The Tax saving Schemes of MFs and the DTC 2010

The govt's intent to push tax saving schemes to the long term spectrum was visible as eary as 2010 with introduction of Direct Tax Code bill 2010(DTC) . DTC seeks to integrate the IT Act 1961 and Wealth Tac Act 1957 into one single platform.

As a class of investment, the Equity Linked Savings Schemes(ELSS) is an entry level product to mutual fund industry for the uninitiated. They invest atleast 80% funds in equity and have 3 year lock-in period. They allow you get diversified across assets.

All other investments in the Sec 80 C of the  IT Act 1961 are of longer lock-in-period. Even if the lock-in-period is over, investors can continue in the scheme is an added attraction of the ELSS open ended ones. This provides an opportunity to wait for the market conditions to improve and the NAV give a better appreciation..but one should have the capacity to wait..

The assessment of Risk-Return profile is necessary for entering into the  ELSS like any of the Mutual Fund Schemes.There are certain expenses also qualify along with the specified investments under Sec 80 C of the IT Act 1961

Look at the performance of the ELSS - the 36 funds that completed 3 years have given 8.77% to 29% and the last one year returns alone have gone beyond 100% in certain cases.

When RGESS (2010) was introduced MFs were allowed to offer such schemes(2012). They have given similar performance as that of ELSS in the last 1 year.

Budget 2014-15 has raised the overall limit of Sec 80 C investments to Rs 1.5 lakhs & ELSS automatically is a beneficiary the budget also had a mention that MFs would be allowed to offer pension products.. So make hay when there is sunshine..

However, there are already two MFs offering pension products already

happy investing

Budget 2014 and Mutual Funds

The core identity of a mutual fund is that of a professional investment manager. A fund chooses from the securities in the market and builds a portfolio with stated objective. This is diversified and, hence, less risky than direct investment, and is managed to a process. The fund managers charge a fee to do this and are evaluated on the basis of their ability to do better than the market index, which is a passive diversified portfolio.

 This time around, the level playing field got created with bond funds treated on par with other long term assets by making holding period for claiming Long Term Capital Gains made as 36 months from 12 months.

During the debate on the Finance Bill it was clarified by the Finance Minister that the higher long-term capital tax of 20% that he announced in the budget on 10 July will be applicable on all debt funds redeemed after 10 July.

The additional exemption of 50,000 under 80C will provide a limited window for tax exemption eligible mutual fund schemes. Now you can invest 1,50,000 under specified investments and claim tax rebate.

 more at: http://www.moneycontrol.com/news/economy/budget-2014-india-changelong-term-capital-gain-to-impact-mutual-funds_1124081.html?utm_source=ref_article

Another important development is an opportunity to launch pension funds by the mutual funds.

Happy inversting


 

more at: http://www.moneycontrol.com/news/economy/budget-2014-india-changelong-term-capital-gain-to-impact-mutual-funds_1124081.html?utm_source=ref_article

The additional exemption under 80C will provide a limited window for tax exemption eligible mutual fund schemes

Read more at: http://www.moneycontrol.com/news/economy/budget-2014-india-changelong-term-capital-gain-to-impact-mutual-funds_1124081.html?utm_source=ref_article

Assured Return alternatives in Investment

Safety of investment refers to getting income or capital appreciation or both at the pre-determined time span without any hazzles

That means, it has broadly three components: the money part, the time involved and the last, but the most important one, the ease of handling

1. The post office saving schemes are the nearest one to anybody by the sheer number of offices across the country. Variety of schemes are available ranging from savings, recurring, fixed deposits and monthly  income plans. You get senior citizen schemes and national saving certificates from post office.
one generally requires the following at the time of opening the account itself.

• Address Proof
• Two passport size photographs
• Identity Proof – This may include

         i)  Passport

        ii) PAN Card

       iii) Ration Card

       iv) Voter Identity Card issued by the Election Commission of India

 2. Bank Deposits are another product in the assured return category. Bank deposits are safe to the extent of insurance guaranty available to the bank subject to Rs 1 lakh per account. Indian banks are mostly govt owned and RBI controls all banks with strict control and supervision. A comparison of rates available with the banks show that the time periods are kept different for look alike products.

3. Guaranteed return plans from Insurance companies offer 4% to 8% . One should make clear what really is important what risk one wants to cover while buying such products. purely from an investment angle, they may not be attractive. But the risk profile may require one to cover in such cases, insurance plans are a better alternative.
Still another variant is the highest NAV guarateed products offered by Insurance companies as they are not goverened by SEBI, but IRDA.
4. Capital Protection Oriented funds from  mutual funds

SAFETY IN NUMBERS

	2009	2010	2011	2012	2013
Existing schemes	12	13	42	58	71
New schemes launched	0	7	30	22	26
Assets of new schemes (Rcrore)		1358	2390	1538	1910

Such schemes gave rate of return approximately equal to 1-2 years bank deposits.

5. Public Provident Funds are another investment alternative for differing time periods with assured rate of return. they are serviced from the post offices.
6. NBFCs offer several options
Make sure that you are dealing with RBI approved NBFC only. RBI has asked NBFCs to prominently display the CoR issued by the central bank on their website. If an NBFC is authorized to accept public deposits, the certificate reflects that. And safely keep the Fixed Deposit Receipt for future purposes. At times, when banks are not able to provide more than the inflation rate, NBFCs come handy.
7. Company Fixed Deposits

There are times when company FDs are better alternatives to bank FDs.

one thing is for sure. the moment one seeks assured returns, the rate offered is lesser than capital market alternatives like equity/bonds issued by companies. When more rate is offered, take adequate precautions.

Happy investing

Getting a loan

Alternative Options to personal loans are a plenty :

Loans against Gold jewellery, Fixed deposit rates, etc.. are common. many sites are available that compare rates.

Banks give you  loan for vacation, marriage, owning gadgets..Now a days, you hear about getting al oan in 2 minutes.. or less.

In case you are looking at Educational loans, mostly the SBI is the first choice.

Buying a house is a dream for everyone.when you approach for a housing loan, it is better to do some homework.

Can you afford to buy a house?

For NRI's also loans are available  for owning a house.

Women entreprenuers have a preferential approach for certain banks

CIBIL tells you how to look at a loan whether it is a personal loan, credit card, auto loan or a home loan.

When you take a loan, it should  be for creating an asset, preferably.

Happy investing

Marriage planning

Everybody is probably thinking of the event planning. may be you wanted to know what is the cost of a samudrka pattu?

You wanted to find out how much will be the money required for the marriage of your child??

It is important. but more important is to plan ahead the living expenses after the marriage.

The expenditure habits of spouse matters quite a lot. somebody may be staying with parents with spouse working elswhere. somebody may be staying with parents for other reasons or staying away at work place without access of relatives for immediate help. In any case, a consciuos planning will help the newly wed to emain focussed on the finnacila mile stones to achieve.



So make a plan together and try to make it successful


happy investing

The PAN procedure revision

Your financial planning requires to comply with basic procedures. Permanent Account Number(PAN) is one of them. recently the guidelines have been simplified we f 03/02/2014:

every PAN applicant has to submit self- attested copies of Proof of Address (POA) and Date of Birth (DOB) documents and also produce orginal documents of such POI/ POA/ DOB documents for verification at the counter of PAN facilitation centers. List of documents of POI/ POA/ DOB is given in the Instructions part of Form 49A/ 49AA.

Read more at: http://www.moneycontrol.com/news/tax/check-out-procedure-for-pan-allotment_1046362.html?utm_source=ref_article

 Every PAN applicant has to submit self- attested copies of

a). Proof of Address (POA) and
b). Date of Birth (DOB) documents

Produce orginal documents of such POI/ POA/ DOB documents for verification at the counter of the facilitation centers. List of documents of POI/ POA/ DOB is given in the Instructions part of Form 49A/ 49AA.


Happy Investing

Read more at: http://www.moneycontrol.com/news/tax/check-out-procedure-for-pan-allotment_1046362.html?utm_source=ref_article

Succession planning or Estate planning -2

Finances tend to be one of the trickiest topics as people do have traditional ideas about what you should and shouldn’t talk about while discussing with grown up children

One need to know much more than whether a will exists. Are there powers of attorney or advanced health care directives in place? What does their health insurance cover? Do they have life insurance? Have they made a list of every single account that they owe or collect money from?

When you deal with parents consider the question “I’m concerned about doing the right thing when you pass,” instead of, “You’re so disorganized and are going to make this difficult for me,”  because power play might spoil your intentions.

Trust is important in building the relationship strong enough to talk about wealth and transition


Happy Investing

Those who read this, also read Succession Planning-1

Succession Planning or Estate Planning -1

Estate planning is closely related to succession planning. You are making it known what should be done with your property and who should be looking after what out of your accumulated assets & liabilities.

 It is the process of anticipating and arranging for the disposal of an estate during your life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate  and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiarieswith incapacity.

When you have the choice, would n't one prefer to keep control of who receives what and when? Wouldn't you like it to be settled at home than taken to prolonged litigation and public discussion? Your little one may need more assistance  than the elder children. Your spouse may need more money than the proportionate share to survive


You may leave a will  or not are the two ways in which succession is dealt with in our times.

Planning your estate will help you organize your records and correct titles and beneficiary designations.
 Planning your estate now will help you organize your records, locate titles and beneficiary designations, and find and correct errors.
 It is much better for you to take the time to do this correctly now than for your family to pay an attorney to try to fix things later.
Estate planning does not have to be expensive.
Start with what you can afford. For a young family or single adult, that may mean a will, term life insurance, and powers of attorney for your assets and health care decisions. Then, let your planning develop and expand as your needs change and your financial situation improves. Don’t try to do this yourself to save money. An experienced financial planner will be able to provide critical guidance and peace of mind that your documents are prepared properly.
The best time to plan your estate is now.
None of us really likes to think about our own mortality or the possibility of being unable to make decisions for ourselves. This is exactly why so many families are caught off-guard and unprepared when incapacity or death does strike. Put something in place now and change it later…which is exactly the way estate planning should be done.
The best benefit is peace of mind.
Knowing you have a properly prepared plan in place - one that contains your instructions and will protect your family - will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.



Happy investing

The pause by RBI did not signal a downward trend....

In a highly fluctuating interest rate scenario in the market.RBI's pause of December 2013 did not signal a downward trend, was actually known when the short term rates were tweaked up marginally

RBI’s original mandate has been to ensure price stability while keeping an eye on growth. The Patel committee set a 4% target for CPI by 2016, within a plus or minus 2% band.

The Urjit Panel committee has suggested that price stability should be the predominant monetary policy objective, and that CPI inflation rather than WPI should be the rationale for rate action. The RBI should aim to bring down CPI inflation to within 8 per cent by 2014-15 and 6 per cent over the next 24 months. Perceptive analysts have pointed out that it is the first time that the RBI has projected an inflation path over a long period of two years.However, it is well realised that for inflation to come down, monetary policy need to be supported by fiscal consolidation. The role of the new government after the elections will be critical.

On the basis of an assessment of the current and evolving macroeconomic situation, RBI decided to:

• increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75 per cent to 8.0 per cent; and
• keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL).

Consequently, the reverse repo rate under the LAF stands adjusted at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.

Volatility gets passed on through the interest rates globally and India is not alone


Therefore,it is Important that people invest systematically .

Happy investing