Prajna Capital - An Investment Guide

Where should I park my money? That’s a question many are asking wealth advisors today. Looking at the current market condition it is important to invest across asset classes. With the hardening of interest rates financial advisors say over the next 6 to 12 months income funds are a good option to consider. The income funds have generated a return ranging from 5% to 15% on a one-year basis. The returns have been divergent across the schemes depending on the interest rates view taken by the fund managers. How safe are debt funds Debt funds are less volatile and the risks are lower. However, there are some risks like interest rate risk and credit risk. While interest rate risk is a macro level trigger and cannot be controlled, credit risk can be controlled by prudent portfolio construction and active portfolio management. Fund managers’ say in the current scenario both income and gilt funds are becoming popular on expectations that the interest rate would be heading lower. However, nea...

It is advisable to make bonds a part of your investment portfolio if you need a steady income stream. So lets understand what are bonds and how it can help to generate returns. Bonds were almost a forgotten word in the last few years. The stock markets were exciting and were giving anywhere between 25 to 50 percent returns per annum. Stories of investors gaining great wealth in the stock market were dime a dozen. Generating returns on an equity portfolio seemed a cakewalk. Bonds, on the other hand, did not have the same appeal. Bonds were boring during bull markets when they seemed to offer an insignificant return compared to stocks. However, with the crash in equity markets, investors saw their capital erode by almost 50-75 percent in less than six months. Scorched by the experience, investors are now looking at other options to park their surplus funds. All it took was a bear market phase to remind investors of the virtues of a bond's safety and stability. What are bonds? ...

IF ONLY life were as good as the ads portrayed it to be. You could travel to exotic locations, shop till you drop, indulge in the choicest delicacies — with nothing but that sleek plastic card in your wallet. In fact, freedom is the trump card that credit card companies always play up to sell their gold, silver and platinum cards. However, the reality is that when you come back home from that fancy vacation or shopping spree, at your doorstep will lie a bill that, as much as you try, you cannot wish away. And if you’re not the kind of person who cares for detail — remembers where or when you spent what — chances are that you may be paying more than you actually spent. To help you guard against fraudulent activities by credit card issuers (generally banks and NBFCs), COMMON ACHES If you’re one of those who haven’t given this a thought, here is a chance for you to find out if you are being victimised or not. You need to know that no bank has the right to forcibly issue a credit card. ...

At a time when stock markets zigzag, what would be the right investment arena? Corporate FDs or equities? THE sharp fall in the equity markets has changed a lot of things including India Inc’s fund raising plans. This, in turn, has changed investment avenues for retail investors. Till about a year ago, the only way for retail investors to participate in a company’s growth was to buy equities either in the secondary market or invest in primary issues (IPO) or rights issue. However, the primary market option currently is almost closed with the virtual drying up of the IPO market. Bearish sentiments and lack of investors’ confidence due to wild volatility, on the other hand, has decreased the participation of investors in the secondary market. In such a situation, India Inc is now approaching the potential investors through fixed deposit (FD) schemes. In fact, FD schemes are not new to India Inc. Earlier, every major company had an FD department and it was considered to be one of th...

INDIA, like many other economies, has embarked on a long, difficult road to check runaway prices. It’s now evident that policymakers will hike interest rates till it hurts and pulls down demand. The central bank as well as the government are willing to sacrifice a bit of growth to douse inflation — an issue that has captured the collective imagination. On Tuesday, the Reserve Bank of India hiked the benchmark short-term rate by 50 basis points, about 25 bps more than what the market had expected. Bonds and equities reacted sharply. Soon, home loan seekers and corporate borrowers will feel the pinch, since borrowing money will now be far more costly. RBI has not only raised the benchmark repo rate — the rate at which banks borrow from the RBI — from 8.5% to 9% with immediate effect, but has also hiked the cash reserve ratio ( CRR ) for banks by 25 bps — a measure that will drain Rs 9,000 crore from the banking system. Given the outright hawkish policy stance, it’s clear that RBI will no...