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The Gold Bungalow


Gold BungalowThe gold bungalow above was the most talked about offering to the Lalbaugcha Raja this year. At auction, devotee Santosh Mane put in the highest bid at Rs 5.21 lakh.The current market price of gold is Rs 3,54,818 lakh for 130 grams.

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Investing In Solitaires


wealthymattersWhile the BSE Sensex, the country’s equity benchmark, and gold prices rose 68% and 70%, respectively, since 2010, the price of one carat of high quality solitaire has doubled during the same period to around Rs4 lakh from close to Rs2 lakh, that too without any wild swings. And there is the added advantage of being able to flaunt them.

A solitaire is priced anywhere between Rs75 lakh to Rs 20,000,depending on its weight and other parameters. There are some 123 factors that diamond sellers follow around the world. The major ones that determine the price of a diamond are its colour, clarity, cut and carat. A flawless diamond with a certificate from an international lab is considered the best quality. This last point is the most important. You will find a lot of cheaper stones with local certificates.

If you sell an old solitaire, with a certificate of authenticity from an international lab, jewellers across the country offer 90% of its prevailing market price.

 

Investing In Unlisted Shares


wealthymattersIf you’d like to be part of the action and excitement of various start-ups, you can consider investing in unlisted shares. But there are a few challenges to overcome and difficulties to bear up to.

Since these companies are unlisted, very little financial information is available. Also, because there’s no formal platform to trade these shares, the demand-supply situation varies and the price at which deals are struck are a function of the quantity, demand-supply situation and the sentiment prevailing in the secondary markets.

Unlike listed stocks, the unlisted space has few brokers and trades are made through known sources.Often, a broker accumulates small lots of shares from employees who have earned them as ESOPs, or from investors who have bought earlier and are looking for an exit. Once the broker has a sizeable chunk of shares, typically worth more than Rs 1 crore, it’s offered to HNIs.

Unlike listed shares, where a holder can exit through the stock exchange, liquidity is poor in unlisted companies. You would have to look for an IPO or another buyer. Read more of this post

The Grim Side Of Foreign M&As


wealthymattersYes, there is the successful take-over of JLR by Tata Motors, but most of India Inc’s big-ticket overseas acquisitions in the past five to seven years have,eroded wealth. The reasons for this range from high leverage taken to acquire a company , adverse changes in business cycle, or simply , failure to turn around a loss-making unit.

Tata Steel-Corus

Tata Steel acquired Corus, four times its size, for $12.04 billion in 2006. The valuation was more than one and-a half times its initial offer and was paid mainly through debt. Eight years down the line, Corus hasn’t contributed much to Tata Steel’s earnings. The European business was loss-making till FY13 and has not yet shown strong signs of a turn around.

Hindalco­- Novelis

Hindalco acquired Canadian company Novelis for $6 billion in 2007, making the combined entity the world’s largest rolled-aluminium producer. However, the high leverage, resulting from the acquisition and the slowdown in aluminium demand, post acquisition, have led to the company’s stock stagnating at the same level, adding nothing to its value. Read more of this post

Loans Against Insurance Policies


wealthymattersThe news that Life Insurance Corporation (LIC) of India has recently surpassed banks as the largest personal loan lender in India has turned the focus on insurance policies as collateral. Apart from LIC, other life insurers like ICICI Prudential Life and Edelweiss Tokio Life, and several banks, including the State Bank of India (SBI), ICICI Bank and HDFC Bank, offer loans against life insurance policies.

Loans are granted only against traditional policies that have life cover along with a savings element in them. Term insurance covers and unit-linked insurance plans cannot be pledged to secure loans against them.Policies must acquire surrender value -the amount you would get if you terminate the policy after a certain years -to qualify for loans. You must assign the policy in favour of the insurer to get a loan. Typically, insurance companies offer loans up to 85-90% of the surrender value. LIC charges an interest rate of 10%, to be paid every six months. Read more of this post

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