@Leisure - Vol-3 | srei
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@Leisure - Vol-3


The origin of the word ‘buck’

There are different versions to the story of the origin of the word ‘buck’. While there is a lot of speculation revolving around its genesis, there is no firm conclusion as such. Some people believe that the term ‘buck’ for the American dollar originated from the use of silver dollars for buck markers used in the game of poker, while others believe that the term ‘buck’ for the dollar originated due to the fact that buckskins were used in trade, as a form of money, in early America.

The main theory revolving around its origin leads back to an old practice in poker. In the 19th century, card players couldn’t remember whose turn it was to deal next. So they placed a counter or token in front of the next dealer. This token was called a buck, since it was commonly a buck knife, whose handle was made of buck horn. When the turn came for the next dealer, he would simply pass the buck onto the next player and they would know whose turn it was to deal next.

The other theory is that the word ‘buck’ is short for buckskin (deerskin), which was a common medium of exchange in early America where it was used in trading with the Indians. The abbreviation of buckskin, which was a unit of trade among Indians and Europeans in frontier days, came to be known as ‘buck’ and became the slang for dollar in modern times. There are writings from 1748, which state “Every cask of Whiskey shall be sold to you (Indians) for 5 Bucks.” Here, ‘buck’ refers to buckskin, and the transition from bucks to dollars seems natural and plausible here.

Today, ‘buck’ is a slang used for money, especially in the US. It is used to describe a $1 bill.


Non-Convertible Debentures versus Corporate Fixed Deposits

When it comes to investments, the common preference has always been bank fixed deposits due to its convenience and simplicity. But recently, there is an increased trend towards corporate fixed deposits (Corporate FDs) and a better option i.e. Non-Convertible Debentures (NCDs). Let’s compare both these investment avenues on parameters like safety, liquidity etc. to help you take the right decision:

  • Security: NCDs are fully secured by the company’s assets while corporate FDs are treated as an “unsecured loan” by the issuer company. corporate FDs don’t even qualify for deposit insurance of Rs 1 lakh available in case of bank fixed deposits.
  • Credit Rating: For NCDs, the issuer company has to necessarily obtain and disclose the credit rating, which makes it more secure for the investor. For corporate FDs, there is no mandatory requirement for disclosure of rating.
  • Liquidity: NCDs are far more liquid than corporate FDs because they are listed and traded on recognised stock exchanges. For corporate FDs, the investor has to approach the concerned issuer company and the investor may be charged a penalty for cancelling the FD.
  • Returns: Though NCDs and corporate FDs offer a fixed interest income, NCDs can get you additional return in the form of capital gains if sold on the stock market. In case of corporate FDs, that benefit is not available.
  • Taxation: Interest from both avenues is taxed at the applicable slab rate. However, there is no Tax Deducted at Source (TDS) on NCDs as it is listed on the stock exchange. For corporate FDs, TDS is applicable if interest is more than Rs 5,000.
Parameters  Non Convertible Debentures (NCDs) Corporate Fixed Deposit (FD)
Safety Yes Less secure than NCDs
Credit Rating Yes No
Liquidity Yes - can be sold anytime on stock exchanges Need to apply to the issuer company and the investor may be charged a penalty
Source of return Interest + Capital Gain (if sold on the stock exchange) Only interest
Taxation Interest taxed as per slab rates. No TDS. Interest taxed as per slab rates. TDS if income > Rs.5000/-.

Srei Infrastructure Finance Ltd. offers various choices in NCDs that are rated by various prominent agencies. The company’s focus in priority sectors like infrastructure lending with interests in equipment finance and project advisory, and over 25 years’ of experience, give its offering high credibility.


Bonds can give you protection from inflation

It’s a no-brainer that when it comes to investment options, the most popular amongst them is fixed income products. This is because these products offer you safety both in terms of interest and principal invested. However, these products carry the challenge of inflation risk (when the rate of interest that you get on a product is lesser than the rate of inflation). Increasing inflation reduces your purchasing power and erodes the value of your savings. In order to counter this risk, you are tempted to invest in riskier assets like equity, gold or real estate.

The good news is that you can beat this risk by staying invested in the fixed income category itself. This is possible through one of the lesser used fixed income products - bonds. Inflation indexed bonds, as they are called, can protect you from the monster named inflation. These newly introduced bonds protect your principal and interest from rising prices as they are based on the concept of inflation-adjustment. Here, every month, the principal amount is aligned to the consumer inflation rate. The interest is calculated on this amount through a pre-decided coupon rate on a compounded basis. You get this amount after every six months. At the time of maturity, you get the higher of the original investment or the inflation-adjusted principal. The total gains are, therefore, much higher than what you may achieve through a fixed deposit of a bank or a normal bond.

Let’s understand the working of inflation indexed bonds with the help of an example. Suppose you invest Rs 1 lakh in such bonds and the inflation is 10 per cent for the year. As of now, these bonds carry an interest rate of 1.5 per cent annually. So in the first year, you would get an interest of Rs 1,500. But in the second year, this increases to Rs 1,650 since the interest is now calculated on the principal of Rs 1.1 lakh, which is inflation adjusted. In the third year, this principal would increase to be Rs 1.21 lakh if the inflation rate remains the same. You can invest a minimum of Rs 5,000 and a maximum of Rs 5 lakh. The tenure of such bonds is 10 years. You can subscribe for them through designated banks. The inflation adjustment of the principal amount is the capital gain. After indexation, this gain would almost disappear so you have to pay tax only on the interest income. You can sell these bonds after 3 years. In case you are a senior citizen, you can sell after a year. But in both cases, be prepared to lose out 50 per cent of the last interest payable as penalty.


Buddy Jokes

A kid to his dad: Daddy, “How much does marriage cost?”
Dad: “Not sure, son. I'm still paying for it.”

A thief points his gun at a man and says "Give me your money or I will take your life!" The man laughs and replies, "I have no money and no life; I AM A SOCIAL WORKER."

Teacher: “If you had Rs 10 and you asked your father for Rs 5 more, how many rupees would you have?”
Sunny: “I would have Rs10.”
Teacher: “Wrong; you don't know your mathematics.”
Sunny: “Maam, you don't know my father.”

After marriage, an employee went to his boss with a request to increase his salary.
Employee: “Sir, as you know I got married recently. Can I get a raise?”
Boss: “We cannot compensate for the accidents that happen outside of the company.”