Saturday, May 30, 2009

Top performing Mutual Funds for May 2009

Top performing Diversified equity Mutual Funds for the month of May 2009

1) Taurus Infrastructure Fund
2) JM Core 11 Fund
3) Escorts Growth Plan
4) Taurus Ethical Fund
5) Sundaram Capex Opportunity Fund

Top performing ELSS Tax Saving Mutual Funds for the month of May 2009

1) Bharati AXA Tax Advantage
2) Taurus Tax Sheild
3) DBS Chola Tax Saver
4) SBI Tax Advantage
5) ING Tax Savings

This funds have performed much better the the average broader market. The average broader market returns were 28.3 % for Sensex and 28.1 % for Nifty for the period May 2009

Thursday, May 28, 2009

Intestate Succession Act ; person dies without making a will

Intestate Succession
When a person dies without making a will, which is capable of taking effect. The property devolves upon the wife or husband or upon the relatives of the deceased in the following manner:

If 'A' has left no will - He has died intestate in respect of the whole of his property.
'A' has left a will, whereby he has appointed 'B' his executor but the will contains no other provisions-
'A' has died intestate in respect of the distribution of his property.
'A' has bequeathed his whole property for an illegal purpose- 'A' has died intestate in respect of the distribution of his property.

and lastly when a will is partially incapable of being operative.

'A' has bequeathed Rs. 1000 to 'B' and Rs. 1000 to the eldest son of 'C' and has made no other bequest and has died leaving the sum of Rs 2000 and no other property. 'C' died before 'A' without having ever had a son. 'A' has died intestate in respect of the distribution of Rs. 1000.

Distribution of property in case of widow/widower

  • Where the intestate has a widow-
If he has also left any lineal descendants, one third of his property shall belong to his widow, and the remaining two-thirds shall go to his lineal descendants, according to the rules hereinafter contained;

If he left no lineal descendant, but has left persons who are of kindred to him, one-half of his property shall belong to his widow, and the other half shall go to those who are kindred to him, in order and according to the rules hereinafter contained;

If he has left none who are kindred to him, the whole of his property shall belong to his widow.

Lineal descendants mean descendants born in lawful wedlock only.

  • Where intestate has left no widow, and where he has left no kindred-
where the intestate has left no widow, his property shall go to his lineal descendants or to those who are of kindred to him, not being lineal descendants, according to the rules hereinafter contained; and if he has left none who are of kindred to him, it shall go to the Government.

  • Rights of a Widower
A husband surviving his wife has the same rights in respect of her property, if she dies intestate, as a widow has in respect of her husband's property, if he dies intestate.

  • Rules of distribution - Children, Grandchildren Etc.
The rules of the distribution of the intestate property (after deducting the widows share) amongst his lineal descendants (descendants born in lawful wedlock only) are as follows:

  • Where intestate has left child or children only

Where the intestate has left surviving him a child or children, but no more remote lineal descendants through a deceased child, the property shall belong to his surviving child, if there is only one, or shall be equally divided among all his surviving children.

Child or children - The word 'Child' does not include an illegitimate child, but must be born out of lawful wedlock. The words 'any child' mean and include 'children' as well.

  • Where intestate has left no child, but grandchild or grandchildren
the property shall belong to his surviving grandchild if there is only one, or shall be equally divided among all his surviving grandchildren.

  • Where intestate has left only great- grandchildren or remote lineal descendants
In like manner, the property shall go to the surviving lineal descendants who are nearest in degree to the intestate, where they are all in the degree of great- grandchildren to him, or are all in a more remote degree.

  • Where intestate leaves lineal descendants not all in the same degree of kindred to him, and those through whom the more remote are descended are dead.
If the intestate has left lineal descendants who do not all stand in the same degree of kindred to him, and the persons through whom the more remote are descended from him are dead, the property shall be divided into such a number of equal share as may correspond with the number of the lineal descendants of the intestate who either stood in the nearest degree of kindred to him at his decease or having been of the like degree of kindred to him, died before him, leaving lineal descendants who survived him.

One of such shares shall be allotted to each of the lineal descendants who stood in the nearest degree of kindred to the intestate at his decease; and one such share shall be allotted in respect of each of such deceased lineal descendants; and the share allotted in respect of each of such deceased lineal descendants shall belong to his surviving child or children or more remote lineal descendants, as the case may be, such surviving child or children or more remote lineal descendants always taking the share which his or their parent or parents would have been entitled to respectively if such parent or parents had survived the intestate.

  • Where an intestate has left no lineal descendants, the rules of the distribution of his property (after deducting the widows share, if he has left a widow) are as follows-
If the intestate father is living. he shall succeed to the property.
If the intestate father is dead, but the intestate mother is living, and if any brother or sister and the child or children of any brother or sister who may have died in the intestate lifetime are also living, then the mother and each living brother or sister , shall be entitled to the property in equal shares, such children taking equal shares - only the shares which their respective parents would have taken if living at the intestate death.

If the intestates father is dead, but the intestates mother is living and the brothers and sisters are all dead, but all or any of them have left children who survived the intestate, the mother and the child or children of each deceased brother or sister shall be entitled to the property in equal shares, such children taking in equal shares- only the shares which their respective parents would have taken if living at the intestates death.

If the intestates father is dead, but the intestates mother is living and there is neither brother, nor sister, nor child of any brother or sister of the intestate, the property shall belong to the mother.

Where the intestate has left neither lineal descendants, nor father , nor mother, the property shall be divided equally between his brothers and sisters and the child or children of such of them as may have died before him, such children taking in equal shares, only the shares which their respective parents would have taken if living at the intestates death.

Where the intestate has left neither lineal descendants , nor parent, nor brother, nor sister, his property shall be divided equally among those of his relatives who are in the nearest degree of kindred to him.

Monday, May 18, 2009

Succession Rules for Male Hindus and Female Hindus

Succession rules in case of Male Hindus

The property of Male Hindu dying intestate shall devolve in the following manner:
Firstly upon all the heirs being relatives specified as in CLASS I.
Secondly if there is no heirs of CLASS I, then upon the heirs being the relatives specified in CLASS II.
Thirdly if there is no heir of any of the classes, then upon the agnates of the deceased (one persons said to be agnate of another if the two are related by blood or adoption wholly through males)
Lastly if there is no agnate, then upon the cognates of the deceased.(one person is said to be a cognate of another if the two are related by blood or adaption but not wholly through male.)

Class I heirs:
  • Son
  • Daughter
  • Widow
  • Mother
  • Son of predeceased son
  • Daughter of predeceased son
  • widow of predeceased son
  • Son of predeceased daughter
  • Daughter of predeceased daughter
  • Son of predeceased Son of predeceased son
  • Daughter of predeceased son of predeceased son
  • widow of predeceased son of predeceased son
Class II heirs
  • Father
  • sons daughters son , (2) sons daughters daughters, (3) brother,(4)sister
  • daughters sons son, (2) daughters sons daughter, (3)daughters daughters son, (4)daughters daughter.
  • Brothers son, (2)sisters son, (3)brothers daughter, (4)sisters daughter
  • Fathers father, fathers mother
  • Fathers widow, brothers widow
  • Fathers brother, fathers sister
  • Mothers father, mothers mother
  • Mothers brother, mothers sister
Class I heirs take simultaneously to the exclusion of all other heirs. Heirs in the first entry of ClassII shall be preferred to those in the second entry, those in the second entry shall be preferred to those in the third entry and so on in succession.

Succession rules for Female Hindus
The property of a female hindu dying intestate shall devolve:
  • Upon the sons and daughters (including the children of any predeceased son or daughter) and the husband
  • Upon the heirs of the husband
  • Upon the mother and father
  • upon the heirs of the father and
  • upon the heirs of the mother
However if any property is inherited by a female hindu from her father or mother, it shall devolve in the absense of any son of daughter of the deceased(including the children of any predeceased son or daughter) not upon the heirs referred to above but upon the heirs of the father and any property inherited by a female hindu from her husband or from her father - in - law shall devolve, in the absense of any son or daughter of the deceased(includng the children of any predeceased son or daughter) not upon their reffered to above but upon the hiers of the husband.

Saturday, May 16, 2009

How does a Financial Planner Help?

Financial Planners can guide individuals to achieve there financial goals.
Following are the things on which Financial Planners can guide you and improve efficiency of your money matters.
1) Systematic savings : Many of the middle class Indians teach there young kids to save many of you would have your own "Piggy Bank". we would keep on putting smaller changes and over a period once we open the piggy bank it would be amazing to know it would have turned into a big amount. The same principle is applied and instead of your money being idle in the money bank you should make your money work to earn more money. Most FP would recommend you to have a Systematic Investment Plan or an SIP.

2) Cash Flow Management: The financial planner would study your income generation and spending habit and would advise you on leaks if any in your habit and how you can maximise the savings part from you cash flow.

3) Asset Allocation for Investment : Normally there are two kinds of people one who strongly believes safe investment like Bank FDs, Post Office Deposit, PPF, LIC etc which are very safe in nature but hardly manage to beat the inflation and actually it seems to be safe but if you look for inflation adjusted returns its not safe as such.
There is an another extreme case where in investor only invests in Stocks and they dont bother about FDs and stuff and they are very vulnerable to the Equity market performance and in the downturn it would be very painful to see people making huge losses even the most experts would have made loss in this tough times.
so the idea is to balance out were in you should have safe investments for markets downturns as well as you should also have equity exposure to beat the inflation for a long term gains. Financial planners would guide you in maitaing an asset allocation for Debt, Equity, Real Estate, Gold.

4) Risk Management via Insurance Planning : Financial planner will study your lifestyle, your bussiness, your dependents etc and suggest you Insurance planning which will help you should there be any unforseens events. example a Jewellery showrooms can have insurance against Theft and robbery thereby owner is protected in case the robbery takes place. House owners can have insurance for there house in case there is natural calamities like Flood or Earthquake you will be covered if there is a damage to your property.
The list goes on and on like Mediclaim Insurance, Life Cover etc

5) Tax Strategy to improve your savings: There is so many laws in taxation and so many cases were in if you plan properly you could end up saving lot of money on taxes. Like if you invest Rs 1 Lakh under section 80C. you could end savings as much as Rs. 33K if you in highest tax break. Another example would be you could save tax if you hold Shares or Mutual Funds and made short term profit then you can sell the share were you have made losses and then you can buy those shares again next day. so your profit is reduced because of loss booking you also have the shares.

6) Estate Planning: Everybody who have assets this includes real estate, bank Fds, Stocks, Jewellery etc, one should always have a will in place so that there is no problem for the legal heirs later on. Financial Planners can work out succession plan and draft wills and suggest best ways to do things in a planner manner.

Thursday, May 7, 2009

New Pension System; Details about NPS

New Pension System (NPS) - Many people even call it New Pension Scheme.

OBJECTIVE
NPS is regulated by the governing body PFRDA and is voluntary defined contribution pension system in India. The aim of this scheme is
1) Provide Old age income
2) Provide market based income over long term with minimal risk.
(The scheme will have around more equity exposure if you are young and it will keep on reducing to less then 10% when you reach retirement)

HOW Does it work ?
you will have to get a PRAN (Permanent Retirement Account Number) from point of presence. (list of point of transaction is available at http://pfrda.org.in/writereaddata/linkimages/POP-SP%20LOCATION%206-may9759639400.pdf)

The forms are available at http://pfrda.org.in/indexmain.asp?linkid=180

There are two types of accounts
1) Tier-I pension account : This is a non-withdrawal account till retirement
2) Tier-II savings account: This is simple voluntary savings facility. you will be free to remove your money from this account whenever you wish.

The customer need to make two choices
A) The customer has to select one fund manager out of 6 so far
1) ICICI Prudential Pension Funds Management Company Limited
2) IDFC Pension Fund Management Company Limited
3) Reliance Capital Pension Fund Limited
4) SBI Pension Funds Private Limited
5) Kotak Mahindra Pension Fund Limited
6) UTI Retirement Solutions Limited

B) customer has to select Investment option out of 3 choices. (By - default 'Auto choice' will be selected)
There are 3 classes defined as below in which your fund will be invested.
Asset class E - 'High return, High Risk' - Investment is mostly in Equity(That also only Nifty stock)
Asset Class C - 'Medium return, Medium Risk' - Investment is mostly in fixed income by corporates
Asset Class G - 'Low return, Low risk' - Investment is mostly in purely fixed income by government
you can select the ratio in which you want to invest your wealth in, E class can have at the most 50% of your investment. G and C class can have maximum of 100%.

DEFAULT option is Auto choice a Life cycle fund
If you do not select the investment choice, then the default investment will be in Auto choice called Life cyle fund

The way it works is as follows depending on your age throughout your life the asset allocation will keep on changing every year. The following table gives you an idea about your asset allocation
Age Asset E Asset C Asset G
35 50% 30% 20%
40 40% 25% 35%
45 30% 20% 50%
50 20% 15% 65%
55 10% 10% 80%

This is a very good choice so for most of the people who do not understand financial planning this is by default very good recommended thing government has done.

How Much minimum do I need to invest in NPS every year ?
1) You need to make minimum of 4 contribution in year with a minimum of Rs 500 in each transaction and overall minimum Rs 6000 in a year. There is however no upper limit as of now.

What are penalty charges if I am unable to contribute in a particular year ?
For every year default you will have to pay Rs 100 as penalty. Also during the period you do not pay, NPS keeps charging this penalty every year from your corpus, till it goes zero and then the account will be closed.

Can I withdraw money from the NPS in emergency ?
In Tier I scheme is a non - withdrawal scheme till you turn 60 or in case of death
In Tier-II scheme however is a voluntary savings scheme, which will allow you to withdraw money. The starting date of this scheme will be announced later.

What are the charges.
The best part of this scheme is the charges are very low.
Fund Management charges - 0.0009% on value of investment every year, (Note: this in comparison to other insurance companies which charges 0.75% to 2% is very very low)
Transaction charges are also very low.

I am 30 years now and need a pension income of Rs 10,000 per month when I retire at 60 years how much should I contribute in the scheme ?
This will depend on the asset allocation you select and the performance of the fund which again depends on market conditions. however for reference the returns from the past similar scheme run by PFRDA for government employee was around 14%.

To be on the safer side Assuming you will need a corpus of around Rs 16 lakh for monthly returns of Rs 10,000 so you will have to invest annually Rs 84,000 or Rs 7000 per month. To achieve your goals.


How to contact in case of queries for NPS ?
Toll free number - 1 800 222 080
Website for PFRDA - www.PFRDA.org.in
Website for accessing your NPS account online - www.npscra.nsdl.co.in

For Once This is an excellent pension scheme for the people in the unorganized sectors. If implemented properly this will be a great boon to the people of India and they thank Government during there old age. This scheme is really good for people from blue collar to businessmen to even your sandwichwalla and milkmans.

My only concern is who will market this scheme to the common man. I hope government does lot of marketing for this scheme.

Sunday, May 3, 2009

Top performing Mutual Funds for April 2009

Following are the top performing Equity Diversified Mutual Funds for the month of April 2009

1) Principal Junior Cap Fund
2) SBI Magnum Emerging Business
3) Can Robeco Emerging Equity
4) JM Small & Midcap
5) ING C.U.B Fund

Saturday, May 2, 2009

Top ELSS Funds for the month of April 2009

Following are the top performing ELSS Mutual Funds for the month of April 2009

1) DBS Chola Tax saver fund
2) Can Robeco Equity Tax saver
3) JM Equity Tax saver
4) Birla SL tax releif 96
5) Bharati AXA Tax Advantage

Sensex average returns for the month was 19.2%