World Of Finance

        World of Finance by M.Vijaya Sai 1. Will gold ETF finally become part of the Indian investors' portfolio?   India is one of the biggest gold markets in the world. Last year, gold worth Rs 70,000 crore (Rs 700 billion) was traded in India. However, the stipulate is now shifting from jewellery towards investment . Nearly 5 years ago, demand for jewelery was 90% and demand for gold as an investment only 10% of the total trade. Investment in gold has picked up and has reached 30%.   Gold worth Rs 20,000 crore (Rs 200 billion) per annum is being sold in the figure of coins, biscuits or bars, while a lot of people are buying from banks. Banks have started selling gold in the precedent five years. Leading jewelers sell pure gold. There is an investment demand of Rs 20,000 crore for the gold. But when you go to the jeweler or the bank to buy gold coins, you have to pay 5-7% premium.   When you go to a jeweller to sel...

        World of Finance by M.Vijaya Sai India has been growing at over 8% for the last five years . This growth has created a large section of people who have good disposable earnings and are investments conscious. They are different from the previous generations, who only invested in PF, PPF or fixed deposits. Today’s youth want more return and are willing to take additional risks. Hence, this section of people has become a target of all the investments companies who promise them great return through equities and mutual funds . What type of investment will give the best performance over the long haul? Many financial “experts” argue that over the long term, the stock market has outperformed all other investments. In India this claim is based on the fact that the stock exchanges gave an average return of around 20% between 1979 and 2008 while in the US, the S&P 500 returned an average annual 10.5% gain. Putting aside for a ...

        World of Finance by M.Vijaya Sai Banks are more familiar to people these days than food malls, shopping malls as every activity of maximum number of people is been controlled by banks. Banks play a significant role in ones life and the contribution of banks to the nation and the economy is immense. There are hundreds of things about banks which a common man does not know. One such concept is CRR. We all read in the news papers that RBI has increased the CRR limits and the interest rate will go up. But what is the correlation between CRR and the interest rates ? What is CRR? Why do they increase or decrease it? Like this, there are many questions. Here is a small article to answer all your queries relating to CRR. Cash Reserve Ratio mandates that all commercial banks maintain a certain percentage of their total demand and time liabilities with themselves or with the Reserve Bank of India (RBI). This could be in the fo...

        World of Finance by M.Vijaya Sai I covered monetary policy of a central bank (RBI in case of India). Now, I will cover another very important macroeconomics concept – Fiscal Policy. Fiscal Policy is considered to be acts of a government to influence the direction of nation’s economy by using its financial and regulatory powers. The two main important instruments of fiscal policy are government spending and taxation. These are also known as financial powers. By regulatory powers we mean the ability of government to influence or require its people to change their behavior. For example, Indian government might ask all the industries to conform to universal environmental standards to reduce global warming. Thus, we see fiscal policy is different from the other macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money . Stances of Fiscal Policy The...

        World of Finance by M.Vijaya Sai Like every country, India has its own central bank – RBI, which performs the following roles: 1. Conduct monetary policy 2. Monitor and regulate banks and financial institutions 3. Act as government’s bank I will focus primarily on the first role in this article. Conducting monetary policy means that the central bank is in charge of making sure the country has the right amount of money by taking decision on how much money gets printed and how much get circulated into the economy . What do we mean by money? By money we mean currency, coins, deposits, saving accounts, travelers’ checks and short term deposits (less than 90 days). Credit cards are NOT considered as money because money is an asset while transaction on credit card is a liability i.e. credit. Right amount of money So how much is the right amount of money in an economy? Economists say that the right amount is...

        World of Finance by M.Vijaya Sai What is Tax….? It is a monetary, pecuniary or compulsory burden that is levied or put on each and every individual by the government . The payment of tax is inevitable that’s why a funny thing that is said about the tax is that “death comes once, but the payment of tax comes every year”. When the topic of tax comes, being a common man there are two questions that arise in our mind the first one is why the government needs to collect tax and the second one is what does the government do with the amount of tax collected? Well the answer for the first question is that the amount of tax collected is very huge and is the main source of income forthe government. The gross tax receipts for the year 2008-09 is Rs.6, 87,715 Cr whereas according to the budget the estimated amount of tax to be collected in 2009-10 is Rs.6, 41,079 Cr. The answer for the second question is thatthe government invest...

        World of Finance by M.Vijaya Sai Definition: A mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as the portfolio manager , trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. Concept: A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such a...