Are you Mutual Fund Investor?

Are you Mutual fund Investor?

You may be think that this question is as simple or silly but in really it is very important question for your economic freedom and wealth creation. First of all if your answer is YES then I want to congratulate to all of you for participating in mutual fund schemes. Most of you are investing in XYZ amount in a particular scheme suggested by a friend or an agent without any target amount and also knowing without risk which is associated with your schemes.

In general, I have observed many investors consider mutual fund as share market investment only but this is not true. It also invests in debt instrument and fixed term deposit investment also. Unfortunately in India most of investor are not getting benefit from debt mutual fund also. People even do not know in which schemes they should invest either in equity schemes or debt schemes or hybrid schemes. They even do not bother to know about this and in some cases agent have not much knowledge about mutual fund schemes.

Many investors often lament that they had lost a lot of money in mutual fund which is suggested by someone else or randomly picked by themselves. It is due to lack of awareness and lack of understanding about mutual fund as a product.

In my view, mutual fund is the best investment option available in the financial market for any investment time frame. Before start investing in mutual fund you should decide your investment time horizon and target amount at the end of investment period. There are different types of schemes available in the market for different needs and investment horizon. You have to decide your investment time frame first. Your investment period may be from 1 week 20 years or even more years and accordingly you should invest in suitable schemes.

If you are not able to choose the right schemes or you don’t have time please contact an IFA (Independent Financial Adviser). We also help to the investor to choose the right mutual fund schemes. Believe me If you invest in disciplined manner after knowing the product you will definitely create a lot of wealth. There are many equity schemes which have generated multiple times return in 10 year or 15 year time period.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Are you Smart Investor?

Are you smart Investor?

Whenever I ask this question to investors or my friends, unfortunately the answer come in “No”. In our country, majority of people have no clear time frame and understanding the risk associated with a particular investment. They often invest on the advice of relative and sweet talking agent and even do not want to know about investment in details. In this article I am explaining a one fine example of smart and value investing.

In four wheeler segment, Maruti is a reliable and very well known brand in India and has been biggest carmaker year after year. Company has many popular model and Maruti Alto has been remained the top selling car for the tenth year in a row.

In 2003, Maruti had come with IPO at price Rs 125 and listed in the exchange at the price Rs 164. Many people had booked the profit at that time and that was the biggest mistake. After 12 years listing, the share is trading now around Rs 3,500, nearly 28 times higher than the IPO price.

The price of Maruti 800 was Rs 2 lakh in 2003 and If you had invested that amount in shares of Maruti company, your worth is Rs 56 lakh in 2015. It means you can now buy BMW or Mercedes by that investing amount.

It is just one example of value investing. There are many multi bagger companies in market which had outperformed to all investment avenue and will outperform in future also. I will say, the time is still in your hand you can still choose wealth creator companies and by investing them you can ensure your financial freedom.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Sector Update: Insurance

Sector Update: Insurance

After 7 years wait, Indian parliament has approved long pending insurance bill. According to insurance bill, now FDI has been raised to 49% from 26% with Indian ownership control. Penalty for non compliance raised to 25 crore. It is Modi govt’s first major reform sign. Industry expert hopes that this insurance bill help bring in over Rs 50,000 crore in fresh capital which will stimulate the insurance sector.

From 1st April 2015, the premium rates for third party motor insurance cover has been raised after issuing new draft by IRDA. IRDA is also planning new investment norms for general insurance companies. According to new norms, investment limit in securities other than those approved would be now 10% earlier it was 25% of total premium collected in a fiscal. It may reduce the earning of general insurance companies.

The Bombay High Court has asked to IRDA to ensure that insurance companies should not involve TPA in the claim settlement. As per ruling of health insurance, allowing or rejecting claim should decide by insurance companies not by the TPA.

According to British Medical Journal, India’s private healthcare sector treating patients as revenue generators. Doctors get Rs 30,000 to 40,000 to refer patients for angioplasty. Unnecessary tests are being carried out and fabricated reports were generated. Large sums were paid for the same only to fill the pockets of referring doctors and pathologists. There is serious need for stringent, transparent and mandatory regulation.

IRDA said that insurance companies can appoint individual agents on their own from 1st April 2015. As per current practice, IRDA grants license to a person to become an agent of insurance company. After the new norms, whole licensing systems will go.

To bring more transparency, IRDA is planning to treat health insurance as a stand alone segment. As per current rule health insurance come under non life insurance category. Now, separate regulation will be made by IRDA for medical insurance.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

SUKANYA SAMRIDDHI YOJNA

SUKANYA SAMRIDDHI YOJNA

Modi government has launched campaign ‘Beti Bachao Beti Padao’. Under this scheme the government has launched Sukanya Samriddhi Yojna Account. It is a small saving deposit scheme for the girl child to support her education and marriage. This account can be opened in the name of girl child from the time she is born till she becomes 10 year old. It can be opened in a post office or any public sector bank.

It can be opened with a minimum amount of Rs 1000 and maximum of Rs 1.5 lakh. The money can be deposited till 14 year from the date of account opening by parents or guardians. The interest rate will be decided by government every year. For FY 2014-15, the interest rate is 9.1% and it is compounded annually. The interest will be tax free. You can avail section 80C tax benefit, the amount deposit in this account till Rs 1.5 lakh in each financial year.

The account will mature after 21 years from the date of account opening. 50% fund can be withdrawn after the girl turns 18 year old. The premature closure of account is allowed in the case of death of girl child. If you do not deposit any amount in a whole year, a penalty of Rs 50 charged. One family can open only 2 accounts even if there are more than 2 girl child in family. Only 1 account per girl child is allowed. You cannot operate account online.

This scheme is better than post office schemes and fix deposit schemes or RD schemes. It will give the same tax benefit as PPF. It is good plan for your child because at least the government will try to meet the inflation rate at least. Interest rate will be announced every year. It is illiquid investment so invest in planned manner. Birth certificate of girl child, address proof and photo identity proof of girl child and parents/ guardian are required documents for opening the account.

It is less risky investment option and it will not give return like mutual funds or share market. As an asset allocation plan for debt investment, one can consider it. In my personal opinion, if you invest for 21 year then it is not much good option. A good mutual fund will give much better return if you compare between mutual fund and this scheme. I have still not opened this account for my daughter as I already invest in mutual fund.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Union Budget 2015-16: An Overview

Union Budget 2015-16: An Overview and Analysis

An Overview on Budget 2015-16:

1.     GDP growth estimated between 8.0 – 8.5%.

2.   Fiscal deficit target relaxed to 3.9% of GDP in FY 2015-16      with increased focused on public investment in infrastructure  and also proposed to fiscal deficit target 3% within 3 financial  years.

3.    Net market borrowing  to be Rs 4.56 lakh crores.

4.  No change in personal income tax slab and rate of tax for companies in respect of income earned in the financial year 2015-16.

5.  Proposal to reduce corporate tax from 30% to 25% over next 4 years, starting from next financial year

6. Wealth tax abolished, additional surcharge 2% imposed on individuals having income more than Rs 1 crores.

7.  Excise duty on cigarettes is being increased by 15% to 25%.

8.  Service tax is being increased from 12% plus education cess  to 14%.

9. Online and mobile advertising, radio taxis or radio cabs, services provided byair-conditioned contract carriages are now under service tax.

10.Total subsidies limited at 1.7% of GDP in FY16 against 2.1% of GDP in FY15 due to fall in fuel subsidies.

Banking and Financial services:

Announcement of autonomous bank Board Bureau and Holding company structure for PSU banks in 2015-16 is positive for PSU banks in long term. Reduce in corporate tax is positive for banking and financial services companies as most of them pay full tax rates. Overall budget impact is positive.

Oil & Gas Sector:

The impact of budget on this sector is neutral. The subsidy for FY16 is 30,000 crore marginally negative for oil companies. Focus on DBT (Direct Benefit Transfer) to curb subsidy leakages is positive for entire sector.

Infrastructure / Capital Goods Sector:

Road development allocation has been increased to 85,565 Cr(this budget) from 37,845 Cr(last budget) in this budget. NHAI target has to complete 8,500 KM road development. It is positive for all road developers. Infra investment trusts to be set up to securitizes infra project assets. Announcement of  National Investment and Infrastructure Fund (NIIF) and infuse Rs 20,000 Cr every year in this fund has been positive for all infra companies.

Power Sector:

Announcement of 5 new Ultra Mega Power Projects of 4000 MW, in the plug and pay mode is positive for new investments in this sector. Focus on renewable energy by increasing the capacity is positive for long term.

FMCG Sector:

Increase in service tax and from 12.36% to 14% can hit the consumer demand and will impact negative for this sector.

Retail Sector:

Excise duty on leather footwear having more than Rs 1000 is being reduced to 6% from 12%. It is positive for footwear companies. Gold Monetisation Scheme is positive for jewellers and consumer both.

Travel Sector:

Facility of Visa on arrival to be extended from 43 countries to 150 countries is positive for tourism economy. Development in heritage sites in India is also positive for this sector.

The budget has been positive for agriculture sector, logistic sector, real estate. Housing for all is big positive for housing development companies. For cement and metal sector this budget has been neutral. 

While the budget cleared most of the issues related to FII, it failed to meet general expectations about reduction of MAT in SEZ, reduction in STT and CTT and reduction of custom duty on gold. Increase in service tax may discourage the consumption. The revival of investment in near term is limited but the good result will come in next 3-4 years not in immediate future.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Short Review of Railway Budget 2015-16

Review of Railway Budget 2015-16

This railway budget seems to focus on improve passenger’s commuting experience and at the same time gives a signal for investments thrust. It proposes an annual plan of Rs 1 lakh crore with support from central government of budget allocation, market borrowing, internal resources and institutional investments. The highlights of railway budget are given below:

(A) There is no hike in passenger’s fares this time. The railway minister’s statements range from additional wagons to accommodate more passengers to improving security with equal importance of cleanliness indicates the government’s intention to improve the commuting experience. Only time will tell whether these promises fulfilled or get blocked due to lack of funds investment.

(B) The revised operating ratio for this year was 91.8%. Railway Minister Suresh Prabhu has set an ambitious operating ratio of 88.5% for the financial year 2015-16. The operating ratio is the amount that the railway has to spend to earn Rs 100. A lower operating ratio helps to improve passenger amenities and creating long term assets. The proposed operating ratio will be the best in the last nine years. Lower diesel prices will certainly help to keep lower the operational ratio.

(C) The government has proposed to hike the freight rate with effect of 1st April 2015. It will increase freight earnings by 13.6% in FY 2015-16.

(D) The focus on expansion of railway’s capacity over the next five years by increasing in daily passenger carrying capacity from 21mn to30mn, increase in track length by 20% from 1,14,000 Km to 1,38,000 Km and also the rise in freight-carrying capacity 1bn to 1.5bn ton.

(E)  There are much attention to modernization of infrastructure at railway stations, signaling and electrification works, coaches and wagons. A great attention has given to dedicated freight corridor projects which can benefit many railway equipment suppliers.

(F)   ABB, BHEL, KEC International, L&T, BEML, SIEMENS, Kalindee Rail Nirman, Texmaco and Titagarh Wagons may get benefited from this year budget proposals.

Overall, the railway budget for 2015-16 showed its thrust towards investments.

 If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Expectation from UNION BUDGET 2015-16

Expectation from Coming Union Budget for 2015-16

Everyone in India is waiting for 28 February. Last year in May 2015, modi government came in full majority with great expectation of citizen. People wanted change and that is the main reason behind that spectacular electoral victory. In July 2015 this government had passed the budget but that budget was not reflecting the government’s intention truly. Now after completing 9 months the government is ready with its full budget. Not only the people of India are waiting for this event but also foreign media also looking it very carefully.

Prime minister is very well known for hard working and fully focused man towards goal. Overall feeling across the country since the formation of the government has been that the government is working for only big industries and the expectation of poor and middle class have been ignored by this government. Recently the Delhi election result is showing the emotions of nation. This budget of Modi government is an opportunity for showing the path of “ACHHE DIN” means inclusive growth of overall.

Everyone have some expectation from the budget. I am not an exception and I have also some expectation. Agriculture and rural development should get proper attention. The fact is that our agriculture production has declined and there are need to take some steps for farmers and rural families.

The funding for social sector schemes like public health, education, senior citizens, handicapped people should not be cut. Potable drinking water for all should also get special attention in this budget. Rain water harvesting should be encouraged. With highly pitched ‘Make in India’ program there are need to develop a self-sustaining economy that can fulfill the job thrust of our country. Within high targeted GDP figure there are need to develop SMEs and skill development program. Corruption has been the root cause of all backwardness in this country and there should be scheme implementation should be in more transparent manner. There should be no scope of corruption. It means zero tolerance of corruption cases across the country without any partiality.

Inclusive growth means SABKA VIKAS. 70% rural and village BHARAT should not be ignored in the name of technology, FDI and industrial growth. Without growing agriculture one cannot think about strong India. There are many other sector like police modernization, defense sector, e-governance and to ensure the delivery of public service need proper budgetary allocation. There should be increase in tax-exemptions limit with simple tax structure.

Overall I expect this budget will have good provision for the development of agriculture, job creation, health reform, education, security and infra sector. The budget should be come with intention of inclusive growth as they promised in election SABKA SAATH, SABKA VIKAS.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com