Money For Investment

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...

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 pl...

Its that time of the year again when all of us scramble to do tax planning. We have lot of options under Sec 80 C of the IT act to invest upto Rs 1,00,000 and save taxes on it. Some of the options under Sec 80C are as under:- 1. ELSS 2. Insurance Plans - ULIPs 3.PPF 4.PF and VPF( Voluntary Provident Fund) 5. Tax Saving FDs There are quite a few other options as well like deduction on account of paying tuition fees for kids, housing loan deductions etc. Out of the 5 options listed above, ELSS is my own favourite for following reasons:- 1. It has lock in period of just 3 years . This is lowest among all the options available. 2. It gives you equity exposure while PPF and FDs give only debt exposure. 3. Is more likely to give inflation adjusted positive returns . So , if you are looking to invest in ELSS, following are the top ELSS schemes that you may consider. Happy Investing!!

"The desire for gold is the most universal and deeply rooted commercial instinct of the human race." Gerald M. Loeb The above mentioned adage perfectly sums up the love investors have showered on the precious metal since times immemorial. This metal has retained its numero uno pisition as the "Metal of choice" over centuries. So what really makes this metal so desirable inspite of its very limited medicinal or industrial usage? Following are just the few of many reasons responsible for the same : 1. Its widespread use in Jewellery - It has always been used a metal of choice when it comes to Jewellery. In India, for instance, most of the gold demand is on account on Jewellery .This demand for gold jewellery has made India one of the leading countries as far as gold consumption is concerned. 2. It was used as Currency - Gold emerged as a major currency very early during human civilization where kings across continents used gold coins as currency in their respe...

Well like every year , this year too 28th Feb 11 was one of the most awaited days of the year. Everybody was waiting to see what our beloved FM dishes out to common taxpayers via his budget for FY11-12. The budget overall hasn't done much to enthuse common man. There are no major tax breaks for majority of the junta . But, he has done few things which we need to take note of :- 1. Increased tax exemption limit for male to Rs 1.8 Lakhs : The tax exemption limit has been increased by Rs 20000 from 1.6 Lacs last year to 1.8 Lacs this year. This is only for males as the tax exemption limit for female taxpayers is already at 1.9 lacs. The additional relief will save 2000 rupees for everyone who falls in ta bracket. Small relief, but, relief nonetheless. 2. No need to file ITR for salaried people: Pranab Da has also mandated that those salaried people whose annual income is less than Rs 5 lacs/annum need not file ITR separately. The same will be done by their company. They can decalrae...

January to March is that time of the year when most of us are rushing towards making our mandatory"tax saving investments". While we are all well versed with tax saving options available to us under section 80CC, but, this financial year government has offered us another option where we can invest in infrastructure bonds and save taxes. Here, an investor can invest upto maximum of Rs 20000 which can be claimed as deduction from his taxable income. This is over and above RS 1 lac that you can save under Sec 80 C. SO question to ask is should you and I invest in it? Lets first examine the pros of this option 1. Additional tax saving of Rs 6600 if you are under 30% tax bracket. Other than the above mentioned benefit , there isn't any other major benefit associated with investing in these bonds. Now , lets look at cons too 1. High lock in period - Most of these bonds are of 10 year tenure where minimum lockin is of 5 years and then these bonds will be listed on exchanges wh...

I have always stayed away from directly getting into equity markets. This was inspite of my firm belief that equity is the best asset class to invest in if one intends to make money over long period of time. The reason why I stayed away was my inability to devote enough time to research the stocks before investing and hence I always relied on Mutual Funds for equity investing. But, I always had this urge of making quick buck in equity markets. The most popular mode of short term investing in stock markets in via trading either intra day or for few days trades. But IPO investing for listing gains can be a great opportunity for common people to make money in stock markets in India. This I can talk from my own experience of investing in CIL IPO. For retail investors there was money to be made in this IPO and I personally made About RS 19000 in this IPO on an investment of Rs 46000. That's cool 46% in less than a month's time. This extra 19000 could be used to pay off my electrici...

Those of us who are in India, we have been inundated with news of tussle between SEBI and IRDA to control/regulate the ULIPS launched by insurance firms. The SEBI's contention was that since ULIPS are primarily a MF in the garb of insurance plan with huge upfront charges, SEBI should have right over regulating that product, while IRDA position was that since ULIP is an insurance product it will be regulated by IRDA. This dispute was also referred to court,but, finally the finance minister intervened in favour of IRDA. So, it is settled now, IRDA is the regulator who will regulate ULIPS. So what does this mean for an average investor like you and me?? Is it good or bad?? The answer is both, good and bad. Let us see why IT IS GOOD BECAUSE 1. ULIPS to become relatively a cost effective saving tool- My displeasure over ULIPS as an investment product is well known to the readers of this blog. I feel they are one of the worst products that one can invest in.The reason is its atrociousl...

SEBI is an institution which aims to act as watchdog to protect the interest of common investors in the equity markets. With this aim in mind, SEBI sometime back mandated that all AMCs do away with collecting entry fee to investors who wishes to invest in mutual funds. This is a revolutionary decision since it makes the mutual funds the best investment structure by a long distance. Now the investors will not be charged any entry fee and the entire money invested will be accounted for in the number of units. This will push up the effective returns that the investor will get. But, all is not well with this step. There are certain concerns as of now which needs to be addressed. 1. No entry fee means lesser people willing to sell- The abolition of the entry fee has led to a dramatic fall in the number of distributors who are willing to distribute or sell MFs. Many banks who earlier used to aggressively sell MFs to their clientele have completely stopped or have gone slow on it since selli...

One of the most classic dilemma facing a retired or soon - to-be -retired person is whether he should use the retirement proceeds to start up some sort of business to keep himself busy while making good money out of it or should he just invest the money in a safe place like bank FD and live off the interest accrued? There are people who would argue in favor of starting up something on ones own using the money while there are equally good number of people who think otherwise. So, what is the right decision or rather which is the better option? Well , I think there are no right or wrong options here . Both the options have their own merits and demerits , but, I would stick my neck out in favor of one option. But before I do so , let us examine the pros and cons of both the options :- OPTION 1 - STARTING UP A SMALL BUSINESS PROS - The first and foremost benefit of starting a business after retirement will mean that the person will be able to productively employ himself or herself. This i...

The global financial meltdown has led to various governments across the globe into pumping billions of dollars into the economy to revive demand and growth in the economy. Increased money supply does help in pushing the demand for goods and services up thereby helping the economy grow . There are green shoots of recovery already in some parts of the world. India and China are already growing at a healthy rate. One of the bad effects of de-growth and recession is the menace of deflation. India is already in deflation officially. Deflation is potentially very dangerous to the economy and can lead to serious damages on the demand side in the economy.But we need not worry too much about it because of 2 reasons . First reason is that in India even though the WPI is in negative the CPI is still at 9% , which is very high. So technically the demand for essential items like food articles etc is still on the rise. The second reason is the deflation is expected to be a short lived phenomenon. Th...

New Fund offers or NFOs, as they are popularly know, are quite popular among lot of people for various reasons but the most important factor which is responsible for the popularity of NFOs is the notion among investors that NFOs offers units at a discount or at a cheap rate. They feel since NFOs offer units at NAV of 10 , they are better off investing in an NFO as against investing in other schemes where the NAV is higher than 10.The feel by investing an X amount in an NFO they will get more units and hence would be better off. This is completely wrong theory about NFOS and NFOs are in no way cheaper or better than other funds available in the market. Let us examine this in detail . Now, the question that we need to answer is this : Do we invest in a fund to make more money /return or to buy a unit at lower NAV? the answer is obvious. There are various drawbacks of a NFO , some of which are mentioned as under:- 1. NAV of 10 does not mean you are better off - Return on any investment...

Remember the story about a tortoise and a rabbit competing in a race? In that race ,the rabbit , being more agile and fast , expects himself to win the race hands down against a slow but steady tortoise. We all know who wins the race in the end. We have the same race run on stock markets every day. We have traders and investors both competing to make more and more profit. Traders are very similar to the rabbit who was fast and agile , while investors are more like the tortoise who made slow but steady progress. The end goal for both of them is same but the route that they take is different. TRADERS - Traders are those set of people who make transactions in the stock market with a definite exit strategy. They initiate trade for short term and look to exit from the stock on making small gains. Sometimes, they can buy and sell the same stock 3-4 times in a single trading session, making smaller gains every time. They do not believe in "buy and hold" strategy. INVESTORS - Inves...

Most of the life insurance companies in India have at least one child care plan , if not more. Almost all the insurance companies spend lion's share of their advertising budget on promoting their respective child plans inspite of the fact that child plan is just one of the many life insurance products they have. HDFC Standard Life Insurance Company has positioned itself as premier life insurance company in the child care plan category. Almost all of its advertising communication is based on this premise. The reason why insurance companies promote their child plans heavily in India, is because of the fact that child care is an "emotional issue" for most of the parents in India, as much as its a financial issue . Most of the parents feel emotionally obliged to plan for their kid and this is where insurance companies hope to make a mark via their advertising. Nothing wrong in doing so. The question to be asked is whether or not these child insurance plans are good enough ? D...

Last one month has been an eventful one with news on "thugs" and cheats like Mr. Jadeja, B.K. Jewellers of Delhi, Mr. Agarwal etc who duped unsuspecting people to the tune of thousands of crores of rupees. Cheat Jadeja alone is suspected to have duped people to the tune of Rs 2000 crores. These are huge sums and have impacted thousands of people who have been robbed of their hard earned savings almost overnight. These are not the first incidents of this nature in India or world. These schemes or frauds have been in there since a long time. The recent Madoff Scam unearthed in US too is a part of this list. Madoff was a well respected investment advisor handling billions of dollars of investment for his clients till his real motive and modus operandi was revealed. Modus Operandi - So, how do these cheats manage to dupe people so easily and how do people get in their trap. Well , the modus operandi of all of these thugs is to play on the "get quick rich" desire of t...

With the Income tax return filing deadline of 31st July fast approaching, its time for you to brace yourself to file your tax returns. Following are the important things that one must keep in mind while filing his/her tax returns:- 1. Who needs to file the tax returns - All corporates and individuals whose income is within the taxable income slab need to file income tax. For those individuals whose total annual income is less than the taxable income (currently Rs 1.5 lakhs pa for men and Rs 1.8 lakhs for female) need not file income tax returns. However, in case your net tax liability is 0 after availing the various income tax deductions under Sec 80C and Sec 80D etc, then you are required to file your income tax returns. 2. When is the last date for filing your income tax returns? For all those who have tax liability yet to be paid , have to file their income tax returns by 31st July . However, if you are a salaried person and have all your tax liability already paid via TDS , then ...

Financial planning is important for people of all age, young or old ,but it assumes extra significance for young people because it can make a huge difference to their finances, if done in the right way. There are many elements involved in financial planning , but, here I am listing down few broad steps which every young person must take in order to have a healthy financial position over a period of time. 1. Start Saving early - One of the most common mistakes all young person commit with respect to their financial planning is that they do not start saving early enough. Most of them think that since they only have started earning now , its time for them to enjoy with their money. While there is no harm in enjoying a bit, one must also ensure that he/she saves a bit out of his /her income every month. Saving is a habit and the earlier one develops it the better it is for him. 2.Try and save every penny paid in tax- One must also ensure that he saves every possible penny of tax that can...

In our daily lives, there are few items which are high ticket items like Car, LCD TV, AC etc . Other than that there are other expenses also which are large ones like paying the renewal premium of your life insurance plans etc. Now each of these products do require a significant amount of money to first buy them and then replace them as and when required. None of these items last life long and as such will have to be replaced at some point in time. In the absence of any planning towards meeting these expenses , the renewal/replacement of any high ticket items can place undue stress on the your finances. And as such you need to have a sinking fund. What is Sinking fund?- Sinking fund is a fund where a small amount of money is saved regularly towards meeting a large ticket expenditure like buying a new car or replacing an old car etc. It is similar to a depreciation fund used by corporates where they save a percentage of the cost of buying new machinery in the depreciation fund so as to...

World famous investment advisor Marc Faber believes it is time for every prudent citizen to become one's own central bank by owning some gold. He believes that gold will be the safest and most valued asset class to hold in times to come. His rational for saying so are 1. With billions of dollars being printed world over by governments to pump into economy to stave off the depression, the risk of inflation in some time is real. The inflation in consumer prices will rise leading to increase in the value of gold . 2. The unprecedented printing of money will also lead to reduced purchasing power of paper currency in due coarse of time and as such gold will gain value in future. 3. Physical gold's supply is limited and with increased demand its price is bound to go up. 4. More and more central banks will look to buy and keep gold , thereby pushing the overall price of gold up. Read more on this at http://www.business.in.com/interview/close-range/is-a-gold-bubble-building-up/372/1...

The Indian Stock Markets are showing consistent sign of exuberance ever since the results of the 15th Lok Sabha General Elections have come in. The mandate is being hailed as " historic and path breaking" considering that it is for the first time in nearly two decades that a single party has managed to cross 200 MP mark on its own in the Lok Sabha. As soon as the results came in , the market experts hailed it as game changer for the stock markets. Congress was expected to bring in sweeping reforms on back of a decisive mandate. The same optimism and hope was reflected in the historic rise of stock markets the following Monday when the trade had to be suspended because the markets had breached the upper circuit twice in a single day. This was historic indeed. But, today as the final lot ministers got sworn in , much of that optimism and hope is being proved little too much for the government to live upto. The government is full of old faces and as such chances are that the pa...