-well-off family who has been enticed into doing an MBA with a huge bank loan. However, by the time the student completes the course the market is in a downward spiral and he/ she is unable to find a job. Actually not enough jobs are being created. In this situation what can a student do? Well, here are some useful tips:

1. Go get a job, any job: It is quite surprising as to how people can sit at home and twiddle their thumbs WAITING to see what to do in life! Go get a job, any job. This has to be the most important advice for an MBA graduate or also an engineering graduate! If you think an MBA degree should get you a Rs. 500,000 job at the least, it may not always happen in real life. I have seen MBAs working on a starting salary of Rs. 6500 (year 2009) and are not badly off for it!

2. Stop thinking sales job should not be done: There are many MBA students who have unfortunately got into a mindset that sales jobs are bad. Sales people bring in the money for the organization to run, so selling is not so bad after all. If you ever want to be a CEO, go and learn how to sell. Other tasks can be outsourced, but if you have a product, YOU NEED to be passionate about it. Learn selling skills is very important – do quick arm-chair researches on how many Managing Directors have reached that post from the sales side of the organization. If you have to be on your own, then you need to be passionate about sales. That is one very important characteristic that venture capitalists will look for if you are seeking funding for your project.

3. Try to defer your student loans: Just check out the possibility of deferring your student loan repayment. The bank may agree to charge you interest for the deferred period, but at least the day-to-day worry about the month end payment is postponed. If your parent has given the guarantee, keep them informed and let them know that you will not be able to meet the commitment either in full or part.

4. Take no chance with insurance: Ensure that your vehicle insurance, medical insurance and life insurance payments are up to date! These are the easiest of payments to skip, and tempting too. Do not delay or neglect to pay - if you break your leg you still need medical insurance. Make sure that you have a cheap term insurance and some minimum medical insurance at least.

5. Keep your chin up: Learn to laugh about what is happening in your life. I am sure that this is easier said than done. I recently heard of a client whose daughter was in coma for 9 days. Would not have been easy, but he was holding his chin up. So remember, tough times do not last, tough people do.

6. Move back to your parent’s house: If you have moved from your town to a city to study or take up a job, seriously reconsider moving back. It is all right to come to town for interviews instead of incurring rent at a new place. This is really a tough call - it is a mix between wanting to be where the action is and saving some money. Tough call kids, but you have to take the call.

7. Join groups: Alumni, HR groups - any group to keep in touch with the corporate world. All colleges have (and need) such groups which meet - accounting, finance, Human Resources, just about anything. There is some chance of meeting a potential employer!

8. Some small companies will happily let you work for free! Well, if they offer you Rs. 5,000 per month, do not get into an ‘I am a MBA’ kind of aggressive mode. Just take it. Yesterday heard of a kid who moved from Rs. 5k a month in a production house (media companies are perhaps the worst exploiters!) in the year 2007 to freelancing today at a price of Rs. 80,000 a month (year 2010). Yes, on an assignment basis! It pays to have a worn out sole and some time spent in the sun.

9. Learn some skills: Public speaking, dramatics, Excel, Power-point, basics of business finance, sales marketing, and written communication - all are useful skills. See what you can learn for free, and what you can learn cheap. Offer to do some marketing for the organizer – tell him you will get them five people signing up – and can you attend for free? No harm in asking. See if you can get something free or for a pittance. Learn everything that you think is transferable...all this can add up.

10. Be clean: Say no to drugs, tobacco, alcohol - all these have a terrible way of catching up in your corporate life later on. Be clean, be clean, be clean, need one say more? No drunken driving, getting into trouble for anything illegal. And do not get into some bravado about doing something like this and putting it on Facebook. Enough numbers of HR people keep prowling FB for tell tale signals.

11. If you rely just on job websites for a job, you are doomed! Be on job sites, be on networking sites, be on Facebook, be on LinkedIn, just connect, call, meet and get a job. If you still cannot get a job (be honest to yourself, not to me) there is something wrong with your attempt.

12. Keep that credit card at home: If you do not know how you will repay a loan, do not take the loan. Carrying a credit card with you everywhere is not a great way of avoiding temptation. If you know you cannot resist the urge to buy, destroy the credit card. Get a new card when you have a job. By that time if you have learnt to live without a credit card, rejoice! An eight percent growth economy creates enough jobs. You will find yours, for sure.

Harshad scam crores released

The custodian appointed to look into the 1992 securities scam today released payments worth Rs 2,196 crore to the income tax department and the State Bank of India from the liquidated assets of Harshad Mehta’s group of companies.


Nearly 19 years after the share scandal shook the BSE, Satish Loomba, the custodian (trial of offences relating to transactions in securities), handed over cheques worth Rs 1995.66 crore to B.P. Gaur, the director-general of investigation (central) of income tax, and Nilima Mansukhani, the chief commissioner of income tax in his Nariman Point office.

Another cheque of Rs 199.25 crore was given to B. Sriram, the chief general manager (securities) of the SBI.

The amounts were released after the Supreme Court on Monday declined to stay the distribution order by Justice D.K. Deshmukh of the special court, Mumbai, on payments to the IT department and the SBI.

Justice Deshmukh had issued the order on February 25. The payments were released on the basis of undertakings given by the department of revenue and the SBI that the amounts would be brought back, if ordered by the special court.

Loomba told reporters that the nearly Rs 2,000 crore payment had settled the IT department’s claims of principal amount of dues from Mehta’s companies.

He said according to court orders, the IT department’s claims had to be settled before those of banks and financial institutions. If any money remained, claims related to interest and penalties would be settled for the IT department as well as banks and financial institutions, he said.

The custodian said of the Rs 4,500 crore obtained from liquidation of Mehta’s companies, Rs 4,000 crore had already been disbursed. The rest would be distributed according to apex court orders, Loomba said.

He said of Rs 1,717 crore in claims from banks and financial institutions, nearly Rs 1,000 crore was claimed by the SBI, Rs 500 crore by Standard Chartered Bank and the rest by other banks and FIIs. He said after the nearly Rs 200 crore payment, the SBI had now received the principal amount totalling Rs 800 crore.

The custodian is the principal administrative officer appointed under the Special Court (trial of offences relating to transactions in securities) Act of 1992 to deal with the securities scam and the recovery of huge amounts of money lost by the banks.

Under the act, the officer has the powers for attachment, management and liquidation of assets of notified persons and functions under a system of concurrent judicial review by a special court comprising sitting Bombay High Court judges.

With today’s payments, the custodian has released over Rs 4,000 crore worth of payments from the liquidated assets of Mehta’s group of companies.

Courtesy: - The Telegraph,Kolkata.17/03/2011.

Skype and the Sendai earthquake and tsunami - free WiFi and Skype Credit vouchers

A great move by Skype. Skype and the Sendai earthquake and tsunami - free WiFi and Skype Credit vouchers