postaday | wealthymatters

The Rupee Dollar Exchange Rate -II

April 5, 2012 Leave a comment

I have long been interested in knowing more about the historic Rupee Dollar exchange rates and the story of the devaluation of the Indian Rupee.I previously posted some data I had gathered on the subject here:https://wealthymatters.com/2011/09/25/the-rupee-dollar-exchange-rate/ .This post contains some more data I came across today here http://www.mises.ca/posts/blog/are-weddings-in-india-really-driving-gold-prices/ :

In early controlled exchange rate regime, the rupee exchange rate hovered around Rs 4 in the 1950s, Rs 5 in the 60s, Rs 7 in the 70s, and Rs 8 in the 80s. The liberalized era of 90s was different, the rupee moved in the Rs 20s (the rupee was also partly decontrolled in early 90s) and Rs 40 in the decade of 2000. Read more of this post

Filed under Theory, Tool Kit Tagged with postaday, rupee devaluation, rupee dollar exchange rate

Gold To Preserve Wealth

April 5, 2012 1 Comment

Gold is generally believed to be a hedge against inflation.However there has been a spate of articles disputing this belief.I found this nice article here that analysis the relevant data for India http://sachasingh.blogspot.in/2010/01/is-gold-good-hedge.html . The graphs and table below are extracts from this post.

The graph below shows the movement in WPI and average prices of 10 gms gold in Mumbai from 1970-71 to 2008-09.

Pay Yourself Twice

April 5, 2012 1 Comment

wealthymatters.com The details of this idea can be read here:http://7million7years.com/2011/05/26/the-pay-yourself-twice-wealth-strategy/

The general idea is that if we want to be seriously wealthy we need to do more than just save a small part of our incomes to be invested for the long term in various savings instruments so that we can achieve various life goals .Such a strategy will help us secure a middle class lifestyle but no more.So paying ourselves once secures us some insurance against the vagaries of life.To raise the capital to build businesses and participate in other higher risk ventures and to buy other truly passive assets we need to pay ourselves once again.

BTW the savings rate suggested so that we pay ourselves twice is over 75%. To check your savings rate why not use the calculator here:https://wealthymatters.com/2011/01/17/am-i-wealthy-calculator/ ?

Filed under Theory, Tool Kit Tagged with capital building, pay yourself, pay yourself twice, paying oneself, postaday

The Rate Table

April 4, 2012 Leave a comment

wealthymatters.com The table above is from http://7million7years.com/2011/05/26/the-pay-yourself-twice-wealth-strategy/. I put it up here as it is such a nice way of explaining things and keeping expectations of returns from different types of investment vehicles realistic.

Filed under Theory, Tool Kit Tagged with postaday, returns from various investment vehicles

Eloquent Defence of Gold

April 4, 2012 2 Comments

Mr Buffett’s views on gold (post before}will definitely help us realize just how much money can be made in good times from the possession of various assets like securities and farmlands.But come the hard times there is just nothing else that compares with gold.Ganesh Ratnam explains how gold has been a pretty good investment for Indians.

Gold: India’s Capital Asset through History

Mises Daily:Tuesday, October 27, 2009 by Ganesh Rathnam

India’s obsession with gold is well known around the world. To most Western commentators, this obsession seems irrational, and Indian people seem like incurable gold bugs.

However, on closer examination, gold ownership in India is neither excessive nor irrational. In fact, when religious, cultural, and historical perspectives are considered, India’s appetite for gold seems rather matter of fact indeed. Nonetheless, it is not lost on any Indian worth his or her salt that gold is the asset that best protects wealth and freedom.

When my father, a pediatric surgeon, wanted to buy land to construct his clinic and supplement his meager government income, he purchased the land by mortgaging my mother’s jewelry. Similarly, millions of people in India have capitalized their businesses or farms, or secured their basic necessities after severe business reversals, by pledging their gold jewelry. As we shall see below, were it not for gold, the average Indian’s lot through history could’ve been a lot worse.

India’s Per Capita Gold Holdings

India’s private gold ownership is difficult to determine accurately. However, several websites, such as Gold Eagle, estimate the total private gold holdings to be about 15,000 metric tons. Compared to that figure, the Indian government owns a negligible 360 metric tons of gold. Read more of this post