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Hostile Takeovers

December 28, 2012 Leave a comment

WHAT IS A HOSTILE TAKEOVER? WHY IS IT CALLED SO?
The acquisition of a company by another by directly approaching the company’s shareholders and not reaching an agreement with the management of the target company is called a hostile takeover or a forced takeover bid. Many a time, the acquirer will try to replace the target company management or tender an offer to get a takeover done. The key characteristic of a hostile takeover is that the target co’s management doesn’t want the deal to go through.
HOW IS IT DIFFERENT FROM A NORMAL TAKEOVER OR ACQUISITION?
In a normal takeover or acquisition, the buyer as well as the seller reaches an agreement on the pricing, the sale and the nature of the merged entity. But in a hostile takeover, the management of the company does not support the unsolicited offer and reject it. In such a case, the offer is made against the will of the management to the shareholders by the acquirer based on which a decision is taken. Read more of this post

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Liz Pulliam Weston On Planning For Emergencies

December 28, 2012 6 Comments

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I like to emphasize financial flexibility, rather than dictate a set dollar amount. I think you should look at all your available resources, including cash in the bank, available credit and your “Plan B” options. Is there another earner in your household? How secure are his/her job prospects? Do you have friends or family who could help you out if your back was really up against the wall?

You also need to look at your overhead and how easily you could cut back if necessary. If you’ve got huge mortgage and car payments, for example, you have less flexibility than if you would if your “must have” expenses-shelter, food, utilities, insurance, child care, minimum loan payments-total 50% or less of your after tax income.

The people who are most vulnerable right now are the ones who spend every dime they make on their overhead and who really don’t have a Plan B. There’s just no wiggle room. If you’re a dual-income household and both work in the same troubled industry, or for the same firm, heaven forbid, you’re really on the edge unless you have a fat wad of cash in the bank.

Personally, I’m most comfortable when I have access to cash and credit that equals at least a year’s worth of must-have expenses. I think most people should try to shoot for at least three months’ expenses in cash alone, but unless you’ve already lost your job I wouldn’t stop saving for retirement or paying down credit card debt just to boost that emergency fund.

Filed under Paper Assets, Tool Kit Tagged with access to cash and credit, available credit, car loans, cash balances, dual-income household, emergency fund, financial flexibility, Liz Pulliam Weston, mortgage loans, overheads, paying down credit card debt, Plan B, planning for emergencies, postaday, saving for retirement

Is Saving In Silver Better Than Saving In Gold ?

December 27, 2012 3 Comments

wealthymatters.com Silver is the poorer cousin of gold and shows more volatility.However it is also considered a precious metal.So how does it compare to gold as a savings/investment?Where would you be today if you had bought and held silver for the last three decades?Follow this link to your answer :Long Term Returns From Silver Vs SENSEX

So silver would have given you marginally better returns.However you would have had to stomach its greater volatility.And worrying for 30 years just doesn’t seem worthwhile.

Also like gold, silver returns adjusted for inflation are pretty underwhelming and gets beaten by equity returns by a big margin .And in times of negative real returns silver like gold shoots up in price.

Filed under Paper Assets, Precious Metals, Tool Kit Tagged with historic silver returns vs SENSEX returns, investing in silver, long term silver vs gold returns, negative real returns, postaday, saving in silver

How Well Would You Have Done if You Had All Your Savings In Gold?

December 27, 2012 3 Comments

wealthymatters.com Today financial planners and daily wage earners speak of ” investing” in gold.In fact,given the dream run of gold in the last decade,most people can’t see past gold.Never mind that between last Diwali and this one there was no substantial increase in the price of the metal and that there was a fall in price in between and then it struggled to rise for a while.

There is no denying that in the dark days after the stock crash of 2008 and the poor economy thereafter, gold provided good comfort for all of us who worried about our financial health.And the fact that gold price rose fantastically in uncertain times was the icing on the cake.

Also gold has helped us hedge against inflation.Here is the link to an older post.

Gold also does superbly well when the equity markets and debt markets are giving negative real returns.

So should you just have all your savings and investments in gold?Far from it!Aside from the wealth tax you might be forced to pay every year on an asset that will give no returns till it is sold, at which point it might attract capital gains tax,keeping your money in gold over the last three decades wouldn’t have given you stellar returns.Check out the chart here:Long Term Returns from Gold Vs SENSEX While gold keeps up with inflation,just buying and holding it for long is unlikely to make you rich any time soon.So be certain to enjoy the touch and feel and beauty of your gold.

Filed under Paper Assets, Precious Metals, Tool Kit Tagged with Capital Gains Tax, financial planners, Gold Inflation Hedge, Historical Gold and Sensex returns over 30 years, Inflation, Investing In Gold, keeping your savings in gold, negative real returns, postaday, wealth tax

So How Well Would You Have Done With FDs Only?

December 26, 2012 2 Comments

wealthymatters.com Every time the stock markets tank or or equity returns look less than appealing,there is a tendency to want to return to the stable and predictable FDs. Why lose capital on the stock market or risk one’s money for lower rates than FDs?Why not just invest in FD’s and avoid the hassles of investing in the stock market?

In fact,what would have happened to you if you invested exclusively in FDs over the last thirty years?Ever wondered about that?If so,this link will give you your answer:Long Term Returns From FDs

Of course by locking in the higher rates ,when they appear, for as long as possible, and taking care to avoid FDs when they trail inflation rates for prolonged periods, you will be able to do a little better.Also these rates are those of the nationalized banks.You could earn a bit more by opting for smaller private banks and scheduled co-operative banks.You would still enjoy the same deposit insurance.

However the ravages of inflation should give you a pause before you decide on an all FD approach. Equity at worse is a necessary evil.