Comments on: Allocation of Resources

By: Simmi Harding

Simmi Harding — Sat, 21 Feb 2009 09:08:39 +0000

many many thanks…. I shall do the same….

grateful for your advice…

By: Sudip

Sudip — Wed, 18 Feb 2009 04:49:04 +0000

My recommendation for deployment of Rs. 30 lacs assuming that you are a young person (age group 25 -40 years) and have a regular income without too much of family liabilities would be as follows:-

a. Please do take adequate Life Insurance cover to protect your income in the eventuality of any unforeseen contingency (death or permanent disability) assuming you earn Rs. 10 lacs per year and the market rate of interest is 10%, you need to take a cover of at least Rs. 1 crore to ensure that in the event of the said contingency, your regular income is protected. Term insurance would be recommended since the cost for the same is low.

b. Do invest 20 -30% of funds in liquid / cash scheme of any good Mutual Fund (Asset Management Company). Please do select dividend option (the income in your hands will be tax free). In the event of any contingency you would be in a position to withdraw this money with a days notice. The same funds can also be used if any interesting investment oppprtunity arises in the near future.

c. Invest 10% of your funds in Gold Coin / Bars or gold ETF. This would be again a contingency reserve.

d. Invest the balance in a large cap equity diversified fund,thru SIP (Systematic Investment Plan ) over the period of next 6 months.

The above is with the assumption that you have a place of your own to stay. In case you dont have same , please look for an opportunity to buy an appropriate flat/house over the next 6-12 months when the prices are depressed.

By: Simmi Harding

Simmi Harding — Mon, 16 Feb 2009 07:27:50 +0000

Sudip, people all across look at you for your advice and suggestions on various matters concerning their financial status and relative financial independence. You are also seen as a subject matter expert when it is the india economy in question or when people are looking for clarity. ONE SMALL QUESTION to you. Pls advice what I as an average retail investor (with about Rs 30 lacs of investible surplus must do in these trying times. I have been staying in the US for the last about 6 years and have just come back to india. regards simmi

By: Sanfu

Sanfu — Sat, 14 Feb 2009 11:35:47 +0000

Thanks for clearing doubt

By: Sudip

Sudip — Fri, 13 Feb 2009 05:10:51 +0000

Sudip says :What we have been referring in the related article is Investment in Infrastructure related to commodities which can facilitate increase in Production, Storage and Distribution. In case of crude oil, the leading oil producing countries like Iran, etc. due to political reasons either shut their country or were shut out by the US and European countries for investments. No fresh investments were made to increase capacity either in production or storage. This resulted in both, commodity prices shooting up when demand increased and crashing down when demand decreased. Absence of storage makes the oil producers extremely vulnerable to short-term demand trends.

By: Sanfu

Sanfu — Wed, 11 Feb 2009 15:08:04 +0000

Hi Sudip

Thanks for providing new direction for the reason of financial turnmoil. It is true that global investors invested too much in real estate but don’t you think investor also invested in good proportion on commodity and energy. Last year all commodities hit their life time high, people were paying astronomical prize to companies who have huge mineral resource. Agricultural products also hit their life time high. Investor were also invested huge amount in energy and energy due to high oil price. All power equipment companies in globe whether in wind, thermal, hydro has huge order backlog. It would be great if you provide more insight how asset allocation play more important role in financial turnmoil then leverage. Thanks a lot for making us to think in more than one direction because everywhere we read that leverage is the main cause of turnmoil.