Financial Freedom

BOREWELL IN GOTTIGERE 2016

2016-06-10T10:18:00.002-07:00

Recently borewell was dug up in my apartment. It was dug up in the month of May.
We found water at 1221 feet. Yes, very deep. Totally we dug up 1257 feet.
It took 29 hours to reach 1257 feet.
The water source is 1.5 inches.

We are yet to push the motor in. Would keep you guys posted with the details like total cost , yield etc.

Nandi Housing Project : Nandi Retreat

2012-09-25T22:12:00.003-07:00

Felt it would be nice to share my experience to reviewing Nandi Retreat project of Nandi Housing Group.

On Sep18 2012:
I checked Nandi Retreat in Gottikere yesterday. They are charging 3500 psf. Apartments are in the dimension 1030 , 1000 and 990. The place is quite isolated. Its very close to gottikere lake. The site also seems quite small. This must be the smallest project undertaken by Nandi group.
On the good side the floor plan is very nice.

On May 15 2013:
Close to booking Nandi Retreat project in Gottikere. Its 1.3 kms from bannerghata road if you enter through Radclif school on gottikere. If you go through the road after Meenakshi Mall, its 2.6 kms. The roads connecting from Bannergata road and from Meenakshi Residency is in good shape now.

Note:
In 6 months a lot has changed in the area. Lots of new projects coming up.

National Pension Scheme

2012-08-02T07:11:00.004-07:00

NATIONAL PENSION SCHEME [NPS]

Guess most of us have not heard about this scheme. Its largely because Financial Institutions and Agents are not promoting it owing to less commission.

Explain New Pension Scheme?
The NPS was introduced by the government last year to give people a way to get a pension during their old age. Employees of the government sector already get a pension, so this scheme was introduced as a social security measure that enables people from the unorganized sector to draw a pension as well.

The working mechanism is quite simple – you contribute a certain sum every month during your working years, which is then invested according to your preference. You can then withdraw the money when you retire, which is currently set at 60 years old.
When I say you invest according to your preference, I mean that there are a couple of different options that you need to select from. These options pertain to your preference on withdrawal, and asset allocation.

Explain Tier I and Tier II accounts in the NPS?
The NPS is meant to be a pension scheme, so it is geared towards giving you a steady stream of income on your retirement.
That means that NPS makes it difficult to withdraw your money during your working years or till the age of 60 in this case.
Tier I and Tier II are two options under the scheme where you can invest your money, the primary difference between them is how they differ in allowing you to withdraw your money before retirement.

NPS Tier I
There is severe restriction on withdrawing your money before the age of 60, because it is necessary to invest 80% of your money in an annuity with Insurance Regulatory Development Authority (IRDA) if you withdraw before 60. You can keep the remaining 20% with you.
When you attain the age of 60, you have to invest at least 40% in an annuity with IRDA; the remaining can be withdrawn in lump-sum or in a phased manner.

NPS Tier II Account
The first thing about the NPS Tier II account is that you need to have a Tier I account in order to open a Tier II account.
The Tier II account makes it easy for you to withdraw your money before retirement because there is no limit on the withdrawals you can make from the Tier II account.
You need to maintain a minimum balance of Rs. 2,000, and you can transfer money from the Tier II account to Tier I account, but not the other way around.
There is a Rs. 350 CRA (Credit Record Keeping Agency) charge which is not present in the Tier II account, but the rest of the fees remain the same.

Fees and Costs related to the NPS

I talk about expenses a lot here, and the expenses on the NPS are really low. The annual fund management charge is 0.0009%, which is probably the lowest in the world.

What is the minimum amount needed to invest in the NPS?

For a Tier I NPS account you need to contribute a minimum of Rs. 6,000 per year, and make at least 4 contributions in a year. The minimum amount per contribution can be Rs. 500.

Minimum amount for opening Tier II account is Rs. 1,000, minimum balance at the end of a year is Rs. 2,000, and you need to make at least 4 contributions in a year.

What are the tax implications of NPS?

The revised Direct Tax Code proposes to make the NPS tax exempt at the time of withdrawal. Initially NPS was going to be taxed at the time of withdrawal, and that had put it at a disadvantage to other products like ULIPs and Mutual Funds. But the revised code proposes it to be exempt from tax, and that really adds to its lure.

How to open a NPS account?

You can open a NPS account by going to the bank branches of the banks that are authorized to sell this.

Ex:

Axis Bank Ltd

State Bank of India

State Bank of Mysore

LIC of India

Central Bank of India

IDBI Bank

Conclusion

This is quite a good option for people who wish to invest for their retirement, and the government has done good to come up with such an option. It is still early days for the scheme so there are going to be some teething troubles, and I am sure you have come across several articles that write the NPS off completely, or suggest major changes.

HOW TO BUY A TELEVISION

2012-05-03T21:51:00.000-07:00

Step in to a store to buy a new TV and you are greeted by intimidating array of flat screens playing everthing from saas-bahu programmes and movies to cricket and football matches.

There are four major types of TV’s available in the market today. They are PLASMA , LED , LCD and CRT.

PLASMA TV:

These offer the best colours and widest viewing angles and in fast moving pictures , motion blur or ghosting is almost non-existent. However, Plasma consume three times as much power as LED, LCD Tv’s. Repairing of these TV is also quite costly.

Price : 35000 Rs to 3.2 Lakhs

LED TV:

These TV’s are much sleeker and the most power efficient. Images are sharp and structure finishing is smooth. But the disadvantage is that the colours can be uneven at times.

Price : 28000 Rs to 1.5 Lakhs

LCD TV:

It provides smooth picture quality and is power efficient. It again supports rich colours. But at times can overlap. Its prone to ghosting while watching sports or playing video games.

Price : 20000 Rs to 70000 Rs

CRT TV:

Its the old Cathode Ray Tube system. Its major point is its cost advantage. Its very cheap. Manufacturers are trying hard to dispose it off as soon as possible.

The disadvantage is big size, high power consumption, parts to repair becoming redundant, mono system, ghosting and less range in colors.

April Vegetable Price in Bangalore

2012-04-21T05:12:00.001-07:00

I have gathered and listed vegetable prices as available on April 16 and April 21:
Source Bigbazar : Jayanagar 9 Block

April 16 2012

Capcicum: 58 Rs /Kg
Beans : 55 Rs/Kg ,
Potato : 16 Rs/Kg ,
Brinjal 28 Rs/ Kg
Tomato : 26 Rs / Kg
BottleGoud : 19 Rs /Kg ,
Onion 11 Rs /Kg
Madras Cucumber : 34 Rs/Kg
Cocunut : 13 Rs

April 21 2012

Tomato : 20 Rs/Kg
Gourd Snake : 30 Rs/Kg
Coriander : 4 Rs/Kg
ARBI (Crocienia) : 36 Rs/Kg
Ladies Finger 36 Rs/Kg
Brinjal : 26 Rs/Kg
Pudina : 3 Rs/Piece
Green Chilli: 41 Rs/Kg
Curry Leaves: 3 Rs/Piece
Lemon : 90 Rs/Kg
Onion : 11 Rs/Kg
Potato : 16 Rs/Kg
Coconut : 13 Rs

Prices have shot up for a lot of vegetables on account of summer.

Make Fiscal Year Resolutions

2012-04-04T07:01:00.005-07:00

As we enter the new fiscal, I would like to list some simple yet effective steps you can take to keep tabs on and improve your financial goals...

Set specific Financial Goals:

Consult your family members to chalk out what your family’s long-term financial goal should be. Then if needed consult a financial planner about how to achieve those goals. Some of the important things to take care are of here are to remain realistic about the goals, and keep the plan and the portfolio simple.

Regularly Check Your Financial Health:

You take care of your and your family’s health and probably go for regular check-ups. Remember to do the same with investments. Revisit regularly the status of your investments to see if they are aligned to your long-term financial goals.

Write down all investment related information:

Maintain a notebook or a diary for this. When you make the investment – be it a mutual fund, stocks , bonds , gold or any other asset class – write down the rationale for investing in the particular asset. It should also contain the expected rate of return which should help you achieve your financial goals.

Also write down the information that you believe are important to your investment decisions, and keep updating it as and when you find some-thing relevant. Flip through its pages once in a while.

This should help you evolve into an educated and alert Investor.

Keep All Investment Papers in Order and Updated:

This is as critical as investing. Keep all your mutual fund account statements updated and at one place. Be careful to update your contact details with the companies with which you have investment related relationships, like mutual fund houses , broker , insurers etc.

Make sure you read all the papers, documents and letters that are sent to you from these companies. If you don’t understand something reach out to your investment adviser or the companies directly.

Be Prepared to Fight for Your Rights as as Investor:

With the number of companies offering investment products growing, along with the number of investors, there is bound to be some investment related problems.

In case you are an investor facing such a problem, be sure to address the problem without much delay.

Approach the right forum to resolve it. It it’s not resolved on time, or to your satisfaction , escalate the problem to the next level.

Saving Account Looks Attractive

2012-04-01T23:24:00.002-07:00

With the announcement in Budget 2011-2012 that interest up t 10K would not be taxed, Saving Account looks far more attractive.

There are three main reasons to consider Saving Account than Fixed Deposits right now
i) Interest up to 10K is tax free
ii) Higher interest rate provided by YES and Kotak Mahindra.
They offer 6% for deposits over 100K.
iii) High liquidly offered By saving account.

I am listing below , the rates offered by various banks on Savings Account:

Bank	SB A/c Intt Rate(as on 24.10.2011) %	SB A/c Intt Rate as on 21.03.2012 (w.e.f) %
Allahabad Bank	4.00	4.00(25.10.2011)
Andhra Bank	4.00	4.00(25.10.2011)
Bank Of Baroda	4.00	4.00(25.10.2011)
Bank Of India	4.00	4.00(25.10.2011)
Bank Of Maharashtra	4.00	4.00(25.10.2011)
Canara Bank	4.00	4.00(25.10.2011)
Central Bank Of India	4.00	4.00(25.10.2011)
Corporation Bank	4.00	4.00(25.10.2011)
Dena Bank	4.00	4.00(25.10.2011)
IDBI	4.00	4.00(25.10.2011)
Indian Bank	4.00	4.00(25.10.2011)
Indian Overseas Bank	4.00	4.00(25.10.2011)
Oriental Bank (OBC)	4.00	4.00(25.10.2011)
Punjab & Sind Bank	4.00	4.00(25.10.2011)
Punjab National Bank	4.00	4.00(25.10.2011)
Syndicate Bank	4.00	4.00(25.10.2011)
UCO Bank	4.00	4.00(25.10.2011)
Union Bank Of India	4.00	4.00(25.10.2011)
United Bank Of India	4.00	4.00(25.10.2011)
Vijaya Bank	4.00	4.00(25.10.2011)
State Bank Of India	4.00	4.00(25.10.2011)
State Bank of Bik & Jaipr	4.00	4.00(25.10.2011)
State Bank Of Hyderabad	4.00	4.00(25.10.2011)
State Bank Of Mysore	4.00	4.00(25.10.2011)
State Bank Of Patiala	4.00	4.00(25.10.2011)
State Bank Of Travancore	4.00	4.00(25.10.2011)
ICICI Bank Ltd	4.00	4.00(25.10.2011)
Axis Bank Ltd.	4.00	4.00(25.10.2011)
IndusInd Bank Ltd.	4.00	5.50(01.11.2011)
Yes Bank Ltd.	4.00	6.00(25.10.2011)
HDFC Bank Ltd.	4.00	4.00(25.10.2011)
Kotak Mahindra Bank	4.00	6.00(25.10.2011)

I am planning to contact Kotak Mahindra and Yes Bank in the coming days. Rates are excellent.

TRENDS AND TREND-LINES

2012-03-25T05:05:00.002-07:00

Trend identification can be called the keystone of technical analysis.

The price typically moves in a wave like motion forming a series of peaks and troughs. The direction in which these peaks and troughs are moving is called the trend.

In an uptrend, we have a series of higher peaks and higher troughs.

In a downtrend, we can see successive lower peaks and troughs.

When the peaks and bottoms move horizontally we call it the sideways trend.

An example is the stock of Reliance Communications is in a downtrend since January 2008.

A stock chart that resembles a roller-coaster ride is typically in a sideways trend.

Sintex Industries is moving between Rs 60 and Rs 250 since 2006. Such sharp price swings are common when stocks enter a sideways or consolidation phase.

Trend identification is done with help of trend lines. Constructing a trend line is fairly simple. When the stock is in an uptrend, the trend line is constructed by joining the troughs formed during the uptrend.

Conversely, a down trend line is formed by connecting the peaks formed during the down trend.

A buy signal is generated when the stock price moves above the down trend line. A sell signal would be generated when the stock price moves below the up trend line.

Lets look at one more example:

Andhra Bank has been in a downtrend ever since it peaked at Rs 190 in December 2010. The next significant peak was formed at Rs 159 in April 2011. We should join these two peaks with the help of a trend line.

This downward sloping trend line was breached in February this year thus signalling a trend reversal.

TYPES OF EQUITY

2012-03-24T00:53:00.001-07:00

Essentially seven types of equity shares are important from the investor’s point of view:

1. Blue chips

2. Growth Stocks

3. Defensive Stocks

4. Cyclical Stocks

5. Turnaround Stocks

6. PSU Stocks

7. MNC Stocks

The above classification has to be understood in a broad sense for there is scope for overlap, as the last two categories are based on ownership. It is possible to classify the PSU stocks and MNC stocks into one of the first five categories.

BLUE CHIP STOCKS

Shares of established companies whose asset, sales , turnover and profits continue to grow rapidly are fittingly called Blue Chips. Ex: HDFC Bank, TITAN etc

GROWTH STOCKS:

Shares of relatively new companies which are performing in outstanding manner are known as growth shocks.

Growth stocks eventually graduate into established blue chips. Ex is Infosys and Dr Reddy’s LAB

DEFENSIVE STOCKS

Typically these are shares of traditional companies engaged in stable and mature industries. Their earnings do not fluctuate very widely from year to year. Market prices of defensive shares tend to fluctuate within a narrow range.

CYCLICAL STOCKS:

These are shares of companies engaged in business which are susceptible to fluctuations caused by economic and trade cycles. Typically do very well in Boom and hit the bottom in Bust phase.

Ex : Real Estate industry, Automobile industry , Sugar industry etc.

TURNAROUND STOCKS:

A turnaround share is one whose market price is currently lower than its intrinsic value because the company has recently gone through a bad patch. One of the example is TATA Motors.

Choosing the Right Equity

2012-03-23T07:11:00.003-07:00

This is a truly tricky decision to make for most. But if you are willing to study and follow fundamental principal for investment, it should be a good decision.

Let me look at some salient factors that you must keep in mind:

Pinpointing a Company:

All companies in a particular industry earmarked for investment may not be uniformly good. You have to pick the right company or companies based on fundamental criteria and non-financial aspects such as management reputation , past track record , future plans , etc.

Deciding on the Right Price:

Having chosen a company, you need to decide , whether its stock is attractive at the prevailing price. Is it overpriced, is it under priced , or is the price just right. Whether a price is right or not essentially depends not so much on a company’s asset base but upon its earning power. If the earnings are good and growing, a high price may be justified ; otherwise not.

Deciding on the Right Time:

In a way, the time and price issues are interlinked and may be examined together. A good understanding of share price movement chart may help in timing your purchase. Here to perception of an investor and trader is different. An investor has more freedom here than a trader. Investor can survive a fall in price better than a trader.

Equity Buyers

2012-03-23T05:26:00.002-07:00

At the highest level you have just two types of people buying stocks. One is Trader and the other is Investor.

Trader can be qualified as daily trader , weekly trader and monthly trader.

Investor typically hold on to his investment for a long time. A investor might be holding on to a equity anywhere from 1 year to 10 years.

I shall try to perceive stock buyers in terms of their risk taking appetite.

Low Risk Takers : They should invest in blue chips and aim at long term gains (3 yaers and above) only. They need to adopt a buy and hold strategy

Medium Risk Takers: They should invest in growth stocks and aim at medium term (1 to 3 years). They should adopt a reasonably aggressive strategy.

High Risk Takers: They should invest in turnaround stocks and aim at short-term gains only (around 1 year). Adopting a very bold investment strategy , they should go bargain-hunting.

DALAL STREET AND ITS BULLS AND BEARS

2012-03-23T04:58:00.003-07:00

The Bulls , Bears and investors are the kingpins of the money game on DalalStreet.

The BULLS:

The bulls , whether investors or brokers have an optimistic view of the market.

A half empty glass always looks half filled to the bulls.

They expect stock prices to rise. A strong and rising market is known as a bull market.

When bulls swing in to action , prices tend to rise. The bulls buy shares hoping to sell them soon afterwards at higher prices.

The BEARS:

The bears, whether investor or broker hold a pessimistic view of the market.

A half full glass always looks half empty to the bears.

They expect stock prices to decline. A weak and declining market is known as bear market. When bears are active stock prices tend to decline. The bears sell shares hoping to buy them soon afterwards at lower prices.

The stock prices on Dalal Street fluctuate due to brisk buying and selling from bulls and bears. The market has been a silent witness to numerous periods of bull run and bear hug.

New Service Tax Impact after Budget

2012-03-21T06:42:00.001-07:00

New Service Tax Impact

Budget 2012 has delivered a staggering blow by hiking the service tax and excise duty from 10% to 12%.

So, if you were feeling thrilled at being able to take home a bigger salary, I am here to burst your bubble: your expenses are bound to go up too, more so since the service tax net has been widened to include almost all services that comprise a huge chunk of the household consumption basket. Only 17 items, such as essential education, public transport and services meant for agriculture, are exempt from this tax.

A good example of little gain on the tax front is your expenditure on health. Though preventive health check-ups for up to Rs 5,000 are exempt, a visit to the dentist or diagnostic tests will be more expensive due to the higher service tax levied on these. You will also be shelling out more on your life insurance policy.

The service tax on the premium for policies where the mortality charges are explicit has also been raised on the charges. For other policies, the service tax on the gross premium for the first year has been hiked from 1.5% to 3%, while subsequent premiums will be taxed at 1.5%.

Even the hike in excise duty and customs duty is going to bloat your expenses as manufacturers are bound to pass these on to the end-consumer. Be prepared to pay more on everything from cigarettes and cosmetics to watches and washing machines. If you were planning to buy a sedan this year, increase your savings as the duty on cars that are more than 4 m in length has been hiked from 22% to 24% and 27%, depending on the engine.

The good news: since these taxes are mostly levied on discretionary spends, not on roti, kapda and makaan, you could tighten your purse strings if you want. Here's a look at how much more you will pay every year as service tax and other indirect taxes.

ITEM	Expenses	Service Tax	Service Tax
		10.30%	12.36%
TelePhone Bills	12000	1236	1483
Coaching Classes	24000	2472	2966
Eating Out	20000	2060	2472
Gyms	12000	1236	1483
Car maintenance and Repair	12000	1236	1483
Cable TV	3600	371	445
HealthCare	5000	515	618
Life Insurance Premium	6000	618	742
Functions : catering , photographer etc	20000	2060	2472
Real estate agent/ stock broker	10000	1030	1236
Salons , courier , packaging services	8000	824	989

ITEM	Expenses	Service Tax	Service Tax
		Old	New
Transportation : There hasn't been any change in the road cess, which is charged on diesel and petrol. Its at 2 Rs/Litre. Assuming petrol consumption at 1000 litres a year at 74 Rs/ Litre	74000	2000	2000
Jewellery: Prices will rise as customs duty on gold and platinum has been hiked from 2% to 4%. While excise duty for gold has been increased from 1.5% to 3%.	50000	1000	2000
Entertainment : No change in entertainment tax. It still ranges from 15% to 40%	6000	1200	1200
Holiday : Hotel Stay for 5 days	25000	3125	3125
Holiday : Food and beverages at hotel	6000	618	742
Holiday : Air Travel	20000	2060	24600
Holiday : Train Travel	12000	Nil	1483
Holiday : Tour operator / Travel agent	3000	309	371

As you can see friends almost all areas are going to come under new tax regime.

Comparison of Bank FD and Company FD

2012-03-20T06:31:00.003-07:00

BANK FD vs COMPANY FD

Its a good time to invest in FD. The rates offered by banks are high. Now, they have even better news from companies. There are around 100 companies offering FD schemes currently, and most of them offer at least 1% to 4% more than bank FDs. A three-year FD from Mahindra Finance, for example, gives 10.5%, while one from Jaiprakash Associates offers 12.50%.

Compared with this, the State Bank of India and HDFC Bank offer 9.25% and 8.5%, respectively, for a three-year FD. You don't need to be an investment wizard to figure out that the rates offered by the companies are the best you can pocket and you should park some money in their FD schemes. But, don't commit the mistake of equating a company FD with a bank FD, say experts.

This is because bank deposits are covered by a guarantee from the Deposit Insurance and Credit Guarantee Corporation of India, which assures repayment of Rs 1 lakh in case of default by a bank, but there is no such guarantee for company deposits. The safety of the FD rests firmly on the financial position of the company. That is why you have to be extra careful while choosing and investing your money in a company FD. "When investing in company deposits, do not get lured by high interest rates. Check the past track record and financial position of a company before committing your money.

Do A Thorough Check: Before putting money in a company's FD, try to get a rough idea about the company and its activities. Go for companies which have an AAA or AA rating (for their deposit schemes).

If a company has a long history and is making consistent profits and paying dividends - HDFC and Mahindra Finance, for example, then your money in its schemes will be in safe hands. Both HDFC and Mahindra Finance have a sound past track record.

This, along with their strong financial performance and strong parentage, makes them a good bet in the company deposit space. If the financial performance of a company has been erratic, and the promoters are not well known, you should think twice before investing in its schemes.

Rates High? Check Why: Whenever you come across a company paying higher interest rates, try to find out why the rates are so high. Put simply, a company should have some reason to pay a higher interest than the prevailing market rate to depositors. Most often, you would find out that the company is paying a high rate because it is in some financial trouble and the higher rate is a way to compensate investors for taking the high risk of putting money in its scheme.

Illiquid And Taxable: If the money you have is for use in an emergency, then company FD may not be the best investment option. If you have a bank FD, then in an emergency, all you need to do is walk across to your bank with the FD receipt and you can get your money back with no difficulty. Sure, there may be some penalties for breaking the FD, but you get access to the funds to be used for the emergency. But, a company FD cannot be redeemed so easily.

Budget 2012 Impact

2012-03-16T06:26:00.003-07:00

BUDGET 2012-2013

For salaried class, this budget is rubbish. Completely disappointing.

Income Tax:
The slab has been increased from 1,80,000 to 2,00,000. So a gracious raise of 20,000. If you are in 10% bracket, then the saving is 2000 Rs/Year and if you are in 20% bracket would end up saving 4000 Rs/Year.
I am listing below tax slab and tax rates:

Old Rate

Slab in Lakhs	Rate%
0 to 1.8	0
1.8 to 5	10
5 to 8	20
Above 8	30

New Rate

Slab in Lakhs	Rate%
0 to 2	0
2 to 5	10
5 to 10	20
Above 10	30

Other Impact:

Prices of consumer electronics like LCD TV, LED TV, air-conditioners, refrigerators, washing machine and microwave ovens are going to go up by 2-4%. This is because of increase in exercise duty from 10% to 12% .
Accordingly, a 1.5 tonne 3-star split AC will now cost Rs 1,000 more, while a 240-litre 5-star frost-free refrigerator will cost Rs 800 more. A 6kg fully-automatic front-loading washing machine will cost Rs 1,200 more.
The other announcement - exemption of basic custom duty for LCD and LED TV panels, will have little impact since there was already nil custom duty for imports from Japan and Korea from where major companies like LG, Samsung, Panasonic and Videocon primarily source their TV panels.

TV makers indicated LCD and LED TV prices will also go up by 2-3%. As a result, a 32-inch LCD TV price will go up by Rs 800 while that of a 32-inch LED TV by around Rs 1,200.
Apart from the items listed above other areas impacted would be:

Air Travel
Eating Outside
Phone Bills

Salaried urban middle class is going to be in a big way affected.

NSC CERTIFICATE

2012-03-15T21:58:00.000-07:00

NSC CERTIFICATE or National Saving Certificate

Let me take some time out and share my knowledge and information on National Saving Certificate. I remember my dad investing in NSC during my growing up years. Of late white collar urban middle class seems to have lost interest in this investment tool, largely owing to extravagant marketing of Mutual funds [Equity, Non Equity] , Direct equity , Bank FD and other Debt options.

Investment limit

NSCs do not have a limit of how much one can invest. What's more, interest up to Rs 1 lakh is tax-free. You read that correctly. NSCs offer you the possibility of earning up to Rs 1 lakh fully tax-free.

This is because NSC is the only small saving scheme wherein not only the initial deposit, but also the interest for the first five years, out of its term of six years, is eligible for a deduction under section 80C.

Interest and returns

NSC offers 8% interest compounded half-yearly. Due the compounding, the effective rate per annum works out to 8.16%. It is a cumulative scheme with a term of six years, meaning, though the interest accrues every year, it is paid to the investor together with the initial capital invested at the end of six years. For example, Rs 10,000 invested in NSC today will grow to Rs 16,010 at the end of six years.

Tax treatment

Let’s talk about the tax treatment of the interest paid out . Unlike PPF, where the full amount of interest is tax-free, NSC interest is taxable. However, as it is a cumulative scheme (eg interest is not paid to the investor but instead accumulates in the account), each year's interest for the first 5 years is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Sec 80C, thereby making it tax-free. Only the final year's interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the earlier years and the capital amount.

Illustration

Example: You invest Rs 1,00,000 in an NSC on April 1, 2010. Interest on this investment for each year is shown in the following table:

April 1, 2010 Initial investment 100,000
Mar 31, 2011 interest for Yr 1:   8,160
Mar 31, 2012 interest for Yr 2:   8,830
Mar 31, 2013 interest for Yr 3:   9,550
Mar 31, 2014 interest for Yr 4:   10,330
Mar 31, 2015 interest for Yr 5:   11,170
Mar 31, 2016 interest for Yr 6:   12,070
Total interest 60,110
Total value of investment:   1,60,110

Important detail:

From the above discussion, it is shown that both NSC and PPF interest is tax-free. However, the difference is that PPF interest is tax-free per se, whereas the NSC interest becomes tax-free on account of the deemed reinvestment under Sec 80C. Remember that Section 80C has a limit of Rs 1 lakh. Your NSC interest would only qualify for the deduction provided you have funds left in Sec 80C.

Comparion with Fixed Deposit:

NSC is a better investment than Fixed Deposit. Lets say the above 100 K was invested in a Fixed Deposit for 5 years. Ler ROI be 10%. Then in 6 years you would have earned 60000 unlike 60110 above. But your entire 60000 rupees can be taxed. In NSC only the last year’s interest of 12070 would be taxed.

Where and how to buy?

National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at most post offices in the country in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. NSCs can also be transferred from one person to another by paying a small fee. They can also be transferred from one post office to another.

See url’s:

http://www.bajajcapital.com/gss/nsc.html

http://www.investmentyogi.com/planning/national-savings-certificates-nsc.aspx

Plan for Your Retirement

2012-03-14T07:03:00.000-07:00

Start Planning for retirement:

For most of us retirement planning means PF and Gratuity paid from our salary. Frankly the word retirement brings to our mind only these two items. Its good that these two components of our salary gets added onto our retirement corpous month after month. The major question is : Would it be enough?

Lets say that our current expense per month is 15000. Any idea how much it would be in 25 years. To sustain our lifestyle as it is today how much we would have to spend 25 years from today.

At 5% interest:

Years	Year-Start	Year-End
1	15000	15750
2	15750	16537.5
3	16537.50	17364.38
4	17364.38	18232.59
5	18232.59	19144.22
6	19144.22	20101.43
7	20101.43	21106.51
8	21106.51	22161.83
9	22161.83	23269.92
10	23269.92	24433.42
11	24433.42	25655.09
12	25655.09	26937.84
13	26937.84	28284.74
14	28284.74	29698.97
15	29698.97	31183.92
16	31183.92	32743.12
17	32743.12	34380.27
18	34380.27	36099.29
19	36099.29	37904.25
20	37904.25	39799.47
21	39799.47	41789.44
22	41789.44	43878.91
23	43878.91	46072.86
24	46072.86	48376.50
25	48376.50	50795.32

As you can see from the table listed above, at the end of 25 years to sustain today’s life style costing 15000 Rs per month, you would need 50795 Rs per month. I am taking here inflation of 5%.

Challenges:

i) Need to ensure that our investment and savings targeting our retirement years yields an income reflecting inflation.

ii) Medical Cost: This is a huge burden on old age. As we grow old medical expenses are only going to grow. So apart from taking care of income to provide decent life style, we also have to plan for medical emergencies.

The savings and investments planned to retirement years has to be kept separate from financial needs to buy house, children education, family vacation etc. To execute this plan for more than 2 decade calls for strict discipline.

Lets look at things positively. Imagine that you have shown enough financial discipline and saved a huge corpus for life after retirement. This would not only provide quality life for your and your partner in the evening of your life, but also enable you to leave substantial inheritance for posterity.

BigBazar Bangalore Vegetable Prices

2012-03-11T21:24:00.000-07:00

BigBazar Bangalore Jayanagar 9 Block Vegetable Rate on 10/Mar/2012

My post last week focussed on Jayanagar 9 Block vegetable vendor rates. This week on saturday morning I landed up in BigBazar to purchase vegetable. The rates are listed below:

Tomato : 25 Rs/Kg
Carrot : 20 Rs/Kg
Green Chilli : 31 Rs/Kg
Palak Leaves : 3.50 Rs/Pack
Ladies Fingerv: 40 Rs/Kg
Coconut : 12.50 Rs
Corainder : 2.50 Rs/Pack
Potato : 12.50 Rs/Kg
Cabbage : 17 Rs/Kg
Capcicum : 40 Rs/Kg

Jaynagar 9 Block Vegetable Vendor Price:

Tomato : 30
Potato : 20
Onion : 20
Ladies Finger: 60
Capsicum : 60
Lemon : 5 Rs
Cabbage : 30 Rs/Kg
Mehthi Leaves: 1 bunch for 10 Rs
Palak Leaves : 1 bunch for 7 Rs
Brinjal : 30

Note:
As you can see vegetable vendor rates are much higher than BigBazar rates. There is any where between 20% to 100% difference in rates. Its much cheaper in BigBazar.
One issue normally people have with Vegetable and Fruits outlet like BigBazar , Reliance , SPAR etc is the quality of items. They are right about it. In SPAR quality sucks. Reliance is mixed bag. BigBazar was also like Reliance. This time around, I found almost 70% vegetables sold in Bigbazar to be on par with road side vegetable vendors.

Quality Observation of vegetables sold in bigbazar on saturday 10/mar/2012:
Tomato : Good
Potato : Good
Ladies Finger : Good
Capsicum: Good
Carrot : Above Average
Cabbage : Good
Palak Leaves : Good
Brinjal : Good
Onion : Pathetic
Methi Leaves : Average

Onion being a weekly chief requirement, I have no choice but to buy it from road side vegetable vendors.

I have arrived at the decision to purchase at least 60% to 70% vegetables from Bigbazar and the rest from vegetable vendors. This way I get to save almost 30% more money.

NRI and Bangalore Real Estate

2012-03-07T05:29:00.001-08:00

Recently my friends staying in USA started pressing me to find out real estate rates in bangalore and mysore. I was quite surprised by this sudden barrage of interest to buy property. Subsequently, I understood that this sudden excitement was due to weakening rupee value.

Yes! Its a very good time for NRI's to invest not just in bangalore , but also in other parts of India. In bangalore it is a fantastic time to buy as rates have been flat for almost 14 months now.
Lets look at it from NRI perspective:
Last March 1 US dollar was costing close to 45 Rupees. Today after 1 year the exchange rate for a US dollar is around 50 Rupees approximately. So close to 11% fall. Advantage of buying now:
i) You are getting properties at almost 11% discount
ii) Rates in bangalore have been flat for almost 1 year.
iii) They can book profit once rupee strengthens.
iv) They can book profit as rates in bangalore starts to move up

Some broker are making nice profits while booking a deal for NRI's of late.

Any one wanting to buy property in bangalore need to decide whether its for investment purpose or not. If the transaction is used for investment. Then they have two choices : Land and Flats.

Land : The rates here only appreciates. The risk is with buyer not in bangalore it becomes very tricky. Buyer would not be able to keep an eye on his site.

Apartment : As we all know apartment rate depreciates at -2% every year from market rate. So if the plan is to buy and hold for a few years. Then it is unwise.
If the plan is to invest in launch phase and sell once construction is complete, its fine. You stand to gain.

The one issue NRI buyers would face is if rupee is going to further fall, then it offers more discount for them. Its a bit like buying equities. In a falling market to determine the bottom level is quite difficult.

Most of the queries which I got from my NRI friends was related to buying land. So they wanted to know about gated community , BBMP approvals, BIAPPA approvals , Plot dimension and location.
A lot of enquiries were regarding plots beyond Ecity. That's largely because of the way these plots are being marketed. I am personally not too positive about this area with rumors of ground water pollution due to BIOCON.

Also visit the site : http://articles.timesofindia.indiatimes.com/2011-12-23/other-news/30550600_1_commercial-property-office-space-nris

Vegetable Price in Bangalore as on 4/Mar/2012

2012-03-05T05:50:00.000-08:00

I just felt it would be nice to share vegetable prices. The primary motive is it would let us know how prices rise and fall in different seasons, plus get a hold on food inflation. The vegetable prices listed are 4/Mar/2012 rate in Jayanagar 9 Block Market.
Per Kg Rate in Indian Rupees

Tomato : 30
Potato : 20
Onion : 20
Ladies Finger: 60
Capsicum : 60
Lemon : 5 Rs each [I Bought 5 for 20 Rs]
Mehthi Leaves: 1 bunch for 10 [I bought 2 for 15]
Brinjal : 30

Inflation Management

2012-02-29T20:36:00.002-08:00

Inflation:

Its the big or the biggest devil eating in to our savings. Any plan to invest and save for future has to be planned keeping inflation in mind. At a very basic level inflation means increase in price. It could be on account of food , real estate, health or education. The cost to avail food, provisions, transport, property and education etc eventually go up due to inflation. To ensure that our purchasing power remains on par or even better than today, we have to overcome inflation factor.
The best investments that grow with inflation is equity , real estate and gold. I would rate them in the order:
Equity
Real Estate
Gold

Equity:
As long as you have bought your security at the right time and are willing to wait for decent time period, it should fetch excellent returns. Equity investment is always [100 - Your Age].
That is if your are 30 years of ager. Then you can maximum invest 70% in Equity.

Real Estate:
Real Estate represents two asset class investments. One is apartment and the other is land. Of the two, as an investment I am more comfortable with Land. The trouble with apartment is depreciation. Land on the other hand does not depreciate but only appreciate.
By the way if you are buying an apartment to stay it cannot be termed as an investment. Buying apartment for investment purpose is tricky as your income generation would then be purely from Rental resource. In case you wish to sell your apartment , then the rate fetched would be based on depreciation. Since I am here referring to long term investment here to beat inflation, people who trade on apartment do not qualify. That is people who buy apartment in the launch phase and sell later after completion.
Land on the other hand appreciates in the long term. The issue here is approvals and encroachments. You need to take care of these two issues.

Gold:
In 1992 cost of 1 gram gold was 300 Rs/Gram . After 20 years, today it is 2700 Rs/Gram. So the price has gone up by 8 times or 800%. The only problem here is the fact that the dramatic rise is a recent phenomena. In 2002 the price was close to 700 Rs/Gram. So from1992 to 2002 , Gold appreciated by 120%. From 2002 to 2012 it has appreciated by 285%.
The best practice here is to buy in a systematic manner. Do not buy everything in one go.

UnListed Stocks in India

2012-02-29T01:57:00.000-08:00

What are unlisted stocks?
These stocks are offered by companies that are too small to qualify full listing.
Though some of these unlisted company's pose good returns its too risky to invest in them. Stocks listed in BSE or NSE is reviewed by SEBI and their operations are reasonably transparent.
Some web sites like 10paisa.com provides access these stocks. Many of them are penny stocks.
Some famous unlisted stocks are Madhukan Investment, South West Port, Tantia Concrete and Kotak Mahindra Prime Ltd.

Overall, I find it to be very risky business. None of the online trading websites are listing them either. You need to buy securities directly from these companies. Frankly with no autonomous government controlled body controlling these institutions its too risky to invest.

Buying Apartments in Bangalore

2012-02-24T02:43:00.000-08:00

Real Estate Case Studies:

For last 3 years , I have have experienced and heard of illegal and maipulative ways of builders in bangalore. Felt it would be apt to list down all these informations. It gets easier to go through repository of real estate observations and make decisions. Believe that’s what is called Informed Decision making.

Case 1: Small AP Builders:

These people are originally from Hyderbad. Have very little experience in handling projects start to end. A lot of projects in Ecity, BTM and JP Nagar are their products.

These chaps insist that you pay 100K upfront to be given the property documents.

Get ready to run after them for everything.

For a very small- small issues you have to run after them for months e.g. for getting the flooring done, for kitchen slab,doors, windows, electrical fittings, house painting.Remember these are the basic things that comes with your flat,they will have one or another excuse for not getting it done. They will even get angry on you if you go with complains/requests. Sub-standard materials would be used for contruction.

Within a year you will start facing problems like major cracks on walls , water coming from outside wall , dampness, window coming out, electricty problem, bathroom tiles problem,hollow tiles,broken tiles. They have a very standard answer to these problems 'Will do it next week'. They simple wait till completion of one year then they will disappear.

These builders have no previous history of completed projects. Then how come they have so much information on bank loans, approvals etc. They keep changing name of their company. Stay away from them.

Case 2: Some FAMOUS BUILDERS:

1) Delivery Delays (Project delays are common. In some cases exact hand over date is delayed by a year or more

2) Be ready to lose 25% of project cost...by the time they deliver, your net project cost would have gone up by 20-25%

3) Careful with their agreement clauses

4) Careful with their payment schedule...this has no relevance to their construction progress.

5) Careful with their sales promises...knowingly or unknowingly they may be cheating you (my personal experience) and management does not care about those promises.

Agreement Terms
They are mostly one-sided.

They also charge hefty Advocate fee from customers. This basically means you are paying the advocate fee to have the agreements designed for the benefit of the "Other Party". Considering that all the agreements use the same format - Advocate fee is really wonderful profit margin !
Be cautious of delay clauses: What happens if the project is delayed ? Developers may also have a clause to pay penalty on delay. But look at these clauses carefully to see when they are not applicable and argue with them to change suitably.
Be cautious of Payment Schedule : Clarify what it means in terms of actual completion. Most probably, you will pay all the money at least 1 yr in advance, though they claim otherwise !!!
Ask them questions on sharing of financial loss. e.g. if they delay the project by 1-2 years, govt may increase taxes & levies. If the increase is substantial, then you will lose a lot.

Normal areas of contention:

Uninterrupted Power Supply:

Check and see what they mean by this.

They claim uninterrupted power supply, while actually you get only 50W of back up power per apt and that also only in a pre-designated point. In most cases only the Lift can avail the power backup.

Amenities:

Its only a conceptual offering on their broacher, and it is not legally binding. Verify with the builder.

Club house charges:

They charge initial amount + monthly maintenance + usage charges, so overall it turns out to be quit expensive

Construction Quality:

Extremely bad tiling work - cracked tiles, not leveled properly, not filled properly (they crack later), diff shades of tiles used in same room

Be careful with bath fittings. These chaps promise something and install some other things.

Water Supply:

Check whether they have bore well and also depth of it. Also get to know where is the storage tank and its size. If the aparatment is more than 8 storied then pressure regulators is a must.

NEW INCOME TAX SLAB

2012-02-16T01:53:00.001-08:00

BREAKING NEWS: New proposal to increase tax slab has been communicated by Finance Ministry. The proposal is listed below:

0 - 3 lakhs = 0%
3 to 10 lakhs = 10%
10 to 20 lakhs = 20% and
> 20 lakhs = 30%

Old Slab:

0 – 1.8 lakhs = 0%

1.8 to 5.0 Lakhs = 10%

5.0 to 8.0 Lakhs = 20%

> 8.0 Lakhs = 30%

Most of the TV channels and newspapers have already reported this information. Lets hope and pray that it gets tabled in parliament and passed.

OUTCOME: SAVINGS AS A RESULT

As soon as the news reached my ears, I reached for my calculator to find what’s going to be the gain for me. Need to say it’s a nice gain. I have created a table to explain this impact better.

The Annual salary taken here is just “Take Home Per Month” * 12. I consider “Take Home Per Month” to be drawn after deducting PF, HRA, 80 C investments etc.

Old Tax Structure:

Annual Income	300000	600000	900000	1200000	2400000
1.8 to 5 slab	12000	32000	32000	32000	32000
5 to 8 slab	0	20000	60000	60000	60000
above 8 slab	0	0	30000	120000	480000

TOTAL	12000	52000	122000	212000	572000

New Tax Structure:

Annual Income	300000	600000	900000	1200000	2400000
3.0 to 10 slab	0	30000	60000	70000	70000
10 to 20 slab	0	0	0	6000	200000
above 20 slab	0	0	0	0	120000

TOTAL	0	30000	60000	76000	390000

Comparison between Old and New Tax Slabs:

Annual Income	OLD SLAB Tax to be Paid	NEW SLAB Tax to Be Paid	Amount Saved
300000	12000	0	12000
600000	52000	30000	22000
900000	122000	60000	62000
1200000	212000	76000	136000
2400000	572000	390000	182000

Note:

The new tax slab as of now remains just a proposal. It needs to be tabled and passed. I am quite optimistic that if not this financial year, at least next financial year the proposal would be passed.

With our GDP winding down, government would be compelled to take measures to increase spending.

BSE Sensex Touches 18K

2012-02-14T21:04:00.000-08:00

Hurrah! BSE Sensex has touched 18K again after Aug 2 2011. So after a gap of nearly 6 and half months. 2012 started with sensex at 15454 . By the end of January 2012 market was at 17193. So the market has gone up by 11% in 1 month. From Jan 1 2012 to Feb 14 2012 market has gone up by 16.5%. In 45 days market has rallied by 2500 points. The bearish movement has been very rapid.

Experts had predicted at the start of this year that the market would be range bound between 14K and 18K. We are already at 18K. Now of course experts are re aligning their predictions upward and expect the market to touch 19K. Lets all wait with our fingers crossed.