How to calculate Fund Growth Rate

Dear Readers,

               

              Hope you are Njoying our post about different concepts of finance and investments. Now in this article i would like to preset some information about the different ways of expressing the growth rate in funds, like CAGR, Annualised rate, Absolute returns, Average returns.

Lets first look into what is absolute growth in funds.

CAGR (Compounded Annual Growth Rate) is a mathematical formula that provides a "smoothed" rate of return. It is really a method of calculating number that tells you what an investment yields on an annually compounded basis. it indicates to investors what they really have at the end of the investment period.

In this V(t₀) : start value, V(t_n) : finish value, t_n − t₀ : number of years.

Actual or normalized values may be used for calculation as long as they retain the same mathematical proportion. also can be expressed as

# of years indicates number of years.

Absolute Returns is the returns that an asset achieved over a period of time. This period of time could be some days or months or years.This measure looks at the appreciation or depreciation  that an asset - usually a stock or a fund - achieves over a given period of time. 

Absolute Returns = ((V(te) - V(ts))*100)/V(ts)

V(te) - Value of the fund at the end of specified period

V(ts) - Value of the fund at the start of specified period

Annualized Returns is the returns describe the rate of returns for a whole year (annualized),

           =  ( ( Absolute Returns ) * 365 )/(Total No of Year the amount invested)

Average Returns is the average of the returns or gain in assets over a period of time. 

Lets see this with an example.

If a person invested 100000(INR) in fund in year Jan-2003, and the fund has grown much faster in the year 2007 by Jan-2008 the fund value is around 3,00,0000(INR) which is equal to 200% returns ( this is assumption for illustration purpose. and in 2008 the fund recorded a down fall of say 50% the his fund value os 1,50,000(INR)

Table

   

    ---------------------------------------------------------------------

   |          Year                |     Jan-2007       |      Jan-2008    |    Jan-2009   |

    ---------------------------------------------------------------------

   | Investment Value  |    1,00,000        |      3,00,000     |    1,50,000    |

    ---------------------------------------------------------------------

   |     Returns  ( % )     |           NA            |         200%        |       -50%        |

    ---------------------------------------------------------------------

   

From the above table :

Absolute returns is 

   ((V(te)-V(ts))*100)/V(ts)

          = ((1,50,000-1,00,000) *100)/1,00,000

         

         which is 50%  ( this is overall growth )

CAGR  is 

         

          = ((1,50,000/1,00,000)^(1/2)-1)

     

          = (1.2247-1) which is 22.47% (compound annual growth rate)

If you consider that your investments give 22.47% compounded growth year on year the end value of your investment is 1,50,000.

Annualized retuns  is 

                = (Aboslute returns * 365)/(Total No of days the investment fund)         

                = ( 50 * 365 )/ (730) which is 25%

Average retunrs is 

              SUM(R1,.....,Rn)/(# of years)

              =(200-50)/2 which is 75% 

Coparision of different types of messures:

    ------------------------------------------

   |      Returns Type       |      Persentage     |

    ------------------------------------------

   |          CAGR              |        22.47%       |

    ------------------------------------------

   |   Average Returns      |         75%           |

    ------------------------------------------

   |   Aboslute Returns      |         50%          |   

    ------------------------------------------

   |  Annualized Returns    |         25%           |

    ------------------------------------------

My recomendation is for you people is to look for CAGR and annualized returns before investing any fund at lease look for last 3 to 5 years fund performance if posisible looke at the fund performance since inseption.

For more information please contact us at

E-mail : sriram.adviser@gmail.com

Phone No : +1-408-250-9952 (USA)

               +91-9741598945 (India)

Net Asset Value

Dear Readers,

In this article we are presenting what is NAV (Net Asset Value) and how to calculate NAV..? Every one when it comes to investments in Funds or Unit Linked Insurance plan people will talk about NAV but much people re confused about that is NAV and how thing is being calculated. Lets see what is this NAV...


Name it self will indicate the meaning what it is, In this is term which describe the value of an entity's assets less the value of its liabilities. Hear liabilities could be any thing like all the charges( general this include fund management charges ).

In general this term will be used with o collective investment schemes like Mutual Funds and funds preset in unit linked insurance plan to represent the asset value.
But not only for this, it will be used to represent the value of a company as well.


NAV = ((Total Value of Investment) - (Liabilities ))/(Total Number of Units Out Standing)

This NAV will be calculated on daily basis. Most of the funds they will consider fund management charges on daily basis. So the NAV announced at the end of the day is after deducting the Fund Management charges.

For more information contact.
sriram.adviser@gmail.com
+1-408-250-9952

what is insurance for bank deposits?

Dear Friends,
Do you know there is insurance coverage for your money in the bank, the amount could me savings account money or deposits.

Deposits up to Rs 1 lakh are insured under the government's Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per this scheme, even if you keep multiple deposits (savings and fixed deposits) across branches of one bank, only a total of Rs 1 lakh is insured.

However, spreading your money across two-three banks helps. "This way you can get the maximum coverage on your deposits", Chabria.

There is another good news. The government is in talks with the RBI to raise the ceiling on deposit insurance from the present Rs 1 lakh to Rs 2 lakh.

Smart tips

Hazari has some tips for the safety of your money:

-- Stay away from banks that offer you a comparatively higher interest rate on FDs than other banks. This is known as 'adverse selection' in banking terms. “They would offer higher rates only because they need funds," he adds.

-- Beware of banks that have grown too fast, too quick.

Despite the rumors that have been doing the rounds, Chabria brings in assurance by saying," Depositors in India are extremely well protected. Even if a bank goes bust, the RBI should take care of it, and the investors may suffer, not the depositors."

how to know bank financial health -- Some points

Dear Reader,

Recently when i am reading some article about the financial crises across the world i came to know few points regarding "how to know bank financial health". I would like to share those points with you.

When you are estimating the financial health its important that you take both qualitative and quantitative aspects into account as weakness in one area could easily be compensated by strength in another segment.

Reserve Bank of India (RBI) will maintain the details about the banks which are in India, this date will be collected by RBI in regular time periods you can find details about the banks in Bank Profiles provided by RBI

Lets look into the details how we can estimate the financial health.

SLR (Statutory Liquidity Ratio):
In simple terms SLR means minimum amount of reserves (held in cash, gold, short term securities and other liquid assets) a bank must maintain during all times, after all it's investments and lending.The SLR for Indian banks is normally 25 per cent of the capital. For example, if a bank has Rs 1000 with it, before it gives away all of it, it has to maintain at least Rs 250. This helps in case depositors want to withdraw money, or for liquidity purposes.

Non-performing Assets (NPA) Ratio:
NPAs refer to the loans given by a bank that it classifies as doubtful. This means that the bank has low or no hopes of recovering money on these loans.A non performing asset or a loan is when the interest and/or installment of principal on it has remained 'past due' or unpaid -- for more than 90 days

CRAR(Capital Adequacy Ratio) :
In INDIA Commercial banks need to maintain a minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent. In simple terms this means that if the bank has given out Rs 100, it should have at least Rs 9 with it as capital.


Related Links :

Assessing the health of your bank

3 ratios that tell if your bank is safe

Information about Bonds

Dear Readers,
There is a great investment option in fixed returns Bonds, These bonds are offered by one of the India's most trusted company called Shriram Transport Finance Company Ltd. These Bonds are rated by RBI, and few more India's most trusted asset management companies like UTI, Reliance.

UTI Bond Fund
Reliance Liquid Plus Fund
And there are many more.
Interest rates offered are as flows

Invested Amount	Deposit Term in Months	Interest Rate(Monthly)	Cumulative Rate of Interest	Interest	Amount
10000	12	11.50%	12.10%	2100	11210
10000	24	12.00%	13.50%	2700	12700
10000	36	12.50%	15.07%	4521	14521
10000	48	12.50%	16.12%	6448	16448
10000	60	12.50%	17.24%	8620	18620
10000	62	13%	18.39%	9500	19500
10000	65	13.00%	18.74%	10150	20150

you can redeem the interest on Quarterly bias's, Half yearly bias's also.

To get the deposits in these bonds contact :
Ramana D V
Phone no: +91-9741598945
e-mail id : sriram.adviser@gmail.com

Personal Financial Management presentation

Dear Friends,
Greetings form Ram Financial Consultancy. We are planning to conduct some training programmes (seminar) about financial planning & its use in day to day life. This is a free seminar which covers the following topic including so many other topics, followed by Q&A section.

• Personal Wealth Creation and Finance Management

You just have to register with us for free of cost by simply sending mail to sriram.adviser@gmail.com . We are not any commercial Financial Consultancy, This is started with a Greeting vision by the team of financial experts.

contact person : Ramana
phone no: +91-9741598945 
e-mail id : sriram.adviser@gmail.com

Time : 1st Section : 09:30am to 12:00am
2nd Section : 02:30pm to 05:00pm

venue:
Building No: 237/1,B.M.P No:36
6th C Cross KaggadasPura,
C.V.Raman Nagar Post,
Bangalore-560093,
India

Report about the Banks

Dear Readers,

There are so many rumors about the Banks and there cash flow, i found some data related to this in RBI web site, I think there is any problem you can find the report in the following link.

http://rbidocs.rbi.org.in/rdocs/Publications/DOCs/87122.xls

For any question please write us @ sriram.adviser@gmail.com

Credit Card usage Be smart

Traditionally, Indians have been quite averse to buying on credit. Don't look too far; just ask your dad if he purchased as much on credit, as you probably are now, thanks to your credit card. Your dad probably never owned a credit card and if he did, he probably preferred to use it only in emergencies. But that was in the past; among the many customs and trends that have undergone a change over the last few years in the country, credit card usage probably ranks very high.

Technically speaking, a credit card is an unsecured loan. This means that unlike a secured loan, which is advanced by a bank/financial institution against a security like property for instance, a credit card is offered without any security. In a secured loan, if the borrower fails to make good on his principal/interest commitment, the bank/institution can seize the security as compensation. In an unsecured loan like a credit card that is not possible. Hence banks take necessary steps to ensure that only those meeting certain parameters are qualified to use their credit card.

Without getting into how you can qualify for the credit card, let's understand how you must use your card once you have qualified for one. Credit cards have their pros and cons, which explains the good and bad that get reported about them. Not surprisingly, many of the negatives that get written about credit cards are related to expenses, hidden or otherwise, that the user did not know (or was not informed) at the time of opting for the card. To avoid distress at a later date, we have listed down some points that you must note while using the card:

1. Term and conditions

How many times have you read this before - read the terms and conditions carefully before signing up for anything. For every product you purchase or service you opt for, always read the terms and conditions and that includes credit cards. If you find anything in the terms and conditions of the credit card that was not conveyed to you or is contrary to what was conveyed to you, then seek a clarification from the bank. If you are not satisfied with the clarification, dump the card.
It's important that you read up on the terms and conditions before you use the card and not after. Once you use the card, it is assumed that you have read the terms and conditions and have accepted the same.

2. Annual fees

It is common for banks to waive off the annual fees/membership fees in the first year (cards are usually issued for at least two years). The second year fees are usually charged. It is possible that you are promised that the second year's fees will be waived off as well. The only way to find out is to check with the bank in the second year. It is possible that the bank may waive off the fees based on your track record of making timely payments. If the bank does not waive off the fees in the second year, you can cancel the card. However, if you wish to cancel the card in the second year ensure you do so before using it, because using the card indicates that you have agreed to pay the fees/charges for the second year's subscription.

3. Lifetime free cards

Offering 'lifetime free credit cards' is a relatively new trend in the credit card industry. While there was a time when most banks charged annual fees on their credit cards, the industry is graduating to a level where annual fees are being phased out. In effect, clients are being given lifetime free cards i.e. no annual fees are charged. However, its best to double-check with the bank what the executive has promised you about all annual fees being waived off.

4. Minimum payment

One detail you will find relatively well highlighted in your monthly account statement is the Minimum Payment Due. This is the minimum amount that you must pay for the purchases done in that month so as to not attract a penalty for default on payment of card dues. We would recommend that you pay the entire sum to the extent possible. Buying on a credit card is okay till the time you pay your bills religiously. The moment you carry forward your payment to the next monthly cycle, you will have to pay interest on the unpaid amount along with taxes. In the final analysis this turns out to be very expensive.

5. Payment by EMI

On the same lines, whenever you make a large purchase (usually over Rs 10,000, although the amount varies across banks) you may get an offer from the bank to opt for the EMI (equated monthly installment) facility to make the payment. This facility does not come cheap and the interest on the EMI is prohibitive. Again to the extent possible, we recommend that you make the payment before the due date in one go and give the EMI facility a miss.

6. Borrowing cash is expensive

Credit cards can be used for making purchases on credit as also for borrowing cash. While making purchases on your credit card (so long as you pay on time) is okay, borrowing cash on your credit card is a very expensive affair. Avoid borrowing cash on your card; use the card to the extent possible for making purchases.

7. Insurance benefit

Many credit cards are known to offer an insurance cover. We recommend that you ignore this benefit and go for the core offering - credit card. If the card has features that suit you, then you can opt for it even if there is no insurance cover. On the other hand, if the card features are not to your liking then reject it regardless of the insurance cover. In any case, on most occasions the insurance cover is usually linked with so many terms and conditions that it is very difficult to claim the same. It is altogether another thing that the insurance cover is unlikely to be sufficient for you.

This article is taken form personalfn.com

Ram Financial Consultancy
SriRam
Email Id: sriram.adviser@gmail.com
Phone : +919741598945

Portfolio Creation

What is a Portfolio? We have all heard the word used when talking about finance, but what actually does the word mean? The actual definition of Portfolio is:

“The combined holdings of more than one stock, bond, money market instrument, commodity, collectible, or real estate investment.” When creating a Portfolio, our advisor's split the creation process into six key points, all of which need to be considered and discussed and the Clients’ requirements taken fully into account – this process allows our advisor's to tailor-make a Portfolio to meet any specific and exacting need.

These key areas are:

Access and Flexibility – How liquid should the portfolio be from the outset and what access is required? Timescales Involved – Are there pertinent timescale parameters within which the Portfolio has to perform? Are there any target dates for encashment? Are there any key goals in the future that this Portfolio is linked towards?

Risk Profile – For us this is probably the most key point, how much risk is the Client prepared to take in order to meet their goals? Has the Client completed an Investor Profile Questionnaire? Does the Client fully understand the meaning of Risk?

Asset Classes – Ascertain whether Client wants any particular asset classes to be included in the Portfolio, are there any that they particularly want or do not want? Explain the differences between the asset classes in relation to risk.

Strategy – Given the time frames, risk profile, flexibility requirements and decided composition, discuss a strategy that suits the Clients needs and implement this strategy. Ensure the client understands the strategy and how it is being implemented in order to meet their needs.

Management – Decide through discussion what type of Investor the Client is and whether they wish to be ‘hands-on’ and actively manage this portfolio with the advisers, whether they wish to be ‘hands-off’ and allow the adviser to track the Portfolio or use a Discretionary Fund Management service.

All of the above six points are crucial when creating a Portfolio and our advisers cannot place enough emphasis in covering these points when helping to create a Portfolio. The key to making a Portfolio work, is reciprocal communication between Client and adviser at the outset, allowing the adviser to fully understand what is required by the Client and this enables the adviser to tailor-make a specific Portfolio to match the Clients’ needs.

Our advisor's will also gladly review any current Portfolio and offer impartial advice in the form of a Portfolio Appraisal.

By:- Ram Financial Consultancy
Email Id: sriram.adviser@gmail.com

Bonds Interest Rates

Dear Readers,
Good news for the investors who are planning to invest for short term for height returns... Above are the interest rates. if any one are interested please contact Sriram, Phone Number:09741598945, Email Id: sriram.adviser@gmail.com

Invested Amount	Deposit Term in Months	Interest Rate(Monthly)	Cumulative Rate of Interest	Interest	Amount
10000	12	10%	10.47%	1047	11047
10000	24	10.50%	11.63%	2326	12326
10000	36	11%	12.96%	3888	13888
10000	48	11%	13.74%	5496	15496
10000	60	11%	14.58%	7290	17290
10000	62	11%	15.48%	8000	18000
10000	73	11.50%	16.44%	10000	20000