Plan your finances

"Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give."

By,William A. Ward

Banks -All set to grap the open opportuinity with Nano in tune

Banks are charging a differential rate for booking finance for the Nano with interest rates on booking finance being higher than auto loan rates for the car. The Nano, the eagerly-awaited Rs 1-lakh car from Tata Motors has become available for booking from March 23.

Bank of India — the latest lender to announce a package for funding the Nano — has already decided on booking finance rates. BoI’s normal auto loan rates, that become applicable once the car is hypothecated to the bank and delivered, would be around 10-11%. However, at the booking stage, ie, till the delivery of the vehicle, the bank will charge 12-12.5% interest.

Private banks price their loans in the range of 11.75-13% for financing of new cars.

State Bank of India and Punjab National Bank have already announced a tie-up with Tata Motors. Earlier, SBI had announced that it was freezing interest rates on loans for purchase of all new cars at 10% for the first year. PNB said it would charge between 10.50% and 11% for the Nano — 0.5% lower than its standard rates.

Many bankers, largely from the public sector, feel that the car has the capacity to open up vast new markets as it is targeted at people who never owned a car before. Since the focus is on affordability, they felt that cheaper loans will be more effective.

How Risk Free Is The Risk-Free Rate Of Return?

The risk-free rate of return is one of the most basic components of modern finance and many of its most famous theories. The capital asset pricing model (CAPM), modern portfolio theory (MPT) and the Black-Scholes model all use the risk-free rate as the primary component from which other valuations are derived. The risk-free asset only applies in theory, but its actual safety rarely comes into question until events fall far beyond the normal daily volatile markets.

An article by Michael Schmidt looks at the risk-free security in theory and in reality (as a government security), evaluating how truly risk free it is. The model assumes that investors are risk averse and will expect a certain rate of return for excess risk extending from the intercept, which is the risk-free rate of return. Find details...

MFs slowly emerging from FII dominance

If FII selling is blamed for the carnage in the last one year, increased buying by domestic mutual fund houses has seen the Indian equity market bounce back recently. Between March 12 and 23, mutual fund houses net bought equities worth Rs 1319 crore against Rs 1093 crore by foreign institutional investors. In the same period, the Sensex has risen to 9424 from 8343.

However, the MFs may be trying to shore up their balance sheet for year end consideration, and so the increased buying. This is also because they had been sitting on cash for too long. But does this suggest that MFs are gaining prominence in driving the indices? Domestic institutional investors have already started showing their dominance.

Given the expansion of mutual fund industry, domestic fund houses can play a vital role in driving the market in the next five years, experts feel. For the month of February, the AUM for mutual fund industry stood at Rs 5,00,973 crore.

Source:ET

What's your habit?

"It's not your salary that makes you rich, it's your spending habits. "

By, Charles A. Jaffe

Find out the most trustworthy Indian company

Ratan Tata’s Tata Group is the most trustworthy business house in India.This was found in a poll conducted among domestic investors. The trustworthiness is for financial reporting. This survey is in line with the previous survey conducted by Mint. Only difference is the Tata group companies were listed separately. In this case they were clubbed together .Because, in the group companies the DNA is already set. There won’t be much of a difference between Tata Chemicals and TCS in the way they operate.
10 Most trustworthy companies in India :

• Tata group
• Infosys
• HDFC Group
• L&T
• Aditya Birla Group
• Bharti Airtel
• Sundaram/TVS Group
• ICICI Bank
• Mukesh Ambani Group
• Anil Ambani group

However, the poll found that many companies may have resorted to window dressing their accounts, but on a smaller scale, others were of the opinion that the financial statements presented were of quality and are not necessarily tainted because of Satyam fiasco. (source) Satyam scam has not given one but two phrases so far. First one is the Hyderabadi discount and now window dressing.

PS : Hyderabadi discount is the discount that should be given by Hyderabad based companies to factor in the cooking. Read this ..

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