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Stay the course in a bear market and think long-term to gain from stock play

Stock market was not a great place to be in last year. A host of issues like the euro zone crisis, slowdown in the domestic economy and the policy paralysis spooked investors in 2011.

While the broad-based Nifty lost 21% during the year, the CNX Mid Cap lost 32%. Some sectoral indices like the CNX Infrastructure and Bank Nifty were down 39% and 32%, respectively. And things don't look rosy for 2012. Most investment experts believe the stock market is likely to remain subdued this year too.

However, these don't mean you (or investors) should stay away from the market, as the market can always spring a surprise. For example, not many people were bullish on the market in 2009, but it gained over 80% that year. That is why it is important that you tread cautiously in the market so that you can reap the most from any upside.

Don't Buy A Stock Because It Is 'Cheap'

Since we were in a bear market for the major part of 2011, several stocks were beaten down badly. Especially, most of the stocks in the infrastructure as well as real estate sectors were badly mauled. Many investors feel that since these stocks — badly bruised and available at attractive valuations — are great value picks. One must, however, realise that price does not matter when picking stocks. The valuation of a business determines how much the stock is worth and not the price at which it is traded.

Before buying a stock one should research well. Consider how well the company is likely to do in the current macro-environment, how much it depends on government policies, does the management have a proven track record and so on before deciding to buy a stock. Buy after you do a proper research. Also, keep in mind that penny stocks are an easy target for traders to manipulate since there is low ownership, low market capitalisation and they can put in large buy or sell orders. At any opportune moment such operators will dump the stock, leaving retail investors stranded.

Don't Panic And Sell If The Market Goes Down

The stock market is likely to be volatile this year too. Obviously, many investors get nervous when there is a sharp fall in the market. More so, when several blue chips lose heavily. For example, many blue chips like L&T, State Bank of India, Reliance Industries have recently touched their yearly lows.

However, experts advise investors against taking hasty decisions on the basis of short-term market conditions. There is no need to panic and sell as valuations are low for several blue chips which indicate we are close to the bottom. From lower levels the bounce back could be pretty sharp. As seen in March 2009, when the Sensex touched the levels of 8500, it bounced back pretty fast, and by November 2009, it was close to 16,000. Moreover, the fundamentals of the Indian economy are sound and there is no such need to panic. GDP growth is expected to be robust at 6.5%. Even on the global front, recent data on jobless claims and new home sales from the US is positive, though some uncertainty still remains on the euro zone. The market could be volatile on bouts of global uncertainty, but that phase is expected to be temporary.

The time to buy is when the markets are falling. So if you have the cash and are convinced about the fundamentals of blue-chip companies, this could be a good time to buy. Definitely this is not the time to sell.

Don't Behave Like A Trader

Many investors are ready to hold a stock for as long as three years when they buy it. They do fundamental research and after they are convinced with the business and valuations, they invest.

However, once the investment is done, they need the flimsiest of excuses to lose patience and hit the sell button. They start checking stock prices virtually on a minute to minute basis. Not to forget the so-called experts holding forth on the prospects of the stock in the next two days to next month.

The biggest mistake people make is not differentiating between longer-term investing and shorter-term trading, which we call speculation. The rules are totally different for the two.

Don't Stop Your Equity Sips

Systematic investment plans (SIPs) are a common tool used by many investors to invest in equity mutual funds, individual stocks as well as exchange traded funds (ETFs). Typically, since you invest a fixed amount every month, it eliminates the risks associated with timing the market. Now with the outlook for the stock market having turned negative, many voices are wondering aloud whether it makes sense to continue with SIPs.

It is virtually impossible for any investor to buy at the bottom and sell at the top. Hence if you stop your SIP in bearish markets it would defeat the very purpose of investing in this manner.

Since the markets are bearish you can get a higher number of units at lower prices over the next few months. Besides this, many of us do equity SIPs to meet various goals in life such as children's education, wedding, or a foreign trip. Cancelling your equity SIP in between or skipping a few installments would make it difficult for you to meet those goals. While equities can be volatile in the short-term, in the long-term they offer higher returns as compared to other asset classes.

Don't Stray From Your Asset Allocation

One thing which most financial planners suggest is sticking to your asset allocation. Asset allocation is diversifying your money across different asset classes such as equity, debt and gold. The objective of this exercise is to minimise risk and maximise returns. So if you have 50% of your assets in equity, 40% in debt and 10% in gold, maintain it.

Many a time, while chasing high returns, investors end up changing their asset allocation. Just because gold did well in 2011, does not mean that you increase allocation to gold in your portfolio.

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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

Mutual fund strategies for different market cycles

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Posted: 15 Apr 2012 06:27 AM PDT

THERE are different cycles in the equity markets leading to varying performance of the equity-oriented funds. The sharp movements in the markets and consequently the funds often disrupt the entire position of investors. There are times when the investors are not able to do much about it especially during downturns. While looking for different ways to tackle this position, the investor can ensure that they consider using various options which are made easier by the presence of different kinds of mutual funds.

Different strategies: One of the ways in which a cyclical downturn in the equity markets can be tackled is by ensuring that the investor adopts different strategies for different part of their portfolio. This will enable them to have a different kind of exposure in their portfolio so that the entire portfolio is not affected in a similar manner in case of some specific developments.

There can also be a contrarian position that can be seen if the strategy turns out to be effective, so these are considered and then put into action.

Dividend yield strategy: A strategy that proves popular during tough times is that of selection of high dividend yielding stocks. These consist of companies that have a stable earnings and cash flow with a good business model so that they are able to pay a consistent dividend to the investors.

This helps in tackling the situation when in downturn, going gets tough for companies as sales and profits come under pressure. There are companies that have a consistent business flow that enables them to meet dividend expectations even during these

times. Further, when things turn around, there would be some capital appreciation in the stock price adding to the overall gains that would be received by the investor.

Funds available: The good news for the investor is that they can replicate this strategy by the help of dividend yield funds present in the market. These funds invest in companies that have a high dividend yield and seek to benefit from the opportunities offered by these companies.

Using these funds ensures that the investor does not have to do the work of identifying and choosing the companies for their investment. At the same time, they get a diversified holding even for the small amount that they actually invest.

Conservative and time specific: While dividend yield funds offer a good opportunity for many investors, there are few factors related to the investment that actually need attention. One is the conservative nature of the strategy which actually is sort of an alternative to investing purely in some debt fund due to the nature

of the investment, though there would be a higher risk here. The idea is to minimise the risk but still generate some returns from the investment on a steady basis.

The other thing that is equally important is that there are times when this strategy will work and times when it will not be effective.

When the valuations in the markets are depressed and equities not going anywhere, there would be interest witnessed in the adoption of the dividend yield strategy.

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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

Demat for insurance policies coming soon

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Posted: 15 Apr 2012 03:36 AM PDT

HOW many times have you thought about your insurance policies and worried about the safety of the documents? There are a lot of times when keeping this investment safe and secure becomes a problem for individuals. While all the other routes of investment now have the demat facility, this has not yet been witnessed in the insurance space.

But, this need not be the case for a long because the good news is that a demat account for your insurance policies could soon become a reality.

Efforts undertaken: There are reports that the Insurance Regulatory and Development Authority (Irda) is working on putting a system in place that will enable holding of insurance policies in demat or electronic form. The way in which the system proposes to work is that it will be introduced initially for life insurance policies.

These policies are usually similar in nature, even though different insurance companies offer them, and, hence, the facility would make the life insurance segment simpler. The facility for general insurance policies will be introduced at a later date, and, so, if the system works well, then it can be extended to the other areas of insurance also.

Ease of effort: There will be an ease of effort for getting an insurance policy once this system is put in place. At present, there is some work involved at the time of purchase of every insurance policy.

A prospective customer has to provide proof of identity and proof of address and these details will be verified. With an electronic account, all these details will be available with the account, and, hence, there would not be a requirement to submit these information every time a policy is bought. The advantage of this is that the process can be completed smoothly, without requiring a lot of documents, as is the situation now.

On the other hand, there will also be a quicker and easier way to get a new policy because a lot of the work will already be completed, so, the selection and the payment of premium would be the only things left to do.

No preservation worries: Another major concern for a lot of people is the preservation of the insurance policy and the submission of this at the time of filing a claim. Storing the policy in a safe place is a major task due to the fact that these policies are often for 20-25 years and keeping the physical documents for this time period often leads to some problems, especially, if there is flooding or some natural calamity in the interim period.

Often, these documents are misplaced and this leads to another round of work on getting another duplicate set. All this would no longer be necessary because the electronic version does not pose these challenges.

Similar structure helps: Life insurance policies in India are not yet tailormade for specific individuals in the sense that these have features that are largely common, therefore, the policyholders will then be subject to the terms and conditions of the policy. Since these policies are so similar, it is also possible for these to be in the electronic form and be used in a proper manner.

On the other hand, it also lays the ground for further action in terms of additional ways by which the complexity of the policies can be raised and this will be easily assimilated into the entire system that has been set.

All this would work out very efficiently going forward, so, policyholders will benefit from the many variations in the policies without major disruptions to the system.

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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

Life Insurance - Transparency is the Key to a Smooth Claim Process

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Posted: 15 Apr 2012 03:04 AM PDT

A life insurance policy is like a divine financial promise, made to a policyholder's family and his loved ones, that they will be taken care of even in his absence. But, then, there are things that the policyholder must ensure first to enable the promise to be fulfilled. Let's consider the following case studies to bring home the point.

Claim 1:

Mr A, 31, recently got his life insured for an 'X' sum. He is a senior executive, jet-setting from one city to another. He can only spare 10-15 minutes to engage with his advisor and fill the application form. Blame it on the hurried approach or a deliberate miss, he ticks on 'No' where the application form asks him whether he has diabetes or not. This is despite the fact that once a day he slips into the bathroom for his daily shot of insulin.

Claim 2:

Mr B is also 31 and also got his life insured for an 'X' sum recently. Like Mr A, he, too, is a senior MNC executive. He met his advisor on a day when he had ample spare time. While filling the application form, when Mr B came across the query that asked if he had hypertension, he paused, wondered, and upon discussion with the advisor, thought it best to consult a doctor before he answered. He filled up the form on the basis of the doctor's report.

Now let's examine what would happen to their claim payments. Giving Mr A the benefit of doubt, it looks as if he completed his life insurance application like he would complete some general marketing questionnaire while shopping at a mall. On the other hand, Mr B gave his life insurance application the importance it deserved. He was in no hurry. He, in fact, delayed the application for the sake of a health checkup to ensure that the form was filled based on authentic and honest information.

Now a few years down the line, if Mr A and Mr B's families need to file for claims, the latter's family stands a better chance of getting the claim disbursed without any hassles.

For nearly all the rejected claims, incorrect application forms are the main reason. Getting one's life insured without taking into consideration the relevance of a death claim will be a futile endeavour. The key goal of getting one's life insured is to secure the future of the dependants by offsetting the financial loss in case of his/her death and not to make up for the emotional trauma caused by death. With the death of the breadwinner, however, the trauma may well transform into a crisis if there is no financial security. Thus, it becomes the moral duty of the breadwinner to make sure that insurance is bought properly.

Transparency, Key To Securing Your Family

Death claims are dependent on a number of factors. But the most important thing for a trouble-free claim process is correct and honest declaration of details. A life insurance policy form should be filled with the same sentiment and morality with which the policyholder strives to ensure happiness for his family at all times.
Trust is the basis of the pledge of well-being the policyholder bequeaths his family with. Therefore, the customer must:

Fill up the life insurance policy form himself and not depend upon an agent or service advisor to do so

Ensure transparency by providing full and complete information

Declare medical history and lifestyle disorders with full details. Don't ever give an incorrect age or tamper/fudge additional documents required with the application

Spend time and not be in a hurry while filling in the details, lest anomalies creep in

Carefully read and fully understand the terms and conditions of the policy issued. If there are areas or features that are not clear or difficult to understand, one must revert to the insurer with query

Remember that the policy is a security for the policyholder's family in his/her absence and, thus, he needs to pay the premiums regularly for them to benefit

Must keep the nominee in the loop at all times about the insurance cover

It is imperative to realise that complete and honest disclosure is a sure way of avoiding any risk of the claim being rejected. Disclosing your problem is better than hiding it as it ensures faster claim payment.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

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

SBI Mutual Fund

Posted: 14 Apr 2012 11:18 PM PDT

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.

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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

Misconceptions about Life Insurance

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Posted: 14 Apr 2012 07:50 PM PDT

Planning for contingencies like death and hospitalisation is an important part of financial planning.

Buying a life insurance cover provides money to dependants of the bread earner on his or her death. However, there are a number of myths associated with life insurance that should be debunked first to ensure that one buys adequate life cover to protect the family.

Myth 1: Life Insurance Is A Waste Of Money

Life insurance is bought to protect ourselves from the contingency of untimely death. It would take care of the living expenses of your family if you die young.
Life insurance is an investment that is more of a safety mechanism; it is to provide financial security to the dependants. Term policies that cover the risk of untimely death are cheap and most ideal for providing life coverage.

Myth 2: Life Insurance Is For Saving Taxes

This could probably be a selling point for agents. But tax-saving is one of the many benefits life insurance offers. The main benefit is the provision of finances in case of the death of the policy holder.

Taxes can be saved with other tax-saving instruments like mutual funds, tax-saving bonds and government bonds, post-office savings schemes and Public Provident Fund (PPF).

Paying a premium to cover the full financial needs of the family in case of the death of the bread earner is very important. The cover should be for about 7 to 10 times the annual income of the bread-earner.

Myth 3: The Very Young Don't Need Life Insurance

This is a wrong notion. The common notion that people die when they are old may be true to a large extent. But having the risk of death covered is definitely better than leaving dependants financially bereft in case of an untimely death. Besides, it is smart to take benefit of the lower premium rates offered to the young. Also, you may find it difficult to take life insurance when you are old due to higher premium rates or being refused because of ill-health.

Myth 4: Life, Medical I covers Are Provided By Employers

These covers are available only until you are in a particular company or till retirement. Also, life insurance provided by employers may not adequately cover the living expenses of your family in case of your untimely death.

It is advisable to buy medical insurance when you are young, as fresh medical insurance taken just prior to retirement could be refused on medical grounds. Critical illness policies help meet additional living expenses of the family in case of a critical illness.

Myth 5: Ulips For A Limited Period Seem Attractive

In most cases, this is more of a sales gimmick. Most insurance products are so designed that the major costs are incurred in the first few years and deducted from the premium.

There are charges that the company wishes to recover over the entire tenure of the policy. So very less is actually invested in units. It is, therefore, best to look at unit-linked insurance plans with an open mind and consider a commitment of periodic investment for the whole tenure of the insurance policy.

Paying for a longer tenure could result in a more profitable proposition.

Myth 6: It's Best To Buy A Policy In The Name Of A Minor

This emotional sentiment selling point has helped many to sell insurance. Also, the premium paid on child policies may be much less than on a policy for an adult wanting the same coverage. A life insurance policy is taken to make good the loss of income to the family, so taking a policy with the child as a beneficiary or nominee may be a smarter thing to do.

Myth 7: Pleasing Relatives/ Associates Is Important

Avoid taking policies just for the sake of satisfying your friends and relatives who are insurance agents. Also, you need to avoid taking policies just to maintain relationship with business associates like bankers. Insurance policies need to be taken based on your need. These days, online term insurance plans are 50% cheaper when compared with term policies taken through agents or brokers.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Taurus Mutual Fund Change in Fund Manager of Taurus Ethical and Taurus Bonanza

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: 14 Apr 2012 12:44 PM PDT

Taurus Mutual Fund has appointed Mr. Abhinav Sharma as the fund manager of Taurus Ethical & Taurus Bonanza, with effect from April 10, 2012. He will replace Mr. Sadanand Shetty.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Do not Stop SIPs during Market Fall

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: 14 Apr 2012 11:24 AM PDT

It used to be that the main skill an investor needed was to be able to tell good investments from bad. However, it has become amply clear over the past four years that managing one's own reactions to panic and crisis is just as important, if not more so. All indications and data suggest that the number of investors who are investing in equity through the SIP route has grown substantially over the past few years. However, times like the current ones are a potential source of damage to this style of investing. Whenever there is a spate of negative news, or when the stock markets fall sharply over a short period, a certain proportion of investors cancel or pause their SIPs, or don't extend them if the initial SIP period comes to an end.

The emails and the questions that I get generally read something along these lines: I started an SIP of 12 months and it just got over. The markets are looking in a bad shape now. So I'm thinking of not renewing it. I will restart later when the markets look better.

Obviously, this is the wrong thing to do, but that's an understatement. It's actually a disastrous thing to do, which can render the whole concept of SIP investments useless, or worse than useless. Investing through SIP is not like a doctor's admonition for exercising or dieting that you drop for a few days and then try to catch up.

You see, investing during the bad times is the central point of SIP. It's the main advantage, the reason why SIP makes sense. In some ways, the whole concept is just an elaborate psychological trick to make you invest when the market is declining. Investors who are smart enough to escape getting tricked are actually not being very smart.

Here's a simple study that I did. Consider a hypothetical investor who has been investing since 1997 in a fund that just tracks the Sensex. The investor has an SIP of 10,000 a month and just sticks with that year after year. In the 14 years since he started, he would have put in 17.4 lakh into his investment. Today, that investment would be worth 48 lakh for a total return of 174% over these years. This is 13% per annum.

Contrast this with an investor who pauses every time the market crashes.
An investor who responds this way would probably have stopped investing some time in the middle of 2000, when the Sensex had declined to around 4,000 from its peak of 5,900. He would probably have congratulated himself as it drifted lower and then restarted investing when it again approached close to 4,000.
Then again, this investor would have stopped investing after the market started crashing in early 2008, probably by mid-year when it had come close to 15,000 from the Sensex's peak of close to 21,000. This time, this investor would probably have come back in mid-May 2009, likely a day or two after UPA won the election and the markets zoomed up.

This behaviour, which looks entirely natural, would have pushed down his total returns down to 134% — 11.3% on an annualised basis. Instead of investing 17.4 lakh and getting 30-lakh return, he would have invested 12.3 lakh and got 16.5-lakh returns. That is not a small difference.

The moral of the story is clear: We're probably going to have months, if not years, more of panic and crises. However, the only sensible thing to do is to keep investing. Since the point of SIP is to invest when the markets are down, you should actually be glad that you are going to get so much opportunity to do so.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

A Good Credit Score will Help You Demand Better Terms

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: 14 Apr 2012 10:49 AM PDT

In today's fast-paced economy where brands and services are competing closely for the consumer's attention and business, deriving the best value of your money is imperative. Be it goods or services like insurance, telecom or banking, we now have multiple options to choose from based on our requirements.

Take for instance the credit sector where we now have several banks and financial institutions which are keen to provide loans and credit cards to disciplined consumers who have a healthy credit history. Today, almost all banks and lending institutions check the credit score and credit information report (CIR) before approving loan applications. A consumer's credit score has today become the most prudent indicator of his or her financial discipline and credit eligibility. Therefore, a consumer with a good credit score is most desired by lenders and can use this powerful reputational collateral to his/her advantage.

The first step is to know your credit score and understand your credit health.
Since the growth of the credit information industry, the only implemented generic scoring model that has been introduced and is being used by lenders in India is the CIBIL Trans Union Score. Through advanced analytics, this score assigns a number from 300 to 900 to a borrower based on the credit history. The higher your credit score (i.e. the closer it is to 900) the more likely you are to get your loan application approved. The reason being, closer the score is to 900, the more confidence the loan provider will have in the individual's ability to repay the loan.
While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above. In addition to a good credit score, lenders may also consider other critical factors like your income to debt ratio, your residential status, professional qualifications etc. while deciding on your loan application. Therefore, along with a good credit score you must also ensure that all these factors are well placed before applying for a loan. To avail the benefits of your good credit score you should:

• Evaluate the home loan options and shortlist the ones that best suit your financial requirements

• Ensure that all the documentation required along with the loan application is up to date and ready for provision. This may include PAN card copy, passport copy, Form 16 for the previous two years, and six months' bank statements etc.

• You should also keep your latest credit report and score ready with you if the lenders require any clarifications.

• If you are planning to have a co-applicant for this loan then you must also ensure that all the documents required on behalf of the co-applicant are also ready. It is also advisable to check the co-applicant's credit score, as this is also checked by the lenders.

• Approach the lenders who are providing the loan plans which you have shortlisted. Mention to them that you have a high credit score and healthy credit report, along with all the documentation in place. Request them to provide you the best possible terms and conditions, as well as loan processing timelines, based on your credit score.

• Once the lenders revert to you with the information, evaluate the most optimal option that provides you the best deal in the shortest possible processing time.
Based on the information on your high credit score, there are chances that the lenders may provide you with competitive terms and conditions. Through this approach, you will be able to bargain and avail the most advantageous home loan offer. Also, as all your groundwork and documentation is ready, you can immediately apply for the loan. Once you apply, your credit report and credit score will be checked by the lender and on reconfirmation and validation of the documentation, they may sanction the credit based on the promised terms and conditions.

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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

Birla Sun Life Dividend Yield Plus

Submit filled up application Collection canter near you

Posted: 14 Apr 2012 09:38 AM PDT

To invest in fundamentally sound companies with a dividend yield of at least twice the Sensex yield. The fund has flexibility to invest up to 35 per cent in companies facing special situations like de-merger, buy-backs, open offers. However, the same is used very selectively with focus on minimizing downside risk. Dividend paying companies usually have healthy free cash flows, steady earnings growth and a strong balance sheet. This results in steady stock returns over the long term while providing relatively better downside protection in case of market correction. The strategy of investing in a dividend yield stock at times becomes a contrarian one as undervalued or out-of-favour stocks also offer higher dividend yield. Tactically, we are focused on segments of the market which are dependent on mainly domestic economy / developments. The fund has held significant positions in banking, FMCG, Fertilizers, oil and gas (policy related).

Its downside protection capabilities have proved that the fund gains ground by not losing it in the first place. One would expect this trait from a dividend yield fund, but it's surprising when one considers the high mid- and small-cap allocation. This gives it a risky bent but Sancheti balances it by staying away from aggressive bets and has even increased the number of stocks over time. Historically, the fund has not been a bull-market standout. But over the long term it proves to be a worthy bet

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Invest Mutual Funds Online

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New Cheque Norms

Posted: 14 Apr 2012 08:24 AM PDT

RBI has restricted the time period for the validity of issued cheques from six to three months

THE decision of the Reserve Bank of India (RBI) to restrict the time period for the validity of issued cheques and demand drafts will have a major impact on the manner in which people use these instruments. There are a lot of times when the life of the cheque comes to an end, requiring the issue of another one, and hence, there has to be a lot of care that is actually taken while these are being handled.

Otherwise, the individual could find that they are holding an instrument that is suddenly worthless.

Here is a look at some of the impacts that this would have in the coming time days.

Process followed: There are a lot of occasions when people just write a date on the cheque along with the name, and the amount and the cheque is then given to the person after a period of time. At present, this does not pose a problem because of the fact that there is a long time period of six months for the validity of the cheque to remain intact.

Now, with the period being reduced to just three months, this might no longer be a good idea and there could be a situation, wherein, the cheque is nearly outdated by the time it is given to the person in whose name it is. A better route would be to write the date only when the cheque is being given to the receiver.

Importance: Earlier, there was a focus on the amount of the cheque as well as the name that was written on it. Now, the date on the cheque would also be added to this list, and this would require extra care, as there is an additional detail that needs careful attention. Earlier, as long as the amount was correct and this was in the name of the right person, there was little to worry about, but now, even the date will have to be checked before the issue of the cheque or the demand draft.

Small mistakes of writing a wrong month can prove to be a big hit, and hence, this will require an additional amount of care.

Receipts: The biggest problems could come in the process of receipts, wherein, there is a delay in several areas or places when it comes to the receipt of the cheques. This often takes place when there are bills cleared by different departments and they actually take a long time to get the cheque across to the individual. This could result in a situation, wherein, the individual will have to go and deposit the cheque in the bank as soon as they receive it, so that there is no risk of cheque actually becoming worthless by the time an individual uses it.

Implementation: The real test that is likely to come up for the individual is after the switchover to the new system occurs. This is likely to be done from the start of April 2012, and this will require some work, as the situation will change overnight. Earlier, the six month rule was in place and now, when the three month rule comes, then on the first day itself several cheques and drafts bearing the previous period dates will become invalid.

Similarly, other instruments that actually are some time away from the expiry would need to be disposed off fast, and hence, the individual will have to be really alert about the entire position. To tackle this effectively, they will need to ensure that they are ready for the changeover and have a complete list ready to tackle the entire situation.

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