Desicritics Author: Ranjan Varma

Book Review: Optimizing Corporate Portfolio Management by Anand Sanwal

Ranjan Varma — Sun, 20 May 2007 01:29:56 EDT

As Indian companies continue to emerge and gain prominence on the world stage, those that outperform will be the ones that make better resource allocation decisions. Companies that do this consistently over time will lead their industries. It is time for corporates to optimize their Portfolio Management for competitive advantage and outperformance.

Optimizing Corporate Portfolio Management, authored by Anand Sanwal, is a useful book whose main premise is that where an organization allocates its resources is what truly drives it strategy and financial returns. So while company leaders issue strategy in presentations or in speeches, this is really not what creates strategy - it is where money gets spent that determines this.

Anand explains,

Let's take a very simple example of a company which has $100 to invest and whose leadership says that their main strategy is to focus on customer loyalty. However, when you look at where they invest their money, you see that $75 is spent on customer acquisition and $25 is spent on initiatives focused on customer loyalty. So even though the stated strategy is customer loyalty, the true strategy is one of acquiring new customers if you look at the resource allocation.

Optimizing offers a practical methodology to bring this powerful discipline to your organization. The book is targeted at any organization struggling to figure out how to better allocate resources - this is every company and any sub-organization within a company, e.g., Information Technology (IT), marketing, R&D, sales, operations, product groups, etc who manage discretionary resources.

The book can be used to help general managers decide which product they should invest in or which country/region deserves more investment versus another. It advocates treating all investments as part of a portfolio whose risk and reward must be balanced - similar to the way a person tries to manage their money as a portfolio of investments.

The focus of the book is not on describing why CPM is important but in showing people how to implement a CPM strategy. It also features case studies of successful companies deploying this discipline including AmEx, Cisco, HP, TransUnion and the State of Oregon. The case studies demonstrate that the CPM discipline can be used across organization of all types, across industries and also across for profit and not for profit (government) organizations.

Anand believes that the complexity of decision-making cannot be boiled down into two dimensions or some overly simplistic framework. Decisions within organizations require using data and are much more complex. CPM understands this complexity and is about providing a way to make better decisions in a more holistic, complete way.

Anand holds a degree in finance and accounting from the Wharton School of Business and a degree in chemical engineering from the University of Pennsylvania. He is currently handling the American Express' CPM effort which spans the entire organization and captures over $4 billion of per annum discretionary investment spend. He is in fact also the holder of a CPM patent.

So Optimizing Corporate Portfolio Management is a book from the horse's mouth and is a pragmatic approach on how to link capital allocation to strategic planning. Anand's approach to enterprise portfolio management is lucid for a beginner, practical for a practitioner, and provides a lot of insights for the experts of CPM.

Economics for Dummies: By a Dummy

Ranjan Varma — Sat, 12 May 2007 00:43:03 EDT

I am both intrigued and fascinated by Economics. Maybe because Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing. Or is it that Economists get to do it with Models?

So even though I'm a dummy with Economics, I've been busy reading and trying to fathom some aspects. Honestly, my interests have soared high after I discovered a treasure trove of Economics in the form of a friendly blog by Ajay Shah and an amazing series by Walter Williams.

To start with I'll attempt to ask and answer three basic questions about economics: Why, What and Where?

Why?
Economics provides a framework for taking decisions by Governments and the Management of firms. While it studies the production, distribution and consumption of products and services, Economics also studies human behaviour to address issues of demand and supply.

To me, this makes Economics an important subject to get serious about. Despite the horrible jargon and graphs. Incidentally, I don't have any problems with the curves!

What?
Economics can be analyzed in two ways, Micro Economics and Macro Economics. The macro-economic environment (tax, monetary and fiscal policies, etc) defines the setting within which the firms operate. The micro-economic environment (e.g. cost analysis, marginal analysis, etc) provides the conceptual underpinning for the tools of financial decision making. Simple, no?

Where?
This one is easy. Just head to Ajay Shah's Blog for an Indian perspective. You'll learn much more from them rather than any thing else because there you don't find the intimidating mumbo jumbo of Economics. And I found this amazing series on Economics for the citizen, which is very useful.

Enough for now. I'll come back with more on this "interest"-ing subject! Read this amazing explanation about exploitation where Walter Williams tries to understand economic behaviour:

By no means do I suggest that you purge your vocabulary of the term "exploitation." It's an emotionally valuable term to use to trick others, but in the process of tricking others, one need not trick himself. I'm reminded of
charges of exploitation Mrs. Williams used to make early on in our 44-year
marriage. She'd charge, "Walter, you're using me!" I'd respond by saying,
"Honey, sure, I'm using you. If I had no use for you, I wouldn't have married
you in the first place." How many of us would marry a person for whom we had no use? As a matter of fact, the problem of the lonely hearts among us is that they can't find someone to use them.

The Fundamentals of Exchange Traded Funds

Ranjan Varma — Sun, 15 Apr 2007 01:01:25 EDT

Despite giving the highest returns last year and also being the least costly, Exchange Traded Funds or ETFs are hardly known to the general public. The irony is that ETF managers don't incentivize their products, which other regular mutual funds do very aggressively, hence there is no one pushing it.

But internationally what has happened that over a period of time people have found out that ETFs are ideal instruments and it has become very popular.

Basically, Exchange Traded Funds (ETFs) are open-ended index funds that can also be traded on the stock market.

Compared to Mutual funds, there are many advantages of ETFs; one is real time pricing, secondly long term investors are protected from short term traders. Hence it proves to be an ideal instrument for both long term as well as short term investors and also it is easy to buy and sell from the exchange.

One major disadvantage of ETF is that the investor should have a demat account and a broking account.

There are two types of advantages over index funds - one is the expense ratio which is currently lower in ETFs as compared to normal index funds. The second advantage is the distribution costs- the other index funds have to pay commission to the broker, while ETFs do not pay the same. So the ETF costs will be lower.

In addition to the above-mentioned expenses, there also exist some 'hidden' costs like transaction costs. Such costs do not form a part of the expense ratio like brokerage and STT. The transaction costs however, are incurred by index funds but not by ETFs. This is another area where ETFs score over regular index funds.

Did I tell you that in India the ETFs have outperformed the actively managed funds over the last year (2006-07)?

Even though the actively managed funds have done better on a 3/5 year scale, the net difference would be lower or non existent because of the higher cost. The active funds charge you 2-2.5% while the ETFs charge around 0.5% only. The extra Fund management charges will even out the difference, I guess.

I wonder why a good product like index funds do not sell like hot cakes. Comparatively an expensive product like ULIP is selling like hot cakes even though it is much more expensive than the MFs.

I guess it boils down to lack of adequate knowledge and information and unwillingness on the part of the agents have no interest in selling them.

The Fundamentals of Stocks

Ranjan Varma — Sat, 14 Apr 2007 11:36:02 EDT

I must claim my place as a successful stock investor since I have made huge profits. How? By not investing a single penny, and investing with my instincts!

Well, this (technical) analysis stems from the fact that my elder brother who is an IIT(D)/IIM(A) product has invested a lot and has lost a lot. Since I didn't have any money to invest, naturally I profited with the absence of loss. This part of the story happened when the markets were down in the dumps.

Now cut to a later date when I had some money and I invested them into the first stocks that came to my mind without troubling anybody with any analysis. Luckily the stocks happened to be HDFC, Satyam and LICHFL. And the rest they say is history.

Hey, I'm not asking you to follow my style. You may not be that lucky after all.

Let's take a look at the fundamentals of stocks.

When you buy a share of a company you become a shareholder in that company. Shares are also known as Equities. Equities have the potential to increase in value over time. It also provides your portfolio with the growth necessary to reach your long term investment goals. Research studies have proved that the equities have outperformed most other forms of investments in the long term.

This may be illustrated with the help of following examples:

a) Over a 15 year period between 1990 to 2005, Nifty has given an annualised return of 17%.

b) Mr. Raj invests in Nifty on January 1, 2000 (index value 1592.90).The Nifty value as of end December 2005 was 2836.55. Holding this investment over this period Jan 2000 to Dec 2005 he gets a return of 78.07%. Investment in shares of ONGC Ltd for the same period gave a return of 465.86%, SBI 301.17% and Reliance 281.42%

Therefore, Equities are considered the most challenging and the rewarding, when compared to other investment options. Research studies have proved that investments in some shares with a longer tenure of investment have yielded far superior returns than any other investment.

What precautions must one take before investing in the stock markets? Here are some useful pointers to bear in mind before you invest in the markets:

All investments carry risk of some kind. Investors should always know the risk that they are taking and invest in a manner that matches their risk tolerance.
Do not be misled by market rumours, luring advertisement or 'hot tips' of the day.
Take informed decisions by studying the fundamentals of the company. Find out the business the company is into, its future prospects, quality of management, past track record etc.
Sources of knowing about a company are through annual reports, economic magazines, databases available with vendors or your financial advisor.
If your financial advisor or broker advises you to invest in a company you have never heard of, be cautious. Spend some time checking out about the company before investing.
Do not be attracted by announcements of fantastic results/news reports, about a company. Do your own research before investing in any stock.
Do not be attracted to stocks based on what an internet website promotes, unless you have done adequate study of the company.
Investing in very low priced stocks or what are known as penny stocks does not guarantee high returns.
Be cautious about stocks which show a sudden spurt in price or trading activity.
Any advise or tip that claims that there are huge returns expected, especially for acting quickly, may be risky and may to lead to losing some, most, or all of your money.

Though direct stocks have the ability to give the best returns, it takes time and effort to be able to get the best out of it. The trouble is that we consider investment to be rocket science. Which, it is not. The irony is that even when the investing rules look so simple, it's hard to follow them.

Help Teach my Son about Sex

Ranjan Varma — Thu, 12 Apr 2007 13:53:31 EDT

I need help. I need help to be a better father to my only son. No, it's not that I have been a bad father. Not that there is anything life threatening or emotional about it. It's more serious. I need help to teach my son about sex.

I have little hope from the schools. The "Morals" brigade of politicians are busy throttling any effort in this direction by teachers. I'm also scared whether the untrained teachers would do more harm than good by imparting the wrong education.

Back to my son. Last year I was driving with my son for company when a bike zipped across with the girl clinging on to the guy.

"I hate girls", quipped my 11 year old son. "They do not let the guys drive properly and they end up with accidents", he said to my question.

Let him learn his own way, I thought priding myself to be on the "papa don't preach" brigade. I always think that we have to learn it ourselves. The hard way.

Contemplating on my life situation recently, I felt pretty happy about it. I have ongoing battles with things like anger, conceit, etc but I feel that I have taken "pole" position in my race against them.

Smug and happy, I was not ready for a question popped up by my son some days back.

"What is sex?"

I squirmed.

"Aren't you listening to me?", my son demanded after I refused to react for many moments. My mind was working furiously. I can't tell him that he's too young. He might get worse information from his friends. Can't he ask somebody else. Who?

"Well...., err......, it's something done between a boy and a girl...", I muttered aloud weakly. My son nodded understandingly trying to hide a wicked smile. Thankfully, he did not probe further!!

My son will be a teenager next year. He tells me that I am his friend. But will he ask and discuss sensitive matters? Could the generation gap between him and I been putting him off? What if I had a daughter? Maybe my wife would have taken care of her. But wouldn't I be more worried in case of a daughter?

What answers do I have? What is the best answer? Am I capable of giving the right answers?

Or am I bothered about something which would solve itself over a period of time? I should not worry as it is not a big issue?

I looked around on the 'Net. Got some answers googling for "Sex Education". But I guess translating theory into practical advice, as in my case, I have a lot of work to do.

Growing up is a never ending thing, it seems, and the learning process never ends. We jump to conclusions and somewhere conclusions jump on us.

Life re-begins at 39. Or is it that life rebegins every year? Maybe every moment!
Meanwhile do let me know with ideas on how to go about giving sex education to my son. Thanks.

The Fundamentals of Asset Allocation

Ranjan Varma — Wed, 11 Apr 2007 13:54:38 EDT

Doesn't Asset Allocation (AA) sounds sophisticated? It assumes you have an asset to allocate and gives a boost to your ego. It's a smart and sexy word for something as drab and dreary as planning your personal finances. Asset allocation also gives you a feeling that you are holding some aces up in your sleeves. It specially applies to the Financial Planners or Advisors.

But seriously, asset allocation is a useful concept to know. And it's very simple too. Once you get your fundamentals clear about AA, you can use it to your advantage. It is the first step of adding value to your money or putting your money to good use.

Asset allocation is the percentage distribution of your money into equity, debt and liquid instruments. Equity, as you know, gives the highest growth but comes with the highest risk. Debt instruments are more or less guaranteed but give you a lesser return. Liquid money is your money in your savings account.

Let’s start with the thumb rule of AA. Your allocation to debt should be equal to your age. And as you age, the percentage in debt should increase too. In other words, your investments in equity should be (100 - your age).

But AA should be much more dynamic than the above thumb rule. I feel that it should depend on your age and your risk appetite. Guys at 20-25 years of age may want to invest everything into equities and I think that is the right strategy.

And before you set off to do some AA for yourself, I would like you to ask the following questions to yourself:

What is your risk appetite? I mean if you are jittery with the slightest tremor in the stock market, you better be away from the stock market. Even though, stocks give the best returns on a longer run.

What are your financial goals? For example, if you believe in frugal approach to life and give a thumbs up to "Simple living, High thinking", you don't need to set very high goals with your money. In the other case, you may have to align the allocation to your goals.

When do you need the money? Is it for the car you want to buy in another 2-3 years? Or is it for the dream house 10 years from now? Ask yourself and then decide your asset allocation.

And if you love ready made formulas, here's some allocation strategies from John Bogle:

Older investor in distribution phase: 50% equity; 50% debt

Young investor in distribution phase: 60% equity; 40% debt

Older investor in accumulation phase: 70% equity; 30% debt

Young investor in accumulation phase: 80% equity; 20% debt

The accumulation phase means the period when you have no use for the money and are focussed on building it on. In the distribution phase, you are also using your assets for your goals.

All said and done, AA can contribute to your financial prosperity in a big way. Studies have pointed out that the asset allocation decision is more important than the process of choosing the actual stocks, funds and even market timing.

In other words, if you just replace active picks with simple asset allocation decisions, it will work just as well as, if not even better than, professional fund managers. Do your allocations now.

Book Review - The Big Idea by Stephen Strauss

Ranjan Varma — Mon, 9 Apr 2007 13:03:08 EDT

The Big Idea by Stephen D Strauss is an amazing read. It profiles dozens of creators who have gone ahead with launching their own innovation like remote control, Viagra, Tupperware, Barbie dolls, etc.

One of the profiles was on Coca-Cola. Coke is the no.1 brand in the world. Back in 1985, after facing tremendous competition from Pepsi, Coke took a bold and considered decision. It changed the formulation of its 100 year old flagship product.

No, it wasn't a knee jerk reaction to competition from Pepsi or because Pepsi was winning all the taste tests. Coke carried out an elaborate $4 million research and after the R&D team brewed a new formula that beat Pepsi handsomely, the Coke management launched the new Coke. During the launch, the Coke president thundered, "It's the surest move ever made".

The new Coke bombed. And two months later, Coke was wise enough to reintroduce the old Coke.

What were the mistakes that Coke made? One, people liked the new coke but the interview process did not expose them to the fact that the old Coke would no longer be available.

Two, Coke estimated that only 10-12% Cola drinkers would be upset. But this 10-12% was sufficient to stir mass discontent!

Three, such a big brand has immense ownership. To the point that it is being owned by the public rather than the management! You can't tamper with their whims and fancies. It's similar to our Indian cricketers. They are owned by the people rather than themselves. Look what Sachin has to face despite being a legend like that.

We digress. The Coke story does not end here. No heads rolled despite the massive blunder by the top management. No, it's not the lack of accountability. In fact the blunder helped Coke to understand their customers better and reinforced their brand in a powerful manner. Also the fact that the top management took responsibility for the mistake and rectified it fast, within two months.

My takeaway? Always keep a lookout for improvement. You may take a bad decision. But if you accept your mistakes and make corrections, the blunder would make you stronger.

Back to some real gems from the book which teaches us to innovate- and grow richer.

Think of things that never were and ask, "Why Not?"

The power of One: You can make a difference.

Keep it Simple, Stupid. (KISS)

First is Best.

Try, Try again.

Risky business brings out the best in you. It is more exciting, crazy, fun, exasperating, rewarding, frightening and challenging.

Synergy is necessary. 1+1 = 11

The book ends with Goethe's couplet:

Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.

Picking Stocks in Real Estate

Ranjan Varma — Fri, 23 Mar 2007 12:40:17 EDT

One of the questions asked of my earlier post was how to choose a stock to invest in.

It is alright to say, " You can start with identifying a list of 10-15 companies out of 3-5 sectors which you know or which interests you. You can keep a tab on their management team, financials and future outlook and over a period of time, you will be able to take a call on them." I guess, it's good in theory.

How about we do an analysis of a sector and then take a look at some of its stocks. Let's take a look at the Real Estate/Infrastructure sector which is so much in the news.

When we do an industry analysis, what are the things we look at? Companies producing similar products are subsets of an Industry/Sector. For example, National Hydroelectric Power Company (NHPC) Ltd., National Thermal Power Company (NTPC) Ltd., Tata Power Company (TPC) Ltd., etc. belong to the Power Sector/Industry of India.

It is very important to see how the industry to which the company belongs is faring. Specifics like the effect of Government policy, future demand of its products etc. need to be checked. At times prospects of an industry may change drastically by any alterations in business environment. For instance, devaluation of rupee may brighten prospects of all export oriented companies. Investment analysts call this Industry Analysis.

To start with, let's look at some macro facts and observations about the industry.

The Tenth Five Year Plan has estimated a shortfall of 22.4 million dwelling units in the country. According to one estimate, over the next 10 to 15 years 80 to 90 million housing units will have to be constructed.

The investment required for constructing these dwelling units and for providing related infrastructure during this period will be of the order of $666 billion to $ 888 billion at roughly $33 billion to $44 billion per year ($1 billion = Rs 4,400 crore).

There is a steady growth in Housing Finance sector of approx. 30% over last four years. The rate of interest for housing finance has become reasonable and affordable which has resulted in more credit offtake and subsequent maturing of the housing industry. Even though there is an increase, the rates are still reasonable to my mind after factoring in the tax benefits.

Fiscal benefits provided by the Government of India have encouraged the end users and investors alike.

Income of the urban buyer has grown substantially. There is tremendous scope and growth in the Infrastructure Development.

Foreign investment by way of FDI has been approved. Emergence of professional builders in the market with proper accounting standards. There has been an emergence of rating systems for building projects.

The high growth of the real estate sector has led a lager financial institution to launch a dedicated real estate fund. These funds are simultaneously enticing large institutional investors as well as High Net worth Individual (HNIs) to expand their portfolio.

The award of ultra mega power projects and privatization of airports demonstrates a commitment at the highest level. So the momentum to build up roads, ports and urban infrastructure is building up for sure.

The JawaharLal Nehru Mational Urban Renewal Mission (JNNURM) initiative in 63 cities and urban transport projects will also drive up Investments in Infrastructure. Water Supply projects and sewerage projects would be part of the JNNURM.

So what do you think about the future of Infrastructure stocks in India? Ready to take a call?

There are three major stocks in the Infrastructure sector which are worth talking about: 1. Nagarjuna Construction (NJCC) 2. IVRCL and 3. HCC

Remember, do not go by the order book size alone, which is what many people do without understanding the intricacies. We need to understand the execution period of the order book, and the kind of margins that the company would make, given the kind of raw material prices at which it has booked these orders.

Even though it may look daunting, a little bit of research helps you in understanding the stocks as well as improving your general knowledge.

Investment Options In India: Grow your Money

Ranjan Varma — Tue, 13 Mar 2007 06:34:36 EDT

Some readers are asking me where to invest. I have been guarded with my answers and start with the observation that since everyone has different financial goals and risk appetite, my recommendation may not work for him or her.

But when my elder brother asked me this question, I did not have an escape route anymore. And I had a responsibility too. After all I can't vanish from him after a year or so!

By the way, it's also important to note that this elder brother is an IIT(D)/IIM(A) guy and can't be taken for a ride. And that IIT/IIM guys also need proper financial advice!

Let's take a look at some of the popular options available which are Bonds, Stocks, Real Estate, Mutual Funds (MFs), Unit Linked Insurance Policies (ULIP) and Exchange Traded Funds (ETF). Now I'll try to rate them on four parameters of investing. i.e. 1) Growth, 2) Liquidity, 3) Security and 4) Expenses

Growth: Stocks, MFs and ETFs top the rankings here. Over a period of over 5 years, the Compounded Annual Growth Rate (CAGR) is above 15% in comparison to 8% in Bonds. ULIPs begin to give a good growth only after 5 years or so because initially they are very expensive. Real estate is on a fairytale run these days too.

Liquidity: Again, Stocks, MFs and ETFs score heavily while Bonds and ULIPs have a lock-in period or have substantial surrender charges. Real estate scores low here (You have to be lucky to get good buyers at the right time).

Security: I would rate all of them at par over a long-term of over 5 years. But you may get into a bad stock or real estate which are unsecured. Otherwise also, stocks and real estate are very volatile and can affect your blood pressure too!

Expenses: ETF is the least expensive with charges of around 0.5% compared to 2% from MFs and much more in ULIPs (especially in the initial years). Stocks too, are the least expensive, provided you get into the right stocks at the right time.

Based on the short analysis, I would recommend ETFs. Read more about ETFs here. But as I said earlier, one man's meat could be another man's poison. Moreover, the diversification rule says that one should not keep all our eggs/ apples (for the vegetarians) in one basket. So let us take a look at the various options, one at a time.

Shares: Investing in the equity market directly is exciting and sexy. You are in the thick of things and learn a lot in the process. Though the volatility and the information overload makes it a daunting task, investing in stocks is not rocket science. One should start with identifying a list of 10-15 companies out of 3-5 sectors which you know about and interests you. You can then keep a tab on their management team, financials, and future outlook and over a period of time, and will be able to take a call on them.

Real Estate: I feel that one has to be plain lucky to get into a good deal and be able to get the right buyer at the right price and time. I can't think of any other factor other than luck. So if you feel you are blessed and have the right tip, go for it. Otherwise, it's a no-no.

Mutual Funds: One should allocate their time to investment decisions in proportion to their income generation goals. Also, convenience and hassle free investing should be a major factor. Mutual Funds fit the bill where Fund Managers are into it full time. If you van identify fund managers who have consistently performed over last 3-5 years, nothing like it. The fund manager also has the muscle power of crores of Rupees and is able to take entry and exit decisions impartially. MFs continuously churn their portfolio. When MFs buy and sell stocks, they don't have to pay capital gains as you would do when you churn. With Systematic Investment plans (SIP), you can start investing with as low as Rs 500 per month. But MFs have its own loading and administrative charges and the fund managers make merry on your hard earned money.

Exchange Traded Funds: While the index fund has given a one-year return of 42% last year, diversified equity schemes (MF) could only come up with 34% returns. Diversified equity funds usually have large expense ratios compared to index funds. For example, the expense ratio of Banking BeES, an index fund, is only 0.45, while it is anywhere between 2-2.50% for diversified equity schemes. That's why I recommend ETFs.

ULIPs: Unit linked insurance policies combine two products, i.e. Insurance and Mutual Funds. In the initial few years, ULIPs are very expensive. But in case you don't want any hassles of investing, and you have a tried and tested Insurance agent who is almost part of your family, then ULIPs are for you.

Bonds: For those of you who are risk averse.

Handy Tips for Financial Planning

Ranjan Varma — Tue, 9 Jan 2007 09:26:48 EST

Getting rich is in your hands, nobody else's . So get started with working hard or smart (depends on you again), adding to your finance knowledge and generally taking responsibility for yourself. Get Rich Or Die Trying.

If Financial decisions look like rocket science to you and Investing is even more daunting, here are some baby steps for you.

This one is from Deborah Fowles, Guide to Financial Planning in About.com Seems very elementary but I doubt how many people are scoring more than 5/10. Here it goes, the top ten:

1. Get Paid What You're Worth and Spend Less Than You Earn : Hey, I get less than what I deserve and so do you!! And I've not done any budgeting so that I may be sure of the second part.

2. Stick to a Budget : I'm ashamed, no budgeting exercise for myself, not to speak of sticking to one.

3. Pay Off Credit Card Debt: Thank God, I finally get a score on this one. I've managed to stay clear though I've had to suffer with the agonising interest calculations earlier.

4. Contribute to a Retirement Plan: I do have a pension plan but I've never cared to figure out whether it is sufficient! Will give 1/2 for that one to me.

5. Have a Savings Plan: Yeah ,I'll be partial to myself and give some score here too! I do save about 15% of my income though it's a recent phenomena. Better late than never!

6. Invest! : Pretty straight forward. But few people manage to find an hour for that in a week. They'll rather watch TV(Big Boss is on these days!)

7. Maximize Your Employment Benefits : A meeting with your HR guy!! Brace yourself. I have no hope with my guys.

8. Review Your Insurance Coverages: Putting a finger on that is important from the family point of view. Those of you without that responsibility can breathe easy on that count. But I get full marks here!

9. Update Your Will: Never thought about that up till now. Bless Ms Fowles.

10. Keep Good Records: I will, as part of my New Year resolutions. But I've yet to get started on that. Next Monday, I promise.

Phew!, I score about 4/10!! So much potential to improve!!

But before I sign off, for guys who suddenly want to get started with their budgeting exercise, here are percentages of major spending categories from the US Bureau of Labor Statistics (2003) Consumer Expenditure Survey. May not apply to you and me but it's an interesting statistic anyway. Gives you an idea where you stand and where you can increase/decrease your expenses.

Food at home 7.7%
Food away from home 5.4%
Alcoholic beverages 1.0%
Total food and drink 14.1%
Housing 32.9%
Apparel and services 4.0%
Vehicles 9.1%
Gasoline and motor oil 3.3%
Other transportation 6.7%
Healthcare 5.9%
Entertainment 5.0%
Personal care products and services 1.3%
Reading .3%
Education 1.9%
Tobacco products and smoking supplies .7%
Miscellaneous 1.5%
Cash contributions 3.4%
Personal insurance and pensions 9.9%

Work on your Budget sheet for two hours and it'll tell you a lot about yourself. Look at it as a personality test!!