Rediff Portfolio tracker - Simple and Effective !

One of my friends suggested the Rediff Portfolio tracker tool.
I find it quite useful and effective. Its much better than the portfolio tool available in ICICIDirect.com (in case you have a icici trading / demat account).

Please visit,
http://www.rediff.com/money/index.html

and look for "My portfolio".

Graphical representation, day-to-day changes and more. I am sure you would love to use it.

ULIP

I heard about ULIP few years back thru my colleagues. One had invested in Aviva and many others in Metlife. And i wasn't so keen in ULIP at that time...

This year April, there was a presentation in our company and the person showed us an excel sheet where in, if we invest 60K per year, after 15 years, the net amount was 20Lakhs. And also this came with an insurance cover of 15lakhs for first 10 years.

It was very interesting and the presentation really made me think that ULIP was a great way of investment. I even regretted that i didn't take one few years back.

But few of my friends mentioned that charges might be quite high in few ULIPs. Hence one need to be wary of the same while investing in one.

So decided to get details of all the ULIP schemes from different companies and compare the same. There was Metlife, Tata AIG, Aviva, ICICI and then SBI Life. In all the brochures and the explanations given by the agents, Charges were mentioned as only 2% or less than 5%.

Even got one excel sheet from Metlife which explained the amount to be invested per year and the returns expected after every year.
Also it seems as per IRDA Rules, any insurance company can show only return of 6% or 10%, nothing greater than this.

Once i got this excel sheet, thought as why don't i backtrack with the return value and identify the charges deducted every year.

Below image is the result of the same. (not sure how to add excel attachment..so took a screenshot of the same and pasted here)

Sheet1 is the one which i got. (0% return is hidden as it doesn't fit in one view)



Sheet 2 is the calculation done by me.



Column C - Total amount invested at the end of the year.
Column D - Amount invested every year.
Column E - Account value as mentioned in the Sheet1 for that year.
Column F - Calculated by me (Column E /1.1)

Column F gives the real amount invested by the company that year after deducting the charges from our payment.

Column G - Charges (Column D - Column F)

As per the calculations, at the end of 10 years, if an amount of 6 lakhs is invested, Charges paid will be slightly higher than 1 lakhs, if the return is around 10%.

So i decided not to go for an ULIP.
Learnt the below 2 Lessons as a result of this activity :)

1. Only when any charge is added up in an excel sheet for over a period, the real impact is seen. In general, 2% charge might sound very simple... but 2% of 60000 over a period of 10 years is almost 12000.

2. It might be a prudent decision to go for a Term insurance which gives a guarantee of money on one's death and invest all the remaining money in Mutual funds, instead of paying too much of money as charges for ULIP.

first post

well, this is my first post in this blog :) and i have pondered over the last 2 weeks on what to write in this first post..

In this blog, I would like to share the information which i read and which i use for my modest investments.
And when it comes to investments(mainly stock market), it would always be good to remember the below 2 points.
1. Always take input from others with a pinch of Salt.
It doesn't mean one should not seek advice from others. It only implies that one should get advice from others and make sure to be the final person who weighs the pros and cons in following that advice.
2. Follow the below Warren Buffett golden rule.
"The first rule is not to lose. The second rule is not to forget the first rule."
Because as per simple math, if an amount decreases by 20%, there needs to be a 25% increase to bring the amount back to its original value. So it's not always one to one, when something goes down and need to come up.

will write about ULIP in my next post.

Welcome Maheswari !

Maheswari has shown interest in joining me as a fellow contributor for this beginner's blog on investments & tax planning..

To give a intro.. Maheswari is my good friend.. we know each other for nearly 10 years, since our college days. She is one among the people who ispired me and helped a lot in starting my investment journey with good pointers. No doubt having her as my fellow contributor gonna add more value to the blog.

Let me extend a warm welcome to Maheswari !!!.

Interest from Savings Bank Account is Taxable !!!

I find that there is a general assumption that Interest accumulated in your Savings bank account i.e the Salary Account is NOT taxable up to the limit of 12K.

AFAIK, as per the revised IT Guidelines, there is no such limit that qualifies for exemption.

Please look for "Common mistakes people make while filing tax returns" HERE

I see that there was a 12,000 limit under a section called 80L.
This is now no longer applicable, so you pay full tax on all interest received.

If you have received interest of more than Rs. 5,000 banks will deduct TDS,
and give you a Form 16A. In that form the "Interest earned" will be mentioned - total up all the interests received if you have more than one source, and put the total in this field.

Refer to this Link

Insurance Coverage - Adequate ?

Term Insurance Plans..

http://www.personalfn.com/insurance/termplan.html
http://www.personalfn.com/insurance/termplan1.html

SBI's Shield - Term Insurance Plans..

http://www.sbilife.co.in/sbilife/application?pageid=Insurance&InsuranceId1=products&InsuranceId2=Shield

ICICI's Iprotect - Online Term Insurance Plans.

Pay taxes online

You can pay your self-assesment tax online..

The procedure for payment of taxes online is simple and the user-friendly instructions make it even more attractive. To start with, you need to log on to NSDL-TIN website (www.tin-nsdl.com) and click on the ‘e-Tax-online payment’ option. You will then be directed to a list of banks that provide the e-tax payment facility. Click on the option for your bank and choose the applicable tax challan.

For more details, have a look at this Article.

Few updates - IT Returns Filing 07/08 !

If you are filing the returns by paper (using paper printouts of ITR1/2 forms),
you need to fill the Acknowledgement forms too.

The Ack form is available
here.

This has added recently in IT Website.

For e-Filing of the returns, the special software for ITR2 has been added recently
to the IT dept site.

Visit the following link..

Happy filing IT returns !!!

e-Filing IT Returns makes life easy !

IT Department has come up with a initiative to make life easy for us. We can file the IT returns electronically i.e Online via IT Dept Website.

Visit the following link.
http://incometaxindiaefiling.gov.in


For the assesment year 2007-08, the IT Department has come up with an option to file the returns online in their website. Click HERE

The steps are very simple and easy to follow.

1) You need to download the applicable ITR1 or ITR2 PDF file - Adobe Reader 8.1 is needed.
2) Fill the downloaded PDF file offline and save it after you enter some data - Based on Form16 issued to you recently.
3) The amount for the lines marked in Blue in the PDF will be calculated automatically. (similar to excel sheet formula).
4) Once you are done, verify with "Check Form" option and press Export to XML button at the bottom of the PDF.
5) Register yourself in IT Website link given above.
6) Press "Submit Return" Button and upload the XML file generated.
7) Up on completion, the ITR V form will be generated.
8) Take a printout of ITR V - 2 copies - Fill them & Sign them as required and submit the forms in Income Tax Office. Retain one copy with IT office seal as a Ack.

Step 7 and 8 are applicable when you do not have a digital signature.

Note : The Return Preparation Software is currently
available only for ITR-1, ITR2 . For other forms, the respective software is yet to be released.

The following link lists the different forms and whom each of them is applicable for.
http://incometaxindiaefiling.gov.in/portal/html/individual_huf.htm

Filing IT Returns - New forms this year !!!

Finally the month of July has come.. Its time to file our IT returns.. And we have some news for you.. yes.. From Assessment Year 2007-08, tax filing for year 2006-07, We will have to use new IT return forms.

Visit the following link for all the details.. There is step-by-step guideline on filling out the new IT Retunrs form..


http://blog.investraction.com/2007/06/filling-out-it-return-forms.html

The following adds more clarity on the AIR - Annual Info Report.

http://rasoni.blogspot.com/2007/06/basic-guidelines-for-filing-new-income.html

Special thanks to Deepak & Rajesh for all the time and efforts in compiling the articles !!!

Before you start Investing..

Just came across this good collection of articles written for those who had just begun INVESTING..


http://journeytowealth.blogspot.com/search/label/Beginning%20Investing

Thanks to Amit for all his efforts !!!

Equities/Shares Trading & Mutual Fund Accounts

With some basic understanding & familiarity with share trading & Mutual funds, we can start the "Action"...

Interested in Share Trading ??

Well... You need to apply for a DEMAT Account from ICICIDirect.Com.

Go to,
http://icicidirect.com
and

https://secure.icicidirect.com/customer/customer_open_acct.asp?from_site=2

Register yourself. Agents would contact you and provide further guidance. If you have a Salary Account in ICICI Bank, things would become very simple. All you need to do is to sign in a each page of 20+ pages Document. Thats all. Your account details would be sent to you thru Post.


If you want to invest in Mutual Funds,

Get to know the different types of funds and their ratings at,


http://www.valueresearchonline.com/funds/default.asp

If you want to invest in ELSS Funds (Equity Linked Savings Scheme - with 3 years lock in period) - to claim tax exemption up to 1 lac under sec 80 C, some of recommended funds are,

Fidelity ELSS, HDFC Tax Saver, HDFC Long Term Advantage.
Can consider SBI Magnum Tax Gain too but it is more agressive.

While making a choice, please don't just go by the returns given by the funds in recent months / years. Do some evaluation yourself looking at the performance of the fund over long term and during volatile times of stock market.

For all types of investments in Mutual Funds ( including general - Non Tax saving ones), you can get in touch with consultants from

http://personalfn.com/

They don't charge you anything. If you choose to invest in MF thru these agents they will get some % commission from the fund house. (Very similar to LIC Insurance agents).

These agents would provide more clarity and attempt to provide a complete financial planning solution for you.. Better give a try.. after all you are not going to loose anything except for few minutes of your time. Its worth the time listening to them - you will learn a lot.

All the best folks !!!

Know the Basics !!!

Understanding the Investment Terms is a major challenge. We can make ourselves familiar with the terms & their meanings only with a disciplined & dedicated reading.

ICICIDIRECT.COM's Online Courses link,

http://content.icicidirect.com/learning/university.htm

is a good place to start with. This provides an Overview on Indian Stock Market - NSE and BSE, Stock Exchanges, different investing options & more.

Few other useful material on Investing could be found at,
http://investopedia.com/university

This site has very good tutorials on Investing Basics, Mutual Funds and few Advanced Topics.

For PersonalFn's Money Simplified Archives.. Click Here.