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- Reverse mortgage - How can it help senior citizen
- How to earn Tax Efficient Investment Returns?
- Constituents of an Investment Portfolio
| Reverse mortgage - How can it help senior citizen Posted: 12 Jul 2013 01:50 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
With increased urbanization and prevalent nuclear family culture, many senior citizens are forced to fend for themselves. This situation has been aggravated by increase in the cost of living accompanied by longer life expectancy, thus making it very difficult for the senior citizens to make both the two ends meet.
In order to help those senior citizens who own their house but don't want to sell it, the Government of India introduced reverse mortgage a scheme in 2008.
Under this scheme, the senior citizens can unlock and tap the value of their residential house while enjoying the benefits of living in the house during their lifetime.
What is the reverse mortgage scheme?
This scheme is exact 'reverse' of plain home loan scheme. In case of a home loan one takes a lump sum loan and repays it in instalments in future. Under the reverse mortgage scheme, you get instalments and the loan is repayable in lump sum in future.
Here, the payment stream comes to the borrower for a fixed period of time in the form of monthly, quarterly or yearly payments. The maximum permissible monthly payments under this scheme cannot exceed Rs. 50,000 per month.
You can even get lump sum payments under reverse mortgage loan however the total amount which you can get as lump sum which cannot be more than 50 percent of the total eligibility amount subject to a maximum of Rs. 15 lakh.
The one time lump sum loan can only be taken for the purpose of meeting medical expenses for yourself, your spouse or any dependent person.
The money receivable under regular reverse mortgage scheme money so borrowed can only be used for the genuine needs of the owner like medical emergencies, day to-day expenses, repairs and renovation or repayment of loan taken for the same property.
It is important to note that should not be used for any speculative purpose.
What is the tenure, rate of interest and repayment of the loan?
Various banks have devised their own schemes within the framework of the scheme announced by the government. Broadly the tenure of such loan shall not be more than twenty years.
This is the period during which the owner of the house will continue to receive the periodic payments. However in case the borrower outlives the tenure of the loan, the payment stream shall stop but he can still continue to stay in the house.
Even after his death, his spouse can also continue to stay in the same house without having to worry about repayment of the loan. The rate of interest will vary from one lender to another.
The lender will recover normal charges associated with the mortgage like appraisal fee and legal charges for documentation etc. The lender is however required to disclose the fee chargeable in advance. The lenders are free to provide the loans under fixed or floating rate regime.
Once you have obtained reverse mortgage loan, it is not necessary for you to continue with this for the entire tenure of the loan. You can always prepay the outstanding loan and get your documents released any time.
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 )
------------------ Best Performing Mutual Funds
|
| How to earn Tax Efficient Investment Returns? Posted: 11 Jul 2013 10:51 PM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
An important aspect of investment which is often ignored by investor is tax efficiency of return and that is the reason why traditional options like bank fixed deposit, bond debentures and small savings scheme continue to be mainstay of portfolio of large number of investors
There are three important factors that investors need to keep in mind; (1) they must invest in investment options which provide tax efficient return, that is where mutual funds score over other investment option, for example look at the debt side, even if bank fixed deposit and bond fund gives the same return, the fact that the long-term capital gain is taxed at the concession rate of 10 percent, the post tax returns are much higher. Similarly on the equity side also even though tax benefits are same for investing directly into stocks and through mutual fund, a mutual fund investor gets a benefit because if a fund manager sells an investment within 12 months, the mutual fund investor is not required to pay any tax whereas a direct investment will attract a short-term capital gain of 15 percent.
(2) While investing in tax investment option also, investor needs to choose right options. There are three options which are available to investors; dividend payout, dividend reinvestment and growth. So, anyone who is investing for the long-term should be looking at growth option, but they need to be little careful while investing for a shorter duration, for example the dividend distribution tax on debt fund is 25 percent, which means that someone who is in the highest tax bracket of 30 percent should choose dividend distribution, dividend payout whereas investors who are in the tax bracket of 10 percent and 20 percent should opt for growth option.
(3) Investor needs to minimise the portfolio turnover, which means that they need to avoid buying and selling at random because many a time investors overreact to market conditions. So, if they honour their time commitment which they have for the portfolio, if they continue to keep investing or remain invested for the defined time horizon then they can minimise their tax incidence a lot.
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 )
------------------ Best Performing Mutual Funds
|
| Constituents of an Investment Portfolio Posted: 11 Jul 2013 10:02 PM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) One should be able to choose the right fund within an asset class to create the most rewarding portfolio
After asset allocation at broad level of debt-vs-equity, the second level of asset allocation that a portfolio must do is within these asset classes. There are a wide variety of funds available within both debt and equity.
The world of debt funds is an orderly one and the funds are rather neatly arranged in terms of the time horizon of the securities they invest in. While studying the impact of these is a science by itself all that an investor needs to do is to match the time horizon of the fund to his own. Thus very short-term money must go into ultra-short term funds, short-term into short-term and so on. The longer the period, the more volatile funds tend to be when interest rates change. This makes it dangerous to invest in longer-term funds for short periods of time.
Core Funds
The next thing to understand is what are core equity funds and how much you should invest in them. The idea behind a core fund is that it should be a fund that is able to deliver returns in good times without being too volatile. While almost any fund can deliver returns when the markets are rising (as is obvious nowadays), it takes a special skill to keep a fund relatively stable during volatile or bad times. The Value Research star rating system is based on a methodology that captures the returns that a fund generates relative to the risk it takes. On ValueResearchOnline.com, you can peak behind the scenes and see how different combinations of risk and return can earn different funds the same rating.
For example, the June 2013 list of large cap equity funds has six funds that have a five star rating. Of these, Franklin India Bluechip has below average risk grade and above average returns grade. In contrast, IDFC Nifty has an average risk grade and high returns grade. Thus, compared to Franklin India Bluechip, IDFC Nifty delivers higher returns but takes more risk in doing so.
This is the kind of insight that should be the key driver in deciding which funds should form the core of your portfolio. In general, the core should be composed of funds that offer stability coupled with returns. It is dangerous to judge funds purely by short-term returns. Long-term risk-adjusted performance through a wide variety of market conditions should be the key parameter for selecting core funds.
Supporting Funds
On the same principle, you could also use sector funds as non-core holdings. However, this needs to be done with a great deal of care. You could read the ad of a sector fund and buy into the argument that you need to invest in that sector but if the sector is worth investing in, the chances are that the managers of your other funds have already invested in it. If you analyse your portfolio using the online tools in the portfolio manager at
If you decide to invest in a particular sector then you are actually saying that there is something wrong in the sectoral break-up that the fund managers of your existing funds have chosen and you need to correct that. Clearly, you should think of sectoral funds if you are really sure you know what they are doing.
How many funds?
Of course, looking at the actual portfolios that people send us, most investors tend to err on the side of having too many funds rather than too few. Portfolios of around 20 funds are actually quite common and 50 or more are not unheard off. To make matters worse, many of these portfolios actually have very little diversification because investors tend to buy many funds of same type that they like. One portfolio that we came across recently was a collection of practically every mid-cap fund in the country. This is not diversification by any stretch of the imagination.
Evolving a Portfolio
The other reason for changing a portfolio is that the time when you will need the money is getting nearer. A portfolio that started out as a five-year, medium-term investment will be a short-term portfolio four years later. The solution is clear--portfolios must be reworked as the time to liquidate them gets nearer. Otherwise, your hard-earned equity returns could get wiped out in a bear market just as you need the money. As the time comes nearer, you must start moving the money into debt funds gradually, perhaps a year or two beforehand. This is crucial in protecting you returns.
Think
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 )
------------------ Best Performing Mutual Funds
|
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