PFRDA proposes incentive for POP's for New Pension Scheme (NPS)

PFRDA (Pension Fund Regulatory and Development Authority) which launched the New Pension Scheme (NPS) has opened the door for many govt and private sector employees to secure their future through a single united scheme. To reach out to the common man PFRDA has opened many PoPs or Point of presence which are outlets to deal with NPS Scheme. SIB or the South Indian Bank has become the largest service provider in this category among 21 competing banks in India like SBI, ICICI etc.

SIB has altogether about 105 branches which are dedicated as PoPs. PFRDA has now plans to bring out low cost pension schemes which can reach to the millions of poor residing in India.

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Don't Invest in Highest NAV Guaranteed ULIP's- See Why

'Highest NAV Guaranteed' product is the new buzz started by most of the insurance companies in today’s time, but does it make sense to go in for it?

LIC Wealth Plus

ICICI Prudential Pinnacle

Tata AIG Apex Pension

Bajaj Allianz Max Gain

Max New York Life Smart Xpress

SBI Life Smart Ulip

And many more by other insurance companies

What the investor thinks?

The impression it leaves in the mind of Investor that one will get guaranteed highest returns in the period. The kind of words agents are spreading is that you will get the Highest NAV as per stock market performance as if the fund will participate in the equity market growth. However that is not the case. What a company guarantees is the highest value of its own NAV. For guaranteeing the NAV they will have to invest in debt products whose maturity value is equal to the guaranteed value.

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Tax Angle of NPS (New Pension Scheme)

At present, the NPS is to be Taxed at the time of Withdrawal. The Pension Fund Regulator has taken up the issue with the Finance Ministry to address the anamoly and the decision is expected when the New Govt is formed.

NEGATIVES :

1) No Tax Concession on Withdrawals.

2) No premature Withdrawals allowed expect for Critical Illness, building/buying a house; Even at sixty, you can only withdraw as cash 60 per cent of the corpus, the rest must be used to buy an annuity, However this drawback has been nullified by introducing Tier II account, wherin all your contribution can be withdrawn anytime.

3) You need to compulsorily buy Immediate Annuity with 80% of the Money accumulated, if you want to Withdraw before you are 60. Again, introduction of Tier II account will nullify this hurdle.

POSITIVES :

1) The Investor has the option of shifting from One fund Manager to another by instructing his POP to do so. This facility is available between May 1 and May 15 every year.

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Analysis and Charges in NPS (New Pension Scheme)

The new pension scheme is basically a system of fund management for retirement like the EPF, GPF and PPF. Anyone in the age group of 18 to 55 years irrespective of the sector in which he /she works(govt as well as private sector) can apply for the new pension scheme India and get its benefits. It’s a system for financial security for old age when we no longer work.

Once you join the new pension scheme, you would be given a Permanent Retirement Account Number (PRAN). It is something like a account number which will help you to check your funds online or at the point of presence (Pops).The Pension Fund Regulatory and Development Authority(PFRDA) has been assigned the work of protecting the interest of the people participating in the new pension scheme. It’s a Govt regulatory body of India. Signing up and enrollment in the New Pension Scheme.

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NPS can fetch 80% higher yield

NPS account can fetch you upto 80% higher net yield than Mutual Funds and ULIP’s…. See How

If one invests Rs 6000 in NPS then the net yield after 30 years would be minimum 75% higher, as compared to mutual fund and insurance considering the fund performance is same and just because of much higher Fund management charges and allocation charges being charged by them. The 75% higher return is just because govt is also contributing Rs.1000/- per annum, just because, fund management charges being levied

Hence if you want to invest Rs.24000/- better open 4 accounts from your family and invest Rs.6000/- each where you get Rs.4000/- from the government.. Please refer the table

below where comparison is shown in the net yield @ various interest rate with or without govt contribution and be surprised by what difference Rs.1000/- government contribution will make to your portfolio.

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Health Insurance

Health Insurance also known as Mediclaim is a facility provided by general insurance insurance companies, whereby in return for a small premium amount, the latter agreeing to bear the medical expenses including hospitalization, medical fees, tests and other related expenses due to illness or injury upto pre-decided amount till the policy is in force.

Key Health Insurance Covers & Benefits:

• Room & Boarding expenses: There are limits to this feature varying from company to company. 

• Cashless Hospitalization: So that there are no worries on availability of cash.

• ICU charges, doctor, consulting, anaesthetist and surgeon fees, operation and other diagnostic and surgical material costs, ambulance charges are covered. 

• Day-Care expenses such as Chemotherapy, Dialysis & Radiotherapy etc.

• Pre & Post Hospitalization Expenses which normally are 30 days prior and 60 days after hospitalization.

• Domicilliary expenses – these are expenses which may be incurred when the patient is at home.

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Financial Planning

Financial planning is the process of meeting life goals through a proper planning and management of your finances. Financial planning helps us to convert our dreams and aspirations in to reality. It also helps us to provide meaning and direction to our financial decisions.

Financial planning has to be done in a proper way, so that it can be implemented effectively.

It involves the process of assessing your financial situation, determining your objectives and formulating a plan to achieve them. The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve an individual's life goals. It also allows you to understand how each financial decision you make affects other areas of your finances. There is difference between Financial Planning and Wealth Management. If you are wealthy, then Wealth Management will help you manage your wealth better, however if you are looking to create wealth, Financial Planning will help you achieve it faster and in a much systematic way.

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Da Hiked by 8 % for central govt employees..

Today the government increased the dearness allowance for central government employees and pensioners by eight percentage points to compensate for price rise.

The increase is in accordance with the accepted formula based on the recommendations of the Sixth Central Pay commission, Union information and broadcasting minister Ambika Soni told reporters after a meeting of the Union Cabinet here.

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ELSS Versus other tax saving Instruments

Comparison of various Tax Saving Instruments

ELSS is Equity Linked Savings Scheme. ELSS as the name clearly suggests is a savings scheme linked to equity markets. It is a type of equity mutual fund, which offers tax benefits to the investors added with possible high returns comparable to any other equity fund.
Equity linked saving schemes is a mutual fund diversified equity funds with Tax benefits. It is just like other tax saving instruments like National Savings Certificate and Public Provident Fund. Main advantage with ELSS is lock-in period is only 3 years while for NSC it is 6 years and for PPF it is 15 years. At the same time risk factor is high in ELSS and also with high possible returns. Also as per present tax norms, withdrawal after 3 years is exempted from any kind of tax.

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Lowest Premium Term Insurance Policy in India & Lowest Charges Unit Linked regular Premium Policy

Friends, I have personally shortlisted 2 types of insurance which can be bought online only. Since there are no agents involved, charges deduction in these pans are minimal and even agent's profit share are passed on to you.

Term Insurance plan
The term insurance plan with lowest premium is offered by Aegon Religare I-term plan. This is an online insurance and hence can be bought online only or by calling the toll free customer helpline no of the company. You will be amazed to see that premium offered by this company is 50% lower than any other Life insurance company. According to me this insurance deal is a steal.

Please find the comparison of Term insurance policies from various Insurance companies for a 30 year old healthy male for a term of 25 years.

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Mutual Funds

Mutual funds, as we all have been witnessing has become extremely popular over the last few years. It was once known as another obscure financial instrument, but it has now become a part of our daily lives. In fact, to many people, common notion is that investing means buying mutual funds. After all, it's common knowledge that investing in mutual funds is better than simply letting your cash waste away in a savings account, but, for most people, that's where the understanding of funds ends.

Originally, mutual funds were heralded as a way for the little guy to get a piece of the market. Instead of spending all your free time buried in the financial pages of newspapers, all you had to do was buy a mutual fund and you'd be set on your way to financial freedom. But it's not even that easy. Mutual funds are an excellent idea in theory but in reality, they haven't always delivered. Not all mutual funds are created equal, and investing in mutuals isn't as easy as throwing your money at the first salesperson who solicits your business.So, before foraying into the business, one requires to be well equipped with the related informations.

Complete Information about ULIP's

Unit Linked Insurance Polices (ULIPS)

1. What is a ULIP?

ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. REMEMBER THAT IN A UNIT LINKED POLICY, THE INVESTMENT RISK IS BORNE BY THE INVESTOR.

2. What is a Unit Fund?

The allocated (invested) portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund.

3. What is a Unit?

It is a component of the Fund in a Unit Linked Policy.

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Reliance capital on a roll!

ADAG-promoted Reliance Capital was ranked the topmost retirement fund manager overall by the EPFO for providing good returns and investing money in quality assets on the other hand the state-owned SBI finished at the bottom.

HSBC AMC and ICICI Pru AMC have been ranked second and third respectively for their performance during the nine-month period ending December 2009.

On the basis of maturity profile, Reliance Capital AMC continues to perform the best on the said parameter followed by ICICI Pru AMC, HSBC AMC and SBI in that order. On Asset quality profile, ICICI Pru AMC is ahead followed by Reliance Capital, HSBC AMC and SBI.

The analysis placed before EPFO's key advisory body, Finance and Investment Committee, last week, pointed out that HSBC AMC churned out the highest yield (return) of 8.43 per cent followed closely by Reliance Capital at 8.41 per cent.

However, among all fund managers appointed in July, 2008, ICICI Pru has been ranked first on overall basis for managing fund since September 17, 2008 till December 31, 2009 followed by HSBC AMC, Reliance Capital followed by the SBI.

Book your houses before July this year

The cost of flats will go up 3.3% of the total purchase consideration once service tax begins to be levied on construction.
The government is considering exempting from tax flats booked before the notification

So, a buyer who has booked a flat but will get possession only after the notification of the new service need not worry.

So, if ur budget for new house is 30 lakhs you need to pay 1 lakh extra...think wisely!

Gratuity ceiling hiked appreciably!

The Cabinet has approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament as told by government officials.

Every salaried person, who has completed five years of government or private sector service, is eligible for half a month's salary as gratuity for every completed year of service. But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh. The proposed amendment raises this to Rs 10 lakh. 

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Impact of Budget 2010 on our Economy

The Union Budget 2010-11 is out and had open doors for number of suggestions in regards to the financial system as well as equity and debt markets for the coming year. In particular this budget aims to reduce the gap between the government’s overall revenue and expenditure, called fiscal deficit, from 6.7% in FY2010 to an estimated 5.5% in FY2011 a difference of 1.2%.The budget had aimed at improving finances by reducing subsidies and normalizing indirect taxes even as it had reduced income taxes on individuals. Over the last couple of years, due to the macro-economic crisis and high commodity prices leading to rise in subsidies, the government’s finances was weakened and the government has taken a multi-year road map to improve on the loss.

It has noted that growth in economic activity always leads towards improving long-term finances, and generating surpluses requirement for investment. On a closer look at the budget it reflects clearly that it had intended either maintaining the momentum, or at increasing it, with more allocations to various development and infrastructure segments this budget is designed keeping in mind the growth in economic activity. The reduction in income taxes on individuals will put more money into the hands of consumers who in turn will provide a boost to private sector demand, at the same time partly neutralizing the impact of price hike that will happen in various segments, such as petrol and diesel prices, on account of reduction in subsidies. GDP which is on an improving trend overall, despite the impact of weak monsoon, will maintain the pace in FY2011 showing a higher GDP growth rate than FY2010. As such the budget for the overall economy is growth enabling even though it is likely to be mildly inflationary.

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Life Insurance: Types of life Insurance policies

Need for life insurance

Risks and uncertainties are part of life's great adventure -- accident, illness, theft, natural disaster - they're all built into the working of the Universe, waiting to happen.

Insurance, therefore has proved to be man's answer to the uncertain vagaries of life. If you cannot beat man-made and natural calamities, well, at least be prepared for them and their aftermath.

Insurance basically can be defined as a contract between two parties - the insurer (the insurance company) and the insured (the person or entity seeking the cover) - wherein the insurer agrees to pay the insured for financial losses arising out of any unforeseen events in return for a regular payment called "premium".

These unforeseen events are defined as "risk" and that is why insurance is called a risk cover.

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Insurance and Policies

The best insurance one can get for risk cover is Term Insurance. The biggest disadvantage of Term Insurance is that you dont get any money back at maturity, however that disadvantage is taken care by absolutely very low premium.

For Instance to take cover of 50 lacs, one has to shell out between Rs6000/- to Rs 15000 only. Premium varies from 1 insurance company to other and the difference can be substantial. Hence I suggest to do complete survey before signing up with any insurance company.

Term insurance is also the cheapest for of Insurance one can have. Actually this is a "No Frills Policy"

One has to usually go for medical checkup for this type of insurance as insurers are very particular about it. While it may be cheapest form of insurance for us, its the most risky proposition for the Life insurance company. One policy issued to wrong person resulting a claim can cost dear to the insurers and hence, they are really cautious when it come to issue of this policy.

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