The World of Investments and Money

Thursday, May 31, 2007


I'm reviewing of a very interesting website today. It's called Cashunclaimed. For the US people, it seems like there's some kind of central database of all the money that is lying without being claimed by anyone. This website offers a service to find if you have money lying somewhere without your knowledge. It offers money-back guarantee that the legitimate owner will get their money.

One can search the website for free by First name and Last name if they have such money. It could be some inheritance, some savings account, or some other source. The search is free, but if you get some unclaimed money on your name and want to search the records to find where the money lies, you have to pay a fee of $11 per month to Cashunclaimed. You can do anything you want for this one month.

Being sceptic, I entered my first name and last name, and there was no money unclaimed for me. I entered Bill Gates, and his namesakes have some money. Note that there is a big chance that the unclaimed money doesn't belong to you but to some other person with same name as yours - or a person with some variation of your name. There would be only one person or a group of such persons with legit claim on the money, but hundreds others with similar names. So, one has to be careful before registering in such sites. Try to make sure you are likely to have been left with unclaimed money from somewhere. Otherwise, the website will make money.

Tuesday, May 29, 2007

Review - Compare credit cards

These days credit cards have become a sort of necessity for consumers. Be it shopping, eating out, or simply booking flight tickets online, many times there is no other option but to use a credit card. With the abundance of credit cards, it would be good to have a website that compares the different types of credit cards available in the market. Today I will review one such website .

There is a website aptly named for credit cards available in the UK. It compares credit cards based on different categories. There are different categories of cards like Gold cards, Cashback cards, Platinum cards, 0% purchase cards, etc.

There are so many options to chose from the available credit cards that such a site for comparing credit cards is useful for anyone planning to get a new credit card. The home page of the site has 'Compare credit cards' menu from which one can select any category to compare. The user can compare these cards based on offers such as rate, duration, cashback, rewards and choose the best one.

Even though there are different categories of credit cards to choose from the drop down menu, I had a feeling that it doesn't have information on all credit cards. For example, I chose cashback cards but the result showed only one card. Similar was the case with Gold cards. That is very unlikey, even impossible, that there's only one bank offering such cards in the UK. Similar was the case for some other categories as well. To be truly useful to a user, all available cards should be available in the result so that he can select the best.

Monday, May 28, 2007

Gambler's Fallacy

There are people who see patterns in random data and try to predict the future based on such patterns. Probability theory states that for an unlimited set of trials, the numbers in a game should come up equally or the same number of times.

For example, a coin when flipped a given number of times, should have equal number of heads and tails. So, if the coin has been flipped 5 times and the outcome have been head, head, tail, head, head, the outcome has not been what was perceived. A person might assume the chance of the next outcome being tail is more as it has only occurred once in the last five tosses. The reality is that the next toss has equal chance for tail and head, both have 50% chance. The past events don't mean anything for the future outcome. But, the person thinks there'll be an unknown self-correction that will skew the results in favour of tail to make it more balanced as per probability theory. This belief is known as the gambler's fallacy.

There are similarities in such beliefs with trading. Predicting the price change at any time is like flipping a coin. Most of the patterns that are found are a result of the random data searched. These patterns are not likely to repeat in the future. They can't be used to make predictions. But people often make such predictions and others fall for them.

Saturday, May 26, 2007

Rule of 72

Here's a simple rule of thumb to quickly calculate compounding interest in your mind. It is called the rule of 72.

To calculate the annual compounding interest required to double your money in a fixed number of years, or conversely, given an annual interest rate, to calculate the number of years it would take to double your money, divide it my 72.

For example, if the rate of interest is, say 9%, it would take 72/9 = 8 years approx. to double your money. Similarly, if you want to double your money in, say 6 years, you'd need an annual
compounding interest rate of 72/6 = 12%.

This rule gives good results for upto 20 years or 20% rate, and very good results at typical compounding rate between 6% to 10%.

The same rule can also be applied to find out the number of years for the value of money to get halved at a certain inflation rate. For example, for an inflation rate 6% it would take 72/6 = 12 years for the value of your money to get halved. This means the money which gets you a certain commodity now would only buy half of that after 12 yrs. In other words, you'd need double of this money to buy the same thing after 12 yrs.

UK finance forum - a review

Finance Markets recently changed the look of their website and UK finance forum. They wanted to get a review of the new look forum of their website. So I registered on the forum to experience how it is like before reviewing.

A forum dedicated to discussions on finance anywhere would, expectedly, have similar kind of discussions. The forum is no exception and has all kind of threads of discussions. The discussions are divided into three main categories - Finance, Investing, and General. Each category is then further subdivided into different groups e.g. in Finance they have Banking, Loans, Mortgage, etc. I feel while it is nice to divide them into so many different groups, it somehow fragments the category too much and browsing the forums becomes more cumbersome. Instead, if they had just the main categories, it could be better. Since it is not a heavy traffic forum yet, this could give users a better experience.

The topics of discussion in the forum vary from "how do I save money to invest" to "where should I invest", to any other topic one could come up with related to finance and investments. In addition, the "General" category has threads on other non-finance topics as well.

The look and layout of the forum is not intuitive. In fact, one would immediately feel he has seen such layout many times in other forums. It looks like this is the most common format for online forums.

There are a few hundred registered users in the forum. The traffic is not high; there are entire stretches of weeks with not a single posting in some groups. That is one of the reasons they are pushing on getting the word out about the forum. People interested in Finance and Investment, specially in the UK, could register and might find their answers in this forum.

Friday, May 25, 2007

Super affiliate Zac Johnson

Today I am reviewing the blog of super affiliate Zac Johnson. The term super affiliate means they run their own affiliate networks and obviously earn quite $ome money online. Well, quite a lot, actually. Zac's network of affiliates is called Moneyreign network.

First thing I did, which I hope every reviewer does, was to go spend some time on his blog. The blog is lively with daily updates on interesting ways to make money online through affiliate marketing. Zac has a lot of experience in online money-making (10+ yrs experience in online affiliate marketing is like doing business on earth since prehistoric time. Afterall, the real thing started with companies like Google, Amazon, and Ebay that weren't around 10 years ago).

One of the things I like most in a blog, apart from the quality of posts, and which keeps me subscribed is the frequency of posts. It should be frequent and Zac does it almost daily which is a big plus. His postings are mainly about money making schemes but there are some personal posts as well, along with pics. Such postings makes the blog more attractive to readers and breaks the monotone. Afterall, there's more to write than just money even if the site is named 'Make money with Super Affiliate Zac Johnson'.

The blog posts are nicely aggregated into categories which a new reader to the blog should find useful depending on his/her topics of interest. Archives of his blog shows that he started the blog in March 2007 which means it is only a few months old. Still, it is generating a lot of traffic and comments. I guess it should have a loyal feed readers, though the number isn't yet shown on the site(maybe Zac want the number to go up to few thousands before putting up that chicklet showing xxxx readers).

There are few ads on the site. In fact, I observed only some affiliate links in the blog, some of which are very wisely converted into tinyurls. The lack of ads on the site indicates he is focussed on increasing the readership of his blog.

Overall, the blog is interesting for those wanting to learn how to make money online. Since I am one of them, I have subscribed to his blog and intend to read it with interest.

Tuesday, May 22, 2007

Merchant account processing website

I have decided to review some websites as a filler to this blog i.e. When I don't write about investment, I will try to keep this blog updated frequently with such reviews. These reviews may be of interest to some of you.

Today I am reviewing a website that deals with merchant accounts It provides merchant account processing services to small and big merchants. If you don't know what a merchant account is used for, read it here.

The website accepts Visa/Mastercard processing and also accepts Credit Card Payments processing. Retailers who accept such cards from their customers are expected to have a merchant account. Without a merchant account, a retailer has to wait for weeks for invoice to come and more for the payment to clear. With such accounts it is a matter of days when payments get cleared. Merchant account are provided by banks as well as third party like the website being reviewed. Banks are very selective in opening such accounts, so third party solutions are the best option in that case.

As far as the website is considered, it is decent with every page having at least three links at various places to "Apply now" link. The navigation could be improved though. For example, there is a FAQs section, but it would take some serious effort to locate it. Similary, the help/tutorial/information section is difficult to reach from the main page. These two sections should be on the homepage. Sitemap is not the most obvious place to place those links, and many readers don't even click it.

Overall, it is a good website to go look out for more info on merchant accounts and to get in touch with a processor of such accounts.

Friday, May 18, 2007

How double indexation works for FMPs

My last post discussed FMPs and why they are better than FDs because of Double indexation benefits. I'll discuss how double indexation works for FMPs against FDs, for the same amount of investment:

Let's say you invest Rs 1000 in FDs and Rs 1000 in an FMP in March this year.
The maturity value in May next year for both FD and FMP = Rs 1100 approx.
Assuming inflation of 6%, the cost price of your investment after March this year = 1000 + 1000*6/100 = Rs 1060
Cost price of Rs 1060 after March next year = 1060+ 1060*6/100 = Rs 1123.6
For FMPs the maturity value of Rs 1100 is less than the cost price of Rs 1123.6, that is you are at a loss in paper. This happen because the effect of inflation in case of FMPs is calculated twice, at the end of March this year (that is the financial year end) and also at the end of March next year. This results in capital gains tax = 0. This is double indexation benefit.

For FDs, the cost price = Rs 1060 ( it is calculated only once ).
Maturity value of Rs 1100 is more than cost price, so you have to pay capital gains tax on the interest earned.

This results in FMPs giving a post tax return of about 8.5%, where as FDs give about 5.5%. This is for a period of about 13 months of investment that started in March and ended in May.
FMPs don't work for you in case you want to withdraw the money invested before the maturity period. Then FDs might be a better choice.
If one is sure they can remain invested for the period, then FMPs are a good choice over FDs.

Sunday, May 6, 2007

Fixed Maturity Plans ( FMPs )

Recently, I read about Fixed Maturity Plans or FMPs as they are commonly known. These plans are of about 13 months duration and give better returns than Fixed deposits (FDs), normally. FMPs manage to do that because of Double Indexation benefits. Double indexation basically is - showing the effect of inflation on your investment for two years even if the investment is for only slightly more than a year. Since the financial year ends in March, FMPs show the period of investment from March of the year of investment to May of next year. This results in showing on paper the final value of investment as being much less than what it is in real. This results in less tax to be paid and more net return to the investor. FDs in banks, even if they give the same % return like FMPs don't have such double indexation benefits and so the investor ends up paying more in taxes and gets less net return.
In effect, while FDs manage to just beat the inflation, FMPs manage to grow the investment. FMPs, thus, are a better choice if one has money they are sure they can invest for at least 13 months.
One thing I haven't found yet is if FMPs are available all year around, or just around March. Would they be available in May? According to a relationship manager, they should be.

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