STRUCTURED SETTLEMENT (Contd.....)

SHOULD I SELL OUT MY STRUCTURED SETTLEMENT ?

In most of the cases , selling a structured settlement is not a good investment decision. Ideally, selling a structured settlement for cash should be the last alternative and should be resorted to only if the individual is confident of managing his own investment portfolio in a competent manner. This is because in any sale of a structured settlement, it is possible to lose up to half of the long-term value of the structured settlement.

A structured settlement offers guaranteed payment that is tax-free; this may not be the case with investments made by selling a structured settlement. Moreover, the regular payments offered by a structured settlement are a source of great comfort to retired individuals and those with an impaired earning ability. A structured settlement offers the advantage of a regular income without having to worry about managing it.

If one has sufficient business experience and is confident of himself, he can use the money obtained from the sale of a structured settlement as capital, and the money can also be used to make intelligent real estate purchases. In case, an individual has to sell his structured settlement, he should try and sell as few payments as would be required to get his work done. Exchanging the security of structured settlement payments for another investment plan has its risks and one should consider alternatives in collaboration with a financial advisor. An advantage of investing money obtained from selling a structured settlement is that one gains control of his own finances; with a structured settlement, the control is largely in the hands of lawyers and companies that pay the settlements.

Selling structured settlements can be particularly detrimental to individuals who are disabled, minors, workers compensated for loss, and compensation due to severe injury.

WHY COMPANIES LIKE TO BUY STRUCTURED SETTLEMENT ?

Structured settlement companies that buy a structured settlement do for a profit. The amount of lump sum received by an individual selling either a part or the complete settlement is not the same as the value of the structured settlements sold.

The money they earn is invested by these companies as per the best option available in their investment portfolios at that point in time. The profits are used to run the company, pay employees, and advertise. A financially healthy structured settlement company is a safer option for an individual as there is less chance of the company going bankrupt. Also, the market standing of such a company would allow it to offer the best rates to their clients, use their own money to pay the clients without having to take loans from a bank or take the services of a middleman. If they do take the services of a broker or a middleman, they will have to factor in the broker’s charges which are ultimately paid by the structured settlement owner.

Companies are attracted toward structured settlements because it guarantees a safe cash flow and the transaction is not taxable. There are always individuals in need of quick cash who would like to swap their structured settlements for some quick cash. The work involved in purchasing a structured settlement is not much, the main effort lies in marketing and obtaining court approval in compliance with the prevalent state and federal laws.

The fact that structured settlements are guaranteed means that structured settlement companies can obtain debt at low interest rates and finance other ventures with that debt.

UNDERSTANDING THE BASIC OF STRUCTURED SETTLEMENT ?

A Structured Settlement is an agreement under which an insurance company agrees to pay an individual a predetermined amount of cash for a fixed length of time if the individual meets an accident. The documents generated in a structured settlement include an agreement, a qualified assignment, an annuity application, a court order if a claim is made by a minor, and an annuity policy.

Payments for a structured settlement annuity can be made for the duration of the life of the claimant. The amount paid can comprise of equal installments, installments of varying amounts, and lump sums. The payments from a Structured Settlement Annuity are free from income-tax and are guaranteed by contract. Since a structured settlement annuity is meant for long-term financial security, it is important to get an assurance of the credentials of the annuity provider.

The periodicity of payment is entered into the settlement agreement. Factors that individuals can consider in deciding upon the date of commencement of payment, duration, and periodicity include monthly expenses, present age, extent of hazard in occupation, and retirement plans. In order to ensure that the payments remain tax-free, the structure of payments should not be altered once it has been agreed upon by both parties. In the case of a qualified assignment, the insurance company making the payment can transfer its obligation for payments to a third party.

There are issues that one should understand before opting for a structured settlement agreement. If payments are made to an estate, they are free from income tax but subject to estate tax. Purchasing a structured annuity can affect the availability of ready money with an individual.

The funding company commences payment to an individual after acknowledging the assignment and receiving a court order. The payments start 30-45 days after the receipt of the court order.

HOME EQUITY LINE OF CREDIT

Home equity as a source of a line of credit

If ever you are in need of borrowed funds, one practical and handy source of credit is a home equity line. To begin with, a home equity credit line will offer you a large amount of cash with a comparatively LOW RATE OF INTEREST. It also gives you some tax benefits not available with other kinds of loans.

HELOC and security for the loan

Home equity lines of credit (HELOC) will require property to be pledged as security for the loans. Obviously, this kind of borrowing may jeopardize your home and you, if you default on a loan or even if you are late with your monthly payments.

A loan with a balloon payment, that is a large payment at the end of the loan term, may result in your borrowing more money to pay off the debt. It may also put your home at risk, if in the course of the original loan you are deemed ineligible for REFINANCING. In the event that you sell your home, the conditions of most loans will require you to pay off all debts on your credit line at that time. While home equity loans provide you with ready cash quite easily, you tend to borrow more freely as well. Always compare HELOC rates from several lenders to assure that you get the lowest rate possible.

Alternatives to home equity line of credit and home equity loans

It is important to bear in mind that there are many other ways to borrow money besides home equity credit lines. second mortgage installment loans are one such viable option. Certainly second mortgage plans place an extra future burden on your home or property, in terms of an added mortgage. But the money lent is usually given as a lump sum, not as advances through continuous charges to a card or checking account. Also, a second mortgage generally has a fixed rate and fixed monthly payments.
Another option, preferred to borrowing money outright, is a credit line that does not use your property as security. Under the right conditions, that also might be available to you with a credit card, or an unsecured credit line allowing you to write checks whenever you need the funds. Information about loans for specific items, such as auto purchases or tuition fees, is available at your request.

EQUITY LINE OF CREDIT BASIC TERMS

Understanding EQUITY LINE OF CRDEIT we must be aware about the basic terms used.

Outstanding balance

Total dollar amount of your equity line.

Interest rate

Annual interest rate for this equity line. Please keep in mind that this is a variable rate product and that this calculator can only assume one rate for the draw period.

Draw period

The number of years over which you will repay this equity line. This calculator assumes a 10 year draw period.

Minimum monthly payment

The minimum monthly payment for the balance on your equity line. The minimum monthly payment is calculated as 100% of the interest owed for the period.
Principal payment type
The frequency of prepayment. The options are: none, monthly, yearly, and one-time payment.
Principal payment amount
Amount that will be prepaid on your line of credit. This amount will be applied to the principal balance, based on the prepayment type.

Start with payment

This is the payment number that your prepayments will begin with. For a one time payment, this is the payment number that the single prepayment will be included in. All prepayments of principal are assumed to be received by your lender in time to be included in the following month's interest calculation.

Savings

Total amount of interest you will save by prepaying your equity line.

EQUITY INVESTMENT RULES

Below mentioned are some of the so called golden rules to be followed by every investor or trader before entering and after entering equity market. May be you are in IPO investor or trading delivery based you must not neglect or overlook certain points beofre investing your hard earned moneyu in this most risky platform. Never follow the principal of investment on rumours and others tips , the matured view is that after getting the tips from other you make self asseessment on basis of basic principle and then opt. for it.

Identify your risk tolerance

Young people at the start of their working lives will have a greater appetite for taking financial risk as compared to people at the end of their career who are looking forward to stable income and preservation of capital. These two extremes will exemplify the ability to take equity exposure. The young person is likely to be largely in equities for he can afford to take short-term capital loss in anticipation of higher rates of return from equities. The elderly will be unable to take the risk of capital loss even in the short term as their ability to make back any losses will be limited by time and ability to earn.

Middle-aged people will balance their investments between capital growth and some capital preservation to take care of near needs such as children’s education and consumption.

Categorise stocks

Investing in cyclical stocks, such as those in the cement or steel sector, requires an understanding of the economic scenario, both national and global. An active involvement in the investment is required in order to reap the maximum benefits of swings in economic cycles over time. The stock prices are likely to move through extreme highs and lows, and the ability to time entry and exist will be necessary. Growth investing refers to stocks in sectors where the future direction is clear for the medium term-such as technology. However even here, timing is key, for the stock may do nothing for a long time as momentum builds up and then move sharply thereafter. Defensive investing is that which is done from a long-term viewpoint, where a stock is held on the premise that it will grow consistently and on a sustainable basis over time, such as those in the fast moving consumer goods sector. While the appreciation may, at times, not be as dramatic as cyclical or growth stocks, stocks that constitute defensive investments grow steadily over longer time periods.

Check out technical position

Can you actually sell your investment when you want to? The liquidity of a stock is very important in taking an investment decision, for if there is very little free stock available in the market, buying and selling may well impact the stock price in an adverse manner. It is interesting to see what the price volume relationship is for a stock. So if a stock price is moving up or down on high trading volume, it is more likely that there is real interest in that price movement than if there is very little volume supporting the price move.

Compnay work?
The fate of each stock is tied inextricably to the fortune of the underlying business, and the market’s perception of the future prospects for that business. The industry’s future potential in terms of projected demand-supply is key as is the company’s competitive position in the industry. The business model of the company should be considered, as well as possible future changes, and the ability of the company to sustain growth and momentum well into the future.

Promotors & Management of the company

To my mind the capability and integrity of management is even more important in determining the future viability of your investment. A strong, credible, experienced and shareholder responsive management team is critical for operating and growing a successful company. In the newer areas of our economy, management vision is also of significant importance.

Company’s performance track record

The price earnings (P/E) ratio is the often-quoted measure of a company’s value. This ratio divides the stock price by the year’s earnings, and is useful in arriving at comparative valuation. But the tool that is quite prevalent in professional evaluations is the return on equity (ROE), which is the year’s earnings divided by the net worth of the company. This when compared to the cost of capital for the company allows the investor to gauge the company’s wealth creating ability. Apart from the ratios the investor must also focus on the sustainability of earnings growth.

Company’s valuation?

Two stocks may have the same ESP but different PE’s. This is because ROE may be different and its sustainability may be different. Broadly speaking, the higher the sustainable ROE, the higher the P/E rating. A high P/E does not therefore necessarily imply an overvalued stock. Stocks with high sustainable ROE’s are likely to trade at high P/E multiples.

Know the price target?

Having completed rule 1 to 8 above, and having selected stocks and built a portfolio, it is now imperative to track these investments loosely. One method of doing so is to set expectations, by identifying a target price, and to re-evaluate the stock when this target is reached. Here, it is important to consider opportunity costs. If there is a loss on a stock, should one realise that loss and invest in another stock, which has a greater potential, or should one wait for the loss to turn into a profit. By not selling out of low return stocks to get into higher return stocks, investors miss out on opportunities.

Do you want a professional manager?

Many investors mistakenly assume that they can purchase one or two stocks and they will do well. In the absence of good luck, this can be a dangerous strategy since there is always a risk of a stock declining in value or the business facing company specific problems. The more diversified the portfolio, lower is the risk of one poorly performing stock affecting overall performance of the portfolio. However, a good way of diversifying the portfolio is to invest through mutual funds where the professional fund manager and the rigorous investment process is likely to limit risk while maximizing profit, depending on the risk profile of the fund invested in.

MEASURES TO CHECK ONLINE BANKING FRAUDS

To Minimise The Risk of Fraud

1) Utilize paperless options. Restrict receipt of paper statements by subscribing to e-mailed bank account statements, credit card statements and demat account statements.

2)Monitor your account activity regularly by checking your balances and statements online through BAnk's website. This helps you to detect fraudulent transactions, if any, quickly. The earlier a fraud is detected, the lesser will be its financial impact.

3) Restrict the use of cheques. Transfer funds online

4)Receive and pay bills online for free with Bill Payment option at webiste. Fewer the personal documents sent through the mail, lesser the chance of fraud.

5)Register for mobile banking and receive alerts upon all significant transactions in your account. Learn more about Mobile Banking.

6)Communicate with the bank through the secure mailbox option at webiste, “Write to Account Manager”.

Tips For Use When Banking Through The Internet

1)Avoid accessing your Internet Banking account from a cyber cafe or a shared computer.
However, if you happen to do so change your passwords from your own computer.

2)Every time you complete your online banking session, log off . Do not just close your browser.

3)To access Bank's Internet Banking, always type in the correct URL into your browser window. Never click a link that offers to take you to our website.

4)If your log-in IDs or passwords appear automatically on the sign-in page of a secure website, you should disable the “Auto Complete” function to increase the security of your information.To disable the “Auto Complete” function

5) Open Internet Explorer and click "Tools" > "Internet Options" > "Content".
Under "Personal Information", click "Auto Complete”.
Uncheck "User names and passwords on forms" and click "Clear Passwords".
Click "OK".

6)Change your Internet Banking passwords (both log-in password and transaction password) after your first log-in, and thereafter regularly (at least once in a month).

7)Your password should be complex and difficult for others to guess. Use letters, numbers and special characters [such as !,@, #,$, %, ^, &,* (, )] in your passwords.

8)For additional security to financial transactions through Internet Banking, create and maintain different passwords for log-in and for transactions.

9)If you have more than one Internet Banking user ID, use a different password for each of the user IDs. You may also view all your accounts with Bank under a single user ID by linking your various accounts to your preferred Internet Banking user ID.

10)Never share your Internet Banking passwords with others, even family members. Do not reveal them to anybody, not even to an Bank employee.

11)Always check the last log-in to your Internet Banking account.

CREDIT CARD BASIC KNOWLEDGE

What should I do if my card is lost or damaged?

Contact your Bank help centre immediately via phone banking .They will block your lost/damaged card instantly and a new card will be delivered to you within seven days.


Can I retain my credit card if I emigrate?

Credit cards (including global cards) are issued to resident Indians only. Therefore, under RBI guidelines, you have to clear your outstanding and surrender your credit card to the issuing bank if you are proceeding abroad on employment or on emigration

Can I use my credit card for expenses on the Internet?

Yes, your credit card can be used for expenses on the Internet. However, the Reserve Bank of India prohibits its use for certain expenses on its banned list like football pools, sweepstakes and lotteries.

What do I do if my credit card is declined?

Contact your Bank help centre immediately via phone banking

How do I protect my credit card against fraud or theft?

Do not forget the following :

1) Sign your card as soon as you receive it!

2)When you use your card at an ATM, enter your PIN in such a way that no one can memorize your keystrokes.

3)Don't leave your receipt behind at the ATM. Your PIN and account number from a discarded receipt could make you vulnerable to credit-card fraud. Also, don't throw out your credit-card statement, receipts or carbons without first shredding them!

4)Never give your credit-card number over the telephone unless you initiated the call.

5)Even when you place the call to a legitimate merchant, never give out your card number over a cordless phone. One common scam is when someone calls you "back" right after you place an order, claims to be from the merchant and tells you that there was a problem with your card number, so would you mind giving it to them again? The safest thing to do is to ask them to read out the number they have, and then change any incorrect numbers.

6)Ignore any credit-card offer that requires you to spend money upfront or fails to disclose the identity of the card issuer.

7)Make certain you get your card back after you make a purchase (one good habit to observe is to leave your wallet open in your hand until you have the card back). Also, make sure that you personally rip up any voided or cancelled charge slips.

8)Always keep a list of your credit cards, credit-card numbers and toll-free numbers handy, in case your card is stolen or lost.

9)Check your monthly statement to make certain all charges are your own, and notify the card issuer of any errors or unauthorized charges immediately.


What if I cross my credit limit?

If you make a transaction that exceeds your available credit limit, Bank will use its discretion and decide whether or not to approve the transaction. If the transaction is approved, an over-limit charge would be levied to the card account. The over-limit charge(Varying from bank to bank) will be charged of the amount by which the credit limit is exceeded (subject to a minimum charge ).


What is a temporary credit-limit enhancement?

There will be times when you feel the need for an increase in your credit limit to enable you to make increased purchases on your card.

What is a self-set limit?

You can pre-set the monthly spending limit on your supplementary/add-on credit card. Any transactions over the specified 'Spend Limit' will be declined.

What is the revolving credit facility?

When you receive your bill, you have the flexibility of selecting any of the following payment options:
Pay the total amount due.
Pay only the minimum amount due.
Pay any amount ranging from the minimum amount due to the total amount due.
Should you opt for either of the last two options, then the unpaid amount due is carried forward to the next billing period. This is referred to as the revolving credit facility



When do I start paying interest on new purchases if I am already revolving credit?

If you are revolving credit, fresh purchases attract interest from their respective dates of purchase.

What is the balance transfer facility?

Worried about the outstandings on your other-banks’ credit cards? Are the interest rates bothering you all the time?this is a special offer just for you, which would surely help you get rid of your worries on interest charges. The Bank balance transfer facility allows you to transfer your outstandings from your other-banks’ credit cards to your Bank Credit Card at interest rates as low as 0%. Various attractive schemes like the ‘0% Balance Transfer offer’ and the ‘Life Time Balance Transfer offer’, along with zero documentation and crisp draft delivery make the Bank Credit Card balance Transfer programme the best in the market.


Will fresh purchases also attract interest if I use the balance transfer facility?

Your fresh purchases get the normal credit period for the first month. However, if at the end of the first billing cycle, your total amount due (including balance transfer) is not reduced to zero, your fresh purchases attract interest from the respective dates of purchase.

Are there any interest charges?

If you make a payment for the Total Amount Due before the Payment Due Date, no interest charges are applicable. Thus you can enjoy interest-free credit from the date of purchase to the date on which the payment is due. This can be as high as 50 days for Silver Card members and 52 days for Gold/Titanium/Platinum/Signature Card members!
If you send a payment for the "Minimum Amount Due" or pay any amount less than the "Total Amount Due", interest charges are applied on the outstanding amount and on any fresh charges that you incur subsequently. However, for certain transactions like cash withdrawals, interest charges would be applicable from the date of transaction till date of payment.
If there are some unpaid "Minimum Amounts Due" of previous statements, then these will also be added on to the "Minimum Amount Due" of your current statement.
If you have for some reason exceeded your credit limit, then the amount by which you have exceeded the credit limit will also be added to the "Minimum Amount Due".



When will the interest charge stop?

If all outstanding charges are paid at any time, the interest charges will cease to apply immediately.

How are interest rates calculated on an Bank Credit Card?

Interest charges are applicable only if the cardholder chooses the part payment facility (revolver facility). It is governed by a rate of interest. The interest accrual is on the daily outstanding balance. The monthly application of interest happens on the statement date.
An example of calculation of interest, where the customer has made all retail transactions and no cash withdrawals:
As the customer has made a part payment, interest is charged on transactions of the previous month from the respective transaction date up to the statement date; then on the TAD (total amount due) from the statement date up to the part payment date; and then on the balance amount (after deducting part payment made from TAD) from the part payment date up to the next statement date.
Finally, if there are any fresh purchases interest is charged on them from the respective transaction date up to the statement date.
If the customer makes a part payment he does not enjoy interest-free days on fresh purchases.

How do I pay my credit-card bill?

1)Drop your payment cheques in the 'drop box' facility at any Bank branches and ATM centres.
2)Cash payments are accepted at Bank branches during banking hours.
3)auto-debit facility.
4)Bank account holders can also avail of the convenience of scheduling payments through Bank Internet Banking or pay their credit-card bills through customer care centre.
5)If you are not an Bank account holder, you can still pay from your existing bank account via the Internet.


What is the auto-debit facility?

Auto-debit allows Bank account holders to give standing instructions to pay their credit card bills (either minimum amount or total amount due) directly through their bank account. Simply give a written instruction to Bank, or inform Bank’s customer care centre to debit the payment directly to your account every month.

What happens if my cheque gets delayed in the post beyond the payment due date?

If your payment is not received by the Payment Due Date, a late fee is applicable and the outstanding amount attracts interest for the number of days by which the payment has been delayed.


What happens if I pay more than the total amount due?

TThe excess amount shows up in your monthly statement and is adjusted against future purchases.

What happens in the case of a disputed card transaction?

In the case of a disputed card transaction, Bank will get back to you at the earliest with the status of your transaction.

KEYPOINTS OF PPF ACCOUNT

1) The Public Provident Fund Scheme is a statutory scheme of the CentralGovernment of India.

2) The Scheme is for 15 years.

3) The rate of interest is 8% compounded annually.

4) The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year.

5) One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.

6) The deposit can be in lumpsum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.70,000/-.

7) It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders.

8) The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity.

9) The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.

10) Account can be opened by an individual or a minor through the guardian.
Joint account is not permissible.

11) Those who are contributing to GPF Fund or EDF account can also open a PPF account.
A Power of attorney holder can neither open or operate a PPF account.

12) The grand father/mother cannot open a PPF behalf of their minorgrand son/daughter.
The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.

13) The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.70,000/-.

14) No age is prescribed for opening a PPF account.

15) Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year.

16) The facility of first withdrawal in the 7th year of the account subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one Withdrawal in every year is permissible.

17) Pre-mature closure of a PPF Account is not permissible except in case of death.
Nominee/legal heir of PPF Account holder on death of the account holder can not continue the account, but account had to be closed.

18) The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.

19) The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.

20) One withdrawal in each financial year is also admissible in such account.

21) The PPF scheme is operated through Post Office and Nationalized banks.

22) PPF account can be opened either in Post Office or in a Bank.

23) Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office.

24) Account is transferable from one Bank to another bank as well as within the bank to any branch.

25) Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.

26) The interest on deposits is totally tax free.

27) Deposits are exempt from wealth tax.

28) The balance amount in PPF in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.

29) Nomination facility available.

30) Best for long term investment.

PROVIDENT FUND Vs PUBLIC PROVIDENT FUND

PROVIDENT FUND

Employee Provident Fund or provident fund :- is a retirement benefit scheme that is available to salaried employees. Under this scheme, a stipulated amount (currently 12%) is deducted from the employee's salary and contributed towards the fund. This amount is decided by the government. The employer also contributes an equal amount to the fund.However, an employee can contribute more than the stipulated amount if the scheme allows for it. So, let's say the employee decides 14% must be deducted towards the EPF. In this case, the employer is not obligated to pay any contribution over and above the amount as stipulated, which is 12%.

Return on this investment 8.5% per annum

Tenure of investmentThe amount accumulated in the PF is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs. In case of the death of the employee, the accumulated balance is paid to the legal heir

TAX TREATMENT :The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C. If you have worked continuously for a period of five years, the withdrawal of PF is not taxed.If you have not worked for at least five years, but the PF has been transferred to the new employer, then too it is not taxed. The tenure of employment with the new employer is included in computing the total of five years. If you withdraw it before completion of five years, it is taxed. But if your employment is terminated due to ill-health, the PF withdrawal is not taxed.

PREMATURE WITHDRAWL : If you urgently need the money, you can take a loan on your PF.You can also make a premature withdrawal on the condition that you are withdrawing the money for your daughter's wedding (not son or not even yours) or you are buying a home. To find out the details, you will have to talk to your employer and then get in touch with the EPF office (your employer will help you out with this).

PUBLIC PROVIDENT FUND

The Public Provident Fund has been established by the central government. You can voluntarily decide to open one. You need not be a salaried individual, you could be a consultant, a freelancer or even working on a contract basis. You can also open this account if you are not earning. Any individual can open a PPF account in any nationalised bank or its branches that handle PPF accounts. You can also open it at the head post office or certain select post offices. The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.

Return on this investment: 8% per annum

Tenure: The accumulated sum is repayable after 15 years along with the accrued interest

Reinvestment : The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account.It can be extended for a period of five years after that. During these five years, you earn the rate of interest and can also make fresh deposits.

TAX TREATMENT :The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C. On maturity, you pay absolutely no tax.


PREMATURE WITHDRAWL :You can take a loan on the PPF from the third year of opening your account to the sixth year. You are allowed to withdraw 50% of the balance at the end of the fourth year, preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.

PLANNING FOR AN INVESTMENT

What is Planning for an investment?

Art of Managing Money, would have made our lives so much easier. Most of us spend more than half of our lives working and saving because money is important, in fact crucial. However, most of us spend almost no time planning to make that hard-earned money work more effectively for us. So, how do you plan your financial life?

What is investment planning?

Financial planning is nothing but an assessment of your goals and the steps you must take to help make them a reality.


What is it that you want?

Is your wish to retire with a sound lumpsum amount or do you want a steady monthly income. Is your son's education or daughters' marriage worrying you? The key is to figure out your goals.

When to Invest?

The sooner the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early2. Invest regularly3. Invest for long term and not short term There is always a first time for everything so also for investing. To invest you need capital free of any obligation. If you are not in the habit of saving sufficient amount every month, then you are not ready for investing. Our advice is :- Avoid unnecessary or lavish expenses as they add up to your savings. A dinner at Copper Chimney can always be avoided, the pleasures of avoiding it will be far greater if the amount is saved and invested. Clear all your high interest debts first out of the savings that you make. Credit card debts (revolving credits) and loans from pawnbrokers typically carry interest rates of between 24-36% annually. It is foolish to pay off debt by trying to first make money for that cause out of gambling or investing in stocks with whatever little money you hold. Infact its prudent to clear a portion of the debt with whatever amounts you have.


Where is your money going?

The most important thing is that you should where your money is going. Zero on your monthly and annual expenses.

Why should you invest?

You should invest so that your money grows and shields you against rising inflation. If prices rise by four per cent annually it would not be sufficient if your savings only give you a return of three per cent. It leaves you with a deficit of one per cent. The idea is that your rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time.

Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary.

IPO INVESTMENT CHECKLIST

BEFORE MAKING AN INVESTMENT IN APPLYING IN ANY IPO (INITIAL PUBLIC OFFER ) , FOR A SMART INVESTOR ITS MANDATORY RATHER THAN CUSTOMARY TO CONSIDER AND JUDGE THE FOLLOWING POINTS:--

Is this an IPO or an FPO?

In IPOs, initial public offers, company decides the price band and the collective secondary market discovers the true price post-listing .

In FPOs, follow on public offers, the price is already discovered; gains/losses can only be marginal; no new information for the market to analyze.


Is this a fixed-price or a book-building issue?


The methodology, classes of investors and issue pricing are totally different.
There is no book or price discovery in a fixed-price issue.
There are no reservations for FIIs/HNIs in a fixed-price issue; 50% of the issue is reserved for small investors (in book building, it is 35%).
Fixed-price issues are typically small.

Is this a good promoter?

If the promoter is okay, almost all other factors will automatically get taken care of.
If there is any foreign collaboration of repute, it helps.
Experience in the same business/industry of the promotr is also a prime factor which guides the future of the company.