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Wednesday, November 30, 2011

HDFC Standard Life Pension Maximus

HDFC Standard Life Pension Maximus is a single premium pension plan with policy term restricted to 10 years. Adhering to IRDA norms, the scheme offers guaranteed returns based on RBI's reverse repo rate, which is calculated as simple interest on the gross premium amount at the end of each financial year. The company has offered a minimum guaranteed interest rate of 5.44% per annum (pa) for FY12 subject to a maximum of 6% pa. At the end of the policy term, the policyholder is entitled to receive either the guaranteed returns or the fund value whichever is higher. However, in case of the death of the policyholder during the term of the policy, the nominee shall be entitled only to the fund value plus a fixed amount of sum assured.

Unique Feature

Pension plans, usually, do not offer any sum assured to the policyholders. HDFC SL Pension Maximus, however, offers a fixed sum assured of 1,000 to the nominee of the policyholder along with the fund value in the event of the death of the policyholder.

For Existing Customers

It does not really make sense for existing investors to exit the scheme as they have already paid quite a bit of charges. Since the scheme has a limited policy term of 10 years, investors should rather focus on choosing the insurer that provides the best possible annuity rates at the end of their policy term.

For Those Looking to Invest

The only USP of this single-premium pension plan is the surety of a fixed sum assured of 1,000 to the nominee in case of the death of the policyholder, which is quite mediocre in the current times and more so if one considers the time value of money for the coming 10 years. The scheme, as such, appears expensive in comparison to its peers with no significant value addition.

Take SIP route of Investment during this volatile stock market


THE usefulness of a systematic investment plan (SIP) is clearly visible at regular time intervals. Often, it is during tough times, when one is able to appreciate the benefits that an SIP provides and how this can be effectively utilised by the investor to build a strong financial position.

Here is a look at some of the conditions when this route would be useful for making investments.

Large amount to invest: One situation that the individual has to encounter is where they have a large amount to invest but they actually are not very confident about investing the amount. This happens due to the fact the investor wants to ensure that there is a low initial risk present on their investment. There is a large risk in making a one-time investment, as a sudden change in the situation from the time the amount is invested, could result in a large loss that is unaffordable.

So, if a person has Rs 25 lakh to invest and they want to invest into equities, then they would not like to come to a situation, where, in a week, after they invested the amount, there is a loss of 10 per cent and they find that they have lost a sum of Rs 2.5 lakh. Instead, they would want to ensure that the amount is invested in such a manner that this kind of initial risk is minimised, which is where the usefulness of the SIP comes in.

Regular investment: The other thing that a lot of people want to ensure is that there is a regular investment over a period of time so that they are able to ensure that the financial planning process is successfully carried on.

When the regular investment is required, then they would want that there is some way by which they need not make calculations every month and direct the investment in a specific manner.

This will mean following the SIP process, where, for example, they are able to, say, that out of the savings of Rs 15,000 per month, Rs 8,000 a month will be invested into two equity-oriented funds. This will ensure that there is ease of completion of process, without having to undertake any tension once they have set up the entire investment structure.

Uncertainty about equity markets: The manner in which the individual selects the investments for the SIP is important, but there is also a situation where the individual faces an uncertain equity market. There will be occasions when the individual will not be clear about the manner in which the equity markets will move, and hence, they will be confused whether they should complete their investments immediately or wait for a better opportunity to emerge. In such a situation, when the manner of the movement of the markets is not clear, the individual would be better off in selecting an SIP route for the investment.

This could mean that there are a lot of times when the SIP would be the best route that would be present for the investment. The individual can save a lot of trouble by just going in for the SIP and leaving out the investment worries to the fund manager, rather than trying to understand very short-term movements in the equity markets and then finding out that they have been wrong in these predictions. It is nearly impossible to time the markets, and hence, investors would realise that they are better off using the simple SIP route and save a lot of worries.
Download Section 80CCF Tax Saving IDFC Infrastructure Bonds Application Form

Download Section 80CCF Tax Saving L&T Infrastructure Bonds Application Form

What you need to know about Health Insurance Portability ?

What does 'Health Insurance Portability' mean?
Health Insurance policy holders, who are not satisfied with the services of the present provider, will be able to switch/change their service provider without losing the basic coverage of health insurance.
As per IRDA portability rules, consumers will get credit for the time already spent for covering the pre-existing disease along with bonus accrued to him from his past insurer.

What all benefits you can shift under 'Health Insurance Portability'?
Health Insurance Portability allows you to shift from one health insurance provider to another, without having to lose any of the benefits that your current health insurer provides. It includes -
1. The credit from the waiting period already completed can be carried forward to the new insurer.
2. Any bonus accrued to him (insured) from his past insurer.
3. The new insurer will provide some cover, at least up to the cumulated sum assured in the old insurance policy.

What happens if the customer applies to the new insurer does not have a similar policy?
If the new insurer does not have a similar policy, the policyholder will have to purchase one with a higher sum assured. Suppose a person with insurer A has a sum insured of Rs 3 lakh. When he shifts to insurer B. However, if insurer B has no product offering Rs 3 lakh as sum insured, he will have to offer the nearest higher slab of, say, Rs 4 lakh. While the premium will be charged on Rs 4 lakh, the portability benefits will be limited to Rs 3 lakh.

What happens if the customer applies for an increased sum insured in the new ported policy?
If the customer has a policy of sum insured of Rs. 4 Lakhs, and now he/she wants to port the policy to another insurance company with a higher sum insured of Rs. 10 Lakhs. The portability relief in waiting periods in the new policy would only be to the extent of Rs. 4 Lakhs sum insured. The waiting periods for the additional sum insured of Rs. 6 Lakhs would similar to a fresh policy.

What happens if the customer has holding an old policy for two years (which has waiting period for pre-existing conditions for 4 years)?
The policyholder will be able to carry over the waiting period with respect to pre-existing ailments. The waiting period for most pre-existing conditions is four years. So, say, the person wants to shift after a year itself. His waiting period for the pre-existing ailment will be three years with the new insurer.

I have bought a policy of sum insured of 2 lakh, a few years back and have cumulative bonus of Rs. 50,000; what would be the new sum insured after porting the policy to new insurer – 2 lakh or 2.5 lakh?
It would be 2.5 Lakh. For example - A person with insurer 'X' has a sum insured of Rs 2 lakh and cumulative bonus of Rs 50,000. When he shifts to insurer 'Y' his sum insured will automatically beRs 2.5 lakh. However, if insurer 'Y' has no product offering Rs 2.5 lakh as sum insured, it will have to offer the nearest higher slab of, say, Rs 3 lakh. While the premium will be charged on Rs 3 lakh, the portability benefits will be limited to Rs 2.5 lakh.

I have a health insurance policy from life insurer e.g. LIC; can I switch my policy under 'Health Insurance Portability'?
Currently, Health insurance portability will be limited ONLY to non-life insurers .

I am currently covered under Group Health Insurance Policy of my company; can I switch my policy under 'Health Insurance Portability'?
Currently portability will be allowed ONLY to individual health policies, which also includes family floater policies. For policyholders covered under Group Health Insurance policy first have to shift to individual health insurance to same insurer (from where they are covered under group policy) then in future they can port their policy to new insurer.

What things one need to watch out for?
The following are some of the conditions for which you should watch out, while switching your health insurance policy –
1. Maximum renewable age - Certain policies do not let you renew them after you reach a certain age.
2. Exclusions - Not all policies are same; certain exclusions are there in each policy. Check each one of them before you should switch.
3. Moving job - If you are moving jobs, then you can take advantage of portability.
4. Not all benefits continue - Not all policies are same; so check that all benefits that you are looking for are there in new policy.
Download Tax Free IDFC Long Term Infrastructure Bond and L&TLong Term Infrastructure Bond below:

Bond prices are up because of Insurance buying


BOND prices rose slightly as insurers made their purchases taking advantage of the high long-term yields.

Traders say among the insurers that made the purchases include LIC.

LIC's purchases are mostly made through switches.

Such switches imply that short-term bonds are sold and long tenure bonds are bought. Besides, some banks and funds also remained buyers on the back low credit demand and swelling deposits.

The purchases pushed up the price of the 10-year benchmark bond, the 8.79 per cent coupon security falling due in 2021, to Rs 99.71 (face value Rs 100) translating to a yield of 8.84 per cent last weekend. Previous weekend the security had ended at 8.96 per cent. Long-term yields for maturities above 10year, were above 9 per cent. The 29-year security, the 8.4 per cent coupon, falling due in 2040 was

priced at Rs 91 that translated into a yield of 9.2 per cent. This was a particular favourite for insurers like LIC, who have long term liabilities.

Quantum's Mutual Funds head of fixed income Arvind Chari said, "The increased limit for foreign institutional investors helped bonds. But the rise in bond prices is still far short of a rally.

Bonds could fall back gain." Last weekend, the overnment had enhanced he limit for FII investment into government se urities by another $5 bilion (Rs 25,000 crore), tak ing the overall limit to $20 billion.

But a fall back in yields is expected beginning next month onwards, in view of the tight liquidity conditions in the financial mar kets. The tight cash condition was evident from bank borrowings from the Reserve bank of India. At the weekend liquidity adjustment facility auctions, where banks borrow overnight cash from the RBI, borrowings amounted to Rs 1.06 lakh crore. In fact, most of last week, borrowing stayed above Rs 1 lakh crore. Borrowings, from RBI, or the Repurchase window is done against collateral of government securities.

Risk aversion remained a dominant element in financial markets. The mounting risk aversion, stemming from the worsening soveriegn debt crisis in Europe, triggered a flow into U S government securities. The ten-year US treasury yield has dropped 33 basis points from the beginning of November.

Besides, European yields are also becoming attractive to institutional investors at this point of

time. The yield on the 10year Italian government bond yield is presently 7.25 per cent (source: Italy, department of Treasury). As a result, traders said, interest from foreign investors in Indian government bonds was unlikely to be significant.

The shortage of dollar supplies in the foreign exchange markets and low capital account flows also sparked a dollar shortage.

The shortage reflected in high short term forward and low long term forward premiums. But there was likely to little reprieve. In the non-deliverable forward markets (off shore trading in Rupees and settlement is done in u s dollars) the dollar was priced at a record Rs 51.71. On the onshore market one month forward was priced Rs 50.61 indicating another round of outflows or another tumultuous week.

ELSS will lose appeal once DTC is effective


THE coming few months will see the relevance of a category of mutual funds coming to an end. This category is the equity linked savings scheme, also known as ELSS, because the introduction of the Direct Tax Code (DTC) will leave no room for its existence as a tax-savings instrument.

The question that investors have to deal with is what they should do with their existing investments and how they will be affected if they put money into these ELSSs over the next few months. Let's take a look at the overall situation.

ELSS is a category of funds that provides a tax deduction for the investments that are made in the fund.

Under Section 80C of the Income Tax Act, there is a deduction of up to Rs 1,00,000 that is available for investments in various instruments and ELSS is one instrument that is included in the list.

The reason why several investors find this an attractive route to invest is that there is a tax deduction, and, at the same time, there is also the possibility of high returns from the investment. At present, this is the only route that provides a pure equity exposure to the investor in the tax deduction area. Now, with the introduction of DTC, which would be effective from the financial year 2012-13, there will not be any tax deduction benefit available for investments in such funds because the eligible instruments list does not include ELSS.

There is nothing very distinctive about ELSS due to the fact that they are exactly similar to diversified equity funds that are available in the market. The funds invest across a range of sectors and in several companies that stretch across market capitalisation, so they have the features of a diversified equity fund.

The only difference is that there is a tax benefit here and this separates the fund from the other schemes that are usually launched by mutual fund houses. Thus, when the tax benefit goes away, it will be difficult for the funds to actually get investments because there is nothing much in terms of its features that distinguishes them from the others.
Lock-in period: One of the main things that will actually protect investors in these funds is the three year lock-in period. Normally, when a fund loses flavour, the main way by which existing investors react is by pulling out the investments in the fund.

However, due to the fact that there is a three-year lock-in, this will not be easy as far as ELSSs are concerned because only those investors who have completed this time period will be able to take their money back. This will lower outflow and protect existing investors.

What will happen once the funds lose their tax benefit is that they will continue to run like before as there will be existing investors who will continue with the fund due to the lock-in provision. There cannot be a sudden windup of the fund because investors will have to continue with this fund at least till the time the lock-in period prevails.

After that, there can be different things that could happen, including winding up of the fund, but, what is important is the fact that investors should not worry about the fact as to what will happen about the continuation of the fund at least for the next three years.




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Tuesday, November 29, 2011

Section 80 CCF Tax Saver Infrastructure Bonds for 2011 - 2012

Following issues are expected this year:

1. LIC Infrastructure bonds.

2. PFC Infrastructure bonds.

3. IDFC Infrastructure bonds.

4. L & T Infrastructure bonds.

5. IIFCL Infrastructure bonds.


7. REC Infrastructure bonds.

8. IFCI Infrastructure bonds.

Download application forms for L&T and IDFC Infrastructure Bonds for year 2011 – 2012.


Also, know how to buy mutual funds online:

Invest in DSP BlackRock Mutual Funds Online

Invest in Reliance Mutual Funds Online

Invest in HDFC Mutual Funds Online

Invest in Sundaram Mutual Funds Online

Invest in Birla Sunlife Mutual Funds Online

Invest in IDFC Mutual Funds Online

Invest in UTI Mutual Funds Online

Invest in SBI Mutual Funds Online

Invest in L&T Mutual Funds Online

Invest in Edelweiss Mutual Funds Online

Gold Silver ratio helps to predict the price pattern

GOLD-silver ratio, which denotes how many ounces of silver are needed at a given point of time to buy an ounce of gold, is a handy tool to understand the direction in which the two volatile metals may move in the near future.

The ratio can help an investor to switch his holdings to gold or silver as the ratio moves up and down, thus, accumulating more quantity of both the metals.

The ratio shows how many times more expensive gold is to silver. Typically, the ratio moves in a pattern, and in normal circumstances, it helps predict which direction the prices shall move in the near future.

Between 1950s and 1980s, the gold-silver ratio has largely moved between 20 and 50. In 1980, however, it touched 100, when global economies were trying to contain inflation and were selling their gold reserves. In 1990-2000, the ratio largely remained stable.

In the past decade, the ratio has been moving gradually, but consistently lower.
The median point has remained at around 54. At the start of the year, the ratio was at 52 levels, down to a low of 32 and is at present back at 52 levels.
The ratio has moved significantly higher during times of economic uncertainties as gold is one of the leading safe-haven assets.
Gold is mainly an invest ment tool, while silver serves industrial purposes as well.
During stable times, it is better to invest in silver and shift monies to gold during uncertainties.
The ratio had peaked in recent times during the financial crisis of 2008-09 and the dotcom bust in early 2000. During the dotcom bust, the ratio had touched 80 and in late 2008, it shot up to 84.
How to use the ratio: At the present ratio of 52, an uninitiated investor can start putting his money in gold till it reaches 70. "One need not invest the entire amount in one go, but make a staggering investment as the ratio moves up," said Bitupan Ma jumdar, analyst, commodities and assets, JRG Wealth Management.

Once it reaches 70 and if there is an upward trend, it is time to move the gold holdings partly into silver. Almost 60 per cent of the holdings can thus be moved into silver in phases if the ratio touches 80.

The ratio moving beyond 85 levels has happened only in 1980 and this is not likely in normal situations. From 80, the ratio has come down and silver prices have started rallying.

At 80 levels, the investor should wait for the silver rally to play out and the ratio to once again drop down to levels between 50 and 55.
Between 50 and 35, he can once again accumulate gold as the ratio is only going to move up at around 35.

Along with the ratio, an investor also has to follow the macro economic factors to understand the duration of the cyclical movement in gold and silver.

The ratio can stay at higher levels for a longer period if the financial crises are triggering safe-haven buying in gold. On the other hand, if the financial markets are stable and the industrial output of key economies remain robust, the ratio can remain at lower levels for a longer time.

Monday, November 28, 2011

IDFC Tax Saving Infrastructure Bonds Tranche 1 Application Form for section 80CCF

Download application form for Infrastructure Bond for year 2011 – 2012.

These Bonds are Tax Saving Infrastructure Bonds. By making investment of Rs 20,000 in Infrastructure Bonds, you can avail tax exception under Section 80CCF.

Section 80CCF is in addition to Investment of Rs 1, 00, 000 that you can make under Section 80C and Rs 20,000 under Section 80D and Section 80E for Education loans of the Income Tax Act.

Find a collection canter:

Collection canter near you

Documents Required:

1) Filled Up Application

2) Copy of the PAN card (Self-attested)

3) A Cheque in favour of the

4) KYC Documents: Self-attested copies of the following documents are required to be submitted by the Applicants as KYC Documents:

a. Proof of identification for individuals: Any of the following documents are accepted as proof for individuals:

Ø Passport

Ø Voter's ID

Ø Driving Licence

Ø Government ID Card

Ø Defence ID Card

Ø Photo PAN Card

Ø Photo Ration Card.

b. Proof of residential address: Any of the following documents are accepted as proof of residential address:

Ø Passport

Ø Voter's ID

Ø Driving Licence

Ø Ration Card

Ø Society Outgoing Bill

Ø Life Insurance Policy

Ø Electricity Bill

Ø Telephone Bill (Land/Mobile).


1) Print the application form, print and Fill it up

2) Attach the required Documents

3) Submit the form in a collection canter near you

What is Tax Saving Infrastructure Bond?

These bonds are options given to infrastructure finance companies (IFCs) to support their lending to avoid dependence on banks. IFCs are not supposed to take deposits from retail customers.

The bonds would be issued in the dematerialised format and investors can even buy it in physical format if they don't have a PAN card or demat account.

The bonds will be listed on the Bombay Stock Exchange (BSE) and investors can exit the bonds in the secondary market after the completion of the lock-in period.

Motilal Oswal MOSt 10-Year Gilt Fund (MOST10)

Interest rates seem to be nearing a peak in India. It throws open opportunity to invest in long-term bond funds, say experts.

Motilal Oswal Asset Management Company has unveiled Motilal Oswal MOSt 10-Year Gilt Fund (MOST10) to try to make the most of this opportunity. This is an open-ended debt mutual fund scheme that will invest in government securities.

The fund manager invests 90% to 100% of the money in 10-year benchmark government securities. The fund manager can invest up to 10% of the money in government securities maturing in 7-12 years. The fund will be a passively managed fund. It can be seen as a vehicle for investors trying to benefit from interest rates. Most10 does away with the fund manager risk – the possibility of fund manager taking a wrong bet on government securities. Instead, it will invest in the most liquid security among government securities, where there will be little default risk. The NAV movement of the scheme will be married to the price movement of the benchmark 10-year government security.

Bond prices and interest rates share an inverse relationship. When interest rates fall, bond prices move up and when interest rates rise, bond prices fall. Typically, a fund manager of an actively managed gilt fund will keep the average maturity of the fund low when interest rates are rising. The average maturity goes up when the fund manager of an actively managed fund is expecting the rates to fall. If you are expecting interest rates in the economy to move down, Most10 can be a good vehicle to take advantage of the possible rally in the bond market. The key risk will be rising interest rates, as the fund manager can do little in this passively managed fund.

The proposed expense ratio of the fund is 0.99%. It accepts a minimum investment of . 10,000. If you choose to sell within three months from the date of allotment of units, an exit load of 0.5% will be charged. The NFO closes on December 5.

You can consider this fund as an investment in long-term government securities with no fund manager risk, especially at a time when interest rates are nearing their peaks.

Investment in this fund will be subjected to the risk of interest rates moving up. If that happens, prices in the bond market will fall and investors will suffer losses.

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