Section 12 - Financial Planning,pdf.pdf

Counselling Referencer –
Section 12 –
Financial Planning
Author
Sudhir Vaidya

Overview of Financial Investment Planning.
1.0 Introduction:
1.1 The word investment has a very wide/ macro meaning. We have to make
investment in various categories for leading a happy life. At present I wish
to concentrate on Financial investment.
1.2 Financial investment is call of the day.
1.3 The topic is very complicated but I will try to simplify the same for you.
1.4 We must first understand the difference between saving & investment.
1.5 Saving is the starting point. Investment is made out of saving.
Purpose / intention of saving & investment are slightly different.
1.6 You can look at saving from two angles as outlined below.
 Income Less Expenses = Saving
 Income Less Saving = Expenses.
1.7 Saving can be increased by earning more income or by reducing excessive
and unwarranted expenses or by combination of both methods.
1.8 Saving is a habit and it needs to be cultivated.
2.0 Why we should save money?
 We should save money according to our capacity for following reasons.
2.1 For investment for future/ old age.
2.2 To take care of short term needs. E.g. Festival expenses, periodic expenses
such as education expenses etc.
2.3 To meet unexpected expenses such as medical expenses.
2.4 To purchase / replace household requirements such as kitchen utensils
which would save our energy / entertainment articles such as TV, Radio,
Transistor/utility articles such as fan, furniture etc.
2.5 To keep certain portion of saving to meet emergencies.
3.0 Which factors should be considered while making Financial Investment?
3.1 Safety of Investment should be the prime consideration. Investment should
not be lost.
3.2 Liquidity: Investment should be easily available in case of need.
3.3 Returns: Investment should not remain idle but should also earn reasonable
income.
3.4 Spread: Investment should be made in different forms to minimize risk.
3.5 Purpose: Investment should be made according to purpose.

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4.0 Types of Investment:
4.1 Investment can be made in Immovable property or in movable property.
4.2 Immovable Property: Agricultural land, Farm house, Bungalow, Flat etc.
4.2 Movable Property: Gold, Bank deposits, Postal schemes, shares etc.
5.0 Security should meet the following criteria: (MASTDAY)
5.1 M Marketability.
5.2 A Easy to ascertain its title, value, quantity and quality.
5.3 S Stability of value.
5.4 T Transferability of title.
5.5 D Durability – not perishable.
5.6 A Absence of contingent liability. i.e. You may not have to spend
more money on the security to make it marketable or even to
maintain it.
5.7 Y Yield. The security should provide some on-going income.
6.0 Risks associated with holding Financial Investment:
6.1 Physical risks such as Fire, flood loss, theft etc.
6.2 Inflation. Decrease in purchasing power of money. Our income does not
grow in same proportion as increase in inflation rate.
6.3 Remedies to overcome physical risks: Household insurance, Mediclaim
policy, Personal accident policy, hiring of safe deposit locker to keep
investment.
7.0 What precautions should be taken in respect of Investment?
7.1 Investment should be made in joint name.
7.2 Investment should be payable to either or survivor.
7.3 Nomination facility should be availed of.
7.4 Proper record of investment held should be kept.
7.5 Your spouse should be aware of all your investment matter.
7.6 Excessive faith should not be kept on relatives, friends.
7.7 Necessary secrecy should be kept. The investment matters should not be
discussed with strangers.
8.0 Investment in Macro Terminology:
To lead a Happy life, we should not only invest in financial security but
also in the following:
8.1 Education 8.5 Positive Attitude 8.9
8.2 Health 8.6 8.10
8.3 Family 8.7 8.11
8.4 Good Friends 8.8 8.12

06-Estimate of Household Expenses
A Savings: Rs. B Repayment of Rs.
1 PF 1 Housing Loan
2 LIC 2 PF Loan
3 PPF 3 Bank Loan
4 NSC 4 Vehicle Loan
5 ULIP 5 Personal Loan
6 Recurring Deposits 6
7 7
8 8
9 9
Total Total
C Household
Expenses
Rs. D Other General
Expenses:
Rs.
1 Rent / Society
charges
1 Telephone
2 Food & Provisions 2 Internet Charges
3 Vegetables 3 Mobile expenses
4 Meat & Fish 4 Electricity
5 Milk 5 General insurance
premium
6 Fruits 6 Wages & Salaries of
servants
7 Gas / Fuel 7 Dress, clothes,
Tailoring charges
8 8 Laundry
9 9 Postage
10 10 Newspapers,
Periodicals
11 11 Cosmetics & allied
items
12 12 Special shopping
Total Total

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E Education: Rs. F Other Expenses: Rs.
1 School / College
Fees
1 Medical expenses
2 Books & Note books,
stationery
2 Conveyance
3 Pocket money 3 Vehicle expenses
4 School Bus fees 4 Travelling
5 Tuition fee 5 Club expenses
6 Wages of servants 6 Eating out
7 Miscellaneous 7 Entertainment
8 8 Charity
9 9 Repairs of gadgets,
appliances.
10 10 Contingencies
11 11
12 12
Total Total
Summary Rs.
A Savings
B Repayment of Loan
C Household Expenses
D Other General Expenses
E Education
F Other Expenses
Total

08 / My Tips for Saving Household Expenses
1.0 Introduction:
1.1 Global Recession has become a Topic of discussion since September 2008.
Now news about ‘Rising Inflation and hike in Petrol prices’ is the favorite
breaking news.
1.2 Economists are analyzing the above situation and taking remedial steps to
reduce the hardship to common man.
1.3 There is a saying in Marathi namely ‘Antharun pahun pai passarawet.’
It means ‘we should live within our means.’ This was the LIFE philosophy of
earlier generation which is still being continued by certain segment of people.
However younger generation has mostly rejected this philosophy of ‘living
within means’ and are constantly trying to increase the ‘means.’
1.4 However now this is the time to go back to same Age Old LIFE Philosophy
for Survival and Mental Peace.
1.5 In the back ground of above discussion, I have outlined Few Tips under
various categories which would enable every one to not only Save Money but
it will also help to improve the quality of LIFE. One will reap many indirect
benefits such as improving planning skills, understanding importance of
co-operation, improvement in personal relationship, good health, mental
peace and Happiness from Inside out etc.
1.6 You are aware that we spend money for ‘Necessity, Comfort and Luxury.’
However it is interesting to note that the terms are relative and the
classification will vary from person to person. Necessity of one person may be
Luxury of another person. Hence it is necessary to always bear in mind the
basic purpose of spending. These Tips should be read & implemented in
this context.
1.7 One can draw Time limit for implementation of the various suggestions.
I assure you that these are time tested suggestions based on my experience.
I have also made an attempt to give justification of my suggestions.

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1.8 I request all of you to suggest further Tips, your experiences in this regard by
sending email to ‘spandane2008@gmail.com.’
1.9 Your Life should be like a square meal. Your destination of ‘Happiness’ in Life
will be your mind it self if you can manage to keep balance between your
educational/occupational career, family, health and friendship.
1.10 I hereby invite you to visit my web site ‘www.spandane.com.’
1.11 Now I would give ‘Road Map’ for handling your tension arising from
Inflation.
i Make detailed list of your Financial Investment and interest income as per
format attached.
ii Make Household Expenses budget based on your experience under various
expense heads as per format attached. Compulsory investment for LIC/ PPF,
Repayment of EMI should be considered as expenses.
iii Estimate the Revised Level of Expenses after reviewing following Tips.
iv Now arrive at the Gap between Revised expenses and Interest income.
v Find out the ratio of Gap & Salary. Thus even if your salary is cut by 100 less
the said %, you will not have problem for household expenses.
vi Now what is the chance that salary will be cut to that extent?
1.12 It is now interesting to note as to who is really worried about Inflation &
rising Petrol Prices?
i In terms of Financial Wealth, we classify population as Rich and Poor.
ii Poor people may further be divided into Below Poverty Line and Above
Poverty Line.
iii Rich people may be further divided into ‘Garbha Shrimant’ (Rich from earlier
generation) and ‘Nav Shrimant’. (Present generation becoming rich due to
higher education and taking up top level jobs in India or abroad.)
iv Working Class may further be divided into Government employees and

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Private sector employees.
v Poor people are as it is worried for their basic needs of Food, Shelter and
Clothing even under growing economy.
vi Government employees have job protection and no fear for even pay cut.
In fact with every new Pay Commission, their salary shows handsome
revision. These employees are also entitled for other ‘Fringe benefits.’
I need not elaborate on the point.
vii Business Class has no need to worry for survival. I need not elaborate on the
point.
viii Thus this Inflation is causing worries mainly in the minds of Private sector
employees who have mastered the Western Style of enjoying Life. Shopping,
Travelling, Eating out, parties etc. has become synonymous as Happiness.
Saving is outdated for this class. Credit Cards are used regularly.
 This note has been prepared keeping this class in mind.
1.13 Best of Luck from Spandane.

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2.0 Food:
2.1 Switch over from Buffalo milk to Cow milk.
 Price difference is about Rs.5/- per liter. Moreover Cow’s milk contains less
Fat. Reduction in milk consumption / consuming milk with lower fats is
beneficial for the body / heart as the age advances.
2.2 Vegetables should be purchased from the main market.
 You will notice price difference if you purchase from small vendor near to
your residence and from the main market near the station. If you plan your
menu for say next week, it is economical to purchase vegetables from main
market even if conveyance is involved. Your beloved husband would also love
to join you in this mission.
2.3 Enjoy Fruit juice at home instead of taking fruit juice at hotel or purchasing
tinned juice.
 If you are fond of juice, then you can enjoy the same at residence and save
good amount. Quality of juice will be definitely good avoiding ill effects of ice
used by the hotel / restaurant.
2.4 Visits to Hotels should be reduced.
 There is a scope for reducing substantial amount if visits to hotels are even
slightly reduced. Just think as to why we like to eat at hotel? Is it due to wrong
notion of status / easy money / wife does not cook nicely? 
2.5 Carry water bottle from residence instead of purchasing Mineral water
bottle.
 Once upon a time we all used to drink Tap water without any filter / Zero B
etc at least in Mumbai. When ever we go out for picnic, malls, hotels, travel
etc. we purchase mineral water @ Rs.12/- per liter. We can easily carry water
bottle from home. Do you remember having seen special copper vessels for
carrying water during journey used by earlier generation?
2.6 Curd should be made at home.
 Many people are fond of curd / buttermilk. In fact your digestion system
becomes strong due to curd, Buttermilk. 100 grams of curd costs

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approx.Rs.12/- and is hardly sufficient for 2 persons. It would be definitely
economical to make curd at home.
 No doubt it would call for discipline on the part of kitchen in charge.
2.7 Carry Tiffin.
 In case you are taking Lunch in a hotel, then it is worthwhile to carry Tiffin
from home. However if you have a good subsidized canteen facilities provided
by your employer, then the suggestion may not hold good.
2.8 Purchase mass consumption items such as Rice, Wheat, Oil, Turdal, Sugar
etc. from whole seller in bulk quantity for 3 months.
 Substantial cost reduction but availability of storage space, lump sum amount
for bulk purchases also needs to be considered. Just keep an eye on Schemes
floated by Malls.
2.9 One can settle for slightly lower rate variety of food items.
 Prior to 1971 rice, wheat and sugar was not available in grocery shop but had
to be purchased from ration shop irrespective of quality and availability of
money. The food grain situation has now improved and number of varieties is
available. It is certainly possible to switch over to a slightly lower rate variety.
2.10 Avoid ready made food packets, tins etc.
 There is a craze for ready made food packets, gravy packets and all
advertisements promise hotel like food at home. The quality may be good and
cost wise may compare favourably as compared to hotel rates. Are you aware
that lot of preservatives added in such ready made food packets and tins are
not good for health? Avoid such ready made food packets to save long term
medical expenses.
2.11 Food Masala, Pickles if made at home will be much cheaper and tastier as
compared to ready made Masala or Pickle.
 Self explanatory. No comments are called for.
2.12 Avoid Cold drinks. Lemon drink can be easily made at home.
 Young generation is very fond of cold drinks. PH factor of cold drinks is very
high. You must have observed that number of young boys and girls visit

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Dentist for some problem or the other. Believe me that this problem is due to
consumption of cold drinks which is responsible for erosion of enamel on
teeth. Lemons are fairly cheap as compared to cold drinks. Lemon is well
known source of Vitamin ‘C’ which is anti-oxidant and useful for control of
cold. Pickle made from Lemon skin helps to protect the heart.
2.13 For a change, one can try ‘Oats’ for breakfast.
 Have you tried ‘Oats’ for your breakfast, which is very much famous abroad?
Oats Kheer is very tasty. (3-4 spoons of Oats and ¾ cup of water and ¼ cup of
cow’s milk and 2 spoons sugar should be boiled for 5 minutes) Sugar free
tablet can be used instead of sugar. Oats contain lot of fiber, which is required
for the body. It helps to reduce Weight, Cholesterol. 500 grams of Oats costs
approx. Rs.75/-
2.14 Switch over from Non-Veg. to Veg.
 I hope non vegetarians will excuse me for making this bold suggestion. Let me
share a secret with you. Our body is not best suited for non-veg digestion as
we have additional small intestine which is missing in wild animals.
2.15 Nice soup can be made of portions of vegetables thrown away in the
kitchen.
 We all consume junk food and our body is deprived of sufficient quantity of
fibre. Generally we throw outside leaves of cabbage, roots of green vegetables
/kothimbir, skin of bottle guard etc. These items can be stored in a fridge for a
week. All these items can be boiled with water in a pressure cooker with say
2 potatoes, 2 tomatoes and one onion etc. and a nice soup can be prepared.
Add pinch of salt and pepper. Just enjoy this soup and give your feedback.
3.0 Conveyance, Travel:
3.1 Avoid / minimize use of own vehicle. Use Public Transport.
 Do not use your vehicle for short distance to save petrol and botheration of

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searching parking slot. Instead it is advisable to walk down. Good exercise!!!
3.2 Purchase daily BEST bus (In Mumbai) ticket or monthly Bus pass.
 If you are likely to spend over Rs.20/- on bus fare in a day, it is beneficial to
purchase bus ticket of Rs.20/- for a day. Quite economical!!!
3.3 Purchase Quarterly Railway Pass instead of Monthly Railway Pass.
 Quarterly Railway Pass cost works out to less than 3 times of Monthly Pass.
3.4 Use share Rickshaw, Taxi etc.
 You save money. Generally demand for Rickshaw, Taxi during peak hours is
more than availability and hence Good social action!!!
3.5 Use bicycle for short distance.
 You save money. No botheration of parking slot. Good exercise!!!
4.0 Entertainment etc.
4.1 Switch over from Cable connection to ‘Tata Sky’. Cable connection is
costlier as compared to ‘Tata Sky’.
 Cable reception is increasingly becoming poor. Cable charges vary from area
to area. Receipt is not given. Service & entertainment tax collected is usually
pocketed. Government is deprived of this revenue. Minimum package of Tata
Sky is Rs.200/-pm. Quite economical!!!
4.2 Avoid watching movie at Malls as rates are prohibitive. Instead advance
booking can be done at normal single screen theatre.
 It would easily cost Rs.1000/- if family of 4 wants to view movie at Mall.
The cost would be less than 50 % if movie is watched at single screen theatre.
 If you are really addict of Films, then you can opt for ‘Tata Sky-Showcase’.
You also get Movie channel free with Tata Sky. Why you watch movie?
For time pass? Whether movie gives any message? No hobbies? Lack of
reading habit?
 One can join DVD Library. It costs Rs.200/-p.m. for 4 DVDs.

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4.3 In case you have a habit of purchasing books, then you can think of joining
good Library.
 You would save money. There is a limit as to how many books one can
purchase and have space at home to store. Just think seriously your action of
purchasing books. Is it a prestige issue or you love reading? There is a saying
in Marathi namely ‘Wachal tar Wachal’ (Meaning- To live life fully one must
read.)
5.0 Education:
5.1 Avoid Tuitions / Coaching classes.
 In old days, going to coaching class was like declaring to the world at large
that you are an ‘ordinary guy’ in studies. Time has changed. Kids need
support practically in every sphere of life. Handling personal chores
independently has become an exception. Self study will generate confidence in
his mind. Inform your Kids in clear terms that ‘you won’t mind paying
handsome tuition fees to school, college but do not expect your parents to pay
fancy donation to secure admission for engineering or medical.’
5.2 To confirm that stationery is not wasted by your kids.
 Education stationery has become very costly. Confirm that your kid does not
waste the stationery, colour box etc. Clutch pencil can be used instead of
normal pencil. Rough note book can be made from unused blank pages of
previous year. Donate old school books of earlier year to needy students.
5.3 Pocket money should be restricted.
 I agree that it is a delicate issue and there are number of angles to this issue.
However kindly answer few questions such as amount required for
conveyance, eating out, emergency purchases, entertainment, mobile recharge
etc. Amount should be fixed based on estimated expenses and not on pocket
money received by his/her friend.

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6.0 Communication:
6.1 Avoid Telephone calls for Home delivery.
 You will recall that earlier home delivery was not offered for all and sundry
items. Home delivery is now available due to ‘Buyer’s market’ and
competition among the shop keepers. There is a tendency to keep ordering
even ½ bread costing say Rs.6/- and spending Rs.1.20 on telephone call.
Just take a close look at number of calls made for home delivery.
This will also improve your planning skill which has equal role to play in
office and residence.
6.2 Depending on number of calls, one can choose MTNL Plan to reduce
Telephone bill.
 MTNL offers number of plans depending upon number of calls. One can study
the number of calls over last 6 months and select the proper MTNL Plan.
This will bring down telephone bill substantially. Refer back side of Telephone
bill or MTNL web site.
6.3 Triband connection should be taken instead of dial up connection.
 Triband would cost Rs.599/-per month for unlimited download. Modem costs
approx. Rs.1200/-. Phone will not remain engaged. However Triband
connection may not be readily available due to exchange capacity constraint.
Dial up connection costs Rs.24/- per hour for call charges plus Rs.6/- per hour
for dial up connection.
6.4 Mobile connection should be switched over from ‘Post Paid to Pre Paid’ and
claim refund of security deposit.
 One can save on monthly rentals approx. Rs.150/- pm and caller ID charges
Rs.75/- pm. With Dolphin Rs.149/- card, one can get free incoming calls for
life time  years with half yearly recharge of minimum Rs.100/-.
 No need of security deposit. Trunk call and ISD calls can be made from
Prepaid connection.
6.5 Send SMS.

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 It is needless to say that sending SMS will cost less as compared to talking.
Moreover the receiver will be relieved from attending call while busy in a
meeting etc. Do not send SMS to participants of TV competition as such SMS
are charged @ Rs.3-6/- per SMS.
6.6 Family members should have common service provider such as Dolphin,
Hutch etc. Group can be formed for communication.
 This will reduce mobile expenses of the family.
6.7 Disconnect Ring tones, news, cricket, astrology subscription.
 What is the need of ring tone? It costs at least Rs.30/- p.m. plus extra charge
for downloading a song. Many persons keep changing the song frequently.
You hardly get any news on mobile. Most of us have internet connection even
at office and latest news can be referred. Not to forget your wife, who keeps
informing you the breaking news???
6.8 Communicate via Email instead of post.
 Paper cost of communication would be more than email cost. I agree that all
are still not computer friendly.
7.0 Personal care, Routine expenses, Shopping etc.:
7.1 Avoid going to Hair cutting saloon for shaving.
 Don’t you think that there is no necessity for visiting saloon for shaving? Apart
from cost factor, time is also precious.
7.2 Avoid Hair Dye.
 Accept the fact that you have become old & your hair has become grey!!
Hair dye is not only costly but also has side effects. You will agree that beauty
of hair dye lasts for say 2-3 days. Thereafter your head shows mixture of white
and black hair making things worst. Hair dye has side effects on your facial
skin. In fact all white hair looks more charming. Just think!!!
7.3 Use of cosmetics can be greatly reduced.

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 Cosmetics are not only costly but have side effects on your facial skin. In fact
after applying coats of cosmetics, your original beauty is diluted. Many
household tips are available for improving beauty such as milk cream, haldi,
kakadi juice, multani mati etc.
7.4 Avoid giving clothes for dry cleaning, ironing to Laundry.
 Considering the quality of dry cleaning, it is better to wash clothes at home.
It will not only save time and trouble for visiting laundry but also save
handsome amount.
7.5 You need not go to Gym for doing exercise. Resort to exercise at home.
One can definitely resort to ‘fast walking’ irrespective of age.
 Of late there is fashion to join Gym for toning up body /reducing weight on
crash basis. Charges depend on kilos to be lost /reduced. Unless your job
demands you to join the Gym, it is not at all necessary for a common man to
join Gym and waste money. One can resort to Yoga & followed by brisk
walking for healthy body.
7.6 One can also think of saving water even if you are staying in a flat.
(i.e. you are not paying water charges as per consumption.)
 You are aware that water is scares. Watch out for water wasted for bath, used
in the garden, washing hands in the wash basin. One can adjust the flow to
avoid waste. Tap should be closed when we are rubbing the hands during the
course of washing.
7.7 You should pay telephone bills, Electricity bills, Pipe Gas bills by ECS and
earn 1% discount. It is not out of place to consider saving of cheque book
cost as Banks charge Rs.3/- per cheque and time to be spent for payment.
MTNL bill is to be paid monthly in case Triband connection is used. Such
bills are received just 2-3 days prior to due date. Late fee is quite substantial.
7.8 Mahanagar Gas (Pipe line Gas) pays interest @ 7 % on minimum deposit of
Rs.1,000/- You will observe that average bill works out to Rs.150/- pm.

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7.9 Pay bills, Society charges, School fees in time to avoid penalty.
7.10 Pay Credit Card bills in time.
 Otherwise late fee of approx. 3 to 4 % pm is charged.
7.11 Maintain minimum balance in SB account to avoid bank charges.
7.12 Kindly confirm that all newspapers, magazines subscribed are read by
family members.
 If not, discontinue the magazine, newspaper. One can join Library for
magazines.
7.13 Family members can distribute the household work and save servant’s
charges.
 You will agree that it is difficult to get sincere and honest servant in
metropolitan cities. Moreover there is a problem of adjusting his timing as in
many cases both husband and wife are working. With the help of washing
machine, clothes can be washed as per our convenience. Every one in the
house can wash his own plate and some utensils. Rooms can also be cleaned in
rotation. Major cleaning can be done during week end. This will save cost,
mental agony for tolerating the servant and accepting the poor quality of
work. This way of attending household cores on ‘co-operative basis’ will
improve relationship among the family members, good lesson for kids to
follow when they grow up. In Japan. School is cleaned by students and
teachers. (Refer MT -07-12-2008)
7.14 Household gadgets should be repaired and used.
 You must have observed that there is tendency of not using the gadgets
properly/not servicing. Periodically manufacturers keep introducing new
models and heavy dose of advertising induces the customers to throw
/exchange old gadget and purchase new one. Let me share my personal
experience, no exaggeration. I have been using Refrigerator for last 25 years.
TV for 12 years, Washing machine for 15 years, Inframatic for 23 years.

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7.15 New purchase should pass through well defined tests such as whether you
have managed without this equipment? Whether your existing equipment is
beyond repairs? What is the maintenance cost? Whether you have proper
place to keep the said equipment? Whether it will reduce your time, cost?
7.16 Similar criteria’s should be used while doing other shopping, new clothes?
7.17 Shoe polish can be done at home as it costs approx. Rs.10/-.
 Self explanatory. No comments are called for. Good exercise for arms!!!
8.0 Habits:
8.1 Habits such as ‘Smoking, tobacco chewing, Pan Masala, excessive
consumption of tea, coffee, drinks etc. should be discontinued.
 Save money and health.
 Do you remember the advertisement issued by LIC few years back? It stated
that if you eat one pan less during the day, you would accumulate premium
for a handsome LIC Policy.
8.2 If your home atmosphere and culture permits, then one can even take drinks
while enjoying home comforts. This will bring automatic control on
consumption, save your body from eating junk food apart from saving
sizable amount. Give a thought to this suggestion!!!

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9.0 Save on Electricity bills:
Appeal to Save Electricity Consumption.
Electricity Saved is Electricity Generated.
1 We are aware that Maharashtra is facing acute shortage of electricity. Entire
Maharashtra except Mumbai is facing Load shading ranging between 3 to 14
hours.
2 ‘Mumbaikars’ are given special treatment as Mumbai is Financial Capital of the
Nation.
3 It is always easy to criticize and find fault with others. It is easy to say as to
what the Government has done to solve the problem? It’s time also to reply as
to what we have done for this problem?
4 Why we need Actors & Singers for making appeal on TV, Press to save
electricity?
5 Let us Act positively by implementing the following tips for saving electricity
consumption. Electricity Saved is Electricity Generated.
6 Kindly circulate this Appeal & Tips to your friends, colleagues & relatives.
7 Kindly update this document with new tips.
8 Let us implement the Tips in Residence & Office. We may not have control on
Tips for public places but those who are responsible for this assignment can
make use of the said tips.
9 This compilation has been prepared to create awareness about necessity of
reducing electricity consumption.
10 Source: Reliance energy bill, Tips published in Press, Discussion with
colleagues, friends and family members. neighbours etc.
A Usage & Electricity consumption:
1 40-Watt bulb used for 25 hours would consume 1 unit.
CFL bulb of 10 Watt is used for 100 hours would consume 1 unit.

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2 Use of 50-Watt Fan instead of 75 Watt would save one unit per day.
3 Appliance usage guide:
Appliance Capacity Consumption
Units Per
hour
Appliance Capacity Consumption
Units Per hour
Bulb/Tube 40 W 0.04 Refrigerator 265 Litres 0.10
Fan 48” 60 W 0.06 Geyser 3000 W 3.00
TV 20” 0.15 AC 1.5 Ton 2.00
B Residence & Office:
1 Switch off the fan and lights when you move out of the room.
2 Use solar energy whenever possible. e.g. solar cooker, lights etc.
3 Switch off the AC half an hour before you intend to leave the residence/
Office
4 AC Temperature should be set at 25-26 degrees.
5 Use CFL lamp instead of regular tube light /bulb.
6 Purchase electrical equipment/ gadget, which are more efficient and
consumes less power. Read Energy Label.
7 Read the instructions carefully before using new electrical equipment/gadget.
8 Use Dimmer for controlling light.
9 Use electronic fan regulator instead of regular fan regulator.
10 Use electronic choke instead of regular magnetic chock.
11 Do not switch off AC on & off. It would consume more power.
12 Clean the tube lights & bulbs regularly.
13 Use Sodium vapor lamp instead of mercury vapor lamp.
14 Avoid use of lift for climbing 2-3 floors. (Good exercise for the body)
15 Use Washing machine dryer in such a way that clothes are left little wet which
will keep the room cool.
16 Housing societies / establishments should be requested to use solar energy

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equipment to take care of street lighting in the society compound etc.
17 Switch off the computer monitor when not in use.
18 Fans if in use can be kept on medium speed.
19 TV should be given rest. In other words, reduce TV viewing.
20 TV should be switched off from main line instead of by using Remote.
21 Electric Rod should not be used for heating water for bath. Geyser should be
installed.
22 It is better still if we take bath with lukewarm water. Cold bath can also be
tried as it improves blood circulation which is good for the body.
23 Electrical gadgets such as Oven, Toaster etc. should be used sparingly.
24 It is suggested that we should use Pipe Gas instead of using electricity. E.g.
For heating food, making toasts, heating water for bath etc. Pipe Gas is cost
effective as well as available in abundance.
C Commercial Establishments / Offices / Show Rooms etc.:
1 Following tips should be considered in addition to above tips.
2 Switch off the lights during lunchtime.
3 Now days, 4 –5 lights are controlled by one switch. Hence if you switch off
one button, it creates black out in certain area. It is suggested to remove the
alternate bulbs/tube lights to reduce electricity consumption.
4 Few bulbs of low voltage can be used.
5 1 or 2 ACs can be switched off alternatively.
6 It is necessary to ensure that printer is loaded with paper before taking
computer print out.
7 It is observed that generally all TV sets are on in a TV shop. If this situation is
avoided, 75 units of electricity will be saved per day per TV set.
8 There is a scope for saving power consumption in Jeweller’s
shop/showroom/mall.
9 Neon sign name board should not be used.

17
D Public Places:
1 Switch off fans and lights while getting down from train.
2 Switch off the fans, lights between 1 am to 5 am on railway station.
3 Switch off streetlights according to sunrise timings.
4 Switch on the lights according to sun set timing.
5 Lighting of Heritage buildings through out night should be discontinued.
6 Power should not be provided to cable operators for say 2 hours in a day.
7 Neon signs should be switched off.
8 Extra Lighting of theaters, clubs, malls etc. should be banned.
9 Last show of movie, entertainment programme and play may be cancelled.
10 Electricity should not be provided for social functions held in open.
11 Alternate streetlights can be switched off.
12 Day night cricket matches and other night sports should not be conducted.
10.0 Overview of Financial Investment Planning.
A Introduction:
1.1 The word investment has a very wide/ macro meaning. We have to make
investment in various categories for leading a Happy Life. At present I wish to
concentrate on Financial investment.
1.4 We must first understand the difference between Saving & Investment.
1.5 Saving is the starting point. Investment is made out of saving. Purpose /
intention of Saving & Investment are slightly different.
1.6 You can look at Saving from two angles as outlined below.
1.7 Saving can be increased by earning more income or by reducing excessive and

18
unwarranted expenses or by combination of both methods.
1.8 Saving is a Habit and it needs to be Cultivated.
B Why we should save money?
2.1 For Investment for future/ old age.
2.2 To take care of short term needs. E.g. Festival expenses, periodic expenses such
as education expenses etc.
2.4 To purchase / replace household requirements such as kitchen utensils which
would save our energy / entertainment articles such as TV, Radio,
Transistor/utility articles such as fan, furniture etc.
2.5 To keep certain portion of saving to meet emergencies.
C Which factors should be considered while making Financial Investment?
3.1 Safety of Investment should be the prime consideration. Investment should not
be lost.
3.2 Liquidity: Investment should be easily available in case of need.
3.3 Returns: Investment should not remain idle but should also earn reasonable
income.
D Types of Investment:
4.2 Movable Property: Gold, Bank deposits, Postal schemes, RBI Bonds, Shares etc.

19
E Security should meet the following criteria: (MASTDAY)
5.6 A Absence of contingent liability. i.e. You may not have to spend more
money on the security to make it marketable or even to maintain it.
F Risks associated with holding Financial Investment:
6.2 Inflation. Decrease in purchasing power of money. Our income does not grow
in same proportion as increase in inflation rate.
6.3 Remedies to overcome physical risks: Household insurance, Mediclaim policy,
Personal accident policy, hiring of safe deposit locker to keep investment.
G What precautions should be taken in respect of Investment?
7.2 Investment should be payable to either or survivor.
7.5 Your spouse should be aware of all your investment matter.
7.6 Excessive faith should not be kept on relatives, friends.
7.7 Necessary secrecy should be kept. The investment matters should not be
discussed with strangers.

20
H Investment in Macro Terminology:
To lead a Happy Life, we should not only invest in financial security but also
in the following:
8.1 Education 8.5 Positive Attitude 8.9
8.2 Health 8.6 8.10
8.3 Family 8.7 8.11
8.4 Good Friends 8.8 8.12
Investment & Interest Income
Type Face value Rs. Due date Interest % Interest p.a.
Received Accrued
Fixed Deposits
RBI Bonds
NSC
PPF 0
LIC 0
PF 0
Total

21
Household Expenses
A Savings: Rs. B Repayment of: Rs.
1 PF 1 Housing Loan
2 LIC 2 PF Loan
3 PPF 3 Bank Loan
4 NSC 4 Vehicle Loan
5 ULIP 5 Personal Loan
6 Recurring Deposits 6
7 7
8 8
9 9
Total Total
C Household
Expenses:
Rs. D Other General
Expenses:
Rs.
1 Rent / Society
charges
1 Telephone
2 Food & Provisions 2 Internet Charges
3 Vegetables 3 Mobile expenses
4 Meat & Fish 4 Electricity
5 Milk 5 General insurance
premium
6 Fruits 6 Wages & Salaries of
servants
7 Gas / Fuel 7 Dress, clothes,
Tailoring charges
8 8 Laundry
9 9 Postage
10 10 Newspapers,
Periodicals
11 11 Cosmetics & allied
items
12 12 Special shopping
Total Total

22
E Education: Rs. F Other Expenses: Rs.
1 School / College
Fees
1 Medical expenses
2 Books & Note books,
stationery
2 Conveyance
3 Pocket money 3 Vehicle expenses
4 School Bus fees 4 Travelling
5 Tuition fee 5 Club expenses
6 Wages of servants 6 Eating out
7 Miscellaneous 7 Entertainment
8 8 Charity
9 9 Repairs of gadgets,
appliances.
10 10 Contingencies
11 11
12 12
Total Total
Summary Rs.
A Savings
B Repayment of Loan
C Household Expenses
D Other General Expenses
E Education
F Other Expenses
Total
Monday, April 25, 2022

07/Guidelines for Investment in Share Market
Part I
1.0 Introduction:
1.1 The word ‘Investment’ has a very wide/ macro meaning. We have to make
investment in various categories for leading a happy life. At present I wish to
concentrate on Financial investment.
1.4 We must first understand the difference between saving & investment.
1.5 Saving is the starting point. Investment is made out of saving. Purpose / intention of
saving & investment are slightly different.
1.6 You can look at saving from two angles as outlined below.
1.7 Saving can be increased by earning more income or by reducing excessive and
unwarranted expenses or by combination of both methods.
1.8 Saving is a habit and it needs to be cultivated.
2.0 Why we should save money?
2.1 For investment for future/ old age.
2.2 To take care of short term needs. e.g. Festival expenses, periodic expenses such as
education, house renovation etc.
2.4 To purchase / replace household gadgets such as kitchen utensils which would save
our energy / entertainment articles such as TV, Radio, Transistor/utility articles such
as fan, furniture, AC etc.
2.5 To keep certain portion of saving to meet financial / health emergencies.

2
3.0 Which factors should be considered while making Financial Investment?
3.1 Safety of Investment should be the prime consideration. Investment should not be lost.
3.2 Liquidity: Investment should be easily liquidated in case of need.
3.3 Returns: Investment should not remain idle but should also earn reasonable income.
4.0 Types of Investment:
4.3 Movable Property: Gold, Jewellery, Silver, Bank deposits, Postal schemes, shares,
vehicle, luxury articles etc.
5.0 Security should meet the following criteria: (MASTDAY)
5.6 A Absence of contingent liability. i.e. You may not have to spend more money
on the security to make it marketable or even to maintain it.
6.0 Risks associated with holding Financial Investment:
6.2 Inflation: Decrease in purchasing power of money. Our income does not grow in same
proportion as increase in inflation rate.
6.3 Remedies to overcome physical risks: Household insurance, Mediclaim policy,
Personal accident policy, hiring of safe deposit locker to keep investment.

3
7.0 What precautions should be taken in respect of Investment?
7.2 Investment should be payable to either or survivor / former or survivor.
7.5 Your spouse should be aware of all your investment matters.
7.6 Excessive faith should not be kept on relatives, friends in respect of investments.
7.7 Necessary secrecy should be kept. The investment matters should not be discussed
with strangers and at public places and also in front of family members.
8.0 Having considered the concept of Investment from macro level, let us try to evaluate
the investment in Share Market from various issues raised above.
Security should meet the following criteria: (MASTDAY) Now let us apply these
criteria’s to investment in shares.
8.1 M Marketability: Generally yes
8.2 A Easy to ascertain its title, value, quantity and
quality.
Yes
8.3 S Stability of value. Not guaranteed in short –
medium term.
8.4 T Transferability of title. No problem
8.5 D Durability – not perishable. No problem
8.6 A Absence of contingent liability. i.e. You may not
have to spend more money on the security to make
it marketable or even to maintain it.
No problem
8.7 Y Yield. The security should provide some on-going
income.
Generally Dividend will
be received.
9.1 Every person has a dream of making quick money. However very few really venture
out to meet this dream. Those who are lucky make money but mostly you are likely to
loose or won’t make handsome money in the bargain.
9.2 However on a fairly long term basis (5-8 years), investment in share market should give

4
better returns as compared to other avenues of financial investments such as PF, PPF,
NSC, KVP, Fixed deposits with Banks and companies, Bonds etc.
9.3 However as stated earlier, our financial investment should be made in different forms
to minimize risk and according to purpose. Not to forget the safety of investment.
9.4 Hence investment in share market should comprise of a reasonable proportion of total
investment. What is reasonable will vary from person to person. Generally it should not
exceed 15-20 % of your total financial investment as on date. I am bit conservative and
readers may excuse me for that.
10.1 Inspite of Professionally qualified in commerce faculty, I never made any investment in
share market when I was young. Of course, the reasons were many such as
occupational responsibilities, Share investment was in paper form, settlement period
was lengthy, help of broker was necessary, non-availability of time to run after broker
etc.
10.2 Hence I entered the share market as soon as shares were dematerialised and On Line
Trading was possible from home/office PC.
10.3 I am now making an attempt to compile guidelines based on my professional
knowledge and personal experience in share market for last few years.
10.4 You may be surprised that where is the necessity of one more set of guidelines when
enough material is available regarding investment in share market in print media, TV
etc. But friends, you must have realised that this material at times is difficult to digest
for a layman and is more focussed towards day to day movement. Share index
movement on a day to day basis also baffles the ordinary investor. Every reason is
available for drop in the share price but concrete reason is not known for jumping the
share price very next day. What undergoes change in share price overnight? Is it the
performance of the script, some political news, FII participation, mood in share markets
across the globe? It is generally observed that that American market and European
market in red previous night will affect the Asian Markets next day morning and
Indian Markets in turn.

5
10.5 Investor experiences panic situation under such scenario as generally investment is
made based on share tips given by friends, colleagues, brokers, media, websites etc.
Even tips are sold in the evening for a nominal price at railway platform. I do not
intend to under estimate these tips but wish to drive the point that your hard earned
Money should not be invested purely based on these tips or just because your
neighbour or friend is making money in the share market.
10.6 I am of the opinion that investment is made based on study to the extent possible, then
the risk of investment in share market can be minimised over a long term of say
5-7 years.
Part II
1.0 Introduction: Investment in Share Market:
1.1 The first question to be answered is choosing the company out of more than 5000 listed
companies. Following parameters should be considered, analyzed and evaluated
before choosing the company. You have to track these parameters continuously even
after purchasing the shares. Most of the data /parameters are readily available on
http://money.rediff.com or many such websites.
2.0 Basic decisions & actions to be taken once you decide to invest in share market:
2.1 Demat account should be opened.
 Demat account should be opened in any Nationalized Bank. Demat account should be
opened jointly. Nomination should also be made. You need to open bank account along
with Demat account.
2.2 Whether to do On Line Trading or through Broker?
 Online Trading tie up has been made by Nationalized Banks with various Brokers. e.g.
State Bank of India has a tie up with Motilal Oswal Securities. On Line Trading is more
convenient way of investing in share market. Your bank account gets credited for the
shares sold, dividend received. Shares sold are deducted from Demat account. No need
to run after the broker. Shares can be lien marked permanently and instruction can be
given over the phone to sell the script. Similarly once margin has been provided, then

6
shares can be purchased by telephonic instruction.
2.3 How much investment you intend to do in shares?
 As stated earlier, your investment in share market should not exceed 15 % of total
financial investment as on date. Initially you may invest say 50 % of that and keep
balance for investment when market falls sharply.
2.4 Investment to be made at a time or gradually over a period of say 6 months
depending on Sensex?
 Entire investment should not be made at a time but you must keep your list of
companies ready and should make the investment on dips in prices and after
considering other prevailing factors. Investment should be made over say next 6-12
months.
2.5 Selection of sectors.
 You have the option of selecting various sectors such as : AUTO | BANKEX | CD
| CG | FMCG | HC | IT | METAL | OIL&GAS | PSU | REALTY
| TECK | POWER.
 You need not invest in every sector. Sectors with minimum government control
should be selected.
 Consider as to How sector is classified? e.g. Growing, Steady, Infant.
 National Policy: The current, future policy or Budget of the country may favour,
encourage certain industry (software, power, telecom, construction etc) & allied
industry.
 Whether the industry is controlled by Government Regulatory authority. Government
decision to control the price of the product/service will affect the share price.
These things may be of short or medium or long term phenomena.
 The economic data announced by Government also affects the market in short term &
medium term. e.g. High GDP growth is considered positive. More Foreign Exchange
reserve is considered good. Less Interest rate is considered good.
2.6 Selection of companies in each sector.
 You must invest in atleast 2-3 companies in each sector for better spread of risk.
 Is it a growing company? Increase in sales, net profit, operating profit.

7
 Size of the company: Large, medium, small.
2.7 Decide the proportion of investment in each sector and in individual script.
 Investment in each sector should not be more than 10-15% of your investment in share
market. Obviously your investment in one company should not exceed 5 % of your
investment in share market.
2.8 How long you intend to hold shares? (Time dimension of investment.)
(0-3 years, 3-5 years or over 5 years) Returns will be averaged out over a long period of
say over 5 years.
 As stated earlier, your returns over a long period would be better than other
investments.
 Some stocks (small company, lesser known, unstable performance) may be good at
times depending upon market mood but they may bring loss in the long run.
Good company shares considering the various parameters will fetch good returns in
the long run (5 to 10 years)
Part III
1.0 Guidelines for investing in Share Market:
 How much a stock rises or how fast stock rises depends ultimately on current, future
earnings of the company. When this is fully accounted in the stock price, investors tend
to book profit thereby stock prices start falling to small extent. This is called market
correction. This is good and healthy for stock market. You have to buy at low & sell at
high price. 20% of profit should be considered moderate. The target price of the stock
depends on what parameters are driving the stock price & how much steam is behind
it.
2.0 Management:
2.1 What is the management stake?
 You can get this information from Share holding details. Higher the management
stake, better it is.

8
 The Promoter holding of around 40 to 60 % is good. It means they have interest,
confidence in the company.
2.2 Whether management is in the hands of Professionals?
 This information will be available from annual accounts and website of the company.
2.3 Whether company is managed by any Family?
 This information will be available from annual accounts and website of the company.
If yes, whether the family members are professionally qualified?
2.4 What is the policy of the management?
 Is it conservative, aggressive, growth oriented investor friendly? You may need to read
the directors report, reports of press conferences, press news, website of the company
etc.
 Capital expansion, Geographical market expansion, Diversifying product portfolio,
Market penetration, Entering foreign market.
2.5 Whether Financial institutions have nominated their directors?
 Directors are nominated when ever financial institutions have substantial share holding
in the company. Hence there would be a fair chance of outside control on the company
affairs. But this may not be happen practically. It is better if you guess.
3.0 Share holding:
3.1 Shares held by Indian Promoters, Foreign Promoters, Banks & insurance holing, FII’s,
Private corporate bodies, directors, NRI’s, General Public.
 You can get this information from Share holding details.
3.2 Whether share holding is constant or increased or gradually reducing?
 Preferably, share holding of Promoters and FII’s should be either constant or should
show upward trend.
3.3 Whether Mutual Funds, FII’s have invested in the company?
 If the stocks are held by renowned Mutual funds, financial institutions, foreign

9
investors, it means they have studied and selected. It is a very good, positive indication
for you. If above institutions increase/decrease the stake follow it but don’t get too
much carried away by their short term action.
3.4 What is the capital structure?
 Capital Structure: Authorized, Issued, Paid up, face value etc. This information is also
available on website.
4.0 Business of the company? (Business: Market leader, Monopoly, many competitors)
4.1 Products manufactured.
4.2 Whether production is seasonal or throughout the year?
4.3 Whether demand is seasonal or throughout the year?
4.4 Features of the product and plus points over other products.
4.5 Who are the main competitors?
4.6 Who are the main customers?
4.7 What is the Demand & Supply position?
----Existing
----Future
4.8 Market share: Existing & Future
4.9 Location of market
4.10 Exports
4.11 Whether Indian / Foreign standards have been specified?
4.12 Whether the product meets the said standard?
4.13 Quality control / R & D facilities.
4.14 Is it a standard product or to be produced against order booking?
4.15 Life of the product
4.16 Cost of production, margin
4.17 Gross margin on sales
4.18 One should also review the status of a product (traded or manufactured) in
commodity exchange? Company performance will ultimately depend on the product.

10
5.0 Raw Material requirement:
5.1 Whether Raw Material produced in house or Purchased?
5.2 Who are the main suppliers of Raw Material?
5.3 Availability of Raw Material: freely, controlled?
5.4 Availability of Raw Material: Existing & Future?
5.5 Whether Raw Material is available throughout the year or seasonal?
5.6 Whether Raw Material is indigenous / imported / controlled?
5.7 Main items of Raw Material
5.8 One should also review the status of a product (i.e. Raw Material) in commodity
exchange? Company performance will ultimately depend on the product.
6.0 Manufacturing process:
6.1 Technical know how: Foreign / Local
6.2 By-products if any
6.3 Advantages of alternate Technologies
6.4 Technology: Stable / fast changing
6.5 Length of production cycle
6.6 Whether material / WIP is sent out for processing?
7.0 Infrastructure Analysis:
7.1 Location advantages of the project
7.2 Transport facility
7.3 Nearness to market
7.4 Availability of raw material
7.5 Availability of power / fuel
7.6 Availability of water
7.7 Availability of skilled labour
7.8 Government incentives such as capital subsidy, sales tax concession etc.
7.9 Availability of communication network

11
8.0 Profit & Loss Account & Balance Sheet:
8.1 Study Quarterly, Half yearly and Annual P&L and various ratios. One may refer
section Books  Management  Financial concepts on www.spandane.com
8.2 Current quarter results should be compared with previous quarter and also with same
quarter of last year as company performance may vary quarter to quarter depending on
product mix.
8.3 Operating Margin (OPM): When OPM of the business increases, stock price will go up.
When raw material costs goes up profitability reduces hence stock price also.
8.4 Study Balance Sheet of the company.
9.0 Price earning ratio: (P/E = Stock price/Earnings Per Share)
9.1 This ratio is most crucial for decision making. If it is too high, the stock is expensive.
Compare P/E Ratio with peers in the same sector.
9.2 High growth, good company will have high value 30 to 40 (telecom, software, pharma)
Yet it is justified considering its future prospects. As a thumb rule P/E Ratio of about 20
may be considered as bench mark.
9.3 Each industry will have different average P/E depending on future prospects.
9.4 Normally when a stock reaches high P/E Ratio, share price starts falling which is
called correction (due to profit booking)
9.5 One can estimate the price range of a script. e.g existing P/E ratio is 22. (Price
Rs. 220/- & Earning per share Rs.10/-) If expected earning per share would be Rs.13/-
next year, then it is quite likely that price may rise to Rs.286/-. Such EPS guidance is
given in quarterly accounts submitted to stock exchange. Compare the estimated price
Rs.286/- with current price Rs.220/- and then take decision. If estimated EPS falls to
Rs.12/- even then price should be around Rs. 264/-.
9.6 You would also observe that whenever a company bags order or gets tender, share

12
price shows some upward movement that day. The logic is that profitability will
increase and hence EPS will also increase.
9.7 Companies with very high PE Ratio or at times minus PE Ratio show high volumes
of trade and price fluctuations. But in case of correction, such script gets corrected
sharply and again takes its time without any guarantee to restart its run in the trading.
9.8 Compare EPS with face value of a share. e.g. If face value is Rs.1/- and EPS is Rs. 10/-,
it means that company is earning Rs.10/- per share. Higher EPS figures should be
Preferred. It should be compared with competitors. Reliance Industry has earned
Rs.49.65 per share of a face value of Rs.10/- for the year ended 31-03-2010.
10.0 Book Value of share:
10.1 Book value = Actual value of companies Assets Less Liabilities or Net Worth / No. of
shares.
10.2 Stock price under book value should be considered / compared with price at which the
script is traded.
10.3 Price/book value varies with the industry. Compare with peers in the same sector.
 book value - Less for more skill based, knowledge based industry
 Book value – more for Capital & infrastructure intensive industry
11.0 Equity size: This is number shares that entire market capital consists of.
11.1 Less equity (10 million) means rapid movement of stock price.
Large equity (>100 million) stable stock price. Extent of Rise/fall will not be too much.
In any case one should not forget about liquidity
12.0 Dividend & Bonus shares issued:
12.1 Dividend % age over last 10 years. Company which pays dividend regularly is liked by
the investors. Whether dividend % varies from year to end?
12.2 Review dividend payout ratio. (Dividend per share divided by earning per share.)

13
Is it consistent over the years?
12.3 Bonus given in previous years. If you observe the trend of issuing bonus shares, then
one can predict bonus issue in near future. Some companies may not pay exorbitant
Dividend but may issue bonus shares at regular intervals.
13.0 Review of Script: Every script should be reviewed on an ongoing basis after
purchase. Following data is readily available on website for review.
13.1 Price. Is it near to share price of last 52 weeks high?
13.2 Volume: Average Number of traded shares should be adequate (more than 10000).
Otherwise you may not find a buyer when you want sell the stock.
13.3 Mutual Fund Holding. Is it increasing, decreasing?
13.4 Sales: Upward trend or downward trend.
13.5 Net Profit Margin: Upward trend or downward trend.
13.6 How stock is classified? Cold or Hot based on last 15 days trading figures.
13.7 Market Cap: Market cap is an abbreviation of market capitalization. Market cap refers
to the value or capitalization the market puts on a company. It is calculated by
multiplying the price of the shares by the number of shares issued. Market cap is
only one of many ways to value a company. Market cap is frequently broken down
into the following ranks: mega cap, large cap, mid cap, small cap, micro cap, and
finally nano cap -- the largest to smallest.
Another common method used to value a company is the book value. The book value
is calculated as the difference of a company's Assets and its Liabilities. The book
value is also referred to as the Net worth of the company.
The market cap of a company and the book value of a company are almost never the
same value.
A high growth company typically has a much higher market cap than book value,
while an established company with little growth expectations usually has a market cap
that is closer to the book value.
It is important to realize that both market cap and book value are really just opinions.
If investor thinks the market cap value is too high with respect to the book value, he
will try to sell the shares. If investor thinks the market cap is too low, then he will

14
try to buy shares in the company.
13.8 Share price movement for the day, for the week, for the month, 6 months, one year,
High & Low in last 52 weeks.
13.9 Market Tips may be judiciously weighted.
13.10 Sales Last quarter.
13.11 NP Margin Last year end
13.12 Last dividend
13.13 Last Bonus.
13.14 Return on average equity
13.15 Company Announcements, Next board meeting etc. If expected performance for the
quarter / year is likely to be good, you will observe upward swing in the price few
days’ prior to declaration of results. If declared results are not as expected by the
market, then on the day of results/board meeting, share price may come down.
13.16 Competitors & their performance. Share prices of competitors are given on the same
web page.
13.17 Discussion Board, Questions raised by other share holders and replies given.
May not be reliable but still may be helpful at times.
Part IV
1.0 Disclaimer: I do not claim that this is the complete and exhaustive commentary on
Investment in Share Market. However I have made an attempt to cover the important
parameters which should be considered for choosing the script. One should always
supplement the knowledge by referring to various websites, magazines, newspaper
articles etc.
2.0 I have also taken the liberty to assume that the investor is conversant with internet
surfing and basic concepts of share market.
3.0 It is also necessary to keep proper record of share investment. One may refer ‘Personal
Data Formats’ section of www.spandane.com.
4.0 Taxation aspect also should be considered while dealing in Stock Market.
5.0 Best wishes for your safety of investment and your dream of making money in stock
market.

15
6.0 It is suggested that initially transactions should be made for delivery. Intra day trading
may be tried once you gain adequate experience in Stock Market.
7.0 Your suggestions, observations and comments may be informed by email to
spandane2008@gmail.com.
Monday, April 25, 2022

Section 12 - Financial Planning,pdf.pdf

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