Category Archives: General

Resident to NRI

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Are you planning to go abroad and become am NRI? Today you are a Resident Indian. Tomorrow you may become an NRI if your employer provides an opportunity. When an opportunity like this knocks at our door, are we ready to face the change? Are we prepared?

Creating a Checklist or ‘to-do list’ helps to ensure consistency and completeness in carrying out a task. Becoming an NRI is a major transition which definitely needs a checklist. Here is a personal finance check list to be taken care before departing from India.

NRO & NRE ACCOUNT:

The first thing to do is to convert your savings bank account to an NRO or NRE account. An NRO or non-resident ordinary account is like an ordinary savings bank account that gives a domestic rate of interest. This account can be used for depositting your domestic earnings like rent, interest and dividends and remittances from abroad into this account. Cheques can be issued for EMI and investment, but there are restrictions for transferring money to the country of residence. Money in this account is non-repatriable.

You can transfer current income earned in India, but transfer of sales proceeds of property and investments can be only to the extent of 1 million $’s a year. A certificate from a chartered accountant, declaring that all taxes have been paid has to be furnished. It is important noting that an NRO account invites a tax of about 30.9% at source.

An NRE or non-resident external account can be opened with foreign currency when you wish to transfer substantial money to the country of your residence. There is neither restriction to remittance nor any taxes in this account, but you would only get a low rate of interest. This account offers no facility to receive incomes in the shape of rent, interest and dividends, but you can make local payment in rupees, invest money and receive proceeds from sale of investments and property.

It is much easier to open both these accounts in India, with you requiring giving 2 passport size photographs along with a copy of your passport and visa. In case you are already abroad, it is mandatory to get an attestation from the Indian Embassy or Notary before sending it to the bank branch.

DEMAT ACCOUNT

The next step is to close your domestic demat account and open a non-resident ordinary (NRO) demat account under the Portfolio Investment Scheme (PINS). This is mandatory, as there are restrictions to the amount of investment that an NRI can make in the shares and stocks in Indian companies; it should not exceed 5% of the paid–up capital of any Indian company. You need to transfer your existing share holdings also into this account.

You have the option of 2 types of separate demat accounts namely for repatriable and non-repatriable shares and this account is to be separate from other bank accounts. Your demat service provider would help you on submission of copies of passport and visa. Once you return back to your country you can close the PINS demat account.

Power Of Attorney:

The third step is to give the power of attorney to someone you trust in India to manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms. The power of attorney could be general, where the authority entrusted holds good for banking as well as real estate transactions or could be specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and mutual funds proves essential.

Update your NRI status in Various KYCs:

The last step is inform the mutual fund, bank and insurance companies by submitting the updated Know Your Customer forms stating your change of status as a non-resident Indian. Your Financial Planner and Iagent and bank branch could help you best regarding the different formalities that are required.

Now you are all set to assume your NRI status.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

HSBC faces trouble over PPI complaints as deadline looms

Bank fails to tell all victims mis-sold payment protection insurance how much compensation they will receive

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HSBC said the regulator would be ‘supportive of our approach’ in dealing with PPI complaints. Photograph: Luke Macgregor/Reuters

HSBC could find itself in trouble with the Financial Services Authority after it emerged the bank will fail to meet a deadline for clearing its backlog of payment protection insurance (PPI) mis-selling complaints.

Six banking groups, including HSBC, were given until midnight on Wednesday to resolve PPI mis-selling claims that were put on hold during the long court battle over the way people’s complaints were to be assessed.

It is understood HSBC will miss the deadline because it has failed to tell all its affected customers whose claims have been successful how much compensation they are to be offered. There was speculation that another bank may be set to miss the target by a very small amount.

The FSA has already warned it is “not afraid to take tough action” against any firms that do not deal appropriately with complaints. Consumer body Which? said any banks failing to meet the deadline should be punished. However, HSBC may be hoping that its pledge to have all its cases sorted out by the end of this week means the regulator will take a lenient view.

The six banks – HSBC, Barclays, Lloyds Banking Group, Royal Bank of Scotland, the Co-operative Bank and Egg – were granted the temporary extension by the FSA to ensure their backlogs of complaints were handled properly.

Many firms had decided to put some or all of their PPI cases on hold when the banking industry mounted a legal challenge to the FSA’s new complaint handling measures. The banks abandoned their challenge in May, opening the way for millions of people to receive compensation totalling billions of pounds.

It is understood that the banks were supposed to send out letters telling people whether their complaints had been upheld or not, and, in the case of those individuals who were successful, at the very least provide information about how much money they were likely to receive. The redress is typically taking the form of a refund of premiums paid plus interest.

HSBC has been sending out these “decision letters”, but some have not contained all the necessary information about redress.

In a statement to the Guardian, a bank spokesman said: “Over the past 12 weeks we have been in weekly contact with the FSA over our processing of customer PPI complaints. We have already written to all customers whose complaints were on hold due to the judicial review with a decision on their complaint, and will have communicated the final redress amount to all customers with an upheld complaint by the end of this week.”

He claimed the regulator was “supportive of our approach”, though it was not clear whether the FSA shares this view.

Earlier this year it emerged that while Lloyds Banking Group had put aside £3.2bn for compensation, HSBC had made provisions for £270m.

Banks and other companies have had to look back at past PPI sales, even where people have not complained, and contact customers if necessary.

With the FSA deadline now looming, Which? executive director Richard Lloyd said: “There’s no excuse for banks not to have cleared the backlog of complaints caused by the judicial review. Any firms that have not met the 31 August deadline should face tough enforcement action.”

He added: “The FSA should require banks to be more transparent about their complaint-handling processes, to show they are improving the way they handle customer disputes. Anyone who thinks they were mis-sold PPI should contact their bank immediately and, if they’re not happy with the response, go to the Financial Ombudsman Service.”

Those who think they were mis-sold a PPI policy – perhaps because they were told the insurance was compulsory or were not asked about pre-existing medical conditions – and have so far taken no action should complain first to their bank or loan provider. If the complaint is not dealt with to their satisfaction within eight weeks, they can take their case to the Financial Ombudsman Service.

 

Apple staffer loses test iPhone in bar – again

Police called in for search as ‘priceless’ prototype iPhone 5 is left in Mexican restaurant in San Francisco, according to report

 

A man uses an Apple iPhone

An Apple employee left a prototype iPhone 5 in a Mexican restaurant on San Francisco, according to a report. Photograph: Mario Anzuoni/Reuters

Have you heard this one before? An Apple employee walks into a bar in California with a top-secret iPhone prototype – and leaves it behind. Apple then scrambles to recover the phone, involving the police in the process after it has been sold by a finder, eventually getting it back under wraps.

 

It happened in April last year – and now, says CNet, it has happened again with a prototype of the very latest iPhone, expected to be launched within the next few weeks.

 

But this time Apple does not appear to have got the phone back.

According to the report, the phone was lost while being tested outside the Apple campus in a Mexican restaurant in San Francisco’s Mission district, and then sold on Craigslist for $200 (£123).

It was initially left in a bar called Cava22, which says it takes “real pride in bringing a live and festive Mexican experience, for all our cleints [sic] to enjoy” including a margarita sweet-and-sour mix, by an Apple employee who appears to have been testing it off Apple’s campus. The company carries out external testing by letting selected staff take prototypes to urban and other locations in order to test its behaviour in normal settings, rather than the laboratory conditions of its own headquarters.

 

But they are not meant to leave them behind. “I guess I’ll have to make my drinks a little less strong,” the owner, Jose Valle, told CNet.

CNet says Apple contacted the San Francisco police as soon as the loss was discovered and told them that the phone was “priceless” and that the company wanted its safe return.

It was eventually tracked down via a location-tracking system built into the phone to a single-family home in San Francisco’s Bernal Heights area, says CNet. But when police and Apple’s investigators visited the house, the occupant denied any knowledge of the phone, and it wasn’t recovered despite a search – with the occupant’s permission – of the residence.

Apple has not commented on the events, which come as interest in the successor to the iPhone 4 – which has variously been guessed at as being called the iPhone 4G, 4S and iPhone 5 – is growing. With the existing model now comparatively old in smartphone terms, having been released in June 2010, the expectation is the next model will have to bring dramatic improvements in performance to compete with rival handsets from companies such as Samsung, Motorola and HTC using Google’s Android operating system.

 

New versions of the iPhone are expected to use more powerful processors and have a different arrangement of the antenna system in the casing. The external antenna caused a media furore last year after some users complained that reception seemed to drop when their hand completed a contact between two metal components. One source at a carrier company suggested to the Guardian the problem arose because the prototype phones are principally tested on the Apple campus, in areas with relatively strong mobile signals; the signal drop from the antenna “bridging” was principally seen in areas with weaker reception.

 

Apple is understood to provide carrier companies with iPhones for testing that are shipped in sealed boxes so that staff cannot see the exterior. The tests are necessary to ensure that the phones comply with network software requirements.

 

Last year a prototype of the iPhone 4 was left in a beer garden by Gray Powell, an Apple engineer. That eventually made its way to the gadget blog Gizmodo, which published pictures and a video of the device. Apple called in the police, who got a warrant to search the home of Jason Chen, Gizmodo’s editor. Early in August, prosecutors in San Mateo filed criminal charges against two men, alleging that they sold the iPhone 4 prototype to Gizmodo. It is illegal under California law to take lost property if you know who the owner is likely to be, punishable by up to a year in prison.

 

Alleged Gadhafi message urges Libyans to fight on

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In a message of utter anger and defiance that aired Thursday, a man purported to be Libya’s fugitive leader Moammar Gadhafi urged Libyans to continue the fight and not surrender.

“We are not cowards,” he said in an audio message broadcast on Syrian-based Rai TV a day after two of Gadhafi’s sons gave mixed messages about whether his supporters should lay down their arms.

He spoke on the 42nd anniversary of his assumption of power through a military coup and on a day when his foes were mapping out the next phase of Libya’s history. At a meeting in Paris, global leaders welcomed the National Transitional Council’s top leadership as the new government of Libya.

Gadhafi’s words offered nothing new since the last time he was heard on August 25, after the rebels arrived in Tripoli, but suggested, though not conclusively, that Gadhafi is still alive.

He called the rebels “traitors” and “animals” and said the Libyan people will lose trust in them. Libyans are not frightened of sacrifice, he said, and should stand up to the rebels.

“The destiny of the great people of Libya will be above all traitors,” he said. “Remember you are powerful. Fight them. … Go and fight. We will fight from valley to valley, town to town. They will give up, they will surrender. Go attack them, take away their arms.”

The rebels still face battles in cities where loyalists still hold sway.

The National Transitional Council initially set a Saturday deadline for loyalists to surrender but have extended that by a week, said Tarek Abuzgaya, a spokesman for the council in Benghazi

But in Tripoli, military spokesman Mahdi Al Arash tempered the extension by telling CNN the rebels are still meeting to discuss options to avoid further bloodshed.

“As of now, the deadline is this Saturday,” Al Arash said. “However, it could change if they see fit after the meeting.”

Gadhafi’s alleged message was intriguing in that his whereabouts remain a big mystery. No clues surfaced from the message about where he is hiding or when it was recorded.

Gadhafi’s foreign minister, Abdel Ati al-Obeidi, who had been contacting the council for the past few days, surrendered Wednesday night, council member Elamin Belhaj told CNN.

“He is in a safe location now and al-Obeidi is satisfied with it,” Belhaj said.

Thursday marked Day 12 since opposition forces stormed the capital and captured Gadhafi’s Tripoli compound.

Speculation that Gadhafi may be in Algeria gained ground this week after the neighboring nation confirmed that his wife, pregnant daughter, two of his sons and other relatives fled there.

Algeria described the move as a humanitarian gesture, but it angered the rebel leadership, with one official calling it “an aggressive act.”

A doctor in the gynecology department of Djanet Hospital said Gadhafi’s daughter Aisha arrived there Monday and gave birth to a baby girl, Zafia, and left about 2 p.m. The doctor is not authorized to speak to the media and did not want to be identified.

The doctor said he did not know where the family went after that. The transitional council wants them extradited back to Libya.

Ahead of Gadhafi’s audio message, two of his sons appeared to offer divergent and sometimes contradictory answers Wednesday on whether loyalists should keep fighting or negotiate.

“Victory or martyrdom!” said a man who identified himself as Saif Gadhafi, speaking on Rai TV.

“Everyone should move now, begin to attack these gangsters,” he said. “Attack everyone, day and night, until we clean this country from those gangsters and those traitors.”

The man said he was speaking from a Tripoli suburb, where he had met with residents and found their morale was high. He also said he had recently visited the family’s compound, Bab al-Aziziya in Tripoli, an improbable statement since it was overrun by rebels.

Saif Gadhafi predicted the rebels near Sirte would find 20,000 fighters “ready, willing and able” to defend the loyalist stronghold where his father was born.

He said he had spoken with tribal leaders who were meeting in Bani Walid “and they all agreed unanimously that this is our country and we will defend it.”

But council member Abdulrazag Elaradi told CNN that he is not aware of any meeting by tribal leaders in Bani Walid to support Gadhafi. He said the rebels were not involved in any negotiations with loyalist forces.

On another station, a man purporting to be Saif’s brother appeared open to the possibility of surrender, but with a catch.

“If this will prevent bloodshed, we will do it, just give us guarantees,” said a man identified by Al Arabiya as Saadi Gadhafi.

“We need to stop the bloodshed right away,” Saadi Gadhafi said, adding that he was speaking on behalf of his father.

He said he could not say whether he was in close touch with his father, but added, “If the rebels want to lead this country; we don’t have an objection to that. In the end we are all Libyans and we are all together.”

Asked if Moammar Gadhafi was willing to surrender, he said, “Stop the fire and all ways of negotiations are open.” Asked if he was willing to hand Sirte to rebel forces without a fight, he said, “Nothing is impossible.”

Whatever happens, he added, “I don’t have a weapon and will never fight a Muslim Libyan.”

Despite that talk, Saadi Gadhafi told CNN Wednesday in an e-mail that he was leaning against surrendering to the rebels.

“Since they don’t want to negotiate, I don’t think I will go to them and surrender myself,” he wrote. “They have already killed thousands of people and destroyed the country. I’d rather surrender myself to a real government than … to those guys.”

Moammar Gadhafi, Saif Gadhafi and the former head of military intelligence, Abdullah Al-Senussi, face charges in the International Criminal Court at The Hague, Netherlands, for crimes against humanity.

Via CNN

 

 

Sharing Media with Media Server

There have been several instances in my life where a lot of my friends wanted to watch movies or listen to some songs or just browse some photos and that started the hunt for the pendrive or a portable hard drive with enough free space to transfer the content on copy on self’s laptop or pc.

This has a lot of drawbacks.

1. Time consuming.

2. Pen drive or Hard drive needed (with enough free space)

3. Content is replicated at several places thus reducing space efficiency

One solution to this setup all devices as media servers and share the content on the network.

All that is needed is

1. A wired or wireless network

2. PS3 media server or any other media server.

I personally am in favour of PS3 media server as it is free, available for all platforms – windows, linux and Mac, and can do any thing and everything that a media server is supposed to do. (Media servers comparison)

PS3 media server will make the device it is installed on a media server. It will also look for all the devices on the network that can play the media also known as renderer. It can be a PS3, Xbox or any DLNA certified TV with network connection or even a Laptop or PC.

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Once installed and configured the PS3 media server will become visible in media player other libraries section on all the computers on the network that have media sharing enabled.

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Download PS3 Media server here, Installation and configuration guide can be found here.

For unified communications, a future unclouded

http://www.computerweekly.com/assets/getasset.aspx?itemid=45500The IT industry is prone to get enthusiastic about emerging technologies. In many cases, this has the positive effect of driving support for technologies that go on to make a tangible difference to business performance or, in some cases, people’s lives.

But by the same token, this enthusiasm sometimes has the unintended consequence of hurting a technology’s chances of being taken seriously. We are all too familiar with Gartner’s Hype Cycle. Unified communications and collaboration (UCC) technologies have over the years suffered from being overhyped.

This year, some are claiming unified communications will come of age. So why should this year be any different from previous false starts? The answer lies with another emerging technology that has suffered from its own share of hype: the cloud.

Read the full article by Sudhir Narang – MD BT India

WikiLeaks Leaves Names of Diplomatic Sources in Cables

http://graphics8.nytimes.com/images/2011/08/30/world/WIKILEAKS/WIKILEAKS-articleInline.jpgIn a shift of tactics that has alarmed American officials, the antisecrecy organization WikiLeaks has published on the Web nearly 134,000 leaked diplomatic cables in recent days, more than six times the total disclosed publicly since the posting of the leaked State Department documents began last November.

A sampling of the documents showed that the newly published cables included the names of some people who had spoken confidentially to American diplomats and whose identities were marked in the cables with the warning “strictly protect.”

State Department officials and human rights activists have been concerned that such diplomatic sources, including activists, journalists and academics in authoritarian countries, could face reprisals, including dismissal from their jobs, prosecution or violence.

Since late 2010, The New York Times and several other news organizations have had access to more than 250,000 State Department cables originally obtained by WikiLeaks, citing them in news articles and publishing a relatively small number of cables deemed newsworthy. But The Times and other publications that had access to the documents removed the names of people judged vulnerable to retaliation.

WikiLeaks published some cables on its own Web site, but until the latest release, the group had also provided versions of the cables that had been edited to protect low-level diplomatic sources.

This post first appeared on NYTimes

Bird Flu Q&A

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Concern is growing about a mutant strain of the deadly H5N1 bird flu virus that is spreading in Asia and beyond.

Existing vaccines appear to be powerless against the new strain.

What is bird flu?

Avian influenza, or ‘bird flu’, is an infectious disease caused by viruses that normally infect only birds

There are many different types or strains.

The one concerning experts at the moment is the "highly pathogenic" H5N1 strain – this means that it is highly likely to cause disease.

What is the concern?

There have been over 565 cases of human infection with H5N1 since it first appeared in 2003, killing 331 of them, according to the UN World Health Organization.

Most of these have been in south east Asia, and have been associated with close contact with diseased birds.

Birds shed the virus in their faeces and so close contact with their immediate living environment can spread disease.

There is also the potential that the virus could spread directly from person to person.

H5N1 Highly Pathogenic Avian Influenza virus was eliminated from most of the 63 countries infected at its peak in 2006, but it remained endemic in six nations. Outbreaks have risen since then, with almost 800 cases recorded between 2010 and 2011.

Is it possible to stop bird flu coming into a country?

No. Wild birds do not recognise natural boundaries. But measures such as exclusion zones and bringing poultry indoors are designed to stop the virus taking hold.

The UN’s Food and Agriculture Organisation has urged heightened readiness and surveillance. There is concern about spread of the new bird flu virus to Korea, Japan, Malaysia and elsewhere in Asia. Australia is not presently on the high alert list.

Can the virus be passed on through eating poultry or eggs?

No. The virus is easily destroyed by cooking, so even if it was present it would be destroyed.

Is there a vaccine or treatment?

Scientists have made a vaccine for H5N1. As with all flu vaccines, it is a "best guess" vaccine based on the strain experts predict will be most problematic. However, flu viruses are able to rapidly change or mutate, rendering such vaccines powerless. WHO says new H5N1 candidate vaccine viruses will be developed as the viruses continue to evolve and announced as they become available.

In addition to vaccines there are also antiviral drugs, like Tamiflu, that can treat and minimise infection.

Does the seasonal flu jab protect against avian flu?

No. The seasonal flu jab does not protect against avian flu. Seasonal or winter flu is a highly infectious and very common viral illness that is spread readily between people by coughs and sneezes.

Is bird flu different to swine flu?

Yes. Bird flu, as the name suggests, originates in birds and is called H5N1. Swine flu originates in pigs and is a different type of flu, called H1N1. Both have caused outbreaks and deaths in humans.

All you want to know about Mediclaim Policy

Health care costs are sky rocketing day by day. Therefore the need for having a mediclaim policy for you and your dependents has grown. Suppose you have to undergo some medical treatment or need to be hospitalized for certain reason, then a mediclaim policy will be of immense help to you in covering your health care expenses. The reason is Mediclaim offers protection in case of unexpected medical and health care emergencies.

Hospitalization expenses in case of illness, disease or accident will impose a heavy financial burden on individuals and families. This is where the mediclaim policy comes in handy. The mediclaim policy can reimburse the hospitalization expenses or can pay the hospital directly on behalf of you.

A mediclaim policy provides a health cover of certain amount of money. This amount depends on the amount that the insured person was insured for.

The mediclaim policy can be taken for an individual or for an entire family. Some insurance companies allow a discount on the premium if the policy is taken for a family.

Insurance companies have fixed some age limit for medical test. If the individual is below that age, then he or she need not undergo medical test for taking mediclaim policy. If the individual is above that age limit then he needs to go for medical test.

If any pre-existing disease has been found out in the medical test, then those diseases will not be covered under the mediclaim policy for a waiting period of a first few years.

If you have a mediclaim policy from your employer, that may not be sufficient. Employer may cover the employee and not necessarily his entire family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage.

It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.

The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.

If you are not health conscious or you don’t do regular exercises or you don’t follow proper diet or you frequently take outside food or don’t go for annual health check-ups then it is advisable to go for more sum insured coverage in your mediclaim policy.

If your family has got any adverse health history like heart disease, high blood pressure, stroke, diabetes, kidney disease, cancer, any form of paralysis, or any hereditary disorder then you need to choose higher coverage amount in your health insurance.

If you will be choosing high class hospitals for your treatment then you need to go for higher sum assured. If you will be choosing medium level or low level hospitals then you can choose the coverage amount accordingly.

Also you need to revise your health insurance coverage amount based on the changes in the above factors and the changes in the medical cost. Also the increase in the age needs to be considered for deciding the coverage amount.

The icing on the cake is you get tax benefit under section 80D for the mediclaim premium paid. For senior citizen the limit under this section is Rs.20000 and for others it is 15000.

Most people don’t think about health insurance very often.  But it comes to mind first when a loved one is sick. Mediclaim policy is one of those things everyone knows he or she should take but usually puts off until a more opportune time. Living without a mediclaim policy is like going out on a rainy day without an umbrella or a raincoat.

If you have not covered adequately yourself and your dependents with mediclaim policy so far, then now is the right time to take action. The fact that you are reading this article shows you have decided to stop procrastinating, delaying and have answered the ancient question, “If not now, when?” with “NOW!”.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

8 Investment Myths To Be Avoided

http://www.moneyhoney.co.in/img/investment_planning.jpgToday I am going to debunk a few investment myths. You will know ‘why individual investors are failing miserably and how you can avoid being one of them’.

1. I am too young to plan for retirement

Have you started planning for your retirement? You may be saying ‘who me? I am too young to be thinking about retirement”. It is not so! Rethink. You should have started thinking about it yesterday. Because time flies quickly.

If you were smart, and planned for retirement when you are young, your retirement years will be really those “Golden years”. If not you need to compromise and you need to work longer and retire later than others.

2. East or west FDs are safe and best

Nothing wrong in investing in FDs. FDs are really safe and it gives us fixed return. But there is no meaning in investing all your money in FD. The post tax return of an FD will hardly beat inflation. If your investments are not beating inflation, then your money is losing its purchasing power. FDs are safe but not always the best option.

3. I can never be as good as Warren Buffet or Rakesh Jhunjhunwala so why try?

In the words of Warren Buffet “Success in investing doesn’t correlate with IQ once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” You don’t need a super brain for making investment decisions. You only need common sense and discipline. If you don’t have enough time and expertise, then you can get assistance from professional financial planners.

4. Stock markets can earn me quick bucks

This is a common myth among investors. Stock market will reward the long term investors. Stock market is a system which transfers money from investors who are fearful and greedy to the investors who are balanced and rational.

You need to be calm, patient, disciplined, and rational. You don’t have to be smarter than the rest; you have to be more disciplined than the rest.

5. Timing the market is important

Investors often spend a lot of their time in trying to identify when the market is very low or high, and timing the purchase and sale of investments accordingly.

In other words, they want to time their exit when the market has reached its top and to time their entry when the market has reached a bottom. This not a practical idea because there are so many influencing factors to the stock market. Predicting all the factors and making investments is practically not possible.  Instead of that stagger your investments through SIP, STP and stay invested for long term.

6. There is no such thing as too much diversification

Diversification is needed. A well diversified portfolio can be created with 10 stocks or 3 mutual funds. Having more than 20 stocks or 6 mutual funds can dilute your returns. The reason is you are not only investing in best stocks and funds, you are investing in above average and average stocks and funds. So your returns will come down. Instead of over diversification, you need to concentrate on a few stocks. It is possible to achieve the required diversification with a few stocks or funds.

7. The best way to make money is investing in what is hot

If you are investing in what is hot, then you are following the crowd. If you follow the crowd, you will get what others are getting. You will not get anything more. You need to be fearful when others are greedy and you need to be greedy when others are fearful. So don’t go by the market trend or the hot pick of the month. Think like a contrarian and follow value investing.

8. Saving tax is the only objective for me to Invest

Which group you are in? There is a group of people who invest just to save taxes. They will not bother to invest anything more than that. They will meet their objective of saving tax. There is another group which invests to save tax as well as to save for their other life goals like retirement, children’s future. They will meet the objective of saving tax and achieving other life goals. Kindly check you belong to which group.

You can be an assured successful investor if you could avoid these investment myths.

 

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.