CONTENTS
LETTER
ISSUE CONTENTS
FROM THE
25 August 2011
EDITOR Baby Steps
T
he more letters I receive from Moneylife readers, the more convinced I am on how well-informed our audience is. It is just sheer lack of space that prevents us from publishing more— but do keep your comments coming; also, we look forward to more feedback from you on our website www.moneylife.in. Moneylife’s Books section has always been vibrant (we don’t carry full-page excerpts). In one of our reviews, we have covered an in-depth study of the state of the Indian microfinance industry—and what its future looks like. Our prediction on how that strange animal called the market will behave would really interest you— given its wild gyrations that seem to be impacting the world. And securing your investments would be the first thing on your mind. Swimming as we are in volatility, this Moneylife issue gives you the legal aspects of secured debentures. From illegal mining and the quarry mafia, understanding the importance of your credit history, to using the Right to Information Act effectively, we have a host of events lined up for you from the Moneylife Foundation. But please register early—all the details that you want are inside and on www.mlfoundation.in. Many of us long to hear the patter of little feet. But planning for your child’s future is no child’s game. Solicited and unsolicited advice can make you lose your way. Our Cover Story has it all. Raj Pradhan with his new born daughter Who better to explain it all than Raj Pradhan? I leave you with this picture of the writer Raj and his latest little wonder—and, yes, Raj has given you more than a thousand words this time. From all of us at Moneylife—all the best to Raj and his family. Debashis Basu MONEYLIFE | 25 August 2011 | 10
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SAVING AND INVESTING
53 Earning Curve
Investor Protection Fund: Investors’ money captured by the industry; Multi-level Marketing: Racketeers’ escape route; Regulatory Reform: Arbitrary and opaque consent orders must stop
How many schemes should you have? TRAVEL
DIFFERENT STROKES
22
Wasted Opportunity
The Damodaran committee report is full of homilies and general statements rather than action points suited to the Indian ground reality FUNDS
28 Cover Story
Planning for your Child
or 24 AA Bird Plane? A lot of debt with a bit of equity is a poor idea, as ML Research Desk finds out
STOCKGRADER 43 Momentum
Titan rose 1% and Cadila Healthcare ended flat, while Orchid Chemicals plunged 13%
Ganj 58 McLeod & Dharamshala Jaideep Mukerji discovers this Himalayan paradise with its elegant mixture of British heritage and Tibetan Buddhist tradition
Medium Term
Lupin rose 1%, while Shoppers Stop dived 13% and Petronet fell by 4%
Long Term
Wyeth surged 3% and Castrol India ended flat, while Adani Enterprises plunged 11%
Do you want a complete, secure plan for your child’s future? Raj Pradhan gives you all the options INSURANCE
48 Insurance Trends
13 Your Interest Do not call, or pay up to Rs2.5 lakh; MakeMyTrip fined for room with no bath; Compact Disc investors in a spin; NGO told to shut shelters over UID; File postal complaints online; Teachers denied 6th Pay Commission scales SMART MONEY
14 Your Money Collective Amnesia; Surprisingly Good; SEBI Gets Active; New Launches: Share SIPping; HDFC Bank; IPOs, Anyone? Higher EMIs
16 Current Account – Now, Sajjan Jindal is facing the heat – No fancy food or gifts during AGMs
19 LOOSE CHANGE Moneylife Quiz; Soundbites
Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
Buy 26 Don’t Bond Funds, Yet The Reserve Bank of India has raised interest rates again. What does it mean to you as an investor? STOCKS
38 Street Beat Venus Remedies: Steady growth and profits; Seshasayee Paper & Boards: A short-term setback
– Will the lure of monthly income work? – Pension ULIP: IRDA changes tack – “We want to retain our record of low claim rejection,” — Bajaj Allianz Life – Fine Print: Aviva Dynamic P/E Fund; Ownership changes don’t matter for auto insurance; Future Generali simplifies motor insurance claims
42 Noise Filter Long-term investors should start looking for buying opportunities
Pyramid 62 Spotting Schemes and MLMs At a Moneylife Foundation workshop, Sucheta Dalal warned of any scheme that asks you to introduce more members to get extraordinary returns
AUTO
50
Exports Up, Local Sales Splutter
Improved public transport is making more people park their cars at home, while local fuel-efficient small autos are gaining traction globally
LEGALLY SPEAKING WHICH WAY
ML FOUNDATION EVENTS
52
How Secure Are Secured Debentures?
A ‘secured’ debenture does not necessarily imply that your investment is secure
BEYOND MONEY
with 66 Learning a Difference
ChildRaise Trust is committed to the empowerment of kids with special needs & adults with disabilities
DEPARTMENTS Letters.............................4 Book Review.....................56 Living .............................61 Money Facts.....................63