RandomBlog2011 | wealthymatters

Laddering

April 10, 2011 4 Comments

Normally,for fixed income instruments , the interest rates corresponding to longer terms are higher than those for shorter terms.However,locking in money for longer periods is not always an option.One way of ensuring a greater degree of liquidity while taking advantage of the higher rates offered for the longer tenures is laddering.

If you want to create a 5 year ladder you could buy a 1year, 2year, 3year,4year and 5year instrument .Then after the first year,renew the matured 1 year instrument for a term of 5 years.Then the following year do the same with the matured 2year instrument.Continue the process.

Laddering ensures that at least some of the higher interest rates are locked in and that the average rate is higher than the rates at the lowest point in the interest rate cycle.

If you are drawing an income from your fixed income instruments say to pay or part pay you a pension,your EMIs,a tution fee or get some passive income,laddering smoothes out the variations.

Laddering is possible with bonds,NCDs,FDs,CDs etc.

Filed under Paper Assets, Theory Tagged with bonds, CD, Certificate of Deposit, EMI, FD, Fixed Deposit, Fixed Income Instruments, higher interest rate, Income, Interest Rate, interest rate cycle, laddering, liquidity, low interest rate, NCD, Non convertible debentures, passive income, pension, postaday2011, RandomBlog2011, tution fee

Woo Hoo ! 103 Page-Views Yesterday !

April 9, 2011 3 Comments

At long last my blog registered 103 visitors yesterday.I’m so happy I’m floating on air!

Filed under Tidbits Tagged with 100 page views, celebrating, girl dancing, party, postaday2011, RandomBlog2011, stick figure

The Perfect Guru

April 8, 2011 2 Comments

Mentors and gurus,we all need them to shine.But picking the right teacher is really very important.The Indian Cricket Team has not always been fortunate in its coaches.To have followed their history, is to know how a bad teacher can squish the best talent in the world.Teaching is oh so much more than imparting knowledge,instilling discipline and creating perfection.In fact, trying to mould every student to fit some abstract idea of “perfect” is probably the best recipe for killing talent.I hope this article from the the ‘Mumbai Mirror’ helps you pick a good mentor.The red ink is all mine.

There’s only one way to coach

Ashish Magotra

An Inspiring Story

April 8, 2011 2 Comments

While looking for nice blogs to read I came across ‘Boston Gal’s Open Wallet’.Here is a link to the blog : http://www.bostongalsopenwallet.com/ .I also came across the most inspiring story I have read in a long time.I have pasted it below.I hope it works the same magic on you. Though she writes about personal finance in the US,I think I will visit often and be be inspired by her life lessons.

A little history lesson about me and money – Part 1

I have always had a weird relationship with money. I enjoy amassing it and can deny myself much to gather it, but at points can spend large amounts of it with no fear. What is odd about that is that fear is my primary motivation for amassing the money in the first place. Let me explain…I am the youngest of five children and my parents divorced when I was about 5 years old. My Mother won custody of the children and was given the house (which had a mortgage) while my Father got the car and the boat. Unfortunately my Mother was a stay-at-home Mom while my Father was the main bread winner. Since my Father’s income was mostly commission based, the divorce settlement was barely enough to keep the five us in the house with the lights on. The upshot of this was I grew up in a nice middle-class house and enjoyed summers sailing at the yacht club with my Father, but worked two large paper routes starting at age seven (and kept both routes until I graduated high school at 18). While my Mother did go back to school and eventually got a decent job as a nurse, my older siblings child support checks kept stopping as each turned 18 yet everyone went to college so all were around well into their 20’s. Read more of this post

Filed under Tidbits Tagged with Boston Gal's Open Wallet, Inspiring Story, postaday2011, RandomBlog2011, relationship with money

Using Inflation To Create Wealth

April 7, 2011 6 Comments

Those who learn from history, have the ability to PROFIT from it.So here is some history:

Inflations start out slowly.Governments will not openly admit to debasing the currency. They will cite other reasons for why inflation is going up. In Weimar Germany,for example, government officials and those within the finance community blamed their trade partners and foreigners for the Reichsmark depreciating. German writers and politicians at the time had said that “paper inflation was not the cause or consequence of the external depreciation of the Reichsmark. The depreciation of the Mark was held completely independent of the condition of paper circulation between 1921 and 1923″ – even though money in circulation went up 23 times within 2 years ! Prices of imported goods back then – denominated in US dollars – went up 344 times. The official view from within the government of the Weimar Republic – the chancellor, the head of finance, the head of the Reichsbank – was to blame it on the excessive burdens thrust on the German people with war reparations, the violent policy adopted by France (when France invaded and took over an entire industrial section of Germany), and they also blamed it on increases on the price of imported goods.Conversely, the view held by those outside of Germany was that the depreciation of the Reichsmark was due to the government’s huge budget deficits, which required Germany to continuously print paper money. I guess people around the world will recognize the current day parallels to this scene from history.Quite a few governments are doing something like this today. Read more of this post