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- Loan down payment - How to arrange money that?
- All about Equity Linked Debentures
- Learn To Earn From Your Gold Holding
| Loan down payment - How to arrange money that? Posted: 09 Nov 2012 03:34 AM PST Call 0 94 8300 8300 (India) WITH the Reserve Bank of India (RBI) imposing restrictions on the quantum of loan that banks can extend to home-loan seekers, arranging for the down payment has grown into a bigger concern for house hunters. Recently, RBI issued a directive saying that the loan-to-value (LTV) ratio for housing loans is not supposed to exceed 80%. For small-ticket loans – i.e. housing loans up to 20 lakh – however, it can go up to 90%. What this essentially means is that if you have finalised a house for say 10 lakh, the bank may sanction a loan of 9 lakh. However, if your transaction is valued at 1 crore, no bank will extend a loan of more than 80 lakh.
The most convenient option could be borrowing against your life insurance policy, especially if the life insurer extends the amount. This is because you can benefit in terms of lower interest rate and an easy repayment schedule. However, note that the loan is not available in case of term insurance policies and those that have not acquired a surrender value. Also, not all insurers extend this loan against Ulips (unit-linked insurance plan). Depending on the insurer, you can borrow up to 85-90% of the surrender value. Interest rate could range from 9-9.5%, to be paid half-yearly. Alternatively, you can allow the loan amount to be deducted at maturity. In the event of the policyholder's demise, the benefits will be paid out to your dependents after settling the outstanding loan amount. 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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| All about Equity Linked Debentures Posted: 08 Nov 2012 07:46 PM PST Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
An equity-linked debenture is a hybrid structured product. It is a zero-coupon bond and the returns are linked to an index such as Nifty or Sensex or a basket of stocks. There is no fixed rate payout like other debentures which are usually linked to debt instruments. The zero-coupon bond matures to the principal by the end of the tenor of the product. The rest is used to effectively create the payoff of the structure (the variable market linked coupon). Higher the interest rate, the better is the payoff to the customer. Although these have become an all-season product, the combination of high interest rates and bullish equity market indices has been the best time to invest in such debentures. Even if the stock market slips into a bearish phase, these debentures, just like most other structure products, protect the downside even as they allow the customer to participate in the upside of the market, say wealth managers. Who Issues Them These debentures are issued by nonbanking finance companies (NBFCs) to meet their credit requirements. Industry experts say NBFCs meet 40% of their credit requirements through these debentures. NBFCs have been issuing such debentures as these are primarily zero-coupon bonds with no fixed regular interest servicing, unlike regular debt borrowings. Pricing Of Elds One of the major determinants of the overall payoff is the rate at which the issuing NBFC borrows. In the current high interest rate scenario, there is more money available for allocation to optionality, which can create better payoffs for investors. Two factors play an important role in pricing an ELD — the underlying funding cost and option prices. In a high interest rate regime, structures can also be attractive as a pure hedging mechanism. The Ideal Investor Profile Equity-linked debentures make sense to those investors who want to participate in the upside potential of equities, yet at the same time they need to protect against the downside risks of capital erosion that accompany equity investing. These products can help bridge the gap between a pure equity exposure and pure fixed income products.
Every investor has his or her own idea and outlook on the market. The investors have to ensure that the structure suits their requirements. If the investor is aggressive, then knock-out option should be avoided.
These products are not without strings. Such instruments usually carry a knock-out level clause, wherein if its benchmark index rises beyond a particular level, your returns will not be commensurate with the rise in the index.
The argument put forward is that it is a 'small' price that you pay in return for any structured product with capital protection.
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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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Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
| Learn To Earn From Your Gold Holding Posted: 08 Nov 2012 06:57 AM PST Call 0 94 8300 8300 (India) Interest rates on bank gold deposit schemes are low. Retail investors should explore other options Given the current rise in gold and silver prices, by getting locked in such schemes, you might lose out on opportunities that come with having physical gold in hand. State Bank of India (SBI) and Corporation Bank have been running gold deposit schemes for years. Similar schemes are also being offered by private jewellers. The latest to join the fray are private bullion traders who aim to tap the high net-worth individuals. RETAIL CUSTOMERS Banks target customers willing to deposit their idle gold. These will be melted to check the purity and then used by the Indian Mint. Customers are given certificates by the bank that need to be produced on maturity. The certificate can be used as collateral for loans. There is no income tax on the interest earned, no wealth tax on the gold deposited and no capital gains tax applicable on transfer or maturity. However, if earning income while keeping your gold safe is the aim, deposit schemes offered by banks don't really help. The interest offered on these schemes is low — SBI only offers one per cent for a five-year deposit, while Corporation bank offers four per cent per annum for a seven-year term. So, retail investors should take a cue from Mathur's advice and sell at least a part of their holding while prices are still high. The money earned could be invested in options such as exchange-traded funds (ETFs), feeder funds and the e-series (popularly called e-gold) launched by the National Spot Exchange. Opting for ETFs would incur a cost, since individuals need a demat account on which heshe needs to pay an annual maintenance fee of `400500. There is an additional broker fee of up to 0.5 per cent for gold ETFs. Investing in feeder funds would cost less, as fund houses would levy an expense ratio of only one per cent. HIGH NET-WORTH INDIVIDUALS The Bullion ++ scheme, introduced by private bullion dealer, RiddhiSiddhi (RSBL) allows investors to book a minimum one kg of gold or 30 kg of silver at its benchmark price in cash. The holding will remain with the company, even as the ownership remains with the investor for one year. Further, as an investor, one has the option to permit the company to keep the gold or silver as collateral with other bullion traders, who will use these for their own bullion requirements. This should help one earn three-seven per cent interest. Investors can also extend the scheme for another year or even longer. In case investors want premature exit within the three month lock-in period, they will have to pay 0.5 per cent penalty. In terms of earnings, if the investor is risk-averse and does not permit the company to use it as a collateral, his/her earnings would be limited to the extent of escalation in his/her invested commodity. However, investors will need to pay RSBL a marginal management fee of one-two per cent, depending upon amount of investment for the risk of holding the bullion and its insurance. Physical possession of gold and silver, especially such high amounts, makes it risky. On the other hand, investment in futures through commodity exchanges is meant for hedgers and speculators, where the roll over cost is also factored in after expiry of the contract. But, one of the biggest benefits of investing in Bullion ++ as compared to ETF is the option of investing in silver as well. Investors have ETF options only in case of gold that has appreciated by 28 per cent in the last one year. However, silver which shot up by a staggering 133 per cent during this period, is not available for investment through ETF. RSBL Commodities plans to introduce smaller size products with 100 gm of gold and 5 kg of silver products in near future. To attract retail participation, the company is considering launching one gm gold investment, for which modalities are currently being worked out. BANKS GOLD DEPOSIT SCHEME Minimum deposit amount 500 grams For individuals, HUFs, Trusts and companies Gold will be melted and used by the Indian Mint Low interest rates of 1-4.5% for 5-7 year period Charges for checking purity of gold `1000 in Mumbai, `300 in smaller centers 25 -.50% penalty on premature withdrawals BULLION ++ SCHEME Minimum deposit of 1 kg gold or 30 kg silver For high net-worth individuals 3month lock-in. 1 year deposit period that can be extended Gold/silver can be kept collateral with other bullion traders to earn a minimum interest between 3-7% Management fee of 1-2 per cent depending upon amount of investment 0.5% penalty on premature withdrawal 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 Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
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