Hot money is that money which flows regularly between financial markets as investors attempt to ensure they get the highest short term interest rates possible.
Capital transferred from one financial centre to another seeking the highest interest rates or the best opportunity for short term gain, mainly from changes in exchange rates.It is also known as flexible income.
Money or capital received through Foreign Institutional Investors (FIIs) is known as Hot Money.
[…] Read more
Portfolio is a group of financial assets such as stocks, bonds and cash equivalents. It is a collection of investments all owned by the same individual or organization. Portfolios are held directly by investors or managed by financial professionals. It should show a spread of investments to minimize risk.
Portfolio management is about analyzing strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety and many other trade offs encountered in attempt to maximize return at a given level of risk.
Some major tasks involved with Portfolio management are:
1. Taking decisions about investment mix […] Read more
You must be thinking of using tax saving investments for planning tax but precautions should be taken while selecting these investments. Following things should be considered while selecting tax saving investments:
1. LIQUIDITY: How fast your investments can be converted into cash? When will you be able to access your money in one year or two years or so.
2. RISK AND RETURN: Access what type of investor are you? Whether you are risk averse (do not want to take risk), risk lover (love to take risk) or risk neutral ( risk don’t affect your decision). As criterion that follows with investment […] Read more
Tax planning is arrangement of financial activities in such a way that maximum tax benefits, as provided in income tax act, are availed of. Usually people confuse tax planning with tax avoidance and tax evasion. But these three are different terms.
TAX AVOIDANCE: It is the act of dodging without directly breaking the law. It is done with a purpose to defraud the revenue.
TAX EVASION: Through tax evasion dishonest tax payers try to reduce their taxes by concealing income, inflation of expenses, etc.
The most important step in tax planning is divide and rule i.e. total income of family should be divided […] Read more
There are various alternatives available for investment. Few investment alternatives discussed here:
1. CASH & DEPOSITS: It bears minimum risk.
2. FIXED INCOME SECURITIES: It offers fixed periodical returns.
3. SHARES: The value of share changes according to the market’s view of the worth of the company.
4. UNIT TRUSTS: Unit trust investments can generate income in the form of interests, dividends and capital gains.
5. PROPERTIES/REAL ESTATE: It is less liquid and involves less risk.
6. LIFE INSURANCE: One should not buy insurance solely as investment as it involves cost which other alternatives may not involve.
7. COMMODITIES: Commodities can be bought as physicals where the […] Read more