Prajna Capital - An Investment Guide

LOOKING at ways and means to split your identity for the purpose of better accounting and tax-saving provisions? Well, you could take a cue from the times when people lived in joint families and shared joint incomes. The same concept can help you save on income tax if you open a Hindu Undivided Family ( HUF ) account. In fact, the account — coming under the provisions of the HUF Act — can help you enjoy driving your brother’s or father’s luxury car and yet save some tax by claiming depreciation on the same in your business. The only thing required is to know the details of this Act and its implications in saving tax. FLEXI-OPTIONS Unlike the name suggests, a HUF does not mean only a Hindu family but even Jains, Buddhist and Sikhs can form HUFs. Generally a HUF consists of at least two members, of which one must be a male, and are lineally ascended from common ancestors. But smaller partitioned families can also form HUF with only one male member. According to the Supreme Court (C.I.T. ...

MOST CEOS COMPLAIN that people in the workplace just don’t ‘listen’. Most of us hear but don’t listen and instead we spend time thinking about what we are going to say next. Poor listening skills can create misunderstandings, make us miss deadlines and focus our attention on the wrong issues in the workplace. Simple steps to improving your listening skills : Awareness: Recognising it as an area of improvement sets you on the path to becoming a better listener. Convey Interest: Set aside whatever you’re doing and give the speaker your 100% attention. This offers encouragement to the speaker and he/she doesn’t feel compelled to speak faster or abbreviate their message. Convey interest nonverbally by nodding, maintaining direct eye contact and leaning forward. Speaker’s Non-Verbal Cues: Watch out for the speaker’s gestures, facial expressions, tone and volume of voice, as being alert to these cues increases your ability to comprehend the full message. No ‘Overtaking’: ‘O...

THOUSANDS of life insurance policies lapse for a variety of reasons every year. Policyholders may not pay the renewal premium either because of a change in their financial circumstances or because they discover later that the policy was mis-sold to them and it does not meet their requirements. They may also inadvertently skip renewals because of a job transfer. While lapsed policies result in a loss for policyholders, they are also a drag on the books of life insurance companies, contrary to popular perception. This is why life insurers often make special efforts to revive lapsed policies. THE PROCEDURE Typically, a policy can be revived within six months of its lapsing through a simple revival. If the lapse has occurred more than six months ago, a personal health declaration needs to be submitted. The policy is then revived subject to underwriting decisions. Additional medicals may be triggered depending on underwriting decision. The policy can be revived within one, two or five y...

IF the bull run during the last few years had encouraged retail investors to shed their apprehension regarding equities, the subsequent downturn has made them retreat to traditional safe havens like gold and fixed deposits. While it’s not surprising, this short-term view may prove to be detrimental when investing for a long-term goal such as creating a retirement corpus, which necessitates an investment horizon of at least 15-20 years. For those who are comfortable with this kind of horizon, there is no need to look beyond equities, as it is the ideal wealth creation tool, feel market experts. As per data provided by IDFC Mutual Fund, top-rated diversified equity funds have outperformed other asset classes over a period of 15 years. Between January 1994 and January 2009 , they delivered a return of 14.22% against 6.09% from gold, 8.64% from fixed deposits and 9.97% from real estate. Equities have always earned a premium over other investments options over a longer period of ti...

THE real dilemma today is how to protect wealth from erosion and make it grow sufficiently to at least beat inflation. The volatility has been unnerving and is not restricted to equities; even bonds have seen swings never experienced before. So much so that there was a run on liquid funds in October as risk aversion touched an unprecedented high. Real estate, which witnessed a price spiral in the last three years, is also a major victim of the market slump. Also, compression of time for market moves means shorter window of opportunity to react. Risk aversion and risk premium is at its peak and investments flows have evaporated. So does the turmoil in the markets mean that investors remain passive and wait for the troubled times to pass? Inaction may not be the best solution for one’s portfolio. As adages go, “ Invest when there is blood on the street, sell when there is greed, buy when there is panic .” These words of wisdom which have stood the test of time suggest well thought–out...

‘UPON THE Education of the people of the country, the fate of the country depends.’ Our country seems to have taken the wise words of UK’s inter-war year’s Prime Minister Benjamin Disraeli in true spirits. Given the high level of illiteracy in the country, and the need to ensure that Indians are as competitive as their global peers, the government has been taking steps to boost education sector. While the government has been raising the budgetary allocation for education every year and has also imposed 3% cess to promote primary and secondary education in the country, it also provides tax breaks for those who are pursuing higher education. Section 80E of the Income Tax Act is in fact a boon for students who wish to undertake graduation and post graduation courses in various educational fields. Rising cost of education has forced most students to take loans to pursue their dreams. Section 80E, thus, ensures that any interest paid on these educational loans is exempt from incom...

NON-LIFE insurers will in the near future develop a standardised mediclaim policy to facilitate portability in health insurance. Besides having uniform coverage, the policy would have standardised benefits for ‘no claim bonus’. The general insurance council - an industry body representing non-life insurers - will meet to discuss the details, according to two industry officials. Health insurance portability, as defined by the regulator, aims to facilitate change of insurance provider without the insured losing out in terms of the policy coverage. While policyholders can shift companies even now, the essence of portability is that an insured is able to carry his track record with him. In other words if a health policy covers pre-existing ailments only after four years and a policyholder decides to shift to another company in the fourth year he will get immediate coverage of pre-existing ailments and will not have to wait another four years. Another advantage is, if there i...