How are you today? I must say that I have enormous respect for you considering the manner in which I have made contact with you.  I would go straight to the proposal at hand without wasting much of your time. It is left for you to make up your mind if you would go along with me in accomplishing this or not. If you do wish, then please act as I have instructed. If not, please keep these details to yourself and I promise to compensate you all the same as soon as the transaction is concluded, as far as you stay in touch. I would respectfully request that you keep the contents of this email confidential and respect the integrity of the information you come by as a result of this email. I contact you independently and no one is informed of this communication.

In 2004,late HK (name withheld!) came to our bank to engage in business discussions with our private banking division. He informed us that he had a financial portfolio of $42 million US dollars, which he wished to have us invest on his behalf and I was appointed his private banker/portfolio manager at the time.  I then provided numerous suggestions and advise in line with my duties. Given the volume of funds he wished to put into our bank, we met on numerous occasions prior to any investment being placed. I encouraged him to consider various growth funds with prime ratings. The favored route in my advice to customers is to start by assessing data on 600 traditional stocks and bond managers and alternative investments. Based on my advice, we spun the money around various opportunities and made very attractive profits margins during our first few months of operation. The accrued profit and capital at that point stood at over US$46 Million.

Few months later, he instructed that the portfolio be liquidated because he needed to make urgent crude oil investments requiring cash payments in UK, I was very surprised since we were making much money from his investment but he informed me that he desired low risk and guaranteed returns on investments, and as such we could not utilise the full potential of the funds. Immediately I got in touch with a specialist bank in UK who agreed to receive this money for a fee and make cash available to H.
Last month, I received a notice from the bank in UK notifying me that as a policy, their bank was obliged to notify the originator of a transfer in the event of such remaining dormant/unclaimed after 5 years. The $46 Million we had transferred on behalf of H had sat in the bank for over 5 years untouched, without any instructions from him.

This was indeed shocking news for me considering the urgency he had requested we make the transfer at that time.  Upon enquiry I found out that he was involved in an accident in M C and passed away only a few weeks after the transfer was made to the specialist bank in UK on his behalf.

As his personal banker, I used all information available to me from his files and upon further enquiries discovered that he died without nominating a next of kin, or a beneficiary for his estate in the event of the inevitable.
His records with us too shows no next of kin because when I asked him then to fill it, he said he will do that on a later date and now the reason I am writing you is because you bear the same last name with him. (actually I do not, but what the hell, it was fun reading it: Subra)

What I wish to relate to you may smack of unethical practice but I want you to understand something. It is only an outsider to the banking world who finds the internal politics of the banking world aberrational. The world of private banking especially here in xyz, is fraught with huge rewards for those who occupy certain offices and oversee certain portfolios. What I propose is that since you are a foreigner and I have exclusive access to his file and the specialist bank was given instructions by me to receive funds when we sought their assistance, you will be made the beneficiary of these funds and the specialist bank will subsequently be instructed to make payment of the monies in their custody to you.

Nobody is getting hurt in this, as a banker here in Hg, we see so much cash and funds being re-assigned daily. The alternative to this would be that when my bank is notified, the Specialist Bank would be instructed and the money reverts back to the state or embezzled by a corrupt top official which is more likely to happen. I know that this may be hard for you to understand, but the dynamics of my industry dictates that I make this move. Such opportunities only come once in a lifetime and as personal banker to the DECEASED and custodian to his files and all his information here, I hold the KEY to these funds. Please, again, note I am a family man; I have a wife and children. Do not betray my confidence. If we can be of one accord, we should act swiftly on this. Late A may even be a relative of yours but i hope you do not let the corrupt officials here get hold of this money, it will be used for drugs and oppression.
I propose that upon successful completion of this deal, we will split the proceeds according to a ratio to be agreed in subsequent communication between us.

Finally, I thank you for taking the time to read this and look forward to receiving a swift response from you (hoping you accept my offer to participate in this once in a lifetime opportunity).

Yours,
L

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Many people have been screaming about real estate as an investment. Well I have nothing against it, except that I do not understand it. Given limited brain power, I would rather not do it, instead of making a mess of the same

Let me share one real estate transaction that I saw from close quarters:

India Bulls has a property in Panvel (a suburb of a suburb of Mumbai!!).

Cost / buying price for the customer in Sep 2010        : Rs. 2200

brokerage                                                                                                       50

total cost say Rs          2250

the price at which one can be reasonably sure of selling : Rs. 4000 (the builder says 4400)

BUILDER’S transfer charges: Rs. 400

brokerage (assumed)               Rs.     80

Net cash that you will get (over a 16 month period) :              Rs. 3520

Capital Gains 3520-2250 = Rs. 1270

Cap gains tax @ 25% (short term cap gains, so you will pay at max marginal rate): 320 (rounded off)

so net gains: 3200 (cash) on an investment of Rs. 2250 over a 16 month period.

Net gains: 1270 – 320 = 950….

Not bad at all.

Right? Sure, you took the risk, made the investment and the broker still decides to take Rs. 400 – which is greater than the Capital Gains that the government of India charges…

So is realty a good investment…?

Well if you did invest cash, or if you leveraged (after all you did not have the money to do the deal)..and you made money…yes.

Did I do this transaction? NO.

I have done transactions where I have got about 10%p.a.  return over the past 3 years. Not cribbing.

I have seen / done a funding transaction with a builder @ 28% p.a. – secured.

I have seen / done a funding transaction with a builder @ 24%p.a. unsecured….

but my debt transactions are rarely worth talking about – I take too much risks.

Capital gains tax (short term cap gains so assuming 25% tax)

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vow I said…and as usually probed ….

she said “Oh my husband only applies in an IPO, so he says we cannot lose money”…vow!

There are 2 routes to the equity market. One is called PRIMARY and the other is SECONDARY – either way you can make or lose money. It is that simple.

When the husband surfaced, he was not happy at the topic…..ha ha!

His gushing wife wanted her husband to ‘share his portfolio’ with me….still waiting…and this whole conversation happened about 10 months ago.  Many, many people are under the impression that if you apply in an IPO you cannot lose money. It used to be true once upon a time, long long ago…about 4 decades ago. When pricing was done by the Government! There used to be a government body called ‘Controller of Capital Issues’ who could decide the premium at which your company could issue shares. So companies who did not ‘oblige’ the powers that be had to come at a ridiculously low price. And of course there were companies who could manage their way who could come with a HUGE premium.

Two companies which come to mind immediately on either side are – Advani Oerlikon Ltd. – which deserved a much, much higher premium than what they got (Rs. 2) and Garden Varelli which deserved a much, much lesser premium than what it got (Rs. 75 if my memory serves me right).

Of course, as usual the mis-pricing benefitted / cost the shareholder as usual.

There are no bulls or bears only pigs who do not understand how the market works. The dice is always loaded in favor of the gambling house.

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Alas such options are not available. In fact not even a SINGLE pension product (disbursal stage) is available from the mutual fund industry, and that is a real big tragedy.

The Chairman of SEBI occasionally makes a noise that Mutual funds should ‘bring pension products’.

To me this is complete humbug. There has to be some clarity among the regulators about who will regulate what! If a mutual fund has a pension plan will PFRDA make norms for it? If a life insurance company has a pension plan without a life cover attached, should they be allowed to launch it at all? What is the role of IRDA if the ‘product’ call is taken wrongly by another regulator…these are all issues which the govt. will have to resolve BEFORE making holistic statements.

By the way I am convinced that there is no pension plan with the life insurance companies which inspires you to lock in the money for 60 years….

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- I have a lot of money, but so do my kids. They will not fight for Rs. 50 lakhs.

So true. I heard of a family which fought for Rs. 50, 000 crores, I am sure you did to!

- I am not like Birla…my money is not worth fighting over. NOBODY (REPEAT NOBODY) is going hungry because of the ‘Will’ fight between Birla and the Kedias.

I have heard of cases where the son has refused to pay for the younger brother’s college fees. I know of a brother who refused to pay for his sister’s marriage expenses.

Please clarify which investment is for which goal, make a will, specifically say Rs. 20,00,000 lying in ‘ABC mutual fund’ is to be used for Miss. S (my daughter)’s education, marriage,…etc. ONLY.

Remember you will not be around to answer the questions – so the clarity has to be fantastic….just a thought is not enough.

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Remember this advice sometime in 2007….and as usual I smiled it away. In fact the EDITOR of a financial mag told me ‘Hey this fund is doing well in my portfolio…why is such a story being carried (somewhere else, thankfully!!). I said, ignore the advice.

2. “Hindustan Unilever has lost its pricing power. It is losing market share. There is no use in having a company with a fantastic brand recall – sell it”.

A friend’s Dad with about 100,000 shares was worried. I said, ignore the advice, change the channel. This was in 2008 or 2009 – not sure.

3. You can never make money in an industry where the government controls the input price and selling price. Avoid Fertilisers – the FII will NEVER buy it, so it cannot go up AT ALL. Very, very famous TV loving investor/broker/fund manager.

Look at the performance of Coromandel International.

4. Investing and waiting for the market to improve / get good returns is history. You should trade in and out of the market.

Obviously given by a MD (broker of a big brand)…

Please ignore. Most market intermediaries are rewarded on action. You reward YOURSELF only if there is growth AND the charges are less.

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1. What you do not understand, is not worth knowing: If a financial planner tells you ‘Sir, you do not understand this, I will explain it to you’ – please be IMPOLITE and ask him to …….. (unprintable!). NOBODY (repeat NOBODY) is interested in ‘teaching’ you. Normally it is in the interest of the oil skin salesman that you understand LESS, rarely more. Unless of course he is a professor. If he is a professor, he is not really interested in teaching you, so he will not attempt.

2. Be careful of what your broker can do for you: First of all have less expectation from your broker. Then meet him. Then lower your expectations to the right level. He is interested in getting you to fill some forms, buy some shares, mutual funds, unit linked pension plans, etc. YOU and YOU alone are interested in knowing what is good for you. Take inputs from your broker, use your OWN brain and then decide. If he pushes you for time, ask him to take a chill pill.

3. ANYBODY who has a secret way of earning more is telling you a LIE. A pure blatant lie. There are no secrets that people go around giving free to all and sundry. Sadly some such people go around the world -and they have a fantastic affinity to recent retirees sitting on Rs. 85 lakhs and wondering what to do with that money. Be damn careful.

4. Oil skin salesmen today have many qualifications, be careful. Once upon a time you could trust your banker – but like I said that was once upon a time! So in the alphabet soup of qualifications they pick up a few alphabets and threaten you with their lingo. See point 1. What you do not understand is NOT WORTH KNOWING especially once you have retired.

5. Do not be overconfident (It cannot happen to me syndrome): Remember that is what everybody thinks, till it actually happens. Be careful. Ask your kids, friends, neighbors,….but decide on your own.

6. THE MOST IMPORTANT one: know whom to trust. Not your brother, brother -in-law,…..boss, exboss, banker….remember finding the right person is not easy, but it is a MUST – and you should have 3-4 people with whom you can discuss. Choose such a person carefully.

Risks are worth taking, only if you understand them.

If you are sitting in a group where investment advice is being given FREE and you do not know who is paying the bill, boss it is you. You are sucker who is being had

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When they are trying to lose weight (I am talking about the serious guys n gals)

When they are trying to write an exam (you know a 6 month effort can impact your NEXT 60 years!)

When they are trying to meet a financial goal (need to make a down payment to buy a house in 6 months)

One very important thing with goals is to get a little realistic with your goals. Also some tactical changes are necessary from time to time with the goals.

Let us say a kid has a goal of preparing for an exam. He / she knows that ‘Diwali week’ or ‘marriage week’ or ‘Christmas week’ – can be very demanding on the reading time. It is necessary to adjust ones goal for that week accordingly. Let us say he/she studies for about 60-70 hrs a week. It is necessary to say ‘because there is a marriage in the family and many guests may come home, I will go to the college library and study’ or say “I will do subjects like accountancy or costing – so that there need not be too much of concentration …as some other subjects may require”. Or say ‘this will be a light week, where I will revise what I have done in the past”.

Using one week as a part recovery week in a study of say 8-9 weeks is not so bad after all.

Now you could do a similar thing with your diet also. Tell yourself..I wanted to reduce 6kgs in 12 weeks..HOWEVER instead of trying to lose HALF a kilo every week,…in the ‘Marriage’ week, I would be happy to hold my weight constant, and I will work on my weight from next week.

And similarly for financial goals. “This month is my sister’s wedding…so I will not be able to spare money for my SIP’…

THESE are just examples…but I am sure you get the drift…

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Funny that the same countries who were telling the EAST -( in 1997) are in such a bad shape today. Exactly when their economies are slowing down, they will have to raise a LOT of money to stay where they are / where they were!

The US is borrowing at about 3.5%p.a.  and Spain is borrowing at 5.7% ! Not sure if all the risks are priced in EVEN at these price levels!

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It is always easy to predict – especially if you have nothing at stake!

The world is today very worried about the Euro problem – because it is much bigger than the US problem. In fact the situation is so bad, that US has even decided to teach Europe about coping with the crisis…LOL.

In 2006 you saw NINJA loans (no income no jobs), in 2008 you saw the property bust in US. Now we are worried about the falling prices in UK.

In the year 2012 we will be panicking about the falling prices of real estate in CHINA. Not that it is not falling now, but it is expected to HARD LAND much worse than the soft landing that the government of China thinks it can manage.

China is a funny country – people have the money, but CANNOT spend. So they are investing. When they invest, they create a bubble. If the bubble bursts, there will be an issue!

So if 2008 was lost to US and 2011 to Europe, will 2012 be lost to China?

PS: did you notice I did not predict the Sensex or the Nifty? So any one can reach 12000 – be ready to hear my saying ‘I said it here first’…..

http://www.forbes.com/sites/gordonchang/2011/11/06/property-prices-collapse-in-china-is-this-a-crash/

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