The trioka of achieving higher speed: power, wind and weight

The phase of speed beyond a certain normal speed range and sometimes what your machine gives you in terms of a super acceleration in a certain range is exhilarating, surprising,  awesome and a little scared. The acceleration beyond 75 km/hr upto 95 km/hr or so without full throttle is amazing. Beyond that, going full throttle is usually a necessity on the peripheral roads of cities as they are never enough to slowly increase speed towards and beyond 100 km/hr.

There are 3 main forces at play at speeds above 95km/hr: wind/wind speed and its direction, weight (of the bike and the riders on it) and the power of the engine (juice to go each and every extra kmph).

Stillness of air is usually the best scenario for achieving high speeds as wind from an angle or blowing at your body makes it difficult to maintain balance of the bike. A higher weight of/on the bike is definitely a good counterbalance to overcome wind along with not wearing a jacket (they are usually not body-hugging and are not aerodynamic and wind can enter from the hands and bloats the jacket further offering air resistance and allowing the wind to play havoc to the balance the rider is trying to achieve). A higher body or bike weight negatively affects the speed capacity as the bike now has to lug out the extra weight and will deter the achievement of higher speeds. The other way to put it is that the power/weight ratio of the bike is reduced.

Based on this analogy, there is usually an equilibrium top speed that can be achieved and maintained under each circumstance defined by the variables wind speed and direction, power and weight of the bike and riders combined.

It is upto each rider to realise the 3 forces at play and not to overreach speed and endanger lives.

Cheers to safe and speedy riding!
P.S: Just achieved a new high speed of 112km/hr with a pillion rider on my Apache 180 ABS :)
Could have achieved a little more but restricted myself :)

Monitoring Assets, Liabilities and Networth

One of the key aspects of financial success is financial discipline. Financial discipline is about doing things like investing, paying off debts on time, monitoring bank accounts to check for expected dividends, unexpected charged levied, etc. regularly.
Another aspect of financial success is to monitor some key numbers. These are Assets, Liabilities and Networth.

Assets are explained more over here.
Liabilities include loans of all types (home, auto, personal, credit card dues, loan from family and friends, festival advance, etc.) and any amount you owe anyone.

Networth is what you are actually worth after removing your liabilities from the assets.
Networth = Assets - Liabilities

Monitoring these key figures is important for these reasons:
1. If your finances are proper, you should see your Networth increase over time.
2. You know how much you are worth financially or how much is your family financially secure for future needs.
3. You can also monitor asset allocation and do the necessary diversification based on the needs and your risk profile.

Here is an example of how you can monitor asset allocation and monitor the key figures over time.
I. Sample Current asset portfolio:
NSCs          1,00,000
PPF                  5,00,000
Bonds          5,00,000
Fixed Deposits 4,00,000
MFs                  5,30,000
Stocks          1,20,000
Cash             2,50,000
Assets        24,00,000 
The above can be well representated as below in the pie chart:

II. Sample Liabilities:

Festival advance   10,000 

Vehicle Loan     3,00,000 

Liabilities     3,10,000 

Networth = Assets - Liabilities = 20,90,000

To monitor how these vary over time, it is important to take a snapshot of the above figures regularly (say every month end).

You can also look at the trend of your networth along with assets and liabilities:

This is all more of a one-time effort to put the tables and graphs. Then, it is easy tracking your finances and see your wealth grow (hopefully) over time.

Free float

Float has many meanings depending on the context. Beverages, Finance - in terms of shares available for trading; moving/changing amounts; and also Savings and Current account of banks.

In the perspective of savings accounts of individuals, the float what I am referring to is the liquid cash lying in the savings account which is useful for taking care of emergencies, exigencies and sundry expenses. We should not keep an excess float as this earns us a lower interest rather than investments. There are a few particular situations when the float or the savings balance should be high:
1. You are expecting high expenditure soon
2. Lack of investment opportunities vis-a vis risks in those investments
3. Temporary cash while transitioning across asset classes. i.e., selling one asset to buy another or to settle some liability

As an individual, we should maintain this cash in more than one bank account for convenience and availability and risk diversification. Lets understand this aspect a little better with an example:
If you have two bank accounts with Rs.30,000 each and say, you suddenly need Rs.10,000 for an emergency. You can draw from whichever ATM is nearer (although most ATMs are now inter-operable across banks). But, say the ATM is out of order that day or out of cash, then the choice of the other ATM is your answer. On another day, if you needed, say, Rs.40,000 and the daily limit of withdrawal is Rs.20,000 then this diversification will help you draw the money when in need. If the entire money was in one bank account, this would not be possible.

There is a tradeoff between liquidity (keeping a lot of cash in the savings account) and the rate of return on investment. The more the cash in savings account the lesser the money is earning interest compared to investments.
One can never really say how much money would be required in an emergency. With medical expenses very high, it is difficult to say how much is too much. A better way to manage this emergency liquidity is to make sure your close family members (spouse, siblings and parents) also maintain some emergency money in their accounts. That way in an emergency, the pooled money would be more than enough to tide over the emergency. This two way mechanism of helping each other out in case of an emergency can help all the people from keeping excess money in savings accounts. The family members are more like your second line of source of money in case of an emergency. To truly implement this in word and spirit, each of the parties should have already enabled third party transactions and should have added the other persons' accounts to their third party transfers. The enabling of a new third party can vary from a minute to 24/48 hours depending on the banks' policies.
If this is implemented, money can be transferred from one account to another by logging in and transffering funds in a few minutes.
Remember that another very useful source of money in emergencies is a credit card.

Giants do their own thing

The giants of the world - USA, China, Russia do what they please. It seems that they are all in a cartel. Whenever they want to attack, block, intimidate, loot, capture, bomb, takeover, harass, overthrow dictorial/ democratically elected governments/leaders, assassinate or buyout, etc. any territory, resources, country or person, government, group or leader etc., they do so without giving a damn of what the others will say/do. How else, can these giants take unilateral action against so many sovereign nations?
USA did it to Iraq, Afganistan, Many south American countries, etc. (the list is long)
China does/did it to Tibet, Taiwan, Spartly islands
Russia is doing it to Crimea region of Ukraine.
There is one big exception though - India.
Its useless politicians/ political parties/ bureaucrats are not able to defend the countries' face against the smallest of neighbours like Maldives and Sri Lanka despite years of relationship. They are not able to provide modernisation of weapons to its army and navy assets and with the likely non-sense that has happened so far, it is very difficult to see India being able to do anything unilaterally even if it wants to.

An interesting way to learn/test history is to do the following match the following puzzle:

Country| Did this                 | To                            | Motivation              | Reason claimed
USA      | Attacked                | Tibet                        | Annexe Territory       | Remove Dictator
China     | Harrase(d)             | Georgia                   | Kill competition         | Give democracy
Russia    | Bombed                | Iran                         | Oil resources              | Remove WMD
India      | Looted                   | Libya                       | Strategic trade route   | Give Independence
NATO   | Overthrew             | Nicaragua                | Other resources          | Destroy Terrorism
UK        | Captured                | Philippines               | Take Revenge
France   | Intimidated           | Bangladesh              | Nullify future threat
              | Occupied               | Dominican Republic  | Show military might
              | Gave Indepedence | Haiti                          | Force trade
              | Forced Exile          | Mali
              | Assassination      | Panama
              | Fought                   | Mexico
              | Intervened militarily| Honduras

Asset Classes in India

The world of investing may sound like a jungle or another world to a new person entering this field with so many financial terms and products and features. But, at the most basic level there are only as many as 5 different asset classes to invest in. They are:
1. Equity
2. Fixed Deposits/Bonds
3. Gold
4. Real Estate
5. Exotics (Futures and Derivatives on stocks, commodities, currencies and Alternative investments like Wine, Art, etc.)

The products which we hear can all be classified into one of these 5 categories or are a combination of these 5 categories. The marketing departments in financial firms put in a lot of effort to create more combinations of these existing asset classes and sell them as a new differentiated product suited for your need. Stripping them out of the unnecessary jargons, you will essentially flesh out these 5 categories.
Further, if you remove all the cacophony of the noise produced by these marketing, you have to just think and concentrate on 4 key dimensions of investing. These are mentioned in the post here:
http://ajitjagan.blogspot.in/2013/10/know-4-dimensions-of-investing.html

So, dont let fear of the unknown get the better of you when you are discussing or buying a financial product. Just ask them the questions on basics and force their hand to reveal the truth.

Innovations in the washrooms

There have always been television ads on italian/porcelain bathroom fixtures usually showcasing the shininess of the products. And print ads containing attractive females to add to the fixture.

How come none of these bathroom fixture makers ever advertises on the benefits of using their products? Like, the commode whose design enables waste to be cleared with the least amount of water usage per flush? Or the tap which is rust proof/drip proof?

Even after all these years, it is difficult to see why innovations in the washroom space have not yet become common in India. Why cant I have a shower that shows me the temperature of the water coming out of it? Which brand do I have to see if I want commodes that heat up the seats during winter? Do I have a commode that does make sound while flushing? Do I have toilets made of anti-bacterial material? How about a special geyser that not just heats water, but also has an option to make steam so that I can have a sauna bath in my bathroom.

Where are the innovations in the bathroom? I demand euphoria in the most private of spaces to start the day off!

Know the 4 Dimensions of Investing

Investing and analysing investment options can seem burdensome, tiring, boring, confusing, hair-splitting to know everything about it before committing your money to it. Irrespective of what the brokers, sales guys, agents try to push to you as an excellent opportunity for you and your loved ones, it is important to know that they have an inbuilt interest in selling things to you and you have to do your own due diligence. Doing your own due diligence is often spoke about, but some of you may wonder what does this mean and how do you do it.

There are essentially 4 dimensions to understand any investment:

1. Return/Potential Return

I say return/ potential return and not just return so that you are not overly swayed by the superb past returns of an investment, but realise that not all investments will repeat their super duper track record time and again. There may have been a time and environment where something really made great returns, but this time and environment may well be very different. 

A plot in a far away village may not give you a great return on your investment without nothing new happening. But, once it is known that an international airport will be coming in the area, the investment may have great returns. And once all the development is done, the return on investment may not follow the run you saw during the days when the news of the airport was coming. Similarly with stocks. There are good times and great times for companies depending upon a myriad of factors such as demand for the product/service, cost of making things, saturation of product usage, etc.

2. Risk & Return

Each investment has a certain risk to it. Even Govt. owned companies and their shares/bonds have some risk in it. Nothing is risk free. Sometimes the risk is on the return, while on some others, the risk is on the capital deployed itself. One has be aware of the risks and consider the return on the investment proportionately to the risk involved. Derivatives are more riskier than Stocks which is more riskier than fixed deposits/bonds/gold.

Do remember that sometimes even a less risky investment can cause a major loss compared to a higher risk investment.

3. Liquidity

This involves multiple things and is very important but unfortunately not given much importance by many people. Liquidity refers to how fast can you to convert the investment to cash whenever you need it. Another related aspect to liquidity is whether the investment can be used as a collateral against which you can get a loan. Certain investments cannot be given as collateral and no loan can be obtained against them. E.g. Bonds, Fixed deposits in some NBFC (Non Banking Financial Company)s. Some investments may have a lock in period which will limit the ability to sell the investment. Certain bonds have a lock in period before which you cannot trade it in the market. Sometimes, holding a stock/bond that is not widely traded also brings about liquidity problems while trying to sell it.

4.  Tenor

The length of the investment period. At the end of the day, you will need to match the investment tenures to the life's various goals. No point in investing in a 20 year investment that is locked if you don't have money for your other urgent goals.

All investment avenues would have the above mentioned 4 characteristics. You should know these 4 aspects of your investment and competing investments before you make a decision to invest in one based on your life's goals and risk apetite.

All hail the projections!

Bigger image available here: http://epaper.timesofindia.com/Repository/getimage.dll?path=ETM/2013/09/30/17/Img/Pc0170800.jpg

Today's economic times report has an article titled "How clouded is our financial forecasting?"

The picture above gives the GDP growth prediction according to RBI's survey of professional economists sitting in the same financial year and making a prediction of the GDP growth at the end of the current financial year.

The numbers are shocking! If this group can get it so wrong, how will analysts of equity research and other analysts work on their assumptions, which are further derived in some way or another on this data.

I think it is time to employ monkeys to predict data as they have amply demonstrated their skills in the monkey funds.

http://www.gizmodo.com.au/2013/04/monkeys-make-better-stock-market-traders-than-people-study/

Political war of words

Over the last 2 months or so the war of words between Congress-BJP and BJP-JDU have increased, even more so after Modi has been named as the chairman of the election campaign committee. The politicians have been bickering between bad, worse and worst with their rhetorics and idiotic statements which are nowhere near ground realities (A meal at Rs.12/Rs.5/Rs.1). They have tried to compete with each other in making more outrageous and stupid remarks. Probably, the noise in the media (read television news channels, digital newspapers and printed newspapaers) will get even more and become unbearable as the elections due next year come closer.

But, what I am wondering is how much of all this noise actually reach the majority of the voters in the rural areas. How much of it will they hear and how much will they read/hear about and consider it considering the following factors: illiteracy, availability of newspapers, power for viewing televisions, interest in national politics, considering that in villages the head of the village or the head of the house decide which party to vote to power, big political parties throwing money and liquor at the villagers to buy their votes.

Is all the noise generated worth it?