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NCDs offer higher interest than bank FDs, but does a quality check on the issuers' credentials

Conservative investors never forego a chance to earn 1% extra return on their investments in deposits and bonds. They are forever looking for that bank and company deposits, bonds, and debt mutual funds where they can earn that extra percent. The quest is currently taking them to a hitherto unfamiliar – though not exactly unheard of — place: private placement of non-convertible debentures, or NCDs.

Simply put, a private placement is the sale of bonds or NCDs by companies looking to raise small amounts, typically less than . 300 crore, to a small set of investors. A clutch of distributors sells these bonds through word-of-mouth publicity, as regulations don't permit companies to advertise or market these bonds. That means unless your agent or distributor is well connected, you won't know about the offer. Another hurdle is the minimum ticket size, which is higher than for normal bond offerings. One has to make a minimum investment of . 25,000 to . 1 lakh, compared with . 5,000 or . 10,000 in a regular public issue of bonds.

Currently, some finance companies like Muthoot, Mannapuram, SREI Infra Finance and HUDCO are offering bonds under the private placement route. And guess what? The rates offered by them are indeed more. Muthoot Finance is offering 12.75% for 18 months and 13% for 26 months. Similarly, Mannapuram Finance is offering 12.5% for 366 days, with an extra 0.5% for senior citizens. SREI Infra Finance is offering 11.85% for a tenure of five years and three months, while HUDCO is offering a tax-free 8.09% for 10 years and 8.16% for 15 years. Even though private placements are not advertised or marketed, a detailed prospectus is filed with Sebi and the issue is governed by Sebi guidelines. Check the ratings and evaluate company fundamentals before committing your money to any such issue.

How Private Placement Differs From Public Issue ?

The major difference between a public issue and a private placement is in their marketing and distribution. While a public issue can be advertised, you cannot do that for an issue offered through the private placement route.

Any kind of media communication, be it through print, television, internet or even mass mailers, cannot be used by the company or the distributor in a private placement issue, an investor can just walk across to distributors and ask them for a form and fill it up, you need to check with your distributor if there is any NCD being offered through the private placement route.

As an investor, your investment approach to a public issue and an issue through private placement shouldn't be different. So, once you hear of any such investment opportunity, you need to do a check on the company issuing the NCD.

Quality Of Issue And Liquidity

Check the credentials and financials of the company and the industry it functions in before investing in its bonds. Ratings assigned by credit rating companies could also give you a fair idea about its financial strength and pedigree. If you are risk-averse, avoid companies with low ratings. Lower-rated companies may pay you a higher coupon than higher-rated companies, but may come with extra risk. We advise retail investors to only go for companies which have an AA+ rating and above, as the extra return is not worth the risk. These NCDs come with various tenures, ranging from one year to 15 years. Check the tenure of the NCD and see if you are ready to commit money for that long. While the tenure of Mannapuram Finance's NCDs is only one year, that of SREI Infra is 63 months. Even though these NCDs would be listed, it is unlikely they would be liquid due to their low issue size and lack of trading on the exchange. So if you are committing your money to a long-duration NCD, be sure that you do not need the money for the next five years.

Calculate Post-Tax Returns

It always makes sense to evaluate the post-tax returns of any product by taking into account the tax bracket you are in. If you are in the high-income bracket, take that into consideration. For example, the interest income earned on HUDCO bonds is tax free. So even though the interest is lower than the other issues, keep the tax-free aspect in mind.

How Much To Invest ?

Finally, a high coupon rate does not mean you go all out and invest all your money in the instrument. Many of these NCDs on offer are from non-banking finance companies, which carry higher risk compared to bank deposits. Some of them will be listed, but due to the small base, it is unlikely that they will be liquid. In the event of you requiring funds in an emergency, it would be difficult to exit these products.

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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

Top 10 Mutual Funds to Invest in India

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Posted: 03 Apr 2012 05:09 AM PDT

Investing in Mutual Funds

Indian economy is quite resilient and has robustly bounced back after the global economic recession – though many countries are still struggling to stage a comeback. Many foreign investors are investing in the Indian stock markets which are experiencing a bullish trend. As there are a lot of mutual fund companies in India, it is difficult to name the top 10 Indian mutual funds. However, an attempt can be made:

HDFC Mutual Fund

The HDFC mutual fund that was approved by SEBI in June 2000 offers Equity Funds, Balanced Funds, and Debt Funds schemes. HDFC Mutual Fund has witnessed significant growth in the past few years. It is regulated by HDFC Asset Management Company Limited which is a Joint Venture between India's largest housing finance company HDFC and British investment firm Standard Life Investments Limited. The HDFC Asset Management Company Limited manages the assets of various mutual fund schemes and has assets over Rs. 25000 crores.

What is a Mutual Fund?

Tata Mutual Fund

ABN AMRO Bank, N.V. and Deutche Bank are the other custodians of Tata Mutual Fund and that speaks volumes for its reliability. It is widely acknowledged that Tata Asset Management Limited is one of the most rapidly growing fund management firms in India and the AMC of Tata Mutual Fund has consistently performed well and provided ample returns to its investors. Tata Mutual Fund offers a wide range of investment products for both institutional and individual investors and has assets exceeding Rs. 13000 crores.

SBI Mutual Fund

The State Bank of India (SBI) is India's largest bank and SBI Mutual Fund is sponsored by the bank. SBI Mutual Fund has an excellent track record in creating wealth for its members. Interestingly SBI Mutual Fund is a joint venture between the State Bank of India and Société Générale Asset Management, one of the world's leading fund management companies that manages over US$ 500 Billion internationally. During the 20 years since inception, SBI Mutual Fund has launched 38 schemes and successfully redeemed fifteen of them. Today, SBI Mutual Fund manages over Rs. 40000 crores of assets and has a diverse profile of members with investments across 38 active schemes.

Investment Advice : Are Mutual Funds Risky?

Reliance Mutual Fund

Reliance Mutual Fund, a part of the Industrial giant Reliance (Ambani Group) and is arguably one of the fastest growing mutual funds in the country. RMF offers investors a wholesome portfolio of products to meet the diverse investor requirements. Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited. Reliance Capital Ltd. ranks among the top 3 private sector financial services and banking companies, in terms of net worth.

DSP BlackRock Mutual Fund

DSP BlackRock Investment Managers Pvt. Ltd. is the investment manager to DSP BlackRock Mutual Fund. It can be said that at DSP BlackRock Investment Managers Pvt. Ltd has some seasoned investment professionals who deploy an array of analytical tools, to successfully and consistently add value to client portfolios. DSP BlackRock Mutual Fund has an enviable track record and investors have amply benefited over the years.

Kotak Mutual Fund

Kotak Mutual Fund is sponsored by Kotak Mahindra Bank Limited that is emerging as one of India's fastest growing banks. Kotak Mutual Fund has grown from humble beginnings and Kotak Mutual Fund today offers a total array of products and services suiting the varying needs of its investors. Kotak Mahindra Asset Management Company Limited is the Asset Manager for Kotak Mahindra Mutual and it has over 13 Lac investors in various schemes.

How to Pick a Mutual Fund to Invest

Principal Mutual Fund

Principal Mutual Fund has been functioning successfully with the principal goal of mobilizing savings from the public, providing investment expertise and achieving optimal returns to its members. The Fund was initially set up by Industrial Development Bank of India (IDBI) in 1994 and on March 31, 2000, Principal Financial Services Inc. USA became its sponsor. The Principal Financial Services Inc. USA thereafter became the sole sponsor by acquiring 100% stake in IDBI-PRINCIPAL Asset Management Company Limited. In May 2004, Principal admitted Punjab National Bank and Vijaya Bank into the venture. The Mutual Fund has been growing at an enviable rate and unfailingly rewarding its investors.

Sundaram BNP Paribas Mutual Fund

Sundaram BNP Paribas Mutual Fund investments are managed by Sundaram BNP Paribas Asset Management Company Limited. The sponsor of the fund, however, is the trusted SUNDARAM Finance, one of India's frontline financial services companies. The Asset Management Company was started in 1996 as a joint venture between SUNDARAM Finance (61%) and Newton Investment Management (39%). In 2002, SUNDARAM Finance acquired the 39% stake of Newton in the AMC. Sundaram BNP Paribas Asset Management is one of the largest and reputed fund houses in India. This is understandable as the fund is sponsored by two giants of the financial services industry – Sundaram Finance Group and BNP Paribas Asset Management.

Franklin Templeton Mutual Fund

Franklin Templeton is a widely talked-about Mutual Fund in India with offices in 33 locations across the country and having assets worth exceeding Rs. 35000 crores and over 23 lakh investors. Franklin Templeton Mutual Funds are managed by Franklin Templeton Investments - a global investment management major. Franklin Templeton Asset Management (India) Private Limited acts as the asset management company with Templeton holding a majority of 75 per cent of the equity. Since inception in India, Franklin Templeton has devoted ample resources towards investor education and has strived incessantly to achieve optimum gains for both its individual and organizational investors.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is a joint venture between the giant Aditya Birla Group and Sun Life Financial. Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth creation products worldwide. The mutual fund is managed by Birla Sun Life Asset Management Company Ltd. which is joint venture between the Aditya Birla Group and the Sun Life Financial Services Inc. of Canada. Lately, Birla Mutual Fund crossed AUM of Rs. 10,000 crores.

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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

Submit filled up application Collection canter near you

Kotak Mutual Fund

Posted: 03 Apr 2012 04:32 AM PDT

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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

10 year NSC launched, all set to give 8.7 per cent

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Posted: 03 Apr 2012 04:15 AM PDT

Invest in Mutual Funds Online

Transact Mutual Fund Online

THE government introduced a 10-year National Savings Certificate (NSC), which will earn an interest rate of 8.7 per cent per annum.

The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said.

The scheme will come into effect from December 1, it added.

Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC.

There is no upper limit for investment in the certificate, it added.

The new scheme will give better returns along with tax benefit to savers.

At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C.

The decision to raise the maturity period of NSC has been taken on the basis of the recommendations of the committee for comprehensive review of national small savings fund (NSSF), headed by Shyamala Gopinath, the former deputy governor of Reserve Bank of India.

Under the new scheme, the certificate can be transferred from the post office where it is registered, to any other post office and can be pledged as a security.

This certificate will be available in the denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.

The spread on 10-year NSC (new instrument) will be 50 percentage point higher than the 10-year government security. The interest rates for every financial year will be notified before April 1 of that year.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Reliance Mutual Fund New scheme - Reliance Fixed Horizon Fund

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 03:46 AM PDT

Invest in Mutual Funds Online

Transact Mutual Fund Online

Reliance Mutual Fund has launched a new fund named Reliance Fixed Horizon Fund XXII Series 2. The new issue will be open for subscription from April 4

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

A Trust may help you to Get Tax Benefits

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 03:11 AM PDT

Philanthropy, these days, seems to be the buzzword. But not many are aware that one can set up his/her own organisation or trust dedicated for undertaking charitable activities such as medical aid to the poor or providing education to those who cannot afford it.

Setting It Up

Setting up a trust can be done by executing a trust deed, which should ideally contain details of the trustees, proposed objectives of the trust and the intended beneficiaries, generally the public at large. Such a trust needs to be registered under either the state trust Acts, like the Bombay Trusts Act or as a society under the Societies Registration Act or as a section 25 company under the Companies Act, 1956. The government, to encourage such philanthropic activities, provides various tax rebates. The Income-Tax Act provides for various tax benefits to trusts engaged in charitable and religious activities, including complete exemption from income-tax for income received by a recognised trust for undertaking charitable activities, as well as tax deduction for the person donating money to a recognised trust.

Registration

After the formation of a charitable trust, first and foremost, it needs to obtain registration from the income tax commissioner. The commissioner may grant registration to the charitable trust if he/she is satisfied with its objects. Accordingly, it is imperative that the objects of the trust fall within the definition of a charitable purpose provided under the Act. Broadly, charitable activities have been defined to include:

Relief to the poor
Education
Medical relief
Preservation of environment, including watersheds
Forests and wildlife
Preservation of historic and artistic monuments or objects; and
Advancement of any other object of general public utility

However, advancement of object of general public utility does not include any activity in the nature of trade, commerce or business where revenues exceed . 10 lakh in a year. Accordingly, any non-commercial activity that benefits the public at large would be covered under the definition of charitable purpose.

I-T Benefits

Section 12 of the Income-Tax Act provides for exemption from tax of all voluntary contributions received by the trust which form part of the corpus of the trust.
Additionally, under section 11 of the Income-Tax Act, income received from property held by the trust is also considered as exempt, where such income is applied or spent by the trust for charitable or religious purpose in India. Such application can be either for revenue or capital expenses. Exemption is also available if income is spent for charitable purpose outside India for promoting international welfare in which India is interested. To qualify for the exemption, the charitable trust has to apply at least 85% of the total income received from property; the balance can be accumulated to be utilised in future. If the trust is not able to apply 85% of the property income due to non-receipt of income or for some other reason, then the trust may apply the balance income in the year of receipt or in the immediately succeeding year in which the income was accrued or derived.

Alternatively, such a trust may accumulate or invest in specified securities (viz government savings certificate, post office savings bank account, deposit with scheduled bank or co-operative bank) the income which it is not able to apply for its charitable objects, and specify in writing to the income-tax officer concerned, the purpose for which such an income is being accumulated or invested. The period of such accumulation or investment has been capped at a maximum of five years.

Dos & Don'ts

The objectives of the trust should fall within the definition of a charitable activity
Registration from the income tax commissioner should be obtained

The income of the trust should be applied for the objectives of the trust
In case the trust is not able to apply the income as specified, accumulate the balance or invest such balance only in specified securities in accordance with Income-Tax Act

   Maintain books of accounts and get it audited from a chartered accountant
   File income-tax return of the trust regularly within the specified time limit
   Anonymous donation in excess of Rs 1 lakh or 5% of total receipts, whichever is higher, should not be accepted

Contributions from any foreign source should be accepted only after the government approves them and if they are in compliance with the provisions of the Foreign Contribution Regulation Act

The trust should not undertake commercial activity. In case any commercial activity is undertaken in furtherance of the trust's charitable purpose, separate books of accounts should be maintained for it.

However, under the proposed Direct Tax Code charitable trust would be called a NGO and it is proposed to tax income of non-profit organisations at 15% on the surplus income.

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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

Submit filled up application Collection canter near you

Tata Mutual Fund

Posted: 03 Apr 2012 02:38 AM PDT

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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

HSBC Fixed Cum Floating Home Loan

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Posted: 03 Apr 2012 02:18 AM PDT

FIXED-CUM-FLOATING home loan schemes have been the flavour of this season. After HDFC and ICICI Bank, among others, HSBC India is the latest to launch a similar scheme.

The scheme offers a fixed rate tenure for one, two, three (at 11.50 per cent) and five years (at 11.75 per cent). However, customers who are sure of not prepaying during the fixed rate period are rewarded a 25 bps rate discount and will pay 11.25 per cent and 11.50 per cent, respectively. The loan, on expiry of the fixed-rate period, will switch to a floating rate at 200 bps over the then prevailing base rate.

Why did HSBC India go for the move? Customers assign value to the predictability we offer by allowing them to a lock-in at a fixed rate. Customers can hedge their interest rate risks over the fixed-rate tenure." The maximum tenure under the HSBC scheme is 25 years. The 11.25 or 11.50 per cent interest is a flat rate for any sum one is eligible for. Yet, the rate seems higher when compared to the schemes of HDFC or ICICI. ICICI charges 10.50 per cent for ~25 lakh, while HDFCs rate is 10.75 per cent for ~30-lakh loan for a 20year tenure. HDFCs scheme offers a three and five-year fixed rate, while ICICI offers a one, two, and three-year fixed rate. Even HSBCs discounted rate for those not pre-paying is only a notional benefit, given that its interest rates are higher than most fixed-cum floating rate schemes.

The peaking of interest rates has prompted lenders to push fixed or fixed-cum-floating rate products, to lock in as many customers as possible at the existing high rates.

But experts say a reversal of the rate cycle can be expected in the next nine months to a year. So, sticking to a floating rate loan seems the best bet. "Most floating rate home loans are available at an average of 10.75 per cent. Even if the rates rise half a percentage point, they will be on par with what the fixed-rate loans offer. Even if you must really look at a dual-rate loan, Opt for the minimum period of one year. Reason: home loans are long tenure loans that may go through more than two to three interest rate cycles. So its best to avoid locking oneself with a fixed rate for such a long tenure.

Besides, customers need to consider the prepayment penalties on home loans. Typically, these penalties for fixed-rate loans are two-three per cent of the amount due. Even borrowers who have taken a fixed-cum-floating rate home loan can avail waiver of prepayment charges only after their loan moves to a floating rate, says an ICICI Bank official.

Some lenders like Union Bank of India are offering a fixed-cum floating scheme with no prepayment restriction even during the fixed period, as long as the prepayment is done from ones own source of funds.

But even with respect to prepayment options, floating rate loans should be preferred. Housing finance companies have already done away with penalties on floating-rate loans. And, with two of the largest banks, State Bank of India and ICICI, having phased out penalties, others are likely to follow.

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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 get Better Returns from Unit linked insurance plans or ULIPs ?

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Posted: 03 Apr 2012 01:04 AM PDT

Unit-linked insurance plans or ULIPs, as they are popularly known, offer not only a professionally-managed investment-cum protection platform but also provide an entry point into the equity markets. Apart from equities, investments in highest-rated debt instruments also make Ulips a perfect choice for investors looking for a long-term investment instrument that offers transparency and flexibility.

Ulips offer a range of fund options with different asset allocations to meet the requirements of policyholders with different risk appetite. By spreading investment across different asset classes, investors can create a diversified portfolio where the loss on a certain asset class can be compensated by the profits made on another. Thus, you reduce the overall risk of your investments. Keeping this in mind, unit-linked insurance plans by insurance companies offer policyholders the option of free switches between funds, so that they can effectively manage their portfolio asset allocation. Using switches, the policyholders can move their investments between various asset classes like cash, debt and equity, depending on their risk appetite and financial goals. Policyholders can make appropriate asset allocation decisions to lower risk or improve returns by spreading the investment across a variety of asset classes that behave differently during different market cycles. Policyholders can benefit from switching strategies as appropriate switches can take advantage of the movement in asset prices resulting from changing financial and economic conditions.

To build a well diversified portfolio, it is important that the policyholder has an exposure to all asset classes – equity, debt and cash. The two key questions that policyholders always face include: (i) which asset should he own and (ii) how much of each asset must he own. The policyholder's fund switching decision will depend on the answers to these two questions.

Which and how much of each asset one must own is a function of one's risk tolerance as well as ones perception on how each asset class will perform. Each asset has varying risk-return characteristics – equity having the highest risk and also the highest returns, and cash having the lowest risk and lowest returns over the long term. On the other hand, investment in debt gives your portfolio the certainty of returns and lessens the risks of erosion of the principal invested. The risk appetite that the policyholder has will vary depending on which stage of his life cycle he is in and he needs to balance this with his return aspirations. Policyholders tend to get more risk averse as their financial obligations increase as they get older. They should, intuitively, switch from more risky equity funds to less risky cash and debt funds as they get older. At Birla Sun Life Insurance, we offer policyholders a life cycle option which is an automatic switching strategy depending on their age and risk profile. The assets of individual policyholder are reallocated amongst equity, debt and cash assets in a proportion based on the individual's age and risk profile. This ensures that the level of risk that an individual is exposed to is optimised and his returns protected. One's perception of how various asset classes will perform in different economic scenarios could also influence ones switching decision. For example, if equity markets look significantly overvalued and expensive, policyholders may switch out of the equity funds only to switch back when equity markets correct substantially. Many insurance funds offer trigger options that allow for automatic switching based on the behavior of the underlying assets in the fund.

The appropriate and timely use of the free fund switching options from insurance companies helps policyholders optimise on their asset allocation, minimise risk and maximise returns.

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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 get best returns from FMP Investment ?

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Posted: 03 Apr 2012 12:23 AM PDT

THE last few weeks of the financial year is usually a time when the mutual fund arena sees the entry of a large number of fixed maturity plans (FMPs) that seeks to mobilise investments from the investors. This is an instrument that can be relied upon to provide a specific kind of exposure that comes along with ease of operation and also simplicity. Here is a look at some of the ways in which the individual can gain from the overall position at this specific point of time.

Fixed maturity plans: These are mutual fund schemes that are of the nature of fixed deposits in the sense that they are in operation for a specific period of time. Once this time period is over, the mutual fund scheme will also come to an end and the amount will be returned to the investors based upon the net asset value (NAV) of the fund.

This allows the investors to ensure that they are able invest for the exact time period that they want and then get back their money.

The fund manager invests the amounts in such a manner that the debt instruments in the portfolio also mature on the date of the maturity, eliminating the existence of the interest rate risk in the entire investment. There are a host of such funds that come into the market at the end of the financial year, intending to tap the need of investors at this point of time.

Time period: There will be different time periods for which the FMPs will be launched and, hence, the investor has to select the period that suits their requirement. In some cases, there is a position where the liquidity for a specified period in the debt market is less, leading to a spike in returns for some type of particular instruments.

Thus, for example, if the short-term rates have spiked, mutual funds are likely to launch a lot of short-term FMPs to enable them to make the best use of the opportunities.

In other cases, it could be that there is the benefit of double indexation available due to the fact that the investment spills out in to a financial year that represents a two-year holding period for indexation benefits, while the actual holding period is just over a year. These are usually in the nature of slightly longer period of FMPs that range from 13 months to around 36 months.

Benefits: Since there are various benefits that can be utilised for different types of FMP investments, there is a need to look at how this can be utilised to the maximum extent possible.

Take a situation where there is a high return possible for short-term three month FMPs. Here, investors should see whether they have a chance to continue with the high returns for their money that they can maintain after this initial time period is over, if they invest elsewhere. If the reinvestment of the money might not be possible or the rates expected then are very low, there could be a position where the investor might actually prefer to lock in the money for a longer time period FMP , where the earnings potential might look a little low, but it will actually last for a longer time period.

There might also be some short-term chances, whereby, the investors can lock their money for the time period that they actually desire. When they have large amounts of funds present for this kind of short time period, which can even go to a few lakh of rupees, they should ensure that not much time is wasted on this area but the requirements are completed quickly.

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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

Canara Robeco Gold ETF - Change in Fund Manager

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Posted: 02 Apr 2012 11:56 PM PDT

Canara Robeco Mutual Fund has appointed Mr. Kiran Shetty as the Co-Fund Manager of Canara Robeco Gold ETF, with effect from April 1, 2012. Now, he will manage the fund with existing fund manager - Mr. Akhil Mittal.

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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

Consider buying an adequate health cover for family

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Posted: 02 Apr 2012 10:39 PM PDT

WITH rising pollution, change in lifestyle and change in eating habits, among others, diseases have attacked mankind today like never before. In the event of an unforeseen illness, you may have no option but to utilise your hard-earned savings. A right health insurance cover is a saviour in such situations and is a must today.

Need for adequate health cover: Today, almost all employers offer a group health policy to their employees. But, these health covers are generally customised covers and may have many restrictions. Some of the common restrictions relate to limited sum insured, family definitions (cover restricted to limited number of family members), co-payment clauses, compulsory deductibles, room rent and ICU limits. The cover is also limited to the employment period and ceases on termination of employment.

Hence, it is advisable that one should think of buying an adequate health cover for himself and his family.

Various ways by which you can ensure an adequate health cover: There are various health insurance products in the market to choose from — an individual policy, a family floater, a policy for elderly parents, a cover that gives a lumpsum benefit on diagnosis of a critical illness, or a hospital cash cover.

A health insurance cover taken as top-up cover over and above the sum insured under the employer's policy will help in case the cost of treatment exceeds the amount provided under the employer-provided cover. Also, in case the employerprovided cover excludes certain family members, such as parents, then additional cover should be bought to ensure that all dependent family members are adequately covered.

Sometime there are co-payment clauses or sub-limits on certain expenses, such as room rent and ICU bills, to name a few.

In such cases, a hospital cash cover is very useful.

Most importantly, the employer-provided covers are valid only

for the period of employment.
Generally, a person's new job starts only after a gap. This gap could be short or long depending on the employment environment and also on how the entire move is timed.
Technically, today, health insurance is portable and an individual can carry the benefits of the employer's policy to a policy bought on an individual basis on termination of employment. Therefore, there may not be any need to keep a concurrent cover in force all the time. However, in case of careers in high turnover industries, it is advisable to keep a concurrent cover just to ensure there is no gap in cover between the two jobs.

Employers typically buy in demnity-based products. This means that the policy pays only for the expenses incurred. But a health contingency is not limited to cover hospitalisation expenses alone. In addition, there are several hospitalisation-associated expenses that are not covered by standard health policies.

To cover the additional expenses, it makes sense to buy an additional hospital cash policy. These policies provide a defined daily cash allowance based on the number of days of hospitalisation. The additional cover can also provide cash benefits in lieu of the leaves taken on account of hospitalisation.

However, loss of employment can be a matter of serious concern and should be handled appropriately. In case, the ailment impacts employability, a traditional health cover may not pro vide any benefit to make up for the loss of employment.

Critical illness policies are specifically designed to take care of such contingencies. These policies are benefit policies and the sum assured is paid as a lumpsum. Once the claim is paid, the policy ceases to exist.

A critical illness cover can be taken as a standalone policy or as a rider with a hospitalisation policy. There are various sum insured options available and one can, therefore, decide the most suitable option based on one's risk evaluation. However, it may be prudent to buy an adequate sum insured under critical illness policies.

Lastly, a wise advise. When purchasing a health insurance cover, keep a close eye on details such as coverage, exclusions, waiting period for pre-existing diseases and sub-limits on various expense heads. This will help to secure your future in critical times.

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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

Submit filled up application Collection canter near you

SBI Dynamic Bond

Posted: 02 Apr 2012 09:45 PM PDT

After languishing at the bottom of the ladder, in 2009 it picked up in performance. In the last two years, it has been amongst the top three performers in this category.

Once its performance began to get noticed, the asset base began to rise and in December 2010 crossed the Rs 10 crore level for the first time in five years. The strategy of this dynamic bond fund is to actively manage duration in the most liquid segment of the market - be it government bonds, corporate bonds or money market securities. So one should not be surprised to see the portfolio radically change from being fully invested in high duration securities to an almost 100 per cent cash position. In fact, in 2009, the fund was almost 100 per cent into cash and cash equivalents for the entire year barring the last month.

In November 2010, the average maturity stood at 11.53 years (category average: 4.49 years). Expenses are maintained at a lower level though fund manager changes are frequent.

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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 balance your investment ?

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Posted: 02 Apr 2012 08:50 PM PDT

THERE has to be some effort undertaken by every investor to rebalance their mutual fund portfolio depending upon the changing circumstances. Often this requires a shift from equity investments to debt, at specific points of time. This will be important due to the fact that the money has to be invested in an area where the risk remains low, so that, a higher protection is present for the capital.

Such a situation normally arises at the time of retirement or when there is some occasion that requires a determined amount of funds.

Here is a way in which this situation can be effectively tackled using mutual funds.

Systematic withdrawal: The best way to ensure, that there is some amount that is being regularly withdrawn and then put aside for the purpose of additional use, is through the systematic withdrawal plan (SWP) route. The problem that often arises while withdrawing the amount is that there is no good time for doing so, especially in equity-oriented funds, as the equity markets are very volatile.

This is the reason why a simpler route is adopted, where the amounts will keep coming out of the investments in fixed sums at specific points of time without any extra effort. The SWP can be set such that a fixed sum, say Rs 15,000 per month, is withdrawn from the equity fund on the 15th of every month. This route is, however, useful only where there is some time present for the purpose of getting the money out, so that, the entire thing can be done in instalments over a period of one to three years.

Several batches: When it comes to something like retirement planning, then there is a long time period that is actually present and available for the purpose of completion of the entire withdrawal or transfer exercise. The time of retirement is known, so, there would be enough time that would be available beforehand for the purpose of ensuring that the withdrawal from equity and investment into debt is completed.

When this is the situation then the individual can ensure that they are able to slowly transfer the amounts when the conditions for this are suitable.

This can be done in a few batches. This will also ensure that there is not much pressure when it comes to the issue of making the transfers because there is reduced pressure on the investor.

Immediately withdrawal with a plan: There can be a situation, where, there is an immediate requirement of the funds for investment in the debt area due to the fact that there might be a good investment opportunity that could soon be over. It could also be because there is a small time window for the debt investment process to be completed.

The end result of the exercise is that the amount has to be present in a short term debt fund, while the question of actually withdrawing the amount is a tricky one. There has to be some element of care that is actually taken to ensure that the amount is withdrawn after proper thought, even though, this is in a lump sum.

The individual should always plan for this kind of thing, and hence, there should be some element of readiness that is present to tackle such a position so that they know the funds that will be sold in such a situation. This involves decisions such as selling funds that are doing well or those that are not doing well and whether entire investment in a fund is to be sold or only a part of it.

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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

To Claim HRA you need to get House Owner’s PAN

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Posted: 02 Apr 2012 07:52 PM PDT

The latest circular from the Central Board of Direct taxes, which says that rentals of more than `1.8 lakh a year need to have proper documentation, with the owners permanent account number (PAN).

Similarly, many chartered accountant advise clients that they can claim house rent allowance (HRA) even if staying in their parents or spouses flat. That is, they can pay the rent to their spouse or parents and claim the same. And, often, parents or spouse (especially, if she is a housewife) do not have a PAN. Sometimes, when both are working, they pay rents to each other.

Such people now need to be more careful. Payment of HRA can be traced through their spouse or parents PAN numbers. As a result, taxes will have to be paid on such rentals by the recipient.

There are many who show they pay rent to their family member and claim HRA benefits. The employee may be doing this only to get HRA and the family member may not be reporting the rental income. This is mostly practised where the HRA in question is a big amount. Hence, the tax authorities have kept a threshold of `1.8 lakh or rent of `15,000 a month.

In case the house owner does not have a PAN, a declaration to this effect from him/her, with name and address, should be filed by the tenant-employee, it further says. It should be signed by the landlord, with a valid identity proof such as passport details, ration card or voters card. A copy of the declaration format should be given to the tenant.

Since the circulars introduction in August, tax consultants say they have started advising clients to obtain the PAN of the house owner. They say if this is not furnished before the due dates for filing proofs on tax-saving investments, that is, before February 2012, the HRA benefits may be withdrawn, because there are no alternatives provided in the circular if the owners PAN/declaration is not available. And, the additional tax liability for 2011-12 may be recovered between January and March 2012.

However, the circular is silent on whether the employees HRA can be honoured in the absence of such documentation. Because, the law or the Income Tax Act does not prohibit anyone from getting HRA benefits in the absence of landlords details. Section 10 (13A) on HRA benefits does not have any clause where the claim will not be honoured if the house owners details are not attached by the tenant or HRA claimant.

Experts say as long as you can provide details like the rent receipt or rent agreement, there should not be any problem. And, rent agreements are supposed to also have the house owners PAN details. The problem gets solved if you pay the rent online or through cheques. You can also show your bank account statements. These are good enough proofs and you cannot be denied your claim.

· CBDT circular says rentals of over `1.8 lakh a year need the owner's PAN

· Those paying rent to parents' or spouse's flat will need to show PAN

· Owner needs to give declaration in absence of PAN

· HRA payment can be traced through owner's PAN

· Cash rentals mostly practised when HRA is huge, hence the threshold of `1.8 lakh

Owner's PAN, if not furnished before result in HRA benefits being withdrawn

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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

Reliance Mutual Fund ATM CARD

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Posted: 02 Apr 2012 07:43 AM PDT

NEED urgent cash or want to make that impulsive purchase? Use your 'debit' card, the one linked to your mutual fund investments. Reliance Mutual Fund is offering investors an 'Any Time Money Card', that works like a debit card (allowing withdrawals at ATMs or point-of-sale transactions) and uses the schemes (debt and equity) one has invested in as the account.

Company officials note that liquid funds give better returns than other instruments like bank savings account. "However, customers tend to stick to their bank accounts, as they are comparatively illiquid," points out one of them. "The new card is aimed at doing away with this limitation." The move is interesting because it adds liquidity to mutual fund schemes, much like banking saving accounts. After deregulation of savings account interest rates, several banks are offering annual returns up to six per cent. Short term FDs are 3.75-7 per cent per year, depending on tenures. In comparison, ultra short-term and short-term debt funds are giving annual returns of almost 8.5 per cent, says Value Research, a mutual fund portal.

The Visa-enabled card, first introduced in 2006, was re-launched recently in association with HDFC Bank. The main changes include the concept of a primary scheme account and daily withdrawal limits. That is, investors must have either Reliance Liquid Fund — Treasury Plan or Reliance Money Manager Fund-in the portfolio to avail the card. The returns from these schemes are in line with the category average. If both the schemes are a part of the portfolio, then either must be chosen as the primary scheme upfront. Else, the former will be picked by default.

Given the higher returns, financial planners advise individuals to park their short-term surpluses or any idle funds in debt funds. With Reliance MFs ATM card, investors can even access their funds instantaneously. However, many frown upon withdrawals from equity schemes, which are investments made with a long-term view. "Premature withdrawals, will derail your financial planning for long-term goals like retirement or childrens education and marriage. The card is therefore a strict no-no for such withdrawals.

Using it: At the HDFC Bank ATMs, one can view details about the schemes, available balance and withdrawal limits. If you hold more than one scheme, you must choose the scheme and then withdraw funds from it. At non-HDFC Bank ATMs, you can withdraw funds only from your primary schemes. Also, at PoS terminals, only your primary scheme gets debited.

This is mainly for operational ease. But, it also makes HDFC Bank ATM withdrawals from other schemes akin to redemptions without paperwork.

Daily withdrawal limit: It would be the lower of 50 per cent of the scheme balance or

`50,000. For PoS transactions, the amount is capped at `50 per cent of primary scheme balance or `1lakh, the lower of the two.

For instance, say you hold two equity schemes with a balance of `50,000 each and primary scheme account with `1lakh.

Here, you can withdraw up to 25,000 daily from each of the equity schemes and `50,000 from the primary scheme.

Since mutual fund schemes are market-linked, the scheme balances and approved withdrawal limits will change on a daily basis. For calculating both, the scheme will consider the previous days net asset value of the units held.

Exit loads are applicable for withdrawals within a year of investment in equity funds and the gold savings fund.

Therefore, while the cash will be dispensed entirely, the remaining scheme balance will be adjusted after the requisite charges.

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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

L&T Mutual Fund - Change in Fund Manager

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Posted: 02 Apr 2012 07:31 AM PDT