Money For Investment

With RBI's announcement of lowering of CRR and repo rate , the lending rates too have gone down. While the private banks have been less than keen on lowering rates , the public sector banks have been very proactive in lowering lending rates especially on high ticket size Housing loans. State Bank Of India, recently announced lower rates on its housing loans for all its new customers. This created a flurry of housing loan customers of other banks moving to State Bank Of India to avail of this new rate benefit. While on the face of it, it looks to be a tempting proposition for all existing borrowers to foreclose their loans with their banks and move to a new bank offering lower rate, the truth is, that it is not beneficial for all and sundry. Before we decide on foreclosing our existing loan and moving to a new bank , there are certain things that need to be kept in mind.They are: Do a Cost Benefit Analysis (CBA)- Cost Benefit Analysis involves weighing the benefits accruing out of a...

In India we never had any insurance cover to protect an individual from the financial ill effects of a job loss, till now. In Western countries, the job loss insurance is very popular product and has been there for a while. Most of the countries in developed world do have such products which provide help in meeting their loan EMI obligations etc, to people suffering from layoffs etc . But, ICICI Lombard has come up with a similar product in India as well. What is this product? This is not a stand alone Job loss insurance policy , but, comes as an add on cover with critical illness policy of ICICI Lombard which Covers risks such as accidental death and permanent total disability. What does it cover? Under this policy the company undertakes to pay 3 EMIs of the policyholder in case of job loss. For example, if the policyholder has housing loan of Rs 25000 p.m. , the company will pay off the 3 EMIs on the policyholders behalf as part of this policy cover.It also covers job loss due to ter...

In our quest for securing our life post retirement, we are always on the look out for an investment plan which is just right for us or in other words best pension plan for us. In India, till now the pension sector was not really thrown open to private players and as such the pension was primarily a facility given to employees of the government organizations only. For others the options were PPF, PF etc. However, subsequently mutual fund pension plan was launched and with the opening of insurance sector , pension plans from insurance companies became available to every one. So, for some one who is planning to invest towards building a retirement corpus , what are the pension plan options available in India today and which one is the most suitable option for him. OPTIONS AVAILABLE 1. Debt based saving instruments like PF, PPF etc – For large part of Indian populace, these have been the most popular saving instrument for building ones retirement corpus. Provident Fund is the mandatory de...

We all get lucky with money once in a while. Sometimes we get unexpected bonus at work , while at times we get gifts from relatives or some investment maturing etc gets us cash surplus. So what should you do with the extra cash that you have. Here by the term extra cash I intend to mean the cash flow which was not accounted for in your household budget. Now getting back to the issue of deploying it to the best use. Should we buy stuff for us like LCD TV/Fancy Laptop etc or should we go on vacation to Miami or should we buy a new car or should we invest it for rainy day or should use it pay off our bills?? The answer to this will depend on the amount of money that we have at our hand. Large amount of money can help us do all of the above . But, what if we have limited sum of money and we want to get the best out of it. I suggest that we put our money to use in the following order: 1. Pay off your credit card debts first - Since credit card debt is the most expensive debt to have in the...

The thought of writing this piece came while I was watching news where Delhi Police claimed to have solved Soumya and Jigisha murder mystery. They did so by tracing the credit card transactions of Jigisha. The murderers took Jigisha’s credit card after murdering her and went on a shopping spree buying LCD TV, Reebok Shoes etc. People can and do misplace/loose their cards. Sometimes they are stolen. After your card is stolen, the first thing that you need to do is to call the card call centre and report loss/theft of the card and get it blocked immediately so that no one can use it from that moment onwards. But, there are chances of the card being misused from the time it was stolen till you call the call centre and get it blocked. So how can you protect yourself from the consequent liability on your card? Or god forbid, if something were to happen to you causing total or partial disability because of which you are not able to work and hence unable to earn, who will pay your card bills ...

Thinking beyond Section 80C for saving taxes in India?? Individuals, who need to save more to save their tax money more than what section 80C allows for, can opt for other options: a. Home loan: Interest payments towards home loans of upto Rs 150,000 pa are eligible for deduction under Section 24. b. Medical insurance: An individual who pays medical insurance premium for self or spouse/dependent children is allowed a deduction of upto Rs 15,000 pa under section 80D. An additional deduction of up to Rs 15,000 pa is allowed for premium payment made for parents. In case the parents are senior citizens, then the maximum deduction allowed is Rs 20,000 per year. c. Donations: Subject to the stated limits, donations to specified funds/institutions are eligible for tax benefits under Section 80G. d. Education loans: The entire interest of an educational loan is eligible for deduction under Section 80E. The loan can be for self, spouse or child from an approved charitable institution or a ...

These days we see so many ads in print and electronic media about the capital guarantee ULIPs being branded and promoted as the ultimate solution to investor worries in this bear market. There are many more such plans and all the insurance companies in India have this product in their portfolio. The prospect of capital being guaranteed in this volatile market scenario is very tempting one. Lets try and figure out all about these products and understand how is that they are promising to deliver what others can’t. 1. WHAT IS CAPITAL GUARANTEE ULIP Capital Guarantee ULIPs, by definition, is a product where the money invested in the plan is guaranteed i.e. the investor will at least get back his money invested in the plan ,unlike, normal ULIPs where the investors gets the fund value as on the redemption date. This fund value may or may not be higher than the total money invested in the plan by the policyholder. 2. HOW DOES IT WORK Most of the capital guarantee ULIPs promise capital preserv...

We all use debit and credit cards in our daily lives for multiple purposes right from cash withdrawal to shopping in malls to online shopping to paying bills , the list is endless. While it does offer a great convenience value to us, it also requires us to be little cautious while using it. To ensure that your card is not misused by anyone, there are few precautions which you must take with your card. They are: 1. NEVER SHARE YOUR PIN - The first thumb rule is that you should NEVER share your ATM/DEBIT/Credit card PIN number with anyone. The PIN number is a unique identification number meant for you and not for anyone else. So keep it that way. 2. HAVE ALPHA NUMERIC PIN – After you get your card , the card company sends you a computer generated PIN which is to be used for the first time post which you are encouraged to change PIN . While changing PIN, the mistake most people do is that they choose the obvious ones like ones birth date, Car number, Street number etc. The problem with ...

Every now and then we come across cases of fraud involving credit card in print and electronic media. Most of these incidents are shocking, but, these can be easily prevented by the bonafide user if he takes due care of his card and its usage. To prevent ourselves from falling prey to these credit card fraudsters out there in the market , we need to know how do they operate and what exactly are the dangers involved. As a user we need to careful right from the time we apply for the card till the time it is cancelled and safely disposed to prevent any abuse. So, lets see the possible frauds at every stage, right from application to termination/cancellation, and also understand what can you do about it. A. DURING APPLICATION PROCESS 1. Manipulation while filling the app form by the agent – Most of the people applying for credit cards just sign on the blank/partly filled app form and rely on the agent to fill in other details. While this may seem convenient to you, by doing so you will b...

Life is full of uncertainties. Everyone goes through good and bad times in his/her life. While good times are relished by everyone , its the bad times that people really dread about. So when we think about the subject of financial planning whose basic aim is to plan for financial security, we can not help but plan for all those bad times that might present themselves in our lives. How do we do that? The answer to that is first to acknowledge the need for planning for a rainy day as they say. What exactly is an "emergency fund"? Emergency fund is the fund kept aside to be used only during an emergency. They are not supposed to be used to meet your daily expenses.Examples of emergency are need to plan for possible job loss, medical emergencies, temporary loss of pay due to temporary physical disability etc. These situation might put great amount of stress on ones finances, if not planned properly. The best way of planning for any such eventuality is to create a basic emergency ...

Since January 2008 when the Indian Markets were at dizzying heights of 21000 , the market has corrected over 55% and is hovering at 8500 today. There are lot of people who have lost tons and tons of money in equity from the markets peak. But, unless they entered in January 2008 in the market, they may not have lost that much. Also people who have been investing for over 4-5 years ion the market still have their capital intact even at these low levels. So much loss of wealth over last 12-15 months has set a sense of dejection and hopelessness towards equity markets. Is this correct or this hopelessness is overdone? Should we be shunning equities for ever?or is there still some merit in it? My take on this is that while its true that equity markets have not performed well in last 12-15 months , we can not forget that this market over a period of last 5-6 years has still given handsome returns to all its investors. The bull run from 2002-2008 has been nothing short of exceptional where pe...

There are so many investment options like mutual funds, insurance, ELSS,gold, FD, NSC , PPF, POMIS, Senior citizen saving scheme, Pension plans etc available to Indian investors that it sometimes becomes difficult for him to decide where to invest his hard earned money. While investment decisions are primarily driven by ones investment goals and risk appetite it still requires some research and analysis before one can zero in on the final investment tool/option. So how should we go about it? What should we check before we choose to invest in a plan/policy etc? Well there are primarily 5 parameters on which we need to analyse each and every investment option before we put our money into it. They are 1. SAFETY - First and foremost concern of every individual is to ensure that the money which he is investing is secure i.e. the money comes back to him either more or equal to the amount invested. There should not be principal erosion in the investment. Equities don't fare too well on t...

We all have wondered at some point in time as to which is the best investment strategy for me? Where should I be putting my money? Which is the most stable, secure and flexible plan for me? Well in short we always wanted to know the ideal portfolio for us which will help us meet our investment goals. So here I will try and list down the ideal portfolio for each one of you. Before deciding on the architecture and structure of your portfolio ,one needs to identify the investment goals of each person along with his risk appetite because its the investment goal or end result which will help you decide on the ideal investment portfolio. For simplicity sake , I am dividing everyone in age brackets coz age has go strong correlation with financial needs and goals of an individual.It also gives you an idea about the risk that a person can take with his investment. So, the various age brackets are 1. 20-30 years 2. 31-40 years 3. 41- 50 years 4. 51 - 60 years 5. 61 and above So, now that we hav...

One of the major worry for every person approaching old age is his deteriorating health condition. To make matters worse his conventional medical policy (ex Mediclaim etc) gets over once he/she crosses age of 60 years. So the time when he needs it most , the cover is gone leaving him with no choice but to provide for himself. Right? Wrong Because there are quite a few insurance companies primarily in the public sector in India which offer medical cover to senior citizens between the age of 60-80 years and in some cases even up to 90 years as is the case with National insurance Company. These policies are provided to everyone in the age bracket. So why is that very few people seem to know about? Why is that if companies are offering such product , they don't advertise about it considering the huge demand for it? Well folks the reason is bottomline of these companies. Its no secret that most of the general insurance companies offering medical/health policies make losses on these pol...

I found this interesting video on youtube.com about the lecture given by noted economist Mr Venkatesh at an event in Chennai. His thoughts on globalisation and its effect will startle you. Its a very nice speech and it exposes one of the greatest myths of this century and that is that globalisation in its current form is good for everyone. He explains how and why America has delinked dollar from gold in 1970s when all currencies were supposed to be linked gold deposits. He explains how America has used up worlds savings to fuel its own consumption and that it has managed to do by simply keeping the dollar's value high artificially by creating demand for it. One way of creating artificial demand for dollar is through setting oil exchanges in its own backyard and allowing oil trade to happen only through these exchanges where the currency used is dollar thereby creating perpetual demand for dollar resulting in its high value. He also cautions world against putting its savings in Amer...

In my earlier post we evaluated Gold as an investment option and why it should be a part of every prudent investor. There are primarily 3 ways in which one can invest in gold. They are : 1. Buying physical gold One of the most ancient and popular way of investing in gold has been through the purchase of physical gold either in form of gold bars, gold jewellery or gold coins etc.Most of the families in India do indulge in gifting gold ornaments to the bride on her wedding night.This in most cases forms bulk of the gold investment that bride has throughout her life. Few others invest in gold bars or gold coins. This is the most popular form of investment in gold in most of the countries even today. 2. Exchange Traded Funds (ETF) As the wikipedia an exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over th...

For any investor worth his salt, a portfolio without gold in it is a bit embarrassing because there are compelling reasons for buying /investing in gold. The investment in gold makes more sense today than it did ever before. In India, there is an old practise of investing in gold via ornaments etc which is a very health practice as it helps every household diversify its investment portfolio to that extent.(Though gold bars would be much better). The reason why investing in gold is a fantastic idea for you me and everyone else is because of the following inherent advantages that it offers as an investment class: 1. Acts as "Quasi Currency" Almost all the paper currencies of the world right from dollar to pound to euro to all other currencies of the world is backed by physical gold. Gold determines which country can print how much paper currency as the value of paper currency like dollar($) lies in the physical gold behind it as security. So primarily gold is main currency of t...

Well lets start with a very basic question? Why do we take insurance policies ? Is it for insurance sake i.e cover the risk of loss of the asset insured?,or is it for investment? or is it for both? The answer to this could be all three.There are people who buy it just for insurance sake, while some buy it for investment purposes, while some others see it as both as an investment and insurance tool. So which is the right way of approaching insurance? Friends, insurance polices are meant only for insurance sake and NOTHING else. Get this very clear. It is NOT an investment tool ,at least not an effective one. So first thing to do is to buy insurance only for insurance sake. And one must have insurance in his portfolio as it is the most important hedge against any eventuality that might rock your finances. Now, that its clear that we need an insurance plan which actually serves to meet the "insurance" promise, which policy should we go for ? Basically there are only 2 types of i...

We are always in pursuit of perfect investment tips so that our money is safe ,secured and earns us above average returns. While this is desirable by everyone,not all manage to make perfect investments. There are quite a few who have made one or more investment mistakes that they should have avoided. Here let me state 10 such very obvious mistakes that you must guard against at all times:- 1. Buying any insurance plan other than pure Term Plan I am of the firm opinion that we all must have life insurance for self and family members,but, I strongly recommend you to buy only Term insurance and not any other plan like endowment,money back etc. The reason is very simple.In term plan the companies charge you premium only to cover the mortality charges while in endowment plan they charge you huge charges like admin charge etc over and above mortality charges. In traditional endowment plans as much as 40-50% of the premium paid might just go in servicing the charges for first few years ther...

Friends, with so many companies offering so many different credit cards with so many different features that the customer gets confused as to which one is really suitable for him. While most of the credit cards are same in basic features , they do differ from each other on things like interest rate charged,credit period, add on features, co branded offers etc. So to make your job of choosing a suitable credit card for you easier, I am listing down few do's for you: 1.Credit Card with "No Annual Fee" - Annual fee is the fee charged by credit card companies annually to offer you credit card . This is fixed fee and is not dependent on your spends and hence is fixed cost for you. There are quite a few credit card companies which offer you credit cards at 0 annual fee. Always choose credit cards which do not charge you annual fee so that you save money on this and your charges are spend based. Example - ICICI Credit Cards, HSBC Premier cards etc. 2.Credit Card with "Low...

Friends, in these recessionary times everyone wants to stay light on debt. Hence people are staying away from borrowing money now and avoiding debt. But for those of us who already have debt on our head and want to get light on this account need to get their debt consolidated. Debt Consolidation is a process where the company will consolidate the customers all unsecured loans into another unsecured or secured loan to offer the benefit of lower interest rate , lower EMI etc to the customer. Simply put its a process of taking a new loan of lower interest rate and foreclosing all your current high interest loan ,thereby paying only 1 EMI at a time. There are quite a few ways wherein a person can consolidate his/her debt. They are: 1. Taking DC loan First and the most obvious one is to take a Debt Consolidation loan from a company which will foreclose all your high interest loans like credit cards dues , personal loans etc and offer you a new loan at a lower rate of interest. This will hel...