MEMOIR OF MONEY

With the evolution of society; the transactional needs and availability of medium of exchange has evolved from a very humble beginning to a much more complex and convoluted layout in this modern times. Everyone uses money but for most of us, the understanding of the concept of money has been slenderised down to the printed green paper whose monetary valuation is same as the numerical impression reproduced on it. Money is, however, a mechanism that controls cultural and social relations within the country as well as between different states. Before the development of monetary relationships, people used barter in order to exchange and buy various goods from each other. Barter was a good alternative until people started to develop entrepreneurship mind-set and tried to find the way to make their exchange tools transferable and unified across different barter deals. First, people replaced barter with commodity money that can be considered as the first attempt to introduce currency, which laid foundation for the economic relations. The value of money is the sum of the individual values of goods and services produced in the country. With that in mind, monetary mechanism is self-limiting, as printing money will neither generate wealth to the country, nor will it benefit capital holders. Still than, how is money different from any other materialistic possession? Is it because of David T. Bazelon, according to whom, Money: A dream, a piece of paper on which is imprinted in invisible ink the dream of all the things it will buy, all the trinkets and all the power over others. It is because of an anomalous quirk of money- apart from everything it can buy for one, money can buy more money. The instrument to achieve it is systematic, planned and well calculated investment. It is notable to mention at this point that investment is a different ball-game from savings, contrary to the common beliefs. Savings is often regarded as the safest form of investment in our existing financial structure. But we live in times when the average inflation rate(CPI) for past 5 years stands at 10.36%, whereas the interest rate on various retail banking instruments have been spanning from a range to 4% to a maximum of 8.75%. That essentially means that over last 5 years, valuation of ones capital even though deposited in various forms of retail banking financial instruments like SB account or FD account has devaluated by minimum of 1.61% to a maximum of 6.36%.still, according to recent RBI data 94.87% of Indians only opt for retail banking financial savings instruments. As we can see, the picture has not changed much since the times of my grandmothers domestic financial instrument of stashing bundles in tin cans and deep in the piles of cloths. Avenues like mutual funds, corporate and government bonds are relatively unfamiliar grounds in country like india.For a more risk ardour investors equity ,currency and commodity markets provide with a greater and better investment prospects. Times are changing and spinning at a rapid speed. zero interest savings a/c are not the thing of future anymore, with melting pot of global economy, it would not be possible for long for RBI to ward of regulatory rates like CRR,SLR ,REPO and reverse REPO rates. Developed countries like USA already have repo rates like 0.25% against 7.75% in that of india. Thus, alternative sustainable financial measurements other than SB a/c and FD a/c are the future of marginal savings .Teachers EPF funds of Canada has been a consistent foreign institution investor(FII) in indian stock market over few years now. So has many numerous other EPFs of developed nations, earning an average of 67.39% gross return in last 3 years. Whereas, EPF funds in india are chiefly invested in high yielding government and corporate bonds which gives an yearly

return of an average of 8.5% with zero exposure to the lucrative oppurtunities like equtity. Which , if sanctioned can boost the economy substantially and more importantly , earned much higher returns to employees under EPF Act. Whereas , the picture as it stands , even though widely poplular EPF doesnt secure once capital against the standing inflation which previously mentioned stands at average 10.36%for last 5 financial years.

Financial awareness and understanding has grown out to be a single most resilient solution to problems of personal financial growth and there by a nations. Professionalism is a derived manifestation of our primary need and want of monetary security and luxury. Thus burning ones midnight oil to earn healthier cheques is not the end of the road, the hard earned money needs protection from inflation, fraudulence and channelization of proper growth agents. Ones profession may be far well from the mathematical understanding of complex financial instruments like credit swap or currency options or his savings plan may not be options strategies like straddles or strangles, but a basic understanding of fundamental financial instruments is a necessity in ever so evolving economic scenario. Times have been bad, or as so one must have read, heard and learnt over past half a decade but in words of Charles R. Swindoll - we all faced with a series of great opportunities brilliantly disguised as impossible situations. We live in times of George Soros an Hungarian-American business magnet who has made a Billion US Dollars in a span of last 9 months betting USD against depreciating YEN. But as Edgar Bronfman would argue, to turn $100 into $110 is work.to turn 100 million into $110 million is inevitable .luckily, we also live in times of Chris Camillo a self-directed investor who turned his own capital of $20,000 to a whopping $2 million in a brief span of 3 years ,importantly between 07-10, financial trauma recovery years. But more importantly, he managed this in midst of the biggest financial crunch of our times of 08. Money is an managing entity not a controlling one is what drives investments to gold pot of returns. But sadly we also live in times of like Nick Leeson, Peter young, Bob Diamond who has accused and in some cases convicted of charges like cheating, conspiring and cooking of financial books, rigging of interest rates .Back home scandals like the stock market gurukul, Speak Asia have skimmed off common people of millions of INR. Understanding and education about such fraudulent acts can protect investors from being conned into making misled investment decisions. Home to investments , savings and various other financial instruments are the financial institutions likes banks , stock market and various regulatory bodies. Various types of banks serves diverse financial purposes like trading, share flotation, mergers or a simple savings a/c.and regulatory bodies help maintain a balance between the over-reaching investment banks, merchant banks against retail, co-opereative banks. Glass-steagall Act of 1933 is an shining example of the same inacted by US CONGRESS after the 1929 crash to limit the commercial bank exposure and activity to securities firms. Career in financial institutions has earned much more lucrative perks in recent decades, due to the healthy severance and compensation packages. More-over employment in commercial or retail banks gives one higher rate on interest on ones deposit and lower chargeable rate of interest on loans availed, among other things.That would mean not only a good pay-off but also an moderate lift off of expenditures.

When we talk about money , its only because we can spend it.Be it now, or in the future. Expanses are fundamental part of the concept of money. Its cause. Expense is the yin to the yang of money. It is easier to spend money than to earn it; than again, its easier to earn money than to spend it wisely, as an old proverb Chinese says. Expenditures are inevitable, but thats the test of ones understanding and appreciation of money . As has it evolved over the centuries with growth of more complex social and economonical structure, the concept of money will grow into new forms like plastic and NFCs. But what will underly is the fundamatal neccesities and its derivatives. So, a habit of controlled expenses, at last will always be the best financial instrument of savings. In words of founding fathers of United States of America Benjamin franklin , a penny saved is a penny earned.

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