Financial Non Traditional Thoughts

Many of our Tamil brahmin brothers are senior citizen living on pensions with money safely parked in banks in savings accounts and fixed deposits.

They are averse to taking any risks with their money.

With Govt clamouring for interest rate cuts , it is a matter of time when RBI obliges.

This will reduce incomes from bank deposits with lower interest rates

Already HDFC bank has cut its base rate for lending to 9.25% and others may follow .

We may end up with deposit rates of 7 to 8 percent over a period of time leading to lot of pain.

Food inflation is high due to bad monsoon expectations and agriculure growth is 1 %.

We may end up with high food prices.

It might be Time to wake up and take some risks to add to income .

The easiest is the indian share market which has plummeted on china slowdown and greek crisis. There is more pain when US will raise interest rates.

Rupee has also depreciated to 66rs a dollar.

Shares have plummeted to last year aug 2014 levels.

There are very attractive buys at reasonable rates.

It would be wise to buy index stocks with large market capitalisation

Sectors like IT,Pharma are good. Bank shares -private ones are worth looking at. Some large Consumer goods are fine as protective plays.

One can distribute over various sectors .

Even 20 percent parked in FDs are moved into these , one may not regret it in future.

At a personallevel, I coolly moved some money from Public provident fund to shares.

Time will decide the wisdom of my actions.

I missed out the 2008 oppurtunity . This time , let me see if my judgement is good

You have to pick and choose the companies....Therein lies the success or failure... Do your own research before investing

There are two simple approaches.

Find two or three maximum traded large cap. in each sector online and decide.

never invest more than 10-15k in any share.

Oppurtunities do not wait for research in a fast moving market.

If more than 6 out of 10 are good hits , one should get a good return.

Members can suggest good stocks for investment. Even interest rates come down steadily, still it is safe to invest in Post Office, Banks, preferably nationalized banks, and healthy non-nationalized banks.

Though I am an investor in the stock market for the last 25 years, it is rather difficult to understand when to invest and come out.

Senior citizens should invest 90% of the income in safe savings i.e. FDs and the balance may be spared for stock market, with safe and sound stocks.

Investing in Stock Market is not for faint of heart.
In Bad times it will be worse than any FD.
In Good times you will reap much better than FD.
If you have a time horizon of 5 years then Mutual funds may be a better option, than investing in Individual stock. Then again if you are expecting monthly income please do not invest in stock market alone.
Like Vganeji said to Invest in stock you need to do your research.
For example
Best Funds to Buy



LARGE CAP »
6m 1y 3yr


http://www.moneycontrol.com/mutualfundindia/

CHANDRU1849 said:

Members can suggest good stocks for investment. Even interest rates come down steadily, still it is safe to invest in Post Office, Banks, preferably nationalized banks, and healthy non-nationalized banks.

Though I am an investor in the stock market for the last 25 years, it is rather difficult to understand when to invest and come out.

Senior citizens should invest 90% of the income in safe savings i.e. FDs and the balance may be spared for stock market, with safe and sound stocks.

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One can start with 10% in shares and scale up to 30 percent.

More than money made or lost , most would develop a more mature attitude towards money.

Money locked in deposits is money wasted and getting depreciated over time.


Indian economy has got very speculative.

In this those who do not multiply it fast enough thru investment in shares or real estate will only regret later.

There is a non functional govt which has come to a halt.

Big ticket reforms like GST or land are stuck. Monsoon is adding to misery.

Some simple wise actions like investing can reduce the pain somewhat.

TBs are highly literate and can easily analyse and decide what is the best place to invest.

It is a good occupation . Observing the ups and downs in the share market can open our minds to the world of economists, investing gurus and economic power play in

the world.

One may end up with a lot more knowledge about the markets which might make us regret at our foolishness of playing for only security and handing money over to banks

to play with it.

even the money we give to LIC or PF ,a part of it ends up in stock market

sangom said:

I have seen a few friends/relatives who fell for advice like in the OP and have come to crisis stage, even though they had constant advice from such experts, or had invested in Mutual Funds schemes as per experts' advice. The truth is that share market is gambling; so unless one has the gambling luck, one is destined to ruins! They are now wedded throughout the day, to their computer screens, and go on bothering about world wide stock markets all the time.

In so far as Tabras are concerned, senior citizens will be able to carry on with whatever interest FDs yield, if there is no sudden development like hospitalisation, costly treatments, etc. Hence, those who can take the risk, may invest in share markets but those who are not so bold, should better stick to FDs. The fox may know many tricks but fail, but the monkey which knows only tree climbing will be smarter, sometimes!

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Excellent advice to all retired people !

Sangomsji and a-tbji may be right. But it depends on the age of the investor, their time horizon, and the risk aversion.
There is every reason, Why you shouldn't invest in a fixed deposit.

Among some of the best practices followed by top investment managers, tax emerges as an important aspect to be considered. It is common to see advisors in the West talking about pre-tax returns, and more importantly, post-tax returns. However, in India, we do not talk about post-tax returns when talking about the returns of bank fixed deposits.

As investors it is important for us to ask our financial advisors, bankers or agents about the post-tax returns. The impact of tax on investment decisions cannot be underestimated.




http://profit.ndtv.com/news/your-money/article-why-you-shouldnt-invest-in-a-fixed-deposit-378978

prasad1 said:

Sangomsji and a-tbji may be right. But it depends on the age of the investor, their time horizon, and the risk aversion.
There is every reason, Why you shouldn't invest in a fixed deposit.

Among some of the best practices followed by top investment managers, tax emerges as an important aspect to be considered. It is common to see advisors in the West talking about pre-tax returns, and more importantly, post-tax returns. However, in India, we do not talk about post-tax returns when talking about the returns of bank fixed deposits.

As investors it is important for us to ask our financial advisors, bankers or agents about the post-tax returns. The impact of tax on investment decisions cannot be underestimated.




http://profit.ndtv.com/news/your-money/article-why-you-shouldnt-invest-in-a-fixed-deposit-378978

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Mr Prasad ji

Makes sense. It depends on the age of investor etc.

You know if a person has worked out a sound financial plan to outlive the money, then during retirement they should not get greedy to take advantage of the market's up and down. Usually good financial planners will consider all kinds of situations to make sure one can outlive the money including strategies like cutting back.

I am no risk taker..still very traditional when it comes to finance.

I just invest in buying some property like houses and shop lots and rest of money in Fixed Deposits.

No share market stuff for me..too much of a risk..sometimes when we try to look for more we end up losing what we have.

There is no harm trying to live with what we earn and adjust if we have less.

Houses are as good an investment with appreciation and rentals.

But housing prices in india are set for a fall in major metros.

The property prices may soften due to drives against black money.

Big builders are holding on to inventories but offering some facilities as freebies

a-TB said:

Mr Prasad ji

Makes sense. It depends on the age of investor etc.

You know if a person has worked out a sound financial plan to outlive the money, then during retirement they should not get greedy to take advantage of the market's up and down. Usually good financial planners will consider all kinds of situations to make sure one can outlive the money including strategies like cutting back.

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To say that investing in stock market is greed is not very wise.

Due to increased life expectancy ,people are living longer while retirment age is stagnant at 58/60 years.

Pensions and deposit incomes have not kept pace with inflation and cost of living rises due to opening of economy.

In any case most pensioners are likely to become lower middle class or poor due to this.

With interest rates set to fall to 7 to8 % there is no alternative to high return investments if lifestyle is not to be compromised further.

If there are minor risks , let it be.

It is better to live with dreams of a good life than worry about becoming financially unviable .

Age has got nothing to do with taking risks. It is a mindset.

Those who take risks when they are thirty will do that at seventy also.

But I do not see a high risk in investing in blue chips when they are available at low price.

at best you might lose may be 5 to 10 percent if you buy low .

the downsides are not very low.

Not many can really buy when it is at absolutely low as no one knows how much is low

First off, this new age western idea that FDs are so not in fashion should be junked immediately & permanently !! LOL!

FDs are the “only assured income” across all instruments including property – I mean the renter needs to pay rent right? LOL!

Wealth building happens due to the compounding effect,which FDs provide, so one does NOT have to look at any other instrument other than, just save, save, save, put in FDs, & come out ahead in life!! Pl do not fall for the rubbish that FDs cannot beat inflation!!.

Moving out of FDs mean’s risk of losing the capital unless one is shrewd enough to manage it well. In India you get 9+% return & one will NOT get this kind of return anywhere in the world, so why the hell should one get into adventure of risking the base capital ???,

So whether it is senior citizens or juniors etc…, the best & safest way to invest is FDs. So one can just stick to FDs & come out ahead in life!!

Having said this, one can look at diversifying their portfolio to include other means to build wealth which is why I wrote a thread on money management way back. This requires some or more appetite for risk, & street smartness apart from lot of research, hard work, etc.. !!

** Pl don’t get into what happens if Banks fail, currencygoes bust, govts fall, countries collapses, etc.. – all these mega world ending events can be discussed in another thread !! LOL!

krish44 said:

To say that investing in stock market is greed is not very wise.

Due to increased life expectancy ,people are living longer while retirment age is stagnant at 58/60 years.

Pensions and deposit incomes have not kept pace with inflation and cost of living rises due to opening of economy.

In any case most pensioners are likely to become lower middle class or poor due to this.

With interest rates set to fall to 7 to8 % there is no alternative to high return investments if lifestyle is not to be compromised further.

If there are minor risks , let it be.

It is better to live with dreams of a good life than worry about becoming financially unviable .

Age has got nothing to do with taking risks. It is a mindset.

Those who take risks when they are thirty will do that at seventy also.

But I do not see a high risk in investing in blue chips when they are available at low price.

at best you might lose may be 5 to 10 percent if you buy low .

the downsides are not very low.

Not many can really buy when it is at absolutely low as no one knows how much is low

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Investing in stock market is not greed but investing in risky market deep into retirement could be. If one has enough to outlive the savings why take risks

a-TB said:

Investing in stock market is not greed but investing in risky market deep into retirement could be. If one has enough to outlive the savings why take risks

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members can have own fancy definitions of greed.

Most who have retired at sixty are bound to face a real bad life by eighty wih indian economic conditions of high inflation and food prices.

house rentals have shot up manifold.

there is no sense in being sitting ducks in this economy .

I know many senior citizens who are at the mercy of their children who reluctantly give them monthly doles .

pensions are mostly a pittance.

indian stock markets have given average 17% annual returns tax free from 1989 to 2015 if one sees the value of sensex then and now.

All people had to do was to buy some blue chips .

Ramesh damania -a veteran of stock exchange had this to say on cnbc TV18.

He intends presenting a show interviewing various veterans and new performers on this channel.

He says it is not money alone that moves people but a passion to achieve and excel .

Pray tell me, which mutual fund in this entire world has given 9% year over year for 25 yrs????. Pl don’t quote, Berkshire hatchway.

Some of us know in the past, our banks have given over 14% per year in interest!! So there is NO point in looking for some holy grail, when we have FDs right in front of us ! even for NRIs, the best option is to put the money into NRE accounts & earn the 9% interest in dollar !!

Most people I know turn to the stock market after they lose their jobs.. LOL !! looking for some easy money.. LOL !! After a few months, years of losing, they go back to the daily grind of the Jobs. That’s why the quote – the best investment ever is college degree – it pays you for life !!

For eg, when it comes to entrepreneurship, everyone quotes Narayana Murthy!!, which shows the success rate is extremely low – 99% entrepreneurs fail. Similarly when it comes to stock market, 99% people fail. People quote Warren Buffet, Soros, Jhunjhunwala, & now Damania .. etc.. LOL !! if you count them, they will be less than 1% of all investors !!

How many people do you hear who lived next door making windfall money from the stock market ??? – How many stories do you hear about people next door losing their shirts in the market !!

Not to mention, the new comer who suddenly makes money in the markets will end up with Gambler’s ruin… I will leave the people to look up in google to understand the Gambler’s paradox !!

All I am saying is lets not glorify the stock market !!

Warren Buffet was unknown 25 yrs back, the only people who benefitted were those who knew him & bet on him - and you can count them on your fingers !!.

Post #14 and 17 by Jaykay.

Well said. LOL.

The name of the thread is Financial Non traditional thoghts.

There are many status- quo ists and would not like to think differently.

This thread is not for them.

If anyone would like to do only what their parents trained them to do, they can of course continue.

Others who could think of operating differently can try my ideas.

I have done better than most in evolving a reasonable strategy of investing 30% in index stocks which has worked for me .

These have given me dividends and capital appreciation.

I see no reason others cannot do the same.

I do not believe in mutual funds.

More often than not the fund managers do not manage them well.They are just overheads. Also one loses flexibility in buying and selling.

One great advantage these days is easy liquidity when one invests in shares.

One can get money by selling small quantities when there is a need

krish44 said:

members can have own fancy definitions of greed.

Most who have retired at sixty are bound to face a real bad life by eighty wih indian economic conditions of high inflation and food prices.

house rentals have shot up manifold.

there is no sense in being sitting ducks in this economy .

I know many senior citizens who are at the mercy of their children who reluctantly give them monthly doles .

pensions are mostly a pittance.

indian stock markets have given average 17% annual returns tax free from 1989 to 2015 if one sees the value of sensex then and now.

All people had to do was to buy some blue chips .

Ramesh damania -a veteran of stock exchange had this to say on cnbc TV18.

He intends presenting a show interviewing various veterans and new performers on this channel.

He says it is not money alone that moves people but a passion to achieve and excel .

Click to expand...

Most small investors and seniors lose their wealth in market fluctuations. If one has 20 years of time, stock investments may outperform other safer means. Many seniors cannot deal with downside risks since they need money from savings to live. Financial planners are like vultures and cannot be trusted.

Best advice for seniors is to find out how much you need, adjusted for inflation if you were to live up to 95.
Downsize your spending significantly today to make it last. Consider some health care cost. Have a living will so no one will keep you alive in artificial manner.

Nontraditional does not always mean that it is better.

Cant believe being in alignment with my sparring friends Mr Vaagmi and Mr JayKay in this topic Lol

If seniors started calculating how much they require to live upto 95 yrs taking present inflation also into account, many will get heart attacks and die immediately.It might

turn out to be a mind boggling figure.

The whole issue has come up due to increased longevity, large consumer inflation, high food prices and shrinking rupee. with inadequate compensation in pension and expensive

medical care.

One can make only casual back of the envelop calculation and take some immediate action to mitigate the pending disaster.

Or else , many of us will be pleading helplessly for more pensions on delhi roads in course of time

krish44 said:

If seniors started calculating how much they require to live upto 95 yrs taking present inflation also into account, many will get heart attacks and die immediately.It might

turn out to be a mind boggling figure.

The whole issue has come up due to increased longevity, large consumer inflation, high food prices and shrinking rupee. with inadequate compensation in pension and expensive

medical care.

One can make only casual back of the envelop calculation and take some immediate action to mitigate the pending disaster.

Or else , many of us will be pleading helplessly for more pensions on delhi roads in course of time

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This is through Android. So I make it very brief.
Why all the trouble?
Buy a house with the savings. When inflation overtakes you take a reverse mortgage loan and live happily for ever. LOL.

Vaagmi said:

This is through Android. So I make it very brief.
Why all the trouble?
Buy a house with the savings. When inflation overtakes you take a reverse mortgage loan and live happily for ever. LOL.

Click to expand...

I like this.

The first positive thinking post.

The present problem in housing is there is a downward trend and stagnation.

The sector is heading for a correction.

If one can buy a flat which is about 80 % or so complete where one can get possession in a year or so it might be worth it.

Best is to rent it out after fully furnishing it [ Itwill give 30 % more rent] and live on the income . Capital appreciation of property will protect and appreciate the

money.

It might be sensible if possible to take part housing loan to buy the same. one can add childrens name for financial viability assessment.the ratio of 40-60 ie 40% loan

and 60 percent personal capital works well.the rental income then can in many cases pay off the balance loan .A 7 year loan is optimal. One issue is management of property with all its

hassles -tenants, utility bills,society nuisances can drive senior citizens mad. Also if in need of liquidity , the disposal of property is not easy

This is from 'unreal times':

[h=1]Crank’s Corner: The Financial Expert[/h] Posted on September 5, 2015 by K Balakumar in General, Latest
(Image via www-tc.pbs.org)

I don’t know about you, but whenever I read news items that report that such and such billionaire had his entire wealth scraped down by, say, 14% due to the crash in the stock market, as a sensible and sensitive bloke, I instantly become sad that the bugger was worth so much in the first place. But being the gentleman I am, I also let out a silent prayer for him that next time around when the share prices fall, it better be drastic enough to wipe out at least 90% of his holdings.
Anyway, these being volatile times in the stock market, what are the other financial investment options for the middle-class folk? We analyse a few:
Provident Fund
The working of the provident fund scheme is, in a nutshell, the beauty of collective living: you contribute X amount from your salary and your employer chips in with Y amount, and the government collects them and uses them to a larger social good, like paying salary to provident fund employees who are otherwise unemployable elsewhere.
You are allowed to withdraw money from your provident fund account for only genuine reasons, like your death. You may think this to be extreme. But you have to agree the government is strict in this matter for a practical purpose: It does not want you to be wasting your money. Especially since when it is precisely there to do the same thing (rim shot).
But if you are a monthly-salaried working person, the employment provident fund scheme remains the most secure investment option. It is so safe that you alone can withdraw the money that too only when you are probably able to produce a gun or a dagger with a threat to unleash it on the officers unless your money is returned. Which they may if the gun is, I don’t know, attested by a notary public.
Fixed Deposit
Do you remember that you, as a kid, used to place peacock feathers between the pages of a book in the hope that they would somehow magically yield another feather by morning? We strongly suspect that your childhood peacock feather fantasy to be the guiding financial strategy of most banks when it comes to fixed deposits. Because when you invest in them you basically get back the same amount. Perhaps that is why it was named fixed deposit to start with.
Of course, you stand to get a decent return if your fixed deposit is worked out on a compounded rate of interest. But let us not kid ourselves here, if you and your banker are anywhere near capable of understanding how this compound rate of interest is calculated, you guys would probably now be a scientist in NASA and not reading this. So basically you have to make do with the simple rate of interest, whose formula, as you would doubtless recall from your school maths, is PNR/100, and you can work out this PNR by looking it up on your train ticket.
Insurance Policies
There are many types of insurance policies, but as an investment option the popular ones are mostly two:
(A) You agree to pay a fixed amount every month/quarter/half-year and after a period of time you get a well-meaning call from the insurance company that your policy is ‘lapsing’ as you had not paid the premium amount for the last few months/quarter/half-year. You will ask them why did they not inform you earlier itself. They will say they had sent regular intimations. It is then you will realise that those irritating envelopes from the insurance company that you cast aside without even opening them were those blighted intimations. Or at least this is what usually happens to me as I forget to pay the premium after some time. I am sure this will happen to you, too.
B) You pay a huge amount upfront on a policy that promises considerable return after 10 or 15 years and generally forget about it, till one day you realise that you had parked some money in some insurance company and you begin searching for the policy document in your cupboard and, voila, you will unearth your (unpaid) credit card bill from 2001 which heaven knows why you are retaining till today. And then after considerable rummaging, during which you and your spouse blame each other for the total lack of upkeep, you will finally manage to locate the policy document and luckily the maturity date is still five years away. It will be five years away even when you see it five years later. It always is. Nobody I know of has ever encashed a long-term policy.
Insurance industry, or for that matter the entire financial market, works on the larger prudential principle — this is the first lesson at the IIMs — most people are suckers.
As you can see, the popular investment options available to the common people don’t allow you to get rich. In the event, stock markets continue to offer the best hope. To be sure, you may not become rich overnight on the bourses. But by the dint of your patience and perseverance, stock markets can help you realise the ultimate middle-class dream, that of seeing a few billionaires become middle-class overnight.
(Originally published in Crank’s Corner)