Sucheta Dalal :IDFC L&T Infra drop interest rates for tranche2 —IFCI is good bet
Wednesday, January 11, 2012
SBI tax saving deposits—can it really fetch you 17.77% return? - Moneylife Personal Finance site and magazine
SBI tax saving deposits—can it really fetch you 17.77% return? - Moneylife Personal Finance site and magazine
SBI’s tax saving deposits advertisement claims to give you 17.77% return. While it assumes you are in the 30% tax bracket at the time of investment, it conveniently calculates the return without considering tax obligation on the interest generated at the time of exitDuring the tax savings season, people are desperate to save Rs30,900 in taxes by investing their hard-earned Rs1 lakh in certain kinds of savings instruments. One such avenue is a tax-saving fixed deposit (FD) which is for a five-year term without option for premature withdrawal. SBI has put a front page advertisement in Times of India and other leading national dailies claiming to give 17.77% effective annual yield. It assumes you are in the 30% bracket (which may not be true) and it gives an effective annual yield without considering the tax on the interest generated, which could be up to 30%.While your effective annual yield will vary based on your tax bracket at entry and exit, SBI’s calculations in the advertisement shows the slick marketing which wants to consider highest possible tax savings on entry and no tax liability on exit. It is misleading to an average investor who can get dazzled by the big returns claimed in the advertisement. This kind of advertisement is usually seen with infrastructure bonds giving tax benefit under 80CCF for Rs20,000 investment. Last year, IDFC bond claimed a tax-adjusted yield of up to 17.85% to investors on buyback (after five years for 10-year bond), which was confusing to the average investor. The company was offering 8% return last financial year.On a positive note, SBI’s rate of interest for tax savings five-year FD is 9.25% per annum (p.a.) which is also the same as it offers for regular FD. In the past, tax savings deposit FD used to offer a little lower rate than the regular FD. With tight liquidity for banks, they want to entice deposits with high interest rates. It is important to note that there is no option for premature withdrawal even with penalty for tax savings FD and the interest is taxable. There are other better options for tax savings under 80C. Consider all the options before jumping in with tax savings FD.SBI has been advertising heavily for attracting big deposits. It is giving 8.5% p.a. interest for deposit of Rs1 crore and above for only seven-day FD. This is a good option for high-net-worth individuals, who want good return as well as liquidity.
Tuesday, January 10, 2012
NRIs will get right to vote; pension fund for overseas workers
Manmohan wants them to contribute "much more" to building a modern
India
Prime Minister Manmohan Singh on Sunday called upon the Indian
communities living abroad to play a more active role and contribute
“much more” to the building of a modern India and promised significant
steps to facilitate, encourage and promote their engagement with the
country of their origin.
Inaugurating the 10th Pravasi Bharatiya Divas here, Dr. Singh also
announced the right of franchise to the non-resident Indians who are
registered under the Representation of the People Act, 1950. A new
pension and life insurance fund for overseas Indian workers, to enable
them to voluntarily save for their return and resettlement, has also
been introduced.
Trinidad and Tobago Prime Minister Kamla Persad-Bissessar is the chief
guest at the three-day festival, which began on Saturday. About 1,900
NRIs and Persons of Indian Origin (POIs) are taking part in the flagship
event, which will focus on India's success in diverse fields and
invited them to strengthen their bonds with their ancestral land.
The formal inauguration of the annual event at B.M. Birla Auditorium
here on Sunday, a day after brainstorming seminars were organised on a
variety of subjects, was attended by a battery of distinguished persons,
industrial magnates, young entrepreneurs and government functionaries.
Among others, Union Minister for Overseas Indian Affairs Vayalar Ravi,
acting Rajasthan Governor Shivraj Patil and Chief Minister Ashok Gehlot
attended the inaugural session. Union Finance Minister Pranab Mukherjee,
Union Road Transport and Highways Minister C.P. Joshi and Lok Sabha MP
Shashi Tharoor addressed the subsequent sessions.
Dr. Singh said that while the notifications had been issued to enable
Indian residents abroad to participate in the country's election
processes, a Bill had been introduced in Parliament to merge and
streamline the PIO and Overseas Citizen of India schemes by amending the
Citizenship Act. This would provide for an overseas Indian card that
would be given to foreign spouses of the holders as well.
The new pension and life insurance scheme, fulfilling a long-pending
demand, would enable the overseas Indians to save for their old age
after returning to the country, said the Prime Minister. It would also
provide a low-cost life insurance cover against natural death.
Listing the steps taken for safety and security of the Indians living
abroad, particularly in the regions of instability, Dr. Singh said the
government was “acutely conscious” of the security needs of over six
million Indians staying in the Gulf and West Asia. “We have conveyed to
[these] countries that we have a stake in the peace and stability of
this region. We expect that they would appropriately look after the
interest of Indian communities.”
He said the Ministry of Overseas Indian Affairs had prepared an action
plan to implement the recommendations of an inter-ministerial committee
on issues relating to repatriation, relief and rehabilitation of Indian
nationals affected by the recent developments in the West Asian region.
IDBI Bank hikes interest rates on NRE deposits to 9.5% p. a.
-- IDBI Bank has revised
Interest rates on NRE deposits to 9.5% p.a. for deposits with maturity
ranging from 1 year 1 day to 10 years. The Interest rates on deposits
for maturity period of 1 year will be 9.25% p.a. This rate will be
applicable on fresh NRE deposits & renewal of maturing deposits. The
interest rates will stand revised from December 28, 2011.
The revised interest rates are as follows -
Maturity Slab Interest Rate [% p.a.]
1 year 9.25 %
1year 1 Day - years 9.50 %
Notes to Editor
About IDBI Bank:
IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank has essayed a key nation-building role, first as the apex Development Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service commercial Bank (October 1, 2004 onwards)
The revised interest rates are as follows -
Maturity Slab Interest Rate [% p.a.]
1 year 9.25 %
1year 1 Day - years 9.50 %
Notes to Editor
About IDBI Bank:
IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank has essayed a key nation-building role, first as the apex Development Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service commercial Bank (October 1, 2004 onwards)
Tuesday, January 3, 2012
Saturday, November 5, 2011
Monday, August 16, 2010
Is Baroda Sector Focus Fund a diversified scheme?
Despite its moniker, the fund may do better by switching between sectors. But that makes it an equity diversified fund
Baroda Pioneer Mutual Fund has filed its draft offer document with the Securities and Exchange Board of India (SEBI) to launch an open-ended 'Baroda Pioneer Sector Focus Fund'. The scheme will be benchmarked against the S&P CNX Nifty.
The fund will have exposure to six sectors with 25% of net assets to each sector at any given point of time depending upon their growth prospects and valuation. The scheme has provided an indicative list of 15 sectors which it may invest in.
These sectors include automobiles, cement & cement products, construction, consumer goods, energy, financial services, industrial manufacturing, industrial capital goods, information technology, media & entertainment, metals, pharma, services, textiles and telecom. Baroda Mutual Fund manages a corpus of Rs3,954 crore as on July 2010 and has 15 schemes in its basket.
Is it worth investing in this fund? Unfortunately, sector funds are not a good idea. They are launched when a particular sector is doing well, which is when prices have already run up. The subsequent stock price performance is usually lacklustre. We analysed the performance of 49 equity sector funds. Over a one-year period, 40 funds have outperformed their respective benchmarks while only 9 have lagged behind.
However, over a three-year period, only 23 funds outperformed their benchmarks while 26 funds failed to outperform their respective benchmarks. The Baroda Pioneer Sector Focus Fund may do better than others because it will able to switch between six sectors. But then, that makes it a diversified equity growth fund!
Baroda Pioneer Mutual Fund has filed its draft offer document with the Securities and Exchange Board of India (SEBI) to launch an open-ended 'Baroda Pioneer Sector Focus Fund'. The scheme will be benchmarked against the S&P CNX Nifty.
The fund will have exposure to six sectors with 25% of net assets to each sector at any given point of time depending upon their growth prospects and valuation. The scheme has provided an indicative list of 15 sectors which it may invest in.
These sectors include automobiles, cement & cement products, construction, consumer goods, energy, financial services, industrial manufacturing, industrial capital goods, information technology, media & entertainment, metals, pharma, services, textiles and telecom. Baroda Mutual Fund manages a corpus of Rs3,954 crore as on July 2010 and has 15 schemes in its basket.
Is it worth investing in this fund? Unfortunately, sector funds are not a good idea. They are launched when a particular sector is doing well, which is when prices have already run up. The subsequent stock price performance is usually lacklustre. We analysed the performance of 49 equity sector funds. Over a one-year period, 40 funds have outperformed their respective benchmarks while only 9 have lagged behind.
However, over a three-year period, only 23 funds outperformed their benchmarks while 26 funds failed to outperform their respective benchmarks. The Baroda Pioneer Sector Focus Fund may do better than others because it will able to switch between six sectors. But then, that makes it a diversified equity growth fund!
Subscribe to:
Posts (Atom)