Elastic Straps: June 2008 Archives

F ew would dispute the fact that investors today are better informed as opposed to their counterparts from previous generations. The barrage of investment advice and information from various quarters is largely responsible for this phenomenon.

However, the prevalence of investment myths is something that hasn't changed over the years. And acting on a myth while getting invested, always has the same result -- an incorrect investment decision.

1. It's too early to plan for retirement If you are in your 20's and comfortably placed in terms of your career, retirement planning is unlikely to be high on your 'to do' list. Instead, buying a car, going on vacation to exotic locations and acquiring the latest gizmos are likely to have more appeal. Nothing wrong with that, but this shouldn't be at the cost of retirement planning.



Full Story: 5 investment myths debunked

T hese are interesting times for investors. The testing market conditions have finally offered them the opportunity to appropriately evaluate their investments.

Over the past few years, when equity markets rose almost secularly, the investment scenario became rather skewed.

As a result, some prudently managed funds ended up looking rather mediocre and some mediocre funds managed to pitch in noteworthy performances.



Full Story: Have infrastructure funds delivered?

I n the past few years, the banking sector has given great returns. On January 14, 2008, it touched a high of 12,678.98. Four years ago it was hovering at around 3,000 levels.

Over these years, the BSE Bankex has delivered an annual return of 35 per cent. Last year it impressed with a 61 per cent return, far ahead of the 47 per cent delivered by the Sensex.

From the turn of the century, the industry has been growing at 20 per cent per annum. And it is estimated that in the coming years, Indian banks are expected to grow at 35 per cent per annum.



Full Story: Banking funds are good for every portfolio

W e receive several queries from investors on investment-related dilemmas. Irrespective of the nature of these queries, they help us understand the investor's perception on investments. Typically, such queries highlight the conflicts that investors face while making investments.

Getting into a dilemma while investing is a common phenomenon. It usually happens when investors are indecisive about two seemingly similar situations or investment avenues. If the dilemmas are not tackled early on, it could lead to a flawed investment decision, which can be disastrous for your finances.

These dilemmas are usually a result of the lack of knowledge among investors about various investment options. This leads to confusion about which investment option is most suitable in a given situation. In a bid to simplify things, investors look for answers that may have worked for their friend or colleague in the past.



Full Story: 5 common investment dilemmas

T he best way to create a good corpus for retirement is by investing at an early age. However, once you actually retire, it becomes even more important to choose the right instruments to park the accumulated funds.

real estate for regular rental income This is very important because the returns from the corpus would finally decide the kind of lifestyle you can afford.

Risk-return profile. Retirement is generally associated with safety. However, given the present levels of high inflation, investing in most fixed income instruments would give you a negative real rate of return. Further, rising inflation might upset retirement calculations quite badly.



Full Story: Retiring? Some quick money tips

O ver the last few years, when equity markets were surging northwards, balanced funds were relegated to the sidelines. Instead, equity funds, especially new fund offers were the season's flavour. Fund houses were busy launching a slew of infrastructure and global funds, among others.

And most advisors (taking a cue from the markets and fund houses alike), were busy piling up their clients' portfolios with equity fund offerings. As a result, several investors landed up with investment portfolios lop-sided in favour of equities. Expectedly the volatile equity markets have adversely affected such portfolios.

Then there are balanced funds with the mandate to invest at least 65 per cent of their portfolio in equities and the balance (35 per cent) in debt instruments. In effect, balanced funds offer investors the benefits of asset allocation, while investing in a single avenue.



Full Story: Is DSP ML Balanced Fund a good buy?

H olding your nerve in a bear market requires both sound knowledge and a cool head. If you can do so, you can both reduce losses and find profitable gems gathering dust. After all, it's worth remembering that that most revered of all investment prophets Warren Buffet eyes bear markets with a special gleam in his eye - for it's at such times that buying opportunities are available with handsome value in-built into their prices. Here are ten rules from a master trader to steer by in difficult times...

Flick the switch You'll never make rational investment decisions if you're mesmerised by the gyrating prices on your screen. Steel yourself not to look at prices, read market reports or talk to stockbrokers during trading hours. Markets are not going to turn for the better just because you will them to. And, as prices have fallen so far, it matters little if you miss the first inch of their eventual recovery.

Pound the streets You don't just need a sense of perspective; you need the widest possible perspective. The best investment opportunities are those you discover by observation of the workings of the economy in the aftermath of the stock market collapse. If you can bear it, take the taxi driver litmus test.



Full Story: 10 rules for investing in a bear market

W ith equity markets at their volatile best, doomsday scenario predictions are doing the rounds thick and fast. When the BSE Sensex was hovering around the 21,000 levels in the month of January 2008, irrational exuberance was the order of the day. Then, few investors would have foreseen a fall of over 30 per cent in the ensuing 6-month period.

Expectedly, the exuberance has been forgotten and despondency has set in. So what should investors do now? Remember the cliche - when everyone around you is losing his head, it's a good time to keep yours. Now's the time to put that in practice. In this article, we present a 4-point checklist of things to do now.

Get a reality check The volatile market conditions have presented an opportunity to get a reality check. In times of euphoria, the 'noise' from various quarters can make investors lose focus of their investment objectives and plans. Now is a good time to critically evaluate your investment portfolio. The present market volatility only underscores the high risk associated with equity investments.



Full Story: Shaky market? Here's what you should do

A dvice on when you must invest in a mutual fund is available dime a dozen. But it takes a certain degree of expertise and proficiency to redeem your mutual fund investment at the right time. Since this is the dilemma that many investors grapple with, we have outlined the five most critical reasons for redeeming your mutual fund investment.

At the outset, it is important to note that the 'right time to redeem' does not mean that there is a timing element involved over here. Rather the right time to redeem means when the time is up on your mutual fund investment and it is no longer prudent to hold on to it.

While there may be several occasions to redeem your mutual fund investment, we have narrowed it down to the five most pervasive reasons.



Full Story: 5 reasons to sell your mutual fund

W hen it comes to investing, it is commonly observed that investors tend to replicate the investment strategy followed by their colleagues, friends or relatives.

It is generally believed that an investment strategy that has worked for one will also work for others. However, this is the wrong approach, simply because 'one size does not fit all' while investing. Instead, investors need to build an investment portfolio that is right for them.

Building an investment portfolio requires the investor to put in a fair degree of thought and time. The need for the latter is only accentuated in light of the overwhelming choices available. In this article, we present a 4-step strategy that will help investors build an investment portfolio.



Full Story: 4 great tips for safe investing

Outlining his vision for a strong US economy, presumptive Democratic presidential candidate Barack Obama has said outsourcing of American jobs to India and China cannot be reversed.

"Revolutions in communications and technology have sent jobs wherever there's an internet connection, that have forced children in Raleigh and Boston to compete for those jobs with children in Bangalore and Beijing," Obama said in a speech in Raleigh, North Carolina.

"We live in a more competitive world, and that is a fact that cannot be reversed," he added.



Full Story: Jobs' outsourcing to India, China not reversible: Obama