Money Matters - Simplified


Yahoo smugly surges ahead, share crosses $ 30

It’s time for Yahoo to beam a big smile for its investors! The Sunnyvale, California, company marches ahead with the stock crossing a significant milestone. The Yahoo stock has exceeded $ 30, first time and maybe now can save itself from the “takeover-aspiring” Microsoft.

Ganesh Chaturthi break, Indian Markets witness relief rally!

Indian Markets wish everyone a happy Ganesh Chaturthi! The Indian equity markets took a breather on Monday leaving the trading off till Tuesday on account of Ganesh Chaturthi.

Ranbaxy Laboratories: US FDA and DPCO Issues Underline but Analysts Optimistic about Recovery

A number of reasons govern why Ranbaxy is up by 35% even after posting Q2 loss.

9 Retirement Killers

Retirement is the No. 1 goal of investors. Yet, looking at the numbers, it's clear that many investors are undermining their good intentions with unfortunate actions. Here are nine mistakes to avoid if you want your retirement dreams to become a reality.
Retirement is the No. 1 goal of investors. Yet, looking at the numbers, it's clear that many investors are undermining their good intentions with unfortunate actions. Here are nine mistakes to avoid if you want your retirement dreams to become a reality.

9 Retirement KillersGet original file (10KB)

1. Cracking your nest egg before retirement. A study by Hewitt Associates found that 45% of workers cash in their 401(k)s when they switch jobs. In other words, they take the money -- paying income taxes and a 10% penalty if they're not yet 59 1/2 years old -- rather than leave it in a retirement account. That's no way to build the retirement of your dreams.

When you change jobs, you can transfer the money in your employer-sponsored retirement plan to an IRA, which will allow the money to continue growing tax-deferred. You might also be able to leave the money in your old plan or transfer it to the plan at your new job, depending on the plans' rules. But your best bet is the IRA. You'll have many, many more investment choices, usually at far lower costs.

2. Spending your retirement money way too early. Cashing in your 401(k) at a young age isn't the only way for your retirement to meet an early demise. Not saving enough in the first place will guarantee that your retirement will be DOA. Of course, no one wants to be told to "save" -- it's so boring, so ungratifying, almost Puritanical.

But this is what low-savers (and non-savers) are really doing: They're spending their retirement now -- which may mean they won't be able to retire at all. Buy that luxury purse now, or buy time in retirement tomorrow. Take a cruise this year, or take time off several years from now. Those are the choices you have to make. Building a nest egg isn't a decision of whether to consume, but when to consume. Do it now, and you won't be able to do it later without having to work for a paycheck.

3. Having no clue about how much to save. According to the 2007 Retirement Confidence Survey from the Employee Benefits Research Institute, only 43% of workers have calculated how much they need to retire. But you can't get to where you want to go if you don't know how to get there. You need a plan. (A free 30-day trial to my Motley Fool Rule Your Retirement service is a good place to start.)

4. Spending your retirement savings too fast. If you've made it to retirement, congrats! You've amassed enough money to create your own portfolio-generated paycheck. Excellent work.

But you can't take it too easy. Because you'll receive a severe pay cut if you deplete your portfolio too fast. How much can you take out each year and be almost certain that you won't outlive your savings? Just 4% a year. That's the withdrawal rate that would have sustained a mix of stocks and bonds over most 30-year historical periods. Sure, if you retire on the eve of the next bull market, you can take out more. However, if you quit working right before the next bear market, then taking out more than 4% a year could have your portfolio beating you to the grave.

5. Not giving a hoot about asset allocation. And speaking of mixing stocks and bonds, nothing can wound a retirement like bad investment decisions, whether it's owning too much of one stock, letting emotions take over, chasing the latest fad, or letting short-term events affect your long-term strategy.

You basically have two choices: You can be a master stock-picker like Warren Buffett or Peter Lynch and try to find the next Wal-Mart , or decide whether a nearly 6% dividend yield makes Pfizer (NYSE: PFE) a good stock. Or you can broadly diversify your assets, mostly via low-cost index funds such as Vanguard Total Stock Market (VTSMX). This way, you enjoy exposure to giants like Cisco (Nasdaq: CSCO) and Procter & Gamble (NYSE: PG) -- both stocks are among the fund's top 10 holdings -- and smaller growth firms such as GameStop (NYSE: GME) and Akamai (Nasdaq: AKAM). But until you've established your skill at finding great investments, keep the bulk of your assets in a broadly diversified, regularly rebalanced portfolio.

6. Letting Uncle Sam eat your retirement. There are many types of investments and investment accounts, and they all have their own quirks when it comes to taxes. Not knowing all the rules can lead to too much taxation -- and less money for retirement.

For example, profits from stocks that are held for at least a year will be taxed as long-term capital gains -- a rate no higher than 15%. Interest from corporate bonds, on the other hand, is taxed as ordinary income -- a rate as high as 35%. Yet many investors keep their stock investments in their tax-advantaged accounts and their bonds in regular, taxable accounts. That just doesn't make sense. Asset location can be just as important as asset allocation.

7. Depositing your retirement in your fatty deposits. As Americans' savings rate has dropped, our obesity rate has risen. Just a coincidence? All I can say is, the more we stuff our faces, the less we can stuff our IRAs. So before you make your next visit to the Olive Garden, find out how much you need to save every month to retire when you want, how you want. Then make sure that amount gets deposited in your retirement accounts. If you get that far, then visit the Olive Garden as a reward. You deserve it.

8. Paying too much for help. There's nothing wrong with getting financial advice. If we Fools didn't think investors could use ideas, feedback, and answers, we wouldn't be here.

But we firmly, strongly, passionately believe that such help should be objective and affordable.

Paying too much for advice (especially if it's bad or at least conflicted) does a lot for your broker's retirement, not yours. Paying just 1% a year on a $100,000 portfolio over 20 years could result in your forking over more than that amount in fees. That's a hundred grand that could have been in your pocket. Of course, if the advice you received had your portfolio performing better than what you could do on your own, then the price might be worth it. But if you're paying 1% or 2% a year to lose to an index fund -- as most mutual fund managers do -- then you're better off taking control of your own investments.

9. Retiring permanently when you really just needed a break. If you're in your 60s, you should plan on living at least another two decades. Can you stand full-time leisure for 20 years? Sure, it may sound good now, but many retirees find they get pretty bored after a while. But by then, they have already severed many of their professional ties. Before you decide to retire fully and permanently, discuss a phased or gradual retirement with your employer and/or business partners. Or the possibility of working on a project basis, allowing you to take several months off each year. Or maybe just a one-year sabbatical. Explore your options before you no longer have them.

Originally published on 2008-01-01.

Flipkart creates record by raising $200 million, largest in Indian e-commerce space

The mega online retail store, FlipKart is in news for raising a whopping $200 million, i.e. 1,200 Crore from its existing investors. According to the sources, this is the single largest Indian e-commerce space round of investment.

Revealed by the sources familiar with the latest development, FlipKart is valued at $1.5 billion by the investors.

The investors for the company has generated after almost 5 rounds of funding, a massive turn over of more than $380 million. Previously the investors, the South African Internet major, Naspers has bought out bus ticketing startup redBus, private equity firms Accel Partners and Tiger Global, and San Francisco-based family office Iconiq Capital.

Sachin Bansal-co-founder and the CEO of FlipKart:
According to the co-founder and the CEO of the Online retailer, Flipkart- Sachin Bansal, this investment model was an e-commerce growth story and a major validation of the FlipKart model.

He said, "There have been skeptics on Flipkart and Indian e-commerce. Today's development should put to rest these arguments,".

Recent investments:
The massive investment and its validation received by FlipKart is an indication towards global acclamation of the interest of Indian technology startups. The other major investments are as follows:

-In 2011, SoftBank, Japan's telecom and Internet company invested $200 million in Bangalore-based ad network Inmobi.

-Naspers invested in redBus an estimated amount of $120 million last month.

-In 2011, $108 million were invested on analytical services firm Mu Sigma by a consortium led by General Atlantic.

Future plans of company turnover:
Currently the total amount generated by FlipKart considering it annualised run rate is over $500 million, however according to the company co-founder and the CEO, Sachin Bansal they will soon hit the $1 billion mark by 2015.

He also confirmed that the company is not able to make profits only with the massive investments it has been making, the company would still be profitable if the huge investments were stopped.

He said, "We can be profitable if we stop investing. But we want to be market leaders in a number of categories, and the market is almost doubling every year, so it's a strategic decision to invest. Binny (Binny Bansal, the other co-founder) and I are thinking very, very long term,"

When asked how could the money generated through profits be used, Sachin Bansal suggested that they would be used for developing emerging talent, improving the current supply chain and also investing on technology.

He added, "One day last month we shipped 1.3 lakh items. That's 1.5 items a second, or, if you look only at daytime, about 4-5 items a second. In a few years, this will become several million shipments a day. The only way to handle that kind of volume is through automation, and that will require a lot of investment,".

With the growing popularity of the Online retail store which originally started with selling of best seller books has now laid its hands on numerous other products too which include electronics, apparel, watches, cameras, footwear, beauty & personal care, baby care and many many others.

The company has seen a drastic increase in the number of registered subscribers from just about 2.5 Lakhs users to a massive 96 Lakhs within a span of two and a half years.

Facebook Gifts an idea to users and investors!

With Facebook Gifts, the social networking behemoth, "Facebook", has come up with a novel idea that gives everyone plenty of reasons to cheer about, especially its investors.

Yahoo set to reduce investment in Asian market

Internet giant Yahoo is all set to reduce its investment in the Asian market by selling its shares in Alibaba Group and SoftBank.

Twitter board shrinks: 2 members step down

Two major power players have left Twitter in the last 24 hours. The microblogging company confirmed Friday that its two board members are stepping down, bringing the size of its board to seven directors from nine.

BOA to pay $8.5 billion as mortgage claims

The announcement of the $8.5 billion settlement by the Bank of America is not good news for the home owners particularly those who are at a risk of facing a foreclosure for the deal includes a clause that the Bank will deploy extra ‘subservicers’ to hasten the foreclosure process.

Facebook IPO in Q1 of 2012

It’s getting bigger for Facebook. The largest social networking site is all set to come out with its initial public offering (IPO) in the first quarter of 2012.