Do you know what numismatics really is?

Numismatics is the study or collection of currency, including coins, tokens, paper money and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the exchange of goods. A broader study like a particular country’s cultural background, history, language and other major information. Coins are one of the most important sources of information from which archaeologists and historians can try to interpret the past. This is partly because, unlike most other ancient artefacts, they are often stamped with words and images. It is also because they are hard-wearing and survive in large numbers.

Coin collecting is one of the oldest hobbies in the world. There are many facts of numismatics but I would like to share 5 which I believe is worth sharing:

  1. The first city in the world to mint its own gold coins was Florence,
    situated in Italy. This significant event took place in 1252.
  2. In Britain, the oldest Roman coin was found which was about 2,224
    years old. This coin was minted in 211 BC. On one side of the coin,
    there is the image of Goddess Roma while the other side has the image of mythical twin horses Pollux and Castor
  3. In ancient India, cowrie shells were used as an important economic tool instead of coins. These had great value at that time. In fact, Veda has the earliest reference of coins in India.
  4. The largest numismatic organization in the world is “American
    Numismatic Association” was founded in 1891. This Association has the largest circulating numismatic material in the world. Its headquarters includes the “World Money Museum”.
  5. During the rule of Ming dynasty, China issued the largest currency note in the world. In 1917, Romania issued the smallest banknote in
    the world.

I would like to compare by sharing a few differences of what actually a numismatist is and what a few collectors do in this vast hobby. Let me start by talking about myself. When I started in 1997, I started off with stamps and the love for them started off due to the beautiful designs and colours on them that attracted me towards it. And then when I left India and went abroad, in 2001 there the love for coins started and then banknotes thereafter, having the same reason but the twist was i was curious about knowing about the history of why such and such note was made and what was the reason behind it the history etc., I started to buy books on them to learn more and found a very deep history behind this ast hobby. And that was the secret of my interest in this hobby.

Unlike the current generation collectors’ most of them collect just for the sake of the looks or interest but they do not go in details or at least the stick to one particular form like just let’s say the local country banknotes nothing more than that, so their information and knowledge is limited to that level.
Therefore, I would like to conclude by saying that no numismatist is an expert in all the felids of this vast hobby, but if they are focusing on one particular area, they must gain more and more knowledge on that particular chosen area of interest. There are different types of numismatists in the world.

My suggestion would be for young/future numismatists to first choose
an area that interests you the most and makes a deep study about it by
reading relevant authentic books, attending exhibitions, coordinate with experts, go through blogs and have a collection of your own.

All the best!

Courtesy: Sulaiman Sameeh

SIP or Lumpsum? The question will stay forever.

SIP stands for Systematic Investment Plan where you invest in an equity fund at regular intervals of time. Lumpsum stands for investing the entire sum you planned to invest in one go. Let’s look at both the options.

If you are new in the market and do not know when to enter (remember that in the market, timings are what matters most), SIP is usually the course taken by most people. Why?M

1.Minimizes the risk

Let’s assume you invested Rs. 10,000 during the peaks of the market and the next day market goes down by 30%, you have already lost Rs. 3000.  Consider a SIP where you invested Rs 5000 during the beginning of the first month and another Rs. 5000 in another month.  The market went down by 30% in the first month and recovered by 10% during the second month.  This makes your investment amounting to Rs. 3500 at the end of the first month but Rs. 5500 during the second. Taken for two months, investing in lump sum amounted to the total balance of Rs. 7700 at the end of two months while through SIP, it was Rs. 9000.

2. Help you take advantage of the market

Sometimes when you buy, the market is weak and hence you can buy more stocks at low prices and in times when the market is strong, you might be able to buy less for more.  This is what SIP takes advantage of and however hard we try, the one thing that somebody cannot time accurately is market.  Certainly, some prediction can be made, but nobody can take care of all the endless things that can suddenly change the weather in the markets. SIP is a smart way of taking advantage of these golden times.  This is also called rupee-cost averaging much for the same reason explained above.

3. Makes you a saver

Taken a chunk of your hard earned money every month and putting it up for investment that could otherwise have bought you a delicious pizza is hard but yes, if you go for a SIP, it just gets done on fixed dates.  The fund manager takes the share it owes making you a habitual saver.

But the choice of SIP over lump sum is more of a psychological choice than the return for investments.   People who would have invested lump sum during the times when the market was falling and finally crashed, they would be wary of taking such a risk again.  But, eclipses are not an everyday event.

Consider an example.  Let’s say Mr A has Rs. 4, 00, 000 to invest.  Similarly, Mr B also wants to invest Rs. 4,00,000. Mr A put his money into the equity fund a lump sum with an average return of 15%.  His invested capital at the end of 4 years would be 7 Lakh. Mr B, however, puts his money into the equity fund as SIP, investing 1 lakh every year.  His return at the end of four years would be 5.74 lakh invested at the same average rate of interest.

In market essentially, it more about the time that the money stays invested which decide the returns.  In lump sum, 4 lakhs was invested for entire 4 years that generated 7 lakhs.  In SIP, 1 lakh was invested for 4 years, another 1 lakhs for 3 years, and other 1 lakh for 2 years and the remaining sum for 1 year pulling down the overall return on investment.

Though this is a never-ending discussion, choice of SIP over lumpsum is essentially about the financial choices of the individual.  If I am not sure of the total balance in my bank account every month, SIP is out of the question while if I am a not so rich with a large capital at hand, the lump sum is out of the question.

Return is obviously subject to the volatilities of the market but the longer you stay invested; the more returns you can expect.  SIP and lumpsum both are good means of investing your capital in markets, your choice depending on the amount of capital in your hand, the time for which that capital won’t be needed to meet your emergency needs and the degree of risk you can afford with your money.

Important note: As per the performance statistics of the leading long term equity mutual funds like Axis long term equity fund or Principal hybrid fund, for example, the return for lump sum over the period of 3 to 5 years are higher than those for SIP.

How do financial institutions help economies?

As promised in the past articles, I will first brief you about the need for financial intermediaries in the system and then a throw little light on how economies and financial institutions linked.

When savers have extra money to lend, it is hard for them to figure out the right borrower and the one meeting their needs, among the huge crowd available in the market.  It is also important for savers to check the background and financial health of the lenders in order to make sure they will be able to pay back the money.  Similarly, it is also crucial for savers to keep monitoring the condition of their invested value and regularly keep an eye on the borrowers.  Lenders do not usually have the time and resources to do it efficiency and that is when financial intermediaries come into the picture.

Consider for example banks. How do you think they pay you interest over investments?  You pay them certain among of money in return for a fixed rate of return. They then lend that money to somebody else, in the form of loans in return for some rate of return (usually higher than they owe you) and then pay you the part they owe, keeping the remaining themselves.  Insurance companies are other examples.  Insured person money goes to somebody who is willing to take up the future risks and they use this money to invest in financial markets expecting more returns than the probable risks from the insured person.

In the situation where finances are scarce, individuals are forced to make a choice. A certain sum of money that they hold could either for used for buying a house, or a car or a take an abroad trip for example. This competition for resources is important to ensure that the limited resources are used wisely.

Consider for example capitalist markets.  There some business holds all the power to decide what products will go the market and what prices would be paid by the customers.  On the other hand are democratic economies where multiple businesses compete with each other for similar products.  Let us take the example of soap.   There is Dove, Dettol, Cinthol,  Medimix and a number of others and all are priced very close.  Similar is the case for toothpaste and for that matter any other product.  Ever wondered why Lays and Uncle chips sell at the same price? Same products competing in the markets cannot afford to be priced higher from the other until they hold a significant advantage. This competition to be the choice of customers fosters creativity in the market and also drives down prices.  Now when businesses like these are expanding and need capital, they approach the markets for funds.  Here savers play a crucial role,

  1. They invest in businesses that have good financial history, good client base and excellent upper management. This benefits the economy as the growing big businesses could mean increasing employment, increasing variety of products to the customers, and improved quality at the best price.
  2. Some risk-takers invest in businesses that have the potential to become big through the potential in their ideas.  Some of these businesses might be trying to expand in the territory of existing businesses.  This fosters competition, which improves efficiency and drives down prices. 
  3. Savers have financial intermediaries in the system to choose the right borrower for them by using their comprehensive research database and in house skilled team of professional experts in these kinds of analytics. This ensures that resources used by individual savers in finding the right borrower are saved and they can be used for their best use.
  4. Investment industry packages the relevant information about borrowers together making it easier for lenders to give money. This hassle-free and transparent approach builds confidence in the savers and makes them more willing to participate in the markets.
  5. Investment industry also helps investors with liquidity.  It is difficult to sell land or a house immediately at your desired price in the time of need but if you have shares of actively traded companies, you can share fairly large of shares without compromising with your returns.  

Ultimately, the investment industry essentially exists as the point of connection for buyers and lenders, with regulations and systems in place. This confidence in system security and credibility helps lenders enter and actively participate in the market, crucial for the economy to grow.

Ten things that make an organization successful.

Apologies for going a little off track! I thought that business can’t grow without a strong value culture. Forget about investment and wealth creation and finances, nothing is possible without the backing of strong organizations which stand on the shoulders of excellent employees.

The ten things listed below are crucial for a company to be successful, survive long and create an image where people dream to be a part of it.

Team-working is promoted

There are companies where one project one person approach is followed with the perspective that more people mean more projects and faster work results. On the other hand is a company where each project has a team, however small or big is the project. Problems with the single person handling every aspect of a project are:

  • Competencies of a person vary and the only person handling a project might not be good at all.
  • There is nobody to correct and suggest improvements.
  • Limited learning, no knowledge transfer.
  • Unnecessary dependencies and therefore work delays.
  • Internal destructive competition in the team to prove themselves better.

When only one person looks after the project or a problem, the credit or discredit goes to one person and this internally divides the team. The progress of one project is ultimately the success or failure of the single person handling it and this creates a feeling of competition between the members of the same department. Working in groups or teams ensures that everybody is helped by everybody else to successfully conclude a project in the interest of the company to which they all belong. It also encourages productive discussion between the team members over lunch/dinners and helps to build a healthy relationship. Working in teams develop a culture of mutual responsibility and this eliminates people questioning each other in difficult times.

Have strong managers

In successful organizations, the people leading the team are problem solvers, approachable, friendly and dedicated to creating a healthy culture in the team. Managers are people employees look forward to when they are stuck in a problem and are expected to offer smart solutions. They trust their teams and open to accepting that their team members could be smarter than they are. They don’t gossip about their team at their back and take accountability for their actions. They share credits and help team trust each other and prevent internal dissension.

Employees are heard of

In a successful organization, employees are not scared to speak. Whoever might be the person in question, successful organizations ensure that anything in the good of the organization is heard of. Be it about managers, team leaders, directors’, flaws in the system or anything for that matter, employees aren’t insecure to speak. Good organizations understand that people at any level are working for the company and not for the people belonging to that company. Everybody in the company holds equal powers with varying responsibilities and this is developed in the culture of the company.

Employees feel secured and valued

In a successful organization, an employee works because they want to and not because they have in order to survive. Good organizations provide freedom to employees. Their experience and contribution to the company are valued and they are not disparaged when another person competent to take up their responsibilities is hired by the company. Employee work as the time demands and they need not appear to be busy to be valued. The good organization ensures trustworthiness and openness in culture. Even after an employee leaves, their transition is ensured to be smooth and they are waved goodbye respectfully and thanked for their contribution to the company.

An organization pays the employee for the time taken from him. No organization can pay an employee for the value added to the company and the benefits it reaps from it several decades after the employee is not there to serve the company. This notion is respected by successful companies.

Ideas win over politics or titles

In good organizations, ideas win over politics. Politics spoiling or masking the ideas from the introverts in the company are taken care of. Good organizations ensure transparency in the transfer of information and that bad politics do not spoil the culture of the company. Rising up the ladder in such an organization is based on the ideas and competencies.

Lower level workers are made to feel important

No organization can succeed if the people at the lower level stops working and therefore needs to be given the top priority. Whether they are people in the shop floor, sweepers, watchmen, pantry boys, production workers or laboratory workers, good organizations understand that they are the real assets of the company. It’s their sweat and blood that helps company meets its targets whether directly or directly and they deserve that respect.

Organizations where they are made to feel they are different and less important from people earning higher salaries rarely rise the ladder. No organization can earn a penny if these people stop working. Successful organizations understand their contribution and give them the respect and consideration they deserve.

Valuable employees are retained

Good organization ensure that the best brains of the company are retained. A good employee working for another organization is ultimately a competition to the company and they understand that. Strong managers ensure that the best brains are kept engaged. Every valuable employee leaving the company pushes it back by several years. Every new hire needs to be trained and will take around a year to fit and understand the culture and work-style of the company. By the time they fit, they leave the company and the cycle repeats making bad organization investing more time in hiring and training new hires than investing in retaining and development of their old employees considerably saving on time and money.

Micro-management is absent

Successful organization hire the best fit for the role and they understand that every person has their own work style. If an employee needs to be managed, you have probably made a wrong hire. An employee who can’t manage them self can’t be expected to manage anything else. Managers ensure that they hire people who are enthusiastic and take responsibility, keep them engaged and motivated, peep-in when they are asked to and give their teams freedom to decide, give a practical deadline and invest in employee growth and development. Micro-managing puts off the valuable employee, suggests a lack of trust and mars productivity and zeal. Successful organizations ensure that employees learn to manage their work with the help of their managers rather than managers controlling their time and work.

Right people are hired

Successful organization hire the right people. As famously said by Steve Jobs, “It doesn’t make sense to hire smart people and tell them what to do. It makes sense to hire a smart person and let them tell you what needs to be done”. An organization is nothing but its employees. An organization consisting of bad employees and weak brains is a higher cost to the company than hiring great employees, smarter brains and paying more. Ultimately, this sets the baseline for the company and the cycle goes on. The cost saved on hiring an incompetent employee, training and managing them periodically, investing time to get the work done is equivalent to hiring a smart person, paying more and saving on these auxiliary costs. Successful organizations are good at these cost-benefit analyses and know that a strong employee base ultimately turns into a strong company.

Knows that all the above are important

A successful organization know that to be competent means all the above are taken due care of.

These are things I learned from my own experience working in the industry for a year now. So, are you working for a strong organization? Let me know in comments. Do tell me if I missed something!

Mutual funds! Sahi hai?

This is, in fact, a significant question to ask and the article aims to throw light on the various factors that make people invest in mutual funds. Of course, nobody trusts anybody easily when it comes to money and this is about giving a large sum of money to somebody for investing on your behalf. My God! It needs careful thought.

With the growing number of mutual funds in the market due to the rising number of people finding it attractive, it is difficult for a beginner to make a choice.  Yes, you can consult magazines and check online investment websites, but as an entrant new to the investment world, it is not an easy game to understand it all. Let us discuss the various factors that influence the investor’s decision,

  • Returns and the associated risk

No doubts, investing in markets are one of the best ways of maximizing the return on investment.  But most people lack the expertise needed to choose their investment portfolio for themselves and do not always have enough capital to diversity it enough to minimize the risks possible. That is when mutual funds make the weather so convenient. Somebody smarter than you collect the money from all the interested investors and invests it in multiple companies, in multiple kinds of the sector and across a wide range of securities. People with limited income especially find mutual funds attractive rather than entering directly into the market.

  • Educational qualification

Research shows that people who are educated tend to favour investing in mutual funds.  It suggests that as the people become more aware, they tend to be more inclined towards mutual fund investment compared to people who aren’t educated enough. For the latter, the mutual fund is an especially risky avenue for savings appreciation.

  • Lack of time

Close to 95 million people are investing in mutual funds as per the latest data. Statistics show that people, even when they know about markets, prefer investing in mutual funds for the convenience it offers.  It takes away the hassle of regularly monitoring your investments. It is an easy route to higher than bank and fixed deposit returns, saves a lot of time and a lot of worries.

  • Tax benefits

A lot of mutual funds offer a tax benefit to people under section 80C. This makes it an attractive proposition for a lot of people.  Taken effectively, the return on a good mutual fund can exceed CAGR 25% if the income saved in taxes is accounted too.

  • Transparency

While mutual funds make you carefree since your funds are in the hands of an expert managing your investment portfolio, you get regular updates on its performance with details of all the sectors and companies that the funds have large holdings.  This makes thing transparent and anytime the fund doesn’t meet the expectations, the investor is free to withdraw its money (mutual funds usually have high liquidity) and put it into a different fund. It’s as easy as that!

  • Other factors

Research shows that males have a higher tendency to invest in mutual funds.  Married females have a higher tendency to invest in funds as compared to males.  Mutual funds also have less transactional costs as compared to when the individual stocks are traded.  All the factors combined to increase the tendency of people to invest in mutual funds and this is probably the reason that while it originally started in States, this has been so popularized in India and a growing number of Indians now have their money multiplying in the hands of various fund managers.

VISION 2020 – What do the Malaysian banknotes say about it?

The third series of Malaysian banknotes are released by the Bank Negara Malaysia (BNM) to raise awareness about a transformation plan called Vision 2020.

Before I share a brief history of Malaysian banknotes, let’s look at what does the pictures on the banknotes signify. Colours and pictures on the banknotes are not meant to enhance its beauty and make it more appealing. They carry with them a meaning and a purpose in the greater sense of the nation. The pictures are carefully chosen to educate, inform and promote the nationalism among the people. The overall appeal of the banknotes is carefully crafted to instigate the emotional side of the nationals to their country, signifying their belonging to their nation and evoking the feeling of self-sacrifice and loyalty.

The first series of Malaysian banknotes were released in 1967 and they featured the portrait of Yang Di-Pertuan Agong(it means the supreme head or the head of the state of Malaysia) on the front and Kijang Emas (the official gold coin of Malaysia) on the back.  They were based on the geometric concept. Another series, the second series was released in 1982 with the banknotes featuring artefacts (traditional ornaments) and national heritage on the front and back while it retained the photo of Yang Di Pertuan Agong. The third series of banknotes were issued in 1996 which convey the idea of Vision 2020 in the form of pictures. The notes featured images of tourism in RM1, telecommunication in RM2, transportation in RM10, oil and gas in RM50 and car production in RM100.

The visuals on the third series signify the journey of Malaysia from a developing to a developed country. The third series also has the image of Yang Di Pertuan Agong and the BNM logo but as opposed to first and second series, it has introduced Jawi script on the back side.

Another important and interesting thing about the third series is the use of ‘RM’ as against ‘$’ signifying Malaysia’s economic liberty and its appeal as establishing itself as an independent currency.

Appointment of Dr Zeti Aktar as the governor of BNM symbolizes the achievement of women of the Malaysian nation. The images of car vision on the banknotes come from the vision of Dr Mahathir Mohamad, Prime Minister of Malaysia, who aims to transform it into an industrialized nation.

What you need to know about Network Marketing?

This is coming from my recent reading, “Business for the 21st century”.  This is aimed at giving a summary of what the book suggests. Interested readers,‘Go on’.  For the rest, ‘Sorry to disturb you man’.

Robert Kiyosaki is one of the few people I really admire. Be it his ‘Rich Dad’ series or other books on business, none fails in communicating his passion and perseverance for his job.

According to him, each person falls into one of the following four quadrants,

  1. Employed: It denotes somebody like me working at a respectable company earning a monthly income and saving some part of it.
  2. Self-employed: It could mean a freelancer who is not really working for another company but for himself. This means that now his boss is his own self.
  3. Businessman: These are people who do business.  The difference between businessman and self-employed is small. A businessman has power over his source of income and it keeps coming even when he is working or sleeping (of course after a certain stage). For a self-employed person, the income stops as he does.
  4. Investor: This is a person who invests his earnings in order to get maximum return on his investments.

Each person has a mindset which makes him do what he does. An employee is a person who aims for security, self-employed people aim for independence, businessman aim for wealth building and investor aim for financial freedom. Wealthy and being rich do not mean the same thing. Being rich means owing a lot of money but being wealthy means owning enough that you live to the standard you aim to, till the date you want to without worrying about going to work.  Not every wealthy person is rich and not all rich people are wealthy.

Robert then shares what it takes to be an entrepreneur.  As he says, “It takes courage to discover, develop and donate your genius to the world”.  As per the statistics he shared, “It takes approximately $5 million to build a business, 90% of which fail in the first few years and every new business takes at least 5-10 years before the founder receives his first paycheck”. Phew! That’s asking too much.

What if I say that you do not need to start from scratch? The groundwork is already done for you. This is what network marketing exactly does. What do you think of an advertisement where one person sipping tea asks her neighbour to take that tea daily for good health? What happens when somebody comes to you for recommending a good toothpaste brand and you say ‘Colgate’ and then that person recommends the same to his friend who then shares it with somebody else initiating a chain reaction (as per any chemistry guy)? In terms of Robert, it’s called ‘Metcalfe law’, the power of multiplication.  You share something with 2 people and if they do it exactly the same way and this process goes on say for 10 times. There are already 1024 people who know about now. Whoa! It is quite a good number.

This is called network marketing.  Every advertisement where one person is recommending something to another person is trying to do just that.  ‘Why pay commercials such huge money?’ thought some smart businesses.  Why not distribute the money among people and let them do on the floor what they are trying to communicate through televisions? This gave birth to network marketing.

Network marketing as everybody things is not selling things. It is developing a network of people who share your ideas and values and trust in something with as much passion as you do. In network marketing, you are the source of contact for somebody interested to know about that thing. You represent that thing and most important of all, you believe in it.

Network marketing as Robert says is not a salesman job.  It is not a job where greedy could survive and it is not a job where ‘I can do it alone’ people can win the game. It’s the business for people who love talking, who love sharing and telling stories and who like people to grow with them.  More than above, Robert shares the eight assets you earn in the process of involving yourself into this business.  They are,

Asset 1: A Real-World Business Education: Mukesh Ambani dropped out of business school because his father told him that it’s not science. If he has to learn the business, he has to be in the playground.  This is what network marketing do. It provides you with real-world business education right as you pitch into this business.  No kidding, this like any other business needs a lot of time and effort to be successful.

Asset 2: A Profitable Path of Personal Development: Do you shy about talking to people, failing or hearing people saying ‘No’? This business is then exactly for you.  To be successful in this business, you have to be outgoing, an excellent communicator, a storyteller and a person who rejoins in rejections and learns in failures.

Asset 3: A Circle of Friends Who Share Your Dreams and Values:  It is an excellent opportunity to circle yourself with people who share your vision.  As Robert says in his book, you are the sum of the people who surround yourself with. 

Asset 4: The Power of Your Own Network:  In terms of Robert, “The power is not in the product, the power is the network”. An excerpt from books puts it perfectly, ‘

From the shipping magnates and railroad barons to Sam Walton, Bill Gates, and Jeff Bezos, the great fortunes of the world have been made by those who figured out how to build networks. Sam Walton didn’t manufacture goods for people; he built the distribution network that delivers the goods. Bill Gates didn’t build computers; he built the operating system that ran on those computers. Jeff Bezos didn’t go into publishing books; he created the online network Amazon that delivers those books.’

Asset 5: A Duplicable, Fully Scalable Business:  Why can’t salesman be excellent network marketers? They do not know how to replicate themselves in the other person.  This is the beauty of network marketing.  You can replicate yourself innumerable times in terms of your network.  McDonald’s did not seek people with a high level of expertise.  Instead, it developed the expertise right into the operation and in this way replicated itself so much that it is now present in 120 countries with more than 30000 restaurants worldwide serving more than 60 million people every day. This is the power of duplicity and scalability.

Asset 6: Incomparable Leadership Skills: More than above, it is not a business where you are earning and growing yourself.  It’s a business where your job is to help others grow and learn every day, be a teacher to your network and therefore build leaders for the growing network.

Asset 7: A Mechanism for Genuine Wealth: As you grow your network, so you grow you’re earning and as you earn and reinvest, earn and reinvest, you are building wealth.  This wealth, after you have built your network, will not depend if you are on office or a vacation, sleeping or playing baseball, the money keeps coming.  This is the power of genuine wealth creation. 

Asset 8: Big Dreams and the Capacity to Live Them: And yes, if you have all the above, you will have time to live your dreams and be free of the scary mornings where you brush up, go to the office, come home, sleep and again do the same things.  You will then go office because you want to and not because you have to.

I am not a promoter of network marketing business nor do I own one myself.  The idea of sharing it is the revolutionary shift in the culture where people step on each other to rise up the success ladder.  In this business, you will fall right on your back with this attitude. You can only grow together which makes it so great.

An overview of Investments

Financial industry as you know exists because on the one side of dice are people who are in need of money and on the other are a set of people who have money to offer. The financial industry acts as a pipeline connecting the two sides.  People need money to grow their business, purchase house, car and provide education to their children. People offer money because they have a surplus.  There are savers and then there are spenders. The role of the financial industry is to match the perfect spender with a suitable kind of saver.

Let’s take an example.  Sanjay is a young entrepreneur who just started an organic juice corner.  He needs money to buy machinery and hire people.  There is another person named, Rajni who has a lot of capital but is looking for attracting investment options to spend.  Organic juice to Rajni sounds like an interesting idea as the growing number of people is going crazy over healthy diets.  Rajni thinks if successful, this business can offer her huge returns on her invested capital.  She, therefore, lends Sanjay a fraction of her savings.

People usually invest money (mind you I said invest and not spend), to accumulate assets. What are assets? Assets are things that have value. They could be real assets or financial assets.

Real assets: Something like land, machinery and gold is called a real asset which you can later sell for a price typically higher than what you purchased it for.

Financial assets: They vary in type but they are usually paper assets.  Let’s say you own a share of a company. That means you own a part of the company’s assets and earnings.   This kind of an asset is called a financial asset.

Why would somebody consider some business to be a financial asset? Most of the times people invest in companies they expect will thrive and therefore multiply their money in terms of a share in the increasing profits of the company over the period of time.  The above example answers that.

Some financial assets can be traded. These assets are called as Securities.  The place where these assets are traded is called financial markets.  Trading can be done directly or through means of an intermediary.

Securities are broadly categorized as:

Bonds:  This is where the saver lends the spender a loan. They are therefore also known as debt securities. In return, the saver wants the spender to pay some interest on the lend money which earns a consistent profit to the saver.  Since the interest is fixed, the return for such kind of securities is fixed. They are therefore called fixed income securities

Equity: They are the share that you own in a company.  Let’s say I am confident that Nestle will do wonders in the coming years and therefore I invested a fraction of my money in Nestle.  High side,  there is no bar to the profits I can make as long as the company continue to excel and make huge profits, Downside, nobody is responsible for my money and if the company closes the next day of my investment, all my hard earned money is gone.

Interesting? Isn’t it!

So the next question is, are you accumulating assets with your hobby every day? Each coin or banknote that I own is worth a good sum of money today and as the time pass, this asset value is only going to shoot up. So yes, my hobby is accumulating my assets.

A question to all my numismatic friends here; is your asset a real or a financial asset? Looking forward to the answer in your comments below!

Next time we will see why we have financial intermediaries in the system.

The Largest Banknote


We discussed the world’s first largest banknote in the previous article. Let us share about the largest banknote of today’s time. RM600 measuring 370 by 220 mm holds the record for world’s largest commemorative banknote ever issued in the history of banknotes.

Bank Negara Malaysia issued RM600 in conjunction with the 60th Anniversary of the Signing of the Federation of Malaya Independence Agreement. This commemorative banknote was launched by His Majesty Seri Paduka Baginda Yang di-Pertuan Agong XV Sultan Muhammad V at the Museum and Art Gallery, Sasana Kijang, Bank Negara Malaysia, Kuala Lumpur. This banknote commemorates the 60th Anniversary of the Federation of Malaya Independence Agreement signing in the year 1957. 

The observe of the banknote symbolises Malaysia as a constitutional monarchy, placed in the middle is the majestic royal throne encircled by the portraits of 15 Yang di-Pertuan Agong who have reigned from 1957 till the present day. 

The reverse of the banknote features Portraits of the nine rulers signing the Federation of Malaya Independence Agreement, the silhouette of Tunku Abdul Rahman Putra Al-Haj, National Palace, Perdana Putra, Parliament building and Palace of Justice. These reflect the four pillars of the nation: the institution of the Monarchy, the Executive, the Legislature and the Judiciary respectively.

Only 6000 pieces were printed and were put to sale for 1100 ringgit more than it’s face value. The note was released for sale on 29 December 2017 along with RM60 and Uncut 3-in-1 RM60, all three at a premium. The picture of the Uncut sheet is attached for your reference.

RM60 has the same design as that of RM 600, the only difference being in their sizes measuring 162 by 84 mm. 60,000 pieces were printed and were sold for RM120 each. 

The First Largest Banknote

100,000 Philippine pesos

When we talk of largest, we could obviously be talking of the size or dimension of something. Yes! We are talking of the largest banknote of the world ever issued by any country. Banknote by nature tend to be of  pocket friendly size for the ease of storing and carrying it in our pockets. These large sized banknotes are intended as a commemoration specially issued in limited quantities for a limited time to honor or feature someone or something. And so it follows that the world’s largest banknote are not intended for practical everyday use.

This banknote is slightly larger than the A-4 sized sheet of a legal paper having dimensions of 22 cm by 33 cm printed by the Philippine government in 1998 is claimed to be the largest piece of paper money in the world. It was issued by Bangko Sentral ng Pilipinas to commemorate the 100 years of Philippine independence from Spanish rule in year 1998.  

The observe of the banknote features “Sigaw ng Himagsikan”, a scene that brings to mind the struggle for independence and the cry of defiance against Spanish tyranny by Andres Bonifacio and his Katipunero on 24 August 1896.

The reverse of the banknote features the glorious and triumphant scene of the Proclamation of the Philippine Independence by Gen. Emilio Aguinaldo on 12 June 1898 in Kawit, Cavite. It was on this occasion that the Philippine flag, made by Marcela Agoncillo, was unfurled while the national anthem, composed by Julian Felipe, was played.

Only 1000 pieces were printed and was put to sale for 80,000 pesos more than it’s face value.  It was recorded as the biggest note during that time in the Guiness Book of World Records. Now the Malaysian 600 ringgit has taken over the place of largest legal tender banknote with size slightly larger than Philippine 100,000 pesos on which we will discuss about in later articles.

RBI to issue rupee 200 note on Friday


After the official announcement of  ₹ 50 note in the Mahatma Gandhi (New) Series on August 18, 2017, the Reserve Bank Of India (RBI) officially announced the introduction of  ₹ 200 note in bright yellow colour in the Mahatma Gandhi (New) Series on August 25, 2107. Both the notes bear the signature of Governor Urjit R. Patel. The base color of ₹ 200 note is bright yellow while that of ₹ 50 note is fluorescent blue.

The note has geometric patterns aligning with the overall colour scheme, both at the obverse and reverse. The dimension of the new banknote will be 66 mm × 146 mm. For visually impaired it has an intaglio of Mahatma Gandhi portrait, Ashoka Pillar emblem, raised Identification mark H with micro-text Rs 200, four angular bleed lines with two circles in between the lines both on the right and left sides.

The Obsereve and Reverse of the note will be depicting:


  1. See through register with denominational numeral 200
  2. Latent image with denominational numeral 200
  3. Denominational numeral २०० in Devnagari
  4. Portrait of Mahatma Gandhi at the centre
  5. Micro letters ‘RBI’, ‘भारत’, ‘India’ and ‘200’
  6.  Windowed security thread with inscriptions ‘भारत’ and RBI with colour shift. Colour of the thread changes from green to blue when the note is tilted
  7. Guarantee Clause, Governor’s signature with Promise Clause and RBI emblem towards right of Mahatma Gandhi portrait
  8. Denominational numeral with Rupee Symbol, Rs 200 in colour changing ink (green to blue) on bottom right
  9. Ashoka Pillar emblem on the right
  10. Mahatma Gandhi portrait and electrotype (200) watermarks
  11. Number panel with numerals growing from small to big on the top left side and bottom right side.


  1. Year of printing of the note on the left
  2. Swachh Bharat logo with slogan
  3. Language panel
  4. Motif of Sanchi Stupa
  5. Denominational numeral २०० in Devnagari

Both the notes are expected to be in circulation soon and the images had already gone viral on the internet before it’s official announcement. The collectors are even found bidding openly on the new note so to have their hands on the note before rest of the public. Happiness can be be seen on the face of the collectors because they have now new beauties to add them to their collection. It is expected that by December ₹ 20 note will added to Mahatma Gandhi (New) Series.

Bank Note of the Year Award 2016

Swiss National Bank has been awarded the “Bank Note of the Year Award” for 2016 for it’s 50 Franc banknote, issued on April 12, 2016 voted by the members of the International Bank Note Society (IBNS). The green 50 franc note has the theme of ‘wind’ and shows a dandelion releasing seeds on one side and a paraglider in the mountains on the other.

Over 120 banknotes were released worldwide of which half of them were of new designs and features in year 2016 which were eligible for nomination.

The three runners-up were  Maldive Islands 1000 Rufiyaa tortoise/whale shark, Argentina’s 500 Peso jaguar, and the Royal Bank of Scotland’s 5 Pound first polymer note.

The other nominated banknotes were:

  • Maldives 1,000 Rufiyaa Note
  • Switzerland’s 50 Franc Note
  • Scotland’s 5 Pound Note (Royal Bank of Scotland)
  • New Zealand’s 50 Dollar Note
  • England’s 5 Pound Note
  • Georgia’s 50 Lari Note
  • Belarus’ 100 Ruble Note
  • Sweden’s 100 Kronor Note
  • Australia’s 5 Dollar Note
  • Argentina’s 500 Peso Note
  • India’s 2,000 Rupee Note
  • Colombia’s 50,000 Pesos note
  • Seychelles 500 Rupee note
  • Saudi Arabia’s 500 Riyal note
  • Bahamas 10 Dollar note
  • Ukraine’s 500 Hrivna Note
  • Macedonia’s 2,000 Denar Note
  • Bahrain’s 20 Bahraini Dinar Note
  • Scotland’s 5 Pound Note
    (Bank of Scotland)


A banknote is a negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note. Banknotes are considered legal tender, and, along with coins, make up the bearer forms of all modern money.

Banknotes are called by several names such as commemorative notes, real notes which are legal tenders and fantasy banknotes.

Legal tender notes are the banknotes issued by the government as a legal form of payment. Formally,  it is anything which when offered in payment extinguishes the debt.

The commemorative banknotes are the banknotes issued to commemorate some occasion. These banknotes are expected to be printed on either polymer or a composite substrate or high quality paper to distinguish it from regular issue legal tender notes.

Fantasy Banknotes are tend to be created for countries or regions where banknotes are not issued. These notes are not meant for circulation and are neither legal tenders.

Fantasy and commemorative banknotes is another area of collecting that has good number of collectors worldwide.

MMM Banknotes Result of the biggest ponzi scheme ever


In 1990s, when the communist rule was over in Russia and the economy was trembling and people were looking for a ray of hope in capitalism, which was also failing them, Sergei Mavrodi had some plans. Sergei, along with his brother Vyacheslav Mavrodi, and friend Olga Melnikova created a pyramid corporation named MMM (the name came from the initials of three founders) in 1989. The purpose of MMM in the beginning was probably not to cheat people but be a genuine corporation in the business of importing electronics goods in Russia and selling them. What inspired Sergei to cheat millions of people is still unknown.

The pyramid scheme started taking shape in early 1994 when the company announced that it will be offering a much better interest rate to its investors as compared to public and private banks in Russia. Initially, they convinced a few people to invest small amount in the company. And their money got doubled in a very short period of time. The returns on the investment were made in days’ time. The news of the corporation and its generosity spread like a wildfire through the word of mouth. Russians were already confused about how to save their money or attain economic stability amidst the economic turmoil plaguing the country. A lot of people decided to invest money in MMM to see it get doubled or tripled. Along with the popularity through word of mouth, MMM started running ad campaigns in Russia’s leading newspapers and on state television. Soon, each and every Russian knew what MMM was and what they do.

With lucrative interest rates and returns, nobody bothered to ask how MMM was making profit. In reality, they were not. They were just taking money from one investor and giving it to the investors who invested earlier. The only people getting rich with this scheme were Mavrodi and his family.

Soon, the shares of the company hit the skies. By July 1994, an estimated 5 to 10 million people had invested in MMM. The rate of interest at that time was 10% a week. But this mammoth growth of the corporation in such a short period of time rang alarms with the government and in the month of July, the finance ministry released a statement asking people not to invest in companies like MMM who does not offer any insurance on the money invested. Meanwhile, the shares of the company rose from 1600 Rubles in February to 115,000 Rubles in the month of July. That’s when Mavrodi came up with the idea of “biletov” or “Mavrodki”, or as referred in the modern day world, “MMM banknotes.” Mavrodi started offering part shares to the investors in form of biletovs where 1 biletov was equal to 870 Rubles and 100 biletovs constituted 1 share of MMM.

There were three series of biletovs printed, all bearing the image of Mavrodi in the front and with the text “MMMBILETOV” repeated in Russian. The first series of biletov consisted of 7 denominations, 1, 10, 20, 50, 100, 500 and 1000. The second series consisted of 4 denominations viz., 1, 100, 1000 and 100000 biletov. And the third series also consisted of 4 denominations of 10, 50, 500 and 1000 biletov. Biletovs were designed in the shape of banknotes. The paper used in some of the denominations was similar to that of normal banknotes while the paper used in some was cheap. Some of the higher denomination banknotes also had a few security features. Since the stocks of MMM were not listed on any exchange market and the company used to decide the price of its shares, the value of biletovs used to be flexible all the time.

In mid 1994, biletovs became an unofficial currency in Russia and people used to even transact using biletovs. Some of the 500 biletovs notes from the last series contained a stamp saying “Not convertible to cash” in Russian. Even though no hard evidence exists, it’s believed by many that Russian government either asked MMM to put this stamp on the bond or they did it themselves so that people cannot use them as a mode of transaction and hoarde them in the form of black money. At that time, 500 biletovs were equal to 475,000 Rubles.

In August of 1994, Mavrodi, who was the sixth richest man in Russia at that time, was arrested by the government for tax evasion. MMM shareholders, many of who were people with power, wrote petition to Russian prime minister to release Mavrodi so that he can compensate the people of Russia whom he defrauded. He was subsequently released, but the amount of money refunded was meagre as compared to the amount lost. MMM owed an estimated 100 billion to 3 trillion Rubles to approximately 5 to 10 million people of Russia. No official data of the exact number of people and the exact amount of money owed exists. The Russian court could only fine him for 100 million Rubles.

Biletovs are still fairly common in numismatics market as Russian who were defrauded decided to keep the bonds in the hope of getting their money back in the future. But nothing was returned to them. In the aftermath, at least 50 of the investors in MMM corporation committed suicide. After this scandal, Russia stock market became stricter with more regulation on any joint stock companies but the harm was already done.