Guide to Investors

Why do mutual fund houses check citizenship?

2018-08-05T14:35:00.000+05:30

Ever noticed that pesky question that pops up every time you visit a mutual fund house's website? It asks you whether you are a US resident/person or not. What is the logic of that question? It is not just
us-who reside in India and are Indian citizens-who can invest in mutual funds here. There could be a non-resident Indian (NRI) residing in the US or an American citizen who would want to invest in India. However, according to US capital market regulator Securities and Exchange Commission (SEC), only US registered and regulated schemes can solicit money from US investors.

Fund houses in India came to the conclusion that if their websites carry mutual fund scheme-related information and application forms and if US-based people could invest in them online, it may be interpreted as solicitation. So the question is asked upfront. This rule pertains to everyone who resides in the US-US citizens or NRIs or green card holders.
The good news for these investors is that if they are physically presentbin India or Indian territory, they can invest in mutual funds that are registered in India. All they need to do is sign a declaration that she has invested on her own accord and the Indian fund houses did not solicit money from her.
But what happens if you are sitting in the US and select the option on an India-registered fund house that you are indeed a US resident/person? Your transaction will not go through. But you can browse the website.
Over the years, taxation laws have got more stringent. Another twist to this tale is the Foreign Account Tax Compliance Act (Fatca) which was passed in the US in 2010. Until then, tax laws in the US had put the onus on self-declaration; residents in the US had to disclose their income. But since self-declaration didn't appear to have worked all the time, the US government enacted Fatca and signed an agreement with more than 50 countries worldwide. India is a signatory to this agreement.
This means any financial institution, like banks, fund houses, insurance companies, that get investments from anyone residing in the US (she may be temporarily living in one of these countries at the time) is supposed to furnish such investment details to the US. If the firms refuse to cooperate, the Act allows the US government to deduct 30% tax from these companies if they are already registered or doing business in the US.
While the SEC enacted the first law, the US government enacted Fatca. Although both are not directly related, they are aimed at investor protection and investor disclosure.
In arrangement with HT Syndication | MINT

How to diversify your investment portfolio

2018-08-05T14:29:00.002+05:30

The basic objective of diversification is to reduce risk.

Traditional wisdom says don’t put all your eggs in one basket. It restricts the damage to your financial well-being in case one asset class or instrument goes for a tailspin. For example, equities crashed by 39% during 2008-9. If you had a goal maturing that year and were depending largely on stock investments, it would have been a disaster.

However, if you had spread your investments across equity, debt, cash and gold, the portfolio would have given an average return of 0.68% ( see graphic). This is because of the stellar performance by gold (up 24%) and stable returns from debt and cash during that year. The situation reversed the next year, with equities rising 94% and all other asset classes giving lacklustre returns. Even so, the diversified portfolio managed to generate 27% returns that year.

Not all investing stories have happy endings though. Some may think that diversificationled to lower returns in 2009-10. Instead of earning 27% from an equally weighted portfolio they could have earned 94% from equities. But this is based on hindsight. In the real world, most equity investors would have panicked and withdrawn from the market in 2008-9, when equities had crashed by 39%. “Those who held on during the difficult periods of 2008-9 would have made money, but most would not have because genetically humans are risk averse and react to crisis situations,” says Kunal Bajaj, Founder and CEO, Clearfunds.

Purpose of diversification
The basic objective of diversification is to reduce risk. But can’t one do that by investing only in ultra-safe government schemes such as PPF, NSCs and RBI bonds? No, because investing in these instruments will reduce the overall returns significantly. “Investing 100% in debt options won’t help meet future needs. Investors should have some growthoriented assets such as equities to increase returns,” says Rahul Agarwal, Director, Wealth Discovery. Besides lower returns, the income from debt products attracts higher tax rates. “Interest is taxable for most debt instruments, so the post-tax return will be very low and won’t beat consumer inflation,” says Amol Joshi, Founder, PlanRupee InvestmentServices. Investors may have to forgo several of their financial goals if they follow this risk-free strategy.

Though everyone would love to earn high returns without taking any risk, in real life one has to manage risk and return together. “What investors should aim is for decent returns with reasonable level of risk,” says Shailendra Kumar, CIO, Narnolia Financial Advisors. The best way to do this is by following a disciplined asset allocation strategy.

A diversified portfolio can give decent returns

Year-wise returns from some asset classes have been quite volatile in the past 11 years. The diversified portfolio was more stable.
Ideal asset allocation for you
Though there are thumb rules, the asset allocation should be based on individual needs. Here are a few things to keep in mind when determining the asset allocation of your portfolio.

Current asset allocation: As a first step, investors need to understand where they stand. Many aggressive investors, who claim that they have invested 100% in equities may not be aware of the real situation.

“There is no investor who has put 100% in equities. People who say that usually mean that 100% of their liquid assets are in stocks,” says Bajaj. “Most people usually ignore investments like EPF, PPF, etc while calculating their asset allocation. If they consider all of them, their status can change from ‘aggressive’ to ‘moderate’,” says Melvin Joseph, Founder, Finvin Financial Planners.

Everyone needs debt products: Though debt offers low returns, investors can’t ignore it altogether. This is because every investor’s first financial goal should be to create contingency corpus—a liquid corpus that can take care of 3-6 months’ expenses. A large portion of this needs to be in extremely liquid instruments such as bank FDs that can be broken immediately (you may need funds immediately in case of medical emergency, even if you have medical cover) and the remaining can be with liquid funds. Since these are debt products, the remaining portion only can be allocated to other asset classes.

Your age: Age is a major influencer in deciding asset allocation. The ‘100 minus your age’ is the most commonly used thumb rule for equity allocation. It says that young investors should have higher equity allocation (eg investors with 25 and 35 years of age should have equity allocation of 75% and 65% respectively), while older people should have lower equity allocation. Young investors have smaller portfolios (Rs 1-2 lakh) so the absolute loss will not be as painful compared to a bigger portfolio (`40-50 lakh) of an older investor. Second, younger people have a longer investing horizon and can wait it out if the portfolio takes a tumble. Third, they usually don’t have high commitments like supporting a family, children’s education, etc and can afford to take higher risks.

Willingness to take risk: Many youngsters are not ready to take higher risks. “The equity allocation is right when investors can take a 20-30% cut in a year without affecting their lifestyle or losing sleep,” says Bajaj. This willingness to take risk is the investor’s ‘risk appetite’. But this risk appetite is a double edged sword—some people believe they can take higher risk without understanding the implications. These aggressive investors get jumpy when their SIPs start generating losses. “Besides the risk appetite, we also have to consider the experience of equity investing when suggesting the asset allocation of an individual. For example, 50% equity allocation is fine for a 70-year-old veteran equity investor. But a first-time investor should not have more than 30% in stocks,” says Joseph.

Ability to take risk: Investors also need to consider their ability to take risk. People with steady income streams can take higher risk with their investments because the market volatility won’t affect their lifestyle. This should be a critical consideration while allocating retirement corpus because the ability to take risk can vary with age. “Several investors get nervous close to retirement. Risk appetite or risk taking ability can also change due to health related issues. So qualitative factors like this also should be considered while fixing asset allocations,” says Joseph.

Time period to goal: The time available for the goal is equally critical. The general rule is that invest more in equities if the time horizon is long and in debt if it is short. Stock market volatility comes down as the investment horizon increases. As a thumb rule, don’t put any money into equity if the holding period is less than three years. Increase the equity component if the holding period is more. Some experts say that if the goal is 10 years away, you should invest the entire corpus in equities.

Goal level or individual level: Asset allocation should be primarily based on the time available for the goal. If the equity exposure is high, it should then take into account other parameters such as the investor’s age, risk appetite, risk taking ability. Suppose all the goals of a young investor are long term (8, 12 and 15 years). Even then, the entire allocation should not be to equities. “The investment portfolio, regardless of the time frame, should be balanced. Never put the entire money into equity just because all the goals are far off,” says Agarwal.

This may contradict the general principle that equities generate the best returns in the long term. But this modification is needed to give investors peace of mind. “The purpose of balanced portfolio construction is not to get the highest returns, but to reach the goal comfortably,” says Joseph.

Strategic changes in allocation: The asset allocation should not ignore market situations. “An asset class trading at elevated valuations will have higher risk compared to an asset class trading low,” says Shailendra Kumar. Investors should reduce allocation to equities when the PE of benchmark indices is above 24 and increase when it is below 16. The same rule can be used to decide on asset allocation within asset classes. The allocation to mid-cap stocks can be kept low now because the PE of BSE Midcap index is placed at 33.64 compared to the Sensex PE of 22.69. Similar valuation based rules can be used to fix allocation for other asset classes. One can reduce long-term debt in a rising interest rate scenario and increase it when rates are falling.

Special rule for first-time investors: New investors need to understand the meaning of long-term investing. “One year holding period is considered long-term for equities for tax purposes. But equity investors should hold for at least five years because economic cycles last much longer,” says Joshi. Please note that this five-year threshold is for large-cap stocks. Mid-cap and small-cap stocks may need to be held for longer periods.

First-time investors need to be especially careful. “Risk takers among first-time investors can invest small amounts in aggressive equity funds,” says Agarwal. The high volatility in these segments will help them understand the risks better. But since the amount invested would be low, the loss would also be limited. “Asset allocation funds or hybrid funds are good for first-time investors because the asset allocation changes automatically,” says Joshi.

Don’t ignore other asset classes: While most investors have some exposure to domestic equities and debt, they usually ignore other asset classes. Financial planners don’t suggest real estate (other than primary residence) because property is very illiquid. Though Indian investors won’t sell their gold ornaments, most will have enough gold exposure through this route. One advantage of gold is that it is an international commodity and therefore, will act as a hedge against rupee depreciation. However, experts suggest international equity funds as a better alternative to gold . “Investors should have around 20% of their equity allocation in international equity,” says Bajaj. Some international funds have delivered good returns in the past ( see table).

Don’t over-diversify: Some investors tend to assume that the greater the diversification, the better it is. They keep adding stocks to their portfolios. According to modern portfolio theory, 15-20 stocks from different sectors are enough to make a well diversified equity portfolio. This is because diversification can reduce risks only up to a limit. Since the market risk (known as systematic risk) can’t be diversified away, there is no purpose in continuing with diversification after that.

Does this rule apply to India as well? We have 18 main industry classifications and picking one stocks from each will give you 18 stocks. If you avoid 2-3 sectors because you are bearish on them, you still have 15 to choose from. These 15-odd stocks should be enough for a portfolio of Rs 50-60 lakh. However, the situation changes for investors with larger portfolios. “Since the liquidity is not very high in India, investors with large corpus are forced to invest in more than one stock from each sector. This explains why mid- and small-cap oriented schemes have a large number of stocks in their portfolio,” says Shailendra Kumar.

Diversification reduces but doesn’t remove the risk in stock investing
15-20 stocks from different sectors can effectively remove the diversifiable (unsystematic) risks in a stock portfolio.

Number of mutual funds
Many investors also tend to binge on funds. Since mutual funds already hold a diversified portfolio of stocks and bonds and there is a lot of overlap in companies held by funds, there is no need to go for large number of schemes. “Around six schemes are enough for a mutual fund portfolio of any size. Four equity funds, one liquid fund and one shortterm debt fund is all you need,” says Joshi. Bajaj concurs with this view. “Ideally, no single scheme should have more than 20% corpus (increases risk) and less than 10% corpus (impact is insignificant),” he says.

Changes in asset allocation
The asset allocations discussed till now are structures needed at the time of investments. For example, you may have a 100% equity allocation for a goal that is 15 years away. But what should you do when your goals come nearer? Experts say that you need to shift to debt 1-2 years before the goal date (in year 13 or 14 in this case). A lot will depend on the market situation also. Get out earlier if the markets are overvalued, and wait a little longer if they are down. A fixed formula can be risky because the equity market may be in doldrums during the 14th year. Gradually shifting from equity to debt is the only solution for it. “Instead of shifting the entire corpus just one year before goals, investors should start shifting from equity to debt in a gradual manner (shift 20% per annum to debt from 11th year onwards for a 15 year goal),” says Bajaj.

This kind of shift from equity to debt also depends on the type of goals and the way money is needed for them. For example, money is needed in lump sum for a daughter’s wedding goal. However, money requirement will be staggered for her education goals (assuming four years of graduation and two years of post-graduation). “If only a portion of goal value is needed in a year, shift only that part from equity to debt in advance,” says Joshi.

Starting the journey in monetary view.....

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Sumit is 24 years old. He works with a multinational company. His monthly take-home salary is Rs 35,000. Since he lives with his parents, he doesn't have to worry about the necessary living expenses. His parents would also take care of his wedding expenses; Sumit plans to marry in two years. He is a diligent saver and keeps his monthly spending below Rs 10,000. He wants us to build a financial road map for him and analyse his investments in stocks and mutual funds.

Emergency fund

Since Sumit is sin gle and stays with his parents, he doesn't have to worry about emergencies. But he should maintain an emergency corpus equivalent to at least six months' expenses once he gets married. An emergency fund acts like a cushion during tough times. It should be kept in a
combination of sweep-in fixed deposits and short-duration debt funds. This helps earn higher returns, without compromising on liquidity. Action: Maintain an emergency corpus equivalent to six months of expenses once you tie the knot.

Life insurance
Sumit has a term cover of Rs 50 lakhs. Term plans are the best form of life insurance as they provide a large cover at low cost. Endowment insurance plans and unit-linked plans (ULIPs), which are a combination of investment and insurance, should be avoided as they provide neither sufficient
insurance nor good returns. However, Sumit doesn't need such a large life cover at this stage. One
needs a life cover only if one has financial dependents. Since he has already purchased one and plans to get married in two years, he may retain the cover and reassess the needs once he gets married.
Action: Continue to stay away from endowment and unit-linked insurance plans.

Health insurance
Sumit has a health cover of Rs 4 lakhs from his employer. He had a personal health cover, too, but he discontinued it a few months ago. It is recommended that one has a personal health cover, apart from the one provided by one's employer. The health cover provided by the employer ceases with the employment and one is not covered during the job-transition phase.Hence, Sumit should buy a health cover of Rs 2-3 lakhs, which would cost him around Rs 5,000-7,000 per annum. While purchasing health insurance, Sumit should ideally go for a policy without co-pay and sub-limit clause. In a co-pay clause, you have to necessarily bear a certain proportion of the treatment cost from your pocket, irrespective of whether the total bill amount is within the health cover limit. A sub-limit clause restricts the coverage to certain expenses, like doctor fees, room rent, ICU charges, etc. For example, if a Rs 2 lakhs policy cover has a sub-limit for daily ICU charges at 2 per cent of the sum insured, the insurance company will only pay up to Rs 4,000 for the same. The balance cost has to be borne by the insured. Further, he should try not to miss any premium payment and continue with the same health plan year after year. Health plans cover treatment of certain medical conditions only when the policy has been renewed continuously for a specified number of years, which is known as the
waiting period. This may vary from two-four years depending on the policy. Also, he should ensure that his parents have the necessary health cover as unforeseen medical expenses can dent one's financial plan in a big way.

Action: Buy a personal health-insurance plan

Children's education and marriage

Sumit wants to start investing for his children's higher education and weddings. He estimates the combined cost to be Rs 40 lakhs in today's terms. This would swell to more than Rs 3 crore in 20-30 years at 8 per cent inflation, when he would need this money. Assuming a return of 12 per
cent, an SIP of Rs 7,500 in one-two good equity funds should suffice, provided the SIP amount is increased by 10 per cent every year.

Action: Start an SIP of Rs 7,500 and increase the contribution every year.

Retirement
It is too early to estimate the required retirement corpus for Sumit as his lifestyle and expenditure are likely to change in the coming years, especially after he gets married. But he should continue to invest the available surplus regularly in equity to reap the benefits of compounding over the long term.

Action: Continue to invest in equity mutual funds through SIPs Portfolio

Sumit has accumulated around Rs 2.40 lakhs in eight decently rated equity funds through SIPs. These are a mix of tax-saving, large-cap and small-cap funds. He should invest in not more than four-five mutual funds as too many schemes make it difficult to monitor the portfolio and may
result in losing out on the returns in the long run. Investments in a tax-saving fund should be limited to the amount required for tax-saving as it has a mandatory lock-in period of three years. Sumit's goals are more than 20 years away. The major portion of his portfolio should be invested in two multi-cap funds and a small portion in a good small-cap fund. Multi-cap funds have the flexibility to invest in companies of all sizes. This helps the fund manager derive the best possible return.

Since Sumit has enough time, he can continue to invest in his small cap funds. But he should remember that small-cap funds are extremely volatile and may move up or down sharply, even with the slightest movement in the market.
Sumit has also invested Rs 1.40 lakh in stocks. He should continue with them only if he has the required skills and time to invest directly in stocks. Otherwise, he should shift to equity mutual funds
.
Action: Reduce the number of funds. Invest in multi-cap funds.

Keep in mind

It's always desirable that you start investing early in life as you will be able to reach your financial goals faster and more comfortably.

Marriage increases your financial responsibilities. Make changes to your financial plan accordingly.
Don't rely only on the employer-provided health cover. Buy your own health insurance as well. Take into account the co-payment and sub-limit clauses. Four-five funds are enough for optimum diversification.

Multi-cap funds are the best category of equity funds to hold as they can invest across companies of all sizes.
Direct equity investing is fine if you know how to research stocks.

Otherwise, go for equity funds.

Beginner's guide to mutual funds

2018-07-21T09:39:00.000+05:30

Here's everything a first time mutual fund investor needs to know and do......

Mutual Funds are a well-diversified, low-cost and tax-efficient way of making your savings grow. They are an ideal investment vehicle for those who do not have the expertise to invest directly in stocks. You simply invest in a fund, and the fund manager will do the job of picking the stocks that he thinks will yield good returns. Despite their simplicity and suitability for small investors, mutual funds are not a preferred investment vehicle for the vast majority of Indian investors who are either not aware of them or find them too complex to understand. If you happen to be one of them, here's a primer that should help you step into the world of mutual funds with ease. It summarizes the key steps in your mutual fund investing journey and explains all you need to know.

1. Getting started: There are a few one-time pre-requisites that you must complete before you can invest in a mutual fund. You need to have a bank account and you must be KYC (know your customer) compliant. Simply put, KYC is the process of verifying the identity of an investor. You can check your KYC status here: https://camskra.com/. If you are yet to register for your KYC, you can apply for it with a Registrar and Transfer agent. You can apply for a KYC with a Registrar and Transfer agent (CAMS/KARVY) or directly through a mutual fund house. Self-attested copies of proof of address, proof of identity and recent passport size photographs are required. For small investors, the facility of e-KYC is also available now in which you do not need to submit any physical forms. Lastly, you need to have a permanent account number (PAN) and Aadhaar number.

2. Choosing funds: Mutual funds are meant to simplify the job of investing for you. But ironically, the task of choosing the right funds can become overwhelming, given that you are faced with more than 2,500 fund schemes to choose from. Here are the decision points you'll be confronted with and here’s how you can make the right choices with ease.

a. Debt or equity? Referred to as the asset allocation decision, this is basically where you decide whether and how much should you invest in fixed income yielding securities versus equity shares. Both are meant to fulfil different needs. Debt mutual funds offer steadier but lower returns. Given their low risk-low return profile, they are a suitable choice to meet short-term goals where capital preservation assumes precedence over return potential.

On the other hand, as the name sugge sts, equity mutual funds invest in shares which can earn far higher returns but can also fluctuate much more in the short term. They are suitable for time horizons of five years or more. The chances of incurring losses from equity investments fall drastically over longer investment horizons. And coupled with their superior return potential, they are an ideal choice to build meaningful wealth over long-term. you are a first-time investor looking to inves t in equity, aggressive hybrid (balanced) funds could be a suitable option for you. These funds invest between 65% to 80% of your money in equity and the rest in debt. With this combination, you get a good flavour of equity investing even as the debt portion brings a bit of stability.

In summary, a debt fund is a suitable choice to invest the money you have earmarked to buy a car next year. On the other hand, equity and balanced funds will be a good way to plan for retirement.

b. Which funds? Once you have decided on your debt-equity allocation, the next step is to pick the specific fund(s) within the debt or equity categories. Do not randomly pick mutual funds or blindly rely on the advice of a relative or a friend. You should opt for funds that have performed well consistently over the long-term instead of the season's chartbusters. The list of 4 or 5 star rated funds by Value Research can greatly simplify your job. These ratings are based on funds' long-term risk-adjusted returns and therefore, reward funds that have a proven track record of performance.

c. How many? Even by investing in a single fund, your portfolio gets diversified across 40-50 stocks. Two or three funds from different fund houses are quite enough to provide adequate diversification. With a larger number of funds you may just end up replicating your existing holdings.

d. Direct plan or Regular plan? Every mutual fund now offers a direct plan and a regular plan. They are the same except that a direct plan charges lower annual expenses (lower by around 0.75%-1% per annum in case of equity funds) because it does not pay the distributor fee or commission. This is because in case of this type of plan, you have invested the money yourself, without going through a broker or agent. Whilst Direct Plan will save you money, you'll have to do everything yourself, and being a 'do-it-yourself' investor requires active tracking, rebalancing, switching funds, etc. which can be daunting for a beginner. You may want to instead go through a distributor initially and invest in regular plans. Later on, once you’ve become more knowledgeable and confident, you can think of switching to direct plans.

e. Growth option or Dividend option? If you don't have a specific requirement to get part of your money returned in the form of dividends (as and when they are declared by the fund house), it is best to go for the growth option. This will ensure that your fund's returns make the most of compounding. Read this article to know about why dividend is not something 'extra' that you get and how the magic of compounding works to your advantage with the growth option.

3. Buying funds: Now that we are past the stage of choosing funds, we are ready to go ahead and buy them. You can either buy funds directly from a fund house or through an intermediary. For investing directly, you'll have to submit filled forms, cheques, etc. at investor service centers of the mutual fund houses or registrars, who have their branch networks across many cities. Or more conveniently, you also have the option of investing online at the websites of the mutual fund houses.

In case you prefer to invest through an intermediary, there is a wide variety of them available, including banks, individual financial advisors, distribution companies, online portals, and brokerages. At this stage, you'll need to ponder over how much to invest and at what frequency. Here, you broadly have two options - lump sum investment or Systematic Investment Plans (SIP). Lump sum is, of course, investing the entire money that you want to invest at one go. SIP, on the other hand, means investing a fixed amount at a fixed frequency (generally monthly). For instance, if you have Rs 1 lakh to invest, you may invest the entire amount in lump sum or you may create a monthly SIP with each installment of Rs 10,000 over a 10-month period. Which one is better? Well, for debt funds, you may invest in lump sum but for equity or balanced funds, we strongly recommend you create an SIP spread across a certain number of months. Read our story 'Are SIPs always better than lump sum?' to know why.

4. Monitoring your investments: You should keep a track of how well your investments are performing. But don't overdo it. Given the ubiquity of modern technology, you will constantly get updates about the ups and downs of the market. Do not be swayed by them. Reviewing your investments once a while is all you need to do.

5. How and when to sell: There are broadly two reasons why you should consider selling your fund - 1) It has become a poor performer; or 2) You need the money to meet the financial goal(s) for which you were investing, in the first place. Let's look at both of them one by one.

a. Poor performance: If the fund’s performance has been consistently dipping, compared to the peer group and benchmark, you should consider carefully whether or not it should be part of your portfolio. However, don’t let a single month of bad performance change your mind. You need to take a longer-term view on this. A quick and convenient way is to keep an eye on the fund's rating. In case its rating drops to one or two and remains there for a few months, you can consider selling it and looking for a better option.

b. Meeting your financial goal: In case of equity funds, you should withdraw systematically (remember SIP?). Therefore, as your planned goal nears, exit your equity funds over 2-3 years and move your money into debt funds. This gradual withdrawal is important to avoid getting adversely impacted by any sharp declines in equity markets right at the last minute. In case of debt funds, however, it is fine to withdraw your money at one go. Lastly, you should keep the tax implications in mind while selling your funds.

How to do financial planning? Here are top 6 money habits for healthy finances

2018-01-22T23:21:00.000+05:30

Creating a strong financial plan is about understanding your current financial health and taking necessary actions to reach where you want to be in the future. Here are six money habits that will lead you to a stronger and healthier financial life.

Prepare a financial plan

Financial planning is the process of allocating your monetary resources for achieving various life goals. These goals can be your child?s higher education or marriage, post-retirement expenditures, down payment money required for buying a house or a car, etc. Start by calculating your financial net worth and list down the monetary value of each of those goals, after factoring their time horizons and inflation. Use SIP calculators to find out the monthly contribution required and explore the possibility
of reducing your expenditures, in case of a shortfall. While allocating your contribution to various financial goals, do not neglect your emergency fund or your post-retirement corpus.

Set your asset allocation strategy

Next is to implement your financial plan by distributing your investments across various asset classes, such as debt and equity, according to your risk appetite and the time horizon of your financial goals. Investment for goals maturing after five years should be invested in equity mutual funds as equities outperform other asset classes over the long term. Similarly, investment for goals maturing within three years and 3-5 years should be invested in short term and hybrid funds respectively, as equity funds can be very volatile over the short- and medium term.

Get adequate insurance cover

Most of us confuse insurance as an investment instrument. As a result, we end up investing in unit-linked insurance plans, endowment policies, money back plans, etc., which have high expense ratios while providing very little cover. Instead of buying such life policies, stick to term plans for your life cover. These policies can easily provide a life cover of 15 times of your annual income at a fraction of the premium charged by other life policy types. Also buy health and personal accident policies to protect yourself from high medical costs and loss of income due to disability.

Automate your bill payments

Not all of us are good with remembering multiple payment dates and managing paperwork. While missing utility bill payments will cost you in terms of late payment fees, missing EMI and credit card bill dates will cost your credit score and future loan eligibility. Hence, set standing instructions in your bank account or credit card to automatically deduct your insurance premiums, EMIs, utility bills, credit card bills, etc., on preset dates.

Use credit cards for daily expenses

Making payments through credit cards is equivalent to taking loans. Thus, credit card transactions are reported to the credit bureaus and timely repayment increases your credit score too. Hence, use credit cards to make payments and ensure their bill repayment by the due date to build or improve your credit score. However, make sure to contain your credit card bills within 30% of your total credit limit as doing otherwise will pull down your credit score.

Reduce your debt burden

Falling interest rates and improved access to retail credit entices many to avail loans for consumption. As a result, increasing number of people are saddled with multiple EMIs at various rates, leaving little scope for any investment. The best way to come out of such a situation is to avail a bigger loan at lower rate, longer tenure and other favourable terms and use its proceeds to prepay the costlier ones. This process is also known as debt consolidation. Top-up home loan and home loan balance transfer are the best debt consolidation options for existing home loan borrowers while others can consider loan against property, loan against securities and personal loan balance transfer depending on their loan eligibility.

5 money lessons for you to make it big

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Money is scarce and you should make sure that as you grow in your professional life, your money also grows at a phenomenal pace with time by investing systematically and following proven processes.

1. Don't just save, but invest too

Many young investors now are very good at saving a portion of their salary for the future. Having said that, saving alone will not do the trick.
Keeping money stacked up at 4 per cent in your bank account won't make you wealthy.
You have to invest your savings into appropriate financial instruments in proportion to grow your money.
Do remember, investing in financial instruments which don't grow for the long term is also a way of destroying wealth.
Investing in expensive ULIPs and shunning equity altogether (not investing in equity linked savings scheme) in your 20s can be an opportunity lost.
Control the urge to invest randomly in direct equities based on advice from various quarters.
Many investors, in their mid 20s stop their equity investments completely midway due to losses they incur by randomly investing in stocks.
Investors should control such an urge till they get a hang of equity markets, the volatility associated with it, basics of investing, how to identify long term compounding stories.
Equity mutual fund is an excellent financial instrument to start investing in equity markets.

2. Don't be too defensive in the early years

Getting guaranteed returns is the best case scenario but if you are young and looking to grow your
wealth, shying away from equities and stacking up all your money in a bank account or FDs will not
make you rich.
In fact, it will barely give you positive inflation adjusted returns.
In the early years, you can dedicate a good percentage of your savings to equity for your long term
goals as equities tend to give much better returns over a long term.
Decide on adequate equity-debt proportion based on your risk profile and start investing.
So start a SIP without any delay as part of equity allocation.
It is always fruitful to have an adequate proportion of equity and debt in your financial portfolio but
you can't shun equities altogether. Have it as part of your investment portfolio.
I have come across many investors who save close to Rs 80,000 per month but are investing only Rs
2,000 via SIP for their long term goals.
You need to understand that to achieve all your goals, you need to increase SIP amount as a specific
percentage of your savings every year.

3. Starting your SIPs as soon as you start earning

Starting early is the success mantra, however small that amount may be.
You can start a SIP in equity mutual fund with as low as Rs 500 per month. This is the biggest favour
you can do yourself.
SIPs is a must have in your financial portfolio of any individual, irrespective of the age but it holds
much more significance for a young investor.
If a young investor is able to understand the power of compounding and as to why initiating SIP in
equity mutual funds early can make a big difference to the end corpus, that's about it.
Let's talk about some numbers.
If you start investing Rs 5,000 per month at the age of 25 till your retirement age of 60, you will
accumulate Rs 7.4 crore, assuming a return of 15 per cent annual returns.
If you start investing the same amount at the age of 30, then till retirement age of 60, assuming 15 per
cent annual returns, your corpus will be Rs 3.5 crore.
I think you can very well appreciate the huge difference and act accordingly.
Most of the times, it's not that we can't spare a specific amount (not necessarily Rs 5,000 per month);
it's just lack of awareness on the part of investor which costs them dearly. So in case a young investor
or any investor is reading this article and have not yet started investing in mutual funds, please initiate one tomorrow first thing.
It's your responsibility to make sure that your money works for you; just like you work hard at your
work place for your salary at the end of each month.
A high proportion of investors who I have met in the field, realise this big mistake only between the
age bracket of 35 to 40 years losing precious 10 years of aggressive investing in the process.
If you are in your 20s, make sure you don't repeat the same mistake.
Invest via SIP from the very beginning of your professional life.

4. Don't introduce too many funds in your portfolio from the word go

Do adequate research before choosing the right funds and have conviction in the mutual funds you
choose.
A large proportion of investors introduce too many funds when they start investing even if relative SIP amount is pretty less, to begin with.
For instance, if you start investing with initial SIP amount of Rs 5,000, then even investment in two
funds, Rs 2,500 each, should be good enough.
Choose funds depending on your risk profile and keep investing.
Going forward as you increase your SIP amount, you can introduce few more funds in your portfolio.
5 to 6 funds should ideally make up a good mutual fund portfolio.
In addition, don't choose sector/thematic funds initially if you are a first-time investor in mutual
funds.

5. Don't stay away from equity markets just because someone incurred heavy losses in
the past

Many investors often take cues from someone in the family or friend who has had a bad experience
with equity investing at some point in time.
Investors do take such a loss as a general phenomenon and decide to stay away from equity markets.
It's always good to learn from the experience of investors who have been in the market at some point
in time but assuming losses in equity markets is the norm will be incorrect.
Markets are supreme and always reward investors who have virtues such as patience and consistency
in investing regularly in quality businesses for a long time.
Always be positive and think about growing your wealth.

5 Benefits You Must Know As A First Time Credit Card User

2018-01-22T23:00:00.003+05:30

If you are using a Credit Card for the first time, always try to use its distinctive features to maximise the advantages.

If you are the first-time Credit Card user, then huge financial benefits may not be far away. Credit Cards help you learn financial discipline while giving you the advantage of getting interested free usage of the amount spent for 17 to 52 days. But that is not enough and here we discuss many more benefits of using a Credit Card prudently.

Travel With Less Cash

In The Wallet Credit Card acceptance has increased significantly after last
year’s demonetisation exercise. If you possess a Credit Card, then you can use it to pay at fuel stations, grocery shops, school fees, travel bookings, regular bills payments, etc. So, you can easily reduce the cash amount in your wallet and instead carry the Credit Card always. By using the Credit Card, you can maintain a much higher liquidity and get leverage on your finances during an interest-free credit period.

Keep Track Of Your Expenses

Credit Card is a spending instrument. When you make a cash expenditure, it becomes tedious to
remember all small spendings. However, in the case of Credit Cards you get a monthly statement detailing all your expenditures helping you to analyse your spending patterns. Most Credit Card users consider this to be a very helpful tool in cutting down on unnecessary expenditure.

Support During Financial Emergencies

There are situations when your salary may get delayed for some reason and you may not have
sufficient cash reserves to pay-off regular requirements. During such short-term financial emergencies, a Credit Card can be your most reliable saviour since you can also use it as an ATM to withdraw cash. However, it is important to note here that using the Credit Card to withdraw cash is charged with hefty interest from the day you take out money. So, you must refrain from using the Credit Card for withdrawing money, unless you are in a deep financial mess.

Build Your Credit Score

There are people who would have never used a debt instrument such as a bank Loan. In such
scenarios, their Credit Score is normally ‘zero’ i.e. no credit information available for them. If you
want to get a loan without a credit history, then you may find it difficult to prove your credit worthiness. By using a Credit Card, your Credit Score builds-up over time, provided you repay
the outstanding amount before the due date and do not default in repayment. Long-term disciplined use of Credit Card reflects your credit worthiness and it may help you to get higher Credit Score and attractive loan offers from top lending institutions.

Facilities, Offers And Discounts

While buying things on cash payment, you may miss several offers and discounts, which are exclusively available on purchase through a Credit Card. Retailers and merchandise have an exclusive tie-up with a specific Credit Card companies and if you buy things from such stores, then you may get cash back benefits, discounts or reward points to be redeemed later.

Similarly, Credit Card companies also offer big benefits to the customers on online shopping from time to time. For example, during the festive period some card company allows EMI with zero processing charge and zero interest rate.

Credit Cards can make your spending convenient, safer and enjoyable, but you must quickly adapt to an appropriate usage pattern. Never rush to exhaust the card limit when you use it for the first time.

Learn the benefits of Credit Cards slowly and use it as per your requirements. Do not exceed the
credit utilisation ratio over 30% when using the Credit Card, if you think you need more limit,
then you can request to the card company for limit enhancement or you can apply for another
Credit Card from another company. If you take a little care while using the Credit Card, then it can
give you huge benefits in the long term.

Investments: Take a ladder approach for your portfolio

2018-01-21T15:45:00.001+05:30

On a physical ladder, you climb step by step to move ahead. In fund management or wealth management, it means matching the maturity of the investments with the time-defined fund requirement. That is to say, when there are defined fund requirements after, say, two years, five years, seven years, etc., if I invest in financial instruments maturing aftertwo years, five years and seven years, I will be doing a laddering of my investments with my financial goals. The advantage of doing this is, when I am matching my investments with my goals, there is no worry about market
fluctuations when I need my money. Any investment in market-related securities, even in defensive avenues, is subject to market movements. Hence laddering leads to defensiveness in the portfolio. To be noted, "earmarking" of investments is different from laddering. Investments in equities can be
earmarked for particular time-defined fund requirements, but that is only a segregation. When you require the money, the equity market may be booming, which may be an advantage of not laddering. However, if the movement of equity market is not favourable at that point of time, you may be impacted when you liquidate your investments.

How to do it?

Investment in securities maturing as per your requirement of funds leads to perfect laddering. Following up on the earlier example, if you invest in bonds of maturity two years, five years and seven years, you will be laddering your investments. If the horizon is three years, it can be done through a Fixed Maturity Plan (FMP) of three-year maturity. For shorter tenures than three years, it can be done through Interval Plans of Mutual Funds with rollover period matching your horizon, e.g., one year. This part is straightforward. The question here is, if you ladder your entire portfolio, even for long horizons, are you giving up on high-risk, high return avenues like equity and thereby settling
for lower returns? If your horizon is 10 years or 15 years, which is adequate for investment in equity, and if you are laddering your entire portfolio, it would be sub-optimal.

The answer to that is, for long horizons like 10 or 15 years, start with allocation to equity and as you approach your timeline, gradually shift to debt or defined maturity instruments. The shift should be done, not at the last moment, but one to two years prior to the timeline. Thereby, the upside of investment in equity will be availed of, and the stability sought through laddering will also be achieved. There may be a temptation, if the equity market is booming, to remain invested in equity. However, discipline in investments is advisable. In your personal financial planning, return maximisation is one of the objectives, but not the only objective. Volatility minimisation also has to be taken care of.

Quasi-laddering

Matching of the maturity of your investment with your timeline is perfect laddering. The whole idea is to minimise volatility. Moreover, sometimes, the timeline itself is not very clear as life's events may not be under your control. In such cases, an adequate proportion of your investments should be defensive, even at the cost of relatively lower returns (debt) and the proportion where you are sure there is an adequately long horizon, the allocation should be in aggressive avenues, gunning for higher returns (equity). In quasi laddering, being defensive, you are minimising the potential
volatility in your portfolio.

Conclusion

In the planning and implementation of your wealth portfolio, the objective is to meet your financial goals through your savings and investments. The returns in your portfolio has to be optimised, not maximised. Rather than speculate with your life savings for little higher returns, preservation followed by growth should be the priority. Laddering should be given due importance, even at the cost of a little lower returns.

Six money tips for a debt-free life (for all)

2018-01-21T15:39:00.000+05:30

One needs to understand that it takes years to get out of debt. Here's Amar Pandit's advice on how to move towards a debt-free life In the current scenario, with increase in the standard of living and the rising costs of necessities, we have seen a surge in the number of middle class families that are borrowing money to meet their family's needs.

Further, the younger generation has an excess cashflow in their initial years of working. Lack of responsibilities makes it easy for them to have more money than they need. Thus, these 'extra bucks' are spent to live a luxurious lifestyle that they desire.

As they advance in their career, family responsibilities increase along with the salary and thus, they are in a troublesome situation of being entitled to a standard of living that they cannot afford. In such a situation, credit cards and cover loans are highly rated as saviours.

Plus, they also offer you loyalty points for your next purchase. Cherry on a cake, isn't it?

The dream of owning a home, having a fulfilling career, settling down, maintaining a life style, etc., all will lead to growing debt and you will be stuck in the vicious debt cycle before you even start to realise it. But is this an ideal situation to be in? Definitely not!

In the chase of always 'wanting more', people tend to miss out on the rate at which they're piling up the debts. Any income can be spent but when contingencies arise, managing day-to-day expenses along with debt repayment becomes a huge issue. Does this mean you shouldn't borrow at all?

There are good arguments about debt and leveraging being beneficial, like a mortgage, since it's a smart investment, considering the lower interest rates.

Debt, if used well, can create income-generating assets to boost your income and improve the productivity; otherwise it is wasted only on things that won't really add value.

One needs to understand that it takes years to get out of debt. Following are the key things to remember which will lead your way towards a debt free life...

1. Understanding your debt

Understand if your debt is consumer debt (credit card bills, personal loans) or secured debt (car or home loans).

2. Plan your finances

List down the mandatory expenses which occur to keep your routine going (Grocery, Electricity-Water-Telephone Bill, EMIs, etc.) and always ensure that you have enough cash in hand to pay for these.

3. Set aside 3-4 months mandatory expenses

This would be beneficial in case of any emergencies and would help you to avoid adding debt.

4. Set goals

Find the goals that inspire you and you'll have no problem focusing on the same.After listing down your cash inflows and outflows, look out for the surplus balances that can be channelised towards these goals. Find out the investment avenues which would help to achieve these goals. This would indirectly stop impulsive purchases.

5. Turn your junk into cash

We always tend to make impulse purchases only to realise later that it was unnecessary. Anything in your house which hasn't been used for past 6-12 months, chances are slim that you'll use it anytime in future. So, why not get a rid by selling it off and get yourself some extra bucks?

6. Control debt

Limit your overall debt payments to a maximum of around 35 per cent of your gross income. The lower, the better.When it comes to getting rid of debt, the most important thing is to get started. Assess your situation and consider the options that will work best for you. If you are struggling with debt, act quickly and seek help from a Financial Advisor. Amar Pandit, CFA, is an engineer-turned-financial planner, and founder of HappynessFactory.in, a unique fintech company.

Using A Credit Cards Regularly? Here Are 10 Important Things That You Should Know

2018-01-21T15:32:00.001+05:30

The use of plastic money has increased over the years, especially post demonetisation. According to a recent media report, by the end of Mar 2017, there were 29.8 million active Credit Cards in India. Despite the credit aspect and associated interest charges, people have been transacting in large sizes through Credit Cards. The easy availability, advantage of paying through EMI, and rewards and discounts are the major attractions. However, lack of financial discipline and careless usage can cost a hefty price.

Let’s explore 10 smart ways in which you can avoid getting into a debt or distress due to Credit Card usage.

Pay Due Amount On Time

If you do not pay the outstanding amount on or before the due date, you are charged with an interest rate, which ranges between 24% and 48% p.a. On failing to pay the minimum due amount repeatedly, your CIBIL score would get negatively impacted. So, make sure you pay the outstanding amount on time to avoid paying interest and penalties.

One way of doing it is by setting a reminder on phone. You can also set an auto debit instruction with your online banking account for making payment of the Credit Card bill on a specific date after the bill is generated.

Maintain Low Card Utilisation Ratio

It is important that you do not exhaust the complete Credit Card limit on a regular basis as it increases your credit utilisation ratio, impacting your credit profile negatively in the long term. Banks and financial institutions identify you to be credit hungry if your credit utilisation ratio is high. A credit utilisation ratio of around 40% is advisable.

Don’t Withdraw Cash

When you withdraw cash using a Credit Card, you do not get an interest-free period on it. You are charged with an interest of around 24% to 48% p.a. from the day of withdrawal. It’s best to stick to Debit Cards, when it comes to withdrawal of cash, and save the unnecessary interest outgo.

Use The Interest-Free Period Smartly

The easy accessibility of Credit Cards often leads to spending beyond means. Remember, it is not a borrowing tool. If you are in a real need to borrow, look for alternatives such as Personal Loan or other secured loans. The interest rates on these loans are lower than that of Credit Cards.

Make Good Use Of Reward Points

Credit Cards come loaded with benefits such as cashbacks, discounts, etc. Do watch out for such offers and save up on your expenses while shopping. You can also earn reward points on specific merchandises.

Use The Credit Card And Wallet Combination

Some e-wallet companies have tied up with banks to offer interest-free credit period on transferring money to mobile e-wallet. You can save up a lot more by availing the benefits offered by both Credit Card and e-wallets.

Use Multiple Credit Cards In Rotation

If you have multiple Credit Cards, use them in rotation to keep the utilisation ratio in control. It would also help you to keep all your accounts open and cards active in the long-term.

Get The Right Card That Suits You

There are many types of Credit Cards available in the market with some offering benefits on flight bookings while some offering cashback on fuel etc. You must pick the one that suits your needs best.

Redeem Credit Card Reward Points On Time

The reward points that you accumulate over time on merchandises can be redeemed to avail discount on transactions. However, these reward points have a validity period. If you do not redeem the Credit Card reward points before the expiry date, your accumulated reward points get wasted. The validity period usually varies from one year to three years.

Read Your Credit Card Statement Regularly

Your Credit Card statement carries all the charges, interest and penalties levied by the Credit Card company. You must read this document without missing a detail. If there is an unaccounted element, you must immediately report to the Credit Card company.

Smart use of the Credit Card not only saves your money, but also improves your credit profile along with adding to your financial reputation.

Always Use virtual wallet & keep your debit / credit card safe from being fraud

2018-01-21T15:30:00.002+05:30

There are lots of virtual wallet available right now in the word. You can pick any one from then
to shop online or offline.

For example if you blogs to India then you can use.

Paytm
Freecharge Go
Mobkwik
Airtel Money
PayZapp
ICICI pocket

Out side from India can have a wallet like Paypal, that gives you much enough power to pay using
virtual wallet.

Why virtual wallet?.

Carrying real Debit/Credit card may be missuses by persons but E wallet can reduces these chances almost to 99%. As there is no physical card so no one can swap it. There are lots of reason which make you feel to think about why you should use a virtual wallet instead of physical wallet.
Easy to access – You can access your e-wallet at anytime when you are connected to internet.

No one can swap you virtual wallet, 99% fraud happens by swapping unauthorized Credit/Debit cards today.

It protected with OTP that sends on your registered mobile number. How to use virtual wallet?.

Find virtual wallet accepted by your shopping partner Now add money to virtual wallet.

Shop on online/offline stores.
Select wallet/virtual wallet on payment page.
Pay the amount using same virtual wallet.

What to do if your digital payments go wrong

2018-01-21T15:28:00.000+05:30

Electronic transactions are rising fast, so are cases of payment failure and delayed settlement.

The government's demonetisation drive has forced people to adopt digital payments. But as the
numbers of electronic transactions are rising rapidly, so are issues related to those.While shopping online, Deepika Kohli used a mobile wallet for payment. The service provider e-mailed that her transaction was successful. But the online retailer claimed it didn't receive the money. It has been over a week and she has no clue where the money disappeared.

"Depending on the instrument used for a transaction, it can take from a few seconds to seven working
days for settlement. If it takes longer, the money usually is in a pool account that wallets or banks
maintain with the payments network provider," says Hari Velayudan, head-service delivery at PayU
India.

The Reserve Bank of India has timelines for reconciling failed ATM (Automated Teller Machine)
transactions. No such guidelines have been issued for newer instruments such as wallets or unified
payment interface.

Banks need to reconcile failed ATM transactions within seven working days after a customer has
lodged a complaint. Else, there's a penalty of Rs 100 each day of delay.

Claiming your funds

If you or the vendor has not received money within two to seven days, depending on the transaction,
you should approach the wallet service provider."After demonetisation, the volume of transactions has increased 10 times but the headcount has only gone up by 1.5 to 2 times. Some players might therefore take longer to resolve transaction failure queries," says Akash Gupta, vice-president (marketing), MobiKwik. But wallet players are increasing headcount rapidly. Before November, the MobiKwik team had 160 employees and by March-end, the count could touch 1,000.

If you don't receive a satisfactory response at first level, escalate the issue. "Every wallet player has grievance redressal guidelines on its Web site that provides contact details of different authorities," says Vinay Kalantri, managing director, The Mobile Wallet.

The final authority for resolving problems with most is the Grievance Officer. "If customers are not happy after escalation, they can approach the grievance cell of the RBI," says the Freecharge spokesperson. Sony Joy, co-founder and chief executive of Chillr, says posting on the company or bank's social media pages can help in quick resolution.

"Brands are very cautious about their social image. A user should reach out to the brand through their
social media handles if it is has taken more than seven days."

While seven days is the maximum it should take for you to get your money back in most cases, you
should start following up with the wallet provider after 48 hours.

Transfers via net banking

When an individual transfers money from a bank account to a wallet via net banking, it happens in a
two-step process.
There's a payment gateway between the two, which fetches money from the bank and forwards it to
the wallet.
A transaction failure can happen after money leaves the bank account but doesn't reach the payment
gateway due to bad connectivity, server problems, etc.
Payment gateway companies settle payments with banks every day. A user should get his money back in the bank account within two business days. If not, he should start following up proactively.
If the failure happens after the payment gateway receives the money, the funds should reach the wallet within two business days.

"The individual needs to contact the wallet company to help resolve the issue," says Velayudan.
Deepak Abbot, senior vice-president at Paytm, says delays are only experienced when a customer
transfers money to a bank from the wallet.

"Delays are often due to queues at the bank level to process the refund. We immediately issue a
reference number to the customer, which can be quoted to the bank for faster redressal," says Abbot.
"Paytm has no control over a bank's processes. We can only guide the customers who reaout to us,"
adds Abbot.

Transfers via cards

The process is similar to transfers done using net banking.

But it can take as many as seven business days for the money to reach back to the user's bank account
or card. It depends on the process an individual's bank follows.
Some banks have a central pool, from which the money is transferred to the customer's account.
Some also have individual pool accounts for each branch.In such cases, it can take longer for a person to get his money back if transactions fail.

Failure at merchant

If you pay a merchant using a wallet and the transaction is not completed, as with Kohli, the funds should be back in your wallet immediately. A merchant only accepts payment from a wallet if it is on the same platform. As there are no other parties involved, it should take a few seconds for the transaction to reverse. An individual should seek the help of her/his wallet the next day in such transaction failures.This is also applicable when you have done a booking for a bus, train or flight using a wallet, but later cancel the tickets. Once the merchant issues a refund, it should not take more than a few minutes to reflect in the individual's wallet.

"In the digital space," says Gupta of MobiKwik, "a person needs to be cognisant and watchful, as it is a relatively new way of payments. The systems and processes of digital payments players are evolving."

What You Need to Know Before Buying Cryptocurrencies...

2018-01-21T15:21:00.002+05:30

Bitcoin, Litecoin and other cryptocurrencies have garnered significant attention in the last several months. Bitcoin prices, for example, have risen at one point to over $4000 per bitcoin. Purchasing digital currencies could prove to be a great long-term investment. For now, predicting where cryptocurrencies could go is really just pure speculation.

Before you run out and spend your hard-earned capital buying Bitcoin or other digital currency, here are a few things you should know.

You Can Lose a Lot of Money

Just because Bitcoin prices have been on the rise doesn’t mean that prices cannot fall. In fact, if the network were to somehow become completely compromised or rendered unusable as a medium of exchange, prices for bitcoins and other electronic currencies could decline to zero.

That’s right: zero.

Make sure that any capital you decide to invest into cryptocurrencies is risk capital that you can afford to lose.

On The Other Hand, You Can Make a Lot

The sharp rise in Bitcoin in recent trade has many tradersand investors excited over the digital currency’s potential for price appreciation. There simply is no telling just how high prices could go. Some estimates have already suggested that Bitcoin could reach $500,000 by 2030. Although more merchants are now accepting Bitcoin, this form of money still has not reached mainstream status. Don’t expect to pay your mortgage using cryptocurrencies just yet.

Security May Be An Issue

As a new form of money, cryptocurrencies have not yet been fully tested for potential vulnerabilities. Cyber crimes are on the rise all over the globe, and digital currency security is sure to be a primary issue as these products become more mainstream. If a Bitcoin
wallet file is lost, for example, all of the bitcoins contained in it are likely gone.

Fraud May Be Perpetrated

As cyber crimes rise, so does the amount of good old-fashioned fraud. Double spend attacks are just one example of the types of fraud that may be seen with digital currency. As hackers and cybercriminals become even more technically advanced, other types of fraud could also begin to take place.

There is no Buyer Protection

If you were to make a purchase using Paypal or a credit card, you would likely have a degree of fraud protection. If the funds were sent to a fraudulent seller, those funds can be called back in the form of a chargeback. However, no such protection exists with cryptocurrencies, and all transactions are irreversible.

Only Time Will Tell if Cryptocurrencies Are the Wave of The Future

There has been much discussion already about the future of Bitcoin and other digital currencies. Although these currencies have become more popular, they have not yet been fully tested. It may also be unlikely that digital currencies could fully replace fiat money, as central banks can increase or decrease the paper money supply in order to tackle inflation, deflation or other economic issues.

Cryptocurrencies like Bitcoin and Litecoin could become the next major vehicle for global
commerce, or they could prove to be a complete and total dud. Before buying
cryptocurrencies, carefully consider the risks involved and only invest with risk capital.

Your Step-By-Step Guide To Buying A Home (do it yourself)

2018-01-21T15:13:00.004+05:30

Buying a property demands a lot of effort and time. However, following this step-by-step guide can make this process smoother for you. This guide could be your checklist during the process, making you confident about your decision. Find the right agent An important partner in your home-buying process, a property agent is the first person you should hire. Look for an agent who is well-versed and has an experience in the localities of your choice. Pick an agent with good business acumen about
the current real estate market. Their knowledge about the localities and surroundings, and home-buying process as a whole coupled with negotiation skills can prove to be boon for you as a home buyer.
Begin to identify properties An agent, once hired, will be your partner from the very beginning of the process. Along with your agent, begin to find the potential property options in the localities of your choice.
Make sure the properties you choose fits the list of your key parameters of home buying. Figure out your expectations from your home such as amenities, features and specifications. Start touring these properties and strike out the ones that are not fulfilling all the key parameters you want in your home.

Make a list of all the things you saw in each property, take pictures and make videos. Sit down and put all of these together to shortlist.

Know how much can you afford The price of the property is a crucial parameter. Know that apart from the cost of the property, there are other overhead charges, too. This includes stamp duty, legal fees, brokerage fees, property tax, etc. Define how you plan to invest in a property. Now, pick the shortlisted properties and begin to evaluate their worth in context of the selling price of these
properties. Once you find a property that fits your budget, begin to look for a bank that offers attractive rate of interest on home loan.

Perform legal diligence

Whether you are buying a primary or a secondary property, make sure that the developer or the seller has the title of the property (the right to sell). In case the property is in a housing society, know all about their occupancy certificate and safety certificates. The home-buying process would also require a legal expert to read into the agreement and also, handle other legal formalities.

Consider these before you close the deal:

*Check the sanction plan of the project and confirm that the development is approved and entirely legal.

*Make sure the building bye-laws are applicable in the specific area and there are no violations on the part of the seller.

*Don't forget to take no-objection certificates (NOCs) from the water, electricity and land ceiling authorities.

*Make sure there are no unwanted encumbrances in the property.

*Know about the payment procedure. Payment patterns vary from developer to developer and in case of a resale property, the homebuyer has to pay a certain percentage of the property as down payment. On the other hand, for an under-construction property, there are three types of payment plans you could pick from – time-linked where a buyer has to pay at certain intervals irrespective of the progress of construction; in downpayment, the homebuyer needs to pay a certain percentage upfront and the remaining through installments; and flexi plan which is a mix of both construction-linked plan and down payment plan where the buyer pays 10 per cent at the time of booking and the remaining in a fixed time span.

*After you pick your payment plan, fix your home loan. Get all the property, income and tax-related documents at a place and apply for the home loan as early as you can.

*Once the booking amount is paid, make sure you receive an allotment letter which has all the relevant details such as flat number, size, floor and other extra charges.

*A sale agreement must be signed between the developer/seller and buyer. It is a proof that makes the buyer the legal owner of the property. Recheck the deed so as to be sure about all the specifications of your home.

*The last and the final step after all the relevant formalities you attain the possession of your home. Now it’s your responsibility to register the sale deed in the local municipality and the get the property registered in your name.

A to Z about Bitcoin!!!!!!!!!!!!!!!!!!!

2018-01-20T23:40:00.001+05:30

What is Bitcoin?

Bitcoin is a digital currency which is traded on applications based virtual exchanges throughout the world. Bitcoin is often quoted in dollar terms but is widely traded in local currencies of the respective nation.
Who invented Bitcoin?

This remains a mysterious question till now. A person using the name Satoshi Nakamoto invented Bitcoin in 2009. According to Newsweek, he is an American-Japanese living in California with a full name Dorian Prentice Satoshi Nakamoto.

Where can you buy/sell Bitcoin in India?

Bitcoin is traded on virtual exchange based applications, it can be bought and sold on these only. In India, there are several Bitcoin applications which facilitate Bitcoin trading, for example, Zebpay, Unocoin and Coinsecure.

How can you buy/sell a Bitcoin?

Bitcoin can be bought and sold very easily after creating an account with the trading partner filling in your necessary details.

What is all needed to trade in Bitcoin?

In India, the mandatory things needed to start Bitcoin trading are an active email account, a bank account, a mobile number, an aadhaar card and a pan card.

How is Bitcoin price calculated?

As of now Bitcoin is not regulated or governed by anybody anywhere. Bitcoin prices are calculated based on the demand and supply on respective exchanges.

Why is there so much difference in Bitcoin prices across exchanges?

Bitcoin neither have an intrinsic value nor it is derived from an underlying asset. With a huge difference in the number of people participating on different exchanges, the price of Bitcoin varies accordingly.

Can you trade Bitcoin between different exchanges?

Several traders enjoy a huge price arbitrage across Bitcoin exchanges. But there is no common or central depository for Bitcoin unlike that in the stock market. Therefore Bitcoin is usually bought and sold on the same exchange only.

Can you buy things with bitcoins?

In India, credit and debit cards are rarely accepted in rural and even in few semi-urban areas, imagine yourself how much Bitcoin can be accepted. Though there have been few places which have started accepting Bitcoins but with a very high volatility and price fluctuations people refrain from transacting in Bitcoin.

Do you know the total value of Bitcoins in the world?

According to the latest data, the total value of all the Bitcoins in circulation has reached $283 billion. "That makes its total value - sometimes dubbed its 'market cap' - greater than that of Visa, and bigger than the market cap of BlackRock and Citigroup combined," Reuters said in a report.

How many Bitcoins are there?

Around 21 million Bitcoins are available right now, according to a Reuters report. Interestingly, about 12.5 new Bitcoins are released into the system every 10 minutes through a process called 'mining'.

How many Bitcoins are there without owners?

Less than 16 bitcoins that have been already mined in circulation and accessible had been lost till now. This happens because of forgotten passwords of accounts, accidental losses,hoarding, owners forgetting about coins or even dying. It is impossible to know for sure how many bitcoins have been permanently lost, because those bitcoins are still in the system, in dormant addresses.

What is cryptocurrency?

Cryptocurrency is nothing but a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Bitcoin is one such example of cryptocurrency.

How many cryptocurrencies are there?

There are more than 1,000 cryptocurrencies which are present in world traded on different exchanges. Popular being, Bitcoin, Ethereum, and recently spiked Litecoin.

How is Bitcoin created?

Bitcoins are created through a process called mining. There are many Bitcoin miners in the world, reportedly most of them located in Japan, China, US and Singapore.

What is Bitcoin mining?

Bitcoin mining is a process of creating virtual currencies like Bitcoin. Mining is an iterative process which incorporates machines with supercomputing power as in creating one Bitcoin, it takes about running an algorithm for about a million times.

Are Bitcoins available in physical form?

Yes, Bitcoins are also available in physical form. In the United States, there are several places
which have Bitcoin ATMs also.

What is Bitcoin ATM? How many are there in the world?

Bitcoin ATM is just like another ATM machine, a difference is just that it gives out Bitcoins after
you insert money into it. Reportedly there are about 1,400 Bitcoin ATMs in over 50 countries,
as of August 2017.

What is blockchain?

Blockchain a technology in which transactions made in digital currencies are recorded chronologically and publicly. Blockchain as a technology supports Bitcoin trading, but it not
synonymous with Bitcoin. Blockchain can be used for a wide variety of applications, such as tracking ownership or the provenance of documents, digital assets, physical assets or even voting rights.
Smaller size of Bitcoin If you want to invest in Bitcoin then there is no obligation that you should buy a whole one unit of it. Bitcoin has a smaller unit called Satoshi, which is named after the anonymous inventor of cryptocurrency, Satoshi Nakamoto. One Satoshi is one-hundred-millionth of a Bitcoin. According to a price of $16,000, one Satoshi equals $0.00016.

What is Bitcoin Futures?

Amid the rapidly rising popularity of Bitcoin, very recently, leading exchanges such as CME Group,
CBOE and NASDAQ have announced that they will be offering future contracts over Bitcoin. Now, this is like anticipating the future of something, if you can't anticipate its underlying asset.

Where is Bitcoin legalised?

Bitcoin is a legal currency in over 60 major nations including the United States, China, Japan,
United Kingdom, Mexico, Canada, Hong Kong, South Korea, Singapore, Germany, Switzerland.
Interestingly, Bitcoin has not been legalised in India but many Indians are after it, in order of
quick millionaire dream. Apart from India, Bitcoin is also stated as illegal tender in Pakistan,
Bangladesh and Nepal.

Can you mine Bitcoin at your home?

Yes, you can mine Bitcoins at your homes but you will need supercomputers and very powerful
servers which can handle the algorithms through which Bitcoin is mined and moreover, a habitual
environment for those machines.These mining computers require a vast amount of energy to operate. As the prices of Bitcoin increase, more and more miners enter the market, driving up the energy consumption further. Earlier last week Reuters said in a report citing a tech news site Motherboard "the energy cost of a single Bitcoin transaction at 215 kilowatt-hours, assuming that there are around 300,000 Bitcoin transactions per day. That's almost enough energy as the average American household consumes in a whole week."

Can you steal Bitcoins?

Bitcoin thefts have been reported many times as according to some experts bitcoin stealing requires moderate knowledge of hacking. Reportedly, over 9.8 lakh bitcoins have already been stolen from exchanges, either by hackers or insiders. At current prices of bitcoin, it is worth more than $15 billion.
Are you biggest Bitcoin owner?

There are 5,638,155 Bitcoins in the 1,000 biggest wallets, Reuters said in a report. This is more than a third of all Bitcoins in circulation which makes the 1,000 biggest wallet-holders worth a collective about $87 billion. This value keeps on changing with the movement in the price of Bitcoin.

Where is largest Bitcoin trading happens?

Reportedly, China was touted as the largest Bitcoin trading nation until early 2017, accounting about 90% of trading volume. "But it has become clear that some exchanges inflated their volumes through so-called wash trades, repeatedly trading nominal amounts of Bitcoin back and forth between accounts," Reuters mentioned in a report. Chinese trading volumes have plummeted heavily after Chinese authorities have imposed transaction fees and now represent less than 20%, Reuters reported
citing a website Bitcoinity. Now, the largest Bitcoin trading happens in Japan as there are huge retail investors which have taken riskiest bets in the past. According to a Reuters report, Japan has emerged as a major force in Bitcoin's spectacular rally, now accounting for an estimated 30-50% of trading in Bitcoin.

Is Bitcoin trading safe?

No, not at all safe. There have been clear warnings by many persons from around the world which has repeatedly stated that Bitcoin is a bubble with no intrinsic value.

Is Bitcoin tax-free?

Yes, in some countries. But with the rising reach of Bitcoins, it is now being used as a method to
evade taxes. Even in India, tax regulators are reportedly conducting investigations into tax evasion using Bitcoin, and are mulling bringing the transactions under the tax net.

Who has all warned about Bitcoin?

World's biggest investment wizard, the maestro of Wall Street Warren Buffett said that "You
can't value Bitcoin because it's not a value producing asset."Words from Chief of world's largest
investment bank Jamie Dimon, Chief Executive Officer, JPMorgan Chase. "Bitcoin is a fraud and will blow up," Jamie Dimon said at an event in New York in September 2017, adding, "The currency isn't going to work." Finance Minister Arun Jaitley said India does not recognise cryptocurrencies as legal tender. "Recommendations are being worked at. The government's position is clear, we don't
recognise this as legal currency as of now," Arun Jaitley said. Earlier in August, Arun Jaitley
informed Parliament that, there are noregulations governing virtual currencies, including Bitcoins, in India and the RBI has not given any licence to any entity/company to operate such currencies. Risks associated with Bitcoin With aforementioned risks of losing money, there is another major risk associated with it. There is no governing body, no regulator, no centralised check, no government intervention under any of its ministries be it department of finance or Electronics & Information Technology. As Bitcoin exchanges are very vulnerable to hacking and heists, even your personal data is at a risk of leak! One may recall bit threats of a dreaded ransomware earlier this year. High fees
The average fee paid to process Bitcoin transactions has soared over the past year, outpacing even the staggering price increase of the cryptocurrency itself. Each Bitcoin transaction now costs around $7.3 to process, up from around 30 cents at the start of the year, according to trade website BitInfoCharts.

Bitcoin crackdown: Income Tax Department to send notices to 4-5 lakh HNIs for suspected tax evasion in India

2018-01-20T23:21:00.001+05:30

Bitcoin's blistering bull run, and all the worries that come with it becoming the biggest asset bubble ever, has finally galvanised the Income Tax Department into taking action. After surveying nine major cryptocurrency exchanges in the country last week to investigate instances of tax evasion, the taxman is now all set to issue notices to lakhs of high networth individuals (HNI) involved in Bitcoin trading in India.

According to official sources, the survey had revealed that out of the estimated 20 lakh entities registered on these exchanges, about 4 to 5 lakh were "operational" and indulging in transactions and investments. "Those individuals and entities are now being probed under tax evasion charges.

Notices are being issued seeking their financial details and, if tax demand can be established, they will have to pay capital gains tax on the bitcoin investments and trade," said a senior official privy to the operation. So the Bengaluru investigation wing of the tax department, which supervised last week's operations, has now dispatched their information to eight other such wings across India for a detailed probe.

The crackdown on the cryptocurrency exchanges, under section 133 A of the Income Tax Act, was triggered not only by the huge spike in the value of virtual currencies of late but also by suspicions of black money being converted into white using Bitcoins post demonetisation. According to Inc42 Media, the initiative also appears to be closely linked with Panama and Paradise expose, as their ongoing investigation team suspected that some of the black money involved has been deflected into Bitcoins as a safe passage.

To remind you, the Panama Papers and the subsequent set of leaks called the Paradise Papers had revealed how the world's HNIs, including politicians and celebrities, had allegedly stashed away money abroad in offshore companies in tax havens. In September this year, sources in the Enforcement Directorate had confirmed that Bollywood superstars Amitabh Bachchan, Aishwarya Rai Bachchan and Ajay Devgn would be among the names against whom summons would be issued under Section 37 of Foreign Exchange Management Act (FEMA).

If you are wondering why the taxman is taking the lead in investigating Bitcoins and not the government or the RBI, the simple answer is that cryptocurrencies have not been declared illegal in the country yet. Since they are not under the purview of Indian constitution, the RBI can't do anything more than caution users and traders of virtual currencies about the potential financial, operational, legal and security related risks that they are exposing themselves to.

Moreover, the trading of cryptocurrencies falls under the SEBI norms and, as most of the Bitcoin exchanges do follow KYC and AML regulations, none of it is illegal. However, as with all trading, one has to pay taxes on Bitcoin gains so the IT department has taken action as per the existing provisions.

In any case, the cryptocurrency gravy train may be headed for a dead end in India. In March 2017, an Inter-Disciplinary Committee had been set up by the Union finance ministry to explore the legality of the trading of Bitcoin and other cryptocurrencies. The committee's report, still under examination of the Department of Economic Affairs, has reportedly asked for a complete ban on cryptocurrency in the country.

Bitcoin and the Blockchain Are Disruptors in Global Real Estate

2018-01-20T23:18:00.001+05:30

Cryptocurrencies and smart contracts could improve transparency, speed and security of property transactions
In recent weeks, stories about bitcoin have become more dominant as the digital currency’s value has
skyrocketed, almost tripling in the last three months from $2,000 per digital coin in mid-July to just over $5,600 per coin today.

The story is even more dramatic if you consider that bitcoin—a cryptocurrency backed by an online ledger called the blockchain—was worth less than one cent when it was released to the public in 2009, and less than a dollar when it went slightly more mainstream in 2011. That means that early investors who converted a small sum of government-backed currency into bitcoins in its first two years are now millionaires. Investors who’ve watched the value of their bitcoin holdings grow are now looking to divest those funds into real estate and other tangible assets, said Mike Komaransky, an early bitcoin investor and former head of trading at Chicago-based Cumberland Mining, a company that helps people buy and sell cryptocurrencies for cash. This explains, in part, why there are more luxury properties being purchased with bitcoins and offered to buyers who want to transact in this way in cities including Los Angeles, London and Miami. Developers are also getting in on the action, and notably accepting bitcoins for new projects in New York and Dubai.

30 Years After Black Monday, A Look At Its Effects on Real Estate “Initially, we expect to see a small number of sales in bitcoins,” said Magnum Real Estate Group president Ben Shaoul, who recently announced he’ll accept this cryptocurrency for deposits and purchases in his new East Village conversion project called Liberty Toye. “But over the next five or 10 years, I could see up to
25% of payments happening in bitcoin or a like digital currency.” “It’s going to be the future,” he continued, “and a lot of developers will start to adapt and offer the same option.” The benefits of using cryptocurrencies Experts agree that we’re at the beginning of a major shift in residential real estate as more and more people are looking to engage in property transactions using cryptocurrencies, which offer quicker, cheaper and more efficient transactions, among other benefits.

“While traditional real estate is very paper based and involves a lot of third-party players, including
brokers, escrow agents and banks, the blockchain allows people to transfer funds, property titles and
data in a more peer-to-peer manner that is digital and open source,” said Ragnar Lifthrasir, the Southern California-based founder of the International Blockchain Real Estate Association (IBREA)
and Velox.RE, a blockchain real estate startup focused on collecting real estate data and streamlining the title transfer process. The cost savings come not only from cutting out these third parties, who need to be paid and can slow down the process, but also from reducing transaction fees to the 1% required for bitcoin transfers.

Peer-to-peer digital transactions are especially compelling in markets where international sales are
common because they’re instantaneous and remove the need for currency conversions and transfers
between foreign banks, which can take weeks or in some cases months. “Cryptocurrencies enable the quick, frictionless transfer of value across the globe,” said Emin Gun Sirer, an associate professor of computer science and co-director of the Initiative for Cryptocurrencies and Smart Contracts at Cornell University. “This enables someone in Russia to be able to easily send bitcoins to purchase land in Belize.” Since he announced that he’ll accept bitcoin for purchases in his East Village project a few days ago,Mr. Shaoul said he’s received dozens of emails and calls expressing interest from overseas buyers in China and other Asian countries. Meanwhile Mr. Komaransky, who is selling his 9,400-square foot, seven-bedroom Miami property for $6.5 million—or the equivalent amount in bitcoins, Zcash or another digital currency—said that early interest in a bitcoin buy has come from South Americans.The pictured seven-bedroom Miami home is listed in U.S. dollars, as well as digital currency. The pictured seven-bedroom Miami home is listed in U.S. dollars, as well as digital currency.
Lifestyle Production Group “They live in higher interest rate environments and don’t like to hold onto their nation’s currency,” Mr. Komaransky said. “But if they have some of their portfolio in bitcoins, they’re looking for new ways to spend it.”

This Technology Related to Bitcoin Could Revolutionize Real Estate Transactions But we’re not quite there yet Many industry insiders are excited about the potential for cryptocurrencies and the blockchain to disrupt the status quo when it comes to buying and selling real estate. But although bitcoin and other digital currency transactions may represent the future, we’re not there yet, experts say. Today, most bitcoin transactions only involve one party who wants to use a cryptocurrency, while the other prefers a more traditional route. “There are temporary patches to merge markets,” said
Dr. Sirer, noting that the service BitPay, which converts bitcoins to cash, is one of them. That’s exactly what Keller Williams agent Piper Moretti used when she helped a client purchase a $3.2
Manhattan Beach, California property with bitcoin in January. Even though the seller’s agent wasn’t sure about how bitcoin worked, the seller agreed to open a BitPay account and then send an invoice to the buyer for the purchase price. The buyer then transferred those funds, which were immediately converted back to U.S. dollars, and paid the 1% fee. “In the end, it was basically like an all-cash deal,” Ms. Moretti said. But not necessarily an easy or straightforward one. “We were in a 30-day escrow,” she said, “and it took us every one of those days to figure this out.”

Turning a Luxury Property Into a Home Can Be More Expensive Than Expected Since then, Ms. Moretti has helped the same buyer close on three more area properties using bitcoins. In these other cases, she opted not to use BitPay, and instead went through a London bank that exchanges cryptocurrencies for Euros or U.S. dollars, but the other details were pretty much the same. The title
transfers were all done on paper in the traditional way, and all of the transactions came with some
headaches.“Trying to get people used to an old-school and outdated system on board with this new way of doing things is difficult,” Ms. Moretti said, “but I feel like the people who don’t learn about this now and stay open to these changes will be left behind.” The need to keep real estate data safe
While accepting cryptocurrencies in real estate transactions is certainly new, this change doesn’t have
the capacity to disrupt the entire industry the way that the blockchain could if governments started
storing their data there. Dr. Sirer explained it this way: Most governments keep track of their land records in paper form behind closed doors in closed systems. “This creates the grounds for government malfeasance,” he said, in which people can forge documents and fraudulently claim that some land was a great great grandfather’s that they’re now entitled to. “This is perhaps not a big
problem in the U.S.,” he said, “but it’s a huge problem in tropical fantastic places that lack checks and balances, and don’t have a stringent a history of record keeping.”

Geopolitical Events Have Immediate Impact on Luxury Market Activity, Not Pricing If land records were moved on an immutable online ledger—which is exactly what the blockchain is—no one could go back in time and manufacture records that didn’t exist, Dr. Sirer said, noting that the Republic of Georgia plans to move its land records to this sort of system, as does Dubai. “I see this as an incredibly empowering adjustment,” he said. “If the bulk of land records aren’t being stored on the
blockchain in 10 years, there’s something wrong. I’m confident that that’s where we’re headed in the longterm. Mr. Lifthrasir agreed that a huge benefit of the blockchain in real estate is preventing fraud, which is mostly based on someone’s ability to produce counterfeit paper documents that look real.
"Blockchain is unforgeable,” he said. And the possibilities don’t end there. “You can put any information that you want in the blockchain,” Dr. Sirer said. That includes any data about the building, sales history or records from inspections. “Once this data is in this ledger,” he continued, “there’s no way to falsify, alter or delete it. It will all be publicly visible and can never be changed.”

Bitcoin neither currency nor coin, it's like ponzi schemes: Indian Govt

2018-01-20T22:18:00.003+05:30

Bitcoin Drops as South Korea Says Exchange Closures Are Possible

2018-01-20T22:10:00.002+05:30

Bitcoin resumed its tumble on Thursday after South Korea said it was eyeing options including a potential shutdown of at least some cryptocurrency exchanges to stamp out a frenzy of speculation.
South Korea has been ground zero for a global surge in interest in bitcoin and other digital currencies as prices surged this year, prompting the nation’s prime minister to worry over the impact on Korean youth. While there’s no immediate indication Asia’s No. 4 economy will shutter exchanges that have accounted by some measures for more than a fifth of global trading, the news is a warning as regulators the world over express concerns about private digital currencies.

Bitcoin fell as much as 9 percent to as low as $13,828 in Asia trading, erasing modest gains after the South Korean release, composite Bloomberg pricing shows. The cryptocurrency had retraced some of its losses by 7:46 a.m. in London, trading down 5.5 percent to $14,362. That puts the drop from a record high reached last week at about 27 percent. South Korea will require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto-exchanges, according to a statement from the Office for Government Policy Coordination. Policy makers will review measures including the closure of crypto-exchanges suggested by the Ministry of Justice and take proper measures swiftly and firmly while monitoring the trend of the speculation. Bitcoin was trading at about a 30 percent premium over prevailing international rates on Thursday in Seoul, according to price data from local exchanges, a continuing sign of the country’s obsession, and the difficulty in arbitraging between markets.

“Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in the statement, which comes little more than a week after the bankruptcy filing of one South Korean exchange. “The government can’t leave the abnormal situation of speculation any longer.” Singapore’s monetary authority warned last week that digital currency buyers should be aware they could lose all their money, joining counterparts who’ve warned about speculative mania surrounding bitcoin, which has surged more than 1,300 percent this year.

“Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon,” said Stephen Innes, head of trading for Asia Pacific at Oanda. “Regulators not only in Asia but globally are going to start addressing this fact because I don’t think they’ve actually come to terms with what the absolute downside of a complete drop in crypto means for the economy.”

©2017 Bloomberg L.P.

Bitcoin Alternatives: Ethereum Vs Litecoin Vs Verge Vs Ripple Vs Zcash

2018-01-20T21:50:00.001+05:30

The bitcoin prices may have stabilized but, they still hover around $13,000, a price far too high for a lot of potential investors. The exorbitant price of bitcoins dissuaded hundreds of thousands of potential investors who missed the 2017 rally. The bitcoin prices had jumped in the last month of 2017 in run up to the launch of futures trading by CBOE (Chicago Board of Options Exchange) and CME Group this month. After the futures trading launch, the prices have more or less fallen from the peak of $19,666, a feat achieved on December 17. However, there are numerous cryptocurrencies which are still not as popular and can be bought owing to their affordability.
Following are some of the bitcoins' smaller rivals Ripple (XRP): Ripple, one of the largest cryptocurrencies by market capitalization, claims to offer frictionless experience to its customers to send money globally using the power of blockchain. By joining Ripple, financial institutions can process their customers' payments anywhere in the world instantly. The Ripple woos banks and payment providers to use the cryptocurrency for reducing costs. Ripple's price had surged $1 for the first time on December 21.

Litecoin (LTC):

The market capitalization of litecoin rose from $1 billion in November 2013 to $4.6 billion. What makes a litecoin appealing is that the price of a litecoin (at $277) is still affordable for many such investors, at least as of now. Another thing that distinguishes litecoin from a bitcoin is that the litcoin takes relatively less processing speed (2.5 minutes) unlike bitcoin that takes around 10 minutes for one block. The market capitalization of litecoin is over $15 billion.

Ethereum:
Ethereum is a distributed public blockchain network. Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher. Bitcoin offers one particular application of blockchain echnology, a peer to peer electronic cash system that enables online Bitcoin payments, the Ethereum blockchain focuses on running the programming code of any decentralized application. The value token of the Ethereum blockchain is called ether. The price of Ethereum is over $700. Verge (XVG): Verge currency is a cryptocurrency that improves upon the original Bitcoin blockchain and aims to meet the primary purpose of providing individuals and businesses with a fast, efficient and decentralized way of making direct transactions while maintaining personal privacy, says the Verge currency's website. Verge makes it possible to engage in direct transactions quickly, efficiently and
privately. With Verge currency, businesses and individuals have flexible options for sending and
receiving payments. Verge uses multiple anonymity-centric networks such as Tor and 12P. The IP addresses of the users are obfuscated and the transactions are completely untraceable. Price of one verge is around $0.1583 on Saturday while the total market cap is over $2.2 billion.

Zcash (ZEC):

While the bitcoin blockchain contains records of the participants in a transaction, as well as the amount involved, Zcash's blockchain shows only that a transaction took place, and not who was involved or what the amount was. Zcash is an open-source protocol because of which, the Zcash Company does not control it (including controlling the mining or distribution of it), not does it have any special access to private or shielded transactions. Just like anyone else, the Z cash Company only
has the ability to see a private or shielded transaction if it is a party to that transaction or someone provides it with the correct view key. Zcash is valued at $518.

6 ways to make a fortune when stocks crash

2018-01-20T21:39:00.002+05:30

Experts suggest 6 ways to play stocks that tank suddenly and make money.

When the price of a stock falls sharply on a single day, the immediate impulse is to exit

On July 18, ITC shares fell 13 per cent after the Goods and Services Tax Council decided to increase the cess on cigarettes.

Often, when a stock witnesses a big decline within a day, a herd mentality sets in and investors stampede towards the exit.

Experts suggest that in such situations, investors take some time to weigh the prospects of the underlying business and then come up with a measured response.

1. Avoid the impulse to sell

When there is a steep fall in the price of a stock, many small investors get jittery and feel they have suffered an irretrievable loss.

Experts say this happens because most investors don't do their own fundamental analysis. They invest on others' recommendations.

"If you buy after doing proper research, you will have confidence in your picks. If you buy a stock at Rs 100 and feel it is a good price, you should feel better about purchasing more of it when the price goes down to Rs 90," says S G Raja Sekharan who teaches wealth management at Bengaluru's Christ University and an avid investor.

Other experts agree. "Unless you are a trader, in which case you have a pre-set stop-loss, price movement alone should not trigger a sell decision. The intrinsic value of the underlying business should drive all buy and sell decisions," says Jatin Khemani, founder and chief executive officer of the Delhi-based Stalwart Advisors, a Sebi-registered independent equity research firm.

2. Dig deeper

Whenever a stock witnesses a steep fall, the key is to investigate further.

"The retail (small) investor must find the reason for the fall in stock price before deciding to retain or sell it," says Anand Shah, deputy chief executive officer and chief investment officer, BNP Paribas Mutual Fund.

An investor who bought a stock for the long term would have a thesis (a reason) for making the purchase.

He needs to revisit it to see if it is still intact. Take the case of ITC.

Any investor who bought the stock after doing due diligence would be aware that regulatory risk is an intrinsic part of the business. S/he would perhaps also have studied what happens each time the government increases its levy on this business.

S/he needs to check if things will be different this time.

"The investor needs to take a call on whether this is a temporary issue and if the company can tide over it. If the conclusion is yes, s/he should not sell the stock," says Vinod M S, head of direct equity, Mitraz Financial Services.

3. When to hold on

Sometimes an event might appear very negative initially.

A careful examination could, however, indicate that the long-term impact would not be so dire after all.

Take the instance of the US Food and Drug Administration issuing an import alert for products made at Divi's Laboratories' Visakhapatnam plant in March.

"Anyone who studied the business carefully would realise only a small percentage of their US revenue would be at risk, given that the USFDA had given exemptions from the import alert to many key products from the same units," says Vinod.

In such cases, the investor is better off ignoring the negative development.

4. When a fall spells an opportunity

Sometimes, certain macro events generate so much fear and panic that they drive the entire markets, including quality stocks, down.

In the aftermath of demonetization, many high-quality consumption oriented stocks corrected by 20 per cent or more, though the impact on most was going to be only temporary.

As soon as the shortage of currency notes ended, it would be business as usual for these players.

Any value-oriented investor could have, and many did, benefit from the temporary price decline caused by this development.

To cite another example, in October 2015, DCB Bank announced it would double its branch network over the next two years.

Its stock crashed from Rs 140 to Rs 90 within two days and eventually to Rs 70.

"While this development was going to punish near-term earnings, it was very positive for the long-term growth and sustainability of the business, making the stock a great buying opportunity," says Khemani.The stock has since given 185 per cent return.

5. When you should exit

Sometimes, the price of a stock declines due to factors that are long-term in nature.

"Your investigation could reveal structural problems in the sector or company, which may have impaired its prospects for the long term. In such cases, the investor is better off exiting the stock," says Shah.

For instance, many pharmaceutical companies have found it difficult to bounce back from the blow dealt to them by USFDA actions.

Stiff competition within telecom and the inability of Indian information technology companies to make a timely transition to newer technologies are structural issues.

Investors should also exit post-haste in case of corporate governance issues, like fraud by a promoter or director.

6. Curtail losses

While it is usually a good idea to buy more of a stock whose price has fallen due to temporary reasons, investors also need to watch for the risk of over-exposure.

One way you can do this is by limiting the allocation to each stock in your portfolio.

"Once you have decided on, say, a 5 per cent allocation, do not invest more in the stock even if its price declines further," says Raja Sekharan.

Having a fixed allocation curtails risk. Sekharan recounted the case of an investor who lost Rs 33 lakh in a single stock.

He kept buying more of it even as its price fell, believing that by doing so, he was reducing his average purchase price.

Eventually, the company closed down and he lost his entire investment.

Having a limited allocation to each stock comes handy in such instances when an investor's judgment about a stock is completely off the mark.

4 powerful Bitcoin investing tips in India: Investment strategy that you must follow

2018-01-20T21:36:00.002+05:30

Bitcoin is a non-aligned digital currency, which is not tied to any financial institution. The currency is not physical and is stored in a public ledger on the Cloud. A public ‘key,’ serving the role similar to

a bank account number, is the address through which bitcoin transactions are made.

Bitcoin is the digital cryptocurrency that you may have been hearing about since years, but may

not have invested in one yet. You'll be surprised to know that even though it was introduced way

back in 2009, less than 1% of global population is familiar with Bitcoin and its working.

As mentioned earlier, Bitcoin was introduced in 2009 by an unknown person or group with a

pseudonym Satoshi Nakamoto. It is a digital decentralised currency protected with layers of

encryption and can be used to merchandise through a peer-to-peer network. Like gold, it

needs to be mined. However, it is much more scarce, portable, durable, divisible and storable.

These properties make it one of the ideal forms of money imaginable. With the increasing reliance on the Internet, this virtual currency is gradually, yet assuredly, gaining the interest of a number of investors. Investment in Bitcoin serves as an excellent opportunity to delve into a completely new asset class. In the current scenario, people are now much more inclined to invest in Bitcoin as the

potential return rate is much higher than in other assets like real estate, gold etc.

That being said, here are 4 things you must know before you invest in Bitcoin:

1. Bitcoins are scarce

There is an upper cap of 21 million on the total number of Bitcoins that can be mined. Consider

gold as an example. As you need to use a lot of energy and resources to mine gold, it has the

huge cost. The same scenario holds true for Bitcoin as well. You need high computing power

to maintain a bitcoin transactions database and keep it synced with other miners, and this

process is called mining. However, there is a small difference that we don't know how much

gold is reserved on earth, but Bitcoin has upper capping of 21 million, of that around 1.67 million

are already mined. As time goes by, Bitcoin will become harder to mine, which will ultimately

lead to soaring values of this digital currency in the future. Thus, from an investment perspective,

it would make sense to invest in Bitcoin now.

2. Decentralised Policy with Bitcoin

This cryptocurrency contributes towards a monetary policy that is sound, predictable, and can be easily verified by anyone. You can easily see when new Bitcoins are generated or how many Bitcoins are in circulation. The transaction can take place with ease between any corners of the world. Being decentralized, no manipulation, inflation or forgery with in Bitcoin is possible. It also makes cross-border payments possible. If used wisely, this global currency can have a significant impact on finance as well as the global economy. With so much potential in this digital era, one can see why investing in Bitcoin now may be a really good idea.

3. Bitcoin's Value

Bitcoin is a virtual currency that is not backed by hard assets. There is no definite price set on it. Its value is based on its mining cost. It is highly volatile and its value varies purely on the supply and demand.

4. Look before you leap

Even though it is slowly carving its way into the mind of investors as an attractive investment option, there are a few industry experts that still consider digital currency as a risky option to make a hefty investment. A lack of awareness about technology and the functionalities of digital currencies increases the risk of being duped by scams and third-party companies that try to take advantage of the over-eager investors looking to take a quick bite out of the Bitcoin pie.

So invest wisely! Look before you leap. There are websites like LocalBitCoins that allow you to find

people nearby and carry out transactions in Bitcoins. However, we won't recommend it to the new investors. Instead, get in touch with an Indian BitCoin Exchange.

Conclusion

To conclude, it is imperative that you carry out your own research and critical thinking before investing in it. It could take months to understand Bitcoin's true potential and its impact on the world. Cryptocurrencies have a bright future and could serve as a new way to conduct commerce and business in the digital era.

3 Cryptocurrencies That Skyrocketed by 800% (or More) in December 2017

2018-01-20T21:28:00.004+05:30

It's a new year, but the cryptocurrency romp higher hasn't slowed one bit.

After catapulting from a combined market cap of $17.7 billion to $613

billion in 2017, the aggregate value of all cryptocurrencies has leaped once

more to $774 billion as of Jan. 4, 2018. What was once a laughable target

of $1 trillion in aggregate market cap a year ago is looking ever more like a

genuine possibility at this point.

Perhaps what's even more impressive than the aggregate gain in virtual

currencies over the past year is that it's been more a function of digital

currencies not named bitcoin than bitcoin itself. Even though bitcoin

handily remains the largest virtual coin in the world, it now accounts for

only 34% of the total cryptocurrency market cap, according to

CoinMarketCap.com, which is less than half of what it accounted for at this

time last year. This recent push higher in cryptocurrencies is really about

everything not named bitcoin.

In particular, Verge relies on multiple anonymity-centric networks, such as

Tor and I2P, to obscure the original sender of a payment. Though privacy

and anonymity are somewhat implied with digital currencies, blockchain

analysis can usually be traced back to the sender. That isn't the case with

Verge, along with a handful of its competitors, such as Monero, and it's

clearly exciting investors.

The Verge network also promises fast-settling transactions. One of the

major reasons for the cryptocurrency revolution are transactions on current

bank networks that are either slow to process or settle. With Verge's

proprietary blockchain, most transactions are expected to settle in around

five seconds.

Verge also has a number of ready-to-use mobile wallets that provide

decentralization, security, and anonymity directly from a

smartphone. Though it's unclear if this incredible run can continue, Verge's

investors certainly have a lot to crow about in the interim.

Reddcoin: up 947%

With Americans absolutely addicted to social media these days, it probably

comes as little surprise that a virtual currency focused on microtransactions

conducted via social networks was December's second-best performer with a gain of 947%. Ladies and gentlemen, say hello to

Reddcoin.

One of the unique aspects of Reddcoin is its incorporation of microdonations

to support the creation of content on social networks. Reddcoin

fully understands that its virtual currency is the only currency that some of

today's teens and kids have ever known, which makes it uniquely

positioned to handle small-money transactions over social networks, and

therefore encourage micro-donations to content creators.

Another intriguing feature of Reddcoin's blockchain is its reliance on proofof-

stake velocity to verify transactions.

To ensure that the same token isn't spent twice, quite a few

cryptocurrencies employ what's known as the proof-of-work model. This is

where folks with high-powered computers compete against other people

with high-powered computers to solve complex math equations that are

the basis of verifying and protecting an encrypted block of transactions.

This is a highly energy-intensive and costly way of verifying transactions.

With Reddcoin, ownership in Reddcoin and activity are the secret sauce

required to find valid blocks and receive rewards. Ownership of Reddcoin

serves as the "stake," while leaving your wallet open and connected to the

internet is the "velocity" or activity that Reddcoin seeks. The more active a Reddcoin holder, the more likely they are to verify blocks and receive

rewards.

Ripple: up 817%

Ripple, which recently vaulted to a market cap in excess of $125 billion,

had an impressive December as well. Already riding a ton of momentum

heading into the final month of 2017, Ripple's XRP coin wound up

exploding higher for an 817% gain.

Why such a good month? To begin with, Ripple has benefited from its

partnership with American Express (NYSE: AXP) and Banco

Santander(NYSE: SAN), announced in mid-November. This combination

is allowing American Express users to send non-card payments over

Ripple's blockchain to U.K. Santander accounts, and have these

transactions settle instantly. With today's banking networks, a cross-border

payment like this may not settle for days. This is Ripple's shot to show big

banks that its blockchain is scalable, and that its transaction fees and

settlement times are leaps and bounds better than the current payment

platform.

Ripple also received a shot in the arm from rumors that it may soon be

listed on Coinbase, the world's most popular cryptocurrency exchange.

Considering that Coinbase lists bitcoin, Ethereum, bitcoin cash, and Litecoin, it seems only logical that the second-largest cryptocurrency by

market cap would soon gain listing. Should Coinbase choose to add Ripple

to its platform in 2018, it would greatly improve access and liquidity to a

rapidly growing virtual currency.

While a smorgasbord of risks remain for cryptocurrencies as a whole,

these three were the shining stars for December.

8 common stock market jargons you should know

2016-07-09T10:41:00.004+05:30

Here are 8 commonly used stock market jargons which you should know before trading or investing in the stock markets.

Long Position ? ?Long position? or ?going long? is simply a reference to the direction of your trade. For example if you have bought or intend to buy Biocon shares then you are said to be long on Biocon or planning to go long on Biocon respectively. If you have bought the Nifty futures with an expectation that the index will trade higher then essentially you have a long position on Nifty.

Short Position ? In markets you are allowed to sell first and buy later. This is called shorting. For example you can sell a stock at say Rs 100 buy it back at R.95. By doing so you are essentially making a profit of Rs 5. If you think about it, this is as good as buying at Rs 95 and selling at Rs 100. It is just that when you short, the order of transaction is reversed where you sell first, buy later.

Square off - Square off is a term used to when you close an existing market position.

OHLC - OHLC at the end of the day stands for Open, High, Low, and Close of the stock price. Open is the price at which the stock opens for the day, high is the highest price at which the stock traded during the day, low is the lowest price at which the stock trades during the day, and the close is the closing price of the stock. For example, the OHLC of TCS on June 2, 2016 was Rs 2600, Rs 2650, Rs 2598 and Rs 2651

Volume ? Volumes represent the number of shares traded on the stock exchange. For example if I buy 100 shares from you and 50 shares from someone else, then volumes recorded will be 150.

Bull Market (Bullish) ? If you expect the stock prices to go up then you are said to be bullish on the stock price. From a broader perspective, if the stock market index is going up during a particular time period, then it is referred to as the ?bull market?.

Bear Market (Bearish) ? If you expect the stock prices to go down then you are said to be bearish on the stock price. From a broader perspective, if the stock market index is going down during a particular time period, then it is referred to as the ?bear market?.

Face value of a stock ? Face value (FV) or par value of a stock indicates the fixed denomination of a share. The face value is important with regard to corporate action. Usually when dividends or stock split are announced they are issued keeping the face value in perspective. For example the FV of Infosys is 5, and if they announce an annual dividend of Rs 63 then it means the dividend paid is 1260 per cent (63 divided by 5).

Through The author, who is VP-Education Services, Zerodha

7 money management lessons!!!!

2016-07-09T10:40:00.003+05:30

1. Pay loan EMIs/credit card bills on time each month

Always ensure that you have sufficient funds in the account through which your loan EMIs get debited. In case you are making payments through cheque each month ensure that the check is deposited in advance before the due date of the EMI payment. Similarly also make sure that you pay credit card bills on time each month.

Try to make the credit card bill payments in full each month to avoid accumulation of debt and interest charges. If not possible then make sure to pay at least the minimum amount due on the credit card for that month. Missing any EMI or credit card bill payment will impact your credit report and lower your credit score.

2. Keep a control on your credit card limits

While increased spending on your credit cards may not necessarily negatively affect your CIBIL TransUnion Score, an increase in the current balance on the card over time is an indication of an increased repayment burden and may negatively impact your score. It’s always prudent to not use too much credit.

3. Limit credit exposure

The total size of your debt reflects on your credit report and has an impact on your CIBIL TransUnion Score. Having many loans or credit cards increases the total amount of debt you owe and increases your credit exposure. High credit exposure may impact your CIBIL TransUnion Score. If you have many loans running ensure that you close some of them so that your total credit exposure is reduced, before you apply for new loans.

4. Maintain a healthy mix of credit

A higher concentration of home loans or auto loans (commonly known as secured loans) is likely to be more favourable for your credit score than a large number of unsecured loans. Although unsecured loans offer easy access to finance, it’s also by far the most expensive form of credit. More the number of unsecured loans with high utilisation, larger are the payments resulting from its high rate of interest.

5. Monitor your co-signed, joint accounts

Do this every month as these also form a part of your credit history and impact your credit score.

6. Monitor the loan accounts for which you have stood as a ‘guarantor’

It is important to understand that by pledging as a guarantor on the loan, you are also legally responsible towards the timely repayment of the loan. In case of defaults and delinquencies by the principal borrower, the CIBIL TransUnion Score of the guarantor will also get negatively impacted. Hence, it’s imperative that the guarantor on the loan should ensure that the borrower pays the EMIs regularly on the due date, month on month.

7. Review your CIBIL TransUnion Score and credit history regularly

This helps you to track your financial standing and be “loan ready” always.

Remember responsible credit behaviour is the cornerstone of financial independence. In order to enjoy financial freedom and access to credit you must ensure responsible credit behaviour and due diligence.