Tuesday, September 20, 2011

Prajna Capital

Prajna Capital

Tata Dividend Yield Fund & Tata Infrastructure Fund

Posted: 20 Sep 2011 06:59 AM PDT

Tata Dividend Yield Fund
Objective
To provide income distribution and / or medium to long term capital gains by investing predominantly in high dividend yield stocks.

Tata Infrastructure Fund

 

Objective
To provide income distribution and / or medium to long term capital gains by investing predominantly in equity / equity related instrument of companies in infrastructure sector.

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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 IDFC Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in L&T Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Nomination for your financial assets

Posted: 20 Sep 2011 06:07 AM PDT


   When you opened a bank account, a demat account or made some investment, you would have come across a column on nomination. You may have skipped the column because you didn't have a photograph, necessary documents or the patience to read through the entire form before parking your money in that investment.


But what many don't realise is that nomination is important. A nomination gives the nominee — usually a family member — a rightful claim to your hard earned money, especially at the time when they have a pressing liquidity need. Also, not every investment works like a term insurance, which ensures that your family gets the benefit after your life time.

 
If you have not filled up the nomination form, don't fret. It is never too late to go back to the bank, the company or the AMC to fill in those details. They have a separate form for nomination, which can be filled up even after you have made the investment.

The Importance Of A Nominee

Every bank account holder, investor or owner of any immovable asset should have a nominee. It is not necessary that the nominee of the bank account, asset or investment has to be the final beneficiary. The nominee will be the custodian of the account after the death of the actual investor/ account holder.


It is not the bank or the AMC's prerogative to ensure every account holder or investor has a nominee. The onus is on the investor to ensure hassle-free transfer of assets after his/her death

The Process

The nomination process is very simple. One has to just fill up a form to assign nominees to your bank account/investment.


Usually, there is a column on nomination in an application form for opening a bank account or starting an investment. If you did not fill up the details in the application form, you can still walk up to the bank branch or the company and do the needful.


However, the process is a tad different in case of properties.


Typically, a house is in a cooperative housing society and is owned by virtue of owning shares. These shares can be transferred to the nominee and the ratio of the share ownership has to be mentioned in the share certificate. But, again, this nominee is a mere custodian of the property and not the owner unless stated in the will.

Choosing A Nominee

It is best to choose a major — your grown-up child, spouse or dependent parents — as nominee. Married couples usually choose their spouse as the nominee; some nominate their spouse and children. The assumption here is the child usually lives longer than the spouse or the investor's parents.


There are situations where a couple separates or the investor's spouse may die unexpectedly. In such cases, the investor has the flexibility to change the nominee. Even a simple change of mind can be a reason for changing the nominee.


Hence, there is no sacrosanct rule that the nominee cannot be changed. Therefore, even if you are uncertain, just fill the nominee details. It can always be changed later if you want.


But, if your nominee is a minor, you have to choose a trustworthy guardian to ensure there is a credible custodian for your assets till your child becomes legally eligible to inherit your wealth.

Nominee And Succession Right

Does the nominee have succession rights? The answer lies in the nature of investment.


If the investment is in the form of a company bond or equity, the nominee would be the beneficiary of such investments. As per the Companies Act, a nomination always supersedes the will. For instance, if you nominate your daughter as the nominee for the shares of a particular company held by you, your daughter will be the final beneficiary of the investment after your death. It does not matter even if the will states your son will be the beneficiary of all your investments. However, for all investments falling outside the purview of the Companies Act, such as real estate, bank accounts or mutual funds, the will supersedes the nomination. Hence, ensure the nominee(s) of your various investments and the beneficiary or beneficiaries in the will are the same to avoid confusion or any family feud after your life time.


In short, for all investments except company bonds and equity, nomination does not provide ownership of your assets. The nominee will only be the custodian of the asset till it is given to its beneficiary.


To ensure the nominee becomes the final beneficiary, you have to ensure there is a will to bequeath your wealth in a hassle-free manner.

'Either or Survivor' Clause

You can opt for the either/or survival clause, which makes your spouse the natural owner of your investments in case of any unexpected turn of events. This is a viable option especially in case of joint bank accounts or investments. A joint investment/bank account needs signature of both the parties. If you opt for an 'either or survivor' mode of holding, then transactions can be carried out by either of the individuals. Secondly, if one of the investors/ account holders dies, the transaction is not stopped. It can be carried out by the survivor.


In case of just a joint holding, the survivor (living individual) has to submit the death certificate of the deceased along with the application to the bank/asset management company. Thus, the 'either or survivor' clause is legally a sound option. You have the option of joint investments as well, but the survivor clause is a good option.

 

Product Review: IDBI Magic Card for Salary Accounts

Posted: 20 Sep 2011 04:48 AM PDT



IDBI Bank, which had earlier waived all charges for its account holders, has now launched a debit-cum-credit card named 'Magic Card', which can be obtained only by its salary account holders.

Essentially a debit card, it functions as an overdraft facility, allowing the user to spend more than the balance in his/ her account up to a predetermined credit limit.

FEATURES

According to the bank, the credit limit is a multiple of an individual's salary which can go up to three times in accordance with the eligibility. For instance, if the account holder draws a salary of . 50,000, he can get an overdraft credit limit of . 50,000. So if the credit limit is . 50,000, the account holder can spend the bank balance plus . 50,000 credit amount. The daily withdrawal limit has been fixed at. 50,000. The salary received by you will be used by the bank to adjust the credit availed. Like credit cards, you can earn reward points for using the card to make purchases. It also comes with an in-built insurance cover for lost, stolen or counterfeit card, which will come to your aid in case your card is misused by fraudsters.

CHARGES

The bank levies a charge of 14.75% per annum for PSU staffers and 15.75% for privatesector employees on the credit amount used by the card holder, while the processing fee is nil. Interest is calculated on the overdraft amount on a daily basis, but charged on a monthly basis. The card does not entail a cash advance charge that other credit cards impose for cash withdrawal at ATMs. Also, it has done away with third-party ATM fee for using the card at other banks' ATM more than five transactions a month. While the interest rate levied is lower than what credit cards carry – up to 39-44% per annum – it is applicable from the day you use the credit limit unlike credit cards which offer a 30-45 day interest-free period. This USP of credit cards has made them popular and in this area, credit cards score over Magic Card. In this context, it is comparable to a personal loan rather than a credit card.

UPSIDE

Apart from the convenience the card offers, lower charges, when compared to other credit cards, constitute a key advantage. Waiver of cash withdrawal charges is also a plus point.

DOWNSIDE

While all credit cards offer an interest-free period of 30-45 days during which the amount used can be repaid, this card charges interest for the entire period of credit use.
 

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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

 

Mutual Fund Review: UTI Pharma and HealthCare Fund

Posted: 20 Sep 2011 02:20 AM PDT

 

 

Scheme Objective:

This is an open ended sector fund, which invests in the equities of the pharma and healthcare companies. These companies both manufacture and market bulk drugs and healthcare products.

Type of Scheme: Open Ended Equity Scheme

Inception: May, 1999

Minimum Amount to be invested – Rs 5000

Entry Load: NIL

Exit Load: NIL if the scheme is redeemed after 1 year.

                   1% if the scheme is redeemed before 1 year.

Latest NAV: 20/12/2010

Income Option: 31.74

Growth Option: 41.08

Top Portfolio of Stocks:

·         Dr. Reddys Laboratories

·         Cadilla Healthcare

·         Cipla

·         Aventis Pharma

·         Divis Laboratories

·         Lupin

·         Ipca Laboratories

·         Sun Pharma Advanced Research Company

Returns from the Scheme: (20-10-2010)

·         3 months – 11.2 %

·         6 months – 11.8%

·         1 Year – 33.7 %

·         2 years – 50.2 %

(Returns upto 1 year are absolute and over 1 year are annualised.)

 

 

UTI is a reputed mutual fund company and UTI pharma and healthcare is one of its top performing funds. Investors with risk appetite and long term investors can invest in this scheme.
 

Mutual Fund Review: HDFC Capital Builder Fund

Posted: 20 Sep 2011 01:26 AM PDT

Objective
To achieve capital appreciation in the long term.

Option/Plan
Growth Plan,Dividend Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility.

Entry Load (as a % of the Applicable NAV)
In respect of each purchase / switch-in of units less than Rs. 5 crore in value, an Entry Load of 2.25% is payable.
In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 crore in value, no Entry Load is payable.

Exit Load (as a % of the Applicable NAV)
In respect of each purchase / switch-in of Units less than Rs. 5 Crore in value, an Exit Load of 1% is payable if units are redeemed / switched-out within 1 year from the date of allotment.
In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 Crore in value, no Exit Load is payable.

Minimum Application Amount
For new investors :Rs.5000 and any amount thereafter.
For existing investors : Rs. 1000 and any amount thereafter.
 

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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 prevent misuse of credit cards

Posted: 19 Sep 2011 11:40 PM PDT

 

THERE are some simple steps that can be taken to ensure that transactions using credit cards are secure. The added level of security is essential to ensure that there is no misuse of the information on the cards for carrying out fraudulent transactions.

While there is a long list of things that can be done to ensure this, it is important that the individual focuses on a few steps that will be effective in ensuring that there is adequate security for transactions.

Verify sites:

One of the ways in which credit card users can protect themselves on the internet is to ensure that they use only sites that are verified and have a certain level of security. This will ensure that the information that they are submitting on the website is protected.

The presence of the term 'http' on the address space of the website and a lock at some place on the screen of the browser are the signs that one has to look for. This does not eliminate fraud but it increases protection.

Computers:

A common way by which the information related to a credit card is stolen is through computers and there are times, when the credit card user also does not pay attention to the computer on which they are conducting transactions. Thus, using public computers where anyone can insert a virus and not a personal one, where there is a certain level of security and safety, could lead to problems.

When such computers are used for transactions, someone can capture the details of the credit card, which is then misused.

There are also computers and browsers where the information relating to an individual's credit card is often stored and this should not be allowed so that someone else does not get this information once the credit card user has completed the transaction.

There is also an option that is given on various websites, where the user can use a virtual keyboard instead of the actual keyboard and the use of this can also ensure that in many cases, the password can be protected from being captured by unauthorised entities.

Physical use:

When it comes to the physical use of credit cards, the individual has to be aware of where it is actually being used and the manner in which the card is being used. The use of the CVV number on the back of the card is important for any transaction and hence, the individual has to ensure that whenever they are giving the card for a physical swipe, it is being provided at a place where chances of theft are remote.

Even after a basic level of care, a cardholder must also check the details of the transactions once these are completed. They can sign up for the transaction alert system, whereby they are informed after each transaction through a message on their mobile and this will help them track any usage that is unauthorised and help in taking immediate action. At the same time, they need to keep the helpline number of the credit card with them.

Additional security:

There are a host of options that are available for the individual user when transacting using a credit card. The Reserve Bank of India has made it mandatory that there should be an additional level of password use that has to be present when a transaction is done online.

Similarly, there has to be a new, one-time password generated when the transaction is being done on the phone using a credit card.

The same level of protection has to be followed with these passwords while transacting in this manner so that the additional layer of security acts as a protection ring for the user.

 

HDFC Cash Management Fund - Savings Plan

Posted: 19 Sep 2011 09:27 PM PDT

Objective
To generate optimal returns while maintaining safety and high liquidity.

Option/Plan
Growth Option, Daily dividend option (reinvestment facility only) and Weekly dividend option (with payout and Reinvestment facility).(Effective from Jun 1st, 2007 - Dividend Payout facility is being introduced under the Weekly Dividend Option).

Minimum Application Amount
Growth Option - For New/ existing investors - Rs.10000 and any amount thereafter.
Daily Dividend and Weekly Dividend Option - For New/ existing investors - Rs. 100000 and any amount thereafter.
 

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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

 

 

Whole Life Insurance Plans

Posted: 19 Sep 2011 09:46 AM PDT

 

Longer-maturity plans insure you till you're 100, but find out if the extra premium that you have to shell out is worth it


   Until recently, those wishing to buy insurance at a later stage in life had to grapple with some common problems – the cap on the age of entry and also the policy tenure. Barring a few products, most were designed with the younger population in mind. Assuming that they would need cover only till retirement, most policies offer a maximum tenure of about 30-35 years. In the last few months, however, some life and non-life insurance companies have started promoting plans that extend life-long coverage or at least till the policyholder turns 99 or 100.


IDBI Federal and Tata-AIG Life are two companies that introduced plans with longer maturities recently.


A health insurance that offers cover for a longer term is understandable, since it offers comfort at a time when health concerns and health costs are mounting. However, the logic behind life insurance with longer maturities is not very clear.
After all, isn't life insurance meant to replace the policyholder's income and aid his dependants financially, in the event of his or her demise? That's always been the fundamental premise – if you do not have to provide for those who are financially dependent on you, you do not need the protection cover.


However, pure term covers, which fulfil the objective of protection, are rather under-sold, owing to a combination of factors — higher incentives for agents in pushing insurance-cum-investment plans and also reluctance on the part of insurance-seekers to 'spend' on a product that promises no return as such. That explains why Ulips and endowment plans are popular. So, can longer maturity life products also serve any purpose?

THE LIFE INSURERS' STANCE

Insurers say that longer-tenure products, particularly term plans, are intended to meet the hitherto unrecognised need of those who are past their earning years. Their argument is: it's never too late to buy life insurance. "With a large number of nuclear families emerging, and the rising life expectancy and cases of lifestyle diseases, there is the possibility of a large number of people nearing retirement with inadequate life insurance to support their spouse after their demise. While launching its term plan for senior citizens. The plan is designed to secure the next of kin so that they are not left dependent on the next generation. Parents should aim to become self-reliant when their children start a family of their own.

EVALUATE THE MERITS

The need for such plans depends on your circumstances and what the product has to offer. Such plans may be purchased for certain specific situations. For instance, the life assured might be purchasing the policy purely as a part of his estate planning (the sum assured on death would be made available for heirs along with other distributable assets) or for the benefit of a handicapped dependant for whom the sum assured may be needed to be held in trust.


Then, there could be those who desire an income even after their working years. One of the insecurities people labour under is that they will not get regular income after retirement. That is why pension plans are such a hit. On the face of it, these things seem attractive, but the effective returns these policies offer are pretty low — 5-6%. Pension policies from various companies also fall in this category. Such plans will also work for those who have commitments beyond their retired years and continue to pursue employment well beyond their superannuation due to financial compulsions.


Longer-tenure term plans may help those taking an insurance policy very late in life, when they are past the maximum entry age for other policies. In such policies, the premium, however, will be very high. This apart, you need to assess whether the sum assured attached to the product is sufficient to meet your requirements.


Also, you need to take into account the fact that the features of all longer-tenure plans are not similar. A term plan and a Ulip could serve different needs. The need for a protection plan after your retirement is limited. However, a term plan bought at an early age that covers you up to the age of 70 or 75 years can be fairly competitive since you lock in a low annual premium.


At the same time, whole-of-life plans that have a savings component, and thus a cash value associated with them, can be a useful tool for your longer-term estate or inheritance planning. It is important to understand the differences between the two and the underlying needs they fulfil when evaluating these plans.

ASCERTAIN THE NEED

Life plans with longer tenures/ maturity periods are niche products designed to fulfil specific needs of policyholders. Therefore, they are not a must-have for every individual.


A policy purely for protecting the sole income-earning capacity of the individual may prove to be expensive as the individual's age advances. In such a case, it would be advisable for individuals to weigh the options and see what works best for them in terms of the cost for income protection, for example, the likelihood of dependants beginning to earn their own income, the cost of insuring life for a short term vis-a-vis benefits, etc. Also, a health insurance plan may prove to be more essential than a pure term plan in such situations.


Servicing an insurance policy post retirement, thus, makes little sense. If the cover continues beyond this point, one is unnecessarily paying a premium for no real benefit. Even if the premium stops before retirement and the cover continues for life, one would have anyway paid the premium for coverage for entire life.

 

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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

 

 

 

 

Birla Sun Life - Government Securities Fund (LTP)

Posted: 19 Sep 2011 09:18 AM PDT

Birla Sun Life - Government Securities Fund (LTP)

 

The Scheme seeks to provide investors investors current income consistent with a portfolio invested 100% in securities issued by the Government of India or the State Government and the secondary objective is capital appreciation.
 
 

Mutual Fund Review: LIC Nomura Bond Fund

Posted: 19 Sep 2011 08:35 AM PDT

Objective:
To generate an attractive return for its investors by investing in a portfolio of quality debt securities and money market instruments.

Liquidity:
Unitholders can redeem their units on an on going basis on any business day.

Exit Load:
0.5% if repurchase is before 6 months from the date of allotment of units for investments upto to Rs. 50 lakhs.
0.25% if repurchase is before3 months from the date of allotment of units for investments greater than Rs. 50 lakhs

Minimum Subscription:
Rs. 5000/-.

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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

 

 

 

Is it a good idea to mix insurance with investment?

Posted: 19 Sep 2011 07:34 AM PDT

 

AS THE debate between choosing pure protection and endowment plans continue, we look at whether it makes sense to select an insurance plan with the objective of savings.

The insurance sector in India is growing at a fast clip. However, policyholders often get confused between the concepts of 'insurance' and 'investment' and cannot differentiate between pure protection or endowment life insurance.

Some insights into the different facets of both these instruments should be helpful.

Term insurance or pure protection plans: A term insurance policy offers protection for a pre-determined premium. Generally, the premium is low and quite affordable, but does not have a built-in savings component. It provides coverage for a specific time period. However, the most important benefit of a term policy is that it offers a guaranteed death benefit at a considerable low cost.

Term plans are beneficial when protection needs are high at certain phases in life. For instance, when your family is growing and may be you do not have sufficient funds to pay a large premium.

However, term insurance policy has no cash value, or savings component, and the premiums tend to increase through the years.

The policy provides benefit only upon the death of the insured. In the absence of an eventuality, the premium is not refunded.

Endowment plans: Endowment life insurance plans offer both protection and savings opportunity. Generally, this is chosen to avail of fixed and market-linked variable returns. Hence, the important benefit of a endowment life insurance policy is the cash value benefit.

The Indian consumer prefers bundled products to pure protection plans due to a preference for returns from all financial instruments. As per `Life 2010', a study done by AC Nielsen, 67 per cent respondents bought life insurance to get good returns from it.

Most endowment policies are also eligible for dividends, which are not guaranteed, if and when they are declared by the insurance company. Many companies offer the option to apply current and accumulated dividend values towards payment of all or part of the premiums. If dividend values are sufficient, out-ofpocket premium payments may end or be reduced after several years, yet coverage can continue for life.

So while premiums must be paid under both the term and endowment plans, long-term out-of pocket cost of permanent life insurance may be lower compared to the total cost for a term policy.

Additionally endowment policies can also eliminate the problem of future insurability.

Cash value life insurance does not expire after a certain period of time.

For example, whole life policies which allow for increasing protection through paid up additions thus matching the lifestyle needs of the policyholder.

Also, some policies contain guaranteed purchase options, which allow you to buy additional coverage at specified times and thus it builds cash value.

This amount, part of which is guaranteed under many policies, can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children's education or to provide income for your retirement.

Most often, life insurance policy inculcates systematic and disciplined savings behaviour among the consumers to achieve their long term goals unlike any other financial instrument.

To conclude, be it a term or endowment insurance plan, choose a policy according to your objective and which accommodates the premiums and benefits to suit your budget.

 
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