Investment Planning » Money

Inflation Might Come Off Faster Than Expected

Mayank — Thu, 08 Dec 2011 17:20:47 +0000

As we all know inflation has consistently been high for a long time now. The last numbers were around 9.6% or so in October. But what most don’t know is how did that 9.6 number come up. Inflation comprises of three main parts, primary articles having 20% weight, fuel group having 15% and manufacturing 65%. October inflation numbers had 11%+ primary articles, 15%+ fuel group and 7.5%+ manufacturing index inflation. This means primary added 2.3, fuel adding 2.3 and manufacturing adding 4.9 as per their weightage.

Fuel group is biggest problem here as it’s weight is just 15% and adds 2.3% to overall numbers. But no monetary policy can control that and thus we have to live till Brent oil comes down or base effect comes into play which starts from January. Primary articles was equally a problem but November has changed everything now. Every week, food prices have been coming down thus bringing primary articles inflation to 8.5%. In November primary index is supposed to add 1.7% down .6% against October. If we assume manufacturing index inflation remains at 7.5%, even then, inflation is expected to come down to around 9% in November.

But what more important is, December where we saw primary articles index surging high last December and this time we have the same index coming off. Even if we assume that primary index remains flat in December rather decreasing as we saw in November, the index inflation would drop from same 8.5% to close to 4% which means it would add just 0.8% to entire inflation numbers down from 1.7. Manufacturing index is also expected to come down to 7% whereas fuel index to remain the same, 15%. This brings us to something like 7.7% kind of expected numbers for December. We should know more on these expectations as we proceed into next week and we get November official figures and December first weekly numbers too.

Another important thing to note is fuel group as well as manufacturing index were surging very high every month starting January. As far the numbers are suggesting, manufacturing index might fall to 5.5-6% by march and fuel group too would fall below 10%. My calculations suggest we should hit below 6% by march unless something unexpected happens by then otherwise the current trends suggest that inflation will fall faster than most are expecting.

Spread The Blog To Your Family/Friends

Mayank — Sun, 04 Dec 2011 07:21:20 +0000

It’s been a while that I’ve been writing on this blog and by now we have quite some readers/subscribers as well who regularly check the blog for updates. If you feel that this blog has helped you in making better investment decisions, learning about new stocks, their fundamentals or in short, better investing then please do a favour and share the blog with your family members or your friends and get them to subscribe to this blog as well.

If you have a family member or a friend interested in earning more by proper investing in shares, then you can help them by referring them to this blog and make them email subscribe so whenever a new post is made on this blog, the updates will directly reach their inbox. I see no harm in anyone subscribing as you get all this updates for no fee, it is all free and all one gotta do is to read and make their own decisions.

If each one of our subscribers refers even one person each, we could easily double the number of subscribers in no time. Our blog is relatively new and have only a handful of posts, so it cannot attract a lot of natural traffic from search engines just yet. So the best way to spread the blog is by word of mouth traffic and that can only be achieved if you’re willing to help in spreading the blog.

You could do word of mouth sharing of this blog, or you could regularly share the blog on twitter, facebook or emails etc. The biggest favour you could do to this blog is by getting more people to subscribe to the blog as only then they become a regular reader which not just helps this blog but them as well.

In return, all I can promise you is, good and interesting regular updates about stocks, new investment ideas etc. Lets all together make wealth!

Thank you,

Mayank

Benefits of Systematic Investment Plan(SIP)

Which category do you fit in?

Mayank — Sat, 11 Jul 2009 04:42:56 +0000

We all love to spend money and enjoy a luxury life but there are ways to fulfill these dreams. Earning a good income and spending all of it is not the right way to do it. Of course you would enjoy a rich lifestyle but the one who saves for sometime initially will enjoy more than you later and will always be in a better position than you. I am not discussing how this happens in this post, but just the three categories of people and their lifestyles.

Categories of people: -

1. Spend everything and save nothing - These people have a habit of spending everything they earn. They will spend everything to make their life luxurious right from the start. They will buy a good home, large TV, big car, costly dining at hotels etc. And after all these spending, their interest will be so high that they will not be in a state to save anything. Thus they live a life of luxury enjoying and anytime they have any money left, they will go and buy something else as this is the time to enjoy and savings and all can be done later on in life. Satisfying themselves by planning to start saving later on in life is pretty common with them. But remember that once you get into a habit of spending everything, it is very difficult to resort back. You just cannot see a lot of money in your hands, you are addicted to spending and without spending you wont feel nice at all. And thus the “will save later” story will continue on and on. Now remember, you earn nothing extra, you have no savings and thus your passive income is zero.

2. Save everything and spend nothing - These people have a habit of saving up everything of what they earn. They would just have some minimum expenses and rest of all will get saved into bank or invested into stocks. They have extra expenses once in a blue moon. Well of course they will end up having a lot of money, especially passive income from the investments and savings, much more than the category 1 as time passes, but I would ask that what is the use of earning money if you just cannot spend anything? You still live in a small home, drive a small car etc, and live a frugal life forever. I believe that saving is good but just saving and no spending is not justified. They might enjoy their life like that but I’m pretty certain that if they spend only a part of their income in improving their lifestyle, they would be happier. And I am not asking to spend everything, but spend only a part of. Let the passive income flow in and spend some of your income and reduce the saving as by this time the passive income is already generating nicely and the only way for it is up. So just spend a little bit and see how your life improves and makes you even happier.

3. Spend some and save some - Probably the best category out there. Here people save and spend both. You are spending a part of income on enjoying the life and saving a part of income to enjoy even more in the future. Since money is getting invested into the stocks, passive income will flow into the pockets, so tomorrow is bright for sure and even today is not dull at all. You don’t lose the habit of spending and you also have the habit of saving. This way we can enjoy life forever, once a good passive income flows, we can get richer than the one who always spent everything, we can even buy everything they have and still have savings increased as the passive income would flow till your savings stay invested and which always will. They will be less rich than the category 2, but the life prosperity would definitely be higher.

I will discuss more on savings and importance of savings in upcoming posts. Stay tuned =)

How debit card payments increase your spending

Mayank — Tue, 07 Jul 2009 18:36:17 +0000

It is very common that people who have habits of paying through debit cards often spend more than those who use cash. Now let me share a small example with you that will prove this. Let us assume that you plan to go for shopping because you need a pair of jeans but you plan to spend no more than 1000 rupees. But instead of taking cash, you take your debit card with you. And while shopping you find an attractive shirt that costs 1000 or maybe 500 and you feel like buying it. You know that your account has around 20,000 rupees savings, so you think that spending 1500 or 2000 would not be much of a big deal and you finally end up buying that shirt. You did not buy that shirt because you needed it but just because you felt attracted to it and you had money to buy it aswell. Would you be able to buy it if you had only 1000 as cash in your wallet? But only because you had a card that holds 20,000 bucks, you satisfied yourself by claiming that you are spending only 1500 or 2000 out of the 20,000 in your account which is merely 10% or less of what you have. This is a common satisfaction one gives to themselves in such situations. Some even satisfy themselves by saying that next time they will not shop or will shop less to compensate for the extra they want to spend today.

Well, this is not entirely true for everyone as a lot of people have self control, but then it is definitely valid for those who have no self control. And many times these items attract us even when we are determined to not spend anymore than what we have planned. And it is evident that if you used cash, then you would not be able to spend anything extra simply because you cannot. I have personally seen people doing this and so I know how debit cards actually lure you to spend more. I still remember the evening I was walking inside the mall and my friend asked me to come into a clothes showroom. I rejected the idea with the reason that why should we go in when we don’t have to buy anything. So he said that he knows that we won’t buy anything but just wanted to go and look at the new clothes that were present in the store. We went in and he actually ended up purchasing two shirts because he liked it so much. I tried to stop but he was too attracted towards them. And guess what? He used his card as mode of payment and the reason he gave was that recently money was transferred into his account, so he was okay with the spending. He didn’t have enough cash to buy, but only because of debit card he spent over 2000 bucks on shopping even when there was no intention of purchasing.

The only solution to control this extra spending is either make it a habit of spending only through cash whether you keep the card with you or not or just don’t keep the card at all. Leave the card at home when you go for shopping, so even if you want, you cannot spend anything extra than what the cash in your wallet can buy you. Just think that if my friend had no card in his wallet, no matter how much he wanted to buy, could he? Remember that when you keep a debit card in your wallet, you are actually carrying all the money in that account in your wallet, the only difference is that all the money in that account is being masked over by an electronic card.

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