Asset allocation for Married & No Kid ►►► Age less than 25 years

At his stage, your main priority is to have a property considering your age and absence of responsibilities of kids. You may afford to take risk. Your asset should be allocated as follows :

►  Invest a decent amount of savings, nearly 45%, in equity. You should now have relationship with a professional stock broker and a mutual fund adviser too.

►  You need to plan for the days when you may have a family. Invest 35% of your savings in property. You ca also think of keeping 40% in property and another 40% in equity.

►  In order to have liquidity, you need to have around 10% of your savings in bank accounts. Depending on your day to day needs, you can also reduce the percentage of allocation.

►  It is necessary to keep some money around 5% in fixed income instruments.

►  And keep 5% in Gold also. Please don’t jump on buying gold at today’s market price – the rate is bit high now. Just wait when the rate of 10gm Gold bar is available at around rupees 12K. Insist on buying Gold bar from reputed banks.

Asset allocation for Single ►►► Age between 25-40 years

Typically you are at the stage of building wealth with no immediate family to support. So you may be willing to take high risk. Your portfolio should be as follows :

► You may have already started acquiring your own real estate so keep on contributing 40% of your investment in property. If you feel this is bit high you can switch some portions to equity too.

► Keep a good amount of money nearly 40% in equity. Hoping you do have a professional stock broker to maintain your capital.

► And keep around 10% in bullion. We will have a detail discussion on bullion later on.

► You don’t need to have more than 5% of your money in savings accounts.

► Keep around 5% fixed income instruments like debentures and bonds.

Asset allocation for a Single ►►► Age < 25 years

Typically you are a person with no liability. So you can afford to take high risk.

Your portfolio should be as follows :

► Keep a significant portion of your savings, around 45%, in equities. This is bit risky, but looking at your age, it's somewhat feasible.

► You should start investing in a real estate. Nearly 40% of your savings should be for the purpose of buying the real estate. You should always consult an expert real estate broker for this.

► You don’t need to have more than 5% of your money in savings accounts. If you need to keep something for any emergency purpose you can think of keeping aside some more percentage.

► You may also keep some money in fixed income instruments, may be to the extent of 5%. Say in Post Office or Bank fixed deposits.

► And keep some nearly 5% in bullion. We will have a detail discussion on bullion later on.

Asset Allocation : Some basic things

Each one of you must remember that investing is a continuous process, based on certain scientific methods, which would enrich the quality of your lifestyle and help you in achieving your personal goals and aspirations. Designing of portfolio for most of the individuals is a lifetime activity and not an ad-hoc process. You should ensure that you are taking a right decision to invest your heard earned funds in safe place.


First of all, before investing you should have an adequate knowledge of financial market and the various options available for investment then, then only you can plan you portfolio. Your investment strategy should be such that it fulfills your real life need like purchasing a house, receiving regular income, children education & marriage and future financial security.


The whole article is somewhat bigger and I need some more posts to cover every approaches of allocation for different age groups. In a nutshell, we would throw some light, on how you should allocate your savings at different stages in your life to gain maximum advantage. However, the asset allocation depends upon various other factors also, so you should also consider those factors before finally putting your money.


Just see the table below and find out the category in which you fall. [In the table, column depicts the age and rows show the status in which the person falls presently.] You may go to cell number in which you fall and find out what should be your asset allocation. Just click on the category number on the cell and you will be navigated to the corresponding post.

Status / Age	< 25 years	25-40 years	40 – 60 years	> 60 years
Single	I	II	-	-
Married with no kid	III	IV	V	-
Married with kid	VI	VII	VIII	IX

In the next posts we will suggest you an appropriate asset allocation depending upon the category in which you fall.

ALTERNATE CREDIT SCORE

Alternative Credit Score acts as one of the prime criterion for loan disbursement for an individual. Credit Score has positive co- relation with income.

Many individuals have thin or non-existent credit files. It indicates that giant U.S. credit bureaus don't have enough information about finances of many individuals and hence they are not assigned any credit score, a figure generated via statistical models that examine outstanding borrowing, history of payments and debt loads. Banks use credit scores to determine eligibility and pricing for mortgages, auto and other loans.

However, this group of people having proper income but devoid of necessary credit score is increasing in number which is no less significant and opportunities are opening up for them with extensive effort from the financial institutions who are developing credit values of these people on the basis of what is today popularly termed Alternate Credit Score. It runs parallel to regular credit scores, risk profiles are updated on the basis of diversified data like rent, utility, child care, medical, and other payments. Banks are also coming up in hurried pace to tap this un-trodden territory and it may see a sea change when lot of people will shift more towards banks and move away from high interest bearing payday lenders.

However due to lack of collective data and information of either parties with each other, there remains a vide gap of co-ordination and it may happen that many among the credit seekers fall in hands of several pay day lenders or may end up consuming several products that otherwise wont have a valid presence in their port-folio. One necessary point to remember is the appropriate data should be with the banks and the degree of authenticity is worth mentionable in this Alternate credit Score method.

Thanks

Pamela

USA Insurance Sector - Slow Down

Recession in Global Economy has definitely created a huge impact on world market and insurance sector has also been hit by the financial slow down.

The catastrophic impact has become prominent with several millions being wiped out from the industry and many insurance giants witnessing sluggish growth and even negative return since last year as compared to returns booked and revenue generation analysis on quarterly basis.

Let us brush through a few points to carry forward the analysis.

Several millions were invested in financial institutions according to the portfolio set up which had badly affected the insurance sector on a whole.

Going by the available data, Hartford’s financial erosion reached around $2 billion during third quarter of 2008 as compared to $850 million gain during the same period the year before. MetLife’s accounts witnessed shooting up of costs in leaps and bounds with more than $ 1 Billion draining out to meet the claims and benefits. With rising cost and dampening effect on profit margin Insurance companies coughed large sum of money with little margin to fall back on.

Analyzing the problem from economic point of view, the gross approach of portfolio build up and direction of monetary flow boomeranged in many ways fuelling the problem. The portfolio had major exposure in fixed maturity investments like bonds mainly corporate bonds and with lesser credit liability; the insurance companies are witnessing fast erosion of asset value.

With the fall of value of the bonds, the claims and benefit payments are getting hard for the companies, drawing them to the verge of facing the problem of survival.

The most likely effect of this scenario may be total government assistance to sail through the tough period as well as several mergers and acquisitions may occur.

The question of survival now hovers around for most of the insurance companies.

Thanks

Pamela

US CREDIT CRUNCH

A credit crunch is an economic condition, in which loans and investment capital become dearer and difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get done. Credit crunch is a modern day economic problem which may occur at micro level (individual level) or even at macro level (country / region). Statistics reveal that USA, though one of the biggest consumer country has been in rough patch due to this credit related problem. Year 2007 has witnessed that employment news of Americans were not good and there has been lesser faith in cash market, panic prevailed all over, that fueled the credit crunch even more.

The credit crunch has become a difficult situation in USA especially for the finance corporate as well as retails investors. In the earlier phase, banks and financial institutions have been giving requisite loans to the buyout firms as the banks were able to re sell the loans to the investors. However the problem increased from mid 2007 when things dried up for several new investors as well as existing clients. Several investors who had previously taken loans could not sell their loans from their portfolio at any price, loaners were losing out the opportunity cost of money, the situation was acute with total disappearance of buyer, banks were hurled into tremendous liquidity problem.

Direct financial field saw backing out of several commercial papers which promises to pay that wide variety of companies issue to acquire short-term funding , $1.2 trillion asset-backed commercial paper evaporated from market.

Going by statistics, we see that housing / real estate boom started from late 90’s, more precisely from 2000 onwards. Fresh from Dotcom bubble burst, real estate became a safer bet for many Americans, especially when the rates of interest were quite low. It created an opportunity for many lenders who became proactive and drew many home buyers alluring them with apparently lucrative deals to buy houses. Increasingly low credit worthy home buyers entered the market and lenders provided them with basket of options like exotic mortgages, such as interest only loans or flexible rate mortgages other wise termed option ARMS. These loans had characteristics of initial low payments and later came with sky rocketing interest rates. Banks had written nearly 15 % ARMS by mid 2006. One important characteristic in this whole process are the brokers who don’t hold the loan nor they maintain a life time relationship with customers rather they are motivated by the commission structure which acts as driving force for them and hence Misselling occurred frequently. Securitization of mortgages became a problem which crawled into several financial tools like Futures and Option trading (Financial Derivatives), high leverage taking hedge fund became more vulnerable being more exposed to risk. However when defaulting eventually took place the situation worsened and Financial institutions and banks faced the heat of credit crunch which became more and more complex leading to many big shots succumbing to the credit crunch pressure .

Thanks

Pamela

STUDENT LOAN CONSOLIDATION

Loan is a financial package offered to borrower from lender with a mutual or written agreement with specified terms and conditions for some fixed tenure with an expected repayment and is usually borne with an interest. We may say that loan refers to consuming or using future purchasing power in present. Student loan is a structured package meant for students to finance their educational expenses.

Even after flexible loan plans, several students fall in debt trap due to over expenses and unplanned spending. In this scenario it is often advisable to manage the loan by consolidating it in a judicial way. While maintaining numerable loan repayment liabilities

which accounts to maintaining that much interest repayment trouble, maintaining records of all at the same time, it is better to transfer them into one consolidated structure and start repaying them through one. Often this helps to negotiate interest rate changes in a good way and acts as buffer during hard pressed times of high interest rates.

Students who often take care of their finances during their educational period may find this extremely time consuming as well as deviator from their daily chores.

According to 2002 statistical data, students on an average left college with $17,000 in loan debt. With loan amount steadily increasing in the last few years, the US Department of Education and other higher-education institutions have entered into a contract with private collection agencies to collect overdue student loans.

It is always advisable to understand the loan regulations, clauses, interest rates, repayment possibilities before taking a loan and to counter any for-coming financial crisis

or any unforced errors certain steps are perennially advised:-

• Savings: Just $20 every month savings can create wonder, by the end of college, one will have almost $1,000 saved for student loans. Hence a small but regular savings can do wonder.
• Budgeting: Many college graduates exceed their cost of living; hence it is often suggested for developing a budget and sticking to it. Determine what bills and payments have to be paid (i.e. student loans, rent) and then calculate how much is left over for additional expenses and as savings.
• Ask for advice: One shouldn’t hesitate to ask student loan counselor or collector for a flexible payment plan. Many organizations are willing to develop a payment schedule that works for both the consumer and lender.

Student loan debt consolidation program can only work, if he / she introspects his / her financial standing and work out his / her repayment program accordingly.

Thanks

Pamela

SEZ — SPECIAL ECONOMIC ZONE

# What is SEZ???

SEZ is an abbreviation of Special Economic Zone and refers to a development of geo-economic condition of a country. SEZ is a dedicated geographical area enjoying more trade liberty and lesser or a few governance that otherwise would have been applicable under a country’s typical economic and trade laws.

Infact SEZ covers a broad range which can be sub categorized into more zones:-

i. FTZ -- FREE TRADE ZONE

ii. EPZ--- EXPORT PROCESSING ZONE

iii. FZ --- FREE ZONE

iv. IE --- INDUSTRIAL ESTATES

Apart from these, there are Free ports, Urban Enterprise Zones and other categories. Jordan, Pakistan, Philippines, Poland, Russia, and Ukraine Brazil, India, Iran, Kazakhstan are among many countries to adopt SEZ to facilitate their Economic growth.

SEZ has a concept to allow ventures often private or joint ventures of government and private collaboration to improve domestic production Increasing national output, creating favorable environment for FDI and to be more competitive in world market.

Infact the laws are liberalized inclined more to waiving off taxes and duties and more friendly towards production and development.

Thanks

Pamela