Saturday, February 28, 2009

Best Performing ELSS Mutual Fund in the month of February 2009

Few of the Top performing ELSS - Equity Linked Saving Scheme for the month of February 2009 are as follows.

1) JP Morgan Tax Advantage (G)
2) IDFC Tax Advantage ELSS (G)
3) Tauraus Tax Shield (G)

Sensex gave a return of -1.2% during the month of February 2009. The above funds performed better then broader market. This should not be considered for long term investments.

Tuesday, February 24, 2009

Finance Minister cuts Service Tax by 2% ;

Finance Minister decided to cut Service Tax by 2% ; Thus bringing it down from 12% to 10%. What does that mean to a common man ?.

Its not a huge saving but quite a good amount of saving for an Individual.

Lets a take a simple example of an Individual look at things we use in daily lives for monthly bills.
1) Telephone bill = Rs 500
2) Cell Phone bill = Rs 700
3) Internet bill = Rs 1000
4) Cable TV = Rs 300

This comes to nearly Rs 2,500 per month meaning Rs 30,000 a year and the service tax @ 12% would come to around Rs Rs 3,600 now the same would come down to Rs 3,000 so you end up saving around Rs 600 bucks for a year.

This list above does not include various other service tax you might be paying, like courier fees, lawyers fees, Chartered Accountants fees, Doctors Fees etc . Everywhere now you would saving around 2% which is really good in this tough times.

Saturday, February 21, 2009

How to calculate Surrender value, Loan Value of an LIC policy ?

In order to find a surrender value of a LIC Policy, first you need to find out is PAID UP Value.

PAID up Value = [No of years premium paid * S.A /Policy Term] + [Bonus * S.A/1000]

where S.A = Sum Assured

Example: from LIC Wings Ready Reckoner book, Mr. A has taken an Endowment policy of 30 years term on 15.7.1983 for S.A of 2 lakhs and has paid premium upto date till 15.7.2007 i.e 25 years. Now he wants to know how much is the surrender value.

First let us find out the Paid up value by using the above formula
Paid up value = [25 * 2,00,000/ 30] + [ 1583 * 2,00,000/1000] = [ 166667 + 316600]=4,83,267
* Bonus is given from the bonus chart of LIC for 25 years Endowment plan
* Most of the people would get a reminder from LIC with details of your bonus , you can just put the total bonus amount in the second part of above formula or you can also call up 1251 from MTNL or BSNL and get the bonus information by just entering the policy number.

SURRENDER VALUE = Surrender value factor * Paid up value /100

for above example surrender value factor from lic chart is 65.84 so substituting we get
Surrender value = 65.84 * 4,83,267 / 100 = 3,18,183

Loan Value = 90% of Surrender Value (approximate)
In above case you can get loan of up 90% of 318183 = 2,86,365

Monday, February 16, 2009

Jeevan Varsha close ended Money back policy from LIC

After hugely popular and successful Jeevan Astha which collected more then 1k crore, LIC has come up with a new money back policy called Jeevan Varsha.
  • The plan will be available for sale only between February 16 and March 31, 2009 .
  • Jeevan varsha plan is available with two policy terms of 9 years and 12 years.
  • The policy will offer Rs 65 per Rs 1,000 sum assured for 9 year term and Rs 70 for a 12 year term.
  • The first time survival benefit are payable every three years.
  • Amount received 15%,25% (60%+G.A+L.A) at the end of 3, 6, 9th years respectively for 9 year plan.
  • Amount received 10%,20%,30%,(40%+G.A+L.A) at the end of 3,6,9,12th year respectively for 12 year plan.
LIC officials said though guaranteed additions in Jeevan Varsha is lower than Jeevan Astha, the rate of return will be similar to it taking into consideration other factors.

Below is an example from LIC for 35 years Male for a term of 9 year and sum Assured Rs 1,00,000

End of year
Premiums Paid during the year

Benefit on Survival / Maturity at the end of year




Scenario 1

Scenario 2

Scenario 1

Scenario 2


15918 0



0 0


15918 0



0 0


15918 15000



15000 15000
15918 0
0 0
15918 0
0 0
15918 25000
25000 25000
15918 0
0 0
15918 0
0 0
15918 118500
118500 138500

Wednesday, February 4, 2009

Max New York Life 'Life Maker Unit Linked Investment Plan' - Risk Element

Most of the readers of Financial Planning articles would know that ideally you should have your Investment and Insurance separate. But because of the lack of financial knowledge or aggressive marketing campaign and aggressive follow-up by agents most of the people tend to take ULIP plans. But I would say at least it's better that you started thinking of Insurance and investments which most of common man don't even think in there busy day to day life.

Following is an example of ULIP plan from Max New York Life the plans name is Life Maker Unit Linked Investment Plan - Risk Element.

This plan the allocation is 50% in Balanced Fund and 50% in Growth Fund.
Out of investment of Rs 1499.94
Balanced Fund investment is of Rs 581.28 and Units alloted are 35.926 at the rate of 16.18
Growth Fund investment is of Rs 581.25 and Units alloted are 30.337 at the rate of 19.16 as on 18/12/2008

so the total investment is of (581.28 + 581.25 = 1162.53 ) so out of Rs 1499.94 your actual investment is of only Rs 1162.53 and the remaining Rs 337.44 which is almost 22.5% of total investment has gone for various charges such as admin charges mortality charges etc.

so you can make your own conclusion how good is this ulip plans where charges are as high as 22.5%

TIP: If you have taken similar policy then you can maximize your returns by using the switch option and rebalance yours investment. If the markets are down and you think it will go up in the future then allot maximum investment towards Growth portion and when the markets are at high then you can move the maximum investments towards Balanced option.

Sunday, February 1, 2009

Top performing equity diversified Mutual Fund for the month of January 2009

Few of the Top performing Equity Diversified fund for the month of January 2009.

1) ICICI Indo Pru Indo Asia Equity RP (G)
2) DSP-BR Natural resources RP (G)
3) JM Multi strategy fund (G)

Sensex gave a return of -3% during the month of January 2009. The above funds performed better then broader market.