How to create assets and get rich

We tend to see lakhs and crores worth of assets owned by our employers and companies whose shares we hold. But when it comes to our own assets, leave aside crores, most of us don't even see a few lakhs worth of assets and we have already reached middle age.
Life is such that most of us are driven by our financial circumstances. Normally we tend to think -- this is all that I can obtain from what I have. One never really thinks in terms of -- this is what I want to have, so how can I afford it?
It is not that we don't know about this doctrine or that this is some new age-thought. We practice this philosophy in our lives practically each day. Say, we take a particular road each day to work, we think -- how can I reach faster? Say, we feel we are overweight, we think -- how can I reduce my weight? So on and so forth.
We go for many training programmes: from anger management to art of living to possibility thinking. We all use this 'How can I' principle practically every now and then in our life. Strangely enough, when it comes to money and when we wish to buy something, which we know we cannot afford, we tend to get cold feet and label the event as destiny. Never do we think of using the 'How can I' principle. Read more on How to create assets and get rich

Tags: create assets, get rich, crores, lakhs, money, management, art of living, principal, destiny, grow fast, career, philosophy

Invest globally and earn BIG

Every household investor should diversify his or her portfolio all over the world so as to benefit from global diversification. An interview article, which gives information about investing globally and eraning BIG.

Tags: investor, diversify portfolio, global diversification, earn big, invest globally

Taking stock of India's Fortune 500 gems

Six Indian companies have now entered the elite Fortune 500 list. These are: Indian Oil Corporation, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd, Oil and Natural Gas Corporation, Reliance Industries Ltd, and the State Bank of India.
It should time to rejoice, one would say. But hang on; let us do a reality check before we get carried away.
The Fortune 500 listing is based on the annual revenues of the companies and not on their profits, EPS (earnings per share) or market capitalization, which happen to be true indicators of a company's health.
The most-valued companies are not necessarily the ones which are biggest in terms of revenues, but the ones which have high capitalisation, which in turn reflects the investors' faith in the company for higher returns in future.

IOC, BPCL and HPCL: Southwards Ho
A closer look at the current financial status of IOC, BPCL and HPCL would reveal that it would require nothing short of a miracle to keep them away from becoming loss-making units if the present crude prices continue to climb and pump prices remain lower than the cost price.
With situation tense in the Middle East following Israel's bombing of Lebanon, and China showing no signs of decreasing oil consumption, crude prices will continue to climb up. Added to this is the fact that the US dollar is strengthening by the day. Thus, crude prices will continue to rise for India. Disaster is waiting at the doorsteps of India's public sector oil giants, to say the least.

ONGC: Milking Bombay High dry
ONGC will show profits as long as the oil companies pay them import-parity prices for crude oil. It will face a litmus test only if the supply of crude exceeds the demand -- an unlikely scenario in the near future.
To be called a truly great company, ONGC needs to reduce its dependence on crude from Bombay High and discover a couple of rich oilfields rather quickly, something like what it did at Sakhalin, its successful joint venture in Russia.
ONGC has not been lucky in Nigeria and Angola in bidding for the oilfields, which have near-proven reserves. It will take hard work and great leadership to prove that Sakhalin was no flash in the pan.

Reliance: Great past, rosy present, rosier future
Reliance Industries has been very consistent: growing in topline while keeping its bottomline healthy. It is doubling its refining capacity, aiming to be the most efficient and largest single-location refiner in the world.
The Jamnagar refinery itself is a symbol of path-breaking technology and amazing foresight. It can refine the heaviest and most waxy crude from Venezuela, convert it into the best gasoline and export it back to the European and American markets at competitive prices.
Reliance is a pragmatic operator and is even ruthless when it comes to cutting down losses. The Reliance management has no qualms about seriously restricting petrol and diesel supplies to its newly constructed petrol stations given the fact that fuels retailing is a loss-making business at the moment.
This is the sort of decision which the PSUs cannot even dream of. They will continue supplying fuel supply to their retail stations even at loss because of social commitments and under the diktats of the Union ministry for petroleum and natural gas.
Reliance's petrochemical plants at Hazira and Patalganga are among the most productive units in India. It has a near-monopoly in the petrochemicals sector after taking over IPCL. It decides the market prices and others simply follow suit.

State Bank: The pride of India
The real winner amongst the six elite Indian firms, however, is SBI which has answered its worst critics by reducing its non-performing assets ratio to less than 1.8 from a high of nearly 6 some four years ago. Although it has conceded a lot of ground to the likes of ICICI Bank and HDFC Bank in the metros, its stranglehold in medium and small towns in India is unshakeable.
It has also been growing ceaselessly in the rural areas and the branches that it opened many years ago have broken even after long gestation periods. These will reap in consistent profits for many years to come.
So three cheers for SBI and Reliance.

Tags: Fortune 500 list, ONGC, SBI, Reliance, EPS, higher returns, BPCL, disaster, Nigeria, Angola, icici bank, hdfc bank

Have Rs 500? Here's how to get rich

How many times have you said to yourself, "I am not investing now because I don't have enough money?"
Well, even if your answer is 'once', you are only fooling yourself.
If you are waiting to amass your savings to invest, you are wasting your time. That, seldom happens. Before it gets too late, start investing today. And you don't need a fortune to do that. You can start with a mere investment of just Rs 500 per month. The amount is of little significance, the regularity matters more.
After all, "People who create wealth are those, who invest on a regular basis and not occasionally," says Certified Financial Planner, Gaurav Mashruwala. The important question is where and how to invest?
According to investment advisor Sandeep Shanbhag, one can maintain discipline with a monthly investment pattern. "First, asset allocation between debt and equity needs to be determined as per the investor's risk profile and situation. Once this is determined, monthly investment in debt and or equity can be done."
As far as debt instruments are concerned, Public Provident Fund (PPF), bank fixed deposits, recurring deposits and post office schemes are good options. The minimum investment in PPF is Rs. 500 and it gives 8% tax-free return. In fact, it is a must in any investor's portfolio, big or small. The downside of PPF is that it has a long lock-in period of 6 years.

Talking about recurring deposits, Mashruwala says that although there is no risk of any loss, the liquidity is at cost. You may not be able to withdraw the savings for a certain period and if you do so, either you have to pay penalty or some amount would be deducted. Moreover, he cautions that the interest on these deposits is taxable. These deposits usually give an interest of anywhere between 6 per cent and 7 per cent depending on the term. So, a post tax return on these deposits can be quite low.
As against that, post office schemes like national savings certificates offer taxable returns of 8 per cent. "Investing in debt based mutual funds through SIP (Systematic Investment Planning), is also a good option," says Mashruwala. Systematic investing is especially valuable for the investor who wants to get his investments going, but doesn't have a large sum of money to invest. "Systematic investing works particularly well if you fear that you might buy a mutual fund at its peak, just before the stock market and your fund's shares head into a slump.
"It offers a disciplined way to invest a portion of your income at regular intervals without trying to second-guess the market, thereby also protecting you from extreme fluctuations in the market. And, its effect on your investment's growth over time can be nothing short of amazing. This concept is called rupee cost averaging. Read more

Tags: investing, PPF, portfolio, lock-in period, investers portfolio, SIP, debt funds, mutual funds, investment, post office schemes, NSC

Rent a house

Conventional wisdom says paying rent is as good as throwing your money down the drain. For years now, sellers of home loans have told people how it’s always better to buy a house with the same money. Tax benefits, sense of ownership and freedom from landlords and brokers — builders cite ‘n’ number of reasons to sell that dream home to you.
But is this the right time to buy? Or should you hold back for now? ET Big Bucks does a realty check. HDFC recently hiked its fixed loan rates to 11%, while ICICI Bank, which already charges 11% on fixed loans, is likely to review rates again.
A borrower who takes a fixed rate home loan of Rs 10 lakh will have to shell out Rs 1,23,960 per annum for 20 years. The equated monthly instalment (EMI) comes to Rs 10,330 at an interest rate of 11% per annum. Add to that society charges, which are quite high in metros. Even in Mumbai’s suburbs like Borivali, maintenance costs go up to Rs 2,000-3,000 for a 1 BHK house. And if you add insurance costs to that, your total outgo is around Rs 15,000 per month.
Now, the basic question of whether to take a house on rent or buy a house can be answered by looking at the rental yields. The ratio of prices to rents is like a price-earnings ratio for the housing market. Just as the price of a share should equal the discounted present value of future dividends, the price of a house should reflect future benefits — either as rent or accrued rent in case of owned house. In the current scenario of property rates rising fast and rentals increasing slowly, the equilibrium seems to be disturbed.
Find more at Rent a House

Tags: rent house, home loan, icici personal loans, hdfc loan, fixed rate home loan, price-earnings ratio, property rate, accured rent