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• Diversification is not just among Asset classes further within each of the Products.
• All Asset class should be a part of one’s investment portfolio.
• Asset Classes can be broadly classified into Equities, Gold, Real Estate , Debt & Cash.
• While Equities ,Gold & Real Estate are ‘’Growth Assets ‘’;
• Debt & Cash are ‘’ Defensive Assets’’.
• Growth Assets are high risk investments , high volatile in the short term & will generate high return over the long term.
• Defensive Assets generate stable returns in the short term & low returns in the long term.
• So, Each of the Asset classes come with different risk – return profile.
• Highly volatile investment.
• Interest Rate is one of the most important factor that affects this Asset class.
• Interest rate has a direct impact on the Capital expenditure of companies .
• In the raising interest rate scenario , companies will reduce their debt exposure & will postpone the capital expenditure. So, Consumption is reduced & sales of the company will come down.
• Crude Oil is another factor will affect the Equity Market.
• Global Markets & Currency rate are also important factors .
• Other Factors like , Political Stability, Market Liquidity/ Volatility & etc.
1. Choose a Fund Category based on Client’s Investment Objective :
-Know Client’s investment objective.
-Choose type of Fund Category.
- Choose available Funds & decide which of them is matching his investment objective.
-Four factors will help you to choose the right type of fund .
* Universe of Sectors & Stocks : If the Fund has wide range of sectors & themes in its Portfolio, then, it is less Aggressive, due to its diversification.
* Universe of Stocks’ market capitalization : Funds with stocks of all range of market capitalization are less aggressive .
* Investment Style : Check whether the fund is Growth Vs Value –style Funds. Growth –style Fund will have higher scope of giving higher returns with additional risk.
* Portfolio Concentration : Portfolio holdings of a Fund indicate its risk. A diversified Fund with top sectors in its portfolio will have the risks associated with those sectors in the Portfolio.
2. LOOK at PAST PERFORMANCE :
-Just look at it. But, it is not an indicator for the Future return.
3. FOLLOW CORE & SATELLITE APPROACH :
• Create a Portfolio to your investors on Core & Satellite basis. Here, the Core Holdings will be Long term Wealth Creation & it should form major portion of the overall portfolio. Satellite holdings should be treated as Secondary holdings & should not be beyond 30% of the Portfolio.
Now, based on these above points, Choose the most suitable fund which has to match the Investment objectives of the Clients.
• Is a tangible & liquid asset.
• Gold price will depend on Demand and Supply.
• Gold and US Dollar prices are oppositely correlated.
• It is a way of diversifying your investments.
• Interest rates are main factor will have major impact on Real estate. In the Falling interest scenario, the demand for Gold will increase because of cheap credit offer by banks and it is vice versa in the raising interest rate.
• Best hedger against Inflation.
• Very Low correlation with Equity & Debt.
• They are Income Generating investments.
• The return from the debt market instrument is known as ‘’ YIELD’’.
• They are considered as Conservative investment avenues, since the risk associated with debt funds are low.
• They are suitable for conservative investors.
• Before investing, understand the Yield Curve movement.
• Invest in the yield curve which is flat than choosing upward sloping curve.
• STRATEGIES FOR INVESTING IN DEBT FUNDS :
1.Based on Interest movements , decide whether to invest in long term / short term debt funds. This is because, the long dated papers are more sensitive to interest rate movements than short term papers in which short term bond funds invest. Also, the Yield curve will be more/ less flat, the return difference between long term bonds Vs short term bond funds will be very less. So, it is better to invest in short term debt funds.
2. Choose to invest in Liquid Funds.- Ideal for 3 months Parking and can earn around 6-7% interest. Tax structure will also be lesser than Saving Account.
3.FMPs –FIXED MATURITY PLANS : They are most ideal plans against bank FDs. The tax liability will also be lower than FDs.
4. If a Debt Fund Investor Wants to go for Long term investments [ 3-5 years ], then, some Equity exposure will be good. For this, they can consider MIPs & Capital Protection Funds .
• The investors can invest in Equity or Debt oriented Balanced Funds/ Dynamic Asset Allocation Funds[ based on CPPI & DPI ]. This DAAF may give higher return than a balanced fund.
• So, DAAF can be considered than debt oriented balanced funds.
1.Life Style stage.
3. Risk Level.
Some Important Points on Asset Allocation :
• The assets that we hold should ideally match our needs and we should know what we intend to do with them.
• Allocation between assets that earn an income and the assets that grow in value over time.
• Assets that provide income are meant to serve immediate & short term needs. They will be low & steady return , mostly matching with inflation rates apart from preserving the invested capital.
• Assets that grow in value are meant for long-term needs. They will grow at inflation beating rate with higher short –term risks to the capital.
• There are 3 broad ways of Asset Allocation : If an investor who primarily needs growth, then he should have 70% in growth assets [ EQUITY ] and balance 30% in income assets.
• Similarly, if an investor need is income , then, it is vice versa on the above. Here, Retired investors are good examples. That 30% is to beat inflation.
• One has to do 2 things : First, check the portfolio once in a year. Second switch from 70% : 30%to 50% : 50% and then, 30% : 70% as her needs change.
• Every Investor’s core portfolio should be constructed in this manner.
SLR RULE :
• When you are going to invest in Fixed Income Products, stick to the SLR Rule. It is Safety, Liquidity & Return.
• SAFETY : Safety of the Principal is the most important factor. Eg. : Govt/PSU Bonds.
• LIQUIDITY : The invested money can be withdrawn any time . Eg. : PPF, EPF & etc.
• RETURN : The rate of return is generated by the bond. It is also called as Coupon Rate. Return consists of both interest and capital gain/loss from the bonds.
• CAPITAL GAINS : It is the capital appreciation of the bonds.
1. PUBLIC PROVIDENT FUND [ PPF ]:
• Interest : 7.6%.
• Investment for : 15 years and extendable by blocks of 5 years.
• Age : NoRestriction.
• Taxation : Sec.80C for the investment anr Interest is Tax Free.
• Suitable for Creating wealth for the long-term without any risk.
2. VOLUNTARY POVIDENT FUND [ VPF ] :
• Interest is 8.55%.[ same as EPF ].
• Invest for : as long as one continue with EPF .
• Age : No Limit.
• Investment Amount : Depends on his salary.
• Taxation : 8OC Benefits and Interest is Tax Free.
• Suitable for : as like PPF.
3. SENIOR CITIZENS’ SAVINGS SCHEME [ SCSS ] :
• Interest : 8.30%.
• Invest for : 5 years & can be extended by 3 years.
• Age : Above 60 years.[ For VRS : 55Years ].
• Investment Amount : up to Rs.15 lakhs .
• Taxation : 80C benefit. But, Interest is Taxable.
• Suitable for : Senior Citizens who need regular income & are in lower tax brackets.
4. SUKANYA SAMRIDDHI YOJANA :-
• Interest : 8.1%.
• Invest for : Deposits can be made till the age of 14 and the maturity at 21.
• Age : 10 years or less.
• Investment Amount : Rs. 1.50 lakh a year.
• Taxation : 80C benefit. Interest is also Tax Free.
• Useful for : Girls child for building the Corpus without any risk.
5. PRADHAN MANTRI VAYA VANDANA YOJANA [PMVVY ] :-
* This is a Pension related scheme.
* Interest : 8%.
* Invest for : 10 years.
Age : Above 60 years.
Investment Amount : Up to Rs.7.50 lakh per family [ Maximum Pension of Rs.5,000/ month].
• Taxation : No 80C & Pension is also taxable.
• Useful for : Senior citizens who need regular income & are in lower tax brackets.
6. SAVINGS [TAXABLE ] BONDS 2018 [ RBI BONDS ] :
* Interest : 7.75%.
* Invest for : 7 years.
* Age : No Limit.
* Investment Amount : No Limit .
* Taxation : No 80C Benefit. Interest also Taxable.
*Useful for : Investors who need regular income & are in lower tax brackets.
7. LISTED PSU BONDS [ TAXABLE ] [ VALUES TAKEN FOR SBI BOND N5 ] :
• Interest : 8.55%.
• Invest for : 8 years.
• Age : No Limit.
• Investment Amount : No limit.
• Taxation : Interest & capital gains [ if any ] are taxable.
• Useful for : Investors who need regular income & are in lower tax brackets.
8. LISTED PSU BONDS [ TAX-FREE] [VALUES TAKEN FOR IRFC N2 ] :
• Interest : 6.29% Yield To Maturity [ YTM ].
• Invest : 9 Years.
• Age : No Limit.
• Investment Amount : No limit.
• Taxation : Interest is Tax Free. But, Capital gain, if any, is taxable.
• Useful For : Investors who need regular income & are in higher tax brackets.
1. PRADHAN MANTRI JAN DHAN YOJANA :
• Is a Saving Account with no minimum balance.
• The Rupay ATM –cum- Debit card has an in- built Life and Accident covers of Rs.30,000/ & Rs. 1 lakh respectively.
• An Economic weaker sections of society and people working in un organized sectors are eligible.
2. PRADHAN MANTRI JEEVAN JYOTI YOJANA :
• A Pure Protection Term Plan for Rs.2 lakh .
• Premium Rs. 330 per year.
• Anyone in the age group of between 18- 50 years who should have saving account in a bank that offers this scheme.
• Premium will be deducted from the bank account directly.
3. PRADHAN MANTRI SURAKSHA BIMA YOJANA :
* This Plan is an Accidental Insurance Policy.
• Accidental Death and Disability Cover of Rs.2 lakh.
• Premium is Rs.12 per year.
• Renewal is Every Year.
• Age : 18 to 70 years.
• Anyone who is having saving account in the bank that offer this scheme.
4. ATAL PENSION YOJANA
• Pension between Rs.1,000 to Rs.5,000/per month.
• To get a monthly pension of Rs.1,000/, a 40-year old has to invest Rs.210 per month for 20 years, while a 18-year old will have to invest Rs. 42 per month for 40 years.
• AGE : 18-40 Years who will have to contribute till he turns 60.
• Un-Organized Workers are eligible.
• Nominee will get the pension after his death and after the nominee’s death , the legal heirs can get the balance amount as lumpsum
5. HEALTH INSURANCE :
• Covers for expenses incurred during hospitalization due to illness / surgery.
• Rs.7,000 to Rs. 8,000/ per year for a cover of Rs. 50,000/.
• Age : 18-40 years.
• All individuals are eligible.
6. SUKANYA SAMRIDDHI SCHEME :
• Guaranteed annual return of 9.2%.
• Minimum contribution : Rs.1,000/ a year and the maximum s Rs. 1.50 lakh.
• Girl child age below 10 years are eligible.
7. KISAN VIKAS PATRA :
• A Secure interest rate of 8.7% and the promise to double the investment in 100 months.
• Minimum investment : Rs. 1,000 and maximum No Limit.
• All individuals are eligible.
8. POST OFFICE TIME DEPOSITS AND BANK FDs :
• Time Deposits with tenures of 1-4 years with 8.4% and 5 year deposit gives 8.5%.
• Minimum for post office time deposits is Rs.200/ and maximum no limit.
• All individuals are eligible
• A retirees can withdraw the required amount from their Retirement Income Portfolio at a sustainable withdrawal rate of return.
• The Retirees should know the maximum withdrawal rate of return to balance the Longevity risk and desired retired lifestyle.
• The main objective of a retirement income portfolio is to draw cash flow for the retired life.
• Larger withdrawal can deplete the portfolio, leading to Longevity risk. That is : The risk that a retiree my outlive the portfolio. • Longevity risk will increase if the portfolio generate loss. For example, If a portfolio generates 10% lossin the first year followed by 10% gain means that the portfolio has to generate 11% just to recover the capital. Similarly, if the same portfolio generates 10% gain in the 1 st year and 10% loss in the 2nd year, which means that the portfolio has to generate 9% to recover the losses. If this difference widens with the time, the longevity risk will arise.
• It can be moderated thro.’ withdrawl rate. HOW ?:
• Suppose, if a retiree buys an immediate Annuity after retirement will remove the longevity risk, since Annuity will pay a certain amount till the retiree’s death.
• But, retirees don’t prefer to have only Annuities in their portfolios.
• They can equally allocate their money into stocks, bonds and annuities also. They create Stocks- Bonds – Annuities portfolio.
• So, the retirees ‘ withdrawals rate from the portfolio should be equal to the Annuity payment. Because, Annuities are paying till the retirees’ death, this stock-bond- Annuity portfolio should have same withdrawal rate
• But the Problem in the Stock-Bond-Annuities Portfolio is subject to downside risk. To control the downside risk, it is better to to set-up side-pockets account[ ie; exposure in the money market mutual funds.
• When the porftolio generates more returns than the maximum sustainable withdrawal rate , the retirees can transfer the money to side-pocket account. This money can be used during last years of the retirement.
• So, a retirement portfolio having stock-bond – annuity portfolio should have a PURE ANNUITY’ s Withdrawal rate.
1.AGENT RISK :
• An Agent’s motivation is not inline with the investor.
• Skill of a Fund Manager.
• Excess return above the Index .
• Important in the Capital Asset Pricing Model.
• ‘’Active Return’’ of a Fund Manager.
3.ASSET ALLOCATION :
• Balancing the risk by diversifying Investments across different asset classes to reduce the overall risk of the Portfolio.
4. ASSET CLASS :
•A group of securities have similar Financial Characteristics, behave similarly in the Market &have same rules & regulations.
• Asset classes are : Equities[ Stocks], Fixed Income [ Bonds],Real Estate [ Property] , Commodities and Cash.
5. INFORMATION RISK :
• one person has more information than the other person.
• The First person may take advantage of the second person’s knowledge/ Information deficit.
• Positive or Negative evaluation of People , Object, Events , Activities & Ideas.
7. BETA :
• Systematic risk or a measure of Volatility of a Portfolio in comparision to the Market .
• Indicates the Investment is more or less volatile than the Market.
8.BALANCE OF RISK :
• Balance between risk tolerance and risk capacity.
• When the Investor is comfortable at risk level, then, the balance is achieved.
9. BASIS RISK :
• Due to imperfect Hedging.
• Mismatch between Hedged Asset’s expiry date & actual date of the selling asset.
10. BLOCK BOX RISK :
• Similar to Information Risk.
• Specific knowledge about system’s internal operations are not known.
11. BLACK SWAN EVENT RISK :
• Low-Probability with High Impact event risk which is almost impossible to forecast.
• Hard & rare to predict events which are beyond expectations in the History, Science & Technology and Finance.
12. CAPACITY FOR LOSS :
• Worse outcome than anticipated outcome without affecting achievement of Important Goals.
• Risk Capacity is evaluated by analyzing investor’s financial circumstances before final decisions are taken.
• Risk Capacity is the extent to which a risky event [ Loss ] can happen.
• Risk Capacity is Customer’s ability to absorb the falls on value of his Investments.
13. CAPITAL ASSET PRICING MODEL [ CAPM] :
• To determine rate of return of a risky asset.
• In this Model, only risk of the stock should be determined. Ie; How the stock move with the Market [beta].
14. COMMODITY RISK :
• Value of an asset will be adversely affected by the fluctuations in the prices of Commodities.
15. COMMODITY RISK :
• Failure of Understanding between Communicator and the Receiver.
16. COMPLEXITY RISK :
• Financial Investments which are complex, multi- layered & difficult to understand become the risk.
17. CORRECTION :
• Measure of the relationship between two random variables. Value can be Positive or Negative.
• Perfect Correlation will have value of 1 meaning the variables move identically in the same direction .
• If the value is Zero, means, No correlation and If it is– 1[ negative 1],means inverse relationship.
18. COST RISK :
• Unknown Costs or the level of known costs increases.
19. DEFAULT RISK :
• Also called as ‘’ Counter Party Risk’’.
• Each party in a contract & when the counter party will not meet its contractual debt obligations.
Under this, There are two risks :
1. Credit Default Risk
• Risk of loss arising from a debtor being unable to pay its loan obligations.
2. Credit Default Swap
• Is a Financial Contract in which a buyer [ who buys Corporate or Soverign Bonds] tries to hedge with issuer of the Bonds.
• Buyer of the Swap makes payments to the Swap’s seller till the maturity of the contract.
• In this case of Default, the seller has to pay the buyer’s security premium & interest between the time of default and the maturity of the bond.
20. CONCENTRATION RISK :
• Any single exposure makes losses to an entire portfolio.
• Example: Bank’s exposure to specific loans and assets.
21. COUNTRY RISK :
• Also called as’’ Sovereign Risk’’.
• When a Country / Government not complying with the terms of Loan / Debt agreement.
• Associated with Country’s Wealth / Macro–Economic Performance.
• Example : Greek Debt Crisis.
22. DIVERSIFICATION :
• Wide variety of Investments / Asset Classes to reduce Overall Volatility [ Risk ] of the Portfolio.
• Don’t to Put all Eggs in one basket.
23. DOWNSIDE RISK :
• Loss on an Investment which is less than expected.
24. EQUITY RISK :
• Price of a Stock will change.
25. EXPECTED SHORTFALL :
• Means ‘’ Expected Loss’’.
• Is calculated in addition to the value at Risk.
26. EXCHANGE RATE RISK :
• Adverse movement in the Exchange of Currencies among Countries.
• Can be hedged using Foreign Exchange Futures & Forwards.
27. GAP ANALYSIS :
• Investor’s risk tolerance can be compared with return required from Portfolio to achieve his Goals.
• Comparison of actual performance with Desired Performance.
28. GAP HEDGE [ RISK ]:
• To offset Potential Gain / Loss that may be incurred by another investment within the Portfolio.
29. HOLDING PERIOD RISK :
• The Longer the term of the Bond , Greater the chance of more attractive investment opportunity available.
30. IMPLIED VOLATILITY :
• Volatility extracted from Options. Investors’ Expectations about Future Volatility.
• Example : VIX is extracted from S& P 500 Options. VIX is often referred as an ‘’ Investor Fear Gauge ”.
31. INVESTMENT SUITABILITY :
• Investment Companies must give suitable Investment Advice & Discretionary Decisions to investors who based on that will take decision .
• Companies have to give Good Investment Advice to meet Investor’s Needs & Expectations , Goals to match risk capacity & tolerance.
32. INFLATION RISK :
• ‘’ Purchasing Power Risk ‘’.
• Cash Flow from an Investment will not be sufficient in future due to Inflation.
• A reduction in the real value of money due to increase in the price level o Goods & Services in an Economy over a period of time.
33. INTEREST RATE RISK :
• ‘’ Purchasing Power Risk ‘’.
• Called as ‘ Duration Risk’.
• Changes in Interest Rates.
• How Sensitive Bond’s Price to the changes in Interest rates.
1. Time to mature the Bond
2. Coupon rate of the Bond.
34. LIQUIDITY RISK :
• Investment becomes more difficult to buy / sell.
35. IMPLEMENTATION RISK :
• Also called as’ Mapping / Financial Plan Risk’.
• Mapping of a stated Plan with Actual Financial Plan.
36. MARKET RISK :
• Underlying Market Variables changes over time.
• Any Market Variable has an impact on the Market.
37. MARKET CONCENTRATION RISK :
• A single company accounts for very large amount of Market Transactions.
38. MEASUREMENT ERROR :
• Errors may be Systematic or random.
• Random errors are more serious as they impact the accuracy of measurement.
39. MODEL PORTFOLIO :
• called as ‘ Mapped Portfolio’.
• Pre- Constructed Collection of Investment Products.
• Wide Investments Solutions based on risk profile , asset allocation & fund selection.
40. POLITICAL RISK :
• Due to Political Change.
41. PROFIT RISK :
• Due to Changes in Profits [ Earnings ].
42.REGULATION RISK :
• Due to Changes in Rules & Regulations.
43. RISK :
• Due to Absence of Certainity.
• ctual Return may vary from Expected Return.
• Potential Gain/ Loss of the Value .
44. RISK APPETITE /ATTITUDE :
• How investors think about Financial risk.
45. RISK AVERSION :
• Investor Behaviour to reduce Uncertainity.
46. RISK CAPACITY :
• Refer Sl. No.12- Capacity for Loss.
• How much risk an investor takes to achieve his Financial Goals.
• To achieve the Goals, Details like, required corpus & time, rate of return are necessary.
• Rate of return will be used to decide the type of Investments.
47. RISK EXPOSURE :
• Investor’s reaction to the short term Gains/ Losses to his Portfolio.
• In General, Investors are more sensitive to short term market fluctuations & will frequently monitor his Portfolio.
48. RISK FREE RETURN :
• IDefault Free return of a bond with short maturity .
49. RISK GAP/ RISK MISMATCH :
• Refer Sl. No. 8- Balance of risk.
• Mis match between risk required, tolerance & capacity.
• Trade –Offs become necessary to resolve the mis match & to give suitable Financial Advice.
• Keeping the risk tolerance & capacity, investors must Trade –offs some Goals in order to achieve others.
50. RISK GROUP :
• All similar risk tolerance levels can be put into one risk group .
51. RISK INTELLIGENCE :
• To Protect the Values amid Un certainty.
• It is at Company’s level to integrate People, Processes & Systems to increase Informations available to Investors for taking improved Decision.
52.RISK OUTSIDE RISK CLASS :
• Apart from Market , Credit & Operational risks, other risks are’’ Outside Risk Class’’.
53. RISK PREFERENCE :
• Investor uses a combination of Subjective & Objective Cognitive Evaluations to generate risk preference.
54. RISK PREMIUM :
• Investment gives Excess Return than risk-free return.
• Compensation to invest in a risky asset class compared to the risk-free asset class.
55. RISK PARITY :
• Allocation of Risk to Investment Portfolio.
• When Asset Allocation is adjusted, Risk Parity can achieve Higher Sharpe Ratio.
56. RISK PROFILE :
• Individual ‘s optimum level of risk with regard to his Risk Required, Capacity & Tolerance.
57. RISK PROFILING :
• is the Process of ‘Risk Profile ‘.
58. RISK REQUIRED [ NEEDED ] :
• Investor’s Current & Future Financial Position to be considered .
• Investor’s Income, Savings, Expenses , Liabilities and Rate of Return required[ to achieve his Financial Goals ] to be considered.
59. RISK TOLERANCE :
• Individual ‘s willingness to take risk [ Potential Loss ] towards achieving the Financial Goals .
60. RISK TOLERANCE SCORE :
• A Scale shows the level of Risk Tolerance of an Investor.
• Higher the Score , the more risk seeking by Investor.
61. RISK PERCEPTION :
• Investor judges about severity of Risks.
• It can change from Investor to Investor.
• When Market is Bullish , he under-estimate the risk & Over-estimate when market is falling.
62. RE-INVESTMENT RISK :
• When Bonus/ Dividend is given, Investor could not able to find suitable investment avenue.
63. RETIREMENT ALPHA :
• To maximize Individual’s Retirement Income.
64. SEQUENCE RISK :
• If there is a steep fall in the market in the early years of Income Distribution Period[ Retirement Period ],it can have negative impact.
• Similarly, If market increases in early years & falls in later years, it can have negative impact .
65. SHARPE RISK :
• Profile of Hedging does not match Profile of Risk.
66. SHARPE RATIO :
• Excess Return/ Unit of Risk Taken at any Price Movement [Up or Down ].
67. SKIN –IN – THE- GAME :
• EMonetary Risk in an Investment.
• How much does Equity hold in an Investment.
68. SORTINO RATIO :
• Excess Return / Unit of Risk taken only at Downside Market Movement.
69. SPECIFIC RISk :
• Called as ‘ Un-Systematic Risk’.
• Affects individual asset in a Portfolio.
70. SYSTEMATIC RISK :
• Called as ‘’ Aggregate Risk’’.
• Arises from Market Structure and its Dynamics .
• Affects all Investors & Assets in the Market.
• It can’t be diversified .
• In CAPM, the Market risk is referred as ‘ Systematic Risk’ .
71. SYSTEMIC RISK :
• Risk of a collapse of a Market.
• Risk due to linkages & dependencies in the Market.
• For Example : Default of Lehman Brothers .
As the default of this Bank triggered the default of other market participants thro.’ Market linkages.
72. TAXATION RISK :
• Arises due to Tax Laws/ Systems in relation to Financial Products.
73. MARKET TIMING RISK :
• Arises due to error in timing of the Investment.
• Is the risk that an Investor takes when trying to buy/ sell a stock based on future price predictions.
• Example : Being out of Market.
74. UNCERTAINTY :
• Due to Imperfect & or Unknown information.
• Not knowing whether the information is true / false.
75. VALUE AT RISK [ VaR ] :
• Estimates how much an Investment might lose within a specified time period , often a Day.
76. VALUE assumption RISKS [ ILLIQUIDITY ] :
• Exists where the true value of traded assets when markets are Illiquid.
• It causes Market Participants stop taking at given prices because of illiquidity to provide clear price signals.
77. VARIANCE :
• Squared deviation of a random variable from its mean.
• Measures how far a set of nos. spread out from their mean.
• Small Variance indicates the data points tend to be close to the mean[ Expected Value ].
• High Variance indicates the data points are away from the mean & from each other.
78. VOLATILITY :
• The degree of Variation of a trading Price/ Value over time.
• Measured by the standard deviation or Variance. .
1. INVEST FOR MAXIMUM REAL RETURN :
• This means that the return on investment after Taxes & Inflation.
• This is should be the main objective of the long –term investors.
• To get the maximum real return, diversify your investments in Stocks, Bonds and other asset classes.
2. ONLY INVEST – DON’T TRADE / SPECULATE :
• How much better the relaxed, you, as the long-term investor will get the benefits.
• Be more Patient and less Emotional.
3. BE FLEXIBLE & OPEN –MINDED ON INVESTMENTS :
• The basic fact is that no one type of investment is always the best.
• Sometimes, Equity will perform better. Some other time, Bonds may perform well. In some other times, Gold may do well.
• If a particular industry/ stock become popular with investors, then that popularity may remain for a temporary period. If lost, may not return for many years.
• So, Be Flexible on and open-minded on your investments.
4. BUY LOW :
• Buy when Stock prices and demand are low.
• It is extremely difficult to go against the crowd. That is: To buy when everyone is selling/ when the things look darkest.
• But, if you buy the same securities when everyone else is buying, then, you will have the same results as like everyone. You can’t outperform the market, if you buy the Market and it will become overpriced.
• Benjamin Graham says: ‘’ Buy when most people, including Experts are pessimistic and sell when they are optimistic’’. That is: Never follow the Crowd.
• Simple in concept and difficult in Execution.
5. BUY QUALITY STOCKS WITH BARGAINS:
• Quality means that the company will have the following attributes :
1. Sales leader in the growing market.
2. Technologically leader [technical innovation].
3. Strong management team with proven track record.
4. The first among the companies to enter into a new market.
5. A well known trusted brand with a high profit –margin products.
6. BUY VALUE , NOT MARKET TRENDS / ECONOMIC OUTLOOK :
• It is the individual stocks that determine the market and not vice versa.
• Generally, investors focus on the market/ Economic trends. But, individual stocks may rise in the bear market and fall in the bull market.
• So, buy individual stocks and not the market trend/ Economic outlook.
7. DIVERSIFY IN STOCKS AND BONDS :
• No one can predict/ control the market.
• So, diversify – by industry, by risk & by country.
8. HIRE FINANCIAL ADVISER :
• To help you on planning for your Finance to achieve your life time goals, it is better to hire a financial advisor.
9. LEARN FROM YOUR MISTAKES :
• The only way to avoid mistakes is not to invest- which is the biggest mistake of all.
• Forgive yourself for your errors. Don’t become discouraged.
• Take each mistake into a learning experience.
• Analyze what went wrong and how you can avoid the same in the future.
10. OUTPERFORMING THE MARKET IS A DIFFICULT TASK :
• The real challenge is making investment decisions that should be better than those of the professional / Market.
• So, if any company that consistently outperforms the market is actually doing a superb job. But, it is very tough to outperform the market continuously.
11. THERE IS NO FREE LUNCH :
• Never invest on Sentiments. If you have any personal/ official relationship with the company, don’t invest on that basis.
• Analyze the company in depth before buying the stock.
• Never invest in IPOs. Because, the commission given to the advisors will be added into the price of the stock which most new stocks decline in value after the listing.
• Never invest solely on Tip.
12. DON’T BE FEARFUL / NEGATIVE ALWAYS :
• There will be corrections and even crashes. But, over time, the stocks do go up….and up…and up.
• Businesses will start to boom after the corrections/ crashes. Wealth will increase and stock prices will rise accordingly.
• So, if you follow the basic rule of ‘’ Buying Low and Selling High’’, then, building wealth thro.’ stocks will become true.
# PMS is suitable for '' High Net Worth Individuals " who are looking for investing Professionally in a '' Customized Portfolio of Stocks ''.
# It is a Specialized Service to '' HNI INVESTORS '' Who can invest a minimum of Rs. 50 Lakhs.
# Direct Equity Portfolio will be created separately for each and every investor.
# The Individual Portfolios will be managed by Professional Fund Managers.
# PMS is a ''Good option '' beyond Equity Mutual Funds.
TYPES OF PMS:
There are 3 types of PMS.
# Here, PMS Manager has the '' Right to take Decisions on behalf of the Client ''.
# PMS Manager is not bounded to consult with client to take the Decisions.
# PMS Manager will suggest to the Client regarding Suitable Stocks based on his risk appetite and Decision will be taken by the Client.
# But the Trading Activities [Execution of Trades] will be done by the PMS Manager.
# Here, PMS Manager Will only suggests the Investment Ideas to the Client who will do both activities [selecting the Stocks and also the Trade Execution].
# For Investing in PMS, One has to Open a Bank A/C, Demat A/C & Trading A/C separately .
# One has to sign in the Agreement Form which will have the details, like, Strategies and Model Portfolio to be Followed.
# One has to give Power of Attorney to the PMS Manager, if he chooses Discretionary type of PMS.
# PMS Manager has to give a Performance Report to his Clients once in Every 6 months.
# A separate User Name and Password can be given to Client to Log-in to the website and he can view his Portfolios at any time.
# Whenever Dividend / Bonus / Interest Income / any other Amount is credited to his Bank Account,the PMS Manager has to redirect the amount to the Client Portfolio.
# PMS Fee Structure is costlier than any other Investment Options.
# It will have Entry Load, Yearly Management Fee and also Profit Sharing. This will vary from one PMS to another .
1. ENTRY LOAD:
* It may be in the range of 1% to 3%.
* It will be deducted from the Investment Amount.
2. MANAGEMENT Fee:
* It may be between 1 - 3 %, depending upon the Service Provider.
3. PROFIT SHARING FEE :
# This is based on the “Promised Return " which is agreed between PMS Manager and the Client.
4. Other FEE:
Apart from the above charges, PMS will have some more charges;
They are: 1. Custodian Fee.
2. Demat Account Opening Charges.
3. Audit Charges.
4. Transaction Brokerages.
NOTE: The above Fees are Negotiable. So, One can negotiate with the PMS and also, There is No Standard Norms is defined for PMS Fee.
ADVANTAGES OF PMS
1. A Customized Portfolio of Stocks can be created and professionally managed by PMS Manager.
2. PMS promises to outperform the Benchmark.
3. The Client will have different asset Class in his Portfolio. That is: Equity, Debt, Gold and Mutual Funds.
4. There is No Limit of investing in a single stock. The client can invest any amount in a single stock.
5. PMS Manager will keep your Requirements in mind and invest accordingly.
6. Diversified as well as Focused Portfolio can be framed depending upon the Client Profile.
DISADVANTAGES OF PMS
1. As per SEBI Rule, the minimum investment amount is: Rs.50 Lakhs.
2. PMS will not share the Losses. They share the Profits only.
3. Long Documentation Procedures. Like, Opening new Bank, Demat and Trading Accounts.
4. High Entry Load and Other Fees.
Fixed Income Investment is important for investor and in their Portfolio:
Here, Fixed Income Investment Products are explained.
1. PPF: PUBLIC PROVIDENT FUND:
* It is a 15 year Period Investment Plan.
* Deduction under Section 80C of the Income Tax Act, 1961.
* Liquidity is the greatest dis-advantage.
2. BANK FDs:
* 1month to 5 Years.
* Interest Income is Fully Taxable.
* There will be some Penalty for Pre- Closure of the FDs.
3. POST OFFICE SAVINGS:
* 1 Month to 5 Years.
* Interest Income is Fully Taxable and Section 80C benefits are available in some schemes.
* Liquidity is available with some Penalty.
4. TAX FREE BONDS:
* Maturity Period is: 10 Years and 15 Years.
* Interest is Tax Free.
* Liquidity is Moderate.
* Interest will be higher.
* Interest Income is Taxable.
* Liquidity is Poor.
6. FIXED MATURITY PLANS [FMPs]:
* 1 -5 Years and above.
* Interest will be based on Investment Period.
* Liquidity is Poor.
7. DEBT FUNDS:
* 1 Day to 5 Years and Above.
* Interest will be based on Investment Period.
* Liquidity is the Greatest Advantage.
WHY WE HAVE INVEST IN DEBT FUNDS:
The following is the reasons why we have to invest in Debt Funds:
1. More Tax -efficient than other Investment Products.
2. Very High Liquidity.
3. Ability to generate Better Returns and 5 Years.
4. Flexible Investment Periods are available, starting from 1 day to 5 Years and above.
5. We can invest thro. SIP, STP and SWP investment options for our convenience.
6. INDEXATION Benefits are available if the Investment Period is above 3 Years. This Benefit is not available in other Investment Products.
TYPES OF DEBT FUNDS:
1. High Quality Focused Funds:
* Overnight Funds
* Liquid Funds.
* Money Market Funds.
* Low, Short, Medium and Long Duration Funds.
* Banking & PSU Funds.
* Gilt with 10-Year Duration Funds.
2. High Accrual Focused Funds:
* Ultra Short Duration Funds.
* Floater Funds.
* Credit Risk Funds.
* Medium Duration Funds.
3. Cash Management Funds:
* Short term / Medium / Long term Savings Funds.
* Dynamic Solutions.
All Indian Citizen [Resident Indian and NRI] Aged between 18-65 years can join in the NPS.
1. It is allowed after First 3years of joining the scheme.
2. Accumulated amount can be withdrawn.
3. Withdrawal is up to 25% of the Contributions made.
4. Only 3 times during the entire period of subscription.
1. For a Salaried Person:
Tax Exemption of up to 10% u/sec.CCD  which comes u/sec.80CCE [Rs.1.50 Lakh].
2. For an Employer:
The Employer can also claim the deductions for the Contributions made by the Employer u/sec. 80CCD which is above Rs.1.50 lakh u/sec.80CCE.
3. For a Self-Employed:
Self-Employed can claim deductions of 20% of Gross Income u/sec.80CCD .
NPS offers freedom to decide how the money is invested.
There are two options:
1. ACTIVE CHOICE
2. AUTO CHOICE
In Active Choice, the money will be invested in Asset Classes: E, C & G.
Asset Class E: '' Investing in EQUITIES''- Maximum 50% only.
Asset Class G : '' Investing in GOVERNMENT SECURITIES''.
Asset Class C : ''Investing in ''Other than Government Securities ''.
AUTO CHOICE :
Based on Life cycle of the subscriber , the Fund Manager will invest .
1. In-efficient Taxation :
That is NPS is not an EXEMPT-EXEMPT-EXEMPT Investment.
2. 60% of the accumulated Retirement Corpus will be coming under Tax Structure.
3. Withdrawal from the Retirement Corpus is also taxable.
4. Inability to beat Inflation .
Economic Indicators give you an idea on the ''Health of Our Economy '' and which direction economy is moving.
So, one should know these Indicators before making an investment.
1. BANK CREDIT GROWTH:
* Lending [Credit] activity indicates '' Confidence among Corporate to borrow for expansion as well as Consumption sentiment.
* Higher Credit Growth suggests growth in the economic activities.
2. CAPACITY UTILISATION:
* How much of Production Capacity at manufacturing Plants is being utilized will give an idea on economic growth.
*Higher Utilization suggests ''Robust Demand''.
3. BOND YIELDS:
* The movement in Government Bond Yield suggests Confidence of Bond Markets.
* A fall in Long-term bond yield can indicate ''Market expects a Recession and Future cuts in Interest rates.
* Govt.bonds is more risky assets.
4. HOUSING LAUNCHES:
* The no.of new Residential Projects are being launched indicates '' The strength of the Housing Market which is very close to the economic Growth.
* A large no.of launches suggests an upward in the economy.
5. MANUFACTURING ACTIVITY:
* Manufacturing Activity at factories indicate '' How the economy is shaping up.
* Increase in Index of Industrial Production [IIP] suggests more Demand, leading to Healthy Economic Growth.
6. INTEREST RATES:
* RBI may raise or decrease the interest rates to control Inflation.
* Lower Interest Interest Rates will stimulate the Growth.
7. CONSUMER INFLATION:
* Higher Inflation indicates Demand is Robust or supply is constrained.
* Soft Inflation implies '' either weak demand or Excess Supply''.
8. GDP GROWTH:
* GDP is the important measure of economic health. But, it has limited value since GDP gives you a lag which has already happened.
* GDP gives a definitive confirmation for Policy actions to be taken by Government.
9. CORPORATE EARNINGS GROWTH:
* Profit Growth is the confirmation of trends that have already been established.
* Strong earnings growth reflects healthy demand for Goods and Services.
10. UNEMPLOYMENT RATE:
* The no. of individuals looking for Work provides a delayed indication of the state of the economy.
G-Sec. is '' Sovereign Bonds backed by Govt.of India [GOI] and issued by RBI on behalf of Government''.
The guiding Principle of G-Sec.Bonds is:
They are 100% safe, since the bonds are backed by GOI. On Maturity, Principal and Interest will be paid by Govt. But, the price of the bond will be volatile. To control this volatile, simply hold the bond till the maturity. If you do, you will get the Face value of the bond.i.e; the Price at which it was issued.
If you want to liquidate before Maturity, then, you can do the redemption thro.' Stock Exchange or Mutual Funds [if you have invested thro.' MF].
Returns are Guaranteed, Fixed Interest payable Semi-Annually.Generally, G-Sec.Returns will be higher than Bank FD Return.
G-Sec.bonds are available in short and Long term also, ranging from 91,182, 364 days to 10,20, 30 and 40 years.
Interest income is Taxable as per your Tax slab.
Capital Gain Tax:
If you redeem the bonds before one year, then, it is Short term Capital Gain which is taxable as per your slab and If you redeem the bonds after one year, then, it is Long term Capital Gain which is 10% Flat or 20% with Indexation.
G-Sec. are good investment option for longer duration [above 10 years] and Ideal investment for Portfolio Diversification with Low-risk and Steady Returns.
1. GOLD ETF:
* ETFs are '' Schemes offered by Mutual Fund Companies that are listed and traded on Stock Exchange''.
* It represents the '' Ownership in an underlying Security, Commodity or Asset''.
* Gold ETF means ''Ownership of Gold which will be held by a Custodian’’.
*Gold ETFs are listed and traded on Exchange. It can be bought and sold like, Stocks on a real-time basis.
*To invest in Gold ETFs, Demat and Trading Account to be opened.
* This is the smart way to invest in Gold and the cheapest way of buying Gold.
2. Gold Savings Bonds:
* They are also called as '' Gold Funds''.
* Gold Savings Bonds are Passive Funds.
* They are Fund of Funds schemes which invest into an underlying Gold ETF and give the returns that are close to the returns of its underlying Gold ETFs.
* Gold units are allotted in a Paper form and not like Gold ETFs where Units are in Demat Account.
*The Annual Expenses will be higher than Gold ETFs. It includes Fund Manager Charges along with the cost of Gold ETFs.
* You can invest as Lump sum or SIP.
* Gold Savings Fund Schemes are available in Mutual Funds.
3. Sovereign Gold Bonds:
* In order to tackle the current account deficit, Govt.of India introduces time to time these Gold Bonds.
* These Bonds are backed by Govt.of India as an Alternative to purchase Physical Gold.
*One can purchase these bonds via, Bank, NBFCs, Post Offices and thro.'Agents.
* They are available in denominations of Rs. 5, 10.50 & 100 grams.
*These bonds can be held in Physical [Paper] or Demat Account.
*An Individual can buy a maximum of 500 grams per year.
*These bonds have the tenure of 5-7 years. But can be redeemed before maturity by selling thro.' stock exchange.
* Here, We can earn interest at 2.50% on initial value of investments on Half-Yearly basis.
* Capital Gains made after 3 years are taxable under Long Term Capital Gain tax [LTCGT].
* Interest is also taxable.
* It provides interest on the investment apart from Capital Appreciation.
*This is not available in other instruments.
* It is a Unique Investment Product launched by National Spot Exchange Limited [NSEL].
* It allows you to buy Gold in an smaller denominations of 1, 2, 3, ...grams.
* Here one unit of E-Gold is equal to One gram of Gold.
* At the time of Settlement, you can get Physical delivery of Gold. There is no storage or holding costs.
* Transaction Pattern will be similar to Equity Markets where Settlement is on T+ 2 basis.
* Buying Paper form of Gold is the better option than Physical Gold because of Security Reasons and need not to worry about quality of Gold.
* There is no making charges and other hidden charges.
* Treat Gold as a Diversifier asset. Invest for Long term horizon.
* Allocate 10-15% of your entire portfolio to Gold.
Mutual Fund Schemes with the time horizon for Investment is given below.
1. Liquid/ Overnight Fund : up to One month.
2. Money Market Fund : 3- 6 months.
3. Ultra Short term Fund : 6-12 months.
4. Low Duration Fund : 12- 24 months.
5. Arbitrage Fund : 12- 24 months.
6. Short term Fund : 24-48 months.
7. Medium term Fund : 24- 48 months.
8. Equity Savings Fund : 24-48 months.
9. Income/Credit/Dynamic Bond Fund : Above 5 years.
10. Equity Hybrid Fund : Above 5 Years.
11. Equity Fund : Above 7-10 years.
2. Set your Goals.
3. Start to Plan before Investing.
4. Allow time work for you.
5. Don't time the Market.
6. Invest Regularly.
7. Understand Risk- Return Concept.
8. Start as early as possible even with small amount.
9. Save as much as you can.
10. Invest in an efficient Investment Plans.
11. Don't invest in risk-free investments, if your holding period is longer.
12. Follow Asset Allocation Strategy.
13. Do invest in Equity Funds, if your time horizon is above 5 years.
14. Don't keep large investments in Savings / Current Account.
15. Review your Portfolio frequently.
16. Don't expect good or bad times to last forever.
17. Invest both in Growth and Value Investment Style.
18. Switch Under -Performed Funds to Top Performing Funds.
19. Look at Fund's Investment Philosophy and Portfolio Holdings.
20. Follow Rupee Cost Averaging to minimize the risk.
21. Have only limited Funds in your Portfolio. Don't have too many Funds.
22. Expect only decent return from your Portfolio.
23. Have a Frequent Discussion with your Financial Adviser on Portfolio Management.
24. Don't chase the Return. Chase only your Goals.
25. Keep Faith on Stock Market and Invest with Hope, Confidence and maintain Patience.
Risk-averse investors now have new options to park their money. The interest earned on these bonds will not be subject to income tax. The interest on these bonds will be paid annually (for example 31st March every year) by credit into the account of the investor. There is no cumulative option.
These bonds will be eventually listed on the Bombay and National Stock Exchange, so investors will have the option of selling them before the full term of the bond. However, the price you may get for selling before they mature will depend on market conditions.
Is effective yield the right way to look at tax-free bonds?
Investors get carried away by the effective yield on tax-free bonds. The effective yield is calculated as follows:
Effective yield = coupon rate/ (1-tax rate). Hence, for a coupon of 8.2%, an investor in the 30.9% tax bracket has an effective yield of 11.86%. The cash flow in the hands of the investor is only Rs 8.2 for every Rs 100 invested in the bonds, and the reason the yield is shown higher is due to the tax rate.
Change in tax rate will change the effective yield on the bonds.
Who should invest in tax-free bonds?
Effective yield is only relative in nature, not absolute. If the comparison is between investing in a ten-year fixed deposit of an AAA-rated bank at 8.2% which is taxable and investing in a ten-year maturity tax-free bond at 8.2%, then effective yield can be used as a measure for comparison. Investors can substitute tax-free bonds for fixed deposits as post-tax return is much better on tax-free bonds.
Investors wanting to park surplus funds in an asset that will give them an absolute return of 8.2% every year for ten years, or 8.3% every year for 15 years, irrespective of the returns available elsewhere, can invest in tax-free bonds. In such cases investors are content with the returns offered and have surplus money that can be locked in for ten or 15 years.
Come August-September, a slew of Tax free bonds are slated to hit the market, with government entities raising funds worth Rs40,000 crore during this fiscal year. The instrument seems to appealing, categorically for the investors falling in to the higher tax slab. The return on the tax free bonds is comparatively higher than other alternatives. However, it may not sound that enticing for individuals in the lower tax category, considering the availability of other investment options.
To begin with, investors who fall in to non-retail segment will fetch around 7.16% on 10 year AAA rated Tax free bond, 7.4% on 15-year and 7.48% on the 20-year instrument. Non-retail segment is defined as the investors who deploy more than ten lakhs in a particular bond issue. Retail investors are classified as individuals who invest less than ten lakhs. Retail segment will earn 7.41% on 10 year instrument, 7.65% on 15-year and 7.73% on the 20-year one. Government of India has determined a limit on the coupon for AAA-rated bonds, wherein the rate for retail investors will be fixed at 55 basis points below the yield on government securities, while 80 basis points lower for the non-retail segment.
Although the indicative yields offered are about 50-100 basis points lower than what was offered two years back, the new tax free bonds will still attract high tax bracket individuals. Tax free bonds (issued by government institutions) score much better than Bank FDs, when the yields on tax free bonds are compared with the post-tax returns on the FDs. For instance, an investor (belonging to 30% tax bracket) fetches annualised return of 7.16% on 10 year tax free bond, while one year FD may offer 8.25%. However, back of the envelope calculations reveals a post-tax return of around 5.8% on the FD, literally 135 basis points lower than the yield on the tax free bond. Also, tax is deducted at source when Banks pay more than Rs10,000 as interest payment in a year. While, listed NCDs in the demat form attract no TDS. Such post-tax return on high quality paper is unmatched in the current environment.
Besides the fixed tax free coupon, investors can also encash on the prospect of capital appreciation. Bond prices are inversely correlated with the yields, implying that bond prices go up when interest rates go down. With the monetary policy of India being data driven, there is scope for monetary easing if the macroeconomic situation permits the same. The next rate cut is primarily dependent on the progress of monsoon and its effects on inflation. Healthy monsoon and positive government action can pave the path for further reduction in interest rates. The onset of monsoon has been healthy this year; however, July rainfall has witnessed unprecedented lull. Market participants will keep their fingers crossed and expect rain gods to be sympathetic. Nevertheless, there is a wide expectation that the government will contain food inflation through effective food management policies. Better fiscal consolidation, effective reforms, improving economic growth and containment of inflation should ensure additional rate cuts to the tune of 50 basis points by the end of this fiscal year. Effectively, there is a great upside potential for the bond prices. Investors in the high tax bracket can particularly deploy money, if they want to benefit from the capital gains arising from the transition in the interest rates over the period of more than 12 months and need not hold till maturity. Bonds held for a period more than 12 months account for long term capital gains, which is taxed at 10% or 20% with indexation, whichever is lower.
IRFC Proposed private placement of Tax Free bonds:
Subject to internal approval, they are planning to float RFQ on Friday by late evening (after coupon rate calculation for next week) and planning bidding on Monday/ Wednesday i.e. July 27/ 29 and pay-in on Wednesday / Friday i.e. July 29/ 31. They are thinking to invite bids for only 10 year option (they are not likely to offer 15 and 20 year options). Issue size shall be upto the overall eligible amount i.e. Rs. 1800 crore
NHAI Proposed private placement of Tax Free bonds:
Subject to internal approval, they are thinking to hit the market next week for its first tranche of private placement with base issue size of Rs. 500 crores with option to retain oversubscription upto the overall eligible amount of Rs. 7,200 crores. They may finalize terms shortly and planning bidding on Tuesday i.e. July 28 for 2 bond options i.e. 10 year and 15 year options (they are not likely to offer 20 year options).
NTPC Proposed private placement of Tax Free bonds:
Subject to internal approval, they may think to hit the market for its private placement with issue size of overall eligible amount i.e. Rs. 300 crores. They may take internal call on the matter on Friday i.e. July 24.
IREDA Proposed Tax Free bond issue:
They are going slow on the matter. However, their board meeting is scheduled on July 28. After board meeting they may take up matter further.
பாதுகாப்பான முதலீடு - வரிவிலக்கு பத்திரங்கள் ஒரு அறிமுகம்
மிக அதிகமான மக்கள் பாதுகாப்பான முதலீட்டையே விரும்புகிறார்கள். வங்கிகள் தங்களது வட்டி விகிதத்தை குறைக்கும்பொழுது அவர்கள் சற்று கலக்கமடைந்து வேறுவிதமான திட்டங்களை நோக்கி திரும்புகிறார்கள் .மேலும் வங்கிகளிலேயே வைப்பு நிதியில் முதலீடு செய்யும் பொழுதும் வரும் வட்டித்தொகை குறிப்பிட்ட அளவை மீறும்பொழுது வங்கிகளும் வரிபிடித்தம் செய்தே வட்டித்தொகையை திரும்ப தருகிறார்கள். வரும் வட்டி தொகையிலும் வரி பிடித்தம் செய்வதை தாமதமாகவே அறிவதால் மேலும் குழம்புகின்றனர்.இவர்களின் இந்த குழப்பத்தை பயன்படுத்தி பல்வேறு விதமான மோசடி நிதி நிறுவனங்கள் பல்வேறு மோசடிகளை அரங்கேற்றுகிறார்கள். இந்த வித இக்கட்டுகளில் இருந்து காப்பாற்றும் விதமாக வருகிறது வரிவிலக்கு பத்திரங்கள் (Tax Free Bonds ).
வரிவிலக்கு பத்திரங்கள் (TAX FREE BONDS )- ஒரு அறிமுகம் .
வரியில்லாத பத்திரங்கள் (Tax free bonds) என்பது குறித்து பலரும் கேள்விபட்டிருக்கலாம். ஆனால் அது என்ன என்பது பலருக்கும் தெரியாது. முதலீட்டாளர்களுக்கு வட்டியாகக் கிடைக்கும் பணத்துக்கு வரி செலுத்த தேவையில்லை என்பதை குறிக்கும் பத்திரத்திற்கு தான் வரியில்லாத பத்திரங்கள் என்று பெயர்.வரியில்லாத பத்திரங்களின் மூலம் பெறப்படும் வருமானத்திற்கு வரி செலுத்த வேண்டிய தேவையில்லை. மேலும் மற்ற வருவாய்களுக்கு வரி பிடித்தம் செய்யப்படும் போது, இந்த தொகை அதில் சேர்க்கப்படாது.வரியில்லாத பத்திரங்கள் அரசு அங்கீகாரம் கொண்ட நிறுவனங்களின் மூலம் வழங்கப்படுகிறது. தேசிய பங்கு சந்தை மற்றும் மும்பை பங்கு சந்தை ஆகியவற்றில் வரியில்லாத பத்திரங்கள் வர்த்தகத்திற்கு பயன்படுத்தப்பட எளிய வழிகள் உள்ளன.
வரி இல்லா பத்திரங்களின் மூலம் கிடைக்கும் வட்டிக்கு முதலீட்டாளர்களிடம் வரி பிடித்தம் செய்யப்படுவது இல்லை. இத்தகைய பத்திரங்களில் இருந்து கிடைக்கும் வருமானத்திற்கு வரி கிடையாது. மேலும் இந்த வருமானம் வரி செலுத்துவோரின் மொத்த வருமானத்தில் ஒரு அங்கமாக கருதப்படாது. அதாவது நீங்கள் செலுத்த வேண்டிய வரியை கணக்கிடும்போது, இந்த பாண்ட்களிலிருந்து கிடைக்கும் வட்டி வருவாயை உங்கள் மொத்த வருவாயோடு சேர்த்துக் கணக்கிட வேண்டிய அவசியமில்லை.
நீங்கள் ஒரு வங்கியில் டெபாசிட்டை தொடங்கி அதன் மூலம் பத்தாயிரம் ரூபாய் வட்டி வருமானால் அதனை மொத்தவருமானத்தில் கணக்கில் கொள்ளவேண்டும். ஆனால் வரிச் சேமிப்புப் பத்திரங்கள் வாங்கினால் அதனைக் கணக்கில் கொள்ள வேண்டியதில்லை. எனவே இதன் மீது நீங்கள் எந்த வரியையும் செலுத்த வேண்டியதில்லை என்பது தெளிவாகிறது.
இத்தகைய பத்திரங்கள் அரசு மற்றும் தனியார் சேர்ந்து நடத்தும் நிறுவனங்கள் மூலம் வழங்கப்படுகிறது. எனவே, இது மிகவும் பாதுகாப்பானதாக கருதப்படுகிறது. இந்திய அரசாங்கம் கிரேக்கத்தின் வழி சென்று கடன் நெருக்கடி பிரச்சனையில் சிக்கினால் மட்டுமே இந்தகைய பத்திரங்களுக்கு பாதிப்பு ஏற்படும். இந்த பத்திரங்கள் தேசிய மற்றும் மும்பை பங்குச் சந்தைகளில் விற்கப்படுகின்றன. எனவே, இது முதலீட்டிற்கு நீர்மைத்தன்மையை வழங்குகிறது. எனினும், இத்தகைய பத்திரங்கள் பங்கு போல் பெரிய அளவில் வர்த்தகம் செய்யப்படுவதில்லை.
வட்டி விகிதங்கள் வீழ்ச்சியடைந்து வரும் இந்த நேரத்தில் அரசாங்கத்தின் வரி இல்லா பத்திரங்களில் செய்யப்படும் முதலீடு ஒரு நேர்மறையான பந்தயம் ஆகும். இந்த பத்திரங்கள் நீண்ட கால முதலீட்டை தேர்ந்தெடுத்து, இரண்டாம் நிலை சந்தை வழியாக வெளியேற நினைக்கும் முதலீட்டாளர்களுக்கு ஒரு வரப்பிரசாதமாகும். இந்த பத்திரங்களில் முதலீட்டாளர்கள் முதலீடு செய்ததன் மூலம், கடந்த ஆண்டு அவர்கள் முதலீட்டு நிறுவனத்தை பொறுத்து 8.20 முதல் 8.35 சதவீதம் வரை வரி இல்லா வருமானத்தை பெற்றார்கள். இத்தகைய பத்திரங்களை வரி சேமிக்கும் பத்திரங்களுடன் ஒப்பிட்டு குழம்பக் கூடாது. வருமான வரி சட்டம் 80 சிசிஎப் பிரிவின் படி, வரி சேமிக்கும் பத்திரங்கள் மூலம் கிடைக்கும் வருவாய், வரி செலுத்துவோரின் மொத்த வருமானத்தில் ஒரு அங்கமாக கருதப்படும்.
இதில் எதற்காக முதலீடு செய்ய வேண்டும்?
நீங்கள் ஏற்கெனவே வரி செலுத்திக் கொண்டிருக்கும் பட்சத்தில் இதில் எதற்காக முதலீடு செய்ய வேண்டும்? என்ற கேள்வி தோன்றலாம். உண்மையில் இது மிகவும் நல்ல கேள்வி. ஒரு நபர் அதிகபட்ச வரி அடைப்புக்குள் (30.9% வரி விகிதம்) இருக்கிறார் என்று வைத்துக் கொள்வோம். இந்த பாண்ட்கள் மீதான அவரது வரி விதிப்புக்கு முந்தைய ஈட்டமானது, 10 வருடங்கள், 15 வருடங்கள் மற்றும் 20 வருடங்கள் வரையிலான காலகட்டங்களுக்கு தலா 11.96%, 12.64% மற்றும் 12.52% என்ற விகிதங்களில் இருக்கும். ஒரு வங்கி ஃபிக்ஸட் டெபாசிட் உங்களுக்கு அளிக்கக்கூடிய அதிகபட்ச விகிதம் 9.25% மட்டுமே ஆகும்.
20% வரி அடைப்பு
இப்போது நீங்கள் 20% வரி அடைப்புக்குள் இருக்கிறீர்கள் என்று வைத்துக் கொள்வோம். இந்த பாண்ட்கள் மீதான வட்டி மூலம் உங்களுக்குக் கிடைக்கக்கூடிய ஈட்டம் 10 வருடங்களுக்கு 9.9% ஆகவும், 15 வருடங்களுக்கு 10.45% ஆகவும், 20 வருடங்களுக்கு 10.33% ஆகவும் இருக்கும். இதுவும் வங்கி ஃபிக்ஸட் டெபாசிட்களை விட அதிமானதே.
உயர்ந்த மதிப்பீடு மற்றும் அரசு ஸ்தாபனம் போன்ற அம்சங்கள் இதன் பாதுகாப்புக்கு உத்தரவாதம் அளிக்கின்றன: ஆர்இசி என்பது மத்திய அரசுக்கு சொந்தமானதொரு நவரத்னா ஸ்தாபனமாகும். அதனால் இந்த பாண்ட்கள் பாதுகாப்பு ரீதியில் உச்சபட்ச உத்தரவாத்துடன் திகழ்கின்றன. மேலும் இவற்றின் அதிக பட்ச பாதுகாப்பை குறிக்கும் வண்ணம் ஏஏஏ (AAA) என்ற மதிப்பீடு சான்றிதல் இந்த பாண்ட்களுக்கு வழங்கப்பட்டுள்ளது.
யாரெல்லாம் இதில் முதலீடு செய்யலாம்?
வெளிநாட்டு-வாழ் இந்தியர்கள், தகுதி வாய்ந்த அயல்நாட்டு முதலீட்டாளர்கள், தனிநபர் சில்லறை முதலீட்டாளர்கள் மற்றும் பிரிவினையற்ற இந்துக் குடும்பங்கள் (HUF) ஆகியோர் முதலீடு செய்யலாம்.
பாண்ட் ஈட்டங்கள் வீழ்ச்சியடைந்து கொண்டிருக்கும் தற்போதைய காலகட்டத்தில், எதிர்காலத்தில் விநியோகிக்கப்படக்கூடிய வரியற்ற திட்டங்கள் இத்தகைய அதிகமான வட்டி விகிதங்களுடன் வழங்கப்படுமா என்பது சந்தேகமே. இவை அனைத்தும் ஆர்இசியை கட்டாயமாக சப்ஸ்கிரைப் செய்ய வேண்டிய ஒன்றாகத் தோற்றமளிக்கச் செய்கின்றன.
1. Upto 3 months : Invest in Liquid Funds.
2. 3-6 months : Money Market Funds.
3. 6months to 1year : Ultra Short term Funds.
4. 1 -2 years : Low Duration Funds.
5. 2 -3years : Short term Funds.
6. 3-5 years : Medium term Funds.
7.Above 7 years : Dynamic Bond Funds. The above funds will not be invested in Stocks Market.These Funds are "the best alternative to Bank FD". So, There is no Volatile in the invested amount.
Before allocating Various Asset Classes , The Following Steps are important :
1.To Understand and Analyse Investor’s Needs/ Goals. That is : Investor’s Short –Term, Medium-Term and Long-Term Goals.
2. To Recommend the Investment Strategy based on the above needs/ goals.
There are two Strategies are followed in Asset Allocation.
1. Strategic Asset Allocation :
2. Tactical Asset Allocation :
So, It is for an Advisor to decide which strategy to follow based on Investor’s Needs/Goals.
For example, If your SB Account Balance is Rs.100 as on 10 th of a month and if you deposit Rs.1 lakh on 11 th of the month , you will get an interest on the minimum balance of Rs.1,000/ as on 10 th at 3.5%.
Suppose, if you have zero balance at the start of a month and you deposit Rs.1,000/ on 11 th of the month and withdraw it on 31 st of Next month [ie;after 51 days], then, you will get Zero interest for the both months.That is from 10 th of the month to 31 st of next month balance is Zero.
If you work out annual inflation is around 8%, then, your post tax return will be negative 6%.
Most People think that Retirement Planning is a Complicated one and avoid to plan for their Retirement.
But, It is not.
*Retirement Planning has two aspects
The earlier you start to invest, the more money you will have at the time of Retirement.
Here, I have given 10 easy steps that help you to calculate and compute how much money is needed to reach the Goal.
10 EASY STEPS :
1. SPLIT CURRENT MONTHLY EXPENSES INTO TWO :
One : Expenses that continue even after Retirement.
1. Groceries. 2. Phone Bills. 3. Electricity Bills. 4. Medical Expenses. 5. Rent. 6. Clothing.
7. Annual Vacation. 8. Fuel and Vehicle Maintenance. 9. Gifting.
Second : Expenses likely to stop after Retirement :
1. Travelling for work. 2. Professional Clothing. 3. Home loan for EMI. 4. Kid’s Education.
2. CALCULATE EXPECTED INCOME AFTER RETIREMENT :
3. CALCULATE NET INCOME NEEDED IN RETIREMENT :
4. CALCULATE THE FUTURE VALUE OF THE ADDITIONAL INCOME NEEDED DURING RETIREMENT :
5. CALCULATE THE RETIREMENT CORPUS NEEDED AT 90 :
6. FIND OUT HOW MUCH YOU HAVE ACCUMULATED :
7. CALCULATE HOW MUCH YOUR CURRENT RETIREMENT CORPUS WILL GROW TO :
8. CALCULATE THE ADDITIONAL CORPUS NEEDED FOR RETIREMENT :
9. BE SAVED PER MONTH FOR ADDITIONAL RETIREMENT CORPUS :
10. ADD UP ONGOING INVESTMENTS TO KNOW HOW MUCH MORE TO INVEST :
Who can Join :
NPS Architecture :
NPS Benefits :
Key Features of NPS :
TIER I Account :
TIER II Account :
Pension Fund Managers:
1. Scheme A:
2. Scheme C:
3. Scheme E:
4. Scheme G:
5. Auto Choice : [ Life Cycle Funds ] :
Extension of Scheme :
|S.No.||Annuity Scheme||Annuity Description|
|1.||Annuity for Life||Annuity is paid during the Life time of Annuitant. On Death, Annuity stops.|
|2.||Annuity is guaranteed for 5,10,15 or 20 Years and for the Life there after.||Annuity is paid during the life time of Annuitant.|
|3.||Annuity for Life increasing At simple rate of 3% per annum||Annuity is paid during the life time of Annuitant. on Death Annuity ceases.|
|4.||Annuity for Life with return of Purchase Price.||Annuity is paid during the life. On Death,Purchase Price is Returned to Nominee.|
|5.||Annuity for life with 50%||Annuity is paid during the Life time of Annuitant. On Death, 50% is paid to Spouse. On Death of Spouse, Annuity Ceases.|
|6.||Annuity for Life with 100%||Annuity is paid during the Life time of Annuitant. On Death , 100% is paid to nSpouse. On Death of Spouse, Purchase Price is returned to Nominee.|