Monday, November 25, 2019

How to invest Business Cash ?

One of the dilemmas facing businessmen all over the world is , how do I make the best use of the cash being generated by my business ? Should I reinvest it in the business or is there any other use of the same where I can get better returns?

So, to answer this question, we must first analyse following ?
1. What is the return expected from your business? Is it less than what you would get from investing in Bank FD or Mutual funds?
2. How much risk appetite you have with this surplus cash ? If your risk appetite is less then you may invest the money in FD with banks. If you can take little bit of volatility , then invest in Mutual funds. If you have stomach for equity markets, then you would be better off investing in direct equities and let the market work its magic on your surplus cash.
3. Whether you would need money in near future to run your business? If you will need this cash in near future , then simply go for FDs which can be liquidated anytime, else look for suitable investment tools basis your time horizon and risk appetite.

If you are from United States and are looking to invest in equities , then look no further and simply go with etoro. Click on the link below.

Your Social Investment Network

Sunday, November 24, 2019

How to invest in "Cheap" Mutual Funds ?

Investing is all about buying cheap and selling for a profit and thus we all are always on the lookout for the next big investing opportunity where we can buy cheap and sell for a premium. Is this concept possible when it comes to Mutual Funds ? Can we buy cheap mutual funds ? or better are there any cheap mutual funds?

What are CHEAP Mutual Funds : Lot of people consider mutual funds with Low NAV as being cheap mutual funds to invest , which is a completely wrong notion since NAV being high or low has no bearing on the returns given by the fund. For example , a fund with low NAV may give lower returns than fund with higher NAV is the underlying stocks of the second fund do better. Also low NAV may be indicative of poor past performance . Thus simply investing in mutual funds with LOW NAV may not be same as investing CHEAP for selling for a PREMIUM. Understand this difference.

So, what should you do if you are looking to invest CHEAP and sell for a PREMIUM? If you are from United States, I would recommend that you start investing in direct stocks which are transparent in terms of their worth since there are multiple metrics to find out their relative premium. One of the most important metrics is Price to Earnings multiple. Always invest in stocks which are trading at relatively lower PE multiple than the overall market and that company has relatively good growth prospects going ahead. This way you shall be able to buy CHEAP and with some patience will be able to SELL at premium and make nice profits. If you want to get started, this is great place to start.

OIL LP English
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Tuesday, March 19, 2013

Should you buy Gold from Banks ??

The dream run up in Gold prices in last few years has enticed all and sundry as an attractive investment asset class. It has not only proved to be an excellent hedge against inflation a, reputation it holds with elan since time immemorial, but also, has delivered returns in excess of debt, equity etc as an asset class. Thus , it has emerged as the Best Investment Option in last few years. However, skeptics believe that gold has had its share of dream run and may not be possible for investors who are entering into now, to expect the same kind returns in future .

But, if you are on of those who believe that best years of gold as an asset class is still ahead of us and want to invest in physical gold then you must be pondering where should you buy the gold from? These days we have seen most of the banks aggressively positioning them as place where one can buy physical gold bars/coins etc. The other option is offcourse our old Jeweller , both unorganized and large organised players like Titan, TBJ etc.
Before deciding to buy Gold , ponder on these points:-

1. Purity of the Gold:- The singlemost important factor that must guide your decision is the purity of the metal. Most of small Jewellers dont have the track record to write home about on thei account. Banks can give you complete assurance on quality. They give you 24 Carat Gold as against 22 Carat that Jewellers sell. Besides it is 999 Gold with Certificate of Purity. Some Large Jewellers also give the same.

2. Premium Charged- Banks generally charge a premium on the price of Gold over what is the prevailing rate. Simply put, the Gold that you will buy from Bank will be costlier than  what you wil get in the market.

3.Resale Option - Most of Banks DO NOT buy back the gold that they sell. However, Jewellers normally will take back the gold in case you were to sell it back to them.

You must ,therefore, carefully weigh your options before rushing to buy Gold as an investment asset.
Your Social Investment Network

Tuesday, March 12, 2013

Does Pension Plans make sense ? - Should you invest in Pension Plans?

Recently IRDA has allowed Insurance companies in India to launch Pension plans after a gap of over 2 years . Earlier, the insurance companies did have pension plans in the market, but , the regulator viz IRDA had asked them to withdraw all such plans and as such we had a situation where there were no "Pension" plans available in India for some time. However, it has been allowed again . While doing so IRDA has mandated few changes in the product design/features which are aimed at safeguarding the investors interest like offering minimum guaranteed returns etc. 
So , as a person wanting to secure your post retirement years, should you be investing in them? The short answer to this question is NO . Let me elaborate on this. 
1. High charges : Most of Pension Plans offered by Life Insurance companies today, have very high cost structure. Most of the Products have charges to the tune of 4-5% of the overall yearly premium/contribution that you make in the plan. This is against 1.5 to 2% charges on most of the well diversified Mutual Funds. Thus it is one of the most expensive ways of planning for your retirement.

2. Lower guarnateed returns offered  : Most of these plans have guaranteed returns promise attached with it . While on the face of it, guaranteed returns gets people /investors excited and thats the reason why it is offered in first place. What companies dont tell you that while the guarantee is mostly of the premiums paid only ( or negligible returns over it) what they dont tell you i\with as much enthusiasm is that they charge you for providing you that guarantee too . Yes , they have something like guarantee charge in the cost structure.

3. Lower than FD returns on annuities : The annuities offered ( pension ) in most of these plans range from 6-7% annually. This is even lower than what Bank FDs pay today . So there is no compelling reason why one shouldnt simply put money in FD ( the corpus if one has) and get superior returns from it.

4. No Option to buy annuity from other company or pension provider. Another drawback of these plans is that most of them make it mandatory to buy annuities from them only . So if you invest with ABC company , then you are locked with them and will have to necessarily buy the annuity also from them irrespective of the rate they offer you. So , even if there is someone else in the market offering you better annuity rate, you will still not be able to move to that firm for your annuity. This is a serious drawback considering that Pension Sector is proposed to be reformed and opened up in India, which will drive competition among players thereby making it imperative on them to lure customers with better and superior products. 
So , short answer is that planning for retirement doesnt have to be done only by investing in Pension Plans offered by Life Insurance Companies . One would be better off investing in PPF , NPS etc for Pension Planning.
What do you think?

Thursday, March 7, 2013

Retired Recently? -Best investment option for Retired Person

Best investment option for Retired Person

There are broadly 2 kinds of retirees viz 1. Those who draw pension from their employers 2. Those who dont have any pension from Employers . Now lets look at how each one of them should approach their investments for post retirement phase.
1. Retired Persons having Pension from Employers
 Since they already have some kind of pension income coming in they are better placed and have less daunting task to plan for this phase of their life.  They need to do following things :
1. Buy a comprehensive Health Insurance Plan - There are lot of general insurance companies in India who are offering health covers upto 65-70 years . There are few options from Life Insurance Companies where one can have the health plan before 70 years and then can continue to renew it for their lifetime. Example is Health Assure Plan for HDFC Life. It is an absolute must that you cover yourself adequately against any untoward health shocks at this stage, since one such shock can wipe out your entire savings.

2. Invest in Senior Citizens Savings Scheme -  At the time of retirement if you have received any lumpsum amount, then, invest teh same in Senior Citizen Savings Scheme. Its Govt of India Scheme meant for providing attractive returns to retired people. One can invest upto maximum Rs 15 lakhs and get 9% returns payable quarterly on it.

3. Invest in Debt/Balanced Fund - Balance surplus investible amount may be invested in good debt or balanced mutual funds . This will ensure it gives better than FD returns with minimum risk. You may consider HDFC Prudence in this category.

2. Retired Persons having  No Pension from Employers

This set of people need to be very meticulous in planning their investments. They need to plan to ensure that they get regular monthly income but also guard against inflation. They must do the following things:-
1. Buy a comprehensive Health Insurance Plan - They too are equally exposed to all the health risks and as such need to cover themselves adequately. Buy cover for both yourself and your spouse.

2. Invest in Senior Citizens Savings Scheme -  Invest upto Rs 15 lakhs in this scheme . This will give them 9% pa.

3. Invest in Post office Monthly Scheme - This will ensure that they get decent returns monthly which will help them keep their basic household expenses going.

4. Invest in good Balanced or Well diversified Equity Fund - Since they do not get any inflation adjusted pension income from their employers , they have to ensure that they invest their money in instruments which gives them superior inflation adjusted returns. I would suggest they can invest in good balanced fund or well diversified  large cap equity funds  like Reliance top 200 , BNP ParibasEquity, HDFC Equity etc.

If you stick to this , I think you will have a comfortable retired life without worrying for paying your next electricity bill .
What do you think? Pl comment.
Your Social Investment Network

Wednesday, March 6, 2013

How to File Income Tax Returns? - 5 Must Dos.

Filing Income Tax returns is one of the activities about which there is lot of anxiety among lot of people .  We need to understand that while filing ITR is important and necessary , it is also important that we do so correctly . So what are the things that you should keep in mind while filing ITR.
1. File ITR within specified time - The first things that you must ensure is that you file the ITR within the specified period and not delay it. Any delay in filing ITR ( especially wehere you have to pay taxes ) may attract penalty from the Govt .  And  as such , sticking to the timeline is a great idea.

2. Disclose all incomes - The most common mistake tax payers make is failing to report all the sources of their income. One type of income that is forgotten by many individuals is interest earned on a bank savings account and on Fixed Deposits (FDs). This income is taxable according to your respective tax slab. Usually banks deduct 10 percent as Tax Deductible at Source (TDS) on the interest income earned on FDs. However, if you fall under a higher tax slab of say, 30 percent, you are liable to pay tax accordingly. Not reporting these incomes might attract a notice from the income tax department.
In addition, if you have changed your job recently, make sure that you report the income earned through your previous employer as well.
Also, any income earned by a minor through investments is taxable according to the tax slab of the parent with higher income. The income of the minor is clubbed with that parent’s income while computing net taxable amount. In case you have made investments in your children’s name, keep this in mind while filing your taxes.

3.Paying tax on House Property - Lot of people assume that there is no tax to be paid on house property . While the truth is all house property owned by the person attracts tax and one needs to pay the same.

4.Filing details of income which is tax exempt - Some people assume that we have to file details of income where there is tax liability and as such do not disclose incomes which are tax free. For example, Long Term capital gains out of equity invetsments , dividends received etc are tax free but still need to be disclosed in your tax returns. This reflects your total income accurately and removes any chances of receiving any notice from Income Tax Dept since most of the AMCs, brokerages  etc from where you receive this income will anyway report this to the authorities.

5. Give Correct email Id and Postal Address : Since all the necessary information is communicated by the income tax department via email or post, it is extremely important to enter these details correctly before filing your taxes. A minor mistake in filling these details means that you may miss important notifications. So check and re-check your postal and email address when you file your income tax.