Sunday, January 31, 2016

Top 10 Best Tax Saving Mutual Funds to invest in 2016

 
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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Tax deduction under Section 80CCD(1B)

 You can claim an extra deduction of up to Rs 50,000 on your contributions to National Pension Scheme (NPS) under Section 80CCD(1B).
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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Accrual Debt Funds

Accrual Debt Funds Invest Online 
 
Accrual Debt Funds - Your Companion in Times of Volatility

The Reserve Bank of India (RBI) has lowered repo rate by 125 bps in 2015 and more rate cuts may happen in 2016 after the announcement of the Union Budget. Trying to gauge which way interest rates will move is very difficult for retail investors. To give you a sense of this, here's a simple historical reference: the RBI has reduced the benchmark repo rate four times in the calendar year 2015, lowering it to 6.75% from 8.00%. Still, there is just a 50 basis points (bps) difference in the repo rate of today and of that almost a decade ago.



An investor in a debt mutual fund category must strike a balance between risk and return with stress on the credit quality of the portfolio. Accrual funds fit the bill in terms of risk adjusted returns and provide a means to diversify the debt fund portfolio.

Understanding Accrual Funds

Accrual funds by definition are those debt funds that invest in short- to medium-term debt instruments and focus on earning accrual interest income from the coupon bearing bonds in their portfolio. There is no separate category for accrual funds in the mutual fund industry and they are either clubbed under income or short-term funds.

With accrual funds, a fund manager looks for corporate bonds with appropriate yields and adopts a strategy of buy and hold. The focus is on generating returns through the coupon bearing bonds rather than making capital gains from rise in bond prices.

Accrual funds can be of two types based on their approach towards credit risk in the portfolio -

Corporate bond funds follow the mandate of investing in higher credit rated papers and focus on fundamentals. They do not aim at generating higher returns by investing in lower grade papers.

Credit opportunity funds on the other hand look for opportunity to take advantage of the difference in credit rating of papers and their fundamental attributes.

Pros and cons – Setting the context

When an investor opts for accrual funds, the objective is to allocate some amount in order to diversify and balance the total debt portfolio, rather than invest the entire corpus in them. The advantages include –

• Investors need not worry about the underlying interest rate scenario as the fund manager's mandate is to buy and hold. This works in both rising and falling interest rate scenarios.

The disadvantages include –

• With credit opportunity funds, there could be a chance of sharp fall in net asset value (NAV) due to credit rating downgrade or rating withdrawal.

Parameters for selecting accrual funds

An investor should look at the following before investing –

Average maturity of the portfolio – The fund manager generally does not take duration calls and hence the average maturity of the portfolio should not change drastically with changing interest rate scenario.

Credit rating of the portfolio – Focus shouldn't be only on the alpha generated by the fund manager. Stress should be on credit quality of the portfolio.

Instrument allocation in the portfolio – Investors should look at the percentage allocation towards bonds/debentures and how much of the portfolio comprises of "cash and others".

Others – Apart from the above, it is advisable to look at the investment objective, expense ratio and returns (comparison with benchmark index).

Last word

The present economic climate seems lucrative with the Government looking committed to reforms. Thus it seems that in this kind of a scenario, the probability of credit papers defaulting or witnessing a chance of degrading are less. Hence an investor may evaluate the option of allocating a certain portion of his investment in credit opportunities / accrual strategies.

Amid the interest rate volatility, accrual funds are gaining popularity among investors as they provide them an opportunity to diversify their debt fund portfolio.
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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Franklin Templeton - Franklin India Bluechip

 

Franklin India Bluechip Invest Online

The fund avoids highly leveraged companies

 Hemant Mishra/Mint
 

Franklin Templeton-Franklin India Bluechip fund's exposure to good quality stocks in banking technology and healthcare sectors helped. It avoids highly leveraged companies.

 

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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Investing for our children Part 1

 
Financial Planning article in Advisorkhoj - The best investment choice for our children: Part 1 of 2
 

The future of our children is probably the biggest concern for most parents. Many parents start saving for their children's education and marriage, soon after the child is born. This is, of course, the right thing to do, because the parents can benefit from power of compounding while the child is growing up. As far as investment choices for their children are concerned Indian parents are mostly conservative. Public Provident Fund, National Savings Certificate and life insurance endowment plans have traditionally been the preferred investment options for the children's education and marriage. These investment options continue to be preferred choice of a majority of parents today. While these investment choices offer safety of capital, on the flip side the yield of these investments is quite limited. Cost of living in general and cost of education in particular has been increasing at such a pace in India, that relying on low yield investments may leave parents short of the goals they have set for their children or force them to compromise on other important goals like retirement planning. In this two part series, we will discuss investment choices that will help parents meet the financial goals for their children's future.

The cost of professional education in India nowadays is easily in the range of 10 – 12 lacs. As per market surveys, education cost is growing at a rate of 20 - 25% per annum. PPF interest rate is currently at 8.7%. NSC interest rates are 8.5% and 8.8% for the 5 year and 10 year schemes respectively. PPF returns are tax free, but NSC returns are not. You can get 80C tax benefit for the accrued interest deemed for reinvestment in NSC, but the accrued interest for the final year of your NSC scheme is taxable as per your tax rate. Returns of life insurance endowment plans are tax free, but it is only around 6%. You can do the math yourself to see how much you will need for the higher education of your young child factoring in inflation and the maturity amount of your investment at your current savings rate or even at an accelerated savings rate. Simply put, the gap between the cost inflation in education and returns of low risk investment options is just too large. The thought of falling short of our children's goals is difficult for any parent. Fortunately many young, financially savvy, parents are investing in equity mutual funds which over a horizon of 10 to 15 years, when the children are growing up, can give sufficient returns to beat inflation and with proper planning can help the parents meet the financial goals for their children, without having to compromise on other important life goals. However, when it comes to equity investment the biggest worry of the average investor is risk, the worry about the safety of your capital. When it concerns the future of our children, can we take risks? There two points that parents need to consider regarding risk of equity investments. Firstly, the yields of low risk investment (e.g. PPF, NSC etc.) falling substantially short of cost inflation, leave you with the risk of not meeting the financial goal for your children. Secondly, we need to understand risk and return in the context of long investment horizon. While the notion of risk is largely psychological for the average investors, thankfully there are quantitative measures of risk, which can enable the investors get a sense of expected returns and deviations thereof from a probabilistic standpoint.

Risk and return in equity investing

Mutual funds are subject to market risks. The net asset value (NAV) of your mutual fund investment goes up or down on a daily basis. This is also known as volatility. But should you worry about daily volatility, if you are a long term investor? Over the last 10 years, the Sensex has given an annualised return of 16.8%, despite through big crash in 2008. Over the last 15 years, the average rolling 10 years (i.e. average point to point returns of all 10 year periods starting November 1999 to November 2014) is about 17%. The standard deviation of rolling 10 year returns over the last 15 years is 2%. Standard Deviation is a measure of risk or volatility and measures the deviations from the average return on investment. Standard deviation gives us the sense of downside risk within the context of a probability distribution of Sensex returns. Probability distribution is nothing but the probability or likelihood of all possible returns of the Sensex. It has been observed that equity returns follow a probability distribution called Normal or Gaussian distribution, in which most of possible returns are clustered around the average return and then tails of symmetrically from the average. The shape of the distribution is therefore like a bell and this distribution is more popularly known as the bell curve. The diagram below shows the bell curve and probability of returns exceeding or being less than 1 standard deviation, 2 standard deviations and 3 standard deviations from the average.

In the diagram above, µ is nothing but the average and σ is the standard deviation (SD). The average Sensex 10 year rolling returns (µ) since 1999 is 17%. The standard deviation of 10 year rolling returns (σ) is 2%. The probability that the expected 10 year rolling returns is less than 2 standard deviations from average is 2.28%.Therefore while the expected 10 year annualized Sensex returns is about 17%, the probability of Sensex returns being lower than 13% is only 2.28%, based on the last 15 years data. Nobody can predict the future, but a statistical analysis of last 15 years Sensex returns can give you a probabilistic perspective of what to expect. The analysis of historical Sensex returns gives us a high degree of confidence (over 97%) that equities can beat inflation and provide much higher returns than risk free or low risk investments in the long term. Equity markets are volatile in the short term depending on the demand and supply situation, but in the long term markets are driven fundamental factors like GDP growth, corporate earnings growth etc. In a developing economy like ours, it can be expected with fairly high degree of confidence that equities will give good returns in the long term.

Mutual funds are ideal investment options for planning your children's futures

We have seen that equity is the best long term investment choice for your children. As such good equity mutual funds through systematic investment plans (SIPs) are ideal investment options for your children as they are growing up. Long term capital gains in equity funds are tax free. You can even save taxes under Section 80C by investing in Equity Linked Savings Schemes (ELSS). Financial planning for your children is a dynamic process. As your children approach their life milestones like higher education or marriage, you need to rebalance your investment portfolio to have a greater allocation to debt investments where the risk is considerably lower, while you still earn a decent return. There are enough mutual fund products across risk profiles like equity funds, balanced funds, monthly income plans, income funds etc, that parents can choose when their child is growing to optimize the returns while ensuring that the risk profile of their investment portfolio is consistent with the financial plan for their children.

Parents can also opt for mutual fund child plans. Mutual fund houses like HDFC, ICICI Prudential, UTI, Templeton, Tata and SBI offer a variety of choices as far child plans are concerned. Child plans also help earmark funds for specific goals, dividing the portfolio into several categories. This makes it simpler for a parent to monitor the investment for a particular goal. This segregation is important because each goal has a different time frame and, therefore, requires a different investment mix. For example, your child's college or higher education may only be two or three years away and while his or her marriage may be five or six years away, prompting different investment choices for these two goals. We have discussed child plans in our article, Investing for the future of your children.

When your children reach their milestones, you can redeem your investment either through systematic withdrawal plans (SWP) to meet the cash flow needs of your children's higher education or in lump sum to fund the expense of their marriage.

Conclusion

In this article we have discussed why you should invest in equities to meet your children's financial goals. We have also discussed in brief how mutual funds can help you plan for your children's future. In the second part of this series, we will discuss how you can use mutual funds and life insurance to meet the financial goals of your children.

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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Credit Card Late Payment Charges

 

Credit card is loved by many, as you get to borrow money and yet have sufficient number of days to pay the bill and even an option to pay minimum balance. In addition to this, there are many benefits offered by card issuers to their customers such as discounts while shopping online, cashback, reward points, fuel surcharge waiver and many more. For those who pay credit card bills on-time the benefits are further more. But there are individuals who miss paying the credit card bills before the due date. There could be many reasons for this missed payment such as:

  • Paucity of funds: This is the most common reason for credit card late payment. Again this condition can arise due to medical emergency, lay-off and many other reasons.
  • You did the payment on the last date but through cheque/demand draft which took time in processing.
  • You made the payment but due to technical reason the same was not processed. Again this can be a fault at your end or at the bank's.
  • You are travelling at the time of due date and did not have access to make payments.
  • You forgot to make the payment. Check out how to avoid missed payments.

What happens when credit card payment is made late?

Frequently missing your card payment knowingly or unknowingly is an invitation to the lenders to tag you as a defaulter.

Effects of late credit card payment are:

  • Credit score is impacted increasing the chances of loan or credit card application denied. A poor or low CIBIL score is an invitation to future financial trouble. Read tips on getting credit card when you have poor score.
  • Credit limit is slashed
  • Credit card can get cancelled
  • Interest rate will be increased
  • Your card account will be classified as a non-performing asset (also called as delinquent in banking terminology).
  • You will be blacklisted by the banks.
  • Recovery agents (in-house by the banks or third party agencies recruited by the banks) will start harassing you over phone any time during the day. This mostly happens when the overdue payment is very high.

Apart from the above effects, late payment charges are levied by the banks as follows.

CARD ISSUING BANKCREDIT CARD NAMETOTAL AMOUNT DUELATE PAYMENT CHARGES
State Bank of IndiaSignature Card/Platinum Card/Signature Contactless Card/Gold Card/Advantage Gold Card/Advantage Plus Card/SimplySAVE/SimplySAVE Advantage SBI CardRs. 0 to Rs. 200
No Charge
""Between Rs. 200-Rs.500
Rs.100
""Between Rs. 500-Rs.1000
Rs.200
""Between Rs. 1000-Rs.10,000
Rs.500
""Rs. 10000+
Rs.750
Citibank
Rewards Card/Cash Back Card/Rewards Domestic CardUpto Rs. 10,000Rs. 300
""Between Rs. 10,001- Rs. 25,000Rs. 600
""Rs. 25,000+Rs. 700
CitibankPremierMiles/Prestige CardNARs. 100 per month
ICICI Bank
For most of the cards
Less than Rs. 100
No Charge
Between Rs. 100-Rs.500
Rs.100
Between Rs. 500-Rs.10000
Rs.500
Between Rs. 10000-Rs.20,000
Rs.600
Rs. 20000+
Rs.700
Axis BankPrivée Infinite Credit Card/Wealth Signature Credit Card/Signature Credit Card/Platinum Advantage/Platinum/Titanium/Gold/SilverUpto Rs. 2000
Rs.300
""Between Rs. 2001-Rs.5000
Rs.400
""Rs. 5001+
Rs.600
Kotak Mahindra Bank
Royale/Privy League/League/Delight/PVR Platinum/NRI Card/Aqua/PVR Gold/Urbane/Feast/Easyday/Easyday-TitaniumNA
Rs.550
HSBC
Visa Platinum Card/Advance Platinum Credit Card/Platinum50% of the minimum paymentMinimum Rs. 400 to Maximum Rs. 750
per month)
Showing 1 to 19 of 19 entries

As mentioned in the above table, as the due amount increases the late payment charges also increase. the charges also depend on the due amount and type of card you have chosen. Readers are requested to verify the details as card companies often keep on changing their terms and conditions.

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300