Invest and Prosper: Goals & Discipline

investing_1

In mounting an imperative challenge, it is essential that realistic long-term targets be set according to individual aspirations, time horizons, risk tolerances, tax brackets and comfort zones. It’s like embarking on a long highway journey in which there could well be many bumps and detours – maybe even the occasional flat tire or accident – along the way before arriving safely at one’s destination.

GOALS

Investment goals can vary according to individual lifestyle preferences, estate plans and designated beneficiaries and charities. In addition, they can change as economic and market conditions change and/or as we change; for example, from needing current income to finance a growing family to focusing increasingly on the accumulation of latter-year savings for those ever-lengthening years in retirement.

DISCIPLINED

If there is a single constant in a multi-changing and ever-challenging process it is the importance of building wealth according to a customized and well-constructed investment plan without having to risk precious (and hard-won) savings beyond affordable limits. It follows that successful investing must be a systematic long-term affair in which en passant volatility, distractions and temptations are rigidly subordinated to a

Read More
Too Late for Gold?

gold_1

I was 13 when India was in crisis. It had borrowed too much money in dollars and was desperate to pay it back.

India needed dollars badly. So the government came up with a scheme to get it from people like my father who were earning money in petrodollars.

The Middle East was booming, and thousands of Indian people had followed my dad’s example and gotten jobs in Dubai and places like it. They were benefiting from the fast-growing economy there.

Dubai’s currency is easily exchanged into dollars, and India was desperate to lure my father and others like him into lending those dollars to the government.

To do this, India offered my father a once-in-a-lifetime deal: Lend your dollars to India, and get 18% interest per year tax-free for 30 years. To sweeten the deal, the government set it up so you could get your money back in dollars after a couple of years if you wanted – or keep earning 18% tax-free for 30 years.

Eighteen percent is an astonishingly high rate of return. You’d be lucky to get that from stocks or risky

Read More
The Options Scenario for Hedge Funds

Hedge funds continue to be one of the most dynamic users of both exchange-traded and OTC options, especially in the US, but certain managers could still not be using the opportunity that these instruments can provide them.

Equity-based investment strategies manage hedge funds, which account for a large portion of the equity options market. Several funds focus on the liquid US equity markets and use single stock options, ETF and index options to hedge risk.

Types of Option-Based Strategy

Defensive

Covered put or call options have always been a feature for the long/short equity manager, especially in markets where there is an extensive availability of single-name contracts.

For e.g., in Asia, the choice of single name options is extremely restricted, managers are still dependent on OTC contracts or basic volatility strategies.

The equity hedge fund could use index based puts and calls to economically hedge upside or downside exposure. Managers have been able to concurrently profit from both long and short positions using options. But, it is hard to accomplish constant returns on the short side during an upward-trending market as call selling is not a ‘set and forget’ strategy.

There are extremely sophisticated defensive strategies that regularly make use of options such as hedging

Read More
Saving Money on Healthcare Costs in Retirement

ret_1

Healthcare expenses in retirement is a growing concern for retirees. The increasing costs of healthcare and the inflation factor that goes along with it creates a growing need for advanced planning related to preparing for these costs. Currently Medicare Part B inflation is running around 8% and Part D around 7%.

Healthcare and Medicare expenses are one of the largest expenses – even larger than recreation and housing costs combined. Consumers are often confused when it comes to what is the proper amount to plan for on the “Medical Expenses” line item on their household budgets. Many do not realize that an individual’s Medicare premiums are affected by one’s annual income. Understanding one’s MAGI (Modified Adjusted Gross Income) and implementing strategies to plan around certain income thresholds can positively affect healthcare expenses in retirement.

Here’s an example – a married couple who moves their tax bracket one threshold lower can save $70,000 over their lifetime. How can planning make that happen?

Non-qualified annuities, Health Savings Accounts, Permanent Life Insurance, Reverse Mortgages, ROTH IRAs, are all ways to reduce one’s taxable income. Required Minimum Distributions

Read More
Is a Monthly Income Bond Worth Paying For Every Month?

Most investment plans pay either annually or bi-annually. Stock gives you the earnings quarterly, but there is a lot of risk when investing in the stock market. Therefore, this bond has been introduced to help you build a portfolio which can pay dividends every month. This investment product can ensure you have a reliable income after retirement to help pay your living expenses.

When you invest your lump sum in a monthly investment plan, then the bond issuer gives you the coupon payment (interest amount) monthly on the investment, however, the interest is calculated daily.

There are several benefits over other types of investment which are listed below, if you invest your savings in a Monthly Income Bond:

Lucrative & Less Risky:

This type of bond is labeled with good monthly returns and is also less prone to risk. These are the reasons that make this product a lucrative deal for investors. Your capital amount is safe and the interest amount will transfer into your account every month. However, the amount of interest may vary with inflation, but won’t stop the monthly payments.

Tax Exempted:

Investors can build a good portfolio investing their money in this type of bond. The interest amount is paid tax-free,

Read More
Savings and Investments – How Are They Different?

Savings and Investments are absolutely important for every citizen. They can be used in various ways to meet expenses but it must be understood that there are some major differences between the two.

Economists and bankers always advise that ‘savings’ as a habit has to be learned at a very young age; this essentially teaches the value of money in a small way and helps to understand macroeconomics at a later stage. Saving money and investing money are two completely different concepts altogether; savings is part of the money left over after monthly or annual bills and expenses have been met or keeping aside a certain portion of the income. Savings are generally used to deal with unexpected expenditure like an illness or unforeseen accident, home repairs, educational expenses etc. It can be a pre-fixed percentage of total earnings like 10 percent or 20 percent. In other words, savings is hard cash ‘saved’ from expenditure by being cautious or avoiding an expenditure altogether. Investments on the other hand pertain to that certain sum of money put aside in financial products or systems to generate returns and increase incomes.

The three prime factors where savings and investments differ are:

• Time – savings

Read More
The Dollar Value of Gold

Breaking Golden Rules

Modern day economics has added more value to Gold than the fundamental worth of the yellow metal. Although the most radical changes have come about by means of aggressive marketing of the commodity, Gold has always been the darling of the murky derivative trading world. The intrinsic value of the commodity has successfully attracted Hedge Fund managers across the globe so much so that billionaire hedge fund manager Paul Singer who oversees an AUM (asset under management) of $27 billion has been recently quoted saying “It makes a great deal of sense to own gold”. Singer believes, that in the highly competitive world of business, the weakness of the Dollar evolves into a pillar of strength, boosting the export volume of the United States even as the world’s Central Bankers are focusing on devaluing their respective currencies as well.

When Zero Means More

Near zero lending rates have failed miserably to recreate the much waited financial magic that Central Bankers were hoping for, while deflationary scenarios are back square on the court turning low inflation and high unemployment into a complex quagmire. The world’s top economies are fast spinning into a death spiral thereby propping up the dollar value

Read More