Posted on MarketFastFood.........
Invest in NHAI – National Highways Authority of India Tax Free Bonds
Options
Series – I Series – II
Face Value Rs.1000/- Rs.1000/-
Coupon Rate 8.2% 8.3%
Tenor 10 Yrs 15 Yrs
Interest Payment Annual Annual
*Minimum Investment Rs.50000/- *Rated Highest by Crisil and Care *Will get listed on BSE and NSE *Issue open currently will close on 11/Jan/2012 (last date for us 10th)
VRIDHI’s point of view: The Post-Tax Yield from these Bonds will be higher for the Investors in the 20% and 30% Tax Bracket & wanting to invest in fixed deposits.
Thursday, December 29, 2011
Seven National Crimes
Seven "national crimes" :
I don't think,
I don't know,
I don't care,
i am too busy,
I leave well enough alone, I have no time to read and find out,
I am not interested.... -William Boetcker
I don't think,
I don't know,
I don't care,
i am too busy,
I leave well enough alone, I have no time to read and find out,
I am not interested.... -William Boetcker
Points to consider before hiring a financial planner
Pankaj Mathpal, Financial Chronicle 29/12/2011
source: http://www.mydigitalfc.com/personal-finance/points-consider-hiring-financial-planner-979
Financial planning is a process of achieving one’s financial goals and a true financial planner provides guidance and a process for determining the bestway to meet important goals of life through the proper management of financial resources. Though the world is full of an endless array of free financial planning information, websites, books and blogs, yet, you need the help of a financial planner. The reason may be that you lack the time to do a lot of research yourself or you feel the need for a professional opinion. But don’t rush out and hire just anyone.
Make sure that you receive enough value for the fees you are paying to your financial planner. You should do some research and think about what you need and expect from your financial planner, because, there may still be some wolves in sheep’s clothing calling themselves ‘financial planners’.
Do the following checks before you hire your financial planner.
Qualification and experience: The term financial planner is not regulated, and hence, used by many financial professional. An insurance agent, working in a tied agency channel of an insurer, can also use the term financial planner or financial adviser.
Ask the planner that what qualifies him to offer financial planning advise. There are different types of certifications offered by several bodies such as NCFM, NISM, BCFM, IRDA and FPSB India to name few, but not all have the same importance or weight. So, do make sure you know what the certification mean.
Professional status of a financial planner is shaped by the kind of education they have, or the letters behind their names. If your planner is qualified as certified financial planner (CFP), it ensures that he has undergone the internationally recognised financial planning curriculum, covering topics such as insurance planning, retirement planning , investment planning and tax and estate planning . Also, find how long the planner has been in practice and his experience in counselling individuals on their financial needs.
Services offered: Its not that all financial planners offer comprehensive financial planning services. It’s also not necessary that your financial planner is able to execute all aspect of financial planning, but, the scope and limitation of the financial planner should be disclosed at the start.
If the planner works with professionals outside his own practice such as lawyers, insurance agents or tax practitioners to develop or carry out financial planning recommendations, get their names to check on their backgrounds.
Reference check: Ask for references of present clients. Ask if any regulator or professional standards setting body like FPSB India has initiated any investigation against him. Google some information about your financial planner.
Financial planning approach: Ask the financial planner about the type of clients and financial situations he typically likes to work with. Some planners prefers to work with high net-worth individuals (HNIs), other may like to work with salaried individuals. Some financial planner may require you to have a certain net-worth before offering services. Does he exhibit a strong willingness to understand what goals you have set out, and has he thoroughly explained the intended approach to reaching these goals?
Find out if the planner will only develop the plan for your or also help you in execution of the plan. Check that how frequent your financial plan will be reviewed. Ensure that your planner is not a product-driven salesman and has a client-centric approach.
Resources: Some financial planners work in team in their financial planning firm, while others may provide personalised advice. If your financial planner has many clients, it is very difficult to maintain personal relationships with everyone. Many smaller clients can easily get ignored or may not be able to get personal attention. Make sure that there are sufficient number of planners in the firm to provide appropriate service to the clients.
Research and support: The right advice is backed by adequate research. Your financial adviser should have such capabilities and access to the best technology and financial tools to select the appropriate product for you. There are frequent changes in regulations and policies. Make sure that your financial planner keeps him updated with such changes.
Fee structure: Financial planners may follow different compensation models. Some may charge a lumpsum fee for making your financial plan, while others may charge fee based on your asset managed by him. Few even may charge both if the financial plan is executed by them.
Typically, the financial planner who has been around for a long time with a good track record will cost more than the new graduates with little experience.
Conclusion: Deciding on the right financial planner is an important step to ensure your financial well being. It requires you to do some research and shopping around before finalising on your financial planner because a bad decision on a financial planner can be a long-term burden in more ways than one.
source: http://www.mydigitalfc.com/personal-finance/points-consider-hiring-financial-planner-979
Financial planning is a process of achieving one’s financial goals and a true financial planner provides guidance and a process for determining the bestway to meet important goals of life through the proper management of financial resources. Though the world is full of an endless array of free financial planning information, websites, books and blogs, yet, you need the help of a financial planner. The reason may be that you lack the time to do a lot of research yourself or you feel the need for a professional opinion. But don’t rush out and hire just anyone.
Make sure that you receive enough value for the fees you are paying to your financial planner. You should do some research and think about what you need and expect from your financial planner, because, there may still be some wolves in sheep’s clothing calling themselves ‘financial planners’.
Do the following checks before you hire your financial planner.
Qualification and experience: The term financial planner is not regulated, and hence, used by many financial professional. An insurance agent, working in a tied agency channel of an insurer, can also use the term financial planner or financial adviser.
Ask the planner that what qualifies him to offer financial planning advise. There are different types of certifications offered by several bodies such as NCFM, NISM, BCFM, IRDA and FPSB India to name few, but not all have the same importance or weight. So, do make sure you know what the certification mean.
Professional status of a financial planner is shaped by the kind of education they have, or the letters behind their names. If your planner is qualified as certified financial planner (CFP), it ensures that he has undergone the internationally recognised financial planning curriculum, covering topics such as insurance planning, retirement planning , investment planning and tax and estate planning . Also, find how long the planner has been in practice and his experience in counselling individuals on their financial needs.
Services offered: Its not that all financial planners offer comprehensive financial planning services. It’s also not necessary that your financial planner is able to execute all aspect of financial planning, but, the scope and limitation of the financial planner should be disclosed at the start.
If the planner works with professionals outside his own practice such as lawyers, insurance agents or tax practitioners to develop or carry out financial planning recommendations, get their names to check on their backgrounds.
Reference check: Ask for references of present clients. Ask if any regulator or professional standards setting body like FPSB India has initiated any investigation against him. Google some information about your financial planner.
Financial planning approach: Ask the financial planner about the type of clients and financial situations he typically likes to work with. Some planners prefers to work with high net-worth individuals (HNIs), other may like to work with salaried individuals. Some financial planner may require you to have a certain net-worth before offering services. Does he exhibit a strong willingness to understand what goals you have set out, and has he thoroughly explained the intended approach to reaching these goals?
Find out if the planner will only develop the plan for your or also help you in execution of the plan. Check that how frequent your financial plan will be reviewed. Ensure that your planner is not a product-driven salesman and has a client-centric approach.
Resources: Some financial planners work in team in their financial planning firm, while others may provide personalised advice. If your financial planner has many clients, it is very difficult to maintain personal relationships with everyone. Many smaller clients can easily get ignored or may not be able to get personal attention. Make sure that there are sufficient number of planners in the firm to provide appropriate service to the clients.
Research and support: The right advice is backed by adequate research. Your financial adviser should have such capabilities and access to the best technology and financial tools to select the appropriate product for you. There are frequent changes in regulations and policies. Make sure that your financial planner keeps him updated with such changes.
Fee structure: Financial planners may follow different compensation models. Some may charge a lumpsum fee for making your financial plan, while others may charge fee based on your asset managed by him. Few even may charge both if the financial plan is executed by them.
Typically, the financial planner who has been around for a long time with a good track record will cost more than the new graduates with little experience.
Conclusion: Deciding on the right financial planner is an important step to ensure your financial well being. It requires you to do some research and shopping around before finalising on your financial planner because a bad decision on a financial planner can be a long-term burden in more ways than one.
Monday, December 19, 2011
Recent Changes in Postal Products
How to get the most out of small savings schemes
Arnav Pandya, 19/12/11 Financial Chronicle
source: http://www.mydigitalfc.com/personal-finance/how-get-most-out-small-savings-schemes-316
The small savings landscape has changed with the overhaul of the different instruments that are available in the market. While freeing up interest rates by linking them to the interest rate of securities in the debt market is one of the changes involved, there are several other changes that investors will face when they want to make investments over the coming days.
Understanding these changes is a very important part of the entire investment process because the investor needs to know exactly what is available and how he should be going about completing his investments. Here is a look at relevant changes.
Kisan Vikas Patra (KVP): The Kisan Vikas Patra has been an investment instrument that has been in existence for a long time and was also popular. However, a lot of investments in KVP were being made in cash, and, hence, it came to be regarded as an instrument that was being used for hiding wealth.
This instrument, which offered around 8.41 per cent yields for investors, has now been discontinued from December 1, 2011, therefore, investors will no longer be able to buy any additional KVPs for investment requirements. Now, investors will have to choose between the other alternatives that are available for investment.
National Savings Certificate (NSC): There has been a major change in National Savings Certificates. Up until December 1, these were instruments, which paid 8 per cent yield that was compounded half-yearly, giving a yield of 8.16 per cent, with a maturity of six years. Now, the features of this instrument have been changed and the difference will be visible on many fronts.
First, the tenure of the investment has come down with the end result that the six-year instrument will no longer be available, but the time has actually been reduced to five years. The new interest rate on the instrument is 8.40 per cent for the five-year period and the figure will be 8.7 per cent for the 10-year instrument.
Earlier, there was only a single instrument that was available for investment, but, now, there is a longer-term option. Investors now have to make a choice about the time period for which they want to lock in their investment. Investors who do not want any worries on interest rate risks should lock into the longer-period instrument when they expect rates to remain low during the interim period, although, it is very difficult to take a 10-year view on interest rates in such uncertain times.
Monthly Income Plan (MIP): One of the biggest changes will, however, be witnessed in case of the post office Monthly Income Plan. The old plan was discontinued from December 1 and now there is a new plan. Again, this will have multiple implications. In the past, the instrument was operational for six years, but now, this tenure will no longer be valid. New investment tenure will be for five years.
There is another aspect to this investment and this is in the form of a bonus paid at the time of maturity. This was an incentive for the investor to remain invested till the time of maturity because it would enable the investor to get a bonus of 5 per cent. This will no longer be available, so in case, the investor remains invested till the end of five years, there will be no bonus coming in. The only relief is that the interest rate has gone up to 8.2 per cent over the life of the new instrument.
Arnav Pandya, 19/12/11 Financial Chronicle
source: http://www.mydigitalfc.com/personal-finance/how-get-most-out-small-savings-schemes-316
The small savings landscape has changed with the overhaul of the different instruments that are available in the market. While freeing up interest rates by linking them to the interest rate of securities in the debt market is one of the changes involved, there are several other changes that investors will face when they want to make investments over the coming days.
Understanding these changes is a very important part of the entire investment process because the investor needs to know exactly what is available and how he should be going about completing his investments. Here is a look at relevant changes.
Kisan Vikas Patra (KVP): The Kisan Vikas Patra has been an investment instrument that has been in existence for a long time and was also popular. However, a lot of investments in KVP were being made in cash, and, hence, it came to be regarded as an instrument that was being used for hiding wealth.
This instrument, which offered around 8.41 per cent yields for investors, has now been discontinued from December 1, 2011, therefore, investors will no longer be able to buy any additional KVPs for investment requirements. Now, investors will have to choose between the other alternatives that are available for investment.
National Savings Certificate (NSC): There has been a major change in National Savings Certificates. Up until December 1, these were instruments, which paid 8 per cent yield that was compounded half-yearly, giving a yield of 8.16 per cent, with a maturity of six years. Now, the features of this instrument have been changed and the difference will be visible on many fronts.
First, the tenure of the investment has come down with the end result that the six-year instrument will no longer be available, but the time has actually been reduced to five years. The new interest rate on the instrument is 8.40 per cent for the five-year period and the figure will be 8.7 per cent for the 10-year instrument.
Earlier, there was only a single instrument that was available for investment, but, now, there is a longer-term option. Investors now have to make a choice about the time period for which they want to lock in their investment. Investors who do not want any worries on interest rate risks should lock into the longer-period instrument when they expect rates to remain low during the interim period, although, it is very difficult to take a 10-year view on interest rates in such uncertain times.
Monthly Income Plan (MIP): One of the biggest changes will, however, be witnessed in case of the post office Monthly Income Plan. The old plan was discontinued from December 1 and now there is a new plan. Again, this will have multiple implications. In the past, the instrument was operational for six years, but now, this tenure will no longer be valid. New investment tenure will be for five years.
There is another aspect to this investment and this is in the form of a bonus paid at the time of maturity. This was an incentive for the investor to remain invested till the time of maturity because it would enable the investor to get a bonus of 5 per cent. This will no longer be available, so in case, the investor remains invested till the end of five years, there will be no bonus coming in. The only relief is that the interest rate has gone up to 8.2 per cent over the life of the new instrument.
Wednesday, December 14, 2011
Few words on Savings and Investments
Getting the basics right : Savings and Investments are usually misconstrued as synonyms - they are not. Simple terms - Savings is putting away a small portion of your income after ensuring that you have taken into account all your expenses, regularly, so that you have some money left in your hands should you run into rough weather. This is similar to the ants constantly working through the summer months to save up foodstuff well before the monsoon sets in. Investment is also money that has been put away after taking into account your expenses but this money is placed in a manner that it works on its own to grow. In other words it can be considered passive growth of wealth wherein you are not involved day to day in growing it. This also entails that utmost care is required in choosing the right kind of investments which in turn necessitates that a) one must follow a disciplined investment routine b) more importantly, we realize our needs and understand our goals so that we can have a good routine to achieve these ends and last but not the least c) our individual risk apetite meaning how much risk can we financially and psychologically withstand. Once clarity on these three points is achieved then we get to the serious business of planning both savings and investments. Return on savings may be small but it would be steady and comforting. Return on investments could be as high as 25% as in the case of realty or even higher in the case of some business activities, but may not always be steady inflow of return but an Investing discipline can help beat the woes of inflation and what better times to understand this than the present state of the economy.
It is my experience both past as well as present that often owing to the clouded understanding on these two aspects of finacial planning that many a times people are either under-insured or inappropriately insured. Also due to a faulty understanding of the basics of investing, many people are invested in stocks either at the wrong time (meaning when they should have switched their investments to fixed assets or simply been in cash) or are taking to the stocks and commodities markets in a hurry to make that elusive fast buck and then realize only too late that they were almost skinned in this misadventure.
There is a lot to go by a systematic investment discipline keeping in view the following :
a) of course, the total income of the household
b) the expenses that must be met
c) the surplus that they can hence put away
d) very important, the financial goals both short term as well as long term that the household needs to be planned for
e) planning for retirement so that people retire from regular jobs and not from the joy of living
f)planning for medical contingencies
In future posts I will continue to dwell upon each of the above points in order to shed more light on the subject.
Monday, December 12, 2011
Low Retirement Planning in India
Financial Express, 13/11/2011
source: http://www.financialexpress.com/news/15-pvt-sector-staff-invest-for-retirement/875146/
As low as 15 per cent of employees in the private sector have started investments for retirement so that they can maintain the level of living standard post the work period, says a study by Metlife International.
"Though retirement looms as a source of financial worry, few Indian employees are taking steps to prepare for it. Only one in four Indians has taken any steps to prepare for retirement and even fewer ¿ one in six have begun planning for it," said the 2011 International Employee Benefits Trends.
In three emerging markets including India, there is also a high level of financial anxiety, it said, adding that this concern is coupled with an even greater lack of preparedness for both retirement and shorter term financial eventualities in countries whose combined total population is 1.5 billion.
In India, a full 85 per cent of those surveyed had not taken any steps to plan for retirement, the study said.
Analysing low level of planning among Indian employees, the report said, cultural factors could be at work here. Fully half of all Indian employees say they do not plan to retire.
This could reflect the relatively young age of the working population, an ambitious, entrepreneurial and interested group highly motivated to improve their standard of living, the study said.
It could also be related to the tradition of older family members being taken care of by their children in India. While it is not their number one concern, a full 55 per cent of employees in India say they are extremely concerned about having enough money to provide for elderly parents or in-laws.
The study, released recently, is based on the survey done across seven major cities in India and 1,090 employees were part of it.
It highlighted that although the wages have appreciated but employers still continue to provide limited benefit to employees.
"While foreign multinationals have caused wages to rise in certain sectors and are influencing the types of benefits offered, Indian employers nevertheless continue to provide only a limited benefit offering to their employees," it said.
With the exception of health and critical illness insurance, less than half of all employers offer any other products. The labour surplus and cultural factors, plus the cost of benefits, continue to play a role here and influence employer attitudes as they did in the first survey four years ago, the study said.
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