Investment Valuation in India

Growth vs Dividend Option in a Mutual Fund When we select the fund for investing, often, the funds offer you the option of Growth Plan or the Dividend Option. It is important to understand the difference between the two and to select the option best suiting the needs and taxability aspects for an individual. Regular Income: The dividend option helps you get regular income (for example, for senior citizens). The growth option does not help you get regular income. Building Wealth: Since the dividend option gets you money at regular intervals, you cannot get the benefit of compounding. It is not suitable for building wealth. The growth option, instead, helps you build wealth over time and income gets compounded. Growth option is suitable for people wanting to save for future (example, child’s marriage, higher education etc) Tax Treatment: While dividends from equity oriented funds are tax free, if the fund is a non-equity fund, there is a Dividend Distribution Tax (...

Mutual Fund investment is common and is often advised as one of the safest options for investments by individuals. But these individuals are loaded with questions given the large number of funds available. We try and answer some of the questions that investors have. Should one invest in an Actively Managed fund or a Passively managed Fund Actively managed funds are more popular among investors, but carry a higher risk than passive index funds. Fund managers often use a benchmark (say Nifty, BSE 200 and so on) to measure their performance. A fund manager trying to beat the benchmark is forced to take positions that would give his fund an edge over the benchmarked index. It is not uncommon that in most cases, they fail to beat the benchmark and the fund - consequently the investors - suffer. So picking the right fund becomes an important decision for the investor. “Past performance is not an indicator for future performance”. So even if you buy consistent outperforming funds, the...

The last few days has seen some significant policy announcements by the government the absence of which, for long, was coined as the government’s policy paralysis. - Diesel prices have been increased by close to 12% - Allowed 51 per cent foreign investment in multi-brand retail (remember, this was allowed last year as well, but could not be implemented due to political opposition) - Allowed 49 per cent investment by foreign airlines in aviation - Raised the FDI cap in broadcasting from 49 per cent to 74 per cent - Capped subsidised LPG cylinders by a household to 6 cylinders in a year, more cylinders if required will have to be purchased at market rate that is approximately Rs 750. While most of the above are being seen as extremely positive moves in order to avoid a credit rating cut that’s being threatened by rating agencies, these cannot be termed as big-ticket reforms. A lot more needs to be done in order to bring the economy back on the growth track. Perhaps, it is th...

India has been able to withstand some of the biggest global financial meltdowns in recent times. This was attributed to a very strong regulatory environment (particular credits to the Reserve bank of India) and the Great Indian Consumption story.  These two factors have led to the world expecting a lot from us. The last couple of years have shown that we have under delivered, badly. The global investors are shying away from investing in India given the government indifference to the industry requirements.  Who's responsible for the mess around? The opposition succeeding in keeping the government's attention away from more core issues by highlighting one issue or the other (read 2G and then Coalgate). They worsened this themselves by trying to override the Supreme Court's judgment on Vodafone case. Unnecessary!  Consequently, the world has been able to blame the government for policy paralysis and lack of judiciary relevance. Only the government is responsible for...

Imagine a situation where you grow old and have managed to buy a house. However, you could not save enough for your retirement. You certainly need money to manage your day to day finances since you are retired and have no fixed source of income or your income is not enough to meet your finances. Reverse Mortgage is the answer for you. Reverse Mortgage is a type of mortgage available to senior citizens in which a home-owner can borrow money against the value of his/her home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan. [1] How does it work? Reverse Mortgage in India Realising the potential benefits of Reverse Mortgage, the Union Budget 2007-...

Notification No. 29/2012- Service Tax ( New Delhi, the 20 th June, 2012) Under notification No. 29/2012 - Service Tax, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of renting of an immovable property, from so much of the service tax leviable thereon under section 66B of the said Finance Act, as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies : Notes:  1) Any amount such as interest, penalty paid to the local authority by the service provider on account of delayed payment of property tax or any other reasons shall not be treated as property tax for the purposes of deduction from the gross amount charged. 2) Wherever the period for which property tax paid is different from the period fo...

Having an Online profile on a networking site is almost mandatory today for professionals looking for (changing) jobs. Almost every potential employer ensures to check your online presence before short-listing you for the job. What they’re looking for is your online professional presence. And in today’s world, you need to have one out there for them to find. For most professions, an online professional profile will only help you. And the best place to go to build one is LinkedIn. (While they would surely go through your Facebook pages as well, they may not conclude much from it given it’s more of a social networking site than professional networking). LinkedIn is the most common site that the employers would screen through as part of their evaluation of whether to hire you or not. Here are some important tips of what to take care of while designing and maintaining your online professional presence on Linked In. 1.        Complete your profile...