5 questions to ask an NRI investing in India – Vipin Khandelwal.


5 questions to ask an NRI investing in India – Vipin Khandelwal

3 Tips for Responding to Failure

Everyone reacts differently to failure: some immediately accuse others while some take the heat themselves, even if undeserved. Next time you and your team fail, resist the temptation to place blame. Take these three steps instead:
1. Think before you act. Don’t respond immediately or impulsively. Doing so can make matters worse. Take the time to consider several possible interpretations of the event and how you might react.
2. Listen and communicate. Never assume you know what others think. Gather feedback and then explain your own actions and intentions.
3. Search for a lesson. Mistakes happen. It may be that you’re to blame, someone else is, or no one is. Create and test hypotheses about how and why the failure happened to prevent it from happening again.


So the European Central Bank (ECB) has decided to follow through on its plans to tighten monetary policy this year. The ECB will begin by raising its benchmark interest rate next month. This is unbelievable. The Eurozone is under severe pressure that could ultimately lead to its breakup and yet the primary concern at the ECB is tightening monetary policy according to schedule. If followed through, the consequences of this are not only bad for the Eurozone, but for the rest of the global economy too. The slow-motion bank run now taking place in the Eurozone could easily turn into another severe global financial crisis.
So why then is the ECB pushing so hard for monetary policy tightening? From the New York Times we learn the answer:
With Germany, the euro zone’s largest economy, growing so quickly that some economists fear overheating, the E.C.B. has been trying to nudge interest rates back to levels that would be normal in an upturn.
Silly me, I thought the ECB’s mandate was for the entire Eurozone not just Germany. Now Germany is the largest economy in the Eurozone and so its economic conditions have a large influence on the the Eurozone aggregates that the ECB targets. So maybe I am being too hard on the ECB here. Still, if the ECB really desires to save the Eurozone in its current form then tightening monetary policy is a move in the wrong direction.
Here is why. If the ECB were to ease monetary policy, it would cause inflation to rise more in those parts of the Eurozone where there is less excess capacity. Currently, there is far less economic slack in the core countries, especially Germany. The price level, therefore, would increase more in Germany than in the troubled countries on the Eurozone periphery. Goods and services from the periphery then would be relatively cheaper. Thus, even though the fixed exchange rate among them would not change, there would be a relative change in their price levels. In other words, there would be a much needed real depreciation for the Eurozone periphery. This would make Greece, Portugal, Spain, and other periphery countries more externally competitive.
Again, the relative price level change would not be a permanent fix to the structural problems facing the Eurozone–it is not an optimal currency area and there needs to be debt restructuring–but it would provide more flexibility in addressing the problems. Tightening monetary policy, on the other hand, would only make matters worse. It would force all of the needed real depreciation for the periphery on wages and prices in the troubled countries. That only increases the pain for them and makes it more likely they will leave the Eurozone. This seems so obvious to me. Why isn’t it obvious to ECB officials? Why are ECB officials fiddling while the Eurozone burns?
P.S. See Kantoos latest idea for saving the Eurozone: apply countercyclical haircuts on bonds accepted by the ECB for refinacing (HT Matt Yglesias).

This post originally appeared at Macro and Other Market Musings and is reproduced here with permission

Fiddling while the eurozone burns

Reasons People Fail Financially in Retirement (Larry Rosenthal’s)

Larry Rosenthal’s Top 5 Reasons People Fail Financially in Retirement
1. Procrastination
• People take the path of least resistance. They wait to save and play and tell themselves that they have a long way to go. Most people have to fund for two colleges and then turn around the get ready for retirement shortly after that.
2. Failure to set clear financial goals
• People need to know their finish line. Some people can retire now and have no idea they can, while others are trying to force an early retirement on themselves and will struggle throughout their retirement years.
3. Failure to establish plans to meet their goals
• Everyone needs to develop a written financial plan. Most importantly, that plan needs to be monitored and reviewed each year.
4. Lack of understanding about what money can do for them
• Understanding compound interest and how to accumulate money with dollar cost averaging vs. market timing is important. In addition, it is vital to understand how to take money out during retirement to provide dependable streams of income from a reliable source.
5. Failure to understand and apply tax laws
• There are four different tax buckets: taxable; tax deductible and tax deferred; non-deductible and tax deferred; tax exempt or tax free. One of the most over looked tax advantages is the use of the Roth IRA. Take high income earners for example. Most of them think they cant make a contribution to the Roth. Heres how its done: Make a contribution to the non deductible IRA and then the next day convert it over to the Roth. One of the best kept secrets. (US Only)
6. Unwise use of credit
7. Failure to prepare for the unexpected
8. Neglecting to plan their estates
9. Failure to develop a winning attitude

Investment implications (Dr V. Anantha Nageswaran )

Investment implications (Dr V. Anantha Nageswaran )
Build a portfolio that would stand volatility and insure (hope to) against downside risk in the next 24 months
Keep a small portfolio of high quality stocks
As for stock markets, Japan, Russia, Thailand make sense to us
Invest in no-default history Emerging Market bonds for coupons
Keep cash in three structurally sound sovereign bonds
Diversify into physical precious metals, agricultural commodities. Retain exposure to crude oil (Energy Fund or stocks)
Keep a sizeable portion in cash in a diversified portfolio of currencies
Take ‘known downside’ bets on over and undervalued currencies using cash portion as collateral
Convexity is what we are likely to see in the next two years
“It’s easy to forget that responses to actions aren’t linearly proportional to the force applied, that many situations have a convexity in which just a little more can make all the difference, and a little less does nothing.”
Some potential convexity areas:
“That China won’t run into social trouble in the long run either, even though so far everything proceeds linearly towards growth without political freedom.
As for the US, sooner or later there will arise a successful popular nonlinear response to the linearly increasing concentration of economic power that isn’t devoted to popular improvement
Insanity: doing the same thing over and over again and expecting different results
Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.
Albert Einstein

Bondman Returns: Revenge of the yields (via Market Gup Shup)

2010 could as well go down as the year of debt markets in India. For investors in debt instruments it would be akin to being part of the Akshay Kumar’s reality TV show “Khatron Ke Khiladi” which started to be aired sometime ago. Or better still it could also be like watching the latest Hollywood Super hero flick in which our Super hero toils against the evil powers throughout 80% of the screen time but in the last 20% part of the movie we get thrilled with the climax which more than compensates our waiting time to get to this part of the movie. Our Super hero has the last laugh and not before he awes us with the kind of fire power only he could manage, making the evil powers look meek and without any iota of class.

So where’s the connect, you might ask?

For people who are used to making 2+2=5 you could skip because any amount of persuasion is not going to suffice. However, for those like me and who like to keep the game fairly simple, read on.

The above situation or parallel is likely being played in the bond markets in India currently. Rising yields are back with a vengeance. They are bleeding portfolios and investors are scurrying for cover. There is blood on the portfolio statement of an average debt investor. The last few months have been a double whammy. For one, there was low return on traditional instruments like bank FD’s. Second, debt mutual funds offered returns with commensurate higher risk but ended up hurting as risk free rate inched up higher due to higher borrowing and resultant inflation. Third and last, there were only liquid funds that offered hope, but investor’s patience waned as the situation persisted for long.

Come 2010, and there was more bad news. The evil forces of yields are back to their menacing best. Rising fast, staying there, declining and trying to tell us they are going away and striking back when we think it is a good time to invest and make money.

So what does a pre-dominantly debt investor do after being subject to such a mauling over a relatively short period?

We believe that it could be a best time to invest in debt funds over the next couple of years. We also believe that this would be a golden period for debt funds, a period which one witnesses in 5-7 years. The last time this happened was in 2002-2003. Annual returns from medium term debt funds could average 8-12% on a gross basis for the next 18-24 months.

In light of this, we think it would be a good strategy to forget the red ink on your current debt portfolio statement (if you have a reasonable debt portfolio already). But if you are not a debt investor, then we think its winter in India and a good time to hit the beach in Goa.

Invest sizeable amounts of money in a staggered manner in star rated Income funds and wait till our Super hero – the Bondman (as we prefer to call him) vanquish the menacing yields and prevail upon them. The movie is still reaching the interval and the climax is set up for the end of 2010.

List of Document for Mortgage(Republice of India)

LIST OF DOCUMENT FOR SANCTION (Under Income of Salary) Applicable to ROI
• 1 Photo.
• Latest Cost to the Company copy.
• Form No: – 16 of the latest year or previous year.
• Appointment letter if not completed one year.
• Latest 6 Months Salary Slips.
• Latest 6 Months Bank Statement of Salary A/C. (Duly Attested with the Bank)
• Company I.D copy.
• Age Proof: – Pan Card, Passport Copy, Driving license, or Leaving Certificate.
• Residence Proof: – Telephone Bill, Electricity Bill, Ration card, or HR Confirmation Letter.
• Investment Details:-FD Receipt, PF, PPF, NSC, KVP, Shares Statement, or LIC Policy.
• 1 Cheque favoring with the respective bank.

• Original Agreement.
• Original Registration Receipt.
• Original Stamduty Receipt.
• Original Payment Receipt.
• NOC from Builder or Society as per Bank Format
• Original Previous chain of Agreement, Stamduty & Registration Receipt in case of Resale.

• 80 % funding in case of Builder & Resale Property.

Total cost considered by XXXXX LTD will be Agreement Cost +Stamduty + Registration Fees.

If a prepayment is made within 3 years of the first disbursement*, under Adjustable Rate Home Loan (ARHL) option an early redemption charges of 2% of the amount being prepaid is payable if the amount being repaid is more than 25% of the opening balance.


PROCESSING FEES: – 0.50 % of the Loan Amount or Max Rs- 11030 /-(For Republice of India)