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Abhaya,
You are right about LIC Market Plus being a Unit Linked Plan. Like other ULIPs, this plan also has some risks associated with it. Specifically, the type of risk will depend upon which fund you choose to invest in, i.e., is it a debt or an equity fund. If you choose an equity fund, please remember that it is best if you continue to remain invested in the equity funds for at least 3-5 years, because equities are a long-term investment.
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Market plus is a unit linked deferred pension plan from life insurance corporation available with or without risk cover. You can choose from single premium or regular premium. Being a unit linked plan your premium will be applied to purchase units as per the fund type you choose from bond fund, secured fund, balanced fund, and growth fund.
You may choose to invest in any of these funds depending on your risk profile. the bond fund invests 100% in the debt market, while secured fund invests upto 85% in the debt market and a maximum of 35% in
equities.
The balanced fund invests upto 50% in debt and upto 50% in equities. Similarly the growth fund invests upto 40% in debt and upto 80% in equities. You can also enjoy tax benefits under section 80C of the income tax act.
The first year allocation charges are 16.50% and 2.50% from the second year onwards. apart from this there are other charges like policy maintenance charges and fund management charges which are also levied.
Benefit on vesting - on your surviving to the date of vesting, the fund value of the units held in your unit account will compulsorily be utilized to provide a pension based on the then prevailing immediate annuity rates under the relevant annuity option. you may opt to commute up to one-third of the benefit to be paid as a lump sum. In other words you can withdraw upto one third of the total corpus tax-free. And with the balance amount you can choose to buy an annuity from LIC or any other insurer. But note that annuities are taxable.
Please note that withdrawal after 3 years will attract taxes as it would be a premature withdrawal as the minimum tenure for a ULIP as specified by the IRDA is 5 years. Also the return shown by LIC market plus in the growth option over last one year period has been just 17% compounding your money at the same rate will yield you Rs. 16,000 and post deduction of charges it would be Rs.14,000
For over the years equities are known to outperform other investment avenues. But equity investment needs to be long term for you take advantage of the full benefit. Please invest in market plus if you are willing to hold it till the vesting period - this is not the instrument for short term investment.
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You can use the health insurance comparator at this website to compare the features of different health and mediclaim policies.
Thanks.
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Mayur,
Given your specifications for the apartment size and your budget, its best if you go for an original booking. In the original booking market, you will be required to pay your installments by cheque so the question of black does ot arise.
You have not specified which city in India you want to buy this property in. In the metros, you should be able to get a 3 bedroom in your price range. In the smaller cities, you might even be able to get it for a lower price.
In case you need a housing loan as well, these are easy to get as long as you have all the papers that the financing company or bank will need. You can get details on this from FAQs about Home loans in India article on this website . Please ensure that the property that you are interested in buying has been approved by the financing company or bank.
Thanks.
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Hi Kanish,
If you are thinking of putting a financial plan in place, you must think long-term, and that means at least 5-10 years. Specifically, you must think of the following items:
- What is your risk profile, can you take more or less risk. This will depend upon your existing financial situation and the number of family members that you need to support
- What are your financial goals. Sample goals can be like paying for your child's wedding or education, purchasing a car or a house, paying for a vacation, or paying off an existing loan. Please identify your own goals.
- Next you need to understand over what time frame do you want to achieve these financial goals. If your kid is just newly born, then maybe your goals towards the child's college education is at least 15 years away. On the other hand if your child is already 25 years of age, maybe your goal to save up for the child's wedding is just a 1-2 years away.
- You also need to know about how quickly you need money and at what point in time. For instance, if you need to buy a house within the next 12 months, then it is not worth it putting your money into a fixed deposit that will mature in 5 years because you need the money within 12 months.
More details on the above are available in the You and Your Financial Plan article.
Hope you find it of use. All the best towards achieving your financial goals.
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We are in the middle of the season when many of us will make tax savings related investments. So, I thought I would update my answer that I had given earlier this year.
Our website has a section on how to save taxes. Please visit the following links, and I hope that you find this content of interest.
This link has suggestions on how you can save up to Rs. 1 lakh through tax planning.
This link has lots of detail on the various section 80C options.
Please do leave comments on these articles and suggestions on what else you would like iTrust to write about.
Thanks.
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Warren buffett way – robert hagstrom
Common stocks and uncommon profits – phil fisher
Value investing – bruce greenwald
There are numerous other sources to learn about the market. You can read the business section of your newspaper
Or, you can subscribe to a business newspaper like Economic Times, Business Standard or Hindu Business Line. all of the have commentary on the stock market
You can also watch tv programmes like on zee business
Finally, the internet is a good source as well. you can find lots of sites that will tell you about the workings of the stock market. Just type your search into your search engine and begin your education
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Systematic investment plan. it is a way of investing in the mutual funds market.
Allows you to invest small amounts of money at regular intervals. Helps you avoid market timing and you can enter the market with a small amount of capital rather than a lump sum. Many funds have minimum investment amounts of rs 500/month, but reliance and icici have some lower amounts as well.
You can also set up an electronic transfer directly from your bank through the ecs transfer facility, so you don’t have to write a cheque every month.
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A demat account allows you to buy, sell and transact shares without lots of paperwork or delays in a safe and secure way. There are more than 200 depositary participants that offer demat accounts.
Under the depository system, there is no limit to the number of accounts that you can open. There is also no limit to the number of depositary participants that you can open your accounts with. you can even open a multiple-sign demat account, which can be operated by multiple holders like a joint savings account.
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PPF is a long term investment. It matures in 15 years. However, from start of the 7th year onwards you can withdraw money, once a year.
You have now had your account for 11 years, since 1996. Therefore, you should be able to withdraw money without a problem.
The amount you can withdraw is the lower of:
50% of the ppf balance that existed 4 years ago from the current date of withdrawal
Or, 50% of the amount at the end of the proceeding year
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First of all, insurance is not purely an investment option. It is a protection option. The investment comes attached to it, if you want. Otherwise, it only protects you against risk.
If you choose only the protection option, then you will not get any returns.
However, if you choose an investment option along with it, then its no longer just an insurance. Such a plan is called a ulip. This plan gives you returns that are linked to the market. Irda suggests that the return expectation should not be more than 6% for bond funds and 10% for equity funds
Insurance will be more expensive for you if you are looking for ulip plans. It will be much cheaper for you to buy a mutual fund and term insurance
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You have not shared whether this is a debt or equity fund. if one assumes a long-term return of 12%, then the amount will grow close to rs 7l, if one assumes 15% then the amount will grow close to rs 8.4l
In the long term, you should not expect more than a 12%-15% rate of return on equity mutual funds, even though in the past 7-8 years their returns have been higher.
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Any time you exit from investments and make a profit on it, then you will have to think about capital gains taxes.
If you are investing in equities and you hold these equities for longer than 1 year, the long term capital gains tax on equities is zero. So you will not have to pay taxes on the gains
However, if you hold the investments for less than one year, then you will have to pay short-term capital gains at 10% of the profits that you make
Dividends that you might receive from your equity holdings aren’t profits, but they are tax free in the hands of the recipient.
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If you invest in a ELSS via a SIP, you can take advantage of up to Rs 1 Lakh of tax exempt investing from your income tax.
Additionally, if you invest into an equity mutual fund via a SIP and hold a fund for more than 12 months, you will not have to pay capital gains tax. Of course, this is equally true if you invest in a lump sum.
Other than this, there is no special tax treatment for sips versus lump sum investing.
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Interest and finance charges are levied by the credit card company because of late payments and penalties. These are not tax deductible.
These are very similar to interest charges that you might pay for a personal loan or car loan. You will not get any tax benefit or deduction
Our advice is that credit card debt is very expensive. Its never a good idea to borrow money that costs you so much, especially for items that depreciate in value or that you consume (like food or drinks).
Download free income tax calculator
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Closed ended mutual fund is a type of mutual fund. It can be bought in the initial offer period or through the stock exchange only when another investor wants to sell these units. The fund house is not allowed to issue more units. In an open ended fund, the fund house can issue additional units and these units can be freely bought and sold, without any restrictions of lock in period.
There is a lock in period as well specified by the fund, if you decide to sell within that period there are exit charges levied. Post completion of the lock in period, the fund is usually converted into an open ended scheme e.g HDFC Midcap Opportunities
In the past one year, many of the funds have been closed ended funds. One advantage of such funds is that because your money is locked in for 3 years, you do not churn your portfolio and therefore an benefit from long term investing, as well as a better tax situation as long terms capital gains on equities is zero.
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Insurance policies are primarily for protection and then for investment. ULIP is a good option if you are under-insured and need insurance. You should not just blindly invest in an insurance policy unless you need risk cover. In fact, if you invest via a ULIP, in the initial years it will be a very expensive option as the commissions and charges that you will pay will be quite a lot. An alternative to this is if you buy a mutual fund and term insurance, but otherwise, do not think of ULIP as a investment option unless you are committed to it for at least 10-15 years.
Mutual funds are easy ways to invest in the capital markets. You can choose the type of risk you want to take: debt funds are generally lower risk, equity funds are generally higher risk but also much higher returns. These are long term instruments, but much cheaper as an investment vehicle compared to ULIPs. You can freely trade in and out of mutual funds without any restriction unless its a closed ended fund.
National savings certificates is a fixed income instrument. This means that you will get a fixed interest rate from them. For this reason, they are not good protectors against inflation. Also, there is no capital appreciation you get from an NSC. However, in terms of risk, they are the least risky. Your return is almost guaranteed, but generally speaking it will be not be as high as the equity market return. It will stay around 8% or so. Finally, you will also not have access to your money till maturity. If want to withdraw your money before maturity you will attract a penalty.
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There are many factors that affect the stock market. They can be classified into two types of risk: Systemic risks and company specific risks.
The type of risk that you are referring to is a systemic risk. Systemic risks are risks that affect the whole system and not just 1-2 different sectors or companies.
These could be like border troubles with a neighbour, some macroeconomic event like high inflation or oil prices going up, or general elections.
It is very hard to quantify what the measurable impact that emergency in Pakistan has had on the stock market in India. If the situation gets very bad and there is a risk of aggression or some noise from their side that is provocative, then the risk premium will go up in India and it will affect the market.
For instance, when the Kargil even the happened, the risk premium associated with India went up.
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There will be no gift tax if you give an amount to a direct member of your family.
There is no income tax benefit that you will get.
However, if you live in your father’s property and want to pay rent to your father, then under certain conditions you might be able to get HRA benefits. But, you father will then have to pay tax on the rental income he gets from you.
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You will have to see whether the rate you get is fixed or floating. Assuming it is fixed, your EMI will come to approximately 3,200.
Check with your lender what the fees involved are as well. sometimes the EMI might be a figure you can afford but if the fees and penalties are high, then you can end up paying out more money than just the EMI
Finally, see what purpose the loan is for. An education loan or personal loan will have a very different rate of interest compared to a home loan in India.
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There is no correct answer for this question. It is difficult to recommend one type of loan over another. It all depends upon what the prevailing market interest rates are, and whether at that time the lender is willing to give you a fixed rate home loan or a floating rate home loan.
Fixed rate is typically higher than floating, but they offer you the stability that your rate is not going to change in the near term. However, even fixed loans are fixed for only a certain period, then they reset to floating rates based on the then prevailing market rate.
It is very hard to predict interest rates, no experts can do this either. so, if you have a feeling for where rates will go, choose one accordingly.
Keep in mind the home loan tenure. For short term tenure a fixed rate might be good.
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Auto loan is not a category under which you can benefit from tax saving.
Therefore, you cannot get any tax benefits on this. However, if you are working in a company, then see if you can get a company lease on your car. You might be able to structure your CTC in such a manner that you can have a company lease.
They will give it you as a reimbursement and so you do not have to pay the 33% taxes on it. Your company will pay fringe benefit tax on it, and if the company passes on the tax to you, then you will pay FBT around 6%-7%
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If you are an individual, you do not need to get an audit
However, if you are a company then you will need an audit because you will have to file this with the registrar of companies.
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ETF or exchange traded fund is a security that listed on the stock exchange and available for trading. Its a good way to participate in the gold and bullion market.
However, you do not get the physical delivery of the metal. This is actually one advantage of investing in an ETF. Otherwise, there is a problem of storage of the material, as well as liquidity and resale issues.
ETF is good if you want exposure to gold but not the problems associated with keeping possession. Selling the ETF shares is as easy as selling shares or mutual funds. So managing your investment is easy. There are no risks of whether the metal is genuine or not, which could be a problem if you are dealing with a jeweler
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It is very easy to get a home loan in India. There are numerous banks and housing finance companies that will give you a loan, as long as you can pay the loan back. It does not make a difference that you are in a transferable job.
First, you need to identify the house or flat that you want to buy. Even if you have not identified one yet, you can apply to the bank for your loan approval. This can help you save time later on so that you can quickly get the loan once you have found a property that you like.
You also need to identify who to take the home loan from. there are many choices. you can go to your own bank, or to another bank or finance company. There are a few criteria that you must look at, you can get these at most of the websites of the banks:
What are the conditions that they will apply?
What are the loan processing fees?
How quickly will the money be disbursed?
What will the EMI be?
What are the pre-payment conditions in case you pre-pay?
Do they approve the builder where you are planning to buy the house or property?
Finally, you must also look at the interest rate. Often consumers go with the cheapest rate, however, this might not be the best because of all the hidden charges and costs that the loan provider might charge you later on
You can avail of the tax benefits that you will get once you take a home loan anywhere in India.
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There are a few ways in which you can invest in gold. You must understand for yourself what purpose are you trying to achieve – is it for wedding/gift purposes or is it for protection or just another investment.
You can go to your jeweler and buy some gold from the shop, but make sure that it is certified as high purity with the stamp.
Many banks now sell gold coins.
You can buy some of the recently launched ETFs or exchange traded funds that are focused only on gold. These instruments are listed on the exchange and allow investors to participate in the gold investment market, without taking the physical delivery of the metal.
Please keep in mind that owning the metal in itself does not earn any interest income or dividends. The best you can get is capital appreciation.
Two things you should be aware of are:
Ability to sell back. An ETF will be best because you will get the market price, and a jeweler will generally be the worst because they will not be very transparent.
Amount of money needed to invest. Gold coins come only in standard denomination. You can buy an ETF usually in multiples of 1 gram.
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Yes, you can get the 80c benefit on both home loans in India. However, the total amount that you will be entitled to will be a total of rs 1 Lakh across both the homes.
The interest paid on a home loan is not directly deductible from your salary income for either of your flat loans.
In fact income from house property will be calculated for each flat you own. If either of theses calculations shows a loss, this loss can be set off against your income from other heads.
On one flat, which is your self occupied house, your income from house property calculation will result in a loss which is equal to your interest payment on your loan or Rs.1,50,000, whichever is lower, and that can be set off against your income from other heads.
For the other flat your income from house property will be calculated as follows:
Actual or deemed rental income net of municipal taxes
Less:
Standard deduction @30% of rental income
Interest payable on home loan
If this calculation results in a loss, the loss can be set off against your income from other heads. If this results in a gain it will be added to your income from other heads and would be taxable!
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It is very easy to get a home loan in India. There are numerous banks and housing finance companies that will give you a loan, as long as you can pay the loan back. It does not make a difference that you are in a transferable job.
First, you need to identify the house or flat that you want to buy. Even if you have not identified one yet, you can apply to the bank for your loan approval. This can help you save time later on so that you can quickly get the home loan once you have found a property that you like.
You also need to identify who to take the home loan from. There are many choices. You can go to your own bank, or to another bank or finance company.
There are a few criteria that you must look at, you can get these at most of the websites of the banks:
What are the conditions that they will apply?
What are the loan processing fees?
How quickly will the money be disbursed?
What will the home loan EMI be?
What are the pre-payment conditions in case you pre-pay?
Do they approve the builder where you are planning to buy the house or property?
Finally, you must also look at the interest rate. Often consumers go with the cheapest home loan rate, however, this might not be the best because of all the hidden charges and costs that the loan provider might charge you later on.
You can avail of the tax benefits that you will get once you take a home loan anywhere in india.
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STP is not a fund but a method of investing. STP stands for systematic transfer plan, through a STP you can transfer smaller amount of money into a fund of your choice from an existing pool of money that you have already invested with the fund.
It is similar to a systematic investment plan (sip) in a way that you would get the benefit of rupee cost averaging and the transfer is made monthly.
?A STP can be utilized when you want to invest a large amount of money for the long term and do not want to take the risk of timing the market.
You can invest the money in a liquid or a debt fund and then start a STP to transfer the money to a fund of your choice over 12 months or any period that you are comfortable with.
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You can claim income tax exemption only if you are the co-owner of the house in question. If you took the entire home loan in your name and are repaying the loan, you can claim the entire tax benefit for yourself (provided you are co-owner and your wife is a co-applicant).
If you are not the co-owner you could explore the option of becoming a co-owner by executing a gift deed or sale deed with your wife. only after you become a co-owner, will you be able to claim the tax benefits. However, you must keep in mind that both these transactions will require you to pay stamp duty so please carefully weight the cost of stamp duty paid versus the tax benefits received.
Click here to download free income tax calculator in India
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First of all you are liable to pay long term capital gains tax @ 20% after indexation on the gain on sale of the property. however, as per income tax act section 54 EC you can be eligible to save on capital gains tax if you invest the entire gain amount in specified capital gain bonds like the ones issued by REC or NHAI within a period of 6 months from the date when the property was sold.
This is up to a limit of Rs.50 Lakhs. However, investors are required to stay invested in the bonds for a period of 36 months from the date of investment and the rate of return is 5.25% per year.
However I would recommend that since the returns are very low on the capital gains bonds, you could invest the money in other instruments, which would meet your investment objectives as well as keep you better off from an overall returns perspective. I would suggest the following investment plan:
Mothers regular medical treatment expenses - Rs.2 lakhs in a post office monthly income scheme – 8% assured annual interest payable monthly.
Son’s higher education – Rs. 5 lakhs in a balanced fund like the HDFC Prudence Fund. You could expect annualized returns of around 10% between now and when your son is ready for college 12-13 years from now.
Retirement goal - Rs. 3 lakhs in an equity growth fund like Reliance Growth or DSPML Tiger since you will not need the money until after 19-20 years. You can expect annualized returns of around 12% over this period.
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Open ended mutual funds are the mutual funds in which the investors can buy units from the fund house at any given time. There is no lock in period and they can redeem their units anytime as well. e.g HDFC Growth Fund
Closed ended mutual funds can be bought in the initial offer period or through the stock exchange only when another investor wants to sell these units. The fund house is not allowed to issue more units. There is a lock in period as well specified by the fund, if you decide to sell within that period there are exit charges levied. Post completion of the lock in period, the fund is usually converted into an open ended scheme e.g HDFC Midcap Opportunities.
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To achieve a savings target of Rs. 20 lakhs, you will need to save at least Rs. 2000 per month. You can invest it through a systematic investment plan into an aggressive mutual fund as you have a long term investment horizon.
Some of the good funds in this category are Reliance Growth Fund and ICICI Pru Dynamic Fund.
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Birla Sunlife produces both mutual funds and life insurance. Both sectors are highly regulated.
Mutual funds are regulated by AMFI which is related to SEBI, the securities regulator. Insurance is regulated by IRDA.
Both these government regulators constantly monitor the health and performance of companies in these two sectors. So, I would not be worried about buying products from Birla Sunlife.
No mutual fund or insurance company can exist until the regulator has conducted enough analysis and audits of making sure that the right systems and procedures are in force to protect the consumers and customers
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Mutual funds are instruments that you can use to invest in the capital markets. Many people pool in money into a fund. These combined funds are then used to buy securities. When a new mutual fund is launched, its called an NFO, or new fund offer.
Mutual funds can be equity, debt or liquid, or a mixture of the three, depending upon the type of securities that they invest in. Usually, when you think of NFOs, most people think about equity mutual funds.
In our opinion, just blindly investing in an NFO is not a good choice. In fact, often it can be a bad choice. Ideally, you want to see some operating history for the fund whereby you can study the past performance under different market conditions, risk management, administration and management of the fund.
Don’t fall for the advertising of investing in an NFO. check if a similar fund already exists or not.
ICICI Asia Growth Fund was just launched recently, but there is not enough operating history to say whether in the long run this is a good fund or not
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HRA is available if you have this allowance as part of your salary, you are paying rent, and the rent is more than 10% of your salary
You can claim HRA as long as you pay rent to your parents and they show it as taxable income in their income tax return. You end up paying lesser tax if your parents are in a lower income bracket than you.
HRA exemptions are only available on submission of rent receipts or rental agreement. But, if your rent is less than Rs. 3,000, then receipts are not mandatory.
While HRA is available for an agreement with parents, you cannot claim HRA benefits for rent paid to your spouse. The idea is that you relationship with the spouse cannot be commercial in nature
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Yes, you can claim income tax exemption if you are a co applicant in a housing loan as long as you are also the owner or co owner of the property in question.
If you are only person repaying the home loan in India, you can claim the entire tax benefit for yourself (provided you are an owner or co-owner). you should enter into a simple agreement with the other borrowers stating that you will be repaying the entire loan.
If you are paying part of the home loan emi, you will get tax benefits in the proportion to your share in the loan.
Click here to download free income tax calculator in India
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First question to you is why you want to use LIC to invest. if you are adequately insured, you might find it cheaper to invest through mutual funds in India, where you can manage to diversify your risk a little more.
LIC is a good choice for life insurance, but if you want a lumpsum and not insurance, Then insurance is not the best option.
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Max New York Life is a joint venture between Max and a US Insurance company New York Life. New York Life has been in operation for over a 100 years and is very well reputed. Max is a large industrial house in India. they were investors in Hutch Mobile and are the promoters of Max hospitals. They have a long history of success in India
Max New York Life makes life insurance products that are regulated by the IRDA just like all the other insurance companies. So, they are safe in that regard.
You need to see what is the actual product that you are buying from them and whether that is well suited for you needs or not.
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To achieve your goal of reaching 35 Lakh in year 2025 you would need to invest Rs. 16,000 monthly for the next 18 years. Aggressive growth funds would provide you a 12% return over the long term and that is the same return used to calculate this number. Some of the funds that you might consider investing in are Reliance Growth and SBI Magnum Global.
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What you are saying is that you want a 100% return on your Rs. 25,000 of investment
There is no instrument in the world where you can get a 100% recent within the year, unless you speculate and trade very aggressively and take a lot of risk.
Even during the past 2-3 years, during which the stock market has been performing very well, the market has not gone up more than around 50% on average per year.
Finally, if you invest in only one instrument, you will take on a lot of risk due to lack of diversification. My suggestion to you would be to reduce your expectations of return to a realistic level. If you do not need this money for anything, then invest for the long run in some high growth equity mutual fund.
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There is absolutely no way to tell which mutual funds in India will do the best in the coming year. Even an astrologer cannot tell you that
Fund performance depends upon multiple factors such as risk taken by the fund, market conditions, stock picking and the abilities of the fund manager. Combined all these can influence how well a fund might perform
While past performance is no guarantee of future returns, past performance can inform us about which funds have done well in conditions that were common to all funds out there.
My suggestion to you would be not to look for best performing funds, but rather to look for funds that are most suitable to you based on your needs, age, risk profile and the time duration you can keep the money invested for
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Hi Sachin,
Its great that you are thinking of investing at such a young age – but a short term investment in both equity as well as equity oriented mutual funds is fraught with risk and I would not encourage you to do the same.
You will be better off by doing some financial planning like how much money would you be needing in the short term and how much in the long term. Invest your long term money in good equity funds like DSPML Tiger and Reliance Growth Fund and your short term money in debt instruments like fixed deposits and debt mutual funds.
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Hi,
The true amount of your investment is determined by your needs and goals that you are saving for and the liabilities that you need to provide for.
As for investment- we recommend an asset allocation strategy based on your stage of life. Investing in such a large amount in a ULIP might not be prudent as it typically has higher charges associated with it.
Investing in mutual funds in India through a SIP is the ideal way of investing in the equity markets – which apart from having comparatively low upfront charges also give you the benefit of liquidity in the short term.
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To advise you your exact investments I would need a more detailed picture of your goals and expenses.
Looking at your age profile and the fact that you still have some years to go before retirement I would advise you to increase your exposure to equities through well managed funds in the large cap category which have invested in comparatively stable companies with an established track record.
Some mutual funds in this category are Birla Sun Life Frontline Equity Fund, HDFC Equity Fund and Franklin India Prima Plus.
You can invest through the SIP route for the same and while your core holding will still remain in debt. the equity component would give you adequate growth in investments to finance your goals like son's education.
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Sanjeev, If you want Rs 50,000 per month after 17 years for a period of 20 years (I am assuming that you would be using this for your retirement, you would need a corpus of Rs. 69 lakhs.
You can reach this sum of Rs 69 llakhs over 17 years by making a monthly saving of Rs 10,500 per month and investing it in diversified equity funds like DSPML Tiger and ICICI Prudential Dynamic Plan
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Dear Satish,
Its great that you are already thinking about saving for your daughter's education.
I would suggest that you start investing through a SIP in an ELSS fund like Franklin India Taxshield. This would give you tax benefit under section 80c this year as well as good long term returns.
You could begin by investing 10% of your monthly income – Rs. 1500 and increase that over time.
To give you an estimate Rs. 1500 invested every month over the next 17 years would give you an amount of 900,000 when your daughter turns 18. This amount can be used to finance her education at that point of time.
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You should plan to buy a house for you and your family if you already do not own your house.
You also need to plan for your children's education and set money aside every month through the SIP route for long term investment.
You can choose a mutual fund of your choice based on your risk taking ability.
Post this you should think of savings for your retirement planning.
Evaluate the life style that you plan to have post retirement and how much you can accumulate through your present savings in PF etc and then save to finance the gap.
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Small saving schemes like NSC, KVP and PPF are available at all post offices across the country.
You can also utilize the services of authorized agents of the post office small savings directorate.
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The immediate priority for you would be to buy a adequate health insurance or mediclaim policy in case you are not covered by a health plan and set aside enough money for the education expenses of your son.
Then estimate the amount that you need for bulk expenditure like your son's marrriage, money for charity etc
With the balance invest it in a monthly income generating investment like post office scheme, bank deposits or mutual fund monthly income plan based on your cash requirements.
I would highly recommend that you avoid a large exposure in risky equity investments and invest in quality debt securities.
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Congratulations on your wedding! This will bring many different responsibilities, so you are right to start thinking about them.
First of all, sit with your fiancé to decide together what your family’s financial goals are. Think of both your short terms goals as well as your long term goals.
As a start, you should focus on ensuring that your family has adequate life insurance protection. This is especially important if you are the only earning member of the family and your wife is financially dependant upon you.
Then, understand when you and your wife might want to buy your own house. Start saving up money for that
Finally, ensure that your family has a mediclaim policy. The cost of healthcare is rising, and you need to ensure that you are adequately covered.
After these basic needs are fulfilled, then you the focus of your financial planning can be your lifestyle goals.
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You can utilise the benefits under section 80c like investing in NSCs, Infrastructure Bonds, FDs of tenure more than 5 years, insurance olicies from LIC or any other private insurer like Bajaj Allianz and ICICI Prudential and equity linked saving schemes like SBI Magnum Tax Gain and Birla Sunlife Tax Relief 96.
Apart from this you can also take advantages of chapter VI-a deductions which include your HRA and conveyance allowance to reduce your taxable income.
Download free income tax calculator
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Would suggest a balanced mutual fund seeing the medium term time horizon.
Monthly SIP needed at 10.5 % annual compounding is Rs. 64,000
Recommended funds would be DSP Merill Lynch Balanced Fund, Tata Balanced Fund, HDFC Prudence and Franklin Templeton India Balanced Fund.
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Nihar, if you have take care of all your other needs, then the best way of investing in a mutual fund in India for you is through a systematic investment plan.
You can decide the amount that you want to invest in a year and invest it monthly or quarterly based on your convenience.
Some of the advantages of investing through a SIP are the fact that market timing becomes irrelevant. Does not strain our day-to-day finances and finally averages out the cost of our investments.
The choice of a particular mutual fund is dependent on your time horizon and risk appetite. You have not shared your age or goals, so I would suggest a conservative exposure through a balanced mutual fund.
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Ritesh, its great that you are saving up for your own education.
A few key factors to keep in mind when you are doing that :
First what is the time horizon that you are looking at when you are saving – do you plan to go to the US in the next two year – 5 years or 10 years.
I would suggest that you go for a debt dominated portfolio if the time horizon is nearer and you can think of investing money in equity only if your goal is more than 5 years in the future.
Some of the good income funds in the market are Birla Income Fund and ICICI Prudential Income Plan
You can also utilize educational loans from the leading banks in the country like SBI, Bank of Baroda and Allahabad Bank. They can extend a loan upto Rs 15 Lakh for foreign education. You or your parents can taken benefit of section 80E on the interest component of the loan when you are repaying it.
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Two classics are “Reminiscences of a Stock Operator” by Edwin Lefevre and “The Intelligent Investor” by Benjamin Graham.
A good basic book is to read “The Warren Buffett Way” by Robert Hagstrom which is a very easy to understand guide to how to analyze companies in the stock market. This book looks at the investment style of the world’s greatest investor, Warren Buffett
Fnally, another highly recommended book is “Common Stock And Uncommon Profits” by Phil Fisher.
All of these are books that many professional equity investors read before they start their investing job. The good thing is that these books are written with people like you in mind, so you will be able to easily read them and understand the concepts very easily.
Once you have read these books, you should develop your own investment philosophy – i.e., what type of companies, businesses and industries would you like to invest in. It's good that you are looking at a three year time horizon, because equities are a long-term investment instrument.
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Before we go ahead I would like to clarify that a term policy is a type of life insurance policy and not something different.
However, the thing to note about a term policy is that it provides pure risk cover. There is no investment involved in a term policy and as such you get no money back when the policy period ends.
Term insurance policy is also the most cost effective way to buy life insurance in India.
Based on the details provided your estimate of sum assured of rs. 60 lacs sounds reasonable.
There are a couple of term insurance plans that you should consider such as Max New York Life’s Level Term Plan or HDFC’s Term Assurance Plan which are among the lowest cost plans available.
Given your age and coverage required and if you choose to cover yourself till age 60 you can expect to pay an annual premium of approximately Rs. 19000 to 20,000.
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I would suggest investing in equity-oriented funds since you have a long-term horizon.
You can reasonably expect an average annual return of 12% on your investment in an equity fund over a 15-year period.
If we take an average annual return of 12%, you will need to invest around Rs. 12500 per month (Rs.1.5 lakh / year) to reach your target of Rs. 60 lakhs. If you need to reach a target of Rs. 70 lakhs then you have to invest Rs.14500 per month (Rs. 1.75 lakh/ year).
With your planned investment of Rs. 1 lakh per year you can expect to reach a corpus of only around Rs. 40 lakhs in 15 years. if you are fortunate and your investments provide you returns at an average of 15% you could get to Rs. 50 lakhs - still short of your target.
However please do not get disappointed! I would advice that you start with investing Rs. 1 lakh and as your income grows start saving more so you can get closer to your target.
Some of the diversified equity funds that you can consider investing in are DSP Merrill Lynch Tiger, Reliance Growth and ICICI Prudential Dynamic. if you want some tax benefit along with this investment then consider an ELSS like HDFC Tax Saver or SBI Magnum Tax Gain
Please check the performance of these mutual funds in India at regular intervals to ensure that you are comfortable with these funds in terms of your objectives being met.
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Today, it is easy to get loans against property. Generally speaking, all the banks will have a rate that is very similar. However, more importantly, you should be concerned about under what conditions they give you this loan.
These conditions are dependent upon features such as: duration of the loan, face value of loan, your emi, pre-payment options, processing charges and late fees. All these in combination will have a more important impact than just the interest rate you end up paying.
As an example, hdfc bank is offering:
Loans of minimum Rs. 2 Lakh up to 60% of the value of the property subject to upper limits
Loan processing fees are 2%
Sometimes banks where you are already a client might give you preferential
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First of all understand why you are investing in shares and how much time you have on a daily or weekly basis to study your investments and the market. My general advice is that if you have a job and can only do this part time, then put your money in a mutual fund.
You will not be able to compete with investment professionals who do this for a living, so mutual funds are a better option for you.
If you still want to invest in the equity market, then set aside a pool of capital that you want to invest. make sure that these are not the funds that you need for your kids education or wedding.
Before you buy any stock, understand your risk profile. Do you want to invest in safer stable companies, or higher growth but possibly higher risk companies as well.
Finally, understand how long you want to own stocks for. some of the most successful investors of the world have been people who hold their stocks for long periods of time
You can open a demat account at any bank or similar depositary participant and trade through them
Select shares of companies that you understand or where you feel you will not be worried if the share price drops a lot.
This way if there is a correction, then you will use this an opportunity to buy more shares of your portfolio companies
It is very difficult to analyse the market. in fact no expert can tell you where the market will be tomorrow or next week or next year.
Invest in good companies and disciplined about holding your investments for the long-term. The worst thing you can do is to day trade. You will risk your capital, as well as incur tax liabilities and get your blood pressure to go up.
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The type of instrument that you are talking about is an ELSS, equity linked savings scheme. These are the only type of equity mutual funds that have a tax-exempt feature.
Premature withdrawal from an ELSS fund is not permitted, as these are close ended funds for three years and your money stays locked in for the three year minimum.
In order to get the benefit of section 80c, there is a mandatory lock in period of 3 years as per the income tax rules regarding ELSS
However, there might be certain funds where an early withdrawal might be available under certain special conditions. you will have to read your fund’s prospectus or contact your agent who helped you buy the fund.
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Yes, loan for land purchase is available as long as it is for residential purposes only.
Many mortgage lenders lik HDFC and SBI offer this loan. you can get up to 85% of the purchase amount based on your credit profile and paying capacity. the maximum term for the loan is 15 years subject to your age of retirement.
You can apply for a loan individually or jointly.
You get no tax breaks if you take a loan to buy a plot of land. but, if you take a loan for construction, that means a loan to build a house on that plot of land, then you can get a tax break.
In such a case, the tax benefits are available on both portions of the loan the one to purchase the plot and the one taken to construct the house thereon.
Please note that the benefits under section 80c and section 24 can be availed only when the construction of the house is complete.
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Your goal is to accumulate 30 Lakh in 20 years and you have other sources of income plus income from your spouse to take care of your daily needs. And you can afford to devote a large part of your income to funding this goal.
I would recommend investments in equity oriented mutual funds as you have a long term horizon.
If we take an average annual return of 12% on an equity fund, you will need to invest around Rs. 3500 per month to reach your target.
Some of the diversified equity funds that you can consider investing in are DSP Merrill Lynch Tiger, Reliance Growth and ICICI Prudential Dynamic. If you want some tax benefit along with this investment then consider an ELSS like SBI Magnum Tax Gain.
Please check the performance of these funds at regular intervals to ensure that you are comfortable with these mutual funds in terms of your objectives being met.
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You will be eligible for deductions for your home loan in India under section 24 and section 80c.
The maximum limit Rs.1.5 Lakh in section 24 will apply individually to both of you (i.e. the total deduction will be limited to Rs.3 Lakh). the relevant sections in this regard are, the explanation to section 26 as well as section 23(2) and section 24 (b).
The tax benefits will be shared in the ratio of the share of the home loan for husband and wife. both can enter into a share agreement, indicating the respective shares in the property and the loan.
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In investing, there is always a risk, so you will have to expose yourself to some risk.
However, you can choose how much risk you can want exposure to. Choose debt instruments if you want to low risk exposure.
These instruments can be either fixed deposits where you can choose the term or fixed maturity plans if you want to lock up your money for say 366 days. or, you can invest in debt mutual fundsas well for a long term.
Finally, you could consider investing in post office instruments – which apart from being lower risk can also provide you tax benefits under section 80c.
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The Reliance Money Guarantee Plan is a regular premium unit linked policy which guarantees the entire premium (including premiums for top- ups) paid by you. Please note it is the only capital amount that they are guaranteeing and no certain return is being guaranteed.
This plan offers you a choice of 3 funds with varying degrees pf equity participation in the same. you can choose the fund based on your risk appetite.
The feature of a minimum capital available in case of death or maturity is not a new feature and it is available in other ULIP plans as well.
ULIPs are recommended only for investors who have investment horizons of more than 15 years else mutual funds are better investment options as ULIP charges are up fronted.
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LIC Market Plus is a unit linked policy from LIC. It has four investment options - bond fund, secured fund, balance fund and growth fund.
The growth of your investment will be determined by the fund option that you have chosen. -assuming that you have chosen the growth fund which has an equity component of 80% and chosen no insurance cover and a single premium policy.
At the IRDA mandated illustration of 10% your money would double in 7 years. For the bond fund at the IRDA mandated illustration of 6% your money would double in 12 years.
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First of all, if you are planning to invest the money that you have borrowed at 13% as a personal loan, then you are playing a dangerous game.
I would recommend that you pay off your personal loan rather than speculate to earn a return of more than 13% to be able to make a positive return. Taxes on your investment return might further eat into your return.
If you have two young daughters, i would recommend that you save a small amount every month and invest via a systematic investment plan in a debt or a balanced and diversified fund. This will be relatively lower risk and can give you decent returns in the medium term.
First, take care of basic needs like their education and planning for their wedding, then get more aggressive to invest in for other goals.
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For a first time investor we recommend that they choose a fund with comparatively less risk like balanced mutual funds or large cap funds. We also recommend that they invest through SIPs which ensure that their investments are not affected by market timing.
Both the funds that you have chosen to invest in SBI One India Plan and Birla Sunlife long term advantage are close ended funds which were offered through a NFO in the recent past. SBI has returned 6% since its launch in December 2006 and Birla has returned 3.7% since it launch in May 2007. it is too early to tell what the performance of these funds is going to be like, so for this reason we suggest that investors invest in funds with a track record.
To get maximum benefit of these investments I would suggest that you hold them for the specified term of the close ended funds.
For first time investors for their future investments – I would suggest investing through a SIP in a balanced mutual fund like HDFC Prudence, Franklin Templeton India Balanced and SBI Magnum Balanced Fund.
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Since the property is still under construction, you will not be able to claim tax deduction benefits as it can be claimed only from the financial year in which the construction is completed.
The principal portion of home loan in India is eligible for deduction under section 80c only when the house is capable of being taxed under the head `income from house property'.
The pre-construction interest portion can be claimed after completion of construction in five equal installments,
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Based on your long term horizon and your young age I would recommend that you invest in diversified equity funds.
You can expect a return of 12% for the long term. Based on this conservative estimate you will need to save approximately Rs. 1,300 per month for the next 25 years to achieve your target of Rs 25 Lakhs.
Some of the diversified equity funds that you can consider investing in are DSP Merrill Tiger and Sundaram Select Midcap. If you want some tax benefit along with this investment then consider a ELSS like SBI Magnum Tax Gain.
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At your age, I would recommend a stable and conservative investment plan for you. First of all, ensure that you have sufficient liquidity for an emergency. Therefore, use Rs. 20,000 for cash savings in a bank account. You could consider putting this into a liquid mutual fund. Currently, these are offering about 10% interest rate per annum.
Next, I would recommend that you put Rs 40,000 in a post office savings scheme like a national savings certificate. You can get an annual interest rate of about 8%. However, this will tie up your money for 6 years.
Finally, for capital appreciation, you can consider investing the remaining Rs 40,000 in a balanced mutual fund that will be diversified and stable. for example, you might want to consider the HDFC Prudence Fund, which has been a top performing balanced fund for the last 7-8 years.
As an aside, i would also like to suggest that you think about some health insurance or mediclaim policy if you do not already have a health plan. at your age, I wish you a happy life, but just be ready for any negative situation.
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There are over 500 mutual funds in india, So it can be quite challenging to choose what is the best product. Different funds satisfy different needs. what is good for your friend might not be relevant for you because your situation is unique.
Therefore, to identify the best mutual fund for yourself, you need to understand your unique characteristics around the following items:
Risk profile
Time horizon
Expected returns – debt funds will give you lower returns compared to equity funds
Purpose of investment – do you need income or capital appreciation
Then look at mutual funds that have been in existence for a few years where you can look at their track record, as well as their operating history through up and down markets.
Also look at which mutual fund family the fund belongs to. Lots of new fund houses are launching in India. Not all of them will succeed, so select a family that has been operating mutual funds for a few years in India.
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Hasan, there is no way of being certain that you can make an investment where you will earn more than your EMI. Your loan is at a high cost of borrowing at 11%. In order to earn more than your EMI, you will need a return that on an annualized basis is at least more than 11% after taxes.
This is a dangerous game you are playing by borrowing at a very high cost and using this leverage hoping that you can perform better in the stock market.
I would advise you to prepay the personal loan if you have the cash readily available. Every investment that you would make would carry a certain amount of risk and you might benefit or lose because of that but your EMI needs to be paid irrespective of that.
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Sonia, it great that you are already thinking of saving for the long term through a pension plan.
The pension maximizer plan is an aggressive equity oriented investment option that you can choose when you are buying an ICICI Pru Ulip pension plan. close to 97% of the assets under this option are allocated to equity. The fund gave returns of 34.21% last year and 36.40% since its year of inception (2002).
These are very high returns and are not sustainable over a 20 year period. You should opt for plan option only if you have a high risk appetite and you can absorb the fluctuations in this investment. At your young age, if you do not have any other financial obligations, then your current equity exposure under the maximizer ULIP is good for now. However, I would suggest that as you grow older, you might want to re-consider your plan options to a less aggressive plan.
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There are no administrative charges which are added on to a SIP investment. Investment through a SIP attracts the same amount of entry load as well as running expenses as a normal purchase would.
However, in certain [not all ] funds an exit load may be payable if units are redeemed switched-out on or before 1-2 years from the date of allotment of units. Also, if you switch out of your SIP before the duration that you had agreed to invest the money for, then your mutual fund might charge you a fee. Check the prospectus for more details.
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It is not compulsory to file the income tax return unless you fulfilled any of the following conditions anytime during the previous year:
(i) Were in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified by the it department; or
(ii) Were the owner/ lessee of a motor vehicle other than a two-wheeled motor vehicle; or
(iii) Were a cellphone subscriber; or
(iv) Have incurred expenditure for himself or any other person on travel to any foreign country; or
(v) Held a credit card, not being an add-on card; or
(vi) Were a member of a club where entrance fee charged is Rs. 25,000 or more,
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Mr. Jain I am assuming that this is under the scenario where you would be withdrawing the money after 6 months. Under such a scenario, I would recommend that you put your money in debt oriented mutual funds. Equity funds are recommended only for investors who have a longer time horizon in mind.
Debt funds are comparatively low risk and give you greater returns than comparable holdings in a savings bank account. Some of the debt funds that you can consider are Birla Sunlife Income Fund and HDFC Floating Rate Income Fund.
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Smartkid offers a choice of 3 education insurance plans: Smartkid new unit-linked regular premium, Smartkid new unit-linked single premium and Smartkid regular premium
The first two are unit linked policies and the regular premium one is a traditional endowment plan.
The difference between ULIPs (unit linked investment plans) and traditional products is the way your money is invested. In a traditional product, the companies invest the investible portion of the premium as per IRDA guidelines- primarily in notified Govt securities. However in ULIP, the company’s fund manager invests in different asset classes and gives you three to four varieties of funds in one policy.
ULIP should be preferred if you are inclined towards the stock market and want to actively participate in fund management. Typically, ULIPs are exposed to the high risk and high return equation due to their exposure in the market
You should consider taking a child plan only as an insurance plan for yourself which ensures that your child's education goes on uninterrupted even when you are not there. This plan will also give you money at crucial junctures in the child’s education, like at class x or class xii or at graduation i.e., to fund crucial commitments in the child’s future. Additionally, there is a death benefit as well – is something happens to you, your child will get the sum assured and ICICI Pru will pay the remaining premia, assuring that the policy can continue as is.
However, please do not treat it as an investment. Typically, insurance plans have higher commission charges compared to investment products and consequently give you less return compared to a pure investment product
You might be better served in investing in mutual funds if you are looking at long term returns.
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ICICI Prudential 's unit linked pension plan lifetime pension II gives the customer an option of choosing the sum assured. it could be anything between zero and the multiple of the term and the annual contribution.
This product is a pension/ investment oriented product and necessarily does not need to carry the investment option.
If you or your advisor has filled up the zero sum assured option then the policy is correct.
All insurance policies come with a free look period of 15 days – if you think this policy is not suited to your needs you can return it with minimum charges.
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In investing, nothing comes without any risks. Mutual funds also have risk, but there are different kinds of funds that have a different exposure to risks
Liquid funds generally have the least amount of risk
Debt funds generally have a little more risk, but offer slightly higher returns as well & finally, equity funds have the highest of risks, but offer the highest returns to make up for this risk.
Specifically, for equity funds the risks are:
Volatility: how much your investment goes up and down in price
Damage to principal amount: unlike a bond where your capital is guaranteed, in equity or mutual funds the capital is not guaranteed
Diversification in case of equities: by investing in just one company, you are putting all your eggs in one basket
Market risk
Manager risk
Please keep a long-term horizon in mind when investing and make yourself familiar with the risks involved. if you do not get comfortable with the risks, then its probably not worth your time or money to invest in that type of instrument.
It is not necessary to give the asset management company cheques in advance. However, often customers do give post dated cheques. alternatively, you can also set up an auto debit through the use of electronic clearing services of the RBI. you could also fill out a standing instruction form for payment. all these three mechanisms are safe and well accepted
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Banks and many NBFCs provide you loan against securities, these securities could be stocks, debentures, Govt. issued paper like NSC and KVP (in Demat form) as well as mutual fund units. whichever bank you are taking the loan from will have a list of approved mutual fund schemes.
Typically it is provided as an overdraft facility available up to 50% of the value of the mutual fund holdings. sometimes there will be minimum and maximum amounts. for instance, ICICI gives a minimum of Rs.1Lakh and maximum of Rs.20 Lakhs
It is not possible to combine it with any other secured loan like car loan or home loan in India.
The prevailing rate right now is close to 15%
Some of the banks providing this facility are HDFC Bank, ICICI Bank & IDBI Bank
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Good thinking on your part to start creating assets in anticipation of your children growing older.
Assuming you can tie up your money for 8-10 years (your kids will be 14 and 9 years by then), you should look to invest in some mutual fund that has long-term capital appreciation as its main objective.
DSP Merill TIGER dsp merrill tiger
Sundaram Select Midcap
If you want some tax benefit along with this investment then consider the SBI Magnum Tax Gain ELSS
I would recommend that if you do not need regular income from this investment, then go with the growth option and not the dividend option.
Plan according to milestones that your kids will reach, for e.g., when are they ready for school or higher education. it is good that you are thinking over a long-term horizon.
The mechanism that you can choose is a SIP, whereby you can invest your Rs.1,000 per month into your chosen fund
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Closed end fund for 3 years, so your money is locked. If you withdraw before this period, you will have to pay some exit fees. Also, you might have to pay short-term capital gains if you exit within one year. I hope you read the offer document before investing!
Infrastructure sector in india is expected to see great investment and growth in the coming decade (estimated that 14.5 Lakh Crore is expected of investments will occur in the 11th five year plan). This fund, like other recently set up infrastructure funds, wants to invest in companies that will benefit from this infrastructure spending. Such companies will be focusing on: oil & gas, hydroelectricity, heavy engineering, metals as well as banking, hospitality & construction.
Ultimately, it depends upon the stock picking capability of the fund manager. Recent other infrastructure funds in the past year have returned approximately 30%-40% returns (ICICI,UTI, Birla, TATA). But, we should not measure short-term performance, as these types of funds are long-term plays on India GDP growth.
Fund manager: Mr Jayesh Shroff, 34 years old, was with BoB funds before
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We would encourage you to invest in shares and mutual funds, as they are a convenient way of capital appreciation. equity is also a typically a good protection against inflation.
However, you should understand the risks associated with both these instruments
Equity and equity mutual fundsrepresent an ownership interest in companies.You are the residual risk holder, i.e., all other obligations are fulfilled before you get paid.
Mutual funds can also be debt funds or money market funds. These have lower risk than equity funds, but still have some risk because they will be sensitive to interest rates and inflation expectations
Equity instruments like shares or equity mutual funds have much higher risk, unlike bond or fixed income instruments. Commensurately, they also have a higher return. with more risk, usually there comes higher return.
Specifically, the risks are:
Volatility: How much your investment goes up and down in price
Damage to principal amount: Unlike a bond where your capital is guaranteed, in equity or mutual funds the capital is not guaranteed.
Diversification in case of equities: By investing in just one company, you are putting all your eggs in one basket
Market risk
Manager risk
Lets take an example: In May/June 2006, the equity market dropped a lot many of these risks were affecting investors
Please keep a long-term horizon in mind when investing and make yourself familiar with the risks involved. if you do not get comfortable with the risks, then its probably not worth your time or money to invest in that type of instrument
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Assumption of Rs. 50,000 invested through a monthly SIP of rs 4200
Compounded at rate of 12% return based on equity investment returns invested for 20 years, would give Rs. 41.5 Lakhs
To get exactly 50 Lakhs you should invest Rs. 5000 per month or 60,000 per annum
or a slightly risky investment and compounded @15% would give Rs 60 Lakhs at the end of 20 years.
There is no guarantee of the long-term rate of returns that the equity market will give in the coming 20 years. Based on reasonable assumptions, it is quite realistic to assume that 12%-15% will be achieved.
Some mutual funds in India, which focus on growth and where you can invest through SIP are ICICI Prudential Dynamic or Reliance Growth Fund
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I would suggest investing your monthly savings in an equity linked savings scheme fund through a SIP.
This would ensure that you get immediate tax saving and long term gains.
Some of the ELSS schemes available are SBI Magnum Tax Gain and Franklin India Tax Shield
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Its good that you have shared two important criteria:
a) That you are investing for the long- term, and
b) That you can take risk. this makes it easier for you to think about your investment options
Additionally, you have indicated that you want a 20% annual return
I would recommend that in order to receive that high a return, you look at equity mutual funds. Historically, over a long-term period of 5-10 years, 20% would be seen as a very high return. In order to get this, you should invest in an aggressive growth fund such as:
DSP Merril Lynch Equity Fund or DSP Merril Lynch India T.I.G.E.R Fund
ICICI Prudential Dynamic Plan
Reliance Growth Fund
SBI Magnum Global Fund
Sundaram BNP Paribas Select Midcap
The mechanism could be either a lump sum payment or a SIP, depending on your cashflow cycle
additionally, you might want to consider whether you are availing full benefit of the section 80c deductions that you can get from this current tax year.
We would recommend that you monitor your portfolio regularly to see if it is giving you the kind of return that you expected. However, if you really are looking at long-term then even if the market performs badly in one year, you should not withdraw your investments because in the long-term the markets will recover and improve their performance.
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You are new to mutual funds, but have a high risk taking capacity. Additionally, you are comfortable that you do not need this money for another 8-10 years. On a monthly basis, you can invest approximately Rs.1,000/month
I would recommend that you invest in an aggressive equity growth fund to satisfy your need for growing your capital:
DSP Merrill Lynch India T.I.G.E.R fund.
Reliance Growth Fund
Sundaram BNP Paribas select midcap
In case the market does not perform well for a short period, you will have enough time to recover from this short-term weakness
At your age and with the amount of capital that you can invest, you should invest via a SIP
Finally, if you are filing tax returns, please take advantage of the section 80c deductions that you can get. Invest in ELSS funds like SBI Magnum Tax gain scheme 1993, Franklin India Tax Shield
All the best for a journey in investing! Its great that you are starting so young. Learn more about mutual funds in India.
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Yes, it is safe to check your bank balance on the internet. however, please do not share your personal information, pin, password or other sensitive information with anyone.
Usually the bank will not be liable for losses arising out of sharing your password, id, account information etc.
Banks use state of the art technology to ensure safe operations on the internet: firewall, 128 bit secured socket layer, digital certificates, dual layer of passwords, encryption
Here are three tips for you for safe operations:
a) If you are using the internet at an internet café, then you need to be even more sure that nobody is watching you or your keystrokes. In fact, I would recommend that you do not visit your online banking site from an internet café.
b) We would also recommend that you change your passwords periodically, at least once every 30 days.
c) Finally, you should log off the bank website, rather than close the browser. Otherwise, someone can always open the browser and your account can be accessed if you have not logged out.
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SIP, Systematic Investment Plan, is an investment option that is available with mutual funds in India. The other investment option comparable to SIPs is the recurring deposit schemes from post office and banks. Basically, under an SIP option an investor commits making a regular (monthly or quarterly) investments in a particular mutual fund, at the then prevailing price of the fund (i.e., NAV)
a) The sip option is available with both equity and income types of funds. The advantages of SIPs are
b) Regular investment, don’t need a lump sum
c) Rupee cost averaging, don’t need to worry about timing the market
d) Can enter with a very low amount of investment
e) Liquidity, redemption is possible easily, unlike fds
f) Diversification benefits of mutual funds
g) Minimum sip investment needed is Rs. 500/per installment. However, recently Reliance has launched a RS. 100 sip, and ICICI has launched a Rs. 50 SIP
What is the type of investment fund that you would like to invest in?
What duration can you invest over? Is their a specific goal that you are working after?
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ULIPS have market linked returns and hence cannot guarantee any returns to you.
Secondly, all unit linked plans have a minimum term of 5 years but the premium paying term could be one time or 3 years. You have an option of making withdrawals after 3 years, but there might be limits and penalties depending on the terms of the plan that you might have bought.
Finally, its very difficult to get double benefits within 3 years because :
a) Most ULIP policies have high charges loaded upfront so the actual allocated amount is less then the premium you have paid.
b) The probability of the indian market giving you more than 30% year on year for the coming 3 consecutive years might not materialize, not impossible, but not very realistic where sit today given what the last 2 years of upward market movement that we have seen.
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Yes, interest earned on fds is taxable, after Rs. 10,000 of interest accrued per annum. Tax is deducted at source, from the interest on fixed deposits, as per the income tax act 1961
TDS rates, after the Rs. 10,000 exemption are: individuals – 10% plus cess on top of this
However, if your income falls below the taxable limits, you may submit form 15H to request exemption
TDS liability is determined at branch level. It takes into account interest on aggregate amount of deposits in a particular branch
To gain advantage, you might want to consider opening different fds at different branches or different banks additionally, 5 year Fixed Deposits in a bank is eligible for a deduction under section 80c up to Rs 1 Lakh. however, the interest on this is not tax deductible.
Compare fixed deposit rates in India.
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You need to understand your capacity to take risk and accordingly adjust the risk reward that you are comfortable with you. It is unlikely that you can get high returns without taking on risk.
If you want to secure your principal amount because you want it back every February, I would suggest that you look at less risky investment. Perhaps a recurring deposit scheme at a bank that would yield about 8% will be suitable. However, the tax benefits on this are limited, and you will be liable to pay taxes on the income that you earn based on your existing tax status.
Finally, I would like to add that you need to define and quantify what you mean by a good return. For a retired person, 8%-9% might be considered good. However, for someone who can take more risk, they might consider a return above 15% to be good. So, please figure out what you consider a good return and invest accordingly.
Learn more about mutual funds in India
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Paypal is an online payment solution. all you need is an email address and you can send or receive money in a secure, easy and quick way.
The service builds on the existing financial infrastructure of bank accounts, credit cards. there is a very advanced fraud prevention system to create a safe and global payment solution. Currently, Paypal has 100 million users and the service is available in 190 countries, including India.
How can you use the service?
Let me give you an example: Supposing you call me from Punjab and I am in Delhi and ask me to buy a book for you and send it to you. I can pay for it on my own, but now you owe me money. you can send me a cheque or draft, but that will take time, I will have to go to the bank to deposit.
Alternatively, if we both have Paypal accounts, you can send credit to my account from your account and that will instantly get transferred into my account.
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First of all, most insurance companies usually offer term insurance policies only till the age of 65 years
You might be able to get a term policy for a 40 year term from age 20 years to age 60 years. The amount of the premium will depend upon, among other things, your current age.
Its interesting that you are clear that you want a pure term policy.
For the benefit of our other viewers we should add that this is a pure risk cover product, and there are no investment features of this product.
Its for this reason that the premium on this project is lower than other type of insurance products that have both risk and investment features. iTrust can help you compare life insurance term policies in India.
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The first thing that comes to mind is that mutual funds are subject to market risk and please read the offer documents before investing.
Your expectations of return appear a little high. Not impossible, but you will need to take a higher amount of risk, that might also put at risk your capital invested.
I would like to add that no fund can guarantee you a return, so no one can predict what will happen. It appears that your risk appetite might be high, so you might want to do some research on growth funds. I am not going to give you names of funds, because even their own fund managers don’t know what their results are going to be for the year.
Finally, if you are looking to invest only with a one year horizon, then it might be risky, because in the short run, sometimes you can also loose money.
My advice would be to be sure of your investment objectives and risk appetite and think longer term that just one year.
Learn more about mutual funds in India.
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SIP is a very good way of investing if you are looking at long term investments and especially if you want to avoid losses as your investments are spread across market ups and downs.
But through, your question I realize that you have lower risk appetite - I would suggest that you go in for instruments which have a mix of debt and equity.
You consider monthly income plans which have a 10%-15% equity component or balanced funds which has 65% equity component.
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You could consider various businesses. important that you understand:
a) Which industries are you interested in – which business can you start
b) What will get you excited about every morning when you are getting out of bed to go to work
c) How much capital can you invest in the business initially
d) How quickly do you want to make a profit?
Some businesses you can make money more easily and quickly than others. e.g., restaurant businesses are easy to start and can generate good cash if you can get a franchise; however, if you open an airline you will have more challenges, high upfront investment and lots of losses in the early years
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