Kavitha Menon's Blog

Our Prospective client was a confident man. He was confident and optimistic. He had walked in to our office to inquire about our Portfolio Management Scheme and wanted to know the returns given by us in the last three months. He said that he would compare the same with the returns given by his existing PMS Manager and then decide whether to stay put, or switch to our scheme. After comparing, he happily informed me that his current scheme has performed far better in the last three months and he would not switch right now.The client was not a prospect after all .Out of curiosity I wanted to know for how long had he been invested in the scheme and what were his returns. You may think that he was joking, but our man was dead pan serious. He had invested over three years back and in the ensuing three years his fund manager had given him only his capital back! He was sitting on a 50 % loss till three months ago and it was only due to 'restructuring' of the portfolio that his fund ma...

Every person on a 9 to 5 naukri dreams of being an entrepreneur . There is so much more glamor in being you own boss , of working flexi hours and making all the money that you believe you deserve. Sadly very few will make the transition from employee to employer.Responsibilities and fear of losing the comforts one is so accustomed to , do not permit the vast majority of aspiring entrepreneurs to take that big leap . What if there was a way by which you could keep your job and yet create wealth like an entrepreneur does ? . It is surprisingly simple . Read on.. Robert Kiyoski in his book Rich Dad Poor Dad tells us the secret of growing rich . Rule one in his book is about understanding assets and liability and building assets . An asset is something that brings in money into your pocket while a liability is anything that takes it out. The Rich acquire assets while the middle class acquire liabilities, but assume they are assets . By buying assets the Rich make money...

Decisions by the central bank of our country effects us directly as investors as well as borrowers of money. It is important to know what RBI action on various fronts does to your financial situation. To aid its primary goals of controlling inflation, the RBI uses several measures. Let's understand what each of these measures are and how they impact you. REPO and Reverse REPO - Banks are in the business of borrowing and lending and often need very short term funds to meet their liquidity requirements. Let's take an example of a bank that needs to borrow money for day. Our bank may be holding on to securities that don't mature in a day. Instead of selling securities in the market it can instead sell the same to the RBI, get funds to meet its short term requirement and then buy the same securities back from the RBI. This is called the REPO - short for repurchase agreement and the bank pays to RBI a rate of interest for the funds used. The REPO rate is thus the very short term...

Very gleefully my client, a salaried individual said , 'I want to have a net worth of 50 crores in the next ten years , that's why I am here to see you '. I couldn't help think that he was in the wrong place , cause what he needed was to consult a magician who could take those crores out of his hat or something like that . My optimist client was sobered and his expectation of wealth ( thankfully ) toned down after I told him what he will need to save to achieve his goal . Creating wealth is both easy and difficult . Easy because we have many investment options, experts who can guide you and technology that makes money management simple . Yet it is the very same reasons that make investing tough . Today there are a slew of product offerings from insurance , mutual fund and other financial services companies to choose from . There are all kinds of advisers vying with each other for your mind space and technology is adding to information clutter like never before . Step On...

Busting some myths about Financial Planning Kavitha Menon kavitha@ppfas.com While most of us would agree that a financial plan is a good thing, there are many mental blocks that prevent you from making one for self and family. These blocks are a result of many myths around financial planning. Let's deal with these myths to make the decision of making a plan easier. Myth 1: Financial Planning is about investments - Life stage planning, insurance tax planning and estate planning are important building blocks of a good Financial Plan. Buying investments products is just one step of many. Myth 2: Its expensive - Financial planning helps with a life time of money management. Although the initial costs for professional services looks high, amortize it over your life time and you will realize that these services are in fact cheap. I must add that there is no concept of free financial planning. If someone is offering you that, then you will pay with buying the wrong products. The costs of...

HUF or Hindu Undivided Family is defined under the Hindu Law as a family that consists of all persons lineally descended from a common ancestor, including wives and unmarried daughters. It is a separate entity in the eyes of law. It can own assets and generate income from rent, profession and business. All income that arises on the investment of the HUF's funds and utilization of its assets is separately assessed and taxed. As the name suggests only Hindus governed by the Hindu law can create such an entity. Though Jain and Sikh families are not governed by the Hindu law; they can still be treated as a HUF. Unfortunately persons of other religion such as Muslims, Christians or Parsis do not have such a facility . The oldest male member of the Family is the Karta while other male members are called co-parceners. The female members are simply called members. It is the Karta whose name the HUF carries and it is he who signs documents on behalf of the HUF entity. For Example if there i...

Kavitha Menon If one dies intestate i.e. without a will, then ones assets are devolved as per the applicable personal law. The legal heirs need to apply to court and go through very lengthy documentation. Based on the laws of succession that are diverse and complicated, the property will be divided between legal heirs. Children, spouse and relatives can also stake claim to the property and in the case of large stakes lengthy legal battles ensue. It's a common belief that appointing second holders or nominees in various assets will ensure that the property passes to such second holders/nominees. In the eyes of the law, a nominee (including a nominee appointed in insurance policies) is a trustee and he need not necessarily be a beneficiary to a will. He or she is merely a caretaker and the right to the property passes by will or if there is no will, under the personal law of the deceased. Such nominee will be legally bound to transfer the nominated property to the beneficiary of the ...