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This week we came across  interesting articles on: EuroZone Crisis, Results for Quarter 2 of Financial Year 2011-2012 with HDFC Bank continuing on it’s magical journey of growth, infographic on the tax saving investments, breaking the illusion of timing the market,  8 investment myths, relationship between Lakshmi and Diwali, Myth of Dhanteras and what has gone into making of Ra.one the most expensive Bollywood film. Also a game Fooly-wed game for couples. Echoing Warren Buffet Predicting rain does not count, building the ark does. Hope you find this post useful to make a strong financial boat.

 Big Picture

Over the past few months, a number of events have rocked the global oceans of finance: the US debt downgrade, Eurozone debt crisis,  Slowdown in China, Sluggish growth in Japan and back home in India the inflation, interest rate hikes by RBI.

European crisis

European leaders are meeting in Brussels on Sunday 23 Oct for a crucial summit aimed at forging a plan to save the euro currency. As Greece struggles to avoid a default on its debts, EU leaders must try to stop the crisis from spreading to much bigger economies like Italy and Spain, which could threaten the future of the European Union itself.

Outlook Money article Ride the Storm covers what lies ahead of the Eurozone crisis. Three possible scenarios : Greece survives,  Greece defaults, Debt restructuring are explained in detail with what would be impact on and what to do: Jobs,  ULIPS, Fixed income,  Mutual Funds,  Loan and Real Estate, Stocks, Precious Metals. 

Came across the slide show on Rediff:European debt crisis: Explained in SIMPLE terms which we found very helpful. Explanation is in terms of question and answers.  It all started when European Union formed in 1993 introduced the Euro on January 1,1999 which benefited countries such as Portugal, Italy, Ireland, Greece and Spain (together now known as the PIIGS).

“So how did it benefit them?” she ased.

“Before these countries started to use the euro as a currency, they had to borrow money at interest rates much higher than the rates at which a country like Germany borrowed. When these countries started to use the euro they could borrow money at interest rates close to that of Germany, which was economically the best managed country in the EU,” I explained.

To know in depth about the European crisis  one can read European Debt Crisis on Wikipedia

EU finance ministers are  meeting in Brussels on Sunday 23rd Oct to discuss how to stabilize banks faced with massive losses related to Greek debt, bailout fund.

Inflation in India

Inflation will come down. Wondering how? We read on equitymaster  quoting them.

The Economic Affairs Secretary actually expects inflation rates to trend downwards in the coming months. He has given a forecast that the inflation rates would come down to 7% by March 2012. And as unbelievable as it sounds, experts actually agree with him.
However, the reason for this is not because the prices would come down. It is simply due to the base effectt. So what does this mean? It means that due to the high rate of inflation recorded during March 2011, the percentage change in prices for March 2012, would appear to be low. It is just a statistical phenomenon. Nothing more than that. And other than the fact that it will make the government look in a better position, it would not really be of any help for the ‘common man’.
But as of now inflation is showing no sign of moderation, RBI may continue monetary tightening and is likely to hike policy rate by another 25 bps in the forthcoming policy review on Tuesday 25th Oct.

Result season

Around 100 companies have reported the results and the results and not bad. Quoting Outlook Money digitial edition Q2FY12 results so far have been nowhere as bad as people were expecting them to be. From the article.

 

Results

Results from outlook money

RockStar Stock: HDFC Bank

HDFC Bank stock continued it’s magical growth.  FirstPost did an article on Why HDFC Bank is the best annuity scheme you can get.  Over the last 26 quarters, net profit growth has never fallen below 30 percent. The average for the quarters is 34.2 percent, and in the latest quarter (30 September 2011) the net profit growth is 31.4 percent. Between 2006 and now, the share price has been compounding at the rate of 19.45 percent annually. As per the article: Assuming the share continues to compound at the same rate for the next five years, the HDFC Bank share should be at Rs 1,184 by 2016.

HDFC Future price

HDFC Future price as per FirstPost

Basics

An interesting  Infographic on Section 80C  Tax Saving Instruments on onemint.com.  It covers all the sections, 80C, 80DD, 80G etc. If you haven’t already started planning for your taxes – now is a good time to start.

Have you wondered about “Timing” or “Time in” in Equity Markets. Then this post is a must read as  TFLguide.com clarifies that  Market timing is an illusion. Read here
8 Investment Myths To Be Avoided from holisticinvestments.in.
  • I am too young to plan for retirement
  • East or west FDs are safe and best
  • I can never be as good as Warren Buffet or Rakesh Jhunjhunwala so why try?
  • Stock markets can earn me quick bucks
  • Timing the market is important
  • There is no such thing as too much diversification
  • The best way to make money is investing in what is hot
  • Saving tax is the only objective for me to Invest
Do you and your spouse know each others financial mindset?  You can play the Fooly-wed Game which is a way to get couples to discuss money, possibly identify problem areas, and maybe have a little fun.  Note it is not designed to cause violence between couples. Some questions :
  • What would your partner say is the annual income your family would need to be happy?
  • How much is too much to spend without consulting your partner?
  • Discussions about money are: A) Easy and constructive; B) Occasionally difficult but eventually lead to a resolution; C) Usually combative and lead to arguments; D) Nonexistent.

Coming Week

It’s Diwali the festival of lights on Wednesday 26th Oct 2011. To know about relationship between Lakshmi, Diwali and Money in other cultures including America which proclaims In God we Trust on the currency you can read Diwali, Lakshmi and Money and to know about the myth around DhanTeras you can read my article DhanTeras: Myth behind Celebrations

Ra.One the most expensive film of Bollywood of  Shahrukh Khan, marketed a lot, is going to be released pn 26th oct.Will it break the record of 3 Idiots? Will Shahrukh prove to be king of marketing? Will Ra.One will set new benchmarks? To know everything about the movie-story,music, release date, cost,  marketing , tie ups, merchandise, one can read our post Ra.One:Can it get bigger than this one?

Formula 1 Grand Prix race is in India, the first one in India, is on 28, 29 and 30th Oct. 

Disclaimer:I’m not a finance professional, and all content on this site is for general informational purposes only – you should not construe this as professional financial advice.

Happy Diwali to all our readers.

Did you find the post helpful? What did you like? What you didn’t? We would appreciate if you could spare few moments on commenting this post.

 

 

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