Wordless Thursday – The most pirated movies of all time

With SOPA, PIPA and now the ugly cousin ACTA, the world is getting ready for a series of laws that are ready to stop our piracy habits and with it freedom of usage f the internet. It will end the era of remixes and such as well if implemented right. So, well ladies and gentlemen before the governments complete the act of putting up the new laws where you will not be able to download anything from the internet without having to pay someone money, please go ahead and download some movies / music or what ever you want. If you need help, here is a link from one of my early posts in how to.

If you are not sure what you want to download and keep or you want to know which movies are the most kept for record, here is this week’d infographic that might help. The most pirated movies of all time. Wordless Thursday is this blog’s attempt of bringing interesting infographics to the eyes of people.

Inquisitive Guide – The “new” Facebook : Everything you need to know

Yes, our semi favorite Social Network has changed … again. The fact of the matter is whether we like it or not, the changes are here for a while, until they change are going to change once more. There have been more negative reviews to the redesign than positive ones, the fact of the matter is no matter how much we complain, it is still a free product that we are NOT compelled to use, but we all use during our everyday life. After desperately trying to add in all the features that were unique in the rival social networks like the subscribe feature making the twitter’s main feature available on Facebook and the lists redefined to behave more like Google Circles; Facebook threw their biggest gamble yet. A complete redesign from the profile to the user page.

Yes I liked the previous Facebook better, but I guess we all need to adapt into the new one; so what if I thought someone had a Blue Drink and barfed all over the screen. So I thought I will post some of the most important features of the “new” redesigned Facebook. Some that might need to be known to all. Sigh, I liked Social Networking sites when you did not need a manual to use them. Some humor about the changes first here below.

Changes to the News Feed including the Ticker

This is one of the most noticeable new changes on the new Facebook. Facebook’s new design highlights posts that you’ll likely find important (well what they think you will find important), and prioritizes them at the top of your feed when you log in. The top stories are designated by a blue tag in the upper left corner of the post. Knowing so much about you it might be easier for them to actually “guess” this through their algorithms. Keeping the page open for a while, I did notice that it did not change much if you leave it open.

If you have used Twitter you will know that new tweets are displayed at the top and Facebook has a similar feature for their new recent stories. The ticker in the right is interesting and annoying. This is the place where real time information will be put up. It will always be there and also auto attach to the chat window as well.

Photo Albums

It has been known for a while by all that the largest database of pictures on the Internet is with Facebook. From Albums that people add to Facebook Apps that create its own set of images (for some reason are very popular on Indian Profiles) the entire Facebook is full of pictures. Using the previous theater mode, people who had complaints realized that the way pictures are displayed is now changed. Google Plus users will immediately pick the copy cat. However, the images are provided with good area for commenting and viewing in a theater like view as well.

The Like Button is no more just that

The Like button is one of the social legends of our time. Nearly everyone trying to come up with an equivalent. Google even got the +1 as a competitor, but guess what, like everything else Facebook is going to fix the like button although its not broken. Now you will not only like, but the most requested Dislike will come up as well along with any verb that people can think of. So well with the new redesign developers can come up with their own verb like, “Inquire”, Broke, and stuff. This is an evolutionary step for the like button, lets just hope it does not evolve into extinction. Facebook’s most used feature might just become diluted in the crowd.

Media is coming to Facebook… Big time

When a good friend of mine mentioned a while back, that he is now used to picking up news and interesting information on Facebook first before checking up on it on other sites, I realized that Facebook’s sharing feature had grown BIG. I cannot imaging the last time I searched the web for new trailers, all friends put up something interesting inevitably.

Facebook I guess realized the same thing and has made it possible to now watch TV and movies, listen to music, and read news with your friends — all within Facebook. Starting today, thanks to a whole bunch of partnerships, there are a lot more things you can do without ever having to leave Facebook. You can watch a show on Hulu, listen to a song on Spotify, or check out a story on Yahoo News. The ticker will tell you what your friends are watching, listening to or reading, allowing you to share the experience with them by clicking on a link. Although the video and songs are now US centric, they are going to spread around the world soon.

Now to the two most dangerous and ones you really need to watch out for.

Apps posting information about you

Applications on Facebook used to ask your permission before posting anything on Facebook. Now they dont need to. If you are worried about privacy you need to ensure that you are clear about what Apps you choose and what you dont, cos once an application has access to your profile it can post and access information when ever it wants.

With this move Facebook is slowly trying to kill one of its biggest problems Privacy. How ? Well this is the first step to removing privacy completely. Eventually all information about you will be available freely with your knowledge and you will be OK with it, thats what Facebook is trying to suggest, this could be the very first step in that direction.

But for those worried about privacy, this is something you need to go back and check, all the applications you use and what information they can access and what sites you have logged in using your Facebook Id and what they can do with that information is all something that we need to worry about for the time being.

The TimeLine instead of the Facebook Profile 

In what is the biggest of the changes to Facebook, the entire provide of a person is now going to change into a Digital scrapbook for all of us. With all information we ever put up being physically available to anyone viewing your timeline. Although the feature is going to go live only by the October 1st, I got a preview of the feature and my timeline is available now. Here is how it looks.

You can now add a lot more “life events” on your profile, a new banner picture as well. Maps on the profile all in the name of making a complete Timeline. So much so that you will be asked to provide your birth photo as well. I am sure we are going to see quite a few baby photos soon. Timeline is going to reveal everything you wanted to forget and regret about posting on Facebook ever ! And it will tell your friends about it too, if they have time to stalk on you. The further back in Timeline you go, the more Facebook will compress the information so that you’re only seeing the most interesting parts of your history. You can customize this by clicking on a star next to a status, say, or enlarging a picture.

If you would really want to get your own timeline right now, try some of these steps mentioned here.

Probably the most riskiest decisions ever, this redesign might have the impact of driving its users to other sites like Google Plus. And with Diaspora now opening windows to new users, there could be very soon fragmenting of these social networks.

Create your own QR Codes in 5 simple steps

QR codes are slowly growing to be popular, and people are using them more and more. Recently in a bit of work for one of my freelance clients, we introduced the QR code into their business card, brochure and even their print ads, being well received by all this was a great feeling. But like a lot of people in the creative field will tell you, people around the UAE don’t really feel the need to experiment. This being the main reason for why most technology does not really get completely adapted well here. Getting back to the main topic on hand; QR codes are really getting more and more interesting and innovative not only in their applications but also with their designs.

If you’re unfamiliar with QR codes, not to worry I have a introductory guide written before. Those fuzzy boxes on business cards and promotional swag are easily scannable information barcodes. Essentially, you point your camera at the image and get a message, website, or other piece of content beamed directly to your smartphone or computer. Try the one above here. QR codes are still a relatively foreign concept for most casual users, but they have a lot of potential to change the mobile game. I am sure all those Android users will know what it is already as well as the Blackberry users with the introduction of QR codes in their BBM.

Since you are reading on the Inquisitive Mind, here is a small tutorial for the creation of these QR codes for yourself.

1. Decide the content 

Although the QR code can hold a bit of information, if you do properly you can maximize the small black and white chequered board for marketing, operation or some other innovative usage. A client of mine who is a Computer service person, uses the QR codes to be a sort of a information holder on when a computer was last formatted and when it was last services, by whom as well as which office. Another client uses the QR code to redirect the scanner to his business website on the back of his business card. So first of all decide what is the information you are going to embed in the code.

2. Find a QR code generator 

There are many QR Code generators online, I usually use the kaywa creator, you can find the creator here on their website. The swiss site is one of the simplest I found for the generation of QR codes.

3. Add your Content 

Based on the usage, you would need to pick if you would like to add in a URL, text only, a Phone Number or an SMS and add it in the relevant fields. I am creating one for my blog. So will chose the URL feature and add in the code. Hit Generate and wallah, its there.

4. Check that it works 

The next step is to ensure that the CODE works. Pick up your phone and scan the code, to ensure that the result matches with the exact same text or url that is added. 

5. Share it, use it, print it, save it 

One of the best places I have seen these used is at the back of a Business Card, information can be scanned and saved on the phone without the need to actually store the Business Card. Other placed include Social Network Profile pages, email signatures and Resumes. These will definitely help put up an innovative touch to your communication.

Another awesome way of using these codes, especially if you want it in print and you want the content to keep changing is the usage of Bit.ly. You can create a custom shortened URL for yourself on Bit.ly and then use the link to create the QR Code.  Then based on the source of the information that will be added in, the source of the Bit.Ly URL can be adopted. True if you are updating resumes, using linked in or Facebook versions for people etc. Another advantage of using the Bit.Ly method is to gain some analytics information of the Code. Bit.Ly will by standard provide you with analytics to use the code.  Try it out and let us know how the QR code is working.

From nutritional information on groceries, or comparison shop for textbooks, to addresses, games and free giveaways and bonuses at community events, these QR codes are really coming soon to a mobile phone next to you.

What is Bit coin and why you should bother ? – an Inquisitive Guide

Unlike most people, I had not really heard about the Bitcoin used at large. However, now that I think about it, I think I might have come across the BITCOIN phrase in passing when looking through the internet for some cracks, yes I did search and no I did not find what I was looking for. Getting back to the whole topic of Bitcoins. A couple of weeks back a friend Megha, posted the information about the BitCoins on facebook, and I have been reading about it from then, to get a good idea about BitCoins. Here is what I have found out, simplified for all.

Like everything on the internet, from the internet itself, this is revolutionary. It is a new form of currency, completely online and something that all of us can use. This post is an indepth guide to the Bit Coin and what you can and cannot do with it. Like everything on the internet, there is a major real difficulty among all people to accept it, there are discussions on the god and the bad of the BitCoin all over the internet at this time. So I will not divulge into that for now.

What is BitCoin ?

BitCoin is a new currency – it wants to shake the entire global economy. And some people think it might! It’s online money—an alternative to dollars and euros. Well what’s that mean? It’s complicated, but I will break it down over the next few posts. Yes, there are some simple infographics that help in making it easier to understand, I will add them here below. I will however tell you there is one part which is not so clear and that is how the coins are generated.

Bitcoin is underwritten not by a government, but by a clever cryptographic scheme. For now, little can be bought with bitcoins, and the new currency is still a long way from competing with the dollar.

Again, BitCoin is Digital ..

BitCoin is not real money. It’s an online “currency”—virtual tokens that can be exchanged for goods and services at places that accept it. The list of which is fast growing.

In 2008, a programmer known as Satoshi Nakamoto posted a paper outlining Bitcoin’s design to a cryptography e-mail list. Then, in early 2009, he (or she) released software that can be used to exchange bitcoins using the scheme. That software is now maintained by a volunteer open-source community coordinated by four core developers. Like real money, It does have a market where its value against some real world currencies are mapped against, check it out here http://www.bitcoinwatch.com/, while writing this post the value of a BitCoin was nearly $14.

The programmer Satoshi wanted people to be able to exchange money electronically securely without the need for a third party, such as a bank or a company like PayPal. He based Bitcoin on cryptographic techniques that allow you to be sure the money you receive is genuine, even if you don’t trust the sender.

If you look at the first video above, its from the four core developers and they are thinking big, they are looking at BirCoin as a way to revolutionalize finance, just as how the internet revolutionized publishing.

How do I start. I.e the Basics

Once you download and run the Bitcoin client software, it connects over the Internet to the decentralized network of all Bitcoin users and also generates a pair of unique, mathematically linked keys, which you’ll need to exchange bitcoins with any other client. One key is private and kept hidden on your computer. The other is public and a version of it dubbed a Bitcoin address is given to other people so they can send you bitcoins.

Crucially, it is practically impossible—even with the most powerful supercomputer—to work out someone’s private key from their public key. This prevents anyone from impersonating you. Your public and private keys are stored in a file that can be transferred to another computer, for example if you upgrade.

A Bitcoin address looks something like this: 1H4NSNzoP7eoYnL69HCvehVTZBPJoyMzK9. You can transfer a donation to me on the attached BitCoin Address. YOu can also go to some online stores where you can use these BitCoins to buy real world goods.

Transactions with BitCoins and how they occur

When you perform a transaction, your Bitcoin software performs a mathematical operation to combine the other party’s public key and your own private key with the amount of bitcoins that you want to transfer. The result of that operation is then sent out across the distributed Bitcoin network so the transaction can be verified by Bitcoin software clients not involved in the transfer. [ This is important as this is the step where the internet and BitCoin software clients perform the function of banks where they confirm the person is you, such that your current value of Bit Coins is calculated and the balance given back to you]

Those clients make two checks on a transaction. One uses the public key to confirm that the true owner of the pair sent the money, by exploiting the mathematical relationship between a person’s public and private keys; the second refers to a public transaction log stored on the computer of every Bitcoin user to confirm that the person has the bitcoins to spend.

When a client verifies a transaction, it forwards the details to others in the network to check for themselves. In this way a transaction quickly reaches and is verified by every Bitcoin client that is online. Some of those clients – “miners” – also try to add the new transfer to the public transaction log, by racing to solve a cryptographic puzzle. Once one of them wins the updated log is passed throughout the Bitcoin network. When your software receives the updated log it knows your payment was successful. It takes a bit longer than banks in this step as the cryptographic puzzle that they solve is also part of the BitCoin universe, more on that later.

The nature of the mathematics ensures that it is computationally easy to verify a transaction but practically impossible to generate fake transactions and spend bitcoins you don’t own. The existence of a public log of all transactions also provides a deterrent to money laundering. The global public transaction register is a register that keeps track of the history of every single Bitcoin through that log, from its creation through every transaction. Yes there is a bit of a problem here.

Identity, since every BitCoin is tracked it would be possible to know how much money each person has in the system and who is performing transactions. I dont really think its a problem, In fact its better. Considering whats happening in India these days with corruption and black money, there will be none. Everyone will have as much money as they are worthy of, so this is really a blessing in disguise. However unlike the real world, it might be an issue to some, as very rich people can be targeted for crimes like kidnapping, extorsion etc. But hey, at least we can keep our blood sucking politicians at bay.

How are these coins created and how can you obtain bitcoins? 

Bitcoins are “mined”. When you set your Bitcoin client to a mode that has it compete to update the public log of transactions. All the clients set to this mode race to solve a cryptographic puzzle by completing the next “block” of the shared transaction log. Winning the race to complete the next block wins you a 50-Bitcoin prize. This feature exists as a way to distribute bitcoins in the currency’s early years. Eventually, new coins will not be issued this way; instead, mining will be rewarded with a small fee taken from some of the value of a verified transaction.

Mining is very computationally intensive, to the point that any computer without a powerful graphics card is unlikely to mine any bitcoins in less than a few years.

Other ways of obtaining BitCoins are exchanges like Mt. Gox, which provide a place for people to trade bitcoins for other types of currency. Some enthusiasts have also started doing work, such as designing websites, in exchange for bitcoins. This jobs board advertises contract work paying in bitcoins.

Money is made to spend right ? So, Where can I spend these coins ?

There aren’t a lot of places right now. Some Bitcoin enthusiasts with their own businesses have made it possible to swap bitcoins for teabooks, or Web design (see a comprehensive list here). But no major retailers accept the new currency yet.

My thoughts

The BitCoin is in its infancy, however it has corrected some of the loopholes that current fixed currencies have. However, at the end of the day this is the first of its kind in this space. However, like most software and services on the Internet (which is what I look at it now) it will evolve, and might come up with a new variation of this concept and that will be the one to look out for.

Current world currencies do not have to be threatened by this new currency. As financial masters and grand masters analyze and dissect this form of the currency they will point out some of its flaws and what will come out of it is a clean workable currency format that all of us can eventually use. For the time being it is a nice to know fact that there is an alternate currency that is not government controlled and neither bank influenced. This might just be the spark for the actual online currency to come into being. Lets hope it does.

Some Resources

BitCoin and What is it: http://weusecoins.com
BitCoin home page: http://www.bitcoin.org
Bitcoin Trade: http://www.bitcoin.org/trade
BitCoin Economy Watch: http://www.bitcoinwatch.com
Bitcoin Exchange: https://www.mtgox.com
Bitcoin escrow service: https://clearcoin.appspot.com
Bitcoin e-commerce platform: https://www.mybitcoin.com
Fun with bitcoin http://witcoin.com – the bitcoin q and a .

Let us help – NGO Awareness – Part 2

Through the years NGO’s (Non Government Organizations) have come forward to fill the gap which the government in India has been unable to fill in. While talking to Sowmya on her interview (which you can read here) I realized that the number of NGO’s that are trying to work on issues related to India are quite a few, and they talk to research analysts like Sowmya to help them do the right thing. But there are those who have already spent a lot of time in trying to help various segments in India, like the poor, the old or just children. Working with profit or non-profit these people definitely deserve a mention in their role in the society in India.

 

The list of NGO’s last time was inquisitive enough to receive a lot of hits from you folks. So this time around I thought it would be good time to send in the second set of NGO’s list for the sake of NGO action from all of us, maybe eventually we will start our own action plan to help pick one of the NGO’s on the list.

Bhumi

Website  |    |    |

Activity: Bhumi is one of India’s largest independent youth volunteer non-profit organisation. Our volunteers work amongst orphaned and underprivileged children in Chennai, Thiruvallur, Bengaluru and Chandigarh with the aim of providing children with quality education and enable them to become responsible and productive citizens of the future. The efforts of our volunteer force consisting of over 300 students and young professionals under the age of 30 benefit over 2,500 children every year.

Support: Education, Children, Environmental Conservation, Mentorship

Note: Bhumi is an under-30 youth volunteer organisation, and to be able to reach out to more children, we need volunteers who can spend 2 hours every weekend to teach at an orphanage near their residence.


Help A Child to Study

Website | |  |

Activity: Help A Child to Study sponsors the higher education of meritorious underprivileged students, supporting them to achieve dreams of a better future. We sponsor all formal courses above 10th, including 11th and 12th, diploma courses, degree courses, B.E., M.B.B.S. and Postgrad. Through education our students are able to escape the cycle of poverty through their own talents.

Support: Education, higher education, sponsorship of students.

Note: – We are looking for financial donations to support the higher education of our students, most of whom live in rural areas of Maharashtra and Karnataka.


SAHAI helpline for suicide prevention and emotional distress.

Website | |  |

Activity: Started on 2nd Oct 2002, SAHAI is Bangalore’s telephone helpline for people in emotional distress. Our dedicated, trained volunteer counsellors are available to answer your calls between 10.00 a.m. & 6.00 p.m., from Monday through to Saturday.

All calls are confidential and privacy is assured.

Whether it is facing problems with your family, in school, at work or with your friends,Sahai Counsellors will give you their undivided attention and will guide you. And, when you’re ready, SAHAI will help you find a long-term solution to your problems, through telephone counselling.Sahai volunteers will help and equip you with the skills,needed to cope with distressing situations of life like loss, failure, broken relationships or the ever-increasing demands of today’s fast-paced life.

SAHAI volunteers are homemakers, professionals and college students – people from all walks of life who are committed to saving lives. SAHAI volunteers undergo 30 hours of suicide prevention training conducted by professionals from NIMHANS and the Medico Pastoral Association, along with Rotary Bangalore East, three of the help line’s founding partners.

Volunteers are trained to help each caller ventilate, to respond without judging, and to guide the caller to address their problem. Volunteers learn how to listen pro-actively, and to recognize and assess signs of stress and depression.

Support: Suicide prevention and emotional distress telephone helpline.

Note: Public awareness, more volunteers and funds to raise awareness.


This post is a part of BlogAdda’s Bloggers Social Responsibility (BSR) initiative. I am exercising my BSR. You can too by spreading the news of these NGO’s and Support. Its the least you can do if not donate money.

Get Richer by avoiding Mental Accounting

The Inquisitive Minds, features guest authors who are interested to contribute to the readers of this blog and the author of this article is Ramalingam Kan MBA (Finance) and Certified Financial PlannerHe is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.  He has been a regular on this blog for a while now. If you would like to contribute something then please let us know on guest [at] melvinpereira.com.

Mental Accounting is one such money mistake even smart people are committing.  Understanding this mistake and avoiding this could make us richer. Behavioral Finance experts say that mental accounting works this way: Let us say you have bought a Rs.200 ticket to a movie. When you show up at the entrance of the theatre and realize you have lost your ticket, do you buy another ticket? If you are like most people, you would probably think twice. You may still drop down the money, but you will now feel that you paid Rs.400 for a Rs.200 movie.

But let’s construct the scenario differently. Let’s say you hadn’t bought the ticket yet, and you show up at the entrance to buy your ticket. Unfortunately, you realized you’ve lost Rs200 in cash since you walked from the parking place. But fortunately, you still have enough in your wallet to cover the cost of the ticket. Do you buy the ticket? Again, if you are like most people, you may feel upset about the lost money, but it probably won’t affect your decision to buy the ticket. Why?

Behavioural Finance experts conducted similar experiments. They found that 46% of those who lost the ticket were willing to buy a replacement ticket. On the other side 88% of those who lost an equivalent amount of cash were willing to buy a ticket.

Both scenarios are a loss of Rs.200. However, in the second scenario you separate the loss of the Rs. 200 from the purchasing of the ticket. In the first you consider the cost of the movie as a total of Rs.400 and suffer at the high cost.

It is because of the psychological phenomenon known as mental accounting. One of the fundamental concepts in Economics says that wealth in general and money in particular, should be fungible. Fungibility, in a nutshell, means that Rs.100 in lottery winning, Rs.100 in salary and Rs.100 tax refund should have the same significance and value to you since each Rs.100 has the same purchasing power at the market. But do you treat them in a similar way?

Mental accounting has enormous consequences in your daily life. It affects how you spend money and how you save. It influences how you deal with losses and windfall gains.

How Does Mental Accounting Affect You?

1)   The source of the money affects how it is spent.

  • You tend to dine lavishly with the “gift meal vouchers” given by your company. But you will be dining consciously if you are paying out of your salary.
  • You are most likely to spend more with credit cards than with cash.
  • You may consider Tax refund as“free money”. In actual terms it is your own money. You will not spend tax refunds, birthday gift money or lottery winnings on essential things like utility bills, school fees, paying off your credit card debt. But you will be more than happy to spend the same money on discretionary items such as vacations or a trendy mobile phone.

2)   Don’t be a victim of ‘Relative cost’.

Assume you are going to a super market to buy a laptop. The price is Rs.40000. But you get to know that there is another branch of the supermarket, a ten minutes walk away, in which the same laptop is sold for Rs.39950. Will you walk down to the other branch? Let us say instead of buying a laptop you have planned to buy a memory card. The price at the supermarket is Rs.100 and at the other branch is Rs.50. Where will you buy the card? Most of us will make a trip to the other branch for the memory card but not for the laptop. Because we think that the Rs.50 saved on a Rs.100 item is better than the same amount saved on a Rs.40000 item. But both the situation is same. You save Rs.50 by making 10 minutes walk to the other branch. Remember that money is money. Rs.50 saved on Rs.40000 laptop is not less money than Rs. 50 saved on Rs.100 memory card.

How to face Mental Accounting and spend consciously?

  • You can use mental accounting to your advantage by spending money out of your salary. Immediately invest the “free money” like Tax refunds, gifted money or any other windfall gains.
  • Imagine that all income is earned income.
  • Use the free meal vouchers and other gift vouchers to buy essential items.
  • Pretend you don’t have a credit card. I am not telling you not to use credit cards. I am saying you should stop and think: would I buy this if I was using cash?

A Successful Practical Strategy:

You can have two bank accounts. One for the purpose of savings and the other one for spending. Every month you need to set aside some amount for expenses as per your budget or previous experience. That amount you need to transfer to your spending account. Balance amount you need to keep it in savings account.  You need to meet all your expenses including your credit card payment from the spending account. You should not spend from your savings account.

In between, if you receive any cash gifts or windfall gains, deposit them in your savings account. If you receive gift vouchers, then transfer the money equivalent of that voucher from your spending account to your saving account. That is your spending limit will not go up by just receiving the gift voucher. So that you will not use it lavishly and use it only on pre-planned things. When it comes to money your mind unconsciously plays this trick of mental accounting. You have understood that today. So hereafter, you can avoid this mistake and you become richer day by day.

Wordless Thursday – What is a Data Scientist

This week’s infographic is actually a profession. Something that I would like to give a hand at, but actually I think that guys like Pointy Haired Dilbert might end up being really awesome at. Either way, the definition of a Data Scientist is a person who can analyze, present and make action plans based on information that is collected and help people make better decisions using the information by making it more understandable.

Real Estate Investments Made Simple

The Inquisitive Minds, features guest authors who are interested to contribute to the readers of this blog and the author of this article is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.  He has been a regular on this blog for a while now. If you would like to contribute something then please let us know on guest [at] melvinpereira.com.

Gold and Real estate are very traditional investment avenues. Gold has evolved from its traditional investing and found its place in the modern sophisticated investment world via Gold ETFs. Similarly Real estate is also emerging as an investor friendly avenue with less hassle via PMS route or private equity route. Have you ever thought of investing in real estate will one day be as simple as investing in mutual funds? If no please read on….

Real Estate as an Investment:

 Buying a dream house or flat to reside ourselves is basically not a real estate investment. Buying real estate with a view to generate income and capital appreciation is considered as Real Estate investments.  Real Estate investments can be further classified into residential, farm house, commercial, retail, leisure. Leisure is a relaxation place where one can spend their free time or vacation.

Depends upon his/her risk tolerance and time horizon one can invest in real estate at different risk levels. It can be at the time of converting a rural land to urban land, or at the time of building development stage or in already developed city area.

Real Estate and Risk:

Most often investors assume real estate prices will not fall down and they only go up year after year. It is not so.  During the mid 2009 some of the real estate investments were quoting below 30% to 40% from their 2007 prices. Real Estate investments are also prone for price fluctuations.

Real estate Vs Stock market:

Real Estate is a complex and complicated investment when compared to stock market.

Non-transparent: There is no transparency in the price. It is not easy for a buyer or seller of real estate to identify the last transacted price in the same locality. There is no price discovery mechanism.

Illiquid Asset: Selling a real estate is a time consuming process. It is not liquidable easily. There is no organized market for the buyers and sellers to meet.

Impact Cost: Stamp duty and registration charges are really very heavy when compared to the other investment products.

No Regulator: There is no regulator for the real estate participants and intermediaries. Anyone can become a builder. Technical qualification is not mandatory. Also anyone can become a real estate intermediary or advisor. There is no certification or training to be completed before practicing.  As there is no qualification requirement for participants as well as the intermediaries, it is very difficult to see best business practices.

Real Estate hassles:

The other hassles with reference to real estate investment are documentation, maintaining the asset without any encumbrances, and genuineness of the title deed.

There are some practical problems with diversification. Normally an investor invests in a real estate in his own locality. It is very rare to find someone in Chennai investing in the real estate properties located at Mumbai, Delhi or Kolkata.  Affordability also limits diversification. An investor may not be able to diversify his investments across various cities with Rs.25 lacs or 50 lacs.

It may not be possible for an individual investor to buy a land and develop a viable project in that land and sell it in the market. Managing the project development need some kind of expertise.  Even if an individual is able to do it, he will be doing it in his limited ways and means.

Is there a solution for this? Of late yes.

There are some collective investment vehicles. These investment vehicles will be promoted by an investment management company. The investment management companies collect money from investors. Being professionals, they will identify good projects and do joint venture with the project developers. They will be able to diversify across various cities as well as various types of real estate investments such as housing, commercial, hospitality and the like. These investment management companies charge a reasonable management fees.

At times they collect money via PMS route and at times via private equity route.  The minimum investment ranges from 10 lacs to 25 lacs. This amount needs to be invested over a period of 3 years. That is they will collect money from investors in 4 or 5 installments. After 3rd year whenever they exit from a project they will repay the principal employed in the project as well as the profit generated out of that project. End of 6th year or 7th year, the investment management company will exit from all the projects.

The advantages of this collective investment vehicle are

  • One can invest into real estate without any hassles. All the hassles will be managed by the professional investment management companies.
  • One can invest in various real estate projects at a time.
  • One can geographically diversify his investments across India.
  • One will be able to apportion his total investment into small sums in large projects like township development, Technology Park, industrial estate, health city…
  • Cost advantage because of economies of large scale operation

This is really an investor friendly investment vehicle. Apart from the regular stocks, mutual funds and fixed deposit investments investors can consider investing in these real estate products also. This will give better diversification to your overall portfolio. Also Investors need to be careful in choosing such investment options. Background of the investment management company and their transparency levels are more important. Investors can seek the advice of the professional financial planners before investing.

This investment vehicle is in its primitive form only. It still needs to go a long way. As of now there are only a very few companies in India which specializes in promoting collective real estate investment products. But in a few years time these kinds of products will be available from various investment management companies and in different varieties like our present mutual fund schemes.

Wordless Thursday – That’s what THAY say

This weeks wordless Thursday will be something that anyone and everyone will be able to read and relate into. Because this Info graphic has been created using information that people have collected from regular people like you and me providing with a statistical view of the world. Created by the website Hunch, which helps find recommendations that are customized to your taste. And how do they customize information by collecting information from people. Here are some Hunch insights and correlations based on selective THEY questions:

A step by step guide to first financial plan

A financial help guest post again this week from our regular guest blogger Mr. Ramalingam; The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

If you would like to contribute to ‘Inquisitive Minds’ with your article you can get in touch with us and we will provide you with the relevant guidelines for the same. Please send in your email to me [at] melvinpereira.com.

A step by step guide to first financial plan

Prabu was a college student till yesterday. Today he has got a job. He has changed his costume from T-shirt and jeans to a formal wear with a tie. When he got his first pay cheque, his father advised him to save, his girl friend asked him to take her out on a date, and his friends wanted a party. Prabu was totally confused what to do with his first salary. What are all his actual priorities? Let us help him by laying out a step by step initial financial plan for him.

Get a PAN Card:

PAN Card is an ID card issued by income tax department.  This card is useful in filing your Income Tax returns. Apart from this, the PAN card is very much useful in opening a bank a\c, demat a\c, investing in mutual funds and the like. The required documents for getting a PAN card is a passport size photo, address proof and an identification proof. You need to apply with either UTI or NSDL. They are the two approved agencies by income tax department for issuing PAN card.

Personal Accident and Disability Insurance:

Almost every day you can find a news column about road accident. It may be your colleague, your distant relative, your neighbour, your friend, your classmate. The stories of such incidents give us a reminder that the accidents can happen to anyone. The impact of these accidents on ones working life could be huge. Some accidents could reduce our employability temporarily or permanently. Personal accident and disability insurance policies will cover the financial losses arising out of accident and disability.

You need to decide the coverage amount of this policy based on the estimated loss you may suffer because of accident. That is how much loss you may incur from employment temporarily or permanently because of the accident. This will cost you approximately Rs.1500 p.a for a coverage of Rs.10 lakhs.

Health Insurance:

Most people don’t think about health insurance very often.  But it comes to mind first when a loved one is sick.  Under health insurance, the insurance company pays the medical bills if the insured person becomes sick and hospitalized. Health insurance can protect a family from financial damage in case of severe and serious illness.

If you have a health insurance from your employer, that may not be sufficient. Employer may cover the employee and not his family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage. It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.

The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.

Term Insurance:

Generally as a beginner, there will not be any requirement for any life insurance. But if your parents are financially depending on you, then you need to cover yourself with life insurance. As a breadwinner, today you are there for your family to provide a lifestyle. In case of any mishappening to you, your family members should not compromise on their lifestyle. That is why it is advisable to cover yourself with life insurance if you have dependents.

But don’t fall prey for ulips. Go for a pure term insurance policy. These policies give you a high coverage with low premium. The premium for a sum assured of Rs.10 lakhs will cost a 25 year old only Rs.2500 p.a. approximately.

Emergency Reserve:

Once you have completed the above obligations, you need to build an emergency reserve or contingency fund. One aspect of financial planning involves planning for situations where there could be a temporary break in one’s professional income. This could happen, amongst other reasons, due to ill health or could even be self opted. Such planning requires creation of contingency fund. The size of a contingency fund is linked to one’s estimate of what could be the maximum duration of such a break. For instance some people plan for the possibility of a 3 months break, others for 6 months.

This emergency fund gives a psychological security to you. In case you need to quit you r present job and need to search a new one, you can do that comfortably and confidently as you have an emergency fund for the intermediate period. You need not panic. If you have created a contingency fund, in the event of any emergency you need not pre-close your other investments and hence you avoid paying penalty or booking losses.

Tax Planning:

You can save under section 80 C up to Rs.120000. Out of this Rs.20000 need to be invested in the infrastructure bonds and the balance Rs.100000 can be invested in NSC, PPF, insurance premium, and ELSS mutual funds., You can give maximum allocation to ELSS mutual funds, as you are so young and in the beginning of your career.

Other goals:

You may have other goals like buying a laptop, higher studies, and vacation. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon. How much risk you are afford to take and psychologically comfortable in taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.

Plan out your work and work out your plan. Normally we don’t plan to fail, but we fail to plan.If you work on your financial plan, when your friends are partying and taking their girlfriends out, you will be definitely going to be retired richer than your friends.

11 ways to Get out and Stay out of Debt

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

In spite of steady, regular income there are so many individuals who live paycheque to paycheque, carry their credit card outstanding, and fail to save anything for retirement. If you are one of them, now is the right time to take action to come out of debt and stay out of debt. It is not only possible; it is unbelievably achievable.

1. List down all your debts

You need to take stock of all your loans. It could be credit card due, personal loan, car loan, housing loan, education loan, loan from FD, loan from insurance policies, loan from your employer, hand loan and so on. For each and every loan you need to note down how much you owe, the present interest rate, EMI, Number of months to be paid.

2. Negotiate for lower interest rates

If you could negotiate the interest rate and bring it down then you can come out of debt faster. Most of the credit card companies come forward for negotiation if you really show interest in repaying. They need not run after you to collect the debt. It will reduce their expenses. So they will be happy to negotiate. Balance transfer offers from credit cards are also a way to reduce your interest rate.

3. Refinancing and consolidation

Replacing a loan with another is known as Refinancing. By doing a refinance it should reduce your interest rate and it should bring down the time you are in debt. But most often people go for refinance that provide them lower EMI but increasing the time they stay in debt.

4. Categorize your debt

Housing loan can increase your net worth over a period of time. Housing loan gives you tax benefit also. For a business man car loan provides some tax benefit. Based on these factors a debt needs to be categorized. This will help us in comparing different loans.

5. Prioritize your debts

After sorting out various loans, now we can comfortably prioritize the loans. Obviously this will be based on the interest rates and tax benefits. At times paying off a small loan first can give you a lot of motivation to get out of debt.

6. Creating and Executing a Debt payoff plan

You need to create a debt pay off plan with different scenarios. So that you can find out how some more savings or a different repayment order will help you to get out of debt faster. When creating a plan, you need to choose one which is comfortable to your attitude. Otherwise, you may not execute it properly.

7. Refrain yourselves from applying for fresh loans

You need to make a vow that you will not be adding any fresh loans, till you come out of all your debts completely. Think for a moment, how you will feel when you become debt free. This will give you a lot of positive energy to come out and stay out of debt.

8. Postpone buying major assets

Buying a property or any other assets need to be postponed till you get out of debt. With your new ownership comes the new, probably large and unpredictable expense. This can make you deviate from your debt pay off plans and at times the consequences could be uncontrollable.

9. You stop using your credit card

There are two groups. One group of people uses the credit cards responsibly. That is they will repay the credit card dues in full when they receive the bill. The other group will pay the minimum amount due and carry forward the balance amount due. If you belong to the second group, you need to stop using credit cards temporarily. Take out and keep your credit cards in the locker. Once your financial situation and buying habits improve, then you can start using your credit cards again.

10. Change your spending habits.

Being in debt obviously means that you have been living beyond your means. The solution is very simple. Spend less than you earn and you will get out of debt soon. You need to change your spending habits. Then only this simple solution will be achievable. If you buy things you don’t need, you’ll soon sell things you need. Don’t save what is left after spending; spend what is left after saving.

11. Involve all your family members

You need to inform all your family members and dependents about your debt status. Then you will be able to take decisions with much more clarity. Moreover, if your family members know about your debt, they will also change their spending habits and support you in getting out of debt faster.

Consider the postage stamp: Its usefulness consists in the ability to stick to one thing till it gets there. Similarly, you need to stick to your debt pay off plan till you get out of it.

Guest Post – Instruction Manual for Investment

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in. If you want to write for Inquisitive Minds, please send us an email with details at the contact page.

Instruction Manual for Investing

Let’s open the manual:

Every gadget you buy in the market comes with an instruction manual or user’s manual. But your salary, savings…retirement don’t come with an instruction manual.  So we don’t know how to handle these and we end up mishandling. The result is poor investment choices and unhappy retirement. This article is an effort to draft an instruction manual for our investments.

Investment forms an integral part of our work life, with many wanting to save and invest to meet our long-term financial needs. We would all agree that just living from paycheque to paycheque would leave us in a bad financial state making us incapable of meeting our family’s financial commitments and our expenses after retirement.

Don’t Fly Blind; Have a Financial Plan

It is vital to chalk out a financial plan at the very beginning of our career. This plan would tell us how much we should save and invest. This plan also ensures that our long-term financial needs are met. It may prove difficult and sometimes costly in the long run if we chalk out a financial plan on our own. So it is better to engage a professional financial planner, who would be in the right position to advice us on the investments to meet our long-term objectives in life.

Generally investment advisors or financial planners ensure that we invest in the right type of investments that are relatively safe and tax efficient. They ensure that our investments do not divert away from the set financial goal. The advisors or planners who charge a fee, can be expected to act in the best interest of us; their clients. But we will not be in a position to trust those who live out of the commissions earned from selling insurance policies or mutual funds or stock broking.

However, it is best for you also to be cautious and not allowed to be fooled by flattery. Since it is your money you need to be cautious and vigilant.

Do control what you can:

The first thing that we can control is unnecessary expense on investment. It is in our interest to try to minimize or avoid investment expenses like entry load, exit load, fund management fees, commissions for buying and selling stocks, account maintenance fees,  allocation charges, administration charges, surrender charges, and other overheads. Small drops make a mighty ocean. Similarly these small amounts of cost cutting will definitely pay us in the long run.

The second control is over the diversification of your investment. You also need to ensure that at all times your investments are done over a wider variety of assets. This will ensure that you do not suffer large losses in one type of investment. The losses in one would then be offset by the gains in the other and you will be financially safe at all times.

The third control is the maintenance of our asset allocation to reach our financial goal. We need to keep a check over the asset allocation or ratio of equity to debt and to other things in your portfolio with the help of a professional financial planner. This will help us ensure that we are not taking more risk than what we want or can possibly handle.

Do pay as little attention as possible to the financial media.

It is best not to be influenced too much by the media to buy and sell investments. Investing is not a competitive sport. Buying and selling stock frantically by being influenced by the media is counter productive to your financial objectives.

It is best to understand that our conscious investment is for long-term wealth appreciation. So we should not be distracted by the investment shows that run 24 hrs a day, investment column they publish 365 days a year. Media doesn’t understand your requirements. So it is difficult to get a customized solution for your personal finance.

Don’t fall into “Invest and Ignore”

We have invested your precious savings, so do not be careless and sleep over it. Though our investment advisor would make sure that our investment grows, it is better that we too are vigilant and keep track of market conditions. It is our precious savings that we have invested. So if we lose it, we would be losing not only money but also our peace of mind.

Don’t fall into “HNI Trap”

Being a high net worth person exposes us to being influenced to invest in dubious projects that may bring down your financial status. This is true because the financial industry are on the look out for people that have a lot of money and are of a high status. They try to influence them to invest in dubious projects appealing to their status and vanity.

Being a HNI doesn’t mean that you need a completely different set of investments. They try to pack something and will say “This is a HNI product”, just to massage your ego and get business. Many HNIs would be lot richer, if they could have bypassed their private banking department and just invested in an index and a very few diversified equity funds.

A final thought:

The instructions in the user’s manual need to be used to get the maximum benefit and long life of the gadget. Similarly, having read the set of instructions to make wise investment decisions, it is up to you to follow them strictly or leave it and go back to your routine life.

If you decide to follow these instructions, you will definitely see a lot of positive changes and financial prosperity in the long run. So today is going to be the first day for rest of your life.