Living in India is advantageous

The advantages of living in India:

1. The living-conditions are going to improve (not worsen as in the case of US, UK, and other developed nations) as new technology and investment would find its place in India. I can give you numerous such examples of technology being used in indigenous ways in different places in India which you might not be knowing about. e.g. – You won’t be stopped by the traffic inspector in Delhi even if you break a traffic rule. Instead your vehicle number would be captured by either

a) cameras installed at major locations, or
b) by the inspector;

and you would be sent the Challan by post at your home. If you do not pay it within one month, you would have to present yourself in front of the district magistrate else your vehicle’s number would be broadcasted to all police-mobile vans and the inspectors manning the crossings and it would be towed away from any location it would be found. Now, this system is obviously better than the previous one where you were stopped by that Pan-chewing police-wallah and you had to waste your time and money. Also, it has some good points over the system in UK where your annual insurance fee increases if you break any traffic rule… There is no manual intervention here… What if there has been a mistake in capturing the image by the software or what if you were not driving the car instead it was stolen or given to someone else for some time?

Also, in most cities, after widening the roads, removing encroachments and enforcing strict rules for wearing helmet and seat-belts, the Traffic-police was faced with the problem of vehicles running at speeds higher than the maximum speed-limits. Then, the traffic deptt, used the funds raised through challans and fines imposed on the law-breakers to fund the cost of installing speed cameras on various places on the major roads. Once, the speed-limit breaking vehicle is found, it is identified in the same way as stated in above example and again the same model of sending challan to home is followed.

2. There is a lot of scope for growth (personal as well as national). e.g. if you have a great business idea (like what Wal-Mart had some decades ago), it has more chances to succeed in a developing economy than in a developed one where the processes and systems are already mature enough and any change would be looked down upon with suspicion.

3. There would be Govt support like what the current Govt is providing to the farmers and new entrepreneurs who are willing to take up new initiatives in developing the ailing sectors like corporate farming in agriculture (e.g. ITC-currently working with the farmers in thousands of villages http://www.digitaldividend.org/pubs/pubs_01_echoupal.htm (this is an old article, but will give you an idea), oil-exploration (e.g. Reliance), energy-production mainly through renewable or non-conventional sources (e.g. Suzlon), and many more. Also, there has been lot of funding for developing the infrastructure in the country, the results of which you would be able to see in next few years.

4. In terms of the Govt functions, I agree that the biggest hindrance is the red-tapism or the bureaucracy around us, which increases the implementation time for any project manifolds. Also, it leads to corruption. But, gradually the functioning of Govt is going to change, if you take a brief notice of the activities going on in India, the turn-around time of various Govt projects, etc. you would be able to see the differences. Take for example the Metro rail project being successfully implemented before time using lesser money than the allocated estimated amount. How the sole responsibility of the project was given to one person and it was done in a way any corporate-management would function. Also, you can take the example of Indian railways, which has made a profit of Rs. 20,000 crores this year !! And, how well this money is being planned to be invested in increasing the cleanliness, safety and quality of service in railways… (go through the rail-budget) There are many such examples, but you have to look for them.

Right now, these examples are few and isolated, but they are like a premonition to the things which are going to happen… They give us an indication of how things are going to change in due time…

5. We have one of the world’s largest markets in our country. It is even bigger than the US and Europe market combined in terms of size. But, the services and goods being used by the average Indian is way less than his counterpart in the developed or even some developing nations. This means there lies a HUGE potential. Do you know that if tomorrow the Govt wants to digitize all its operations (to bring-in e-Governance), it would create numerous IT projects bigger in size than any other IT project worldwide, and this is what the Govt is planning to do in near future.

Do you know that the Indian rural population consumes very less amount of packaged FMCG products (around 2% of World’s average). Now, if this consumption can be increased by just 5%, it would lead to such a huge requirement that all the Indian companies would not be able to meet the requirements. So, there would be space for new companies and this is going to happen because the per-capita income of rural and semi-urban population is bound to rise in near future. Take for example, the average consumption of toothpaste in India is just 82gm/person as compared to Thailand’s 262 and US’s 518. So, don’t you think that this is going to increase and there is scope for more industries to come up into that space? Well, there can be many such examples given and many scenarios being thought off.

6. The population of India is consisting of a majority of young people, who are much better educated than their US/European (including UK) counterparts. So, do you think that this whole mass is going to perish without making any efforts to better their own living-standards? Well, I know you would say that what about unemployment, poverty and illiteracy? These are the problems which need to be targeted and are being targeted, but all these problems would slowly solve themselves on their own with the increase in the economic prowess of our nation. Well, there is a very detailed relationship between the economy and the problems in India, and I am too tired to type all that here.

You can earn Profit while playing Safe in equity through VCA

What is VCA?

Value cost averaging is a strategy of spending more money to buy mutual fund units when the price is low and less money when the price is high. It is similar to SIP, though it can be more effective. It also requires a more active role from the investor as compared to a SIP.

However, there is a difference between the two. In VCA, you keep on increasing your investment amount as the value of a mutual fund unit reduces and vice versa.

SIPs allow you to invest a fixed amount at a fixed interval (every month). This means you invest the same amount even when the value of a MF unit comes down.

SIP is a safe investment strategy; any financial expert or experienced investor can tell you that. But the problem for this type of investment strategy is that you are sacrificing maximum profit potential in exchange for simplicity, automation and less of an active role by you as an investor.
VCA, on the other hand, allows you a more active role.

In order to make the VCA system work, the first thing you should do is NOT to second-guess (time) the market. You must be able to invest on a regular basis without fail.

Here is how value cost averaging investing works

Take note of the date and the price you paid per unit of a mutual fund scheme. Let us assume you invested $1,000 at $10 per unit. When it is time for the next investment you check the net asset value, NAV, of the fund.

SIP vs VCA

SIP: When you invest using the SIP strategy, you invest a fixed sum every month.The example mentioned below shows that no matter what the NAV, the person would put in the fixed sum of $1,000 every month. With that s/he tries to achieve an average price which would be lower than the price s/he would have paid if s/he would have made a lump sum purchase on day one.

VCA: As shown in the example above, the first thing you need to determine is that how much money do you want to invest in mutual funds at the end of each period.

Say, in this case, you want a total investment of Rs 6,000 at the end of six months in a mutual fund in such a manner that, at the end of first month, your total investment is Rs 1,000, at the end of second month your total investment is Rs 2,000 (including the Rs 1,000 invested in the previous month and so on).

Then you can break up this Rs 6,000 over the 6-month period. Unlike a SIP, which entails putting in Rs 1,000 (or for that matter any fixed amount) every month, the amount invested using VCA technique will vary every month. However, the target of investing Rs 2,000 by the end of second month, Rs 3,000 by the end of third month remains unchanged.

Say, in the first monthof your VCA investment, the cost per unit of the mutual fund that you want to buy is Rs 10 and you are putting in Rs 1,000. This will get you 100 units (Rs 1,000/ Rs 10).

Now, assume that the markets did well and the cost per unit increased to Rs 10.50 by the end of your second month. At this time, the value of your investment would have become Rs 1,050 (Rs 10.5 * 100). Now, remember, the total money you need to invest by the end of second month is Rs 2,000. So, you need not put in another Rs 1,000 this month. Your total investment this month will be Rs 950 (your target investment – the value of your investment; ie Rs 2,000 – Rs Rs 1,050).

With this Rs 950, you can buy 90.48 units (Rs 950 / Rs 10.50) that will take your total units at the end of second month to 190.48 (100 units in the first month plus another 90.48 units in the second month).

In the third month, let’s say the cost per unit of your mutual fund further increases to Rs 13. This will take the value of your investment to Rs 2476.24 (190.48 * Rs 13). So, the amount you need to invest in the third month will be Rs 3,000 (your target as decided in the beginning) less Rs 2476.24, that is Rs 523.76.

With this amount at the end of the third month, you will be able to buy 40.28 units (Rs 523.76 / Rs 13). The total number of units at the end of the third month at 230.76 (190.48 plus 40.28).

Now, let’s see what happens when the cost per unit goes down. As per the table in the fourth month, the cost of each unit has gone down to Rs 8. That takes the value of your investment to Rs 1,846 (Rs 8 * 230.76). That means at the end of the fourth month you will have to invest Rs 2153.92 (Rs 4,000 less Rs 1846).

This clearly shows that, in the VCA method, you keep increasing your investment amount as the value of a mutual fund unit reduces, and vice versa. This is how it goes on and on till you deem it fit to stop your VCA investment. In the example above, we have stopped at the end of the sixth month.

This is the basis on which the VCA method works.

The table above shows the effect at the end of the sixth month. The total amount invested in SIPs is Rs 6,000 (Rs 1,000 every month) and you get 605.27 units at a price of Rs 9.91 ( Rs 6,000 / 605.27) per unit.

But the total amount invested using the VCA strategy is Rs 5,597 and you get 600 units at an average price of Rs 9.32 (Rs 5,597 / 600) per unit.
Current value for SIP = Rs 10 (the price at the end of the sixth month) * 605.27 (total units) = Rs 6,052.70
Current value for VCA = Rs 10 (the price at the end of the sixth month) * 600 (total units) = Rs 6,000

At the end of the sixth month, the cost of one unit is Rs 10. That will take the value of your SIP investment to Rs 6052.70 (Rs 10 * 605.27) against an investment of Rs 6,000 and the value of your VCA investments to Rs 6,000 against an investment of Rs 5,597.

So, the profits made by you investing in SIPs is Rs 52.70 (Rs 6,052.70 – Rs 6,000) and the profits made under the VCA method is Rs 403 (Rs 6,000 – Rs 5,597).

Profits in per cent made under SIP = (Rs 52.70 / Rs 6,000) * 100 = 0.88 per cent and
Profits in per cent made under SIP = ((Rs 403 / Rs 5,597) * 100 = 7.20 per cent

This makes it abundantly clear that your profits have increased at a faster pace via VCA method (7.20 per cent), against a mere 0.88 per cent via the SIP method.

As you can see, the majority of shares are purchased at low prices. When prices drop and you put more money in, you end up with more units (this happens with SIP as well, but to a lesser extent). Most of the units have been bought at very low prices, thus maximising your returns when the time to sell beckons.

If your investment is in a sound scheme, VCA will increase your returns beyond simple SIPs for the same time period. And it does so at a lower level of risk.

Warning: Neither approach will bail you out of a declining market with all your money intact.

All said and done remember this gem from multi-billionaire investor Warren Buffet: The best holding period is forever.

Happy Investing guys!!!

Comparison between UK n India

AN INTERESTING COMPARISION

THE BCs India

3300 BC Indus Valley Civilization
2600 BC Mature Harappan Middle Bronze Age
1800 BC 1000 BC Indian Iron Age
538 BC Cyrus the Great, conquers parts of Pakistan
333 BC Pakistan conquered by Alexander the Great*
273 BC Ashoka the Great
265 BC Kalinga War
184 BC Collapse of Mauryan Empire (Ashoka’s empire)

UK:

2500 BC Neolithic Period begins
1600 BC Bronze Age Period begins
900 BC Early Iron Age
55 BC Julius Caesar makes first visit to England
43 AD Roman invasion of Britain*

*Compare the first invasion of Britain & India

THE ADs

The period between 350 and 550 AD is known as the Golden Age of India because of the large achievements Indians made in the fields of mathematics, astronomy, science, religion and philosophy. The decimal numeral system, including the concept of zero, was invented in India during this period. The peace and prosperity created under leadership of Guptas enabled the pursuit of scientific and artistic endeavors in India. The Golden Age in India came to an end when the barbaric Hunas invaded and captured most of northern India in 500 AD.

Many rulers and dynasties ruled over India after that but there was no single major ruler who ruled over whole of India until the invasion of Mughals and the establishment of the Mughal empire in 1504 AD by the Timurid prince Babur. He was followed by Humayun, Akbar, Jahangir, Shah Jahan & Aurangzeb (the prominent ones). Under the rule of Shah Jahan, the Mughal empire was the world’s richest empire. After that, its decline began aided by the war-mongering policies of Aurangzeb.

The final dent:

1739: Nadir Shah entered Delhi. Nadir Shah remained in Delhi for forty eighty days and departed with millions worth of gold, jewelry and coins. Even the emperor’s throne, the bejeweled peacock throne of Shah Jahan was packed on elephants and carried away to Persia. Another prize was the Koh-I-nur diamond. This is probably one of the greatest plunder in human history.

In a series of attacks starting in 1748 until 1761, Ahmed Shah Abdali pillaged and looted Delhi, he also cleaned out Mathura, Kashmir and cities in Punjab. This lead to the widespread poverty in India which was world’s richest nation once.

In 1806 Shah Alam’s son Akbar Shah II acceded to the much diminished empire of the Mughals and ruled until 1837. His son Bahadur Shah Zafar II would be the last emperor of Mughals before the British deposed him in 1858 and the Mughal dynasty would officially come to a dishonourable end.

The decline of the Mughal Empire, which had separated into many smaller states controlled by local rulers who were often in conflict with one another, allowed the East India Company to expand its territories, which began in 1757, when the Company came into conflict with the Nawab of Bengal, Siraj Ud Daulah. Under the leadership of Robert Clive, the Company troops defeated the Nawab on 23 June 1757 at the Battle of Plassey, mostly because of the treachery of the Nawab’s former army chief Mir Jafar.
The wealth gained from the Bengal treasury allowed the Company to strengthen its military might significantly. This army (comprised mostly of Indian soldiers, called sepoys, and led by British officers) conquered most of India’s geographic and political regions.

The Company fought many wars with local Indian rulers during its conquest of India, the most difficult being the four Anglo-Mysore Wars (between 1766 and 1799) against the South Indian Kingdom of Mysore ruled by Hyder Ali, and later his son Tipu Sultan (The Tiger of Mysore) who developed the use of rockets in warfare.

The Company was also responsible[citation needed] for the opium trade with China against the Qing Emperor’s will, which later led to the two Opium Wars (between 1834 and 1860). As a result of the Company’s victory in the First Opium War, it established Hong Kong as a British territory. The Company also had a number of wars with other surrounding Asian countries, the most difficult probably being the three Anglo-Afghan Wars (between 1839 and 1919) against Afghanistan, which were mostly unsuccessful from the British perspective.

By 1870, the German textile and metal industries had surpassed those of Britain in organisation and technical efficiency and usurped British manufactures in the domestic market. While invisible exports (banking, insurance and shipping services) kept Britain “out of the red,” her share of world trade fell from a quarter in 1880 to a sixth in 1913.

The rise of anti-colonial nationalist movements in British colonies and the changing economic situation of the world in the first half of the 20th century challenged an imperial power now increasingly preoccupied with issues nearer home.

The independence of India in August 1947 ended a 40-year struggle by the Indian National Congress.

Burma achieved independence in 1948. Ceylon (Sri Lanka) in 1948 and Malaya in 1957. Mediterranean islands of Malta and Gozo achieved independence from Britain in 1964.

Ghana’s independence (1957) after a ten-year nationalist political campaign was followed by that of Nigeria and Somaliland (1960), Sierra Leone and Tanganyika (1961), Uganda (1962), Kenya and Zanzibar (1963), The Gambia (1965), Lesotho (formerly Basutoland) (1966), Botswana (formerly Bechuanaland) (1967), and Swaziland (1968).

In 1982, Britain’s resolve to defend her remaining overseas territories was put to the test when Argentina invaded the Falkland Islands, acting on a long-standing claim that dated back to the Spanish Empire. Britain’s ultimately successful military response to liberate the islands during the ensuing Falklands War prompted headlines in the US press that “the Empire strikes back”, and was viewed by many to have contributed to reversing the downward trend in the UK’s status as a world power.

In 1984, Britain ended the protectorate status of Brunei, although the British Army maintains a presence in the Sultanate at the request of the Government of Brunei.

In 1997, Britain’s last major overseas territory, Hong Kong, became a Special Administrative Region of the People’s Republic of China under the terms of the Sino-British Joint Declaration agreed some thirteen years previously.

TODAY

By 2000 the world was a very different place to the world of 1900, and Britain too had undergone massive change.

In the Labour Party’s second term in office, beginning in 2001, the party increased taxes and borrowing. The government wanted the money to increase spending on public services, notably the National Health Service, which they claimed was suffering from chronic under-funding.

Growth rates have consistently been between 2% and 3% since the year 2000 and inflation has levelled off at around 2%. The Bank of England’s control of interest rates has been a major factor in the stability of the British economy in recent years.

The economy of Britain is the fifth largest in the world and British GDP grew by 2.7% in 2006.

The economy of India is the fourth largest in the world and second fastest growing major economy in the world, with a GDP growth rate of 9.2%

Is the history going to repeat itself???

🙂

The Most General Blogs on Net

As the name would have made it crystal clear, yes it is the place where you would find most general blogs on the net. Now, you would ask in what sense would these blogs  be “General”?? eh ?

Well, here “General” means general in terms of the topics on which the articles would be written, general in terms of the issues discussed, and general in terms of the style and language that would be used.

I will give you something “good to read” very soon. Till then Ta !!

Hello world!

This is my first post. I will Edit it on my leisure!!

😉