Mandatory application of Cost Accounting Standards

The Council of the ICWAI at its 251st Meeting held on 12-13 February 2009 decided as below:
Mandatory application of Cost Accounting Standards
“RESOLVED THAT the following Cost Accounting Standards
CAS 1: Classifications of CostsCAS 2: Capacity DeterminationCAS 3: OverheadsCAS 4: Cost of Production for Captive ConsumptionCAS 5: Determination of Average (Equalized) Cost of TransportationCAS 6: Material Cost
shall be mandatory with effect from period commencing on or after 1st April 2010 for being applied for the preparation and certification of General Purpose Cost Accounting Statements. Since there is no statutory requirement for the application of such Cost Accounting Standards for the preparation and certification of Cost Accounting Statements, in case the cost accountant is of the opinion that the aforesaid standards have not been complied with for the preparation of the Cost Statements, it shall be his duty to make a suitable disclosure/qualification in his audit report/certificate

Gold will ensure liquidity and help diversify your kids' portfolio. Invest in gold to get good returns in choppy markets and to hedge against inflatio

What To Do
To build a corpus, buy a coin or bar of gold on your child’s birthday every year
Buy from a reputed jeweller in your city
Avoid buying from banks
Buy gold ETF through a mutual fund broker. You can also use online trading portal of brokers to buy ETF
***
Securing your child’s future in gold is an intrinsic part of the Indian tradition, one that has been passed down several generations. While gold may not give you the kicker returns of equity, it is a stable and often a necessary asset for diversification. And, it fits your kids’ future financial requirements. Outlook Money recommends that 2-5 per cent of your portfolio should be in gold. Typically, when a child is born, family and relatives give gifts in gold—coins or jewellery. This forms the base on which you can accumulate the gold part of your portfolio. There are several ways of building on this corpus, provided you are regular and disciplined in your investments. One way is to gift your child a gold coin every year on his birthday. Obviously, you cannot get away from giving him a ‘real’ gift, but you could mark the day on your calendar and buy a coin every year. You can also buy units of gold exchange-traded funds (ETFs) every year.
Usually, the gold section of your portfolio comes into use for your child’s marriage. There would be several requirements for jewellery and gifts during the marriage, and if you have been building a portfolio of gold over time, it will come in handy when you need it the most.
High returns. In the long term, gold earns high returns. The price of one gramme of gold has gone up from Rs 350 in 1999 to Rs 1,416 in 2009. It is also an excellent hedge against inflation. As inflation goes up, market sentiment and equity prices go down, but gold prices rise. Returns are attractive—from 1995 to 2008, gold has given a CAGR of 12.69 per cent. Gold is trading at very high rates at present— Rs 1,390.02 per gramme. But indications are that the prices would go up further. Analysts expect prices to touch Rs 1,760 per gramme this year. In fact, some even predict a high of Rs 2,200 per gramme. If you haven’t bought this year’s supply, then sooner might be better than later.
Exchange value. When it’s time to cash in on your gold, you can convert the coins into jewellery, or merely sell them at the prevailing rate. Gold coins and bars give you the full value. But, if you are converting gold jewellery into updated designs or other forms of gold, you will lose the making and design charges. Also, jewellery with stones will fetch a lower resale value.

Charge Away The Charges

Banks charge for every small service they provide. Learn how to manage these to cut your banking costs
Your PocketIf you do not maintain the minimum balance in your account, you will be liable to pay the penalty charges as well as other charges for various transactions Penalty Charges (per quarter)*
ICICI: Rs 750 HDFC: Rs 750 HSBC: Rs 750 Standard Chartered: Rs 750-1,500 State Bank of India (SBI): Rs 30-55 Kotak Mahindra Rs 150 Charges On TransactionsCall To Customer Service (non-IVR) HDFC: Rs 50 per call ICICI: Rs 50 per call Cash Transactions At Branch ICICI: Rs 60 per transaction (first 3 transactions per quarter free) HSBC: Rs 50 per transaction (first 2 transactions per quarter free) Dormant Account SBI: Rs 30-50 per quarter Standard Chartered: Rs 1,000 a year Inoperative Account SBI: Rs 150 per quarter HSBC: Rs 150 per quarter Cheque Charges ICICI: Rs 5 per leaf SBI: Rs 2.50 per leaf * Charges for regular savings a/c for urban customers Other Charges Closing An Account Kotak Mahindra Bank: Rs 600 (within 6 months) HSBC: Rs 500 (within 6 months) SBI: Rs 100 (within 1 year) Urgent Cheque Issued Over The Counter HSBC: Rs 50 per leaf
Payment Of Credit Card Bill In Cash At Branch ICICI Bank: Rs 100 HDFC Bank: Rs 100 Duplicate Statement Standard Chartered: Rs 100 HDFC Bank: Rs 100 at the branch, Rs 50 through phone banking or ATM, Rs 30 over the Net, mobile banking, IVR Replacement Of ATM/Debit Card ICICI Bank: Rs 200 per card PNB: Rs 100 per card PIN Regeneration Charges PNB: Rs 25 ICICI Bank: Rs 25 (free if request through Instapin at branch or IVR customer care) Duplicate Passbook HDFC Bank: Rs 100 ICICI Bank: Rs 100 (Rs 25 per page for updation) Stop-payment Charges ICICI Bank: Rs 50 per cheque HSBC: Rs 100 per request Unarranged Overdraft HDFC Bank: Rs 100 per transaction plus 18 per cent interest per annum Cheque ReturnsICICI Bank: Rs 100 if a local cheque issued to customer is returned, Rs 300 if the cheque issued by the customer is returned and Rs 750 if the same cheque is redeposited by the customer and is returned again The list is not exhaustive. Check your bank websites for details of charges
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In these times of financial uncertainty, when markets are down and jobs are scarce, cost cutting has become the buzzword. Let alone companies, even individuals are looking to cut costs—by reducing outings, trips or lavish shopping. Your savings bank account is another place where you can look to cut costs—a lot of it.
Banks levy various charges on transactions—ranging from Rs 25 to Rs 1,000. And if you haven’t been careful about them, or are not aware of them, in all likelihood they have already burnt a hole in your pocket.
A few steps, however, could help you not repeat the same mistakes this new year and help you save money. If you ignore them, you will have to pay, literally.
More Accounts, More CostsWhile there is no limit to the number of accounts you can have, it could prove costly to maintain more than one.
Most banks have a minimum balance limit. So, if you have six accounts, you would have to maintain a balance in each of them. If you don’t, you will have to pay a penalty—Rs 750 in most cases. And, you will have to pay that every quarter. So, in a year, you would end up paying Rs 3,000—that, too, for only one account. If you have more, do your own math to calculate the total losses. If you maintain the balance, you will earn only 3.5 per cent against the 8 per cent that you could earn from a Public Provident Fund (PPF), or more through other saving instruments.
That’s not all. A few banks levy added transaction charges in case of non-maintenance of minimum balance (see From Your Pocket). Moreover, if you do maintain the minimum balance somehow, but are not using the account, you will pay again because some banks charge an inoperative account fee.
By now, if you are convinced about closing those accounts you don’t use or need, be prepared to pay account closing charges. However, it is better to pay up this one-time charge to avoid future losses. This charge is only for accounts that are six months to a year old.
Check Those ChequesThink twice before you write those cheques, it may be better to use cash instead. Most banks do issue at least one cheque book (20-25 leaves) per quarter free of cost if you maintain minimum balance. Otherwise, you pay up. If you want to use more cheque leaves, you will have to pay for each of those.
Also, make sure you have adequate funds before issuing a cheque because a bounced cheque is costly, too.
Reduce Your Bank VisitsToo many transactions could cost you too, whether they are through ATMs, or over the Internet, or phonebanking, or at the branch. Only a limited number of banking transactions come free of cost per quarter for many banks.
In Standard Chartered, the first four transactions through any channel (Internet banking, phonebanking, ATM or branches) per month are free. However, it charges as high as Rs 75 per transaction, subsequently.
Some banks even charge for repeated visits to the bank branch.
If you pay your credit card bill through cash at a branch, you are fined. Says a senior executive of a private sector bank: "We want to discourage customers from coming to the branch, hence the fine. The customers can pay the bill through an ATM transaction, which is free." Banks also charge additional fees for banking at a non-base bank.
Cut The ClutterKeeping fewer papers will not only help you save money, but help keep your documents file uncluttered. So, be content with your quarterly account statements and monthly email statements. A physical monthly statement would cost you Rs 100-200 per year.
Banks even charge you for issuing interest and balance certificates in deposit accounts. A balance certificate gives the balance of a particular day and is used mostly for Visa purposes, while an interest certificate shows the total interest earned on bank deposits and is used at the time of filing income tax returns. Usually one certificate is issued free of cost every year. Make sure you don’t lose it and pay to get a new one.
Know What You Are DoingCarelessness is no excuse, especially when you are banking. For instance, if you deposit cash in the cheque drop box, banks will fine you. Private banks charge Rs 100, and if the deposit amount is over Rs 500, the fine is Rs 300. If you repeat instances of cash deposits in the cheque drop box, you would have to pay an additional Rs 500.
Regeneration of the PIN number of ATM or debit cards costs money in most banks. So, if you can’t remember your number, note it down at a safe place. Even replacement of cards attracts a fee. Subscribing to SMS alerts, bill payment, home banking, duplicate passbook, cheque status, unarranged overdraft, inter-branch transactions and cash delivery are only some of the services which are charged for.
You pay for every personalised service, such as SMS alerts, that you avail from your bank. So, make sure you really need these. And, do remember that there is no such thing as a free service.

How to pick growth stocks

At a time when company managements are giving lower guidance of future growth rates in topline and bottomline, it makes it worthwhile to study companies projecting high growth rates. Such stocks have some inherent characteristics, which popularize them as growth stocks. But exactly what are these traits? Lets see the more important ones;
1.The basic assumption regarding growth stock investing is that these stocks, even in an economic downturn, come up with very high growth rates in earnings and EPS.
2.Such companies grow faster than their peer group. For example L&T is growing faster than companies mostly in the infrastructure group. In favorable business environments most companies show high growth rates. The key is which companies sustain these high growth rates even in adverse economic environments. Also whether these growth rates are sustainable.
3.These companies also show very high ROEs.
4.These companies have high PE multiples. This is because the investor is ready to pay a high price for each unit of the companies' earnings. Educomp Solutions is a good example.
Usually these multiples are greater than the multiples of the overall market.
5.These stocks have high retention rates and low dividend payout ratios.
6.These stocks are very risky and are volatile and have high betas. Areva T&D is a good example.7.The history of earnings growth is also very good

RETURN ON INVESTMENT (ROI)

An investor is someone who commits money, time, or their own effort to get a return on that investment. One way to measure the value of that return is called return on investment, or ROI. Return on investment is a calculation of the amount, or percentage, that you have earned (or lost) on an investment you have made. Returns may be positive or negative. A positive return on investment would mean you earned money, and a negative return would mean you lost money. Return on investment is a percentage of the original amount you invested.
Related to return on investment is risk. Risk is the chance that you will lose money. Different types of investments will give you different returns, and different amount of risk. In general, if you invest in an opportunity with a lot of risk, then you should expect to get a higher return on investment. Low risk investments should give you a lower return on investment. For example, if you place your money in an insured bank account, your money might be pretty safe, but the return may be 1%. If you invest in stocks, you might earn 8%. However, stocks are more risky, and you actually might lose money instead.
The formula is:
ROI =
R - I
x 100

R =
Money received after
making the investment.
I
I =
Original money invested.
Example: John invests $100 in a mutual fund for one year. At the end of the year he has $108. What was his return on investment?
Answer: 108-100 = 8. 8/100 = .08 .08 * 100 = 8%

TEACHING AND LEARNING BASIC INVESTING

RISK AND RETURN LESSON PLAN

Before investing your money, you will have to understand the important concept of risk and return. Risk and return means that the returns you will get when investing your money will vary. You may even lose money. However, no matter what you do with your money, you are always taking some amount of risk. If you keep your money at home, you risk that it could be lost or stolen. If you place your money in a bank account, you risk that the returns that you get will not be high enough.
Risk and return also means that if you take greater risks, you should expect to get greater returns. If you want the possibility of getting greater returns, you need to invest your money in more risky investments, for example bonds or stocks. Different bonds and stocks even have different degrees of risk.
So how much risk should you take with your money? That depends on many different factors including your age, risk tolerance, and investment objectives. No matter where you invest your money, you first should understand the investment's risks and potential rewards.

Additional thoughts on risk and return:
The risky investment in this exercise may be stocks, or may be another type of investment. If you consider the risky investment to be stocks, many people believe that stocks outperform safe investments over the long-term, and therefore showing negative returns (as this worksheet lesson does) may give a false impression that stocks are not good investments.
Our thought is that while it has been true that stocks and bonds have historically outperformed safe investments over the long-term, in the short term you could lose significantly with them. Also, you could lose significantly if you own particular stocks, rather than a diversified basket of stocks.
Also, even though stocks have outperformed in the past, there is no guarantee that they will in the future -- that is what makes them risky investments -- even over the long-term. Many people thought stocks would always give positive returns at the top of the market in March, 2000. No investment return is ever guaranteed -- there is always a risk. We can look at historical returns to get a sense of what we may get in the future, however, the past is never a guarantee of the future.

Account Statement

Your work doesn't stop at investing in mutual funds. Keeping track of them is as important as deciding where to invest. The account statement helps you do just that

Once you invest in a mutual fund (MF) scheme, your MF sends you a statement within seven working days that gives details of the investments. Your MF account statement is just like a bank passbook, and gives information on all recent transactions done within a particular folio.The Securities and Exchange Board of India mandates that in addition to sending account statements to unitholders as and when there is some action in the account (redemption, additional investment or dividend declaration, for instance), MFs also have to send an account statement, at least once a year, for every folio a unitholder has.WHAT TO CHECK1. Current cost and valueCurrent cost is the amount you invested in a scheme while current value is the latest market value of your investments as on the date the statement is generated. Also, the price of one unit will be the net asset value (NAV) plus entry load or minus exit load. 2. Folio and account numbersMake a note of folio and account numbers. Most MFs offer one folio number and several account numbers in the same folio for all investments under the same unitholder combination. This makes for easier tracking all your investments with same MF. 3. Bank detailsCheck your account number and bank name. If you want to change your bank mandate, fill out the slip at the bottom of your account statement and submit to your fund or agent. 4. PAN detailsIt is mandatory for you to give the correct Permanent Account Number (PAN), irrespective of the amount invested. Check your PAN mentioned in the account statement and ensure there are no discrepancies. 5. Advisor nameIf you have invested through an agent, your agent’s name and code will appear on the statement. However, if you have invested directly, these parts should be left blank on your account statement