How Interest Rates Work?

A letter arrives in the mail from your credit card company. Because of a significant change in your credit score, they’re raising the interest rate on your credit card to 23 percent. What?

You’re watching CNN and they’re talking about a recent announcement from Federal Reserve chairman Ben Bernanke, in which he hinted that the Fed would be raising interest rates by a quarter-point in the next week. The stock market plummets, losing 357 points in one day. Why?

You want to save money to buy a motorcycle, so you invest in a five-year CD at the local bank with an interest rate of five percent. But when the CD matures, you notice that the price of motorcycles has gone up by three percent. You really only made two percent interest on that CD. What’s going on here?

Before you get all worked up, you should know that interest rates aren’t evil. They’re the price of living in a world that relies heavily on credit and debt.

Read more at: How Interest Rates Work?


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The festive season is upon us and Indians will fall over each other to buy gold, never mind the prices. While physical gold is favourite among the masses, there exists a better way to invest in gold – gold Exchange Traded Funds or gold ETFs as they are called. Gold ETFs have been a success story around the world and Indians are warming up to the idea of investing in it since they were launched in 2007.

Let us see why they need to be included in yourfinancial planning.

What are Gold ETFs ?

You must already know this, but for the uninitiated, Gold ETFs are open ended mutual funds that help you invest your money in gold which is 99.5 % pure.  Gold Exchange Traded Funds are also known as paper gold.  These are listed on the stock exchanges and investors are assigned units of the mutual fund where each unit often represents one gram of gold. Note that there are ETFs where each unit can represent less then one gram of gold as well.

Being passively managed funds, Gold ETFs simply follow the price of gold in the market and so their returns match the returns of gold you would buy off-line. An investor can buy and sell them on the stock exchange.

Read more at :  What is Gold ETF (Exchange Traded Funds)?


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What is Bookkeeping

Double entry bookkeeping is a generally accepted system. This system was first described by Luca Pacioli in 1494. The system of double entry may be well compared to a scale, which must have equal weight on both sides in order that the scale is balanced. Thus, if the weight on one side of the scale is increased or decreased the same weight must be correspondingly added to, or removed from, the other side. A more common expression of double entry book keeping is the accounting equation.

The total assets of a firm are always equal to the total equities.

This reflects the fundamental accounting equation of: Read more here….What is Book Keeping?

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FMP(Fixed Maturity Plan) vs. Bank FD(Bank Fixed Deposits)

Like thousands of other investors who prefer caution over returns, Mumbai-based Ganesh Anchan (not his real name) was largely a fixed deposit (FD) man. Whatever savings he managed, this financial accountant in a construction company would promptly squirrel them away in investments with assured returns. Anchan was only too happy to do so until he met Amar Pandit, a financial planner. Pandit showed Anchan how his high tax outgo of 30 per cent on the income generated from investments were actually eating into his returns. “All efforts to convince Anchan to start investing in equities were in vain, since he had a low risk appetite,” recalls Pandit. “So, we did the next best thing: We moved his investments from FDs to fixed maturity plans (FMPs).”

What are FMPs?

Read more on FMPs vs Bank Fds here: FMP(Fixed Maturity Plan) vs. Bank FD(Bank Fixed Deposits)

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Investing in NCDs vs. Bank FD, Company FD, Debt funds

The weakness in the stock markets and the high returns offered by debt instruments are making investors rush to the safety of fixed income options. After fixed deposits and FMPs, non-convertible debentures (NCD) have caught the fancy of investors. This article looks into the concepts of NCDs and points to consider while investing in the NCDs….

Continue Reading here…

Investing in NCDs vs. Bank FD, Company FD, Debt funds

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