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India's fifth largest state-owned bank, Bank of India (BoI), will buy 51% stake in the mutual fund joint venture between telecom major Bharti Enterprises and AXA Investment Managers, a statement from the bank said.

This paves the way for Bank of India's re-entry into the 41-member-strong local mutual fund (MF) industry. BoI had shut its MF business in 2004.
BoI will buy Bharti's 25% stake and AXA's 26% stake in the in the asset management company. The deal brings down the Paris-headquartered AXA's stake in Bharti AXA Investment Managers to 49%.

Financial details of transaction wasn't disclosed, but an official familiar with the deal said BoI could have paid about 3% of Bharti AXA Investment's total assets under management of 176 crore as on September 30. Total AUMs of the mutual fund industry was 7.12 lakh crore as on September 30.

This values the deal at about 5.3 crore. BoI will exclusively sell Bharti AXA Investment's products through its branch network, the person said, asking not to be named.

Bharti has been scouting for a buyer for its stake in the mutual fund venture for the past two years. The hunt for a prospective partner has largely been confined to banks, mainly state-owned, because their reach across the country would help the fund sell its schemes better.

Since the ban on entry load, or the fee that mutual funds used to charge investors to pay distributors, in August 2009, which have made distributors disinclined to market mutual fund schemes, banks have been in demand as partners for funds. In particular, small funds, which lack the network to market their equity schemes, are keen to tie up with banks. Currently, most state-owned banks such as State Bank of India, Bank of Baroda and Canara Bank, which hold stakes in mutual fund ventures, own at least 49% in them.

Mutual fund industry officials said AMCs in emerging markets are usually valued at 4-6% of their assets. Recently, L&T Finance, the financial services arm of engineering major Larsen and Toubro, bought DBS Cholamandalam Asset Management for 45 crore, valuing DBS at 1.55% of its total assets under management. In June last year, Japan's Nomura bought a stake in LIC Mutual Fund for about 2.5% of fund's assets. In 2009, IDFC bought Standard Chartered Bank's asset management business for close to 5.7% of its assets.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

How to invest your Retirement Money?

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Posted: 02 Apr 2012 06:22 AM PDT

PLANNING for investing one's retirement funds is getting only difficult by every passing year. Gone are the days when retirees could enjoy bank fixed deposits/ post office schemes giving 12-14 per cent returns and inflation at sub 5 per cent levels and retirement was not difficult, at least financially. However, now, with increasing investment options coupled with a decline in the risk-free interest rates and fixed income options, a retired person has to really be careful in deploying his retirement kitty.

Notwithstanding the above dilemma, an important question that retirees are generally bewildered from, is how much of their pension fund (receivable from their employers) should be taken in lump sum and how much as monthly income?

Taxation rules comes in the picture here and counts as a major decision-making factor. Generally, individuals opt to commute (the technical term used to describe the lump sum option) their pension fund to the extent it is tax-free under the income-tax laws and the rest is enjoyed at monthly rests.

But, is this always the correct and the only option? Well, may be not.

If the taxation factor is ignored, the foregoing paragraphs seek to outline some of the advantages that need to be weighed before making the choice between the two.

Advantages of lump sum money: Select your own investment style: Once the lump sum money is received, the individual will have the choice to deploy the funds as per the asset-allocation and risk profile that suits him / her best. The retiree will also have the option to select an investment adviser, whom he trusts and believes would be able to help him balance the portfolio to a suitable mix of risk and reward.

Provision for medical emergencies: A portion of the money could be allocated for any unforeseen medical emergencies, which may not be possible otherwise.

Estate planning: With money in hand, the retiree will have an ample scope to plan the inheritance of the money to his/ her legal heirs. With the help of a suitably drafted will, an individual can allocate his/ her estate properly. Any distribution of his estate for social causes too could be efficiently planned from the available money.

Tax planning: Annuities or the monthly payouts received by an individual are always taxable. However, with the lump sum money, the individual will have the choice to structure his income pattern for tax optimisation. Investments could be planned and executed so as to minimise tax outgo for the retired individual.

Cash flow management: Not all individuals may require a fixed inflow every month. There may be a need to provide for a lump sum outflow at fixed / planned intervals. For example, an annual trip.

The cash flows required for these planned events could be better forecasted and managed with the lump sum kitty received.

Advantages of regular pension income: Interest rate risk avoided: Most annuity plans available today offer fixed rates for monthly pensions. At these fixed rates, the individual would not be bothered about the interest rate fluctuations and the consequent interest rate risks.

Avoid market related tensions: A lump sum investment would always lure the individual to invest a part of money in the extra returns. However, volatility and uncertainty related to equity market investments may sometimes add to the retired individuals' tensions. Portfolio, not performing according to expectations, may play havoc with the individual's peace of mind.

All these pressures are avoided with the fixed monthly pension.

Pension for spouse: Most annuity plans provide for an option, where in the case of death of the individual, the spouse would continue receiving the pension (same or 50 per cent, as opted for) during his/her lifetime. This would add to the individual's comfort factor knowing that the spouse would be provided for in his/her absence.

Curtailing tendencies to splurge: Many a times, access to funds brings along a tendency to splurge on wants which start seeming like needs. All these tendencies will find no place with the limited monthly income option. Moreover, budgeting for monthly expenses becomes far simpler with the fixed-income option.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Direct Tax Code (DTC)

Posted: 02 Apr 2012 05:47 AM PDT

It is that time of the year when people make investments for tax saving. As an investor, when you think about investments, you have to keep in mind that the existing tax laws will undergo a major change by April 2012, with the implementation of the Direct tax Code (DTC). DTC has suggested some major changes in the way tax saving instruments are positioned. One has to ensure that the investments which are eligible for 'tax saving' under the existing tax laws would also continue to reap benefits under the DTC. The avenues available for tax saving investments are less under DTC compared to the existing tax laws. Following are some of the key proposals under the DTC which could impact your investment decisions.

Deductions

Under the existing tax laws, the umbrella limit of . 1,00,000 is available as a deduction for a host of investments which includes, payment of life insurance premium, ELSS, unit-linked insurance plans (Ulips), tuition fees of children, five-year bank deposits, and provident fund contributions etc.

The revised discussion paper on DTC has proposed to provide EEE (Exempt-Exempt-Exempt) method of taxation on the following investment instruments:

   Government provident fund
   Public provident fund
   Recognised provident funds
   Pension schemes (administered by Pension Fund Regulatory and Development Authority)
   Approved pure life insurance and annuity schemes

Under the DTC, the deduction of . 1,00,000 is restricted to Government Provident Fund, Public Provident Fund, recognised provident funds and pension schemes. Investments made before the commencement of DTC which enjoy EEE method of taxation under the existing tax laws would continue to be eligible for EEE method of taxation for full duration of the instruments.

An additional deduction of . 50,000 has been proposed to cover payments such as life insurance premium (annual premium shall not exceed 5% of capital sum assured), tuition fees for children and contribution to health insurance, which are currently under the limit of . 1,00,000.

National Saving Certificates, five-year term deposits with banks or post offices or deposits in senior citizen savings scheme and non pure life insurance premiums will no longer be a choice of tax saving investments under the DTC. Also, repayment of housing loan principal amount and contribution to long-term infrastructure bonds will no longer yield tax saving under the DTC.

Capital gains

Listed equity shares or units of equity-oriented funds held for a year or less, would be taxed after allowing 50% of capital gains as notional deduction. The main object of the computation of adjusted capital gains is to benefit the lower and middle income group taxpayers, as the effective tax rate would be lesser in case of taxpayers falling under the lower tax rate.

Listed equity shares or units of equity-oriented funds held for more than a year, would be taxed after allowing 100% of capital gains as notional deduction.
In the case of non-equity shares or non equity-oriented mutual funds, period of holding will be considered from the end of the financial year in which it is acquired, where as the holding period is calculated from the date of purchase of investments, under the existing tax laws.

A snapshot of some of the key positive, negative and neutral proposals from a tax saving perspective under the DTC, is given below:

Positive

An additional deduction of . 50,000 is available for life insurance, tuition fees for children and health insurance premium

Neutral

Contribution to employee provident fund, PPF, superannuation fund, pension schemes are subject to deduction with a maximum ceiling of . 1 lakh
   Continuance of NIL tax on capital gains from sale of equity shares/equity-oriented units held for more than a year

Continuation of EEE method of taxation

Negative

The following investments will not be eligible for tax saving – ELSS, national savings certificate, five-year bank fixed deposits, Senior Citizens' Savings Scheme, post-office time-deposits, principal component of home loan repayment, contribution to long term infrastructure bonds

In the case of non-equity shares or non equity-oriented mutual funds, period of holding will be considered from the end of the financial year in which they are acquired

To conclude, diversification always reduces risk and may increase returns, too. So, one could balance his/her portfolio and maintain a fair balance of investments in both government and private securities. The focus for investors will need to move towards investments that provide for a "real" wealth accumulation and not only a tax savings play. Let's keep our fingers crossed for the DTC to be implemented by April 2012 as it will provide more clarity and a long-term view on the investment horizons.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Submit filled up application Collection canter near you

What is P/E Ratio ?

Posted: 02 Apr 2012 04:38 AM PDT

This is a valuation ratio of a company's current share price as compared to its per share earnings. A higher price-to-earnings (P/E) ratio indicates that you are paying more for the company in anticipation of high growth. This can work both ways.

If the investors' expectations are not met the stock price can come down sharply. Hence, a value investor goes for stocks that have lower P/E, indicating that the stock in underpriced in comparison to its performance. Today, most blue-chip companies in the domestic stock markets are quoting at lower P/E ratios.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

The importance of having a PAN card

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Posted: 02 Apr 2012 04:12 AM PDT

THE IMPORTANCE of having a permanent account number (PAN) has grown manifold over the years and it is now a vital element of any financial transaction.

Importance of the card: Simply speaking, PAN is a 10-digit unique alphanumeric number, issued by the income tax department to a taxpayer. The categories of people required to apply for a PAN card to the income tax authorities are provided in the Income Tax Act and include those whose total income is higher than the amount not chargeable to tax, and those carrying on business or profession where the total sales or gross receipts exceed Rs 5 lakh.

The PAN card of an individual contains his name, father's name, date of birth, PAN, signature and photograph. An individual can be allotted only one PAN.

How it works: A PAN enables the income tax department to link all transactions and documents of the individual. These include income tax/wealth tax returns, tax payments, tax de ducted at source (TDS), assessments, tax demands/arrears and correspondences, to name a few. Therefore, a PAN card acts as an identifier for the individual with the tax department.

PAN also facilitates the easy retrieval of information and matching of information relating to investments, loans and other business activities of taxpayers collected through different sources.

Application for PAN: Application for a new PAN can be made in the specified form, either online or physically, along with the documents prescribed by the income tax department. The status of the application made can also be tracked online on the income tax de partment's website. Recently, the Central Board of Direct Taxes introduced two separate PAN application forms for allotment of PAN, with effective from November 1, 2011, for Indian citizens (Form 49A) and individuals who are not citizens of India (Form 49AA).

Quoting of PAN: In addition to quoting of PAN on income tax returns, any correspondence with the income tax department and tax challans, the number is also required to be quoted on documents pertaining to specified financial transactions, which include: Sale or purchase of any immovable property valued at Rs 5,00,000 or more Sale or purchase of a motor vehicle Time deposits exceeding Rs 50,000 with a bank or post office respectively Contract of a value exceeding Rs 1,00,000 for sale or purchase of securities Opening a bank account Making an application for installation of a telephone/mobile connection Payment to hotels and restaurants against their bills for an amount exceeding Rs 25,000 at any one time Deposit in cash aggregating Rs 50,000 or more with a bank during any one day Payment in cash in connection with travel to any foreign country of an amount exceeding Rs 25,000 at any one time Updating PAN details: It is in the interest of the taxpayer to obtain the correct PAN/make changes in the PAN allotted, at the earliest, in order to get the relevant credit of taxes paid during the year and avoid receiving demand notices from the income tax department.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Managing expenses in tough economic times

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Posted: 02 Apr 2012 03:11 AM PDT

DURING hard economic times, there is a need to look closely at various financial transactions that are undertaken.

Analysing income and investments is just the starting point. What also needs to be done is to take a very close look at the manner in which expenses are undertaken. This is one area that holds out hope for the improvement in financial position.

Proper attention will ensure that there are gains that are available in several other areas also.

Large discounts: When the conditions are tough and sales are hard to get, various marketers also get into the thick of things and one way by which they try to induce people to spend is by offering large discounts on their products. The presence of a discount should not be the reason why an individual should undertake an expense. We should look at several factors to ensure that a right decision is being made. The first thing that needs to be checked is the exact nature of the discount.

Thus, it could be that the purchase of a specific item would lead to a discount to the tune of 15-20 per cent. This is something that can lead to cost savings compared with some other discounts that allow the individual to get some discount on some future purchase. In the latter case, it actually leads to additional expenses.

Need for purchase: The best way to start this process is to actually look at the item where the discount is available and then ask a very simple question. Is there a need to purchase this particular item or service or can the purchase be put off without any implication? This would provide the right base from which the process can be started and, hence, the exact need would be revealed. It could be that there is actually zero need as far as the item is concerned, so if that is case, then there should not be an expense at all. If this kind of analysis is not done and expenses are made just because some benefit is being offered on it, then the situation can get tough because it would be very difficult to say no.

Value of item: Another point that also needs attention is the actual value of the item that has the discount offer on it. If the value of the item is very small, then the discount might not matter at all, so there should not be a rush to ensure that the purchase is completed immediately. For example, if there is a situation where the item is worth Rs 60 and the discount being offered is 30 per cent, then the overall figure might not be so significant that would require a rush to get it by spending Rs 20 to complete the process. If the item has a high price and the discount is significant, then the savings can also be big, and, hence, the offer can be considered. Otherwise, all that the process does is place an additional expense burden on the individual.

Under control: At the end of the day, whether the discount is availed or whether the offer is put aside, there has to be one thing that should remain consistent. Every step should be part of the overall planning process that is done within limits set, so that there are no excesses. This will ensure that there is some moderation that is taking place and it will not put any pressure as far as the individual is concerned. It will also lead to a situation where the financial position also remains stable and wasteful expenses are avoided.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

ICICI Prudential Banking and ICICI Prudential PSU Debt Fund - Closing of Subscription

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Posted: 02 Apr 2012 02:36 AM PDT

ICICI Prudential Mutual Fund has announced the closing of subscription for ICICI Pru Banking & PSU Debt Fund.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Buy House the you can Afford

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Posted: 02 Apr 2012 02:30 AM PDT

The stories are dark. The narrators are starkly different from each other, cutting across the class and income. The only common thread that runs through these poignant stories is the 'obsession' to own a home and finances that are stretched beyond repair. After listening to the stories – told by the victims as well as financial advisors – you ask yourself: is the desire to own a home at any cost causing irreparable damage to individual lives and finances? Consider these two stories. The first couple, barely making . 35,000 a month, bought a house in a far-off place in Navi Mumbai. They bought the house only for sentimental reasons, knowing very well that they can't stay there. "When I met them for the first time, the wife started crying and said that they can barely afford even a meal at a restaurant because they were paying EMI plus rent and the EMI has shot up because of higher interest rates," says a financial planner, who doesn't want to be named. Another young couple in their thirties also bought a house in a posh locality in a happening suburb in Mumbai. They almost overshot their budget by 75%, and paid around . 1.5 crore for it. Then came the interest rate shock and the extra EMI, plus living in a posh apartment also meant shelling out more for services, and opting for bigger cars and brands. The husband took a foreign assignment to earn some extra bucks. The wife has some health issues, but can't quit because of bad finances. It is a real sad case.

These days, it is not uncommon to come across people who have exhausted their home loan eligibility and taken personal loans and used all their savings to own a house. Naturally, there is tremendous pressure on their finances because of EMIs. Since most of them have a floating rate loan, they also have to bear the brunt of higher interest rates. Many people are struggling with their home loan EMIs because of the higher real estate prices and interest rates. They also have to face uncertainties on the job front, and also their incomes are not keeping pace with the inflation and expenses. Some of them resort to distress sale as the last option, but some still go on carrying the burden.

His advice to his clients: It just doesn't make sense to be aggressive when it comes to buying a house now because of the higher real estate prices and interest rates. You can pay very little – around 2-3% of the capital value – as rent and stay in the same place. People should realise that they have multiple goals to take care of in life and house is just one of them. "If you pay a huge EMI for next 20 years and left with just five years for retirement, you would be in real trouble. However, for most people buying a house is an emotional decision and it is not easy to reason with them. Buy a house if you can really afford it, but don't become obsessive and give up all financial prudence. Limit all their EMIs to 50% of their income. If you exceed this limit, you could be in trouble.

Financial experts say most of the arguments in favour of buying a house such as inconvenience of staying on rent, the wastage of money, 'you won't be able to buy a house if you don't buy one now', and so on, just don't hold water. Sure, the property prices have gone up phenomenally in the past five-six years and the prices have once again gone up after a small correction, but prices can't go up by 30% every year. It has to be in single-digit, may be on the higher side, in the long term. If you stay on rent, then you will be paying only a fraction of the amount and you will also save a lot.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Long term Investing and building wealth

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Posted: 02 Apr 2012 02:05 AM PDT

When you invest for long-term financial goals, you refrain from timing the market and making impulsive investment decisions

THE decisions that we make today will shape our tomorrow. While managing your money, there are certain golden rules that you can follow. This will help you gain better control of your finances and in turn, help you lead a financially secure life. Here are the tried and tested investing mantras for you.

Invest early: Did you know that Warren Buffett, the world's richest man, started investing at the age of 11? And guess what? He regrets that he began late.

Let's take the case of two friends -Ram and Shyam. Ram puts away Rs 750 every year from the age of 15 and for a period of 15 years. After this, he discontinues any further investments.

While at the same time, Shyam begins investing Rs 5,000 every year from the age of 30 and invest this amount for the next 30 years. Let's assume that their investments fetch them a 15 per cent annual return. Who do you think would have made more wealth at the retirement age of 60? No, it's not Shyam as most of you would think! Yes, it is Ram. Even a modest amount of Rs 750 he invested will snowball to Rs 27.70 lakh by the time he turns 60, whereas, Shyam's Rs 5,000 investment every year will fetch him a little less, that is, Rs 25 lakh.

Both of them managed to build almost an equal amount of wealth. However, did you no tice that it took Shyam Rs 4,250 more every month and an investment period double than that of Ram to build wealth almost similar to his.

Benefit from the power of compounding:

"The most powerful force of the universe is compound interest" -Albert Einstein. He couldn't have been more correct. Simply put, compounding means earning money on the already earned. Confusing? In fact, it is a very simple concept which, when put to use, can give you extraordinary returns over the long term.

Invest for the long-term:

Investing does not end at starting out early and compounding returns. It is equally important to focus on the long-term.

When it comes to risky investment avenues such as stocks and mutual funds, a long-term approach pays, since it irons out market volatility. Besides, when you invest for long-term financial goals, you refrain from timing the market and making impulsive investment decisions.

Think systematically:

We often postpone investing if we feel we don't have enough money or time to invest. With systematic investments, you can make even small contributions (as much as Rs 500) and yet generate enough wealth over the long-term.

And don't forget the power of com pounding is at work even with small amounts as we have seen earlier.

Invest consistently in a disciplined way:

One of the cornerstones of effective wealth building is to invest at a onsistent pace. Take the case of two friends -Luv and Kush. Both started investing Rs 3,000 a year at the age of 25 and continued to invest till hey were 30 years old. After hat, while Luv continued to nvest Rs 3,000, Kush kept procrastinating and discontinued his regular investment.

After some years, Kush, realizing his folly, quickly made lump sum investments (Rs 20,000 when he was 35 and another Rs 25,000 when he was 42).

By the age of 45, both Luv and Kush had invested Rs 63,000 each. Assuming a growth rate of 15 per cent per annum for both of them, Luv had made Rs 4 lakh, while Kush had built up only Rs 3.8 lakh.

Diversify your investments and spread risk:

Each asset class has a unique degree of risk that accompanies it and different returns generated by it. Even at a certain given point of time, a particular investment might experience a growth in its value, while another investment might face a decline and downfall.

Keeping your portfolio concentrated on just one or two assets can lead to an imbalance.

The primary aim of spreading your money among various asset classes is to maximise returns for your preferred level of risk, or put in another way, to minimize risk for a certain expected rate of return. This is known as diversification.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

TDS slips for registering property

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Posted: 02 Apr 2012 01:03 AM PDT

After imposing a 1% tax deduction at source on property transactions above a threshold, the government plans to make it mandatory for people to show proof of this tax payment to get their properties registered.

"Buyers will need to show income tax challan to get their property registered from October," a finance ministry official said.

Finance Minister Pranab Mukherjee in the budget proposed 1% tax deduction at source ( TDS) by the buyer from the consideration paid to the seller if the value of the property is more than 50 lakh in metro areas and more than 20 lakh in other places.

Sellers can claim credit in lieu of this on the basis of a one-page form to be notified soon after the passage of the Finance Bill, the official said.

The rule will cover all home and land transactions, except farmland.

While the move is aimed at checking generation and use of black money by bringing most property deals under the radar of the income-tax department, tax experts say there could be a rush in property deals in the next six months to avoid hassles.

Buyers have a six months window to avoid compliance hassles.

The government is expected to make some allowance for deals struck before October but registered later when it notifies the rules.

Tax officials say the new rule will ensure a steady flow of information to the income-tax department on property deals.

Real estate is considered to be one of the most widely used means to generate and park black money. Cash component in land and property transactions could be as high as 60%, according to some estimates.

Builders, however, say the new rule is unlikely to help curb black money but will definitely add to the woes of property buyers.

It is not clear what benefit will accrue to the government from this move

The government should then provide an easy mechanism for buyers to deposit the amount

Lalit Kumar Jain, president of the Confederation of Real Estate Developers' Associations of India, the apex body for private real estate developers, said the buyer of a property will have to deduct the amount and submit it. It adds to the woes of the customer and administratively it is not a practical suggestion

Buyers will need to provide details about the property, themselves and the seller in the tax deduction form.

Jain said it will affect the seller's liquidity as well because he will get a lower amount.

For developers selling homes it would mean loss of opportunity and interest income, he said.

Long-term capital gains tax is levied at the rate of 10%.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Fidelity Mutual Fund Sale to L&T Mutual Fund

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Posted: 01 Apr 2012 11:21 PM PDT

The mutual fund with an attitude and over . 8,000 crore in assets and 19 lakh customer accounts has quit the game. Fidelity International has sold its stake in FIL Fund Management (the asset management company) to L&T Finance. It entered India in 2005, when Fidelity launched its first equity fund. Fidelity's much-criticised "we-do-not-work-with-IFAs" stance was soon revised, but it refused to publish monthly data like its competitors did, sticking to quarterly disclosures even today. Seven years later, the fund house has decided to call it quits.

Let us start with clearing some basic concepts. What is being sold is the stake of the asset management company (AMC). The investors' money is in the mutual fund, and is secure with the custodians. The price paid and the accumulated losses are all not on the balance sheet of the schemes. Investors will be impacted qualitatively by the transaction, since their trustees and fund managers will change. There is no quantitative impact. The NAV of the funds will continue to be valued based on the market price of what is in the portfolio. There will be no mark-up or mark-down due to this sale.

The new asset manager is L&T Mutual Fund whose sponsor is L&T Finance, a profit-making NBFC. Acquiring Fidelity's mutual fund business is part of the strategy for the group to become large and multi-faceted in the financial services business. The call to take is whether L&T Mutual Fund will deliver performance on the schemes it has acquired. There are three reasons to be cautious on this count. First, the fund house hardly manages . 200 crore of equity funds which are currently not in the top of their league. The debt funds, on the other hand, are doing well. Second, the equity fund managers of Fidelity will handover the management to L&T's newly assembled team, and leave after a period of transition. Investors do not know if the new team will do better, or fail to live up to the expectations. Third, active investors who do not like the uncertainty may leave, making it tough for the fund managers to retain and grow assets.

Investors who do not like the change have the option to quit, without paying exit load. The sale transaction is now pending Sebi approval after which investors in Fidelity's schemes will be given a 30-day notice to quit if they so wish. Those who do not exercise the option will move to the new management. Investors in Fidelity Tax Saver, where a period of three years is not over since investing, will not be able to exit due to mandatory lock-in. They will move into the L&T Tax Saving Fund by default. There are funds that were floated by Fidelity, which were investing abroad, and using feeder funds. Investors in these funds - Fidelity International Opportunities Fund and Fidelity Global Real Assets Fund may be at risk.

The communication from L&T Mutual Fund to investors will specifically indicate which fund will be merged into which one, what the new names will be, and which funds may be closed. Investors in the Fidelity's schemes should ideally await for that communication before deciding on the exit option. Most errors in fund selection are made when investors exit and enter funds in haste and with limited information. Sale of an AMC is a major event, but it should trigger caution, not panic.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Save regularly to get compounding benefit

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Posted: 01 Apr 2012 09:58 PM PDT

Many dream of a financially secure future, but not all manage to get there. Regular savings can provide phenomenal returns over the long run. Despite countless financial obligations and huge debts, one must set aside a fixed amount every month. This can be a contingency buffer or surplus that can bail you out of financial crisis. Wouldn't it be wonderful if your small contributions grew into a huge avalanche of wealth over a period of time?

The power of compounding is phenomenal. Your savings grow exponentially with time, and the sooner you start the more will be the quantum of returns. For example, assume a person sets aside Rs 1,000 in an instrument each year. If the returns were 10 percent compounded annually, at the end of one year, the investment would have grown to Rs 1,100. At the end of the second year, the investment would have grown to Rs 1,210. At the end of 10 years, Rs 1,000 would have grown to Rs 2,594.

If an individual invests Rs 1,000 every year, in 10 years at a 10 percent rate of interest, his investment would have grown to Rs 17,531. Such is the power of compounding. Compounding is reinvesting of income at the same rate of returns to constantly build the principal amount, year after year.

This New Year, make a resolution to save regularly and benefit from the power of compounding to build a corpus. Rule 72 will help you decide on the investment tenure to double your money. By dividing 72 by the annual rate of returns, you can estimate the number of years it will take for the initial investment to double.

If you invest Rs 100 at a compounding interest of 10 percent per annum, according to rule 72, the approximate timeframe required for the investment to double is 72 divided by 10, that is 7.2 years. Instruments like the safe cumulative fixed deposit or recurring deposit offered by banks or the more aggressive systematic investment plan offered by mutual fund houses allow you to get into a regular saving habit.

The actual returns on investments vary significantly even for the smallest rate differential. Hence, it is crucial for investors to pick the best rate of returns. Suppose Rs 100 is invested annually at a nine percent compounded rate for 10 years, the returns at the end would be to the tune of Rs 1,656. Suppose the rate of returns was a few percentage points higher at 11 percent, the returns at the end of 10 years would be Rs 1,856. Further, greater investment durations bring you larger returns.

In the current high interest regime, where the cost of borrowing is high, people who have taken a home loan and a personal loan may be walking on tight finances. The increasing cost of living and high inflation levels may increase the strain on the wallets. Periods of economic recession and slowdown are difficult to predict. Hence, it makes sense to make saving a regular habit and benefit from the power of compounding.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs