E-Investing India - Online Community for Investors and Traders  

Go Back   E-Investing India - Online Community for Investors and Traders > Personal Finance & Investing > Money Management
Read All Rules Contact Site Administrator

Money Management Money Management

Reply
 
Thread Tools Display Modes
  #1  
Old 16th March 2008, 11:24 PM
Member
 
Join Date: Oct 2007
Posts: 39
Rep Power: 11
Manik2012 is on a distinguished road
Thumbs up Managing that Extra Amount



Hi All,

There are ways to best manage money and if our money works as hard as us to give returns its really good.

If one earns 25k and spends 20k for his household expenses rest 5k remains in his account assuming that this money stays idle how could this be best managed?

There are different scenarios

1) Short term : 15days - 1month
2) Medium term : 1month - 6months
3) Long term : more than a year

Few answers could be FD, Mutual funds(market is not supportive), precious metals...

It would be worthy for members of this forum as I have seen people eager to invest. Also it would be good as spending is on the rise, if our money grows at the same rate as our spending(near impossible ) then it would be good.

Regards,
Manik2012
Reply With Quote
  #2  
Old 17th March 2008, 08:14 AM
rookie_gau's Avatar
Regular Member
 
Join Date: Oct 2007
Location: Mumbai
Posts: 337
Rep Power: 16
rookie_gau will become famous soon enough
Post


I think that for anything less than 1- 1.5 years, Mutual Funds are unsuited. I say this because of my own experience of market. I bought a few MFs in june last year. They were NFOs, all 3 of them. One of them is an infra fund, SBI, one is FT High Growth Cos, and the third HDFC Midcap opportunities.

In just 5 months (Nov- Dec), SBI was quoting 15 NAV, FT N HDFC 13- 14 Rs.

People who timed the market (may be by chance) are in for money. But if I try and sell them now, xcept SBI, both are at 10-12 levels. This makes my returns less than FD.

For people entering the market late (Nov-Dec), they are in hell of trouble. There is no question of booking 45-50 % losses in portfolios. They have to wait for years, (I hope not), if not months to get bak to profit.


MFs, in my opinion, should be invested with a horizon of 2-3 years(min).

If going for SIP, make that 2-3 yrs afte u pay the last installment!!


For short term, an RD will be the best, no entry load, no exit load, and more important, no worry of cashing at the right time.

I think investments should be made with the sole aim of investing and not buying a car or bike within 1 year, as shown in HDFC MF ads.
Reply With Quote
  #3  
Old 17th March 2008, 08:52 AM
Regular Member
 
Join Date: Jan 2008
Posts: 526
Rep Power: 15
InvestorB will become famous soon enough
Send a message via Skype™ to InvestorB
Default

The choice depends on individuals' preferences, and mainly the risk appetite one has...

The most common mistake most of us do is expect returns on daily/weekly basis [myself a victim of it due to greed ]..

As you are looking to make your 'extra money' more useful...you should be looking at a longer term perspective. Over a period of 2-3 years this money would give you returns on par with your spending[if not more]. Just wait for the markets to make a bottom...once the bulls return, you can start pumping in money!

I don't invest in MFs/FDs etc.,
Reply With Quote
  #4  
Old 17th March 2008, 09:02 AM
Administrator
 
Join Date: Sep 2006
Posts: 11,083
Rep Power: 7498
Alchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond repute
Default

Quote:
Originally Posted by Manik2012 View Post

If one earns 25k and spends 20k for his household expenses rest 5k remains in his account assuming that this money stays idle how could this be best managed?
If the person is able to save just 20% of his income, he may need his savings anytime in the future.

Any unexpected expense may mean he has to use his savings.

Any savings, which may see a "forced withdrawal" in the future, have to be in low-risk investments like fixed deposits.

===========================================

Imagine, you invest the money in a equity mutual fund and suddenly after 3 months, you need the money. You look at the NAV of your funds and they are down 30% because the markets have crashed.

You have no choice, but to withdraw the money at a loss.

Even Gold cannot be considered a low-risk investment for short to medium-term.

===========================================

The best option would be to activate auto-sweep in your savings bank account and earn higher interest on the excess amount.

You may also look at medium-term debt funds.
Reply With Quote
  #5  
Old 17th March 2008, 09:07 AM
Regular Member
 
Join Date: Jan 2008
Posts: 526
Rep Power: 15
InvestorB will become famous soon enough
Send a message via Skype™ to InvestorB
Thumbs up

Quote:
Originally Posted by Alchemist View Post
If the person is able to save just 20% of his income, he may need his savings anytime in the future.

Any unexpected expense may mean he has to use his savings.

Any savings, which may see a "forced withdrawal" in the future, have to be in low-risk investments like fixed deposits.
Good catch...
I happily forgot the risk
thats the way to look at it...risk:reward!!and thats is what separates a real investor/trader from the rest!!
Reply With Quote
  #6  
Old 17th March 2008, 12:10 PM
Junior Member
 
Join Date: Jan 2008
Location: Benda Kalu uru
Posts: 29
Rep Power: 10
westside is on a distinguished road
Default

Can you folks keep the replies coming in. This is a very interesting topic especially when it comes to low risk investment. I think an FD will let me sleep and live better :-). On a side note, can you help me understand other instruments for low risk investments?

*) Do FMPs qualify as this? Actually what are FMPs and how are they useful?
*) What do bonds exactly mean? Govt bonds security bonds etc. Can one be purchased by us? Are they useful?
*) What about good old NSCs and KVPs?

Thanks
Reply With Quote
  #7  
Old 18th March 2008, 10:12 AM
Member
 
Join Date: Jan 2008
Posts: 104
Rep Power: 10
sdinvest is on a distinguished road
Default

Quote:
Originally Posted by rookie_gau View Post

---
For short term, an RD will be the best, no entry load, no exit load, and more important, no worry of cashing at the right time.

I think investments should be made with the sole aim of investing and not buying a car or bike within 1 year, as shown in HDFC MF ads.

What is RD???.
Reply With Quote
  #8  
Old 18th March 2008, 05:22 PM
rookie_gau's Avatar
Regular Member
 
Join Date: Oct 2007
Location: Mumbai
Posts: 337
Rep Power: 16
rookie_gau will become famous soon enough
Post

RD is Recurring Deposit. You deposit certain money with bank every month and they give you certain fixed interest and a bonus on maturity.

For example, I am depositing 2280 every month for a period of 39 months to get 102000!!

so by depositing 88920, I get 102000!! That is an interest of 7. smthing, I guess!

Hope you are satisfied! You seem to look "angry"
Reply With Quote
  #9  
Old 25th March 2008, 02:49 PM
Member
 
Join Date: Nov 2007
Posts: 40
Rep Power: 11
RAMBO65 is on a distinguished road
Default No One Talked Bout Property Investment

What about Investing In Property ..has Anyone Of You Seen A Decline In Property Rates At Anytime And At Anyplace.
Reply With Quote
  #10  
Old 4th June 2008, 12:42 PM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Question Help - Are Liquid Plans Good?

Hi All,

Can we consider liquid plans like LIC Liquid Plus as safe investments for short term?

Basically i want to create an emergency fund for myself to have atleast 6 months of expenses parked somewhere so when i need it i get it next day. Also any investment which is pretty much safe but returns something better then an FD!!!

Please let me know your views/suggestions on this.
Reply With Quote
  #11  
Old 4th June 2008, 06:25 PM
Senior Member
 
Join Date: Dec 2007
Location: Kolkata
Posts: 1,221
Rep Power: 4162
Prudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond repute
Default

Quote:
Originally Posted by hiren View Post
Hi All,

Can we consider liquid plans like LIC Liquid Plus as safe investments for short term?

Basically i want to create an emergency fund for myself to have atleast 6 months of expenses parked somewhere so when i need it i get it next day. Also any investment which is pretty much safe but returns something better then an FD!!!

Please let me know your views/suggestions on this.
You are talking of a Contingency Fund , u should try and keep one year's expenses in liquid forms as your contingency fund. This typically helps in major illness, switching jobs etc.

I personally use Short Term Debt Funds for this purpose, the current one year rates are around 9%, and if u don't withdraw the fund, u may even avail the indexation benefits, and there is also no TDS dilemma.
Reply With Quote
  #12  
Old 4th June 2008, 07:49 PM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Default

hi prudent investor,

thanks for the reply...any suggestion on which short term fund for the same.

And do liquid funds not qualify for contigency fund investment?
Reply With Quote
  #13  
Old 5th June 2008, 01:50 PM
Junior Member
 
Join Date: Feb 2008
Posts: 4
Rep Power: 0
sharan is on a distinguished road
Default

What are the tax implications for short term bond funds such as tata short term bond growth fund etc..Any LTCG or STCG..any differences vis-a-vis dividend or growth option for debt/bond funds..
Reply With Quote
  #14  
Old 5th June 2008, 03:39 PM
Senior Member
 
Join Date: Dec 2007
Location: Kolkata
Posts: 1,221
Rep Power: 4162
Prudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond repute
Default

Quote:
Originally Posted by hiren View Post
hi prudent investor,

thanks for the reply...any suggestion on which short term fund for the same.

And do liquid funds not qualify for contigency fund investment?
Contingency Fund is not a category it is basically ur way of defining a proper reason for ur investments , which always helps none the less.

I personally use two funds, Tata Short Term Bond - Growth Option and HDFC High Interest Short Term - Growth Option.

These funds don't have any entry or exit loads, and if u are investing from a demat account, money comes to u within 1 day of redemption.

Liquid Funds have a even lower rate of risk and hence lower return too. If you are dedicated not to use ur contingency fund for any other purpose , it's better to go for short term debt, as you can benefit from change in interest rates in the short term

You can also look forward to FMPs of Mutual Funds.
Reply With Quote
  #15  
Old 5th June 2008, 03:43 PM
Senior Member
 
Join Date: Dec 2007
Location: Kolkata
Posts: 1,221
Rep Power: 4162
Prudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond reputePrudent_Investor has a reputation beyond repute
Default

Quote:
Originally Posted by sharan View Post
What are the tax implications for short term bond funds such as tata short term bond growth fund etc..Any LTCG or STCG..any differences vis-a-vis dividend or growth option for debt/bond funds..
These debt funds are taxed as following :

Within 1 year : clubbed with ur income and taxed in the applicable tax bracket u fall in.

After 1 year : @10% without indexation
@20% with indexation.

If u invest in say March 2008 ( FY 2007-2008) and redeem in April 2009 ( FY 2009-2010 ) u can avail indexation for 2years in a investment period of 14 months.
Reply With Quote
  #16  
Old 5th June 2008, 03:44 PM
Administrator
 
Join Date: Sep 2006
Posts: 11,083
Rep Power: 7498
Alchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond repute
Default

Quote:
Originally Posted by Prudent_Investor View Post

You can also look forward to FMPs of Mutual Funds.
Here is a nice article on Fixed Maturity Plans of Mutual funds.

and another on Debt funds.

(The second article mentions the benefits of debt funds).
Reply With Quote
  #17  
Old 5th June 2008, 04:09 PM
San Yad's Avatar
Senior Member
 
Join Date: Apr 2008
Posts: 1,704
Rep Power: 1123
San Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond reputeSan Yad has a reputation beyond repute
Default

Quote:
Originally Posted by rookie_gau View Post
RD is Recurring Deposit. You deposit certain money with bank every month and they give you certain fixed interest and a bonus on maturity.

For example, I am depositing 2280 every month for a period of 39 months to get 102000!!

so by depositing 88920, I get 102000!! That is an interest of 7. smthing, I guess!

Hope you are satisfied! You seem to look "angry"
Interesting!! which plan do u have ? Does ICICI also provides such things? If so then which plan is better to choose for RD?
rgds
Reply With Quote
  #18  
Old 7th June 2008, 02:13 PM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Default

hi prudent investor,

thanks for the reply. what do u mean by "invest from the demat account"? if i buy using my sharekhan account is that what you are saying?
Reply With Quote
  #19  
Old 9th June 2008, 12:23 AM
Regular Member
 
Join Date: Nov 2007
Posts: 350
Rep Power: 210
nitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond reputenitinku5021a has a reputation beyond repute
Default

No idea abt sharekhan but through ICICI or Kotak Demat Acc. you can invest in MF in the same way u do it for equity.

Regards
nitin
Reply With Quote
  #20  
Old 4th October 2009, 10:26 PM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Question Where to invest for short to medium term

Hello Friends,

I am looking at investing for short to medium term. Basically this is extra cash & dont want to invest in equity market.

Can you suggest couple of MFs (debt, arbitrage) where the capital is safe & post tax returns better than FD?

I have short listed following

HDFC HI Short Term

Templeton India ST Income Ret-G

UTI SPrEAD-G

Please advise.

Thanks,
Hiren

Last edited by hiren : 4th October 2009 at 10:30 PM.
Reply With Quote
  #21  
Old 5th October 2009, 08:51 AM
Administrator
 
Join Date: Sep 2006
Posts: 11,083
Rep Power: 7498
Alchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond repute
Default

Quote:
Originally Posted by hiren View Post
Hello Friends,

I am looking at investing for short to medium term. Basically this is extra cash & dont want to invest in equity market.

Can you suggest couple of MFs (debt, arbitrage) where the capital is safe & post tax returns better than FD?

I have short listed following

HDFC HI Short Term

Templeton India ST Income Ret-G

UTI SPrEAD-G
There is always an element of luck involved while choosing mutual funds.

A fund that performed well last year may not perform well this year and vice versa.

If you are sure that short-term debt funds are the type of funds you need, you can select any of the top performers and invest.

UTI SPrEAD looks very interesting.

It has given good returns for the last few quarters and that too with minimal risk.

It has been the best performer in arbitrage funds category.

It should be a good investment for medium-term.

UTI SPrEAD has an exit load of 0.5% if an investor withdraws before 180 days.

A very short-term investment in UTI SPrEAD may not make much sense.
Reply With Quote
  #22  
Old 5th October 2009, 10:39 AM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Default

Thanks Alchemist for quick reply.

Honestly speaking i don't know much about debt funds.

I chose the above after reading through some articles for short term investment cum capital protection & looking at the performance in the past.

I too think UTI Spread is good bet but it depends on arbitrage opportunities in the market.

Do you have any suggestions for any other options?
Reply With Quote
  #23  
Old 5th October 2009, 02:20 PM
Administrator
 
Join Date: Sep 2006
Posts: 11,083
Rep Power: 7498
Alchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond reputeAlchemist has a reputation beyond repute
Default

Quote:
Originally Posted by hiren View Post
Honestly speaking i don't know much about debt funds.
same here.

I have never invested in debt funds and so don't have any first-hand experience.

my opinions are only based on what I read on the internet and hear on CNBC TV18....

maybe you can look at floating rate funds:

http://www.moneycontrol.com/mutual-f...cker/dfloat/ab

I am not really sure if these can outperform fixed deposits, but if rates start to go up, floating rate funds may give you a small additional return.

(I don't see a rate hike in immediate future and rates may stay low for another 4-6 months).
Reply With Quote
  #24  
Old 2nd November 2009, 11:57 PM
Member
 
Join Date: Nov 2007
Posts: 124
Rep Power: 11
hiren is on a distinguished road
Default

it is really difficult to find this out without making an investment.

i asked my bank & they started running after me for SIP's or invest in ULIP's!!! Same band aid for all kind of problems.
Reply With Quote
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


All times are GMT +5.5. The time now is 08:07 PM.


Powered by vBulletin® Version 3.6.8
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
SEO by vBSEO 3.6.0
Ad Management plugin by RedTyger