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NIFTY(S.A.R.) & BANKNIFTY(S.A.R)

Thursday, February 26, 2009

Post titlWhat is Recession? e here...

- It's all in your MIND! And we actually FUEL this recession much more than we think.
Just ask anyone from educated to non-educated person, from smart to dumb; everyone will talk about slowdown, recession, downturn in economy so and so. But do we know what is Recession and who really fuel this?

This story is about a man who once upon a time was selling "Wada-Pav" by the roadside.
. He was illiterate, so he never read newspapers.
· He was hard of hearing, so he never listened to the radio.
· His eyes were weak, so he never watched television.
· But enthusiastically, he sold lots of "Wada-pavs".
· He was smart enough to offer some attractive schemes to increase his sales.
· His sales and profit went up.
· He ordered more a more raw material and "Pav" and used to sale more "Wada Pav's".
· He recruited few more supporting staff to serve more customers.
· He started offering home deliveries.
· Eventually he got himself a bigger and better stove.
· As his business was growing, the son, who had recently graduated from college, joined his father.
· Then something strange happened.
· The son asked, "Dad, aren't you aware of the great recession that is coming our way?"
· The father replied, "No, but tell me about it."
· The son said, "The international situation is terrible.
· The domestic situation is even worse. We should be prepared for the coming bad times."
· The man thought that since his son had been to college, read the papers, listened to the radio and watched TV.
· He ought to know and his advice should not be taken lightly.
· So the next day onwards, the father cut down his raw material order and buns, took down the colourful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs. Very soon, fewer and fewer people bothered to stop at his "Wada-Pav" stand. And his sales started coming down rapidly, same is the profit.
· The father said to his son, "Son, you were right".
· "We are in the middle of a recession and crisis. I am glad you warned me ahead of time."

Moral of The Story: It's all in your MIND! And we actually FUEL this recession much more than we think. What can we take away from this story?

How many times we confuse intelligence with good judgment?
Choose your advisors carefully but use your own judgment?
A person or an organization will survive forever, if they have the 5 Cs
* Character * Commitment * Conviction * Courtesy * Courage
The tragedy today is that there are many walking encyclopedias that are living failures.
The more practical and appropriate views on this economic recession is:
· This is the time to reunite together for any small or a big organization,
· This is the time to motivate and retain people which are the biggest asset,
· This is the time to show more commitments to the customers,
· This is the time show values of our company to the world,
· And this is the time to stand by our Nation".
· "People are as Happy as they decide to be"

Thursday, February 19, 2009

GOLD

I am writing this article on Gold after receiving many enquiries from investors on “Gold as new investment opportunity”. Gold is now trading around Rs 15,650 per 10 gram. Gold now suddenly caught the attention of herd investors when value investors are selling their holdings. Another classic Herd Mentality (Reliance Power IPO) is now on the cards.



Gold was traded below Rs 12,000 levels per 10 gram for more than 1 year but no investor asked me about gold as investment. Now Gold is trading in the above 15,500 zone but people are now asking me about investment opportunities in the gold and my opinion on the target of 30,000 levels. This incident once again illustrated the “Herd mentality” of investors. These people will never learn in their life about the “value of investment” and “Margin of safety”.

Not many people talked about Sensex and stock markets when it was traded below 14,000 till September, 2007. When Sensex crossed the levels of 18,000, many people started investments in the stocks on the hopes 30,000 Sensex levels. Sensex deceived investors by reaching 21,000 levels and everyone knew the rest of the story.

History of Gold as investment:

See the Gold price chart below to know about the less volatile rise of Gold as investment.



Chart courtesy: indiabullion.in

Gold is traditionally treated as safe investment in the difficult times. Big investors will treat this as “Safe Hedge” when equities are not yielding good returns and when dollar is weak. Same thing happened in 2003 when equities are in down turn for 3 consecutive years. These people will sell their hedge holdings like Gold and FMCG stocks once equities make bounce back. But Gold is safe hedge against inflation.

History of gold prices (in rupees):

1930: 180 per 10 gram
1940: 360 per 10 gram
1950: 1000 per 10 gram
1960: 1110 per 10 gram

1970: 1840 per 10 gram
1975: 5,400 per 10 gram

2000: 3,000 per 10 gram
2006: 5,400 per 10 gram

2009: 15,700 per 10 gram.

Gold surprisingly gave 300% returns from 1970 to 1975 when world suffered worst ever recession after great Depression. Will the history repeat? That is the reason behind current “Mad Gold rush”. But if you invested in the Gold in 1975, your investment gave negative returns for the next 25 years.




Remember 2 things:

1. Gold generally trades in the lower range around March and July. Generally, it is the best time to buy gold and marriage season is the best time to sell God.

2. Below 11,000, Gold is a safe investment but above 15,000- it is only for traders but not for investors.

Future of Gold:




When stock markets are in down turn in 2002, Gold was at Rs 5,400 per 10 gram. Don’t forget that Gold traded below 9,000 per 10 gram till 2007 means you might have got routine returns from Gold investment. But investors who made investments in gold in mid-2007 are now making 70% returns in just 20 months. But I don’t know what will happen to gold investors who bought it at above 15,000 but they remain in losses even after 3 years. Why? Gold will recede to 11,000 levels once equities make comeback. What happened to crude oil will repeat in case of gold also. Don’t forget that Gold is not even an essential commodity. But Gold is a less volatile investment.

Examples:

1. Crude oil prices moved to $147 per barrel and Goldman Sachs people gave $200 per barrel target. It is now trading below the fundamental price at $35 per barrel.

2. Sensex moved to 21,000 and analysts and analysts gave 30,000 target. It is now trading at 9,000 levels.

3. Real Estate prices reached astronomical levels in 2007 but people bought land as if there will be no land available for purchase in future.

Interesting analysis from Zaverat:

If you invested 10,000 in various investments in the early 1999, following are the yields by 2004.

1. Fixed Deposit: 13,794.

2. PPF: 16,025

3. Gold: 15,064

4. BSE Sensex: 20,769. Equities saw the worst bear market in this time zone but gave good returns. 10,000 invested in Sensex is still 10,000 by 2002 but 20,000 by 2004.

Gold may deceive investors for some more time but investors should ask themselves some basic investment questions before making fresh investments.




1. “What is the fundamental value of the investment whether it is a share, real estate or commodities like gold?”

2. Whether the price already included the good news or not?

3. Why analysts are giving bullish estimates? Is there any truth?

4. Are there any better value based investment opportunities?

5. What are the historical moments of that investment?

6. Are we late in joining the party?

7. What is the margin of safety at current price?

My estimate on Gold:

I don’t know what will happen to the Gold in the next few days due to these “Herd investments”. But Gold will trade below 12,000 levels even after 3 years. What it means that you will not get a single rupee from Gold investments at current valuations if you are a long term investor. If you are a trader, enjoy the mania. Young investors should allocate 5-10% of your portfolio to Gold and buy at reasonable prices.

Article on Gold From 4Ps:

4Ps magazine published an article on "How to plan investments for 2009-10?". Magazine published articles on various investment options like Stocks, Commodities, Gold, Real Estate and Currency.



Image courtesy: 4Ps.

Highlights of the article:

Warren Buffett: Gold is the most useless commoditiy.

Stat: Rs 100 invested in Gold in 1979 is Rs 400 in 2009.

Wednesday, February 18, 2009

picking up a stock

Dabur can be bought as as a stock for swing trading near the levels of Rs 90 with target of Rs 100 with stop loss of Rs 85.

4. Hero Honda is another stock for swing trading which can enable one to make money as the stock can be bought near the level of Rs 915-920 for the traget of Rs 970 with stop loss of Rs 905.


Tuesday, February 17, 2009

march-09 market lots

Annexure-1

List of underlying in which market lot is being revised downwards:
Sr No Underlying Symbol Present Market Lot Revised market Lot
1 Sterling Biotech Ltd STERLINBIO 2500 1250
2 Lupin Ltd LUPIN 700 350

Annexure-2

List of underlying in which market lot is being revised upwards:
S.No. Underlying Symbol Present Market Lot Revised Market Lot
1 3I Infotech Ltd. 3IINFOTECH 2700 10800
2 Aban Offshore Ltd. ABAN 50 400
3 ABB Ltd. ABB 250 500
4 ABG Shipyard Ltd. ABGSHIP 550 3300
5 Aditya Birla Nuvo Ltd. ABIRLANUVO 200 400
6 Associated Cement Co. Ltd. ACC 188 752
7 Adlabs Films Ltd. ADLABSFILM 225 1800
8 Akruti City Ltd. AKRUTI 300 600
9 Allahabad Bank ALBK 2450 4900
10 Alok Industries Ltd. ALOKTEXT 3350 20100
11 Ambuja Cements Ltd. AMBUJACEM 2062 4124
12 Amtek Auto Ltd. AMTEKAUTO 600 4800
13 Andhra Bank ANDHRABANK 2300 4600
14 Ansal Prop & Infra Ltd. ANSALINFRA 1300 10400
15 Alstom Projects India Ltd. APIL 200 1200
16 Aptech Ltd. APTECHT 650 3900
17 Arvind Ltd. ARVIND 4300 17200
18 Ashok Leyland Ltd. ASHOKLEY 4775 19100
19 Asian Paints Ltd. ASIANPAINT 200 400
20 Aurobindo Pharma Ltd. AUROPHARMA 700 2800
21 Axis Bank Ltd. AXISBANK 225 900
22 Bajaj Auto Ltd. BAJAJ-AUTO 200 800
23 Bajaj Hindustan Ltd. BAJAJHIND 950 5700
24 Bajaj Holdings & Investment Limited BAJAJHLDNG 250 1000
25 Balaji Telefilms Ltd. BALAJITELE 1250 5000
26 Ballarpur Industries Ltd. BALLARPUR 7300 14600
27 Balrampur Chini Mills Ltd. BALRAMCHIN 2400 9600
28 Bank of Baroda BANKBARODA 700 1400
29 Bank Nifty BANKNIFTY 25 50
30 Bata India Ltd. BATAINDIA 1050 4200
31 Bharat Electronics Ltd. BEL 138 552
32 Bharat Earth Movers Ltd. BEML 125 750
33 Bharat Forge Co Ltd. BHARATFORG 1000 4000
34 Bharti Airtel Ltd. BHARTIARTL 250 500
35 Bharat Heavy Electricals Ltd. BHEL 75 300
36 Bhushan Steel & Strips Ltd. BHUSANSTL 250 1000
37 Oswal Chem. & Fert. Ltd. BINDALAGRO 4950 29700
38 Biocon Ltd. BIOCON 900 3600
39 Birla Corporation Ltd. BIRLACORPN 850 3400
40 Bombay Dyeing & Mfg. Co Ltd. BOMDYEING 300 1800
41 Bongaigaon Refinery Ltd. BONGAIREFN 2250 9000
42 Bosch Limited BOSCHLTD 50 100
43 Bharat Petroleum Corporation Ltd. BPCL 550 1100
44 Bombay Rayon Fashions Ltd. BRFL 1150 2300
45 Brigade Enterprises Ltd. BRIGADE 550 5500
46 Cairn India Ltd. CAIRN 1250 2500
47 Canara Bank CANBK 800 1600
48 Central Bank of India CENTRALBK 2000 8000
49 Century Textiles Ltd. CENTURYTEX 212 1696
50 CESC Ltd. CESC 550 1100
51 Chambal Fertilizers Ltd. CHAMBLFERT 3450 6900
52 Chennai Petroleum Corporation Ltd. CHENNPETRO 900 3600
53 CMC Ltd. CMC 200 800
54 CNX 100 CNX100 50 100
55 CNX IT CNXIT 50 100
56 Container Corporation Of India Ltd. CONCOR 250 500
57 Core Projects And Technologies Ltd. COREPROTEC 750 6000
58 Corporation Bank CORPBANK 600 1200
59 Crompton Greaves Ltd. CROMPGREAV 500 2000
60 Cummins India Ltd. CUMMINSIND 475 1900
61 Develop Credit Bank Ltd. DCB 1400 14000
62 Deccan Chronicle Holdings Ltd. DCHL 1700 6800
63 Dena Bank DENABANK 2625 10500
64 Dish TV India Ltd. DISHTV 5150 20600
65 Divi's Laboratories Ltd. DIVISLAB 155 310
66 DLF Ltd. DLF 400 1600
67 Dr. Reddy's Laboratories Ltd. DRREDDY 400 800
68 Edelweiss Capital Ltd. EDELWEISS 250 1000
69 Educomp Solutions Ltd. EDUCOMP 75 150
70 Everest Kanto Cylinder Ltd. EKC 1000 2000
71 Escorts India Ltd. ESCORTS 2400 9600
72 Essar Oil Ltd. ESSAROIL 1412 2824
73 Everonn Systems India Ltd. EVERONN 400 800
74 Federal Bank Ltd. FEDERALBNK 851 1702
75 Financial Technologies (I) Ltd. FINANTECH 150 600
76 Firstsource Solutions Ltd. FSL 4750 19000
77 Gateway Distriparks Ltd. GDL 2500 5000
78 The Great Eastern Shipping Co. Ltd. GESHIP 600 2400
79 Gitanjali Gems Ltd. GITANJALI 500 4000
80 GMR Infrastructure Ltd. GMRINFRA 1250 5000
81 Gujarat Narmada Fertilizer Co. Ltd. GNFC 1475 5900
82 Grasim Industries Ltd. GRASIM 88 352
83 Gujarat State Petronet Ltd. GSPL 3050 12200
84 GTL Ltd. GTL 750 1500
85 GTL Infrastructure Ltd. GTLINFRA 4850 9700
86 Great Offshore Ltd. GTOFFSHORE 250 1000
87 Gujarat Alkalies & Chemicals Ltd. GUJALKALI 1400 5600
88 GVK Power & Infrastructure Ltd. GVKPIL 4750 19000
89 Havells India Ltd. HAVELLS 400 2400
90 Hindustan Construction Co. Ltd. HCC 1400 8400
91 HCL Infosystems Ltd. HCL-INSYS 1700 3400
92 HCL Technologies Ltd. HCLTECH 650 2600
93 Housing Development Finance Corporation Ltd. HDFC 75 150
94 HDFC Bank Ltd. HDFCBANK 200 400
95 Housing Development and Infrastructure Ltd. HDIL 516 3096
96 Hindalco Industries Ltd. HINDALCO 1759 7036
97 Hindustan Oil Exploration Ltd. HINDOILEXP 1600 6400
98 Hindustan Zinc Ltd. HINDZINC 250 1000
99 Hotel Leela Ventures Ltd. HOTELEELA 3750 15000
100 IBN18 Broadcast Ltd. IBN18 1250 2500
101 Indiabulls Real Estate Ltd. IBREALEST 650 2600
102 ICICI Bank Ltd. ICICIBANK 175 700
103 ICSA (India) Ltd. ICSA 600 2400
104 Industrial Development Bank of India Ltd. IDBI 1200 4800
105 Idea Cellular Ltd. IDEA 2700 5400
106 Infrastructure Development Finance Company Ltd. IDFC 1475 5900
107 IFCI Ltd. IFCI 1970 15760
108 Indian Hotels Co. Ltd. INDHOTEL 1899 7596
109 India Cements Ltd. INDIACEM 725 2900
110 India Infoline Ltd. INDIAINFO 1250 5000
111 Indian Bank INDIANB 1100 2200
112 Indusind Bank Ltd. INDUSINDBK 1925 7700
113 Indian Overseas Bank IOB 1475 5900
114 IRB Infrastructure Developers Ltd. IRB 1100 4400
115 Ispat Industries Ltd. ISPATIND 4150 24900
116 ITC Ltd. ITC 1125 2250
117 IVRCL Infrastructure & Projects Ltd. IVRCLINFRA 500 2000
118 IVR Prime Urban Developers Ltd. IVRPRIME 800 8000
119 The Jammu & Kashmir Bank Ltd. J&KBANK 300 1200
120 Jet Airways (India) Ltd. JETAIRWAYS 400 2400
121 Jindal Saw Ltd. JINDALSAW 250 1000
122 Jindal Steel & Power Ltd. JINDALSTEL 160 320
123 Jaiprakash Associates Ltd. JPASSOCIAT 750 4500
124 Jaiprakash Hydro-Power Ltd. JPHYDRO 3125 12500
125 JSL Ltd. JSL 1000 8000
126 JSW Steel Ltd. JSWSTEEL 275 1650
127 CNX NIFTY JUNIOR JUNIOR 25 100
128 Kesoram Industries Ltd. KESORAMIND 500 2000
129 Kingfisher Airlines Ltd. KFA 850 8500
130 Kotak Mahindra Bank Ltd. KOTAKBANK 275 1100
131 KSK Energy Ventures Limited KSK 850 1700
132 K S Oils Ltd. KSOILS 2950 5900
133 The Karnataka Bank Ltd. KTKBANK 1250 5000
134 Lakshmi Machines Ltd. LAXMIMACH 100 400
135 LIC Housing Finance Ltd. LICHSGFIN 850 1700
136 Lanco Infratech Ltd. LITL 425 2550
137 Larsen & Toubro Ltd. LT 100 400
138 Mahindra & Mahindra Ltd. M&M 312 1248
139 Mahindra Lifespace Developers Ltd. MAHLIFE 350 1400
140 Maharashtra Seamless Ltd. MAHSEAMLES 600 2400
141 Maruti Suzuki India Ltd. MARUTI 200 800
142 Matrix Laboratories Ltd. MATRIXLABS 1250 5000
143 United Spirits Ltd. MCDOWELL-N 125 250
144 Mindtree Ltd. MINDTREE 600 1200
145 Mercator Lines Ltd. MLL 2450 9800
146 Monnet Ispat Ltd. MONNETISPA 450 1800
147 Moser-Baer (I) Ltd. MOSERBAER 825 4950
148 Mphasis Ltd. MPHASIS 800 1600
149 MRF Ltd. MRF 100 200
150 Mangalore Refinery and Petrochemicals Ltd. MRPL 2225 8900
151 Mahanagar Telephone Nigam Ltd. MTNL 1600 3200
152 Nagarjuna Constrn. Co. Ltd. NAGARCONST 1000 4000
153 Nagarjuna Fertiliser & Chemicals Ltd. NAGARFERT 3500 21000
154 National Aluminium Co. Ltd. NATIONALUM 575 2300
155 Nava Bharat Ventures Ltd. NBVENTURES 800 3200
156 New Delhi Television Ltd. NDTV 550 3300
157 Network 18 Fincap Ltd. NETWORK18 500 2000
158 Neyveli Lignite Corporation Ltd. NEYVELILIG 1475 5900
159 Nifty Midcap 50 NFTYMCAP50 75 300
160 NIIT Ltd. NIITLTD 1450 8700
161 NIIT Technologies Ltd. NIITTECH 1200 4800
162 Noida Toll Bridge Company Ltd. NOIDATOLL 4100 16400
163 Oracle Financial Services Software Limited. OFSS 150 600
164 Oil & Natural Gas Corp. Ltd. ONGC 225 450
165 Opto Circuits (India) Ltd. OPTOCIRCUI 1020 4080
166 Orbit Corporation Ltd. ORBITCORP 750 6000
167 Orchid Chemicals Ltd. ORCHIDCHEM 1050 4200
168 Oriental Bank of Commerce ORIENTBANK 1200 2400
169 Pantaloon Retail (I) Ltd. PANTALOONR 850 1700
170 Parsvnath Developers Ltd. PARSVNATH 700 7000
171 Patel Engineering Ltd. PATELENG 250 2000
172 Patni Computer Systems Ltd. PATNI 650 2600
173 Peninsula Land Ltd. PENINLAND 2750 16500
174 Petronet LNG Ltd. PETRONET 2200 8800
175 Power Finance Corporation Ltd. PFC 1200 2400
176 Piramal Healthcare Ltd. PIRHEALTH 750 1500
177 Polaris Software Lab Ltd. POLARIS 2800 5600
178 Power Grid Corporation of India Ltd. POWERGRID 1925 3850
179 Praj Industries Ltd. PRAJIND 1100 4400
180 Prism Cement Ltd. PRISMCEM 5550 22200
181 PTC India Ltd. PTC 2350 4700
182 Punj Lloyd Ltd. PUNJLLOYD 750 1500
183 Puravankara Projects Ltd. PURVA 500 7000
184 Rajesh Exports Ltd. RAJESHEXPO 1650 9900
185 Ranbaxy Laboratories Ltd. RANBAXY 800 1600
186 Reliance Communications Ltd. RCOM 350 1400
187 Rural Electrification Corporation Ltd RECLTD 1950 3900
188 Reliance Capital Ltd. RELCAPITAL 138 552
189 Reliance Industries Ltd. RELIANCE 75 300
190 Reliance Infrastructure Ltd. RELINFRA 138 552
191 Reliance Industrial Infrastructure Ltd. RIIL 200 800
192 Reliance Natural Resource Ltd. RNRL 1788 7152
193 Rolta India Ltd. ROLTA 900 1800
194 Reliance Petroleum Ltd. RPL 1675 3350
195 Reliance Power Ltd. RPOWER 500 2000
196 Steel Authority of India Ltd. SAIL 1350 5400
197 Satyam Computer Services Ltd. SATYAMCOMP 600 1200
198 State Bank of India SBIN 132 264
199 Shipping Corporation of India Ltd. SCI 1200 4800
200 Sesa Goa Ltd. SESAGOA 1500 3000
201 Siemens Ltd. SIEMENS 376 1504
202 Sintex Industries Ltd. SINTEX 700 1400
203 S Kumars Nationwide Ltd. SKUMARSYNF 1900 11400
204 Sobha Developers Ltd. SOBHA 350 2800
205 SREI Infrastructure Finance Ltd. SREINTFIN 1750 7000
206 SRF Ltd. SRF 1500 3000
207 Strides Arcolab Ltd. STAR 850 3400
208 Sterlite Industries (I) Ltd. STER 219 876
209 Sterlite Technologies Ltd. STRTECH 1050 6300
210 Sun TV Network Ltd. SUNTV 1000 2000
211 Suzlon Energy Ltd. SUZLON 1000 6000
212 Syndicate Bank SYNDIBANK 1900 3800
213 Tata Chemicals Ltd. TATACHEM 675 2700
214 Tata Communications Ltd TATACOMM 525 1050
215 Tata Motors Ltd. TATAMOTORS 425 1700
216 Tata Power Co. Ltd. TATAPOWER 200 400
217 Tata Steel Ltd. TATASTEEL 382 1528
218 Tata Tea Ltd. TATATEA 275 550
219 Tata Consultancy Services Ltd. TCS 250 500
220 Tech Mahindra Ltd. TECHM 200 1200
221 Thermax Ltd. THERMAX 450 1800
222 Titan Industries Ltd. TITAN 206 412
223 Torrent Power Ltd. TORNTPOWER 1700 3400
224 Triveni Engg. & Inds. Ltd. TRIVENI 1925 7700
225 Tata Teleservices (M) Ltd. TTML 5225 10450
226 Tulip IT Services Ltd. TULIP 250 1000
227 Television Eighteen India Ltd. TV-18 850 3400
228 TVS Motor Company Ltd. TVSMOTOR 2950 11800
229 UCO Bank UCOBANK 5000 10000
230 Ultratech Cement Ltd. ULTRACEMCO 400 800
231 United Phosphorous Ltd. UNIPHOS 1400 2800
232 Unitech Ltd. UNITECH 900 9000
233 UTV Software Communications Ltd. UTVSOF 300 1200
234 Vijaya Bank VIJAYABANK 3450 6900
235 Voltamp Transformers Ltd. VOLTAMP 250 1000
236 Voltas Ltd. VOLTAS 900 5400
237 Walchandnagar Industries Ltd. WALCHANNAG 700 2800
238 Welspun Gujarat Stahl Rohren Ltd. WELGUJ 800 3200
239 Wipro Ltd. WIPRO 600 1200
240 Wockhardt Ltd. WOCKPHARMA 600 2400
241 Wire & Wireless (I) Ltd. WWIL 3150 25200
242 Yes Bank Ltd. YESBANK 1100 4400
243 Zee Entertainment Enterprises Ltd. ZEEL 700 2800

Thursday, February 5, 2009

SOUND FINANCIALS

What does it mean to be financially responsible? It's a complex question with a complex answer, but at its core is a simple truth: To be financially responsible, you need to live within your means. And to live within your means, you must spend less than you make!

Credit cards and debt
Sorry - if you're really looking to be financially responsible, just being able to make your credit card payment doesn't cut it. In fact, the fact that you have a credit card payment at all and aren't able to pay your balance in full shows that you already spend more than you earn. Responsible use of a credit means paying the balance on your account in full each month.

And (this part will hurt) credit cards should be used for convenience, not to make ends meet. Credit cards are handy because they eliminate the need to carry cash - you can even generate reward points. And credit cards can be very helpful in an emergency. That said, if an emergency does force you to carry a balance on your card, living in a financially responsible manner means curbing your spending until that balance is paid off.

The same logic applies to all recurring payments that involve paying interest. Think about: Paying interest on anything means that you are spending more for that item than the purchase price. Does that sound like the most responsible choice, or just the most convenient? When the interest payments are factored in to the purchase price, you are spending more to obtain the item than even the item's manufacturer thought it was worth.

As such, avoiding paying interest on anything should be a major objective. Of course, when it comes to the cost of housing and transportation, avoiding interest is almost impossible for most of us. In such situations, minimizing the amount you spend in interest each month is the most responsible action.

Acting in your own best interest
For many people, cutting down on interest and borrowing is easier said than done, but in practice, it really comes down to knowing the difference between necessities and luxuries. For example, you might need a car, but you don't need a luxury sedan and, unless you can afford to pay for it in cash, you shouldn't be driving one.

Likewise, you might need a place to live, but you don't need a mansion. And, although most of us must have a mortgage in order to afford a home, purchasing a home in a financially responsible manner means that you should purchase one that won't break the bank.

In financial terms, this means it shouldn't cost more than two or 2.5- times your yearly income. Another healthy estimate is that your monthly mortgage payment should not cost more than 30 per cent of your monthly take-home pay.

In addition to avoiding overspending on your home purchase, you should make a down payment that is large enough to eliminate the requirement of having to pay for private mortgage insurance. If you can't afford to meet these purchasing guidelines, rent until you can afford to buy.

Paying yourself first
Spending every dime that you earn is simply irresponsible unless you have a massive trust fund that is so flush with cash that you will never outlive the earnings. For most people, especially those of us hoping to retire someday, saving is an activity that must be taken seriously.

A great way to do this is when you get your paycheck - and before you pay your bills - pay yourself first. A good goal to save is 10 per cent.

When it comes to saving, investing in the stock market might be the most profitable choice available. Sure, investing involves risk, but taking calculated risks is sometimes a necessity. The responsible way to go about it is to have a plan.

Start by examining asset allocation strategies to learn how to choose the right mix of securities for your investing strategy. From there, contribute to your employer-sponsored savings plan if such a plan is available. Most plans offer to match your contributions up to a certain percentage, so by contributing at least enough to get the match, you earn a guaranteed return on your investment.

If your finances permit, maximize your tax-deferred savings opportunities by contributing the full amount that the plan allows. After you've started investing, monitor the progress that you are making toward your goals and rebalance you portfolio as necessary to remain on track.

Emergency fund
Financial responsibility means being prepared for the unexpected. Most experts agree that you need to be able to support yourself financially for at least six months without an income. If you are married and used to living on dual incomes, this means being able to pay the necessary bills such as the mortgage, food and utilities on one income - or even neither income!

If a missed paycheck would ruin you financially, it's time to create an financial escape hatch to prevent this.

Don't worry about the neighbours
Financial responsibly means doing what you have to do to take care of your needs and the needs of your family. To make this happen, your focus should be internal. The neighbors aren't paying your bills, so their spending habits shouldn't dictate yours or set the bar for your standard of living.

Budgeting
Having a budget is one the core pillars of financial responsibility. You should know where your money is going. Business owners know the importance of understanding their cash flows and balance sheets; as a result, no successful business exists without a budget. Neither should you.

A very personal definition
Does being financially responsible mean that you have to scrimp and save? Maybe, but only if that is what it takes to live within your means. On the other hand, if you are the Sultan of Brunei, you may easily be able to afford a jet, a mega-yacht, a mansion in the South of France and a few palaces.

Although those of us with lesser means might frown on this extravagance, it shouldn't be confused with a lack of financial responsibility. After all, there's nothing irresponsible about buying things you can afford to pay for.

Arriving at 'responsible'
Ultimately, financial responsibility means living within your means, regardless of the level of those means. So take a close look at your financial situation, evaluate you earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.