Monday, August 22, 2011

Prajna Capital

Prajna Capital

Future Generali car insurance - `pay-as-you drive'

Posted: 22 Aug 2011 07:11 AM PDT

Drive safely and pay less for your car insurance

 

Future Generali to float pay-as-you-drive motor insurance plan "WE are now devising the pricing model for the product and hope to file it with Irda for approval within a month" KG Krishnamoorthy Rao MD &CEO, Future Generali Insurance

BEING a safe driver on the road and adhering to traffic rules are virtues that go un-acknowledged in India.


But, there could soon be an incentive for such healthy-driving behaviour in the form of paying a lower insurance premium for the vehicles.

Life and general insurance company, Future Generali, is planning to launch a `pay-as-you drive' motor insurance product soon. The `pay-as-you drive' model, where the vehicle owner pays motor insurance premium based on his driving behaviour and the mileage he clocks on his vehicle, may soon be introduced in India.

Since drivers with a higher mileage or baddriving behaviour are more prone to risk of claims, the premium paid by them would be much higher than the one paid by better drivers and less frequent users of vehicles. Those who go on a long holiday would also not be required to pay for the whole year but only for the number of days they actually use the vehicle.

"We have conduced the pilot studies in three-four cities and have collated data. We are now devising the pricing model for the product and hope to file it with the Insurance Regulatory and Development Authority (Irda) for ap proval within a month. We hope to launch it in the market within three months," said KG Krishnamoorthy Rao, managing director and chief executive officer, Future Generali Insurance.

The company has tied up with technology services firm, Logica, which has developed a product, Logica Crimson, which calculates the premium on a real-time basis using data from a device aboard the vehicle and gives real-time data on vehicle usage.

A usage-based insurance solution will ensure a lower claims ratio for insurance companies. The high-risk users would also realise that they have to drive carefully to avail settlement in case of a claim.


Also, claims arising from vehicle theft would go down as the device would help track vehicles in case of theft.

Selling the insurance product would require embedding the tracking device on the vehicle, which would have to be paid for.


Embedding the product and tracking it would carry a cost. It has to be built into the premium amount.


We cannot charge the entire cost in the first year premium but will look at phasing it out over three years. We believe that the customer would not mind paying slightly more when they know that it will help settle claims in genuine cases.

 

Debt Mutual Funds will Help Maximise your Gains

Posted: 22 Aug 2011 05:22 AM PDT

 

Debt mutual funds provide retail investors an avenue to diversify their investments while also providing tax-efficient returns better than traditional investment avenues. The investments in various debt mutual funds can be taken both as part of a normal asset-allocation process or even on a tactical basis.

With the current volatility in the capital markets, investors can use debt funds to even temporarily park their investments and switch to equity-oriented funds in a systematic basis.


In the current interest rate scenario, retail investors can optimise their overall portfolio by investing in as liquid/ultra short schemes, fixed maturity plans and shortterm income funds. Given the fairly large choices available, an investor should make a decision on the basis of investment objective, risk appetite, and time horizon.

LIQUID/ULTRA SHORT SCHEMES

Liquid schemes invest in very short-term money market securities maturing within 91 days. Ultra short-term schemes are money market schemes where a majority of the investments are made in the three months bucket.


Ultra short schemes take marginal exposure to securities beyond three-month tenure to generate higher yields.


Both these categories of products offer high liquidity. The returns from these funds are a function of the prevailing money-market scenario and typically provide higher returns during a high inflation/ tight liquidity scenario like the one being witnessed now. Investors in these funds are exposed to lower interest-rate risk.
The credit risk in these funds is also sought to be addressed by investment in securities with the highest credit ratings.


The dividend-distribution tax (DDT) for retail investors is 25% (plus 5% surcharge and 3% cess) in liquid schemes whereas ultra short term funds, falling in the category of income funds, have a DDT of 12.5% (plus 5% surcharge and 3% cess).


Liquid funds are ideal for investors with a very short-term horizon ranging from overnight to a few days and with a limited risk appetite, and who desire a stable accrual income. Ultra short-term funds are suitable for an investment horizon ranging from a week to a month. Both liquid and ultra short-term schemes are an alternative investment avenue for retail individuals to park their short-term surpluses in a tax-efficient manner.


Investors should ideally spread their short-term cash surpluses among various avenues such as liquid funds, ultra short-term funds and bank savings accounts to optimise returns and also provide liquidity for daily transactional needs.


Retail investors with an investment preference for equity products can also use liquid/ultra short-term funds for temporarily parking the surplus before deploying them in the equity markets.

FIXED MATURITY PLANS

Fixed maturity plans (FMPs) invest in securities matching the scheme tenure so as to lock in the yield prevailing at that time. These schemes have been popular of late due to the high interest rate scenario. Based on the current market yields, FMPs, especially in the oneyear bucket, remain attractive for debt-based investments for investors who do not have liquidity considerations.


Investors in FMPs have to trade off between a fairly predictable return in line with the prevailing market yields and the liquidity and credit risk factor. While the credit risk is managed through investments in higher-rated securities, investors have to seek liquidity through the exchanges where the schemes are listed.
The dividend income is taxed at a DDT equal to that of debt schemes for retail investors.

SHORT-TERM INCOME FUNDS

The current rates in the money market continue to provide attractive returns to retail investors in accrual-based products. However, in the prevailing scenario, retail investors could look at a combination of products to exploit the interest rate cycle and to generate optimal risk-adjusted returns.


For retail investors with moderate risk appetite and seeking liquidity, short-term funds with a tenure of at least six months would be the best option for investments.


Short-term income funds generate returns through a combination of accrual income and capital gains on the invested portfolio.


In response to higher inflation, the RBI has increased policy rates by more than 250 bps since March 2010. Tight liquidity and monetary tightening have started to impact the real economy with early signs of growth moderation.


Going forward, it is anticipated that the RBI is closer to the end of the tightening cycle. In such a scenario, the maturing amounts in FMPs/FDs, etc, would carry higher reinvestment risks.


In the current scenario, high money-market rates in the short term are also accompanied by attractive spreads in the AAA segment in the 1- to 3-year corporate curve.


Short-term income funds have an investment mandate to exploit the above opportunities. Retail investors can consider these funds as they have the potential to provide higher accrual income and also the flexibility to generate capital gains when the market yields move down and also via spread compression. These schemes typically maintain a portfolio average maturity of around 2-3 years. Hence, these schemes are exposed to lesser interest-rate risk and would appeal to investors even in the current interest rate cycle.


In short, debt schemes provide investors options for primarily generating income via accrual to a combination of accrual income and capital gains. The relative allocations among these categories should ultimately be a function of the overall asset allocation and risk tolerance.

 
 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Simple Steps To Ease Your Financial Worries Over Child’s Education

Posted: 22 Aug 2011 05:04 AM PDT




STEP 1

Most experts recommend planning for the child's education and other expenses as soon as possible. It is never too soon in this case

STEP 2

Create an education fund; its size would mainly depend on your aspirations regarding the school you wish to enrol your kid in. Direct savings regularly into this kitty

STEP 3

Foresee future expenses; the fund should factor in not only current education cost, but also the likely inflation rate

STEP 4

First major source of expense is in the pre-school stage, when the child is around two years old. Saving towards this should be the priority

STEP 5

For short-term needs, like paying school fees when the child turns 4, invest money in fixed deposits or fixed maturity plans

STEP 6

Choose a balanced fund and park a sum equal to at least two years' school fee at all times

STEP 7

Concurrently, set aside some amount to fund your child's extra-curricular aspirations – be it music, dance or sports

STEP 8

To create a larger corpus for higher education, channel your savings to diversified equity funds with a longterm view

STEP 9

Read every investment product carefully and evaluate its suitability before you put your hard earned money in it

STEP 10

The estimated corpus post this period (about 18 years) and likely inflation will help ascertain any shortfall, which can be made good with study loans

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

4) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

5) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

6) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

7) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

8) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

Sundaram Mutual Fund - Its Schemes

Posted: 22 Aug 2011 03:15 AM PDT

Sundaram mutual fund is one of the leading mutual funds in the country with great understanding of the Indian economy. They have a team of financial experts who research the company's performance before starting to invest in them. The assets are managed by the managers as their own money and work to generate more returns.

 There are lots of equity mutual funds which are performing well. After analyzing the performance of the equity mutual funds in the last 12 months, the best performing schemes are listed out below to spot the best schemes. 

·         Sundaram Financial Services opportunities Fund – Dividend and Growth

·         Sundaram PSU Opportunities Fund – Dividend, Growth

·         Sundaram Rural India Fund – Dividend, Growth

·         Sundaram India Leadership Fund – Dividend, Growth

·         Sundaram Select Midcap Fund – Dividend and Growth
 

JM Financial Mutual Fund - Its Schemes

Posted: 22 Aug 2011 02:36 AM PDT

 

JM Financial Mutual Fund is a part of JM Financial Group which is one of the first mutual fund companies in India which started its operation in 1993-1994. JM Financial Asset Management Limited is sponsored by JM Financial group. The mission of the group company is to generate good returns in all the product categories.

JM Financial Mutual Fund has launched a variety of schemes in the following categories.

·                           Equity

·                           Debt

·                           Arbitrage

·                           Liquid

Equity Schemes:

The schemes that are launched in the equity category are:

·                           JM Midcap Fund

·                           JM Balanced Fund

·                           JM Agri and Infra Fund

·                           JM Basic Fund

·                           JM Contra Fund

·                           JM Contra Fund

·                           JM Emerging Leaders Fund

·                           JM Large Cap Fund

·                           JM Nifty Plus Fund

·                           JM Small and Midcap Fund

·                           JM Large Cap Fund

·                           JM Tax Gain Fund

·                           JM Telecom Sector Fund

Arbitrage Fund:

·                           JM Arbitrage Advantage Fund

Debt Schemes:

·                           JM Fixed Maturity and Interval Fund Plans

Liquid Schemes:

·                           JM Floater Fund – Short Term

·                           JM High Liquidity Fund
 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

Financial Planner - Do Integrity & Dependability Check

Posted: 22 Aug 2011 01:25 AM PDT



How does one can find value proposition when it comes to financial planning, which is a new area? There is nothing to benchmark it with. So, how does one figure what is the right fee to pay?


Look at what you want. You probably want to hire a financial planner to get a blueprint for your life ahead and want to know how to achieve your goals. For creating a tailor-made financial plan, our experience is that it takes 25-30 man-hours in all. Taking an average of Rs 500 per hour for hiring the services of a qualified financial planner like one who has a CFP(CM) certificate, the fee would come to Rs 12,500 to Rs 15,000. But the per-hour rate can be higher or lower depending on the process adopted, the experience and expertise of the planner, etc. That's how planners arrive at their fee.


Now, is that value for money? For that you need to find out what benefits you would derive by engaging them. The financial plan will give you clarity, direction and pathway to achieve your goals. That is important as you will know where you are, where you need to go and how to get there. The financial planner will also suggest if past investments and insurances are good to keep or are damaged goods that need to be replaced. A good financial planner will also help you a great deal in cash management – matching the right instrument for the end-use and tenure.


We have found that the amount of extra money we could make for our clients by judicious investments would be more than enough to pay our fees! Financial planners will ensure that you don't make a blunder while making allocation to different asset classes or in choosing products. You will also not be sweet-talked into some card-castle-of-a-product, which makes sense only to the company and their agent.


There are various advantages you can derive from using the services of a financial planner. A financial planner will give you a clear financial blueprint, which will ensure peace of mind as you have an expert to guide you on finances all through the year. The planner would also stanch leakages by stopping/reallocating resources to appropriate products, improving returns and relevance.


Before engaging a financial planner, find out about the various services you can get. Find out how much money the planner can save/ make for you. Find out how comprehensive the plan is — for the financial plans of different planners could be different. Do a quick check about the integrity and dependability of the planner. Ask for references if you feel the need for it. Fees differ based on the experience and expertise of the planner, reputation, their processes, services offered, people strength (is it a single person or is it a team?), etc.


After understanding the value offered, you can decide who charges the appropriate fee and whose offering is good for you.

 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

Direct Taxes Code (DTC) and its effect on Fixed Maturity Plans (FMPs)

Posted: 22 Aug 2011 12:25 AM PDT

As the Income Tax Act makes way with effect from April 1, 2012, for the Direct Taxes Code, investors should be careful of overlapping investments. Meaning, investments where the IT Act is applicable while making it, whereas it is the DTC that will apply at the time of maturity.

For example, take the currently popular Fixed Maturity Plans (FMPs) of mutual funds. The attraction of these schemes is the tax efficiency they offer over bank fixed deposits. Both bank FDs and FMPs offer a similar rate of return. While the interest on bank deposits is taxed at the normal rate, in the case of FMPs (over a year), the 10 per cent (20 per cent with indexation) capital gains tax rate applies. Consequently, on a post-tax basis, an FMP is much more advantageous.

However, there is a significant issue. If you were to invest in, say, any one year FMP available currently, the IT Act applies at the time of making the investment. However, at maturity (2012-13), the DTC would apply. And, under the DTC, the tax advantage an FMP has may not be available. Let's understand how and why.

Basically, long-term capital gains from equity shares and equity-oriented mutual funds continue to be tax-free under the DTC. However, the current system of long-term capital gain taxation of non-equity MFs (10 per cent without indexation or 20 per cent with indexation) has been discontinued under the DTC. Though indexation will apply, the resultant capital gain would be added to the other income of the taxpayer and be brought to tax at the slab rates applicable. (Note here that it is not indexation per se but only the special rate of 20 per cent after indexation that is discontinued – indexation itself continues to apply).

Also, under the DTC, there is a significant departure from the ITA with respect to the method of determining whether a non-equity asset is long-term or not. For instance, under the ITA, a financial asset has to be held for over a year to qualify as long-term. Such a holding period is calculated from the date of purchase to the date of sale. For example, if you invest in an FMP in, say, August 2011, it would qualify as a long-term asset with effect from August 2012. However, under the DTC, the asset has to be held for over one year from the end of the financial year in which it was acquired. So, taking the same example, the FMP will qualify as long-term under the DTC only if held for over one year. From March 31, 2012, it will be considered a long-term asset only if sold anytime from April 2013 onwards.

So, let's see what these provisions mean for a typical 370-day FMP on offer currently (say in August). First, since the maturity of this FMP will be in August 2012, it is the DTC provisions that would apply, not those of the IT Act. That being said, since an FMP is a nonequity asset, the current system of 10 per cent (20 per cent with indexation) will not apply and, instead, the income will be subjected to the marginal rate of tax. Even this one could have lived with, since at least the net income subjected to tax would be lower due to applicability of indexation. However, in the above example, for the FMP to qualify as a longterm asset (and, hence, be eligible for indexation), it needs to be held for over one year from the end of the financial year in which it is purchased. That is, it needs to be held till April 2013. However, the maturity of the FMP will be in August 2012 and, hence, indexation will also not be applicable. Consequently, the income from such an FMP will be taxable just like interest from a bank deposit is – to be added to your other income and taxed at slab rates. The net effect would be that, given a similar rate of interest, there would be no difference whatsoever in the posttax return from a bank deposit and an FMP!

SUMMARY

The DTC is just round the corner. It is time various stakeholders take cognizance of this and tweak their offers in a way that would be optimal for the consumer. For example, the FMP tenure could have been so adjusted that every investor would end up qualifying for indexation benefits. Many may have already invested, not knowing (and not being warned) that at the time of maturity, the tax efficiency one has been used to all these years will not be available.

Investors, on their part, would do well to appreciate that this dual law applicability at the time of entry and exit is there for not only mutual fund schemes but also a host of other investments such as insurance plans, bonds and even to payments that earn tax deductions such as home loan instalments and tuition fees. Therefore, before committing funds for the long term, take care that the investments are tax-efficient and in conformity with the provisions of the DTC, rather than the current IT Act.
 

Birla Sun Life New Term Plans - Birla Sun Life Protector and Birla Sun Life Protector Plus

Posted: 21 Aug 2011 11:50 PM PDT



In line with the trend of insurance companies, over the past few months, increasing their focus on traditional endowment and term insurance plans, Birla Sun Life Insurance added two pure protection covers – Birla Sun Life Protector and Birla Sun Life Protector Plus to its portfolio recently.


These are pure terms plans — that is, they offer no maturity benefit to the policyholder if s/he survives the term. However, term cover is deemed as a must-have for individuals, as it is the cheapest form of life insurance and serves its fundamental purpose – of providing for the insured's dependants financially in the event of his/her demise.


The characteristics of both the variants (Protector and Protector Plus) are largely similar. While Birla Sun Life Protector is for those looking for a cover of between . 5 lakh and . 49,99,999, Protector Plus offers cover beyond this limit. There is no upper limit on the sum assured under Protector Plus, but it would depend on the company's underwriting guidelines.


Both plans offer the option of increasing the sum assured every year. The riders attached to the products are similar as well — critical illness, accidental death and disability, hospital care, surgical care and waiver of premium. Insurance seekers can choose policy tenures of between five and 30 years.


The key difference between the two plans, apart from the amount of cover provided, is the discounts in premiums, which are linked to the insurance-seeker's health. While women have to pay lower premiums than men in both the plans, Protector Plus rewards nonsmokers for maintaining a healthy lifestyle.

Under Birla Sun Life Protector, a 35-year-old male will have to shell out an annual premium of . 4,920 for a . 20-lakh sum assured (level) for a 20-year tenure; a woman, on the other hand, will have to pay a premium of . 4,170 for the same cover, provided all the other parameters are the same. Likewise, under Protector Plus, the annual premium for a 35-year-old male (smoker) for a cover of . 1 crore will be . 21,150 (. 16,900 for men staying away from tobacco), while a woman will have to pay . 17,100 (. 13,850 for non- smokers).

UPSIDE:

Term plans offer the cheapest way of ensuring dependants are taken care of in the event of the death of the insured. Hence, they are recommended by all financial planners as a must-have.

DOWNSIDE:

Underwriting norms followed could be very stringent, which means that not everyone who can afford the premium can hope to buy the policies, specifically Protector Plus, since it leans heavily on the insurance-seekers' state of health.
 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

LIC Nomura Mutual Fund - Its Schemes

Posted: 21 Aug 2011 11:24 PM PDT

 

Life Insurance Corporation of India Limited is one of the most valued and trusted brand in India in the Insurance Sector. LIC set up the LIC Mutual fund in the year 1989 to start the operations of the Mutual fund investments.

 

LIC Mutual fund provides tax benefits through its Equity Linked Savings Schemes. You can also invest in certain plans through Systematic Investment Plans. There are also several calculators available with LIC for retirement planning, tax planning, SIP Calculator, Mutual Fund Calculator etc.

 

Contact Address:

LIC Mutual fund has its branches all over india in all the major metro cities, tier 1 and Tier 2 cities.
 

Various Schemes:

LIC has launched various investment schemes under the various categories.

·                           Equity

·                           Debt

·                           Balanced

·                           Liquid

·                           Floating Rate

 

Equity Schemes:

These schemes invest a majority of their investments in equity and equity related instruments. The risk of investing in these schemes is high, but the returns are also considerably high when compared to the other schemes.

·                           LIC Equity Fund

·                           LIC Growth Fund

·                           LIC India Vision Fund

·                           LIC Index Fund

·                           LIC Infrastructure Fund

·                           LIC Opportunities Fund

Debt Schemes:

·                           LICMF Income Plus Fund

·                           LICMF Interval Fund – Monthly (Quarterly, Annually)

·                           LICMF Floater MIP

Balanced Schemes:

·                           LICMF Balanced Fund

·                           LICMF Children's Fund

·                           LICMF Monthly Income Plan

 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

 
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