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- Retirement Planning through Public Provident Fund (PPF)
- Investing in Bank fixed deposits ( Bank FDs )
- AIG India Equity
| Retirement Planning through Public Provident Fund (PPF) Posted: 15 Oct 2012 04:14 AM PDT Download Mutual Fund Application Forms AT THE start of the new financial year, it is time for the investor to once again take a careful look at the various investment options available and make investment decisions.
Starting investment at the start of financial year will provide the investor with the required time to accumulate the corpus as per the requirement. Here is a look at the situation for the public provident fund (PPF) because there is a change once again in the interest rates offered for the financial year.
Features: The PPF is a long-term investment option, available for every individual, irrespective of whether they are salaried or not. With tenure of 15 years and an option of extension in blocks of five years any number of times, this scheme allows investment for a long term.
Thus, it becomes a route whereby, the investor can accumulate money for a long period of time and can become one of the options used to meet their retirement planning needs.
Since the returns are tax free and the amount compounds in the scheme, it offers significant benefits for those looking to grow their money over a longer time period.
Maximum amount: The maximum amount that can be contributed each financial year into PPF has been raised to Rs 1 lakh from December 2011. In the coming financial year too, the entire amount of Rs 1 lakh can be used by the investor. Many people confuse the situation between the tax benefit and the amount that can be invested. So, for example, if a person has Rs 50,000 of other tax-saving investment, then they will just put the remaining amount of Rs 50,000 available as a deduction under Section 80C into this instrument.
If you are looking just at the tax angle, then this would be an appropriate way to go about things.
However, if you are considering building funds for your retirement, then you might want to make the full use of the amounts that are available under the PPF, even though a part of it might be an extra investment as far as the tax deduction under Section 80C is concerned.
There are a couple of reasons why this kind of higher contribution might be a good idea. The first is that the amount actually compounds under the PPF scheme. So, a higher balance in the account is better for the individual investor over a period of time, especially, in the later years, when there is a large amount of earning from the fund. The second thing is that the returns are tax-free, which means that pre tax returns are significantly higher.
Rate of interest: There has also been a change in the rate of interest in the past four months. Earlier, the rate was 8 per cent, which was raised to 8.6 per cent from December 2011. There has been a further rise in the rates to 8.8 per cent from April 2012. This is a significantly high rate and the individual investor should make the best use of the entire situation. It has to be remembered that the interest is calculated on a monthly basis, though credited to the account once a year. It is calculated on the balance present on the fifth day of every month in the account. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com ------------------------------------------- Invest Mutual Funds Online
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| Investing in Bank fixed deposits ( Bank FDs ) Posted: 15 Oct 2012 03:12 AM PDT Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Applications
Bank fixed deposits (FDs), according to a financial planner, fall under the comfort investing category, as most individuals invest in this instrument and often, randomly. This only increases in the present interest rate regime, where the annual rates are between nine and 10 per cent. Some banks (Bank of Baroda, Bank of India and Corporation Bank) have been raising it even now, though on shorter tenure deposits — one year and less. Largely, there are two common tenures — one year or five years — depending on the requirement to save tax.
But that's not how it should be viewed always, planners say. The thumb rule is that in the high rate environment, you should tap the longest deposit tenure to make the most of it and vice versa. But, your risk and age profile also need to be looked at. Here's how:
Youngsters (20-30/35 years):
It is highly likely that those in this age group do not have any liabilities. Hence a longer tenure deposit — three years and more — is suggested. But, mostly when you are just starting to work, you are unclear about future goals, which evolve over time. So, we mostly advise this age group to start with one- to two year deposits. Because they do not have built-up capital and, hence, deposits help in case of a sudden need for a lump sum amount," he explains.
Also, most youngsters take to deposits because they are not well acquainted with stock markets and opt for deposits to create wealth. Then there are cases where the individual has a liability like an education or home loan. If the loan charges a higher interest than he earns on deposits, he is better off prepaying. Deposits help in accumulating the amount to prepay.
Middle age (35-50 years):
The good thing about this age group is that you are likely to have a decent cushion of built up capital. Hence, you could park your funds in bank deposits for two to three years for near-term necessities.
These days many parents do not get covered under their children's employer provided health insurance cover. Neither do they have a separate cover. In such cases, shorter-term fixed deposits, that is, of one year or less, can help in case of a medical emergency.
Here, you also need to keep your tax implications in place. Investment experts say most start planning for their future goals from the thirties. Hence, a larger number of individuals in this age bracket are likely to have invested in either mutual funds or through endowment/unit-linked plans for their retirement or their child's future as high growth avenues are recommended. As a result, fixed deposits, typically, are out of the list. Importantly, most of the equity or long-term instruments are exempt from tax.
Near retirement/retired:
If you fall in this category, you should go for the longer-tenure deposit route — that is, three years or more. For, this will ensure that you have a sustained quarterly/yearly income and give tax benefits. This is also a safe way to preserve the post-retirement corpus.
Long-tenure FDs also help you absorb interest-rate movement shocks, if any. This is especially true in the present conditions, where rates are likely to start moving down anytime soon, and interest income for those in this bracket will remain untouched. Flexi deposit schemes for those not clear about near-term financial needs and yet do not want to keep their money idle in the bank. With State Bank of India's scheme, you need to invest between ~5,000 to ~50,000 a year for a minimum of five years and a maximum of seven years. The rate of interest will be the same as in case of term deposit, or 9.25 per cent in this case.
Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them
OR
You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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| Posted: 15 Oct 2012 01:58 AM PDT With five continuous quarters of underperformance, its start appeared doomed. It changed direction from March 2009 but the road has not been smooth.
After Husain took over in June 2009, he revamped the portfolio based on the premise that domestic recovery would be stronger than the global one. His move paid off. Come 2010, he failed to impress. Early that year he began to pare down exposure to stocks which he felt were overvalued. Unfortunately, his timing was less than perfect. "The market initially did stumble but later in the year started appreciating. We stuck by our fundamental research indicators and did not change our portfolio stance. Hence, the result was an underperformance," says Husain.
Husain tends to take a contrarian stance. Currently, Financial Services is the top sector amongst most funds in this category but this fund's allocation is just around 7 per cent. Again, due to valuations and headwinds in terms of regulatory tightening, especially in terms of provisioning norms, led to his stance in Banking.
Last year, allocation to Auto averaged around 21 per cent during the first six months of the years (category average: 5%) while the fund remained underweight on FMCG and Healthcare. In terms of sector bets and individual stock picks, Husain certainly does not follow the herd. Ever since he took over, popular stocks like Reliance Industries, ICICI Bank and State Bank of India do not feature here.
From being categorized as an 'Equity: Large & Mid Cap' fund, in September 2011, it moved to the 'Equity: Multi Cap' one. Its allocation to small caps has not exceeded 15 per cent in its entire history.
Over the last few quarters, this fund has fallen less than its peers. It's not among the most consistent ones in the category but by showing periodic bouts of performance and restraining its fall in downturns, it does reward investors.
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- 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 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 Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
--------------------------------------------- Application form for Tax Saving Infrastructure Bond and more information Current open Infra Bond Application form
Submit filled up application Collection canter near you
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