How did gold progress through the ages

I am always looking at new things to do on this blog, and when the folks at CreditLoan offered to do an infographic that showed how gold did over the years, I jumped at the offer.

Check out how gold prices moved through the past few decades, which countries mine gold, some history on gold, and a few interesting facts in this awesome graphic below.

New Poll: How much money do you need per month to retire in India?

When I wrote my post about how much money do you need to retire, I focused on the number that you will need at the time of retirement, and how to get to that number by starting off on your investment today.

I see that a lot of people reach that page looking for information on how much they need today, not necessarily thinking about the future.

At some level it makes sense because that is really the starting point in your calculation. You see where you stand today, how much you need today, and then make certain calls about how your retirement lifestyle will be, and extrapolate your needs for then.

Personally, I think that this question is best answered by each individual himself, but that doesn’t mean there aren’t general guidelines and pointers that help frame the answer.

With these thoughts, I start off on my new poll: How much money do you need per month to retire in India today?

a) Less than Rs.20,000

b) 20,000 – 50,000

c) 50,000 – 1,00,000

d) More than 1,00,000

All of you have different assumptions, life-styles, needs etc. and that might give a lot of variation to the answers, but we won’t know if we don’t poll!

Please leave your comments about your thoughts on this question, and vote using the poll options on the left sidebar just above the “Recent Posts”.Readers getting this in email will have to click through the link and reach the website first.

Hoping to see some great comments like last time.

Perpetual Systematic Investment Plans

Last week I wrote about some questions on SIPs (Systematic Investment Plans), and reader Tapan Ghosh wrote in to me, and told me about perpetual SIPs.

Perpetual SIPs allow you to set up a SIP without an end date. There are a few fund houses that allow you to do this like Reliance, IDFC, and UTI.

It seems that you don’t need to specify an end date, and in order to stop payment, you have to tell the AMC (Asset Management Company) to stop the transactions.

If you want to continue then all you need to do is send more checks or further instruction for a bank auto – debit. I didn’t find much info about it online, so its best to talk to your agent about these perpetual SIPs.

Personally, I think you are better off taking a SIP out for a certain time period, and then evaluating your decision and making changes accordingly, but I am sure this way has got appeal for some of you.

If anyone has practical experience with any perpetual SIPs, then please leave a comment and share with other readers.

Image by NUkiwi

India ETFs for US Investors

I included an ETF that invests in both China and India when I first created the India ETF list because there were just so few that focus solely on India.

Since that time, there have been quite a few additions in this space, and now you see a much greater variety – there is an ETF that tracks Nifty, one that invests based on its own methodology, an ETN, leveraged ETFs, one that invests in infrastructure, and another one in small caps.

There are 7 ETFs and 1 ETN that solely focus on India, and Wisdom Tree’s India Earnings Fund is easily the biggest with assets under management of 1.18 billion dollars. It also happens to have performed the best year till date with 11.71% returns.

Here is how some of the other India ETFs have performed. I have updated the original India ETF list with the new ones, so you can read details about any of these funds on this page.

ETF Symbol Name YTD Performance
EPI Wisdom Tree India Earnings Fund 11.71%
PIN PowerShares India Portfolio 6.58%
INP iPath MSCI India Index ETN 7.67%
INDY iShares S&P India Nifty 50 Index 10.34%
INXX EG Shares India Infrastructure Released – August 2010
SCIN EG Shares India Small Cap Released – July 2010
INDL Direxion Daily India Bull 2x Shares Released – March 2010
INDZ Direxion Daily India Bear 2x Shares Released – March 2010

Here is how these ETFs have moved in the last two years (or since they were released).


Market up 400 points; how are you preparing for the crash?

The market went up by 400 points today, and there was cheer all around with plenty of analysts predicting 20,000 by the end of the year, 22 by the end of next year, so on and so forth.

But no one knows what’s going to happen. No one ever did, and no one ever will. It is natural for people to be optimistic and cheer for the market when it’s going up, and be pessimistic and all gloomy when the market is going down.

That’s just how things are.

During the peak of the recession, and much afterwards there was a lot of talk about protecting your portfolio from a crash, looking out for the next bubble, the Greek crisis,  and generally stuffing your money in your pillows, but all that is slowly receding now.

As the tide turns people are looking to get more adventurous, looking for that penny stock that will rise 10 times, the IPO that will scorch on listing, and the gold bar that’ll surely triple in three months.

The market moves in cycles, so don’t let its positive momentum numb your senses and make you throw caution out of the window.

What goes up eventually comes down. Of course, I don’t know when the crash will come, but I do know that a lot of people will be blinded by it when it eventually does.

Personally, when the market goes up and away – I try to remind myself that this is just part of the natural cycle, and not get too carried away by it. It becomes quite hard when everyone around you seems to be making a killing on the penny stock their brother in law recommended, but when you’ve been through the cycle a few times, and burned your fingers, it is easier to ignore the noise.

All the best.

Poll Results: Do you hold stocks or MFs as part of your portfolio?

In the last poll I asked if you hold stocks, mutual funds or both as part of your portfolio, and I thought I’d sum up the results in a slightly different manner than usual (my wife did most of the work actually).

Here is a neat little graphic that shows the breakup of your results, some of the more interesting comments, and then a couple of my notes.


The first note is for people who own just stocks, and if you are salaried and pay taxes, then you are losing out by not investing in tax saving mutual funds.

If you don’t reach the maximum rebate limit through other instruments, and have any meaningful investment in stocks, then do think about the tax saving aspect of such mutual funds, and the effective return you get due to the tax rebate.

The second note, and this is more of a question is for people with both stock and mutual fund investments. Have you ever seen how your own picks compare with the fund returns?

It will be well worth your time to make notes, and compare how well your own stock picks have done when compared with the mutual funds you own. Beating the market is at least quite difficult (if not impossible), and if you find that the mutual funds are doing a lot better than your own stock picks by virtue of being index linked, professionally managed or just because you have a SIP going, then it’s time to rethink this strategy as well.

Thanks to all for voting and leaving comments, and please do leave a comment here as well.

Weekend Links Sep 10 2010

I’ll start this week with a great economics video that I came across via The Baseline Scenario. It is about randomized experiments to see which measures are best fighting poverty. This video is really inspiring, and I’d strongly recommend watching it.

Other links:

P/E Expansion and Contraction @ The Big Picture

The rising trade deficit is a concern @ Sandip Sabherwal

Spamonomics @ Psy – Fi Blog

Facebook Places in New Hampshire turns into a real life @ TechCrunch

Principle, Bravery and the X – Factor @ HBR

How college students can save money @ Digerati Life

Smart Tips for Budgeting Your Money @ Smarter Wallet

Frugal Friday Back to School Edition @ Bad Money Advice

Reliance Index Fund NFO: No expenses for a quarter

Reliance is coming out with a new Nifty Index mutual fund that will mirror the S&P CNX Nifty. The Reliance Index Fund NFO opened on 9th September and will close on the 23rd September.

The fund will invest a minimum of 95% of its assets in the S&P CNX Nifty components and keep the remaining for expenses and redemption.

This is an index fund which means it is passive in nature and the fund manager won’t make any attempts to beat the index. They will invest in the same ratio as the components of Nifty and your returns will be quite close to Nifty returns. Any difference is due to expenses, and the cash that doesn’t get invested, and is kept for redemption, expenses etc.

I normally harp about expenses a lot and the interesting thing about this fund is that they aren’t going to charge any AMC fee in the beginning. This is quite an interesting thing as I don’t think any other fund has ever done such a thing.  Call it the introductory bonus.

Here is what I could find about this in the fine print:

Investment Management Fee will not be charged for the first calendar quarter, once the scheme re opens for continuous sale and repurchase (i.e. till December 31, 2010)**

Good on Reliance to do this, now just don’t raise it too much after the special introductory offer.

If you are interested in Nifty Index Funds, then take a look at my list of all Nifty Index Funds, their expenses and returns for the past year on this page.

Can I cancel my Systematic Investment Plan midway?

I got this comment about SIPs the other day, and it had some interesting questions that I thought I’d address here.

Can I cancel my SIP midway?

Say you take out a SIP for 36 months, but want to stop it in only 3 months  – can you do that? Will any penalty be imposed on you?

Yes, you can cancel your SIP midway, and no – there won’t be any penalty imposed on you.

The way in which you take out the SIP and the fund house will determine how long it takes for the cancellation to take effect.

If you have sent post – dated checks to the mutual fund, you will need to fill up a SIP cancellation form (like this one), and send it to them to return your remaining checks.

They might take anywhere from 2 – 4 weeks to cancel your systematic investment plan, and return your checks to you.

If you have gotten into an SIP online with someone like ICICI Direct, you can log in to your account, and cancel the request online. I’d imagine that this is quicker, but I really don’t know for sure.

Can I change the amount of my SIP midway?

Now if you can cancel your SIP midway, then that in fact allows you to cancel the one that is already going on, and set up a new one with a different amount. If you have set up a SIP using post dated checks then I can’t imagine how you’d change the amount mid way. I couldn’t find any information about changing the amount of a SIP midway even in the case of online trading so I don’t know for sure what happens.

So, I’d say that for sure you can change the amount by canceling the old one, and starting up a new one, but can you modify your existing SIP – I don’t know that.

Can I continue a SIP after it ends?

If I take out a SIP for 36 months, and at the end of that time period want to continue for 3 more years – will I have to start a new SIP or can I continue a new one?

If you have started this by issuing post dated checks then you can issue more checks and get the thing going for you again. If you have used an online platform then this post explains how to set one up.

Again, I am not sure if you can just continue the existing one or not, but the effect is much the same. The commenter referred to losing the benefits of compounding but I am not sure what he was referring to. You won’t lose anything if you start a new one, it will work just like the one that you got out of.

These were some interesting questions, and I’d love to hear if any of you have any practical experience cancelling or modifying a SIP?

If you have any other questions or observations, leave a comment, and we can explore those too.

Things to do before you retire

Authors Bio – Today Marie Nelson will be writing a post for us. Marie is passionate about personal finance, and is going to share a retirement related post with us.

Life has been divided into 3 stages and the last stage is retirement. A new lifestyle waits post retirement. This transition would not only affect you but also have a remarkable impact on the people associated with you. If you are not prepared for retirement then it might affect you and your family adversely. But this article would share few tips that would help you have a post retirement life without any financial hardship.

Before you retire keep the following thing in mind:

1)   Prepare a post retirement budget:

Other than your professional work clothes or transportation to the office your other expenses would remain same. But your income might be less than before so it would be advisable to prepare a budget plan according to your standard of living. Your expenses would not go down post retirement so maintaining a budget would save you from incurring debt. So plan your future that it does not take a toll on your pocket.

2)   Observe your cash flow:

There are several sources for the retirees to draw their income for instance Social Security, pensions, investments and, increasingly, part-time jobs. Before you retire you need to scrutinize your source of income so that you can avoid financial doldrums and can pave a smooth post retirement life. Ensure you have source to pay all of your monthly bills. Retirement income such as home equity, annuities, insurance, royalties and rental income are not that popular among the retirees.

3) Reduce your taxes:

When you put your money in retirement investment plans like 401k and traditional IRAs it is not considered taxable income till the cash is withdrawn. As tax bracket fluctuates year after year so in order to minimize taxes withdraw the cash after you have researched on the market. When you find tax brackets are lower than either you withdraw it or it to a Roth IRA plan. And when the tax bracket is higher on the graph then withdraw a fraction of the amount.

4) Increase Social Security:

Retirees should sign up for Social Security before they retire in order to secure their future. As a certain percentage of your paycheck is directly deposited into the social security fund you can easily reap the benefit from it. Try to avoid claiming it before you turn 70 years as the payments is increasing per annum. Higher return can be expected if you delay your claim it would save you from the financial crisis at the time of your old age.

5) Plan for a long term goal:

Retirees need to do a long-term planning as they might not have any other source of income and they might come across uncertain emergencies. Medicare pays for nursing up to 100days but if you are struck by some chronic disease then you might require longer period of time to cure. In this case hefty amount of cash would be drained out from your savings account making you penny less. Look for a long-term-care insurance policy in order to protect yourself from high chronic care costs.

6) Maintain the emergency fund:

Maintaining an emergency fund is crucial at any stage of your life. This is because you never know when you require cash to mend the leaky roofs, repair the cars, and other large uncertain expenses. Make sure that you keep the emergency fund in FDIC-insured account or invest it in some profitable fund. FDIC insured account would allow you to delay withdrawal from investment accounts when the stock market would be down.

7) Existing debts needs to be paid off:

Before you retire make sure to pay off your entire debts. As these are liabilities and you would never want to carry the burden of debt post retirement. Calculate the total amount of debt you owe and then start paying the debt with high interest rate. By the time you retire you can unshackle yourself from the clutches of debt.

8 ) Synchronize with your spouse:

Retirement would bring a new change in your life and this change might have an impact on your marital relationship. One of the spouses decides to retire then the other spouse may continue with his job. You can divide the financial responsibilities if both of retire together. In this way you can achieve financially secured future even after your retirement.