@Leisure - Vol-33 | srei

@Leisure - Vol-33

Newsletter
 

How to teach your kids about Money

Children who are familiar with money are better at handling it when they become adults. They also make sounder money related decisions. Letting children make some financial decisions by themselves is a great learning opportunity for them. Handling money can teach them about the importance of saving, investing, compounding and much more. Here are some reasons why you should consider letting children learn more about money:

Importance of saving

Pocket money is money that the children consider their own. This is money they can spend on their small needs. The decisions that they make with this money will have a direct impact on the quality of their life. They can save this money for larger goals like buying a video game console or spend it right away on things like candy. However, children will soon figure out that putting money away to pursue larger goals is more rewarding in the long-term.

Investing and growth

Having some funds to manage of their own, children can learn how to operate a children's account at the bank. This allows them familiarity with banking products like passbooks, debit cards and deposit and withdrawal slips. They will also learn soon enough how money grows in a bank account with interest. This gives them their first experience of investments.

Hard work and earning

Reward your children by teaching them about the dignity of labour. Involve them in doing small chores around the house which can not only help you but also give your children the idea that hard work pays off. Earning their way through their childhood while being in the safe environs of their home is a great way of teaching children respect for work.

Borrowing and risk

Sometimes your children want just the extra cash for something that they want to buy. By letting your children borrow the money, you can teach them the importance of living within their means. Extend a loan and have them pay back on time. This will not only teach them the cost of borrowing but also instil financial discipline into their minds.

Money plays an important role in our lives and teaching children its importance will certainly make them more adept at handling it when they grow up to be young adults. Handling money instils a sense of independence and responsibility in children, which makes them more able to take important decisions of life.

 

Srei - a Public Financial Institution

Srei was recognised as a Public Financial Institution (PFI) by the Ministry of Corporate Affairs (MCA) through a notification dated Sep 26, 2011, notified under Section 4A of the Act. The notification was published in the Official Gazette of India. This means that Srei has to comply with certain conditions; one of the conditions is that the main business of the company has to be industrial and/or infrastructural financing. So what are the implications of being a PFI and how is it important?

Who can be a PFI

Not every company can be deemed a PFI. There is a list of strict criteria that has to be met before the MCA will confer the PFI status on a company. These criteria are:

  • The company or corporation should either be established by a special act or under the Companies' Act, which is a central act.
  • The main business of the company must be industrial/infrastructural financing.
  • The company should have existed for at least 3 years and the company's financial statements should reflect that industrial/infrastructural income is in excess of 50%.
  • The net worth of the company should be at least Rs. 1,000 crore.
  • It is necessary that the company be registered as an infrastructure finance company (IFC) with the Reserve Bank of India (RBI) or as Housing Finance Company with the National Housing Bank.

Srei's importance in nation building

The conditions laid down by the government bind us to nation building and continue to focus on infrastructure financing and industrial financing as our core activity. Over the years, Srei has played an important role in the building of roads, airports, seaports, railways, power transmission and water sectors. These are all activities of national importance where we have facilitated not only financing but also helped with our deep domain knowledge.

PFI status is a symbol of trust

With our PFI status, we are the holders of trust of important investors like PF trusts and superannuation and gratuity funds. These investors can invest up to 40% of their entire corpus in Non-Convertible Debentures and securities of a PFI like Srei. They have opportunities of investment available through both public issue as well as private placement.

Srei is proud to have been notified as a PFI. It is our constant endeavour to excel at what we do so that what we build helps India grow. We are committed to building India towards a prosperous future.

 
 

Why your portfolio needs quality debt in it

We strive to seek the perfect balance in life. Similarly, when it comes to our investment portfolios, we need to create a balance as well. Debt can play different roles in your portfolio and can add attributes of stability in a number of circumstances. So how to go around adding quality debt to your portfolio and why should you be doing it?

How to tell good quality debt

While picking your debt investments, you should always look for instruments that inspire confidence due to their high quality. In order to judge the investment worthiness of debt, look for instruments that are rated highly by agencies like CRISIL, ICRA, CARE, etc. Different rating agencies have varied scales of rating instruments but you should look out for high ratings like AAA or A+ etc. Other than rating, it is prudent to do you research and look at the background of the company and its promoters, study the financials and look at the past record of repayment to investors.

Why you should invest in debt

Debt plays an important role in your portfolio. Debt investments can help protect you against excessive volatility in other investments like equity. Debt can also help you protect the returns from equity investments based on your changing risk profile.

Every life-stage requires debt

When you think about evolving risk profile with age, you will notice that there is a role for debt at every stage. Even in the most aggressive portfolio of a younger investor, debt can add an element of diversification. This can help against a massive erosion of portfolio in case of excessive volatility. When you move to a more balanced portfolio in your mid-life, debt helps provide steady returns even as the equity side provides wealth generation. Near retirement when you have a conservative portfolio, debt plays the role of wealth preservation. After retirement, you need debt to give you a stable income from fixed income instruments like fixed deposits, Non-Convertible Debentures, Bonds etc.

Whether you are young or old, a high risk taker or a conservative investor, you should consider high quality debt in your portfolio as an essential element. There is simply no other way to create a healthy and balanced portfolio.

 
 

Buddy Jokes

Jokes / Quotes

People say money is not the key to happiness, but if you had enough money, you can have any key made.

After the effect of Financial Crisis in 2009 - one investor: 'This is worse than divorce. I've lost half my net worth and I still have my wife.'

"In this world nothing can be said to be certain, except death and taxes." - Benjamin Franklin

"All days are not same. Save for a rainy day. When you don't work, savings will work for you." - M.K. Soni

 

Buddy Quiz

1. Children should be made to operate their own bank account to explain the importance of saving.
a) True
b) False

2. Debt can help reduce the impact of volatility in a portfolio due to equity investments.
a) True
b) False

3. A public financial institution must have a net-worth of Rs. 10,000 crore
a) True
b) False

4. Srei was recognized as a Public Financial Institution on Sep 26, 2011
a) a. True
b. False

5. 5) CRISIL, ICRA, CARE assign ratings which can help investors gauge the quality of debt.
a) True
b) False

Answer: 1 - True; 2 - True; 3 - False; 4 - True; 5 - True.