Your Age And Your Investment Plan -- A lifecycle guide to investing

Age plays a key role in determining your investment profile. Hence, constructing a portfolio that suits your age is essential. By mapping your age and your background, you can establish a portfolio that comprises of different asset classes, in differing proportion. For example, if you are five years away from retirement, with no major savings for a post-retirement life, then you would build a portfolio comprising fixed income instruments. Similarly, a 24-year old would focus on parking investments in riskier investments like equities, since time is on his side. 

We have constructed profiles based on your age and some assumptions. Then we have constructed a break-up of investments that can be used as a guide. You may wish to fine-tune this to meet your own requirements. 

While reading through these profiles, please note that these are typical attributes and are not absolute. Again, your risk profile changes depending on how you perceive yourself too. A senior citizen with no dependents, but with lots of savings, may find it perfectly okay to take on more risk. Similarly, a young person but with many dependents and lots of financial liabilities may be more conservative than other people his age. 

We have assumed that tax liabilities have been provided for, and the suggested investment break-up is for the net funds available. Broadly, you can classify investments in to cash and bullion, fixed income instruments, equities and mutual funds. Cash and bullion are taken as one, as both are equally liquid and widely used as a means of savings. Savings would also include funds in your bank savings accounts 

Apart from pure equities and fixed income instruments, mutual funds are popular investment vehicles. We have classified mutual funds separately since the risk of investing in funds is relatively lower. Moreover, balanced funds juggle between debt and equity making an all-inclusive classification difficult. 

Age : 22-30 years 

Profile : 
You are single or are married but with no kids. Dependents are not an issue at this stage and your focus is on creating a sizeable corpus of investments for the future. Incomes typically grow at a fast rate annually. The ability to take risk is high and losses in the short term are acceptable. You can invest in equities with a time frame of about 5-6 years which protects you from short-term fluctuations. 

Category	%
Cash and bullion	10
Fixed income instruments	30
Equity shares	40
Mutual funds-equity growth	20

Age : 31-45 years 

Profile : 
You are now married and your family size has expanded, with two kids. Your parents are now dependent on you for emotional and some financial support. The focus is on consolidating your investments, making them more secure. The ability to take risk is there but to a limited extent. Limiting losses is a priority. Building on a corpus of funds for children’s education becomes a priority now. 

Category	%
Cash and bullion	10
Fixed income instruments	40
Equity shares	30
Mutual funds-equity growth	20

Age : 45-60 years 

Profile : 
This is the age when retirement blues set in. Children's college and higher education make demands on your funds. You must also ensure that your retirement plans are in place, if you have not done it already. Hence, risk taking ability as a whole diminishes considerably. 

Category	%
Cash and bullion	10
Fixed income instruments	50
Equity shares	20
Mutual funds-equity growth	20

Age : Beyond 60 

Profile : 
You are taking life easy, some introspection, spending time with the family and maybe doing some part time work. Or like some workhorses, you are still engaged as a full time consultant with your ex-employer. The ability to take shocks is extremely limited and you should lower your exposure to equities. Your prime criterion should be to have a higher proportion of fixed income investments and stay liquid to meet any medical emergencies. 

Category	%
Cash and bullion	10
Fixed income instruments	70
Equity shares	10
Mutual funds-equity growth	10

Basics of Getting Started with Stock Market Investment

Set Your Objectives

The starting point for achieving financial independence begins with a financial plan. Determine your current financial position, available resources and immediate fund requirements. Then set your long term financial goals: keep in mind your risk-taking ability, current lifestyle, occupational profile and family background. The number of dependents and their own financial status –a working spouse gives you a greater degree of financial freedom- should also be considered.

A financial plan helps an investor to lay out realistic goals and then work towards them over a period of time. Since each individual has a unique setup, this section only makes broad recommendations that should apply to everyone before embarking upon an investment programme.

Estimate short term needs

Many investors plunge into the stock market without assessing their short term fund needs. Faced with a crunch, they end up selling shares much earlier or book losses at the smallest sign of trouble. That clashes with the fact that the holding period in equities is crucial to meet the targeted return. By estimating short term needs and preparing for them, the painful decision of selling shares before time can be avoided.

Create an emergency fund

Emergencies happen when least expected, forcing you to alter your investment plan. Therefore, having a cash reserve to help meet situations like a medical emergency or a layoff, ensure that your fund requirements are met without affecting the investment plan. A cash reserve (money market funds, which can be easily converted into cash should do) of at least six months worth of living expenses or a medical or disability insurance is a must.

Repay debt

Increase your net worth by repaying debt. Start by repaying the most expensive debt – usually credit card debts and unsecured personal loans are the most expensive. Keep some amount of debt, especially if you get a tax benefit, like on housing loans. If the return on investment is greater than the amount of interest paid on debt, invest. But if the risk-adjusted return is still less than the amount of interest being paid on the loan, you are obviously better off clearing the loan.

Set priorities in a chronological order

Classify your own priorities and that of your family members based on their time of occurrence. For instance, paying a lump sum donation for getting admission to school is a more immediate need, than providing for higher education. College education is still years away compared to school. Thus, school education can be provided for by investing in fixed income instruments like short term bonds or fixed maturity plans of mutual funds. For college education, a mix of equity and debt, with more in equity, can be taken to combat inflation and the higher risk is spread across a number of years.

Practice Asset Allocation

No investment plan is complete without an asset allocation. Different types of assets exist; the most common ones are cash and bullion, the most liquid asset class. Then, there are fixed income instruments, like bonds and fixed deposits, which are less risky, but yield lower returns compared to equities, and are less liquid too. Mutual funds come next, their risk profile depends on the type of fund –equity or debt or balanced and the investment philosophy. Sector-focused funds, for example, will be less riskier compared to diversified funds. Equities are the most aggressive investment option, with high returns and commensurate risk too.

Since there are various levels of risk associated with various assets, it makes sense to identify your own risk-return profile and then build an asset allocation strategy. There is no ideal asset allocation, a one size fits all plan. You have to make a plan that suits you best, allocating weights to various asset classes and then designing an investment plan accordingly.

After designing an asset plan, it is imperative to monitor it to ensure that changes in asset prices have not skewed your allocation. A sharp rise in equities, for example, may increase your exposure to equities, much more than you may want. So, selling down equities and increasing exposure to debt would be the right thing to do.

Indian stocks second best performers among BRIC in April

Following a sharp recovery in the equity markets, Indian stocks have emerged as the second best performers as compared to their peers in three other BRIC nations -- Brazil, Russia and China, giving close to 20% return in April.

According to an analysis of MSCI Barra indices, a measure of returns from various stock markets across the world for foreign investors, Indian stocks have given the second highest return after Russia among the four BRIC countries during last month.

Indian stocks have provided a return of nearly 19.54% in April, while China and Brazilian markets have given 10.87% and 18.89% respectively.

However, Russian equities have managed to outperform the Indian stocks in the month as it provided investors with a positive return of over 21%, as per the analysis of performances of Morgan Stanley Composite Indices (MSCI) for various nations.

The 30-share benchmark index of Indian stocks, Sensex, gained close to 1,700 points in the month of April to settle at 11,403.25 points on April 29.

Indian stocks have even outperformed the MSCI Barra's emerging market index, which includes all the developing world markets, giving returns to foreign investors to the tune of 16.28% in the month.

DLF to hive off wind power business

The country's largest real estate developer, DLF, today said it will hive off wind power business, one of its non-core businesses, to a wholly-owned subsidiary.

"The board of directors of the company at its meeting held on April 30, 2009, inter alia, has approved to transfer company's wind power business, as a going concern on slump basis, to a wholly-owned subsidiary," DLF said in a filing to the Bombay Stock Exchange.

DLF would seek shareholders' nod for the same, it added.

While declaring its financial results, regarding exiting from non-core assets, DLF yesterday said: "Wind Power has met with a good response from strategic partners wherein the due diligence of the assets is currently underway."

Besides, the company was contemplating making an exit from long gestation projects such as hotels. It had already withdrew from large township projects at Bidadi and Dankuni.

DLF reported 93 per cent plunge in consolidated net profit for the fourth quarter of 2008-09 at Rs 159.05 crore. Its profit stood at Rs 2,176.82 crore in the year-ago period.

For the whole of 2008-09, DLF's net profit decreased by 41 per cent at Rs 4,629 crore compared with Rs 7,812 crore in the previous fiscal.

Siemens net up at Rs225 cr, bags Rs1380 cr order from Adani

Engineering major Siemens Ltd, which today announced to secure an order worth Rs1380 crore from Adani Power, has posted a net profit of Rs225.5 crore for the quarter ended March 31, 2009, as against just Rs1.7 crore net profit booked last year for the corresponding period.
Sales for the quarter grew by 11 per cent to Rs2368.2 crore, compared to Rs2142.4 crore for the corresponding period in the previous year.

“We have achieved profitable growth in tough market conditions. Our focus on operational excellence and internal measures such as cost optimization and process rationalization supported the results. We also continued with our investment programs to support our growth,” said Dr Armin Bruck, managing director, Siemens.

The sales and profit figures are strictly not comparable to corresponding quarter of last year as the substantial completion of certain large projects has resulted in significant savings in estimated costs and consequential recognition of additional revenue and profits, said a Siemens press release.

In a market weighed down by deferred investments plans, the company booked new orders worth Rs 1859.4 crore for the quarter, 21 per cent less than the orders in the corresponding period of the previous year, said Siemens.

For the half-year period ended March 31 2009, new orders registered a drop of 10 per cent and stood at Rs3839.1 crore as compared to Rs4254.2 crore in the corresponding period last year.

For the half-year ended March 31, 2009, net profit for Siemens increased by 179 per cent to Rs556.1 crore as compared to Rs198.7 crore in the corresponding period of the previous year.For the half-year period, sales remained steady at Rs 3997.1 crore as compared to Rs4056.8 crore in the corresponding period last year.

Today Adani Power, part of Adani Group, awarded Siemens a contract to install a 500-kilovolt High-Voltage Direct Current (HVDC) transmission system of 2500 MW capacity to transmit electricity from over a distance of approximately 1000 kilometers from Mundra power plant in Gujarat to Mohindergarh in Haryana. The Rs1380 crore project will be executed together by Siemens AG, the German parent of Siemens India and the Indian arm. The first phase of the project is scheduled to be commissioned in February, 2011 and the second phase in July, 2011, said Siemens officials.

The project is to evacuate power from Adani Power's 4620 MW thermal power plant at Mundra in Gujarat.

Siemens scope of work for the project will include the turnkey execution of complete HVDC terminal stations at Mundra in Gujarat and Mohindergarh, Haryana, associated electrode stations and a repeater station mid way. The major scope of delivery covers 500 kV converter transformers, thyristor valves, filter equipments, switchgears and other mechanical auxiliaries. In addition Siemens will also undertake marine and inland transportation, civil works, installation and commissioning of the entire HVDC transmission system, said the officials.

APL is also developing a 1980 MW coal based thermal power project at Tiroda near Gondia in Maharashtra through its subsidiary, Adani Power Maharashtra Ltd. (APML). Additionally, APL is planning to develop two thermal power stations at Dahej and Kawai totaling to about 3,300 MW, said company officials at a press meet in Mumbai, today.

March exports slump by a third, outlook bleak

India's exports declined by a third in March to $11.5 billion, its sixth straight fall, and analysts said the global economic slump would further hurt overseas sales by Indian firms in the months ahead.

Imports fell by 34 percent to $15.56 billion in March from a year earlier due to a slowdown in Asia's third largest economy and moderate global crude prices , narrowing the trade deficit to $4 billion in March from $6.32 billion a year ago.

"The impact of global economic crisis on India is going to be higher in 2009/10 compared to (the) previous year," said N.R. Bhanumurthy, an economist at the Institute of Economic Growth.

"After achieving a robust growth for four consecutive years, India's export growth started showing negative trend since October 2008 and is expected to continue for the rest of the year due to recessionary situation in most industrialised nations," he said.

India's exports stood at $168.7 billion in the fiscal year to March, up a paltry 3.4 percent from 2007/08, while imports grew 14.3 percent to $287.8 billion in 2008/09, official data showed on Friday.

Exports, which account for nearly 16 percent of India's gross domestic product, were a notch below a downwardly revised 2008/09 fiscal year target of $170 billion.

The trade deficit widened 34 percent to $119 billion in 2008/09, from $88.5 billion in the previous year.

Last month, the International Monetary Fund slashed global growth forecasts and said emerging markets were dealing with a sharp drop in capital flows and a collapse in global trade.

While growth is expected to pick up in emerging nations, including China and India, a recovery to previous healthy levels will depend on a pick-up in advanced economies, the IMF said.

The United States and Europe, which consume about 35 percent of India's exports, are yet to show signs of recovery and this has dampened prospects for an early recovery in factory output and exports from jewellery to textiles.

NO IMMEDIATE REBOUND SEEN

Since October, India's central bank has cut its key lending rate by 425 basis points while the government has increased incentives for exporters to make their products competitive.

But government officials and economists say these steps would not help in an immediate rebound in exports.

"I don't think exports are going to pick up unless advanced global economies recover. Imports are also going to take a hit. A recovery can be expected not before the second half of 2009/10," said D.K. Joshi, principal economist at ratings agency Crisil.

Last month, Trade Secretary G.K. Pillai said exports were likely to extend their decline until September, and then stage a mild recovery.

Non-oil imports, a key measure of domestic economic activity, fell 18.9 percent in March from the year ago period, signalling that factory output was still sluggish.

IEG's Bhanumurthy said the swine flu outbreak that started in North America was expected to dampen global business through decline in movement of goods and labour.

"For India, this could affect both services and tourism sectors, and hence could delay the upturn in the growth of industrial output."

Tata Motors to launch Jaguar, Land Rover in India

Tata group company, Jaguar Land Rover, on Friday said it will launch its premium saloon cars and utility vehicles in the Indian market later this year.

Jaguar Land Rover has reached an agreement with Tata Motors to be an exclusive importer of these premium saloon cars and utility vehicles, the British company said in a release.

"It is an important strategic move for Jaguar Land Rover and will enable us to realise our competitive potential in this significant market," Jaguar Land Rover's CEO, David Smith, said.

Tata Motors has created a new division called Premier Car Division to handle the distribution of Jaguar and Land Rover.

The first showroom for the British brands would be in Mumbai. Tata Motors has appointed Rohit Suri to handle the premier car division.

"This is a natural move for both businesses and will allow Jaguar and Land Rover to establish a strong and deserved presence in India," Tata Motors' Managing Director, Ravi Kant, said.

The Tata group bought these premier brands last year for $2.3 billion.

DLF Q4 net plunges 93% to Rs 159 cr

The country's largest realty firm DLF on Friday said its net profit has plunged by 92.69 per cent to Rs 159.05 crore for the quarter ended March 31, 2009.

The company's profit stood at Rs 2,176.82 crore in the year-ago period.

Net sales dipped by 73.94 per cent at Rs 1,122.32 crore for the fourth quarter of 2008-09 fiscal as against Rs 4,306.54 crore in the corresponding period of the previous fiscal, DLF said today in a filing on the National Stock Exchange.

On standalone basis, DLF's net profit dipped sharply by 95.32 per cent at Rs 29.86 crore for the quarter ended March 31, 2009 compared to Rs 638.55 crore in the year-ago period.

Net sales fell by 96.56 per cent to Rs 55.53 crore for the fourth quarter of 2008-09 fiscal against Rs 1,613.32 crore in the corresponding period of the previous fiscal.

Maruti sales jump 15% in April

The country's largest passenger car manufacturer Maruti Suzuki India Ltd on Friday reported 15 per cent growth in its sales, at 71,748 units sold in April as compared to 62,336 units in the corresponding period previous year.

"This is the fourth consecutive month of sales crossing the 70,000 units mark," a company statement said. The figures include 6,891 units exported.

Maruti Suzuki's volume in the domestic A2 segment (Alto, Wagon-R, Zen, Swift, A-Star) grew by nine percent while in the A3 segment comprising of SX4 and D'Zire, the sales volume grew by 69 per cent during the month as compared to sales in April 2008.

However, sales for Maruti's 800 model dipped 47 per cent to 2,345 units sold in April this year as against 4,458.

The eye-catcher has been the multi-utility vehicle (MUV) sales of the company - Gypsy and Grand Vitara - recording a whopping 1,231 per cent growth. About 905 units of MUV were sold this April as compared to 68 in April last year.

Total domestic sales surged nine per cent with 64,857 units of sale as against 59,539 units in the same period a year before.

Chrysler files for bankruptcy

Chrysler LLC filed for bankruptcy on Thursday after talks to restructure its debt with lenders broke down.

Despite intense negotiations over the past few weeks, Chrysler failed to gain the full support from its lenders to avoid the first-ever bankruptcy filing by a major U.S. automaker.

At the same time, Chrysler as expected entered into an alliance with Italian automaker Fiat SpA where it sold a stake starting at 20 percent and in which Fiat can become the majority owner once the government loans are repaid.

The Chapter 11 filing, in U.S. Bankruptcy Court in Manhattan, will send shock waves through the entire industry -- including Chrysler's rivals, suppliers, dealers and the hundreds of thousands who rely on the industry for their livelihoods.

As part of the filing, the U.S. government will provide up to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing. Obama said he hopes the entire bankruptcy process will take only 30 to 60 days.

The bankruptcy signals that Obama is prepared to play hardball with holdout lenders rather than knuckle under to their demands and will likely set the tone for similar discussions with bondholders of General Motors Corp -- which is now on the clock to restructure its operations by the end of May.

While Obama voiced his support for Chrysler and the deal with Fiat, he was pointed in his criticism of the investors who did not agree to this deal.

"I don't stand with them. I stand with Chrysler's employees and their families and communities," the president said. "I don't stand with those who held out when everybody else is making sacrifices. That's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations."

This is not the first major government action with Chrysler. In 1980, U.S. President Jimmy Carter signed a bill providing Chrysler with more than $1 billion in loan guarantees.

Once again, the state of Michigan -- and in particular the Detroit area -- will be disproportionately hurt by the auto industry's woes.

"The industry's current crisis, with the potential for bankruptcy or consolidation, represents a fundamental shift in the state's economic base, rather than a simple cyclical downturn," Moody's said in a recent report.

"Bankruptcy is what they have been headed for in the past several months," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "The biggest concern now is that the different stakeholders will be able to make the tough decisions they need to make."

Chrysler Chief Executive Robert Nardelli will leave the automaker following the emergence from bankruptcy. The U.S. government will place six members on the new company's board and Fiat will appoint three.

Investors reacted positively to the news as the broader market was marginally higher. GM shares were up 6.6 percent and Ford Motor Co was up 7.7 percent in afternoon trading on the New York Stock Exchange.



FIAT: A DONE DEAL

The bankruptcy filing did not preclude the Fiat deal.

Chrysler has been seeking a rescue deal from the Italian automaker while also trying to finalize its debt agreement.

The debt restructuring talks have been spearheaded by the Obama administration's autos task force and former investment banker Steve Rattner.

In a bid to win over three fund firms that had spurned an offer to accept $2 billion in cash in exchange for writing off all of Chrysler's $6.9 billion in secured debt, U.S. officials sweetened the terms by throwing in another $250 million, people familiar with those discussions said.

Chrysler, majority-owned by Cerberus Capital Group, has been among the car industry's laggards, but its plight reflects a slump in demand facing an industry whose $2.6 trillion annual revenue is equivalent to the GDP of France and which employs more than 9 million people.



HISTORY-MAKING

The bankruptcy marks a key moment for the automaker and for the struggling American manufacturing sector.

In 1925, Walter P. Chrysler established Chrysler Corp. Three years later, the company laid the cornerstone for the Chrysler Building, briefly the world's tallest building and still an unmistakable part of the Manhattan skyline.

On Wednesday, Obama said concessions by Chrysler's unions and its major bank lenders had made him more hopeful than a month ago that the struggling automaker could be made viable.

The automaker has won cost-cutting concessions from its unions in the United States and Canada and was on the brink of closing its deal with Fiat on Wednesday, a person involved in those negotiations told Reuters.

Putting the two car producers together should give the combined group annual sales of some 4.16 million vehicles, making it equal with Hyundai and behind Toyota, General Motors, Volkswagen and Ford

Tech Mahindra wins Satyam bid: Report

Tech Mahindra on Monday outbid L&T and others and won the Satyam bid, TV reports said.


According to Times Now sources, Tech Mahindra will pay Rs 1757cr for 31% stake in Satyam. It will pay Rs 58 per share of the company. The face value of Satyam shares is Rs 2 per share.

Meanwhile engineering firm L&T reportedly made an offer of around Rs 49 for each Satyam share.

L&T, Tech Mahindra and Wilbur Ross had all put in technical and financial bid for Satyam Computer Services earlier on Monday.

BK Modi's Spice Corp did not submitted a bid for Satyam. "We have not submitted bid for Satyam. Our board wanted e-auction and since there is no e-auction, so we decided not to participate in the process," Spice Corp chairman B K Modi said.

According to PTI sources, Cognizant Technologies also did not put in its bid to acquire stake in the firm.