Basic Investment fundas

Finance and investments can get a bit intimidating if not understood properly. I myself have been a prey to this. But for the past couple of months I have been investing more time into understanding investments聽馃檪 , only to find out that I have been missing out on a lot.

There are certain prerequisites with respect to our mindset before we start off.

聽聽聽聽 Its all about thinking clear, using logic and common sense

聽聽聽聽 Its involves meticulous planning and discipline

聽聽聽聽 It should be understood that there are risks involved

聽聽聽聽 It is a must to keep oneself updated with whats happening around, at least in the economy point of view

聽聽聽聽 And finally, its not about what others are doing but what’s best for you.

What’s investing?

Investing basically means putting your money to work. The money you earn and save after your expenses for a livelihood, need not be kept aside idle. It can be put to work and can earn a profit over itself.

Why invest?

By investing, one is making sure he continues his current standard of living even after retirement. He is ensuring that he is secure at the time of emergencies. Investing is a slow process, which bears tremendous results over a period of time.

Investment needs

Given that there are so many investment avenues, making a choice about where to invest in what amounts, for what period and all depends on the person’s needs or objectives, time, his current situation and personality.

聽聽聽聽 Needs/ Objectives –General objectives for investments could be to generate current income, safety of capital or retirement planning.

聽聽聽聽 Personality – Some people are risk averse or conservative investors, they would rather invest to generate less income if it is at the cost of keeping their money safe. Some people are vice versa.

聽聽聽聽 Timeframe – How much time you have left, for your retirement is a crucial point in decided how to invest. Like, the lesser time you have, the more conservative you should be in planning it out. But if you have just started earning, there is time for making up for losses or investing in avenues that are riskier.

Types of investments <this section is referred from another site>


Grouped under the general category called “fixed-income” securities, the term “bond” is commonly used to refer to any founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out.

The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed (or “risk-free” in investing parlance). The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities.


When you purchase stocks (or “equities” as your advisor might put it), you become a part owner of the business. This entitles you to vote at the shareholder’s meeting and allows you to receive any profits that the company allocates to its owners–these profits are referred to as dividends.

While bonds provide a steady stream of income, stocks are volatile. That is, they fluctuate in value on a daily basis. When you buy a stock, you aren’t guaranteed anything. Many stocks don’t even pay dividends, making you any money only by increasing in value and going up in price–which might not happen.

Compared to bonds, stocks provide relatively high potential returns. Of course, there is a price for this potential: you must assume the risk of losing some or all of your investment.

Mutual Funds

A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which in turn enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries, and the list goes on.

The primary advantage of a mutual fund is that you can invest your money without needing the time or the experience in choosing investments. To know more about mutual funds, please visit our learning centre.

Alternative Investments: Options, Futures, FOREX, Gold, Real Estate, Etc.

So, you now know about the two basic securities: equity and debt, better known as stocks and bonds. While many (if not most) investments fall into one of these two categories, there are numerous alternative vehicles, which represent聽more complicated types of securities and investing strategies.

The good news is you probably don’t need to worry about alternative investments at the start of your investing career. They are generally high-risk/high-reward securities that are much more speculative than plain old stocks and bonds. Yes, there is the opportunity for big profits, but they require some specialized knowledge. So if you don’t know what you are doing, you could get yourself into a lot of trouble. We would therefore suggest that you start with simpler investment avenues and leave these investment vehicles for the experts.

Now that we have a basic idea, in my coming posts I discuss about options available under each of these investment vehicles, their pluses and minuses, trends and analyses.


MBA in India – An overview

This is聽from an email i recently sent聽to a cousin who is doing聽her second year in commerce and聽is聽having thoughts of doing an MBA next.

鈥淣ow that you are thinking of a post graduate degree, thought I’ll share some views. (I’ve been a victim of overloaded advice, now my chance to fire!). Kiddin, just want to make sure you make good choices, and taht I give you some tips based on where I went wrong. I would strongly recommend not doing an Mcom, unless you are thinking of doing a CA side by side. MBA is a good option for a person of any background. But there’s lot of hardwork that goes into it.聽
1) Admission

聽聽聽 > The entrance exam – CAT is the king of MBA entrance exams,聽which is conducted by the IIMs.聽Many other top breed institutes use the CAT score for screening. CAT is the toughest of the lot, and is very competitive. There are other exams too XAT, entrance for the Xavier group of institutes, then MAT, for a large number of lower breed institutes and many more. But by far these are the three most popular ones.
Questions are mainly divided into quantitative (maths, not high level, but tricky) verbal(english) and data interpretation(graphs and statistics). These are not all that difficult but can be very very tricky. Basically they want people to think simple and use loads of common sense. You ll need to learn (simple) formulae and shortcuts and practice as much as you can. And the good news is that most exams dont have a general knowledge section! Coaching centers provide a great deal of resources, training and good attention.

> The Group Discussion and Interview – Based on your CAT/entrance score, these b-school call you for a group discussion based on any topic.. (literally any topic, current events, sports, movies, business, anything). There would typically be around 8 people for the discussion, and what they test there is not only how much you knw abt the topic but how you make your presence felt, communication skills, leadership qualities, angane okke.聽
聽Then a personal interview by a panel of professors, who would ask you about your background, why you want to do an mba, your career goals, some questions about your degree subjects and all.

2) Choosing the right b-school – There are a whole lot of b-schools in the country,聽too many of them. Good ones are聽only about 10% of the lot. IIMs of course rule the list. Basically there are A grade schools(the likes of IIMs), Bgrade (like Bharatidasan, Alliance, IFMR, or Amrita, where i studied) and C grade (the bad ones, dont even look at these)
If you browse thru you will find many sites, that show rankings of top schools. You will also find it in magazines like Business today/world, India today etc.
There is no point in applying to all of them, you have to sit, think and choose as each application form costs from between Rs500-1200. You can make your choice based on the ranking, location, the placement (job) % of the school, the faculty experience, etc. (I can help you on that)

3) Fees – Bschool fees are always high averaging around 4 lakhs for the whole course. There are options of taking student loans, and if you get into a good school, where chances of getting a very good job is certain, you dont have to worry about the repayment. In Govt run institutes, like REC trichy (a very good b-school) the fees is very low.

4) In the Bschool – The idea about going to a Bschool and taking up a career as a manager is to be very capable, mature, smart, active, make good decisions, be approachable, competitive, aggressive and fearless. So thats the kind of attitude they are looking at, the bscools and the companies who recruit from bschools. You must be able to show that kind of an attitude throughout, ie in your attention in classrooms, assignment and projects, the discussions within classroom as groups and interviews.

5) The course – As an MBA you can choose what specific field you would like your career to move in, human resources, marketing, operations, systems/IT or finance. In the first year they teach you basics of all this, and in the second year you can choose the field that interests you the most.

6) Placement – The idea of getting into a Bschool is to end up getting a very well paid job, That is the reward of a 2 yr long competitive professional course, so anything you do right from this moment of deciding to do an MBA should be totally focussed on that final reward and how good you want it to be. Thats the goal.

I would suggest you attend a good coaching class, like Time or IMS for a 6 months or one year course (pref a one year course). They have weekend classes/weekday classes, lots of books and handouts, and very good classroom training. The good part is that they not only train you for the exam but also for GD and personal intw. Another good thing is that you will meet a whole lot of students with different backgrounds, mostly engineers. You ll have to mingle with people from all backgrounds, and show a lot of interest in learning. There will be instances where you lose confidence, seeing the speed and agressiveness of the engineering students but never put yourself down.
There will also be instances where you tend to lose interest in the class itself and focus on having fun and making new friends. I have seen many of my friends who attended a 1 yr course and scored poorly for the CAT, because they lost interest. Make sure that doesnt happen to you. Get yourself a good gang of friends who are very ambitious to make it to the top.
In the exam, its important to not only get answers correct but do the maximum in the given time. thats not an easy task; the key is also to make sure you practice what you learn, specially, being a non-eng student, focus on maths is very important…keep practicing everyday for atleast 1-2 hrs. Trust me, with a stop watch, its fun! is a good site for MBA aspirants,聽 coaching classes聽 coaching classes for basic ranking and info “

India Inc


Of late, India Inc has been the focus of world attention. After 60 years of independence, we can now look back and say we are on the right track to growth and development. Optimism is such, that any聽derailment is now out of question.

Each decade our economy has been going through significant changes. For almost 2 decades after independence, the primary sector, ie agriculture, forestery, mining etc., contributed most to our GDP. Slowly, in the 80’s investment started catching up and focus was laid on infrastructure initiatives like dams, power supply, irrigation, roads etc. When household savings reached a limit where it couldnt grow more, the聽Goverment started borrowing loans from foreign banks and establishments.聽 A balance of payments issue in that period, led the聽government 聽to liberalise and open up the economy.

The 90s saw a significant rise of the middle class, leading to more demand for consumer durables which in turn mobilised the growth of industry. Goverment’s loosened聽foreign policy, small scale initiatives, aides聽to industry聽resulted in more small businesses to sprout, generated jobs and therefore聽pushed demand. During this period the household savings and investments also grew. Growth rate charts showed a uniform upward trend. Education was starting to gain its much needed attention, many top class institutions sprung and the number of people graduating each year increased to new levels.聽Lot of stress聽was being given to job oriented and professional courses.

By the late 90s, growing skilled workforce, the arrival of the internet and liberalisation of the economy led to the IT boom in the country.聽 Revenues rocketed,聽capital flowed in from all sides, middleclass聽grew richer and thereby savings and investment increased manifold. Household investors who earlier preferred fixed income investment avenues, started looking at new, ripe opportunities like stock markets and mutual funds. This boosted industry further. The political scenario had also started becoming favourable and all parties started聽realising that an聽investment and infrastructure based campaign would any day win more votes.

The growth for 2008-09 is projected at 10%. There is lot of optimism in the country and abroad. Foreign institutional investors and NRIs have been showing lot of confidence in our future and are keeping the flow of funds perinnial. It looks like people have realised that somewhere we were lagging behind and its now time to pull up our socks and get to work! Chak de India!!

How it works?

The world is so full of wonders that I dont think a lifetime would ever be sufficient to explore! Man = Curiosity.聽We folks want to know everything. Ever since being,聽we have been discovering, inventing, learning and聽experimenting a great deal, now to the extent that i feel we must recoin the old saying “curiosity killed the cat” to “curiosity killed all the rats”. Yes, looking at the聽innumerable experiments聽being performed on rats i wonder if the day聽聽will come when聽the race will be extinct. Extinct not only because we are killing them, but because they refuse to be born. What is the point anyway? However there is a surprise element to their lives. “Ahem, I wonder what I am being tested for today. Lets see, is it a psychometric test, an alcohol test(vodka only, pls), a dream test or a Common Admission Test??”

Just to give you a feel of it, here’s list of some experiments, performed on rats

聽聽聽聽 Psychology tests

聽聽聽聽 embryonic stem cell

聽聽聽聽 inhalation and injection

聽聽聽聽 alcohol addiction

聽聽聽聽 nuclear RNA

聽聽聽聽 biology of sleep substances

聽聽聽聽 food viscosity influences

聽聽聽聽 sleep and dreams

聽聽聽聽 inheritance of training

聽聽聽聽 attention and performance

聽聽聽聽 and on and on and on and on

And this is just after scanning 4 pages of a total of 45 pages of google results on experiments on rats.

“sigh! are these聽guys as good as us?”

In this category, I write in brief, the聽info聽I google and find out to聽answer my doubts about simple things around that keep nagging me like say, why do we dream? I hope to keep explanations short and sweet!

IT’s Huge!

Man, sometimes how i wish i were an engineer, not an IT engineer, any engineer! The kind of demand there is for a 4 year engineering degree I wish I could relive my school days when聽I thought science of any kind is not my cup of tea(only to learn later that management is an art and a science!). Why should i ever have cared if its not my cup of tea? Thats not the point. The point is, 10 years hence i wouldnt be sitting here writing about IT and my experience watching it happen.

My few months experience as a resource manager for an IT marketing and staffing firm in the US has given me a decent understanding of the H1B recruiting scenario. x number of jobs, y number of prospects, x+y number of staffing consultants and x*y number of websites and resources. Its a haven of opportunities. Everybody is trying to survive, trying to make money. Dont you think this is the place to be?

In this catogory, I write in detail about聽topics related to the H1 job market in USA.

Dilbert – Managers and Targets


Now whats that all about? Your manager sets a goal for you (high enough, he knows聽you simply can’t achieve it). His reasoning, “aim high” “you aim for the stars and you fall on the treetop”.聽 Now why do you think he does that, why does he want you to fall on the treetop and not on the ground? Is he heartless, rude, insane?? Nope, how else do you think he can achieve his? Now, say your manager decides to lower your target this month. How do you take that eh? “The big fat idiot, he thinks he can teach me a lesson by trying to cut down on my commission. Now, I’ve got a better plan, let’s see what he does when I overachieve” vicious circle! thats the point.

In a competitive economy,聽targets will function to equalize the聽interest demanded by bosses and the聽interest supplied by you, resulting in an economic equilibrium of聽targets and interest and willingness to achieve them.

Dilbert comic strip聽1

Related latest post聽–

Photography — Art or science

This “art or science”聽way of putting it, i get from my business studies text book class 11. From that year on, till i finished my MBA, i have been reading this phrase at least one text book per year. “Is management a science or an art” “Is聽accounting a science or an art”. And if you say its both and state your own crappy reasons, lo, full marks!! See, i am already deviating from the topic. My commerce instincts are showing!

Now full marks to me, because photography is both a science and an art. I love photography. I know nothing about it as a science, (so i claim myself to know it as an art!) but I am in the process of learning. Lets go!