Saturday, July 31, 2010

Do you want to Live Longer? Buy a Retirement Plan

Steven Levitt and Stephen Dubner, in their book SuperFreakonomics (Page 82) write
"… People who buy annuities, it turns out, live longer than people who don't and not because the people who buy annuities are healthier to start with. The evidence suggests that an annuity's steady payout provides a little extra incentive to keep chugging along."

While this is written in the context of California pensioners, even in India, the people who buy annuities belong to that part of the population which has access to good medical and other facilities and will live longer than the general population.

Ranjan Varma
Blog; Website; Software

Posted via email from Ranjan's posterous

Monday, July 26, 2010

Last 5 Days to File Your Taxes

There are 5 days to go for you to file your IT Returns! Avoid the rush and stress of filing on the last day i.e. July 31st, 2010 - and also avoid the potential mistakes that can be made when you file in a hurry. And if you want to tackle your return yourself, you have an online option too. The advantage of online filing is that it's convenient and user friendly exercise where you get to learn a bit about your finances too.

Last Date 31st July!

TaxYogi is offering a special 20% discount for my readers. Start Now to get the benefit.

Other than TaxYogi, there are a few offers from others as well.

Elagaan, rated # 1 in India by numerous TV Channels, Newspapers and other medias. They are offering a 15% discount to the readers of this blog and their friends. Please use Coupon code: RANJANTAX to avail the benefit.

Tax Filing 

TaxMunshi, which is an authorized E-Intermediary (means you don't have to upload the xml file yourself, and it's a complete filing!). TaxMunshi's offer is 20% discount and you need to use code: RanjanVarma to get the discount.

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Trust you have already filed your taxes. If not, File IT Today!
Ranjan Varma
Blog; Website; Software

Posted via email from Ranjan's posterous

Saturday, July 17, 2010

Luck By Choice Not Chance

This is an intersting email forward that I got today.

There once lived a great mathematician in a village. He was often called by the local king to advice on matters related to the economy. His reputation had spread in all directions. So it hurt him very much when the village headman told him, "You may be a great mathematician who advises the king on economic matter but your son does not know the value of gold or silver”.


The mathematician called his son and asked, "What is more valuable - gold or silver?"      "Gold," said the son. "That is correct. Why is it then that the village headman makes fun of you, claims you do not know the value of gold or silver? He teases me every day. He mocks me before other village elders as a father who neglects his son. This hurts me. I feel everyone in the village is laughing behind my back because you do not know what is more valuable, gold or silver. Explain this to me, son."

So the son of the mathematician told his father the reason why the village headman carried this impression. "Every day on my way to school, the village headman calls me to his house. There, in front of all village elders, he holds out a silver coin in one hand and a gold coin in other. He asks me to pick up the more valuable coin. I pick the silver coin. He laughs, the elders jeer, and everyone makes fun of me. And then I go to school. This happens every day. That is why they tell you I do not know the value of gold or silver.”


The father was confused. His son knew the value of gold and silver, and yet when asked to choose between a gold coin and silver coin always picked the silver coin. "Why don't you pick up the gold coin?" he asked. In response, the son took the father to his room and showed him a box. In the box were at least a hundred silver coins.


Turning to his father, the mathematician's son said, "The day I pick up the gold coin the game will stop. They will stop having fun and I will stop making money.”


Sometimes in life, we have to play the fool because, people around us like it. That does not mean we lose in the game of life. It just means allowing others to win in one arena of the game, while we win in the other arena of the game. We have to choose which arena matters to us and which arenas do not.

Life is a sum of all your choices

Ranjan Varma
Blog; Website; Software

Posted via email from Ranjan's posterous

Wednesday, July 14, 2010

Swatantra: Road(show) To Financial Freedom

UTI Mutual Fund (UTI MF) launches the largest Investor Education Initiative called “Swatantra” for creating awareness about the concepts of financial planning and benefits of investing in mutual funds. As a part of this initiative three UTI Knowledge Caravans will travel through the length and breadth of the country for spreading financial literacy. UIT MF’s Investor Education Initiative called “Swatantra” was dedicated to the nation today in Mumbai by Shri Pranab Mukherjee, Hon’ble Finance Minister.

UTI Knowledge Caravans will travel from Porbandar, Jammu and Guwahati covering all the major towns and cities in India and will complete their journey at Kanyakumari. During the journey Investors Meets will be held in various centres for spreading financial awareness.

The Investor Education Initiative is in Partnership with Ministry of Corporate Affairs, Government of India.

Shri U K Sinha, Chairman and Managing Director, UTI Asset Management Company Ltd. said, “ ‘Swatantra’ is India’s Journey to financial freedom and is the largest investor campaign in the country which will cover over 300 cities in 100 days through 100 investor meets. Financial Education is very crucial for the growth of India’s capital market and India will progress at a faster pace if there is higher retail participation in the capital markets. This Campaign will target inculcating financial literacy to potential investors which will help them to take informed decisions.”

Shri Jaideep Bhattacharya, Chief Marketing Officer, UTI AMC said,” UTI Knowledge Caravans will travel throughout the country and will cover a total distance of over 9500 kms. The Investor Education Initiative will be conducted in 10 languages. Penetration of Mutual Funds in India is still very low. This Initiative will help in increasing investor awareness, wealth creation and will also help in creating Financial Advisors across the country.”

On the occasion, UTI Mutual Fund also entered into a tripartite agreement with Bharat Petroleum Corporation Ltd (BPCL) and Corporation Bank for providing Micro Pension initiative through UTI-Retirement Benefit Pension Fund to the Short Distance Commercial Vehicles (SDCV) Community Members of BPCL Dealers Network. The tripartite agreement was signed by Shri U K Sinha, Chairman and Managing Director, UTI AMC, Shri Ashok Sinha, Chairman and Managing Director, BPCL and Shri J M Garg, Chairman and Managing Director, Corporation Bank in the presence of the Hon’ble Finance Minister.

Members of the SDCV associated with BPCL & Corporation Bank, will contribute an amount as low as Rs.200/- every month towards UTI-Retirement Benefit Pension Fund. This initiative aims to provide the much needed social security cover for the low income group during their old age.

Hon’ble Finance Minister also presented mementos to organizations like SEWA (Ahmedabad), COMFED (Patna) and Mann Desi (Satara, Maharashtra) where the Micro Pension concept has been successfully implemented.

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Tuesday, July 13, 2010

New Pension Scheme Revisited

THE New Pension Scheme (NPS) is likely to get a makeover if the revised Direct Tax Code is implemented. However, the government is doing its bit to lure investors to take a close look at the NPS. Recently, the government announced the ‘Swavalamban’ scheme through which it would add Rs 1,000 co-contribution every year for the next three years for everyone who joins the New Pension Scheme in this financial year. Any NPS subscriber who invests Rs 1,000-12,000 per annum between April 1, 2010 and March 31, 2011, will get Rs 3,000 free from the government.


The revised DTC, if implemented without any changes, will keep the NPS out of the tax net. This new change will make the NPS an attractive investment opportunity. The government has proposed EEE (exempt-exempt-exempt) method of taxation for NPS, which implies the NPS will be exempt from taxes at all the three stages of deposit, appreciation and withdrawal. Earlier, the NPS proceeds were taxable at maturity.


One of the major advantages is also the lowest fund management charge, which is Rs 99 per lakh (0.0009%) compared to charges of a pension plan offered by an insurance company, which is around 0.75-1.75% per year. This low-cost structure makes it more attractive than most annuity/pension plans offered by insurance companies, financial advisors say. The custodian charges are in the range of 0.0075% to 0.05%. Despite all charges, the cost of investment is cheaper than charges of mutual find and ULIPs.


Investors have an option to choose their investment mix among three categories. The first one (E) refers to high investment exposure in equity, which targets investors with a high risk appetite. Equity investment, however, is capped at 50%, which mainly comprises index funds. The second option (C) is high exposure in fixed income instruments, which targets investors of a moderate risk profile. These instruments include liquid funds, corporate debt instruments, fixed deposits and infrastructure bonds. The last option is pure fixed investment products (G) which offer low returns. Ideally, you should start investing for your retirement in your early thirties. If you have the advantage of longer investment horizon (20 years plus), equity is the best option to start with. But in the case of the NPS, you have to buy a life annuity offered by life insurance companies. The NPS requires the investor to use the retirement corpus to buy annuities to avoid taxation. As per the existing stipulations, you have to invest 40% of the corpus in annuities.


Annuity plans which don’t return the purchase price offer 8-9% and the ones that return the purchase price offer 50% a year are other options. Any bank deposits over five years, which offered 10% a couple years ago, offer around 8-8.5% today because of a decline in interest rates. There are other assured monthly income options like the Senior Citizens’ Savings Scheme (SCSS) which offer 9%, PPF at 15% and the post office monthly income scheme at 8%.


If you are planning to invest in the NPS, invest now to make the most of the compounding effect of Rs 3,000 (the government contribution)


You have to buy annuities at maturity, which offer a return of 5-6.5% Source: EconomicTimes

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Saturday, July 10, 2010

File Your Taxes Online With TaxYogi

The last date of filing your Income Tax Returns is coming closer - July 31, 2010. A gentle reminder so that You should not be left stranded the eleventh hour to file your returns, trying to find someone who would prepare and file the tax return for you.

A very friendly and upcoming option is e-filing. Now there are very intuitive tax applications which offer you live chats and help/tutorials in helping you to file your taxes online. It also gives you an opportunity to learn a bit of your finances yourself. I mean by doing it by yourself, you learn a lot about your finances and how you can improve upon it.

I am happy to inform that InvestmentYogi's tax application TaxYogi has been specially white labeled for my blog/website readers. Take a look.

You can experience an intuitive and step by step process for preparing and e-filing your return. The tax filing online also gives you tips for tax planning for the future.

Bindisha Sarang, LiveMint has reviewed all the tax filing applications in India and she rates the Taxyogi application "Excellent". Check out Bindisha's review here

All you have to do is:
Register yourself [Click here]
Prepare your Tax Return online
File your Return online

You do not need to know any tax laws, sections etc. It is as simple as filling up any online form!And as Bindisha says, "The biggest advantage of doing it yourself is that you get involved in your own financial life".
[Click here]

Crossposted here

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Thursday, July 1, 2010

Become A Member Of AIM

Are you interested in:
1. Getting unbiased, independent financial advice from a panel of experts
2. Pay no commission or get huge savings in distribution costs of the product.
3. Contribute to the financial well being of the underprivileged fellow Indians

Is it possible to have all three? Sounds interesting? Take a moment to read on.

We invite you to be a member of an Association of Indian MoneyManagers (AIM), an investor group where you get the best financial advice and do not pay any commission. The group will negotiate with Financial Services Company for commission free financial products that will entail huge cost savings for you. You also get to invest in financial products chosen by a panel of financial experts.

The Background: WHY
All financial products come with a distribution cost attached. The distribution cost includes financial advice and the logistics. The logistics include document handling, travelling expenses and office expenses of the advisor.

For example, a term insurance of Rs 10 lacs for a 30 year old, the annual premium for a 20 year term policy from LIC costs Rs 3821/-. However a group term insurance will cost approx. Rs 1500 only! This translates into a saving of approx. Rs 2000+

This group insurance cost will depend on the size as well as the age & income profile of the group. The best part is that depending on the profile of the group, the price quote can be negotiated with an Insurance company.

Other than group insurance, there are group schemes available for retirement planning too. For example a Group Superannuation scheme, a unit linked scheme, charges only 0.5% as premium allocation charges compared to 15-40% in other ULIPs.

Further, as the group grows, it can negotiate with a Fund House/AMC for discounts on the trailing commissions or the expense ratio of the fund that the group decides to invest.

Cost Savings: Being a part of the group saves you a lot of money. As we saw that in a group term insurance, the cost savings are to the tune of around 50-67%. For the superannuation fund, the saving is more than 15% on your investment for the first year. If the group can negotiate a lower expense ratio by 2% in a fund, the saving in terms of costs is over Rs 2 lacs over a 20 year period for a monthly investment of Rs 10000/-

Informed Advice: The investor group will be mentored by a panel of informed and independent financial experts. The panel of financial experts will decide on the financial products that the group will put their money on. Therefore, the group will be benefitted with independent as well as expert advice.

Workshops: The members will get the benefit of the Financial Health Check & Planning workshops on a discounted price.

It’s Not For Everyone: Eligibility:
Membership to the group is open to earning individuals and those who are in the age group of 25 to 35. All members have to agree to set up an automatic ECS for their investments. This ensures convenience for both the members as well as the administration of the group.
The eligibility criteria can be reviewed from time to time by the trustees of the foundation.

It is important that the membership is closely monitored so as to not let in rogue elements. A few rotten apples can make the entire basket rotten. So we have to be cautious not to let in members who may want to make false claims.

How to become a member:
If you want to become a member of the AIM (Association of Indian MoneyManagers) Group under the aegis of Financial Literacy Foundation (FLF), take the following steps:

1. Download the application form

2. Send the completed form to FLF along with a deposit of Rs 1000/- only. This deposit will be considered a donation if there is no claim for refunds. This deposit is to indicate your commitment to the group and will help the FLF defray costs of administering the group. The cheque is to be issued favouring "Financial Literacy Foundation" and to be sent to Financial Literacy Foundation, 10-B, Mahagun Mansion, Vaibhav Khand, Indirapuram, Ghaziabad - 201010.

You may also deposit the amount in cash/cheque to the Foundation's Current Account No. 60046469290, Bank of Maharashtra, Indirapuram, Ghaziabad.

Most Important:
The bigger the group, the bigger will be the benefits. We request you to spread the word and ask your friends to become a part of the group.

The last date for filling up the membership form is 31st July, 2010.

We are in talks with various financial service providers and the first product that we buy together will be before 30th September, 2010.

So, join in and spread the word!

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India's first online weekly on Personal Finance