LoanRaja Blog- Personal Finance Guide

For the last few days, the entire country has been glued to images of the horrifying images of the Mumbai riots on TV. We have debated the issue from every possible angle – political, social, religious, from the point of view of bilateral relations, international relations, and crass though it may sound in the light of the lives lost, from the economic angle too.

One initial estimate put the loss to the Taj Mahal Hotel alone at Rs 4000 crore, while loss to businesses in all of Mumbai could be in the range of Rs 50,000 crore, according to news reports. Some industries face direct losses – the tourism industry for instance. The holiday season next month, will definitely not be a time for cheer this year. Business plans and investments from foreign partners are likely to be put off if not cancelled, given that various countries have issued travel advisories, warning against travel to India. Foreign business partners may put off travel, and perhaps even investment, at least until the dust settles (One cold comfort is that there wasn’t too much room for the stock markets to drop further. The current economic conditions had already pulled the stock market to the depths).

Many see the attack on the business capital of Mumbai as actually being a direct attack on the Indian economy. Russia has observed some sort of pattern in the way terrorists have been targeting the emerging BRIC (Brazil, Russia, India and China) economies.

But for those of us trying to make a living in this country, the larger intent is not important. Terror attacks have unfortunately become a part of our lives, no matter which state we live in. And even personal economic stability is a big challenge in these uncertain times.

While the risk to life is certainly the most horrifying, there are others – risk to business and risk to property. And in both cases, one instrument that could help lessen the pain is insurance.

In fact, ever since 9/11 attacks in the US, terror insurance or risk cover for terror attacks came into focus. Terror insurance is not only for large corporates; small business people, media persons who are on the ground covering such attacks, as well as the common man – the biggest loser in terror attacks – are equal beneficiaries.

In India, we have had some kind of terror insurance – the IRDA has directed the creation of a terror pool which has been created where all general insurance companies pool the terrorism premium they have collected into a fund. The pool will fund claims with a limit of Rs 700 crore per location. So far not many demands have been made on this fund, but the latest attacks in Mumbai are very likely candidates to use this and affected hotel companies are reported to have taken risk cover for terrorism.

Most large corporates in the country have all taken some kind of liability cover, but terror cover is different, and requires an additional premium.

However, it is very difficult to predict or assess the risk associated with terror attacks. Secondly, in case of a claim, it can only be for covering losses directly caused by terror attacks (damage to property and possible business disruption), though the loss to the business may be far more. Experience has shown that companies buy low volumes and can never be fully prepared for the extent of the damage that can be caused.

Call it any name – terror cover or simple insurance, in today’s uncertain world, the instrument becomes even more important.

LoanRaja invites BMM Students from various colleges to participate in the LoanRaja Writer’s Contest.

Here is an opportunity to something you love. We have a list of topics that you can choose from. You Write, We Reward….. as Simple as that!

Contest Prize:

Every fortnight, One winner will win Rs 5000/- for the best written article or submitted blog entry. Rs 1000/- will be the prize for the next best written post (Runners-Up). First Contest Price Winners will be announced by 30th December 2008

How to Go About? Simple!

• Your Co-ordinator will be provided a Username and Password, which will be passed on to you, where you can post articles/ blog directly to WordPress.
• Please make sure you mention your college name and your full name at the end of the article.
• The Winner’s of the Contest will be declared every fortnight.

Contest Theme

Entries must be factually correct, well-written, and related to content topics (i.e. loans, finance, insurance, credit cards, banking, investing). This could include advice, anecdotes, guides or personal experiences with credit, banking, taxes, insurance, or investments.

Topics you Can Choose from:

I. Financial Products:

• Is this the right time to invest?
• Stock market still going down
• Top 5 Market Tips- Unleashed
• New Year Resolution- Invest Wisely
• Plan your investment
• Basic Essentials to know before taking a loan
• How financial crisis was built?
• Should you be buying Stocks now?
• Invest In Gold or Invest in Stocks?

II. Experiences:

• Taking Personal Loan changed my life.
• Finally I drive my own Car.
• Benefits of taking Health Insurance at the right time
• Having a credit card is important
• Glad I took Education loan
• Unique experience with LoanRaja.com
• Success story-Life Insurance
• Why get Insurance? Importance Revealed
• True Credit Card Story
• Started my Own Business
• My dream house came true

Terms & Conditions:

You can submit as many blog posts as you want

Ø Your post must be original, authored by you.

Ø Winners will be announced bi-monthly typically on the 15th & 30th of every month and will be notified within 1 week after the end date of each contest.

Ø Winners will be chosen by LoanRaja on the basis of our judgement of the best written article or blog entry. To be eligible to win the contest, you need to have answered our short quiz correctly (you will find the link to the contest on the site). All prizes will be subject to applicable government taxes and levies

Ø Winners will be notified via phone and email and prizes will be mailed to an India address. If we are not able to contact the winner, another winner will be picked. The prize must be claimed in 48 hours.

Ø LoanRaja reserves the right to modify contest copy for editorial usage, republish the posts on our website and remove non-compliant entries.

@ On submission of the entries in the blogger contest, the participant waives all rights in such materials and automatically grants to Komli Media a perpetual, irrevocable license to use, reproduce, modify, edit, adapt, publish, translate and distribute such material (in whole or part) worldwide and/or to incorporate it in other works in any form, media or technology now known or later developed for the full term of any rights that may exist in such content.

Ø This contest is open to writers residing in India only.

Ø We reserve the right to reject any entry to the contest & revise the rules and regulation of this contest.

Ø LoanRaja.com can stop the Contest and the draws without prior intimation to the users. On winning, all the entries shall be verified by the LoanRaja team and if any discrepancy is found, the user will be ineligible for the prize.

Ø Anyone found / suspected of cheating in this contest will be automatically disqualified.

Ø Mere participation in this Contest or posting a blog entry does not entitle the participant to win a prize. All decisions by LoanRaja regarding selection of winners shall be final and binding. No correspondence will be entertained in this connection.

Ø LoanRaja.com reserves the right at any time, without previous notice, to add, alter, modify, change or vary all or any of these Terms and Conditions of the Contest or to replace, wholly or in part, this Contest by another contest, whether similar to this Contest or not, or to withdraw it altogether.

Ø The prizes given under this Contest are non-transferable, non-encashable and any government levies/taxes like Sales Tax, TDS, Road Tax, Airport Tax, any Local Tax etc. arising out of the same will be borne by the winner. The prizes shall be delivered only after paying all applicable taxes. The payment for the cash prize shall be made via cheque after deducting the required applicable taxes.

Ø Employees of LoanRaja.com including their relatives, all other associate companies of LoanRaja, sponsors of prizes, their respective advertising agencies or any other entity associated with this Contest shall not be eligible to participate in this Contest.

Ø Any disputes arising out of this Contest shall be subject to the exclusive jurisdiction of competent courts in Mumbai irrespective of whether Courts in other areas have concurrent or similar jurisdiction. The existence of a dispute, if any, shall not constitute a claim against LoanRaja.

Ø The prize- winner releases LoanRaja.com of any liability arising out of any acts or omissions arising out of or related to the Contest.
Please feel free to revert in case of any queries.

Feedback from writers on how we can make this contest better is always welcome.

As time flies, a thought crosses my mind; how is an investor affected by financial crisis and who can he seek for investment tips? Now for instance would you expect a kiranewala to talk about financial crisis? Last week, I walked into a store to pick up a gift and handed over a Rs 500 note to the shopkeeper. The man didn’t have enough change to return to me. While that is nothing new in a city like Bangalore, what puzzled me was his reply. He cribbed that due to the slowdown in the US and financial crisis, consumers everywhere were going slow on their purchases and business was low during the last few weeks. Going further, we will talk on some investment tips to face this financial crisis.

If a shopkeeper who is not even an investor dealing with small value items is complaining of slow-down and financial crisis it is a clear indicator of the state of the economy. So how does one understand the outcome of financial crisis and how the investor is affected? The stock markets were the early birds to forewarn us by slipping into reverse gear since February and it has been tough for investors to find avenues for products which give good returns. On the other hand, the growing uncertainty at the work place for the salaried class, lack of business growth for the self-employed has forced everyone to change the investment strategies. At this hour, not only one needs to focus on liquidity but investors should also remember the fact that wealth creation is a continuous process and not something done only during boom times. Here, are some tips which can help you tide over the current financial crisis but also help you make a good opportunity of the environment.

Be Liquid during Financial Crisis:

The Investment tip here for investors in the current environment as every investment product has failed to offer stability during this financial crisis. At the same time, different markets have also been offering good investment opportunities for long term investments and hence one needs to have the liquidity to take advantage of the situation. For instance, equity market has failed to sustain intermittent relief and on the other hand, has been presenting buying options in blue chip stocks at regular intervals. Similarly, property too has been going through the phase of corrective mood and investors with long term focus can look for their choice.  However, for being liquid, one need not hold on to cash and instead, the money can be parked in fixed deposits or liquid funds.

Invest in a Systematic way: As pointed out earlier, equity markets have been volatile in the last few quarters and hence, look attractive for long term investors. However, investors need not rush to pick up at one go and instead, the investment process can be over a period of time. There are two ways of going about the staggered investment strategy. The well-known investment tip is to sign up for an SIP in an equity fund and keep buying units in a mutual fund on a monthly basis. The other option is to invest at one go but still take advantage of staggered accumulation through STP. In this option, an investor invests a lump sum in debt funds and transfers a fixed sum into an equity fund on a daily, weekly or monthly basis. The concept is similar to SIP but the biggest difference is that investor can still enjoy the benefits of SIP with one-time investment. Another added advantage is that mutual funds allow STPs even on a daily basis which can make a huge difference over long term. For instance, an investor can park Rs 2-3 lakhs in a liquid fund at the beginning of year and transfer Rs 1,000 to an equity scheme on a daily basis. For STP, the choice of equity funds can be more than one fund too.

The accumulation strategy need not be restricted to mutual funds alone. Even with respect to stocks, buy them in small lots. However, buying has to be planned carefully and you also need plenty of patience to get the acceptable price for your stock.