Cashless Payments Only Credit and Debit Cards

The finance minister, in his budget speech, talked about the idea of making India a cashless society, with the aim of curbing the flow of black money. But what exactly is a cashless economy? It can be defined as a situation in which the flow of cash within an economy is non-existent and all transactions have to be through electronic channels such as direct debit, credit and debit cards, electronic clearing, payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer and Real Time Gross Settlement in India.

In the history of money, the arrival of banks brought in the need for paper currency. Banks had a limited supply of gold and silver and realized that their lending capacity was constrained by this. Hence, they started issuing paper notes in excess of their reserves. This was followed by the governments printing notes that were redeemable for gold and silver. But they printed notes in excess of their reserves. The problem was when people lost confidence in the paper notes and tried to redeem them for gold and silver, the system collapsed, for example, in Germany after the World War I.

This phenomenon of people losing faith in paper money has been repeated often. Whenever governments have printed more currency than reserves, the value of the currency has depreciated.

India continues to be driven by the use of cash; less than 5% of all payments happen electronically. This is due to lack of access to banking for a large part of the population as well as cash being the only means available for many. Large and small transactions continue to be carried out in cash. Even those who can use electronic transfers, use cash.

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SIPs Can Make Investors Richer

Stock market, on the whole, has fared quite well in the past one year. Investors’ reaction, nevertheless, has been mixed. Some continue to invest into equities, while others are still waiting on the sidelines. This trend sums up the investors’ general lack of interest in this asset class (equity), which if invested into carefully, can reap excellent returns over the long term.

​People generally don’t trust the sustainability of equity returns. Market volatility and bad experiences also keep them away. Thus, they lose out on the opportunity to enter during early phases of the market rallies.

​If looked at carefully, equity investments yield best results if they’re indulged into in a systematic manner and with a long-term perspective. While the long-term approach negates the effects of medium and short term market volatility, systematic investment strategy prevents one from committing more than what is advisable at particular market levels.

You must also pay heed to the medium chosen for equity investments, to fetch optimum returns. Hence, a good number of investors choose to invest into equities via mutual funds, taking the SIP(Systematic Investment Plan) route.

​If you’ve avoided equity funds so far for any particular reason, it’s time you take the plunge into equity fund SIPs. However, don’t do it because market is yet to manifest its peak levels. Rather, do it because investing into equity funds using a disciplined and long-term approach, you can accomplish your long-term life stage goals like children’s education/marriage, retirement planning etc. By investing over a time horizon of 10 to 15 years, you won’t have to worry about the fluctuating market levels.

​On the other hand, you shouldn’t take SIP returns for granted. Following are some important factors you must carefully consider to ensure that you receive healthy and timely returns to meet your different life stage goals:

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Redeem Mutual Fund Units Through Onlilne

How do you redeem your mutual fund (MF) units? Most of us fill out physical forms. We either give them to our distributors who go to the fund houses or registrar and transfer agent’s offices, or we go there ourselves. But it’s tedious to go physically. What if you forgot to take signatures or details that you are required to fill in the forms? That is one visit wasted and you have to go back again. All this effort can be saved by redeeming units online.

 

REDEEMING UNITS ONLINE

Many fund houses allow you to redeem your units online. Typically, as soon as you invest, fund houses encourage you to open an online account. Once you do this, you can invest further (additional units), make a switch from one scheme to another within the same fund house and redeem whenever you wish. But even if you haven’t opened an online account in all these years, you can still redeem your units online. To do that, you need to first ascertain whether your fund house allows you to redeem units online, if you don’t have an online account. Check with your fund house’s customer call centre to find out.

 

Fund houses such as L&T Investment Management Co. Ltd, IDFC Asset Management Co. Ltd, and Quantum Asset Management Co. Ltd offer this facility. Others such as HDFC Asset Management Co. Ltd do not at present, though they are working on it.

Currently, with the olatter, you have to first fill out a form, take a personal identification number, open an account and then do online transactions.

 

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How to Save For Your Daughters' Overseas Education

Money is a means to achieve our dreams- be it for ourselves or for our loved ones. In our list of priorities, usually for the ones with kids- children’s education tops the list. Most of us in India want to send our kids to foreign universities for the best education and to the universities of their choice. This can be the single biggest investment one makes in his/her lifetime apart from the goal of accumulating for one’s retirement.

The first thing to put down is how much would you want to invest/ spend on his/her education because identifying the country 15-20 years before the goal can be quite redundant. Say, if you wanted to spend 20 lakhs in today’s value – this would be equivalent to close to 85 lakhs after 15 years if you assume an inflation of 10%. The first thing to do is to predict the goal and you need to predict it in future terms and not just in today’s value because the idea is that goal is met at all costs. The second thing to take care of is that the investment must be done regularly. This is easier said than done. One must start investing as early as he can, the power of compounding can actually lower your burden of investing. When one is planning to send the kids abroad to study, there are a few things additionally that parents should take care of:

1. The amount of corpus: The amount required for sending the child abroad for studying is anywhere between 10 to 15 times the cost of education in India. The cost varies with what university is being looked at and what countries are being considered. For eg: Education in Singapore might be cheaper than one in the US.

2. Tuition/ Boarding/ All: You will need to think about what part of this funding will be done by you, what part of it would be a loan and what kind of scholarship you should look at to ensure that the other important goals are not impacted negatively. You must be upfront with your child on this front to ensure expectations are set realistically.

3. Currency: Because one is unsure of which country the money will be required in, one of the options is to invest in a fund that is globally diversified. This way you protect the portfolio by diversifying it across various countries and currencies. The investment must be done systematically though. In the past few years we have seen that currency has swung quite sharply and hence has a greater impact than inflation.

4. Inflation: Though inflation is lower in developed countries than in the developing ones, the education inflation is still quite high and we would assume a 10% inflation realistically. Another factor to consider is change in rules -- protectionism may result in having more seats for local students, thus pushing up costs for international students.

5. Investments: The investment portfolio for a goal like this should be diversified to include multiple countries and currencies whilst at the same time cushioning against risks. The portfolio should be re-examined from time to time to ensure movement to safer assets as the goal comes closer. We normally recommend a mix of Indian equities, debt and investing in international funds for these goals.
6. Expenses on travel: Since now they are living in another country, the travel expenses might shoot up if you are traveling to be there or if they are visiting you. The number of visits every year could be pre-set too to fit the budget. It is also a possibility that they would want to explore the country they are living in and hence that may be another added expense although not a necessity. -

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You Will Become Rich- If You Know How to Sell

[Jobs in Finance]

Recently, I was doing a recruitment seminar (to fresh graduates from the local universities) for one of the large insurance companies in Singapore. I talked about how anyone could achieve time freedom and financial freedom by becoming a financial advisor in Singapore. I shared how becoming a financial advisor was a powerful strategy in becoming your own boss and having the potential of earning unlimited income WITHOUT having to have lots of startup capital.

What shocked me as the number one reason that stopped them from even considering the career was, ‘ we don’t like to sell’ or ‘we don’t feel comfortable with being a salesperson’ Somehow, many of these grads were under the impression that by being a graduate, selling was beneath them!

I looked them in the eyes and told them, ‘ If you do not like the idea of selling to someone else, you will NEVER EVER BE RICH!!!!!’ I believe that if you don’t like salespeople or if you don’t like to sell yourself, you can forget about ever becoming wealthy.

I believe that in order to achieve ANYTHING in life, you must be great at SELLING! If you want to land that lucrative job, you must be great at SELLING YOURSELF during the interview. If you want to get that promotion, working hard and being loyal is not good enough. It is not always the smartest and most hard working person who gets the promotion. It is the person who is able to SELL HIS IDEAS to management and the person who is able to SELL and convince top management why they are the best person for the job.

The person who ends up President of the United States (or any country) is not the smartest person around (look at Bush), but it is the person who is best able to SELL themselves and their ideas to the people.

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Analytics On The Fly

The basis for real-time analytics is to have all resources at disposal in the moment they are called for . So far, special materialized data structures, called cubes, have been created to efficiently serve analytical reports. Such cubes are based on a fixed number of dimensions along which analytical reports can define their result sets. Consequently, only a particular set of reports can be served by one cube. If other dimensions are needed, a new cube has to be created or existing ones have to be extended. In the worst case, a linear increase in the number of dimensions of a cube can result in an exponential growth of its storage requirements. 

Extending a cube can result in a deteriorating performance of those reports already using it. The decision to extend a cube or build a new one has to be considered carefully. In any case, a wide variety of cubes may be built during the lifetime of a system to serve reporting, thus increasing storage requirements and also maintenance efforts.

Instead of working with a predefined set of reports, business users should be able to formulate ad-hoc reports. Their playground should be the entire set of data the company owns, possibly including further data from external sources. Assuming a fast in-memory database, no more pre-computed materialized data structures are needed. As soon as changes to data are committed to the database, they will be visible for reporting. The preparation and conversion steps of data if still needed for reports are done during query execution and computations take place on the fly. 

Computation on the fly during reporting on the basis of cubes that do not store data, but only provide the interface for reporting, solves a problem that has existed up to now and allows for performance optimization of all analytical reports likewise

Baby Steps Of Financial Planning

Do you remember the feeling that you had when you first held your child in your arms? Some say it was happiness, others say it was responsibility. A part of this sense of responsibility is to provide everything to the bundle of joy. According to a study conducted by Principal Retirement Advisors, children’s education and marriage was the top most financial goal (68%) across age groups of respondents, followed by buying a house (57%). 

Mint spoke to some soon-to-be parents and new parents to understand how they plan their finances to meet their children’s needs, including day-to-day expenses, education and marriage. Here is what we found, along with suggestions on what to do to meet these financial goals. 

In good faith Most parents depend on existing income for the day-to-day expenses. Mumbai-based Prianka Singh, 34, a stay-at-home mother to four-year-old Eva, and expecting her second child in two months, said, “We all know that there will be immediate financial needs such as medical care and other expenses when you are going to have a baby. We are dependent on my husband’s current income for these.” However, for the long-term needs such as education, she prefers to invest in equity. 

While Singh’s choice of investment is equity, many parents choose to invest heavily in fixed deposits, insurance products and physical gold for long-term needs. Dubai-based Sreeja V. Ramachandran, a 30-year-old homemaker and mother to four-year-old Dakshina, is one of them. “We have an insurance policy and a couple of fixed deposits to meet the education needs of our child. I also invest in the form of physical gold coins every year for my daughter. These gold coins are for the marriage kitty,” said Ramachandran. Then there are those who invest only in real estate. “I have a daughter and a son. I only invest in real estate. So far, I have bought three plots near my house,” said Thrissur-based Jayan Raman, 45, who works with Kerala State Electricity Board Ltd. His daughter Archa is 5 years old and son Aromal is 6 years old. 

When asked why he invested in real estate, he said, “Frankly, I don’t understand financial products such as equity. My father used to invest in land and the value of the property he bought has appreciated. I hope that the plot I have bought will also appreciate in value.” Parents try their best to provide for their children, even if they need to compromise in other areas. The blame for the trend can partly be attributed to peer pressure. “Many parents today are making choices that are steadily ratcheting up the amounts they spend on their children, be it for education or leisure. They are also losing sight of what is going on and are constantly trying to push their purchasing power,” said Chandni Parekh, a Mumbai-based social psychologist.

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