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Showing posts from June, 2011

Motor insurance - discount trouble

We always look for discounts when we shop and especially vie for discounts when shopping for insurance. Reason: Most of us think it is a waste if we do not make a claim, as we do not get back any money. Motor insurance is one place where it is easier to avail discounts – on account of your/driver's profile, car model, city, age and low claim history. So, we tend to negotiate more and more here. However, it would pay to be a little careful if your bargaining skills are honoured. This mostly happens when a policy is bought through a broker. If you negotiate very hard with the broker, he may lower the value of your car, hence lowering your insure declared value and give you a hefty discount. For instance, your car is valued at ` 5lakh and you are asked to pay a premium of ` 10,000 for the policy. If you bargain with the broker, he might value your car at ` 4lakh, thus bringing your premium down by ` 800-1,000. Unfortunately, you won't be able to know this till you make a

Steps to meet your financial objectives

Here are five simple steps to help you plan and meet your financial goals over a long term    Gone are the days when you could own a house only towards your sunset years, with your retirement funds and hard-earned savings. Times have changed. People's needs have increased and so has the cost of living. Unlike in the past, your pension funds alone cannot meet your retirement needs in the scenario of ballooning inflation numbers. Financial planning is important because only with properly management of finances, you can achieve your financial goals.     Financial planning is a dis ciplined process to plan your investments to meets your financial objectives. These steps in financial planning will help you meet your goals:     Step one: Define your goals. Set a timeframe.     Probably, the first exercise in financial planning, it lends direction to the entire process. A financial goal could be any desire like buying a home, vacation abroad, vehicle purchase, children's educatio

How to get Loans - For the self-employed class

The salaried class is dream category for banks when it comes to making lending decisions. After all, those in the category have a stable source of income and they seem to be the best placed to deal with equated monthly instalments. High-flyers with fat salary cheques even get loans 'pre-approved' — lending institutions are only more than happy to do so. For them, the loan application and sanction process is reasonably hassle free. For the self-employed class of borrowers, however, things are a little different. But, do note that not everybody in this category might face difficulties. In fact, some may find the going easier than their salaried counterparts. For instance, most salaried borrowers look at a loan to finance 80% of their house purchase cost. In contrast, a self-employed businessman or professional could typically ask for the LTV (loan-to value) ratio of just 55% to 60%, in which case the bank's comfort would obviously be higher. Similarly, self employed profes

Monetary Policy

Monetary policy entails measures taken by the Reserve Bank of India to influence aggregate demand in the economy. The monetary policy affects output and prices through its influence on key financial variables such as interest rates, exchange rates, asset prices, credit and monetary aggregates in the future. Monetary policy actions, therefore, are forward looking. The Reserve Bank uses various policy levers, such as repo rate, reverse repo rate, cash reserve ratio, statutory liquidity ratio and bank rate, to influence the amount of money in the market. An increase in any one of these could raise the interest rates. • How do changes in interest rates affect monetary transmission? By increasing or decreasing interest rates, thus raising or lowering the cost of holding cash for banks, RBI indicates that banks should increase or decrease rates for their customers. This change affects people's ability to borrow and lend money, thereby affecting overall demand and completing monetary tra

From July 1, Check Your EPF Account Balance Online

The department is ready to provide the facility on its website, labour minister to review the facility today For the over 47.2 million members of Employees Provident Fund Organisation (EPFO), finding out the balance in their EPF account will just be a few clicks away from next month. "The updation of accounts is currently on by all the 120 offices across the country and we are expecting that the subscribers will be able to view their account balance online from July 1 this year," a senior EPFO official told Business Standard . He said in the first phase, members would be able to view their EPF balance of the previous financial year on the website by quoting their account number. "In the next phase, accounts will be updated to show the latest balance. This might take 3-4 months after the introduction of the facility in July." The initiative is expected to address major grievance of EPF subscribers as, at present, it is difficult to ascertain the exact amount

Mutual Fund Review: RELIANCE BANKING FUND

Investment Strategy: The fund invests in banking and financial stocks across market capitalisation but focuses mainly on the large cap banking stocks. In the past three years, large cap stocks on an average account for about 75% of the portfolio, midcap stocks account for about 8% of the portfolio, small cap stocks account for about 2% of the portfolio and cash holdings account for 13% of the portfolio. Investments in public and private sector banks account for about 76% of the portfolio on an average. The public sector banks account for 51% of the portfolio while the private sector banks account for 25% of the portfolio. Non Banking Financial companies (NBFCs) also account for about 6% of the portfolio. Asset Size: The fund's AUM is around Rs. 1661 crore as at 31 March 2011. Performance: This fund is the best performing Banking fund in India and also the best performing Banking fund on our platform over a 5 year period (31 December 2005 to 31 December 2010). We have been

For estate planning, a trust proves to be more effective than a will

It is simply a process for an individual to arrange the transfer of his assets in the event of his death or incapacitation Estate planning is not just for the rich and famous. It is simply a process for an individual to arrange the transfer of his assets in the event of his death or incapacitation. In fact, as soon as you acquire some assets or have dependants, you should start planning for your succession. The goals of estate planning are to protect, preserve and manage your estate/assets during and post your life. In fact, looking at the various disputes in families in the public domain, estate planning is becoming increasingly necessary for every individual to ensure a planned succession, avoid family feuds leading to disintegration of businesses and lengthy court battles. Also if estate duty is reinstated in India today or in the near future, estate planning may turn out to be the best tool to minimise the estate duty. As this process is legally binding, it is important to do s

For New Investors in Equities

For any investor, whether firsttime or not, a crucial point to keep in mind is the formulation of an investment plan. Such a plan is meant to be based on the projection of 'needs' over a period of time, normally spanning the entire lifetime. An investment plan may help the investor arrive at a realistic investment objective and the time required to get to the objective. It also assists the investor in determining the risk-return trade-off. This enables the investor to narrow down the investable asset classes, regulating the asset allocation ratio, and drawing up the asset quality framework to adhere to. The investor must realise that equities market in the short run tend to be highly volatile, but its long-term return potential remains high. Thus, the equities asset class is considered as a viable medium for investors wishing to build a large corpus over the long term. For example, an equity investor who would have invested . 10,000 in January 1980 in the BSE Sensex would

Safety of capital with fixed income instruments

Some debt instruments you can consider in these times of rising interest rates    Investors with a low risk appetite can opt for fixed income instruments. Some provide regular income. Others offer deferred returns. Some also offer tax saving. The long term debt instruments provide a pre-stated rate of returns over a long term. However, the returns are relatively low. Also, these instruments are not very liquid. Bank deposits     Then there are bank deposits. The tenures may range from a few days to five years. The interest rates are fixed in advance and remain the same through the tenure of the deposit. The interest earned is subject to tax. The interest may be up to 10 percent. After tax, you may get returns up to seven percent. The deposits are safe. NSC, KVP     You can also look at post office saving schemes such as National Savings Certificate ( NSC ) and Kisan Vikas Patra ( KVP ). These are for 5-7 years. There is an overall limit for investments in monthly income schemes. A

Buying child cover early in life pays off well

    APRIL is the month when children after crossing one milestone move to the next. This is also the time when most parents for the first time realise that their child is growing up and may be faster than their rate of planning for the child's future. Though multiple new career opportunities have emerged, competition at the same time has also increased manifold. It is not uncommon to find a father spending sleepless nights thinking how his beloved son or daughter would cope in this competitive world. This is the time for self actualisation and realisation to plan for your child. And this is why child insurance plans have been gaining in importance. The awareness about child insurance has risen substantially over the past few years. Max New York Life Insurance conducted an extensive ethnographic consumer study, which showed that the child insurance segment had an awareness level of 99 per cent, present ownership of just 16 per cent with 12 per cent intending to purchase a plan

Invest your dormant Provident Fund money in fixed deposits or FMPs

IF YOU have an inoperative employee provident fund account, now is the right time to withdraw your corpus, as it is not earning any interest. With the interest rates on fixed deposits soaring high, it is time to withdraw your employee provident money. From April 1 all inoperative or dormant accounts have stopped earning interest. The central board of trustees of the Employee Provident Fund Organisation ( EPFO ), the key decision-making body for the fund comprising representatives from the government, employers and trade unions took decision to stop paying interest to accounts inoperative for more than 36 months or three years. Most of people do not transfer their existing provident fund account to their new workplace when they switch jobs. Earlier, these dormant accounts also earned interest so it was lucrative to let your money earn high interest rate offered by Employee Provident Fund Organisation. At present EPFO is giving return of 9.5 per cent. At present, around Rs 10,000

Debt funds and their appetite for bank CDs

  IT IS not a secret that cash-strapped banks have been resorted to heavy borrowings and debt funds have been the major buyers of their debt paper, called as certificates of deposit ( CD). This trend continues going by the latest mutual funds' deployment data released by the Securities and Exchange Board of India ( Sebi ) recently, pertaining to March this year. From the end of one financial year (FY10) to the next (FY11), debt fund schemes of domestic mutual funds have deployed a rising portion of funds available to deployed in bank CD in two out of three maturity buckets (based on tenure of debt paper). This has come at the cost of paring down of their exposure to money market instruments as well as to long-term debt to non-banking financial companies ( NBFCs ). Interestingly though, in the shorter maturity bucket of zero to six months, the FCRB analysis also revealed one another debt paper, namely commercial papers by NBFCs, getting prominence. Bank CD completely dominated

You need to Play Safe With Commercial Property As an Investment

Property consultants say sluggish volumes in the residential sector and hardening interest rates have come as a boon for retail investors in office properties. Today, in Mumbai, investors can own smaller units of space, of 500 to 1,000 sq ft, in Grade A buildings (those centrally air conditioned and with standard amenities), in contrast to a few years earlier, when only larger units were available, says Ramesh Nair, managing director, West India, Jones Lang LaSalle (JLL), an international property consultant. "If you look at Lower Parel (in south-central Mumbai), you can own office space for ` 1.5 crore, which was not possible a couple of years ago," says Nair. While residential prices are upwards of ` 20,000 a sq ft, office values are at ` 15,000 a sq ft in Lower Parel. Rental yields have also shot up from 9-10 per cent to 12-15 per cent in the past couple of months, due to increase in interest rates and borrowing costs. Rental yield is the amount of money an owner

Check rating of issue before buying NCDs

  AT TIMES, where inflation hovers above nine per cent and stock market returns are unstable, it is important for an investor to park his funds in avenues that would provide higher returns to combat the inflationary effect on investments. For those looking at fixed and safe rates of returns, fixed deposits in banks and non-convertible debenture ( NCD ) by companies are good options to consider. Shriram Transport Finance has recently announced a NCD issue in which it promises returns of 11 per cent and above. Since many more such retail NCD issue are waiting to hit the markets in the months to come, it is important to know how NCDs fare as investment avenues compared to fixed deposits. Check the ratings of the issue: Companies come out with a bond issue if they need capital but cannot or do not want to borrow it. Hence, they offer higher interest rates. An investor has to look for the rating of the issue. If an issue is rated AA or AAA and offers a 11 per cent interest it is bett

Mutual Fund Review: DSPBR Savings Manager

  DSPBR Savings Manager has a good track record. This one takes its chances and has delivered accordingly. With a leeway to go up to 25 per cent in equity and a small asset base, movements are rapid and opportunistic. Originally, the equity allocation was restricted to the top 100 stocks by way of market capitalisation. That has changed and the equity allocation now follows a multi-cap approach. What's even interesting is the fluctuation in this asset allocation. For example, in December 2009 it stood at 25 per cent but rapidly moved to 8.48 per cent within two months. Naturally, the number of stocks too will fluctuate and has been known to drop to just 3 (March 2007), when the equity allocation was 7.45 per cent before shooting up to 23 by December that year (equity allocation: 25%). "It's a very actively managed fund and we book profits from time to time to give regular dividends. When the market is volatile, the idea is to capture momentum across sectors and stocks

Lending Institutions Prefer Clients with Credit Score of 800 and Above

The launch of India's first credit score for individuals, the Cibil TransUnion Score, last week was a landmark event in the country's credit evolution. While the score has been used by loan providers for almost three years, the Credit Information Bureau (India), in an attempt to improve transparency in the use of information during loan evaluations, now provides the score to individuals as well. CIBIL TRANSUNION SCORE An individual's Cibil TransUnion Score provides loan provider with an indication of the "probability of default" of the individual based on their credit history. What this means is that the score tells a credit institution how likely is that an individual will pay back a loan (should the credit institution choose to sanction the loan) based on the individual's past pattern of credit usage and loan repayment behaviour. Given that the Cibil TransUnion Score is a loan-evaluation tool developed to help loan providers, the first logical question t

Portfolio Management Service (PMS)

Overview   Portfolio Management Services (PMS) is a specialized service that offers a range of specialized investment strategies to capitalize on the opportunities in the market.   Investing requires knowledge, time, and the right mind-set. This is besides constant monitoring. PMS gives you professional managers who strategize to deliver you consistent returns keeping your risk appetite in mind. Every portfolio manager has a well-defined investment philosophy and strategy that acts as a guiding principle.   PMS relieves investor from all the administrative hassles of investments. You receive periodic reports on your portfolio performance and other aspects of your investments. Investments are tracked continuously to maximize returns.   In a PMS setup, your relationship manager defines your financial goals and advises you the right product mix. They give personalized service and ensure that you receive periodic updates and account performance reports.   What are the tax imp

Wine promises high returns

Though it promises high returns, this elite asset class is only for the ultra rich Need a ticket to the high life? Invest in the best wines the world has to offer. For a new class of investors willing to combine passion with investment acumen, wine is more than just an indulgence for the taste buds. Wine advisory companies assess the global market for fine wine to grow at $3 billion annually. For investors looking to diversify from conventional investment classes, this can be agood alternative, say investment advisors. Last financial year, London based Liv-ex Fine Wine 100 Index, the only benchmark index for the wine investment industry, rose by over 26 per cent. The year before, it rose by 31 per cent. In comparison, Nifty, the Indian equity benchmark index, rose by just over eight per cent last financial year. INVESTMENTS As of now, there are no Indian wines, wineries or wine funds one can invest in. Investors have to look to international wine funds. One could even invest

Mutual Fund Review: MIRAE ASSET CHINA ADVANTAGE FUND

Investment Strategy: The Mirae Asset China Advantage fund is a feeder fund that invests in the Mirae Asset China Sector Leader Equity Fund. The Mirae Asset China Sector Leader Equity Fund invests in equities and equity related securities of companies domiciled in or having their area of primary activity in China and Hong Kong. As of 31 December 2010, the Mirae Asset China Advantage fund has invested 97.86% in to the Mirae Asset China Sector Leader Equity Fund. Asset Size: The fund's AUM is around Rs. 101 crore as at 31 March 2011. Performance : This fund is the best performing global fund in India and also the best performing global fund on our platform. As of 31 December 2010, this fund has outperformed its benchmark, the MSCI China Index, across all periods. Over a 1 year period, this fund has given 11.56% while its benchmark has given -1.68% and has given annualized returns of 9.73% since its inception in comparison to -0.15% of the benchmark.    --------------------
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