Have you entered the Perfios contest yet?

About ten days ago – I opened up the Perfios contest where three lucky winners will get a free one year subscription to the popular money management software.

There are still 5 days left to participate in the contest so please do so if you haven’t done it already.

I have compiled a list of people who have already participated and I want you to verify that your name is present in that list.

If you did both things then your name should appear twice, so if you see your name missing or appear only once where it should appear twice please leave a comment and I’ll update the list.

Here are the entries so far.

(Updated List at Sep 30 2011)
1    Rajat Gupta
2    Rajat Gupta
3    Aashish
4    Ashish
5    Sivakumar
6    Ani Patharathil
7    Ani Patharathil
8    R K Tripathy
9    R K Tripathy
10    Uma Kanth
11    Uma Kanth
12    Raja52
13    Raja52
14    Alka
15    Harsha
16    Harsha
17    Aravind
18    Kiransunku
19    Kumaran
20    Vamsi
21    Vamsi
22    Manish Sep 20, 2011 7:34 PM
23    Manish Sep 20, 2011 7:34 PM
24    Vijay
25    Dr. Biju Paul
26    Dr. Biju Paul
27    Prashant Agrawal
28    Prashant Agrawal
29    Amit Tamhankar
30    Manish Sep 22 2011 at 12:17 AM
31    Rajesh Kabra
32    Rajesh Kabra
33    Kumaran Ilangovan
34    Akhilesh Shah
35    Ashish Balachandran Valiyaveedu
36    Anil Kuppa
37    Anil Kuppa
38    Parag Gupta
39    Abhinav Behari
40    Abhinav Behari
41    Chandrasekhar Joglekar
42    Ravi Kukreja
43    Anurag Sharma
44    Anurag Sharma
45    Anirban Chowdhury
46    Saumya
47    Kumar
48    Kumar
49    Sagar Biyani
50    Ams
51    Ams
52    Prashant 2011 9 30
53    Prashant 2011 9 30

Please leave a comment if you notice your name missing, and if you haven’t still entered the contest — there is still time.

How to buy a gold ETF?

This is a very common question here, and a lot of people are confused about what you need to do if you want to buy a gold ETF. An ETF trades like a share in the stock exchange, and if you want to invest in an ETF – you can buy it from your share broker.

It doesn’t matter that this ETF is a gold ETF – it’s all the same – you can still buy it from a share broker. You will be charged the same commission that is charged when you buy any other share, and you will continue to hold it in your Demat account.

You don’t need a separate Demat account or a trading account with the commodities exchange or anything like that – just your regular share trading and Demat account will do.

How to buy a gold etf
How to buy a gold etf

The difference comes in the way shares are taxed and gold ETFs are taxed. For starters, you pay Securities Transaction Tax (STT) on share transactions but you don’t have to pay that on gold ETFs.

Capital gains are also treated differently – shares attract a short term capital gains of 15% whereas short term capital gains on gold ETFs will be added to your income and then taxed according to your slab.

Long term capital gains are tax free for shares, but you will have to pay 10% without indexation or 20% with indexation whichever is lower plus surcharge and cess in the case of gold ETFs. Gold ETFs are still more tax efficient than holding physical gold.

So, in conclusion – as far as buying and holding of a gold ETF is concerned – it’s exactly like a share, but the tax treatment is different.

A Short Writeup on ICICI Prudential Gold Savings Fund

ICICI Prudential is the latest company to come out with a gold fund of funds, and the fund is similar to other gold funds like the SBI gold fund. 

The fund is right now in the NFO period which will end on October 4th 2011, but that shouldn’t make any difference to you because mutual fund NAV doesn’t impact performance.

Everything I wrote about the SBI gold fund review stands true for this fund also, and I don’t really have anything to add except for one small little thing which I noticed in the last discussion.

At least a couple of people seemed to imply that gold ETFs charge you an expense of about 1% or so, and that makes buying these gold funds better.

I don’t know how widespread that view is but I do know it doesn’t make any sense. When you buy a gold fund of funds, that fund will in turn go and buy an ETF, and you will indirectly still incur the fee of the ETF.

The ETF doesn’t care whether you buy the fund directly or whether you own it through a mutual fund – they will charge you the fee anyway.

In addition to that – the fund of funds will now charge you a fee as well – so not only do you pay the ETF fee – you pay the fund of funds fee in addition to that.

The only people who can benefit from a gold fund of funds are people who want to buy very small quantities of gold periodically, and who feel that the brokerage charges hurt their purchases a lot because of these small quantities.

Outside of this, I don’t see any other reason for owning a gold fund of funds, but of course, this is just my view, and there is a counter view also – you can find that in the comment thread of the SBI gold fund post, and see if it appeals to you.

I’m going to stop here else it’s going to be a repeat of the SBI gold fund post and I don’t want to do that. So please read that post if you are interested in gold fund of funds, and if you’re disappointed that this post is so short then cheer yourself up — at least you’re not on a water slide.


Berkshire’s Buyback Program

A friend of mine had gone to the US to work when I was in college and one day I told him that he can buy stock in Warren Buffett’s company – Berkshire Hathaway, and that will take care of all his stock market related investments.

He asked his boss about it who told him that you need at least $50,000 to invest in it. I was a little confused when I heard that because I didn’t know that one share cost that much!

This was more than ten years ago, and the stock trades at more than $100,000 now!

That’s because Warren Buffett has never paid out a dividend, bonus or stock split or reduced the face value – things that are seen very often by other companies who want to increase liquidity, and the stock price as well.

He does have a Class B of Berkshire Shares that trade at a significantly lesser price of around $70, and that was also after a lot of small Berkshire shareholders wanted him to split the shares so that they could gift them or inherit them to their children.

Even these shares were priced much higher, and when they were introduced they had 1/30th value of the Class A shares, but only 1/200th of the voting rights. That means that until recently – the Class B shares traded at over $3,000.

Then last year when Buffett wanted to buy Burlington Railroad he had to split the Class B shares into 50 – 1 and thus the class B shares now trade around the $70 range.

With this backdrop, the world was surprised when Berkshire announced a stock buyback program for Berkshire Hathaway today.  What I found most interesting is that Berkshire has got about $47 billion of cash, and at current market capitalization and exchange rate – India’s biggest company – Reliance Industries is worth some $50 billion in all!

So, Berkshire is a very big company with cash reserves which can be matched by just a handful companies, and they have capped the buyback to a limit of cash reserves of $20 billion which is serious money in itself!

I read a lot of stuff about this today that made absolutely no sense at all, and I think people who wrote it were motivated more by their biases than facts.

However, I did read one article by the Pragmatic Capitalist that was devoid of all hyperbole, and presented two simple takeaways from this news which are that Buffett thinks Berkshire is selling a lot less for what it’s intrinsically worth, and relatively speaking – the rest of the equity market is not as attractive.

I can’t really think of anything else beyond this and rather than thinking too much about this decision, and what it could mean for the direction of the markets, the fate of stocks or in fact the fate of the man himself – people are better off accepting that not every action needs to have a complicated or sinister reason behind it, and these two simple factors could just be what prompted the man to take the decision.

Create a stock portfolio with Google Spreadsheets

I have discussed several stock portfolio tools here, and most of them give you a lot of options, and help you maintain your data the way you want. However, there are always some things that you wish the tool had that it doesn’t and it sometimes forces you to maintain Excel spreadsheets of your own.

The number one issue that I have had using Excel is that I couldn’t build one that auto – updated the stock quotes when I opened it. I know there are ways to do it, but I was never successful in it. I don’t mind entering the initial data there myself because I don’t have many transactions, but if the prices don’t update automatically then it becomes pretty much useless.

That’s why I created several Excel portfolio tools over the years, but never really used them frequently.

But I recently checked out Google Spreadsheets, and the feature of automatically updating stock quotes there is simply amazing. It’s very easy to use, and it works for Indian stocks as well.

I have a basic portfolio setup there now, and I think I’m going to use this for a long time to come.

You need a Google account to get started, which I’m sure everyone does, and then you need to go to Google Docs, and open up a new spreadsheet.

You can then setup your columns any way you want – but you would probably want these at the minimum:

  1. Name
  2. Quantity
  3. Cost
  4. Market Price
  5. Value at cost
  6. Market Value
  7. Profit / Loss

The one that I set up looked like this.

Google Spreadsheet Portfolio
Google Spreadsheet Portfolio

The most important thing in this is the market price column – which is the column that has the latest market price of the stock you want to track, and you can see that highlighted in the blue.

The red ellipse shows you the formula that you need to input in the cell to get the market price.

It is simply:

=GoogleFinance(“Stock code”, “Price”)

You can find the stock code from Google Finance by typing the name of the share in the search bar, and Google will return you a list of matching names along with their codes. You can then use that code in this spreadsheet to get the price.

I’m sure this has been around for some time now, but I didn’t discover it until yesterday and I was really happy to see how easy it was to setup.

I’m going to make a lot of use of this going forward, and I hope you find it useful as well.

Neutrinos, Italian downgrades and Bing losses

This was a rather eventful week and I have quite a few links to share. The biggest news of course was the researchers at Cern finding that Neutrinos travel at a speed faster than light, and if proven correct – this is said to have a major impact on Physics.

I have absolutely no idea how you send particles through rocks, or how you measure that something arrived 60 billionth of a second earlier than it’s meant to, but it still feels quite exciting!

Going back to the beginning of the week – Italy was downgraded by S&P and that added to the confusion and uncertainty already prevalent in the financial markets which culminated in some pretty big falls across the board this week.

The fall was not limited to stocks as commodities saw a sharp sell off as well. Nickel plunged 11%, silver fell 12%, gold fell 5%, and Copper fell 7% on Thursday / Friday.

This sell off was not averted even though the US Fed announced a scheme called Operation Twist which I frankly don’t understand what it does, but it’s meant to boost the economy somehow.

While all this is depressing, it’s probably not as depressing as losing a billion dollars a quarter – which is what Microsoft’s Bing does every quarter.

Despite all this Roger Nusbaum says you shouldn’t freak out, and I agree. Here is an excerpt.

If I say to you that “markets correct downward every so often and sometimes these can be fast and quick moves that scare people but markets and the stocks that comprise markets come back at some rate of speed and that the decline will not wipe you out,” what would you do with that?

If the S&P 500 was at 1550 and everyone was feeling pretty good then most people would say that “well of course the market goes down 20% now and then, the volatility is just fine.” Now as the market feels like it is down a lot people tend to forget the rational voice the knows markets do go down as they are now.

A speech by Deepak Mohanty, Executive Director, RBI on the recent inflation in India – a very good read to act as a refresher on what’s happened on the inflation front in the last 2 years, and RBI thinking during this time.

Finally, something really positive to end a gloomy week.

Enjoy your weekend!

Six things


First thing – the 700 point fall today was quite painful, and countries all over the world have fell with Indonesia falling as much as 9% in one day. The market in general has been quite volatile, and talks of a double dip recession are gaining currency. People don’t talk about decoupling as much as they used to and to my mind there is only one way to think about decoupling – the way Sandip Sabharwal described it – that the markets will have different fortunes over the long run, but in the short term they will correlate quite strongly.

Sticking to the plan

I have touched upon my thoughts on the uncertainty and different asset classes only recently so I’m not going to say the same things again. Investing in equities for the long term means that you believe that a country and companies in that country will continue to grow earnings many years down the line and the stock market will reward such companies. I don’t think any of that has changed. I bought some stock today, and will continue to do that in the days to come even if the market were to fall fifty or sixty percent from here.

NCDs might offer a new opportunity in this volatility

The NCD market is relatively new, and the NCD listing was played like the IPO listing game by punters – if the market continues to get beaten in the next few months – I think some of that pessimism can flow through to the prices of NCDs as well, and make them attractive relative to risk. That can push yields higher, and make it attractive to invest some part of your money in NCDs as well. This is a good space to keep an eye on.

Gold is just another asset class

I don’t think gold can be considered a safe haven any longer with the kind of speculative money that’s invested in it, and the kind of daily movement it sees. Something that moves more than 2% in a day this frequently is far too volatile to be considered a safe haven in my opinion.

The premise that it has a negative correlation with stocks is going to be severely tested in the days to come.


While most of the focus so far has been on Europe, I see increasing mentions of risks in Chinese real estate, and slowing down of the Chinese economy and how that will hurt the market. It won’t surprise me to see the focus turn from Europe to China in the next few days.

Finally, under which tree are all the people who say you should be greedy when others are fearful hiding?

80CCF Infrastructure Bonds Calendar 2011

IFCI has come out with the first infrastructure bond issue of this year, and I was a bit surprised to see how early they came out with the issue this time.

They had to come out with several tranches last year because they were never able to reach their targets, and I think the same thing is going to happen this year as well.

They will come out with several tranches and so will the other players who are allowed to issue infrastructure bonds.

I had written a fairly comprehensive post on Section 80CCF infrastructure bonds FAQ last year, and you can read that post and the comments to familiarize yourself with these bonds if you aren’t already aware of them or need a refresher.

I think it’s too early to buy these infra bonds right now, and it’s better to wait for a few more issuers to come out with their issues. Don’t expect a much higher interest rate from the other issuers though because the interest that they can offer is capped, and the interest rate difference isn’t going to be much.

The other thing that I want to emphasize is that the real benefit of these bonds is that they allow you tax benefits to the tune of Rs. 20,000 over and above what you save by investing in Section 80C instruments, so if you don’t think you will be able to max out Rs. 1 lakh investment in 80C, then don’t bother with these bonds.

I’m going to review each of these issues in detail, and use this page as a calendar and summary page for every infrastructure bond issued.

If you want to see some more details on the issue then let me know and I will modify the table.

S.No. Issuer Series Tenure Open & Close Date Interest Rate
1 IDFC Tranche 2 Series 1 10 years with a buyback option at 5 years Jan 11 2012 – Feb 25 2012


2 IDFC Tranche 2 Series 2 10 years with a buyback option at 5 years Jan 11 2012 – Feb 25 2012

8.70% compounded annually

3 Srei Infrastructure Finance Series 1 10 years with a buyback option at 5 years Dec 31st 2011 – Jan 31st 2012


4 Srei Infrastructure Finance Series 2 10 years with a buyback option at 5 years Dec 31st 2011 – Jan 31st 2012

8.90% but compounded and will be paid at maturity

5 Srei Infrastructure Finance Series 3 15 years with a buyback option at 5 years Dec 31st 2011 – Jan 31st 2012


6 Srei Infrastructure Finance Series 4 15 years with a buyback option at 5 years Dec 31st 2011 – Jan 31st 2012

9.15% but compounded and will be paid at maturity

7 REC Series 1 10 years with a buyback option after 5 years Dec 19 2011 – Feb 10 2012

8.95% but compounded and will be paid at maturity

8 REC Series 2 10 years with a buyback option after 5 years Dec 19 2011 – Feb 10 2012

8.95% annual

9 REC Series 3 15 years with a buyback option after 7 years Dec 19 2011 – Feb 10 2012

9.15% but compounded and will be paid at maturity

10 REC Series 4 15 years with a buyback option after 7 years Dec 19 2011 – Feb 10 2012

9.15% annual

11 L&T Infra Series 1 10 years with a buyback option after 5 years Nov 25 2011- Dec 24 2011

9.00% payable annual

12 L&T Infra Series 2 10 years with a buyback option after 5 years Nov 25 2011- Dec 24 2011

9.00% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.

13 IFCI Infra Series IV Series I 10 year with 5 year buyback Nov 30 2011- Jan 16 2012

9.09% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.

14 IFCI Infra Series IV Series II 10 years with a buyback option after 5 years Nov 30 2011- Jan 16 2012

9.09% payable annual

15 IFCI Infra Series IV Series III 15 years with a buyback option after 5 years Nov 30 2011- Jan 16 2012

9.16% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.

16 IFCI Infra Series IV Series IV 15 years with a buyback option after 5 years Nov 30 2011- Jan 16 2012

9.16% payable annual

17 IFCI Series III – Option 1 10 years Sept 21 2011 – Nov 14 2011

8.5% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.

18 IFCI Series III – Option II 10 years Sept 21 2011 – Nov 14 2011

8.5% payable annual

19 IFCI Series III – Option III 15 years Sept 21 2011 – Nov 14 2011

8.75% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.

20 IFCI Series III – Option IV 15 years Sept 21 2011 – Nov 14 2011

8.75% annual

21 PFC Series 1 10 years with a buyback option after 5 years Sep 29 2011 – Nov 4 2011

8.5% interest payable annual

21 PFC Series 2 10 years with a buyback option after 5 years Sep 29 2011 – Nov 4 2011

8.5% interest cumulative payable at the end of the term

22 PFC Series 3 15 years with a buyback option after 7 years Sep 29 2011 – Nov 4 2011 8.75% payable annual
23 PFC Series 4 15 years with a buyback option after 7 years Sep 29 2011 – Nov 4 2011 8.75% cumulative payable at the end of the term
24 IDFC Series 1 10 years with a buyback option after 5 years Nov 21st2011- Dec 16 2011 9.00% payable annual
25 IDFC Series 2 10 years with a buyback option after 5 years Nov 21st2011- Dec 16 2011 9.00% effective, but interest will not be paid annually and a lump-sum will be paid at maturity.















































I haven’t found their prospectus yet and this info is sourced from Moneyvriksh – when I get hold of the prospectus – I will do a more detailed post.

Update 1: Fixed Option 2 interest payment detail per Shiv’s comment

Update 2: Including Option 2 per comment from Shiv (who you can contact to invest in Infrastructure Bonds & Save Tax u/s. 80CCF at skukreja@investitude.co.in)

Nifty P/E Ratio Chart and how to get to this data

This is another post from the Suggest a Topic page, and today I’m going to write about how you an access the P/E ratios of various Indian sectoral indices and a few thoughts on this data.

The new NSE website makes it quite easy to get the P/E, P/B, Dividend Yield on all the main indices and here’s how you can do that.

First go to the NSE website and look for Products –> Indices.

Nifty PE Data 1
Nifty PE Data 1

Next, look at Historical Data, and View P/B and Dividend Yield.

And finally select an index and a time period to generate data for that.

The second part of the question was what is the average of the various indices, and if this information is even useful.

I don’t know how useful the average will be and my guess is that you are better off looking at a median and that too just for reference, and specifically to tell you of extreme situations.

A chart that I have used here quite often is the historical Nifty P/E Ratio data, and here is the latest chart for data from Jan 2001 till yesterday.

Nifty P/E Chart
Nifty P/E Chart

If you look at the chart above you will see that the Nifty P/E has never gone above 28, and has never fallen into single digits either.

So, when the P/E of this index is close to these numbers it gives you an indication that the market is cheap or expensive.

But, that’s only in hindsight.

In real time – you can’t be sure if the world is going to come to an end or if the world has discovered a new system whereby old economic cycles don’t matter anymore.

I think a great example of this is my own post from October 2008 in which I wrote about P/E ratios being the lowest in the past 8 years, and despite that investor interest being very very low in the stock market.

If you can remember the mood, and I certainly can – you will remember that the share market was the last thing that anyone wanted to talk about.

So, my take on the P/E ratio is that it can be and is indeed a useful measure but I’m really skeptical of people who say we will start investing when the P/E falls below this level, and start selling when the P/E rises beyond that level because I haven’t seen that working well in the real world.


Win a Free One Year Perfios Subscription

This is the third give –away here at OneMint, and this time I’m going to partner with Perfios to give five one year subscriptions free to OneMint readers.

I’ve never used Perfios but I know that it’s a very popular software, and I asked them to send me some details about the product so I could share them here.

This is some information about the product that they sent.

Perfios (PERsonal FInance One Stop) is a one-stop portal that provides a complete view of an individual’s financial status at any point in time, from anywhere. [www.perfios.com]

The solution has the following key features:

  • You need only an email ID to create an account with Perfios for FREE.
  • Perfios does not ask for any personal information like name, phone number, address, PAN etc. None of these questions are ever asked.
  • Perfios consolidates ALL account types (banks/ credit cards/ Mutual Funds/ Equity/ Insurance/ Loan/ PPF/ Bonds /Post Office Instruments/ Real Estate/ Gold etc.) to give a 360 degree view of one’s portfolio
  • Statement Upload – One can upload all types of statements which he/she receives from the financial institutions on a regular basis, Perfios would automatically update the user’s account with just a click of a button.
  • Email Forward – One can even simply forward such statement emails to his/her Perfios account and the system would automatically populate the user’s account with the data!
  • All of this done with very little manual intervention
  • It not only aggregates information automatically, but also auto-categorize the transactions so that one can perform variety of analytics on the aggregated data
  • Perfios works with some of the best names in the Data Security business to ensure highest level of security – VeriSign, TrustGuard and Paladion
  • Perfios does not store any of your credentials (ID/ Password) at its server. It his encrypted and stored in the user machine only.
  • One website (single location) for you to access all financial data (across all institutions)
  • In addition to accessing all the information from your PC, you can also use your mobile phone (Perfios Mobile) to perform all actions with the application
  • Sophisticated Analytics provides deep insights into your finances providing opportunities for more savings and less spending
  • Automated Reminders and Alerts notify individuals of the important payment, maturity dates etc – you never miss a payment!
  • A comprehensive Reporting Framework enables you to generate various reports that can provide insights into your finances so that you can take quick corrective actions
  • Online Income Tax Filing – Perfios is now also integrated with Indian Income Tax Department to file online taxesfor individuals.
  • As a single stop portal, the solution also provides a Secure Document Storage so that you can store all relevant financial documents such as past years IT returns, copies of PAN card, Form 16, interest/dividend statements etc.
  • It is possible to manage the finances of one’s entire family using the solution and yet preserve the privacy of an individual’s accounts using the Shared Accounts feature. Using this feature, one can share on a selective basis the required accounts with other family members, one’s tax consultant, financial planner etc.

They have three plans that range from free to Rs. 1499, and in this give away 5 winners will get access to the plan that’s priced at Rs. 1499 for a year.

Enter the Contest

Now, how do you enter the contest?

The way to enter the contest is similar to the one I used last time, and there are two ways to do it.

How to enter this contest?

There are two ways of entering the contest:

1A) Like the Facebook page of OneMint, AND Perfios
1B) Subscribe to the daily email newsletter of OneMint AND sign up to the free edition of Perfios

2) Leave a comment on this post or OneMint’s Facebook page letting me know that you have done so.

Doing one of the above means that you have one entry, and if you do then you have two entries in the contest, so it makes sense to do both, and if you don’t see value in the newsletters or Facebook updates then you can always unsubscribe later.

If you are already signed up on the newsletter / free edition of Perfios or subscribed the two Facebook pages, then just leave a comment here letting me know and that’s enough.

I will close the contest at 5 PM IST on 5th October 2011. I will then create a list and select a lucky winner at random and declare the winners on 8th October 2011.

I will do a follow up post on this one next week while the contest is still open to share the list of entries collected till that time, and also act as a notice to people who may have missed this post.

All the best to everyone!