Invest In India » investing

Make bright, the future of your child

Malvika — Tue, 23 Feb 2010 09:03:33 +0000

In such a small life we want to achieve all those things which we have dreamed of and we impose our dreams on our children and wish that they also should achieve many more things in life. As parents it’s our first duty to secure future of our child. For securing future start planning from today because as you sow the seed now it will ripe till you child grow up. As engineering, MBA or any field they want to study they need financial help which is an important factor to complete their dream. Don’t sell you property or any valuable things for your child instead start planning about their future and enter in world of investments.

For securing a child’s future you know to deal with a good dealer or a company which can stay till future with you and with your child. Contact that company and ask about different schemes and benefits of investments for child’s future. Investments are done for some particular period of time like for 10 years, 15 years, 20 years etc. depending upon the duration you want to do investment.

These company provides you a benefit that you can invest the amount you want and according to your pocket. Depends upon the type you want to enter in, like -mutual fund, investment in stocks, real estate, saving bonds, etc. There are many companies which offer variety of ways to invest. But saving in bond is considered to be less risky although their returns are much lower than the other ones.

Here are some tips on investing for your kid’s future which will surely help you.

Start planning as soon as possible because the mature period for child investment is 10, 20 or 30 years.

Use plan 529 for saving tax also for educational saving benefit. As there is waive off on tax if money is used for educational purpose.

Rethink about every step you take in investment and know its low, medium or high risks possibilities.

Consider the amount you have in hand and talk with you investor regarding the different schemes and ask for him the best which suit you.

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Disadvantages of investing in a Mutual Fund are:

Tushar Mathur — Thu, 16 Oct 2008 05:26:00 +0000

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or “loads” to compensate brokers, financial consultants, or financial planners. Even if you don’t use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund’s manager to make the right decisions regarding the fund’s portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

©2009 Copyright by Invest In India

Quantum Index Fund (QIF)

Tushar Mathur — Mon, 02 Jun 2008 13:37:24 +0000

Not sure which stock to buy? Unsure about which mutual fund will beat the market? Don’t worry. Take the simpler and cost-effective route. Opt for an Index ETF.

(An open-ended Exchange Traded Fund)

NFO open from 9th June 2008 to 20th June 2008

» No entry loads
Investors in the QIF do not need to pay any entry loads.

» Mirror of Nifty Index (Invest in India – Invest in NIFTY)
QIF is an ETF based on the S&P CNX Nifty (Nifty) Index, a well diversified index of 50 stocks accounting for 21 sectors of the economy. The Nifty is an ideal investment for any investor looking to invest in the India growth story.

» Low investment with diversification
By investing in QIF you can own the NSE Index for as low as Rs. 520* and diversify your exposure.

» Simple way of investing and trading
The QIF trades like a stock. It can be bought and sold on the NSE like a share.

» Faster Realisations
The QIF allows for liquidation of a position faster than an open ended mutual fund.

» Low Expenses
The QIF seeks to offer investors an innovative and cost-efficient way to invest in the Nifty. Through lower costs of operations, the QIF provides investors an excellent means of asset allocation. In QIF, the investment management fees are 0.25% and the total estimated expense ratio is 0.75% per annum, one of the lowest in India.

* Each unit of the Quantum Index Fund will be approximately equal to 1/10th (one tenth) of the S&P CNX Nifty at Index value of 5165.90 (as on 30th April 2008)

For more information on the QIF and for application forms, please visit http://www.quantumamc.com/schemes/qif.html

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First Edition of the Carnival of ‘Investing In India’

Tushar Mathur — Fri, 18 Apr 2008 06:38:01 +0000

Welcome to the very First edition of carnival of Investing In India.

There were some excellent articles submitted and I had a tough time deciding which to publish.

I hope you enjoy this carnival edition as much as I did.

Investing

Frank Vertin presents Buy an S&P 500 Index Fund with Low Costs posted at NO LOAD INDEX FUND.

Richard M. Rothschild presents The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees posted at Best No Load Funds.

Richard M. Rothschild presents Bond Market Index Funds posted at Bond Market Index Funds.

Larry Russell presents Objective Personal Finance Answers Are Hard to Find posted at THE SKILLED INVESTOR Blog.

Frank Vertin presents Top 10 S and P 500 Index Funds posted at NO LOAD INDEX FUND.

Raag Vamdatt presents RaagVamdatt.com :: Financial Planning demystified posted at RaagVamdatt.com – Financial Planning demystified.

Raymond presents List Of the Best Online Discount Brokers posted at Money Blue Book.

Ludus presents The Bigger Fool Nation. posted at India Play.

hank presents Is a recession looming in the US? Should I even invest in the market during a recession??? | My Investing Blog posted at My Investing Blog, saying, “should I invest in India if the market is poor in the US?”

Other

KCLau presents Financial Security: How you feel it? posted at KCLau’s Money Tips, saying, “Article on acquiring financial security and how to increase or protect finances.”

Barb A. Ryan presents Your Family Financial Planning posted at Pasadena Financial Planner.

Sally Thompson presents The Freeloader?s Toolbelt: 50 Tools to Help You Get Anything Free Online posted at Free Geekery.

Sagar presents 10 Surprising Economic Implications of a Barack Obama Presidency posted at Currency Trading.net.

Heather Johnson presents 10 Practical Tips for a Forex Trader | High Yield Weekly Digest posted at High Yield Weekly Digest.

Praveen presents My Simple Trading System: An Indian Product Company posted at My Simple Trading System.

KCLau presents Relative Value of Money posted at KCLau’s Money Tips, saying, “An article on how to earn and spend money as well as the relative value of money.”

Sagar presents Are Bernanke?s Hands Tied? 8 Reasons the US May Be in Worse Trouble Than You Think posted at Currency Trading.net.

Jose DeJesus MD presents Business Loans – How to Get Funding for Your Business posted at Physician Entrepreneur.

Barb A. Ryan presents 1 – Your Personal Financial Planning Skills posted at Pasadena Financial Planner.

Heather Johnson presents 15 Free Things to do When You?re Trying to Save Money posted at Money Under 30.

Raymond presents Making Money With eBay posted at Money Blue Book.

That concludes this edition. Submit your blog article to the next edition of carnival of investing in india using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: carnival of investing in india, blog carnival.

©2009 Copyright by Invest In India

Stable Monthly Income from Cash

Tushar Mathur — Fri, 04 Apr 2008 16:31:16 +0000

Yesterday, my parents, who are visiting us from India asked me, that since I write about Personal Finance and Investments for USA and India, what would be a safe investment vehicle to earn a monthly income from their cash reserves. This question caught me a little by surprise, because, since my Investment goal is growth for the long term, I never really thought about this.

So I started doing some research and concluded that for a stable monthly income that is insured and not very risky, the Post Office Monthly Income scheme would be the best. If there are other safe investment vehicles, please let me know in the comments section.

Below is some information about it.

The Post Office Monthly Income Scheme (MIS) provides for monthly payment of interest income to investors. It is meant for investors who want to invest a lump-sum amount initially and earn interest on a monthly basis for their livelihood. The scheme is, therefore, a boon for retired persons.

The post-office MIS gives a return of 9.5 per cent plus a bonus of 10 per cent on maturity. However, this 10 per cent bonus is not available in case of premature withdrawals.

INVESTMENT OBJECTIVES

Is MIS suitable for an increase in my investment?

No, the MIS is not suitable for an increase in your investment. It is meant to provide a source of regular income on a long-term basis.

Is MIS suitable for regular income?

Yes, the Monthly Income Scheme, as its name suggests, is best suited to provide regular income. Interest is payable on a monthly basis at the pre-specified rate.

To what extent does the MIS protect me against inflation?

With a fixed rate of return, the MIS does not provide adequate safeguards against high inflation rates.

Can I borrow against MIS?

Yes. Depends if the banker accepts it as a security.

RISK CONSIDERATIONS

How assured can I be of getting my full investment back?

Like all post-office schemes, the MIS has the backing of the Government of India, and is, therefore, a safe investment. You can be assured of getting your full investment back.

How assured is my income?

Your monthly interest income is assured at the specified rate of interest. Since this scheme has the backing of the Government of India, it is a safe investment channel.

Are there any risks unique to MIS?

No, there are no risks associated with your investment in MIS. This is a risk-free investment that is backed by the Government of India.

This is a monthly income plan that is utilised by those in need of a regular source of income, and is most suited to retired individuals. So, economic factors such as interest rates do not affect investment decisions as far as the MIS in concerned.

Is the MIS rated for credit quality?

No, the MIS does not require any commercial ratings as it has the backing of the Government of India. It is considered to be free of risk.

BUYING, SELLING, AND HOLDING

How do I buy a Post Office Monthly Income Scheme?

You can buy a post office MIS at any post-office in India.

What is the minimum investment and range of investment in MIS?

The minimum investment in a Post-Office MIS is Rs 6,000 for both single and joint accounts. The maximum investment for a single account is Rs 3 lakh and Rs 6 lakh for a joint account.

What is the duration of MIS?

The duration of the MIS is six years.

Can MIS be sold in the secondary market?

No, you cannot trade your MIS in the secondary market.

What is the liquidity of MIS?

Investors can withdraw money before three years, but at a discount of 5 per cent. No such deduction will be made if an account is closed after three years. Premature closure of the account is permitted any time after the expiry of a period of one year of opening the account. Deduction of an amount equal to 5 per cent of the deposit is to be made when the account is prematurely closed.

How is the market value of MIS determined?

As mentioned earlier, post-office MIS cannot be traded in the secondary market. Therefore, the question of market value of MIS does not arise.

What is the mode of holding of MIS?

Post office MIS is held physically in the form of a certificate issued by the post office. In addition, the investor is provided with a passbook to record his transactions against his MIS.

TAX IMPLICATIONS

The interest income accruing from a post-office MIS is exempt from tax under Section 80L of the Income Tax Act, 1961. Moreover, no TDS is deductible on the interest income. The balance is exempt from Wealth Tax.

Feel free to suggest any other investments and I’ll take a look at them and write about them.

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Life Insurance in India

Tushar Mathur — Mon, 31 Mar 2008 06:10:36 +0000

Is the insurance industry set to spread its wings in India? How much can it grow? The segment is still very small and can expand prodigiously given the right conditions, say industry watchers.

When the insurance in India was reborn in 1999, modest projections were put forth for the fledgling private segment of the industry. Insiders suggested that in about a decade, the private firms should be able to capture between 10 -15% of the insurance market.

In reality, the industry came off the blocks fast, with private players touching 9% market share in the second year of operation itself. The changeover from a monopolistic structure to a competitive segment has been smooth and orderly. Though market leaders are still the huge public sector units, private carriers are becoming significant.

Today, over sixteen companies offer you life cover and more are waiting in the wings. You have a bewildering array of policies and plans to choose from. You face a barrage of aggressive advertising from the carriers. Ironically, in what can be seen as competitiveness, the public sector Life Insurance Corporation of India, the largest carrier in the country was pulled up by the Insurance Regulatory and Development Authority (IRDA) earlier this year for too much aggression in its advertising!

The segment is poised for tremendous growth, simply because there are still so many people to be insured. A few more reforms such as relaxation of the cap on additional cover, incentives for agents, more schemes for children and the elderly, and lifting of taxes on rural micro-insurance will accelerate growth. An increase in foreign participation to 49% or more will definitely energize the sector.

Life insurance in India is growing at about 30% annually and is estimated to be worth US$ 8 billion today. It is expected to cross the US$ 40 billion mark by 2010. Investor education and wider reach will take the life insurance industry higher than ever before.

Where is the insurance industry in India headed? Is plain vanilla life insurance losing out to ULIPs in the market? Is that a good trend? What about the common man who has little money to invest? Should he put some in life insurance?

(Sources: IRDA annual report 05-06, India Knowledge@ Wharton)

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HDFC Infrastructure Fund

Tushar Mathur — Wed, 20 Feb 2008 06:15:17 +0000

HDFC Mutual Fund has launched a new scheme, designed to cater to your long-term equity investment requirement. HDFC Infrastructure Fund*, a close-ended Equity Scheme with automatic conversion into an open-ended scheme upon maturity after 3 years. The investment objective of the scheme is to seek long-term capital appreciation by investing predominantly in equity and equity related securities of companies engaged in or expected to benefit from the growth and development of infrastructure. For the sake of diversification, I feel this could be an important fund in your long term portfolio.

New Fund Offer Price : Rs. 10/- per unit.

The Scheme offers investors two Options :

Growth Option

Dividend Option (with payout and re-investment facility) Dividend re-investment facility will be available only after the Scheme is converted into an open-ended scheme upon maturity)

Investment Objective

To seek long-term capital appreciation by investing predominantly in equity and equity related securities of companies engaged in or expected to benefit from the growth and development of infrastructure.

Benchmark Index

The Benchmark Index for the Scheme would be S&P CNX 500. The Trustee reserve the right to change the benchmark for evaluation of performance of the Scheme from time to time in conformity with the investment objectives and appropriateness of the benchmark subject to SEBI Regulations, and other prevailing guidelines, if any.

Investment Strategy

he Scheme shall invest predominantly in equity and equity related securities of companies engaged in or expected to benefit from the growth and development of infrastructure. The Scheme shall invest in the following indicative list of sectors/industries:

Airports

Banking and Financial Services

Cement and Cement Products

Construction and related industries

Electrical and Electronic Components

Energy

Engineering

Metals/Mining/Minerals

Housing and related industries

Industrial Capital Goods

Industrial Products

Oil & Gas and allied industries

Petroleum and related industries

Ports

Power and Power Equipment

Telecom

Urban Infrastructure including Transportation, Water, etc.

For more information on this fund you can download the offer document here at: HDFC Infrastructure Fund

©2009 Copyright by Invest In India

How do you pick the right Mutual Fund ?

Tushar Mathur — Sat, 02 Feb 2008 06:00:31 +0000

Are you an NRI who has already invested or is considering investments in mutual funds? Do you depend on investment adviser for investment decisions? It’s imperative that you have knowledge of some important parameters for evaluating and selecting the best Mutual Funds suitable to your objectives. So what are the key elements that you should look for? A mutual fund fact sheet can help you find the answers to your queries.

Mutual fund fact sheets are monthly reports published by Asset Management Companies (AMCs). They provide relevant information about a fund and serve as guides for investors, both existing and new. Mutual funds are of 3 types – equity, debt, and balanced. Equity funds are high risk high returns funds with potential for fast growth. The five key elements of a Fact sheet are listed below.

Stock allocation

A good diversified fund should have less than 40% of Net Assets spread evenly across the top 10 stocks in its portfolio and no exceptional concentration in any of these. This helps the fund navigate safely during volatile periods. Stock picks must be consistent with no frequent churning of stocks by the fund manager over the past few months.

Sectoral allocation

Your fund must be well diversified across sectors apart from stocks. Sectoral concentration can be harmful unless the fund has a top-down investment approach. You must combine similar sectors, such as Auto and Ancillaries, when considering sectoral allocation. Different funds may categorize same companies across different sectors due to lack of standardization. Look for this anomaly when analyzing sectors.

Asset allocation

Don’t overlook asset allocation. This tells you about the spread of assets across stocks, current assets, and cash. Cash reserves of an equity fund can tell a lot. A high cash level may indicate a fund manager’s discomfort in staying fully invested in the market. Consistently high cash levels over a few months may probably indicate lack of good stock-picking opportunities. High cash reserves are a good sign in a crashing market, minimizing loss, but the fund must be fully invested in a rising market, maximizing returns.

Turnover ratio

This shows you the stock churning in a funds portfolio. It’s measured by considering the number of stocks bought and sold over a certain assessment period. A higher or lower Portfolio Turnover Ratio doesn’t matter as long as it‘s aligned with the funds investment philosophy. A high turnover ratio can be good for equity funds, though high trading costs bite into the returns. But Value funds must have low churning, as investments are usually long term.

Expense ratio and loads

Your mutual fund investment is expensive if its Expense Ratio is high. This ratio has a regulatory ceiling of 2.50% for equity and debt funds. You must check the entry and exit loads charged by the fund at the time of entry into and exit from the fund, respectively. NAVs are declared by funds after factoring in the expenses and loads.

Remember, a fund with an excellent track record but high expenses is a better investment than a fund with lower expenses but an average track record.

Besides these, you must check the fund’s objective, fund manager and investment team profile, fund performance over the past 3 years and performance vis-à-vis the objective, to ensure they’re aligned with your goals, before making decisions.

©2009 Copyright by Invest In India

Tax exemptions available for an NRI

Tushar Mathur — Mon, 28 Jan 2008 06:54:12 +0000

Incomes of NRIs are exempt from income tax interest on various specified securities or bonds. NRIs enjoy tax exemptions from property investment and other assets including dividend income, interest income, and even gifts! Read on and find out what tax exemptions you could enjoy as an NRI.

Did you know that your NRI status can help you with exemption in income earned or received by you outside the country? Apart from tax deductions (including a standard deduction of 30% of net annual value and interest on borrowed capital), your NRI status confers tax exemptions from other assets and investments such as:

* All the dividends that you receive from domestic companies

* Income arising on any of your deposits at banks – this income will be treated as interest income which would be chargeable under ‘Income’ from other sources.

* Money exceeding Rs. 25,000 (US$ 625), even if received as a gift, is liable to be taxed to the recipient, except in cases of gifts received on occasions like weddings or inheritances

Will you be taxed on your remittances?
Since income earned outside India falls outside the purview of the IT Act, you cannot be taxed on remittances to India. So you can send money to your own accounts in India without any fear of attracting tax! And what’s great is that you can utilize the money for any purpose you like.
When you are remitting money to India, you will not be taxed unless the transfer is compensation received against services in the country which then results in the amount being chargeable to tax for the recipient.

As an NRI, your tax exemptions include:

* Income from interest on National Saving Certificate VI/VII issue and notified bonds purchased by you in foreign exchange

* Income from interest on your funds in NRE/FCNR accounts

* Interest on notified securities or bonds and even premium on redemption of such securities

* Interest paid by scheduled banks on RBI approved foreign currency deposits, to an NRE or NRO

NRIs enjoy special exemptions with respect to investment income! NRI tax concessions have been accorded primarily to attract NRI investment in the country – Do you agree? Were you aware of these exemptions? Do you know of any others?

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