INVESTMENT GUIDE PART - II (For young buddies)

In the first part I discussed why I thought of writing this article. The current generations, many with their thick pay packet know not how to spend or invest prudently. Their working conditions will hardly permit them to continue till superannuation. Most of them are likely to take early retirement form their professional life (but not from life). So what harvest they will have depends upon how they reap now.
First of all budgeting is most important factor in young professional’s life. Unless you do that you wonder where your money goes! Writing a budget shows actually how do spend and shows the area and how you can control them. You can identify the area needs to be controlled. Never forget to add the expenses you do on shopping and entertainment and include your savings too. Keep a track on your utility bills and keep comparing them. Mind you the plastic money or credit cards are major boosters to spending. Not that they do not have any role to play. At an odd hours, god forbid, you need to meet a medical or hospital bill , then you find the credit card is a blessing. It turns a curse, when you over spend and keep repaying the bill in installments with high interest. Interest rates are as high as 42%! So, beware of using credit cards, think twice before you take it out from your wallet.
Start the saving early even it may be of smaller amount, but save it regularly. You do not know the strength of compounding. Open a recurring deposit account with any bank for longer tenure, preferably when interest rate is high, since it fluctuates off and on. Buy some mutual funds scheme under SIP (systematic investment plan), when a particular amount will be invested by you every month and this will cushion the market fluctuation. Even you can do both with as little as Rs500/- per month.
This should be starting point of any investment plan. You should set the objective like short, medium and long term. This should be adjusted to your future program, like marriage, son`s education, buying a house or car et al. Early you save better you gain later; this is specially a reality for buying insurance covers. Since lesser the age, lesser the premium and now all the insurance companies offer unit linked insurance plans besides their age old conventional plans. Better spread you investment in buying insurance cover. For basic cover go for term insurance, it may or may not have return. But with low premium it offers maximum covers. What is the amount of cover you should buy? The rule of the thumb is just six times of your annual income. As the income grows in tandem with that you should increase the amount of your cover too. These all are your primary investments. Beyond them there is wide horizon of investment market. The stock, commodity and currency markets offer immense scope of investments with its inherent risk. Learn first from various resources including sites, how to invest in the market and how the mood of market changes. Identify the stocks which are called blue chips, dark horse and penny stocks. Judge your capacity and risk appetite; then invest in stock or commodity market. If you are a income tax payer then you must think of some tax savings scheme. One of the is Public Provident Fund. Its tenure is 15 years , thereafter renewable by 5 years every time. Though the current interest rate being 8 per cent is not attractive but keeping the long term yield, it is one of the best options. These days all the mutual funds offering various schemes with lock in period for three years. Many of them are good and the best part of it , even with Rs500/- you can join them. Mind you slow but steady wins the race…….this old adage, still holds good for investors in the stock market.
So, bon voyage !

INVESTMENT GUIDE PART ONE (FOR THE YOUNG BUDDIES)

I have a son, last year he grabbed his B.Tech degree and a job with a coveted company. Like any father I was happy to see my son being successful in getting degree as well as a job with software industry. Knowing nothing; about the software industry. It was ok, till I saw his job offer letter. I was surprised to find the amount of initial remuneration as a trainee with that company. After serving for no less than 37 years in a nationalize organization, which was reputed as one of the best pay master when I joined; what I get now, my son is likely to get little less than that amount. His mother was too happy finding her only son starting with such a thick pay packet. I thought what goes so high that falls with more acceleration and may get crushed! Naturally I started enquiring about the industry where he found a berth. My enquiry with my contemporaries did not yield much. After all, at the time when they joined the industry, then the software industries was never heard off! However, for me they gathered the information from the people of their next generations and who are engaged with the same. I am told that people associated with these industries do not make it to the age of superannuation. Either they fall sick or they are frustrated. In both the cases, by the time they quit the jobs, mostly at their 40s, they make enough money to enjoy a good living. Though I cannot imagine how the life would be, had I retired with enough of money, at my forties…./
However, this is the reality and what I felt it is my duty only to pass my experience for the benefit of next generations. May be the time for them is not that tougher as we faced being born after Second World War. May be there would not be any great depression as our father faced during 1930s! May be there won’t be any more cold war, any more sanction; the world would be more livable. However, our old schooling reminds us the old adages like “trust in friends, but keep your power dry” or “have faith in God , but keep your camel tied.” So , I think our current progenies of” would be high net worth individuals” should take a lessons on managing their money from their college days. Here I try to offer them some tips what I have gathered during past 28 years with watching the mood of the markets.
(Investment guide Pt. I…..to be continued)

The Computer Woes

Excess everything is bad…thus goes the old adage. Last century saw the emergence of deadly HIV virus as a result of free-sex; now it is one of the great threats to humanity. This century is taking the toll on our young generations, especially in the developed and developing countries. They are stripped off their capacity to scribe legibly! Obviously this is due to their overexposure to computers. The present generations are introduced to e-culture. They usually communicate more through SMS, e-mail or use likes MS Words to write anything they need to.
A recent report suggests that thousands of teenagers are seeking `scribes’ to help them write their A-level and GCSE paper because they are incapable of answering questions in longhand themselves, a study has revealed. The number of people, in UK seeking `ghost writers’ to help do exams rose from 28324 in 2005 to 40215 in last year. The number of students asking to use a word processor or computer also soared by more than 50 per cent, to 21713. This is in tandem with the ever rising requests for practical assistance short of a `scribes’, such as a teacher sitting in to help a pupil to write legible, also increased. The experts observe more script than ever are illegible because the email and text generation are unable to write properly by hand.

Saving earth by Geo-engineering

Geo-engineering is subject what is least discussed about. In fact recently when I came across an article on environmental issues where geo-engineering was mentioned; I remotely remembered having heard the term earlier Nothing much I knew about it. As the name suggests; later I came to know it has to do with the climate changing technique or technology with scientific knowhow. Obviously, since it concerns the global climate control, the size and enormity of project is beyond our imagination. Steve Connor of The Independent, London reported the recent proposed activities related to geo-engineering.
Fears that not enough is being done to cut carbon dioxide emissions have caused a lot of concern and scientific community are considering to “to think the unthinkable”. They are toying with an idea to alter global climate artificially with mega-engineering projects. Royal Society, later this year, will launch a study aimed at reviewing the possibility of saving the planet by “geo-engineering” the climate on the grandest scales imaginable. Geo-engineering encompasses schemes such as fertilizing the oceans with iron fillings to draw down carbon dioxide from the atmosphere, creating more reflective clouds or eve pumping vast quantities of sulphate particles into the air to simulate volcanic eruptions that cut our sunlight and lower global temperatures.
“ Global emissions of greenhouse gases continue to rise, so there is inevitably interest in technologies that may be able to provide a ‘fix`, says Lord Rees of Ludlow, the president of the Royal Society. “It`s not clear which of these geo-engineering technologies might work, still less what environmental and social impacts they might have, or whether it could ever be prudent or politically acceptable to adopt any of them…. None of these technologies will provide a ‘get out of jail free card’ and they must not divert attention away from international efforts to reduce emissions of greenhouse gases”
The Philosophical Transactions of the Royal Society, published recently, devoted an entire issue to examining ways of altering the climate or interfering with the carbon cycle in a way that could offset the rise in greenhouse gases and the consequent increase in temperatures. Professor Ken Caldeira of Stanford University says it is important to plan now for the possibility of having to use geo-engineering. : Every year carbon dioxide emissions continue to climb” he says. “Reducing carbon dioxide emissions requires individual sacrifice in the here and now for the public good of the distant future. If we start soon, we can phase in climate engineering slowly and cautiously, and back off if something bad happens. The least risky thing to do is to start testing soon”.
Professor Stephen Schineider, a climate scientist at Stanford University who has resisted geo-engineering in the past, says “We are being paced in the precarious position of choosing the lesser of two evils. Potentially dangerous, uncontrolled climate change due to greenhouse gases emissions, or technological fixes involving large scale geo-engineering projects.”

Let us see how the geo-engineering projects work;
High reflection: The eruption of Mount Pinatubo in 1991 pumped enough sunlight-reflecting sulphates into the upper atmosphere to cool the earth by 0.5 degree Celsius for up two years. It may be possible to inject sulphates into the stratosphere from aircraft, right, but this would not deal with ocean acidification caused by rising carbon dioxide and might cause acid rain.

Low Reflection : A variation would be to pump water vapor into the air to stimulate cloud formation over the sea, thus raising the earth`s albedo (proportion of light reflected). Seawater cold be atomized to produce tiny water droplets tht would form low-level maritime clouds.
Fertilizing the sea : The limiting factor for growing phytoplankton - tiny marine plants – is the lack of iron salts. Adding iron to ‘dead` areas of the sea leads to blooms which absorb carbon dioxide. But whether the plants will sink, taking the carbon out of circulation or be eaten, returning it eventually to the atmosphere is not clear.
Mixing layers : Giant tubes could be built to carry surface water rich in dissolved carbon dioxide to lower depths where it will be locked under the temperature gradient that keeps deep water layers from surfacing. Critics fear it could instead bring carbon locked in the deep ocean to the surface.