Money Today Archive December 2010 Issue

Edition: December 2010

Cover Story

Money Today

Is online trading cheaper?

Not if you are investing through a bank or a brokerage house. The fixed charges levied on mutual fund trading facility and debit of securities from a demat account will be too high.
  • Swim against the tide In the current financial uncertainty, following set principles of investing may not yield desirable returns. Find out how to maximise gains by adopting contrarian strategies.
  • Pick stocks that MFs are buying? No, don't invest in a scrip just because it is in a fund's portfolio. Fund managers can also make mistakes, especially when valuations are at peak levels. A good share bought at a high price is a bad investment.
  • Are cheap stocks good investments? Not always. A stock could be available at a price lower than its peers for a variety of reasons. Don't be tempted by this. It's more important to know about the growth prospects of the company.
  • Are stocks better than FDs? Not if you have a 1-2 year investing horizon. Given the prevailing uncertainty and high valuations of other assets, fixed deposits are a better option now.
  • Losing money in debt funds? With inflation showing no signs of abating and the RBI not in a mood to ease the monetary tightening, medium- and long-term debt funds can continue to give poor returns.
  • Should you invest in equities? The uptrend in the stock market is attracting hordes of investors. However, adopting a contrarian approach and investing in other avenues can be equally profitable.
  • How online plans benefit buyers Life insurers are finally waking up to the potential of the Internet as they launch online products in quick succession. Customers are giving these plans a thumbs-up.
  • Should you let term plan lapse? Only if you can buy a new policy with a bigger insurance cover for the same price. Of late, term plan premiums have come down and online plans are far cheaper.
  • Is gold a good investment? Yes, because all the factors that had contributed to the rise in the price of gold in 2008-10 are in play again and analysts expect the yellow metal to do well in the coming months.
  • Is renting a house cost-effective? In the current scenario, yes. It's a better option than buying a house as the real estate market is overheated and speculation has driven up the prices, while rental values have not kept pace with this trend.
  • Follow rules of investing? Only if they offer expected, high returns. Occasionally, it pays more to follow your own rationality and adopt a different approach. Here are some contrarian strategies that can result in more gains.
Stocks
Rajiv Bhuva
It may have been a record year for IPOs, but investors need to be cautious, as the Sensex has breached the 20,000-level.
  • A period of strong growth The second quarter of 2010-11 saw few surprises, with growth continuing in sales, order pipelines and earnings in domestic investment and consumption-driven sectors.
  • The comeback quarter The second quarter results for 2010-11 indicate that the Indian markets have bounced back, with most companies exceeding analysts' expectations.
  • 'Mkts set to give better returns' Amisha Vora, joint managing director, Prabhudas Lilladher, talks to R. Sree Ram about what the Indian investors can expect in the current market boom.
Insurance
Babar Zaidi
Case Study: Rajendra Kumar Khosla
Insurance continues to be missold despite industry's claims to the contrary and senior citizens are the softest targets as they don't understand the newfangled products.
  • A paltry price for protection The low cost of term insurance allows customers to buy adequate life cover. Here are a few things to keep in mind when you go shopping for one.
Investment
Chandralekha Mukerji
In the third part of the series on investor psychology, learn why you tend to carry your losses or are blindfolded by small profits.
Query Corner
Money Today
HDFC MD Renu Karnad
Taxspanner.com will answer queries on tax, Antony Jacob, CEO of Apollo Munich, will deal with health insurance, and Anil Rego, CEO, Right Horizons, will tackle financial issues.
Insight
Money Today
Mid-cap funds continue to fare better than the equity diversified large-caps, returning 37.9 per cent in the past one year compared with the latter's 25.6 per cent.

  • Best performing stocks Small- and mid-cap stocks continue to do well, with eight stocks doubling in value in the past six months.
  • A Measure of Confidence While retail investors seem upbeat in the current market scenario, corporates and advisers are more cautious, according to the latest J.P. Morgan Investment Confidence Index.
  • Fund report Quantum Long Term Equity has delivered steady returns, beating the category and benchmark in the past three years.

Editors Note
Chaitanya Kalbag
Anybody who had invested in Tata Consultancy Services in November 2007 would have more than tripled his money in the past three years. But few investors did.
Talk Back
The story on investing in the current market boom (Finding Value at 21,000, November 2010) was informative. But isn't it better to book profits rather than try increase exposure to equity?
Health Care
Manu Kaushik
Stand-alone health insurers are making a mark by introducing novel policies that cover everything from joint families to a visit to the dentist.
Smart Spending
Anumeha Chaturvedi
Members-only fashion websites offer deep discounts on luxury brands and high-end products. It's a win-win proposition for all - consumers, suppliers and the websites.
  • Big group, small price Group buying is the latest online trend offering big discounts on leisure activities and at eateries, a first in the country.
  • The Hot & the not so Happening Sam Abraham reviews new products and services to help you zero in on those that offer value for money.
  • The world in my pocket Buying is not always the better option. Hiring gadgets and appliances can be more cost-effective and convenient, especially if it's for the short term.
Last Word
Money Today
Is it a winning market? You could play it for profit if the set of favourable factors, such as improving corporate performance, FII inflows and the upswing in hiring, continue.
Perspective
Babar Zaidi & Namrata Dadwal
It's ironical how we hate to lose out on a few grams of vegetables while haggling with the vendor, but are blinded by the bright lights of a store while picking up grocery.
  • Smooth way to pay For many commuters, the worst part about using public transport is not the crowd, noise or traffic; it's the tedium of carrying a large amount of loose change.
  • European Option The Securities and Exchange Board of India has now allowed the bourses to introduce the European style of trading stock options.
  • Realty check Buying a house is a tedious, worrisome process, and it's not just financing that we are talking about. There are several things one needs to check.
  • Optimistic Indians Indian consumers are the most confident worldwide, according to the Global Consumer Confidence Index survey released in November by research firm The Nielsen Company.
  • Protected Benefits Does the fear of losing your credit card make you check your wallet every five minutes to ensure it's intact? A better and safer option is for you to go in for the SBI Platinum Card.
  • Growth plan Life insurers are constantly coming up with innovative plans to woo customers. Now, it's the turn of HDFC Life, which has launched ProGrowth Maximiser, a 10-year Ulip.
  • Regulator Watch A look at the recent rulings that can affect you:

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