Avalokan

Where to Invest?

In this second part of the series on Investment we discuss the various avenues of investments where one can park her money for good use.

We have already seen the importance of investments and how it is a great tool for making your money work hard for you. Now let’s look at the options that are available for us to do that.

The nature of investments one chooses depends on two factors:

• One is the stomach to take risks or the risk appetite of the individual. It decides how much risk an investor is willing to take for her money to grow. Needless to say that in any investments one rule reigns supreme: The greater the risk the higher the gains (or the losses). The risk appetite is the supreme criterion for deciding any type of investments.
• The other factor is the investment goal. The basic reason why a person is planning an investment and what she expects out of it. A 30 year old executive has the time on her side and thus can choose the investment option which gives high growth as the investment isn’t supporting her, while a 70 year old retiree would want to choose an option which safeguards her hard earned money and gives steady assured returns as this is what her main income is.

If you noticed both the factors are closely linked as a high risk investment option would have the potential to give high returns (or high loses) while an assured return would be promised only by an investment option which isn’t much inclined to risk taking.

So before one is certain about the nature of investments one wants to make, the risk appetite and the investment goal should be made clear first. Ask yourself:

• Am I willing to take calculated risk?
• Is Time on my side?
• Is this investment my supplementary income?
• I don’t care about an assured income, I want to see my money grow and grow fast.
• Is this my retirement plan?

Once you are sure about your answer to these questions, you can move onto deciding which investment plan you want to go ahead with. The market provides investment option for every risk appetite category.

• Low risk and low return

Investment options available in this category are Bonds offered by stable governments, Other Debt instruments where in a party borrows your money and promises an assured sum after a fixed period of time. Such instruments offer low returns on money but the returns are virtually guaranteed.

If the answers to most of the above mentioned questions are in the negative then this option suits you the best.

• High risk and high return

The instruments in this category love to take risks and compound money in leaps. It consists of instruments like Equities, Derivatives, Forex trading etc. These instruments have much more rewarding potential than the other instruments discussed as they are not at all risk averse. Practically they don’t assure any returns and if your luck is really bad even your principal may vanish in thin air. But that’s not the case always. As I discussed in my last article these instruments must be handled with care and you must know what you are getting into. Moreover they require time and effort from the investor to provide good results.

If the answers to any of the above mentioned questions are in the affirmative then you surely are not risk averse, go and choose this option as your medium.

• The Moderates

I call it the moderates as the instruments under this category provide the middle path of the other two categories. It consists of a marvelous option called Mutual Funds. This Instrument is a highly flexible investment option, which provides the elements of both the worlds. Many types of funds available in the market take your money and either promises you steady income or high returns depending on the risk taking capability of the fund.

They neither require your time or effort from your part for your money to grow. Needless to say the fund managers take a part of that investment from you as their fees. Most mutual funds, given time and if managed properly give handsome returns to the investors.

All the instruments discussed above have been designed for capital appreciation and what suits an investor’s needs is a totally personal decision. Whatever investment decision an investor makes a positive attitude and an emotional detachment from the investments goes a long way in deciding the success one has. But more on this later!

Having mentioned these options I would like to reiterate that these are only my views and an attempt to explore the wide world of investments and it might not be treated as exhaustive under any circumstance. It’s only an attempt to get things started with those who might have a negative view on investments or for those who might still be searching about where to start.

If you found this article helpful do post a comment or two about what you thought about it

Investments, Equities, Stocks had always been nothing more than a curiosity for me. The whole idea seemed so elitist. The newspaper banner headlines street shouting the butchering of the common investor didn’t help either.

But things took a turn for the better when I first heard about Warren Buffet (see picture) and how he became World’s then second richest man mostly through his investment business. (He is now the World’s richest according to the Forbes List of February 2008: http://en.wikipedia.org/wiki/List_of_billionaires_%282008%29 )

My thinking has changed ever since. It’s no more a gamble or a science, but it’s an art that can be perfected!

It’s an amazing idea after all. Money working for you to get you more money is just too good to ignore. And all these without you having to even move your finger!! What is even more fascinating is that the money earned is capable of getting you more money. It is not magic but a concept called compounding put to good use (Well among all those geometry and Pythagoras we learnt in back in school at least there is something that’s relevant even now!!)

An investment of 10000 units of money may give a return of 600 units by year end (assuming a 6% interest). If the earned 600 units is left alone along with the original 10000 units then the earned 600 units is now also capable of earning more interest and the total investment by year end would generate a return of 630 units and the total sum becomes 11230 units. That’s the power of compounding for you!!

Now that we see how money can grow exponentially we come down to our original topic of investments and doing it correctly. That’s the correct point to bring Mr. Warren Buffet in again. Mr. Buffet had increased his personal savings in 1956 to $140,000 through judicious and carefully planned investments and he further increased it to $1,025,000 in 1962. Gosh a 600 % rise in 6 years. That’s what correct investments are capable of doing to your bank balance.

The point to be noted here is correct investments because as much exciting it may seem the money doesn’t come easy and if you are not careful you may even lose what you have. For it is not gambling where you might speculate and make a quick buck!!

With my own limited experience I can say with conviction that if there is an investment strategy in place and the investor meticulously does her ground work in choosing the right investments then there is ample scope for good money to be made. There are numerous types of investment opportunities available to suit the appetite of every type of investor and if the homework by the investor is adequate she will surely be rewarded accordingly.

Let me take the example of investing in stocks, considered a risky investment medium by many, a rash investment in an equity (stock) based on hearsay or a hot tip would always be destined to be nothing more than a gamble whereas an investment decision based on meticulous ground work into a company’s profile and its fundamentals would not only give the investor the insight to decide whether or not a stock is worth her money but also help her in taking a call about that stock in choppy weathers when the market is in ‘massacre’ mode.

So an investment is sound only when it is backed by a sound research into the fundamentals. If you don’t know what you are doing you are surely inviting a lot of trouble ahead.

But do all investors who perfect the art become Warren Buffet? Amm... Well I am not the right person to answer that question because I am just an amateur exploring this subject. But I think there is lot of foresight that matters in this business, which is behind all those success stories we all see, and not everyone has that.

A person who would have had the foresight to invest in the Microsoft IPO in 1986 would have seen her money grow by more than 50000 % in 2004.
Almost every body in this business is searching for the next Microsoft or a Google but surely it won’t be easy to recognize even if it is right there in front of us because “that eye” is not there with many of us.

One thing is certain though, in these times when financial planning for retirement is more and more becoming a personal obligation than of the government, sound investments have become a necessity to maintain that life style when the steady income stops coming.

(Investments Intro)

Starting today, I would be posting some of my personal views on the importance of Investments and how things can change if you go about it in a systematic manner!
I must emphasize here that these views are based on my understanding of the topic shouldn't be considered complete or exhaustive on the subject. Hopefully they would prove to be useful to the reader !!!

It was a happy moment for me to be part of something I had admired for so long. It was "Ant-tak" or अंत तक in Hindi, a group of friends and family which knows how to enjoy life and has chosen music as the medium to do just that.

The official blog of this group called Anttak describes itself as "a group that just enjoys music singing and dancing just for fun. We organise the gathering at one of the homes of the participants, randomly, in turns. The music is usually accompanied by karaoke music and live instruments. This is purely for a closed group of families who just love music, to sing and listen."

My first experience of this cool group was a frolicking 12 hours of singing, dancing "Sakkat maja maaading". Boy o boy no body was a 50 year old there!!! This happened on 19th of april.
(I think the pics say it all)

It all started with the group meeting at Venkat n priya's place in a rather formal manner which gave me an impression that it would be another one of those "oldies parties" but boy was I proved wrong throughout the get together as I was the only one who remained seated throught (due to my illness). Everyone , even the 70 year old granny got up her feets to shake a leg or two and it was fun all throughout. Everybody seemed fully determined to have the time of their lives in those few years they were all together. And in between there were sweet melodies, oldies sung be elders and some poem recitals/songs sung by small kids, and by small i mean even a 3 year old kid.
But what blew me off was a full shloka recital by a kid named Akshay who did it with full josh and confidence( check out the pic).

Initially I had my apprehensions about this get together and wanted to give it a miss due to my illness but decided to go to cheer my sister Geetika who was supposed to sing one of my favourite songs ( Maa from the Movie "Tare ZAmeen Par").


But the whole concept instantly became a great hit with me as inspite of my illness I could feel the energy and enthusiasm of the people there.
I had a great time meeting such enthusiastic people and I am amazed to find myself desperately waiting for the next get together which is scheduled sometime in the middle of this may I am told.
Hopefully I would be able to enjoy and take part more actively the next time it happens.
Three cheers to अंत तक !!!

In my last post I wrote about my new found fascination for this kannada song "Anisuthide" sung beautifully by Sonu Nigam. I was bowled over from the moment I listened to the song and never once did I have a feeling that its kannada because I could get the feel right from the word go.
The credit I think goes fully to the music director for beautifully rendering the music and choosing Sonu Nigam to sing this song who has perfectly justified his numero uno position in the industry.
I have listened to it some hundred times and even plan to sing it at a family function as a surprise song from my side.
I must say that I have enjoyed learning and singing the song as much as I enjoy listening to it.There's a kind of zing and a freshness to this song which can't be explained in words.
I know that these feelings are totally personal but all I can say is it's among the best I have heard from Sonu.(I hope he agrees too !!)
n hey theres a bias too...I have sung this song with the karaoke and its coming very well so it is adding to the affection I have for this song.
There are some 2-3 more Kannada songs I have heard from Sonu and I must say that the man is doing a fabulous job out here...Well pretty much explains his absence from Bollywood these days...:-)

amm..as i stumble on to this lost blog of mine I realise that its been almost an year since i last visited this page..
Lets accept it,unlike some of my fortunate friends, "blogging" doesn't come naturally to me nor do I make time to do it. But still I find myself coming back to it.
When i scrutinise my past posts one thing is very easily evident.I realise that it's only when I am really passionate about something that I come back here to write it down to make it "permanent".

So maybe blogging for me is not so much of sharing as it is an effort to make smething last.

As about my current craze..its a song. A kannada song.Given my north Indian background and my upbringing in a region where everything south of MP(Madhya Pradesh, India) is Southi and everyperson there a "madrasi", this song and my liking for it has come as a pleasant surprise to me too.

The song I am talking about it is "Anisuthide" from the movie Mangaru Male.It has been beautifully rendered by Sonu Nigam and he is the reason i first listened to the song.

But more about it in the next post..I promise it will come.hehe

It was the best Wimbledon match I have watched and I am talking about the epic Federer-Nadal showdown at SW-19 on July 8, 2007.
Federer was supposed to be the master of grass and Nadal the king of clay but life is rarely all black and white.The match was a thriller even before it had began and why not , with Nadal fast becoming so much comfortable on a surface which was so alien to him not so long ago and Federer having a Borg record in his sights which many greats have failed to equal, we already had a great classic in the making.
And classic it was...but slightly unnerving too for me being a Roger Federer fan.How are we supposed to believe that while Federer had to fight tooth and nail for his respective set victories, Mr.Nadal takes away his sets with so much ease, breaking Federer serve almost at will.
The start couldn't have been more auspicious for Federer who broke Nadal in his first service game, but that was it.
Was it Federer's lack of concentration or was it simple the genius of the young spaniard's stroke play that Federer didn't have any answer to? I have seen Federer's concentration to be flawless so i believe it must be the other reason.Because all i know is that for most of the match the Swiss Ace was as clueless as our Cricket team (Indian).
But he did win and thats what matters , isn't it? well well well, I did watch him win 4 successive Wimbledons and watched him again to win his 5th.But deep down I know I didn't want him to win in this fashion..I want him to run through his opponents like he usually does..

C'mon Feddy show everyone what you are made of...Come next year Win the French Open and Wimbledon both and beat Nadal heads down both place...then only we will be satisfied coz anything less is a torture !

Few days ago i did an article on whether an Mba is a differentiator or just a pre-req!
A dear friend commented on it..and i guess it deserves a place here!!

Here it goes..
---
what u ask is question that irks every mind that thinks and questions.
thinking and rethinking is the basic nature of any creatures brain.

When an ant walks it follows the scent left by its predecessor. infact we may find a trail of ants going zig-zag intead of going straight cuz tht's the trail, tht's the instruction left by their ant that made its way to the food. so ants as we knw are workers. if they could see, if they could sense that the path that they follow can be shortened they could have made a difference may be.

on the contrary watch a crab by the seaside walk. it doesn't go straight to its destination. it will follow many ways, many directions to reach its target. reasons: it expects an enemy around and doesn't want its aim to be revealed or its a risk averse creature and perceives risk at certain poits so makes for a detour to avoid them beforehand. but all along it never loses the sight of its goal.
if u realise by now i'm talking about strategy and planning. the next level comes with the way the tiger hunts, the way it lies in ambush awaiting its prey near the water hole. the rest of it duznt require to be explained further.

so ultimately the point that i have to put forth is that yes, managerial abilities are in-born to a certain extent. but the accumen needs to be developed over time, with hardwork and experience. An MBA course will just provide you a direction, the set of tools and skills that u can use to evalute certain situations. it will provide u a theoretical understanding of what is an industry, what factors affect a business. what is management. what are the various common functions of a business entity, what are the characteristics of these functions. it will provide u examples of strategies adopted in reality by organizatoins in the face of competition, internal destability and many more things.

but the practical aspect of management, how u use this knowledge, the tools and skills given to u, will depend on you.
the knowledge of goal made an ant, a crab, a tiger behave differently, though all were looking for food.
similarly, each carpenter will be different though they will have the same tools and skills.

a b-school will also expose u to the various kinda people there in the world. it will sharpen ur personality if u let it do so. u can benefit from any course provided u let it shape u.
the last of all, in todays scenario, an MBA is the best platform to help u alight in the world of management.

then again when u get a job, which is assured if one is in a good b-school, u will start off as a specialist and then once the organization starts to trust u, will it allow u to grow into a generalist, a person who can manage, think, take decisions to tackle a situation confronted based on the info available.
-----

I can't say more but say that it couldn't have been put better...and hey this friend of mine calls herself songbird...
but hehe songbird is shubhra ;-)

Mr. Laxmi Mittal has finally done it..
It was a long wait indeed but i guess it was all worth it.

I have my doubts whats the real reason for my excitment, is it really due to the formation of a company thats as big as four times its nearest rival..ya maybe thats one.
But the real one is i guess his perseverence that he showed in achieving what he has achieved,it was nothing short of a hollywood thriller!!

He made his intentions clear long ago and faced not much favour from both arcelor as well as the industry..Guy Dolle booed him and cursed him and termed it as an 'hostile' bid.He even went on to make certain remarks which were widely perceived as having racial overtones.
What was heart warming for a person like me was that he never cared to reply to any of Mr.Dolle's remarks eventhough they were pretty rude at times.

But it was never about petty utterings for the Mittal Steel boss, who kept his focus on realising his dream.
He went about garnering support from the people who really mattered-the share holders.
Even a last moment Severstal-Arcelor deal couldn't deter his faith and he kept about his task out of reaching out to the shareholders and uprising them about the realities that they must face, and that he wouldn't let them down.He depended on them!

And it seems now that they didn't let him down either.The share holders voted the Arcelor-Severstal deal out,as they refused to be bullied into Russia just because the Arcelor boss wanted to prevent,at any cost, the Indian from taking over the company.

But Mittal-Arcelor is a reality now and Mr.Mittal believes in it!It's a major step towards consolidation of an industry plagued by just too many producers.
Only time will tell how right he is..he hasn't proved wrong too many times though ;-)

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Its an ongoing battle between the big guns of the gaming industry and the hackers..

In August, Sony Computer Entertainment Inc., launced the web browser in the PlayStation Portable, its US $250 handheld device.It seemed to be a great addition but Sony was only playing catch up to the hackers who beat Sony by launching the unauthorized version months before.

A similar story happened with Microsoft's $150 Xbox.With it's 733 megahertz Intel processor and network capabilities,it created a breed of hackers looking to use its potential.Through a so called mod-chip and other counter copyright measures they converted the Xbox into a hub for playing music and displaying photos even before Xbox 360 was launched.
The hacked boxes were not just being used as gaming devices but a as a full fledged 'media center'.

This community of users believe in not just using the device but exploiting its full potential.They are exploring all the possible potentials a device has to offer and not just what the manufacturer says it can do..
This so called mod community,it seems is pushing both the software as well as the hardware forward.

The industry is not pleased however, with these developments and has made to close many of these mod chip factories.They say that they recognise the creativity of some of these mod chips but they are more comfortable in following their own schedule for official updates.
The hackers on the other end believe the heart of the problem is that gaming devices like PlayStation(PSP) and Xbox should be more open.

But both sides are not giving up,not as yet.
Who will win only time will tell ..but whoever does eventually, its the gamers who are having a ball till then.

let me put forward a question thats on my mind for ages...
Can a business degree help someone to be a successfull entrepreneur or is it something thats one is born with..
can someone really teach you how to create wealth or is it as simple as "either u know it or either u dont"

i would really like to believe that an mba degree would make me good enough to become an enterpreneur myself..but is it true everytime?
Many of the success stories of the industry do not support this argument,where we have examples like Microsoft chairman Bill Gates and lately Mittal steel(world's largest steel producer on volume bases) chairman Laxmi Nivas Mittal are all non MBAs.
Yet a business degree is not much of differentiator as much as it has come to be considered as a pre-requisite to be an entrepreneur.

so blogging starts for me tday..

i am not of the type who would let my inner soul out for the whole world to see..i m basically too shy for that..
therefore this blog too would focus on everything but me, covering mostly business and technological issues.

i wont shy in saying that i m a novice when it comes to blogging and would invite everyone out there who might care to guide so that i can make this something worthwhile for all.
Please dont hesitate to get in touch..