Prajna Capital

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• How critical is home insurance?
• What Happens If Your Life Insurance Lapses?
• Are all your investments with one AMC or Mutual Fund House?
• Gratuity is a tax-free benefit for your loyalty
• Debt Funds can only be a Short-term Inflation Hedge, Equities are the only Long-term Bets
• Mutual Fund Review: Magnum Children´s Benefit Plan
• Mutual Fund Review: Magnum Comma Fund
• Tata Income Fund and Tata Income Plus Fund
• Mutual Fund Review: Birla Sunlife MNC Fund
• Mutual Fund Review: HDFC Core & Satellite Fund
• It is advisable to pay for financial planning

How critical is home insurance? Posted: 16 Sep 2011 05:47 AM PDT Are we personally capable to financially withstand if our property were to be hit by a Tsunami like Japan. The Recent Japanese earthquake & Tsunami loss is estimated at $309 billion. The numbers would be mind boggling if we convert to Indian currency. The dream of the average lower or middle class people in India is to own a house with probably an area of 1000 sq ft costing at least 15 lacs. What if this dream home is destroyed due to a natural disaster? Who can we blame for this unexpected happening? Though the government will support with relief fund but will this fund help us to rebuild the same house which we had? Or can you save Rs 15 Lakh in cash to rebuild the house? The basic five elements of nature - earth, air, fire, water and space along with the various forces of nature, can create any sort of disturbance in this universe. This disturbance may be once in thousand years, this day may be today or tomorrow or a week later. But it's very much unexpected. This means Tsunami in Japan last month could occur anywhere this month. Are we prepared to withstand this loss financially? Naturally we may not be prepared because the impact or cost of any natural disaster may be abnormally high. But on a personal front we do have some recourse The solution is to insure the Home under standard fire & special perils policy given by almost all General Insurance companies. Fire and Special Peril Policies provide protection against damages/fortuities triggered by the following perils: 1. Fire a)  Fire: Excluding destruction or damage caused to the property insured by Its own fermentation, natural heating or spontaneous combustion. Its undergoing any heating or drying process. b) Lightning c) Explosion/Implosion d) Excluding destruction or damage caused to the boilers (other than domestic boilers),  by its own explosion/implosion e) Aircraft Damage f) Destruction or damage caused by Aircraft, other aerial or space devices and articles dropped there from excluding those caused by pressure waves g) Riot, Strike, Malicious and Terrorism Damage h) Loss of or visible physical damage or destruction by external violent means directly caused to the property insured i) Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation j) Impact Damage k) Impact by any Rail/Road vehicle or animal by direct contact l) Subsidence and Landslide including Rock slide m) Bursting and/or overflowing of Water tanks, Apparatus and Pipes n) Missile Testing operations o) Leakage from Automatic Sprinkler Installations p) Bush Fires 2. Earthquake The above mentioned covers are more than sufficient for any house building. This covers all natural disasters and any kind of fire occurrences. The fire can be of any sort. For example cooking cylinder bursting is also covered But not everything is covered! a) 5% of each and every claim resulting from the operation of Lightning. STFI (Storm, Tempest, Flood and Inundation) and Subsidence & Landslide including Rockslide covered under this Policy. b) Loss, destruction or damage caused by war. c) Loss, destruction or damage directly or indirectly caused to the property insured by nuclear forms. d) Loss, destruction or damage caused to the insured property by pollution or contamination. e) Loss, destruction or damage to bullion or unset precious stones, any curios or works of art for small amount exceeding Rs.10000/-, manuscripts, plans, etc. f) Loss, destruction or damage to the stocks in Cold Storage premises caused by change of temperature. g) Loss, destruction or damage to any electrical and/or electronic machine, apparatus, fixture or fitting (excluding fans and electrical wiring in dwellings) arising from or occasioned by over   running, excessive pressure, short circuiting, arcing, self-heating, or leakage of electricity, from whatever cause (lightning included) h) Expenses necessarily, incurred on i) Architects, Surveyors and Consulting Engineer' Fees and j) Debris Removal by the Insured following a loss, destruction or damage to the property k) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever. The Exciting news! Premium - Surprisingly the premium for this product is 0.06% + Service Tax. This means per Lakh you may have to pay Rs. 67 per annum. What's even more interesting is that one can avail a 50% discount on premium if one wishes to insure his/her house for 10 years by paying the premium upfront. Valuation of the Building - It is advisable to take the valuation at the prevailing market price. So the next time you hear of natural calamities destroying houses or wiping out villages, you can rest assured that your family can overcome the financial burden caused if god forbid such a thing occurs to you. All that you would need is to spend a few hundreds to get covered and get peace of mind too!   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

What Happens If Your Life Insurance Lapses? Posted: 16 Sep 2011 05:02 AM PDT Many of us are often unable to continue to pay the premium towards our life insurance policy. Whether its because we were careless and forgot, or because we don't see value in continuing with the policy, or we are in a financial crisis and can't afford it any further, our inability to pay the premium due can result in the policy lapsing. As a result our life insurance coverage ceases to exist. This situation can be dangerous because if something happens to you, your financial dependants/beneficiaries might not get any benefit, which was the reason for you to get the insurance policy in the first place. Here are some basics on policy lapsation and revival that all policyholders must know. Why will my life insurance policy lapse? As long as you are regular and up to date with your premium payments, your policy will remain alive. If something happens to you during this period, the insurance company will honour its commitment and pay you or your beneficiaries, depending upon the type of policy you have. However, if you stop paying your premium, then the insurance company will no longer be obliged to continue providing an insurance cover on your life. In this situation, your policy is said to have lapsed. The insurer might not provide any monetary benefits (the sum assured under the policy) to you or your beneficiaries if something were to happen to you. Before your policy lapses, you still have a limited time period during which you can make good on a delayed premium payment. If you are late on your premium payment, the insurer will send you a reminder and give you a grace period within which to pay your premium. This is usually 15 days when you pay your premium monthly and 30 days in all other cases. If even after this grace period you have not paid the premium, then your policy will lapse. The insurer will send you a letter informing you of the same. Can I revive a lapsed policy? Will the benefits be the same after revival? Most traditional policies (like term, whole-life and endowment plans) can be revived, subject to certain criteria that your insurer might impose on you. Revival can happen at any time, but the conditions for revival might depend upon how long the policy has been lapsed for. At a minimum, under the insurance laws, if the policy has been in force for at least 3 years, the insured gets up to 2 years to revive the policy. (Some insurers like LIC have special schemes under which policies can be revived for up to 5 years from being lapsed). If you revive the policy within 6 months from the date of lapsation, the process might be as simple as paying the overdue premium (and interest) to catch up on the delay on your part. If you revive the policy after 6 months from the date of lapsation, you might be required to pay the overdue premium, penalty fees, as well as interest payment that could be up to 12%-18% of the premium payment, depending upon the type of policy and the date of purchase. At the time of revival, the insurer might impose a lot of conditions or even decline your request for a policy revival if it is not convinced about the integrity of your application on grounds of suspected fraud or the like. It can be very likely that the insurer will ask you to appear for a medical test before the policy can be revived to ascertain whether you have a developed a new medical condition during policy lapse that might expose the insurance company to a high risk in insuring your life. At revival, usually, the full benefits you or your beneficiaries are eligible for will be reinstated. However, if after revival, the insured commits suicide within 1 year, the insurer can deny the claim. Similarly, if the insured passes away within 2 years of the revival, the insurer has the option of conducting an inquiry before they decide to pay the claims to the beneficiaries. Can one still file a claim on a lapsed policy? If a policy is less than 3 years old but then lapses, and if something happens to you after the policy lapses, and a claim is filed, the insurer will not pay you anything. At best, the insurer might be willing to give you or your dependants the premium payments that you made. But, this is also totally at the insurer's discretion. If a policy is more than 3 years old but then lapses, and if something were to happen to you, under existing insurance rules your dependants can still get some benefit. However, the insurer will pay out only a reduced sum assured based on a pre-set formula (for those who are technically inclined, its the number of premiums paid to the total number of premiums payable). What if I am facing a cash crunch and can't pay my premium? One choice you have is to review your insurance contract and change the terms. For instance, you can reduce your sum assured amount and your premiums will go down accordingly, perhaps making it more affordable for you to keep the policy in force. Life insurance is a necessary financial instrument that every person with financial dependants must have. Don't let your policy lapse, otherwise your financial dependants might end up facing financial hardship when you are not around to provide for them.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Are all your investments with one AMC or Mutual Fund House? Posted: 16 Sep 2011 03:59 AM PDT Quite often, in our day to day life we try and make things convenient for ourselves. May it be shopping, travelling or at work, our brains are on a constant look out for the convenience factor in everything we do. And in doing so we totally disregard the fact that many a times if we had put in that extra bit of effort in whatever we do, we could have gained much more value.   This attitude of making things convenient gets us into the habit of creating comfort zones around ourselves. And once a person is in a comfort zone, he or she almost completely loses the ability to think out of the box or take challenges or just do something different and better.   And very often this habit of "convenience shopping" is also quite visible the way most of you invest your hard earned savings as well. Let's talk about mutual fund investing here.   Many of you investors are in the impression that investing in schemes of a single Asset Management Company (AMC) saves a lot of cost. This is absolutely a myth. Your investment in different mutual fund schemes from a single AMC does not reduce your costs at all. In fact having a concentrated exposure to only one AMC may prove to be harmful to your portfolio.   Let us see how a concentrated portfolio consisting schemes from a single AMC affects you adversely:   1.               One man show may not last for long Investing in multiple schemes of a single AMC under the pretext that a "Star Fund Manager" is managing the schemes may prove to be disastrous for your investment portfolio. Say for example, you have invested in a few schemes from a single AMC for a period of 5 years. But to your surprise at the end of the second year, the so-called "Star Fund Manager" quits that AMC and joins elsewhere. This might bring shivers down your spine. A new fund manager might just change the way a fund is managed which may or may not be fruitful for your investments. At this juncture you might argue saying that "I will follow my fund manager wherever he goes". Well it may not be always possible for you to chase down your "Star Fund Manager". What if your "Star Fund Manager" does not pursue fund management profession anymore? Hence, investing in multiple funds of a single AMC under the pretext that a "Star Fund Manager" will boost your fund's performance is truly a myth and nothing else. 2.               What if the single AMC goes bust? Any problem at the AMC level might just trickle down and affect the performance of all the schemes in your portfolio. Now-a-days we come across various scams being unearthed. And if you are unlucky to have your AMC being hit by scams, then be ready to lose all your money. There also have been cases of front-running by some unethical people in the fund management teams, wherein they pass on restricted (price sensitive) information to other people in order to make a quick buck. 3.               Investment systems and processes If your investments are well diversified amongst mutual fund schemes of different AMCs you are in a much better position to take advantage of diverse set of investment systems and processes which the AMC follows in order to make their investments. Diverse investment systems and processes followed by different AMCs helps you to have exposure to a diverse set of companies which in turn makes your portfolio less risky. The risks are diversified as you have exposure to multiple sectors in different proportions. Unlike the above, if you have all your eggs (investments) in one basket, you will not be in position to reap the benefits of diverse investment systems and processes followed by different AMCs. 4.               Concentration risk Well, we all know 'too much of anything is bad'. But still some of you investors ignore this idiom while making your investment decisions. Remember having all your money parked with just one AMC may make you susceptible to concentration risk which in turn might adversely affect your portfolio performance. Hence, the next time while making any investment decisions please take into consideration the above mentioned points and refrain from putting all your "eggs" (investments) in one basket (AMC). Remember, doing convenience shopping while investing can actually disappoint you!   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Gratuity is a tax-free benefit for your loyalty Posted: 16 Sep 2011 03:11 AM PDT   IT IS rightly said that patience is not only a virtue but can also be very rewarding in financial terms. In case you are changing jobs or retiring, you may be eligible for gratuity from your employer, if the terms of your employment so state. Under the Income-Tax Act, 1961, (the Act), employees receiving gratuity are categorised as: Government employees, non-government employees covered under The Payment of Gratuity Act, 1972 (Gratuity Act) and non-government employees not covered under the act. Meaning of gratuity: As per the dictionary, gratuity is the money that you give somebody who has provided a service for you; money that is given to employees when they leave their job. Broadly, as per the Gratuity Act, gratuity is payable to employees by any establishment in which 10 or more people are employed on any day of the preceding 12 months. Who is eligible for gratuity: Under the Gratuity Act, an employee who has rendered continuous service for not less than five years with his/her employer at the time of termination from employment is eligible for gratuity. In addition, termination of employment includes superannuation, retirement, resignation, death or disability due to an accident or disease. The five-year requirement is not necessary in case of death or disability. How much gratuity is payable: As per the Gratuity Act, half month's salary for each completed year of service is payable as gratuity. Here, salary for the purpose of gratuity includes basic salary and dearness allowance, if the terms of employment so provide, months. Who is eligible for gratuity: Under the Gratuity Act, an employee who has rendered continuous service for not less than five years with his/her employer at the time of termination from employment is eligible for gratuity. In addition, termination of employment includes superannuation, retirement, resignation, death or disability due to an accident or disease. The five-year requirement is not necessary in case of death or disability. How much gratuity is payable: As per the Gratuity Act, half month's salary for each completed year of service is payable as gratuity. Here, salary for the purpose of gratuity includes basic salary and dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. In case of employees earning monthly wages, a month is to be construed as comprising 26 days instead of 30/31 days. Taxability of gratuity: The amount that you receive as gratuity is added to your income for that year under the head "Income from Salary" and an exemption in respect of the same is available in accordance with Section 10(10) of the Act. For government employees: The gratuity amount paid to employees of the Union government, state governments, local authorities or defence services in accordance with the prescribed schemes/rules, is completely tax free. For non-government employees covered/not covered under the Gratuity Act: Gratuity would be exempt to the least of amount of gratuity paid, or, 15 days' salary for every completed year of service, or, Rs 10 lakh. Salary in case of establishments covered under the Gratuity Act is the last drawn salary of the employees, while for establishments not covered under the Gratuity Act, it is calculated on the basis of 10 months' average salary lastity amount paid to employees of the Union government, state governments, local authorities or defense services in accordance with the prescribed schemes/rules, is completely tax free. For non-government employees covered/not covered under the Gratuity Act: Gratuity would be exempt to the least of amount of gratuity paid, or, 15 days' salary for every completed year of service, or, Rs 10 lakh. Salary in case of establishments covered under the Gratuity Act is the last drawn salary of the employees, while for establishments not covered under the Gratuity Act, it is calculated on the basis of 10 months' average salary last drawn by the concerned employees. An important point to remember is that if gratuity is received in any earlier year and the whole or any part of the amount was not added to the taxable income in that year, then the amount exempt from income tax shall not exceed the specified limit and such limit would be reduced by the amount received in the earlier year(s). For example, if the exemption limit of gratuity received in the present year is Rs 10 lakh, and in an earlier year, you had received Rs 2 lakh, which was not considered as taxable in that year, the limit of gratuity received in the present year to be considered as exempt would be reduced to Rs 8 lakh (Rs 10 lakh less Rs 2 lakh). It may be recalled that prior to May 24, 2010, the maximum amount of gratuity that was exempt from tax was Rs 3.5 lakh. To sum up, gratuity is a benefit that adds on to the tax-free income of the individual. The enhanced exemption effective from May 24, 2010, is a welcome move because it ensures a higher take-home pay for employees, which is important especially at the time of retirement.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Debt Funds can only be a Short-term Inflation Hedge, Equities are the only Long-term Bets Posted: 16 Sep 2011 01:27 AM PDT We are in unusual times, spending a lot of our time and energy tracking inflation, besides the US economy, global equity markets, domestic bond yields, crude, and gold prices, among others. This obsession with inflation is not unfounded: it is an outcome of the incessantly high inflation, which took us by surprise last year, when the year on-year WPI inflation reached 8.86% in January 2010. In fact, on a month on-month basis, the wholesale price index has inched up for 28 months at a stretch — since February 2009, when it was at 123.3, to 153 in June 2011 — an absolute rise of 24% in 28 months. For our investments, we always look for avenues that will give us the highest real returns, ie, nominal returns less the prevailing inflation rate. In other words, inflation is one of the "causes" of the return we get on our investment. But, in the current unusual circumstances, inflation has in a way become an "effect", ie, we are now compelled to choose those investments that will help us at least cover inflation, if not beat it. All investment asset classes can be broadly divided into two segments: a) Those that will help us grow our wealth, and b) those assets that will help us at least beat inflation marginally so that our wealth does not erode. In the first category, which I would term as growth assets, I would include real estate, equity and art, going by the past decade's data available on International and Indian markets. Data relating to the Indian stock market since April 1979 show that Sensex has given a return of 16.4% over 32 years, against the average inflation of 7% during the period. This translates into a real return of 9.4%, which means that . 1 lakh invested in 1979 would have become . 1.29 crore today in nominal terms. And please note that this amount is . 1.2 crore more than any other investment you would have made, which would have given return equivalent to inflation. In other words, your "net wealth" would have grown by the above amount, justifying the tag of growth asset, which equity has proved to be. The returns in other growth assets like real estate and art are equally impressive over the long term. Other popular asset classes that help you beat inflation are commodities (mainly gold) and debt schemes. Most investors are happy to simply get 1-2% returns more than the prevailing inflation, because their time horizon of investment is short (say 1-3 years), or they do not want to take on the psychological pressure associated with the erosion of capital in short term. At present, inflation is on the verge of hitting the double-digit mark, and there are plenty of debt schemes like fixed maturity plans (FMPs) of mutual funds yielding approximately 9.5%, 3/5/7-year NCDs and bonds yielding returns in the range of 10% to 12%, and corporate deposits giving 11-12% per annum over two to three years. One can, therefore, try and benefit from inflation arbitrage. In all probability, inflation is likely to peak in the next 1-2 quarters and should be around 6-7%, or even lower, by the end of this fiscal year. Once that happens, interest rates should also peak out, thereby making this an ideal time to lock in money at high interest rates for a period of 2-3 years, so that when inflation begins to ease in say six months from now, you would enjoy an extended period of very attractive real returns. Commodities such as gold are considered good investments at the start of an inflationary cycle, but not towards the end of it. Even the global commodity prices are showing a weakening trend in the light of the anticipated slowdown in growth in the developed as well as developing economies. In such an environment when incremental demand is likely to decelerate, commodities are only expected to moderate. Investing in them for the purpose of hedging against inflation can be counterproductive at this point in time. Having said this, gold has continued to surprise everyone, giving a return of 21% per annum over the last three years. Optimists continue to expect high double-digit returns from gold in the coming years due to the continuously high global risk. To conclude, it is important to recognise the phase of inflation cycle we are in, before deciding upon an investment that will help us beat inflation. Based on the present situation, it is better to benefit from the potential of "inflation arbitrage", apart from focusing on growing your wealth in real terms over the long term. So, debt investments for a period of 1-3 years (for inflation arbitrage) and equity investments for long-term wealth creation (3 years or beyond) seem to be the ideal combination for investors.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: Magnum Children´s Benefit Plan Posted: 16 Sep 2011 12:20 AM PDT Investment Objective The investment objective of the scheme will be to provide attractive returns to the Magnum holders / Unit holders by means of capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio, will be reinvested. The following table shows percentage portfolio allocation. Asset Allocation Instrument % of Portfolio of Plan A & B Risk Profile Equity and related instruments Not more than 25% Medium to High Debt instruments (including Securitized debt) and Govt. Securities and Money market instruments Uto 100% Low to Medium Securitized Debt Not more than 10% of investments in debt Medium to High Scheme Highlights 1. Open ended Income Scheme. 2. Parents/Guardians/Relatives/Institutions and NRIs can invest on behalf of the child. The child should be above 3 months and below 15 years of age as on the date of investment. Proof of age is not required. However, the Trustees and/or the AMC may, if considered necessary, in their sole discretion ask for proof of the same. 3.Magnums / Units under the scheme can be repurchased on any business day at NAV related prices. Investors or donors investing through the parent who desire that the investment be locked-in till the Magnum holder / Unit holder attains the age of 18 years, they may do so by indicating it at the appropriate place in the application form at the time of application. 4. The funds collected under the scheme shall generally be invested in equity, debt and money market instruments consistent with the objective of the scheme. 5. On reaching 18 years of age, Magnum holders / Unit holders will have an option to withdraw their holdings either as a lumpsum amount or staggered over a period of five years on annual/semiannual basis. In case the Magnum holder / Unit holder opts for the staggered redemption option, the corpus on maturity will be frozen and will be invested in instruments which seeks to provide capital protection such as bank deposits, Government Securities (the maturities of which will not exceed the residual maturity of the corpus) or in the call money market. In the case of the staggered redemption option, it is deemed that the Magnum holder / Unit holder has redeemed his investment under the scheme and will no longer be eligible for any benefits under the scheme.Alternatively, Magnum holders / Unit holders may also be permitted to continue their investment under the scheme even on completion of 18 years of age. 6. The scheme will provide group accident insurance cover to the Magnum holders / Unit holders or either parent against accidental death or permanent total disability relating to these accidents. In addition to this, on the accidental death of either parent the Magnum holder / Unit holder will stand to receive an additional 10% of the claim amount towards educational expenses. The cost of providing the insurance cover would be borne by the AMC. This cover will be available only for Resident Indian Magnum holders / Unit holders. 7. At the time of application or subsequently, the investor may nominate an alternate child not exceeding 15 years of age. Launch Date January 2, 2002 Minimum Application Rs. 1500/- only and in multiples of Rs. 100/-. No maximum limit. Entry Load 1.50% Exit Load Within 1 year : 3%; within 2 years : 2%; Within 3 years:1% SIP SWP Rs.500/month - 12 months Rs.1000/month - 6months Rs.1500/quarter - 12 months A minimum of Rs. 500 can be withdrawn every month or quarter by indicating in the application form or by issuing advance instructions to the Registrars at any time.   Other Schemes Are: •  Magnum Gilt Fund     i). Magnum Gilt Fund (Long Term)     ii). Magnum Gilt Fund (Short Term) •  Magnum Income Fund •  MAGNUM Income Plus Fund •  Magnum Insta Cash Fund •  Magnum InstaCash Fund -Liquid Floater Plan •  Magnum Institutional Income Fund •  Magnum Monthly Income Plan •  Magnum Monthly Income Plan Floater •  Magnum NRI Investment Fund •  SBI Capital Protection Oriented Fund - Series I •  SBI Debt Fund Series •  SBI Premier Liquid Fund •  SBI Short Horizon Fund   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: Magnum Comma Fund Posted: 15 Sep 2011 10:19 PM PDT   Objective The objective of the scheme would be to generate opportunities for growth along with possibility of consistent returns by investing predominantly in a portfolio of stocks of companies engaged in the commodity business within the following sectors - Oil& Gas, Metals, Materials & Agriculture and in debt & money market instruments. Instrument % of Portfolio of Plan A & B Risk Profile Equity and equity related instruments of commodity based companies within 65% – 100% High Foreign Securities/ADRs/GDRs of commodity based companies 0% - 10% High Fixed/Floating Rate Debt instruments including derivatives 0% - 30% Medium Money Market instruments* 0% - 30% Low Scheme Highlights 1.                               An open-ended equity scheme investing in stocks of commodity based companies. 2.                               Minimum Investment Rs.5000 and in multiples of Rs.1000 Dividend and Growth options available. Reinvestment and payout facility available. 3.                               Dividends will be completely tax-free. Long term capital gains to be completely tax-free. STT would be at the rate of 0.20% at the time of repurchase. Minimum Application Rs.5000 and in multiples of Rs.1000 ENTRY LOAD Investments below Rs. 5 crores - 2.25% Investments of Rs.5 crores and above - NIL EXIT LOAD Investments below Rs. 5 crore, exit within 6 months from the date of allotment – 1%, Investments below Rs. 5 crore, exit between 6 months & 12 months from the date of allotment – 0.5%, Investments below Rs. 5 crore, exit after 12 months from the date of allotment – Nil, Investments of Rs. 5 crore and above– Nil SIP Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter - 12 months Minimum amount SWP A minimum of Rs. 1000 can be withdrawn every month or quarter by indicating in the application form or by issuing advance instructions to the Registrars at any time.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Tata Income Fund and Tata Income Plus Fund Posted: 15 Sep 2011 09:03 PM PDT Tata Income Fund   Objective To provide income distribution and/ or medium to long term capital gains while at all times emphasising the importance of safety and capital appreciation. Option Available Half-Yearly Dividend Option / Quaterly Dividend / Periodic Dividend / Bonus/ Growth Option. Minimum Application Amount Rs.5,000/- & in multiples of Re.1/- thereafter for Half Yearly, Growth, Periodic Dividend & Bonus Options. Rs.25,000/- & in multiples of Re. 1/- thereafter for Quarterly Option. Tata Income Plus Fund   Objective To provide income/ bonus distribution and / or medium to long-term capital gains while at all times emphasising the importance of safety and capital appreciation. Option Available Plan A and Plan B Each Plan has two options - Bonus / Income and Growth Minimum Application Amount Option A: Rs.5,000/- & in multiples of Re.1/- thereafter. Option B: Rs.1,00,000/- and in multiples of Re.1/- thereafter.-----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: Birla Sunlife MNC Fund Posted: 15 Sep 2011 07:59 PM PDT   Scheme Objective: This fund seeks to invest in a portfolio of Multi National Companies across various sectors like the FMCG, Auto Ancillaries and Pharmaceuticals etc. The main objective is to obtain long term capital growth with moderate levels of risk. Fund Type: Open Ended Scheme Options Available: Dividend, Growth Minimum Investment Amount: Rs 5000 Entry Load: NIL Exit Load: 1% if the investment is redeemed within 1 year of allotment. Top Portfolio Investments: ·         CRISIL ·         Cummins Engineering ·         ING Vysya Bank ·         Maruti Suzuki ·         Pfizer ·         ICRA ·         Gujarat Gas Investment Sectors: The various sectors in which the scheme has invested are Engineering, Pharmaceuticals, Automotive, Foods and Beverages, Oil and Gas etc Returns Generated by the Scheme: ·         6 Months – Around 10 % ·         1 Year – Around 28 % ·         2 Years – Around 160 % ·         3 Years – Around 42 % ·         5 Years – Around 115 % ** The returns less than 1 year are calculated as absolute returns and more than 1 year are compounded annualized.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: HDFC Core & Satellite Fund Posted: 15 Sep 2011 10:08 AM PDT Type: Equity Diversified Launch Date: 10-Sep-2004 Fund Manager – Dhawal Mehta   HDFC Core & Satellite fund was launched in Sep 2004 and has appreciated by 35.08% in the last one year period, and has outperformed its benchmark index BSE 200 by just around 4%. The primary objective of the scheme is to generate capital appreciation through equity investment in companies whose shares are quoting at prices below their true value. The fund house defines well established and predominantly large cap companies as the 'core' group, whereas the 'satellite' group comprises predominantly mid/small cap companies that offer higher return potential but carry higher risk. The allocation to core group is proposed to be kept around 60-80% of the portfolio, and would normally have a market capitalisation of more than Rs 2500 crore.   The scheme's allocation to core group in Aug 06 has been around 80.24%, and satellite group accounts for 13.9% of the net assets, and historically, the allocation to core group has rarely fallen below 70% of the total net assets.   The scheme currently manages a corpus of Rs 741.79 crores, which has seen a sustained increase over the months, inspite of the scheme's indifferent track record. HDFC Core & Satellite fund's performance has not been too encouraging, and the scheme has struggled to outperform its benchmark in most of the selected time frames.   The scheme is mandated to invest 90-95% of its assets in equity and equity related instruments and 5-10% in fixed income securities. As on Aug 06, equity investment form 94.16% of the total assets and has remained more or less at the same levels throughout.   Technology sector gets the highest allocation in the portfolio with 15.17% weightage followed by Electrical & electrical equipments with 12.35% weightage; other favoured sectors in the portfolio are Auto & auto ancilliaries and Metal, which together account for around 51% of the portfolio.   The scheme has exposure to 25 stocks top 5 holdings account for 33.67% of the assets, and top 10 make up around 60.13%. Tata Motors is the scrip with highest weightage of 7.41%, for a scheme with a corpus in excess of 700 crores; the portfolio is a bit concentrated. Other top holdings in the portfolio are Satyam, Infosys, Crompton Greaves and BHEL. The portfolio has remained unchanged over the last month, and only Crompton Greaves saw some buying by the fund manager   The scheme has not been successful in playing around the theme of choosing stocks based on their market capitalisation and other criteria's like leadership in their respective sectors and has given a lackluster performance till now. Other equity schemes managed by the fund house are doing quite well, and despite having a good fund size, the restrictive investment policies is not helping the scheme in any way. Investors would be well advised from the scheme to other schemes of the same fund house, which seem to be performing better comparatively.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

It is advisable to pay for financial planning Posted: 15 Sep 2011 08:43 AM PDT MANY of you want all the comforts in life and for all these you are often ready to shell out a fancy price as well. But you are not this passionate when it comes to managing your personal finances. Ask yourself whether you have paid a respectable sum to a financial planner to draw a financial plan and secure your future? I'm quite sure the answer is no. You may say, "I get all such financial planning services free on various website and through financial advisors. Why should I pay?" Well, I beg to differ, as there are no free lunches. Let us consider the case of a 45 year-old Atul with retirement age of 60 years and life expectancy of 80 years having a current expense of Rs 3,00,000 per annum. His financial goals are retirement and insurance planning. He has been approached by two companies for financial planning. The first company ABC gives free financial planning services but has `compulsory product buying' clause attached. The second company XYZ charges Rs 20,000 as financial planning fees and there is no compulsory product buying clause. Based on the data provided by him total corpus required at retirement is Rs 1,51,75,840; the monthly savings required to achieve that amount is Rs 30,076 and the insurance requirement at retirement is Rs 90,03,775 assuming that inflation is at 7 per cent. Pre-retire tion is at 7 per cent. Pre-retirement returns are at 12 per cent and postretirement returns are at 8 per cent. In order to accumulate his retirement corpus he requires investing approximately Rs 30,000 per month till his retirement at 12 per cent per annum. Now based on his requirement the two different companies have recommended him following products. Recommendations of ABC: Invest Rs 2,000 per month in a Ulip for your retirement planning which will give you approximately Rs 10,00,000 at retirement assuming 12 per cent pa return on investment. Buy an endowment plan for next 15 years by paying Rs 6,50,000 pa for an insurance cover of Rs 90,00,000 to fulfill your insurance planning requirement. It will also give you maturity amount of Rs 1.41 crore. Recommendations of XYZ: Invest Rs 30,000 pm in a large cap mutual fund for your retirement planning which will fulfil your retirement requirement of Rs 1.51 crore assuming 12 per pa return on investment. Buy a term plan for next 15 years by paying Rs 59,000 pa for an insurance cover of Rs 90,00,000 to fulfill your insurance planning requirement. Comparison: Now, if we evaluate the earnings of both the companies, even though company ABC is not at all charging Atul for making a financial plan, then too it is able to generate Rs 1,64,420 by way of commissions whereas, company XYZ's total earnings even after charging fees for a financial plan works out to be Rs 36,550 only, assuming that he buys the recommended products from company XYZ. While XYZ provided recommendations on the basis of client's requirement, company ABC provided recommendation on the basis of high commissions products. Total earning of company XYZ is less than company ABC by Rs 1,27,870. According to recommendations by company XYZ, Atul is investing Rs 2,55,000 pa less compared to recommendations by company ABC. Paying fees for financial planning will mean recommendations are on the basis of his requirement and not on the basis of company's requirement. Any company or any practicing financial planner who is making a financial plan for you will charge you in some or the other way for making a financial plan. A paid advice is a more responsible, professional and an unbiased one, but the final decision rests with you to decide whether you want to make a financial plan for free or want to pay nominal fees for making it. -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

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