Narasimhan A R
Here are the five rules which witnesses the success stories of many billionaires. No doubt a game plan is must before one get into investment decisions.
Rule 1: Early Bird Wins
Start investment at your early stage in life. Sooner is the better. This is because you allow growing your money for a longer time. This eventually results in huge outcome.
Today’s average Indian starts earning at the age of 18. From 18, if one starts saving Rs.1,000/- p.m at the interest rate of 8% for the next 12 year i.e., till his 30th year and allow it to grow till 60, his corpus would become Rs.30.04 Lacs. If the same person starts saving from the age 25 he has to save Rs. 1,747/- every month till he reaches 37, if he wants the same corpus of Rs.30.04 Lacs at the age of 60 .
Delayed start would require higher savings to reach the target else it would only fetch lesser corpus.
Rule 2: Compounding is the Key
Albert Einstein called “Compounding” the “Eighth Wonder of the World!”. To appreciate the power of compounding read on further:
‘A’ gives ‘B’ Re.1/- on day 1 with the condition that it has to be doubled at the end of the day and on 2nd day it has to become Rs.4/- and 3rd day – Rs.8/- so on and so forth. At the end of 30th Day could you make a rough guess how much it would be? It works out to whooping Rs.107.37 Crores. Mind boggling?
Even when you start saving a penny, over a period you will see a huge corpus in your kitty. Of course, Rome is not built in a day.
Rule 3: Invest. Forget. Reap Benefits
Here what I mean is do make long term investment plan – forget about short terms. Also forget in between up and downs. I bet the average return rates over a period of time, 10 years and above, would be striking.
Rule 4: Systematic and Consistent wins the race
Fixed sum of savings for a fixed period (say 10 years) without fail is what I mean systematic and consistent. When you want to be systematic and consistent the sure way to keep up this rule is make oneself committed to a stream of savings plan.
Rule 5: Don’t put all your eggs in one Bag
Let’s say you put all your savings in equity which gives 30% return .This may look high return option but do remember the risk is also embedded to this. I would say it is like a sugar coated pill. Hey I am not advocating against equity investment - Of course, it depends on ones risk appetite. On the other hand let’s say you invested all you savings in PPF, the risk is almost NIL, but it will not fetch you what you really intended. Here is where the importance of portfolio mix comes in to picture. There are lot of investment avenues available today – like Bonds, Equity, Real Estate, Housing, Art, Gold etc., One has to do enough home work before choosing right blend which will average out the return and risk.
My view is any investment decision without any of these principles may end up in futile.
The drive home point here is though one need not follow all the rules pointed above; just keep in mind these principles when you do any decision on investments.
Sunday, September 14, 2008
Saturday, September 13, 2008
Ant or Grasshopper?
Narasimhan A R
The moral of this classic parable goes saying “be prepared for the day of necessity”. This illustrates the fundamental differences between savers and spenders. The lifestyle of current generation witnesses sea change in their spending pattern – be it fixed commitments on housing, car, technology gadgets, or party, eating out etc.,. This really compels one to revisit their thoughts and think about investment strategies.
Why should one invest?
Reason 1:
Inflation is one of the main reasons for an investment to become inevitable. To put it in lay man’s language, it is “an increase in the price you pay for goods”. In other words, one has to pay more money to purchase the same product over a period of time.
Let us assume a product requires Rs.100/- to purchase today and the inflation rate is 12% for next 10 years. At the end of 10th year the same product would require Rs.311/- to purchase.
Therefore, if the after-tax return rate is less than the inflation rate, then your rate of return on paper will actually be result in negative return. Hence, it is always wise to look at the real rate of interest that the offered rate of interest.
Reason 2:
If the money is put idle i.e., without any investment it not only losses opportunity income but also ruins what one has today.
Reason 3:
One has to meet future expenditure – like dream homes, children education, marriage, medicines etc., unless sufficient investment backup exists old age will become a lurid
Now, I leave this to you to decide what you want to be – Ant or Grasshopper
The moral of this classic parable goes saying “be prepared for the day of necessity”. This illustrates the fundamental differences between savers and spenders. The lifestyle of current generation witnesses sea change in their spending pattern – be it fixed commitments on housing, car, technology gadgets, or party, eating out etc.,. This really compels one to revisit their thoughts and think about investment strategies.
Why should one invest?
Reason 1:
Inflation is one of the main reasons for an investment to become inevitable. To put it in lay man’s language, it is “an increase in the price you pay for goods”. In other words, one has to pay more money to purchase the same product over a period of time.
Let us assume a product requires Rs.100/- to purchase today and the inflation rate is 12% for next 10 years. At the end of 10th year the same product would require Rs.311/- to purchase.
Therefore, if the after-tax return rate is less than the inflation rate, then your rate of return on paper will actually be result in negative return. Hence, it is always wise to look at the real rate of interest that the offered rate of interest.
Reason 2:
If the money is put idle i.e., without any investment it not only losses opportunity income but also ruins what one has today.
Reason 3:
One has to meet future expenditure – like dream homes, children education, marriage, medicines etc., unless sufficient investment backup exists old age will become a lurid
Now, I leave this to you to decide what you want to be – Ant or Grasshopper
Ant or Grasshopper? Part I
The moral of this classic parable goes saying “be prepared for the day of necessity”. This illustrates the fundamental differences between savers and spenders. The lifestyle of current generation witnesses sea change in their spending pattern – be it fixed commitments on housing, car, technology gadgets, or party, eating out etc.,. This really compels one to revisit their thoughts and think about investment strategies.
Why should one invest?
Reason 1:
Inflation is one of the main reasons for an investment to become inevitable. To put it in lay man’s language, it is “an increase in the price you pay for goods”. In other words, one has to pay more money to purchase the same product over a period of time.
Let us assume a product requires Rs.100/- to purchase today and the inflation rate is 12% for next 10 years. At the end of 10th year the same product would require Rs.311/- to purchase.
Therefore, if the after-tax return rate is less than the inflation rate, then your rate of return on paper will actually be result in negative return. Hence, it is always wise to look at the real rate of interest that the offered rate of interest.
Reason 2:
If the money is put idle i.e., without any investment it not only losses opportunity income but also ruins what one has today.
Reason 3:
One has to meet future expenditure – like dream homes, children education, marriage, medicines etc., unless sufficient investment backup exists old age will become a lurid
Why should one invest?
Reason 1:
Inflation is one of the main reasons for an investment to become inevitable. To put it in lay man’s language, it is “an increase in the price you pay for goods”. In other words, one has to pay more money to purchase the same product over a period of time.
Let us assume a product requires Rs.100/- to purchase today and the inflation rate is 12% for next 10 years. At the end of 10th year the same product would require Rs.311/- to purchase.
Therefore, if the after-tax return rate is less than the inflation rate, then your rate of return on paper will actually be result in negative return. Hence, it is always wise to look at the real rate of interest that the offered rate of interest.
Reason 2:
If the money is put idle i.e., without any investment it not only losses opportunity income but also ruins what one has today.
Reason 3:
One has to meet future expenditure – like dream homes, children education, marriage, medicines etc., unless sufficient investment backup exists old age will become a lurid
Tuesday, September 2, 2008
Pinch of Practice
Inspiration is like a walking stick. It comes handy when we are feeling down.It comes as medical prescription when we are feeling sick. Looking deep into the root,the source and energy of inspiration lies within oneself.
Here, I am just jotting down few Dhirubhaism which I recently read -
YES. The practical approach , rather philosophy of DHIRUBHAI AMBANI.The reading looks easy but when it comes to practice it would be a challenging one.
Dhirubhaism:
- Roll up your sleeves and help
- Be a safety net to your team
- Be a silent benefactor
- Dream big but dream with your eyes open
- The arm-around-the shoulder leader
- The Dhirubhai theory : Supply creates demand
- Money is not the product by itself
- Leave the professional alone
- Change your orbit constantly
- Optimism, the core of Dhirubhaism
- You can find a friend in every human being
- Think Big
- Hold on to your dreams
- Bet on your people
- Be positive
Even a pinch of practice will eventually make a massive turnaround.
Naras
Here, I am just jotting down few Dhirubhaism which I recently read -
YES. The practical approach , rather philosophy of DHIRUBHAI AMBANI.The reading looks easy but when it comes to practice it would be a challenging one.
Dhirubhaism:
- Roll up your sleeves and help
- Be a safety net to your team
- Be a silent benefactor
- Dream big but dream with your eyes open
- The arm-around-the shoulder leader
- The Dhirubhai theory : Supply creates demand
- Money is not the product by itself
- Leave the professional alone
- Change your orbit constantly
- Optimism, the core of Dhirubhaism
- You can find a friend in every human being
- Think Big
- Hold on to your dreams
- Bet on your people
- Be positive
Even a pinch of practice will eventually make a massive turnaround.
Naras
Pinch of Practice
Inspiration is like a walking stick. It comes handy when you are feeling down.
It comes as medical prescription when you are feeling sick.Looking very deep into the root, the source of inspiration is within oneself.
For me, more than inspiration, practice what we inspire matters a lot. Even a pinch of practice will make a massive turnaround.
I am just jotting down few Dhirubhaims, yes true the philosophy of DHIRUBHAI AMBANAI:
- Roll up your sleeves and help
- Be a safety net to your team
- Be a silent benefactor
- Dream big but dream with your eyes open
- The arm-around-the shoulder leader
- The Dhirubhai theory : Supply creates demand
- Money is not the product by itself
- Leave the professional alone
- Change your orbit constantly
- Optimism, the core of Dhirubhaism
- You can find a friend in every human being
- Think Big
- Hold on to your dreams
- Be positive
It looks very easy reading but it would be a very challenging one when it comes to practice - even a pinch of practice in day to day life will eventually make tremendous turnaround - Narasiar
It comes as medical prescription when you are feeling sick.Looking very deep into the root, the source of inspiration is within oneself.
For me, more than inspiration, practice what we inspire matters a lot. Even a pinch of practice will make a massive turnaround.
I am just jotting down few Dhirubhaims, yes true the philosophy of DHIRUBHAI AMBANAI:
- Roll up your sleeves and help
- Be a safety net to your team
- Be a silent benefactor
- Dream big but dream with your eyes open
- The arm-around-the shoulder leader
- The Dhirubhai theory : Supply creates demand
- Money is not the product by itself
- Leave the professional alone
- Change your orbit constantly
- Optimism, the core of Dhirubhaism
- You can find a friend in every human being
- Think Big
- Hold on to your dreams
- Be positive
It looks very easy reading but it would be a very challenging one when it comes to practice - even a pinch of practice in day to day life will eventually make tremendous turnaround - Narasiar
Monday, September 1, 2008
Mr.RBI Governor
Sep 01st 2008 – From now on, you will preside over the country’s highest position which makes monetary policies for the next five years. The Count down starts.
Your academic credentials are on top – a graduate from IIT – Kanpur, MS in economics from Ohio State University in 1978, PhD in economics and worked as economist at the World Bank between 1999 and 2004.You became Finance Secretary in May 2007 and headed several other crucial portfolios before.
No doubt all your actions will be beneficial to our country – But at the same time please be sure that you decide the rule of the game – let not your decision be hampered due to political reasons.
Mr.RBI Governor – Please be aware
- You are the second most vital person next to Finance Ministry
- All your decisions have direct impact on every citizens – needless to mention aam admi too.
- Country’s growth parameters – inflation rate, interest rates , forex reserves, currency rates, GDP etc., solely hinges on your decision.
As a citizen of India, I pray to GOD “let all your powers vested on you are exercised on your own judgment”
Naras
Your academic credentials are on top – a graduate from IIT – Kanpur, MS in economics from Ohio State University in 1978, PhD in economics and worked as economist at the World Bank between 1999 and 2004.You became Finance Secretary in May 2007 and headed several other crucial portfolios before.
No doubt all your actions will be beneficial to our country – But at the same time please be sure that you decide the rule of the game – let not your decision be hampered due to political reasons.
Mr.RBI Governor – Please be aware
- You are the second most vital person next to Finance Ministry
- All your decisions have direct impact on every citizens – needless to mention aam admi too.
- Country’s growth parameters – inflation rate, interest rates , forex reserves, currency rates, GDP etc., solely hinges on your decision.
As a citizen of India, I pray to GOD “let all your powers vested on you are exercised on your own judgment”
Naras
Seed Sprouts
Friend and Collegue - A great admire who always impress people,be it official or personal - by his spiritual thoughts and talks. Whenever he come across an event on spiritual discourse, he informs everyone he knows rather "influence" .Some may follow him, some may just leave him. He never takes this to his head. He still inform the same person, never mind he follows or not. In true sence " Do your action , not focus on fruits of action" .
One day I put forth him a straight question: How come you keep on informing everyone irrespective of person who follow him or not? He gave me back sudden reply - I just sow seeds - never mind when and how the seed sprouts - "smashing reply".
This is SriVATsan, working with RML.
It was on July 10th 2008, when I was going thro' daily news I just came across an advt - "it was Bhagavat Gita:Chapter 4" remembering Gita or not - Srivatsan came to my mind . I called him up and told:I am attending Gita discourse today - hope seeds sprouts!!!!!??
Curiosity makes me to surf what chapter 4 says. Read below what I read :
Lord Krishna reveals how spiritual knowledge is received by disciplic succession and the reason and nature of His descent into the material worlds. Here He also explains the paths of action and knowledge as well as the wisdom regarding the supreme knowledge which results at the culmination of the two paths.
- Naras
One day I put forth him a straight question: How come you keep on informing everyone irrespective of person who follow him or not? He gave me back sudden reply - I just sow seeds - never mind when and how the seed sprouts - "smashing reply".
This is SriVATsan, working with RML.
It was on July 10th 2008, when I was going thro' daily news I just came across an advt - "it was Bhagavat Gita:Chapter 4" remembering Gita or not - Srivatsan came to my mind . I called him up and told:I am attending Gita discourse today - hope seeds sprouts!!!!!??
Curiosity makes me to surf what chapter 4 says. Read below what I read :
Lord Krishna reveals how spiritual knowledge is received by disciplic succession and the reason and nature of His descent into the material worlds. Here He also explains the paths of action and knowledge as well as the wisdom regarding the supreme knowledge which results at the culmination of the two paths.
- Naras
Project Imports - Chapter 98
Project Imports cover all Items of Machinery / Equipment including all components (whether finished or not) or raw materials for manufacture of the aforesaid items required for the initial setting up of an Industrial / Irrigation / Power / Mining / Oil or Mineral Exploration Projects and such other Projects as may be approved by the Central Government or for their Substantial Expansion as well as Spare Parts, other raw materials (including semi-finished materials) or consumable stores not exceeding 10% of the value of the goods specified above provided such Spare Parts, raw materials or consumable stores are essential.
Normally, imported goods get classified on “merits” under the relevant Customs and Excise tariffs for levy of duty.
This implies that each individual article is to be classified separately and assessed not only to Customs Duty at the appropriate rate but also for Additional Duty of Customs which is equivalent to Excise Duty applicable for that article as if it had been manufactured in India.
For setting up of a Project a number of goods may have to be imported in one or more instalments.
If all the goods required for the Project are to be classified and valued separately for assessment of duty, the process may prove to be cumbersome.
This may also lead to delay in clearance of goods.
Further, the overseas suppliers while despatching the goods for a contracted Project may not value each and every item or the machinery parts despatched in various instalments.
Ascertaining values for different items may further delay assessment on “merits” and lead to substantial demurrage, time and cost overrun for the Project.
2 With the objective of simplifying the assessment in respect of import of capital goods and all the related items required for setting up of a Project, a flat rate of duty is levied on all such goods under heading 98.01 of Chapter 98 of the Customs Tariff.
Even this flat rate is subject to change from time to time
The recent Central Budget has reduced the rate from 7.5% to 5% effective March 1, 2008.
It is understood that the machinery / equipment proposed for LEC Project attracts 7.5% or 10% Customs Duty based on the Tariff item, if they get assessed on “merits” under the respective Customs Tariff Headings as compared to 5% duty applicable for Project imports.
LEC may hence consider taking advantage of this concessional duty of 5%.
For the purposes of Project Import Regulations
(a) “Industrial Plants” means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity.
(b) “Sponsoring authority” means an authority specified in the Table annexed to these Regulations.
In the case of LEC, ‘Sponsoring Authority’ is the concerned Administrative Ministry or Department in the Central Government viz. Ministry of Industry.
(c) “Unit” means and self contained portion of an industrial plant or any self-contained portion of a project specified under the said Heading No.98.01 and having an independent function in the execution of the said project.
3 For availing the concessional Rate of 5% Customs Duty under Project Import Regulations, LEC has to submit an application to
The Secretary to Government of India
Ministry of Industry
Department of Industrial Development
Secretariat for Industrial Approvals
Licensing Section
Udyog Bhawan
New Delhi – 110 011
along with the following documents.
- Copy of the IEM # ________ Dated _________
- Copy of the Contract # _______ dated ________ between LEC and the Overseas supplier.
- Essentiality Certificate, in Original, dated _______ issued by a Chartered Engineer together with the detailed list (4 sets) of Equipment to be imported duly certified by him.
- Copy of the Letter of Credit # _____ dated _______ established by _____ Bank, in ________ favour of ___________ for ________
4 Registration of Contracts with the Customs Authorities
The basic requirement for availing the benefit of Project Import Regulations under Heading # 98.01 is that the importer should have entered into one or more contracts wit the suppliers of the goods.
Such contracts should be registered prior to clearance in the Customs House through which the goods are expected to be cleared.
The importer shall apply for such registration in writing to the proper officer of Customs.
The contract is required to be registered before any order is made by the proper officer of Customs permitting the clearance of the goods for home consumption.
To expedite early registration, the importers are to submit the following documents at the time of registration :-
a An application for Registration of the Contract.
b Copy of the Contract duly attested by the Importer’s Authorised Official.
c Copy of the IEM.
d Recommendatory letter for Duty Concession from the concerned Sponsoring Authority, showing the description, quantity, specification, quality, dimension of each item.
Sponsoring Authority should indicate whether the Recommendatory Letter is for initial set-up or substantial expansion, giving the installed capacity and proposed addition thereto.
e Continuity Bond for the total CIF value with Cash Security Deposit equivalent to the 2% of CIF value of Contract sought to be registered subject to the maximum of Rs.50,00,000/- and the balance amount by Bank Guarantee backed by an undertaking to renew the same till the finalisation of the contract.
The said continuity bond should be made out for an amount equal to the CIF value of the contract sought to be registered.
LEC shall with in 3 months of clearance for home consumption of last consignment of the goods, submit a statement indicating details of goods imported together with necessary documents as proof regarding the value and quantity of goods so imported.
f Process Flow Chart, Plant Layout, Drawings showing the arrangement of imported machines along with an attested copy of the Project Report submitted to the Sponsoring Authorities,. Financial Institution etc.
g Write up, Drawings, Catalogues and Literature of the items under import.
h Such other particulars as may be considered necessary by Proper Officer for the purpose of assessment under Heading No.98.01.
Normally, imported goods get classified on “merits” under the relevant Customs and Excise tariffs for levy of duty.
This implies that each individual article is to be classified separately and assessed not only to Customs Duty at the appropriate rate but also for Additional Duty of Customs which is equivalent to Excise Duty applicable for that article as if it had been manufactured in India.
For setting up of a Project a number of goods may have to be imported in one or more instalments.
If all the goods required for the Project are to be classified and valued separately for assessment of duty, the process may prove to be cumbersome.
This may also lead to delay in clearance of goods.
Further, the overseas suppliers while despatching the goods for a contracted Project may not value each and every item or the machinery parts despatched in various instalments.
Ascertaining values for different items may further delay assessment on “merits” and lead to substantial demurrage, time and cost overrun for the Project.
2 With the objective of simplifying the assessment in respect of import of capital goods and all the related items required for setting up of a Project, a flat rate of duty is levied on all such goods under heading 98.01 of Chapter 98 of the Customs Tariff.
Even this flat rate is subject to change from time to time
The recent Central Budget has reduced the rate from 7.5% to 5% effective March 1, 2008.
It is understood that the machinery / equipment proposed for LEC Project attracts 7.5% or 10% Customs Duty based on the Tariff item, if they get assessed on “merits” under the respective Customs Tariff Headings as compared to 5% duty applicable for Project imports.
LEC may hence consider taking advantage of this concessional duty of 5%.
For the purposes of Project Import Regulations
(a) “Industrial Plants” means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity.
(b) “Sponsoring authority” means an authority specified in the Table annexed to these Regulations.
In the case of LEC, ‘Sponsoring Authority’ is the concerned Administrative Ministry or Department in the Central Government viz. Ministry of Industry.
(c) “Unit” means and self contained portion of an industrial plant or any self-contained portion of a project specified under the said Heading No.98.01 and having an independent function in the execution of the said project.
3 For availing the concessional Rate of 5% Customs Duty under Project Import Regulations, LEC has to submit an application to
The Secretary to Government of India
Ministry of Industry
Department of Industrial Development
Secretariat for Industrial Approvals
Licensing Section
Udyog Bhawan
New Delhi – 110 011
along with the following documents.
- Copy of the IEM # ________ Dated _________
- Copy of the Contract # _______ dated ________ between LEC and the Overseas supplier.
- Essentiality Certificate, in Original, dated _______ issued by a Chartered Engineer together with the detailed list (4 sets) of Equipment to be imported duly certified by him.
- Copy of the Letter of Credit # _____ dated _______ established by _____ Bank, in ________ favour of ___________ for ________
4 Registration of Contracts with the Customs Authorities
The basic requirement for availing the benefit of Project Import Regulations under Heading # 98.01 is that the importer should have entered into one or more contracts wit the suppliers of the goods.
Such contracts should be registered prior to clearance in the Customs House through which the goods are expected to be cleared.
The importer shall apply for such registration in writing to the proper officer of Customs.
The contract is required to be registered before any order is made by the proper officer of Customs permitting the clearance of the goods for home consumption.
To expedite early registration, the importers are to submit the following documents at the time of registration :-
a An application for Registration of the Contract.
b Copy of the Contract duly attested by the Importer’s Authorised Official.
c Copy of the IEM.
d Recommendatory letter for Duty Concession from the concerned Sponsoring Authority, showing the description, quantity, specification, quality, dimension of each item.
Sponsoring Authority should indicate whether the Recommendatory Letter is for initial set-up or substantial expansion, giving the installed capacity and proposed addition thereto.
e Continuity Bond for the total CIF value with Cash Security Deposit equivalent to the 2% of CIF value of Contract sought to be registered subject to the maximum of Rs.50,00,000/- and the balance amount by Bank Guarantee backed by an undertaking to renew the same till the finalisation of the contract.
The said continuity bond should be made out for an amount equal to the CIF value of the contract sought to be registered.
LEC shall with in 3 months of clearance for home consumption of last consignment of the goods, submit a statement indicating details of goods imported together with necessary documents as proof regarding the value and quantity of goods so imported.
f Process Flow Chart, Plant Layout, Drawings showing the arrangement of imported machines along with an attested copy of the Project Report submitted to the Sponsoring Authorities,. Financial Institution etc.
g Write up, Drawings, Catalogues and Literature of the items under import.
h Such other particulars as may be considered necessary by Proper Officer for the purpose of assessment under Heading No.98.01.
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