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Fixed income products forms the base of a financial plan. If the base is not strong whatever we build upon it is under risk of collapse, therefore by allocating a higher quanta of funds towards fixed income products improves the overall stability of a portfolio.
Company Fixed Deposits
Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial insstitutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilised are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.
Benefits of investing in Company Fixed Deposits
High interest.
Short-term deposits.
Lock-in period is only 6 months.
No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year
Investment can be spread in more than one company, so that interest from one company does not exceed Rs. 5,000
Like most investment option, Company Fixed Deposits are a mixed bag. Company FDs can be an interesting investment option if you know how to select the right FD, and how to avoid the no-so-good ones. Here are some of the points that investors should keep in mind.
Spread your Risk
The deposits should be spread over a large number of companies engaged in different industries. This way, you’ll be able to diversify your risk among various industries/companies. Try not to put more than 10% of your total investments in one particular company.
Choose the Right Period of Deposit
Ideally, the investment should be for 1 to 3 years depending upon the rate of interest.
Periodic Review
The performance of the companies should be reviewed at maturity. This will help you decide whether to renew or reshuffle the deposit. It is also wise to keep a track of these companies by checking their share prices, annual reports and other details reported in newspapers.
Content :
Portfolio Management Services provides solutions for the investment needs of select clientele, through focused portfolios.
In India there are several institutional participant to offer Portfolio Management Services to HNIs and Institutions,like- Mutual Fund Houses, Broking Houses etc. They are governed by SEBi rule of conducts. Most of these PMS have a successful track record of over 10 years of experience in offering Portfolio Management Services.
Investing requires knowledge, time, and the right mind-set. This is besides constant monitoring. PMS gives you professional managers who strategize to deliver you consistent returns keeping your risk appetite in mind. Every portfolio manager has a well-defined investment philosophy and strategy that acts as a guiding principle.
Our strong base of PMS clients stands testament to the quality and value of our services and recommended PMS. We keep selecting the best PMS of the industry and offer them to our clients from time to time. We select PMS Schemes which aim to create a portfolio that suits your requirements; therefore we will first seek to understand a client's needs and investment objectives, and on that basis offer a portfolio that best suits these needs and objectives.
PMS relieves investor from all the administrative hassles of investments. You receive periodic reports on your portfolio performance and other aspects of your investments. Investments are tracked continuously to maximize returns.
In a PMS setup, your relationship manager defines your financial goals and advises you the right product mix. They give personalized service and ensure that you receive periodic updates and account performance reports.
PMS: Basics
What is the fee structure for PMS?
The fee structure depends from company to company.......
What are the tax implications of investments in PMS?
At present, 10% tax is chargeable for short-term capital gains and no tax is chargeable on long-term capital gains. Securities transaction tax (STT) is also applicable. ......
What are the advantages of investing in PMS vis-a-vis mutual funds?
Read to know the advantages of investing in PMS vis-a-vis mutual funds. ......
PMS: Did you Know
Is there a maximum limit for investing in portfolio management services?
There is no upper limit on the amount you can invest in the PMS. ......
Does portfolio management services have any lock-in period?
There is no lock-in period according as per regulations. But some companies may have a lock-in period depending upon their company polices. ......
Do I need to have Permanent Account Number (PAN)?
Yes, you need to have PAN. ......
HOME LOAN
Why Home Loans?
To own a home is everyone's dream. From a single room to multi-storeyed apartments, private villas, holiday homes, second homes - the Housing market is well developed in most towns.
Get loan for:
purchase of residential Plot/House/Flat
Construction of Residential House/Flat
Renovation/Extension/Repairs to Residential House/Flat
Take over of housing loans from other financial institution
Get Loan against Liquid Security such as:
Life Insurance Policies
Post Office Instruments
Fixed Deposits with Nationalised Banks
Who can avail of this plan:
Salaried Group (State / Central / Semi-Central / Public Limited / Private Limited / Corporations)
Self employed persons
Professionals
Why buy from us?
We operate in the Financial Services industry with you as the center of focus. We provide complete, holistic financial solutions to meet all your financial needs. We ensure well-trained, professional financial planners at your service, as well as provide you with personal finance education and money management tools, to help you make the right decisions for your secure future.
NRI LOAN
Who can avail of this plan:
NRIs (persons of Indian Origin)
working abroad (must be in Service)
Get loan for:
purchase of residential Plot/House/Flat
Construction of Residential House/Flat
Renovation/Extension/Repairs to Residential House/Flat
MORTGAGES
A) Loan against Mortgage of:
Residential House / Flat
Loan against Mortgage of Residential Home / Flat and rent receivables for the unexpired Period of Lease specified in the Lease Agreement:
Residential House / Flat
Commercial Property
Who can avail of this plan:
Salaried Group (State / Central / Semi-Central / Public Limited / Private Limited / Corporations)
Self employed persons
Professionals
Meet needs .. Both personal or business like..
Children’s Education
Marriage
Foreign Travel
Purchase of another property
Business Expansion
Office Loans :
On the basis of projected income and Cash Flow this plan can be availed by:
Professionals like
Doctors
Engineers
Architects
Chartered Accountants etc.
Loan FAQ
Can I get loan for purchasing consumer durables?
Yes. There are separate schemes for purchasing consumer durables like TV, Music System, Computer, Washing Machine, AC etc.
Who Can Apply For The Loan?
You must be in permanent service or engaged in a profession or business to be eligible for a loan. You should have a stable job and a regular income . Loan schemes are for those going in for a residential house. We may be able to advance you a loan under our scheme if you want to
Construct/purchase a new House/Flat
Buy an existing house or flat not more than 35 years old
Extend an existing House.
Extend an existing House.
Who Can Be Co-Applicant?
The Co-owners of the property in respect of which financial assistance is sought, must be co-applicants. Usually joint applications are from husband-wife,father-son or mother-son.
How Much loan can I get?
Loan amount is determined on the basis of the repayment capacity of the applicant/s. Repayment capacity takes into consideration factors such as age, income, dependents, assets, liabilities, stability of occupation and continuity of income, savings etc.
The maximum loan would be Rs.100 lakhs per unit to any individual applicant. It will extend loan upto 85 % of the cost of property vaue (including Stamp duty & Registration charges).
For How Long A Period Can I Get Loan?
Home Loans are granted for a term upto a maximum of 20 to 25 yrs. The term for the loan will under no circumstances exceed the age of retirement or completion of 70 yrs of age whichever is earlier.
What Is The Mode Of Repayment?
Equated Monthly Instalment (EMI) :
It means a uniform lumpsum amount, which includes repayment of a part of the principal amount and payment of interest, calculated on Monthly Rest basis. The amount is payable monthly.
EMI can commence -
Immediately after full disbursement. or the loan is fully disbursed or until 12 months from the date of first disbursement whichever is earlier. Untill EMI starts, Interest is payable on the Amount Disbursed on monthly basis.
What Is The Security For The Loan?
The security for the loan is the first mortgage of the property to be financed by way of deposit of the title deeds, subject to local laws.
When / How / Where Can Loan Application Be Made And How Long Will It Take?
In case of purchase of new flat , you may apply for a loan after you have entered into an agreement with the Builder/Seller and have paid earnest money to the Builder/Seller to purchase the dwelling unit. Loan can be applied only at the Area/Unit office where the proposed property is situated.
In case of re-sale, the loan will be disbursed in a Single installment, with least time-lag, provided, all the requirements are complied with expeditionsly.
In case of construction, loan will be disbursed in installments depending upon the progress of construction and on the requirements being complied with.
What Will Be The Interest Rate?
The Interest Rate is dependent on the purpose for which the Housing loan is taken. The latest rates are mentioned in the News Flash
What Are The Supporting Documents Required While Applying For Loans?
Common requirements for all applicants
Application form duly filled in with two latest photographs of applicants
Current residence proof like telephone bill, ration card.
Xerox coy of original documents, link documents along with encumbrance certificate
Copy of sanctioned plan and sanction letter.
Copy of NA permission/ULC clearence, wherever applicable.
Bank Pass-book or statements for the last two years.
Power of Attorney, wherever applicable
Additional Requirement For salaried persons
Employer's salary certificate in our format/salary slips for the last 3 months.
PAN CARD and Identity card of applicant/s/passport copy/Driving licence.
Latest Form No.16 for last two years
Bank pass book where salary is credited for last six months.
Copies of other bank accounts if any for last six months
For Businessmen / Self-employed/ Professionals
Latest 3 years’ years' income tax returns/assessment orders and supporting computation of income statements
Latest 3 years’ audited balance sheet, P&L account, annual reports etc.
Tax paid challans
Form No.16A, if applicable
Bank statement of firm/business for last 12 months
If any loan has been availed by applicant credit worthiness certificate from lenders.
If any loan has been availed by applicant credit worthiness certificate from lenders.
ITRs and computation of the firm for last 3 years. Profile of the firm, Certificate of Registration of the firm.
Copy of partnership deed
Copy of firms bank statement for last 6 months.
Purchase from builder
Copy of Agreement for sale.
Copy of registration receipt.
Copies of receipts of payment already made.
NOC from builders.
Set of title documents along with legal opinion if any.
Direct allotment in a Co-operative Housing Society
Allotment letter.
Share certificate.
Society registration certificate.
Copy of sale/lease deed in favour of the society.
NOC from society
Direct allotment in a Co-operative Housing Society by Public Agency
Allotment letter, Share Certificate, Society Registration certificate.
Lease Agreement.
Public agency's approved list of members.
NOC from Public Agency in favour of LICHFL.
NOC from society.
Public Agency's allotment to individuals
Allotment letter from Public Agency.
Tripartite Agreement between the borrower, LICHFL and the Public Agency in the prescribed format.
Resale cases and the property is mortgaged to the bank/FI by the Vendor(sellor)
Copy of all previous vendors' registered documents duly attested by bank along with copy of purchase agreement duly stamped and registered and the registration receipt wherever applicable.
List of the documents held by the bank/FI as security for the loan on letter head.
NOC in favour of LICHFL for release of mortgage and release of original documents directly to LICHFL after receipt of the money.
Type of mortgage created (Equitable or registered).
Closure quotation giving break up principal, interest and any other charges.
In case of takeover of loan, apart from the above, applicant has to submit Track record of monthly repayments made by applicant since inception of the loan.
Stages Involved From Application To Disbursement:
Submission of application with supporting documents.
Scrutiny of application personal interview by a company official.
If loan application is accepted the upfront fees(non- refundable) payable is 0.5% of the amount applied + service tax( total upfront fee is 1% of loan amount + Service tax).
Issue of Loan offer Letter by the Company.
On receiving Loan Offer Letter pay the balance upfront fees(non-refundable) 0.5% Loan sanctioned as mentioned in the LOL and submit requirements, if any.
Title clearance through our panel advocate.
Disbursement will be made after the applicant has invested his/her share.(Total cost less the amount of loan sanctioned).
Letter to Panel Valuer of inspection of property.
If the valuer's report is O.K., collect documents for stamping.
validity of a stamped document for its execution is 6 months, the documents should be stamped only after approval of the valuer's report.
Stamping of documents such as Memorandum of Deposit of Title Deeds, Deeds of guarantee etc. are as per the local law.
An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it's known as an IPO.
Companies fall into two broad categories: private and public. A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. Did you know that IKEA, Domino's Pizza and Hallmark Cards are all privately held?
It usually isn't possible to buy shares in a private company. You can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as "going public."
Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In the United States, public companies report to the Securities and Exchange Commission (SEC). In other countries, public companies are overseen by governing bodies similar to the SEC. From an investor's standpoint, the most exciting thing about a public company is that the stock is traded in the open market, like any other commodity.
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It is the process of meeting your financial goals through the proper management of your finances. Financial goals can include buying a home, savings for your child’s education, planning for your retirement or estate planning.
We help you to work out on where you are now, what you may need in the future and what you must do to reach your goal by the process that involves gathering relevant financial information, setting financial goals, examining your current financial status and coming up with a strategy for a plan on how you can meet with your goals, and map the gap.
Benefits Of Financial Planning:
Financial planning provides direction and meaning to financial decisions. It allows the client to understand how each financial decision they make affects other areas of their finances.
For eg. Buying a particular investment product might help them pay off their mortgage faster or it might delay the retirement significantly. By viewing each financial decision as part of the whole, the client can consider its short and long term effects on their life goals. The client can also adopt more easily to life changes and feel more secure that their goals are on track.
You Pay For It Because:
You want to engage the services of a qualified professional and ensure quality advice.
You save money when you avoid making wrong investment decisions.
Financial plan precedes any advice on products and to that extent, is completely unbiased.
You put your trust in the hands of an expert and your mind at ease.
Our Process
Our approach to financial planning is simple and straightforward. However, it is also important that you fully understand our consultative process and our step by step approach.
Evaluate Current Position
This is the first stage of our interaction. It involves evaluating your current situation which includes cash flow analysis, calculating your net worth, reviewing your insurance coverage for life, disability, home, auto, health etc.
Identify Goals
We then go about clearly establishing the objectives of the financial plan so that, several goals can be balanced. The goals could be short, medium or long-term and could include child’s education, marriage, your retirement etc.
Work Out the Plan
We then work out a clear strategy in line with your objectives and risk tolerance. Drawing up a winning asset allocation so that your financial goals are met is fundamental to a successful plan.
Implement the Plan
We will assist you in the process of implementing the plan by suggesting the optimal mix of products and services that are essential for the success of the plan.
Report Periodically
Once the plan is implemented we will monitor the progress on an on-going basis. We will periodically report the progress and measure the results achieved vis-à-vis the plan.
Review & Rebalance
Financial planning is a dynamic process. We will annually review the plan and progress made, to see if any modifications are required due to changes like inheritance, change in job status, birth or death in the family etc.
NRI Services
FAQ's relating to Investment
FAQ'S relating to Repatriation
Returning Indians
NRI Taxation
We offer a convenient and hassle-free way of Investing in the Indian Securities Market to NRIs who wish to participate in the Indian Growth story. We guide our NRI clients at every step of their investment needs so that they have complete peace of mind about their investments in India. Our capability to analyze relevant information in market trends, relevant data and the best-in-class investment products plays an important role in assisting our NRI clients in making a right decision. Our experience of capital markets & retail financial services makes us a reliable NRI investment solutions company. Our products, services and technology help facilitate an excellent investment experience.
Why should an NRI invest in India?
India's economy is sizzling and is one of the fastest growing in the world
Well developed banking system
Vibrant capital market. (National Stock Exchange: third largest, Bombay Stock Exchange: 5th largest in terms of number of trades)
India is rated as the most attractive destination for offshore business processing by global consultancy firms
India amongst the leading entrepreneurial hotbeds globally
Indian policies fully compatible with World Trade Organization
Young working population, with changing lifestyle. High local consumption.
Above all these, India is like a tax haven when it comes to investing in equity. The following are the four tax benefits that all investors, NRIs or Residents enjoy on their equity investment:
a. Long-term capital gains are tax-free
b. Short-term capital gains are taxed at the concessional rate of 10%.
c. Dividend is tax-free, however subject to a dividend distribution tax @15%
d. The capital is repatriable if the original investment was made through forex remitted from abroad or through NRE accounts.
If directly investing in the market is not your cup of tea, then Mutual Funds provide a very attractive alternative. These while broadly delivering the advantages of the equity market also obviate the pitfalls associated with it.
Service Offered (Non Resident Indians)
Our core competency lies in mutual fund advisory & Reality Services for our NRI Clients. We follow Need based advisory model after assessing the risk profile and investment objective.
How NRI strategy would work
Investor opens an NRE account with the funds repatriated into India.
Investor defines his investment goals.
We design a mutual fund portfolio based on invest objectives.
Investor can give mandate letter making Mr. x mandate holder to implement strategy without the loss of time and investor intervention or Investor can make one of his known persons mandate holder who can execute documents and sign cheques on his behalf.
We monitor the performance and progress of portfolio on continuous basis and refine strategy if required and carry out portfolio rebalancing. We provide regular update of the portfolio to the investor. Investment in stocks and mutual funds is subject to market risks. Investors should read the offer documents carefully before investing.
Online Valuation Reporting
From any corner of the globe, you can view status of your India specific investments with just a click of the mouse through our online valuation reporting module. As an investor we all invest in different avenues but keeping track of these investments is a challenging task. Our online valuation reporting system is designed by keeping this specific requirement in mind. Through our online reporting system you can get detail of all your India specific investments at just click of the mouse.
Online Mutual Fund Transaction
Our strong technological platform allows you to transact online for your mutual fund investments. If you want to invest or redeem or switch between schemes, all transactions can be done online. Our online investment platform enables you to transact with complete safety and without any compromise on privacy. We have strict privacy norms & practices in place to protect customer information. Utmost care is taken to secure your Logon Information and other transaction details.
Unbiased Scientific Advisory Service
We strongly believe that asset allocation is the single most important factor, which determines portfolio return, and we rigorously follow this principle while advising our clients. Our system driven approach allows us to track asset allocation of our clients on a regular basis and our advisory is strictly based on decided asset allocation of our clients.
What are Foreign Exchange Assets and Specified Assets
As per Section 115C of Indian Income Tax Act, 1961 Foreign Exchange Asset means any Specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible Foreign exchange.
Specified Asset means any of the following assets, namely:
shares in an Indian company
debentures issued by an Indian company which is not private company as defined in Companies Act, 1956
deposits with an Indian company which is not private company as defined in Companies Act, 1956
any security of the Central Government as defined in clause (2) of section 2 of the Public Debt Act, 1944
such other assets as the Central Government may specify in this behalf by notification in the Official Gazette.
Foreign Exchange for the purpose of the above means foreign exchange, which is for time being treated by Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973(46 of 1973), and any rules made thereunder.
Whether Right Shares and Bonus Shares form part of Foreign Exchange Assets?
RBI notification is silent on the issue of bonus shares and right entitlements. In the case of bonus shares, one can safely take the view that if the bonus shares are allotted as a result of shares for which payment is made by the way of inward remittance in foreign currency or by debit to NRE / FCNR account they would be treated as foreign Exchange Assets. Though nothing specific has been mentioned regarding the right entitlement, one can apply the analogy of bonus shares to right entitlements also. If payment for the original shares has been made by the way of inward remittance in foreign currency or by debit to NRE/ FCNR Account they would be treated as foreign exchange assets.
What are the various investment options available to NRIs under FDI route?
Investment options available to NRIs under FDI route can be broadly classified under two heads namely:
I. Automatic Approval Route.
II. Prior Approval from Government Route.
Presently most of the activities are under Automatic approval Route i.e 100% FDI. No approval is required for FDI in case of activities under Automatic Route only a notification to RBI is required within 30 days.
Cases that are not covered under the Automatic Route fall under Prior Approval from Government Route. Approval from government is required in such cases.
What is the Portfolio Investment Scheme?
Portfolio Investment Scheme (PINS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the 'Non Resident Indians (NRIs)' and 'Person of Indian Origin (PIOs)' can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch .
What steps does an NRI need to take to begin his or her investment in the Indian stock Market?
An NRI should open a new bank account with designated bank branch which is approved by RBI (Reserve Bank of India) for this purpose.
He should apply for a general approval for investment in Indian Stock Market through his designated bank branch.
He should open a Demat Account with a Depository Participant to hold his shares.
He needs to register with a broker to execute his buy/sell orders on the stock exchange(s).
What is the distinction between NRE and NRO accounts?
Funds remitted from abroad or local funds, which can otherwise be remitted abroad to the account holder, can be credited to NRE Accounts. Local funds, which do not qualify for remittance outside India, are required to be credited to NRO accounts.
What is the permission, which an NRI has to obtain to invest under the Portfolio Investment Scheme?
NRIs are allowed to invest in Indian equity markets under the Portfolio Investment Scheme. Under this scheme NRIs are permitted to invest in shares/debentures of Indian companies through Stock Exchanges in India. These investments require prior approval of RBI Designated branch of authorized banks have been now empowered to issue such permissions to NRIs.
Which are the broad schemes under which an NRI can make investments in the Indian companies?
Broadly, NRIs are allowed to invest under the Portfolio Investment Scheme (buying through the secondary market) and through the Direct Subscription route (Investments though IPOs/offer for sale /Private Placements).
Can an NRI have investments under Portfolio Investment Scheme on repatriation as well as non-repatriation basis?
Yes. Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment can only be credited to NRO account.
Under what circumstances can investments made under Portfolio Investment Scheme be repatriated?
The repatriation of the sale proceeds, net of taxes, are allowed if the original purchase was made on repatriation basis and such investments were made out of funds from NRE/FCNR account or by means of remittance from abroad.
Can NRI invest in shares/debentures of Indian Cos., and other securities on a non-repatriation basis?
Yes, NRIs can invest without any limit on non-repatriation basis in shares and convertible debentures of Indian Cos., issued either by public issue or private placement or right issues. NRI can also purchase Govt. Securities (other than bearer securities), treasury bills, units of domestic mutual funds etc on non-repatriation basis.
Can NRIs invest in Govt. Securities etc. on repatriation basis?
Yes. NRIs can invest on repatriation basis in:
Govt. securities(other than bearer securities), treasury bills or units of domestic Mutual Funds
Bonds issued by PSUs;
Shares in Public Sector Enterprise disinvestments by Govt. of India
Fund for such investment are to be received through foreign inward remittance or to debit of NRE/FCNR accounts.
The above securities can be sold through stockbrokers on a recognized stock exchange or tender units of mutual funds to the issuer for repurchase or for payment of maturity proceeds or tender Govt. securities/Treasury Bills to RBI for payment of maturity proceeds. The sale proceeds can be repatriated net of Indian Tax.
Can NRI/PIO invest in any immovable property in India?
An NRI does not require any permission to acquire any immovable property in India or transfer any property in India to a Resident citizen of India.
PIO's who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of RBI for acquiring or transferring any immovable property in India.
PIO has some restrictions. He does not require any permission to
Purchase a property out of forex.
Acquire a property by way of gift from a ROI.
Acquire a property by way of inheritance from a Resident or a person Resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or FEMA.
Sell any immovable property in India to a Resident.
Gift or sell agricultural property to a Resident who is a citizen of India.
Gift or sell a residential or commercial property in India to a Resident or person Resident outside India.
Can an NRI remit money outside India?
NRIs and PIOs (other than citizens of Pakistan and Bangladesh) can remit their money under following circumstances:
For any bonafide purpose (other than sale proceeds of immovable property)
Sale proceeds of immovable property acquired out of rupee sources (when resident or from the NRO account)
Sale proceeds of immovable property acquired by inheritance / legacy
Sale proceeds of immovable property acquired out of funds remitted from abroad/NRE/FCNR accounts
Maintenance of close relatives abroad by citizens of foreign states (other than Pakistan) employed in India, who are not permanently resident in India
Foreign student/trainee (other than citizen of Nepal or Bhutan or a person of Indian origin)
Foreign tourists from NRO account
Current income (Rent, dividend, pension, etc.) out of NRO account.
What is the procedure required for remittance of money out of India?
In order to remit money outside India, an NRI is required to obtain a certificate from a Chartered Accountant, which has to be submitted to RBI along with an undertaking, which will be signed by the individual himself or by any other person authorized by him.
Can proceeds on sale of shares be repatriated out of India?
An NRI should authorize only one branch of only one bank in India for the Portfolio Investment Scheme (PIS). Power of attorney should be granted in favour of a resident Indian/relatives to carry out the various formalities. The dividend and the capital originally invested along with the capital gains thereon can be repatriated only after he obtain a certificate from a Chartered Accountant declaring that proper tax has been paid or satisfactory arrangements have been made to pay it in proper time or if the NRI so wishes a no-objection certificate can be obtained from the Income-tax Department.
On receiving such NOC or Chartered Accountant's certificate, the proceeds would be repatriated or credited to the NRE/FCNR account of the NRI (which is equivalent to repatriation).
What are the provisions regarding repatriation of sale proceeds on sale of immovable property?
In the event of sale of immovable property by a PIO, the sale proceeds may be repatriated outside India, provided ---
The immovable property was acquired by the PIO in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or FEMA. There is no lock in period for the sale of such acquired properties.
The amount to be repatriated does not exceed the amount paid for acquisition of the immovable property in forex and in case of residential property the repatriation of sale proceeds is restricted to not more than two such properties. There is no restriction on the repatriation of number of commercial properties.
Can income earned in India repatriated from India?
PIO can freely rent out their immovable property, whether purchased through the application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax has been paid on the same. The AD is empowered to arrange for such repatriation.
What are the rules pertaining to investments by NRIs in shares and debentures of Indian Cos., on repatriation?
NRIs can invest in shares & debentures of Indian companies on repatriation basis as per general permission granted by RBI provided
The investee company is not engaged in any activity outside the automatic route of RBI
Subject to sectoral caps on investment as prescribed by RBI
Funds for investment are received through foreign inward remittance or to the debit of NRE/FCNR accounts.
Upon disinvestments on a recognized stock exchange in India, through a stockbroker at ruling market prices the proceeds can be repatriated net of Indian Taxes.
Can NRI place deposits with companies on repatriation basis?
Yes, provided the company accepts the deposits under public deposit scheme for the period not exceeding 3 years and has obtained necessary ratings etc.
What happens when NRI/PIO returns to India?
When an NRI/PIO returns to India
He continues holding any assets in foreign currency (foreign securities and properties situated outside India), if the same were acquired while being an NRI or a PIO.
Balances will continue to remain in NRI accounts in India.
Balances held in NRO account will have to be converted to resident status.
Balances lying in the NRE/FCNR Term Deposit may be continued till maturity at the original contracted interest rates or can be converted into Resident Foreign Currency Account (RFC), at the option of the account holder.
Any proceeds of assets held outside India at the time of return as well as salary/pension or other dues received subsequently can also be credited to these deposits.
All the above funds are free from all restrictions on usage
Can NRI/PIO returning to India hold assets abroad ?
Under section 6(4) of FEMA, a person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.
There is no need of any approval from RBI even after the NRI becomes, after his return, a person resident in India.
This general permission will not apply in respect of any asset received after becoming a resident by way of gift or inheritance from abroad. Similarly, the benefit is not available on earnings from employment secured subsequent to the return. If the ex-NRI wishes to retain such assets abroad or liquidate them and deposit the money in an RFC account, he has to apply for permission from RBI.
What will be status of the accounts of an NRI on his/her return to India?
A returning Indian's NRE/FCNR accounts will be designated as Resident account. However, they will continue to run till maturity at the contracted rate of interest.
Is NRI subject to tax after returning to India and can he maintain a Foreign Currency Account?
Yes, earnings of NRIs are subject to tax laws of India and the returning NRI can get his NRE, FCNR accounts converted into RFC accounts.
Who can open RFC account?
A returning NRI who was resident outside India earlier and is returning now for residing permanently is permitted to open RFC account.
What are the benefits of RFC accounts?
The benefits of RFC accounts are:
In case of conversion from FCNR accounts, there is no exchange loss. Balance in RFC account can be used for local payments and can be remitted abroad for all bonafide purposes.
In case the NRI was residing abroad continuously for a period of 9 years out of previous 10 years, then no tax on interest earned of RFC accounts for next 2 years. In the event of the returning Indian regarding his NRI status the balances in his RFC account can be reconverted into NRE/FCNR (B) deposits.
Can I have multiple NRE and NRO accounts with designated branches of different authorized banks for the purpose of investing in Indian equity markets under the Portfolio Investment Scheme?
No. All investments in Indian equity markets under the Portfolio Investment Scheme must be routed through only one dedicated NRE and NRO account opened with any one of the designated branch of authorised banks. Although you can have multiple NRO and NRE account with different banks/branches but Investments under Portfolio Investment Scheme cannot be made through more than one NRE or NRO account maintained with the designated bank branch
Do investments made though subscription to Initial Public Offerings (IPOs) or Private placements also come under the preview of Portfolio Investment Scheme?
No. Investments made by NRIs through subscription to Initial Public Offerings (IPOs) or Private placements are not covered by Portfolio Investment Scheme. Such investments are covered by RBI's regulations with regard to Foreign Direct Investments.
Do NRIs need any permission of RBI to subscribe to Initial Public Offerings (IPOs) or Private placements of equity shares/convertible debentures of existing or new companies?
No. NRIs do not require any permission to invest though Initial Public Offerings (IPOs) or Private placements. In such cases, the Issuing company should comply with all necessary regulations for issuing securities to a person resident outside India.
Do NRIs need any approval from Reserve Bank of India for selling of the securities acquired through IPOs/Private Placement?
No. NRIs can sell such shares/debentures on the Exchange without any approval. However, while seeking the credit of sale proceeds to NRE/NRO account, the bank should be provided with the details regarding date of allotment and cost of acquisition to calculate the taxes, if any.
Do NRIs need to route the sale of securities acquired through IPO/Private Placement through the designated bank branch for Portfolio Investment Scheme, if any?
No. The shares/convertible debentures acquired under IPO cannot be routed through designated bank branch, as this is not covered by Portfolio Investment Scheme.
Is there any limit for purchase of shares/convertible debentures by NRIs under the Portfolio Investment Scheme?
Yes. An NRI can purchase up to a maximum of 5% of the aggregate paid up capital of the company (equity as well as preference capital) or the aggregate paid up value of each series of convertible debentures as the case may be. For the purpose of this ceiling, investment under the Portfolio Investment Scheme on repatriation as well as non-repatriation basis will be clubbed together.
Convertible debentures acquired through Private Placement are excluded for the purpose of above limits.
Investing in a mutual fund is like an investment made by a collective. An individual as a single investor is likely to have lesser amount of money at disposal than say, a group of friends put together. Now, let's assume that this group of individuals is a novice in investing and so the group turns over the pooled funds to an expert to make their money work for them. This is what a professional Asset Management Company does for mutual funds. The AMC invests the investors' money on their behalf into various assets towards a common investment objective.
Mutual Fund is a vehicle that enables a collective group of individuals to:
Pool their investible surplus funds and collectively invest in instruments / assets for a common investment objective.
Optimize the knowledge and experience of a fund manager, a capacity that individually they may not have
Benefit from the economies of scale which size enables and is not available on an individual basis
Why Financial planning is important?
Financial planning is one of the most important aspect of ones life which is sadly ignored by the most of the people. It is a must for meeting ones financial goals and securing their future. There are events which are certain to occur in every individuals life and all those events involve heavy financial expense once they occur. E.g i)when one gets married. ii)Birth of a child. iii)Child's Higher education. iv) Child's marriage.v) Post Retirement expenses when earnings shrinks. Sometimes sudden medical expenses that might arise during our lifetime etc . Besides he or she needs to beat inflation to maintain his/her living standards. If we park our savings in instruments like saving accounts then infact value of our savings are getting eroded with time .Reason being our historical inflation rate lies between5 to 9 percent, current saving rate is around 4 percent. It means that if we keep Rs. 100 in a saving account for one year then after one year it will amount to 104 but due to inflation the commodity we could have purchased for Rs.100 a year back will cost around Rs.109 .It means our Rs.100 value has eroded in one year. To minimize future financial risks and to achieve financial security mutual funds are one of the best instruments for financial growth.
Savings Vs Investment
Saving involves income that is not consumed. Savings are low risk funds that must be liquid (available) when you need them. The purpose of saving money is so you can have it for a specific purpose within a short time frame. Investments, on the other hand, are for wealth building, and will not be needed for many years. Yes, investments do involve greater risk, but, investments also yield much greater returns when left alone long enough to ride out the turbulence of the stock market.
Why One should invest in mutual funds?
Saving involves income that is not consumed. Savings are low risk funds that must be liquid (available) when you need them. The purpose of saving money is so you can have it for a specific purpose within a short time frame. Investments, on the other hand, are for wealth building, and will not be needed for many years. Yes, investments do involve greater risk, but, investments also yield much greater returns when left alone long enough to ride out the turbulence of the stock market.
Reason 1:
They are investments instruments which are capable of giving high returns . An average mutual fund scheme returns easily beats inflation in longer run and a good scheme can give far superior returns.
Reason 2:
Our Mutual Fund industry is one of the best regulated industry in the world. They are governed by the strict guidelines layed down by SEBI(Securities & Exchange Board of India).
Reason 3:
Investments decision of a Mutual Fund is taken by their AMCs and Fund Managers. They are experts who make investments decisions after doing intensive research and analysis of a company & industry. (Individuals generally don't have time and resources to do research hence best option is to let MF manage your investments)
Reason 4:
This industry is highly liquid. Even more liquid than stock markets. Payments are generally made through cheques or in some cases they are directly credited to your bank accounts , If your bank is allowing RTGS & electronic clearing and mutual fund AMC is providing such facility.
Reason 5:
Investments are diversified into many companies & sectors. Which make our investments safer and consistent growth prospects. Diversifying is usually not done by small investors , for such a actions one requires lots of funds.
Reason 6 :
Tax treatments- Governments encourage investments in capital markets and has given many tax sops. Under i) 80(c) investments done upto one lakh in specific mutual funds schemes which is called ELSS(Equity Linked Saving Schemes.) are exempt from tax. ii) Any units held for more than one year if redeemed is treated under long term capital gain tax which is zero percent currently i.e. the whole profit is tax free. If one plans to redeem before one year then he has to pay tax of only15% on the profits.
Reason 7:
Mutual Funds are much cheaper compared to direct exposure to capital market since one does not need demat account ,annual charge to maintain account, charges imposed on demat holdings, stamp duty on transaction are not levied
Now, let's assume that this group of individuals is a novice in investing and so the group turns over the pooled funds to an expert to make their money work for them. This is what a professional Asset Management Company does for mutual funds. The AMC invests the investors' money on their behalf into various assets towards a common investment objective.
Hence, technically speaking, a mutual fund is an investment vehicle which pools investors' money and invests the same for and on behalf of investors, into stocks, bonds, money market instruments and other assets. The money is received by the AMC with a promise that it will be invested in a particular manner by a professional manager (commonly known as fund managers). The fund managers are expected to honour this promise. The SEBI and the Board of Trustees ensure that this actually happens.
Tenor refers to the 'time'. Mutual funds can be classified on the basis of time as under:
Open ended funds
These funds are available for subscription throughout the year. These funds do not have a fixed maturity. Investors have the flexibility to buy or sell any part of their investment at any time, at the prevailing price (Net Asset Value - NAV) at that time.
Close Ended funds
These funds begin with a fixed corpus and operate for a fixed duration. These funds are open for subscription only during a specified period. When the period terminates, investors can redeem their units at the prevailing NAV.
Equity funds
These funds invest in shares. These funds may invest money in growth stocks, momentum stocks, value stocks or income stocks depending on the investment objective of the fund.
Debt funds
These funds invest money in bonds and money market instruments. These funds may invest into long-term and/or short-term maturity bonds.
Hybrid funds or Income funds
These funds invest in a mix of both equity and debt. In order to retain their equity status for tax purposes, they generally invest at least 65% of their assets in equities and roughly 35% in debt instruments, failing which they will be classified as debt oriented schemes and be taxed accordingly. Monthly Income Plans (MIPs) fall within the category of hybrid funds. MIPs invest up to 25% into equities and the balance into debt.
Real asset funds
These funds invest in physical assets such as gold, platinum, silver, oil, commodities and real estate. Gold Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) fall within the category of real asset funds.
Diversified Equity Funds
These funds diversify the equity component of their Asset Under Management (AUM), across various sectors. Such funds avoid taking sectoral bets i.e. investing more of their assets towards a particular sector such as oil & gas, construction, metals etc. Thus, they use the diversification strategy to reduce their overall portfolio risk.
Sector Funds
These funds are expected to invest predominantly in a specific sector. For instance, a banking fund will invest only in banking stocks. Generally, such funds invest 65% of their total assets in a respective sector.
Index Funds
These funds seek to have a position which replicates the index, say BSE Sensex or NSE Nifty. They maintain an investment portfolio that replicates the composition of the chosen index, thus following a passive style of investing.
Exchange Traded Funds (ETFs)
These funds are open-ended funds which are traded on the exchange (BSE / NSE). These funds are benchmarked against the stock exchange index. For example, funds traded on the NSE are benchmarked against the Nifty. The Benchmark Nifty BeES is an example of an ETF which links to the stocks in the Nifty. Unlike an index fund where the units are traded at the day's NAV, in ETFs (since they are traded on the exchange) the price keeps on changing during the trading hours of the exchange. If you as an investor want to buy or sell ETF units, you can do so by placing orders with your broker, who will in-turn offer a two-way real time quote at all times. The AMC does not offer sale and re-purchase for the units. Today, ETFs are available for pre-specified indices. We also have Gold ETFs. Silver ETFs are not yet available.
Fund of Funds (FOF)
These funds invest their money in other funds of the same mutual fund house or other mutual fund houses. They are not allowed to invest in any other FOF and they are not entitled to invest their assets other than in mutual fund schemes/funds, except to such an extent where the fund requires liquidity to meet its redemption requirements, as disclosed in the offer document of the FOF scheme.
Fixed Maturity Plan (FMP)
These funds are basically income/debt schemes like Bonds, Debentures and Money market instruments. They give a fixed return over a period of time. FMPs are similar to close ended schemes which are open only for a fixed period of time during the initial offer. However, unlike closed ended schemes where your money is locked for a particular period, FMPs give you an option to exit. Remember though, that this is subject to an exit load as per the funds regulations. FMPs, if listed on the exchange, provide you with an opportunity to liquidate by selling your units at the prevailing price on the exchange. FMPs are launched in the form of series, having different maturity profiles. The maturity period varies from 3 months to one year.
Country or Region Funds
These funds invest in securities (equity and/or debt) of a specific country or region with an underlying belief that the chosen country or region is expected to deliver superior performance, which in turn will be favourable for the securities of that country. The returns on country fund are affected not only by the performance of the market where they are invested, but also by changes in the currency exchange rates.
Offshore Funds
These funds mobilise money from investors for the purpose of investment within as well as outside their home country.
So we have seen that funds can be categorised based on tenor, investment philosophy, asset class, or geographic region. Now, let's get down to simplifying some jargon with the help of a few definitions, before getting into understanding the nitty-gritty of investing in mutual funds.
Net Asset Value (NAV)
NAV is the sum total of all the assets of the mutual fund (at market price) less the liabilities (fund manager fees, audit fees, registration fees among others); divide this by the number of units and you get the NAV per unit of the mutual fund.
Standard Deviation (SD)
SD is the measure of risk taken by, or volatility borne by, the mutual fund. Mathematically speaking, SD tells us how much the values have deviated from the mean (average) of the values. SD measures by how much the investor could diverge from the average return either upwards or downwards. It highlights the element of risk associated with the fund.
Sharpe Ratio (SR)
SR is a measure developed to calculate risk-adjusted returns. It measures how much return you can expect over and above a certain risk-free rate (for example, the bank deposit rate), for every unit of risk (i.e. Standard Deviation) of the scheme. Statistically, the Sharpe Ratio is the difference between the annualised return (Ri) and the risk-free return (Rf) divided by the Standard Deviation (SD) during the specified period. Sharpe Ratio = (Ri-Rf)/SD. Higher the magnitude of the Sharpe Ratio, higher is the performance rating of the scheme.
Compounded Annual Growth Rate (CAGR)
These funds invest in physical assets such as gold, platinum, silver, oil, commodities and real estate. Gold Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) fall within the category of real asset funds.
Absolute Returns
These are the simple returns, i.e. the returns that an asset achieves, from the day of its purchase to the day of its sale, regardless of how much time has elapsed in between. This measure looks at the appreciation or depreciation that an asset - usually a stock or a mutual fund - achieves over the given period of time. Mathematically it is calculated as under:
Ending Value - Beginning Value x 100
Beginning Value
Generally returns for a period less than 1 year are expressed in an absolute form.
A company organises money to do business with through borrowings and owners contribution. The owners contribution is called equity capital or simply equity. Equity is accumulation of small, equal amounts against which the company issues certificates, which are called shares, stock or again equity. Shares have indefinite life with a face value, which can be changed if the shareholders decide, and no guaranteed return.
Fixed income products forms the base of a financial plan. If the base is not strong whatever we build upon it is under risk of collapse, therefore by allocating a higher quanta of funds towards fixed income products improves the overall stability of a portfolio.
Company Fixed Deposits
Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial insstitutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilised are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.
Benefits of investing in Company Fixed Deposits
High interest.
Short-term deposits.
Lock-in period is only 6 months.
No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year
Investment can be spread in more than one company, so that interest from one company does not exceed Rs. 5,000
Like most investment option, Company Fixed Deposits are a mixed bag. Company FDs can be an interesting investment option if you know how to select the right FD, and how to avoid the no-so-good ones. Here are some of the points that investors should keep in mind.
Spread your Risk
The deposits should be spread over a large number of companies engaged in different industries. This way, you’ll be able to diversify your risk among various industries/companies. Try not to put more than 10% of your total investments in one particular company.
Choose the Right Period of Deposit
Ideally, the investment should be for 1 to 3 years depending upon the rate of interest.
Periodic Review
The performance of the companies should be reviewed at maturity. This will help you decide whether to renew or reshuffle the deposit. It is also wise to keep a track of these companies by checking their share prices, annual reports and other details reported in newspapers.
54EC CAPITAL GAIN BONDS
The benefit under section 54EC can be availed of only if there is an income from a capital asset, being long-term in nature. Long-term capital gains are the profit that a person makes when he sells any capital asset (for example, any immovable property, jewellery or shares) which he has held for a period exceeding three years. An exception is his holding of shares in which the holding period has been fixed at one year.
Any person (including NRI out of NRO account on a non-repatriable basis) and Hindu undivided family (HUF), through its Karta, can make investments (not exceeding Rs 50 lakh in a given financial year) in the two bonds notified by the Government of India. In case only part investment is made, the amount of deduction gets reduced in proportion to the investment.
The two corporations which have been notified by the Government of India as being eligible for issue of these bonds are (a) National Highway Authority of India (NHAI) and (b) Rural Electrification Corporation (REC).
These bonds carry a lower rate of interest as compared to other investment options, such as Public Provident Fund, bank fixed deposits and National Savings Certificates, among others. The main reason for this lower rate of interest is that the investor gets the benefit of reducing his income tax liability upon investing in these bonds, if he has long-term capital gains. These bonds are issued for a fixed maturity period of three years. These bonds have been rated as “AAA/Stable” by Credit Rating and Information Services of India (CRISIL).
The investment has to be made within six months from the date of the transfer in order to be eligible for claiming the benefit of deduction under section 54EC. The face value of these bonds is Rs 10,000, and the full amount has to be paid upfront along with the application.
The maximum amount that a person can invest in these bonds (NHAI and REC combined) in any financial year is Rs 50 lakh. If a person has long-term capital gains which have accrued to him after 1 October of any year, and the amount of capital gains exceed Rs 50 lakh, he can split his investment by investing Rs 50 lakh up to 31 March of the following year and the balance on 1 April of that year. The balance amount in this case, however, should not exceed Rs 50 lakh. By doing this, he can have the benefit of investment of up to Rs 1 crore. Joint applications shall also be included for the purposes of this limit.
The deemed date of allotment is the last date of the month in which the application is made and the amount is realised by the issuer.
These bonds can be held in dematerialised form or in physical form. The bonds can be held under a single name or joint names. The facility for nomination is also available on these bonds. These bonds are non-transferable, non-negotiable and cannot be offered as security for any loan or advance. However, transmission of the bonds to legal heirs in case of death of the bondholder is allowed under the rules.
The NHAI bonds carry interest at 6.25 per cent per annum, payable annually on 31 March every year. REC bonds carry interest at 5.75 per cent per annum, payable annually on 30 June every year. The interest earned on these bonds is fully taxable under the head “Income from Other Sources”. No tax at source would be deducted from the interest on these bonds.
Key Features :
New Section Introduced in Income Tax Act 2011: Section 80CCF was introduced in the Income Tax Act, 1961 in the budget of February 2010. As per this section investments made in notified infrastructure bonds are exempt from tax up to maximum of Rs 20,000 per year. Section 80CCF allows individuals to invest Rs. 20,000 in infrastructure bonds, and reduce this amount from taxable income. This exemption is in addition to the Rs. 100,000 deduction under section 80C (Investment in instruments like ELSS Mutual Funds, Life Insurance, Provident Fund etc).
Interest Income is Taxable: The interest income from infrastructure bond is taxable. The interest will be added to investors taxable income. This means even though the investment in these bonds is exempt from tax (maximum Rs 20,000). interest income is not. This means investment under section 80CCF is advisable only after the investor has completely exhausted Rs One Lakh investment under section 80C.
The funds raised through these bonds will be utilised towards "infrastructure lending" as defined by the RBI in the regulations issued by it from time to time, after meeting the expenditures of, and related to the issue. These infrastructure bond issues are part of the government's effort to mobilise money to part-fund the massive $1-trillion infrastructure spend it has planned for the Twelfth Plan.
Tax Benefits: Under section 80CCF of the Income Tax Act, Rs 20,000 per annum paid or deposited as subscription to long term infrastructure bonds shall be deducted in computing the taxable income. This is over and above Rs 1,00,000 tax benefit available under section 80C, 80CCC and 80CCD.
Pros: The limit of Rs 20,000 per annum is in addition to Sections 80C, 80CCC and 80CCD. Hence, it is advisable to consider applying in this issue. Cons: The bonds are locked in for five years, so there is no exit in case you need the money midway which restricts liquidity.
A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.
Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. An example of a government debenture would be any government-issued Treasury bond (T-bond) or Treasury bill (T-bill). T-bonds and T-bills are generally considered risk free because governments, at worst, can print off more money or raise taxes to pay these type of debts
You will do anything for the ones you love.Thinking about why you need life insurance can be an emotional and stressful task. However, life insurance is one of the most responsible decisions you can make to help ensure that your spouse, children or other loved ones can continue to enjoy the quality of the life they deserve. Life is unpredictable.
So it is important to ensure that your family and loved ones are taken care of financially in case something should happen to you. This is where life insurance comes in.It can provide some financial peace of mind if the worst were to happen.
What is Life Insurance?
Life insurance offers a way to replace the loss of income that occurs when someone dies. Life insurance is insurance for you and your family's peace of mind. With a life insurance policy in place, you can:
Provide security to your family
Protect your home mortgage, loans, credit card borrowings etc.
Provide finance to your loved ones to achieve their goals in your absence
Ensure that your family is able to maintain their lifestyle, no matter what happens
Take care of your estate planning needs
Look at other retirement saving/investment vehicles
The basics of term life insurance
Term life insurance is the purest form of life insurance It provides insurance protection for a specific period of time, such as 10, 15, 20 or 30 years. If the insured person dies within the time the policy is in force, the nominees/beneficiaries receive the Sum assured amount of the policy tax-free. If you outlive your policy term, the insurance terminates and you must buy another policy if you still want to carry life insurance. You can also buy term life insurance that covers you until you reach a certain age, usually 65 or 70.
Since it is a "pure life insurance protection," term life insurance is also the cheapest form of life insurance. Because of its low cost among life insurance types, term life continues to be the product of choice by most of the people seeking protection.
Generally, any one purchases life insurance to replace him for household income in case of death, so that loved ones can pay debts and living costs, without compromising on the standard of living. For example, if an family buys a home with some loan, and one of the spouse were to die tomorrow, the other spouse would have to pay the mortgage on his or her own. If they had a term life insurance policy, the surviving spouse could receive enough tax free money from the policy's death benefit to pay off the mortgage.
Term insurance doesn't just cover specific debts, however. If case of children’s education, term insurance is low cost life insurance that can provide money for college and living expenses if the life assured were to die before your children are fully grown.
These are the offers these pros and cons of term life insurance:
Pros:
Affordable.
Good for someone who has a mortgage or wants coverage for children’s education planning or a retirement kitty for surviving spouse.
Can be used as a a tool to do a charity, as the life assured can nominate a Trust or an NGO as the beneficiary in case of death.
Affordable.
The premium remains constant thru the period of the policy, so if a young person opts for such an insurance, the effective inflation makes the premium cheaper every year.
Cons:
Affordable.
No cash value – This being a pure insurance, the premium is an expense for the cover utilised.
If your term expires, the cost increases exponentially to buy a new policy.
Very easy to stop the policy, since there is no ‘loss’ of income
Medical exam is usually required
When you apply for term life coverage, the insurance company will probably require a medical exam before issuing a policy. The examination covers your height, weight, blood pressure, medical history and blood and urine testing. With the blood and urine tests, the insurer looks for specific medical problems and the presence of nicotine. Positive results could affect your premium, or even your ability to buy a policy.
Smokers will usually pay more for term life insurances.
Different flavours of term life
As you age, the likelihood you will die increases. That's why life insurance costs more as you get older. You can lock in low premiums by buying for a "level premium" policy. That means for a specific time period, say 20 years, your premium rate stays the same. Many term policies give you the option to renew your coverage at the end of the term without undergoing another medical exam, although your premiums will rise for annually after the level term period — often substantially. A less popular policy is "annual renewable term." This gives coverage for one year with the option of renewing it each year for a specified duration, such as 20 years. With this policy,the rates go up every year you renew and are calculated based on the probability of life assured’s dying within the next year.
If someone would like to have term life insurance in place to provide for beneficiaries yet he/she is confident that he will outlive the policy period , then he could consider "return of premium" term life insurance. Under this type of policy, if no death benefit has been paid by the end of your insurance term, they will receive all your premiums back. It pays to shop around for a policy like this, but on the low end you can expect to pay 50 percent more in premiums than comparable traditional term life insurance.
How long a term?
Figuring out which term you should buy — 10 years, 20 years, 30 years or some other number — requires a major review of your debts, financial needs, dependents' needs — and when all those might change. Typically one should take the maximum possible term, when buying a term insurance, as the probability of getting the claim is highest, the premiums remain constant for the said period and at an older age, due occurrence of life-style deases such as blood pressure or diabetes, the premiums could rise substantially or one may not be insurable too. It's a good idea to review your life insurance needs carefully & regularly, both when you buy the policy and when there's major a life change."One may not have the adequate coverage needed or may have more than you needed” either ways is not efficient.
In short, the objectives for buying term insurance are as under :
If someone wants to leave assets for his/her heirs
In case of coverage for debt, like home/car etc. loans
Need the death benefit for business-planning purposes – Keyman insurance
If someone is interested in charity
The cash value debate A whole life insurance policy covers you for your whole life, no matter when you die. It also includes a "bonuses” a that build up value over time as it accrues interest or investment gains. Variable universal life insurance (VUL), a form of permanent life insurance, is popular because it offers a cash value account that may build up with interest based on the performance of the stocks, bonds or other investments.
Some financial planners advocate VUL policies because they force you to save money in the cash value component. Others recommend you buy term insurance for the cheaper premium and then invest the difference in mutual funds or other investments. VUL also allows you to change your death benefit and subsequent premium payments over time.
Cash value in life insurance should not be considered a traditional investment because any partial withdrawals or loans will reduce your death benefit. In addition, every year you own the policy, more of your premium goes to pay for the cost of insuring you and less goes toward the cash value.
Term life insurance is the purest form of life insurance It provides insurance protection for a specific period of time, such as 10, 15, 20 or 30 years. If the insured person dies within the time the policy is in force, the nominees/beneficiaries receive the Sum assured amount of the policy tax-free. If you outlive your policy term, the insurance terminates and you must buy another policy if you still want to carry life insurance. You can also buy term life insurance that covers you until you reach a certain age, usually 65 or 70.
Since it is a "pure life insurance protection," term life insurance is also the cheapest form of life insurance. Because of its low cost among life insurance types, term life continues to be the product of choice by most of the people seeking protection.
Generally, any one purchases life insurance to replace him for household income in case of death, so that loved ones can pay debts and living costs, without compromising on the standard of living. For example, if an family buys a home with some loan, and one of the spouse were to die tomorrow, the other spouse would have to pay the mortgage on his or her own. If they had a term life insurance policy, the surviving spouse could receive enough tax free money from the policy's death benefit to pay off the mortgage.
Term insurance doesn't just cover specific debts, however. If case of children’s education, term insurance is low cost life insurance that can provide money for college and living expenses if the life assured were to die before your children are fully grown.
These are the offers these pros and cons of term life insurance:
Pros:
Affordable.
Good for someone who has a mortgage or wants coverage for children’s education planning or a retirement kitty for surviving spouse.
Can be used as a a tool to do a charity, as the life assured can nominate a Trust or an NGO as the beneficiary in case of death.
The premium remains constant thru the period of the policy, so if a young person opts for such an insurance, the effective inflation makes the premium cheaper every year.
Cons:
No cash value – This being a pure insurance, the premium is an expense for the cover utilised.
Very easy to stop the policy, since there is no ‘loss’ of income
If your term expires, the cost increases exponentially to buy a new policy.
Medical exam is usually required
When you apply for term life coverage, the insurance company will probably require a medical exam before issuing a policy. The examination covers your height, weight, blood pressure, medical history and blood and urine testing. With the blood and urine tests, the insurer looks for specific medical problems and the presence of nicotine. Positive results could affect your premium, or even your ability to buy a policy.
Smokers will usually pay more for term life insurances.
Different flavours of term life
As you age, the likelihood you will die increases. That's why life insurance costs more as you get older. You can lock in low premiums by buying for a "level premium" policy. That means for a specific time period, say 20 years, your premium rate stays the same. Many term policies give you the option to renew your coverage at the end of the term without undergoing another medical exam, although your premiums will rise for annually after the level term period — often substantially. A less popular policy is "annual renewable term." This gives coverage for one year with the option of renewing it each year for a specified duration, such as 20 years. With this policy,the rates go up every year you renew and are calculated based on the probability of life assured’s dying within the next year.
If someone would like to have term life insurance in place to provide for beneficiaries yet he/she is confident that he will outlive the policy period , then he could consider "return of premium" term life insurance. Under this type of policy, if no death benefit has been paid by the end of your insurance term, they will receive all your premiums back. It pays to shop around for a policy like this, but on the low end you can expect to pay 50 percent more in premiums than comparable traditional term life insurance.
How long a term?
Figuring out which term you should buy — 10 years, 20 years, 30 years or some other number — requires a major review of your debts, financial needs, dependent's needs — and when all those might change. Typically one should take the maximum possible term, when buying a term insurance, as the probability of getting the claim is highest, the premiums remain constant for the said period and at an older age, due occurrence of life-style deases such as blood pressure or diabetes, the premiums could rise substantially or one may not be insurable too. It's a good idea to review your life insurance needs carefully & regularly, both when you buy the policy and when there's major a life change." One may not have the adequate coverage needed or may have more than you needed” either ways is not efficient.
In short, the objectives for buying term insurance are as under :
If someone wants to leave assets for his/her heirs,
In case of coverage for debt, like home/car etc. loans
Need the death benefit for business-planning purposes – Keyman insurance
If someone is interested in charity
The cash value debate A whole life insurance policy covers you for your whole life, no matter when you die. It also includes a "bonuses” a that build up value over time as it accrues interest or investment gains. Variable universal life insurance (VUL), a form of permanent life insurance, is popular because it offers a cash value account that may build up with interest based on the performance of the stocks, bonds or other investments.
Some financial planners advocate VUL policies because they force you to save money in the cash value component. Others recommend you buy term insurance for the cheaper premium and then invest the difference in mutual funds or other investments. VUL also allows you to change your death benefit and subsequent premium payments over time.
Cash value in life insurance should not be considered a traditional investment because any partial withdrawals or loans will reduce your death benefit. In addition, every year you own the policy, more of your premium goes to pay for the cost of insuring you and less goes toward the cash value.
What is General Insurance?
Insurance other than 'Life Insurance' falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also other covers such as Errors and Omissions insurance for professionals, credit insurance etc. Non-life insurance companies have products that cover property against Fire and allied perils, flood storm and inundation, earthquake and so on. There are products that cover property against burglary, theft etc. The non-life companies also offer policies covering machinery against breakdown,there are policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business. In respect of insurance of property, it is important that the cover is taken for the actual value of the property to avoid being imposed a penalty should there be a claim. Where a property is undervalued for the purposes of insurance, the insured will have to bear a rateable proportion of the loss. For instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in the event of a loss to the extent of say Rs.50/-, the maximum claim amount payable would be Rs.25/- ( 50% of the loss being borne by the insured for underinsuring the property by 50% ). This concept is quite often not understood by most insureds. Personal insurance covers include policies for Accident, Health etc. Products offering Personal Accident cover are benefit policies. Health insurance covers offered by non-life insurers are mainly hospitalization covers either on reimbursement or cashless basis. The cashless service is offered through Third Party Administrators who have arrangements with various service providers, i.e., hospitals. The Third Party Administrators also provide service for reimbursement claims. Sometimes the insurers themselves process reimbursement claims.
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What is Wealth?
Basically wealth is an abundance of variable material resources. The meaning of wealth is not straightforward. Wealth is basically a person’s net worth. Wealth can be explained as assets minus liabilities.
What is Management?
Management is the art of getting the work accomplished by the efforts of other persons and factors. Management involves Planning, Organizing, Staffing, Controlling, Directing an organization.
What is Wealth Management?
Wealth Management is a discipline that incorporates financial planning, Investment portfolio management and a number of financial services. It is a professional service it can also encompass all parts of a person’s financial life. Wealth management is done by wealth managers. Wealth managers can be MBAs, CFAs & Certified Financial Planners(CFPCM) or any credentialed professional money manager who works to enhance the growth and income. Investors must have already accumulated a proper amount of wealth for wealth management strategies to be efficient and effective. It can be provided by large company entities, independent financial advisers or multi-licensed portfolio managers. Their services are designed to focus on high-net worth customers. Wealth Managers use their experience in estate planning, risk management and legal specialists, to manage the holdings of high net worth client. Wealth managers must contain a current profile of client holdings.
Wealth management is an integrated process for helping clients manage their wealth. It involves huge a wide range of services and the services depend upon each investor but the condition is that services should include investment management, financial planning, retirement, Estate planning, tax planning, debt management and cash flow.
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Allows customer to review risk profiles.
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Captures Customer’s details and risk profile.
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Interfaces with banks, portfolios management systems, price vendors and other agencies.
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We handle information for the following segments:
Stocks.
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Bond.
Funds.
Based on the advanced algorithms they provide tax coverage, education and insurance.
Insurance.
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Estate Planning.
Insurance is an important risk management tool that can protect you and your family from financial hardship caused by unplanned events. we work with you to identify your risks and implement a cost-effective risk management program that has been developed with your specific circumstances and requirements in mind. Insurance recommendations provided by us include:
Life Insurance
General Insurance
Health Insurance
Personal Accident Insurance
Income Protection Insurance
Child Cover
There are various provisions in the Income Tax Act to save tax. The saving schemes one should opt. For would depend on the persons income and the tax bracket he / she is in.
In other words investing in Equity Linked Savings Scheme may result in greater savings for one person while investing in PPF may result in better tax saving for another person. The Tax saving strategy should be finalised on an individual basis after discussion. For tax saving point view, the suitability of a scheme depends on which income tax slab one is in.