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Starting Investment Early the Best Gift for Your Child

A lot goes into ensuring that your child leads a financially secure life. And the sooner you start, the better      The idea behind this planning for the child's future is to invest money in such a way — to get optimal returns and ensure that the child gets the money no matter what the circumstances. So, how do you go about achieving these objectives? The Expenses: With changing lifestyles, parents want to give the best to their child. So, you may want to enrol your child for a skating or a badminton or a swimming class. In addition, s/he may want to learn the guitar or the violin. All these involve expenses which need to be provided for. Inflation is another monster which you have to deal with as it reduces your purchasing power. What you get for a rupee today, may cost you more tomorrow because of inflation. So due to rising inflation and the higher cost of living, these expenses are expected to keep rising.    The first goal is to get the child admitted to a school, follow

Portfolio Management: Capital Protection Strategy

A 75:25 debt-equity investment strategy ensures no loss of principal, plus returns as well Even though stock market valuations are high and pose some degree of increased risk, one cannot deny the fact that equity markets are an avenue to earn an attractive return. Can you really invest in the stock market without undertaking any risk? Perhaps, if you structure your investment in a certain way. First, lets look at the background or the profile of the investor who can consider the avenue. It would be the typical 45-plus investor. If you are one such investor, you are likely to earn a healthy return, but your situation in terms of family responsibilities, loan repayments, possible medical and other future expenses may not always allow you to undertake much risk. So fixed income investing may not leave much in hand after tax. But the risk and volatility associated with potentially higher earning equities may not be thrilling either. We shall consider for this discussion an investibl

Mutual Funds: Asset Allocation Funds

Asset allocation funds promise to lighten the burden of investment decisions. Here's a closer look at what they offer      IT'S BEEN grilled into our head that asset allocation is a must if we want our investment plan to succeed. However, when it comes to drawing up an allocation plan, many people fumble or falter. It's not an easy exercise for many. Consider, for instance: first you have to set your life goals. Next, you have to decide on the instrument (or asset class if you will) that will help you reach the goal. Again, there is the tedious process of reviewing the investment portfolio and rebalancing it — if there is a need — as per the original plan if there is a change in the investment landscape. No wonder, many people pay only lip service to asset allocation plan. Actually, most of them invest in disparate avenues without a proper allocation plan.    If you are curious to see how asset allocation works, you can check out the asset allocation schemes from mutua

Mutual Fund Review: Quantum Long Term Equity

This fund's stock selection is sector agnostic and not limited by market cap levels If you are looking for a fund which truly adheres to a buy-and-hold strategy, this one fits the bill. With such a small corpus, it would not be surprising to see the fund manager dabble in smaller stocks, churn his portfolio rapidly or take concentrated bets. Contrary to expectation, that is not the case at all. The fund started off as a large-cap offering, changed its complexion and now once again is predominantly in large caps. It is also one of the funds with the least amount of churn. Till date, just 54 stocks have appeared in the fund's portfolio and out of them only eight have been held for five or months or less. What you will find here is a value based, well diversified, liquid portfolio.   "We are completely sector agnostic and neither is our criteria on the market cap of the stock," explains Kumar. "We are value investors who go for bottom up stock picking and clos

Kisan Vikas Patra – KVP

• The minimum investment is INR 500. • The interest rate payable is 8.40% annually. The investment doubles in 8 years and 7 months. The interest earned is fully taxable. • This account can be opened by individuals. NRIs, corporates, trusts and other institutions cannot invest in KVP. • On maturity of the term, if the maturity proceeds are not withdrawn then post office savings account interest rate is payable on the deposit and that too for only upto maximum 2 years. • KVP certificate can be pledged as a security to avail a loan against it. • The certificates are transferable from one post office to another. Also the certificates are transferable from one person to another. • Nomination facility is available.  

Some options for those looking at investing in the debt market

   Bonds are debt instruments and typically issued by government bodies or large corporate houses. The market for trading debt instruments (bonds) is termed as debt market. The debt market is quite popular in most parts of the world, especially in the developed countries. However, in India, it is the other way around. The debt market is mainly limited to dealing in government bonds. Yet, slowly, the debt market in India is getting more attractive for investors with many steps taken by the government in the bond market and related trading.    Usually, debt-based instruments are low risk and returns instruments and many investors do not even give a serious thought to them. In fact, debt instruments should be a part of every investor's investment portfolio. Inclusion of debt based investment instruments provides stability to a portfolio and reduces the overall risk.    The primary return from a debt instrument is the regular interest accrual. Investors can also look at getting goo

Apollo to dilute over 15% stake in insurance JV

APOLLO Hospitals' stake in British American Hospitals -the joint venture between the hospital group and British American Investments which runs the Apollo Bramwell hospital in Mauritius, and Apollo Munich Health Insurance Company (AMHIC) -is set to dilute over 15 per cent, as the group is not much keen on pumping further funds into them. In both JVs, Apollo had a 20 per cent holding earlier. In AMHIC, the stake has come down to 16.71 per cent and in the Mauritius hospital it is 19.72 per cent, a senior company official told Financial Chronicle. British American Hospitals had opened the Mauritius hospital last year. Till now, the group has invested Rs 22 crore in this project and it will not be putting any further funds into it. British American Investments has been investing on further expansion of the hospital that is a 200-bed multi-specialty hospital. The total project cost is estimated to be Rs 450 crore. "By virtue of investing no more into the project, Apollo'

Mutual Fund Review: Fidelity Equity Fund

Launched in May 2005, Fidelity Equity Fund is a well diversified equity fund investing in stocks across market capitalisation and sectors. The fund, which is managed by Sandeep Kothari and Subramanian Balakrishnan, invests across large, mid and small cap stocks without any investment style bias. The asset under management of the fund stood at 3,273-crore as on October. Fidelity Equity fund has been Crisil Fund Rank 1 for the last two quarters in the Diversified Equity category Impressive performance The fund has been delivering impressive returns since its launch. The fund's compounded annualised returns since its inception have been 26 per cent till December 16, as compared to its benchmark's (BSE 200's) 21 per cent return during the same period. Over a five-year period, the fund returned 21 per cent, clearly outperforming the BSE 200 and peers, which returned 16 per cent and 17 per cent, respectively. Over the past one year, the fund benefited from the recent rally in

Avail Additional Tax Benefits on Rs 20,000

The IFCI Infra bonds are the latest in the band of tax saving infrastructure bonds on offer for the purpose of tax saving and are the second in the series issued by IFCI. These bonds are the first of its kind since the finance minister announced a new income tax section — 80CCF — which entitles a tax payer to exemptions on money invested in infrastructure bonds. Issued for the purpose of reducing your taxable income under section 80CCF with an overall cap of Rs 20,000 per annum, the IFCI Long term infrastructure bond Series – 2 opened on 16, November and is open till 30 December, 2010. The proceeds from the same would be utilized by IFCI for further infrastructure lending.   These funds are expected to be a hit among retail investors, because of attractive rates of interest as well as tax exemptions. On an investment of Rs 20,000, an individual in the 30 per cent tax bracket can save Rs 6,000 of tax and earn an annual interest of 7.85-7.95 per cent. This issue is 50 basis points, or

Income Tax Planning: Senior Citizen’s Saving Scheme – SCSS

• Senior Citizen's Saving Scheme (SCSS) product was introduced for senior citizens in the annual budget by the then Finance Minister in the year 2004. It is a part of Section 80C of the Income Tax Act. • All senior citizens can invest in this scheme. • Investments of upto INR 1,00,000 made in this scheme are eligible for deductions from taxable income. • Maximum investment permissible in the scheme for an individual is INR 15,00,000. • Interest payable on deposits under the scheme is 9% per annum. The interest is payable quarterly. The interest is paid on 31st March, 30th June, 30th September, 31st December. The interest can be credited directly to the savings account of the investor. The interest earned on this deposit is fully taxable. • Under this a joint account can be opened only with spouse. In case of a joint account age of the 1st holder is considered as the age eligibility factor for opening the account. The age of the 2nd holder (spouse) doesn't matter. • The

Get know-your-customer (KYC) done to invest in Mutual Fund in future

If you're looking to invest or are already invested in a mutual fund, you have to complete a simple verification process before the calendar changes. Mutual funds will not accept new payments unless an investor has obtained a know-your-customer ( KYC ) acknowledgement. All fresh investments, including switches and existing SIPs that go via auto debit, will be stopped. Earlier, KYC compliance was required only for investments over 50,000. From 1 January 2011, even a 100 investment needs a KYC. It actually saves you the pain of submitting documents with a different fund house each time. The documents are to be submitted only once to be maintained by CDSL Ventures. You can download the forms ( amfiindia.com , amfiindia.com / poskyc.aspx or cvlindia.com ) or take physical forms from MF houses, service centres or distributors. Fill in your name, PAN card details, address in the form and attach your ID and address proofs along with photographs. Carry originals and copies of documents si

Mutual Fund Review: Reliance Regular Savings Equity

The fund manager attempts to capitalize on valuation differentials between mid- and large-cap stocks When Omprakash took over the fund in November 2007, it was only around Rs 290 crore. He rapidly changed its complexion and used the flexibility that a small fund offers to the hilt. Exposure to Construction shot up to 28 per cent with almost 21 per cent cornered by Pratibha Industries and Madhucon Projects. Exposure to Engineering was yanked up (18.50%) while Financial Services lost its prime slot (dropped to 6.69%) and Auto was dumped. His moves paid off. In the December 2007 quarter, he delivered 54.66 per cent (category average: 25.70%). That has changed. Now with a corpus that has crossed Rs 3,000 crore, he still takes strong sector bets but plays it safe with individual stock bets. Nevertheless, he still has managed to impress and in 2009 beat the category average by 20 per cent (102%). Though the portfolio is well balanced between large and mid caps, last year had he bet more on

Medical Insurance (Health Insurance) – Section 80D

• Under Section 80D a person paying premium for medical insurance for self, spouse and children is eligible for a deduction of upto INR 20000. • In case the person is above 65 years (senior citizen) then deduction of upto INR 20,000 can be availed. • For premium paid for health insurance for parents, an individual can claim an additional deduction of INR 20000. In case the age of the parents is 65 years or above (senior citizens), the deduction can be claimed upto INR 30,000. • The deduction available under Section 80D for medical insurance premium is over and above the deduction of INR 1,00,000 available under Section 80C • A person can avail a total deduction of INR 35,000 for premium paid for medical insurance – INR 20,000 for self, spouse, children and INR 30,000 for parents if they are senior citizens (INR 15000 if parents are less than 65 years old). • The payment of premium can be made by any mode except for cash to avail the tax benefits.  

State Bank of India (SBI) Bonds have been listed on the National Stock Exchange

S tate Bank of India ( SBI ), India's largest lender, has come out with a Series 1 and Series 2 Lower Tier-II bonds having a face value of 10,000. Though the issue was closed on October 25, you can purchase it from the stock market as the bonds have been listed on the National Stock Exchange ( NSE ). Outlining the bank's plans, SBI chairman O.P. Bhatt said: "We intend to do more such issues, maybe, every quarter. We will create a secondary market for these issues so that exit becomes easy and price discovery takes place." Company background SBI's origin dates back to 1806. Today, it's India's largest bank, with more 12,500 branches. The lender has more than 140 international offices in over 30 countries. Its customer base was over 153 million as on 31 March 2010. The bank reported a consolidated net profit of Rs 3,365 crore for the period ending 30 June 2010, a rise of 22 per cent year-on-year. Product features Series 1 Lower Tier-II bonds will earn

Mutual Fund Review: UTI Dividend Yield

This fund is best suited for those who want decent returns with good downside protection The fund has navigated through good and bad times to emerge as an impressive performer. The mandate demands an investment of at least 65 per cent of the portfolio in equity shares that have a high dividend yield at the time of investment. A look at the track record makes one wonder whether the fund manager follows this principle diligently. Its impressive performance in 2007 of 71 per cent put it ahead of the Sensex which managed 47 per cent and multi-cap category average of 60 per cent. Kulkarni hopped on to the Energy and Metals bandwagon by re-entering Tata Power and adding RIL, SAIL and Tata Steel. That year, the BSE Power, BSE Oil & Gas, and BSE Metal all delivered handsomely. But Kulkarni claims to have never deviated from the mandate. "Almost always 70 per cent of the portfolio will be in stocks qualifying as high dividend yield," she says. "Even in the peak of the bull

Mutual Fund Review: RELIANCE REGULAR SAVINGS EQUITY

When Omprakash Kuckian took over the fund in November 2007, its assets under management were only ` 290 crore. He rapidly changed its complexion and used the flexibility a small fund offers to the hilt. His moves paid off and in the December 2007 quarter, he delivered 54.66 per cent (category average, 25.7 per cent). But that has changed. With a corpus that has crossed ` 3,000 crore, he still takes strong sector bets but plays it safe with individual stock bets. Nevertheless, he has managed to impress, and in 2009, beat the category average by 20 per cent (102 per cent). The portfolio is well balanced between large-and mid-caps. However, last year, had he bet more on mid-caps and lowered his cash holdings rapidly, as soon as the market rallied, he would have probably delivered even more. However, going by the current YTD returns, his large-cap bets have certainly worked out well. The fund manager attempts to capitalise on valuation differentials between midand large-cap stocks,

Income Tax Planning: Home Loan Interest Repayment – Section 24

• An individual can claim tax benefits on the principal repayment as well as the interest repayment on a home loan. • The principal repayment of upto INR 1,00,000 qualifies for deduction from taxable income under Section 80C. The interest repayment of upto INR 1,50,000 qualifies for deduction from taxable income under Section 24(b) for a self occupied property. • To avail the benefit of upto INR 1,50,000, the acquisition or construction of the house property should be completed within 3 years of the year in which the home loan was taken. Else only INR 30,000 will qualify for deduction for interest repayment. • Also the amount of INR 1,50,000 for interest repayment qualifies for deduction for self occupied property. • In case of a property that is let out or given on rent, the entire interest repayment amount qualifies for deduction from taxable income without any limits. • The deduction on the principal component of the home loan can be availed as soon as the borrower starts r

Apollo Munich Maxima Health Plan Review

Introduction Does your health insurance policy cover treatment costs for things like sore throat, cracked lips, running nose, wisdom tooth, broken finger, itchy eyes etc????? Chances are not. Most of the policies issued by Health Insurance Companies do not cover the treatment costs for these small-small illness for which we consult a doctor or visit the Out Patient Department (OPD) of a hospital. Most of the policies issued by Health Insurance Companies cover treatment cost for major illness wherein a patient gets hospitalised. How about a Health Policy, which apart from major hospitalisation instances, also takes cares of treatment costs of small illness, visits to a doctor for consultation, pharmacy expenses, annual health check-up, dental treatment, spectacles etc????? Would you be interested in knowing more about this Health Policy ……. then read on ………. Features of Apollo Munich Maxima Apollo Munich Maxima is a health insurance policy that covers major hospitalisation events alo

Income Tax Planning: Home Loan Principal Repayment – Section 80C

• An individual can claim income tax benefits on the principal repayment as well as the interest repayment on a home loan. • The principal repayment of upto INR 1,00,000 qualifies for deduction from taxable income under Section 80C. The interest repayment of upto INR 1,50,000 qualifies for deduction from taxable income under Section 24(b) for a self occupied property. • The deduction on the principal component of the home loan can be availed as soon as the borrower starts repaying the home loan. • The borrower need not wait till the acquisition or completion of the house property. • The interest repayment deduction under Section 24 can be availed after the completion or acquisition of the house property. • The interest deduction for pre-acquisition or pre-construction period can be availed after the acquisition or construction is complete. This benefit can be availed in 5 equal instalments (20% each year) in 5 years. • The house property for which the tax benefit is availed sh

Stock Review: Mandhana Industries

But High Valuations May Limit Further Upside In The Stock     MANDHANA Industries' stock has nearly doubled since its public listing in May. Much of the appreciation tracks the company's robust performance in the September 2010 quarter. However, its current valuations seem to fully factor in the future growth expectations and, hence, a further upside looks limited.    Mandhana Industries is a textile company involved in yarn dyeing, fabrics and garments. It raised over . 108 crore through an initial public offer in April to fund the expansion of its weaving and garment capacities.    Mandhana earns four out of every five rupees of revenue from the fab rics segment; the garment division contributes the remaining. While it sells fabrics locally, most garments are exported to major retailers in Europe and the US.    The company has shown a strong momentum in both the segments. In the first six months of FY11, its total sales grew 31.4% to . 328.7 crore and net profit sho

Portfolio’s risk-return balancing

Rebalance your portfolio periodically to retain its risk and returns characteristics    Seasoned investors can vouch for the fact that the key to maintaining a good portfolio mix is periodic portfolio rebalancing. Rebalancing helps in maintaining the portfolio's original risk-return characteristics.    Asset allocation strategy is crucial to building a strong portfolio. It determines the proportion of any given asset class represented in your portfolio. An older and risk-averse investor has a retirement asset allocation of predominantly fixed income investments. A young and aggressive investor will have the bulk of his money in the stock markets. In a nutshell, a portfolio's asset allocation strategy determines its risk and returns characteristics.    What happens to the original asset allocation when one asset class yields phenomenal returns while others pale out? As different asset classes give different returns, a portfolio's asset allocation changes considerably w
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