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04 KALEIDOSCOPE ERGO Monday, April 13, 2009

Ask your query


I have 3 credit cards and an outstand-
ing balance of over Rs. 2 lakh. One of
the card companies has sent me a let- Long jump lo n g
h
ter stating that my limit has been re-
duced from Rs. 62,000 to Rs. 30,000
based on my activities. Is it legal for

sigh i t
tedn w
them to do so? And how do I get out of
my card debt?
Shankar, Thiruvanmiyur
The card company is well with its
KARTHIKEYAN JAWAHAR AND

ess
limits to reduce your credit limit with-
PRADEEP YUVARAJ
out asking you. The problem is most of
us fail to read the fine print and the

T
he SENSEX has shown excep-
rules and regulations booklets that ac- tional growth over the past
company our new card. It will surely be week as compared to the last six
stated that the company can at any months.
time enhance or reduce your limit It’s a time when those on the edge
without a need to give justification. of the markets feel the itch to start
As far as getting out of the card debts investing. So is this a good time to
is concerned, there are a few strategies invest in equities? The answer is that
that you could follow. First try to liqui- any time is a good time as long as
date as much cash as possible and set- you let time nurture and grow your
tle off what’s possible. No point in money rather than greed.
keeping cash in a savings account Sounds philosophical, eh? But it’s
which give 5-6% when your negative true; any long-term investment in
out flow is 36% ! Second could be to strong stocks will surely give great
take a personal loan and clear off the returns in spite of various condi-
outstanding. This helps in two ways, tions.
one, reduces your monthly burden and Why stocks perform in the long
two, binds you with a commitment to term?
pay the EMI. The third and most effec- Dividends: Dividends give imme-
tive method is to break your cards into diate cash to the share holders. Even
four pieces and forget them. Learn to though the ratio of dividends to the
live on cash and forget credit. current market price may be less (1
(For queries related to personal to 5%) in the long run they will be
finance, mail your queries to significant as the companies grow
finergo@goergo.in with ‘doctor’ as the larger and the profit base is large.
subject line) Bonus Shares: Sometimes, com-
panies may need cash made from
their profits to grow further and
may not declare dividends.
Mini Quiz They continue to reinvest
profits in the company it-
self. When the accumulat-
1: Surgicare is a health insurance ed profit of a company is
product launched by large enough, they
may declare bo-
A) Apollo Hospitals nus shares. This is
B) Cholamandalam MS done by convert-
C) TTK Health Services ing the “retained
D) HDFC Standard Life earnings” into
capital. Thus our
2: ________ Management Company holding value in
manages a mutual fund. the company goes
A)Audit up. In a 1:1 bonus,
B) Automatic our 10 shares will
C) Allocation become 20 shares.
D) Asset Companies Inherently Take Time
Send your answers to finergo@goergo.in or to Grow: Can our company’s sales
SMS your answers to 92813 98889. For exam- increase by 40% in a month? Can we
ple, if you choose A as the answer to question 1 expect the projects that we handle to
and B as the answer to question 2 type it as jump by 25% in a month? No way. including – political issues, terro- an increase in your wealth too if you
1A2B and send it. Winner will be chosen by Companies are made of people and rism, cost of inputs, management hold its shares.
lucky draw from all correct answers. Winner processes; and growth can be ex- change, labour issues, international Would you believe it if someone
gets a free 2009-10 budget planner. pected only over a period of time. financial markets, takeovers, new said that investing Rs 10,000 in equi-
But can all the three above happen technology, social structure chang- ties in 1992 would be worth 1.5 crore
Answers for last week’s mini-quiz in say a year? Definitely. es, inflation, financial policies of Go- today? You better believe it. Keep a
A) 11 The stock market is an indicator of vernment, strength of the rupee, the watch out for the next Monday to
B) Zero Coupon Bonds the companies’ growth, leave alone cost of crude and so on. But as a know more … ■
the short term rise and fall which can company grows, its value is reflected Send your feedback to
be influenced by a number of factors in its share price in the market and finergo@goergo.in