einstein-compound-interest-rule-of-721.jpgYou may have heard the saying ‘If it sounds too good to be true, it probably isn’t true’. But how do you work out what could be too good to be true?

Start with the rate of return you have been offered. Most investments illustrate their rates of return using percentages. While that’s perfectly reasonable, research suggests that many people have trouble working out percentages, especially in their heads.

To determine how many years for your capital to double, you bring to mind the Rule of 72, which tells you to always divide the capital by the interest, and the result is in how many years it will be doubled. This is simpler than it seems. Before calculators or spreadsheets, investors used the trusty old ‘Rule of 72’.

How the Rule of 72 works

Suppose you were offered an investment with a return of 10% per year and you reinvested all your returns. How many years would it take to double the value of your original investment?

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read_my_lips.gifMany years back an elderly relative of a family friend of mine passed away. The next day, while I was at the funeral, I had a really strange experience. I noticed that a man who looked really stricken with grief was continuously staring at me, I vaguely remembered seeing him somewhere too. A few minutes later, he left the group of people he was with and came and stood next to me.

I‘ve seen you at so and so office, you are the guy who talks Financial Services, am I correct?” he whispered. I nodded, not knowing whether I was expected to carry on a conversation. And then, having surreptitiously glanced around to make sure no one was listening, he whispered again, “Is the market going to go up?”

“I don’t know,” I said. It was an honest answer because I never do know what’s going to happen to the markets (nor, do I think does anyone else but that’s not the point). The man looked hurt and angry, perhaps because he felt that I should have done my bit to lighten his sorrow by predicting the future direction of the stock market. Once he realized that I was too heartless to oblige, he stalked off and kept glaring at me till I left.

Later, I couldn’t help thinking about this incident and wonder at the vast range of attention levels that people pay to investing. I’m not talking about those who have a legitimate professional connection with the markets like investment managers, family astrologers of stockbrokers and perhaps even editors of mutual fund magazines. I am talking instead of ordinary people who have a non-financial profession.

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time-management.jpgYou establish your credibility primarily through demonstrating your with agreements with yourself and others

A good gauge of your ability to keep your agreements is how many times you are late for work or for meeting. Being consistently late is feedback that your time is not “your” time at al, but belongs instead to a constant stream of interruptions and unnecessary delays.

Arriving on time begins with leaving on time. Make leaving on time a priority, a personal challenge. Make a commitment to yourself that being on time is your number one priority. Making excuses for why it wasn’t “your fault” won’t get you there earlier next time. In fact, excuses are an attempt to put a stamp of approval on failure. Chronic lateness is not caused by any one event. It is a symptom of how your entire life is working in terms of your ability to plan your time and work your plan. If you want to master time, master the following strategies and I guarantee you will arrive on time every time.

1. Don’t make getting ready the last thing before leaving. Proper preparation begins with proper planning. If getting ready is the last thing you do before leaving the house, rest assured you will leave late as often as not.

2. Keep losing your keys? Common sense would ask how many times car keys have to be lost before it becomes obvious that a systems approach is needed for keeping track of those elusive little rascals. Although systems approaches may be a part of your everyday business or career life, few people have employed the power of systems, even simple ones to their personal lives.

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gold-biscuit-bars-727186.jpg“All is not golde that glistereth.”

Shakespeare is the best-known user of the idea. The original Shakespeare editions of The Merchant of Venice, 1596, have the line as all that glisters is not gold. ‘Glister’ is now usually replaced by the more commonly used ‘glitter’, which has the same meaning:

If you want to advertise an investment-related website on a major Internet-based advertising network (that of Google, for example), it will cost substantially less to advertise a mutual fund or stock research website than it will for a site on investing in gold.

Does this tempt me to transform from a mutual fund site to a gold site? Not quite, but it does make one wonder how much sense gold makes as an investment and how exactly one should invest in it.

Does it make sense to look at gold as an investment? If you look at historical gold prices over the last 70-80 years, then it does make sense to think of gold as a good asset type in which to put some proportion of your savings. Apart from an anomalous period during the late nineties, Gold has yielded around 8-10 per cent a year over most of period since around 1920.

What is bad is doing what most seem to be doing in the name of investing for gold. We have this idea that gold is a good investment for bad times and then instead of buying gold, we buy jewelery. But there’s a problem. Jewelery is not gold, at least it’s not the kind of gold that can be considered an investment.

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lg1.jpgOil prices have risen to a record high above $98 a barrel, amid concerns over tight fuel stocks, a weak dollar, bombings in Afghanistan and an attack on a Yemeni oil pipeline. Oil prices soared nearly $2 a barrel Tuesday on expectations of further declines in crude oil stocks, fueling concerns that supplies may be inadequate heading into winter. The market remains bullish and seems to be on an upward trend to hit the psychologically important $100 level.

Unfortunately, this year it looks like we’re not going to be able to count on a nice drop in gasoline prices. With crude oil futures threatening to touch $100 a barrel, gas prices jumped. So, fuel economy is paramount. Here are tactics to help you get the most miles per gallon from your vehicle and save money, too.

No matter what you do, increased gasoline prices are going to affect you in some way. While the price increase may hurt some more than others, the fact remains that we’re all going to have to become accustomed to the fact that the days of cheap gas (and energy in general) are in the rear view mirror.

Regular oil changes and tune-ups cost money and can take a big chunk out of your Saturday. But repairing a car that has failed an emissions test will improve its gas mileage by an average of 4 percent. And fixing a serious maintenance problem, such as a faulty oxygen sensor, can improve mileage by as much as 40 percent. Even a simple change like replacing a clogged air filter can improve gas mileage by up to 10 percent.

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staytuned.jpgHi everyone, I will be moving this blog to a new host this week. Nothing will change, but it is possible there will be some downtime, surely not more than a few more hours.

As soon as this is over, I will return to the regular posting schedule. Stay tuned.

Thank you very much for all the support!

Cheers
Robin

23326550.jpgStick to the rules. Believe it or not this is the hardest rule. The trader will keep breaking this one time and time again. As I have mentioned many times, every time that I have strayed away from my trading plan I have always lost money.

Diversify. Don’t have all your eggs in one basket. Buy from a couple of areas, not just the one sector.

Buy shares that suit your trading style. If you are buying shares for long term, obviously this won’t suit you if you are a short-term trader. And vice versa, shares for short term won’t suit if you are a medium to long term trader.

Know your risk tolerance. A speculative share has a different risk profile to an out-of-favor blue chip. Therefore allocate your capital according to the risk profile of the trade and your own personal risk tolerance. This is a personal decision that only you can make.

Don’t rush in. All investor’s particularly new ones should take their time and learn about the market before they start trading. A good way is to “dummy trade” first so as so as to learn the basics first. The market will still be there waiting for you for when you are ready to trade.

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probate1.jpgClients often ask me, “Why do I need a will?” Many people share common misconceptions — that only the wealthiest need a will, or that the process of making one is complicated or costly. What I have learned through the years is that everyone needs a will and that it is far more costly to avoid making one.

Without a will, you leave important decisions to someone else to make after your death. Make a Will now for real peace of mind. I have noticed that people generally manage their lives quite well but leave things in an utter mess when they die.

A will lets you specify how your assets will be distributed and how taxes, if any, will be paid. You can select whomever you wish to administer your affairs. Without such a plan, your state of residence determines who receives your assets and how the taxes will be paid. The courts may become actively involved in administering your affairs, and they may award property to relatives you would never include, but overlook friends or charities you want to remember.

It is a strange fact that around 70% of people have not made a Will, but the consequences of dying without one can be serious. Everyone urgently needs a Will; If you don’t make a Will you die intestate, which means that everything you own is distributed under rules laid down by law irrespective of the wishes of your family.

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india_mukesh-ambani-11.jpg“Recently, there have been several reports in the media on my personal wealth. Frankly, I am amused by these reports. I measure my success by the value that I create for my shareholders and the assets that we, as a company, create for the nation as a whole. My wealth and your wealth are inevitably linked to our growth.”

Mukesh Ambani the Indian Billionaire today became the richest person in the world, surpassing Mexican business tycoon Carlos Slim Helu, American software king Bill Gates,and famous investment guru Warren Buffett, following the latest the Bull run in the stock market.

Following a strong share price rally on in his three group company, India’s most valued firm Reliance Industries, Reliance Petroleum and Reliance Industrial Infrastructure Ltd, the net worth of Mukesh Ambani rose to $63.2 billion. A historical landmark for the nation’s economy, thus pushing Ambani to the top of the list. Mukesh Ambani owns Reliance Industries, India’s largest private sector enterprise with businesses in the energy and materials value chain. His personal stake in Reliance is 48 per cent.

In comparison, the net worth of both Gates and Slim is estimated to be slightly lower.

I wonder where his brother Anil Ambani stands. For those who don’t know, Mukesh and Anil Ambani are brothers who jointly owned Reliance Industries, before they broke up. I am inclined to believe that they would have made it to the top had they not split.

Given below are the five richest men in the world and their net worth:

1. Mukesh Ambani ($63.2 billion)

2. Carlos Slim Helu ($62.2993 billion)

3. William (Bill) Gates ($62.29 billion)

4. Warren Buffett ($55.9 billion)

5. Lakshmi Mittal ($50.9 billion)

Earlier on September 26, Ambani had overtaken steel czar Lakshmi Mittal to become the richest Indian in the world.

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user.jpgOnce again, investors are in a manic-depressive mood. They undergo bouts of wild joy when they see where the markets are heading and how the value of their investments has increased. At the same time, they are sick with worry about whether they should stay invested and whether they should invest more.

The stock markets have reached higher than they have ever done before. This is a good thing for investors but is also a dangerous one. Remember, more bad investment decisions are made when the markets are at a high than at any other time. All-time highs may be exciting, but all savvy investors know that at times like these one’s thoughts should be on what not to do rather than on what to do.

We know it’s difficult to control one’s excitement, but this is the right time to get back to basics and reaffirm one’s knowledge and faith in the basics of investing. Here are some simple rules and principles that will ensure that you can prevent yourself from making the worse mistakes that the stratospheric heights of the stock markets can induce.

1. It isn’t different this time, not really:
Every bull run brings out the chronic optimist in investors. This time, we feel, things have changed fundamentally and the markets will go on rising up for a long time. Sure, we feel, they may pause a bit, but surely they won’t fall ever again. Every great bull run that the Indian markets have seen in living memory has come complete with a set of reasons ‘proving’ why it was different this time.

2. Bulls are no substitute for knowledge and understanding:
As the stock markets rise, most people appear to need fewer and fewer justifications for investing. A couple of years ago, when the markets were down in the dumps, hardly anyone would make an investment without putting it under a magnifying glass.

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