October 28, 2011
What do you do about Risk ...????
October 14, 2011
Commodity Exchange – a great place to buy Gold for Long Term
Gold has been bound between 26,000 & 27,000 on the exchange since quite some time. Now, to understand the investment in the commodity exchange and the benefit it brings, let’s assume that the gold is at 27,000 at this point in time.
Considering either a short or a long horizon, there are only 3 possibilities that can arise at any point
- Gold shall remain at current levels even in future
- Gold shall go northwards in future
- Gold shall go southwards in future
It is all a game of probabilities since, we cannot predict future. So we shall always feel the probability of Gold going up with less confidence in the short term then in the long term.
In the very long term we would safely assume with more that 99% confidence that gold will be more than what it is today. Hence, let’s assume a conservative scenario whereby, we expect gold to reach 28,000 by the end of one year from now. Gold may see highs of above 28,000 and even see lows within this year.
Now, if today we purchase 100gm of gold, the investment required shall be Rs. 2,70,000/-. When at the end of a year, as per our assumption, the price would have reached 28,000. Hence, we would have made Rs. 10,000/- on our investment of Rs. 2,70,000/- . Hence we had an ROI (return on Investment) as under
ROI = 10,000 / 2,70,000 x 100 = 3.70%
Now, let’s compare the situation with investing in Commodity Exchange.
In the commodity exchange, you need to invest only Rs. 25,000 (approx) as margin money to block 100gm of Gold. However, the profit / loss made on the investment are marked to market on real time basis. Hence your account is continuous credited / debited depending upon price movement.
However, let’s assume that we roll on the investment in 100gm of Gold in the commodity exchange for a year. At the end of the year when the market price is 28,000, our account shall be credited with a nett 10,000 as profit. Hence, in this case also the profit remains the same i.e. Rs. 10,000/-. However, this profit is now achieved on an investment of Rs. 25,000/-
This time the ROI is as under
ROI = 10,000 / 25,000 x 100 = 40.00%
Thus ROI through investment in commodity market is over 10 times in percentage terms with that of investing in physical gold / gold ETF or for that manner any other means of investing in gold as no front offers the commodity at such less margin money.
Now imagine the money that can be made in absolute terms when the entire 2,70,000 can get invested in the commodity market.
Interested in Investing in the Commodity Exchange - Click Here
September 24, 2011
Real Estate - Short Term and Long Term Investment
Real Estate is a legal term related to a land or all the fixtures of land including building and other improvement. Real Estate is often called a real property, sometime called Realty. There are different types of Real Estates i.e. Real Estate Marketing, Real Estate Investing, Corporate Real Estate, Residential Real Estate and Commercial Real Estate.
Short Term Real Estate Investment
Short Term investors are looking at great profits in this rapidly appreciating market. Short term real estate investment means buying a property and selling it in a short period of time. The wait for profit potential is very short when compared to any other investments today.
But there are some risks involved in this short term real estate investment for which the investor has to be prepared in advance. There are some situations where the investor has to invest more than his budget; more money is needed for repairs and so on. Short term investors should follow the below steps for a fruitful result:
- Check whether the Real estate property values are increasing every day.
- Complete the repairs and connections as early as possible but at a reasonable price within your boundaries.
- Check whether the finances and taxes are able to withstand possible negative feedback.
The view of short term real estate investment is to make quick profit without holding the property for a long time. It is also required to act quickly during the renovation stage. Hence, proper research and knowledge is required. You may contact the local governments, housing authorities, investment groups, other investors and other resources for gaining a proper knowledge.
- Ability to deal with renters or tenants.
- Investigation for the possibilities for the tax break.
- Long term appreciation of the property should be positive.
- Avoiding tendency to sell the property on profit immediately.
A clever long term real estate investor performs strict maintenance schedules by keep a readily accessible list of concerned professionals to perform the repairs immediately, with an aim to satisfy the tenants. Choosing the potential tenants by avoiding irresponsible and unreliable tenants is a key factor while going for long term investments. Long term real estate investment involves several risks but a smart investor will be able to minimize them at the beginning of the investment. You need to keep some capital on hand in order to maintain the repairs when the property is vacant and when the appreciation is declined.
September 17, 2011
Gold ...Looking ahead from here
- Relative economic prosperity
- High Inflation Rates
- Good Monsoon
- Number of forthcoming festivals in which gold purchasing is customary
August 2, 2011
Advance Tax - Company and Non company
The Due date for Advance Tax payment for the second installment for the company and first installment for the non company has been comes up on september 15,2011 with rate of 30% especially for those whose tax liability exceed upto Rs.10,000.00 for year
The Rates and Due dates for Non - Company and Company are as follows :
1. Company
June 15 - 15% of Tax Assessed
September 15 - 30% of Tax Assessed
December 15 - 60% of Tax Assessed
March 15 - 100% of Tax Assessed
2. Non Company
September 15 - 30% of Tax Assessed
December 15 - 60% of Tax Assessed
March 15 - 100% of Tax Assessed
Here is the tax assessed means = Tax due minus Tax deducted at source. Please note that to check Rs. 10,0000. 00 exceed limitand and then you have to consider full amount of tax due but for interest calculation amount is to be taken is total tax due minus tax deducted / collected at source (TDS/TCS)
Further for capital gain amount person can pay prospective instalments only. Means have to oay future advance tax installment due after earning of capital gain. However this exemption is only considered if you have paid whole of advance tax by March 31st (in same previous year)
If you have not paid your tax pro-rate bases in advance as shown above in advance as shown abobe you have to pay interest u/s 234C. Further if you have not paid your full taxes by 31.03.2012 for AY 2012-2013 then you have to pay interest under section 234B on balance amount of tax.
Due date to file Income Tax Return in respect of assessment year 2012-2013 for person other than companies and non audit case is July 31,2012. Interest U/s 234A is payable only if you miss the Income Tax due date for AY 2012-2013 i.e July 31,2012
And I hope you are not interested in calculation under thse section and have paid advance tax on time. However due to inaccurate estimate of income these one of these sections are applicable in most of the cases.
Rate of Interest: Rate of Interest is 1% per month or part thereof in all the above cases
July 25, 2011
Gold
In spite of the convergence of diamond and palladium, the demand for gold jewellery has seen a regular growth year-on-year. Countries primarily responsible for this growth are India, China, Italy, Turkey and the USA. In the last 3 years, the climb in the price of gold above Rs.20, 000/- in India.
There has been a substantial increase in gold prices, but this has not dampened consumers' inclination towards investments in gold. In fact, investors have begun to recognise the effectiveness of gold as an efficient savings vehicle and an alternate asset class.
Demand for gold for the purpose of investment has outpaced the demand for the yellow metal for jewellery in 2004. Indians purchased 74.0 tonnes of gold for investment from January to September 2004, while it was 67.8 tonnes during the same period in 2003.
Reasons to say YES to Gold
- The dollar is weak and getting weaker due to national economic policies which don't appear to have an end.
- Gold price appreciation makes up for lost interest, especially in a bull market.
- The 5 five years are the beginning of a major increase in rates of the gold in India from Rs.6000 to Rs.20000 +
- Central banks in several countries have stated their intent to increase their gold holdings instead of selling.
- All gold funds are in a long term uptrend with bullion, most recently setting new all-time highs.
- The trend of commodity prices to increase is relative to gold price increases.
- Worldwide gold production is not matching consumption. The price will go up with demand.
- Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth.
- Several gold funds reached all-time highs in 2007 and are still trending upward.
- The short position held by hedged gold funds is being methodically reduced.
- Gold bullion
- Gold coins
- Numismatic coins
- Gold certificates
- Gold futures and options
- Gold Mining stocks
- Jewellery
- Exchange Traded Funds (ETF)
- Gold Mutual funds
- Gold doesn't pay income or interest.
- Except for the last five years, gold has been in a bear market after a peak in 1980.
- Central banks have tons of bullion which they occasionally threaten to sell.
- If you don't count the last five years, gold stocks have not done well.
- Since gold funds have made big moves over the past five years, it's time for them to drop back.
- Your broker probably won't recommend gold funds.