Prajna Capital - An Investment Guide

    What is base rate?     The base rate (BR) is the minimum rate of interest that a bank is allowed to charge its borrowers. Unless mandated by the government, the RBI rule stipulates that no bank can offer loans at a rate lower than the BR to any of its borrowers.     How is the base rate calculated?     A host of factors, like the cost of deposits, administrative costs, a bank's profitability in the previous financial year and a few other parameters, with stipulated weights, are considered while calculating a lender's BR.    The cost of deposits has the highest weight in calculating the new benchmark. Banks, however, have the leeway to take into account the cost of deposits of any tenure while calculating the BR.     When will the base rate come into force?     It is effective from July 1. However, all existing loans, including home loans and car loans, will continue to be at the current rate. Only the new loans taken on or after July 1 and old loans being ren...

When Idea Cellular General Manager Tejasvi Bishnoi finally shortlisted a house on the outskirts of Mumbai, his next task was to identify the loan product that would finance his dream home. His requirement: Rs 70-85 lakh. Soon, Bishnoi was inundated with home loan offers. Among the many offers that he has, one is an offset home loan. This loan allows the borrower to save and, at the same time, utilises the savings to reduce the interest payable on the loan. At present, an offset home loan is offered through HSBC's Smart Home Loan, Standard Chartered's Home Saver and Citibank's Home Credit loans. Typically, in this loan, one has to open a current account with the bank and maintain a specific amount as balance. The interest is charged after reducing the principal by the balance amount. The balance amount can go up or down, depending on one's cash requirement. As a result, while the equated monthly instalment (EMIs) will not change, the interest component will keep on f...

    Brokers are dime a dozen. Reliability, service fee and research support are some of the criteria to follow while picking your broker      MOST investment products — stocks, non convertible debentures, mutual funds, gold (through exchange-traded funds) — can be bought through an investment trading account. Hence, opening a broking account is a must for anyone looking to invest today. Here are some points you should keep in mind while selecting a broker. RELIABILITY & PRODUCT OFFERING Today there is a plethora of brokers available at the nook and corner of every street. Advice, servicing capability and stability should be of prime importance while choosing a broker. You need to understand how reliable has the broker been in good and bad times? Is the past track record of the broker clean? When you sell a share, do you get your payment on the payout day as specified by the exchange? Most brokers provide you with an SMS facility whereby, at the end of the day, you get an SMS ...

  The investment world is fraught with risks. But financial experts can guide you on market trends and products to grow your wealth    MAKING an investment is not as simple as just filling in a form and writing a cheque or calling your broker and buying or selling shares.    There is a lot of hard work which goes behind every transaction. Disciplined and savvy investors follow a step-by step process in order to get it right. While the first step is deciding what kind of investor you are, the second step is choosing the product you wish to buy. The final step is all about buying the product and finally selling it off. At each stage of this process, you have intermediaries like wealth managers, financial planners, stock brokers and even the friendly neighbourhood agent to assist you.    So, for example, first it's a financial planner who does an asset allocation for you and tells you how much to invest in an equity fund or a debt fund, the second stage is choosing which equit...

    YOU heard enough about why you should buy insurance. So you wake up one morning and decide to buy yours that day. And then, you realise, you have no clue where to begin. Well, how about here for a start. Step 1 – Evaluate your life insurance needs An extremely popular product, life insurance offers a lot more than just tax planning and investment returns. You are afforded the ability to plan for unforeseen events that could adversely affect your family's financial profile. Factors to consider Your financial profile and needs are different from your neighbour's. The same holds true for your insurance needs. Your decision when going for insurance must revolve around the number of dependants and their financial needs. Factors you should consider: § Wealth, income and expense levels of your dependants § Significant foreseeable expenses § Inheritance you would leave them § Lifestyle you want to provide for them How much insurance? Obviously the above factors don't ...

Realty had a reality check when it melted furiously and was brought to realistic levels. Its now back in the limelight, with demand picking up slowly. When there is a dearth of buyers, products get the much needed innovative streak and this is what happened. Structured products in this sector have hogged the stage for some time. A quick rendezvous on how they work and whom they suit. WHAT IS A STRUCTURED PRODUCT? Typically, structured products are pre-packaged investment strategy across different asset classes --- equities, derivatives, debt, real estate and so on. They are best suited for high networth individuals (HNIs), wherein the minimum ticket price is significantly high. Normally, it is upwards of Rs 50 lakh. Today, financial institutions offer much lower entry options, with the intention of widening their target market. Often, real estate investments are known to provide quick capital appreciation. However, this product adds a new perspective to this line of thought. It...

  Here are some outlines on global factors equity investors need to track closely to get a sense of the possible market direction    In the current environment, the stock markets, across the world, are mainly driven and influenced by factors and developments in the global markets. The world economy has just come out of an economic recession and there has been a good rally across the stock markets globally over the last few quarters. However, the effects of a liberal and soft monetary policy adopted by governments and central banks across the globe have started showing up. Analysts fear the global economy might fall back into a recession again - double-dip recession - if these factors are not addressed carefully.    These are some of the major factors that reflect the progress in the global economy and therefore have an impact on the domestic stock markets as well: Economic data     There are certain data points that are important when one talks about the world's economic dat...