Source: BankBazaar.com
Akash was an IT employee who was well settled in his career. With a take home that more than met his needs, Akash decided to invest in his future. Let us see how he managed his finances. He applied for a car loan and a home loan. The car was worth Rs.10 L, a bit of an indulgence but then he had always wanted to own the brand. He then invested in a premium upmarket 5-bedroom apartment. His spouse Sheela tried suggesting that they should not be so extravagant but to no avail.
She had recently given up her job to take a break and spend more time with her one year old child. With no bulk savings for the immediate future she was worried about the manner in which Akash was spending the sole income they had. To top it off he invested all the money that remained from spending on the EMIs and his monthly expenses, in stocks. This was the year 2007. They were managing fine till Akash's stocks started tumbling in 2008. Instead of choosing another avenue, Akash started buying more stocks as they were cheaper during this period. The real shocker came when Akash was laid off when the global recession hit and his company had to cut back on resources to counter the effects.
How did Akash cope? How did he manage to pay his EMIs?
Akash did one smart thing though. He decided to approach a debt counseling centre for his financial hassles. They showed him the right way to manage his finances. They also mediated between him and his bank.
Luckily for him Sheela had an ancestral home back in her home town, which was bequeathed to her. She also had some fixed deposits and some gold that she had invested her savings in when she had an income. Based on the debt counselors' advice, she obtained a loan against her property. She then helped Akash pay a portion of the money towards his home loan and another portion towards his car loan as part prepayment. He also obtained written consent from the bank that he would resume repaying his loan once he got a job. In such situations banks do oblige you if you manage to repay most of the money or part of the money if not all as it was a better deal than no money at all.
Sheela whose industry was not so badly hit by the recession went back to her old job while Akash took a break and got to spend more time with his son. Fortunately for him, his peace of mind was restored thanks to Sheela's timely aid and the debt counselors' help.
Six months later he managed to land a good job with a reasonably good pay, though about 20% lesser than his previous pay. He resumed his EMI payments and as banks were slashing interest rates he again negotiated with his bank for a lower interest rate. As it timed with the pressure from RBI on banks for lowering interest rates for existing borrowers also, he managed to come to an understanding with his bank. Agreed, not all can get as lucky as Akash. It was a pretty close brush with fate for him and he could have fallen in a abyss of debt! Yes...he got very very lucky indeed.
However, Akash learnt a valuable lesson for life. He started following simple but smart methods to avert a future disaster.
a. He put aside three months of his pay into a separate account meant to serve as an emergency fund. He planned to put aside 3 more months of pay into that account.
b. He ensured that his current EMI did not exceed 40% of his current income. He manage prepay his home loan at regular intervals to bring this under control.
c. He with the help of Sheela managed to keep his monthly expenses including his loans within 60% of his income and put aside the rest as savings and investment
d. When he invested now he took care to diversify his portfolio and not stick to equities alone to survive a future stock market crash.
Here are some suggestions if you are stuck in debt and do not know how to cope.
1. Try to lower your interest rate. Negotiate with your bank. One other way is to convert your credit card debt into a personal loan debt. It will definitely be lesser than the credit card interest rate.
2. Calculate your net worth and see if any of your investments could help you prepay a part of your loans.
3. Make a contingency plan for the immediate future. Talk to your bank along with your debt counselors and explain your situation and see if you can resume your loan at a later date but do make an effort to prepay some amount.
4. If it is a double income household try and see if your spouse can support you in the event of a job loss in the short term before you land a job, in case you are suffering from a lay off.
5. Manage your current finances judiciously to battle through the current situation and emerge wiser.
Tuesday, November 24, 2009
Thursday, November 19, 2009
Indian equity markets -- is a bubble building up?
(Nipun Mehta is Executive Director & Head - India, SG Private Banking. The views expressed in this column are his own)
By Nipun Mehta
At a Sensex level of around 17,000, are the Indian equity markets looking at the face of a possible bubble in the offing? Terrifying words, probably unjustified for a market which is still 20 percent lower than its all time peak touched in Jan 2008. Let's look at it from different perspectives.
In the Indian equity markets, unlike in other global markets, it is commonly believed that the day the roadside vendor starts giving 'tips' or the day cheerleaders with pom-poms start appearing on business channels, the top is near.
This time however, we have not yet seen any of this fanfare amongst investors or business commentators. There is hence little reason to believe that a retail investor driven bubble is on the horizon. Nowhere close to it actually, since there has been very little retail or high net worth individual (HNWI) participation in the rally of the last 9 months.
What has clearly driven the markets are the Foreign Institutional Investors (FIIs) who have pumped in close to $7.4 bln in India in the last quarter raising their ownership to close to 19.2 percent up from 18.3 percent in the previous quarter. As per statistics available, FII ownership is also up by 2.5 percent from the March 2009 figure of 16.7 percent.
A large part of this is contributed by the dollar carry trade whereby FIIs raise funds at ridiculously low interest rates in dollars and invest it into a stronger currency viz INR. In the process they gain not just by the rising equity markets but also by the strengthening INR against $.
This is clearly similar to the Yen carry trade that happened earlier (whereby borrowings were in Yen at negligible interest rates) and which burst when the Yen -- a strongly controlled currency -- suddenly started strengthening. Can dollar carry trade stop? Can a similar bubble be building up in the $ carry trade as well?
Clearly the dollar carry trade can stop if interest rates in the U.S. rise. Can it happen in the short or medium term? Appears quite unlikely given the state of the U.S. economy and the statements the Fed has made in the recent past.
On the other hand, can the $ start appreciating enough for the stock market gains to be eaten away by a strengthening dollar? At least in the immediate term, this too appears unlikely. Considering the huge trade deficit, the Fed needs to ensure a weak dollar in order to encourage exports.
Effectively, there does not appear to be any bubble building in the Indian equity markets. What can however puncture the rally are the FII allocations to the emerging markets/India being realigned in January 2010 or the FIIs withdrawing big time under instructions by concerned central banks to use the borrowed funds for lending/investing within their own countries as opposed to help India or the emerging markets to benefit. Does that look possible?
By Nipun Mehta
At a Sensex level of around 17,000, are the Indian equity markets looking at the face of a possible bubble in the offing? Terrifying words, probably unjustified for a market which is still 20 percent lower than its all time peak touched in Jan 2008. Let's look at it from different perspectives.
In the Indian equity markets, unlike in other global markets, it is commonly believed that the day the roadside vendor starts giving 'tips' or the day cheerleaders with pom-poms start appearing on business channels, the top is near.
This time however, we have not yet seen any of this fanfare amongst investors or business commentators. There is hence little reason to believe that a retail investor driven bubble is on the horizon. Nowhere close to it actually, since there has been very little retail or high net worth individual (HNWI) participation in the rally of the last 9 months.
What has clearly driven the markets are the Foreign Institutional Investors (FIIs) who have pumped in close to $7.4 bln in India in the last quarter raising their ownership to close to 19.2 percent up from 18.3 percent in the previous quarter. As per statistics available, FII ownership is also up by 2.5 percent from the March 2009 figure of 16.7 percent.
A large part of this is contributed by the dollar carry trade whereby FIIs raise funds at ridiculously low interest rates in dollars and invest it into a stronger currency viz INR. In the process they gain not just by the rising equity markets but also by the strengthening INR against $.
This is clearly similar to the Yen carry trade that happened earlier (whereby borrowings were in Yen at negligible interest rates) and which burst when the Yen -- a strongly controlled currency -- suddenly started strengthening. Can dollar carry trade stop? Can a similar bubble be building up in the $ carry trade as well?
Clearly the dollar carry trade can stop if interest rates in the U.S. rise. Can it happen in the short or medium term? Appears quite unlikely given the state of the U.S. economy and the statements the Fed has made in the recent past.
On the other hand, can the $ start appreciating enough for the stock market gains to be eaten away by a strengthening dollar? At least in the immediate term, this too appears unlikely. Considering the huge trade deficit, the Fed needs to ensure a weak dollar in order to encourage exports.
Effectively, there does not appear to be any bubble building in the Indian equity markets. What can however puncture the rally are the FII allocations to the emerging markets/India being realigned in January 2010 or the FIIs withdrawing big time under instructions by concerned central banks to use the borrowed funds for lending/investing within their own countries as opposed to help India or the emerging markets to benefit. Does that look possible?
Tuesday, November 17, 2009
US recognises Tibet as part of China: Obama Buzz Up Share
(courtesy: Yahoo! India)
Tue, Nov 17 11:38 AM
Beijing, Nov 17 (IANS) US President Barack Obama Tuesday said the US government recognises Tibet as a part of China.
He also said that the US supported the early resumption of dialogue between the Chinese government and representatives of the Dalai Lama to resolve any concerns and differences that the two sides may have.
'The US respects the sovereignty and territorial integrity of China,' Xinhua quoted Obama as saying at a joint press conference with Chinese President Hu Jintao here.
Tue, Nov 17 11:38 AM
Beijing, Nov 17 (IANS) US President Barack Obama Tuesday said the US government recognises Tibet as a part of China.
He also said that the US supported the early resumption of dialogue between the Chinese government and representatives of the Dalai Lama to resolve any concerns and differences that the two sides may have.
'The US respects the sovereignty and territorial integrity of China,' Xinhua quoted Obama as saying at a joint press conference with Chinese President Hu Jintao here.
RBI survey of analysts sees FY10 GDP at 6 pct
Tuesday November 17, 11:20 AM
MUMBAI (Reuters) - Economists and analysts surveyed by the Reserve Bank of India (RBI) revised downwards India's gross domestic product projection to 6.0 percent for 2009/10 from 6.5 percent in the previous round of survey.
The forecasters also assigned a highest 34.3 percent chance for inflation to be within 6.0-6.9 percent in 2009/10, the survey showed.
The RBI released the results of the ninth round of survey on Monday, adding that the result in no way reflects the views of the central bank.
The central bank polled 21 respondents for the survey which included macro-economic parameters like GDP, inflation, interest rates, money supply and credit growth.
The RBI in its mid-term monetary policy review had kept its GDP projection for the current fiscal unchanged at 6.0 percent but had increased inflation target to 6.5 percent by end-March 2010 from 5.0 percent earlier.
The economists surveyed have sharply reduced their expectation for agriculture growth in 2009/10 to -1.4 percent from 2.5 percent projected in the previous round.
"For industry, the forecasts have been revised upwards from 4.8 percent to 6.3 percent whereas for the services sector, there was modest downward revision from 8.3 percent in the earlier survey to 8.1 percent in the current survey," RBI said.
The study also showed that the economists expect the Jul-Sep GDP growth at 6.2 percent and for Oct-Dec and Jan-Mar at 5.7 percent and 6.7 percent respectively.
The government is scheduled to announce the Jul-Sep GDP growth number on Nov. 30.
The forecasters expect headline inflation to be at 4.0 percent in Oct-Dec and at 6.8 percent the following quarter.
Over the next five years, GDP is expected to grow at 7.5 percent, unchanged from the previous round of survey, RBI said.
But inflation forecast over the next five years, was revised upwards to 5.5 percent from 5.3 percent in the previous survey.
(Reporting by Suvashree Dey Choudhury; Editing by Sunil Nair)
Jaibeer says:
Although RBI has predicted the increase in inflaction and at the same time decrease GDP, this has a signal to increase in the interest rate in the near future, so this is the best time to invest in commodities and real estate.
The forecasters also assigned a highest 34.3 percent chance for inflation to be within 6.0-6.9 percent in 2009/10, the survey showed.
The RBI released the results of the ninth round of survey on Monday, adding that the result in no way reflects the views of the central bank.
The central bank polled 21 respondents for the survey which included macro-economic parameters like GDP, inflation, interest rates, money supply and credit growth.
The RBI in its mid-term monetary policy review had kept its GDP projection for the current fiscal unchanged at 6.0 percent but had increased inflation target to 6.5 percent by end-March 2010 from 5.0 percent earlier.
The economists surveyed have sharply reduced their expectation for agriculture growth in 2009/10 to -1.4 percent from 2.5 percent projected in the previous round.
"For industry, the forecasts have been revised upwards from 4.8 percent to 6.3 percent whereas for the services sector, there was modest downward revision from 8.3 percent in the earlier survey to 8.1 percent in the current survey," RBI said.
The study also showed that the economists expect the Jul-Sep GDP growth at 6.2 percent and for Oct-Dec and Jan-Mar at 5.7 percent and 6.7 percent respectively.
The government is scheduled to announce the Jul-Sep GDP growth number on Nov. 30.
The forecasters expect headline inflation to be at 4.0 percent in Oct-Dec and at 6.8 percent the following quarter.
Over the next five years, GDP is expected to grow at 7.5 percent, unchanged from the previous round of survey, RBI said.
But inflation forecast over the next five years, was revised upwards to 5.5 percent from 5.3 percent in the previous survey.
(Reporting by Suvashree Dey Choudhury; Editing by Sunil Nair)
Jaibeer says:
Although RBI has predicted the increase in inflaction and at the same time decrease GDP, this has a signal to increase in the interest rate in the near future, so this is the best time to invest in commodities and real estate.
Dollar slides after short-lived boost as Bernanke says Fed will monitor sliding dollar
NEW YORK (AP) -- The dollar dropped Monday after Federal Reserve Chairman Ben Bernanke pledged anew to keep interest rates at record-lows to nurture the economic recovery, but said the central bank will monitor the sliding U.S. dollar.
Higher interest rates can support a currency as investors transfer funds in search of better returns. Earlier this month, the ECB and BoE maintained their rates at 1 percent and 0.5 percent, respectively, higher than the Fed's current rock-bottom range near zero.
Bernanke's rare remarks about the greenback gave a short-lived boost to the dollar. The 16-nation euro slid to $1.4878, later spiking above the psychologically significant $1.50 mark. The euro bought $1.4987 in late afternoon trading in New York, compared with $1.4893 Friday.
The British pound jumped to $1.6836 from $1.6672, after trading as low as $1.666 after Bernanke's comments. The dollar fell to 88.98 Japanese yen from 89.63 yen.
In remarks to the Economic Club of New York, Bernanke tried to bolster confidence in the dollar without actually raising rates. Economists expect the Fed will hold rates near zero at its next meeting on Dec. 15-16 and into part of next year to help the recovery gain traction.
"It is clear from the Chairman's remarks that the dollar's decline is not of sufficient proportions to prompt a change in the U.S. monetary policy," Brown Brothers Harriman analyst Marc Chandler wrote in a research note.
Also Monday, the Commerce Department said retail sales rose more than expected in October due largely to a big rebound in auto sales.
The dollar tends to lose value as a result of better-than-expected economic reports as investors pursue riskier, high-yielding assets in other countries.
In other late trading Monday, the dollar fell to 1.0068 Swiss francs from 1.0135 late Friday, and edged down to 1.0467 Canadian dollars from 1.0517.
Higher interest rates can support a currency as investors transfer funds in search of better returns. Earlier this month, the ECB and BoE maintained their rates at 1 percent and 0.5 percent, respectively, higher than the Fed's current rock-bottom range near zero.
Bernanke's rare remarks about the greenback gave a short-lived boost to the dollar. The 16-nation euro slid to $1.4878, later spiking above the psychologically significant $1.50 mark. The euro bought $1.4987 in late afternoon trading in New York, compared with $1.4893 Friday.
The British pound jumped to $1.6836 from $1.6672, after trading as low as $1.666 after Bernanke's comments. The dollar fell to 88.98 Japanese yen from 89.63 yen.
In remarks to the Economic Club of New York, Bernanke tried to bolster confidence in the dollar without actually raising rates. Economists expect the Fed will hold rates near zero at its next meeting on Dec. 15-16 and into part of next year to help the recovery gain traction.
"It is clear from the Chairman's remarks that the dollar's decline is not of sufficient proportions to prompt a change in the U.S. monetary policy," Brown Brothers Harriman analyst Marc Chandler wrote in a research note.
Also Monday, the Commerce Department said retail sales rose more than expected in October due largely to a big rebound in auto sales.
The dollar tends to lose value as a result of better-than-expected economic reports as investors pursue riskier, high-yielding assets in other countries.
In other late trading Monday, the dollar fell to 1.0068 Swiss francs from 1.0135 late Friday, and edged down to 1.0467 Canadian dollars from 1.0517.
Monday, November 16, 2009
India is most-confident nation in Nielsen ranking
Tuesday November 17, 03:57 AM Source: Indian Express Finance (Courtesy: Yahoo! Finance)
By fe Bureau
India, Indonesia and Norway continued to top the global rankings for the most-confident nations, while the most pessimistic nations were Latvia and Japan, says the Nielsen Global Consumer Confidence Index, which jumped from 77 index points in April to 86 points this month. Among other BRIC nations, consumer confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter. Consumer confidence fell in only two countries such as Spain (-4) and Japan (-2) in the third quarter: Nielsen s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending habits among more than 30,500 Internet users in 54 countries. In the latest round of the survey conducted between September 28-October 16, Hong Kong posted the largest consumer confidence increase in the third quarter compared to second quarter, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points). Along with the rest of the world, consumer sentiments in Singapore also improved by nine points in the last quarter to hit 96. A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery the tide has turned, said Paul Richmond, managing director, consumer group, Nielsen Company, Singapore and Malaysia. Nielsen s global consumer confidence in October rebounded to almost the same level as the first half of 2008 before the very worst of the financial crisis hit global markets. The survey shows how much the pace of economic recovery has accelerated in the last six months, especially in Brazil and some Asian markets, said Richmond. In the recent survey 66% of global consumers said their economy is in recession compared to 71 in April 2009, but for many consumers in Asia-Pacific and Latin America, the recession is becoming past tense. Amongst the Chinese, 87% said their nation is out of recession, while over 60% of citizens in Hong Kong, Norway and Australia said the same. Meanwhile, half of Brazilians, Indians and Chileans also believed that the recession has ended. Among consumers who say they are still in recession, one in five (26%) expect that their country will be out of recession within 12 months. While global consumers continue to voice concern about job security and the economy, many have started to focus on other issues. Worry about job security has decreased over the past six months. In April, 20% global consumers named job security as their main concern in life, closely followed by the economy (19%). Today, 18% of global consumers say the economy is their prime concern, followed by job security (16%).
By fe Bureau
India, Indonesia and Norway continued to top the global rankings for the most-confident nations, while the most pessimistic nations were Latvia and Japan, says the Nielsen Global Consumer Confidence Index, which jumped from 77 index points in April to 86 points this month. Among other BRIC nations, consumer confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter. Consumer confidence fell in only two countries such as Spain (-4) and Japan (-2) in the third quarter: Nielsen s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending habits among more than 30,500 Internet users in 54 countries. In the latest round of the survey conducted between September 28-October 16, Hong Kong posted the largest consumer confidence increase in the third quarter compared to second quarter, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points). Along with the rest of the world, consumer sentiments in Singapore also improved by nine points in the last quarter to hit 96. A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery the tide has turned, said Paul Richmond, managing director, consumer group, Nielsen Company, Singapore and Malaysia. Nielsen s global consumer confidence in October rebounded to almost the same level as the first half of 2008 before the very worst of the financial crisis hit global markets. The survey shows how much the pace of economic recovery has accelerated in the last six months, especially in Brazil and some Asian markets, said Richmond. In the recent survey 66% of global consumers said their economy is in recession compared to 71 in April 2009, but for many consumers in Asia-Pacific and Latin America, the recession is becoming past tense. Amongst the Chinese, 87% said their nation is out of recession, while over 60% of citizens in Hong Kong, Norway and Australia said the same. Meanwhile, half of Brazilians, Indians and Chileans also believed that the recession has ended. Among consumers who say they are still in recession, one in five (26%) expect that their country will be out of recession within 12 months. While global consumers continue to voice concern about job security and the economy, many have started to focus on other issues. Worry about job security has decreased over the past six months. In April, 20% global consumers named job security as their main concern in life, closely followed by the economy (19%). Today, 18% of global consumers say the economy is their prime concern, followed by job security (16%).
Tuesday, November 10, 2009
You are the First one!
Hi,
My Name is Jaibeersingh Panwar.
This is my first post to the blog. I am really excited about it. I used to have my blog earlier but with no specific activity, so I shut that down. But This time I have come up with.......
nothing, I am confused what should I use this blog for, so instead of being so constructive I will share with you all what comes on my mind, what I feel, blah, blah, blah !!!
Cut to the chase, welcome to my blog!
See you soon,
Jai
Subscribe to:
Posts (Atom)
