Prajna Capital

ELSS Investing Online
Axis Bank Health Eco System
Financial Planning

Posted: 09 Feb 2016 04:10 AM PST

Invest ELSS Funds Online

Most investors need both ELSS and provident fund for effective tax planning.

We are into the new tax-planning season and some mu tual fund distributors have begun pushing equity linked savings schemes (ELSS). Their sales pitch: ELSS has beaten the Public Provident Fund (PPF) handsomely in the past 15 years; PPF investors have lost heavily by not investing in ELSS. But, showcasing only the latest situation isn't being fair to the investor.

Though ELSS has given better returns compared with the PPF in the last 15 years, this hasn't always been the case. Our analysis is based on the assumption that `10,000 was invested at the end of December, every year starting 1985, for 15-year periods (1985 2000, 1986 2001, 1987-2002 and so on) in the PPF as well as in the Sensex. Since there was no ELSS scheme available in the eighties, BSE Sensex has been used for doing the analysis.Dividend yield on the Sensex has been ignored because retail investors can't invest in the Sensex directly--they have to invest via index funds. So the expense ratio of index funds will nullify this small dividend yield. As is visible from the chart, the Sensex was able to beat the PPF in 12 of the 16 rolling holding periods--75% of the times--while it underperformed the PPF across four 15-year periods. It is not a clean sweep. Investors need to carefully consider both PPF and ELSS for their financial planning.

Personal finance

Each individual needs to consider what suits her best. This decision has to be taken at the personal level and that is why it is called personal finance. ELSS is a good option for investors who understand the equity market and can withstand its volatility. PPF is a good option for those who don't want to take the risk even in the long term.

Asset allocation

No financial planner will advise you to put your entire corpus into equities, just because the holding period is long. Similarly, you should also not avoid equities and go overboard on debt. The most important thing is to take into account the employee provident fund (EPF), available to all salaried employees, when calculating one's asset allocation. For salaried employees, a good part of the debt might already be covered by the EPF," says Alam. The co-relation between debt and equity market is low and, therefore, a balanced portfolio reduces the risk significantly. Though the exact asset allocation should be based on your risk-taking ability, a standard asset allocation can be drawn based on one's age. Out of the `1.5 lakh available under Sec 80C, youngsters should invest around `50,000 in EPF or PPF and the balance should be put into ELSS. For investors close to 50, the ratio should be reversed.

Avoid last minute rush

While product pushers love the fag end of the financial year, you needn't wait for the `tax-planning' season for your financial planning. If you do so, you may end up investing in the wrong products. Be it in ELSS or PPF, or a combination of both, investors should start investing from April onwards. Opt for SIPs in case of ELSS funds and regular monthly investment in case of PPF. By taking the SIP route to investing in ELSS, investors also get the benefit of averaging out their costs.

Sec 80C already exhausted?

Sec 80C offers limited tax benefits. It could get exhausted by things like repayment of the housing loan, premium on insurance policies, tuition fees of children, etc. This doesn't mean investors should avoid long-term products including ELSS and PPF. Rs 1.5 lakh should be treated as savings for social security. Instead of treating it as an additional job imposed by the HR, investors should treat it as retirement planning. Of course, investors who exhaust their Sec 80 C limit, have the option of avoiding ELSS and investing in other equity funds.

Moderate expectations

Investors need to note that the government may cut the PPF rates soon, so the future returns may be much lower than what was achieved in the past. Similarly, with the Indian market stabilising, the returns from equity will also come down. The growth of the Sensex from December 1979--119 points--and December 2015--26,118 points--works out to be a compound annual growth rate (CAGR) of 16.16%. However, most of these gains happened in the initial years. If you split these 36 years into two time periods of 18 years each, the CAGR of the first 18 years--till 1997--was 20.98%; for the next 18 years, it is just 11.54%.So, those investing in ELSS funds should also moderate their return expectations.

-----------------------------------------------

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds
Top 10 Tax Saving Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online
Invest Online
Download Application Forms
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
---------------------------------------------
Leave your comment with mail ID and we will answer them
OR
You can write to us at
PrajnaCapital [at] Gmail [dot] Com
OR
Leave a missed Call on 94 8300 8300

-----------------------------------------------

Axis Bank Health Eco System

Posted: 09 Feb 2016 03:18 AM PST

Axis Bank has partnered with Apollo Munich Health Insurance Company to offer its customers health insurance products with value-added benefits such as health advisory services and access to a wellness portal, under their `Health Eco System'.

The health insurance plan will have no sub-limits, co-pays or room rent limits.

-----------------------------------------------

Financial Planning

Posted: 09 Feb 2016 02:31 AM PST

Financial planning

Financial planning is the process of assessing financial goals of an individual, taking an inventory of the money and other assets which the person has, determine life goals and then take necessary steps to achieve goals in the stipulated period. It is a method of quantifying a person's requirement in terms of money.

It is the process of meeting life goals through the proper management of finances. Financial planning is a process that a person goes through to find out where they are now (financially), determine where they want to be in the future, and what they are going to do to get there. Financial Planning provides direction and meaning to person\'s financial decisions. It allows understanding of how each financial decision a person makes, affects the other areas of their finances. For example, buying a particular investment product might help to pay off mortgage faster or it might delay the retirement significantly. By viewing each financial decision as part of the whole, one can consider its short and long- term effects on their life goals. People can also adapt more easily to life changes and feel more secure that their goals are on track.

In simple, Financial Planning is what a person does with their money. Individuals have been practicing financial planning for ages. Every individual who received money had to make a decision about the best way to use it. Typically, the decision was either spend it then or save it to spend later. Everyone had to make the same decision every time they receive money.

Financial Planning is an advisory service provided by the finance industry. Although financial planning is not a new concept, it just needs to be conducted in organized manner. Financial Planner on other hand is a service provider which enables an individual to select proper product mix for achieving their goals.

The major things to be considered in financial planning are time horizon to achieve life goals, identify risk tolerance of client, their liquidity need, the inflation. Keeping all this in mind financial planning is done with six step process. This are self assessment of client, identify personal goals and financial goals and objective, identify financial problems and opportunities, determining recommendations and alternative solutions, implementation of appropriate strategy to achieve goals and review and update plan periodically.

A good financial plan includes Contingency planning, Risk Planning (insurance), Tax Planning, Retirement Planning and Investment and Saving option