I don’t know if you have noticed lately, how much cars built in the late 70′s and early eighties are fetching. These vehicles were the playground of the 40 somethings when they were just turning old enough to drive. The disappearance of cars built in that time frame has made them rare to find. Well, not rare, but rarer.

Nostalgic reasons are why people in their 40′s are paying anything from $5000 to $40,000 for these clunkers. They recall the particular model they owned when they were eighteen and it really makes these car boffins motivated. At the age of 40 most people have their financial affairs quite well in order and they have a penchant for this type of “pre catalytic converter” vehicle.

Most will buy the car and restore it lovingly and store it in their garage and admire the car. That is the purpose of their interest in these old models. They were the muscle cars, the style and the vinyl seating, this evokes memories of their first date and their first kiss.

These facts are extremely high motivators to pay for a particular model. You can go to a junk yard and find dozens of these clunkers still laying around unwanted. But buy the parts and put a whole one together, with a nice factory color paint job and making sure the care is in mint condition, you can actually make an incredible mark up on these cars today. The truth is they will only grow in value in the future, even if the vehicle is not 100% original. People with money are willing to spend big when it comes to nostalgia and their youth. You could purchase a reasonable shell for under $500 and if you have some mechanical skills you could put this investment of $1500 together and get up to $40,000 for it.

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Financial Planning includes:

1) Investment-Planning

It is done to increase your financial resources. Once you have enough money to take care of emergencies, you should start investing your money. It includes risk profiling, creation of investment portfolio, assets allocation, creation of wealth, periodical review and re balancing.

2) Tax-Planning

It is done to reduce tax liabilities. It includes: calculating your gross total income from all the heads of income, computing the total tax payable and then minimizing your tax by adopting certain tax saving schemes and a right mix of investment options.

3) Education-planning

It is done to arrange funds for higher education of self or the children.

4) Cash-flow-planning

It includes analyzing the present income and expenditure and then drawing a plan to maintain a regular flow of cash to meet daily expenses.

5) Business-Succession-planning

It includes systematic and affordable transfer of a closely held or a family business to the next generation.

6) Insurance-Planning

It is done to take care of the Dependants and financial losses

7) Children’s-future-planning

It is done to secure your child’s future by arranging funds for his higher education and marriage. It should be started as soon as your child is born. If we assume the inflation rate to be 5%, then the degree which cost RS 2.5 lacs today may cost RS 6.3 lacs after 17 years

Retirement-Planning

It is done to secure your life after retirement by arranging funds for your post retirements needs and maintaining your living standard. Generally people are not concerned about there retirement at an early stage of there career. But in order to meet future expenses and maintain the same living standard, it is advisable to start planning as soon as you reach the age of 25.

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One of the keys to successful trading and investing is to understand how market cycles operate in a variety of time frames and to profit accordingly. Sadly this is easier said than done as the majority of traders and investors are either mesmerized or alarmed by the hourly and daily moves of the stock markets. Back in 1903 S A Nelson, a good friend of Charles Dow, wrote: “Many people seem to think that the change in prices in any one day is complete in itself and bears no relation to larger movements which may be under way. This is not so.”

There have been many books written about Dow Theory and I do not propose to re-evaluate it in this article, rather I am suggesting that newbie traders and investors should be aware of the effect of one such cycle – the four year US presidential cycle which has now well and truly started.

The theory behind this cycle is that as the election draws near, the administration will do everything in its power to stimulate the economy so that voters will go to the polls with jobs and a feeling of economic well being. Interest rates are generally lower in the year of an election so the stock market can benefit from increased spending. Presidents know that if voters are not happy with the economy when they go to the polls, the chances of re-election are slim.

A combination of the presidential cycle and the lengths to which the current administration is prepared to go to avoid a recession and meltdown in the financial system are the main reasons why I believe the US stock market could actually do quite well in 2008. President Bush convened the so-called Plunge Protection Team last Friday for its first known meeting since 9/11. Officially the President’s Working Group on Financial markets was created after the 1987 crash and appears to have powers to support the markets in a crisis with a raft of instruments, mostly by buying futures contracts on the stock markets (DOW, S&P 500, NASDAQ and Russell) and it has the means to destroy short traders.

Ironically the team is led by Henry Paulson, ex Goldman Sachs, whose old employers were one of the few investment banks to have made a profit from the sub prime debacle last year. A pity Henry failed to spot the dangers from either these toxic investments or the subsequent credit crunch. His brief is now to investigate the “systemic risk posed by hedge funds and derivatives” and based on his experience with Goldman Sachs it will be interesting to have his views in the coming months.

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There is a misconception of what investing is. The typical impression is that it has to do with the stock market or real estate, however investing money is much simpler than that. The above conception keeps many people out of investing because it sounds too hard and complicated. Also, most beginning investors have small seed capital, with broker commissions and such it seems a real barrier to invest in these traditional investment mediums.

The essence of a true investment lies in the return. When ever you spend a block of money, large or small, that is designed and does give you a return, you can say it was an investment. The main thing to remember about investment is that risk is the main name of the game.

Any investment will have a measure of risk and most investors use the simple bank deposit as a bench mark for risk and reward. A bank is guaranteed by the government, so the risk is unusually low for an investment. But also, so is the return or the interest rate a bank will pay you for depositing your money.

Nevertheless, this investment is the golden mean and is used to compare other investments with. The two things you compare is risk and reward. The higher the risk, the higher the expected reward, but not always.

An investment can be as simple as spotting an opportunity in the classifieds. Imagine you noticed the neighbor down the road is selling a mountain bike. It is in great condition and the price is way too low for what your estimation of the bike should be worth. You pay them the asked for $70 and you re advertise the same bike after giving it a thorough clean and detail, for $150 Someone in the next block answers your ad and negotiates with you and buys the bike for $120

What has happened here? Something quite incredible. You invested $70 but you got back your $70 and you got another $50 for your troubles. That is a 70% increase! The bank would have paid you 7% on that $70 after an entire year has passed. You completed this investment in under a week. This can be considered a very successful investment. Heres why.

Before you bought the bicycle, you considered it from a very prudent perspective. You spent several hours looking at bikes and familiarizing yourself with the current micro climate of bikes in your area. You ascertained, it was worth at least $140 but you also expected it to sell quite quickly at a little lower price. The risk question you asked yourself, is will this bike sell, if the worst thing happened and absolutely nobody was interested and I had to price the bike $70 Would I get my money back? If the answer to that question is in the affirmative, then you have a good low risk, high return investment. Your next step would be to compound that $120 into another 50% to 70% return.

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When investing my money, I am always amazed at how complicated the procedures are. The unnecessary barriers that exist in investing capital can be seen as quite serious impediments. One of the biggest barriers is the broker commissions or the deposit size when considering real estate.

I am certain everybody with half an interest would be delighted to begin investing capital for long term rewards. Everyone loves the idea that they are going somewhere as time passes and investment brings that settling feeling. Knowing that your capital is working for you can be a real delight.

However the barriers to investment makes only the people with a large capital account able to invest. There are easier ways. First thing is we need to recognize that people earn a living from investment vehicles. That means there are costs. So for people with a very small seed capital account, investing in mediums where others make a living (like brokers, financial advisors and real estate agents) is quite the wrong direction.

These industries provide a certain legitimacy to the investment vehicles of the stock market or real estate, however, that legitimacy is seen wrongfully as security and a absence of risk. Nothing could be further from the truth. The truth is they are paid essentially to break us the bad news that investing can be risky. Not the other way around.

If we ignore the legitimacy of these institutional investment vehicles and look at the word investment without being baffled by the specialist language, we see investment is nothing more than spending money to get a return while making sure the risk is very low of losing the money. That is all an investment is.

If you want to invest, but only have a few hundred dollars, you will not make much of a return putting that money to work in a bank. At 6% per year you might make a few dollars. Not very exciting. However, link back to what investing means. It means buying something to re sell it later for a profit. The speed of your return is crucial. If you can buy something and sell it in a week, for a 10% or 20% return, well that is a huge accomplishment. If you have $200 and you buy something and re sell it for $230, that is a 15% return. This type of hands on investment is safer than the stock market precisely because you are in control of the money and making the decisions for yourself. You become your own investor source.

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