Invest in Silver, now?

Why you should invest in Silver now? While everybody’s gushing about the returns gold has delivered over the past four years, it’s the yellow metal’s poorer cousin that has been winning the race. Silver prices have jumped from Rs 16,525 per kg in 2008 to Rs 75,020 per kg in 2011, a gain of 354%. However, over the past few months Silver prices have dropped to a more affordable level of Rs 54,000 per kg. Does this mean the potential in silver is already exhausted? "There is still some steam left in silver. Bullion is expected to go up, so silver prices too shall rise steadily in the medium to long term," says Jayant Manglik, president, retail distribution, Religare Broking. What’s pushing the prices up? Silver’s easy availability, diversified use and lower price relative to gold places it high in the list of industrial and investor preference. Silver is malleable, ductile, strong and can endure high temperatures, making it ideal to use in various industries, from electronics to pharma. Over the past century, technological explosion has magnified the scale of its usage. Its demand is outpacing the supply and leading to large gaps, which is one of the reasons why silver prices have been zooming up. Since 2008, the price rise has been further propelled by the global economic uncertainty and the depreciation of the rupee due to the US economy outpacing the European Union. Central banks and their governments across the globe have stopped selling their silver reserves in the world marketplace, thereby freezing the supply, which, has caused silver to become more scarce and valuable. When there is lack of confidence in fiat money and the financial system, silver can be a hedge against inflation. During global turmoil, central bankers devalue their currency and the best way to escape this is to stick with gold and silver. Also, mining of the metal is expected to become more limited due to scarcity constraints in the future. Silver is a precious metal and an industrial metal, and both sectors are dynamic and volatile in nature. The smallest movement can cause large variations, so silver may incur moderate price fluctuations in the short run. However, the white metal mirrors gold and in the long run, gold prices may escalate, leading to a positive trickledown effect on silver prices. "The Chinese economy is expected to bounce back from its downturn with an aim to increase industrial output, so its demand for silver would also shoot up," says Naveen Mathur, associate director, commodities and currencies, Angel Broking. How to invest If you want to invest in the white metal, here’s a look at the various ways you can do it. Coins and bars: These can be bought from jewellery stores at prevailing market rates. Decorative coins involve making charges, though these are much lower than what jewellers charge for gold ornaments, but you will not be able to recoup the charges when you sell the coins. A problem is that if you make a sizeable investment, it may be difficult to find a big storage space to keep these secure. E-silver: The uniformity in the price of silver across the nation and the success of E-gold encouraged the National Spot Exchange Limited (NSEL) to launch E-silver in April 2010. The silver is 99.9% pure and is available in small denominations of 100 gm and its multiples. E-silver can be stored in your demat account so you don’t have to worry about finding a secure storage space. You can also opt for the SIP (systematic investment plan) route to invest in e-silver through the online trading platform of the NSEL or through a broker. This will help you benefit from rupee cost averaging without having to track the markets regularly. Also, SIPs inculcate discipline that enables you to build wealth over time. Whenever you want to redeem your investment, the NSEL will provide the silver to you in physical form. Silver futures: Trading in silver futures is similar to that for gold. Silver futures provide the advantage of leverage position. To avoid the hassles of delivery, you must offset the futures contract before the maturity date is reached. US Silver ETFs and mining companies: Currently, silver exchange traded funds (ETFs) are not available in India. However, keen investors can put their money in silver ETFs that are available in the US. They can also buy stocks of silver mining companies that are listed on the Dow or Nasdaq.

How employers can help staff save tax beyond 80C by VIVEK KARWA, CPFA., CFPCM , Financial Chronicle 5/7/2012 source: http://wrd.mydigitalfc.com/personal-finance/how-employers-can-help-staff-save-tax-beyond-80c-507 Indian tax laws allow an individual to invest up to Rs 1,00,000 in a list of investments that qualify under section 80C and help the taxpayer save taxes of up to 30 per cent if the person is in the highest slab along with the cess. The intent of the law is to force individuals to invest at least for the sake of saving tax, but, the main purpose is to create savings for future needs. India does not have social security schemes, hence, it becomes even more important for every individual to save. We are seeing a gradual shift from guaranteed benefits to a contributory benefits system for many public and private sector employees. Employees leaving organisations prematurely bring liabilities to the company in form of compensations during accidents/death, and such premature exits from the workplace also causes great amount of financial stress to the employee and his family because income stops abruptly. Companies invest heavily in training its employees so that they learn the processes quickly and can start yielding returns in a short span of time. The biggest problem today is attrition. Companies can take some initiatives to create loyal employees in addition to benefits mandated by law like PF or ESI. Since the amounts received by mandated laws are very marginal, companies may look at other options where the employees can protect their families, save higher taxes over and above the section 80C and help the employee save for future needs. Group insurance: This is the cheapest form of insurance that most companies offer employees to protect families in case of premature death. The premiums can be paid by the company and in some cases, contributions are made by the employees also. Keyman or key person insurance: A company may sign up for key man insurance on the life of certain employee or employees who may be contributing significantly to the business by virtue of experience, contacts, knowledge or expertise, who might be a loss to the company by quitting. The insurance compensates the company to the extent of cover taken on the employee’s life. Like the group insurance, this policy also is a term cover, and the company can claim the premium paid as an expense in its books. The key difference between the group insurance and keyman’s insurance is that in the former the employee’s nominee gets the sum assured and in the latter, the company is compensated for the keyperson’s loss. Employer employee insurance (EEI): This is a unique insurance product through which an employer can give his employee all three benefits – protection, tax savings and savings at the same time and earn an employee’s company loyalty. There are no specially designed products under this scheme. Regular insurance products, both traditional and Ulips, can be purchased under this scheme. For EEI, the employer, while signing the contract with the insurer, mentions the number of years the premiums will be paid by the employer on behalf of the employee and the number of years the policy will continue wherein the employee would remain covered. The premiums paid by the company can be claimed as expense under section 37(1) of the IT Act. No tax is charged in the hands of employee either, if the employee after assignment decides to continue paying premiums, he will enjoy section 80C benefit also. The death claims will be tax free in the hands of the nominee under section 10(10D). If it’s a traditional insurance product, the surrender value (SV) is generally very low. The SV is generally calculated as 30 per cent of all the premiums paid, less the first year premium.