tag:blogger.com,1999:blog-63585462951711861752024-03-21T08:14:52.299-07:00Investment Plant !!When you want something, all the universe conspires in helping you to achieve itAtanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.comBlogger39125tag:blogger.com,1999:blog-6358546295171186175.post-43847845809836398282013-05-25T23:22:00.000-07:002013-05-25T23:23:07.108-07:00Inflation Indexed Bond<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaTjZ8Bnsj6o2pA-GWUBC-J6Unnst5BE5Q8yaDn13zT8FvqDgmQGhXvK1stEFF11FZlNKUyXHlFZ2DEULV0254sg2jQBCeQ6c7JpKywKmPRWa9r6iO3KF_DUxXYpuj6WD6CX5wDe11BEo0/s1600/getimage.dll.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaTjZ8Bnsj6o2pA-GWUBC-J6Unnst5BE5Q8yaDn13zT8FvqDgmQGhXvK1stEFF11FZlNKUyXHlFZ2DEULV0254sg2jQBCeQ6c7JpKywKmPRWa9r6iO3KF_DUxXYpuj6WD6CX5wDe11BEo0/s640/getimage.dll.jpg" width="256" /></a></div>
<div style="text-align: justify;">
The RBI has launched inflation-indexed bonds (IIBs) to cushion your savings against rising prices. These financial instruments are meant to encourage savings and wean investors away from gold.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b>Why we need IIBs</b></span></div>
<div style="text-align: justify;">
Inflation erodes the purchasing power of money. Most debt products such as fixed deposits (FDs) or regular bonds provide returns that are not protected against inflation. If a bank FD pays an interest rate of 8.5% p.a.and inflation averages 9.5% that year, the investors loses money in real terms.This is where IIBs T come handy. These bonds adjust the principal investment to the inflation so that the investors earns a higher interest. For example, if a 10-year bond has a face value of 1000/- and the annual coupon rate is 10%, then investor will get 100/-. Now, if the inflation index in the next year rises by 12%, the principal will be adjusted the inflation rate and get raised to <b>1,120/-</b> [1,000 * (1+12)%]. So, the next year the investor will earn 112/- as interest, which is 12% higher than the original amount. The way the returns from the investment will be safe from the incessant march of rising prices.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b>The calculations</b></span></div>
<div style="text-align: justify;">
The Wholesale Price Index will be used for adjusting the principal. The calculation will take the WPI index with four months' lag. For example, the final WPI for December 2012 and January 2013 will be used as reference WPI for adjusting the principal on 1 June, 2013 and 1 July, 2013 respectively. On maturity, the investor gets back the higher of the adjusted principal or the face value.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b>The disadvantages</b></span></div>
<div style="text-align: justify;">
Although inflation-indexed bonds prove beneficial during times of high inflation, they under-perform when the economy goes through a deflationary phase and prices actually come down. In such situation, the IIB will give lower than coupon rate because the principal would get adjusted below 1000/-. However, this is only a theoretical risk. A decline in whole-sale prices is not even a remote possibility in India.</div>
<div style="text-align: justify;">
Another drawback of these bonds is that they have been indexed to the WPI and not the Consumer Price Index (CPI). For most investors in bonds, the CPI is the more relevant index. Consumer prices matter to them in day-to-day life than wholesale prices. </div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b>Can these Bonds beat inflation?</b></span></div>
<ul style="text-align: justify;">
<li>Inflation -indexed bonds were first issued in the UK in 1981 and became popular in other countries as well over the past two decades.</li>
<li>In the US they are referred to as TIPS (Treasury Inflation Protected Securities) and form an important part of investor portfolios.</li>
<li>In India, the Capital Index Bonds 2002 were issued in December 1997. But only principal repayments at the time of redemption were indexed to inflation.</li>
<li>With the launch of these bonds, more investors may not opt to save via a financial instrument instead of buying gold.</li>
<li>One big drawback is that these inflation busting bonds are linked to the WPI and not the more relevant CPI. </li>
</ul>
<div style="text-align: justify;">
<br /></div>
</div>
Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-35246375096316549852013-05-19T08:12:00.003-07:002013-05-19T08:21:27.108-07:00Hoarders vs Investors<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="color: #cc0000;"><b>How hoarders can make a transition to investors</b></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhp703_LPGTODjeRxRkL9LtiQt6qGXQWv7xbB0gBsLD1XFv-4I3i_S22DcMrvHPKco3pa3dr_-PXkVs3eB8HZ3mGNm3OKwpz3QI4eExJmfNkQj_jvlyvn-IWJHYnTdY-A_WcJKMT3hvrudq/s1600/clip_art_image_of_a_mischievous_looking_man_pulling_money_with_a_magnet_0521-1011-0417-0543_SMU.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhp703_LPGTODjeRxRkL9LtiQt6qGXQWv7xbB0gBsLD1XFv-4I3i_S22DcMrvHPKco3pa3dr_-PXkVs3eB8HZ3mGNm3OKwpz3QI4eExJmfNkQj_jvlyvn-IWJHYnTdY-A_WcJKMT3hvrudq/s200/clip_art_image_of_a_mischievous_looking_man_pulling_money_with_a_magnet_0521-1011-0417-0543_SMU.jpg" width="200" /></a></div>
<div style="text-align: justify;">
Enough has been written about investors' obsession with gold and real estate. Hard facts about long-term returns have been published, showing that these assets may not be a good long-term choice. However, investors view such research with skepticism. They continue to prefer physical assets to financial ones, and hold an abnormal amount as cash. Are we mere hoarders of wealth? What does it take to become investors?</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
First, we are guided by the nominal value of assets. What matters is the real value, after adjusting for inflation, but that is not very intuitive for most investors to perceive. When we are told no one loses money in real estate, we believe it because we have only heard of rising prices. That fact is that with a positive rate of inflation, assets prices move up over time. This is true not just for gold and property, but also for rice, dal, petrol etc. A nominal increase in price does not mean that an asset has become more valuable. As hoarders, we are happy with nominal value; as investors, we will ask about the real value, after inflation.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Second, we like assets even if they do not work for us. Assets are acquired for their ability to earn a return. This should come in the form of a regular income, such as dividend, interest, rent, or by way of appreciation in value, which we can actually realize when needed. Assets create a sense of security and represent accumulated wealth. <b>They are, therefore, social symbols, which tell the rest of the world that our incomes are far higher, and that we own assets acquired only by the wealthy</b>. Ostentatious display of jewellery and lavishly decorated homes are all social symbols of wealth. When we want to belong to this class, we accumulate assets without caring for the income or the intent to realize gains. We are also reluctant hoarders, unwilling to sell these assets and strip down our social status. As rightly put by ace investor Warren Buffet - "<b>If you buy things you don't need you'll soon sell things you need</b>". As investors, we want the assets to work hard for us and earn returns.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Third, we obsess about the protection of invested capital. The notion is that an asset should have undiminished value dominates our choice. A physical asset, which can be seen and felt, is the obvious choice for the hoarder. Since inflation increases its price, there is a false sense of security about increasing value. The long-term return from assets that do not work cannot be different from the rate of inflation. We see the steadily rising price as hoarders, and expect this from all assets. As investors we know that what goes up will certainly come down and vice-verse. As hoarders, we fail to see the economics of asset prices.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Fourth, we do not understand the dynamics of markets. We prefer an oversimplified version of the way prices should behave since we seek a linear growth in the assets we hold. Assets prices are not influenced only by demand and supply and could also be distorted structurally. The real estate and gold markets in India are dominated by holders of black money. The unaccounted for cash invested in these assets is generated and stored outside the banking system, and is not sensitive to the changes in borrowing costs that the RBI tries to manage. Large-scale tax evasion, ill-gotten bribes and payoffs, and unaccounted for incomes hidden from the taxman feed these assets purchases.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
It is a combination of these factors that turns several investors into happy hoarders. When the government says it wants to do something about this preference, it needs to work towards ensuring that the large hoarders and evaders stop distorting these markets. Before blaming the small hoarder, who is unable to make the transition to an investor, we need actual asset builders who will guide. That is the missing link</div>
</div>
Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-50611910408392218992013-03-30T20:03:00.000-07:002013-03-30T20:03:30.515-07:00Can't Pay Home Loan EMI<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="color: #cc0000;"><b>Here's how the bank will react to the situation and how you can negotiate with it to resolve it</b></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvITbsPygx8g3kVvBGD7xKlTE8BurBy4oCVIquyRuJ7s3GIXpw4KLd5BlfThyrhxTdDoLPdJQFpqNulkIe-PanS3tcTHbPs2h-RucLv977nlRZsXaNbgdWhmBirFrjTAbTMRLmHmPBz9C_/s1600/payment-due.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="135" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvITbsPygx8g3kVvBGD7xKlTE8BurBy4oCVIquyRuJ7s3GIXpw4KLd5BlfThyrhxTdDoLPdJQFpqNulkIe-PanS3tcTHbPs2h-RucLv977nlRZsXaNbgdWhmBirFrjTAbTMRLmHmPBz9C_/s200/payment-due.png" width="200" /></a></div>
<div style="text-align: justify;">
Buying a house is the most expensive purchase you are likely to make, so you may need help in funding it in the form of loan. What if you take a home loan, but after some time, find yourself unable to ay the EMIs? There could be several reasons for this, from losing your job to depleting your savings for a medical exigency. Will the bank seize your property if you miss 2-3 mortgage payments? No, not immediately, but if you continue to default for six months, the bank will take over your house.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Attaching a property is the last thing a lender wants to do. Though banks have the power to enforce the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (<b>SARFAESI</b>) to recover non-performing assets without the intervention of a court of law, this is the last step they prefer to take.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgC9z-DG9Yz0EJIHDu3FSAS57Ahdj0rKiaO403KcvYUmTNQqJRS-ol4oO8Bm3-MEiIF313G6scEujmDVDUWVzI6m5_5Lw3lHBbRbV2flVEfwve5lKRfszOkJ3M9X0TRfgDJPLXUk1OtzcSO/s1600/11loan6.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgC9z-DG9Yz0EJIHDu3FSAS57Ahdj0rKiaO403KcvYUmTNQqJRS-ol4oO8Bm3-MEiIF313G6scEujmDVDUWVzI6m5_5Lw3lHBbRbV2flVEfwve5lKRfszOkJ3M9X0TRfgDJPLXUk1OtzcSO/s200/11loan6.jpg" width="163" /></a>A bank usually lets one mortgage payment default slip by, but for the next one, it will mail you a reminder to inform you that your payments are late. After three defaults, the bank will send a demand notice, asking you to pay your dues as soon as possible. If the borrower doesn't respond to any of the mails, the bank sends a legal notice through its legal department.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
A bank waits for three months before declaring an asset a non-performing one. After the end of this period, the bank can officially term the home loan an NPA and start the process of recovering the property through the <b>SARFAESI </b>Act.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Even after invoking the Act, the bank gives the borrower a 2-month notice period to repay the dues. Finally, five months after the first default, the bank sends a notice, stating that it has valued the property for a certain sum and that it will auction the house on a particular date. This is usually set for a month from the date that the bank mails you the auction notice.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Banks and financial institutions are more interested in recovering the money than in starting legal proceedings as the procedure of attaching and auctioning a house is lengthy and takes time. So, they will persue the matter for at least six months before taking legal action. </div>
<div style="text-align: justify;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf0vYJtJwCNS-i16D5bzZ3oIEPrqYSSI3ba_TL4hcnq3hCvdZxWyl5G6jVoioZ8TkvHXlUY6JGhQGY-amON5HhFSGK3N_LUS5nmh7auIiYX5BHRRWJGfgzTEi-I6Lra-_rgoKDLyprrxGb/s1600/sfdsdfsff.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="156" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf0vYJtJwCNS-i16D5bzZ3oIEPrqYSSI3ba_TL4hcnq3hCvdZxWyl5G6jVoioZ8TkvHXlUY6JGhQGY-amON5HhFSGK3N_LUS5nmh7auIiYX5BHRRWJGfgzTEi-I6Lra-_rgoKDLyprrxGb/s200/sfdsdfsff.jpg" width="200" /></a></div>
The last state is usually when a borrower gets a notice from the Debt Recovery Tribunal (for loan amounts of more than 10 lakh). It is compulsory for you to attend the hearing that is set by the tribunal, where you can reach an agreement with the bank.<br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
If you are serious about paying your dues and have a good repayment track record, the bank will be willing to offer a leeway. The first step that bank takes is to understand the reason for the default since a home loan is a secured one, with the bank having more control over the asset. If the bank is satisfied that the problem is genuine and that the borrower will start paying the EMI soon, it will be willing to wait for some more time. However, banks take such decisions on a case-to-case basis. In fact, a bank will allow you to reclaim your property even after it has seized it, though this has to be done before the auction takes place. Even if the auction date has been announced, the borrower can come in at any stage and pay the dues to save his property. However, if the bank has incurred any charges for announcing the auction, the borrower will have to pay these.</div>
<div style="text-align: justify;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkg4gCKBeyIf92tLRx3BXBcNUE8oqwsdAT6HhhnhqJUsZzjIJB4EiL1QD8T_e-4lqQvU9Jy9qVdnnT_q72PHXyRrG-UygbEgG7gf8uyJCugux-qtmseI7Ftgj72ge1yYhjEpgrPHorzjwV/s1600/Credit_Report.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="143" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkg4gCKBeyIf92tLRx3BXBcNUE8oqwsdAT6HhhnhqJUsZzjIJB4EiL1QD8T_e-4lqQvU9Jy9qVdnnT_q72PHXyRrG-UygbEgG7gf8uyJCugux-qtmseI7Ftgj72ge1yYhjEpgrPHorzjwV/s200/Credit_Report.jpg" width="200" /></a></div>
<div style="text-align: justify;">
The main reason you need to start paying the EMI again, other than avoiding possession of your home by the bank, is to ensure that your credit score is not adversely affected. About 30% of your credit score is based on repayment history and a significant part of this usually depends on how regularly you repay your home loan, if you have taken one. Even one or two missed payments can negatively impact your credit score, and a continuous default will dent it severely, making it difficult to get loans or credit cards in the future.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
However, if it seems that the situation may not improve even after six months, a better idea may be to sell the property. You can talk to the bank about this and use the sale proceeds to prepay the loan. Ensure that while the sale negotiations are on, you continue paying the EMIs. This will prove to the bank that you aren't taking it for a ride and will ensure that your credit score doesn't dip.</div>
</div>
Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-91390706652775341182013-02-10T06:48:00.000-08:002013-03-01T19:58:26.319-08:00Rajiv Gandhi Equity Savings Scheme (RGESS)<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja9iVUsoHfLHQQ4d-utyR1e8e88l4O3rGZYdV2g2zbDRGL3jvfaIvzNrgf67zxBDVW8CODHGkAm5BOUjYv4MA7IixHjw-5n7Wtt2b_pQ5tK67ooLUzL7DW9uzm6F6iw5jbQlBWIWuBCzk5/s1600/Investors_rgess.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="127" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja9iVUsoHfLHQQ4d-utyR1e8e88l4O3rGZYdV2g2zbDRGL3jvfaIvzNrgf67zxBDVW8CODHGkAm5BOUjYv4MA7IixHjw-5n7Wtt2b_pQ5tK67ooLUzL7DW9uzm6F6iw5jbQlBWIWuBCzk5/s640/Investors_rgess.jpg" width="640" /></a></div>
<span style="background-color: white;"><span style="color: #cc0000;"><b>Who is Eligible?</b></span></span><br />
<br />
<div style="text-align: justify;">
<span style="background-color: white;">RGESS is available to all resident individuals whose gross total income is less than 12 lakh and who are investing in equity for the first time. A first-timer has been defined as the one who has not opened a demat account as a 'first holder' before the notification date of 23 November 2012, even if his name appears in a joint demat account opened before this date. The investor who has opened a demat account as first holder before the notification date but has not bought any shares or traded in the futures and options segment will also be considered as a first-time investor.</span></div>
<div style="text-align: justify;">
<span style="background-color: #cfe2f3;"><br /></span></div>
<div style="text-align: justify;">
<b><span style="color: #cc0000;"><span style="background-color: #cfe2f3;"><span style="background-color: white;">How can you get tax benefits?</span></span></span></b></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="background-color: white;">To avail of tax deduction, an investor has to open a new RGESS designated demat account or designate for this purpose his existing demat account, where no trading has taken place before 23 November. He needs to submit a </span><span style="background-color: white;"><span style="background-color: white;">declaration </span>in Form A, certifying that he has not traded before 23 November 2012, to the depository participant, who in turn forwards it to the depository for verifying the status and designate him a new retail investor. He can then start buying the eligible securities, which include stocks from BSE-100 or CNS 100 index. The listed shares of navaratna, maharatna and miniratna pubic-sector undertakings, and initial public offers (IPO) of PSUs, whose turnover is more than 4000 crore, are also eligible for investment. One can avail of tax benefit by investing in the eligible mutual fund schemes too.</span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b><span style="background-color: white;">What's the lock-in period?</span></b></span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="background-color: white;">Unlike other tax-saving schemes, the lock-in period here is split in two. The first year is a fixed lock-in and the investor cannot sell, pledge or hypothecate the shares. The next two years are flexible and he can sell, but has to buy other eligible securities with the proceeds. All eligible securities in an RGESS designated account are automatically subject to the lock-in periods. If an investor wants to buy more designated shares and keep these outside the lock-in clause, he has to give a declaration in Form B within a month of the transaction date. The tax benefit under Section 80CCG is withdrawn if these conditions are violated, but if the changes are due to involuntary corporate actions it's not affected.</span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b><span style="background-color: white;">What are your savings?</span></b></span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="background-color: white;">While there is no restriction on investment, only 50,000/- is considered for tax purposes. Of this, only 50%, or 25,000/-, is allowed as deduction. Since RGESS is for people with income less that 12 lakh, they will fall in the 10% or 20% tax bracket. The maximum savings under this will be 5000/- for people in the 20% tax bracket and 2500/- for those under 10% (beyond the Section 80C benefits). <b>Besides, the tax deductions will be available for the all the 3 years.</b></span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: #cc0000;"><b><span style="background-color: white;">Stocks or mutual funds?</span></b></span></div>
<div style="text-align: justify;">
<span style="background-color: white;"><br /></span></div>
<div style="text-align: justify;">
<span style="background-color: white;">Since direct investment in equity needs expertise and first-time investors are unlikely to have it, they should refrain from investing directly in the market. The risk is also high because 50,000/- is not enough to create a well-diversified portfolio. A better option is to go through the mutual fund route. Various mutual fund houses have also started filing offer documents for eligible schemes with Sebi, while their new fund offerings (NFO) too are expected soon.</span></div>
<div style="text-align: justify;">
<br /></div>
</div>
Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-4811609595525598002012-09-23T09:33:00.000-07:002012-09-23T09:33:08.731-07:00:: SCORES ::<div dir="ltr" style="text-align: left;" trbidi="on">
<h3 style="color: #990000; text-align: left;">
<b>SEBI REDRESS COMPLAINTS SYSTEM</b></h3>
<h3 style="color: #990000; text-align: left;">
<b> </b></h3>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiG9EmkbNxuBAqhbQmuowefcAnAefqEf1gkdXeqqjzXYW3W7frAnPIMwpJANsDosblaYEvR_k6l6QuMUr2UFuBu7TvxwmEk54Bd2v9Aq2T1lhcIepFbHoa1AQuwelSXj7sFRbdsuU6covHT/s1600/sebi-scores.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiG9EmkbNxuBAqhbQmuowefcAnAefqEf1gkdXeqqjzXYW3W7frAnPIMwpJANsDosblaYEvR_k6l6QuMUr2UFuBu7TvxwmEk54Bd2v9Aq2T1lhcIepFbHoa1AQuwelSXj7sFRbdsuU6covHT/s1600/sebi-scores.png" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div style="color: #990000; text-align: left;">
<br /></div>
<h2 style="color: #cc0000; text-align: left;">
<b>How to Approach SEBI with your Complaint<span style="font-weight: normal;"> </span></b></h2>
<div style="color: black; text-align: justify;">
(The market regulator has initiated a centralized online system for lodging and tracking complaints. Here's how to redress your grievances.) </div>
<div style="color: black; text-align: left;">
<br /></div>
<h3 style="text-align: left;">
1. <i style="color: #0c343d;"><b>File the Complaint</b></i></h3>
<div style="color: black; text-align: left;">
</div>
<div style="text-align: justify;">
<blockquote class="tr_bq">
For registering a complaint, access <a href="http://scores.gov.in/"><b>http://scores.gov.in</b></a> and click on the 'Complaint Registration' tab under '<b>Investor Corner</b>'</blockquote>
</div>
<h3 style="text-align: left;">
2. <i style="color: #0c343d;"><b>Enter your Details</b></i> </h3>
<h3 style="text-align: left;">
<br /></h3>
<div style="text-align: justify;">
(a) Enter your personal details and select a category among the following options </div>
<ul style="text-align: justify;">
<li>Listed companies/registrar & travel agents</li>
<li>Brokers/stock exchanges</li>
<li>Depository participants/depository</li>
<li>Mutual Funds</li>
<li>Other entities</li>
<li>Information to Sebi </li>
</ul>
<div style="text-align: justify;">
(b) Enter specific details of the complaint in the specific category.</div>
<br />
<h3 style="text-align: left;">
3. <i><b><span style="color: #0c343d;">Supporting documents</span></b></i></h3>
<br />
<div style="text-align: justify;">
Supporting documents up to 1 MB can be attached in the PDF format. In case the data to be loaded for each category is more than 1 MB, it can be sent by post to any of the Sebi offices.</div>
<div style="text-align: justify;">
<br /></div>
<h3 style="text-align: left;">
4. <i><span style="color: #0c343d;">Registration number</span></i></h3>
<h3 style="text-align: left;">
<i><span style="color: #0c343d;"> </span></i></h3>
<div style="text-align: justify;">
On filing the complaint, a unique registration number will be generated, which can be used for future correspondence. An e-mail acknowledging the complaint with the complaint registration number will also be sent to the e-mail ID entered in the complaint registration form.</div>
<br />
<h2 style="color: #cc0000; text-align: left;">
Sending a reminder</h2>
<div style="text-align: justify;">
If you want to send a reminder for the lodged complaint, click on 'Send Reminder' under 'Investor Corner' on the home page. Provide details like registration number, reminder details and the security code.</div>
<br />
<h2 style="color: #cc0000; text-align: left;">
If you are not satisfied with the response</h2>
<div style="text-align: justify;">
You can file a fresh complaint, send a mail to the officer entrusted with the complaint, take up the complaint with senior officers, or initiate legal proceedings against the entity.</div>
<br />
<h2 style="color: #cc0000; text-align: left;">
Track your complaint</h2>
<div style="text-align: justify;">
To check your complaint status, click on 'View Complaint Status' under 'Investor Corner' on the home page</div>
<ul style="text-align: justify;">
<li>Provide the complaint registration number which was allotted at the time of registration</li>
<li>Enter your password </li>
<ul>
<li>In case of online complaints, your e-mail address is your password.</li>
<li>In case of physical complaints, send to Sebi, enter the password send to you by Sebi in the acknowledgement letter.</li>
</ul>
<li>On verifying the correctness of registration number, password and security code, the current status of your complaint is displayed.</li>
</ul>
<br /><div>
<h2 style="color: #cc0000; text-align: left;">
How complaint is processed?</h2>
<div style="text-align: justify;">
The complaint is scrutinized by Sebi to see if the subject falls under its purview. If it does, Sebi forwards it to the concerned entity with an advice to send a written reply to the investors and file an action-taken report within 30 days.</div>
<div>
<br />
<h2 style="color: #cc0000; text-align: left;">
Your complaint may not be taken up if</h2>
<ul style="text-align: left;">
<li>...it is incomplete or not specific</li>
<li>...the allegation is not supported by documents</li>
<li>...you are simply offering suggestions or seeking guidance/explanation</li>
<li>...you want to seek explanation for non-trading or illiquidity of shares</li>
<li>...you are not satisfied with the trading price of shares</li>
<li>...it is about non-listing of shares of a private offer</li>
<li>...it concerns disputes arising from a private agreement with companies/intermediaries.</li>
</ul>
<br />
<h2 style="color: #cc0000; text-align: left;">
Points to Note</h2>
<ol style="text-align: left;">
<li>A complaint that has been taken up with the company concerned can be registered on SCORES if the investor is not satisfied with the response.</li>
<li>Unlisted companies and entities not registered with Sebi are not covered by SCORES.</li>
<li>An investor, who is not familiar with SCORES or has no access to the website, can lodge a complaint in the physical form by mail to any Sebi office. Such complaints are scanned and uploaded in SCORES for processing.</li>
<li>You can also call up Sebi's <b>toll-free helpline</b> service number for guidance</li>
</ol>
<ul style="text-align: left;"><ul>
<li><h3>
1800 266 7575 OR</h3>
</li>
<li><h3>
1800 22 7575</h3>
</li>
</ul>
</ul>
(The service is available in 14 languages) </div>
</div>
</div>
Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com2tag:blogger.com,1999:blog-6358546295171186175.post-13320889720057266602012-09-01T01:03:00.001-07:002012-09-01T01:09:58.258-07:00Investment Tax<div dir="ltr" style="text-align: left;" trbidi="on"><div><div><div style="color: #b45f06;"><b>How are your investments taxed</b></div><div style="color: #cc0000;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjptz9UWo7h4rc2y2utpBgQvoRtZemiK5iCAe35YbI6tOfTI_uEDR3G7378bQbwKVkN9QcHNHxtwd-7t-sEOW-HA23fEsD9kMhLIjJ41oXduWdtU74CftqaWxlJJGHG39i18w5VjiNN-JcX/s1600/634556160000000000_NRI64-65_bnr.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjptz9UWo7h4rc2y2utpBgQvoRtZemiK5iCAe35YbI6tOfTI_uEDR3G7378bQbwKVkN9QcHNHxtwd-7t-sEOW-HA23fEsD9kMhLIjJ41oXduWdtU74CftqaWxlJJGHG39i18w5VjiNN-JcX/s400/634556160000000000_NRI64-65_bnr.jpg" width="400" /></a></div><div style="color: #cc0000;"><br />
</div><br />
<div style="text-align: justify;">All financial instruments go through three stages -- Investment, Earning and Withdrawal. Since the tax rules vary across these phases, find out how much tax you will have to pay on your investment.</div><div style="text-align: justify;"></div><ul style="text-align: left;"><li><b style="color: #134f5c;">PF & VPF</b> - This is the most common investment. The interest rates are decided by EPFO Trust.<b><span style="color: #274e13;"> </span></b></li>
<li><b><span style="color: #274e13;">PPF</span> </b>- This assured return scheme is market linked, with 1 lakh annual investment limit.<b style="color: #274e13;"> </b></li>
<li><b style="color: #274e13;">Insurance Policies</b> - Budget 2012 says that for tax benefits, the cover should be 10 times the annual premium.<b style="color: #274e13;"> </b></li>
<li><b style="color: #274e13;">ELSS funds</b> - TAx-saver with the shortest lock-in period of three years may get scrapped under the DTC.</li>
</ul><div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b><b> </b></div><div style="text-align: center;"><b>(E-E-E)</b></div><div style="text-align: justify;"><b>The Exempt-Exempt-Exempt model means all three stages are tax-free. You get tax deduction at the time of investment, the earnings are tax-free, as are the withdrawals. </b></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div><ul style="text-align: left;"><li><b></b><b><span style="color: #274e13;"></span></b><b><span style="color: #274e13;">Unit linked pension plans</span></b><b> - </b>Upto 33% of the pension corpus withdrawn on maturity is tax-free. Rest to be put in annuity.<b style="color: #274e13;"> </b></li>
</ul><ul style="text-align: left;"><li><b style="color: #274e13;">Pension policies</b> - Annuity income is taxable as income at the normal rate applicable to the investor.<b><span style="color: #274e13;"> </span></b></li>
<li><b><span style="color: #274e13;">NPS </span></b>- Launched with much fanfare, it has not done too well. May be overhauled and improved soon.</li>
</ul><div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b> </div><div style="text-align: center;"><b>(E-E-T)</b></div><div style="text-align: justify;"><b>The Exempt-Exempt-Tax regime gives tax deduction at the time of investment and the earning is tax-free, but withdrawal is taxed as income at marginal rate. </b></div><div style="text-align: justify;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div><div style="text-align: justify;"><b></b></div><ul style="text-align: left;"><li><b><span style="color: #274e13;">NSCs</span> - </b>These are now market linked like the PPF and available in 5 and 10 years options.</li>
<li><b style="color: #274e13;">Tax-savings FDs</b> - Best tax saving option for risk averse investors. Higher rates for senior citizens.</li>
<li><b style="color: #274e13;">Senior Citizens Savings Scheme</b> - A popular option that is market-linked, and has an investment limit of 15 lakh per person </li>
</ul><div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b> </div><div style="text-align: center;"><b>(E-T-E)</b></div><div style="text-align: justify;"><b>The Exempt-Tax-Exempt arrangement offers tax deduction to investment but earning is taxed. The withdrawal is tax-free given the tax is paid out at the growth stage. </b></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div><ul style="text-align: left;"><li style="color: #274e13;"><b>Stocks - </b><span style="color: black;">If held for more than a year, no tax on capital gains. You pay 15% tax if sold before a year.</span></li>
<li style="color: #274e13;"><b>Equity funds - </b><span style="color: black;">Just like stocks, there is no tax if held for more than a year. All dividends are tax-free</span></li>
<li style="color: #274e13;"><b>Balanced funds - </b><span style="color: black;">Though up to 40% of portfolio can be in debt, these enjoy the same tax benefits as equity funds</span></li>
<li><b><span style="color: #274e13;">Tax-free bonds - </span></b><span style="color: #274e13;"><span style="color: black;">These bonds issued by infrastructure companies carries a low coupon rate</span></span> </li>
</ul><span style="color: #274e13;"><span style="color: black;"></span></span><br />
<div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b> </div><div style="text-align: center;"><b>(T-E-E)</b></div><div style="text-align: justify;"><b>No tax deduction here for the investor. He invests post-tax income but the earning and withdrawal are tax-free if the investment is held for at least one year. </b></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div><b><span style="color: #274e13;"></span></b><br />
<ul style="color: #274e13; text-align: left;"><li><b>Non Equity hybrid fund - </b><span style="color: black;">After a year, profit from sale is taxed at a lower rate of flat 10% or 20% after indexation.</span></li>
<li><b>Debt funds -</b><span style="color: black;">Tax-efficient way of investing in debt. After a year, profits are treated as capital gains.</span></li>
<li><b>FMPs - </b><span style="color: black;">Similar to FDs, but profits are taxed at a lower rate. Very popular among HNIs</span></li>
</ul></div><div style="text-align: left;"><div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b> </div><div style="text-align: center;"><b>(T-E-T)</b></div><div style="text-align: justify;"><b>Here again, the investor puts in post-tax income. While there is no tax during the growth stage, the earning is taxed at the time of withdrawal.</b></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div></div><ul style="text-align: left;"><li style="color: #274e13;"><b>Recurring deposits - </b><span style="color: black;">Lock into high rates even if you don't have a lump sum. No TDS, so must pay tax yourself.</span></li>
<li style="color: #274e13;"><b>Post office MIS - </b><span style="color: black;">Monthly income is fully taxable without any TDS. Onus is on the investor to pay tax.</span></li>
<li style="color: #274e13;"><b>Fixed deposits - </b><span style="color: black;">TDS only up to 10% if interest is more than 10,000</span> a year. Here, too onus is on investor.</li>
<li><b><span style="color: #274e13;">Bonds </span>- </b>Income from tax-saving bonds is taxable. Pay tax if you fall in the higher tax bracket</li>
</ul></div><div style="text-align: left;"><div style="text-align: center;"><b style="color: #cc0000;">TAXATION</b> </div><div style="text-align: center;"><b>(T-T-E)</b></div><div style="text-align: justify;"><b>This is possibly the least tax-efficient regime with no tax deduction offered and earning fully taxable. With income taxed every year, there is no tax on principal at maturity.</b></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s1600/horizontal-lines-the-rule-588x390.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhol6RqUojl1k1zldiLeO0dZYjOvq0EqMY0BUL7umjTYSt3-BKag43wdwip0RQNiXunB0kuB43yVLHeddYBEYZz3jf-1mvXyMcIyebeuNDlowDDBVZOgObMSngcXFHZStohbrEBVijkUdsR/s200/horizontal-lines-the-rule-588x390.jpg" width="200" /></a></div></div><div><div><br />
<br />
</div></div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com2tag:blogger.com,1999:blog-6358546295171186175.post-52020555842482991672012-07-07T00:50:00.000-07:002012-07-07T00:50:03.224-07:00Wealth Tax<div dir="ltr" style="text-align: left;" trbidi="on"><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisLv4iu5DinnAKPL4XGrw8neUMPCySwB-BehEVDP1pZ6Xxf5FTPDxJXkHctrJeMxhB4YY4YvEB2RR3aY3NfLDhv_9m5iZqWDfKzdr0l78LtPYimVvHJuGgg7IgIDnmvwmrIcf7ExC1KuZ9/s1600/wealth_tax.png" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisLv4iu5DinnAKPL4XGrw8neUMPCySwB-BehEVDP1pZ6Xxf5FTPDxJXkHctrJeMxhB4YY4YvEB2RR3aY3NfLDhv_9m5iZqWDfKzdr0l78LtPYimVvHJuGgg7IgIDnmvwmrIcf7ExC1KuZ9/s320/wealth_tax.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
</td></tr>
</tbody></table><div style="text-align: justify;">Wealth tax came into existence on 1st April 1957. It is termed as most significant direct tax. As per the wealth tax act, wealth tax is applicable to the following: </div><ul style="text-align: left;"><li> An individual person</li>
<li>A group of people who own a property</li>
<li>A company or organization </li>
<li>A Hindu undivided family (HUF)</li>
<li>A representative or heir of a dead person</li>
<li>Non corporative tax payer </li>
</ul><div style="text-align: justify;"></div><div style="text-align: justify;">Wealth tax is the most neglected child of the direct taxes family. However, remember that ignoring wealth tax can lead to serious problems for a taxpayer, with the penalty ranging from 100% to 500% of the unpaid tax. In extreme cases of willful default, a taxpayer may be punished with imprisonment ranging from six months to seven years.</div><br />
<div style="text-align: justify;">The laxity on the part of the government has encouraged taxpayers to ignore their wealth tax liability. Though financial assets do not invite wealth tax, real estate and gold, two favourite investment options of the rich, are included. In the past 4-5 years, crores of rupees has flowed into real estate, while gold prices have more than doubled in the past three years.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">However, this is not reflected in the wealth tax collection, which has grown at a tardy pace, to say the least. However, this could soon change. A committee has been formed which has sought stricter punishment for tax evasion. The panel wants the minimum imprisonment for income tax and wealth tax evasion to be three years.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Most investors in real estate have no idea about the t ax implication of buying a second property. A second house won't attract wealth tax only if it is rented out for at least 300 days in a year. It can be a double whammy for the owner if the house is lying vacant, for he will not only have to pay tax on the notional rental income, but the value of the house will be added to his net taxable wealth. This is why savvy investors prefer to put money in commercial real estate, which does not attract wealth tax.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">An increased focus on wealth tax compliance can bring in significant revenue for the government. The best part is that there cannot be any political opposition to such a move because the law already exists. All that the government needs to do is invoke it more seriously, that's it.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">However there is good news in store. The original DTC had proposed to raise the threshold of assets for wealth tax to 50 crore INR and reduce the tax to 0.25%. It had also sought to bring financial assets under the tax ambit. The revised DTC has not specified the limit, but has hinted that financial assets will bot be included and that the threshold limit needs to be raised.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Till that happens, make sure you pay your wealth tax and file the return to avoid a massive from the tax. </div><div style="text-align: justify;"><br />
</div><div style="color: #4c1130; text-align: justify;"><span style="font-size: large;"><u><b>Quick facts about wealth tax</b></u></span></div><h3 style="color: red; text-align: justify;"><b>What is Taxable ?</b></h3><div style="text-align: justify;">Wealth tax is payable if the value of the following unproductive assets exceeds <b>30 lakh</b> INR on the last day of the fiscal year.</div><ul style="text-align: left;"><li>More than one property, if it is unoccupied</li>
<li>Gold and ornaments</li>
<li>Art and artefacts</li>
<li>Luxury cars, watches, yachts and aircraft</li>
<li>Over <b>50,000</b> INR in cash.</li>
</ul><h3 style="color: red; text-align: left;"> <b>How much is taxable ?</b></h3><ul style="text-align: left;"><li><span style="color: black;">The tax is <b>1%</b> of the value of the assets exceeding <b>30 lakh</b> INR. For example: If the value of these assets adds up to <b>75 lakh</b> INR, you have to pay <b>45,000</b> INR (<b>1 % of 45 lakh</b>) as wealth tax.</span></li>
<li><span style="color: black;">There is no surcharge or cess on wealth tax </span><b> </b></li>
</ul><h3 style="color: red; text-align: justify;">What is exempt from wealth tax ?</h3><ul style="text-align: left;"><li>Any one residential property. Taxpayer can choose whichever property he wants to exempt</li>
<li>Commercial property</li>
<li>Financial assets (stocks, bonds, Ulips, mutual fund, gold funds and bank balance)</li>
<li>Any outstanding loan taken to purchase the asset on which wealth tax is payable.</li>
</ul><h3 style="color: red; text-align: left;">Filing deadline and form to use</h3><ul style="text-align: left;"><li> Wealth tax return has to be filled by <b>31st July</b>. If the assessee is liable for an audit, the last date of filling in <b>30th September</b></li>
<li>You have to use the four-page <b>Form BA</b> for filing the return</li>
<li>If you miss the last date, you can still file the return before the expiry of one year from the end of the assessment year</li>
</ul><h3 style="color: red; text-align: left;">What is the penalty ? </h3><ul style="text-align: left;"><li><b>1%</b> interest for every month of delay</li>
<li>Tax evasion invites penalty ranging from <b>100%</b> to <b>500%</b> of the evaded amount</li>
<li>In extreme cases, the imprisonment ranging from <b>six months</b> to <b>seven years</b>, with fine, if the wealth tax exceeds <b>1 lakh</b> INR</li>
</ul><br />
<br />
<br />
<div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-44151657207523430112012-04-30T21:14:00.003-07:002012-05-16T03:27:28.092-07:00Credit Score<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;">It is derived from the 'accounts' and 'enquiries' sections of your Credit Information Report<i>. </i>Different credit agencies have different marking systems. For instance, CIBIL's scores ranges from 300 to 900 points while Equifax India's ranges from 1 to 999 points. The closer your score is to the upper limit, the better. Sometimes, one may get a score of NA or NH, meaning you're either new to the credit system or you're in the ownership category where you have access to credit but aren't responsible for paying back the loan. So lenders may hesitate to give you a loan if you don't have a credit record.</div><br />
<i>Financial Institutions check your credit score before extending you a loan. Apart from common mistakes, here are some moves that affect your credit. So beware</i><br />
<br />
<div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkGql8UlFszi3BjgyflttWZd6dRmSwfxyvfhC9sL6Vw7iSLROGyLYwInuG_otKzB8WujLH7bfGbAYZ6I1kzhOHyMLhv84h-HLmyv2mcNILczsvDWIA2e4j_MkRdQqBIgYdPV-NrCyAQ9CV/s1600/cards.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkGql8UlFszi3BjgyflttWZd6dRmSwfxyvfhC9sL6Vw7iSLROGyLYwInuG_otKzB8WujLH7bfGbAYZ6I1kzhOHyMLhv84h-HLmyv2mcNILczsvDWIA2e4j_MkRdQqBIgYdPV-NrCyAQ9CV/s1600/cards.jpg" /></a><u><b style="color: #cc0000;">TOO MANY CARDS </b></u></div><div style="text-align: justify;">Bankers won't like it if you are '<b>credit hungry</b>'. Applying for too many loans within a short period or having too many credit cards can go against you and may spoil your chances of getting a loan. This is because it is a sign of desperation and will have a negative impact as well. Access to multiple lines of credit, which may include unused credit cards, also impacts the score as it signals over-indebtedness.</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjuTNub2ix7RdiUG-T_Ebd6W-qi81btskVFhb-W6oMZ7SpY8lFRpigPh2DxTRWycmi2z7MH9rZA6g-oXPJax_-kAme0LD4Ok_cJAmE9baev9yiiuCL5-vpf8pqIw4vFLbHE5ria6VzDCu4S/s1600/care.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjuTNub2ix7RdiUG-T_Ebd6W-qi81btskVFhb-W6oMZ7SpY8lFRpigPh2DxTRWycmi2z7MH9rZA6g-oXPJax_-kAme0LD4Ok_cJAmE9baev9yiiuCL5-vpf8pqIw4vFLbHE5ria6VzDCu4S/s1600/care.jpg" /></a></div><div style="color: #cc0000; text-align: justify;"><u><b>GUARANTEE WITH CARE</b></u></div><div style="text-align: justify;">Don't be surprised if your application is rejected if your friend did not repay a loan you stood guarantee to. Credit information bureaus classify ownership of a loan, that is, the responsibility of repaying, into four categories -- single/individual (you are solely responsible for paying), joint (you share responsibility with someone), authorised user (when you have access to credit but are responsible for paying, as in add-on credit cards) and <b>guarantor </b>(when you guarantee to honour the obligation if loan taker cannot repay). So if you have guaranteed a loan and it hasn't been paid on time, it will impact your score. Keep track of add-on credit cards and monitor joint accounts as the other holder's negligence can impact your access to credit.</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEieEaCO3FVvnmkWdcHxMzNV2N-N01cDLzzGa8XVi1tUcwPTtSN6Y4fV50rqmOCEvqQmtvTL6JkMfXLY_QCf9Ogx3dpe_hmJcTdRwhaSyB7wQNXWgwSebpoxmj55iGPvKlmCCOpYbwPYe6WQ/s1600/limit.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEieEaCO3FVvnmkWdcHxMzNV2N-N01cDLzzGa8XVi1tUcwPTtSN6Y4fV50rqmOCEvqQmtvTL6JkMfXLY_QCf9Ogx3dpe_hmJcTdRwhaSyB7wQNXWgwSebpoxmj55iGPvKlmCCOpYbwPYe6WQ/s1600/limit.jpg" /></a></div><div style="color: #cc0000; text-align: justify;"><u><b>CROSSING LIMITS</b></u></div><div style="text-align: justify;">Frequent use of full credit card limit will be a red flag for lenders. The figure appearing under Current Balances of the "Account(s)" section of your credit report helps the loan provider evaluate whether you'll be able to pay additional EMIs. A lower balance means you have a better change of repaying the loan. While high credit card spending may not necessarily be bad, an increase in the current balance on the card over time indicates a higher repayment burden and may negatively impact the score. Your repayment pattern and track records also influence the score. The payment history appears in the "Account(s)" section of your credit report. The Days Past Due, or DPD, shows how many days a payment is late that month. Lenders view anything other than zero negatively.</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiH4BAM7f0Qi9n1eDuWaBLW0WhyphenhyphenhFN0TqdHTt3a7XHScFtCsM5vFtpXstLiaNBKOvpzIa0kObXqdpHg8oh8_3PBuHGsoAr_4B2udgMR4ZTdsFVLN9bHBIktNqgiYLSRmjXlBz104CHvsZu/s1600/loan.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiH4BAM7f0Qi9n1eDuWaBLW0WhyphenhyphenhFN0TqdHTt3a7XHScFtCsM5vFtpXstLiaNBKOvpzIa0kObXqdpHg8oh8_3PBuHGsoAr_4B2udgMR4ZTdsFVLN9bHBIktNqgiYLSRmjXlBz104CHvsZu/s1600/loan.jpg" /></a></div><div style="color: #cc0000; text-align: justify;"><u><b>MORTGAGE MIX</b></u></div><div style="text-align: justify;">Things such as how old your lines of credit are and the quality of the mix can make a huge difference. Credit is categorised into secured loans (backed by collateral) and unsecured loans (not backed by collateral). Loans that create an asset, for instance a business, house are considered secured, while credit taken for consumption, such as personal loan or credit card spending, is unsecured. A high share of unsecured credit affects the customer's profile. This is because this means large payouts are due owing to the high interest rates on these loans. Therefore, chances of default are higher.</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtW3v9ULyfq4BN66oUv9SLpCeFA7mr_eyjEudOKIznAhASDBrwKDobEhFPkwkMvmjilO8Q0jEPIhJgzDQ1-9mmuUUs8KtoRT5ew1eyxt3RKDHQNion7SQuLT9iibQiJTXF2YrhPZJ4HUTv/s1600/images.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtW3v9ULyfq4BN66oUv9SLpCeFA7mr_eyjEudOKIznAhASDBrwKDobEhFPkwkMvmjilO8Q0jEPIhJgzDQ1-9mmuUUs8KtoRT5ew1eyxt3RKDHQNion7SQuLT9iibQiJTXF2YrhPZJ4HUTv/s1600/images.jpg" /></a></div><div style="color: #cc0000; text-align: justify;"><u><b>GHOSTS FROM THE PAST</b></u></div><div style="text-align: justify;">Ignoring discrepancies in credit information reports or credit card and loan repayment records may come back to haunt you later. If you spot a mistake, you can either approach the lender or a credit information company to get it rectified. However, it is better to approach the bank as a credit information company can't make any change in the report unless it gets the lender's written approval. So don't overlook on anything which you think is not right.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj98wufg2tq8tbAPDPwH2RoHHbF7Tevk96M7gDiBT3nD_tD9EcijUObAd03a58_byiDiCUs-_FuL7mjA0mTfeapAwDz2QzVW5fPvvP2JmrU178zhycNlOXGGMO9YQcqsN69Ki0UNAhMdlVP/s1600/images.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj98wufg2tq8tbAPDPwH2RoHHbF7Tevk96M7gDiBT3nD_tD9EcijUObAd03a58_byiDiCUs-_FuL7mjA0mTfeapAwDz2QzVW5fPvvP2JmrU178zhycNlOXGGMO9YQcqsN69Ki0UNAhMdlVP/s1600/images.jpg" /></a></div><div style="color: #cc0000;"><u><b>FOR THE FUTURE</b></u></div>Though, as of now, mobile phone bill payments do not get captured in the credit information, there is a possibility of it getting included in the near future. According to the Credit Information Companies Regulation Act of 2005, telecom companies are allowed to access an individual's credit report. However, there is no provision for telecom companies sharing data with credit information companies. So do not overlook this bill so that you will be able to meet the future requirements of your credit scores if regulation do get updated. To keep this account pristine, comply with current rules and use all official channels to settle disputes rather than just refusing to pay your bill.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-87358076499415329002012-02-12T07:37:00.000-08:002012-02-12T07:39:30.467-08:00Foreign Capital<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5kxmcqv_h9elhaWiMyhInicwURj9MqcpXRJ6ZFuFghi-d3mP2IGupyszyO6Ri2-swvM3TMme4XJ7slfpIuu6pymwcXtuyTa7pJx_k9C2Q5RTuIgk_ZECWeZRFGJsdmbn2M3pjdbctgD4X/s1600/fdi.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5kxmcqv_h9elhaWiMyhInicwURj9MqcpXRJ6ZFuFghi-d3mP2IGupyszyO6Ri2-swvM3TMme4XJ7slfpIuu6pymwcXtuyTa7pJx_k9C2Q5RTuIgk_ZECWeZRFGJsdmbn2M3pjdbctgD4X/s200/fdi.jpg" width="150" /></a></div><div style="text-align: justify;">In an attempt to increase overseas capital inflows and reduce the current account deficit due to higher imports, India has liberalised foreign investment in stock markets. Qualified foreign investors (QFIs) can now invest directly in Indian equities. Lets have an overview of such new feature introduction.</div><br />
<div style="text-align: justify;">A QFI is an individual, an association or a group from a foreign country complaint with standards mandated by the Financial Action Task Force, an inter-government body that formulates policies to combat money laundering and terrorist financing. Foreign Institutional investors (FIIs) and foreign venture capital investments do not come under the QFI category.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">An individual QFI can invest up to 5% of the paid-up capital of a listed company. Total investment by QFIs in a listed company cannot exceed 10% of its paid paid-up capital. Foreign investors will also be allowed to acquire equity shares by way of rights issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate actions.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">QFIs can invest only in listed Indian equities through depository participants (agents of depositories that provide accounts for holding securities in electronic format) registered with SEBI. Each investor will be allowed to open one trading account and one demat account with a depository participant but will not be allowed to open a dedicated bank account in India.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Depository participants will purchase equity at the instruction of QFIs within five working days. If a depository participant fails to execute the order within five working days, the funds would be repatriated back to the QFIs designated overseas bank. When QFIs sell their stock holding, the sale proceeds will also be repatriated to their designated banks within five working days. In addition, the depository participants wil ensure compliance with the "<b>Know Your Customer</b>" norms for QFIs. QFIs have already been allowed to invest in mutual funds.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The new scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows in the country.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-32981091682787822722012-01-28T07:34:00.000-08:002012-01-28T07:34:48.912-08:00Fund Statement<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #990000;"><i><b>Reading a Fund Statement</b></i></div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0LjRsbfg8cJfhM1MccFrr-IPtxSaoP2CTikNDJMsmt5YeyATRj136EBJVrgmC5YTEyBfItHQfsOmO8fPS9N6RdKEgB4lyOV-W9ywoJOZ2pxQH8aavtxLCaxz8CzuKl7UOM8RdLde2FxpD/s1600/11579611.cms.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0LjRsbfg8cJfhM1MccFrr-IPtxSaoP2CTikNDJMsmt5YeyATRj136EBJVrgmC5YTEyBfItHQfsOmO8fPS9N6RdKEgB4lyOV-W9ywoJOZ2pxQH8aavtxLCaxz8CzuKl7UOM8RdLde2FxpD/s200/11579611.cms.jpg" width="200" /></a></div><div style="text-align: justify;">So you've invested in mutual fund? What is the entry/exit load on it? What is your current net asset value, or NAV? If these seems Greek to you, you clearly haven't been taking a close look at the statement that your fund house mails to you. Much like a bank account statement, this document offers all transaction details carried out within a defined time period. It is also available online and indicates account changes whenever there is a redemption, additional investment or dividend declaration.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Here's look at some of the important details in the mutual fund statement, which should be checked regularly by investors.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"></div><div style="color: #cc0000; text-align: justify;"><b>Investor's personal details</b></div><div style="text-align: justify;">The name, address and phone number of the investor and joint investors (if any) are mentioned in this section. Ensure that all these details are correct and updated, and if there is any discrepancy, it should be communicated to the broker or fund house.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Adviser Name</b></div><div style="text-align: justify;">This indicates the source through which you have invested. If you have done so through an agent, the latter's name and code will appear on the statement. However, if you have invested directly, these parts should be blank on your account statement.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Bank details</b></div><div style="text-align: justify;">Make sure your bank's name and your account number are accurately mentioned to avoid problems while redeeming units. If you want to change your bank mandate, fill out the slip at the bottom of your account statement and submit it to your fund house or agent.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Folio and account numbers</b></div><div style="text-align: justify;">Most mutual funds offer one folio number and several account numbers in the same folio for all investments under the same unitholder combination. This makes tracking all your investments with the same fund easier. Make sure you keep tabs on the different account numbers within the single folio.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Current cost and value</b></div><div style="text-align: justify;">The cost indicates the amount you invested in a scheme while the current value is the latest market value of your investments as on the date the statements is generated.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>PAN details</b></div><div style="text-align: justify;">You must give the correct Permanent Account Number (PAN), irrespective of the amount invested. Check your PAN details mentioned in the account statement and ensure there are no discrepancies.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Transaction summary</b></div><div style="text-align: justify;">This section details the type of transactions you have opted for, such as purchase, systematic investment plan (SIP) and systematic withdrawal plan (SWP). Transactions like dividend payout or reinvestment are also mentioned along with percentage or rupees per unit at which the dividend is reinvested or paid.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Transaction slip</b></div><div style="text-align: justify;">At the bottom of the account statement, there is a transaction-cum-service request slip, which can be used for buying additional units, redeeming and switching units between schemes. The transaction slip can also be used if an investor wants to notify any change in his/her correspondence address and bank details.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The back of the account statement is also worth a careful look. It contains important notes relating to investor services, KYC norms, additional purchase, switch, and the like. A little due diligence and careful monitoring by you can ensure the safety of your investment.</div><div style="text-align: justify;"><br />
</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-58351413784899950872011-11-06T00:36:00.000-07:002011-11-06T00:36:19.099-07:00Trading Terms<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><i>A growing number of small investors is buying and selling stocks online. However, before you attempt to do it yourself, here are a few terms you should familiarize yourself with.</i></div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWZQ22QLtz9d2ecSn13J1kwHTIgU4HnyL8w_291KVHzJcDSF7EwqnfMAjKin3FAxE_AkYP_Q0mKir178oKn6ZUIH0_a2KBgbipBRF58V8aIN2at5K3hiCauF3ZzEkYUewY3Q7vtdyKDt4o/s1600/images.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWZQ22QLtz9d2ecSn13J1kwHTIgU4HnyL8w_291KVHzJcDSF7EwqnfMAjKin3FAxE_AkYP_Q0mKir178oKn6ZUIH0_a2KBgbipBRF58V8aIN2at5K3hiCauF3ZzEkYUewY3Q7vtdyKDt4o/s1600/images.jpg" /></a></div><div style="color: #134f5c; text-align: justify;"><b><span style="color: #cc0000;">A.</span> <u>DAY TRADING</u></b></div><div style="color: #134f5c; text-align: justify;"><b>These orders are used for buying and selling shares in the normal course of stock trading during the day.</b></div><div style="color: #cc0000; text-align: justify;"><b><br />
</b></div><div style="color: #cc0000; text-align: justify;"><b>A.1 DAY ORDER</b></div><div style="text-align: justify;"> This order is valid only for a day. If it is not executed by the end of the session, the order gets cancelled automatically.</div><div style="text-align: justify;"><b>Eg:</b> Tata Steel is trading at 440/-. You place a day order for shares at 430/-. It will be executed only if the share price dips to 430/- during the day.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>A.2 IMMEDIATE OR CANCEL</b></div><div style="text-align: justify;">This is for buying or selling a share as soon as the order is placed. If there is no buyer or seller at the specified price, its gets cancelled. Sometimes IOC orders are executed partially.</div><div style="text-align: justify;"><b>Eg: </b>An IOC order is placed for 100 shares of Reliance Industries at 12.05pm when the share price is 900/-. Only 25 shares are bought before the price rises to 905/-. The order for the balance 75 shares is cancelled.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>A.3 MARKET ORDER</b></div><div style="text-align: justify;">This order is executed immediately, irrespective of the share price. The buyer gets to know the price only after the order has been executed.</div><div style="text-align: justify;"><b>Eg:</b> In the above example, if it was a market order for 100 shares of Reliance, the buyer would have got 25 shares at 900/- and the balance 75 at 905/-.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>A.4 GOOD TILL CANCELLED</b></div><div style="text-align: justify;">Unlike the day order, this remains valid for a specified number of days till it is cancelled by the trader. The validity period is specified by the exchanges. GTC orders help investors buy at a specified price without having to monitor the share price closely.</div><div style="text-align: justify;"><br />
</div><div style="color: #134f5c; text-align: justify;"><b><span style="color: #cc0000;">B.</span> <u>STOP LOSS ORDERS</u></b></div><div style="color: #134f5c; text-align: justify;"><b>Stop Loss orders limit the loss of the investor by buying back or selling a share if the price moves contrary to expectations. He doesn't need to monitor the price.</b></div><div style="color: #134f5c; text-align: justify;"><b> </b></div><div style="color: #134f5c; text-align: justify;"><b><span style="color: #cc0000;">B.1 MARKET PRICE PROTECTION</span></b></div><div style="color: #134f5c; text-align: justify;"><span style="color: #cc0000;"><span style="color: black;">This limits the price as a percentage of the last traded price. It is useful while trading in volatile stocks</span></span><b><span style="color: #cc0000;"> </span></b></div><div style="color: #134f5c; text-align: justify;"><span style="color: black;"><b>Eg: </b>You place an order for shares at 100/-, but by the time it is received by the system, the price rises to 106/-. In a market order, you will get shares at 106/-, but if you opt for 2% MPP, the order will not be executed if the price rises above 102/-.</span></div><div style="color: #134f5c; text-align: justify;"><span style="color: black;"><br />
</span></div><div style="color: #cc0000; text-align: justify;"><b>B.2 SL LIMIT ORDER (SELL)</b></div><div style="color: #134f5c; text-align: justify;"><span style="color: black;">The stop loss order can also be set if shares have been bought.</span></div><div style="color: #134f5c; text-align: justify;"><span style="color: black;"><b>Eg: </b>An investor buys 100 shares at 175/- and sets a stop loss at 173/- with a limit of 170/-. The shares will not be sold if the price falls below 170/-.</span></div><div style="color: #134f5c; text-align: justify;"><span style="color: black;"><br />
</span></div><div style="color: #cc0000; text-align: justify;"><b>B.3 SL LIMIT ORDER (BUY)</b></div><div style="text-align: justify;">A limit order specifies the price at which the shares are to be purchased (or sold) after the stop loss is triggered.</div><div style="text-align: justify;"><b>Eg: </b>If the limit for Axis Bank was set at 1107/-, the order would be executed between 1105/- (the trigger price) and 1107/- (the upper limit). If the price rises to 1110/-, the order will not be executed. Limit order gives the trader some control over the price, but the purpose is defeated if the price moves beyond the defined threshold.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>B.4 STOP LOSS MARKET ORDER</b></div><div style="text-align: justify;">The stop loss is activated when the share price reaches the trigger price and is executed at the prevailing market price. The investor has no control over the price at which the order is executed after it is triggered.</div><div style="text-align: justify;"><b>Eg:</b> A trader short sells 100 shares of Axis Bank at 1100/- and sets the threshold price at 1105/-. When the price rises to 1105/-, the order is activated for immediate execution. However, if the price jumps to 1110 or more before it is executed, the order will be executed at 1110/-. Once the trigger is crossed, the trader has no control over the price.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">---------------------------------------------------------------------------------------------------------------</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>INDEX-BASED CIRCUITS</b></div><div style="text-align: justify;">These are trading barriers set up by the exchanges to prevent excessive speculation and panic selling, the circuits are activated when the market moves by over 10% and trading halts across the equity and derivative markets throughout the country. The circuits are currently applicable to two benchmark indices -- BSE Sensex and S&P CNX Nifty.</div><div style="text-align: justify;"><br />
</div><div style="color: #b45f06; text-align: justify;"><u><b>10% rise or fall in benchmark index</b></u></div><div style="text-align: justify;">Before 1 pm => Trading halts for one hour</div><div style="text-align: justify;">After 1pm but before 2:30 pm => Trading halts for 30 mins.</div><div style="text-align: justify;">After 2:30 pm => Trading doesn't halt</div><div style="text-align: justify;"><br />
</div><div style="color: #b45f06; text-align: justify;"><u><b>15% rise or fall in benchmark index</b></u></div><div style="text-align: justify;">Before 1 pm => Trading halts for two hours</div><div style="text-align: justify;">After 1pm but before 2:30 pm => Trading halts for one hour</div><div style="text-align: justify;">After 2:30 pm => Trading halts for the day</div><div style="text-align: justify;"><br />
</div><div style="color: #b45f06; text-align: justify;"><u><b>20% rise or fall in benchmark index</b></u></div><div style="text-align: justify;">Trading suspended for the rest of the day.<br />
</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-83907605985292443982011-09-23T23:07:00.000-07:002011-09-23T23:07:06.560-07:00Assured Returns<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><i>Don't be fooled by promises of guaranteed returns. It is critical to look for risks in an investment rather than seek assurances that are easy to give</i>.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5Zk7FUKjBGleO_4zmrfMuG8jHI6dk3IIDmCJoA_9yfoTjBzJIAvdxLQVA_R6GeIczrgCQOUfgqlG7BvnZeleXuHYjUr3KwOKBs8ZPL1ar36DDhHOQmY_G4Z5VSKI3IhOuz0UAwjNtndDW/s1600/Software_assurance.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="193" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5Zk7FUKjBGleO_4zmrfMuG8jHI6dk3IIDmCJoA_9yfoTjBzJIAvdxLQVA_R6GeIczrgCQOUfgqlG7BvnZeleXuHYjUr3KwOKBs8ZPL1ar36DDhHOQmY_G4Z5VSKI3IhOuz0UAwjNtndDW/s200/Software_assurance.jpg" width="200" /></a>Investors love assurances. An assured return conjures up the image of a solid investment that will deliver on its promise. It seems like the best choice one can make with one's money. The truth is that delivering an assured return is the toughest act for an financial product. If investors think that assured return means a risk-free and safe investment, they should think again. The quality of the promise matters so much more than the promise itself.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Why is it tough to assure returns? The performance of an investment is primarily driven by the assets in which the investor's money is put to work. All assets are subject to risk. It is not possible to buy assets that will only appreciate in value. The degree of risk may vary, but no one can tell how an asset will perform in the future. Whether it is land, gold, houses, stocks or art, all assets are subject to the risk of price fluctuation. Prices are influenced by cyclical factors such as the state of the economy (the US housing prices crashed in 2008 triggering an economic recession), and structural factors that impact the specific asset. Some assets, such as property or equity, may face short-term risks that even out in the long-term, but they are risky anyway. All investment products are based on an underlying asset port-folio, which is risky by definition. Asking where, not how, the money will be invested is critical to understanding any assurance of return.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">So, how do banks manage to assure returns on deposits? The answer lies in the balance sheet structure. A bank borrows from its depositors. Its assets are the loans it gives out to various borrowers using these deposits. The borrowers agree to pay a fixed rate of interest and return the principal, but their ability to keep the promise is again linked to their assets and performance. A person who has taken a home loan is likely to default, despite committing to a fixed rate of interest, if he loses his job or if his house drops in value significantly. Therefore, the bank's portfolio is also subject to risk. The bank does two things to keep its promise to depositors. First, it ensures that the loan portfolio is not completely risky and holds some safe investments in government bonds as well. Second, it does not fund all the loans with deposits, but ensures that a part of it is funded through equity investors who do not seek assurance. If the risk of the asset portfolio is borne adequately by equity capital, the bank is unlikely to default on its deposits. This is why capital adequacy is a regulatory requirement for banks that seek deposits from the public. This is also the reason that a bank with a poor quality loan portfolio or inadequate capital can default on it deposits despite assurance.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">How does a company pay an assured return on its bonds? It does so by further extending the balance sheet structure used by a bank. Unlike a bank that holds loans, a company holds assets that are expected to generate future income. The risk associated with these assets can vary depending on the nature of the business. Therefore, a company has to be funded by its promoters even before it seeks any lenders. The lenders will, of course, want the company to have adequate equity capital already invested in it. They will ask an external credit rating agency to test the quality of assets that they are funding. As we know, these agencies can downgrade and change the rating unfavourably if a company is more likely to default. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">How safe are government securities? The central government assures returns on its bonds and saving schemes because of its unique powers that provide it with three options to return the money it borrows. It can unilaterally increase the taxes, borrow internationally, or print money. We can, therefore, assume that the government will pay its liabilities. We know from the experiences in Europe that a government which borrows recklessly can also find itself in trouble, causing serious economic consequences for its lenders and citizens. Hence, the ability to assure returns comes either from the strength of the balance sheet in the case of a bank or company, and from special powers vested with a government. It is critical to learn how to look for risks in an investment, rather than seek assurances that are easy to give but tough to deliver.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-24159458936215000782011-09-03T23:49:00.000-07:002011-09-04T00:16:24.352-07:00MF Grievance<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: black;"><i><b>A proper redressal system is in place to address the complaints of an MF investor.</b></i></div><div style="color: black;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5dmlMfNdhlbRAyKzUuj2UO6qX2EdvNJ2pEtKSfpE5NAEol8FYRudGPmbRCo2sblbR8YRwp0eZn5rmnSs00Ft-ZMUFVhDvM9Ja-W5l9WWaz41tWu4FHYVLn5xthzrfoX32ZLFNaf-VHUph/s1600/investors_grievance.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="54" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5dmlMfNdhlbRAyKzUuj2UO6qX2EdvNJ2pEtKSfpE5NAEol8FYRudGPmbRCo2sblbR8YRwp0eZn5rmnSs00Ft-ZMUFVhDvM9Ja-W5l9WWaz41tWu4FHYVLn5xthzrfoX32ZLFNaf-VHUph/s640/investors_grievance.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">Investing in a mutual fund (MF) today is easier than ever before. Now, you could invest not just through the distributor, but also online and without an intermediary. Servicing the MF investor, on the other hand, has always been an issue, though it's being tackled through a series of steps of late. The tardy and unfriendly attitude that characterized the MF industry in its infancy stage has given way to an efficient and personal face. Still, complaints do crop up, such as a missed dividend cheque, issues with a fund's NAV pricing, non-receipt of fact-sheet and annual reports, and so on. If caught on the wrong foot, you can follow the following redressal trail. </div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>The Fund House</b></div><div style="text-align: justify;">Most snags get resolved at the fund house ---- the first step of the redressal ladder --- itself. In case of any clarification or complaint regarding your investment, approach your fund house or its registrar and transfer agent (R&T). Their contact details are there in the account statements or the fact-sheets that funds send to investors. You could also get them from the website of the respective fund house and its transfer agent. The fund house or registrar will look into the complaint and, more often than not, resolve it then and there.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>The Regulator</b></div><div style="text-align: justify;">If, for some reason, the investor is not satisfied with the fund house's response and wants further intervention, the next contact should be the regulator -- <b>Securities and Exchange Board of India</b> (Sebi). A written complaint has to be filled with any of the four zonal offices, detailing the circumstances of the case, along with photocopies of the relevant documents. Complaints can also be filled online on Sebi's website <b><a href="http://www.sebi.gov.in/">www.sebi.gov.in</a></b>. On receiving the complaint, Sebi will give a reference number, which will need to be quoted in all future communications with it. Sebi will follow up the case with the fund house. If the fund house does not resolve the complaint with three months of filing it with Sebi, you will have to sound out (Send reminder) the regulator again.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>Investor's Association</b></div><div style="text-align: justify;">If Sebi also fails to resolve a complaint, you will have to approach an investors' association. These are independent entities that help investors in grievance cases. You will have to write to one of the associations, attaching photocopies of relevant documents. Some of these entities provide the services for free, while others charge a nominal fee in the range of 200 - 500 INR. These associations take up individual cases too. To start with, the investors' association will do what Sebi does -- hear the investor's side of the story and follow it up with the fund house concerned. If it does not get a satisfactory answer from the fund house, and it feels there is a case, it might advise the investor to take legal action. It could even help with the case.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #cc0000; text-align: justify;"><b>Ministry of Corporate Affairs</b></div><div style="text-align: justify;">'Investor Helpline' is a free, dedicated online portal to handle investor grievances administered by different authorities, i.e., the Ministry of Corporate Affairs, Sebi and the Reserve Bank of India, in a focused and sustained manner. It is sponsored by the Investor Education and Protection Fund under the Ministry of Corporate Affairs. Right from filing of the grievances to tracking their status and interaction with the administrator, all the steps have been made online to make it user-friendly.</div><div style="text-align: justify;"><br />
</div><div style="color: #cc0000; text-align: justify;"><b>The Courts</b></div><div style="text-align: justify;">On rare occasions that your problem remains unresolved, the legal system is your last recourse.</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrxpQ14kClX3D1QQQC0kZM6kH5HRMeMqPwcn1mK6ifV3u4T31W2U2j7TBiU1hPYfqU-smp_d4nFjcqbMXj0g50bLwF9fyYrdehmNR7GqPWHJS6t9KqAvqg24UM52o7z_RnYkeGq8XSBG6D/s1600/public-grievance.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrxpQ14kClX3D1QQQC0kZM6kH5HRMeMqPwcn1mK6ifV3u4T31W2U2j7TBiU1hPYfqU-smp_d4nFjcqbMXj0g50bLwF9fyYrdehmNR7GqPWHJS6t9KqAvqg24UM52o7z_RnYkeGq8XSBG6D/s1600/public-grievance.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;"><br />
</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-22044544164170684782011-08-20T09:32:00.000-07:002011-08-20T09:57:11.462-07:00Market Correction<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisRUWwB8wsLg2iCEax3WdhMriYcgjopRbAIGtncbwOxoGfYfXqg2FjRV52T2i_baLlFRKksnLnnNXusfaI2SwhKZaBdZAqiNcyouEDZH7nmI_dAANIqxI08VG9yBZVasHIqAwE_Mp_GSEt/s1600/wecomeimg.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></div><div style="text-align: justify;"><b style="color: #cc0000;">Investing in uncertain times</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><i><b>There is mayhem in the markets. Here's what small investors should do to cushion their portfolios against the downturn</b></i><br />
</div><div class="separator" style="clear: both; text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisRUWwB8wsLg2iCEax3WdhMriYcgjopRbAIGtncbwOxoGfYfXqg2FjRV52T2i_baLlFRKksnLnnNXusfaI2SwhKZaBdZAqiNcyouEDZH7nmI_dAANIqxI08VG9yBZVasHIqAwE_Mp_GSEt/s1600/wecomeimg.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisRUWwB8wsLg2iCEax3WdhMriYcgjopRbAIGtncbwOxoGfYfXqg2FjRV52T2i_baLlFRKksnLnnNXusfaI2SwhKZaBdZAqiNcyouEDZH7nmI_dAANIqxI08VG9yBZVasHIqAwE_Mp_GSEt/s200/wecomeimg.jpg" width="200" /></a></div><div style="text-align: justify;">There is no hard and fast definition of the term "Market Correction". A stock market correction is when the stock market declines 10% or less in a relatively short period of time. It's a natural part of the stock market cycle. Corrections are inevitable. When the stock market is going up, investors want to get in on the potential profits. This can lead to irrational exuberance. This can make stock prices go well above their underlying value. <br />
<br />
A correction is different from a stock market crash, which is when stock prices plummet more than 10%, often in just one day. Unlike a correction, a stock market crash can cause a recession. How? Stocks are how corporations get cash to grow their businesses. If stock prices fall dramatically, corporations have less ability to grow. Businesses that don't grow will eventually lay off workers to stay solvent. As workers are laid off, they spend less. Lower demand means lower revenue. This means more layoffs. As the decline continues, the economy contracts and you have -- Voila! -- a recession.<br />
<br />
If a correction is relatively benign, and a crash can cause a recession, how can you tell the difference? It's not easy. A correction can turn into a crash if the stock market declines more than 10%. Trying to decide if a correction is turning into a crash is known as timing the market. This is nearly impossible to do, since there are so many factors that can influence the direction the market goes in. However, the markets soon regain their confidence, reverse course and begin to head higher once again. <br />
The worst thing to do right now is panic. Over-leveraged speculators and panic-stricken investors were the only ones who lost money in the 2008-09 crash. For the disciplined long term investor, the spectacular decline in the markets that saw the Sensex hitting a multi-year low was actually an opportunity. A bit of data crunching would reveal that there is virtually no risk if you invest in stocks for the very long term (5-7 years on an average).<br />
<br />
Here are a few steps that can help cushion the impact of volatility and ensure that investors don't get carried away by the predictions of doomsayers.<br />
<br />
<b style="color: #990000;">Don't stop the SIPs</b><br />
Don't even think about terminating your SIPs at this point. It's the worst thing you can do to your portfolio and would defeat the very purpose of the SIP. If you stop now, you are effectively turning down the chance to buy more at lower prices. It's a common mistake that can prevent your attempt at rupee-cost averaging. The impact cost of stopping a Ulip premium is higher than terminating an SIP, so many investors opt for the latter. The investors should automate their investments so that there is no discretion in their reaction to the noise emanating from the stock market.<br />
<br />
<b style="color: #990000;">Stick to Blue Chips</b><br />
It's now amply clear that the economy will take some time to regain momentum. Slower growth rates, high inflation and high interest rates are here to stay. When the economy was growing at 9%, the tide has lifted all boats and the mid-cap and small-cap companies flourished. Now, with economies projecting a GDP growth of 7-7.5%, only large companies will be able to clock good growth, while the mid-sized companies will barely manage to stay in the green. Smaller companies will have to struggle and could easily slip into losses in the situation worsens. It's the best to stick to large-cap stocks at this time instead of risky mid-caps and smalls-caps.<br />
<b style="color: #990000;"><br />
Diversify your bets</b><br />
The infrastructure sector has been badly beaten down but analysts expect it to do well when the economy revives. It's a good time to start nibbling at some infrastructure stocks at these beaten down levels. Even so, don't put all your eggs in the infrastructure basket. Spread your bets and risks - across a basket of Metals, IT, FMCG and Banking sectors stocks at such throw away prices..<br />
<b style="color: #990000;"><br />
Rupee-Cost Averaging</b><br />
The markets are down to attractive levels but there is no knowing where the bottom is. It's best not to anchor yourself to an index - say 4000 (Nifty) or 14000 (Sensex). To avoid buying high, don't invest lump-sum amounts, but do so in monthly installments. In this manner, you will be able to gain the advantage of the rupee-cost averaging that the SIPs offer.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-76728233921225151722011-08-19T20:13:00.000-07:002011-08-21T08:14:39.965-07:00Investor Type<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"></div><div style="text-align: justify;"></div><div style="text-align: justify;"></div><div style="text-align: justify;"></div><div class="separator" style="clear: both; text-align: justify;"><i><b>Your investment style will not only determine how you behave during a market crisis, but also help you take the right decisions</b></i>. </div><div class="separator" style="clear: both; text-align: center;"><br />
</div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUFi36AVXniPW_0L3n9ipp0jcVSGJDX_dOjhHd46xNhl255sIa-KYpaxClJ4-nffKuRTi2jpJ9tb5IRa_I-tHqsJP15iTd4U6y-s3c6p1qTM5IwSkuzXJ-SGJV9Y1Um0Q_rcMqh-iK5U8p/s1600/wecomeimg.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUFi36AVXniPW_0L3n9ipp0jcVSGJDX_dOjhHd46xNhl255sIa-KYpaxClJ4-nffKuRTi2jpJ9tb5IRa_I-tHqsJP15iTd4U6y-s3c6p1qTM5IwSkuzXJ-SGJV9Y1Um0Q_rcMqh-iK5U8p/s1600/wecomeimg.jpg" /></a><br />
<div style="text-align: justify;">Uncertainty, which breeds fear of the unknown, hinders an investor's ability to make rational decisions. When the markets are buffeted by negative news from around the world and the general consensus is that the worst isn't over, investors become confused about the course of action they should take. The overload of information and analysis makes things tougher. Ultimately, how he behaves during a crisis will depend on the kind of investor he is. The investors who are financially weak may not be able to participate in every kind of market and should know when to keep out. So, risky markets are not for a person who is, say, rolling over his credit card dues, or is paying a large EMI for house that is yet to be delivered, or is worried about not earning or saving enough. The investors who have a limited corpus or significant liabilities, and senior citizens with a low risk appetite are better off not taking drastic measures in risky markets else they can loose much more than they can afford.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>Strategic </b>investors, on the other hand, focus on building long-term wealth. They are smug in the knowledge that 10 years on, the events that seem cataclysmic now will be pale into insignificance. They stick to an allocation pattern - say. 50% in equity, 30% in long-term debt, 10% in short-term debt, and 10% in gold -- and earn reasonable returns across market cycles. Sticking to one's allocation means continuing to invest in equity even as the market falls and keeping money aside in debt even if the equity market rises. A strategic investor does not care much for market cycles. Instead, he has faith in the power of time to even out losses. For such an investor, panic-driven crashes in the market are opportunities to reduce the average cost and even out the expensive pricing of the preceding boom. The losses during the downside are taken in stride as an essential biter pill in order to be present in the market when it turns up. This breed does not use borrowed capital, and is not in a hurry. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>Tactical </b>investors are the ones who are tested the most during any uncertainty. This breed lies to predict how asset classes are likely to perform, and based on the macro picture that emerges, it tries to modify the portfolio to protect it from losses. For instance, a tactical investor would reduce his exposure to equity if he foresaw any risk to global flows. He would also increase the exposure to gold in an attempt to cash in on the clamour for a safe investment in turbulent times. In the face of an expected drop in a global demand, this group would reduce the exposure to commodities. or would avoid long-term debt if a jump in market and credit risk was on the cards. Obviously, not all calls can be accurate. Tactical investing needs expertise and skill in reading the market signals, as well as the ability to reallocate assets. The investors who see themselves falling short in either department should keep away.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Some investors enjoy event-based trading. Here, the temptation to buy an asset that is moving up is high. This group uses available information, even if it's partial, for a quick take on an event before making a move, hoping to make money from the resulting volatility. Such investors should focus on the capital in hand and be willing to book losses if their call goes wrong. The amount they allocate to an asset after reading the signs should not be too large a component of their wealth, as it can wipe them off. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">There are bound to be problems if the investor's behaviour in uncertain times does not match his type. So a strategic investors gives in to panic and quits the market in haste; an event-based trader stakes a large chunk of his portfolio in what everyone is chasing but fails to exit in time; a tactical investor assumes that all his calls will hit the bull's eye and borrows funds to add to a position he holds, making a risky bet riskier; a financially weak investors hopes to make good an earlier loss but ends up repeating his mistakes.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Hence, it is crucial to identify the type of investor you are, to think through your action plan and focus on your wealth before you act on the market information.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-89878125162888976872011-07-29T09:08:00.000-07:002011-07-30T00:24:56.786-07:00Know your PAN<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><i><b>Whether you are an Indian citizen or an NRI, if you are filing taxes or have financial transactions in India you will almost always need a PAN card. </b></i></div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkaWMjIXDjRU1hZPDDVQ-W_5-08ngfMfQSW4ePvB3BgXsVTUFJf3brd4RbTjP3q9fXjyGnwCCh0VLy6WHAHwelMffsmBB77D4Cs7xZreaDRyY6ISJppcLp9n6ySpSKX3yDyJ5Gy8lD4Rsv/s1600/index.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkaWMjIXDjRU1hZPDDVQ-W_5-08ngfMfQSW4ePvB3BgXsVTUFJf3brd4RbTjP3q9fXjyGnwCCh0VLy6WHAHwelMffsmBB77D4Cs7xZreaDRyY6ISJppcLp9n6ySpSKX3yDyJ5Gy8lD4Rsv/s1600/index.jpg" /></a></div><div style="text-align: justify;"><b style="color: #cc0000;">What is PAN?</b><br />
A Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department of India. Each set of numbers is unique to the individual, HUF, company, etc. (We will take a closer look at those numbers in a moment.). PAN is a permanent number, is unaffected by a change of address, even between states and is not transferable. It is illegal to own more than one PAN.</div><div style="text-align: justify;"><br />
The PAN’s primary purpose is to bring a universal identification key factor that links and tracks various documents and information regarding taxes and financial transactions, such as loans, investments, buying and selling real estate and other business activities of taxpayers. By tracking the above it indirectly prevents tax evasion through non-intrusive means.<br />
<br />
You can consider this number to be similar to the Social Security Number issued in the United States to USA citizens and other legal residents. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b style="color: #cc0000;">Structure of the PAN</b><br />
The structure of the new series of PAN numbers is based using Phonetic Soundex code algorithm to ensure that each number is unique. The following list is “constant permanent parameters” that assist in the creation of phonetic PAN (PPAN) number: </div><ul style="text-align: justify;"><li>Full name of the taxpayer</li>
<li>Date of Birth/Date of Incorporation</li>
<li>Status</li>
<li>Gender in case of individuals; and</li>
<li>Father’s name in case of individual (including in the cases of married ladies). </li>
</ul><div style="text-align: justify;">The Date of Issue (DOI) of the PAN card can be found on the right hand side of the photo on your PAN card.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b style="color: #cc0000;">The 10 Digit Alphanumerical Sequence</b><br />
Let’s take a look at the breakdown of the 10 digit alphanumerical sequence:</div><ol style="text-align: justify;"><li style="color: #20124d;"><span style="font-size: x-small;"><b>The first five fields are called the core fields and are alphabetical in nature.</b></span></li>
<li style="color: #20124d;"><span style="font-size: x-small;"><b>The first three letters of the core field are an alphabetical series running from AAA to ZZZ.</b></span></li>
<li><span style="font-size: x-small;"><b><span style="color: #20124d;">The fourth character of the PAN must be one of the following, depending on the type of assessee:</span></b></span></li>
</ol><ul style="text-align: justify;"><li>C — Company</li>
<li>P — Person</li>
<li>H — HUF (Hindu Undivided Family)</li>
<li>F — Firm</li>
<li>A — Association of Persons (AOP)</li>
<li>T — AOP (Trust)</li>
<li>B — Body of Individuals (BOI)</li>
<li>L — Local Authority</li>
<li>J — Artificial Juridical Person</li>
<li>G — Govt</li>
</ul><div style="text-align: justify;">(Example – Company = AAA<b>C</b>A; Artificial Juridical Person = AAA<b>J</b>A; HUF = AAA<b>H</b>A; etc.)</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"> 4. <span style="color: #20124d; font-size: x-small;"><b>The fifth character of the PAN is the first character of the following</b>:</span></div><ul style="text-align: justify;"><li>Your surname in the case of “P” or;</li>
<li>For all others you would use the first letter of the name of the Entity, Trust, Society, Organization, HUF, etc.</li>
</ul><div style="text-align: justify;">(Example - Atanu Gupta [Personal] = AAAP<b>G</b>4444A; Atanu Gupta [HUF] = AAAH<b>L</b>4444A; General Firm = AAAFG4444A; etc.) </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"> 5. <span style="color: #20124d;"> <span style="font-size: x-small;"><b>The next four numbers are sequential numbers running from 0001 to 9999.</b></span></span></div><div style="text-align: justify;"> 6. <b><span style="color: #20124d;"><span style="font-size: x-small;">The last digit is an alphabetic check digit.</span> </span></b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b><span style="color: #cc0000;">The New Phonetic PAN (PPAN)</span></b><br />
The new Phonetic PAN (PPAN) helps to prevent the allotment of more than one PAN to assesses with the same or similar names. If a matching PPAN is detected, a warning is given to the user and a duplicate PPAN report is generated. In these cases, a new PAN can only be allotted if the Assessing Officer chooses to override the duplicate PPAN detection. Under this new system a unique PAN can be allotted to 17 crore taxpayers.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b style="color: #cc0000;">Myths Regarding PAN</b><br />
Many people believe that PAN cards are used for tax purposes only. That is a myth. PAN numbers are required for the purpose of income tax but not the actual card itself. Photocopies of PAN cards are required as prove of identity in financial transactions such as opening a bank account, purchase and sale of property and motor vehicles, home telephone lines and investments, such as demat accounts and mutual funds, just to name a few. </div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="text-align: justify;"><b style="color: #cc0000;">In Conclusion</b><br />
It is easy to see the importance of your PAN card and why you need the physical card as well as the allotted PAN number. If you do not have a PAN card, take the small amount of time need to apply for one today. </div><div style="text-align: justify;"><br />
</div><div style="text-align: right;"><span style="font-size: x-small;"><i>------</i><i>investmentyogi</i></span></div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-35957652041306925232011-07-28T07:42:00.000-07:002011-07-28T07:47:01.338-07:00Before the MF Plunge<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjb_eOtWKejYWmk0ovjflcKS9BzmYjR8zVDLJVt6m91rKjazlAnywI2oDYaKBdnnOQrulLwqLCA3iHGkQq2BW-vJ22Mz_4020Ns_WF1ihtzp-B9ApbEfCwBovMnrI1IW2znpgz4JASEJhVd/s1600/mutual-fund-investments.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjb_eOtWKejYWmk0ovjflcKS9BzmYjR8zVDLJVt6m91rKjazlAnywI2oDYaKBdnnOQrulLwqLCA3iHGkQq2BW-vJ22Mz_4020Ns_WF1ihtzp-B9ApbEfCwBovMnrI1IW2znpgz4JASEJhVd/s200/mutual-fund-investments.jpg" width="193" /></a></div><i>Investments in equities, especially for the long term, are likely to yield the highest returns. However, for many, keeping track of markets and individual stocks is not possible and also not advisable. Especially so as professionally-managed and tightly-regulated mutual funds are available to do the same job. The endeavor here is to highlight some basic steps to consider in building an equity portfolio through mutual funds</i><br />
<br />
<br />
<b style="color: #cc0000;">Identify financial goals</b><br />
The process starts with identifying your financial goals. You may be looking to plan for retirement, children's education, a marriage or buying a house. If you have a fair sense of the time frame in which to build the corpus, financial websites can help you plan for the various scenarios, including factoring in possible rates of inflation.<br />
<br />
<br />
<b><span style="color: #cc0000;">Risk tolerance</span></b><br />
Identifying your risk tolerance is important. If you are young and at the start of your career, you can have an equity-oriented portfolio as you can afford to take a risk in anticipation of higher returns. Those approaching retirement or are retired should ideally have low equity exposure.<br />
<br />
<b><span style="color: #cc0000;">Selecting a fund house</span></b><br />
The next step is to identify fund houses that have a pedigree in the financial services and provide funds with a consistent track record across all categories. A minimum of five years consistent returns could be a pre-requisite.<br />
<br />
<b><span style="color: #cc0000;">Invest objective</span></b><br />
Familiarize yourself with the investment objective of the shortlisted funds. Identify whether the funds invests across market capitalization or limits itself to large-cap, mid-cap or small-cap stock baskets. Most financial goals are long term and so it is better to invest in diversified funds that have broad mandates. Also consider the benchmark that the fund follows. It will give you a broad sense of whether the fund is tracking a broad index, such as the CNX 500 or the BSE 200.<br />
<br />
<b><span style="color: #cc0000;">Shortlisting schemes</span></b><br />
You may use performance as a measure to make your final list of schemes. However, also consider consistency in performance over longer tenures, including for three, five and 10 years. Your selected schemes should ideally be those that have consistently beaten their benchmark and compare reasonably with their peers over long periods. You should also be aware that there is no advantage to over diversifying your investments. A maximum of four or five equity schemes in more than enough. A fund manager's track record is also a factor. The longer a manager has been with a fund, the better.<br />
<br />
<b style="color: #cc0000;">Keep track</b><br />
Monitoring your investments is the next step. Don't fall in love with your funds. Ask your advisory or sign up for periodic updates on your investments. Do not be tempted to make changes in the first six months or even a year. If you have followed the steps outlined above, you will not need to make a short-term change.<br />
<br />
<b style="color: #cc0000;">Course corrections</b><br />
As long as your investments are giving you the required rate of return, don't change your chosen funds or add funds, especially based on short-term performance. The only reason you will need to consider making a change would be if your selected scheme is trailing your required rate of return for over a year or even two.</div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-12128284957613505652011-07-15T09:09:00.000-07:002011-07-15T10:05:10.278-07:00E-Filing of I-Tax<div style="text-align: justify;"><b>Make sure your e-return is not rejected</b></div><div style="text-align: justify;"><i>If you are e-filing your tax returns, here are the errors you should avoid while sending ITR V </i></div><div style="text-align: justify;"><i><b><br />
</b></i></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO9l4SQVzrOJxNomk0kjAQbNVFEaLd0OcE2o69dCugdHX3A8knQDImNZFHMpU-g-xZmcsU8sAx6jkv5HLiNeBPrnz4ORQlXgc7lEtA-AuypGSObqWEdkNkJsJjEEbWg9G9xwNB7bzO_J_s/s1600/income+tax.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO9l4SQVzrOJxNomk0kjAQbNVFEaLd0OcE2o69dCugdHX3A8knQDImNZFHMpU-g-xZmcsU8sAx6jkv5HLiNeBPrnz4ORQlXgc7lEtA-AuypGSObqWEdkNkJsJjEEbWg9G9xwNB7bzO_J_s/s1600/income+tax.jpeg" /></a></div><div style="text-align: justify;"><br />
Your return can be rejected if the guidelines laid down by the Income Tax Department are not followed while filing returns, be it physically or online. If you are e-filing and not using the digital signature, you will have to print out the acknowledgement form, ITR V. Here are the things you should keep in mind while using the option.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Printing ITR V</b></div><div style="text-align: justify;">Printing the ITR V form correctly is critical. Avoid using the dot matrix printer if you want your return to be processed faster. This is because the bar code on the ITR V should be clearly visible for quicker processing, and this can be done only by using the ink jet or laser printers. Take the printout in black ink only. If you are sending two returns, don't print them back to back. Use a fresh A4 size sheet to print each time. Perforated paper or of any other size is not acceptable.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Signing</b></div><div style="text-align: justify;">The signature on the form must be clear and legible. For this a ball-point pen in blue ink only. Also, if you are taking photocopies, make sure you send out the original one signed in blue ink. A photocopy of the signature is not accepted.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Sending</b></div><div style="text-align: justify;">The filing of non-digitally signed returns is completed only when the ITR V reaches the CPC in Bangalore. So, make sure that your ITR V reaches the destination within 120 days of e-filing. In case it does not reach CPC Bangalore within the stipulated period, you will have to go through the agony of filing your tax return again. Earlier, you could not send more than one ITR V per envelope, but now, you can include more than one such form. Do not attach other documents, such as photocopies of Form 16 or TDS certificates along with the ITR V. Even annexure documents don't need to be attached. Dispatch it in an envelope that can hold an A4 size paper without folding it to:</div><div style="text-align: justify;"><br />
</div><div style="background-color: #fce5cd; text-align: center;"><span style="font-size: large;"><b>Income Tax Department – CPC </b></span><br />
<span style="font-size: small;">Post Bag No - 1, </span><br />
<span style="font-size: small;">Electronic City Post Office, </span><br />
<span style="font-size: small;">Bengaluru - 560100, Karnataka</span></div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Other filing errors</b></div><div style="text-align: justify;">Taxpayers often make mistakes that lead to deduction or incorrect calculation of taxes. One of these is not declaring the correct break-up of deductions under Section VIA, which includes tax-saving investments in life and health insurance policies, mutual funds, bank fixed deposits, etc. It is essential to have the tax filing details like deductee's PAN details, PAN & TAN of the deductor, total amount paid, total taxes deducted and deposited in Form 16/Form 26AS.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In case of a change in the residential address, make the necessary alterations in the PAN database since the IT Department refers to it for correspondence. Do not mention bank accounts that are closed or even dormant because refunds are unlikely to reach you in such a case.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>No response from CPC</b></div><div style="text-align: justify;">The CPC dispatches an acknowledgement on receiving the ITR V. Ideally, it should reach you within three days. If you don't receive it, consider sending it again. You can send it through regular post service or speed post. Do not use the courier or deliver it personally. You can call <b>1800-425-2229 </b>(Toll free) and <b>080-22546500</b> (Direct) from 9am to 8pm on working days to check the status. It can also be done online at <a href="http://www.incometaxindiaefiling.gov.in/">http://www.incometaxindiaefiling.gov.in</a></div><div style="text-align: justify;"><br />
</div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com1tag:blogger.com,1999:blog-6358546295171186175.post-50320160383010852582011-07-08T09:33:00.000-07:002011-07-08T09:35:11.732-07:00Exemption-Can't avail<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2vVf1Rwd9fHHtYyuzyt7acaoa9SFFOinikG_lf11gfheOBjszXYC-eeyRwzBIzq-BUgMlEjCZ1g2Hh0Rx0p0S2XYLdkz15OvScSDuE73mp0zLjLE_-rRltKuiJOkacBxrA8sV5A1I8GDC/s1600/tax-exemption-your-non-profit-how-does-it-work-us-1.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2vVf1Rwd9fHHtYyuzyt7acaoa9SFFOinikG_lf11gfheOBjszXYC-eeyRwzBIzq-BUgMlEjCZ1g2Hh0Rx0p0S2XYLdkz15OvScSDuE73mp0zLjLE_-rRltKuiJOkacBxrA8sV5A1I8GDC/s200/tax-exemption-your-non-profit-how-does-it-work-us-1.jpeg" width="200" /></a><i>The exemption to file return for income up to Rs. 5 lakh looks good on paper, but nobody will be able to fulfil the condtions. </i><br />
<br />
<br />
<div style="text-align: justify;">The Central Board of Direct Taxes (CBDT) has made millions of Indians smile by announcing that salaried taxpayers with an annual income of up to Rs. 5 Lakh need not file their returns. Or so they think. Given the stiff conditions, it's unlikely that anyone will be able to avail of the concession. Here's why the CBDT's proposal is just a clever play, a theoretical relief that nobody will get.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">According to the notification issued on 24th June,2011 a salaried person is exempt from filing his return if he fulfills the following conditions:</div><ul><li>Total income after allowable deductions is up to Rs. 5 Lakh</li>
<li> Income is only from salary and savings bank interest</li>
<li>Salary is from one employer</li>
<li>Savings bank interest is below Rs.10,000</li>
<li>Tax due on savings bank interest has been paid and included in Form 16.</li>
</ul>The announcement comes at a time when Form 16s have already been prepared and issued to taxpayers. Will it possible to make the necessary changes in the Form 16 at this late stage? The second requirement, that the income should be only from salary and savings bank interest, is patently illogical. How many people who earn more than Rs 3-4 lakh a year will not have income from fixed deposits, mutual funds. stock trading, gold and property? If you invested in fixed deposits or NSCs to save tax or received dividend from your ELSS fund during the year, you don't make the cut for the exemption. Have you given your house on rent for even one month? Sorry, you will have to file returns. Only a person who has no tax-saving investment and lets all his money idle in a saving bank will be eligible.<br />
<br />
Let us assume that there is indeed somebody who has no such investments and, therefore, no income other than from his salary and the interest on the bank account. Even then, he may not be able to fulfill the conditions for exemption. The notification says that the tax due on the interest income should have been paid and the income and the tax should be mentioned in Form 16 from the employer. The interest on bank account is credited on quarterly or half yearly basis. The interest from January-March or October-March gets credited after 31st March. You need to be a financial expert to correctly estimate the tax due on this income and pay the right amount. That's not all. You also need to provide these details to your employer in time for the accounts division to mention in your Form 16.<br />
<br />
A taxpayer's quest for filing nirvana doesn't end here. If he has changed jobs during the year, a taxpayer won't be exempt from filing his tax returns. Given the high employee turnover rate in certain industries, such as software and IT-enabled services, very few people in these sectors will be able to claim exemption.<br />
<br />
If you have managed to fulfill all the conditions, hats off to you.Given the plethora of paper work required to avail of the exemption and the possible repercussions of not filing your return, it seems that spending 30-40 minutes online is a far simpler option.<br />
<div style="text-align: justify;"></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com1tag:blogger.com,1999:blog-6358546295171186175.post-67138977257919242722011-06-17T22:30:00.000-07:002011-06-17T22:39:28.155-07:00Rules of Intra-Trading<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #990000;"><i style="color: black;">Follow these basic tenets to avoid losing your shirt in this high-risk arena</i><br />
<br />
</div><div style="color: #990000;"><b> </b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguimKxSwXj3oUhzeq54Y7HethqnzzaSmZ7O5BJllIuRwDQUgjd7bVSbhNvAQMKm1Nlkk0D2CZagfL-EpS5O6nMVOD_434LCKa5T86uxUCO6x0M9Fg1zR0IFSaHoAVnLewEglmW3RgOnoea/s1600/Walk_away_with_intraday_share_trading_profits_in_the_afternoon.GIF" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguimKxSwXj3oUhzeq54Y7HethqnzzaSmZ7O5BJllIuRwDQUgjd7bVSbhNvAQMKm1Nlkk0D2CZagfL-EpS5O6nMVOD_434LCKa5T86uxUCO6x0M9Fg1zR0IFSaHoAVnLewEglmW3RgOnoea/s1600/Walk_away_with_intraday_share_trading_profits_in_the_afternoon.GIF" /></a><b>Invest what you can afford to lose</b></div><div style="text-align: justify;">Intra-day trading carries more risk than investing in stocks. Invest only the amount that you can afford to lose. An unexpected movement can wipe out your entire investment in a few minutes. In January 2009, the Satyam Computer script fell more than 80% from Rs.188 to Rs.31 in one day. If it is a leveraged position, you could lose more than you invested</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Choose highly liquid shares</b></div><div style="text-align: justify;">Day traders must square their positions at the end of the trading session. This is easy if you are trading in large-cap, index-based stocks, which are very liquid and get traded in large volumes every day. Don't dabble in mid-cap and small-cap shares, where the traded volumes are not very large. You could end up holding shares that have no buyers at the end of the day.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Trade only 2-3 scripts at a time</b></div><div style="text-align: justify;">It's prudent to diversity your portfolio when you are investing in stocks, but when it comes to day trading, confine yourself to just 1-2 stocks. You can have up to 8-10 large-cap, index-based stocks on your watch list, but don't trade in more than 2-3 stocks at a time. Stock movements need to be tracked closely by the day trader and you won't be able to monitor more than 2-3 stocks at a time.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Research watch list thoroughly</b></div><div style="text-align: justify;">Read up on the 8-10 stocks on your day trading watch list. You should know about all forthcoming corporate actions (stock splits, bonuses, dividends, result dates, mergers, etc) as well as technical levels of the stock. There are websites, such as <a href="http://www.khelostocks.com/">http://www.khelostocks.com</a> or <a href="http://www.pivotpointcalculator.com/">http://www.pivotpointcalculator.com/</a> where you can feed in the price (high, low and closing) to know the resistance and support levels.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Fix entry price and target levels</b></div><div style="text-align: justify;">Before you buy, fix your entry price and target level. The psychology of the buyer changes after he has bought a stock, which could interfere with his judgement and nudge him into selling too quickly even if the price moves up marginally. This might cost him the opportunity to fully gain from the upside. If you set yourself a price target and adhere to it, your psychological frame will not change.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Use stop losses to contain impact</b></div><div style="text-align: justify;">A stop loss is a trigger for selling shares if the price moves beyond a specified limit. It helps the buyer limit his losses in case the share belies his expectations and moves down(or up). Suppose you buy 20 shares of Reliance at Rs.940 each and set a stop loss of Rs.920. If the share falls to Rs.920, your shares will be sold. In this manner, your losses will be curtailed even if the share drops to Rs.900. A stop loss takes the emotions out of the decision to sell.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Don't be an investor</b></div><div style="text-align: justify;">Day trading and investing are like chalk and cheese. Both involve buying shares but factors considered are completely different. One takes into account technical data, while the other looks at its fundamentals. Don't try mixing the two. Often, if an intra-day bet goes wrong, the buyer does not book his loss, but takes delivery of the shares and then waits for the price to recover. This can be a costly mistake because the shares were bought with an ultra short-term horizon. They may not be worth investing in.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Book profits when targets are met</b></div><div style="text-align: justify;">Greed and fear are the two biggest hurdles for the day trader. Just as he should not flinch from booking losses when the trade goes wrong, he should book his profits when the shares reach his target. If he feels that there is more upside to the stock, he should reset the stop loss. Suppose you invest at Rs.100 for a target of Rs.110 and set a stop loss of Rs.95. If the price goes up to Rs.110 but you are bullish, raise the stop loss to Rs.108. This will reserve some of the profit.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Don't fight with the market trend</b></div><div style="text-align: justify;">Even the most sophisticated analysis cannot predict which way the market will move. All technical factors may be bullish but the market may decline. Technical factors only point to the likely movement of the market, they don't guarantee it. If the market movement is not as per your expectations, don't try and be a contrarian. You may end up losing more.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Small is beautiful</b></div><div style="text-align: justify;">While stock investments can yield stupendous return, be content with small gains from intra-day trading. Day traders get a leverage of almost 3-4 times their investment, so even if your stocks go up by 3%, you would have earned 9-12% on your investment. In any case, it's rare for large-cap stocks to move by more that 5-6% in a day. Even if you get a return of 10-12% on your capital, it's not bad for a day's work.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com1tag:blogger.com,1999:blog-6358546295171186175.post-7000685586732392922011-06-04T00:05:00.000-07:002011-06-04T00:05:33.187-07:00Being a Guarantor<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #cc0000;"><span style="font-size: large;"><b>Should you be a guarantor ?</b></span></div>Take on the financial commitment only if you have the ability to repay a loan if the borrower defaults.<br />
<br />
<div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9tP5Mg-_9wO-DzVrJ0GhuZY90jXpTm7ql5u8aUkzBkFIAJWPyIjZx95Lqws4K5mke6QuYvI7xgJ45pUM6bqPuauQf44YwBY7c1xRLnxVek1kBMaoyVBOl0RIvbIW7G4dOMB4VSnE3aOJE/s1600/Debt-Burden-Cartoon.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9tP5Mg-_9wO-DzVrJ0GhuZY90jXpTm7ql5u8aUkzBkFIAJWPyIjZx95Lqws4K5mke6QuYvI7xgJ45pUM6bqPuauQf44YwBY7c1xRLnxVek1kBMaoyVBOl0RIvbIW7G4dOMB4VSnE3aOJE/s1600/Debt-Burden-Cartoon.jpg" /></a>Guaranteeing a loan is vastly different from signing a document as a witness. When you agree to become a guarantor for a loan, you are making a financial commitment, one that should be done only after considering all the aspects. This is important because if the borrower defaults on the payment, the responsibility of the loan has to be borne by the guarantor. In such a case, there is little a guarantor can do except talk to the lender and try to make a settlement for future payments of the remaining debt</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">When a person signs on as a guarantor, he becomes as liable to repay the loan as the principal borrower. According to the law, if the borrower defaults and is untraceable, the guarantor has to pay the outstanding debt. If need be, his assets can be sold to clear the debt.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Banks insist on guarantors for the loans in which there is no appropriate collateral, such as education and business loans.For other loans too, banks can insist on one, especially if the borrower does not have a good credit history. Other instances where a guarantor is needed are if the borrower has a transferable job or one which involves frequent travel abroad. It's also necessary when the loan is applied for in a city other than the one that is the applicant's permanent address.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">While a guarantor need not service a loan on a monthly basis, the loan repayment can have an impact on his credit history. In case of a default, not only will he be asked by the financial institution to pay, but a default on his part while repayment the loan will also be reported to the credit bureaus.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Even if the EMIs are being paid regularly and on time, the relationship of the guarantor and the borrower could affect his own borrowing capacity. For instance, if a friend is a guarantor, he will be able to take a loan independently. However, if the guarantor has a closer relationship, such as a wife, she will have to shoulder a quasi liability. The means that if she wants to take a loan, her borrowing capacity will be calculated after accounting for the original loan that is being repaid.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Also, the liability of the guarantor usually terminates only after the loan has been fully repaid. If you are signing up for a home loan guarantor, be prepared that it will impact all your other financial borrowings for the next 10-20 years. So if you do want to help someone in need, it would be better to opt for short-term loans, such as car and education loans. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGJZx6qZySVBbAP2JJpiDMc1WmYhyphenhyphenHjMGmTnQMsFjc1B1NR_Jlo7QeBJ7nJO534E56yj1PyJCFX6YygZezGTuzafORzA1zKELSNVOhzpvcUF6PMHjzrHyj2BoY1vjCfJ69uSIVBSKUwEu-/s1600/business+man+cartoon.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGJZx6qZySVBbAP2JJpiDMc1WmYhyphenhyphenHjMGmTnQMsFjc1B1NR_Jlo7QeBJ7nJO534E56yj1PyJCFX6YygZezGTuzafORzA1zKELSNVOhzpvcUF6PMHjzrHyj2BoY1vjCfJ69uSIVBSKUwEu-/s1600/business+man+cartoon.jpg" /></a>In case you want to be relieved of your responsibility as a guarantor, review the guarantee deed and conditions of revocation. Usually, you can revoke it by giving a notice in writing to the lenders as well as the borrower. The lender will then check the borrower's financial condition and the original arrangement. However, relieving a guarantor is solely on the lender's discretion. The bank's rationale is that the guarantor cannot shirk his responsibility mid-way as he had initially offered the guarantee for the full tenure of the loan.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">However, revocation can be considered in certain cases. You can opt for it if an additional loan has been granted to the borrower without your consent, such as a top-up loan. You will, however, only be relived of the second loan and will be liable until the original amount of the loan has been repaid. The other options include you providing a substitute guarantor with the consent of borrower, or prepayment of the loan by the borrower.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-16727007395274201632011-05-29T00:52:00.000-07:002011-07-15T09:17:31.518-07:00Education Loan<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #cc0000;"><span style="font-size: large;"><b>Education loan helps cut tax</b></span></div><br />
<i>Don't dip into your retirement savings to pay for your children's higher studies. Instead, take an education loan because the tax benefits bring down the effective cost of borrowing</i>.<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizM56p-Q4PFfhiInkBsHC6Y3FcAV9FnZHilFk3lcVqBNbhuQhjWfR_0V6oYWMQaFVeVGhchgwP0BuXUpO494c80BECFS0YNPXE_1hTiQmrSXCkEquEAqjG7VE6-sn9pNZ-xNRH-ofSO9pQ/s1600/eduloan.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizM56p-Q4PFfhiInkBsHC6Y3FcAV9FnZHilFk3lcVqBNbhuQhjWfR_0V6oYWMQaFVeVGhchgwP0BuXUpO494c80BECFS0YNPXE_1hTiQmrSXCkEquEAqjG7VE6-sn9pNZ-xNRH-ofSO9pQ/s1600/eduloan.jpg" /></a></div><div style="text-align: justify;"> While everybody wants their child to have a good education, Indian parents are especially intent on achieving this goad. So focused are they that they are willing to scrounge on basic indulgences to save for their kids' college fees. The problem is that in their efforts to fulfill the needs of the child, they sometimes sacrifice more that they should. They dip into their retirement funds to pay for the education. This is a dangerous strategy because it leaves them financially vulnerable to their sunset years.</div><div style="text-align: justify;">We all know that the cost of higher education is raising at a fast pace. Unless you foresaw this trend 10-12 years ago and started investing aggressively for this goal, your savings alone might not be enough to fund your child's higher education. Instead of withdrawing from your Provident Fund or PPF, it's better to bridge the gap with an education loan. It is not only tax-efficient, but helps inculcate financial discipline in the child by making him responsible in his early working years.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">It may be argued that taking a loan in these times of high interest rates is not a prudent strategy. You will be paying 12-14% on the loan, while your investments earn only 8-8.5%. However, keep in mind that any loan taken to pay for the education of your child is eligible for income tax benefits. Under section 80E, the entire interest paid on the loan is eligible for tax deduction. The savings in tax can drastically bring down the effective cost of the loan.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The higher the taxable income of the individual, the bigger tax benefits. See Table:</div><div style="text-align: justify;">Loan Amt: Rs 500000; Interest Rate: 12%; Term: 8 years; <b>EMI</b>: Rs 8,126</div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSRhheMSXjXlVQlN3FKTf_hDStFLZGGabrQz1P7XGL5veCRrvNxaatF2CRpg1V6AC0Jm5J0od3TJIR2r4mDpMp2Qy-nbzK38AISFhyY0l9GnkCaOH0DK0Y-rh50HQ5Z-J-QMi385Ta5uu3/s1600/taxslab.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSRhheMSXjXlVQlN3FKTf_hDStFLZGGabrQz1P7XGL5veCRrvNxaatF2CRpg1V6AC0Jm5J0od3TJIR2r4mDpMp2Qy-nbzK38AISFhyY0l9GnkCaOH0DK0Y-rh50HQ5Z-J-QMi385Ta5uu3/s1600/taxslab.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;"> </div><div style="text-align: justify;">Check <b><a href="http://www.rupeetimes.com/calculators/education_loans/education_loan_emi_calculator.php">Education Loan Calculator</a></b> for more figures </div><div style="text-align: justify;"></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">For someone in the highest tax bracket, a loan taken at 12% p.a effectively costs 8.71% a year. This is very cheap considering today's regime of high in today's regime of high interest rates, wherein personal loans are available at 18-20%. Also, unlike a home loan, where the tax deduction for self-occupied houses is limited to Rs 1,50,000 in a year, there is no limit to the tax deduction on an education loan. However, keep in mind that most lenders don't give education loans for more than Rs 10 lakh, so a limit is set by default.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">An education loan will also help in making your child financially responsible in his early working years. Education loans usually come with an EMI holiday and the repayment can be deferred for up to 1-2 year till the student has taken a job. In the initial years, when the financial responsibilities are few, young people tend to be extravagant. However, if you shift the burden of repaying the loan to your child, he will be more careful with his money and is less likely to blow it up at a discotheque or on gadgets and gizmos. The loan EMI will act as a deterrent and force him to be frugal in his spending.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Eligibility for tax deduction:</b></div><div style="text-align: justify;">You can avail of income tax deduction for the interest under Section 80E only if the loan has been taken for yourself, spouse or children. The interest paid on loans taken for siblings or other relatives is not eligible for income tax deduction.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>Collateral requirements:</b></div><div style="text-align: justify;">If the loan is more than Rs 3-4 lakhs, the lender may insist on a collateral as security. This could be immovable property, National Savings Certificates, Fixed Deposits, bonds and endowment insurance policies. This is a necessary formality and one should not shy away from providing the collateral.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Specified lenders:</b></div><div style="text-align: justify;">If you are seeking tax deduction, the loan should be from a bank or financial institution notified for the purpose. No tax deduction is available if the loan has been taken from a private source or an overseas lender. Some charitable institutions are also included in the approved list.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Courses covered:</b></div><div style="text-align: justify;">Full-time graduate or post-graduate courses in engineering, medicine, management, applied sciences, vocational studies after senior secondary or its equivalent are eligible for education loans. This can be from any school, board or university recognised by the Central or state government.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Interest deductible for eight years:</b></div><div style="text-align: justify;">Unlike a home loan, the interest deduction is available for a maximum of eight years. If you take an education loan in 2011 and start repaying it in 2013, the interest deduction will not be allowed after 2021.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-72001513788312181492011-05-21T20:32:00.000-07:002011-05-21T20:32:48.600-07:00Loss Aversion<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #cc0000;"><b><span style="font-size: large;">Why you pick loss over gain</span></b></div><div style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrjV-l9pKVu-YhpSnpbTw5V5x90eL6lH7J334d3OorVoOfV-dTmXH2pXzQ9uFDIGlJxQTodJObEXThsejKIHf6yW8mLJMVDBcUXiydm-i2XS3qttvJMVC52n4ICjawJbEZzTINoi4SCdmd/s1600/0209_decision_loss_06.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="140" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrjV-l9pKVu-YhpSnpbTw5V5x90eL6lH7J334d3OorVoOfV-dTmXH2pXzQ9uFDIGlJxQTodJObEXThsejKIHf6yW8mLJMVDBcUXiydm-i2XS3qttvJMVC52n4ICjawJbEZzTINoi4SCdmd/s200/0209_decision_loss_06.jpg" width="200" /></a></div><div style="text-align: justify;">It was mid-2007 and mutual fund investments were giving fabulous returns. Enamored by a particular fund, an acquaintance invested nearly 50% of his SIP money in it. It seemed like a good decision as the fund gave returns as high as 150%. Like many others, he didn't think anything would go wrong. But then on 15-Sept,2008 the Lehman Brothers filed for bankruptcy, and stock markets across the world started to fall. When the NAVs of his star fund went into a free fall, performing worse than the others, the acquaintance conducted a desperate check on the various schemes he had invested in. He found the funds full of speculative stocks.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Despite this, he could not get himself to redeem the accumulated fund units and limit his losses. So the losses continued to pile and he continued to hope that he would recover these. He justified these as being paper losses, convincing himself that til he redeemed the units, the paper losses would bot become 'real' losses. In fact, he started buying more units to average down the cost of buying a single unit. A few months later, the fund manager quit the mutual fund and the value of his investment fell abysmally low. It was then he decided to get out of the fund. Why did he wait till the last minute to rid himself of the pilling losses? He has been a victim of 'loss aversion'.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>What is loss aversion?</b></div><div style="text-align: justify;">Loss aversion is the tendency to avoid a loss rather than make a gain. This concept is rooted in the Prospect theory, according to which people tend to base their decisions on perceived gains rather than perceived losses because the emotional impact of losses is far greater than that of gains. Extensive research in behavioural economics shows that people experience twice as much pain when they face a loss in comparison to the pleasure they feel with a gain. So the pleasure derived from a rising Sensex is not as deep as the pain one suffers when it drops sharply.</div><div style="text-align: justify;">Another reason people stick with losing propositions is that they find it difficult to admit they took a wrong decision. They keep hoping that they will recoup the losses, and in the process, they end up deepening these. "When you sell a loser, you don't just make a financial loss; you take a psychological loss from admitting you made a mistake. You are punishing yourself when you sell.", says Jason Zweig, a personal finance columnist at </div><div style="text-align: justify;">Wall Street Journal, in his book, Your Money and Your Brain. "Once you make an investment, you can't help regarding it as yours. When you buy a stock...it becomes a part of you. From that moment forward, the prospect of having to get rid of it becomes a wrenching thought," he adds.</div><div style="text-align: justify;">In fact, people don't stop at holding on to a losing investment. They make things worse by investing more in it a bid to average out the cost. In technical terms, this is referred to as the 'sunk cost fallacy' or trying to recover a bad investment by throwing in more money.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="text-align: justify;"><div style="color: #990000;"><b>Application in financial life</b></div>This theory is amply reflected in our day-to-day financial behaviour. People tend to keep their money in safe debt instruments rather than in equity, despite the promise of higher gains in the latter, because the risk, and the implied loss, in equities is enough to keep them away from the high returns. What they don't realise is that the low returns in safe options will not be able to keep pace with inflation, reducing the purchasing power of their funds several down the line.<br />
Loss aversion also makes people remain stuck to stagnant careers instead of spending money on upgrading their skills and looking for a better job. The lure of an improved and a more lucrative career is not enough to make them part with the money for a degree or a part-time course.</div><div style="text-align: justify;"></div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>How to escape the loss aversion bias</b></div><div style="text-align: justify;">One way of not falling into the loss aversion trap is to keep the big picture in mind or have a long-term view of your investments. So, sit and actually calculate how much the loss in one fund or stock will impact your entire portfolio before you decide to stick with it. If you are dealing in stocks and don't trust your ability to get out of a losing script, resort to stop-loss order. It will force you into a decision and not allow you to become attached to a particular stock.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Another option is to look for ways to turn your losses into gains. Short-term capital losses make on selling shares and equity mutual funds in less than a year's time can be set off against short-term capital gain as well as taxable long-term capital gain. "The easiest way to do that is to remember that selling investments at a loss creates a tax-deductible event"</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-75439898104788662682011-05-15T00:37:00.000-07:002011-06-08T21:33:09.243-07:00Behavioural Accounts<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #cc0000;"><b><span style="font-size: large;">Don't be fooled by the mind</span></b></div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU7nlu3sN6-nplg1TOolnPhoXCdX4Oo_AushAu2K8Io_nW3Pbnem-BWKizrcRLgAwI5FTQjTLbuZntbjIMpG2a4co9RCUdAs1ocVEjL524gFOmGcxWm76mD52yJQ69HIgqH2rWGYV9hF5k/s1600/Basic+Facts+Logo+3.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU7nlu3sN6-nplg1TOolnPhoXCdX4Oo_AushAu2K8Io_nW3Pbnem-BWKizrcRLgAwI5FTQjTLbuZntbjIMpG2a4co9RCUdAs1ocVEjL524gFOmGcxWm76mD52yJQ69HIgqH2rWGYV9hF5k/s1600/Basic+Facts+Logo+3.jpg" /></a></div><div style="text-align: justify;">Lets think about these two incidents. You had bought an advance ticket worth Rs 500 to watch a movie. On reaching the multiplex, you realized that the ticket had been lost. Weekend shows are typically expensive and since you didn't want to spend the same amount again, so you gave up the idea of watching the movie and came back home.<br />
</div><div style="text-align: justify;">In a separate incident, when a friend of your planned to watch a film, he realized he had lost the note he had kept aside to buy the ticket Not agonizing too much over the loss, he took out another Rs 500 note and bought the ticket.<br />
</div><div style="text-align: justify;">Both the incidents were basically the same. You had lost a Rs 500 ticket and not bought a new one. Your friend had lost Rs 500 and had gone ahead and purchased another ticket. The loss in both the cases was limited to Rs 500. So why did your friend buy another ticket and you didn't ?</div><div style="text-align: justify;">This is a situation what economists call "Mental Accounting" or the tendency to categorize different money situations into separate mental accounts.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>What are mental accounts ?</b></div><div style="text-align: justify;">The term mental accounting was coined by Richard Thaller, an economist at the University of Chicago. He defines it as "The inclination to categorize and treat money differently, depending on where it comes from, where it is kept and how it is spent."<br />
</div><div style="text-align: justify;">In the first case, the loss of ticket was attributed to the "<i>ticket loss account</i>", whereas in the latter case, the loss was ascribed to the "<i>money loss account</i>". The human mind tends to add the loss on the "ticket loss account" to the price of a new ticket, that is, Rs 500, and so people in such situations are not reluctant to buy a new ticket. For you, the movie was worth Rs 500, but not worth Rs 1000.<br />
</div><div style="text-align: justify;">In your friend's case, the mind values the price of a new ticket only at Rs 500, whereas the Rs 500 lost is attributed to the "money lost account". This explains the different reactions to what is essentially the same situation.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>Application in daily life</b></div><div style="text-align: justify;">Mental accounting comes into play in various situations in everyday existence, resulting in a monetary loss or an undesired spend. The victim often fails to realize how the mind has tricked him into bearing the loss, content in the belief that he has cut a good deal.<br />
</div><div style="text-align: justify;">Suppose you plan to buy a costly mobile phone and find one tagged at Rs 15,500 in a retail chain. Just you are ready to flash the credit card and pay for it, a friend calls. He tells you he has bought a similar model for Rs 15,300 from a shop just 3 km away. Will you drive the distance and save Rs 200? Chances are you won't.</div><div style="text-align: justify;">Consider another situation. You want to buy a toaster and come across one selling for Rs 1,200. Just as before, you find another gadget selling for Rs 1,000 just 3 km away. Will you rush to save Rs 200 ? Chances are you will. Why does this happen ? On a fundamental level, we are thinking in percentages. If Rs 200 is expressed as a percentage of Rs 15,500, it seems very low in comparison to Rs 200 expressed as a percentage of Rs 1,200. At the end of the day, the saving is all about Rs 200.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Another area where mental accounting foxes us is when we come across a windfall, say a tax refund or bonus. More often than not, the tendency is to spend the money as soon as possible. People consider it 'found' money without realizing that it's their money coming back to them in case of tax refund or deferred salary in case of bonus. A small amount of money that comes to us unexpectedly gets treated lightly and we're more likely to spend it on frivolous things we don't need. Bigger sums that come to us, say, from an inheritance, tend to get treated more seriously and are more likely to be saved.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">This is the reason people continue to earn low interest rates on fixed deposits in the bank, while paying a high rate of interest on their credit card debt or a personal loan, instead of breaking the fixed deposit and repaying the debt. Remember that the interest you earn on your fixed deposit will always be lower than the interest you pay on your credit card debt.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>The bottom line</b></div><div style="text-align: justify;">We need to realize that the money we earn for various sources is basically the same and we should be careful not to divide it into mental accounts while spending it. So, if you get a good bonus or tax refund, don't spend it by categorizing it as 'found' money.</div><div style="text-align: justify;">Also remember that money is fungible. This is the reason you should not let money lie in a fixed deposit while you are paying your credit card balance. It makes more sense to first pay your debt instead of saving money before falling into the trap of '<b>mental account</b>' foolishness.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0tag:blogger.com,1999:blog-6358546295171186175.post-58828217328551825912011-05-14T10:33:00.000-07:002011-07-15T09:20:27.856-07:00Global Income - Tax<div dir="ltr" style="text-align: left;" trbidi="on"><div style="color: #990000;"><b><span style="font-size: large;">5 TAX TIPS if you work abroad</span> </b></div><div style="color: #990000;"><br />
</div><div style="text-align: justify;"><i style="color: black;">If you have a job overseas or plan to emigrate, here's how to avoid any tax bloopers in India or the country where you choose to live</i><span style="color: black;">.</span> </div><div style="text-align: justify;"></div><div style="text-align: justify;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdOglAhUw3TXcd2Ezcn5aJSUw4pZgMCsMxDK3rDd9hJuR1pes0zjneLXrPDat_d_Uy96DFPIPq05nq3PXVw2fvlwZgmLX3YueRFeLmrYg4xHh4xVHdjcBLMEk3YrczpqDm3bEpumlHqZQP/s1600/1_fullsize.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="193" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdOglAhUw3TXcd2Ezcn5aJSUw4pZgMCsMxDK3rDd9hJuR1pes0zjneLXrPDat_d_Uy96DFPIPq05nq3PXVw2fvlwZgmLX3YueRFeLmrYg4xHh4xVHdjcBLMEk3YrczpqDm3bEpumlHqZQP/s200/1_fullsize.jpg" width="200" /></a></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEhaH1E6NtXuLogdpqFWQuq_bZcIU6oxPvYwsOXYkMnLIziVVhYz89azzKO9Zj0SZs-yBUTJzv0jQ5p5HSBSACrVkcrn4Jxykt2tTO6Wh4K0cY3Cu5MyIVo2yNsPKF1m4ml7vjpKCy5bRy/s1600/1_fullsize.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><br />
</a><br />
<div style="color: #990000;"><b> 1. GLOBAL INCOME IN YOUR TAX RETURN</b></div><div style="text-align: justify;">Governments often demand tax on the global incomes of foreign residents living in their country on a long-term basis. This is set to become more commonplace as governments across the globe, strapped for revenue following the economic crisis, are increasingly exchanging information on tax matters. This is a bid to curb evasion and track money kept in low tax jurisdictions. They are also increasing their focus on high net worth individuals as well as heightening surveillance of accounts held in foreign countries to crack down on financing of terrorism.</div><div style="text-align: justify;">Countries such as the US, the UK and Australia now require immigrants who become permanent residents or citizens to report their incomes from all global sources and pay tax accordingly. Temporary residents are not required to declare their global incomes in these countries, but they have to ensure that taxes are paid in the home country. India also requires its residents to pay tax on any income earned overseas, if they ordinarily pay tax in India.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>2. WHAT CONSTITUTES GLOBAL INCOME</b></div><div style="text-align: justify;">Global income includes anything earned abroad, from rental income and dividends to interest and capital gains. If you are emigrating from India, make a list of your assets, the cost of acquisition, earnings from these assets and the tax paid on incomes and capital gains. For instance, if you own a house in India that is rented out, it will have to be reported as global income if you become a permanent resident or citizen of another country, but you may not have to pay tax on it. </div><div style="text-align: justify;">Permanent residents in the US also have to report inheritances and gifts received in India, though there is no tax liability on such gains either in India or the US.</div><div style="text-align: justify;">Conversely, if you are only a temporary resident in these nations, you will have to continue paying taxes in India on the income earned here. You will also have to comply with all the reporting requirements under the Indian tax laws, such as filing the annual information report if a property transaction exceeds Rs 30 lakh. You won't need to declare this income in the country where you are residing temporarily.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>3. MANAGE TAX RESIDENCY</b></div><div style="text-align: justify;">The residency rules determine if an NRI has to pay tax in a foreign country in India.There is no common rule across the globe. Countries such as the UK and Australia, which follow the common law system, use a residency test to determine whether a person is required to pay tax in that country. India too follows this system. So, if you have spent more than 182 days in a country, such as India, the UK and Singapore, during the financial year, or more that 729 days in the previous seven financial years, you will have to pay income tax in that country. This means that if you emigrate mid-year, you will pay income tax in India as well as file returns at the end of the year. In the US, foreign residents are taxed as American citizens if they have either acquired a green card or clear the substantial presence/residency test. This test is far more stringent than the residency rules that apply in India and the UK. An individual is said to have satisfied it if he stays at least 31 days in a calender year and 183 days in the current and two preceding years.</div><div style="text-align: justify;">To avoid confusion about the number of days spend in a country and prevent double taxation, it will be useful to maintain a travel calendar as well as details of entry and exit as stamped on the passport. Tax authorities could check your passport to determine the residency status. Don't try to fool those guys as they already have the complete picture of your residency status in the country before taking you into consideration.</div><div style="text-align: justify;"><br />
</div><div style="color: #990000; text-align: justify;"><b>4. CREDIT FOR TAXES PAID IN INDIA</b></div><div style="text-align: justify;">India has signed double tax avoidance treaty (DTAT) with about 70 countries, including the US, the UK, Australia, Japan, Germany and Switzerland. This ensures that NRIs can claim foreign tax credit if taxes have been paid on incomes and gains made in India. If, however, taxes paid in India are lower than that required to be paid in the country where the the NRI is residing, additional tax will have to be paid. Before you claim foreign tax credit, ensure that you have all the relevant documents as proof.</div><div style="color: #990000; text-align: justify;"><b><br />
</b></div><div style="color: #990000; text-align: justify;"><b>5. RESIDENCY RULES & DIRECT TAXES CODE</b></div><div style="text-align: justify;">This current residency rules in India will change when the Direct Taxes Code is implemented, most probable from 1 April, 2012. This change will mean that a person will have to pay tax in India if he spends 60 days (previous 182) in the country during a financial year, or 365 days (previous 729) or more in the previous four financial years.</div></div>Atanuhttp://www.blogger.com/profile/08474476039899006211noreply@blogger.com0