Money Market vs. Certificate of Deposit

One of the biggest questions investors face is, "what do I do with my cash when I'm in-between investments?". This article seeks to examine two of the most popular choices - certificates of deposits and money markets - and weighs the pros and cons of each.
In the left corner: certificates of depositCertificates of deposit (or CDs for short) are debt instruments issued by banks and other financial institutions to investors. In exchange for lending the institution money for a predetermined length of time, the investor is paid a set rate of interest. Maturities on certificates of deposit can range from only a few weeks to several years with the interest rate earned by the investor increasing in proportion to the time his capital is tied up in the investment.

Pros: The investor can calculate his expected earnings at the outset of the investment. Certificates of deposited are FDIC insured for up to $100,000 and offer an easy solution for the elderly who desire only to maintain their capital for the remainder of their life.
Cons: If the investor opts for a longer maturity and, thus, higher rate of interest, he will lose access to his funds and forgo alternative uses of his capital.
In the right corner: money marketsMoney markets, on the other hand, offer many of the same benefits as certificates of deposit with the added features of a checking account. Technically speaking, a money market is more or less a mutual fund that attempts to keep its share price at a constant $1. Professional money managers will take the funds deposited in the money market and invest them in government t-bills, savings bonds, certificates of deposit, and other safe and conservative financial instruments. This income is then paid out to the owners of the money market.
Investors can open a money market account at most financial institutions. They generally receive a checkbook with which they can draw upon funds in the account.
Pros: Depositing money in a money market is as easy as depositing cash into a savings or checking account. Cash is immediately available for alternative investments.
Cons: Some financial institutions place a limit on the number of checks that can be drawn against the account in any given month. The rate of interest is directly proportional to the investor's level of deposited assets, not to maturity as is the case with certificates of deposit. Hence, money markets are disproportionately beneficial to wealthier investors.
The verdictAlthough both can be useful, for those who need access to their capital, money markets are far superior. Many brokerage houses automatically sweep their customer’s uninvested cash into money markets to earn interest between investments. This is the ideal solution if you regularly invest because the funds can be used immediately to purchase stocks, bonds, or mutual funds.

Secured Credit Card Marketing Scams

ANYONE CAN QUALIFY FOR A MAJOR CREDIT CARD!
Separated? Divorced? Bankrupt? Widowed?
BAD CREDIT? NO CREDIT?
NO PROBLEM!
900-555-1111
Make the call NOW and get the credit you deserve!
Even if you’ve been turned down before, you owe it to yourself and your family.
Your major credit card is waiting.
Ads like this may appeal to you if you have a poor credit history or no credit at all. Beware: while secured credit cards can be an effective way to build or re-establish your credit history, some marketers of secured cards make deceptive advertising claims to entice you to respond to their ads.
Secured vs. Unsecured Cards
Secured and unsecured cards can be used to pay for goods and services. However, a secured card requires you to open and maintain a savings account as security for your line of credit; an unsecured card does not.
The required savings deposit for a secured card may range from a few hundred to several thousand dollars. Your credit line is a percentage of your deposit, typically 50 to 100 percent. Usually, a bank will pay interest on your deposit. In addition, you also may have to pay application and processing fees — sometimes totaling hundreds of dollars. Before you apply, be sure to ask what the total fees are and whether they will be refunded if you’re denied a card. Typically, a secured card requires an annual fee and has a higher interest rate than an unsecured card.
Deceptive Ads and Scams
The Federal Trade Commission (FTC) has taken action against companies that deceptively advertise major credit cards through television, newspapers, and postcards. The ads may offer unsecured credit cards, secured credit cards, or not specify a card type. The ads usually lead you to believe you can get a card simply by calling the number listed. Sometimes the number is not toll-free. A ‘900’ number service, for which you are billed just for making the call, may instruct you to give your name and address to receive a credit application, or give you a list of banks offering secured cards. It also may tell you to call another ‘900’ number — at an additional charge — for more information.
Deceptive ads often leave out important information.
The cost of the ‘900’ call — which can range from $2 to $50 or more;
The required security deposit, application, and processing fees;
Eligibility requirements like income or age;
An annual fee or the fact that the secured card has a higher than average interest rate on any balance.
How to Avoid the Scam
To avoid being victimized, look for the following signs:
Offers of easy credit. No one can guarantee to get you credit. Before deciding whether to give you a credit card, legitimate credit providers examine your credit report.
A call to a ‘900’ number for a credit card. You pay for calls with a ‘900’ prefix — and you may never receive a credit card.
Credit cards offered by “credit repair” companies or “credit clinics.” These businesses also may offer to clean-up your credit history for a fee. However, you can correct genuine mistakes or outdated information yourself by contacting credit bureaus directly. Remember that only time and good credit habits will restore your credit worthiness.
Credit Reporting
If you’re considering a secured card as a way to build or re-establish a credit record, make sure the issuer reports to a credit bureau. Your credit history is maintained by companies called credit bureaus; they collect information reported to them by banks, mortgage companies, department stores, and other creditors. If your card issuer doesn’t report to a bureau, the card won’t help you build a credit history.
For More Information
To build a credit record, you may want to apply for a charge card or a small loan at a local store or lending institution. Ask if the creditor reports transactions to a credit bureau. If they do — and if you pay back your debts regularly — you will build a good credit history.
If you cannot get credit on your own, you can ask a relative or friend with a good credit history to act as your cosigner. The cosigner promises to repay the debt if you don’t.
If you’re having problems paying bills, you may want to contact a credit counseling service. Non-profit organizations in every state counsel consumers who are in debt. Counselors try to arrange a repayment plan that is acceptable to you and your creditors. They also can help you set up a realistic budget. These counseling services are offered at little or no cost to consumers. You can find the office nearest you by checking the White Pages of your telephone directory.
Sometimes, non-profit counseling programs are operated by universities, military bases, credit unions, and housing authorities. They are likely to charge little or nothing for their services. Or you can check with your local bank or consumer protection office to see if it has a list of reputable low-cost financial counseling services.
Where To Complain
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.govor call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

India Insurance (Indian Insurance, Indian Insurance Sector)

India insurance is a flourishing industry, with several national and international players competing to excel. With several reforms and policy regulations, the Indian insurance sector has witnessed tremendous growth in the recent past.

India Insurance: History

The history of the Indian insurance sector dates back to 1818, when the Oriental Life Insurance Company was formed in Kolkata. A new era began in the India insurance sector, with the passing of the Life Insurance Act of 1912.

The Indian Insurance Companies Act was passed in 1928. This act empowered the government of India to gather necessary information about the life insurance and non-life insurance organizations operating in the Indian financial markets.

The Triton Insurance Company Ltd formed in 1850 and was the first of its kind in the general insurance sector in India. Established in 1907, Indian Mercantile Insurance Limited was the first company to handle all forms of India insurance.

Indian Insurance: Sector Reform

Formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance sector. The aim of the Malhotra Committee was to assess the functionality of the Indian insurance sector. This committee was also in charge of recommending the future path of insurance in India.

The Malhotra Committee attempted to improve various aspects of the insurance sector, making them more appropriate and effective for the Indian market.

The recommendations of the committee put stress on offering operational autonomy to the insurance service providers and also suggested forming an independent regulatory body.

The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory and Development Authority (IRDA) in 2000.
The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to initiate different policy measures to help sustain growth in the Indian insurance sector.

Accounting norm changes help major cos boost earnings

Accounting norm changes help major cos boost earnings

Benefit of option to capitalise/amortise differences in forex rates.

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Walking stick

Profits of Tata Motors, M&M and Sterlite Industries would have been lower but for the amendment

JSW Steel, Bharat Forge and Ashok Leyland may have slipped into losses in FY-09 if the new option had not been exercised

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Relaxations in AS 11, the Accounting Standard that deals with the ‘effects of changes in foreign exchange rates’, may have helped quite a few large companies report a better profit picture for March 2009.

Even as top financial companies in the US are said to have benefited from a less stringent Accounting Standard that allows flexibility in mark-to-market accounting, some of the leading Indian companies such as Tata Motors, JSW Steel, Sterlite Industries, Ashok Leyland and Bharat Forge have come up with an improved earnings picture in March 2009 as a result of the amendment to AS 11 and some could even have slipped in to losses in FY-09 had they not chosen to adopt the changes.

Change in AS 11

AS 11, in its original form, required companies to report their foreign currency monetary items based on the closing exchange rate at the end of an accounting period. The gain/loss arising from the exchange difference had to be recognised in the profit and loss account.

With corporate India carrying significant foreign currency loans, companies suffered mark-to-market losses on such restatement especially over the past year, when the rupee saw significant depreciation, expanding the loan value in rupee terms. Although notional, this resulted in depressed earnings.

To grant some temporary relief to corporates, the amendment made to AS 11 on March 31, provided an option to capitalise/amortise the exchange differences on long-term foreign currency monetary items (typically overseas borrowings). This provision, effective with retrospective effect from December 2006, would be available up to FY-11.

Following this amendment, companies with forex loans can now adjust the loss or gain arising from currency fluctuation by adding to or deducting from the cost of fixed asset, if such borrowing were incurred for acquiring the asset. The treatment, in essence, would help bypass the P&L account and make adjustments directly in the balance sheet, thus providing immediate relief to earnings.

Take the case of Tata Motors. The company, in its notes to accounts, has stated that its net profits for the full year were higher by Rs 418 crore as a result of opting for the amendment. The company’s reported net profits for the year were Rs 1,001 crore. It’s per share earnings of Rs 22.7 would have been lower by as much as 40 per cent had it recorded the fluctuation in its P&L.

For others such as JSW Steel, Ashok Leyland and Bharat Forge, the change in accounting practice may have been a blessing in disguise atleast for FY-09 as it reduced or averted losses.

For Bharat Forge, consolidated net profits of Rs 58.2 crore for FY-09 could have slipped to losses of Rs 110 crore, had the company charged the MTM losses to its P&L. It is to be noted that the amendments are with retrospective effect from FY-07; their impact, therefore, appears significant especially in the general reserve.

While the relief comes after prolonged depreciation in the rupee over the past year, the rupee has been appreciating against the dollar in recent times. The rupee gained as much as 9.3 per cent from its low of Rs 51.9 in March.

If this scenario persists, would companies choose to once again record any exchange gains in the P&L account?

They would not; corporates do not have a choice to opt out once they choose the amended version. This is perhaps why companies such as Larsen & Toubro and Ranbaxy Laboratories have chosen to retain the old AS 11.

Forex reserves rise $6.432 b

Mumbai, May 29 The country’s foreign exchange reserves increased by $6.432 billion for the week ended May 22 to $260.639 billion, according to the Reserve Bank of India’s Weekly Statistical Supplement.

In the week ended May 15, forex reserves had declined by $1.734 billion to $254.207 billion.

The rise in reserves is due to the weakness of the dollar against other currencies such as euro and the RBI purchasing dollars to help exporters, said a forex dealer with a public sector bank.

The week under consideration saw the rupee appreciating on the positive sentiment after the Congress UPA won the general elections with a decisive mandate and tracking the huge gains made by the Sensex. The domestic currency had even touched 46.90 against the dollar.

The foreign currency assets increased by $6.411 billion to $250.165 billion. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies, such as yen, sterling and euro.

The euro gained from $1.3436 at the beginning of the week to $1.3916 at the end of the week, against the dollar. During the week, the euro touched a five-month high of $1.3957.

Gold and SDRs were unchanged at $9.231 billion and $1 million respectively.

The country’s reserve position in the IMF increased by $21 million to $1.242 billion.