Tuesday, August 9, 2011

Prajna Capital

Prajna Capital

3 simple steps to choose the good insurance policy

Posted: 09 Aug 2011 05:04 AM PDT

 

With the increasingly uncertain times, what with terrorist attacks and tumultuous financial markets, getting an insurance cover for you and your family has become imperative. However, many of us do not take decisions because of it being such a big ball of wax.

Choosing the right kind of insurance cover not only determines the care that we receive should our health take a wrong turn, but it can be the wild card in your financial plan. There are many benefits of an insurance cover; however, topping the list of benefits is the financial support that a family gets in the event of the untimely death of the income provider. As getting the insurance cover is an important aspect of a sound financial future, choosing the right insurance cover is equally important.

First and foremost, choosing an insurance policy must be based on your current and projected income or simply put your current and projected ability to pay the insurance premiums, your medical state, your age, future financial plans etc.

Secondly, you also need to look at:

Cost-Benefit Ratio

The cost of the insurance cover depends upon many reasons, some mentioned above and other factors depending on what is covered in the cover or its riders. Thus, you have to keep a close eye on the cost of buying insurance and ensure that it justifies the benefits covered under the policy. Simply put, a right balance must be struck between the cost and benefits available.

Cover

You need to ensure that the insurance covers all your dependants and that it also covers the majority of health problems.

Thirdly, the promises made by different insurance companies are all fine; however, it depends on you whether you need a pure insurance cover or you need an insurance cover coupled with an investment opportunity. The four major kinds of insurances that most people opt from are:

Term Insurance - Term life insurance or term assurance is life insurance which provides coverage for a limited period of time

Endowment Policy- An endowment policy is a life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or on earlier death.

ULIPs - Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time.

Money-back Policy - Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, money back policies provide for periodic payments of partial survival benefits during the term of the policy

When comparing between these plans it is important that you keep in mind the factors that were talked about in the first point. Let's take a look at an example:


Arun is a 25 year old businessman who wishes to take an insurance cover for Rs. 20 lakh for a period of 20 years. There are two options he can choose from.

Option 1 - He can opt for an endowment/money-back policy and pay a premium of Rs 90,000 annually. If he survives through the policy term, he shall be eligible to receive the entire sum assured and vested bonuses, if the same are declared by the insurance company.

Option 2 - He pays Rs 4,000 annually and enjoys the risk cover of Rs 20 lakh. Being a term insurance cover, he is not eligible to gain any survival benefit from the insurance company and the insurance premium paid can thus be treated as the cost of covering his life for 20 years.

Whereas under Option 1, he has earned an annualized return of about 6%; Option 2 gives him about 9% returns during the period. Therefore, it is important for Arun to decide what he wants and opt for a plan accordingly.

It's important to correctly identify your dependants' financial needs to establish just how much life insurance cover to arrange. A general rule is to choose a policy providing at least ten times your salary, but more may be appropriate, with the amount varying depending on how you intend it to be used. Basically you decide how much you want your dependants to receive in the event of your death, and your premiums will be determined accordingly. Hence, make sure you keep all these factors in mind, compare different plans and choose your cover accordingly.

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

 

 

DSP BlackRock Mutual Fund - New FMPs

Posted: 09 Aug 2011 04:41 AM PDT

DSP BlacRock Mutual fund has launched three Fixed Maturity Plans (FMPs). The details of the schemes are as follows:
 

Scheme

 

 NFO Opening Date

 

 NFO Closing Date

 

 Maturity Date

DSPBR FMP S5- 3M

 

Aug-12

 

Aug-16

 

Nov-15

DSPBR FMP S6- 12M

 

Aug-12

 

Aug-16

 

Aug-20

DSPBR FMP S7- 12M

 

Aug-16

 

Aug-24

 

Aug-30

 

 

 
 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

A wealth generator - ELSS Mutual Fund

Posted: 09 Aug 2011 04:11 AM PDT

Most of the tax saving instruments under Section 80C are savings oriented instruments with returns after adjusting for inflation either in the negative or slightly positive. The exceptions to this are the ULIPs (Life and Pension Funds) and the ELSS Mutual Funds. The advantage with ELSS compared to the ULIPs is the frequency (mostly a single investment or a monthly investment for a year) and term for investment, for getting good returns.

Does ELSS diversify?

An ELSS (Equity Linked Savings Scheme) is a mutual fund that has to invest a minimum of 80% in Equity Shares. The balance 20% can be in debt, money market instruments, cash or even more equity. There is a 3 year lock-in period for the ELSS mutual funds. Post the 36 months, the funds remain invested and work like any other open-ended mutual fund.

Why an ELSS?

It has been an established fact that in the long run equity gives a much higher inflation adjusted returns when compared to any other investment except for maybe real estate. The top 5 ELSS funds have given returns from 22% to 26% compounded annually over the past 5 years. This is again higher than the market (Nifty) returns over the past 5 years which is at 19%.

ELSS is part of the Section 80C instruments which are cumulatively eligible for a deduction from income up to Rs.1L . This gives the tax payers benefits from 10% to 30% (excluding the educational cess) based on their current tax slab.

The return (maturity and the dividend [(if opted for]) from the ELSS is also tax free under the present EEE (Exempt — Exempt — Exempt) regime.  However, with the DTC regime tax benefits could be phased out and is under debate.

The 3 year lock-in period makes sure one stays invested. Otherwise in a normal mutual fund one tends to withdraw in case of any monetary requirement. The lock-in period also helps the fund managers to plan their investments better and also to hold on to valuable investments as they do not have to worry about sudden redemption pressures. The above logic is proved in the higher returns achieved by the ELSS funds when compared to the market returns. Wealth creation because of this is much better than most of the other mutual funds. Only some sector based mutual funds have given better returns than the ELSS fund in the past 5 years.

Options with the ELSS

Salaried people with a tight budget can opt for a monthly investment (SIP using ECS). The automatic investment from the bank through ECS makes it an easy way to invest.

Those who want an income in between can opt for the dividend option. This is particularly suitable for senior citizens. Also, the ELSS gives a tax free return compared to a bank or company deposit, which is taxable.

Limitations with ELSS

The investment in an ELSS cannot be switched or closed before the 3 years are completed form the date of investment. During market downturns, this becomes a limitation as one can only sit and watch the funds go down. One has the option of averaging when the market goes down, but an investment to save tax may not be required in the year in which the market is going down.

The lock-in works negatively also for the monthly investment because the lock-in is calculated from the date of the investment and not from the date the scheme was started. This means that the 12th month's investment can be withdrawn only on the 48th month. This is a disadvantage compared to ULIPs, where the lock-in is from the date of start of the scheme.

In summary

Most fund houses start an ELSS regular investment at Rs.500/- per month. Single investments start generally at Rs.5000/-. This makes ELSS accessible to all tax payers. With the compulsory lock-in giving better returns than other investments, even the most risk averse can look at an exposure to the ELSS fund for their tax benefits.

 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

4) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

5) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

6) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

7) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

How to protect yourself from food inflation?

Posted: 09 Aug 2011 02:52 AM PDT

Government reports indicate that food inflation is running at about 10%. The net effect for salaried individuals is that the cost of living is going up dramatically, especially when it comes to running the kitchen. So how can you your wallet without compromising your stomach?

Here we give you a few tips that you can use to better manage your expenses on food.

  1. Stick To A Budget

If you don't have a domestic budget that tracks your spending you should create one now, and thereafter stick to it. If you consciously allocate a part of your monthly take home income to kitchen and food expenses, then you will be better prepared to live within this. Additionally, during the budgeting exercise you will see what are the other areas that you are spending money on. Once these are revealed, you might realize that some of these expenses could be temporarily cut down or stopped completely so that you can use these funds towards rising food costs.

  1. Buy From A Wholesale Market

Every middleman in the supply chain from the farmer to your neighborhood green grocer you buy from charges their profit margin on the produce that they sell. Buy your fruits and vegetables from a wholesale market so at least you avoid paying the mark-up charged by your neighbourhood grocer.

  1. Pool Your Purchases With Your Friends And Family

Making those trips to the local "mandi" and carrying back bags of fresh produce in your car means you are probably going to spend some money on fuel costs. So, why not carpool so you can share the cost of driving. Additionally, why not pool orders from different households so you can buy in bulk and avail of discounts.

  1. Make Some Sacrifices

The cost of a restaurant meal or movie tickets for an entire family can be close to the average family's fortnightly cost of green groceries. So while food prices are high, cut down on the discretionary entertainment spend as much as practically possible. Rather than ordering a pizza for delivery, make one at home. Rather than going out to the movies, just watch one at home on TV.

  1. Don't Leave All Your Money In Fixed Deposits

This one is more of a financial tip. FDs currently earn returns of about 8%. After taxes these come to about 5%-6%. With food inflation at 18%, one doesn't have to be a financial genius to figure out that the return on our FDs will be insufficient to keep up with this kind of inflation. Depending upon your risk appetite and financial goals, create sources of investment income that in the long-term yield higher than the current annual level of inflation.

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

 

Product Review: Bharti-AXA Life’s Monthly Income Plan

Posted: 09 Aug 2011 01:40 AM PDT



The last few months have seen several life insurance companies launching traditional endowment plans, unlike earlier, when Ulips (unit linked insurance plans) were more popular. Bharti-AXA Life has joined this list by recently launching a traditional participating plan. The key feature here is its monthly pay-out scheme.

Features

Bharti AXA Life's Monthly Income Plan carries a limited premium-payment term, after which the policyholder will be entitled to monthly income that will last until the maturity of the policy. The policy holder will have the option of choosing from three premium paying terms — 7 years, 10 years and 15 years. The policy tenures offered are 15, 25 and 30 years. The period of monthly income is the policy tenure minus the premium-paying term. That is, if you opt for a 15-year-policy tenure, your premium-paying term will be seven years and your monthly income will flow in for eight years. The maximum age for entry into this plan is 65 years. If a 30-year-old healthy male buys the policy with a 15-year-term for a sum assured of 5 lakh, he will have to shell out an annual premium of 56,700 for seven years. After the premium-paying term gets over, the policy holder will receive 5,208 per month for the next eight years.

Returns and Maturity

In addition to the monthly income, the policy holder may also receive an annual reversionary bonus during maturity. This bonus is not guaranteed but can be declared depending on the performance of the participating insurance fund. You will not be entitled to a lump-sum sum assured like in the case of other savings cum-insurance plans. Also, you will not be eligible for any bonus if your policy has not completed at least three years.

Protection Cover

While no lump-sum sum assured is handed out to the dependents of the insured, they will start receiving the guaranteed monthly income immediately after the insured's demise. The period for the monthly income will be 96 months for a 15-year policy and 180 months for policies with tenures between 25 and 30 years.

Surrender Value

The plan will acquire a surrender value once three years' annual premiums are paid. The minimum guaranteed surrender value under the policy is 30% of all the premiums paid till the request for surrender is made, excluding the first year's premium and any extra premium paid. The company may also choose to declare a surrender value that is higher than the guaranteed surrender value.

Loans And Riders

You can also seek a loan from the company against this policy, provided that it has acquired the surrender value. Two rider benefits – critical illness and premium waiver – are also offered along with this plan.

Upside

Those seeking a regular stream of monthly income for a specific period can consider buying this product.

Downside

Returns are not guaranteed but depend on the performance of the participating insurance fund. It is also not free from the other limitations of a traditional endowment plan – lack of transparency in charges and predominance of debt investments that can constrain the return-generating ability, etc.

 
 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

Mutual Fund Review: TATA DIVIDEND YIELD FUND

Posted: 09 Aug 2011 12:46 AM PDT

 Ø      LAUNCHED October 2004

Ø      NAV 52 WEEK: High 36.9 Low 29.6

Ø      EXPENSE RATIO 2.39%

Ø      NET ASSETS (Cr) 179 crore (Mar 2011)

Ø      BENCHMARK: Sensex

Tata Dividend Yield has performed consistently since 2007 and investors have little reason to quit the scheme. New investors can take a plunge too. But they must exercise caution as the scheme is high on mid-cap stocks which pose a relatively higher risk in volatile markets

 

The scheme invests in stocks that have a dividend yield higher than that of Sensex stocks, which is currently about 1.1%. The average dividend yield of the fund's portfolio is about 2.2%, which cannot be said to be high. But the scheme has delivered in all phases, come rain or shine given its strategy to invest in businesses that are high on capital efficiency. The scheme is optimistic on the FMCG sector, despite its high valuations because it is also high on capital efficiency. The fund manager believes that brands and pricing power will help select companies to do well. Going forward, the scheme aims to invest in stocks that have already witnessed a de-growth in valuations.

OBJECTIVE


• The scheme aims to optimise returns by investing a minimum of 70% of assets in stocks that have higher dividend yield than the Sensex. Other stock selection criteria includes management and business competitiveness, and growth prospects of the company.


 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

4) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

5) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

6) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

7) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

Stock market investors can get complaints tracked, settled online

Posted: 08 Aug 2011 10:23 PM PDT

Stock market investors who wish to file complaints against listed entities with the capital market regulator would now be able to do it through the online route.

This mechanism, titled 'SCORES', is to also draw in companies to address investor complaints through the web. The system is a centralised database of all complaints, wherein the investor is to be enabled to view the current status and action taken The Securities and Exchange Board of India (Sebi) got 32,200 investor complaints in 2009-10. In 2008-09, there were 57,580. It has recorded 2.7 million since its inception and says it had redressed 2.5 million cases till 2009-10.

Complaints are generally related to the issue and the transfer of securities and non-payment of dividend by listed companies. Sebi also takes up grievances against the various intermediaries registered with it and related issues. Some of the grievances redressed are on on refund orders, non-receipt of dividends, of share certificates after transfer, derivatives trading, corporate governance and so on.

According to a Sebi circular issued last Friday, all complaints pertaining to companies will be electronically sent through SCORES at http://scores.gov.in/Admin. The companies are required to view the complaints pending against them and give action taken reports (ATRs), along with supporting documents, electronically in SCORES. A failure by a company to update the ATR in SCORES will be treated as a non redressal, said the regulator.

In cases, where the complaints are processed by a registrar to issue or share transfer agent (RTI/STA) on behalf of the company, the company will have to indicate whether they require the facility to forward complaints to the RTI/STA, so that the ATRs can be uploaded by them. In such cases, the name of the RTI/STA, the name of the compliance officer and email identity has to be furnished.

Currently, an investor can file a physical complaint with the regulator, who would then follow it up with the company. Thereafter, checking the status is a cumbersome process.

Right now, once you file it (a complaint), you are not aware of its status and where it is stuck. With SCORES, one can see online the exact status. Some felt though online redressal was a good step, it would take time to catch on, because many investors are not familiar with the technology How many people are tech savvy or even own a computer out of the one crore investors in the country? This is will be beneficial for those who are tech savvy. At present, investor complaints are maintained at various divisions and regional offices of Sebi. Complaints are also received in various physical and electronic formats. This leads to a lot of time lag between receipt of the complaint and its redressal. The problem of storage and the risk of loss or misplacement of records is also sought to be addressed through conversion of all physical complaints into the electronic format.

Sebi's new web-based complaint system should improve redressal, say experts

Ø       Investors can log onto http://scores.gov.in/admin

Ø       The complaint will be sent to the company through the SCORES website

Ø       Upon viewing the complaint, the company will have to send ATRs, along with the supporting documents

Ø       Failure to update ATRs by the company will be treated as non-redressal of the complaint

Investors can follow the status of their complaints via the website

Choose gold ETF over Physical Gold

Posted: 08 Aug 2011 09:32 PM PDT

Investing in gold is overall a good portfolio hedging strategy as long as gold does not account for more than 5-10 per cent of your investment portfolio. Between physical gold and gold ETF, investing in gold ETF is a better proposition because these funds invest in physical gold making them the closest to investing in physical gold at no risk of holding physical gold.

 

You will need to have a demat account to invest in gold ETFs and there is little to choose between any of the gold ETFs, you can pick any fund that you wish to as long as you pick the fund with the lowest expense ratio.

 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

How to exit joint property?

Posted: 08 Aug 2011 08:34 PM PDT

Once the co-owners approach the courts, the preliminary hearings revolve around determining the share held by each party and the ownership right. Unless the agreement explicitly mentions the percentage-wise holding of each co owner, all of them are considered as having equal rights. This is, however, easier said than done. Maximum cases, if contested, get stuck at this stage, with each party disputing the share pattern ascertained by the court. Pending this decision, the case can drag on for decades. Determining the ownership status can be even more complicated if the property falls under the Hindu Undivided Family (HUF) rules. For instance, say a property is registered under an elder brother's name. Claiming ancestral funds were used to buy it, the younger brother makes an ownership claim. The case could go on till the ownership is determined.

Like Martin's daughters, you may not have the original property papers and worry about proving the ownership. Simply because you don't have the original documents does not mean you don't have a right over the property. The court understands there is just one set of original documents. Therefore, in such cases, the onus to furnish the original documents lies with the other party. If the co-owners accept the same, the court proceeds to appoint a commissioner. He, then, surveys the property under dispute and gives a report about how the property may be divided. Usually, 'the principle of metes and bounds' is followed after taking the owner's consent. This implies physical division of the property.

Such division is simpler for, say, a plot of land. But, it may not be as easy in case of a residential or commercial property. Here, the court would turn to the last resort of selling off the property. If one of the co-owners wants to exit the property, the court may allow the other party to monetarily compensate them and claim full ownership of the property. If the other party fails to do so, the court may auction off the property in open market and divide the sale proceeds between the co-owners, depending on their shares.

Waiting for the final decision could take years. Hence, legal experts advise the arbitration route. Ninety per cent of partition cases get resolved through mutual settlement, saving time and money.

One can either appoint an arbitrator independently or approach a court-appointed practising lawyer or a retired judge as an arbitrator. Any objections to the arbitrator's solution need to be filed within 90 days, failing which, the decision will be final and binding. But, remember, should an objection be filed, it would mean being back to square one.

Stock Review: Hexaware Technologies

Posted: 08 Aug 2011 07:47 PM PDT

 

Indian software exporter Hexaware Technologies is expected to report robust earnings in the near term driven by a healthy deal pipeline and a string of recent order wins. The company on Monday announced a $177-million technology outsourcing deal from an existing client in the US.


The deal, one of its largest ever, includes new business worth $100 million and $77 million revenue from extension of an existing contract for five years, the company said without disclosing the client's name. The latest order is likely to add to its total revenue from 2012. Reacting to the order win news, Hexaware shares rose 6% intraday on the Bombay Stock Exchange. It ended at . 75.80, up 5% from previous close. The benchmark Sensex ended the day down 0.3%.

Mumbai-based Hexaware is a medium-sized software exporter that offers services in banking and financial services, travel and transportation, healthcare and manufacturing.


In the past three months, the stock has gained nearly 35%. The company's consistent financial growth over the past few quarters on the back of a focused approach on account management has provided the impetus to its scrip.
The company posted an operating profit margin of 14.3% in the March quarter, a level last seen in the pre-downturn times. A decline in operational expenses, higher utilisations, lower staff cost and offshore shift have resulted in better margins.


Hexaware expects to maintain steady margins in the June quarter. In the past two quarters, the company has witnessed considerable traction in business from the US and Europe.


Its order pipeline is healthy in niche areas such as Peoplesoft and Testing. Business intelligence and infrastructure management services are emerging as strong service areas for the company, giving it an incremental share with existing clients.


At the current market price of . 75.80, the stock is trading at 15 times its earnings for trailing twelve months. With a healthy order pipeline and robust cash position, the company looks well positioned to explore inorganic growth opportunities.

What are the Costs involved in Buying a Flat?

Posted: 08 Aug 2011 07:47 PM PDT

A flat's price is not based on just the cost per sq ft. Here's the lowdown on the many charges that make up a property's value


   Why does the payment schedule of your house read different from the figure you had in mind?


Most probably because you have done your mental calculation by just multiplying the total area with the cost per square foot. However, the total cost of your flat is not just a function of the total square feet area of the house and the cost per square foot. There are certain fixed costs such as stamp duty, registration, property tax, service tax, etc, that also need to be factored in. Also, there are other costs that vary from developer to developer.

THE EXACT COST AND THE AREA

To begin with, you should know the exact area of your house, which is used to calculate the cost of the house minus the taxes and other fixed costs.


Today, most projects are sold on the basis of the super built-up area (SBUA).
The SBUA is usually 40% to 60% more than the carpet area. Which means that if you buy 1,200 sqft of space from the builder, it can be safely assumed that your net carpet area will be around 700-750 sqft.

KEEPING ACCOUNT OF EVERY COST

The most common costs that are not taken into account are stamp duty and registration charges, floor rise, and the maintenance cost per square foot.
While some of the additional charges such as stamp duty and maintenance are known to most buyers, the less obvious ones – which often adds up to a considerable sum – are only communicated verbally. In other words, the buyer may not have a document to go back to establish when such add-on costs were mentioned. Therefore, the overall cost of buying a property can rise drastically above the originally quoted rate.


In India, the cost break-up given by a builder usually does not include the stamp duty charges. In a way it is a hidden cost for most flat buyers, since they do not factor in this cost while working out their budgets. Also, since most homes in India are bought through home loans, flat buyers should also take into account the cost of an insurance policy to cover the home loan. Besides, a strata search of the property's legal antecedents may add up to quite an amount.


The registration of a new property with the local electricity board for the fitting of an electric meter involves a one-time expense. If a home is not fully furnished and outfitted, the buyer will incur the cost of furnishing, fittings and all other expenses involved in customising the property to individual needs and tastes.


In the case of a resale standalone property, valuation of the property may be a prerequisite. This will be charges involved in using the services of a registered valuation agency. There may also be costs incurred on the transfer of the title of the property, which is also known as conveyancing.


Society maintenance charges and a yearly property tax are among the other costs that most buyers do not factor in prior to purchasing a property.
For most under-construction projects, buyers agree on a price and the agreements are drawn up and registered, post which the bank starts to pay the cost. In most under-construction buildings, there is very little scope for any major negotiation on the costs to be borne by the buyer. Some of the components that should be checked are – floor rise, car park, PLC (preferential location cost), maintenance cost and fit-out cost, if any.


Even while buying a resale property, all the above costs will be involved.

Besides, societies may ask for transfer premium, also known as voluntary contribution, which is rather involuntary. It can range from 2% to as high as 5% of the registered sale value. The actual cost as per the Societies Act is . 25,000. Any amount over this is shown as voluntary contribution.

THE COMMON AREA

Right from your fancy lobby to your elevator to the kid's pool, every square foot gets added to your bill under the common area head. There are several such parameters that come with a rupee value and get added to your final home price tag. What makes this component of the cost tricky is that there is no standard definition for common area.


Usually, common areas would comprise the floor service areas of your apartment, stair cases, lift areas, floor electrical distribution rooms, lobby, swimming pool, etc.


The logic a developer gives is that a home owner uses these facilities as much as his/her own house. Hence, check with your builder on the gross floor area, the difference between the super built-up area and the carpet area, and details about all that is included under common areas.

NO FREE LUNCH

Builders provide facilities/ amenities like pools, gyms, health clubs, recreation areas, and yoga rooms. Some even provide spas, mini theatres, etc. However, none of these is free of cost. These facilities are included in the super built-up area, in addition to all the common areas over the carpet.


In some cases, where clubs, etc, are being formed, there is a separate membership fee that is to be included in the price of the apartment. In some projects, however, the fee may be voluntary.


In townships with facilities for healthcare and education, the premium over the basic rates will be higher.

SOCIETY MAINTENANCE CHARGES

Most builders take the society maintenance charges for up to two years in advance.


This trend is due to the fact that it is easy to create the facilities but difficult to maintain as time goes by. Some people end up not paying as they don't see value in the facility provided. Hence, the best way is to take the maintenance cost upfront.


As far as your developer is transparent about the pricing and terms and conditions, there is no reason to worry.


But now you know all the relatively unknown cost heads that can increase the cost of your house.

 
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