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Wednesday, July 16, 2014

Union budget 2014 Key Points - India's Growth

Union Finance Minister Arun Jaitley presented his first budget today. He started his budget speech with a reality check amid high expectations by saying no miracle should be expected in the very first budget and he expected growth to rise to 7-8% over three to four years. He also said that achche din will definitely come but it will not happen overnight and will take some time.

So here are the list of key points for a common man to remember from the budget 2014.
  • No changes in tax rates for individuals
  • Personal income tax limit increased by Rs 50,000 for people below 60 years
  • Tax exemption limit for senior citizen changed from Rs 2.5 lakh to Rs 3 lakh
  • Tax exemption limit for small and marginal, and senior tax payers changed from Rs 2 lakh to Rs 2.5 lakh
  • Investment limit under 80C raised from Rs 1 lakh to Rs 1.5 lakh
  • Annual PPF ceiling to be raised to Rs 1.5 lakh, from Rs 1 lakh
  • Rs 100 crore for modernisation of madrasas
  • Development of Metro rails in PPP mode; Rs 100 crore set aside for Metro scheme in Ahmedabad and Lucknow
  • Rs 500 crore for digital India programme to ensure broadband connectivity at village level, transparency in governance
  • Govt proposes to set up five new IIMs, four new AIIMS and five new IITs
  • Jaitley announces 'Beti padhao, beti badhao yojana', sets aside Rs 100 crore for this
  • 15 new Brail presses to be established and revival of 10 existing announced
  • Rs 200 crore set aside to support Gujarat govt in the Sardar Patel statue installtion: Jaitley
  • Sanitation: Government intends to cover every household in the country by 2019
  • Govt to provide finance to five lakh landless farmers through NABARD
  • Rs 100 crore set aside for Kisan Television to provide real time information on various farming and agriculture issues
  • Trade facilitation centre to promote handloom work in Varanasi
  • New airports to be developed through PPP mode in tier-II and tier-III cities
  • Rs 4200 crore set aside for 'Jal Marg Vikas' project on river Ganga connecting Allahabad to Haldia, over a distance of 1620km
  • Retrospective tax amendment to be undertaken with extreme caution
  • Rs 3600cr set aside for National Rural Drinking Water
  • Rs 2.29 lakh crore allocated for defence sector
  • Hope to implement goods and service tax this year
  • FM announces 'Namami Ganga' - an integrated Ganga Development Project; Rs 2037 crore set aside for this
  • Sports university to be set up in Manipur, Rs 100 crore to be provided for this
  • FDI in insurance to be hiked to 49%
  • FDI in defense to be hiked to 49%
  • Disinvestment in PSUs

Sunday, June 29, 2014

Cigarette To Cost More - Are you a smoker?

If you are a smoker, then this would be bad news. As Government of India has decide to put extra taxes on the tobacco industry. So government can get an additional Rs.3,800 cr money in its pocket. This would have some serious effects on the pockets of the smokers.

As of today the tax on cigarettes in 45%, planned increase is around 60%. Which would mean the cigarettes would now cost Rs.12-13. Its usual for government to increase the price before the budget but this is a very steep increase of price. So the usual brands link Gold Flak, Classsic, Marlbora would cost you 2-3 rupees more in cities like Mumbai and Delhi.

From government point of view, increasing the price would bring the number of smokers down. Also it is the fact that India is home to nearly 10% of smokers in the world.

Let see what would be the budget a smoker has to keep aside for buying his cigarettes in the coming years.

So, lets assume that the smoker smokes two cigarettes daily on an average.

Per day - 2 Nos
Per week - 14 Nos
 Per Month - 56 Nos
Per Year - 2910 (Appr 3000)

So a person who somes 2 cigerattes per day would be smoking nearly 3000 in year. Which would cost him Rs.36,000/- to buy those cigarettes. So for a person earning 3 lakh as income, he has to keep aside 10% of his income just to buy a slow killing item.

Friends, wasting 36K just for spoiling your health is not a wise thing to do. Please try to reduce your smoking habits and for non smokers please never even think of trying it.

Smoking is injurious to health. And even more injuries to your family, friends and children.

Monday, March 31, 2014

Best Top 5 Investment options to Save Tax for Professional In India

Many young professional who are getting heavy pay checks often make mistake of investing in area which are not so profitable and also doesn't give you returns as expected. We would like to suggest you top 5 best investment option in 2014 which you are look at for investing your hard earned money. This article will cover investment options in India which will also save tax for you.

1. Public Provident Fund (PPF)

PPF is a very good and best small saving scheme we have in India. Not only it earns you interest, it also give you tax exception for your investments. Compared in Fixed Deposit (FD), which attracts tax on interest earned, PPF is totally excepted for income tax on interest.

Opening new account for PPF is fairly  easy. You can open in post office branch or a bank. You can decide on the investment , but you should make sure you are paying Rs. 500, every year to keep you account active. Maximum investment of Rs 1 lakh in a year can be done. You can withdraw only 50% of money after five years and flexibility to take loans. The PPF can be useful for self-employed professionals and those who are not covered by the Employees Provident Fund and other retrial benefits. Even employees covered with EPF can look at this option to save tax, in case they are left with excess money at the end of the year.

This year, the PPF will earn 8.7 per cent, 25 basis points above the average benchmark yield in the previous fiscal year. There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre-mature withdrawals can be made from the end of the sixth financial year from when the PPF commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.
After 15 years of maturity, full PPF amount can be withdrawn and all is tax free, including the interest amount as well.

The PPF is a great wealth building tool for risk-averse investors and should be opened and continued till maturity by one and all.

Example of the PPF interest's
If we invest Rs. 10000 every year in PPF, with interest rate of 8.6% we will have this figures.

Year Opening Balance Investment You earned interest Balance
1 Rs. 0.00 Rs. 10000.00 Rs. 860.00 Rs. 10860.00
2 Rs. 10860.00 Rs. 10000.00 Rs. 1793.96 Rs. 22653.96
3 Rs. 22653.96 Rs. 10000.00 Rs. 2808.24 Rs. 35462.20
4 Rs. 35462.20 Rs. 10000.00 Rs. 3909.75 Rs. 49371.95
5 Rs. 49371.95 Rs. 10000.00 Rs. 5105.99 Rs. 64477.94
6 Rs. 64477.94 Rs. 10000.00 Rs. 6405.10 Rs. 80883.04
7 Rs. 80883.04 Rs. 10000.00 Rs. 7815.94 Rs. 98698.98
8 Rs. 98698.98 Rs. 10000.00 Rs. 9348.11 Rs. 118047.09
9 Rs. 118047.09 Rs. 10000.00 Rs. 11012.05 Rs. 139059.14
10 Rs. 139059.14 Rs. 10000.00 Rs. 12819.09 Rs. 161878.23
11 Rs. 161878.23 Rs. 10000.00 Rs. 14781.53 Rs. 186659.76
12 Rs. 186659.76 Rs. 10000.00 Rs. 16912.74 Rs. 213572.50
13 Rs. 213572.50 Rs. 10000.00 Rs. 19227.23 Rs. 242799.73
14 Rs. 242799.73 Rs. 10000.00 Rs. 21740.78 Rs. 274540.51
15 Rs. 274540.51 Rs. 10000.00 Rs. 24470.48 Rs. 309010.99


2. Equity Linked Savings Scheme (ELSS)

The tax saving mutual fund schemes do carry market risk. But their returns are equally rewarding and tax free for investors. Equity-linked saving schemes (ELSS) have the lock-in period of three years among all the tax-saving options under Section 80C. Equity funds, can generate good returns for investors over the long term. In the past five years, this category has created wealth for investors with average returns of 17.5 per cent. ELSS gives you diversified equity investments, systematic investment planning (SIP), tax exempted in dividend paid out and different funds profiles in terms of large cap, mid cap and small cap.


Do sufficient research before taking investment decisions, which should match your overall financial situation, goals and risk profile. SIP is the most recommended way to invest in equity funds for a long time horizon and try avoiding lump sum investments especially when the market is on an upward mode.


However, this potential to earn high returns comes with a higher risk. There is no guarantee that your investment will generate positive returns after the 3-year lock-in period. The category has generated an average return of 2 per cent in the past three years. Even the best performing funds have churned out disappointing returns. The returns will naturally mirror the performance of the stock markets. Therefore, only investors who have the stomach for a roller-coaster ride should consider this option.

3. Employee PF and VPF:

EPF Employees' Provident Fund Organisation and VPF are very similar to PPF investment. The later one is for employees working in an organization. EPF is mandatory for all the employees of the organization, it is charge at 12% of the Basic salary of employees. And organisation has to contribute equal amount to the EPF account. So if employees pays Rs.2000, then organisation has to contribute Rs2000 every month. This account attracts a interest of 8.6% ad would be changed as per government.

We would like to encourage employees to enable VPF options, which is voluntary provident fund.VPF is a safe option wherein you can contribute more than the PF ceiling of 12% that has been mandated by the government. This additional amount enjoys all the benefits of PF except that the employer is not liable to contribute any extra amount apart from 12%. An added advantage is that the interest rate is equal to the interest rate of PF and the withdrawal is tax free. Please note that the maximum contribution towards VPF is 100% of your Basic. The highest rate of interest (close to 9%) makes it a very attractive saving scheme. Because of these advantages many  employees chose not to close their PF account even after getting employment else where other than India.

Considering the benefits, this would be another best option to invest money. Not EPF and VPF is risk free with return. Which makes it very attractive.

4. ULIPs

There's a good reason why this most hated investment is so high on our rating scale. For many policyholders, Ulips denote the costly mistake they made a few years ago. But that was a different era, when companies were gobbling up 50-60 per cent of the premium in the first few years in the guise of charges.

The 2010 guidelines have reformed the Ulip, turning it into a more customer-friendly investment. Though a Ulip should not be your first insurance policy, you can consider buying one as an investment that also helps you save tax. Of course, it also offers a life cover, but the stress is on investment, not protection. Don't buy a Ulip (or any other insurance policy, for that matter) if you are not sure whether you can continue paying the premium for the entire term. If you end it prematurely, be ready to pay surrender charges.

Your insurance policy should not impinge on other financial commitments. It's easy to set aside a big sum when you are young because your liabilities are limited, but this changes and expenses shoot up when you start a family or buy assets. If the premium is very high, the policyholder may find it difficult to pay it year after year.

Under the new Ulip rules, you cannot take a premium holiday. If you stop paying the premium, the policy will be discontinued. Also, you need to take a long-term view when you buy an insurance plan. A Ulip will yield good results only if you hold it for at least 10-12 years. Before that, the plan may not be able to recover the charges levied in the first few years. This is why short-term plans of 5-10 years usually give poor results, which pushes investors to dump them within 3-4 years of buying.

5. National Savings Certificates and Bank FDs:

Many investors have misconceptions about bank fixed deposits. Most often they think that up to 10,000 interest from bank deposits is tax-free, as announced in the budget two years ago but this is not true. The newly introduced Section 80TTA gives a deduction of up to 10,000 on interest earned in the savings bank account, but not on fixed deposits and recurring deposits.

Also, the nomenclature 'tax-saving deposits' means you save tax under Section 80C, not that these deposits are tax-free. The interest earned on deposits is fully taxable at the normal tax rate applicable to you. You have to mention this interest under the head 'Income from other sources' in your income tax return.


So don't get misled by the high interest rates offered on the 5-year bank fixed deposits. The post-tax yield may not be as high as you think. In the 20 per cent and 30 per cent income tax brackets, it is not as attractive as the yield of the tax-free PPF.



NEW PENSION SCHEME

 The low-cost retirement product is a good option fro those saving for retirement, but watch out for the limited liquidity it offers.

Its low-cost structure, flexibility and other investor-friendly features make the New Pension Scheme an ideal investment vehicle for retirement planning. However, even though the fund management charges have been raised from the ridiculously unviable 0.0009 per cent to a more reasonable 0.25 per cent, the pension fund managers are not hard selling the scheme.

If you want to save tax through the NPS this year, be ready to do a lot of legwork and paperwork before you can get to invest in this unique pension plan. The returns from the NPS funds are a mixed bag (see table).




Mutual Fund Investments is a Safe Option Best Investment Options in India for 2013 - Mutual Funds

Mutual Funds are also very popular among people. They can prove to be very fruitful if you make limited investments & generate a diverse portfolio which can give high returns. If you want to enter into stock markets & don’t wish to take unnecessary risks then this is viable option. Also you can generate higher profits. It is an ideal way investment if you want to diversify your risks & get good returns. A diverse portfolio reduces the risk factors & prevents you from complete loss of your investment. Now you can check the next option in our list of the best investment options in India for 2014 which everybody knows and that is investment in stocks.

Article courtesy : Economics Times.

Disclaimer:
All information is based on personal experience. We are not responsible for any loss of money due to these option. Everything is a suggestion which can be used to decide your investment options. Few suggestions involve market risk, so proceed with caution.

Saturday, March 15, 2014

Amazon and BPCL are in partnership to gain upper hand.

Amazon.in the online retail giant will be testing out a new strategy to increase their penetration into Indian market. Even when they planning to deploy unmanned drones in US to deliver goods at door steps, in India they are planning to have a low tech delivery system to reach out to masses and challenge Flipkart and Snapdeal.

According to this approach, Amazon will enter into partner ship with BPCL, for enabling physical package pickup by the customer. In India, there are customers who may not be in home to receive the items. So this new model will enable user to order online and receive the package by hand in designated store, which are mostly the partners of Amazon. This might be very helpful for people who are working in IT companies in cities like Bangalore, Chennai, Delhi, Pune and Mumbai. Amazon is planning to run a trial in any of the two cities mentioned above.

For Amazon, this will work out very nicely, reducing there operating income and also maintaining the goods. Now goods can be distributed across different stores and the network will be very economical.

The deal with BPCL, is also a very smart move, as BPCL already has a very nice netwok of store through its petrol bunks and stations. This will also increase the number of people coming to BPCL store and thus might increase the sales of the products in the store. Not to mention the fuel too. :).

For Amazon the deal is very interesting, as it gives a huge physical distribution network and good operating margin.

Tuesday, March 11, 2014

Onion Export Falls in January

NEW DELHI: Onion exports in January fell marginally to 1.21 lakh tonnes compared with the previous month due to lower export value realisation.

Onion exports stood at 1.33 lakh tonnes in December 2013 as well as in January 2013.

Onion shipments, however, have picked up since December 2013 after the government lowered the minimum export price (MEP) to $150 a tonne from $350 a tonne.

According to data compiled by the National Horticultural Research and Development Foundation ( NHRDF), onion exports declined as the average export value realisation was Rs 9,300 per tonne in January this year, much lower than Rs 18,600 per tonne in the previous month.

In value terms also, total exports were down at Rs 112.53 crore in January this year as against Rs 247.91 crore in the previous month, it added.

During the April-January period of 2013-14, onion exports have declined by 28 per cent to 11.08 lakh tonnes as compared with 15.39 lakh tonnes in the corresponding period of the previous financial year.

India exported 18.22 lakh tonnes of onion during the entire 2012-13 fiscal.

The government had imposed MEP on onion in September 2013 and then it was raised several times to curb exports and boost domestic supplies as retail prices had shot up as high as Rs 100 per kg in major parts of the country. The country had to even import onion to control price rise.

With improved domestic supplies and crash in wholesale rates, the Centre has now done away with the MEP to boost exports.

Courtesy : The Economics Time (ET)

Gold and silver imports declined

Gold and silver imports declined 71.4 per cent to $ 1.63 billion in February mainly due to restrictions imposed by the government on inbound shipments of the yellow metal to narrow the current account deficit.

Imports of gold and silver in February 2013 stood at $ 5.24 billion. In January this year, they were $ 1.72 billion.

Imports of the precious metals during April-February declined 41.47 per cent to $ 30.7 billion from $ 52.4 billion a year earlier.

Lower imports helped to narrow the trade deficit to $ 8.13 billion in February from $ 14.1 billion.

India's current account deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.

A high CAD puts pressure on the rupee, which in turn makes imports expensive and fuels inflation.

According to a finance ministry official, the CAD is expected to fall by almost 50 per cent to $ 45 billion in the current financial year.

The Reserve Bank had last month projected CAD at less than $ 50 billion, or 2.5 per cent of GDP, down from $ 88.2 billion, or 4.8 per cent of GDP, in 2012-13.

The government had increased customs duty on gold to 10 per cent and banned import of gold coins and medallions, while the RBI linked imports of the metal to exports.

India is the largest importer of gold, which is mainly utilised to meet the demand of the jewellery industry. Imports stood at about 830 tonnes in 2012-13.

Courtesy: The Economics Times

Tuesday, February 18, 2014

Health care for a wealthy tomorrow

‘Health is wealth’ is an age old saying we often hear. Preserving and maintaining our wellness is a way of creating a greater wealth for us and our children. Those who take preventive health care would be blessed with more wealth in their future life. In fact healthy persons can enjoy more wealthy smiles than the unhealthy persons who have more bank balances and wealth at their disposal.

Enjoying a sound health is a blessing. The present era where health care industry boast of high tech diagnostic equipment's, ultra modern operating rooms and super specialists, costs a great fortune for treatment of major diseases. The present day expensive health care treatments makes a real dent on the family finances of the suffering patients and a lot of pain and inconveniences to other family members. In addition, the trend is that hospitals with best of facilities are finding very difficult to serve the increasing number of patients well on a immediate timely basis. Who is to blame? As a responsible individual it is our prime duty to take all the preventive steps to safeguard our good health and our hard earned wealth. There are five major factors that determine good health of an individual: genes, behavior, medical care, social environment and physical environment. The first one, genes is a providential matter and individuals don’t have any control over it to modify them to their advantage. The next two, behavior and medical care, are more of individual’s personal habits and practices taking care of oneself. The last two are more of our social and general conditions prevailing around us which promotes our well being.

If we deeply analyze the causes for our diseases like hypertension, heart attacks, anxiety related diseases, diabetes, cancer etc we can easily understand that most of these arise partly from our induced bad habits, stressful work situations, choice of junk foods, lack of health awareness, discipline and good practices in most of our endeavors. It is a great responsibility of every individual to consciously strive to see that health begins in each and every action of our everyday lives, in home, office and society.

Good Behavior: Habits and behaviors change from culture to culture. Food habits differ from place to place. Following a proven good behavior, healthy food habits suitable to their living culture and place and doing physical exercises promotes good health to individuals.

Medical Care: Taking prompt medical guidance and care as soon as one see unhealthy symptoms or indications would minimize the sufferings and cure the diseases soon. Take a suitable medical insurance for self and dependents to meet unforeseen medical expenses.

Social Environment: Society is a larger group of our own reflections. Move and act with society with a zeal for wellness for all around you, not just for you and your family.

Physical Environment: Let us be a good responsible citizen. Cast your vote to elect  good polity to ensure healthy physical environment, fair policies and equal opportunities to all.

Care your health today and everyday to enjoy a wealthy tomorrow.

Article Courtesy: P. Viswanathan M.B.A., CAIIB., PGDFA.  

This article copyright belong to  © P. Viswanathan, www.yourmoneyadda.com has the legal right to display the article.

LEGAL DISCLAIMER: Your Money Adda (www.yourmoneyadda.com) is an independent proprietary website. Use of the information herein is at one's own risk. This is not an offer to sell or solicitation to buy any securities and Your Money Adda will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information/opinions contained herein does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any recommendation, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. All content and information is provided on an "As Is" basis by yourmoneyadda.com. Information herein is believed to be reliable but Financial Adda does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied.

Sunday, February 16, 2014

Inflation Indexed National Savings Securities-Cumulative (IINSS-C)

The newly launched Consumer Price Inflation linked bonds has the above complex nomenclature. The purpose of these bonds is to address an important task of protecting capital erosion of savers against inflation. Domestic savers capital gets eroded when inflation eats away when they earn lesser rate of returns on their savings/capital than the rate of inflation. To illustrate, a five year bank fixed deposit in a Indian commercial bank today fetches interest of around 9 percent p.a.. On the other hand, Consumer Price Inflation (CPI), has been hovering around 11 percent in the last few recent months. So, the domestic saver by investing his hard earned money in fixed deposit loses around 2 percent.

Smart investors are taking informed decisions and take a little more risk to invest in stock markets to benefit from higher returns than inflation. Over the long period, equity returns have repeatedly proved and given much higher returns than inflation rates. To illustrate, if we take the past 10 years CAGR from 2003-04 to 2012-13,

Inflation          8 percent
Bank Deposits 9 percent
Post Office      8.5 percent
Nifty ETF      14.06 percent.

So, the above factual figures illustrates that a smart investor by investing his savings in Nifty ETFs (Stock Market) has been able to earn around 6 percent more than average inflation rate of around 8 percent and the investors in bank fixed deposits and post office deposits have been able to earn returns only closer to average inflation rate. So in real terms their investments in bank FDs and post office deposits remained stagnant.

The Indian stock market research reports indicate that many individual retail investors have lost confidence in stock market investments and they are slowly moving away from market related investments. As per Association of Mutual funds in India (AMFI) data, both Equity Linked Savings and Equity fund universe saw outflows of Rs.1547 crore and Rs.7652 crore respectively between April 2013 to November 2013. This is mainly because most of them have lost substantial capital erosion in their investments in direct market participation since 2008. Most of these retail investors feel that market may not move further up from the current high levels of indices and many of them are happy with the risk-free 8-9 percent interest offered by Tax Saving Bank Fixed deposit (TSBFD),  Public Provident Fund (PPF) with tax benefits and other bank deposits without tax benefits.

The growing inflation rate is a great worrying factor for most of the governments. The mismatch of resources, demand and supply factors consistently force the inflation rates up and becoming an inescapable part of our macro economy. The high inflation rates impacts more severely on the lower income people and the middle class vulnerable sections like pensioners. It is in this context that the above IINSS-C product to protect savings from inflation erosion has been launched.
IINSS-C details:  The Period  - 10 years, Returns – a minimum spread of 1.5 percent will be added above to the referred Consumer Price inflation (CPI) index, The total returns will be compounded half-yearly and paid at the end of 10 years. MINIMUM INVESTMENT- RS.5000, Maximum amount Rs.5 lakh,  Senior Citizen tag is applicable above 65 years.  Prepayment is allowed after 3 years for ordinary investors and one year for senior citizens, On prepayment the investor will get only 50 percent of the previous year’s interest,

Specially middle class investors and pensioners prefer to get periodical interest on their investments. Here the main disadvantage of IINSS-C is that the returns can be had only after 10 years. For high net worth individuals the cap of Rs.5 lakh will be deterrent factor. As no special income tax advantages are envisaged in the new product, the above mentioned TSBFD and PPF and some recent offers of tax-free bonds by some PSUs scores favour amongst discerning investors. Experts opine that the CPI linked bonds needs little more customer friendly features to make it a great sought after product category.

Article Courtesy: P. Viswanathan M.B.A., CAIIB., PGDFA.  

This article copyright belong to  © P. Viswanathan, www.yourmoneyadda.com has the legal right to display the article.

LEGAL DISCLAIMER: Your Money Adda (www.yourmoneyadda.com) is an independent proprietary website. Use of the information herein is at one's own risk. This is not an offer to sell or solicitation to buy any securities and Your Money Adda will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information/opinions contained herein does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any recommendation, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. All content and information is provided on an "As Is" basis by yourmoneyadda.com. Information herein is believed to be reliable but Financial Adda does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied.

Tax Saving Investments - ELSS may be beneficial in the long run

January, February are the months most of the salaried class think of allocating some of their savings towards tax saving investment products. It must be noted that tax planning is just one aspect of one’s financial planning. Individuals has to analyze and take investment decisions suitable to their long term and short term financial goals. Any ignorance there and investing just to avail tax benefits may cost the individuals a lot later. It is better to decide on your investment allocation well in time to avoid last minute hurry during March.

As you all know, Section 80C of Income Tax Act provides benefit of reducing one’s tax liability by investing in certain financial instruments. When considering tax saving various investments, one must judiciously take into account one’s broad asset allocation based on their goals, age and risk appetite. We often notice that many people choose wrong investments without giving proper thought to their broader asset allocation to feel bad later.

Market data reveals that this year many are avoiding tax saving mutual fund schemes (Equity Linked Savings Schemes or ELSS) in their annual tax planning process. The small retail investors are having a negative opinion about the market moving up further up from the current higher levels. It’s unfortunate that even youngsters who can take a little more risk are also shunning equity related investments.

It’s true that during the last three years ended January 3,  ELSS category of investments has given only an average return of 1.57 percent (As reported by Value Research, a mutual fund tracking entity).But experts from many mutual fund houses are predicting about 15 percent growth in corporate earnings in FY2015. They are expecting above average returns from equity markets due to earnings growth and re-rating of the equities. It’s believed that broader markets are offering scope for attractive valuations and well managed ELSS schemes with more than three year period can be a good investment now for investors.

Facts and figures categorically ascertain that right type of equity investments over longer periods have repeatedly proved great investments for patient investors. To illustrate, an investor in the S&P BSE-30 index since 1981 would have reaped capital appreciation of an average gain of around 16 percent each year excluding the benefits of dividends paid during past 32 years. So we feel it is not a wise decision to avoid stocks altogether.

Some financial advisors are advising risk averse investors to go for a combination of ELSS and Tax Saving Bank Fixed Deposit (TSBFD) to save income tax. They suggest these investors to invest 60-70 percent of allocated money in TSBFD or PPF and the balance of 30-40 percent in ELSS. Some are advising pension products that invest up to 30-40 percent of the corpus in equities.

We are now in high inflationary environment. Inflation rates are nudging on an average of above 8 percent. We are also of the opinion that equity markets have a better future in the next few years. We believe that right selection of equity investments would be rewarding long term investors with inflation beating good returns. So we suggest our readers to take informed decisions and allocate your investible money to match your risk appetite in different asset classes without ignoring all the more important equity category to preserve capital.

Article Courtesy: P. Viswanathan M.B.A., CAIIB., PGDFA.  

This article copyright belong to  © P. Viswanathan, www.yourmoneyadda.com has the legal right to display the article.

LEGAL DISCLAIMER: Your Money Adda (www.yourmoneyadda.com) is an independent proprietary website. Use of the information herein is at one's own risk. This is not an offer to sell or solicitation to buy any securities and Your Money Adda will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information/opinions contained herein does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any recommendation, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. All content and information is provided on an "As Is" basis by yourmoneyadda.com. Information herein is believed to be reliable but Financial Adda does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied.

Beware of Cyber Crimes


Most of us work hard to make a living. Many of us compromise on many of today's pleasures to save for our rainy days. We normally save our hard earned money through reputed banks. Unfortunately of late we are frequently hearing many cyber crimes by fraudsters almost cleaning off the personal bank accounts of gullible innocent savers rendering them penniless for no fault of them. On the New Year day my reading the following cyber crime news item in Deccan Herald made me worry a great about safety of the small savings account holders in the back drop of increasing cyber crimes reported every day in one place or the other.

One engineer, by name Purushottam, a resident of Bangalore falls prey to ATM card 'cloning' and goes penniless. The victim suspects that his ATM card was cloned and used in super markets and bars in the US. He has been maintaining a savings account in the Byrasandra branch of the Bank of Baroda since 1993. Purushottam has a debit card and has not activated mobile or internet banking facilities for his account. The debit card is in his possession. The money in his account was almost emptied in a series of transactions between December 26 and 30. On December 26, he had a balance of Rs.50230.00 and on December 30 when he tried to draw some money from his account, he was shocked to find that his account had a balance of only Rs.144.65. The detailed bank statement for the period reveals multiple withdrawals each day, including payments made for taxi in Sanfrancisco, for purchase of pizzas, juice and settling bar and super market bills all in the US, while Purushottam was in Bangalore. He has lodged a police complaint and the police are investigating. The victim is unhappy with the way the bank responded to his predicament. (News Courtesy- DH News Service dated January1,2014.)

The mute question before all of us is how to prevent such frauds against our own bank accounts?
No doubt, banks the world over are spending huge amounts to build fool proof technical barricades like potent firewalls, anti phishing controls etc to safeguard investors money. But the fraudsters are quite smart enough and keep themselves one step ahead of these type of technical barricades to swindle money from innocent people's bank accounts by one way or the other.

The above reported Purushottam case is a special type of fraud of something like cloning a ATM card never before reported in India. The ATM card was with the victim in Bangalore and the fraud took place in a far off country, US. It's difficult to understand the modus operandi of this fraud to think about any suitable preventive measures. Readers of this article are requested to suggest any useful methods to other interested readers to prevent such future malefic attempts.

In my humble opinion, the menace of cyber crimes will continue to daunt the innocent bank account holders on a continuous basis for ever. To some extent we may prevent such crimes in future by meticulously following all the instructions of service providers i.e. banks as regards internet banking and mobile banking like not opening unsolicited mails and not providing sensitive information to others and frequent changing of usage passwords/pin numbers etc.

Apart from taking utmost caution in handling virtual operations of bank accounts, the people can think of availing facility of converting surplus amounts available in their operative savings accounts into short term fixed deposit accounts leaving only average bare minimum monthly amount required for their regular expenses in their operative accounts. This is only an indirect method to avoid a bigger loss from any malicious attempts by fraudsters. By this method people can also earn a little more interest on their savings and if unforeseen necessity for funds arise in between, they can as well close such short term deposits to tide over the situation. It's on our own interest to safe guard our hard earned savings we have to strive to find some fool proof methods and follow time tested bank procedures. Beware cyber crimes are on the rise every day.

Article Courtesy: P. Viswanathan M.B.A., CAIIB., PGDFA.  

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