Saturday, 28 August 2010

Proposal For Increase Income Tax Exemption limit from 1.6 lakh to Rs 2 lakh

The Union Cabinet on Thursday approved a new set of direct tax rules that proposes to raise income tax exemption limit from 1.6 lakh to 2 lakh, leaving more money in the hands of individuals, and a lower tax rate for companies.

The much-awaited Direct Taxes Code, or DTC, Bill, which seeks to replace the nearly 50-year-old income tax law, is likely to be introduced in Parliament on Monday and may then be referred to a select committee of members of both houses of Parliament.

The basic exemption limit is proposed to be raised to 2 lakh from the current 1.6 lakh and corporate tax rate for both domestic and foreign companies proposed is at 30%, finance minister Pranab Mukherjee said after the meeting of the Union Cabinet.

Senior citizens and women will enjoy a higher exemption of up to 2.5 lakh. There will be no surcharge or cess on companies, thereby bringing the corporate tax rate to 30% from present 34%.

The new code proposes three income tax slabs—income of up to 2-5 lakh will face 10%, 5-10 lakh will attract 20% and income over 10 lakh will face tax at the rate of 30%. The housing loan exemption of 1.5 lakh would also be available to individual taxpayers on the interest component.

“The whole objective is that a plethora of exemptions will be limited. Income tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be changed every year,” Mr Mukherjee said.

“Once the tax rates are part of the code itself, it would provide guidance and stability as to short to mid-term tax rates vis-a-vis current situation wherein tax rates could undergo a change on a year-on-year basis,” said Vikas Vasal, executive director, KPMG.

The new changes in the tax rates, expected to come into effect from April 1, 2011, could lead to some loss in revenue and raise the government’s deficit.

However, the government proposes to raise the minimum alternate tax (MAT) on book profits to 20% from current 18%. The move will be a big blow for Reliance and a host of IT and infrastructure companies that pay MAT.

Ficci general secretary Amit Mitra welcomed the proposal. “We are assuming that this rate of tax is a proposed cap and corporate tax would not exceed 30%. Any cess or surcharge should be subsumed within this 30%,” he said. He further added that at this rate, the Indian corporate tax is moving closer to the rate prevailing in Asean countries, which is again a positive direction for direct taxes.

However, some industry honchos were not happy as they expected much lower rates if exemptions are being withdrawn. Jindal Stainless vice-chairman & MD Ratan Jindal said the proposed rate of 30% is good, but the industry was looking for lower rates of around 25%.

“Hopefully the government will consider bringing down corporate tax at about 20-25 % in the coming years. If more money is put in the hands of the industry, it can be ploughed back for further investment and expansion purposes.”

Source : Economic Times

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Monday, 23 August 2010

Matters to be considered, when purchase property for renting out

Real estate investment is a good option of investment and there are two types of main investment opportunities in real estate investment. One is purchasing real estate for giving it as rent and the another one is for resale the real estate after modification or not and get a profit out of it. I wish to share some important points to be considered while you purchase real estate for giving it for rent and get a good rental income. Following are the points.

Property near good transportation system can get good rent and there will not be difficult to get tenants.

There should be local shops and server at the walking distance.

Church or place of worship should be easily reachable from the property.

You should be aware of the amount chargeable for services such as porter, elevator, concierge, leisure room and gardener etc. even though these facilities will increase the demand of the property.

Ensure the capability of your local real estate agency to get the proper and profitable real estate. If you will not get a good rental income the investment will not be worthwhile.

Find a good property dealer or real estate agency who can deal all related works such as finding a property, checking the reliability of property and title, finding tenants avoiding vacant periods and do all documentations related with purchase, mortgage and renting.

When you give it as rent, find out the where about of your tenant and also do not forget to make an agreement of rent with the tenant which describes all aspects such as amount of rent, service charges to various agencies, repair and maintenance of the property, notice period to vacate etc.,

Consider all the above points and apply when you go for a property to rent out, you can avail a good deal at the time of purchase and afterwards.

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Sunday, 22 August 2010

Himachal Pradesh Government Employees Gets 8% Additional D.A

Himachal Pradesh Government employees gets additional 8% D.A. The present D.A is 27% and it will be enhanced to 35% with effect from 01st January, 2010. The announcement made by the Chief Minister on Independence Day function in his speech at Karsog in Mandi district.

This Additional Dearness Allowance of eight percent shall be paid in with the salary of August, 2010 and the arrears will be credited to GPF account of employees.

This order is applicable for H.P. Civil Services (Revised Pay) Rules, 2009 and work charged employees working in Government departments. All India Services Officers, HP Judicial Services Officers and State Government employees covered by UGC Pay Scales.

Retired government employees or the employees who have closed their GPF accounts and governed under Contribution Pension Scheme, the arrears on account of release of additional instalment of DA w.e.f. 1st January, 2010 would be paid in cash.

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Saturday, 21 August 2010

Methods of Getting Federal Tax Refund.

Getting tax refund is a good thing and joyful. We are getting money which we paid earlier and expected that an expense now recovered. It is not an income and the amount we got as refund is not taxable. So most people considered that it is the reimbursement of a loan we have given to government.  A federal income tax refund occurs when the tax you owe is less than the sum of the total amount of refundable tax credits claimed and the total amount of withholding paid.  For many individual taxpayers those federal tax refunds can be obtained through Earned Income credit, a real refund of overpayment of tax, or through an overpayment from previous years. But it is better to get back money from government than owe money to government.

If you have to get a tax refund you can choose from a lot of options to get back the money. Some of them are Standard paper filing, electronic filing with direct deposit, rapid refunds, and refund anticipation loans and most of the refunds expecting persons choose the rapid refund or the refund anticipation loan.

In this advanced internet world the Internal Revenue Service (IRS) is easy and convenient and quick action through electronic filing. Income tax returns and refunds are very fast. In this scenario we can have a look about the different IRS refund options especially for individual tax payers.

The standard paper filing
The most popular and many people use the method of standard paper filing, but a slow process. No doubt this system will vanish soon because of the tedious paper filing which we adopted earlier and will be replaced by electronic tax filing. The tax refund through paper filing may take around 6 weeks, but now people are not ready to wait for six weeks to get a tax refund which seems a long time in this internet world.

Electronic tax filing
Electronic tax filing is soon and rapidly replacing the standard paper filing method and enables you to get a refund within 10 -14 days. No doubt the delay in getting the refund itself will replace the old system with a most modern electronic filing and can be submitted without any additional fee and these returns can be filed for free through many local, public access facilities.

The refund application loan

The refund application loan is different that the above two options and it should be administered by professional through an established alliance with a financial lending institution. It is really a loan taken on the security of an expecting tax refund. So the financial institution should confirm that the refund is not only anticipation and it is a real one. You will get excellent professional support to file your tax return and there are a variety of choices are also there in such a return and loan. There will be a loan fee and also there is a small interest for the loan amount till the financial institution get back the refund and close the loan account. There are several restrictions placed on receiving a refund anticipation loan, and some of the restrictions may affect many people.  For example, if you owe back taxes, back child support, or liens and judgments, you can’t qualify for the refund. Most of the times the individuals who applied for refund application loan have thousands of dollars to be refunded. This refund application loan can be processed in three hours and the loan money will get to the applicant at the afternoon itself. The professionals’ charge a high fee and also the banks and financial institutions charge a high interest for this loan. But most of these applicants do not bother about these charges and they need to get refund soon and should avoid the time delay of processing and getting back federal tax refund.

My advice is those submits your tax returns electronically and wait for the short delay of 2 weeks to get the refund to avoid expenses such as professional fee and interest.

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Friday, 20 August 2010

Gratuity Calculation and Tax Implication

The Payment of Gratuity Act, 1972, applies to factories and other establishments which are employing 10 or more persons. On completion of five years service, employees entitled to get the gratuity at the rate of 15-days' wages for every completed year of service or part of it in excess of six months subject to a maximum of Rs 3.5 lakh. However, gratuity is an income and the employee who receives it is liable to pay tax on it, but, gratuity up to Rs. 3.5 lakh is exempt from income tax under the provisions of Section 10(10) of the Income Tax Act, 1961. As per Sixth pay commission the maximum limit of Rs. 3.5 lakh increased to Rs. 10 lakh for both government employees and private sector employees. Normally gratuity is a lumpsum amount receivable by an employee at the time of his/her retirement or resignation or by the legal hires of an employee at the time of his/her death.

Calculation of gratuity is Basic Salary + D.A x Number of Years completed x 15 divided by 26

Basic Salary and D.A are the Last drawn basic and D.A. For Gratuity purpose one month is considered as 26 days. Six months or more is considered as a full completed year. For example, if an employee continued his service in an institution for 10 years and 7 months, the service period for gratuity is considered as 11 years. If it is only 10 years and 5 months 20 days, the number of years will be considered as 10 years only.

Tax implication of gratuity

Any death cum retirement gratuity received by a government employee or a Local Authority employee is exempted from income tax, but for any other employees, least of the following is exempted.

(1) 15 days' salary, based on the last drawn salary, for each completed year of service.
(2) Rs. 10,00,000 (Rs. 3,50,000 before May 24, 2010).
(3) The gratuity actually received.

Gratuity is a benefit to all employees who have worked in an institution for a long time. It is receivable at the time of retirement. The gratuity amount can use for purchasing annuities or can invest the amount in a monthly income scheme to get a regular income after retirement.

Gratuity Calculation and Tax Implication

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Income Tax Refund fortnight from August 16 to 31

TheIncome Tax Department will observe the second fortnight of August, 2010 as IT Refund period to solve the pending complaints of salaried tax payers up to the Assessment year 2008 – 2009. This IT Refund Fortnight will be observed all over Tamil Nadu from 16th August, 2010 to 31st August, 2010.

IT officers will sit with the complainants and solve the problem. There are about 2200 complaints are pending with IT department related with the refund of excess tax they paid or deducted from their income.

The salaried employees those refunds are pending should bring the original TDS certificate, Form 16, PAN card, TAN number, bank account details and current postal address etc., with them. You can view your status by log in to
Source : The Hindu

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Income Tax Exemption for leave encashment
Different Investment methods in real estate
How to invest money and where to invest?

Thursday, 19 August 2010

Income Tax Exemption for leave encashment

The amount paid for leave or leave salary is known as leave encashment. All leave encashment including encashment of sick leave to an employee is taxable, if he/she is in service.

But leave encashment is received at the time of retirement is fully exempted, if the person received the leave encashment is a government employee. If the person received the leave encashment is not a government employee, the least of the following is exempted from income for the financial year.

Rs. 3,00,000/- or

Last Ten months' average salary before the retirement, or

Cash equivalent of the leave due at the time of retirement, or

Leave encashment actually received at the time of retirement

The least of the abovementioned items are exempted from salary income for non government employees.

Tuesday, 17 August 2010

Different Investment methods in real estate

Investing in real estate is one of the most traditional forms of investment. Real estate investment is a good option of investment because the value of real estate going upwards only and never come back and also the cost increases every moment. One of the main reasons is that the demand of real estate increasing day by day and has no enough supply to meet the increasing demand. So the investment in real estate also becomes popular day by day. Investing in real estate is not so easy and the money we should invest in is more than that of stock or other investments. So one should be more careful when invest in real estates. In this situation let us see some important methods of investing in real estate.

Investment in property for renting it out. This is one of the traditional methods of investing in real estate. Buy a property and renting out it and make profit out of rent we could collect from the tenant. This may be residential property or commercials property. The land Lord can earn money for the repayment of loan taken for the property and to pay maintenance charges such as repair, taxes and other charges and the balance amount can consider as profit. The value of property always increasing and he will get an appreciated value when he wishes to sell it off. After paying off the mortgage he can harvest more profit because he should not pay the mortgage installments. But he has to take care of the maintenance and sometimes the tenants may be bad tenants and may damage the property etc. In such cases it will be a disturbance for the landlord and he has to suffer these problems. He has to be vigilant to purchase property in high demand area, unless he may face problem to get tenants. Even if there are problems this method of investment is a good option so that the owner can earn rent and also the appreciation of his capital invested in.

Real estate investment group. This is the another form of investment in real estate that if you do not wish to bear all problems of a land lord you can join with this group and they will take care of all these matters collectively and you can take rest and can accept rent as an income. This may be a company or such group those who buy or construct a block of apartments of building and resale it to the investors and they will continue to take care of all repair, maintenance and letting out the property. The owner should not bear any such problem and they will advertise when the building is empty and all. But they would charge a percentage of rent every month. Even though it is a better option for the property owner, before joining such group check all operation and charges of the group in detail. Some of them may charge a high amount and may create any problems etc.

Trading with real estate. This type of investment is just buying the real estate, hold it for a short period and sell it off with a high price. This is like stock trading, making profit from buying and selling of real estate. This type of investors does not spend for maintaining the real estate. There motive is to make maximum profit out of the resale. But some of them renovate the property and sell it with a high value. Some big investors reconstruct the property with many floors and sell all the floors and make a huge profit. Only thing is that you should choose a property which can fetch high value when it is sold.

Real Estate Investment Trust (REIT). Wall Street turns real estate into a publicly traded instrument. This trust uses investors’ money to purchase and operate income properties. They buy and sell major exchanges like stock and they must pay out 90% of their profit as dividend and it is helpful to reduce their tax liability also. They handle non residential properties like malls and office buildings and the investor can invest in such highly liquid investment.

According to your tastes and preference you can invest in real-estate in any of the above methods, but learn thoroughly about the particular type of investment you wish to invest.

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Monday, 16 August 2010

How to invest money and where to invest?

When you spend money to acquire an asset with an idea to make profit in future, it is called investment. These assets may be movable, immovable or other financial instruments. If your intention is making profit from the asset, it is investment. This profit may be the profit when realize the asset or rent by letting out the asset or any appreciation of the asset or interest from such assets. Investment plays an important role in financial planning. Many reasons it is important for every human beings. Most investments give out big revenue than a mere saving. But if you do not act wisely you won’t get any return from investments, rather you vanish your hard earned money.

First of all you must be aware that how to invest money and for what purpose you are investing money. There may be a future plan for you to invest money. It may be the higher studies of yourself or your children, marriage of yourself or your children, buying a house for you, for the retirement of you and your spouse, or transfer the money to your kids or spouse after your death etc. etc. Let us learn some important points before go for an investment.

Time factor of Investment

According to the duration of money held up in investments we can classify the investments in long term and short term investments. In long term investments money will be held up for a long time and you may get a regular income such as rent, interest or dividend and for short term investments the money will be held up only for a short time from a few hours, days, weeks or months and can get profit in the

form of short term capital gain or interest. The investor should decide that the time lag of money in each investment according to the requirement of the investor. If your requirement is for a recent time you should go for a short term investment. If you want the money only after a long while you may opt the long term investments. Some investments itself can treat as short term and long term. I mean whenever you require you can dispose or redeem it and can convert it to liquid money.

Risk Factor of Investment

This also a considerable fact that how much risks an investor can take for his investment. Some investment has high risk and it is not sure that the investor may get back the whole or part of the amount invested in. The profit also has the same nature of uncertainty. Shares of companies and some perishable commodities also can be included in this category. Some investments have only very low risk and some have no such risk. Mutual funds and preferential shares can be included in low risk categories. Government securities and fixed deposits in recognized banks can be included in no risk categories.

Where to invest?
AT present you can see so many options to invest and most of them are decorated with an attracted terms and outcomes. But when you invest choose investment plans wisely. Remember that past performance may not be repeated in future especially for shares, mutual funds and unit linked insurance plans. Learn everything with an analytics view from different angles. You can ask guidance from experts or friends and take a final decision yourself.

Real estate - When you invest in real estate you can get the appreciated value at the time of resale and you can collect rent if you’re letting it out. For buying real estate also you should study all aspects and mainly the reliability of the title. In my view point when you purchase real estate do not give all money out of your pocket, besides get a loan from any recognized finance institution for at least a portion of the cost price. They will check the title of the property and only if the tile is clear they will sanction you the loan. In some places it is not easy to know the accuracy of the title. Consider all other factors also.

Gold and other precious metals, Mutual funds, Stocks and shares, preference shares, debentures, fixed deposits, government securities etc. etc. are various other options. Retirement plans also good option for investment.

You invest anywhere else, but keep in mind that you do not deposit all your money in one investment plan, even if it is a secure investment plan or not. All your efforts will be vanished if the plan fails. So invest wisely and wish you a profitable investment life.

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Sunday, 15 August 2010

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Saturday, 14 August 2010

The biggest intraday drop in the history of the New York Stock Exchange

On 6th May, 2010 New York Stock Exchange dipped more than 9%. The Market crossed under 9,900 points. It was the biggest intraday drop in the history of New York Stock Exchange. Really it was a great time to buy whatever you want to buy. Even if the drop lasted only seven minutes, it was a great chance.

You may wonder why I posted this news piece now. It is just for showing you that if you watch out the market you can understand the drip in time and can harvest a wonderful profit out of them. So be watchful and make money from the stock market.

Learn all aspects of stock market trading with Investing 101 e-course

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Friday, 13 August 2010

Stcok Trading Tips For Beginners.

Stock trading is a very good investment option and can make a lot of money by buying and selling stock.  It is just like trading any other items like buying when the price is low and sell when the price is high and make a profit out of it. But stock trading is not that much easy because it is affected with so many circumstances which may get a heavy loss. There are lot of things you should keep in mind when you try to invest in stock market. Let us check some of the.

Study the Market Well. This is the most important thing you must keep in mind that do not make big purchases without doing enough research and analysis. Discuss with experts and get help from all reliable sources. Stock market is a wide horizon with a plenty of information. Read many books, articles and news and collect enough details from all available sources. Try to Sign up for any expert e-course which teaches you all aspect of stock trading.

Get Experienced in Stock trading. Experience is the best teacher. It is correct in stock trading also. An experienced stock trader can foresee all ups and downs of stock market and also the trend of a particular stock. Try any stock trading demo account. Wall Street survivor does such demo account with virtual money which helps you to learn all aspect of stock trading. Their fantasy stock market is simply the best paper trading platform available. They help you learn about online trading stocks in an absolutely free stock market game. If you want to learn how to trade or practice your trading, Wall Street Survivor is the site for you. Try this game which is very much helpful or any other such demo account and learn and experience without spending any money.

Diversify your investment. In investment you must have heard that do not put your entire in one nest.  In a time of miss happenings all your efforts will be lost. So try to diversify your investments in stock market, Forex, Mutual funds or any other form of investment. Even in stock try to buy stocks from different sectors like banking, real estate, infrastructure etc. etc. and if you wish to purchase shares of one company buy half or it now and buy the other half after a few weeks. Suppose you wish to buy the shares of ABC for $ 25000. Buy for $ 12500 at present and other $ 12500 after a few weeks. We don’t know what would be price after a few weeks and if you purchase so the average cost will be less and the chances of getting profit is more or chances of loss is less.

Buy shares of strong companies. It is advisable that an average 80% of your stock portfolio must be with the shares of strong companies which lead with strong management and strong business dealings. Try some ratings like Motley Fool’s CAPS ratings to know the ideas about a company through the view point of investors

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Thursday, 12 August 2010

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Wednesday, 11 August 2010

Earnings Per Share (E.P.S) To Determine The Profitability Of A Share

E.P.S or Earnings Per Share is an important term in Stock Trading. When we analyze the value and profitability of a stock E.P.S is one of the most important factors which may influence our decision. It is the fraction of profit of one unit of share. In United States, The Financial Accounting Standards Board (FASB) instructed that the EPS of each of the major categories to be reported with the income statement. So EPS is an important factor to determine the profitability of a company.

Let us see how can be calculate the EPS of a Company. Simply we can say that it is the Net profit of the company divided by the number of shares. But the net profit in the income and expenditure account should be reduced by the amount of dividend allocated to Preference shares. So we can say

E.P.S = (Net Profit – Dividend to Preference shares) divided by No of equity shares

The No of equity shares are also may vary in time to time. For example the equity shares may 100000 at the beginning of the financial year and it is increased by another 50000 after six months. So we have to consider the weighted average of the equity shares.

100000 x 12 + 50000 x 6

That is 125000

If the Net profit of the company for the financial year is $ 1200000 and the dividend for preference share is $ 200000


(12,00000 – 200000)

= $ 8

The market value of shares also influenced by EPS of shares, but the EPS itself is not a reliable factor to determine the profitability of shares. Intrinsic value and so many other factors also connected with it. If the Share capital of two companies are $ 100000 and $ 1000000 and the number of shares are 10000. The EPS under this calculation may be same for a given net profit. But the first company is more capable than the second one even if the EPS is same. So I strongly recommend that consider all other factors also when you analyze the profitability of a share.

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Tuesday, 10 August 2010

National Saving Certificate (N.S.C)- A Secure Investment Option

National Saving Certificate is an instrument of saving issued by the central government. Any resident Indian citizen can invest in N.S.C. A non-resident Indian or an H.U.F cannot purchase N.S.C. It is a tax saving instrument and the amount invested in NSC can be deducted from the income of the particular year as per section 80C of Income Tax Act., which allows a maximum of Rs.100000/- in all tax saving schemes under Sec 80C of Income Tax Act. The interest accrued every year is deemed as a re investment and can claim exemption under Sec 80C of Income tax act for the first five years of investment. NSC is available from any post office in India and also can be transferred to any post office in India.

The minimum investment in National Saving Certificate is Rs.100/ and No maximum limit and the NSC is available in denominations of Rs.100/-, 500/-, 1000/-, 5000/- & INR. 10,000. If an investor wishes to Deposit Rs.50000/- in NSC, he can take 5 NSCs of Rs.10000/- each. The investor get a compound interest of 8% (at present) compounded six monthly but payable at maturity. An NSC of Rs.100/- grows to Rs.160.10 after 6 years.

The Lock in Period of NSC is Six years and premature withdrawal is not allowed except the death of the investor or holder. NSC can be pledged in a bank for taking loan or can give as a collateral security for loan. NSC can also be transferred to any resident Indian citizen through proper format. Nomination facility is also available for NSC. When it is transferred, the earlier nomination will be cancelled. The holders can encash the maturity value of NSC directly from the post office or through a bank on maturity. Duplicate certificate can be issued for lost, stolen, destroyed, mutilated or defaced certificate. Interest is taxable under Income Tax Law but no TDS will be deducted form the interest and the deposits in NSC is exempt from wealth Tax. It is a secure investment option.

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Monday, 9 August 2010

Investment Options In Gold.

Gold is a precious metal which is brighter than its color. The demand of gold never satisfies by its supply. So the price of gold go upwards day after day. Most religions and races value its preciousness and some particular season the demand of gold become high and there is a steep hike in the price. Besides this situation we can see a steady increase in the price of gold. So it is a good investment option which has not much risk when compared to stocks and mutual funds. Investors consider gold is a better investment option than that of a metal which increases the beauty of the person it wears. Let us see the alternatives in god as an investment.

Gold Ornaments. Gold ornaments also can be considered as an investment. But for mere investment purpose it is not good. It is suitable for wearing as an ornament. For investment purpose gold ornaments may be devalued by its make and also by the purity. For making ornaments gold will be mixed with some other metals such as copper and silver. This will reduce the original value of gold and different traders value it in different ways. So it is not advisable to keep gold ornaments as investment.

Gold coins. Gold coins are used as legal tender money in some places and it has its own value other than its gold content. But for investment purpose also gold can keep as coins with various weights. It is convenient to keep gold as coins and easy to sell it off when necessary. The value of this gold may not be much lesser when it is sold. This is one of the acceptable methods of investing in gold. Some countries do not charge Value Added Tax for gold when it is traded for investment purposes.

Gold Bars. When you wish to invest comparatively large amount in gold you can invest in gold bars. Gold bars are in variety of weight and can handle easily for investment purpose. An investor can avail gold bars from the market and can keep it in safe custody or bank lockers till he wish to sell it off.

Gold Exchange Traded Fund. This is an acceptable method of investing in gold. This is just like mutual funds and has the same value as gold and made in small units. It is backed with original gold and the value is fluctuating according to the market value of gold. The net asset value (NAV) of such fund is also according to the market value of gold and can redeem it in the same price of gold. The important point is that one can demat (dematerialize) this fund and the main advantage is that you should not take the risk of storing real gold and at the same time you can get all benefit of investing in real gold and more liquid than real gold.

Gold Futures. This is a contract that in a future date that agreed quantity of gold in agreed price and agreed purity can be deliver at an agreed time. The customer should pay only a fraction of the cost at the time of the contract and the rest of the payment at the agreed time. But the agreed price includes the storage and other related expenses. The price may be more than the spot price. This is in anticipation the market price may be high at the time of delivery and the person can make a profit and the cash flow is very less at the time of contract. The market price may be adversely affected and the investor may be in loss also.

Gold Accounts. Gold accounts are operated by gold bullion bank or gold depository service. One can invest in gold accounts and the specified weight of hallmarked pure gold can be kept in this account. The bank or depository keeps the gold according to the instructions of the holder and the terms and conditions of the account. This account can be two types. One is allocated accounts and the other is unallocated accounts. In allocated accounts the banker or the depository keep particular pure gold in a safe deposit box and can be kept there according to the order of the depositor. The account holder should give the price for storage and insurance. In unallocated accounts there is not separate box for each account holder. The Bank itself keeps the gold as a whole till the holder asks for a physical delivery. The account holder should not pay for storage and insurance. Only through the specific instructions of the account holder the banks or depository will trade or exchange the gold. But these accounts handle only a specified weight of gold or more than that.

Small investors can go for Gold accounts pool of gold - you can invest as little as one ounce "or" Electronic currencies linked to gold bullion in allocated storage - which offers a simple and cost-effective way of buying and selling gold, and using it as money. Any amount of gold can be purchased, and these currencies allow gold to be used to send online payments worldwide. Or Gold Pool Account where an investor can deposit a fixed amount per month for a fixed term and the bank will purchase and store gold with that time and at the end of the term, say one or two years the investor can get the gold in desired form or if he wish to sell he would get cash. This is just like SIP (Systematic Investment Plan) in mutual funds. This can reduce the risk of investing a whole lot at one time and the price may be varied and it will not affect the price rise in a specific season.

Gold Certificates. In this case the bank keeps the physical gold and they issue a certificate to the depositor. The depositor can avoid the risk of storing real gold and can sell a part or as a whole whenever he wishes to do so.

Gold orientated funds. It includes shares of gold mining companies, mutual funds and other instruments etc. You can invest in such funds and can make profit from the gold and goldmines.

The above mentioned methods can use to invest in gold. But most of the cases you should get help from a broker just like stocks and mutual funds. You should not give much attention as shares and mutual funds to invest in gold. So get profit from this precious yellow metal.

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Sunday, 8 August 2010

Buy shares when the intrinsic value is more than the market price.

It is important to know the intrinsic value of stock, if you wish to make a good catch from the stock market. Intrinsic value is the actual value of stock. Only through research study of a particular stock on the basis of Earning per share and some other related factors reveals the intrinsic value of a share. Investors and stock market gurus develop their own method to calculate the intrinsic value of a share. Watch out the market when the shares are sold on discounted price. When the market value of shares less than the intrinsic value of shares it is the better time to buy the share and you can harvest profit out of the trade.

Just for an example see the formula for calculating Intrinsic value in Warren Buffet ( a famous investment guru) Way

Intrinsic Value = Net present value = Future value divided by the Expected Return on Investment (In No. of years)
So learn and develop a method of finding intrinsic value of shares and make profit from share market.

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Saturday, 7 August 2010

Plan Your Finance In The Right Time

What is Financial Planning? Time and Tide will not wait for anybody else. Financial Planning is the process of meeting your expenditures including long term and short term with your limited resources. Yes limited, because human needs are unlimited, but resources (income) are limited. We have to meet our unlimited needs with our limited resources. So we should plan our finance and financial goals. Financial goals such as buying a house, higher education of our children, own a car, meeting day to day expenses, retirement plan etc., These goals can be classified as long term and short term needs and we can choose according to the preference of such needs. Some of them are unavoidable and some can postponed to another time.

Steps of Financial Planning. First you should know where you are. What is your current financial position? Analyze your earnings and expenses. Find how much you can save for future.
This may be your monthly income minus monthly expenditures. What are your present Assets including investments and properties. Financial planning includes all above and some thing more. Let us see the steps for financial planning.

1. Identify your goals.

This is what I have stated at the beginning of the post. You have to identify what goals you have to reach in the near future and in your whole life. It may be acquiring an asset such as house or estate, higher education of your children, Marriage of self and children etc. What ever may be the goals, determine it exactly and find out the financial implications of such needs.

2. Understand your current situation.

After identifying your needs or when you identify the needs you have to know where you are. You must be aware of your limitations and also know that what you have. Your income sources and the amount of money you can accumulate etc. If you are working you must take in to consideration of your stability of work, promotion possibilities and your retirement etc. Consider other extra income you can earn such as income from house property or income from agricultural products etc. If your spouse is working, take consideration of it also. Totally find out all your sources of income and immediate needs such as for food, clothing, medical etc.

3. Develop a plan as per your goals and risk bearing capacity.

This is the next step. You have to find out how you can reach these goals. What type of investments you have to do for satisfying your needs? This may be with high risk investments or low risk investments. High risk investments are investments in stocks, unit linked insurance plans etc., and low risk investments are investments in Bank deposits and government securities. You should choose your investment plans according to the risk bearing capacity and according to your needs. If you are not able to find such schemes get advice from some professionals. When you consider an investment plan consider your age and time or retirement etc. Keep in mind that never put all your eggs in one nest. Diversify the investment instruments. If one fails the other will win.

Implement and monitor your financial plan time to time

This is one of the important steps in financial planning. Never leave your investments unattended. You should check it regularly and analyze all your investments time to time. You must know which one is beneficial and which one is failure. Stop the failure ones and do wisely. If you go systematically you can attain all you financial goals with your income.

I have just given out some guidelines and the situations are varying person to person and time to time. Act wisely for a beautiful financial future.

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Friday, 6 August 2010

All about Public Provident Fund (P.P.F) Scheme

Public Provident Fund Scheme is a statutory Scheme of the Central Government of India established in the year of 1968 and so the scheme is called Public Provident Fund Scheme, 1968.

Where to operate P.P.F Account? It can be opened and operated in any post office in India or in any nationalized bank in India and also can be transferred form any post office in India to any other post offices in India or to any nationalized bank and branches there of in India and vice versa.

Maximum and Minimum Deposit. You can deposit a minimum amount of Rs. 500/- and the multiples of Rs. 5 up to a maximum of Rs. 70000/- in a financial year. If you could not deposit the minimum amount in a financial year your P.P.F account will be treated as discontinued and the money can withdraw only after the maturity of 15 years. The discontinued account can be reopened by depositing the minimum amount of Rs. 500/- and a fine of Rs. 50/- for every defaulted years. You can deposit a total of 12 numbers of deposits in a financial year subjected to maximum two deposits in a calendar month.

Who can open a P.P.F Account? A resident Indian citizen in any age can open a P.P.F account. A Non resident Indian Citizen cannot open a P.P.F account. IF the person who opened a P.P.F account changed his residential status before the maturity of the account, he can continue the account till the maturity on a Non Repatriation Basis. A minor can operate a P.P.F account only through his/her guardian and the combined deposit of the minor and guardian should not be more than the maximum limit of Rs. 70000/- (Guardian means Father or Mother or in the absence of them or if the only living parent is incapable of acting, a person entitled under the law can operate the P.P.F account of a minor)

Benefit of P.P.F Account. The amount deposited in P.P.F account in a year can be consider as a Tax Saving Investment and the amount (maximum up to Rs.70000/-) can be deducted from your income under section 80 C of Income Tax Act, which is allowed to get a deduction of Rs. 100000/-

Interest on P.P.F is credited every year (at present 8%) is also consider as a non taxable income (Interest is calculated for the lowest amount between 01st and 5th of every month)

The Deposit in P.P.F is exempt from Wealth Tax

The Balance amount in P.P.F account is not subject to the attachment under any order in respect of any debt or liability.

The depositor can nominate anybody to get the Balance in P.P.F after the death of the depositor.

You may retain the money in the P.P.F account itself even after the maturity and can earn the same rate of interest admissible for PPF every year and can close it any time you wish to do so.

The account holder can opt to extend the P.P.F account for a block year of 5 years without making any further deposits.


The amount deposited in P.P.F has a lock in Period of 15 years, But you can withdraw 50% of the available balance proceeding 3 years from the 7th year onwards. But only one withdrawal is allowed in a financial year.

In the event of death of the depositor, the legal hires cannot continue the account. It should be closed and the premature closing of P.P.F is allowed only in the event of the death of the depositor.

A P.P.F account cannot be opened by Grand Parents for their Grand children.

Even if there are a few disadvantages in P.P.F the advantages are more than that of disadvantages and it is the best investment for long term and a complete risk free investment.

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Thursday, 5 August 2010

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Wednesday, 4 August 2010

Guide lines for a loan application

When you apply for a loan you have to keep in mind some important points. Normally you apply for a loan only when you wish to purchase any new asset or to meet any urgent expenditure and you have not enough money in hand to meet the requirement. But some reason your loan application may be rejected. Normally when you get rejected a loan or any default in payment of loan your name will be recorded in some Credit Information Agencies and an institution which provides loan can easily verify the details from such agencies.

Insufficient Income to meet the repayment: The first and foremost thing a loan provides checks that whether the person who applied for loan have the ability to repay the money according to the terms of loan agreement. If they are not convinced that you could repay the money without much difficulty they won’t allow loan for you.
Your credit history:  If you have a bad credit history such as not paying E.M.Is or late payment of loan etc. the chances of rejecting your application is very high. So clear all dues and even close all possible loans to get approved your loan.

Apply for high amount of loan. The loan provides evaluates you for your repayment capacity. IF you ask for a high amount of loan which you cannot repay may be rejected without further thought.

Your residential address: Sometimes your residential address also may create problem for the approval of your loan. If any loan default is recorded in your address, I mean anybody lived in your address may have taken loan and may be a defaulter and your address may be blacklisted in the credit information records.

Default in payment of loan payments of credit card payments. If you have a large amount is pending due in your credit card account or if any repayment dues are there in any loan account, your application will be rejected.

Number of existing loans and low income. This is another reason to reject your new loan application.

Bad credit of your guarantor. If your guarantor is a defaulter of any loan payment, the chances of approving your loan is very low. And also if your co-applicant has a poor track record in credit information bureau your loan may be rejected.

If you choose the co-applicant is your siblings or you do not have a job with permanent nature you loan may be rejected.

If your any loan application has been rejected in any previous time the chances of rejecting your loan is high.

So apply for a loan only after thinking twice and only if you are in necessary condition to take a loan. Because all the above reasons and may be your plentiful loan also attracted rejection.

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Tuesday, 3 August 2010

Riders of auto insurance to get full compensation

Insurance is an agreement between the insurance provider and the customer for compensating a loss or damage which may occur in future by any reason. But you must be aware that you may not get the actual amount of loss or damage when miss happenings occurred. For car insurance you have to purchase riders also to get compensated fully.  Let us know some important riders when you go for car insurance.

Actual Cash value: Whenever you got a miss happenings the insurance provider settled with the actual value of the things less deductibles (The amount can be fetch for the scarp) you got damaged. But if you buy a car last year and the cost may be more now. So you could not buy a new one or get it repaired with the amount given by insurance providers. To overcome this difficulty you should go for a rider which gives the replacement cost.

Body Injury Liability: This riders covers the medical treatment cost of the person who met with accident. In some places and in some cases there may be a huge medical bill and that expenses can be covered with this rider.

Property damage liability. When you damage others property with your vehicle you can compensate with this rider.

Medical Payments. This rider protect you to cover the additional medical expenses and rehabilitation expenses for yourself and co passengers at the time of accident.

Indemnity. This rider covers the expenses to restore your previous conditions before the accident. The amount may be predetermined when you join the policy.

Income loss protection. This rider covers the amount of loss due to your accident and continuing non working time. This is also with medical payment and without medical payments.

Exclusions. Any type of accident which is not covered under your insurance policy may cover with this rider. But  you have to discuss about this before joining the policy.

Endorsement. When you want to make any additional changes in the term of policies or add any additional coverage or drivers the insurance provider should endorse the changes after approved it.

Collision coverage. when your car hit with other car you can use this coverage to get the compensation.

Rental reimbursement coverage. This will meet the rent of a vehicle you have hired when your car is met with an accident and under repair.

Towing Labor coverage. This will meet the expenses to tow your vehicle when it is break down.

Comprehension coverage. This will cover the damage due to theft, fire etc.

Uninsured motorist coverage. This will compensate you when you met with an accident with an uninsured or insufficient insured vehicle.

Gap Auto Insurance coverage. This is known as umbrella rider which protect you to meet the gap between the compensation and the existing unpaid amount in your car loan. The balance amount will be paid by the insurer.

Riders of Auto Insurance

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Monday, 2 August 2010

Things To Be Considered When You Go For Mutual Funds

Mutual funds are good options to get profit from stock market without knowing more about stock trading. The Last some decades investors around the world turned to mutual funds for secure their future financial needs such as retirement, education of their children etc. etc. But investment in mutual funds also has risk like other investments. Let us learn some important things we should consider before investing in mutual funds.

Mutual funds are not guaranteed or insured by any government agencies, even if there are some controls over there. Your investment in mutual fund may lose even if you bought through a bank or it holds the name of a bank.

Mutual funds have some operating costs and it may reduce your investment up to a certain level. There are so many overhead expenses to be met for mutual fund managers and institutions. So an investor will not get the actual profit. He gets only the profit minus expenses. You can compare the fees and expenses of different mutual funds before investing in mutual funds.

Past performance is not a reliable indicator for the future performance. Even if there is a good turnover in the past there may be a loss in the future due to so many circumstances. But an investor can take decision with the help of past performance.

There are so many types of mutual funds. An investor must know the details of mutual funds that it would meet their financial goals. Some mutual funds are open ended and the investor can enter in fund and exit whenever they need. Some others are not allowed the investor to go out soon. They fix a time period to be in the mutual fund. You can redeem the fund only after a predetermined period.

Mutual funds various types according the investment they are done. It may be in shares, commodities, securities, gold etc. etc. The investor can select the fund according to his tastes and preference.

Mutual funds allow its investor to earn money in three ways.

Dividend Payments. You can opt for dividends and the fund will distribute the profit among the investors in the form of dividends.

Capital Gain distribution. At the end of the year such funds distributes the gain from the increase of their holdings ( the securities they hold)

Increased NAV. The Nest Asset Value of the fund increases or decreases according to the performance of the fund and an investor get the NAV at the time of redemption.

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Sunday, 1 August 2010

Shares, Shareholders and Share Market

Whenever a company wants more money for their work they have alternatives. They can take loan from banks. If they take loan from bank they have to give collateral securities and also should give interest for loan. They have to repay loan in convenient installments or in a whole lot. The other way is that they can sell shares to public and can accumulate money in the form of capital. But for this purpose the rules and regulations of the nation and of the company should allow to issue its shares to public. By doing so they are sharing their ownership with shareholders. They have to share a part of the profit of the company with the share holders and it is called dividend. For the share capital they should not pay interest and also they should not pay back the money. Only a part of profit they have to share with shareholders.

Stock exchange is market place where the company and business people can buy and sell shares. For selling their own shares by a company they have to list in any stock exchanges. For this purpose they have to complete so many formalities and if they allowed they can issue I.P.O (Initial Public Offerings) which means the first issue of shares by a company. This is called “primary offerings”.

Share holders have the option to sell their shares or keep it with them. Those who wish to make money by trading shares they can sell shares and buy other shares as they wish. This is called “secondary offerings”. Normally a share holder cannot take part the decision making process of the company. They can just keep the shares and can earn a part of the company’s profit in the form of dividend. (If there is no profit no dividend.) So shareholders sell their shares in stock exchanges for a higher value and make profit out of it. Whenever they need they can buy shares form the stock market. Stock market is a trading place of shares.

After getting listed the value of shares may go up or go down according to the performance of the company and also due to other many reasons. An intelligent trader makes profit out of the fluctuations of the value of shares. When the demand of particular share increases and the supply of the share is not enough to meet the demand the value of share increases and vice versa. There are so many other reasons also which affects the value of shares. It is important to know these reasons in time to become a successful stock trader. But now working people and even housewife also become successful stock traders.

Learn the market well and make money from stock market. But keep in mind that you should be vigilant, unless your hard-earned money will be vanished in no time.

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