Investment - making money from money

“It’s not your salary that makes you rich, it’s your spending habits” but the question is how & where to spend/ invest. Through this blog I am explaining some basic guidelines for investment that will help you to secure future & help you in making money from money.

Step 1 - Life & Health Insurance: This is your first step of investment buy life & health insurance for yourself & your family members depended on you. Life insurance will help your depended in case of unfortunate circumstances. Many employers provide health insurance to their employees, if you employer doesn’t provide than buy health insurance for yourself & depended.

Step 2 – Secure retirement life: Once you cover yourself under health & life insurance than secure retirement life – invest into retirement plan. Retirement plan investment at early stage of your life helps you to get good return. You should consider inflated value of money at time of your retirement while choosing retirement plan.  

Step 3 – Step towards making money from money: You have secured life & future now take small steps towards making money from money. Invest into low risk & fixed return investment plan like fixed deposit (FD) & PPF (Public Provident Fund). 

Step 4 – Taking higher risk: Now it’s time to invest into higher risk & return products like Mutual fund, Bonds, Stock & Commodity Market. To enter the game of stock & commodity you need to invest some time to have some basic market knowledge & therefore it’s better to start with mutual funds than move to stock & commodity. There are many website & rating agencies which rate mutual funds on the basis of their past performances, study them for your reference. You should stay invested for medium to long term (at least 3 – 4 years) in these products to get good returns. 

Step 5 – Fixed Assets: Once you have secured life, future & getting fixed returns on our investment than invest in property & precious metals. 

Dos & Don’ts:

• Do not put all your eggs in one basket – Always follow this basic rule of investment 
• Do maintain cash savings – it’s very important to understand the objectives of your saving & how to invest it to achieve your goals. A separate cash saving account should always be maintained for immediate needs. 
• Do your research before investing – take an advice from others but do not follow the advice blindly, you should do your own study. 
• Do not invest in depreciating asset where cost of fund is high (like car loan)

These are the some basic guidelines for investment, I will cover each steps in detail in my subsequent blogs. 

ONE NATION, ONE TAX - GST

GST bill passed by upper house. It will be the game changer reform for Indian economy by developing common market & reducing cascading effect of multiple tax on cost of goods & service. As per Finance Minister, GST will boost GDP by 2-3%. I am trying explain what is GST, How it work, advantage & disadvantage of GST.

What is GST 

• GST is a value added tax, collected at all points in the supply chain with credit allowed for any tax paid on inputs acquired for use in making the supply. It would apply to both goods and services.
• GST would replace taxes levied by the Central and State governments such as:

Central Government	State Government
Central Excise Duty Service tax Additional Customs Duty (CVD) Special Additional Duty of Customs (SAD) Central Sales Tax Central surcharges and cesses	Value Added Tax Octroi and Entry Tax Purchase Tax Luxury Tax Taxes on lottery, betting & gambling State cesses and surcharges Entertainment tax (other than the tax levied by the local bodies)

             *Basic Custom duty is not included in GST

• GST will be administrated by GST Council, which will be the apex policy making body for GST. Members of GST Council comprised of the Central and State ministers in charge of the finance portfolio.

How GST Work

India shall adopt a Dual GST model, meaning that the GST would be administered both by the Central and the State Governments.

• SGST – State GST, collected by the State Govt.
• CGST – Central GST, collected by the Central Govt.
• IGST – Integrated GST, collected by the Central Govt.

Case I: Sale in one state & resale in same state

 Case II: Sale in one state & resale in other state

Case III: Sale outside the state & resale in same state

Advantage of GST: 

• Elimination of multiplicity of taxes and their cascading effects.
• Rationalization of tax structure and simplification of compliance procedures.
• Reduction in prices, due to full and seamless credit, manufacturers or traders do not have to include taxes as a part of their cost of production.
• Increase in government revenues because many people resorted to paying taxes rather than avoiding the same. 
• Automation of compliance procedures to reduce errors and increase efficiency.

Disadvantage of GST: 

• As per some studies, in initial 1-2 years inflation will increase, if GST will be 18% than inflation may increase by 0.8 to 1%.
• The GST is a destination based tax, not the origin one. In this case consuming state will be benefited than manufacturing state, in present tax system manufacturing state is benefited than consuming state.  

Our India

On 26th January and 15th August we show patriotism but are we truly patriot? Answer is no. Many of us do not know difference between 26th January and 15th August, it is so shameful. Even we do not respect our national flag and anthem; I saw our national flag on street. We do not do anything for our India in entire life. How many of us contributing to making our nation a better nation, very few of us are contributing. On 26th January and 15th August for formality we show patriotism toward our country, many of us even do not do this for them 26th January and 15th August is like holiday.
How many of us join or planning to join Indian Army, ISRO and DRDO, very few of us. Form our childhood we use resource of India when time come we can do some thing for India we fly to abroad and serve them. Every year talent of India flies to abroad to earn in dollar and euro. I am not against to go to other country we can go to other country to gather knowledge. After gathering knowledge we should came back to India and we should use all this knowledge to develop India.
In our day to day life we can do little thing to make our nation a better nation. We should take inspiration from A.P.J. Abdul Kalam and Nandan Nilekani. A.P.J. Abdul Kalam work for India entire his career. Nandan Nilekani leaves Infosys to contribute his skill for benefit of country. In our life if we reach to a stage where we could serve our country we should grape this opportunity. We should contribute our skill for growth & development of country. Country is made-up of its citizen, its duty of citizen to make their country a better country. Make India a better India.
!!Happy Republic Day & Jai Hind!!

Future of IT

Recession affects Indian IT industry adversely but its growth does not stop although, its rate of growth was decrease to 4% as compare to 7% to 9%. Industry body expects the sector to return on growth rate of 10% to 12% in 2010-11. The Indian information technology industry has played a key role in putting India on the global map. Indian IT industry provides service to over 185 fortune 500 company. In 1997-98 contribution of IT sector in GDP was 1.2 % and now in 2008-09 it increase to 5.8%. IT sector make revenue of $ 59.6 billion in 2008-09.

IT sector has huge scope within India. It has more scope in rural part of India as compare to urban part of India. IT would help to educate children in rural part of India; if every village of India connected with high speed data line we can teach children through internet & video conferencing. We can use IT in agriculture; framer use laptop that connected with high speed wireless internet connection can check weather forecast through internet, framer can trade crop in future market using internet and know how he can increase productivity through information available at website. It looks like reverie but this can be possible. The government also takes initiative they set up the National Taskforce on Information Technology and Software Development with the objective of framing a long term National IT Policy for the country. The government-led National e-Governance Programs, has played an important role in increasing internet access in rural India. If e-Governance implemented properly it also help to reduce corruption.

The Indian IT sector continues to be one of the sunshine sectors of the Indian economy. According to NASSCOM, the exports component of the Indian industry is expected to reach $ 175 billion in revenue by 2020. The domestic component will contribute $ 50 billion in revenue by 2020. Together, the export and domestic markets are likely to bring in $ 225 billion in revenue. We can not predict limit of IT.

Small Wonder Land

I wish happy New Year to all. Today I find some thing very interesting that I want to share with you. I come to know about same small country, they are so small in terms of physical land area, population and GDP that we can not imagine about them. These countries are Tuvalu, Nauru, Marshall Island and Palau.

Tuvalu
Tuvalu is located in Pacific Ocean, midway between Hawaii and Australia. Its population of 11,992 makes it third least populated state in the world. Its physical land size just 26 square Kilometer, Tuvalu is fourth smallest country in world. GDP of Tuvalu estimated in 2002 $ 14.94 million (In IPL cost of Rajasthan Royal team is $ 67.0 million).

Nauru
Nauru officially the Republic of Nauru is an island nation in the South pacific. Nauru is world’s smallest island nation, covering just 21 Square Kilometer (Physical land size of Shimla is 25 Square Kilometer). Its population is 10,000 makes it second least populated state in world. GDP of Nauru estimated in 2006 $ 36.9 million.



Marshall Island
Marshall Island officially the Republic of the Marshall Islands is in middle of the Pacific Ocean. Its physical land size 181 Square Kilometer. Its population is 62,000 (Number of student in Devi Ahilya University and affiliated colleges are 120,000 approximately). GDP of Marshall Island estimated in 2001 $ 115 million.

Palau
Palau is in Pacific Ocean east of the Philippines. It is one of the world’s youngest and smallest sovereign states. Its physical land size 456 Square Kilometer. Its population is 20,000. GDP of Palau estimated in 2008 $ 164 million.

Should voting be mandatory?

The Gujarat assembly passed a bill making voting to munucipalities and panchayats election compulsory. Rise question “Should voting be mandatory?” People always say that government is not functioning properly and when there is time to elect government, they do not come out for vote. There are more literate people in metro cities than rural part of India but in metros percent of voting is generally low as compare to rural part of country (voting percent in metro approximately 50% and in rural area approximately 70%). We can vote in reality show but not in general, assembly and municipalities’ election. Therefore voting should be mandatory. One of the reasons for people does not vote, they think candidate contest in election are not suitable. Therefore in election option for negative vote should be available, if we do not like all candidate we can give negative vote.
Counter view of mandatory voting is implementation. It could not implement because of several reason. One of the reason people are transferring from one city to another. A person domicile of Indore working at Pune can come to Indore for voting. I have suggestion that Election commission could setup e-polling station, where we can vote online from anywhere in country just go to e-polling station with photo identification card officer at polling station check your name and constituency you belong to and you can vote online(suppose you belong to Bhopal and you are presently living in Mumbai, you go to e-polling station at Mumbai officer at polling check your constituency through online database and you can vote for candidate for Bhopal constituency online). So that people away from there home town can also vote. This can implement for Loksaba election but it is difficult to implement for state assembly election. Voter list are not authenticate, there are several name in voter list that don’t exist. This can be one of the reason for low voting percent. 100 percent voting can not possible ideally it should be around 80 percent. We should come out for vote without any law, it is our fundamental right.

Test is real test

First official test match had played on 15 March 1877, contested by England and Australia. After 132 year test cricket is struggling for its survival. There are question about survival of test cricket after huge success of Twenty20. People are not interested in test cricket, they are interested in Twenty20. Twenty20 has every thing to attract masses it has excitement, thrill, glamour and most important point a Twenty20 game is completed in about three and half hour. Therefore sponsors are willing to invest there money into Twenty20 rather than test match. But we have to save test cricket because test cricket is test of strength and competency of players and teams. In test match you have to play consistently for five day, but in Twenty20 one over can change entire game.
ICC should take step to recreate interest in test cricket between spectators and ICC is planning to introduce changes in test cricket. Test matches should play at weekend so that more audiences could watch matches, in weekday it is not possible to watch test match. In England and Australia test match generally commence on Wednesday or Thursday so that match can be play on Saturday and Sunday but in India and subcontinent it commence any day in a week. ICC is planning to launch day-night test matches, I am in favor of day-night test match more people can watch match at evening rather than at day time. Sachin put a suggestion that “There should be some free ticket of test match for school student”. It was admirable suggestion cricket board should consider this suggestion seriously, because school student are future audience. Pitches should be improved neither it help batsman nor bowler completely, it should be 60-40 percent 60 percent favoring the batsman and 40 percent favoring bowler. India will play only two test matches in next eleven month against Bangladesh in January and next test match will play in October against New Zealand. Number of test matches should be increase so that spectators can attach with this form of cricket. Twenty20 is future of cricket but we should not forget test cricket because test cricket is soul of cricket.