REIT - Real Estate Investment Trust

A REIT, is either a publicly listed closed or open-ended trust that allows investors to purchase units of a trust that holds primarily income producing real estate assets. The larger REITs are internally managed and will generally also have their own internal property management operation, which helps to lower the cost of operations. The smaller REITs, in order to remain competitive, have developed a shared management platform where the assets and strategic management are shared, usually with the sponsor, and the property management function is either internal or external to the REIT.

So, how does a REIT make its money? In several ways —

Buying and selling property, thus pocketing gains from any appreciation in value

Developing commercial space

Renting and leasing commercial space, and

Financing mortgages and loans on property.

Some of the key features of a REIT are:

High yield through regular distributions

Capital appreciation

Taxation

Distributable Income

Market Performance

Focused Asset Base

What to look for in a REIT

An experienced sponsor with a proven track record for the property type of the REIT;
• A focused portfolio
• Strong net operating income, cash flow and sustainable income growth (
• Limited debt
• Management that holds a significant investment in the REIT (10% to 20%) as this aligns
management's behaviour with investors' goals;
• Sufficient size to capture the brokerage community's interest, to ensure adequate liquidity and attract institutional investors.
• An infinite life (rather than a finite one), and the ability to use sales proceeds to finance accretive new property acquisitions, and not be required to distribute capital gains

Investing in Real Estate India.

Flying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig profits. All are eyeing Indian property market for a wide variety of reasons:

• It’s ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector.

• India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space.

• Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space.

• Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even.

• Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future.

The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space.

Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards.

Credit Cards vs. Debit Cards - Which Is Better?

Many of us know we have an option to use a debit card but don't take advantage because we lack knowledge or interest or simply are in the habit of writing checks. While checks, ATM cards and credit cards are fairly self-explanatory, many people fail to see much difference between a credit card and a debit card.

So is there a significant difference? And is one better than the other?

The way a debit card works is basically the same in most respects. You make your purchase, plug in your number or swipe your card and the purchase goes through. The merchant, again, will get paid by the company who issued you the debit card. Here is where the difference is. With a debit card the money already has to be in your account. In other words, you've already paid in a certain amount of money to be available to your debit card. By using the card the money is simply transferred out of your account and your balance is reduced until it reaches zero, at which time you have to pay more money into the account or the card can't be used.

Maybe you still don't see much difference, besides where the money comes from and when you have to pay up. So which one is better to use? It depends upon how careful you are with your card and why you are using the card.

The features that make debit cards convenient - instant access to your money, lack of a required PIN number and not having to drag out your photo ID when you use it - make fraud that much easier. Unless reported quickly, theft of your debit card can quickly devastate your bank account. This is where you begin to see the difference.

Credit card companies are held to strict liability laws; the law limits consumer liability for credit card fraud to $50. For example, if you notice suspicious charges on your credit card statement such as double billing or an incorrect charge, the credit card company is obligated to investigate if you send in a written request within 60 days.

Credit card fraud vs. debit card fraud

The law limits consumer liability for credit card fraud to $50. For debit card fraud, your liability is $50 if you notify the bank with 2 days of learning of the fraud, and $500 or more after two days, up to the entire amount stolen under certain circumstances.

Your debit card is usually linked to your checking account. If the thief drains it, he has already made out with your money, and you have to fight with the bank to get your own money back. Meanwhile, your other checks could bounce and you could face bounced check fees, negative marks on your credit reports, cash flow problems and other hassles. With credit card fraud, you simply fight with the bank about getting disputed charges off your account, not getting your own money back.

Discover, Visa and Mastercard have implemented “zero liability” policies that protect you against debit card fraud provided that certain (reasonable) conditions are met. While many debit card issuers offer the same protection against fraud as that of credit cards, it still means closing the barn door after the horse is already out. It may take some time to restore the funds to the account, unlike a credit card where the cardholder can withhold payment on any fraudulent purchases.

Tax saving with Municipal Bonds

Municipal bonds are debt obligations of states, cities, and other public subdivisions. Most, but not all, of them pay interest that is exempt from federal income taxes. This interest is also often exempt from state and local taxes. A small proportion pays taxable interest or interest that is subject to the alternative minimum tax (AMT). Municipal bonds can be purchased through nearly any brokerage company. Investment companies that hold portfolios of municipal funds can also enjoy the tax-exempt income that they provide.

In one sense, tax free munis are more complicated than tax free Federal obligations, since the Federal debt is free from all but Federal tax, while the munis are usually only free from local taxes if you live in that locality. That's why when you look at tax free muni funds, you'll see them listed by state, like "Massachusetts Tax Free" or "California Tax Free." If you don't live in that state, they will be Federal tax free, but you'll still have to pay state, and maybe even city tax. Municipal bonds aren't 100% safe, cities have been known to default from time to time, but there are rating agencies to tell you if the credit isn't top notch, and muni funds that spread the risk around in your state to the point where you shouldn't have to worry about it.

Example
David owns a $50,000 municipal bond that he bought at face value less than a year ago. The bond has a 3% coupon rate. Because of rising interest rates, the bond is currently selling at 95, or $47,500. If David sells the bond in 2006, he will recognize a $2,500 capital loss. He can then invest the $47,500 of proceeds in a new municipal bond paying interest at 4%. David’s effective tax rate is 33%. If David were to do this it would enable him to currently benefit from the $2,500 decline in the bond’s value. He has a short term capital loss, which is a tax savings of $825 ($2,500 X 33%) against his ordinary income. Although David would then have bonds that will pay $2,500 less at maturity, he may more than offset this with the increase in current municipal bond income ($1,800 per year with the new bond versus $1,500 per year with the old bond) and the current tax savings from the capital loss.

Unit Investment Trusts (UITs)

A unit investment trust, also known as a defined portfolio, is an SEC-registered investment company that is composed of an unmanaged portfolio in which the investor has an undivided
ownership in the underlying securities. The portfolio is professionally selected by the trust sponsor and remains fixed until the termination of the trust, usually ranging from 13
months to five years. Some UITs composed of fixed income securities may have longer maturities. Although the securities within the trust remain fixed and are not managed, the
sponsor may remove a security from the trust under limited circumstances.

The portfolio is designed to follow an investment objective over a specified time period, although there is no guarantee that the objective will be met. UITs are created by a trust
sponsor who enters into agreement with a trustee. When the trust is created, several investment terms are set forth, such as the trust objective, what securities are placed in the
trust, when the trust will end, what fees and expenses will be charged, etc. A full accounting of the terms of the trust will be listed in the prospectus.

UITs generally buy and hold a fixed portfolio of stock, bonds, or other securities, often concentrated in a particular industry or sector. This is in marked contrast to mutual funds, which are required to adhere to certain rules of diversification and must hold a minimum number of different securities. UITs are not subject to those requirements, and so can own shares of stock in just a few companies.Mutual funds can sell and buy shares frequently as long as those transactions meet the funds objectives stated in its prospectus. UITs cannot

Another difference between a trust and a mutual fund is that a trust doesn't generally generate capital gains to distribute to shareholders. Because the number of shares available in a UIT is fixed when the trust is created, investors who purchase shares in a UIT after its initial offering buy them from other investors, and not from the sponsor, similar to a stock or closed-end fund.
Because of the fixed number of shares of any particular UIT available in the market, buying and selling shares among investors does not carry tax consequences for other shareholders.purchase or sell securities except in limited circumstances.

Fees and Expenses:
UITs are affordable—investors can purchase a trust’s portfolio of several stocks or bonds with one transaction and at one purchase price. Generally, there is a $1,000 minimum investment for UITs, although the amount can usually be lowered if purchased for Individual Retirement Accounts (IRAs).
UIT investors generally pay a sales charge, or load, at the time of initial purchase, and often pay deferred sales charges. The offering price, which is the price paid to purchase units, ref lects the current NAV plus the initial sales charge. Sales charge discounts may be available for large purchases.
UITs pay an annual fee to cover operating expenses and often to reimburse the trust sponsor for its supervisory activities, organization costs, and a creation and development fee. Since
UITs offer a fixed portfolio, there are no investment management fees and, because the buying and selling of portfolio securities is limited, transaction costs are minimal. Further, there are no
ongoing marketing fees charged to the trust, as most UITs do not continually market their units to the public.

Taxes:
Generally, unitholders must pay income taxes on the interest, dividends, and/or capital gains distributed to them, although in retirement accounts such as IRAs taxes are deferred until
distributions are taken from the account. UITs provide IRS Form 1099 to their unitholders annually to summarize the trust’s distributions. Also, when an investor sells units, he or she will
realize either a taxable gain or a loss that should be reported on income tax returns. Certain UITs provide income that is free from federal and/or state taxation.

ELSS Ideal for Tax Saving

First, what is an ELSS? And even before that, what is 80C?

# 80C is the section under which tax payers can invest
upto Rs 1 lakh and save upto Rs 30,000 tax in a year
# If taxable income was Rs 5 lakh and you put away Rs 1 lakh, you will now pay tax on only Rs 4 lakh
# You can invest in more than10 products under 80C, like PF, PPF, life insurance, 5 year FDs and special mutual funds called ELSS.

So, what is this animal called ELSS?

# Equity Linked Saving Scheme
# Equity mutual fund
# Investments give 80C benefit
# 3 year lock in

# I like the ELSS product to use for tax saving since I can target a higher return through it.
# Some top funds have given more than 20 per cent return over a 5 year period

That understood, our clear advise is stick to ELSS which have a good track record. Why invest in a new ELSS scheme at all? And believe me you will be tempted with financial agents doing a hard sales pitch, but be smart and avoid.

Amongst existing schemes, we've got some clear winners for you to look at. Morningstar, one of the world's leading providers of independent investment research on mutual funds has benchmarked ELSS schemes with 5 year track record; the clear winner in the ELSS group emerges as Sundaram BNP Paribas Taxsaver. It is a 5 star rated fund from Morningstar. Look at its 1 year , 3 year and 5 year returns and these are per annum returns – 22 per cent per annum over 5 years! And what's extremely heartening about this fund is that it has outperformed the benchmark index both in a rising market and more importantly in a falling market. The losses have been well contained by the fund manager - when the benchmark index melted by 55 per cent, the fund is down only 46 per cent - this one we really like.
Scheme: Sundararam BP Taxsaver
# I year return: -46 per cent (When benchmark index fell by 55 per cent)
# 3 year return: 2 per cent (When benchmark index sheds 3 per cent)
# 5 year return: 22 per cent (When benchmark index returns 7 per cent)
Two conservative schemes
# Two schemes that do quite well in an upmarket and the downside is not so bad in tough times.
# Thing to watch: benchmark return and your fund performance in relation to that
# Your fund should give at least 5-5 pp over the benchmark
# Franklin India Taxshield and HDFC Tax Saver have given on a 5 year basis more than 5 percentage points over their benchmarks

Let’s look at -
# Over the past year, market is down 55 per cent but the scheme fell by less than 50 per cent
# Over a 3 year period, market lost 4 per cent, scheme lost less than that, 2 per cent
# Over a 5 year period, Franklin India gave 13 per cent while the market gave 7 per cent per year
# The scheme comes with a 5 star Morningstar rating
Scheme: Franklin India Taxshield
# I year return: -47 per cent (When benchmark index fell by 55 per cent)
# 3 year return: -2 per cent (When benchmark index sheds 4 per cent)
# 5 year return: 13 per cent (When benchmark index returns 7 per cent)
The 5 year returns are less attractive than Sundaram, but the scheme is good. It has a 5 star rating with Morningstar.

HDFC Tax Saver
It is a steady and conservative scheme, riding the downside but not giving supernormal returns when markets are rising.

# Over the past year, HDFC Tax Saver lost half its value, while the market lost a bit more than that
# Over 3 years, the scheme lost 5 per cent, while the market lost 4 per cent, so that is not so good
# But over a 5 year period, it gave 18 per cent return while the market gave 7 per cent return
# 4 star rated by Morningstar

Scheme: HDFC Tax Saver

# I year return: -50 per cent (When benchmark index fell by 55 per cent)
# 3 year return: -5 per cent (When benchmark index sheds 4 per cent)
# 5 year return: 18 per cent (When benchmark index returns 7 per cent)

It is 4 star rated from Morningstar, a steady scheme from a fund house known for long term approach to investing.

And the final ELSS which made our cut for recommendation is SBI Mangum Tax Gain Scheme. It is a High risk, high return scheme; 24 per cent per annum over 5 years. It is hugely outperforming in a rising market, but in a sliding market its fall has been equally rapid. So choose it if your risk appetite is high - this one is a 5 star rated fund from Morningstar.

Scheme: SBI Mangum Tax Gain Scheme
# I year return: -53 per cent (When benchmark index fell by 54 per cent)
# 3 year return: -2 per cent (When benchmark index sheds 1 per cent)
# 5 year return: 24 per cent (When benchmark index returns 8 per cent)

And with this, we hope we've done our bit is raising your tax quotient.
As we promised last week, we will look at some key new products in the market, read the fine print carefully and weigh out their pros and cons, to help you decide whether you should invest in them or not.

Tax Planning Tips India

Taxpayers can lower the incidence of income tax by means of legal transfer of their sources of income among family members, so that each unit of the family enjoys the basic personal income tax exemption limit, which the Finance Bill 2008 has revised for financial year 2008-09 to Rs 150,000 for male individuals and HUFs; Rs 180,000 for resident women tax payers and Rs 225,000 for resident senior citizens.

The first step in tax saving through family tax planning is to adopt the concept of divide and rule. The simple rule is that each family member must have his or her independent source of income so as to legally become an independent tax payer under the provisions of the income tax law.

In case the entire income of a family belongs to just one member, the tax liability is much higher than when the same income is spread among different members of the family.

Now, under the income tax law it is not possible to arbitrarily divide one's income amongst different members of the family - and then pay lower tax in the names of different family members. However, this goal can be achieved by intelligent use of the facility of gifts and settlements.

Thus, for example, even if a taxpayer's parents are not paying income tax today but if they receive some gift from friends or relatives or from anyone else in the world, the income so generated would belong to them.

In this manner, independent income tax files can be started for different family members by developing independent funds for each person through gifts thereby resulting in separate independent sources of income which would then be taxed separately to income tax.

Once the income is spread among more people, chances are some of them would attract lower rates of tax. Also, each one would then be entitled to independently claim exemptions, deductions, rebates, etc.

Generally, any gift you receive from various members of your family and specified relatives is not considered your income but a capital receipt. Thus, no income tax is payable on gifts received from relatives - and also gifts received from parties other than relatives upto a sum of Rs. 50,000 and at the time of marriage up to any amount.

Care should, however, be taken to ensure that any gift which is received should be a genuine one. The person making the gift, called the donor, should have proof of his or her having the source for making the gift.

The other important point to keep in mind in the case of gifts is that the provisions of Section 64 of Income Tax Act prohibit any direct or indirect transfer of funds between an assessee and his/her spouse.

Thus, a husband should not make any gift to his wife; likewise, the wife should not make a gift to her husband. If the gift is made between spouses, it would attract the provision of Section 64 and lead to clubbing of the incomes of the spouses.

To achieve the best results of gift, and to avoid clubbing of income, you may receive gift from any relative other than your spouse, and, in the case of a daughter-in-law from her father-in-law.

The Rapid Rise and Blistering Fall Of Boaz Weinstein

The WSJ has a long piece on Boaz Weinstein's tenure at Deutsche Bank. Weinstein was DB's "star trader" for a few years—right up until he managed to lose $1.8 billion.

So how did Weinstein lose $1.8 billion? The same way every "star trader" loses a boatload of money: they make a lot of money exploiting arbitrage opportunities in good times, and then lose it all when their market goes berserk in a crisis. Repeat as necessary.

Specifically, Weinstein lost most of the money on basis trades when Lehman collapsed and the corporate bond market froze:

By early 2008, Mr. Weinstein was at the top of his game. He, along with a colleague in London, was overseeing global credit trading for all of Deutsche Bank. His own trading group, Saba, had grown greatly, to roughly $30 billion of positions and $10 billion in capital. And his control also extended to the bank's trading for customers.

Wall Street traders were optimistic in early 2008 that the mortgage crisis was contained, though there were some strains in short-term lending markets, causing corporate-bond prices to decline. On several businesses, such as Ford Motor Co., Lyondell Chemical Co. and General Electric Capital Corp., Mr. Weinstein bought corporate bonds or loans as well as credit-default swaps.

The swaps would pay off if the debt defaulted. And the cost of this protection was less than the income produced by the bonds. Mr. Weinstein believed the debt was cheap relative to the cost of protecting it with swaps.

Corporate bond prices soon rallied, leading to a tidy profit for Mr. Weinstein's group, after the Fed's brokering of a deal for reeling Bear Stearns Cos. stabilized the credit markets. Emboldened, Mr. Weinstein added to his positions in succeeding months. His group entered September in the black for the year, expecting to tack on more gains.

But the simmering financial crisis finally boiled over. The government said early in September that it would take over mortgage giants Freddie Mac and Fannie Mae. And Lehman Brothers Holdings Inc. was teetering. Traders worried about losses they might incur if Lehman failed.
...
The next day it became clear Lehman would fail, and a struggling Merrill Lynch & Co. agreed to sell itself to Bank of America Corp. Within days, the government bailed out another big player in credit derivatives, American International Group Inc.

Brooding in his office overlooking Wall Street, Mr. Weinstein remained outwardly calm as markets went haywire, traders say. The value of his group's holdings of corporate bonds and loans began to slide as other investors, needing to raise money, sold such securities.

At the same time, trading in credit-default swaps was curtailed because market players were concerned about entering trades with banks that potentially could collapse. This left Mr. Weinstein's group increasingly unprotected against losses in corporate bonds and loans, because it used swaps to hedge those positions.

Mr. Weinstein wasn't alone. Similar positions held by banks and hedge funds across Wall Street fell apart amid the seismic dislocations after the Lehman collapse.

As prices of corporate bonds and loans slumped to new lows and stocks plunged too, Mr. Weinstein wanted to buy more swaps to protect his positions, traders say. He told traders that in such a trading environment, "the primary objective is to get as flat as possible to the market" -- not betting on either a rise or a fall -- according to a person familiar with the conversation.

But in contentious conference calls, risk managers at Deutsche Bank told Mr. Weinstein to scale back positions or sell them entirely, traders say. Mr. Weinstein's stock-trading desk was instructed to sell nearly every holding, effectively shutting it down.

I don't think the dislocation in the CDS market after the Lehman collapse was as simple as the WSJ article suggests. It wasn't just that "players were concerned about entering trades with banks that potentially could collapse." That was definitely part of the problem, especially for Merrill.

But as I noted earlier, a big problem was that protection buyers all wanted to lock in their profits when spreads exploded wider (or, alternatively, net protection sellers wanted to cap their losses). And since the dealer banks generally try to run matched books—note that Weinstein's biggest concern in the crisis was getting "as flat as possible to the market"—all the end-users demanding to unwind their CDS trades essentially forced dealers to unwind off-the-run contracts at off-market prices, which is expensive for the dealers and generally requires a sizable upfront payment. It probably didn't help that traders at the dealer banks, being traders, couldn't stop shooting at each other.

As the WSJ article notes, however, the losses on Weinstein's basis trades came predominantly from the corporate bond leg, not the CDS leg. That's what happens when the entire corporate bond market suddenly shuts down, I guess.

Buffett’s latest best idea

Investing legend Warren Buffett has stated that he would be happy if he and his partner, Charlie Munger, could come up with one good investment idea every year. That one good idea currently appears to be Burlington Northern Santa Fe Corp. (BNI-N75.37-1.67-2.17%), a Fort Worth, Texas-based railway company that hauls freight.

Of the investments disclosed in recent 13F filings with the U.S. Securities and Exchange Commission by Berkshire Hathaway Inc. (BRK.B-N2,924.00-74.00-2.47%), it’s by far the biggest purchase.* Accumulation began in April, 2007 and has been steady since. The latest buying, in January, increased Mr. Buffett’s stake to 75-million shares, or 21.75 per cent of the company. It’s now one of Berkshire Hathaway’s largest holdings.

The prices paid for Burlington Northern stock range mostly between $75 and $80 (U.S). With the price currently trading several dollars below that range, followers of Mr. Buffett can buy even cheaper than the master himself.

In the past, Mr. Buffett has said the railroads were not his kind of investment. He described them as capital intensive, heavily unionized, extensively regulated, and operating at a comparative disadvantage against the trucking industry.

However, railways now appear to have a competitive edge in long-haul transportation thanks to years of upgrading infrastructure and equipment in response to deregulation in the 1980s. For example, locomotives today get 75 per cent more mileage from a gallon of diesel than they did in 1980, observes IHS Global Insight consultant Kenneth Kremar.

The upgrading continues. Of note, Burlington Northern is keen on technology that will allow it to run trains closer together, increasing productivity even more.

Energy and environmental trends have also conspired to bestow an edge. As Burlington Northern’s chief executive officer, Matthew Rose, recently told Business Week magazine:

• the further the price of crude oil rises above $25 (U.S.) a barrel, the more trains enjoy a cost advantage (they use just a quarter of the fuel trucks use).
• highways have problems with traffic congestion.
• trains are more environmentally friendly – a locomotive transporting 100 tons over 1,000 miles (1,600 kilometres) produces 45 per cent less pollution than long-haul trucks.

The U.S. industry is presently dominated by five rail companies. The division of the U.S. rail system into five railroads means more control over pricing. Railways might be capital intensive but with fatter margins, they can more easily cover capital costs.

Of the big five, the two largest are Burlington Northern and Union Pacific Corp. But Burlington Northern has “a record of more consistent management than Union Pacific does,” writes Money Magazine editor Michael Sivy.

Burlington Northern controls nearly 50,000 kilometres (over 30,000 miles) of track throughout the United States and Canada, including a line that runs through Mr. Buffett’s home town of Omaha, Nebraska. When it comes to railway networks, size matters. For one thing, a large network can provide seamless shipping to a greater number of destinations.

Burlington Northern’s network spans two-thirds of the continental United States and is concentrated in the Midwest and West. The terrain and dispersed populations of these regions play to the strength of rail in long-haul freight transportation. Rail companies operating in the more densely populated Eastern region face relatively greater competition from trucks due to shorter hauling distances between destinations.

The location of Burlington Northern’s geographic footprint also yields a natural advantage over other railway companies (except Union Pacific) when it comes to shipping imported Chinese goods across the U.S. due to easy access to terminals along the West Coast. Lastly, the company’s lines running north and south down the middle of the U.S. give it the lead position for shipping imports and exports generated by free-trade agreements with Canada and Mexico

Donald J. Trump's Top Success Tips

Donald Trump or "The Donald" as he is often called, is a famous New York real estate developer and businessman. He has developed and owns some of the most exclusive buildings in New York.

For those dreaming of that same kind of wealth and business savvy, simply wanting it is not enough. But if you are serious about building wealth, then you must be open to learning, and not just by reading a book - but by actually doing the work. see what we can learn from his own success:

1. "As long as you're going to be thinking anyway, think big."
2. "Listen to your gut, no matter how good something sounds on paper."
3. "You're generally better off sticking with what you know."
4. "Sometimes your best investments are the ones you don't make."
5. "I don't make deals for the money. I've got enough, much more than I'll ever need. I do it to do it."
Passion. That's really what it all comes down to - a passion for your work, for the process of business, and even a passion for the creation of wealth. There is a big difference between loving money and loving the process of making money.
6. "I try to learn from the past, but I plan for the future by focusing exclusively on the present. That's were the fun is."
7. "I wasn't satisfied just to earn a good living. I was looking to make a statement."
8. "Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game."
9. "Show me someone without an ego, and I'll show you a loser."
10. "The final key to the way I promote is bravado. I play to people's fantasies. People may not always think big themselves, but they can still get very excited by those who do. That's why a little hyperbole never hurts."

Comparing Car Different Insurances

Insurance agents don’t like to hear this, but the best way to pay the lowest auto insurance rates is by shopping around and making car insurance comparisons.
But sometimes the buyers are ignorant about all the options that they can have and also the comparing process. This can lead to loss money in terms of more premiums they have to pay to a company as compare to some cheap policy which they can get after researching for it. The higher rates are not the criteria of the protection.

While going to buy a car insurance policy, your first step should be to be certain of all your requirements and needs, along with specified details of what all you expect from your insurance policy. It includes, time span of premium payment, amount of premium payment, mode of payment, monthly, annually payment, coverage needs, etc.
Get at least five quotes for a car insurance in order to be able to make a good comparison. Off course, the more quotes you get, the more you can compare and the more you can save on auto insurance.

When comparing insurance prices it is also advisable to think about credit ratings because these can seriously impact the premium. Companies that sell insurance for cars use the credit rating for determining the insurance rate of the driver.It’s very wise to check a credit report for errors because the smallest mistake can lower the credit score and thus higher the price of insurance. Make sure all comparison quotes use the same (and accurate) credit report because otherwise this will result in a big difference between car insurance rates and it will be difficult to compare.
The insurance policy with lowest price may not be the best available policy. Ask for discounts available at all specific conditions; be sure of the coverage of the scheme.

How To Avoid Repossession

Repossession is generally used to refer to a financial institution taking back an object that was either used as collateral or rented or leased in a transaction. Note that repossession is a "self-help" type of action in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings.

Repossession is something that happens when you aren’t able to make your payments. If you can’t pay the bank for whatever loan you took out, and if you are missing payments to them, since they own your property they can come and take it back. The bank would be able to do repossession, which means that they can come in and take whatever you used their money to buy. This can be very bad for you, so you need to make sure that you know how to avoid repossession.

There are several things that you can do to avoid repossession and to make sure that your items remain your items. One of the best things that you can do is to make sure that you are always organized, so you know how much you are going to have to pay, and when each of these payments is going to have to be made. This is something that is very easy for you to do, and something that you should be in the habit of doing for all of the bills that you have to pay. Being organized can mean that you’ll never miss a payment due to forgetting about it. In addition, by being organized you will feel more in control of your finances and feel better overall.

The other most important thing that you can do is to talk to your lender and let them know about your situation. Whether you have lost your job or have just been laid off for an extended amount of time, let them know everything. A lender who is left in the dark about your financial situation thinks the worst whenever you do not make payments. A successful lender will be able to work out a repayment plan that you can afford. This type of adjustment will affect your credit score, but you will not have to worry about loosing your most valuable possession, your home. As soon as you are aware of the lower payment which needs to be made, you should begging making it as soon as possible. If you go too long without paying, they may take legal actions to repossess your home.

Repossession Calendar

The calendar below will help you remember what happens when property is repossessed, and what you can do to protect your property. Your creditor may notify you that he or she intends to repossess your property before doing so but is not required by law to warn you ahead of time. Your legal rights will vary depending upon whether your creditor gave you advance written notice of the repossession.

REPOSSESSION CALENDAR
TIME	EVENT
Day of repossession	Creditor takes back your secure purchase.
Within 3 days after repossession	If you did not receive advance written notice of the repossession, creditor must give you a written statement of the amount you are currently in default and the expenses of repossession and storage.
1 to 15 days after repossession	If you did not receive advance written notice of the repossession, you can get your item back by paying the amount in default (and correcting any other default) and paying the cost of repossession and storage. If you did receive advance written notice of the repossession, you may be able to get your item back by working out an agreement with the creditor which may require refinancing or paying off the full debt.
Before resale	The creditor must give you at least 10 days' written notice of the time and place of any public sale or the time after which a private sale may take place. You may still get your item back up to the date of resale by working out an agreement with the creditor which may require refinancing or paying off the full debt.
Day of Resale (16 days to 6 months after repossession)	Creditor sells the item that has been repossessed.
1 to 30 days after resale	Creditor gives you a written statement of how much the item sold for and how the proceeds of the sale were spent.

sneaky credit card tricks

Retroactive Rate Increase

This is the No. 1 practice credit card customers complain about. Even if you signed up for a low-interest card, many banks reserve the right to raise your card's interest rate at any time. They can charge you the new, higher rate not only on new charges but on your existing debt as well. It's a real bait and switch.

Tricks to Make You Pay Late

These come in many varieties. If you’re late you’ll pay a hefty fee and your interest rate may go up. Check each statement carefully and pay your bill as soon as it arrives.

Changing Due Dates – Your bill will not be due on the same day every month.

Early Due Dates – Bills may be due just a few days after you receive them.

Weekend Due Dates – If your due date is on the weekend and your payment arrives on the date, it
won’t be processed until Monday and you’ll be considered late.

Morning Due Times –Your payment may be due at 9am on the due date, not 5pm.

Tricky Interest Calculations

For some cards, you can pay interest on purchases from previous cycles.

Say you made a $100 purchase, but you only paid $90 of it off. Instead of being charged interest on the $10 remaining, the card company takes the opportunity to charge interest on the entire $100, because a portion of it was not paid in full.This is known as double cycle billing. Look for a card that uses the “Average Daily Balance” interest calculation method.

Retroactive Application of Higher Interest Rates

To make things worse, if your interest rate increases, they can apply the higher interest rate to the entire existing balance, not just to new charges.

Credit “Protection”

Services like this may sound good, but they’re usually useless. The fee for the service likely exceeds the minimum payments it would cover if you became sick or lost your job. Avoid add-on products like this.

Consumers have been complaining about these practices for years. In December, the Federal Reserve passed new rules that will help curb them, but those rules don't go into effect until July 2010.

The Obama administration and Congress may now be more likely to force the credit card industry to make swift changes, because these are the same banks receiving billions in government bailout funds and Americans are hurting right now.

Tax Gain/Loss Harvesting

Selling securities at a loss to offset a capital gains tax liability. Tax gain/loss harvesting is typically used to limit the recognition of short-term capital gains, which are normally taxed at higher federal income tax rates than long-term capital gains.
Also known as "tax-loss selling".

Tax-loss harvesting
Suppose you have an investment with a cost basis of $10,000, and its current value is $5000 (certainly possible given the stock market’s performance this year). Let’s assume that in two years from now, the value of your investment would return to $10,000. If you do nothing, you’ll have a $10K investment in 2010 and owe no taxes if you were to choose to sell it at that time.

If, instead, you sell your investment this month, wait 31 days, and then buy it back, you’ll be able to realize the $5000 loss on your 2008 tax return.

During those 31 days, you might choose to invest in a money market fund or some similar investment so that you don’t miss out on a possible upswing in the market during that 31-day period — more on that later. Assuming no significant market movements during the 31 days, you’ll still have a $5000 investment. In this case, what have you gained?

Offsetting capital gains
First, the $5000 loss on this year’s tax return can be used to offset any other capital gains you might have realized this year. If you don’t have any capital gains this year, then you can use the first $3000 worth of losses to avoid paying taxes on current-year income. Any amount over $3000 can be carried forward as capital losses towards your tax returns in future years. The losses can be carried forward indefinitely and used to offset $3k of income each year or to offset future capital gains.

But what about your investment, which used to have a cost basis of $10,000 and now has a cost basis of $5000? When you sell this investment at some point in the future, won’t it be a wash since you’ll have to pay taxes on an extra $5000 of investment gains? Although future tax rates are an unknown, we are making two assumptions here:

• The first is that capital gains tax rates will continue to be lower than income tax rates.
• The second is that we’d prefer to defer paying taxes (after all, isn’t this why we invest in 401(k) plans?).

Current capital gains tax rates are 0% for those people in the 10% and 15% income tax brackets. For people in the 25% and higher income tax brackets, capital gains are taxed at 15%.

If a person in the 25% tax bracket takes a capital loss of $5K this year, she can reduce this year’s taxable income by $3000 and next year’s taxable income by $2000. Disregarding state taxes for a moment, she would save $750 this year and $500 next year on federal taxes, for a total savings of $1250.

If she decides to sell her investment with a long-term gain of $5000 in 2010, she will pay $750 in capital gains taxes, for a net savings of $500. If she waits until retirement to sell the investment, which may be decades away, the current savings of $1250 may be compounded over a long period of time.

The waiting game
What should you do with your investments during the 31-day period before you can buy them back? One option is to simply let your cash sit in a money market fund. It will earn a guaranteed interest rate and will be safe from losses. The downside to this choice is that you may miss out on an upswing in the market. With the current levels of volatility in the market, bad timing could mean you’ll miss a significant rally.

Another option is to temporarily invest your money in a similar investment. For example, if your money is currently in the Vanguard Total Stock Market Index (VTSMX) you could swap over to the Vanguard 500 Index (VFINX) for 31 days, and then swap back. This way, you’ll still earn the same approximate market return that you would have earned had you done nothing.

The downside to this choice is that you may lose money during the 31-day period. Also, if the market does go up, you’ll have a short-term gain, and you’ll have to pay taxes on that gain.

Each investor needs to decide for herself which option makes sense for her particular situation and temperament. You may also choose to use this opportunity to change your portfolio if your current investments are not the ones you’d like to hold for the long term.

Playing by the rules
To make sure that your tax-loss harvesting meets IRS requirements, you must refrain from buying any shares of your investment, or a “substantially identical security”, for the 30 days before and the 30 days after selling it at a loss. This is known as the “wash-sale rule”, and it is the reason for waiting 31 days after selling your investment before buying it back. Make sure that you have not purchased any shares of the investment during the 30 days prior to selling as well.

A “substantially identical security” is a little bit of a grey area. It is certainly not allowed to sell shares of a particular stock and then buy back the same stock within the wash-sale time period. Selling shares of one S&P 500 fund and buying a different S&P 500 fund for 31 days is unlikely to cause an issue, but you’re probably better off swapping into funds with somewhat different holdings.

Points to note while using Credit Cards

Technically speaking, a credit card is an unsecured loan. This means that unlike a secured loan, which is advanced by a bank/financial institution against a security like property for instance, a credit card is offered without any security.

The major benefit of a credit card is convenience. The issuer is willing to give you a loan. As a customer, you should use credit cards only for short-term gaps in your ability to purchase goods or services. Ultimately, you have to pay the loan amount back. And if you don’t have the money, then you will pay heavily for it in late fees and charges, which could often be more than you originally spent on the card.

Terms and conditions

Every card will come with terms and conditions. These will specify your rights and obligations towards the issuer of the card. Always read the fine print carefully. Once you start using your card it is assumed that you have read and accepted all the terms and conditions. So read and clarify what you must, before using your card.

Annual fees

Earlier it was common practice for banks to waive annual fees for the first and second year and not beyond this. However, as the market has become more competitive, a lot of credit card companies are doing away with the annual fees completely and are issuing life time free cards. So, shop around to see which is the best card that you can get at the cheapest fees.

Understand your billing cycle

A billing cycle is the period between two statement dates and is normally a period of 30 days. While using your card to buy big ticket items, time your purchase in such a way that you get a longer credit period. For instance, you could use your card to make a purchase at the beginning of your billing cycle. This way you get more time to pay back the issuer because you will not get a bill for at least a few weeks. In case you have more than one card ensure that the statement dates and payment due dates fall on different dates, so that your payments are not due on the same date.

Minimum payment due

The minimum payment due every month is generally 3% to 5 % of your total amount due, but that does not mean that you should pay only this small amount. It is strongly advisable to pay the entire outstanding amount due in one go in order to avoid carrying forward of your balance. The moment you start carrying forward your balance you will have to pay an interest on the unpaid amount. The interest charged could be as high as 40% which is almost double the rate any other lender will charge. This is where you have to be judicious and pay off as soon as possible to avoid credit card debt.

Late payment fees

Late payment fees are charged as penalty for not paying the minimum amount due, on time. The penalty levied is 30% to 35% of your minimum amount due. Default in paying your minimum balance can also lead to discontinuance of the card and will hurt your credit rating.

Service tax

Service tax is the tax levied by the card issuer for using their services which is 12.36%.

Cash advance limit

Credit card companies often allow cash withdrawals from an ATM up to a certain limit. The limit can vary from person to person depending upon their individual profile. Use this facility only in emergencies as interest is charged from the date of withdrawal itself. You might find it cheaper to take a personal loan, as these loans are cheaper than credit card debt.

Balance transfer charges

Today banks are wooing customers with the 0% interest balance transfer facility. Balance transfer is the transfer of outstanding debts on one card to another lesser used card or a new one for a nominal interest or 0 interest. What you must know is that this offer is valid only for the introductory period of 3 to 6 months. After this period, the interest will revert to the previous rate that you were paying. Free balance transfers is a trick that card issuers use to get you to switch your cards to them, by offering you a short-term benefit. In the long-term, you are still liable to paying off your outstanding amount, and no amount of balance transfer can save you from credit card debt.

Rewards schemes

All credit card issuers have numerous reward schemes to promote card usage among customers. Each time you spend a certain amount of money, you accumulate some points. These points can be redeemed in return for discounts, products etc. Be cautious and don’t spend on unnecessary products just to gain points. Similarly read the fine print before going in for any cash back offers during festival times. Please be aware that you will not be able to redeem your points as conveniently as you think. Often discounts are available over a limited period of time, or on a first come first service basis.

A word of caution

Be careful when using your card. If you notice anything suspicious, inform your card issuer so they can monitor activity on your card. Under no circumstances should you share your card with someone who you do not trust. Please do not share the security code on the back of your card with anyone. Above all, pay all your dues on time. This is the best way to use your credit cards.

By exercising caution you can make the most of your credit cards. Happy swiping!

The buy-and-don't-worry portfolio

If the past few bearish months have you almost afraid to look at your portfolio day after day, here's a solution: Don't.

Truth is, even in the best of times, most investors have neither the time nor inclination to monitor their stocks daily or even weekly. The good news is that you don't need to; investing is a long-term game.

Of course, you might also be worried about the damage you could suffer while you looked away. If you're in that boat, I've devised a strategy for finding stocks likely to do well over the next few months no matter which way the market heads.

These are not rockets. You won't find the next Google (GOOG, news, msgs) in this bunch. But they are profitable, low-debt, dividend-paying moderate-growth stocks selected for their low risk. You can buy stocks like these, run away until the market looks safer and not worry too much about what you'll find when you return. Call it a buy-and-hide portfolio.

Here's how it works, starting with earnings growth:

Growth still matters

No matter which way the economy is heading, stocks that grow earnings usually perform best. However, companies with fast earnings growth require constant attention because they almost always get hit when growth slows. Worse, this market is especially tough on stocks that disappoint.

Instead of entering that fray, I'll stick with the slower growers that most investors tend to ignore. These are stocks expected to record at least 5% earnings growth this year, not the 20% to 30% that many growth investors love. Checking analysts' earnings forecasts is the best way to pinpoint these moderate growers.

Investment strategies for 2009

Depending on how you choose to look at it, 2009 could either be the harbinger of more bad news or offer a plethora of opportunities.

While an economic slowdown, turbulent market conditions and job/pay cuts will, no doubt, test your resilience, opportunities may come knocking in the form of correction in realty prices, lower interest rates on loans and attractive valuations of blue-chip stocks.

To capitalise on the opportunities and tackle the challenges during the year, you need to stick to an investment strategy based on your long-term goals and risk profile. Here are a few guidelines to help you frame one:


25 To 30-Year-Old Singletons

Irrespective of the age bracket you belong to, health insurance should figure prominently in your must-have list.

The need for life insurance for this category, however, will arise only if you have dependents. "In addition, you need to create a contingency fund, because this year, increments will be hard to come by, and the sword of job cuts will continue to hang over employees’ heads," points out certified financial planner Amar Pandit.

While this piece of advice will be applicable to all classes of investors, youngsters who have just started their careers need to take it seriously as unlike other age groups, they may not have the luxury of existing investments to cushion the impact of tough times. Also, you will need to be thrifty when it comes to spending on consumption needs.

You should strive to save around 40% of your income and direct most of it towards investments — mainly equities. "Although the asset allocation depends upon one’s risk profile and other needs, generally speaking, youngsters can take advantage of their youth and relatively fewer financial responsibilities to take on more risk and participate in long-term capital appreciation," says Kartik Varma, co-founder, iTrust.in, a financial planning firm.


30 To 45-Year-Olds with Kids

The major long-term goals for this category are buying a house, funding children’s education and providing for retirement. "If you are planning to buy a house, it’s better to wait for six months as prices are likely to correct further by 25%.

If you do decide to buy one, ensure that you don’t overstretch yourself. For instance, if a 2BHK flat fits into your budget, don’t go for a 3BHK assuming that you will be able to manage the EMI payout," cautions Mr Pandit.

If your take-home salary is Rs 1,00,000 per month, the EMI outflow should account for less than Rs 30,000-40,000. Also, go for a joint home loan with your spouse, if possible. Not only will it enhance the loan amount you are eligible for, it will also maximise the tax benefits under Section 80C on the interest amount repaid.

"For children’s education, one can consider child unit-linked insurance plans (Ulip) or high-growth equity funds," advises Dhruv Agarwala, co-founder, iTrust.in. The longer investment horizon (assuming that the funds will be required after 8-10 years) makes equities a viable option. The equity-to-debt ratio for the purpose could be 75:25.

Same will also hold true for retirement planning. At this age, retirement will be nearly 15 years away, which means you can invest in equities. Investment in public provident fund (PPF) is also advisable - apart from being a safe avenue, it also offers a return of 8% per annum. "You can consider real estate too, but only after parking substantial funds in equities, debt and gold," adds Mr Pandit.

Besides, you shouldn’t forget life insurance, which is an important tool for providing for dependents in the event of an untimely demise, especially in uncertain times like these.

Senior Citizens

While health insurance is an important instrument for all age brackets, for senior citizens, it is simply indispensable.

"However, if you do not have a pre-existing policy, you may find it difficult to obtain a suitable one at this juncture. In such cases, you should create a corpus dedicated to meeting your healthcare expenses. Fixed deposits and money market funds, which offer the dual benefit of safety and liquidity, should make up this reserve," says Mr Varma.

These instruments can also provide for your other short-term needs. This apart, 9% senior citizens’ savings scheme and post-office time deposits that promise safety as well as regular income should form part of your portfolio.

Many senior citizens are risk-averse and it’s better to stay that way in 2009. However, if you have surplus funds and additional income streams like rent or pension, you can consider equity and balanced funds to provide for capital appreciation. "What you should completely avoid is life insurance, especially Ulips. "We’ve seen 55-year-old individuals buying Ulips, which, apart from being expensive, are simply not required at this age," says Mr Pandit.

courtesy:TOI

EMERGENCY MEASURES DURING THE CURRENT CRISIS WITH A POTENTIAL IMPACT ON INVESTMENT

How do policy responses during the current crisis compare with earlier decades? Emergency measures can be divided into three categories: restrictions on new foreign investments, including on foreign takeovers of local firms; discrimination against existing foreign investment; and impediments to outward investment by local firms. Each one will be considered in turn.

Policies towards inward investment
Many emergency measures are still evolving, but so far there is little evidence of growing restrictions on inward investment or of rising hostility towards any particular category of investor. Some governments and businesses have actively courted sovereign wealth fund (SWF) investors from the Middle East or Asia,and OECD and partner countries have welcomed investments from SWFs as a positive force for development and global financial stability. Ministers representing 35 recipient countries have adopted a Declaration to express their commitment to preserve and expand an open international investment environment for SWFs. In spite of this welcoming policy stance, SWFs have generally been reluctant to
take on the role of “investor of last resort”. Some SWFs have acquired large stakes in major banks such as Citigroup and Barclays but otherwise their forays into Europe or North America have been limited both by the substantial paper losses they have already incurred on existing foreign asset holdings and by the declines in oil prices and export earnings which are the two traditional sources of funds for SWFs.

Discrimination against foreign-owned firms
Emergency measures include i.a. rescue packages and subsidies to key industries, loan guarantees to stimulate demand for consumer durables and “buy national” provisions in stimulus packages. Apart from the implications for trade policies from these measures, there is a potential risk of discrimination against foreign-owned firms or “transplants” in national economies, should they not benefit from the same measures or under the same conditions. Non-eligibility for capital assistance for financial institutions incorporated under national law but controlled by foreigners would be an example. These same issues could arise in any sector receiving government assistance, but much of the policy discussion has tended to focus on the automotive sector.

Automotive sector
Like steel in earlier decades, the automobile industry is characterised by substantial policy-related exit barriers in many countries – the relative importance of the sector within some national economies is such that governments and electorates take the view that firms in this sector are “too big to fail”. Even before the crisis, it was estimated that global capacity in this sector exceeded demand by 25%. Moreover, consumers have opted to forego purchases of new cars during the crisis, and as a result the sector has been one of the most adversely affected.
Many governments have developed policy responses to assist the sector, including in the United
States, France, Germany, Canada, Spain, Sweden, the United Kingdom, Italy, Russia, China and Brazil.
Absent a full survey of stimulus measures across countries in this sector, this aid appears, in most cases, to be offered to both foreign- and domestically-owned producers. Indeed, in some countries almost all production is already foreign-owned. The aim is to preserve domestic employment at all costs, regardless of the ownership of the firm. Nevertheless, there is a risk that targeted interventions discriminate against “transplants” either de jure or de facto as a result of conditions attached. Government measures have generally been to offer loan guarantees to stimulate demand and funds to develop greener car technologies,
but some have offered direct cash injections as an alternative to bankruptcy. Of the countries listed above, only Russia has sharply raised tariffs.
Government bailouts may affect the pattern of the capacity reduction that is, in any case, inevitable in the sector by influencing which firms reduce capacity and by how much. This, in turn, influences all aspects of sectoral operations, including international investment flows. Although such policies may, over the medium term, succeed in supporting the market positions of weaker firms, they also “risk delaying necessary structural adjustment to new circumstances and creating costly dependence on public support.” The experience in steel suggests that using public funds to shield non-competitive producers from market pressures does not create “champions” that are durably viable in markets.

Greater government involvement in the operations and investment decisions of firms
Even if governments refrain from further restrictions on inward investment and provide assistance to all firms in a sector indiscriminately, there are issues for future global integration which arise from the enhanced financial and ownership role of national and provincial governments in domestic firms.
Government involvement in key industries is a broad issue with manifold implications. Of most interest in the context of international investment and the scope for further integration is how this involvement will influence the international investments and operational behaviour of firms.
At a time of rising unemployment will firms receiving assistance face political pressure to favour
domestic over foreign production to serve the local market? Will takeovers of these firms by foreign competitors also be resisted out of fear that post-acquisition rationalisation will reduce domestic employment? Will these firms be allowed to fail in the future if it implies that their market share will be recuperated by foreign-owned transplants?
These questions are not only hypothetical. In past crises, there has been pressure to keep capital at home, and outward investment has sometimes been seen as exporting jobs. This notion was prominent in the 1970s but has also reappeared more recently in the context of outsourcing and industrial “hollowing out”. Will the government‟s financial leverage in these companies and sometimes even a direct ownership share give greater weight to these fears in policy discussions?

Intuition vs. MBA Analysis

As illustrated by Tim Berry

Entrepreneur Meets MBA

You can look up Philippe Kahn in Wikipedia if you want. He started Borland International on his own and took it from zero to $60+ million per year and an IPO in less than four years. Borland has been bought and sold several times over since then. Philippe has built some other companies, he’s become famous and wealthy and he’s earned it.

I was a co-founder of Borland International, one of four members of the original board when it was founded. I had been recommended to Philippe as a business plan consultant and he had needed a business plan. We met, we worked together, and things clicked. When he offered to give me stock and asked me to join the board as the company started, I agreed.

That was in 1983. I was 35 years old but I was also a recent MBA, only 2 years out of Stanford. Philippe had far more to teach me about business than I realized. Not that he wasn’t schooled — he had a good degree in math from France — but he wasn’t MBA-schooled. And I, on the other hand, trusted analysis first and intuition later.

So as Philippe guided Borland from start-up to success, we disagreed repeatedly as he chose business strategies that defied schooling and analysis, and, over and over, he was right, and the MBA analysis was wrong. Never have I made so much money while being so often wrong.

Take pricing as an example. Turbo Pascal, which was line for line, pound for pound, one of the best software products ever made, fell into our lap in October of 1983. [Side note: that's a good story, you can read it in Fire and the Valley, and I intend to tell it in this blog, but not now]. That was just a few months after the JRT scandal, in which somebody brought out a $30 Pascal package to compete against the $450 mainstream offering, only to go broke after charging a lot of credit cards that weren’t refunded. Furthermore, my MBA analysis pointed out, with the leader at $450 per unit there was no reason to go cheap. Too cheap would hurt credibility, I said. And we were brand new, we didn’t have working capital to handle volume.

Philippe, however, politely ignored my logic and set Turbo Pascal at $49.95 per unit. And he was so right, I was so wrong, if I hadn’t had equity to console me it would have hurt a lot. The pricing move was brilliant, that plus some very gutsy marketing got Turbo Pascal’s wings up and soaring very fast, and Borland International never looked back.

I have a second example: Quattro Pro. Philippe aimed his competing product squarely at the industry leader in 1985 and published the first "Lotus 1-2-3 compatible" PC spreadsheet. I said it was crazy to take on Lotus at that point in our history, Philippe did anyhow, and, once again, he was right and I was wrong. And again, because I was a shareholder, I benefited.

I keep this story not because I like to chronicle mistakes (although I don’t mind doing that, it doesn’t hurt and it seems useful to others) but because I think this illustrates something that happens all too often. A good educated guess often trumps classic analysis.

–Tim

Why invest in Indian capital markets?

• Business Week says that of 100 emerging market firms which are rapidly globalising 21 are Indian firms.
• Economists project India to become the third largest economy in the world by 2040.
• Indian capital market regulator has acquired international credibility in the least possible time.
• India has a disclosure based regime of regulation.
• Disclosure and Investor Protection guidelines available.
• India’s accounting standards are closer to international standards .
• India has a well laid down legal framework.
• India has T+2 rolling settlement as opposed to T+3 in NYSE.
• In India the transactions are totally electronic on a real time basis.
• India has several protective safeguards for the retail investor such as grading system of public offering, retail quota at 25 per cent etc.
• SEBI has made corporate governance guidelines mandatory for listed companies
• Mutual funds are permitted to invest overseas up to $3 billion
• Margin trading is in vogue
• Corporatisation and demutualization of stock exchanges on card - foreign participation in bourses permitted.
• As an integral part of risk management trading and exposure limits, var margins and mark to market margins are in vogue.
• Clearing houses and corporations with novation in place.
• Almost 100 per cent risk free electronic settlement through depository system .
• SEBI has a surveillance and enforcement system in place.
• India to become a regional hub for bond trading once a free financial zone is set up.
• India to set up a world class National Institute for Securities Markets with 7 business schools under its fold .

Right Investment Options BASICS

The choice of the best investment options for you will depend on your personal circumstances as well as general market conditions. For example, a good investment for a long-term retirement plan may not be a good investment for higher education expenses. In most cases, the right investment is a balance of three things: Liquidity, Safety and Return.

Liquidity - how accessible is your money?
How easily an investment can be converted to cash, since part of your invested money must be available to cover financial emergencies.

Safety - what is the risk involved?
The biggest risk is the risk of losing the money you have invested. Another equally important risk is that your investments will not provide enough growth or income to offset the impact of inflation, which could lead to a gradual increase in the cost of living. There are additional risks as well (like decline in economic growth). But the biggest risk of all is not investing at all.

Return - what can you expect to get back on your investment?
Investments are made for the purpose of generating returns. Safe investments often promise a specific, though limited return. Those that involve more risk offer the opportunity to make - or lose - a lot of money.

To a large extent, the choice of the right investment option will also depend upon your financial goals. For example, if you want to invest for funding your vacation next year, don't choose an investment vehicle that has a three-year lock-in. Similarly, if you want to invest for your daughter's marriage after 10 years, don't invest in 1yr bonds for the next 10 years. Instead, choose an option that matches your investment horizon.

Top TaxSaving MutualFunds 2009

Under the Income Tax Section of Government of India, Mutual Fund Investments are subjected to tax exemptions. Hence during an investment, most investors include tax-saving funds or ELSS (equity linked saving schemes) in their portfolio to get the added benefit of income-tax deduction.

Please do ur own research before u come to a decision and don’t blame me if they don’t perform according to ur expectations. Also note due to the market crash most mutual funds have lost loads of money on investments made during last 2 yrs and some have even lost half the capital invested.* standard disclaimers apply.

While NAV (Net Asset Value) is a true reflection of your Mutual fund value, it should not be treated to compare among peers nor should it be a major factor in analyzing a Mutual Fund because of the following reasons:

1) It simply depends on the MF alone on how it has diversified its portfolio and 2 independent MF's can have substantial difference in their NAV's.
Example: an FMCG fund NAV cannot be compared to a Small Cap fund on the basis of their NAV's as the stocks are different, weighatges are different...

2) Fund performance, track record, Fund Manager, Sectorial weightage, Stocks.... are some of the major factors to analyze before u buy in any MF.

Name of the Fund	Risk Rating	Overall rating
SBI Magnum Taxgain	2	1
Sundaram BNP Paribas Taxsaver	1	2
HDFC Long term Advantage Fund	4	3
HDFC Tax Saver	1	4
Franklin India Taxshield	3	5

Tax Saving Mutual Funds India generally maintains the following rules of the SEBI while granting tax benefits on their schemes -

• Any special tax benefits for the mutual fund company and its shareholders (only section numbers of the Income Tax Act and their substance should be mentioned,without reproducing the text of the sections).
• Tax benefits are to be declared under the column of "objects of the offering".

For further information on Tax Saving Mutual Funds India, visit www.sebi.gov.in.

Words of caution

Please note that investing in equity or equity mfs at this moment can be a bit risky, thanks to worldwide recession. Due to heavy uncertainty noone can time the bottom of the markets or guage the trend . Please break up ur investments and dont invest in lumpsome.

Difference between Visa and MasterCard

Should you get Visa or MasterCard? Is one of them better than the other? Will one of them help your credit rating more than the other? Many people ask themselves these types of questions when they think about getting their first credit card or additional ones. The fact is, few differences exist between the two credit card brands today, but you can benefit by having a better understanding of the two companies and using their competition to your advantage.

The two leading credit card companies in the world today are the competitors Visa and MasterCard. They both operate along very similar lines.

First, you should know that neither Visa nor MasterCard actually issue credit cards themselves. Neither company deals with consumers or merchants directly. Instead, they create and run the worldwide computer networks that process the billions of transactions that occur each day from people who use their credit cards at millions of merchants and ATMs. Both companies make their money from financial institutions to whom they license the ability to market the MasterCard or Visa system to consumers and merchants.

MasterCard and Visa have been fierce competitors for years, each vying to be faster and more global than the other, just like Hertz and Avis, and McDonalds and Burger King. Each time one brand creates a new twist on their credit cards, the other soon follows to match it. Both companies now offer nearly identical benefits, such as travel insurance, car rental insurance, product warranty extensions, and so on.

Furthermore, both cards are accepted worldwide by nearly the same number of merchants. MasterCard says its cards can be used at more than 23 million locations around the globe, including 1 million ATMs and other locations where cash can be obtained. Visa says its cards are accepted at more than twenty million locations in more than 150 countries.

In general, most merchants throughout the world accept both cards, or if a merchant takes only one of the brands, another merchant down the block takes the other. The point is, your chances of being locked out of eating or buying a gift or getting a hotel room because you have only one brand of credit card are usually minimal -- other than at a few noted events where one card or the other may have negotiated to be the sole credit card to be accepted. But such instances are far and few between.

Which Card is Right for You?

Given the above, is one card better or more right for you? The best answer depends on whether it’s your first, second, or additional card, as follows:

If You’re Applying for Your FIRST Credit Card

In this situation, you can make a choice based simply on selecting which issuing bank you prefer to work with, or which promotional offer you like the most, without regard to the brand on the card. Perhaps you like Chase or Citibank or HSBC, or perhaps you like the 0% APR with no-annual-fee offer you found online. It's six of one, a half-dozen of the other.

If You’re Applying for Your SECOND Card

In this situation, it is strategically smart to select the opposite brand card from your first card AND to choose a different issuing bank. The rationale for this is that when you have two different cards, you will find that the two banks will compete for your business (assuming you maintain good credit). You will get offers for 0% balance transfers, higher credit limits, and other perks as the two banks vie for your increased use of their card. And just in case you find a merchant who only takes one brand of card, you can now be assured of having all your bases covered.

If You’re Applying for ADDITIONAL Credit Cards

Many people apply for more than two credit cards because something specific motivates them to get a third or a fourth card. You may want a separate card to use for your business charges, or to compliment your airline frequent flyer program. In these cases, your selection is largely predetermined by whichever card has attracted your attention to fulfill your specific needs. You might even shop around among issuing banks to be sure you find the best offer, no matter which credit card brand stands behind it.

In short, choosing between Visa and MasterCard is no longer a frustrating question for anyone applying for a first credit card. You can’t go wrong with either brand. And if you already have a first credit card, it can be a very smart move to apply to get a second card from the other brand. If you treat your credit well, you’ll soon be having two (or more) banks begging for your business -- and that's a good thing!

Copyright 2005 Ed Vegliante. Free reprint of this article is allowed provided the resource box remains intact with a live link back to http://www.credit-card-surplus.com

Need BOOST for your StartUp's :Startup 2009 conference

Startup 2009 will showcase 10 top startups competing for bragging rights, buzz, and a $50,000 prize.
Silicon Alley Insider presents this first annual forum for outstanding entrepreneurs and early-stage companies to meet VCs, investors, journalists, and other members of the East Coast startup community.
http://startup2009.eventbrite.com/
Startup 2009 will be a one-day conference featuring interviews with entrepreneurs, expert panels, networking, and a 10-company startup contest.

Tax saving schemes – India (Subjecting to current rules)

We get tax exemption under section 80C upto Rs 1,00,000. Govt gives us this exemption to indiretly force us to plan for our future. The investments we do can be categorized into risky and risk-free.

Risk-free investment gives us fixed returns where as risky will vary. It is always advised to properly diversify the risky investments.

Risk-Free Investments:

EPF : The Employee Provident Fund, or provident fund as it is normally referred to, is retirement benefit scheme that is available to salaried employees. Under this scheme, 12 % of employee’s salary is contributed towards the fund. This percentage is decided by the government. The employer also contributes an equal amount to the fund. However, an employee can contribute more than the stipulated amount (not sure about upper limit). So, let's say the employee decides 14% must be deducted towards the EPF; in this case the employer still pays 12% of your basic salary. Current interest rate 8.5%. The amount accumulated in the PF is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs.

PPF : Public Provident Fund, You need not be a salaried individual to open a PPF account. Any individual can open a PPF account in any nationalized bank or its branches that handle PPF accounts. You can also open it at the head post office or certain select post offices. The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.Current intrest rate 8%. The accumulated sum is repayable after 15 years.

NSC bonds: National Security Certificate, issued by post-office.It is sold in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. So, if you want to invest Rs 30,000, you will have to buy three certificates of Rs 10,000 each.Current intrest rate is 8% and compounded half-yearly (twice a year), where as PF intrest rate is calculated anually. Note that it has 6 years locking period.

FD: Fixed Deposits for above 5 years are also considered for tax exemption.

Risky Investments

Mutual Funds : These are investment companies which have some dedicated experts for investing in stock market, etc.. . If you don’t have any idea about stock markets, etc... but still want to enjoy the advantages of stock trading , etc.. You can rely on the Mutual Fund companies and buy MF's from them. Note that all the MF are not considered for tax exemption, only the once with more than 3 yrs of locking period are considered.There are some risk and risk free investments which also cover insurance, all those can be categorized into 3 as follows:

Term-Insurance policy : You have to pay some amount every year (premium) for some X years. Unfortunately if you die before X years, your dependents get the assured amount depending on the premium. If you are alive at the end of X years, you don’t get any amount.

Endowment policy: You have to pay some amount every year (premium) for some X years. Similar to term-policy if you die before X years, your dependents get the assured amount depending on the premium. If you are alive at the end of X years, you get some amount. Note the difference between the term and endowment.

(Risk-free investment)ULIP: Unit linked plan, it is combination of term-policy and investment in stocks (kind of Mutual Funds). (Risky as investments in stocks are subjected to market risks).Please note that we should not ever go for Endowment or ULIP. I have attached a document which describes the truth behind the endowment policy. If you want to go for ULIP instead take a term-policy and mutual funds separately. High percentage of commission is given to insurance agents for endowment and ULIP that is why they always try to make us buy them. We should treat insurance and investment separately. So always go for term policy.

Home loans EMI you pay, have principal part and interest part. Initially interest part is more and gradually decreases. (say u take 25l@12% for 20 yrs, EMI is 27500. for first month principal part of EMI is 2500 and interest part is 25000)the principal amount is considered under 80E and interest is considered under section 28 (limit is 1,50,000)Say you take the loan with your father / spouse, then all are eligible for income tax benefit. EMI is broken in percentage of ownership percentages. You can also change (add n remove the owners of house) at any point of time.

The ONE and ONLY Warren Buffet

Even those who are not very familiar with the world of the stock market have probably heard of Warren Buffet. He has been called the most successful investor of all time. He netted over $42 billion personally with an investment partnership he started with only $100.

Though he is widely recognized as being an investor, the bulk of Buffet's wealth was built through intelligent use of leverage offered by his insurance companies.

One of the greatest attractions of Buffett for investors is that his investment methodology is easy to understand. However, it is far more difficult to apply because it calls for large amounts of patience and calm when your stocks move against you. It is also difficult to apply because it requires an orientation towards research and the ability to understand the complexities of accounting and finance. But for those willing to invest time and effort into mastering this approach, superlative investment performance over the long term is guaranteed.

Warren Buffett follows a value investing strategy based on Benjamin Graham's approach. His investment strategy of discipline, patience and value consistently outperforms the market and his moves are followed by thousands of investors worldwide. Warren Buffett seeks to acquire great companies trading at a discount to their intrinsic value, and to hold them for a long time. He will only invest in businesses that he understands, and always insists on a margin of safety.
Regarding the types of businesses Berkshire likes to purchase, Warren Buffett once said,"We want businesses to be one:
(a) that we can understand;
(b) with favorable long-term prospects;
(c) operated by honest and competent people; and
(d) available at a very attractive price"