April 25, 2014 Leave a comment
April 7, 2014 Leave a comment
Ths IRS releases a list of the 400 highest returns filed in the US.They are known as the Fortunate 400.So how do they get there?-Their money works for them.
The Fortunate 400 make as much as half of their incomes (in blue) from investments, and their household incomes have swung very similarly to the S&P 500 (in red) over the past 100 years.The S&P 500 is a broad mix of 500 stocks across multiple sectors, it is a much more accurate gauge of market sentiment than the more well-known Dow Jones Industrial Average – which tracks only 30 stocks.At the very top of the economy, the 400 richest tax returns analyzed by the IRS take home about 50 percent of their income from capital gains i.e they sell at the top of the market.Capital gains are income earned through investments, and they have shot up 1,300 per cent since 1992.
So are there any repeat names on the list ?-73% of the people make it to this list just once.Only four households appeared every year in the last 2 decades.So who are they?Your guess is as good as mine.For privacy reasons the IRS doesn’t publish these names.
April 7, 2014 Leave a comment
The bottom nine-tenths of the 1 Percent club have about the same slice of the national wealth pie that they had a generation ago. The gains have accrued almost exclusively to the top tenth of 1 Percenters. The richest 0.1 percent of the American population has rebuilt its share of wealth back to where it was in the Roaring Twenties. And the richest 0.01 percent’s share has grown even more rapidly, quadrupling since the eve of the Reagan Revolution.
So where do they have their money?In real estate and bonds.So don’t underestimate their relevance to the wealthy.
March 30, 2014 Leave a comment
This post is on how to analyse the key revenue constituents of a profit and loss statement (P&L).
Some companies report the ‘total income’ earned by them within a year as ‘sales’. As an investor,its better for us if we take a company’s integral earnings or core operations only as sales and not the income that is generated from other operations. The latter could include items such income from sale of scrap, income from interest and dividends, forex gains, profit on sale of assets, export incentives and miscellaneous receipts, amongst others.While these items may not be a significant part of the total income, it is still a good practice to follow. In fact, it would be even better if we could further bifurcate such earnings under two heads – other operating income and other income. Details regarding total income are found in respective schedules.
Revenues are generated from sales of goods or services. For companies which have a presence in various businesses, it is a good practice idea to track the change in segment wise/ product wise / business wise revenues on a year on year basis. Look at how the income from each business segment (as a percentage of net sales) has changed over the years. This will give us a good idea how a company’s segments or businesses have been performing over a particular time frame. Read more of this post
March 28, 2014 Leave a comment
Being the promoter of a public company is seen as prestigious.So why do promoters sometimes opt to make their company private again?The simple answer is often the possibility of Private Gains.Public share holders and promoters often have vastly different perspectives on making money,vastly different time horizons when it comes to harvesting gains,vastly different risk perceptions and holding power.Here is an example:
In early ’13,Dell had a total market cap of about $22 billion. They also had about $11 billion in cash, which meant the stock market was valuing the entire business at $11 billion ($22 – 11). The company had a price-to-earnings multiple of about 8.5.
So the situation was that, if Michael Dell and private equity investors put in $2 bilion, used the cash on the company’s books and borrowed the remaining $9 billion, they could control the entire company without the hassle of having public shareholders.
The flexibility of not having public shareholders would enable Michael to do what has needed to be done for years, and that is massively streamline the company’s manufacturing and sales forces (probably through layoffs), re-focus the core PC business, grow the enterprise and consulting businesses, and make the company generally more Lenovo-like or IBM-like. Read more of this post
March 27, 2014 Leave a comment
Job-hopping can increase your pay, but good old loyalty also has its perks. Stay on with your employer for five years or more, and you are entitled to gratuity when you resign, retire or are retrenched. This monetary reward to be paid by your employer in recognition of your years of service is mandated by the Payment of Gratuity Act. Most establishments employing 10 or more workers fall under the Act.
The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and DA for every completed year of service. Here’s the formula to calculate gratuity: (Number of years of service) * (Last drawn monthly Basic and DA) *15/26. So, if you have served 30 years and draw monthly Basic and DA of Rs 20,000 when you leave the job, you get gratuity of Rs 3,46,154 calculated as (30 * 20,000 *15/26). Your employer can choose to pay you more but the maximum amount of gratuity according to the Act cannot exceed Rs 10 lakh. Amount paid above this will be in the nature of ex-gratia — something voluntary and not mandated according to law.
March 23, 2014 2 Comments
I’m just back from the Kotak Jifi launch with Chetan Bhagat.It was a rocking party at a great venue:Cafe Zoe, with great food and better drinks. Well Done IndiBlogger Team!It was the best IndiBlogger meet ever!
Now onward to serious business. And mind you,I’m sober,so the recommendation is not due to alcohol induced mellowing.
Checking accounts for individuals are common in the US,not so in India. Kotak Jifi is a checking/current account for individuals.And more importantly,it is a zero-balance-account.So like most current accounts,this one too pays no interest on your money but unlike others, you are not obliged to park even a single paisa for a single day in this account.So this is a great bank account for transacting business.And in doing so you will find the internationally accepted Platinum Debit card with a 2 lakh limit per day,handy.Any balance over Rs 25,000 you park in this account, however temporarily, is automatically swept into fixed deposits and earns you 8%interest pa .Better yet,you can check your balance in this account via Twitter.This is bound to come in handy when you are abroad and telcom services seem to cost a bomb,ATM balance queries are charged but Wi-fi hotspots are common.
To get your exclusive invite to the Kotak Jifi Circle,click on this Link
And BTW if you are wondering….this account has all the services offered by other bank accounts.
As an aside, seeing Chetan Bhagat upfront,was something of a surprise.I would have expected more of a ‘celebrity type’ or ‘power persona’.He however turned out to be something of a’guy next door’.Perhaps it is this very groundedness and the ability to speak to ordinary people at their level that makes him the success he is.