Sutras for increasing your networth!

Classic
I have been getting some emails from some insurance companies asking me to invest into some of their funds/plans and become a crorepati when you retire.
First, I don't like to rely on insurance companies which sell ULIP only to gain the commissions to give you promises especially for your retirement fund.
The ULIP and mutual funds give the returns only on market conditions. Market goes up, you get a good return and goes down.. you know what that means. This is
acceptable, when you can afford to take risks, but wouldn't be the onlyinvestment for my retirement plan. I would like to invest a bigger portion in debt funds when it
comes to retirement, than on equity funds.
The given ad, said, invest 8000 per month and earn 1 crore. But do these people give guarantee on the returns. The disclaimer is always present there, that the
returns are subject to market conditions.
Lets say, you invest 8000 per month in a FD and lets say, you still have 30 years of your working life. A simple FD with a 8% return would give you 11,745,213/-(1
crore 17 lakhs ) Offcourse, we will not always have 8% as the interest , it can come down or go up, but still an average of 8% is quite reliable over a long period of
time. A simple investment of 8000 per month can do this wonders, why take the additional risk of market equity.
Nothing stopping you from taking risks, but its all based on your target's you want to achieve for your retirement.
Few examples of FD returns
30 years 5000 per month 73 lakhs after 30 years at 8% compounded annually
25 years 10000 per month 95 lakhs after 25 years at 8% compounded annually
25 years 10000 per month 1.29 Crore after 25 years at 10% compounded annually
FD's are something, which are guaranteed income, and the even in the worst of cases, there is no loss.

Prasad Govenkar
APR

Your PF

Every time that you change your company, the HR will give you the document to withdraw the money or transfer it to the next company that you join. And we being
we, the urge is to withdraw it, considering the fact that you are so pressed for clearing that long pending credit card bill, which has already absorbed huge amount
in the form of 33% interest. Definitely, it makes more sense to clear off the high interest rates debts with these amounts which barely give 9% interest.
But hold on. Though the urge is there to withdraw and I know, almost everyone has immediate needs. But just make sure to keep the money handy for your retired
life. Remember, now, you have a source of income and the PF money is meant to take care of you when you dont earn. Please remember that you dont earn a
pension like our parents did, when worked for an government organisation. Yes, those are the perks that they enjoy , and we will not be.
So , in short, once you join your new company, please transfer the money to your new PF account in the new company. From what I last remember, the interest will
be paid on only one PF account. So if you havent transfered it, there is quite a bit of chance that there will be no accumulation of the interest. But I am not sure,
how the PF department finds out that, one has more than one account. Nevertheless, its our job to make sure, we have only one account.
Also, if you still dont have PPF account (Public provident fund), please open one. You can invest there as less as 2000 per year. And that account will earn a good
return at the rate of 8 or 9% interest(the rates keep changing). There amounts are exempted from tax under section 80ccc. This is a great way to accumulate the
funds for your retirement and also have the freedom to invest as per the comfort level.

Posted 6th April 2012 by Prasad Govenkar

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1.
APR

Cost of Appliances
We all know that each of the appliances/Gadgets/Vehicles that we use comes at a cost. The TV, the bike, the car and most importantly the mobile. Whats more
important in today's world is the cost of replacing them regularly, with the advent of new models or features. Yes, we all love the new stuff and always love to do the
shopping. But it only means we are spending more. Not that spending is bad for the economy, but I would prefer one self to use the money carefully.
Lets talk in terms of examples A specific mobile phone costs 12000/- INR. And you use it for 12 months. Which simply means that the cost of owning this mobile has been 1000/- per month.
(The other cost being the variable cost of your mobile service bill, and I would leave that out in this discussion. )
Now, most people replace mobile based on their habits. Some in 6 months, some in 12 and some around 1.5 to 2 years time frame. Its not necessary that the
mobile has stopped working, its only that one gets a tickling to buy a new one.
So the cost of mobile for a person using it for 6 months would be 2000 per month while that for one using it for 2 years would be 500/- per month. For every
additional month that you use your new mobile, you will be paying a little less per month. Isnt that a great saving? There will always be new ones coming with fancy
features. The trick lies in finding it, whether you really need it or its just for buying something new that one just swipes the card.
The similar habits applies for cars and bikes and so on for TV sets.

Just use them one more month.. at a time ..

Posted 6th April 2012 by Prasad Govenkar

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2.
FEB

18

Simple Investment Rules

Contingency Plan and Savings
Always have a plan for your emergencies. They dont come to you giving you time to prepare. Its just that you need to be prepared for it.
Keep aside 3-6 months of your monthly expenses aside in a liquid investment. This could be Fixed Deposits.
Secondly,
Invest in yourself from day 1. If you are not doing it, then start today.
Reading various articles on the simple Investment tips, here is what I follow to take care of both these.
Every month I put in a fixed amount in to a Recurring Deposit. This also makes me to invest regularly into a savings plan and also create enough backup for
emergencies
Preferably create these RD Account's which you dont use regularly and give in to your impulse purchases.
In the Bank where I have got an account created, I dont even have a Debit card.

Posted 18th February 2011 by Prasad Govenkar

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3.

4.
FEB

16

Investing in Equities

Simple Investment Rules

What percentage of your investment's should one invest in equities. Well the rule is simple
If your age is 25, then 25% of your investment's should go into debt funds
(100-25)% ie 75% should go into Equities.
Posted 16th February 2011 by Prasad Govenkar
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5.
FEB

15

Insurance and Investments

This is a term normally reminded by the Insurance Agents just before the tax declaration time for many of the people. But come to think of it, even I have done
pretty much the same. I have normally ended up investing in ULIP's thinking of returns rather than insurance per se. Looking back today, I dont think that I am
covered enough.
So whats the best way to cover one self from Insurance perspective.
Well, lets keep things simple and understand a couple of basic points.

1.
2.

Insurance is meant for keeping a backup incase of any eventuality that happens to you and you dont want your dependent's to suffer
Investment's are meant to create more financial stability for you and your family so that down the years you can enjoy, especially with the rising
cost and for the years you stop earning, or for planning for expenses down the road(House,children's weddings, Children's education)
With time , we have seen that both of these were sold together as a single plan. Either as ULIP's or equivalent one's. At the same time I dont completely blame the
insurance companies. As that was the time markets were booming and people could see some stable income coming in and also get some insurance and finally
and most importantly SAVE TAX.
Today, all I would say is, for Insurance, buy a simple Term Plan. Cover your self, say 7-10 times your current annual income. There are a lot of companies giving
insurance at a very low cost. It is indeed cheap.
For Investment, divide your investment into FD's Mutual Funds, Stocks, Bonds etc. Don't invest in one type of instrument. Most important, keep discipline while
investing. Do it every month fixed amount. Use SIP's(Systematic Investment Plans) wherever applicable. Thats the best way to do it.
Dont make investment complicated. Invest what you can and that doesnt mean spend everything and say you dont have any money left. Keep some target every
month. And If possible increase that over a period of time.You will be surprised the amount you will accumulate at the end of an year.
Keep Investing and creating wealth.
Posted 15th February 2011 by Prasad Govenkar
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6.
FEB

15

Insuring your home

Was reading through the economic times , the ET wealth section and didnt find anything great. But came across this nice article on home insurance. Though I have
taken a home insurance, I hardly took into account any of the points mentioned in this article. Its a good article and I suggest you to read it.
The link of the same is as follows
http://economictimes.indiatimes.com/personal-finance/insurance/analysis/why-you-should-take-a-cover-for-your-home/articleshow/7472214.cms
You work hard and save money to buy a house and household appliances. You take utmost care to secure your dream house, yet there is the risk of a natural or man-made
catastrophe. If you cannot prevent it, transfer the risk. Consider buying a householders- or home . insurance policy.
Scope of cover
A package householders policy provides cover to the structure of the building as well as the contents of the house, that belong to the proposer and his family permanently
residing with him or her. In case you are living in a rented house or in an apartment where the building is insured by your society, you can buy a customised plan which
covers only your household articles and not the building. Some common risks covered under the policy are fire, earthquake, flood, burglary, bursting and overflowing of
water tanks, breakdown of domestic appliances and loss or damage of jewellery and valuables by accident or misfortune. Sum insured for certain items under contents,
such as works of art, jewellery or other valuables, may be subject to a limit. A householder policy also provides cover against the insureds legal liability for bodily injury or
damage to property of third party. Some policies also cover rent for alternative accommodation during reconstruction of a building that has been damaged by fire or other
disasters. Risks covered in the policy and premium may vary slightly from one insurer to another.
Guide to choose the sum insured
The purpose of insuring the building is that, in case the building is damaged due to any disaster like fire, earthquake or flood you should get financial support to reinstate it.
So the sum insured for the building should neither be the cost of acquisition nor the current market value of the house but the current construction cost because market
value of the building includes cost of land on which the house is built. Dont include the cost of land in the sum insured but dont forget to add costs for removal of debris.
On the other hand, for the insurance of household items sum insured should be the market value of these items i.e. the value for which these used items could be bought or
sold in the market.
If you want to insure the breakdown of domestic appliances, then the sum insured should represent the current replacement value of a similar item. For instance, if you
want to insure your two-year-old, 42-inch Sony LCD TV, the sum insured should be equivalent to the current cost price of a new 42-inch Sony LCD TV. However, the claim
amount payable would be the amount required to bring the damaged item to the same condition as it was prior to the damage subject to the adequacy of the sum insured.
Points to remember
Unlike a life insurance policy, householder insurance policies are contracts of indemnity, which means it is a cover that only restores the insured to his original financial
position but the insured cannot gain from the policy. It is very important that the sum insured is adequate because if you are under-insured, claim payments will be reduced
by applying the average clause where your claim will be reduced in proportion to the level of under-insurance. For instance, if your property is worth `1 crore but it is insured
for `75 lakh and the loss is `50 lakh, claim will be settled to the extent of 75% of `50 lakh i.e. `37.5 lakh and you will have to bear the balance. You must ensure that your
house is adequately insured at all times taking into account the renovation, enhancement made to your house or some addition to your household items. Do not just send
the renewal cheque when it is due; take the time to review your cover. Read your policy carefully. Some risks are not covered in certain conditions like if the house is left
unoccupied for more than a specified period of time. It does not make sense to leave any scope to lose what you have invested in your home. After all, homes are not built
every day.

Posted 15th February 2011 by Prasad Govenkar

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7.

8.
FEB

Why one shouldnt invest blindly in stocks

http://economictimes.indiatimes.com/articleshow/7390140.cms
Posted 5th February 2011 by Prasad Govenkar
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9.
FEB

Short term Capital Gains Tax for Property

Another great article from Economic times as to why you shouldn't sell your property in the short term
http://economictimes.indiatimes.com/articleshow/7390819.cms
The complete article as mentioned below
The profit made from the sale of a house is never a simple calculation involving the subtraction of purchase price from sale price. A number of income-tax caveats kick in. If
you buy an apartment for Rs 50 lakh and sell it two years later for Rs 1 crore, your profit from the sale will not be Rs 50 lakh. It will be much lesser. Here is how the maths
works:
If you sell within three years of buying:
The first thing to take into account is tax liability. If you sell a flat within 36 months of buying it, the profit is added to your income for that year, and taxed accordingly. If you
fall in the highest income tax bracket, the tax rate will be 30.9%, which comes to Rs 15.45 lakh.
If you have taken a home loan:
You will also have to take into account what you actually paid for the property in the first place. For instance, if you had taken a home loan of Rs 40 lakh for buying the
apartment, you would have been paying an interest of 9.5% for the past 24 months. Your equated monthly instalment (EMI) would work out to Rs 37,285. Now, under
Section 80C of the Income Tax Act, the principal of the home loan can be claimed as a tax deduction. But if the property is sold within five years of buying, the tax
deductions are reversed.
During the early years of a loan tenure, a major part of the repayment is tagged under interest repayment. In your case, of the nearly Rs 9 lakh repaid over two years, only
Rs 1.78 lakh is the principal repayment. The principal component will be added to your income for the current year and taxed at 30.9%. This means another Rs 55,000
skimmed from your profit.
Also, for two years you paid an interest of Rs 7.17 lakh on the home loan. This will be deducted from your capital gain, which comes down to Rs 26.83 lakh (Rs 34 lakh
Rs 7.17 lakh).
Of your remaining home loan principal, Rs 38.22 lakh (Rs 40 lakh Rs 1.78 lakh repaid as principal), the bank will levy a prepayment charge of 2.25%, which works out to
around Rs 86,000.
After these deductions, the actual profit on the sale is only Rs 25.97 lakh, nearly half of what you had dreamt of.
Most investors look at short-term real estate investments the same way and get carried away by stories of friends or colleagues who made lakhs within a year. However,
before you are inspired to do the same, do your calculations, or better still, stick to your investment for the long term.
Tax facts to note while selling property
A short-term capital gain/loss is treated and taxed in the same manner as any other income or loss.
Tax on long-term capital gains can be avoided if the sale proceeds are reinvested in another residential property within one year before or two years after the sale (Section
54 F).
Long-term capital gains can also be saved if only the capital gain (and not the total sale proceeds) is invested for a period of three years in National Highways Authority of
India or Rural Electrification Corporation Limited bonds (Section 54 EC).
The determination of sale proceeds of a property is based on the valuation adopted by the State Stamp Duty and Registration Authorities and not the amount mentioned in
the Deed of Conveyance (Section 50C). This is intended to cover the cases where a part of the sale price is received by the seller as unaccounted cash.

Posted 5th February 2011 by Prasad Govenkar

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10.
FEB

Avoid Last Minute Tax Planning

Came across this nice link in Economic times.

http://economictimes.indiatimes.com/articleshow/7389665.cms

I found this article very good. In simple words one shouldn't wait for the last minute to invest or rather to plan your investments. Do it regularly and plan it will. Use
the power of averaging and stagger your investments over a period of time. They help you not only from losses but also give you great returns. Systematic planning
is the best way to invest, unless you are full time into this investments.
Here's the article mentioned above in the link

Aamir Humayun looks forward to holidays because they help him unwind and let him spend time with his children. But the public holiday for Mahavir Jayanti in 2007 put the
Delhi-based businessman in a quandary. It was 31 March and Humayun had not finished his tax planning. All banks and post offices were closed. There was just no way I
could
save
tax,
he
says.
So his chartered accountant stepped to help. One call to an insurance agent and a few signatures later, Humayuns tax planning for the year was done. He and his wife had
been sold two unit-linked insurance plans with an annual premium of Rs 1 lakh. I was told that I would have to invest only for three years and that my investment would
grow
to
about
Rs
48
lakh
in
20
years,
says
Humayun.
The agent, who was incidentally the chartered accountants wife, conveniently glossed over the fact that these were only projections and based on the ridiculous
assumption that stock markets would rise 18-20% every year in the next two decades. When the markets crashed in 2008, the value of Humayuns investment plummeted.
He has paid premiums for four years and the fund value is barely in the green. Now these insurance premiums have become millstones around my neck, he says in
disgust.
The only cold comfort for Humayun, if at all, is that he is not alone. Millions of taxpayers across the country compress their entire years tax planning into one month. For
salaried taxpayers, the tax-saving season kicks off when they get a note from the accounts division on how much they need to invest. With it comes the warning: give proof
of investments or get ready for a hefty tax deduction at source (TDS). Thats the time when undisciplined investors start running around like headless chicken, says a
financial
planner.
In the rush to invest before the deadline, taxpayers often make fundamental investing mistakes, which they rue for years to come. Gurgaon-based software professional
Ashwin Arora knows the perils of just-in-time tax planning. Three years ago, he was working with a large global consulting firm that gave him less than two weeks to show
proof of his investments. My company asked for proof by the end of the calendar year and I had only my provident fund contribution to show, he says. So, Arora promptly
invested Rs 33,000 in three tax-planning mutual funds at one go. This was just a few days before the markets went into a tailspin in 2008. The three funds are good
performers but my investments are still in the red, he says glumly. Small investors should not put large amounts as a lump sum in equities. Its best to stagger the
investment in monthly SIPs.
More importantly, experts say tax planning should be a part of the individuals overall financial plan. In other words, the investment choices should not be governed by the
potential returns they offer but by their ability to fit into the asset allocation of the individual. One should choose the option depending on ones risk appetite and asset
allocation, says Pankaaj Maalde, a financial planner working with Mumbai-based Sykes & Ray Financial Planners. Invest in the Public Provident Fund (PPF) if you need
long-term debt in your portfolio. Go for NSCs, fixed deposits and infrastructure bonds if you want medium-term debt. Buy ELSS funds if you want equity exposure. And take
an insurance policy if you require life cover.

Posted 5th February 2011 by Prasad Govenkar

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11.

12.
DEC

21

About your Insurance Policies

Well, this is not something easy. Yes, we all invest into Insurance policies, for various types of coverages. Right from Life cover to Illness Cover to that of Home and
Vehicle.
In
this
article
I
am
primarily
focussing
on
the
Life
Cover.
A life cover is taken so that , in the case of an eventuality, your dependents are taken care of with the money that one was insured against. Normally the bread
winner of the family would invest into such plans. Earlier, or to be specific, LIC agents, would keep a note of all their customers and keep in touch with them. Incase
they found that one of their clients have passed away, they would themselves take up the matter and get the money to their dependent.
But those days are gone, when the agents would be loyal to the customers. Today, they keep changing companies, places and even their clients. So basically, you,
ie the person who is taking an insurance should keep his/her dependents updated of the Insurance plans taken. So that after an eventuality they know that they
have been covered. Having said this, its not easy to tell this directly. I would advice the following, whichever suits you well or all of them.
[1]
Tell
your
main
dependent
that
a
particular
Insurance
has
been
taken.
Direct
Approach.
[2] Tell your close friend about all the plans that you have taken. Maybe an office colleague whom you are very close with and normally do all your investment plans
together.
[3] Keep all your insurance documents in one place in the house and keep others updated that ALL the insurance documents are in a given file. You need not tell
them
the
details
of
the
investments.
They
will
find
out
when
its
needed.
This
is
what
I
follow.
[4] Send an email to your Dependents and close friend on the policy that you have taken with the policy details and Insurance Company name.
Whichever approach you find easier to follow and practical, please follow the same. If there is any other way you do, then nothing stopping you. But the important
part is that, your dependent's should know of all the insurance taken. As thats the only thing that will take care of them in your absence.
Posted 21st December 2010 by Prasad Govenkar
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13.
DEC

Retirement Planning

In this article, I am not going to talk about what one should do towards retirement planning, but rather why one should go for one and what risks one carries.
Gone are the days, that post retirement, the government will pay you all your life. This is the age of private companies and the pay scales are apparently much
higher. But unless you dont save up your own money for retirement, trust me, you are going to have a tough time down the line.
If you are working in a private company, the only two places where the company invests for you normally would be in the Provident fund and the Gratuity. Gratuity
is given to you, only if you spend more than 5 years in the company. While provident is given to irrespective of the amount of your stint in the company.
What I have observed in today's life is that, with every change or a job hop, one withdraws the PF which had been accrued by the company and ofcourse there are
many ways one can spend it. But the problem here is that, this money which was meant for your retirement is no longer available. In simple words, the money
which was supposed to be supporting you when you are not working, is consumed during the period where you are earning.
So
what
should
we
do
?
Well the answer is simple. Plan for your retirement properly. Investment in various options which are available for retirement planning.
Don't withdraw your PF fund. Just get it transferred from your old company to your new one. Also note that, if your PF is withdrawn, then there is a tax which is
charged
on
the
same.
If you are close to 5 years in the company, then make sure you complete 5 years and claim the gratuity and put it into a good investment instrument which gives a
good
return.
On what instruments to invest for retirement planning, I will come back on that in my subsequent articles.
Posted 2nd December 2010 by Prasad Govenkar
Labels: Retirement Planning
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14.
NOV

16

Earn money by not smoking

I dont smoke, but from recollect from some friends that it costs around 100/- per pack of cigarettes, which are commonly consumed in India. Which would mean
3000/per
month
is
spent
only
on
cigarettes.
I understand from some common sense that cigarette smoking is not good for health, and lets assume that you don't smoke during weekends when you are at
home , just because your wife still doesn't know that you smoke. So that would mean 2200/- approx per month spent on cigarettes alone, assuming 5 day working
week.
2200

per

month

amounts

to

26400/-

per

year.

Lets

round

it

to

25000/-

So

just

by

quitting

smoking

you

save

25k

in

year.

Invest this 25k into a FD which gives you around 10% interest for 10 years and guess how much you are going to get at the end of 10 years.
Well
its
a
small
amount
of 463,279.18,
taking
10%
as
the
rate
of
interest
compounded
annually.
Is it a good return for the cost of NOT smoking ?
Posted 16th November 2010 by Prasad Govenkar
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15.

16.
NOV

10

Why Medical Insurance ?

Why Medical Insurance ? This is a typical question many of us have those who are covered by their companies they are employed in.
Well, first lets talk from the Tax savings. Whatever premium that you are paying for covering you and your family upto 35000/- INR is deductible from your taxable
income. Please note, this is over and above your 100,000 that you are saving under section 80ccc. So thats again a saving also.
Now,
the
actual
reason
as
to
why
one
should
take
a
medical
insurance.
The
days
are
gone,
when
medical
treatment
was
affordable
with
your
own
savings.
One
definintely needs Insurance.
Those who are covered under insurance by your companies, please note that this is only until you work for them. The day you quit or retire, the insurance stops. So
lets say that you retire at 60, do you really think a Insurance company will give you a health insurance, especially when you are at a age you would be needing it
the
most.
So
the
best
would
be
to
take
an
insurance
now
itself
when
its
easy
for
you.
ICICI has a good product which invests your money into an ULIP and that actually covers you till 75 if i am not wrong. There are many companies who are having
wonderful health plans. My suggestion would be to go and get you and your family covered and also save some tax
Posted 10th November 2010 by Prasad Govenkar
Labels: Tax Savings Medical Insurance Investments

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17.
NOV

Too many liabilities

Today
as
I
was
going
through
my
various
liabilities,
I
was
wondering
how
to
go
about
clearing
them
all.
I have an outstanding Housing Loan, a Car Loan and then 2 credit card bills to be cleared. Ofcourse I am able to pay my EMI's for the car and housing loan without any
issues,
but
then
getting
them
closed
earlier
is
always
something
one
has
in
mind.
Now if one looks at the various interest rates, its no brainer that one has to clear off the credit card bills first. They attract anything betweem 2% to 3.5% per month , that is
around
24%
to
36%
an
year,
while
your
housing
loan
interest
rate
would
be
around
8-10%
and
the
car
around
10.
If you have more than 1 credit card bill to be cleared and not possible to clear all, clear the one with the least payment due. Remember that if you get rid of interest payment
on
one
it
will
be
better
than
having
on
both.
Then comes the priority of the other credit cards. Once all the credit cards are done, then shift to the other liabilities. I would normally leave the home loan as it is , if you
have a car loan also to clear. Its because, on home loan you still have the tax benefits attached , while that for the car loan its not. On completion of the car loan move to
the home loan. Having said that, in many of the banks part payment of car loans is not allowed. In such cases, it would somehow make sense to clear a little of home loan
itself, and leave the car loan to get completed on its own, or wait for it to reduce till it becomes small enough to pay the entire amount.
From

my

experience,

SBI

car

loans

allow

part

payments.

They

do

have

rules

that

you

cannot

pay

any

amount

in

the

first

year.

At times I am in a dilemma, as to whether to clear the home/car loan or keep the money invested since I would need the money incase of emergency or new expenses.
Thats always been a tough call for me to handle. I try and calculate how much is needed for my emergency, and once reaching that, I repay some of the loans and invest
some into instruments, which give higher rate of interest than the interest rate of the loan. This point would vary from person to person and everyone should take a call
depending on one's family requirements and emergencies, since at the end of the day, home and car loans are the cheapest compared to a personal loan.

Posted 8th November 2010 by Prasad Govenkar

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18.
NOV

Sensex at 21000

On
the
Diwali
day,
during
Mahurat
trading
session
sensex
touched
an
all
time
high
and
now
is
at
21004
level.
Now this is a great news, but at the same time one needs to be pretty sure as to whether to enter the markets at these levels or no. Many TV channels would give
you different perspectives of the same. But one needs to remember that at the end of the day its your money.
From my perspective, one shouldnt enter the markets now atleast for a week or so. See whats the trend in the market especially in the next week and only then
should
take
a
call.
If one really wants to invest, then chose the solid stocks like TCS, Titan SBI etc which are very strong. Or can chose the Mutual Fund route. I would opt ONLY for
the
Mutual
Fund
at
these
level.
Happy investing and happy Diwali
Posted 6th November 2010 by Prasad Govenkar
Labels: Sensex 21000 Investments
0

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19.

20.
NOV

Infrastructure Bonds
One of the safest forms of investments is in the Bonds. But now a days there are bonds which are issued from private players also. Now these have minimum of 5
years of lock in period. and a good rate of Interest. You can get anything between 7.5 to 8 % of interest. Again you can chose for annual payment of interest or can
go
for
cumulative
which
means
that
your
interest
is
again
invested
as
principle.
And the most important part if that you can get Tax Benefits. And now for the most important point, this investment is Tax Beneficial over and above your 1 lakh
invested
through
section
80ccc[
which
is
Insurance,
NSC,
PF
,
Housing
Loan
Principle
paid
etc].
The maximum amount for which you can get the tax benefit is for 20,000/- Currently L&T has an investment for these bonds open. Though I assume there will be
more coming in soon. I would definitely recommend this for investment.
Posted 5th November 2010 by Prasad Govenkar
Labels: Infrastructure Bonds Investments
0

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21.
NOV

Where do I start from ?

Everyone wonders, where does one start to invest. Well there is never a good time. If you havent been doing it early, then NOW is the right time. Start with small
amount. If you dont know the meaning of small amount as such, then see the difference between your monthly income and expenses. Whatever remains is the
only amount you have. Now if that amount is very less, then you should try and save atleast 1000 per month. Cut your expense wherever needed, but then you
dont have any other choice. Keep this amount separately in a different account if possible. Once you accumulate anything above 5000 INR, then put it into an FD.
Well this is the simplest and the safest form of investing you can do without any harm done and least risk. But again the returns too will be dependent on the
prevailing
interest
rates.
For higher returns you would need to venture into Equity markets. Now again in Equity you can chose to play safe by giving your money to a Fund manager and he
will invest properly on your behalf. But off course, whether you have a profit or a lot, he will charge you for his services.
The
different
options
that
you
to
invest
into
equity
are

1.
2.
3.

Directly into the Stock Market

Investing into Mutual Funds
Investing into Equity through Insurance related schemes.
These are the high level ones and can be dealt in detail in each one of them
So if you are looking at investing into stock market then get yourself an Demat account opened.
Again for mutual funds you may need a demat account but for some you may get them in physical form itself.
ULIP's gives you the flexibility to invest into equity, with the benefit of an Insurance cover and Tax Benefits. For the insurance there are many many plans and
schemes. Just call an agent and get yourself familiarised with the same.
Another safe option would be to invest in Gold. Now Gold can be bought in physical form or in the ETF's which are like shares in demat form. This gives you the
flexibility to just have the details without having the botheration of safekeeping of Gold. And can be bought and sold easily. Most importantly, even if you have less
money , with which no one will be able to give you a small amount of Gold, ETF can do the job for you.
Keep saving, Keep investing. Just remember to save a little everyday, and that would help you a lot in the long run.
For example, just by skipping one coffee at any coffee outlet you would be saving 60/- per day. Which would amount to 1800 per month and approx 20000 an year.
Good enough to have a nice Insurance plan to cover you and your family just at the cost of coffee.
Have a nice day
Posted 5th November 2010 by Prasad Govenkar
Labels: Tax Savings Investments
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