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Friday, March 24, 2017

8% Government of India Bonds quick guide


For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability.


What are Government of India bonds
Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form only and are not listed or tradable on stock exchanges. The minimum investment amount is Rs 1,000 (face value of one bond) and there is no maximum limit of investment. The interest received from these bonds is taxable, at the marginal rate of income tax you are liable to pay. Tax is deducted at source if your total interest exceeds Rs 10,000.


What's good with Government of India Bonds...
In the current market environment, interest rates in the economy are expected to head lower. The benchmark repo rate has been lowered from a peak of 8% in 2014 to 6.25% now. This has meant that small savings rates and fixed deposit rates have also fallen. This bond at 8% now boasts a rate of interest higher than the SBI 5-year fixed deposit, the post office monthly income scheme, the National Savings Certificate and the Kisan Vikas Patra. Being issued by the Reserve Bank of India means associated security and safety. The rate fixed by the government has not been changed so far and buying this bond now means locking in income for 6 years at a relatively higher rate.


...What's not good with Government of India Bonds
Since the bonds are not listed, there is no secondary market exit. While you can apply for the bond with a joint holder, you cannot transfer it. You can pledge the bond to raise a loan but that facility is limited to loans from scheduled commercial banks. All the documentation for the bond, nomination, any pledge or transfer at death of the holder is to be done in physical form and there is no online facility available at present. You can, however, apply online through an online portal- icicidirect.com (which acts as a distributor for ICICI Bank for this bond)-if you are a registered user.


This is a good option for savers you seek safety over returns.



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Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

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1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. BNP Paribas Long Term Equity Fund



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Thursday, March 23, 2017

Varishtha Pension Bima Yojana


Under the scheme, the difference between the effective yield paid to the pensioner, and that earned by LIC, is compensated as subsidy to LIC by the government


The Cabinet gave its approval to Varishtha Pension Bima Yojana (VPBY), 2017 last week. The scheme will be implemented through Life Insurance Corporation of India (LIC), and aims to provide social security to senior citizens. It will give an assured pension, offering an 8% per annum guaranteed rate of return for 10 years, with an option for pension on a monthly, quarterly, half-yearly or annual basis.


What is Varishtha Pension Bima Yojana (VPBY)?
VPBY was first introduced as a pension scheme by the National Democratic Alliance (NDA) government for senior citizens, aged 55 years and above, in July 2003 but was withdrawn a year later. Current finance minister Arun Jaitley re-announced this scheme in the 2014-15 budget. The scheme remained open for subscription between August 2014 and August 2015. The scheme offered annuities in monthly, quarterly, half-yearly and annual modes, varying, between Rs500 and Rs5,000 (monthly), Rs1,500 and Rs 15,000 (quarterly), Rs 3,000 and Rs 30,000 (half-yearly) and Rs 6,000 and Rs 60,000 (annually). Maximum purchase price was Rs 6,66,665. The scheme offered an assured return of 9% on monthly payment basis, which amounted to annualized return of 9.38%.


Under the scheme, the difference between the effective yield paid to the pensioner, and that earned by LIC, is compensated as subsidy to LIC by the government. While the recently approved VPBY 2017 is providing a lesser return-8% per annum- given the current falling interest rate regime, experts believe that it is a good offering.


The purpose of VPBY 2017 is to help those citizens who rely on interest income from their retirement savings to cope with lower interest rate environment. The 8% interest is competitive given very low, even negative in some cases, interest rate environment globally. The interest rate on monthly income scheme of post offices is 7.7%, which, too, can come down further if there is further decline in the yields on government bonds.


Under the new scheme, the fixed interest rate commitment is of 10 years, which has faced some criticism. A 10-year duration is reasonable and indeed a sign of good design". The macroeconomic environment may change over time, and sunset clauses are needed in all such schemes, so that a fresh view can be taken at the time of sunset.


Other details of the scheme are awaited. Like the earlier scheme, it is expected that the maximum pension ceiling will apply to the whole family, i.e., total amount of pension under all the policies issued to a family under this plan shall not exceed the maximum pension limit. The family, for this purpose, will comprise the pensioner, his or her spouse and dependants.






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Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

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1. DSP BlackRock Tax Saver Fund

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3. Tata India Tax Savings Fund

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Bull Call Spread

 What is a bull call spread?

It's an option strategy involving the purchase of a call option and simultaneous sale of another call option with a higher strike price. The sale of the option helps part finance the cost of the purchased call. The strategy is followed when you expect moderate price movement of an underlying share or commodity , etc.

 How does it work?

Let's assume you have February options expiring on 23rd.

Ten days ago you purchased a call option of Stock A, whose underlying share price was `98, at 100 strike price for say `20. You simultaneously sold a 110 strike for `10.

Your net outlay for the strategy is therefore `10.

Now assume Stock A on Feb 23 closes at `110. The 100 call becomes `10 in the money , while the 110 call becomes worthless.

So, you get twice the return on investment (`10) . However, the maxi mum gain to you will be `10 no matter how high the stock ends. For ex ample, if the stock ends at `130, the 110 call buyer gets `20 from you. Since you purchased the 100 call, you get `30 but since you sold 110 call, you have to dish out `20 to the buyer of the 110 call., leaving you with `10. (This does not factor premium calculation.)


What's the other advantage?

If the stock ends below `100 your maximum loss is `10 or the initial debit for the strategy.Since you sold an out of the money call for 10, that brings down your outlay by half, which is what you stand to lose.


 Can this be done with multiple options?

Yes, but you can encounter huge losses if the stock rises above break even. For example if you sold two options of 110 instead of one, and the underlying share climbed to above `120 by expiry , you would have to keep shelling out money to the holder of the calls.


Is there a variant on the bearish side?

Yes. It's called a bear put spread.


What's a call and put option?

A call option allows its buyer to lock in price of an underlier, which he expects to rise. If you purchased a call option on a stock at `100 and that became `110 , the `100 call seller is obliged to sell you the stock for 100 and you can the sell it for `110, pocketing `10.If the stock falls to `90 you have to buy it from the seller at `100. A put option allows you to lock in price, which you expect to fall. The same principle as above except in reverse direction applies.






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Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 4 Tax Saver Mutual Funds for 2017 - 2018

Best 4 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. BNP Paribas Long Term Equity Fund



Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

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For further information contact SaveTaxGetRich on 94 8300 8300

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Wednesday, March 22, 2017

PENSION PLAN for Saving Tax



Pension plans from insurance companies are not a great way to save tax be cause of the high charges. Although Ulip charges have been reduced, pension plans still levy high charges on buyers. In comparison, the low-cost NPS is a much better alternative.


The pension plans from insurance companies are also not as tax friendly. Only 33% of the corpus can be withdrawn at the time of maturity and is tax free. The balance 66% has to be compulsorily put in an annuity to get a monthly pension that is fully taxable.


For the NPS, up to 40% of the corpus is tax free. Of the balance amount, only 40% has to be put in an annuity.







Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 10 Tax Saver Mutual Funds for 2017 - 2018

Best 10 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield 

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan



Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms


For further information contact SaveTaxGetRich on 94 8300 8300

------------------------------------

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Insurance Ombudsman - Addressing Your Complaints

 
Insurance Ombudsman - Addressing Your Complaints





Insurance policy holders often find their grievances or issues, getting a cold or unsatisfactory response from the insurer. Whether it is with reference to a mis- sold policy by a pushy agent, or a rejection in claims, many policy holders are unhappy with the support provided by the insurer. The grievances either remain unresolved or, the policy holder is left to compromise. In case of such concerns, policy holders could approach an intermediary government body known as "Ombudsman" to resolve the issue.


The Insurance Ombudsman is an authoritative body set up by the government to address policy holder's grievances that may arise in an insurance transaction. Set up in different centres across the country, the main objectives of the Ombudsman are to:


  • Receive and consider complaints of policy holders against an insurer
  • Aims to find a suitable resolution of the issue.
  • Impartial decisions and upholding right insurance practices in the sector.

Grievances Addressed By Ombudsman

 There are 12 ombudsmen in the country that would look into grievances relating to claim rejections or non-satisfactory response from the insurance company. The nature of grievances addressed is:


  • Partial or total rejection of claims by the insurance companies
  • Dispute with regards to premium payable on policy
  • Dispute on the legal construction of the policy wordings in case such dispute relates to claims
  • Delay in settlement of claims
  • Non-issuance of any insurance document

Approaching Ombudsman- How to go about it

Having understood what the Ombudsman is for, let us see the procedure required to be followed to get your complaint across.

The power vested on the Ombudsman is restricted to insurance contracts up to a value of Rs. 20 lakhs. Only if your policy contract is lower than this amount must you approach Ombudsman. Complaints should be in writing. No formal application or prescribed format exists. So a simple letter addressed Chief Vigilance Officer should do. The letter should be marked to the jurisdiction under which the office of the insurer falls. Attach copies of policy documents, any communication with the insurer along with the letter.


What you need to bear in mind

  • Before making a complaint to Ombudsman, you should have approached your insurer with the concern. Only if the issue was rejected or, a reply was not received from the insurer within a period of one month from raising the same or, if the response was unsatisfactory, must you go to Ombudsman.
  • The complaint to Ombudsman should be made within one year of the insurers reply.
  • The issue or complaint must not already be pending before any other court, arbitrator or consumer forum.

 

Response and Final Decision

It is the duty of the insurance Ombudsman to settle any complaint received, on an impartial basis. The final decision would be on the basis of what he thinks is fair and fit. Ombudsman will examine the grievance and call for a hearing of both parties. Within 30 days, he will send his recommendation on the matter to both parties. If the complainant accepts the settlement, then he has to provide a written consent within 15 days. Otherwise, insurance Ombudsman declares his decision within three months. If further dis-satisfaction persists, the policy holder would have to approach a court of law/consumer forum.


On the part of the insurance company, he must oblige with the decision passed by the insurance Ombudsman, within a span of three months.



------------------------------------------
Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 4 Tax Saver Mutual Funds for 2017

Best 4 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. BNP Paribas Long Term Equity Fund



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For further information contact Prajna Capital on 94 8300 8300

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Equity Linked Savings Scheme (ELSS)


ELSS Funds


 ELSS Funds are tax saving mutual fund that is eligible for Section 80C benefits along with the other investments listed, for a maximum amount of `1.5 lakh a year.


ELSS is an equity portfolio that invests in a diverse set of equity shares. It can hold some cash defensively, but is primarily an equity investment.


ELSS has a lock-in period of three years (lowest among 80C investments), after which the investor can withdraw the funds for short-term goals, besides retirement.


The dividends are tax-free and redemption after three years will not attract capital gains tax, as the holding period is over 12 months.


Fund performance and portfolio are disclosed monthly and investment can be made in lump sum, through SIP or as desired into a folio.







Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 10 Tax Saver Mutual Funds for 2017 - 2018

Best 10 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield 

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan



Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms


For further information contact SaveTaxGetRich on 94 8300 8300

------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300



 

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