Friday, December 13, 2013


                             SALE     SALE  SALE  

It is a SALE you don't want to miss!

Come every January or every June, we get very excited. It is the season of SALES!
Let us face it.

As any good retail shopper, we all love good deals. Comes festive seasons, we look for good discounts on electronic goods, on cars and we live to bargain on everything from furniture to vegetables. From Sales on last season's clothes, to ones with that barely noticeable damage to Export Surpluses, we visit them all!

Getting what we want at rock bottom prices, is a sense of achievement that we cherish. The lower the price and the higher the quality, the greater is our  satisfaction. So why aren't we making the most of the BIGGEST SALE that is currently happening?

It is tendency of all human beings that when we see the SALE or DISCOUNT OFFER , we tend to or get tempted to buy that product, weather we want it or not or  weather it will be useful or Not. We First grab it and satisfy our EGO of buying something cheeper isn’t it.
Which one you ask?

Well, we are referring to the SALE that is currently going on in the Indian Equity Markets - Blue chip, solid stocks at their lowest prices.

As Warren Buffet puts it - As an investor, you must look for Good stocks at Fair Prices rather than buying Fair Stocks at a Good Price. What he means to say, is that, the golden rule for any investor should be to buy Equity when stock prices are at a low, so that you can sell them when they rise in value and book reasonable profit. However, as with any good Sale, you must focus on quality of the products or stock in this case before you buy.
So what all do you look for?

Consider a stock's history and performance record to determine its Valuation. Bear in mind, that the stock's current market value, P/E Ratio (Price to Earnings) and EPS (Earnings Per Share computed by dividing a company’s net profit by its total number of issued equity shares or paid up capital) need to also showcase strong performance for a stock to climb up from its current low in the future.

A good stock would currently be at its lowest pricing but would showcase a high return on equity by reinforcing an Investor's faith in its ability to generate profits - either now or sometime in the future.

When doing your homework, check for a stock's book value which usually is the value of a share should the Company liquidate its operations today. Compare that with the performance of the Company and its prospects for future growth - does it have adequate capital to expand operations, are any of its divisions profitable, is the management capable and stable?
As buyers or investors, it pays to remember that cost and worth do not mean the same thing. While cost is what you pay, worth is what you get. When buying Equity at historic lows, don't just consider price - Consider what will it be a few months in the future.  If by your assessment you feel, that a stock has the potential to be more in worth and has a propensity to grow, invest in it and strike a bargain, else keep looking till you find one that is.

If the current market volatility continues, don't be so worried. It is just an extended Sale. The best  strategy would be to buy as many good quality stocks as you can while diversifying your portfolio. Buy them and hold. Do not be panic at small dips or be lured with temporary highs. The Markets will stabilize but till then, stop and think before you follow the rest of the herd.  Traders / Investors with a long term horizon seldom lose money. Markets are cyclical - a low is by a high.

The Indian markets are at their attractive best, especially if you are an Investor with a long-term investment horizon. Almost all listed Companies have had their share prices corrected post the last bull run and are now at their lowest valuations till date. Analysts around the world, are advising clients to buy Indian stocks given their low and worthwhile pricing.
If You Do Not have Expertise to Select Best Quality Stock or time to Track it on Regular basis we Advise you to Select Best Mutual Fund Diversified Equity Scheme.

So what are you waiting for? Make the most of the biggest financial sale going on - TODAY!

Sunday, October 6, 2013

Understanding All About Credit Card.

Credit cards are becoming increasingly common in India, and while they come with a lot of convenience, the high interest rates and other charges mean that you have to be careful about how you use them.

In this article We Will Discuss About   “Minimum Balance in Credit Card and How does it work ?

A lot of people have no idea on how their credit card works and what is the exact interest applications. Credit cards are in market mainly to make money from customers by charging them huge interest because they overuse their credit limit or just fall for the minimum balance option and get into debt trap. Let’s first understand few concepts like billing cycle and grace period to start with

How Billing Cycle in Credit Card works ?

Billing cycle is duration for which you are liable to pay the due amount. e.g. from the period 6th Mar- 5th Apr. It means that your bill gets generated on 5th of every month. This bill includes all the transactions done in the last 30 days. If you buy something on 7th Mar, that transaction will appear on the bill generated on 5th Apr and if you buy something on 4th Apr, still it appears on the bill generated on 5th Apr.

What is meaning of Grace period ?
Grace period is number of days up to when you have the liberty to pay off your last bill. For example if the grace period is of 25 days, in that case you will enjoy no interest for next 25 days from the recent billing date. In our example, as the billing happens on 5th of every month. You can pay off the bill till 30th of that month, but after that you start paying the interest if you don’tpay the bill in full.

Maximum number of days without interest?

So now based on this info, what is the maximum number of days for which you can enjoy interest free credit?? The answer is maximum 55 days! It’s because your billing cycle length is 30 days and grace period is 25 days, so if you purchase anything on the first day of your billing cycle, in this example say 6th Mar, then it will actually appear on your bill of 5th Apr (30 days are gone) and you still get 25 days to pay off this loan, so total 30+25 days = 55 days of interest free credit. However if you buy anything near the end of your billing cycle, like 4th Apr, then that will appear on the 5th Apr and you can pay off that in next 25 days, so in this case total 26 days of interest free credit.

   Myth of Minimum Balance

Do you know that you start paying interest on your balance outstanding even if you have Rs 1 in outstanding. Yes, if you don’t pay off your full balance by the end of the grace period, you will be charged with the interest from that point of time. Even if you pay off minimum balance, still you pay the interest on the rest of the outstanding balance. A lot of people live in this myth that just because they have paid minimum balance, they will not pay the interest and can pay off the rest of the balance next time without any interest. This is totally wrong!
Paying the minimum balance is just going to make sure that you are not charged any penalty for late fees. That’s the reason “minimum balance” is there. The worst part of this whole minimum balance thing is that once you have any outstanding balance in your credit card, the concept of grace period is lost. You keep on paying the interest on your outstanding balance at the end of your billing cycle. The grace period concept will only return once the 100% dues are cleared.

This is one big reason why the credit card outstanding balance ballons to such a big amount once a person starts paying only minimum balance

Minimum balance are to make sure you don’t pay full?

Minimum balance is a trick , pure trick to make sure you pay less and get into debt trap. Credit card companies know very well, that if they do not give any option to pay minimum balance, people will have no other option than to think “let’s pay off my bill in full”. But they know that if they put an option saying “minimum balance”, most of the people will then think – “Ok! this month let me pay this small amount and next month I will settle the full amount.” Sadly this is the first step for most of the people to get into the debt trap, and this cycle never ends. As this strategy is a lifeline of credit card companies, they make sure they take full advantage of this.

Example of Ajay paying Minimum Balance
Let us see an example to understand all the concepts and working of credit card. Lets take an example of Ajay

Billing cycle
6th Mar – 5th Apr (30 days)
Grace period
25 days
Due date for payment
30th Apr
Interest rate
3% per month (compounding)
Purchases made during the billing cycle
Rs 10,000

Suppose Ajay pays minimum balance of Rs 300 and carries forward the outstanding balance for next month and also spends Rs 5,000 more in next billing cycle.
In this case as Ajay makes the minimum balance of Rs 300, then his outstanding balance would be Rs 9,700 as on due date (30th Apr). Now his total interest will be charged on this Rs 9,700 and that would be 3% of Rs 9,700 = Rs 291, which will be added to his outstanding amount and his final outstanding amount would be Rs 9,991 (just Rs 9 less than his original outstanding amount). Now as he carried forward an outstanding amount on his credit card, there is no concept of grace period. Now in this billing cycle as he has spent another Rs 5,000. That will be added to his old outstanding and the total would now be Rs 9,991 + 5,000 = Rs 14,991
Now this time, suppose his minimum balance is Rs 400 (just for example) , and he pays it, then his outstanding balance will come down by Rs 400 and his final outstanding balance would be Rs 14,991 – 400 = 14,591. Now as their will be no grace period , he will be charged the interest of 3% on his outstanding balance of Rs 14,591 , thats 3% of 14,591 = 437.73 and will be added back to his outstanding , 14571 + 437.73 = 15,008 (approx)

You can see that even after making the minimum balance he is actually having more than his previous outstanding amount because of interest paid. Incase he does not pay the minimum balance also, in that case he will also be charged heavy penalty for late payment and that will be added back to his credit card debt. You can see how the minimum balance gets one into debt trap.

Making Minimum payment affects your Credit Score
Do I need to give any other reason why one should stay away from minimum balance’s whenever possible. Making a minimum payment means not making full payment on time and the more number of times you do it, the worse your credit score gets each time.

Now you know all the terminologies in credit cards and how it works exactly . You also came to know about how minimum payments work and how it gets you into debt trap. Try to make sure you become more responsible for your credit card payments. What do you think about it ?

Give your views /Feedback about it to us. @

Thursday, August 1, 2013

Is Your Chartered Account are Your Financial Planner?

As we interact with a lot of investors, we find that some investors,  have this habit of referring their Chartered Accountants (CA) for every financial decision including investments. We are not saying that this is completely a wrong practice, but one must also check that, is your Chartered Accountant so efficient that he can advice you on your investments or financial planning matters? By efficiency we are in no way referring to his qualification, but yes we are referring to his area of expertise.

We have seen that Chartered Accountants being given god-status in some households. 

Once I was with an aged investor and he was looking for tax efficient returns without any exposure to equity as this was an investment for around 6 months. The investor was into highest slab bracket hence I recommended him Fixed Maturity Plan from a reputed mutual fund house. But investor insisted that I should explain the product to his Chartered Accountant. Reluctantly (because of my past experiences) I agreed.The first question that was asked by the CA was pretty basic- “is this an open-ended product or a close-ended product”. If an expert asks a question like this we all know the fate. He insisted investor to go for a Bank FD saying that the mutual funds are not safe and banks are. So invest in a PSU bank. And then he went for the final kill and suggested that since equity market is in bull phase, you should take 2-3 large cap stocks and sit tight. You will make the same money in one month that this FMP would give.
Although this Chartered Accountant had no vested interest and was working in favor of his client but his knowledge limitations ruined investors portfolio.
Chartered Accountant (CA) is not a Financial Advisor

Consider these following points before you refer to your Chartered Accountant (CA) for any of your investments decision or Financial Planning:
§  CA is an expert in accounting and tax practices. He is not an expert on assets like Equity and Debt. Also he is not an expert on tracking or researching factors which are must for any investment decisions you take. These factors can be macro like European Crisis or micro like inflation. He may have view on these as a spectator but he is in no way qualified to analyze these facts to form an investment advice.

§  In case of individual investor, a CAs job ceases after he calculates the amount of tax that investor needs to pay. Investments to save this tax fall under the purview of your Investment Advisor or your Financial Planner. He will help you invest a suitable tax saving instrument taking care of your overall portfolio, asset allocation and other needs.

§  CA has no role in Financial Planning. He is not equipped to assist you in your goal planning or risk assessment. Also since he is not an asset expert he cannot help you in assessing your future finances and portfolio. CAs engaged into advising on investment just does it for the sake of not losing their clients or for some monetary gains. Beware as his advice will never be comprehensive.

§  Your Financial Planner is expected to have detailed knowledge about economy and individual assets. He can also deal with tax related matters if you don’t have too complicated financial life. Also as he is associated with you since the early stages of investments, he has a broad picture of your individual requirements. He is aware of your family needs and you get personalized service.

§  In some cases CAs act like product sellers for your insurance needs or tax savings bonds. This is not a correct practice in fact the Chartered Accountants are prohibited by their practice guidelines to act as commission agents. It is prudent that you take service of professional who is suited for the job. For all financial planning related aspects, your Financial Planner is most suited.
Roles of different Financial Professionals

If we look at the roles or the expertise, Chartered Accountants are not Financial Planners or even Financial Advisors.
§  Chartered Accountants (CA) work in fields of business and finance, including audit, taxation, financial and general management. (Refer Diagram)

§  Financial Advisor is a professional who renders financial services including investment advice, which may include pension planning, advice on life insurance and other insurances such as income protection insurance, critical illness insurance etc., and advice on mortgages.

§  Certified Financial Planner (CFP) is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).
So next time if you suffer prolonged common cold it is better to show this to a Doctor who is expert in Internal Medicine and not to a Cardiologist, even though the cardiologist is your friend and provides free advice over telephone. For god sake stop worshiping the wrong deity.
Must share your experience with Chartered Accountants for financial advice.
Vcare Investment Services Pvt ltd
201 Sai Sadan 76/78 Modi Street, 
Fort, Mumbai 400001

Wht Debt Fund?

Wht Debt Fund?

Even today a conservative Indian investor continues to confuse mutual funds with equity. It is precisely because of this lack of understanding that they miss on the superior risk adjusted returns, easy liquidity and tax benefits that fixed income funds have to offer. Today 72% of the aggregate AUM of the mutual fund industry in India is invested in debt funds, thus marking the prominent position that fixed income funds hold in the asset management space.

While most retail investors do have a fair idea of the conventional financial instruments such as Bank FD’s, G-Sec, company NCD’s, they seem to be unaware of the fact that fixed income funds in India in fact invest in various combinations of these instruments only. 

The portfolio exposure(as of Nov’12) at the industry level shows that of the entire fixed income AUM ~10% is invested in G-sec, 53% is exposed to corporate securities and ~36% is invested in Bank FD’s. It is thus, important to understand that fixed income funds are nothing but a conduit to invest in such securities, only in a more efficient manner. Not only that, the investor through these funds gets the opportunity to choose from various schemes depending on his risk appetite and the desired tenor. He can custom make for himself a healthy salad by choosing from liquid fund, liquid plus funds, Short term income funds, GILT funds, income funds etc.

But is variety a good enough reason to shed the conventional thrift habits and shift to savvy fixed income funds? Certainly not, but who says that’s all. Fixed income funds have much more to their merit.

Sound investment philosophy germinates from prudent portfolio diversification, and that is exactly what debt funds do. The idea is to invest in the right securities at the right time and in the right proportion to garner the highest return every time. Such a task requires expertise and skill which a retail investor may not possess due to his distance from the intricacies of the market.

While a typical Indian retail investor is always more keen to invest in bank FD’s, what usually skips his mind is the threat posed by volatility in the inflation trajectory, which is inevitable in a developing economy. So when you lock in your money for a fixed tenure at a certain rate with a set anticipated trajectory of inflation that allows you to earn positive real return on an FD, the math completely falls apart if inflation starts to misbehave and eats into your returns. It is here that the flexibility and agility of the fixed income funds play a pivotal role in securing better real returns through prompt portfolio allocation.

Very often investors start comparing pre-tax current return on FD’s with the past performance of various debt schemes and jump to the conclusion that FD’s are better. But that’s incorrect. What they should technically compare is the post tax return on FD in the same time span for which they are looking at the return on debt schemes. And once they do start comparing apples with apples, they’ll see how tax adjusted returns from debt funds are superior to those offered by bank FD’s.

Apart from these, the ease of liquidity that fixed income funds offer vis-à-vis bank FD’s and the like cannot be over looked. If you withdraw your money before maturity from an FD, you are liable to a monetary penalty, but, if you have invested with a debt fund you can redeem your units anytime you like without losing the gain accrued to you till that date! The same applies in case of pumping in small savings. Imagine opening an FD for Rs 2000-3000 every month!!

It is then difficult to justify as to why the retail investor participation in fixed income funds in India so low, even when the institutional investors are in fact making good returns from the same. The usual answer is the fee that they are charged. But is that a reasonable justification? You are ready to pay a doctor his fee for your diagnosis, even when you have the option if using the tried and tested nani maa ke nuskhe, then why this discrimination in case of financial services? The most nominal fee that the fund houses charge is for the expert guidance that they provide as the care taker of your money while bearing the huge onus of delivering superior returns time and again.

I think it’s time the retail investors, for their very own benefit ,move on to fixed income funds and take advantage of professional fund management expertise at low costs, which is already benefitting their institutional counterparts.

Vcare Investment Services Pvt ltd
201 Sai Sadan 76/78 Modi Street, 
Fort, Mumbai 400001

Retire With Ease Even if....

                                                  Retire With Ease Even if....

.... Your income is low
Chinese philosopher Lao-tzu said the journey of thousand miles begins with a single step. start investing Rs 5,000 per month and increase the amount by 10 per cent every year. If your investment earns 12 percent annually, in 32 years you will have Rs 5.15 Crore.

.....You can’t  find time
Automate your investments. Give the mandate for an ECS to invest in mutual fund or other saving instrument. No need to write cheques or fill up forms every time you want to invest. This will ensure you continue to save and your retirement fund continue to grow.

......You need a big sum
Don’d underestimate the power of compounding. Regular and disciplined investment can yield good results over the long term.A monthly investment of Rs 30,000 in an option that earn 12 per cent annually will grow to Rs 3 Crore in 20 Years.

.......You have started late
If you don’t have too many years to retire, maximize your saving by cutting down on discretionary expenses. Don’t go for high risk investment just to make up for the lost time. instead, consider postponing retirement by 2-3 years.

......You can’t monitor
You don’t have to. There are option that reset asset allocation as the investor grows older and his risk appetite comes down. So, even if you don’t know how much to invest in equities at 30 or how much to shift in debt at55, your fund will.

.... you don’t know how
Go to an Exoer for advice. A Financial Planner will tell you how and where to invest to reach your retirement target as well as other financial goals comfortably. Sure, you have to pay him,but you will realize that your is money well spent

Vcare Investment Services Pvt ltd
201 Sai Sadan 76/78 Modi Street, 
Fort, Mumbai 400001

Wednesday, July 31, 2013

Power Of Love, Power Of Compounding

Power Of Love, Power Of Compounding

It's a lovely story read it carefully...... One of the lesson about life that one should not miss...

Monica (Age 28 Years) married Hitesh (Age 30 Years) in 1982. At the end of the wedding party, Monica's mother gave her a newly opened bank saving passbook with Rs.1000 deposit amount.
Mother: 'Monica, take this passbook. Keep it as a record of your marriage life.
When there's something happy and memorable happened in your new life, put some money in. Write down 

what it's about next to the line.

The more memorable the event is, the more money you can put in. I've done the first one for you today. Do the others with Hitesh. When you look back after years, you can know how much happiness you've had.'
Monica shared this with Hitesh when getting home. They both thought it was a great idea and were anxious to know when the second deposit can be made.

This was what they did after certain time:

- 7 Feb: Rs.100, first birthday celebration for Hitesh after marriage

- 1 Mar: Rs.300, salary raise for Monica

- 20 Mar: Rs.200, vacation trip to Bali

- 15 Apr: Rs.2000, Monica got pregnant

- 1 Jun: Rs.1000, Hitesh got promoted

..... and so on...

However, after years, they started fighting and arguing for trivial things. They didn't talk much. They regretted that they had married the most nasty people in the world.... no more love...Kind of typical nowadays, huh?
One day Monica talked to her Mother:-'Mom, we can't stand it anymore. We agree to divorce. I can't imagine how I decided to marry this guy!!!'

Mother: 'Sure, girl, that's no big deal. Just do whatever you want if you really can't stand it. But before that, do one thing first. Remember the saving passbook I gave you on your wedding day? Take out all money & spend it first. You shouldn't keep any record of such a poor marriage.'

Monica thought it was true. So she went to the bank, waiting at the queue and planning to cancel the account.

While she was waiting, she took a look at the passbook record. She looked, and looked, and looked. Then the memory of all the previous joy and happiness just came up her mind. Her eyes were then filled with tears.
She left and went home.

When she was home, she handed the passbook to Hitesh, asked him to spend the money before getting divorce.

The next day, Hitesh gave the passbook back to Monica. She found a new deposit of Rs.5000. And a line next to the record: 'This is the day I notice how much I've loved you thru out all these years. How much happiness you've brought me.'

They hugged and cried, putting the passbook back to the safe.

Do you know how much .  they had saved when they retired

Its Rs 15,17,896/-

This is Power Love, that Compounded.

I believe the money did not matter any more after they had gone thru all the good years in their life.
"When you fall, in any way, Don't see the place where you fell, Instead see the place from where you slipped.

“Life is about correcting mistakes."

The Sandwich generation- are you one of them?

  The Sandwich generation- are you one of them?

Sandwich generation is a financial planning term for an individual with financial dependents on both sides of his family i.e. his/her parents & children. We are seeing a lot of individuals in India today in this situation. Changing demographics & a rising middle class give rise to this scenario. On one side parents are retired & are fully or partially financially dependent on the middle-aged son while on the other hand are the children who obviously are dependent on the parent. The situation is similar to a sandwich & thus the name!

One of the main reasons this situation has risen recently is due to lack of  Retirement planning in earlier generations

With large joint families, retirement planning was actually not a big concern but with families having one or two kids, this situation becomes critical. Where earlier several children would stay together & take care of parents, now only one child does it. If you are one of the people in the sandwich generation, financial planning is extremely important for you. A few basic guidelines would ensure that things are smooth for you.

Keeping a good 
contingency reserve. The importance of this cannot be underestimated. With financial dependents around you, loss of income for a short while can also cause a lot of stress. You need to keep aside 3-6 months of household expenses, dependent expenses & EMI’s. This fund should be kept only liquid instruments like savings bank, short-term Fixed Deposits, Liquid mutual funds, etc.

Medical insurance a must for all members. Medical insurance ensures that in case of any medical contingency, you don’t need to break your assets to pay off medical bills. With so many family members the risk is higher. You need to ensure all have atleast a minimum cover for their age. For children this can be atleast Rs 1 lac, for you & your spouse Rs 2 lacs & for your parents the higher the amount you can afford to pay for the better. 

Even the Government of India understands the importance of this & has given tax benefits for the Premium paid. However if any of the members cannot be insured for any reason, you need to increase your contingency reserve to account for any unforeseen medical contingencies. This is true especially in case of very senior citizens.

With several financial dependents, life insurance is a must for the bread-winner. Ensure you get the right coverage. A
 term plan is the best way to get the same. A personal accident policy can be bought for the bread-winner. This ensures that in case of loss of income due to an accident, the family does not suffer. Buying critical illness policies for all members is also a good idea.

Your parents may also have assets. Ensure that they have their 
nominations in place so that transfer of assets is smoothly done. Advise them to make a will so that there is no problem in transfer of assets when they are no more.

One of the advantages of being in the sandwich generation is of having your parents pass on their wisdom & teachings to your children.

Though there is no immediate financial benefits in that, but the same has long term financial rewards. Encourage your children to listen to their grandparents. They have seen all phases of life & this experience if passed on to your children ensures they are wiser in making choices in life. Also do Remember that if you & your spouse are working, your parents are helping you take care of your kids. Making your parents their financial guardians in case of your untimely demise is one point you can keep in mind.

Tax-planning is another advantage. If certain assets like property, fixed deposits, etc are owned by your parents, then the income accrued from it is taxed in their name. Thus your tax liability does not increase. With high interest rates on Fixed deposits currently it is a good idea for your parents to invest in them. Also for senior citizens the interest rates offered are higher.

Do remember that the most important thing at the end of the day is having your loved ones around you. Gradually as society is moving towards nuclear families you are one of the lucky few who have your parents guiding you & your children along

Vcare Investment Services Pvt ltd
201 Sai Sadan 76/78 Modi Street, 
Fort, Mumbai 400001