Monday, December 3, 2012

what is better ? ELSS , FD or PPF

There is this nice article on comparison of ELSS vs FD vs PPF. what is better you can check out for yourself on this article.

Sunday, November 25, 2012

Basic Financial Planning Calculator

This is nice little easy to use financial planning calculator by Reliance Mutual Fund.

It covers most of the basic life goals of an Individual.

Buying a House
Higher Education
Buying a Car
International Vacation
Retirement Calculation

Monday, November 12, 2012

Top Performing Equity Funds since last Diwali

Following is the list of few of the top performing equity funds since last Diwali.

1. SBI Blue Chip Fund        - 19.9
2. Reliance Top 200 Fund   - 19.5
3. Reliance Equity Fund       - 18.1
4. ICICI Pru Top 100 Fund - 16.9
5. Religare Equity Fund        -16.7

Category Average is 10.4 %

1. Principal Emerging Bluechip Fund - 26.3
2. Axis Midcap Fund                       - 25.9
3. ICICI Pru Discovery Fund           - 24.1
4. BNP Paribas Midcap Fund          - 23.4
5. Franklin Smaller cos Fund            - 22.7

Category Average : 15.9%

1. Reliance Equity Oppor Fund - 24.8
2. Birla Sun Life India GenNext - 20.2
3. Reliance RSF Equity             - 19.9
4. Templeton Equity Fund         - 19.6
5. Principal Dividend Yield        - 19.0

Category Average - 10.7%

1. Reliance Tax Saver         - 22.7
2. Principal Tax Savings      - 19.8
3. HSBC Tax Saver Fund   - 19.4
4. ICICI Pru RIGHT Fund  - 17.6
5. DSP-BR Tax saver Fund - 16.9

Category Average - 11.6 %

1. Reliance RSF - Balanced       - 18.1
2. SBI Magnum Balanced Fund - 17.5
3. Tata Balanced Fund               - 17.1
4. Principal Balanced Fund        - 15.7
5. ICICI Pru Balanced Fund      - 14.9

Category Average - 12.0%

SENSEX - 7.6%
NIFTY - 8.9%

Tuesday, November 6, 2012

Dividend Declared Birla Sun Life Equity Mutual Funds

Birla Sun Life Mutual Fund has declared dividend under the schemes
Birla Sun Life Frontline Equity Fund - Rs. 0.50
Birla Sun Life MNC Fund - Rs 4.0
Birla Sun Life Opportunities Fund - Rs 0.75
The record date is 9/11/2012

Saturday, October 13, 2012

Fidelity Mutual Fund Merged with L&T Mutual Fund

Merger of Schemes of Fidelity Mutual Fund with Schemes of L&T Mutual Fund

Fidelity Mutual Fund has announced the merger of
Fidelity Flexi Gilt with L&T Gilt,
Fidelity Wealth Builder-Plan A with L&T MIP.

Fidelity Equity with L&T Equity,
Fidelity Tax Advantage with L&T Tax Advantage,
Fidelity India Prudence with L&T India Prudence,
Fidelity Cash with L&T Cash,
Fidelity Intl Opp with L&T Indo Asia,
Fidelity Global Real Assest with L&T Real Assests,

The Unit holders of L&T and Fidelity Mutual Fund are given an option to redeem/switch out from the schemes within October 15, 2012 to November 15, 2012 without paying any exit load. New names of the schemes will be applicable from November 16, 2012.

Monday, September 3, 2012

How to calculate VAT tax on Property ?

Recently many of my clients who have purchased flats between 2006 and 2012 have received notices from builders to pay VAT tax running into Lakhs. There is so much confusion on calculation of the VAT tax that many developers charge the maximum possible and buyers are not even aware how much they should pay.

If the flat is 1000sq ft and the agreement value is Rs. 1crore then 5% VAT comes to Rs. 5 Lakhs many developers charge this amount but this is wrong. VAT is calculated only on the CONSTRUCTION COST of the property OR the agreement value of the property and the LOWEST of the two should be considered.

so for above example the construction cost in Mumbai is between 1000sq.ft to 1500sq.ft then even if we take highest value of  Rs1500 X 1000 sq.ft  = 15,00,000. and 5% of this is Rs.75,000 only.

So rather then paying  Rs.5 Lakh your VAT liability is only Rs. 75,000.
which is a huge difference if your Developer is charging more then go and explain him how to calculate VAT TAX.

Reference : DNA page1 on 3/09/2012

Wednesday, August 29, 2012

How to transfer old shares with expired transfer deeds

If you have old transfer deed signed which is more then 1 year old then that deed will work only after getting it extended from ROC.

Process is quiet tedious but you have to go through it.

1. Fill up the transfer deed with all the details.

2. Get the franking done on Transfer deed with BSE in Bank of India. Fort branch
(Franking charges are 0.25% of the current market value of all the shares)

3. Go to the ROC office which is at Marine lines West. Take a form which cost Rs.2 per folio there is one form required for each company. The form is called 7c transfer deed form.

4. you have to fill this form and make online payment of Rs 50 per certificate. can make the payment for the same from the site
you have to create a account first time then login and make payment via debit card, credit card or net banking account.

6. Take the printout of the receipt.

7. Submit this three documents at ROC office in Marine Lines they will ask you to come back after 7 days.

8. After 7 days you can collect all three documents with extended time stamp on your transfer deed forms.

9. Courier them to the registrar of your company along with your PAN card copy and the shares will be transfered in your name within 15 to 30 working days.

10. once you receive them you can send for dematerialization where you have your demat account.

Download Mutual Fund Application Forms

Friday, August 17, 2012

What is a Balanced Mutual Fund ?

There are mainly four Asset classes where you can invest your money to grow your wealth and get rich.

1. Equity  (Shares, Equity Mutual Funds)
2. Debt  (Fixed Deposit, PPF, NSC, Post office MIS, FMPS)
3. Gold / Silver / Daimond
4. Property / Real Estate

Balanced Funds are Mutual Funds with a combination of above two asset class namely Equity and Debt in varying proportion.

Lets take an example of 50:50 Balanced Fund
you invest 2 lakh rupees in a Balanced Fund with 50% Equity and 50% Debt. The fund will invest Rs.1 lakh in debt say which gives 10% return per annum and another Rs.1 lakh in Equity where return is variable.

case 1:
at the end of year stock market perform excellent and gave +40% return so your equity return is Rs 1,40,000 and your debt portion is 1,10,000 so total value is 2,50,000 so now in order to acheive your asset allocation of 50:50 you move Rs 15,000 from Equity and put in Debt so debt becomes 1,25,000 (1,10,000 + 15,000) and Equity also becomes 1,25000 (1,40,000-15,000). This is also called PORTFOLIO REBALANCING.

case 2:
say at the end of year stock market perform badly and gave -20% return so your equity return is Rs 80,000 and your debt portion is still giving 10% so it is Rs 1,10,000 so now your total investment value becomes 1,90,000 so in this case you will move Rs 15,000 from debt fund to equity fund to maintain your 50:50 asset allocation, so Equity is now 95,000 (80,000 + 15,000) and Debt is now 95,000 (1,10,000 - 15,000)

hence you see because of the asset allocation you are selling Equity when markets are high and buying Equity when markets are low.

If you have equity only exposure and you get a market like Japan which does not grow for ages then it will not help and if you have only debt then inflation will eat your earnings in the long term so like a Balanced Food is good for health, Balanced Funds are good for Investment purpose.

Balanced Funds does automatic portfolio rebalancing.

Balanced Funds with more then 65% equity exposure do have tax benefit and are eligible to get long term tax benefit and the rebalancing is done at the fund level so no tax liability to the end customer if holding period is more then a year PLUS (Debt portion is totally tax free in balanced as the profits are at fund levels, If you were to have seperate FDs then they would attract tax and would be included in your income)

Few good Balanced Funds
1. Reliance Regular Savings Funds Balanced Option
2. HDFC Prudence Fund
3. DSP BR Balanced Fund
4. SBI Balanced Fund

Balanced Funds are also called Hybrid Funds

If you are new to Mutual Funds then Balanced fund is a good way to start investing your money.

Monday, August 13, 2012

LIC Nomura Balanced Fund declares Dividend

Balanced Fund from LIC Nomura has declared a dividend of Rs 0.20 per unit. Record date for the same is 14/08/2012.

Its last 1 year return is 3.9% and 5 year return is 3.4%  based on its long term record this fund is below average performer.

Tuesday, July 10, 2012

SBI Magnum One India Fund Merged

SBI Magnum One India Fund launched in December 2006 is about to be merged with SBI Magnum Equity Fund with effect from 10/08/2012.

If you are an Unit holder of Magnum One India Fund then you have an exit option from 10th July till 10th August, for one month period to exit from the scheme without paying any exit load, however if you have invested in NFO then there is no exit load as such. If you do not use exit option then you will be allotted Units of SBI Magnum Equity Fund at applicable NAV as on 10/08/2012.

This scheme has not performed at all in 6 years it has hardly given any returns infact at todays NAV as on 10th July 2012 is 10.4 which is hardly any returns since 2006.

However SBI Magnum Equity Fund is better bet compared to Magnum One India Fund,but this is also not that great fund there are many more better funds available.

Monday, July 2, 2012

Top performing Mutual Funds for the month of June 2012

 Few of the Top performing Funds for the month of June 2012

Diversified Equity Fund
1. JM Core 11 Fund - 9.0%
2. Escorts Leading Sectors Fund - 8.6%
3. Pramerica Equity Fund - 7.6%
4. ING Core Equity Fund - 7.4%
5. Kotak Select Focus Fund - 7.4%

ELSS Funds
1. HSBC Tax saver Equity Fund - 8.3%
2. UTI  Long Term Advantage - 7.9%
3. Tata Infra Tax saving Fund - 7.5%
4. DWS Tax saving Fund - 7.4%
5. Baroda Pioneer ELSS 96 - 7.4%

1. Baroda Pioneer Balance - 5.6%
2. Escorts Balanced Fund - 5.6%
3. Reliance RSF - Balanced - 5.4%
4.Principal Retail Equity Saving - 5.3%
5. Can Robeco Balance - 5.2%

Above returns and funds are based on 1 months performance. It should not form the basis of investment for long term. They are just for your reference. After long time funds have given huge returns in 1 month period.

Monday, June 25, 2012

UTI - ULIP (Unit Linked Insurance Plan) Review

I am from the school of thoughts who represents Term Insurance is good for Insurance requirements and Mutual Funds + PPF are good for Investment requirements. Like to keep both Investments and Insurance seperate and think that most of the ULIPs are a ' CHOR' and they are there to loot the investors because of the high upfront expensive and so many misscellenous charges like Mortality charges, Fund managements charges, Policy admin charges etc. but there is an exception to this general rule of ULIPs.

UTI's ULIP is called Unit Linked Insurance Plan but it is not your regular ULIPs (Its a good exception to ULIP) its more of a Balanced Fund with a 40:60 ratio.( Equity Maximum - 40% ; Debt Minimum - 60% )

1) UTI ULIP gives a maximum Insurance cover of  upto 15 lakhs maximum depending on the target amount selected.
2) Accident Cover : Personal Accident cover of Rs. 50,000/- at no additional cost.
3) Tax Benefit : Tax Rebate under sec 80C of IT Act 1961.
4) Premature withdrawal : Full premature withdrawal in case of any exigency with only 2% exit load.
5) Maturity Bonus: 5% in 10 year plan ; 7.5% in 15 year plan
6) UTI ULIP allots units at the prevailing NAV (No Entry Load) after deduction of premium paid to LIC for Life cover. (Life cover is governed by Master policy taken by Scheme from LIC and yes its mortality charges are cheaper then term cover taken from LIC itself)
7) Expenses: Currently between 1.5% to 2%. This Includes the Fund Management Charges and all other charges like Marketing expenses, R&T fees etc.
8) Liquidity : Corpus of More then 2,280 crores as on 31/03/2012
9) LONG HISTORY: since October 1971
10) Returns : 9.41% CAGR over 40 year period. as on 31/03/2012
11) Insurance cover will continue even if renewable premium is not paid till Rs5,000 is balanced in the fund kitty. (MOST IMPORTANT POINT)

1. Insurance premium deducted is variable and it depends on the age factor.
2. There are two different charts for calculating the premium for different plan one for FIXED TERM COVER PLAN and another for DECLINING TERM COVER PLAN.
3. You cannot take this plan without Insurance cover.
4. There is upper limit of 15 lakh investment you cannot invest more in it.
5. Non-Working womens upper limit is 5 lakh.
6. Entry into the scheme is till 48.5 years of age for 10 year plan Monthly SIP
7. Scheme tenure of 15 years is restrictive

1. First you have to select a Target Amount say Rs 15,00,000 and Tenure (10 years or 15 years ) then select FIXED COVER or DECLINING COVER.
2) Now if you have selected 15 lakhs and 15 years then your annual premium is 15,00,000 /15 = 1,00,000 per year. (If you have selected Target amount= 2,00,000 and Tenure= 10 year then Annual Premium= 20,000)
3) Out of 1 lakh premium for 35 years old around Rs 2,325 goes for Cover and rest 97,675 will get invested at prevailing NAV.
4) you can split the installment into Quaterly, Half Yearly and also do a SIP as well.

This is supposed to be a Must in your portfolio for long term goals. It can give you stable returns which outperforms FD, LIC,PPF for over 40 years that speaks volumes about the scheme. If you are young and dont need Insurance then also I recommend to take this scheme as a Balanced Fund in your portfolio.

This scheme is going to be DTC COMPLIANT Balanced Fund as and when DTC comes into effect your ELSS category will loose its Tax benefit status but this scheme which gives more then 10 times life cover of annual premium is included in proposed DTC for Tax benefit.

What are ETF's (Exchange Traded Funds) ?

Echange Traded Funds (ETFs) are funds which are listed and traded on exchanges like stocks. ETFs invest in constituents of the index in the same proportion as the index and hence it reflects index. ETFs Started in India in year 2001 by Benchmark AMC.

Few example of ETFs in Indian Stock Markets are

1. 'GSNifty Bees'  -  It tracks Top 50 Nifty companies which comes under Nifty Index.
2. 'GS Junior Bees'  -  It tracks Midcap Funds (CNX Nifty Junior Index components)
3. 'GS Gold Bees'  -  It tracks domestic Gold Price
4. 'GS HangSeng Bees'  -  It tracks Hang Seng Index of Chinese Companies
5. 'GS Bank Bees'  -  It tracks CNX Bank Index.

They are mostly passive in nature and hence the fund management is least, as it only has to reflect underlying index or underlying assest.

Benefits of ETFs
1. Easy to invest and understand
2. Least cost as it is passive in nature
3. It will give near about index based return
4. Tax efficient as long term taxes are nil.
5. Transparent Portfolio

Is investment in ETFs good for investors?
Historical data globally suggest that most of the fund managers over long period of time has not been able to beat the benchmark indices constantly as global markets are efficient so for a global investor odds are in favour of person investing in ETFs which will give decent return with reduced volatility and less risk.

However coming to Indian context there have been many funds which have beaten the index by huge margin over long period of say 15 years or more and are still outperforming the indexes so if you can select few good funds you can beat the ETFs as Indian markets are not that efficient yet. so for Indian context I would still prefer to go with your HDFC Top 200 Fund,Reliance Growth Fund, UTI Dividend Yield Fund.

Friday, June 22, 2012

Dividend Yield Fund from UTI declares dividend

Last few years equity market has not performed well. Many people in this times go for defensive play where they select stocks which gives high dividend. This strategy is called Dividend yield strategy. There is once such fund which works on this idea its called UTI Dividend Yield Fund. For last few years it has performed excellently well compared to benchmarks.

UTI dividend Yield has given a return of 11.6% CAGR vs the Benchmark returns of 3.5% and category average is mere 3.3% for over 5 year period.

There is a dividend declaration in UTI Dividend Yield Fund.
The dividend will be 4% of face value or upto 90% of distributable surplus as on the record date, whichever is lower.
The record date for dividend is 26 June 2012.
Last Dividend declared was in November 2011.

UTI - ULIP declares Bonus for year 2012

UTI - ULIP has declared a bonus of 1: 10 that is 1 unit as bonus for every 10 units held.
Record date for the bonus is 20 June 2012.
UTI ULIP (Unit Linked Insurance Plan ) is one of the oldest schemes from UTI Mutual Fund It was launched in the year 1971. The scheme has many benefits including Insurance cover UPTO Rs 15,00,000 and an Accident cover upto Rs 50,000 only.

The scheme is hybrid fund with 60:40 and it can also be used in once portfolio as a balanced fund.

Friday, June 15, 2012

Top 25 companies from BSE 200 will be part of "Axis Focused 25 Fund"

Axis Mutual Fund promoted by Axis Bank is coming up with good and innovative products like Axis Triple Advantage fund which consist of Equity, Debt and Gold all in one Fund.

Now this time they are coming up with a new fund which has nothing innovative about it.
It intends to select Top performing 25 companies from the list of BSE 200 companies and will be more of a large cap oriented flavour. The idea is that large companies are less volatile at the same time they create more wealth. Hence it should be good long term fund with focus on concentrated folio of around 25 companies.

There are similar products from other AMC like Kotak 30 which selects 30 companies and has done well compared to other funds. there is other fund called JM core 11 which will invest only in 11 companies but it has failed miserable.

I would recommend that let the fund get launched and in due course say let it run for around 6 months or a year and see how it fares then we can take investment call on it, but definately we can keep 'Axis Focused 25 Fund' on the watchlist radar for sure.

Axis Focused 25 fund NFO will be open for subscriotion till 25th, June 2012.

Saturday, June 9, 2012

Historical prices of Gold in Indian Rupees

Historical prices of Gold in Indian Rupees source a facebook friend.

Friday, May 25, 2012

Investing in Mutual Funds by SMS its that simple. IDFC starts SMS transact facility

I have seen so many people having spare cash in there savings account or in there current account fetching very less interest. Many of this people know that if they invest in liquid fund they can fetch much higher returns but just dont like the hastle of writing a cheque and going all the way to the amc office to submit the form. well well here is a solution.

you can just send an SMS and your investment is done from your bank account to the debt fund and even for redemption you can just send an SMS and your units are redeemed and amount directly credited to your bank account within 24 hours. so now if you are going out on vaction even for few days and want to park your fund for couple of days you can just send an sms and the money is invested and while coming back from vacation you can just send an sms and your money is back to your bank account with little more interest.  (YOUR MONEY is WORKING even when you are on VACATION )

IDFC mutual fund offers this kind of facility called SMS Transact facility.

The investor needs to sign a onetime debit mandate form & submit at any of the CAMS office or IDFC AMC branches. Investor will recieve a confirmation within two weeks after which they can start transacting.
For Investing send an SMS as INV AMOUNT to 56767267
For Redemptions send an SMS as RED AMOUNT to 56767267
(e.g for withdrawing Rs. 5000 send sms as RED 5000 to 56767267)
Investor will receive a return SMS from CAMS confirming receipt of request for transaction mentioning the date, transaction amount & time of receipt. One can also open a zero balance account.

Currently this facility works with the following banks such as Kotak, Axis, City, ING Vysya, Standard Chartered, SBI, HSBC,ICICI.

by default the money will be invested in IDFC Money Manager Treasury Plan.

for more details

Friday, March 30, 2012

'SIP ki Kahani' an animation video explaining the power of SIP by Kotak AMC

This is an interesting animation movie made by Kotak AMC explaining the power of SIP using filmy style.

Friday, March 16, 2012

Income Tax limits for Individuals for AY 2012 -2013

Proposed Income Tax slab for Individual Tax payer for AY 2012-2013.
  1. upto 2,00,000 - Nil
  2. above 2,00,000 till 5,00,000   - 10%
  3. above 5,00,000 till 10,00,000 - 20%
  4. above 10,00,000                    - 30%
Rajiv Gandhi Equity Investment scheme encourages tax payer to invest upto Rs 50,000 directly in equity will fetch a tax exemption of around 50% of the Investment.

Savings Bank account Interest Income upto Rs 10,000 is exempted.