Through the Looking Glass

Live discussion of Akhilesh Tilotia, Director, PARK Financial Advisors with CNBC Awaaz on the impact of rising interest rates, 31st March 2007 You can watch the video here: YouTube

Rediff - part 2 of 6 We have seen the basic types of assets into which a mutual fund might invest: equity and debt, and how this choice impacts the risk and return characteristics of the funds. However, you would have noticed funds which have now evolved and try to provide you with more fine-tuned products in a specialised niche. Equity funds, in particular, like to identify newer or better avenues of investment and hence they create products around those new avenues. Style of a mutual fund: Equity An equity fund can invest in a large-cap, mid-cap or a small-cap stock. You might have heard these words being thrown around rather liberally by all the new funds on offer. 'Cap' refers to market capitalisation (M-cap) of a stock. M-cap is defined as the total market value of the equity of a company. For example, if a company has 1,000 shares outstanding and the price of each share is Rs 20, the market value of the total equity of the company is Rs 20,000 (1,000*20). To ...

Rediff - part 1 of 6 It is almost always assumed that anyone reading an analysis on mutual funds (or the fund management industry) knows the intricacies of the same. This is not universally true and, at all times, there are a) new people trying to understand the basics, and b) people who want to brush up their knowledge of the fundamentals. We will use this 6-part series to understand mutual funds from their very basic concepts. Here is the first part. What are mutual funds? If we break the phrase 'mutual funds' and analyze the words, we realize that it refers to funds that are raised and invested mutually, i.e. on behalf of everyone participating in the scheme. If you and your friend both pool your money and invest it jointly, you have created your own mutual fund. When the concept of companies initially formed, people who knew each other and were willing to take the risk of the venture used to put in the share capital of the company. Slowly, entrepreneurs realized ...

Financial planning and products are all about number work and most of it is fairly complex. It helps if there are certain simplifications to make life easy. One way is to have rules of thumb, which can be quickly applied to understand the situation The Economic Times Here are a few commonly used rules of thumb categorised into mathematical, financial advice and mythical. Mathematical Rules There are some rules that are true due to mathematical properties: Rule of 72: This rule (written as 72/r) helps one determine the number of years it will take to double money, where r is the annual compounded rate of interest. If a bank offers you 8% p.a. compounded annual rate, then you can expect your money to double in approximately nine years. Similarly, in the earlier days of money doubling in five years, the implied annual compounding rate was around 14.2%. Real rate is twice ‘flat rate’: Many agents sell loans at a rate which appear mouth watering. But look closely and the fine p...