Is it a time!?

This could be the best time to invest equities. Share prices have fallen to such extents and P/E rations are in lower single digits for many companies.

Difference between Growth option and Dividend Reinvestment option in MF

So what is the difference between Growth (G) option and Dividend Reinvestment (DR) option of a Mutual Fund. At present, there is no difference.

There is no entry load when the dividend is reinvested in DR scheme. The dividend is simply used to buy back shares at the new NAV. As a result, the net effect of DR is same as it would have been in a Growth scheme.
If the tax policy changes in the future to either introduce dividend distribution tax, or long term capital gains tax, it would adversely affect DR and G options, respectively.

Smorty - blog for money service

As part of my posts about blogging for money services, I will discuss about another such website today. Smorty is one of the get paid to blog services that connects advertisers and bloggers. Advertisers pay bloggers to put links on blogs and write about their service to get traffic and create buzz. A regularly updated blog has good chance of getting accepted. They, however, reject blogs if the content is not updated frequently, is not indexed by Google and Yahoo, or is not at least 3 months old. This service is only available for blogs in English.

Smorty's interface is easy and any publisher can easily set up an account. The offers for review are priced based on the Page Rank of a blog. More Page Rank sites gets higher paying campaign offers. They also have a combined score called smarty score based on Google Page Rank, Alexa ranking, return rate of given tasks, approval rate of completed tasks and the number of completed tasks. Blogs scoring higher get higher paid offers.

One advantage of Smorty is that one can submit as many blogs as he/she wants unlike some other blog for money services. This is greatly beneficial for small time bloggers. Another advantage is the payment which is a weekly system. So bloggers get paid every week for the previews done last week through PayPal. One can apply from any country for Smorty's service.

One of the limitations of Smorty at present is that one can't submit more than one blog from the same account. One has to create as many accounts if he/she wants to submit many blogs as a publisher. They say they are working on fixing this issue. Also, it seems there are limited number advertisers for blog advertising at Smorty. This puts it at a disadvantage as compared to other more established names in the blog for money services. Hopefully, as the service gets older, more advertisers will register for Smorty.

Mortgage loan guide

I was reading a blog post by Deepak Shenoy the other day in which he mentioned some terms in the US that are unique and not used elsewhere. One of the terms mentioned was Mortgage. It's used when a person applies for a loan to buy a house in the US. It is pretty expensive to buy a house and so most people would find it impossible to pay the price in cash. Not to mention, the tax man would come calling if someone did pay cash.

Mortgage is a common term used in the US for house loans. There's a useful website with links to many useful articles to learn more about mortgage. Mortgage Loan Place has articles ranging from FHA loans to Reverse mortgage to Mortgage insurance and Refinancing. Some of these are complicated terms (e.g. Reverse mortgage) and there are many articles in the guide to make you understand them better. I found the articles interesting to read even though I went to the page to do this review.

The guide gives information on any policy changes and housing market. Buying a house is a dream for most people and one of the most important decisions in their life. Being well aware of the current situation in the market is a must for anyone. The articles in Mortgage Loan Place are one of the easiest way to learn more about loans. The articles are free to read and updated regularly. Anyone interested in knowing more about the housing loans can go read them.

Life Insurance for Key Man

Among different types of insurance that companies buy, key man life insurance is usually neglected. Businesses that protect their assets like buildings and other properties forget to protect their key men. The key man of a business is an important person who is essential to run the business. An obvious key man is the CEO. There can be other important employees like General Managers who can be insured using the Key Man Life Insurance.

Most insurance companies provide this type of insurance for businesses. Among the various ways to get quotes from these insurance companies, getting it online is the easiest one. One can get quote online for key man life insurance.

In case of the death of the key man, the face value of the money he is insured against can be used to hire new key man or other employee. It can be very useful for a business in such scenarios.

Financial goal - calculate the rate required

The author of the book described in my previous post gave a very simple method to calculate the interest rate required to achieve a financial goal in the long term. As an investor knows very well, one should always have a financial goal in mind when he starts investing. Otherwise, his approach won't be a systematic one and the returns not as good. Most investors have a retirement goal.

To start, you must compute a variable called Investment Capital. This is an estimate of the amount of money you have invested and will contribute in the future. The equation to compute this Investment Capital is:

Investment Capital = Value of Current Investments + (1/2 * Annual Contributions*Years to Retirement)

From this equation, compute the Capital Fraction as:

Capital Fraction = Investment Capital ÷ Financial Goal

For example, if I have a goal of 20,000,000 that I want my investments to grow to in 25 years. If my current investments are of worth 400,000 and I contribute 100,000 every year to my investment.
Then,

Investment Captial = 400,000 + (1/2 * 100,000 *25 ) = 1,650,000

The Capital Fraction variable would then be computed as 1650000/20000000 = 0.0825

Now, there is a chart with years and Fraction variable matching the compound interest rate required. It is given in the chart below.


From the above chart it is clear that if I want my investment to be worth 20000000 in 25 years, I have to match 0.0825 in the column '25' i.e. my investments have to grow at about 11.0 to 11.5% every year to achieve that. I find this calculation to be very useful. Just create a long term financial goal, calculate the rate your investment has to grow every year and work towards achieving it.