Debt Instruments of Investment: the best investment option.

Millions of investors have incurred heavy loses by the end of 2008 following the 1 year of unprecedented stock market volatility. This has not only shaken the confidence of the investors, but also made the situation worse as many such investors have already withdrawn considerable sum of money from the various instruments where they have invested. But in contrast to this situation, the global bond investors not only managed to escape the loss, but also bagged considerable profits. Now we may think that what is so special in bonds and what is the reason behind its success. Bonds are debts which are issued by the government and companies. When a person is buying a bond he/she is actually lending the money he/she has invested to the government or companies for a certain period of time. Its just like you are lending the money to someone and getting the interest in return. But your principal amount which you have invested or is safe. Taking care of the present financial market condition it is suggestible to invest in bonds as they are the simplest and safest mode of investment. If this is not enough to motivate you then few facts and figures about the bond performance will be enough I think. It has been seen that the global equity funds have fallen by 24% in 2008 but in comparison the global bond portfolio was up by 16%. The Renfield US government bond fund performed very well with a huge growth of 58%.Quite strange yet a positive indication to the investors. The list doesn’t come to an end. There are other players too. The SWIP global bond fund experienced a growth of 53%, Henderson overseas bonds experienced a growth of 49 %. Now if you are wondering that what is the reason behind this success story inspite of this global financial turmoil, the answer is huge currency fluctuations. Besides the reduction in interest rates has helped in pushing the prices return up. It is really a positive indication to the investors. Besides, people who have just started to invest or already invested in few stocks and incurred losses, must shift to bond investments and its times to balance your portfolio. Often people underestimate bond investment looking at the return or performance in comparison to the stock investment. But Bonds I feel are the safest and best instrument to invest in, taking care of the present market scenario. In matters of investment, “slow and steady always wins the race”.

Long Term Investment : a key to capital appreciation

Farsightedness is very important to succeed in the long run. But often people become desperate when money or any financial issue is involved. It is a general human psychology to apply shortcuts and I have seen many investors following the same path and ending up in huge loss. I always used to recommend my clients to go for long term investment plans instead of high return short term plans. Now you will ask why?? The answer is simple: It is just like the story of the rabbit and the tortoise. For example you are planning to invest a certain amount in a certain plan. Now you will first look into the instruments or portfolio where you are investing, the Net Asset Value of the particular product and obviously the past performance, and if its showing a past return of 40% to 45 %, then you will instantly buy it. Many people have done it also and they are facing the consequences now as millions of people have experienced huge capital loss. But the smarter ones are sleeping peacefully as they have invested in long term plans. Even I did few experimenting investments few years back and seen that all my mutual fund investments suffered considerable capital loss but my long term retirement plans are least affected. Everyone wants to become rich, but this can’t be achieved through shortcuts.

Beside, I have also seen a trend among the young generations to make quick money. They always avoid long term plans thinking of the tenure of those plans. Its my message to the young generations, to go for pension plans, as, time really passes very quickly. So its time to build your future and if you save today after 15 years you will get benefited. Don’t look into the past performances or how much return a plan gave, but look into the basic structuring of a plan, how it works and how you will get benefited. The present situation is so unpredictable that going for long term plans can really benefit you.

Investment to me is just making right choices and just a matter of patience and patience always pays…

Identity Theft Insurance: What is it and How it works?

Human beings are rational animals. We have the power to think, strategize and create such things which can really change the whole functioning of the society and the world as a whole. But beware of few such animals who never think twice before locking up their rationality in their cupboard. Hence they are only “animals” or if the term is too harsh, you can call them “Identity Thieves”. Friends, no need to lock your doors as they will not infiltrate into your home directly, instead they follow a cowardly approach of stealing personal information like social security number, credit card number or any information which is valuable to you , through the misuse of technology. So it’s a real problem as you don’t know where they are and who they are. But apart from being rational, we are smart too.That’s why we are humans and we have managed to device an excellent weapon to kill this non-violent yet dangerous crime. The weapon is THE IDENTITY THEFT INSURANCE.A recent study conducted by the Federal Trade commission revealed that in 2005, around 8.3 million Americans fell victim of identity theft and the thieves accumulated around $6000 worth goods and services from just 10% of the victims. Besides 56% of the victims were unable to give any information as they were clueless. In majority of the cases credit card and debit card numbers were stolen. But thanks to IDENTITY THEFT INSURANCE which will not only cover you, but will also protect you from possible threats.

How it Works?

If you want to buy an Identity Theft Insurance policy then you can buy individual plan as well as family plans. In an individual plan the yearly premium is around $70 to $75 and for family plans the premium amount is around $140 to $150. One can also opt for a monthly premium scheme.

Besides, the policies have various preventive schemes and under these schemes regular alerts, newsletters on identity theft prevention tips by experts are sent to to the policy holders. This creates an environment of alertness which subsequently lowers the risk of frauds and misuse of personal information.

After purchasing the policy if someone fall victim of identity theft then there are experts who take care of the whole recovery process. There are specially appointed recovery advocates who handles all the disputes regarding the recovery. Besides, these experts work on civil and criminal judgment issues and provide necessary information to the Federal Trade Commission to solve the case more quickly and save time of the victim.

Under the reimbursement programme individual and family policy holders can be reimbursed up to a theft of $20,000, inclusive of the fees and costs involved in the recovery process.

I think that Prevention is always better than cure and trust me such an insurance for you and your family will prevent you from many threats which may be you are unaware of.

Ways to deal with the "Investment Phobia" disease.

As an investment planning professional, I have to meet many people daily to suggest them suitable investment options. Though everyday I get mixed reactions and get to know about various preconceived notions about investment from various people, yet recently I got to know about a really unbelievable fact which was unknown to me and perhaps still unknown to many people. This helped me a lot in judging people’s mindset regarding money matters and offering them better investment guidance. The fact which I came to know is about a disease, approved by medical professionals around the world and this is widely spreading like anthrax after the global financial crisis

The medical term of the disease is “Financial Phobia” or “Investment Phobia” or simply put it is just a fear of investing money or something related to money matters. Perhaps you are taking it lightly. Not your fault, I did the same thing. But its indeed a serious disease and doctors have already identified the symptoms. According to them it can even become a serious problem. Its not necessary that this disease will develop due to any financial mishap for example losing huge amount of money or something like that. Since birth this disease may develop in some people. Its actually a real clinical condition. In 2003 a research was conducted in UK which revealed the fact that almost 1 in 5 people there suffer from this disease. It further revealed that almost 20 % of the adults develops full version of this disease and nearly half of the population develop a lighter or milder version of the disease. But doctors are also of the opinion that it can also develop due to huge financial loss, knee deep debts etc. The most common symptoms are anxiety, nausea, high blood pressure etc. In extreme situations or extreme stage people often start neglecting their financial affairs and often start ignoring deadlines. But this attitude will not do any good, but will make the situation even worse. A study of the Cambridge University revealed that even highly educated people do develop this disease though they are extremely successful and brilliant in their respective fields.

But don’t worry; I will not make things complicated to scare you as I know that most of the people complicate things unnecessarily. I feel that it is not as serious as we feel and can be easily corrected. From my experience I have managed to learn that the only thing which gives rise to these types of disease or problems is “IGNORANCE”. I have met many educated people but they are zero in finances and put everything in their respective adviser’s shoulder and when problem arises they feel frustrated.

So here are few steps which will help you overcoming this disease if you follow them:

• Do not rely completely on your adviser. Start learning about finances and investment even if you are a Zero in finances. There are number of CDs, booklets available or you can simply buy a mutual fund booklet to know about the past performances, how a fund works etc. If you learn it in a simple way you will get to know many things.
• Before your adviser buys an investment product, make sure he provides you with a copy of the document explaining about the investment. This will make you satisfied as you are fully aware about where you are investing.Besides, individual decision may fail but collective decision succeed most of the time.
• Verify the legitimacy of the investment.
• Find out the costs and benefits associated with the investment
• Assess risk-return profile of the investment
• Know the liquidity and safety aspects of the investment.
• Ascertain if it is appropriate for your specific goals
• Compare these details with other investment opportunities available.
• Seek all clarifications about the intermediary of the investment
• Explore the options available to you if something goes wrong and if satisfied go for the investment.

Before investing if you follow these steps then I think you don’t have to go to the doctor or invest your money in placing a “PACE MAKER” in your heart. Instead you can invest that money in a good fund for your son’s /daughter’s higher studies.

You can still make Money in such a High Inflation environment.

The term” investment” has become a phobia for many people all over the world following the global financial crisis. This is because, people who were overconfident about their investing brain and gained huge profits suffered the most. As a whole the whole investment mindset got a tremendous blow. I have personally seen people crying after incurring heavy loses in equity market investment. But whenever God closes all the doors, he also throws the keys and we just have to catch those and find the right keys in the right time. So here comes few facts which will help you regain your confidence of investing as I feel that investment plays an important part in our life and we should always go for planned investment moves as the world is too competitive and the future is unpredictable.

Taking care of this present market scenario, have you ever thought that what will happen if you stop investing? Can you predict that the inflation rate will go down? The answer is,” no one can”. But it’s a fact that we can even manipulate a negative situation in our favor and I feel that the best investment tool to do this is the “Commodities.” The panic of financial crisis has affected us so badly that we forgot to think practically that the rising inflation rates can make us helpless but its very much beneficial to the commodity market. We cry and get afraid when we see that the prices of oil, metals and gold is going high, specially when we have to drive 100 miles both way daily, buy necklace to our wives etc.But then why not invest our money in these commodities. We all can easily predict that the inflation rate will not come down, rather it will go up. So let it be because the more it goes high the more you will get benefited, if you invest in the commodities. May be you think that I have gone mad and weird, but it’s a fact and if you look at things positively then it will actually become positive. Investing in an high inflation situation is actually a wise investment as the real estate prices, metal prices etc is going high. Besides one can also invest in soft commodities like cereals, cottons, potatoes etc, because the values of these goods will also always go high.

How to investment?

It is as easy as investing in the equity market. Various online trading accounts can be easily activated to do this commodity investment where one can track daily even hourly price changes of commodities. There will be daily expert tips on which commodity to buy. Besides one can easily judge which commodity to buy and hold as its pretty easy because in our day to day life we are always aware of commodity prices. A basic judgmental power and keeping eyes open and daily watch over the newspaper is enough to make you a good investor in commodities.

One can also go for some specialized Mutual Funds (don’t get scared) which invest in those stocks only which are linked to the commodity market and will always perform well in a high inflation environment.

So its high time to stop creeping and thinking about the past losses and go for something which can really make a difference.

Factors you should remember to lead a tension free & financially fit life.

Let us think of a situation where, for example a person has taken a loan, spent it and failed to repay it on time. After 1 year the person again applied for a loan for a trip to France with his beloved wife. But this time the bank refused to sanction the loan. This situation can easily shatter a person’s dream and similar situations are happening everyday in various parts of the world. But people often overlook few factors which are very important in deciding one’s future. Whenever we get a sum of money we spend it in an unplanned way. But the fact is wealth comes when money works for us and to make it work we must take care of some basic factors which will really help in judging where we stand and what we should do, to lead a tension free and hassle free financial life

Credit Report

It is one of the most important factors one should take into account before a fresh loan application. As per the federal law one can get a free credit report every 12 months form each of the three national credit reporting companies. This report is a snapshot about one’s creditworthiness and it will tell how much a person is eligible to get a loan .Online facility is also there and annualcreditreport.com is such an authentic online source.

Timely payment of Bills

This factor must be always taken care of as failure in paying the bills timely can easily hamper or lower a person’s credit score. If a person cannot pay the bills timely due to work pressure or lack of time it is advisable to go for automatic payment modes available in almost all the Banks. But there must be enough amounts in the account to avoid overdraft fees.

Factors which determine your credit score

Timely payment of bills: Late payment always will lower down your score. so it must be always avoided

Outstanding debt: If the amount of debt is close to the credit limit then it is regarded as a negating factor and your score will come down. So such a situation must be avoided to improve your credit score.

Duration of credit history: A short credit history is always a negative factor in deciding a credit score, but it can be balanced through timely payment.

Number of new credit application: If you have applied for too many accounts within a short period of time, it will act negatively in deciding your credit score.

Types of credit accounts: The credit scoring models often consider the number & type of accounts in deciding the score. If your account is a mix of installment loan and credit card account then it can improve your score.

You can yourself improve your credit report:

It is a dynamic system introduced by the federal Trade commission through which a person can himself/herself improve his/her credit report by correcting the errors. You can directly go to their website (www.ftc.gov) to do the same.

Terrorism: adding fuel to the fire of global financial crisis

India, despite of many internal problems is rising as a major power. Financially the potential of India has gone considerably high. But the recent terrorist attack in Mumbai, the commercial capital of India, not only shook the whole world, but also gave this rising economy a major blow. The series of deadly attacks in Mumbai on Thursday, which continued for around three days, forced the National Stock Exchange and the Commodity exchange to close down. So it is just pouring fuel in the fire. The whole world is already traumatized due to the global financial crisis and this event literally accelerated the situation in India making it even more worse. The Reserve Bank has already closed the bond and foreign exchange market. The Indian market is a paradise for the foreign sellers of Indian assets. But this situation has resulted in steep fall in rupee and gave a massive blow to the market confidence. The risk premium of the major lender bank, The State Bank of India rose considerably. Mr. Joseph Tan, the chief Asian economist in the credit Suisse, Singapore has stated that in this present global situation, the recent attacks in Mumbai created negativity in the minds of the foreign investors. This is quite obvious as people from all over the world suffered and many key personnel from US, Germany, UK, and France etc have witnessed the incident and many more died. Its also being predicted that when the stock market will open in India, it will open considerably down as compared to other Asian stock markets. The rupee closed Wednesday's trading at 49.48 per dollar. Now it figures among the weakest currencies in Asia along with the Indonesian currency and Korean currency, which have dropped by 20% against the dollar. The foreign investors have already withdrawn dollar 13.5 billion dollar from the Indian stock market compared with a withdrawal of 34 billion dollar from the South Korean market and 22 billion dollar from the Japanese market. Similar situation with a much higher intensity was earlier faced by USA following the 9/11 attack on the World Trade Center. If we look into the pattern of attacks we will find that the terrorists always attacks major points which is directly connected with the trade ,commerce & finance of a country, in order to cripple a country financially. Tourism in India attracts huge revenue and throughout the year flocks of foreigners come to India. Thus these attacks in major international luxury hotels gave a massive blow to the tourism industry in India.

It is a fact that when someone is trying to develop himself/herself, others will try to destroy him/her. This is the situation which most of the major powers in the world are facing. This situation will definitely cool down and everything will become normal and we will forget everything. Nowadays most of the discussion revolves around the global financial crisis. Banks and financial institutions are blaming the governments, the government is blaming them for their faulty policy, and we are blaming each other and everyday finding new theories to solve the crisis. But terrorism is another major factor and if this factor comes to the forefront, then no theories will work, no financial analysts and economists can solve it. But inspite of all these we are overlooking this major problem which is preparing itself hard to come to the top of the list. As a result the root problem is remaining same, preparing itself for a next attack. So its enough. Enough we have tolerated the evil intensions. So lets come together and fight this evil because next time it can happen anywhere and we are not safe at all and if it happens again then the crisis which the whole world is facing, will never come to an end.