Pre Election Result Market Rally

Pre pool result market rally….!!!

I was travelling since last 12 days that is why I was not available on my blog in these days. I was travelling across 3 states UP, MP & Maharashtra. I have observed that people are very keen to change in our political system. Markets are at new high as Nifty above 7,000 and sensex above 23,600 with the hope of strong and stable government after 16 May result announcement. The last 10 year our country had witnessed slow decision process, languishing growth and high inflation.

The market expectations are very high and at present no one know the exact direction of the market. Many stocks are still trading from its fair value in spite of all time market high. What should do an investor or trader at this time? It is the common question asked by many of my friends and investors.

In my opinion, election result is an event like other events. For long term and SIP investors I would like to say that the short term moment in the market may be sharp but when we invest in stock market our view should be long term and focus on macro level. We should not put much emphasis on the election result. Investor should stay invested in the market and should take the decision of exit from current investments or change in asset allocation with the help of qualified financial planner and according to your financial goal.

For trader I would urge with folding hands they must put stop loss when they do make any position specially future and option trader. As market my goes towards any direction after election result outcome so be cautious if you are short term trader and want to participate in this event.

Only election result in not the only crucial factor for financial market there are many other factors like inflation rate, IIP data, GDP data, Fiscal deficit, trade deficit, capital inflow, global market and many many others factors. Your sole focus should not only on a particular event. In short term market react very sharp on the events but in long run market reflect the real economy.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Public Provident Fund : A summarized view

Public provident fund (PPF) is one of the best tax saving investment option under section 80C in the point of view safety. However, it does not guarantee to build a great wealth but it offer a great sense of safety with capital appreciation. Many of investors often confused between EPF(Employee Provident Fund) and PPF. Today, we will understand about PPF investment. The main feature of PPF as given below:

• ·         Only Indian citizen can open PPF account. No NRI and foreigners are allowed to open this account. If anyone get NRI status after opening the PPF account then he/she can be continue with it. 

• ·         It can be opened in the name of single name. Joint names are not allowed. Parent can open this account in the name of minor but the total tax exempt limit would be Rs 1 lakh only including parent’s investment.
• 
  
•  ·         The minimum amount needed Rs 500 every year to maintain it. The investor can deposit maximum 12 times in a financial year.

• ·         The return is flexible but sure and it decided by RBI every year. For 2013-14 the rate of return is 8.7% per annum. It is the safest investment backed by government of India. It cannot be attached under any court order for debt recovery.

• ·         You get tax benefit under section 80C on invested amount subject to upper limit Rs 1 lakh. The return is also tax free.
• 
  
• ·         It has 15 year lock-in period. After completion of 15 year one can extend it by 5 year block period. It allowed partial withdrawal facility after completion of 5 year after opening the account. The loan facility is also available in PPF.

• ·         The PPF account can be opened in post office, SBI branches. Now some private banks like ICICI bank are also offering such services. If you move your residence from one place to another, in that case you can easily shift it to nearest bank or post office.
• 
  

It is great tool to accumulate wealth in long term with higher degree of safety. For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Is Insurance plan is the best for tax saving and investment ..?

Insurance Policy is the best tax saving or investment option…?

In these days, we are discussing more about tax saving as the financial year 2013-14 approaching towards end. The whole insurance agents are doing hard work to push their life insurance products and want to increase their income on the expense of investor’s premium.

 I agree that the life insurance is the vital part of any financial planning for face any unwanted events in the life. There are many pure or term insurance plans available in the market which need very less premium compare with other famous insurance plan. The investor also purchase these costly policies in the hurry on the name of tax saving and investment. The two type of policies are very famous among the investors and agents. One is endowment plan and other is money back plan. We will analyze here these type of plans today.

Endowment Plan:  It is life insurance plan which deduct one part of the premium which you pay for insurance cover and the other part invest in different available financial products according to the particular policy plan. Investor get the amount at the time of maturity and pay the premium either till maturity or according to the mentioned year on policy.

Money Back Plan:   This plan is very popular among the investors. In this plan, policy holders get some part of money like 20% to 25% of the sum assured as survival benefit in regular interval. This regular interval varies according to the plan 3 year, 5 year etc. The premium of these plans high compare with endowment plan. Except receiving money in regular interval all other features same as endowment plan.

Let us take one example for better understanding. A 30 year old person decide for insurance plan, risk cover 20 year and sum assured 10 lakh. The approximate premium for endowment plan would be      Rs 48,000 and on the approximate maturity amount would be 19 lakh. The premium for money back plan would be approximate Rs 64,000 and he will receive Rs 2 lakh in every 5 years.  The maturity value would be approximate Rs 12.3 lakh. Investor feel very happy when would receive amount 2 lakh in every year but ignore the high premium.

For above mentioned example, the term insurance premium would be approx Rs 3000 annual which is much lower compare with other plan’s premium.

If we calculate the internal rate of return of the above mentioned plan, the return of endowment plan would be 6% and 5 % for money back plan. You can easily understand the difference now. Would you still like to go with such types of plans which provide you with 5% - 6% during 20 year investment? In fact the return do not beat to inflation even which is at present in 8% to 9% range. We are not showing entire calculation here due to space and it would be too lengthy for 20 year calculation. If you want to see the entire calculation we can provide you.

Many people consider LIC product due to safety. If safety is your most priority there is one product which is more safer called PPF which also give return 8-9% and lock in period 15 years. It also qualify for tax saving under section 80C as equal insurance premium. For insurance cover you can consider term insurance plan which have more cheaper premium.

For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in