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Showing posts from May, 2008

Retirement Planning: How to retire healthy, wealthy & wise

It sounds a little odd. Thirty-year-old person is yet to get a receding hairline, but is already talking of retiring. Just five years ago, he did his post graduation from a reputed B-school in India, and is already a vice-president in a large entertainment company. He has had a successful career till date, earning a seven-digit salary. Now, he is planning to throttle his career life even more for he doesn’t see himself working after the age of 50. For that’s the time he is planning to pursue his life-time passion of wildlife photography. This person is not the only one who aspires to retire early. But could that be a reality for this person and many other people? While the idea of a retired life could be a permanent good bye to all the work-related stress, the fear is of outliving your savings. Financial planners, therefore, advices a proper retirement plan to target a kitty that could earn enough income to sustain one’s lifestyle. Take the case of this person who is planning to retire

Stock Market - Sensex hasn’t got its valuation it deserves

Take A Leaf Out Of Historical Happenings, There Are Returns To Be Made THE long-term trend is pointing towards under valuation of the Indian equity market. The market, as measured by Price-to-earning ratio ( PE ) of the Sensex has just about pierced the long-term trend line. At the current valuation, it is quoting at a one-year forward of 16, little less than the earnings growth rate that Sensex companies have managed since 1991. If the theory of market returns chasing earnings growth is to be believed, this is just about time for accumulation for those looking at the longer haul. Since 1991, while the Sensex has grown at CAGR of 15.5%, its earnings grew at a rapid 16.6% per annum. In the past two years, the market went up partially on the back of ‘ PE expansion’ . It meant PE of the Sensex was getting priced higher than usual, since the market expected faster growth in earnings. But with the current correction, while valuations have been ‘cleansed’ of such expectations, there are pro

Mutual Funds - Invest & Hold for Long Term

“When the going gets tough, the tough get going” That really sums up what it takes for a retail investor to survive in these volatile times – nerves of steel and lots of courage. If you have poured in a substantial amount of your savings in equity shares or equity mutual funds, and are crumbling under the pressure of the falling markets, all’s not lost. It’s unanimous: Stay put for the long term Equities are for the long term. Anyone who has been investing for the long-term should not be affected by the market fluctuations. By long-term I mean 7-9 years. People should continue holding their investments. The current fall has been too sharp and it will take some time for the market to recover. The pain will be longer this time but the market will recover. Remember that a loss is not a loss till you sell. So don’t panic simply looking at the notional loss. Hold on to your investments and watch them turn to profits in the long run. Why long term pays A little bit of number crunching suppor

Income Tax: I - T Notice? Don’t panic

Under Tax Scrutiny Proceedings, Notice Has To Be Issued Within A Certain Period; It Cannot Be Issued To The Tax Payer After Expiry Of Twelve Months From The End Of The Month In Which Return Of Income Was Filed THE income tax authorities for various reasons may issue a tax enquiry notice. Sometimes you may also receive a notice despite filing your returns. Issue of notice where a tax return has not been filed: Salaried employees are required to have their returns filed by July 31, each year for the income earned by them during the previous financial year. To illustrate: For the financial year April 1, 2006 up to March 31, 2007, the tax return was due by July 31, 2007. In case no return of income has been filed but the tax officer feels that a return should have been filed, he or she may issue a notice under Section 142(1) of the Income Tax Act requiring such person to file a return of income within the specified time. Tax notice where a tax return has been filed: It is possible to get

Why are the markets down?

It is better to plan for the long term and buy potential stocks at every fall There have been major corrections in the stock markets all over the world. All major markets have corrected significantly from their peak levels. Major indices in the domestic market - Sensex and Nifty - also saw large corrections over the last couple of months and are currently trading below their 200-day moving averages. The Sensex is at around 16,000 and the Nifty is at around 4,800 levels - more than 20 percent lower than their peak levels. The mid-cap and small-cap stocks are the worst hit in this market correction and this is reflected in the performance of mid-cap and small-cap indices. There are a series of events/factors that resulted in this global meltdown of stock markets . Here are some of the more significant factors that had a negative impact on the domestic markets. US sub-prime issue The meltdown in the markets world over triggered by the US sub-prime news is one. The meltdown worsened thank

Financial Planning: Track expenses to build wealth

Most people merely earn and spend. But if you want your money to stretch far, learn to make a budget Mid year is the time when people take stock of broken resolutions. Not just those they made on New Year’s Eve but also the promise they made to their financial planner about preparing a household budget. As the finance minister takes the stage in Parliament to present the Union Budget, the financial consultant casts a sidelong glance at his client, prompting an apology and a fresh promise. The exercise is repeated the following year. The economic situation in India has come a long way from the time when the man of the house would hand his wife a fixed sum of money every month which she would spend, and save, in a diligent manner. Unlike before, both partners are earning and spending, not just by cash but cheque and credit card as well. So there are multiple points of inflow and outflow of money in a family. This makes it difficult to keep track of expenses. Where did all the money go? P

Tax Returns: Myths and facts of filing your Tax Returns

THE fiscal year has ended and many choose to make tax-filling. Despite this being a regular, annual ritual, several tax payers have some misconceptions, some of which are listed below: Misconception No. 1 Filing tax returns is a complex and cumbersome process. I need a Chartered Accountant to help me file my tax returns. Contrary to popular belief, preparing and filing tax returns is actually quite simple. If you have a digital signature you can accomplish the entire process sitting at home on your computer thanks to the e-filing facility on www.incometaxindiaefiling.gov.in. Alternatively, you can submit the returns online, print a one-page receipt, sign it and drop it off at the income tax office within fifteen days of submitting the returns. No documents are required to be submitted with the receipt. However, if you want help, there are several third party service providers who offer tax preparation and filing services for a fee as low as Rs 200. Misconception No. 2 The interest I p

Equity: The Facts & Figures of Bonus Issues

THE Reliance Power bonus issue is finally out and ex-bonus date is also out, its 28 May. The company declared a 3:5 ratio giving three extra shares for every five shares held by a shareholder. These shares were issued to only non-promoter shareholders. The record date for the issue is still to be declared by the stock exchange. What is a bonus issue? Any company, which has excess reserves that it may have build by retaining part of its profit over the years, may decide to convert some amount into its share capital by issuing bonus shares. This doesn’t change the market value of the company. It is one of the ways, in which reserves of the company get capitalized. In case of Reliance Power, the company is converting its share premium reserves into bonus. What is bonus ratio? New shares are issued in the proportion of their holdings. If the bonus ratio is 1:2, for every two shares held by the shareholder, he will get one extra share. This means, if someone was holding 100 shares of a comp

Zurich Axioms

The First Major Axiom: ON RISK Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough. The Second Major Axiom: ON GREED Always take your profit too soon The Third Major Axiom: ON HOPE When the ship starts to sink, don't pray.Jump. The Fourth Major Axiom: ON FORECASTS Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly. The Fifth Major Axiom: ON PATTERNS Chaos is not dangerous until it begins to look orderly . The Sixth Major Axiom: ON MOBILITY Avoid putting down roots. They impede motion. The Seventh Major Axiom: ON INTUITION A hunch can be trusted if it can be explained. The Eighth Major Axiom: ON RELIGION AND THE OCCULT It is unlikely that God's plan for the universe includes making you rich. The Ninth Major Axiom: ON OPTIMISM AND PESSIMISM Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
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