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Showing posts from 2010

Optimal Capital Mix

        World of Finance by M.Vijaya Sai You decide to start a business one fine day,you have estimated what you are going  to do according to your vision,mission and specific goals and action plans.even before all these creep in one of your first questions is likely to be how to raise money to finance your business operations. No matter how you plan to obtain financing for your business, you need to spend some time developing a business plan. Only then should you go forward with financing plans for even a simple small business. Equity as a source: You may have some cash you want to put into the business yourself, so that will be your initial base. Maybe you also have family or friends who are interested in your business idea and they would like to invest in your business. That may sound good on the surface to you, but even if this is the best arrangement for you, there are factors you must consider before you jump in. If you decide to accept investments from family and friends,

Save Your Money

        World of Finance by M.Vijaya Sai Consider yourself first when it comes to saving money. Get yourself turned on to the idea that your financial future will be prosperous as a result of your efforts.Set aside 10% of your income, just for you. By that I mean set them aside on a savings account with higher interest rate then your normal account. What is important is that the money is out of reach. If you save them on an account where you have easy access, you will more easily spend them. Get them out of your life! Not in your pocket! You can also be well off saving in funds. Pick safe funds when you pick, do not go for high risk investment funds or you might end up resenting your saving plan. Be also careful with credit cards, as a consumer you are better of with no credit on your account. This does not mean that you should not use plastic cards. You can easy use a debit card that does not allow you to withdraw more than you have on your account. Let the planning of saving an

Basics of Option Trading

        World of Finance by M.Vijaya Sai What is an Option? An option is a contract to buy or sell a specific financial product officially known as the option's underlying instrument or underlying interest. For equity options, the underlying instrument is a stock, exchange-traded fund (ETF), or similar product. The contract itself is very precise. It establishes a specific price, called the strike price, at which the contract may be exercised, or acted on. And it has an expiration date. When an option expires, it no longer has value and no longer exists. Options come in two varieties, calls and puts, and you can buy or sell either type. You make those choices - whether to buy or sell and whether to choose a call or a put - based on what you want to achieve as an options investor. Buying and Selling If you buy a call, you have the right to buy the underlying instrument at the strike price on or before the expiration date. If you buy a put, you have the right to sell the underl

Growth of Indian Money Market

While the need for long term financing is met by the capital or financial markets , money market is a mechanism which deals with lending and borrowing of short term funds. Post reforms age in India has witnessed marvelous increase of the Indian money markets . Banks and other financial institutions have been able to meet the high opportunity of short term financial support of important sectors like the industry, services and agriculture. It performs under the regulation and control of the Reserve Bank of India (RBI). The Indian money markets have also exhibit the required maturity and flexibility over the past two decades. Decision of the government to permit the private sector banks to operate has provided much needed healthy competition in the money markets resulting in fair amount of improvement in their performance. Money markets denote inter-bank market where the banks borrow and lend between themselves to meet the short term credit and deposit needs of the economy. Short

CREDIT RISK

        World of Finance by M.Vijaya Sai Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Another term for credit risk is default risk. Investor losses include lost principal and interest, decreased cash flow, and increased collection costs, which arise in a number of circumstances: A consumer does not make a payment due on a mortgage loan, credit card, line of credit, or other loan. A business does not make a payment due on a mortgage, credit card, line of credit, or other loan A business or consumer does not pay a trade invoice when due A business does not pay an employee's earned wages when due A business or government bond issuer does not make a payment on a coupon or principal payment when due An insolvent insurance company does not pay a policy obligation An insolvent bank won't return funds to a depositor A government grants bankruptcy protection to an insolvent consumer

Tax Saving Tips

        World of Finance by M.Vijaya Sai According to Union Budget 2010-11, a few changes have been made in Income Tax Saving Schemes structure. Here is a glimpse to new additions in tax saving methods : The relaxation limit under section 80C has been inceased to Rs. 2 lakhs. The presumptive tax limit has also been raised to Rs 60 lacs. Announcement of a deduction of Rs 20000 on investment in infra bonds In India, the middle class feels the heat of Income Tax more than anyone else. However the intensified tax system poses great stress on the earner's thinking to manipulate different ways to save tax. Here is a list of certain steps which can help you save your income and minimize your Income Tax. House Rent Allowance Applicable If A portion of your salary is marked as House Rent Allowance or HRA You are paying rent of your house Conditions The house should not be in your kids, spouses or your own name. Max Deductions The total amount of rent paid

Investment Stratagy

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        World of Finance by M.Vijaya Sai A well-planned investment strategy is essential before having any investment decisions. A business strategy is generally based upon long run period. Formation of business strategy largely dependent upon the factors such as long-term goals and risk on the investment. As the return on investment is not always clear, so the investors prepare the strategy so as to face the ongoing challenges in investment. A balanced investment strategy is generally required in the process of investment, which possesses long time period and some risk tolerance. In the case, when a strategy is aggressive the chance of attaining a higher goal is higher. An efficient strategy can be obtained from portfolio theory, which shows good estimates on risk and return. Investment Strategy is usually considered to be more of a branch of finance than economics. It is defined as set of rules, a definite behavior or procedure guiding an inv

MASTER DRAFT OF FINANCIAL PLANNING

        World of Finance by M.Vijaya Sai FINANCIAL planning. If that word is a put off, don't let it be. It's the all important word in your money dictionary. Here, we simplify it for you. Start with Step 1 - Put your finances in order We spend more than half our lives working and saving, but hardly spend any time planning on how to put that hard-earned money to work more effectively. So, how do you plan your financial life? Put your (financial) house in order Financial planning starts with a review of your overall financial profile, and not at investing. Before rushing to build an investment portfolio, you need to address the following issues: Insure your health, life and assets Start by protecting your family's current lifestyle against events/ expenses beyond your control. Buy appropriate insurance policies for your medical expenses, life, car, and other important assets. Repay high-cost loans Paying credit card bills on time can save yo

Invest in India"A developing economy with high growth Potential"

        World of Finance by M.Vijaya Sai The process of reforms as part of liberalization has resulted in greater investment in Indian economy. Government policies have become investment friendly and paper work reduced. The capital markets have also been able to receive huge inflow of funds. The Indian economy today is ready to face the competition from overseas market and International investors see India has a potential market for excellent return on investment. Policy Changes Industrial Policy The Indian government has ushered in a policy of reforms to bring about accelerated economic growth. The government has removed the requisition of industrial license except for certain sectors, simplified the procedure for investment and opened the market for foreign technology. Industrial Licensing The following industries require Industrial license. Public Sector enterprises. Industries retained under compulsory licensing. Manufacturing of products reser

SAVE YOUR COSTS

        World of Finance by M.Vijaya Sai The basic needs of man are food, clothing, shelter and entertainment. Today, most of us have graduated from needs to luxuries. When the newspaper headlines were screaming inflation at 11.9 per cent, it became a topic of worry. Today, the challenges are not just high standard of living, high commodity prices, it's job loss too.  How do you deal with meeting your basic requirements with less means to buy them? While eating just one meal a day is good for Yogis and is a nice way to cut down costs, that is not what I'm suggesting. Instead, Try something simpler. 1. Eat at home Eating out can be expensive. If you are spending Rs 200 on eating out compared to Rs 50 at home, you would be surprised to know the kind of amount you are spending. A systematic investment plan of Rs 150 (200-50) a day saved for 30 years can give you returns in excess of Rs 5 crore! 2. Know what you are buying Plan your shopping. If y