Paper Assets | wealthymatters

Kotak Jifi Is Here,Grab Yours

March 23, 2014 2 Comments

wealthymatters 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.

Filed under Paper Assets Tagged with checking account, Chetan Bhagat, current account, Kotak Jifi, Platinum Debit card, postaday, zero-balance-account

The World’s Biggest Life Insurance Policy

March 19, 2014 1 Comment

wealthymatters

Guinness World Records has announced the World’s Biggest Life Insurance Policy ever issued.

However,neither the record keeper nor the issuer would say who is covered by the massive policy.Dovi Frances, the adviser who arranged the policy, would only say it went to a well-known technology billionaire from California.

The wealthiest of the wealthy often buy life insurance for several reasons.Primary among them are tax purposes.In many countries,a wealthy estate is often hit with a hefty tax bill, and there may not be enough cash to cover it, since many millionaires and billionaires hold their wealth in investments.

This $201 million policy overtakes the previous record of $100 million.It is more complicated than most. It’s underwritten by 19 different insurance companies, each with a slice of less than $20 million. If a single company took the risk of the whole policy they would go into bankruptcy if a claim were to be made.

The yearly premium is in the low single-digit millions.

Filed under Paper Assets, Tidbits, Tool Kit Tagged with Dovi Frances, estate duties, estate planning, Guinness World Records, life insurance, life insurance policy, postaday, premium, tech billionaire, underwriting, why the wealthy buy life insurance, worlds biggest life insurance policy

Sensex Churn

March 19, 2014 Leave a comment

wealthymatters

The Sensex churns by over 50% over a 10-year period. That is to say, if we begin a decade with 30 stocks in the Sensex, by the end of the 10-year period, less than 15 of those stocks are in the Sensex. This churn ratio was below 15% in the 1980s, but has steadily risen over the last 20 years.

Moreover, compared to other large emerging markets or the West, the Indian market churns much more (eg. the Dow Jones index (US) has 23% churn, the Hang Seng (Hong Kong) 30% and the Bovespa (Brazil) 39%). So, why has the Sensex’s churn gone up so sharply in the past 30 years? And why does the Sensex (or the Nifty) churn so much more than any other large stock market in the world? Back in the days when the Licence Raj prevailed, the Indian economy was fairly ossified. Unless you turned up in New Delhi with truckload of goodies for the powers that be, your company did not go anywhere. As a result, hardly any companies entered or exited the Sensex during that era.

Then, 1991 came and Manmohan Singh unveiled his ‘New Economy Policy’. Over the next 10 years, the Sensex churned 63% as a host of stalwarts from the Licence Raj tumbled out. So out went Hindustan Motors and Premier with their vintage cars. Along with them a slew of textile companies – Bombay Dyeing, Century Textiles, Futura Polyster – also found themselves ejected from the Sensex. Among the 20-odd entrants into the Sensex were several representatives of the post-liberalisation India, including Infosys, HCL Tech, Satyam Computer, Zee Entertainment, Cipla, Dr Reddy’s, Ranbaxy and ICICI Bank. In effect, the intense churn in the Sensex reflected the revolution that the Indian economy underwent in the decade post-1991. Read more of this post

Filed under Entrepreneurship, Paper Assets, Tool Kit Tagged with investing in index mutual funds, investing in index stocks, investing in large cap stocks, sensex churn

Investing In MNC Stocks

March 18, 2014 Leave a comment

Wealthymatters

Though MNCs shock shareholders occasionally as when they decide to delist or pay hefty royalties, they have always rewarded investors handsomely. In fact, MNCs have been wealth creators for investors across time cycles. Even in turbulent times such as the last three years ended March 14, the CNX MNC index has returned 7.93% compounded annual growth rate (CAGR) against 5.55% CAGR returns generated by CNX Nifty. That is why MNC shares are good for long term investments.

There are some corporate governance issues in this space. But the management quality is good and investors can consider MNC shares for investment with a three-year time frame.

The CNX MNC index consists of eight different sectors that fall in both — defensive and cyclical segments. Defensive include FMCG, IT and pharma whereas cyclical include metals, industrials, chemicals, consumer discretionary. Defensive MNC stocks do well on the bourses in tough economic times when the overall economic growth is anaemic. Cyclical stocks suffer during low-economic growth. So investors can invest in MNC cyclical stocks during downturns to harvest a gain when recovery takes place. Read more of this post

Filed under Paper Assets, Tool Kit Tagged with Birla Sunlife MNC Fund, capital appreciation, CNX MNC index, cyclical stocks, defensive stocks, delist, High valuations, liberal dividend payouts, MNC investments, postaday, stock investment, UTI MNC Fund

The Central Public Sector Enterprises (CPSE) ETF

March 18, 2014 Leave a comment

wealthymatters Almost two years after it was first mooted, the specialised exchange-traded fund (ETF) for public sector stocks is finally getting off the ground. The government has selected Goldman Sachs Mutual Fund to run this fund, which will be called the Central Public Sector Enterprises (CPSE) ETF. ETFs are generally based on an equity index and replicate that index in their portfolio so that investors can invest in it easily.

The CPSE fund’s underlying index is a new index of the same name that the National Stock Exchange launched last week. The index has 10 stocks as its components — Coal India, GAIL, ONGC, Indian Oil, Bharat Electronics, Oil India, PFC, REC, Container Corp and Engineers India. While ETFs are mutual funds, they are bought and sold on stock exchanges .An investor who wants to invest in this basket of public sector stocks can buy this ETF instead.

For the government, the CPSE ETF essentially offers an on-demand, instant divestment route that is always open. This is the solution to a different problem that was talked about when such a fund was first mooted a couple of years back. At the time, the idea was that a PSU ETF could be used to bundle less-desirable PSU stocks with more saleable ones, sort of like what your provisions store does to get rid of hard-to-sell items. That idea was clearly unworkable. By contrast, the new ETF consists entirely of what may be called investible PSUs. Read more of this post