Sunday, November 27, 2016

Note of Rs.500 are still useful

Issuing fresh guidelines on the banned Rs 500, and Rs 1,000 currency notes on Thursday, the Narendra Modi government has stopped the exchange of old notes over the counter at banks from Friday. People will now can only deposit notes in their accounts and then withdraw new currency either through cheques/withdrawal slips or ATMs.
“There will be no over the counter exchange of old Rs. 500 and Rs. 1000 notes after midnight of 24.11.2016,” said the government in a statement.
But, the people can still exchange their old Rs500, Rs1,000 currency notes at the Reserve Bank of India (RBI). The RBI on Friday clarified that it will allow exchange of old Rs 500 and Rs 1,000 notes at its counters up to the limits applicable per person. No last date has been set for such exchanges.
In another significant step, the government has extended the use of old Rs500 note at petrol pumps, government hospitals, and some other public utilities until 15 December. But the Rs1,000 note will no longer be accepted by these utilities.
Here is the list of utilities and services which will still accept the old Rs500 notes:
 Petrol pumps and toll plaza.
 School fees up to Rs2,000 per student in central government, state government, municipality and local body schools.
 Fees in central or state government colleges.
 Pre-paid mobile top-up to a limit of Rs500 per top-up.
 Purchases at consumer cooperative stores such as Safal or milk booths such as Mother Dairy outlets operated under authorisation of central or state governments with identity proof up to Rs5,000 at a time.
 Payment of current and arrear dues to utilities will be limited to only water and electricity and only available to individuals and households.
 Government hospitals for medical treatment and pharmacies for buying medicines with doctor’s prescription.
 At railway ticketing counters, bus ticket counters of government or public sector undertakings and airline counters at airports for purchase of tickets.
 Use at international airports for arriving and departing passengers up to Rs5,000.
 Purchase of LPG gas cylinders.
 Payments towards on-board catering during travel by rail.
 Purchase of tickets for suburban and metro rail travel.
 Purchase of entry tickets monument maintained by the Archaeological Survey of India.
 Payments towards fees, charges, taxes or penalties, payable to central or state governments including municipal and local bodies.
 Payments towards utility charges including water and electricity, but no advance payments.
 Payments towards court fees.
 Payments towards purchase of seeds from designated state-run outlets.
 Payments at crematoria and burial grounds.
 Foreign citizens will be permitted to exchange foreign currency up to Rs5,000 per week. Necessary entry to this effect will be made in their passports. The Reserve Bank of India will issue further guidelines in this regard.

#500 #1000 #demonitisation
News source - livemint.com

Saturday, November 26, 2016

Did you know about more than 100 rewards for going cashless!


Here at #mymoneystreets I am committed to bring to you best way of utilising your money. This post is an dedication to demonitization. 

Demonitisation, banning of Rs. 500; 1000,bank queues, ATM lines, limit on withdrawal etc have become part of our every conversation in last 15 days. Our daily habbits of tendering loose cash for every transaction has become a difficult task, and if you have some notes of Rs.100 on you, you are no less than a local celebrity. Amidst all this, there has been a huge and consistent shift happening towards the way we pay for our bills. With no loose cash to spare, people had been cutting down on unneccesary expenses, forcing it empty retail stores, restaurants, leisure activities. But it cannot continue forever. Thanks to the first movers like #paytm #ola, now numerous retail and B2b businesses opening door for #cashless transactions.

I was astonished to see the local and nationwide convenience offers and discounts spread accross newspapers, Facebook, Twitter, e mailers, messages to promote products and services.
In this post I have listed down more than woo offers running and few might have closed as well just for your reference. Make the best use of it.

Shopping online 
Amazon - Offering 15% off on buying Amazon cards as well as other products. Use code -CASHLESS
JABONG - 25% OFF on payment through debit card/ credit cards on purchase over 999
MYNTRA - 25% off on purchase over 1299 on payment by debit card/ credit cards
Flippant - Offering 10% discount
Pizzahut - Offering 1 on 1 free for online transactions.
Shopeesite.com - offering Rs.200 off on online payments
Snapdeal - Offering 10% instant discount on all card transaction. They have come up with other deals as
Homeshop 18 - Offering discount on products ranging from kitchen, clothes, homeware, appliancesetc, upto 60% off
Hopshopdrop.com -offering upto 60% discount.2
Fine jewellery by Sneha Rateria - 15% discount on everything. Code - NOV15
GETMYCOUCH.COM- offering upto 15% extra discount on shopping cashless. 
missamore- offering 15% discount on paying through PAYUMONEY
FABULER.IN - fashion website offers 10% discount on cashless payment. CODE - FBSAVE10
JUNKD.IN - online accessories portal offering 10% discount on all online orders
CODE - CASHLESS 
Fernsnpetals.com - Offering 15%. USE CODE - FNPFEST15
Craftsvilla.com - Offering discount of extra 10% on online payment
webuynatural.com - e-commerce portal for organic products offering discounts and cashbacks
Voonik.com - Offering upto 60% off on #cashless sales drive
Taruni.in 
offering 5% discount on all purchase. CODE - CASHLS
Jazzmyride - online shop for crazy car accesories offers extra 5% off
Krafts kart - discount of 80% on imitation earrings
Dealstantra - offers 15% off upto Rs. 300
Crispydeal - Flat 25% off on grocery

Government initiative to boost cashless payments 
Homeloan repayment relief for 60 
IRCTC - No fee in debit card payments till 31st Dec. 
No transaction fee in debit card/ credit card for merchants

E-wallets
PAYTM For consumers - wallet limit increases to 20,000 from initial 10,000
PAYTM for merchants - New version of the app allowing small merchants to accept payment through credit card /debit card
mycashlesswallet- ewallet offering upto 40% discount/
JIOMoney app - Offering 10% cashback at Reliance Fresh and Reliance Smart stores
Freecharge - NO Collison, nil charges for funds transferring to bank
Mobikwik - partners with NHAI for toll colloection
Mobikwik - Offering upto Rs200 of on recharge and bill payment
Airtel money - Offering 5% cash discount on all utility bill payment
Times cards - (debit/credit) Offering upto 30% off on movies, dining, travel, shopping etc
SBI card Elite offering discounts and benefits at Shoppers Stop, WestSide, M&S

Electronic special 
Google Pixel - HDFC BANK credit card/debit card offering 7000/- discount
DELL PC offering interest free EMIs

Retail 
Future group announced 5% additional discount on cashless transaction
Spencers - offering discount on cashless
Reliance Fresh - Offering discount on cashless payments
Asmi diamond jewellery - announced 10% additional off on digital payments
Hilite Mall @Kalikut offering 10% discount
Tommy Hilfiger - Offered discounts
Benetton - offered discounts
Marks&Spencer's - Offering additional cashback of 10%
Pepe offering 5% discount on cashless
PUMA - Accepting cheque payments from loyal customers
BIG Bazaar - CASHLESS transaction rewarded with 5% additional discount
Ocean Fruit Water - Paytm cash Rs. 20/-
Admyrin - An online shop for women offering 10% extra #cashback

Pharmacy 
Pharmeasy offers 20% off on all medicines
Oxysquare - a platform for doctors, offer 50% discount ondoctor consultation fee
Apollo pharmacy - FMCG - 5% pharma 10% appollo products 15% discount using IDFC cards
Netmeds - Free medicine delivery and 20% off


FOOD and restaurants -  
Zomato offering 15% discount
Theshopofgoodtaste.com  offering Rs.250 off on orders above 1500 and Rs.500 off on orders above 2500
Didz app offering discounts on restaurant and pub deals
Mealskart offering discounts and cashback
Dineout card offering cash back of 20%
Gourmet Delight - shop for farmfresh produce, cheese etc offer 10% discount on cashless transactions
Niche cafe bars - Flat 25% off
Veggie 24*7  - 10% discount
Crownit - get extra 20% discount when you pay with crownit
Swiggy - online food aggregator offering Rs. 75 off on first bill above Rs. 1500.
Nature's Basket - Rs.55 cashback on #rechargeadda
McDonald's offering frozen coke on cashless transactionsp
Hyderabad restaurant "Chutney's" offered 25% discount to customers who paid Rs. 100 notes
Dunkin Donught offered 25% off on debit/credit card payment
Foodelite online offering 10% discount

Car/bike

Mercedes Benz - Offering 3 years insurance + 3 years maintenance + 3 years buyback
Maruti Suzuki RItz - cash discount of 35,000 and exchange 
Maruti Suzuki Celerio - Cash discount of 25,000 and 10,000 exchange bonus
Maruti Suzuki Swift desire - cash discount and exchange bonus
Wolkswagon offering 0 zero down payment. Exchange benefit 10,000 and loyalty benefit 10,000
Hyundai Verna - Offering 0 downpayment
Hyundai EON offering 0 down payment
Hyundai i10 offering 0 down payment offer till30th Nov
Mahindra SUV Rs.101 down payment for Newgen Scorpio,KUV 100, NEW AGE XUV 500, Bolero, TUV300 offer till 30th Nov 
HONDA Cars- zero down payment till 31st Dec
HERO Scooters - Available on Rs. 5000 downpayment. HDFC bank also offering 100% finance
Bajaj Bikes - zero downpayment offers

Cab-service 
OLA- offering Rs. 100 off through OLA MONEY.
OLA letting customers pay through credit card/debit card
OLA offering 150 off on HDFC cards
OLA has launched post paid s
MERU offering 25% cash back upto Rs. 150

Leisure and Miscellaneous
PVR Cinema offering 35% off on fnb on mobile app
PVR Cinema offering 20% off on first app transaction
PVR Cinema waived convinience fee on online tickets
CINEPOLIS - Offering 30 % discount on online ticketing
Bookmyshow offering Rs. 150 off on movie tickets
Flat pebble - an online portal for personalor  events, offering discounts upto Rs. 2000.
SNAPMINT - A digital lending market place for education, shopping, personal loan, tied up with Edify Furniture and Vijay sales for interest free EMI
QuikrHomes - launched cashless managed rentals
Imagica, theme park- offering host of benefits on cashless transactions
Option pass - Free shopping pass for good, grocery, clothing, flights, hotels at offering upto 25% additional savings
Multiplexes waived parking fee initially
Timesavez offering 15% discount on cleaning services


Air-travel
YATRA.COM offering upto Rs. 1000 discount on HDFC debit/credit cards
Makemytrip offering flat Rs. 800 discount on flight bookings
Jetairways -offered all inclusive fair of Rs.999 for your days till 19th Nov.
Airasia - Big sale week offered fair from 999 till 20th Nov 
Airvistara - Offered travel from Rs 999 for 3 days ending with Nov
SpiceJet - offered spicecash award

These offers won't last forever, so hurryup and make most of this #cashless #fest

Thursday, November 17, 2016

Money goes digital - how do I do online transactions

Online transactions are easy, safe and convinient. There is no tension of getting theft or losing money in the crowded market place or in a hospital. It is accepted every established shops, cinema hall, jewellery shops, hospitals even can services.

It wasn't any different day for Rajiv, he woke up, looked at his mobile, checked the news app, freshenup, got ready and booked an UBER cab, today he had got Paytm offer, so paid by it. He got down right at the office door, he found many people gathered in groups discussing #demonitisation. Though he wanted to share his views too, but he was running late and wanted to have breakfast at office cafeteria, he had a full plate chole nature and paid by his preloaded card and entered his desk. His work was going smooth with occasional interruption with the demonitisation of currency, suddenly a reminder popped up! it was his fiance's birthday and he had forgotten it. An idea struck his mind, he checked and found an online offer on cake and bouqet, he paid through credit card and ensured a delivery to her office within 1 hour making it a real big surprise for bday!
Day passed by and he managed very well with cards, net banking,credit cards, pre paid card hardly disturbing his daily routine.


But this is not the case with all of us. It's high time we understand the benefit digitisation of money and ease of using it. 

How do we get at ease with digital transactions

There are atleast 6 broad category available to make most of your money digitally.

1. Net banking - Most of the time it is sheer inertia or misconceptions to create a net banking account attached to your existing savings account more than fear of online money theft. This has become all the more convenient with the launch mobile applications in the same. One can use it for checking balance, create fixed deposits, recurring deposits, transfering money to other accounts, pay utility bills, credit card bills, buy mutual funds, insurance and even apply for #IPO. For transactions, one can opt for #NEFT #RTGS #IMPS options available in the website itself. These secured transactions with password and security check through mobile varification.

Debit card - This is the oldest form of plastic money. Very common yet less used in transactions other than withdrawing money from ATM. With the ATM PIN, one can use it for online transactions as well as at merchant counters i.e. shopping, dining, movie tickets everything. 

Credit card -This mode exist as long as debit cards, but this is a tricky one. This is not your money, this is a short term loan which attracts very high interest on non payment in he stipulated time. This is a good mode if one uses responsibly. 

Online wallets 
This segment is picking up in India. This wallets can be loaded with money using netbanking and can de used in small amounts.The best part about the online wallet is transaction gateways are not exposed to the bank accounts, hence safer. These are like actual wallets and money can be transfered to anyone with the same online wallet. #Paytm #MPesa are some example of e-wallets. There are some charges attached when you transfer the wallet money to your own account.

UPI - It is government's answer to e-wallet.It is an interface through which account holder of one bank can transfer/receive money to someone having account in same/different bank through smartphone. Multiple bank accounts can be linked to a single cell phone. The transaction takes place through virtual address hence, no requirenent of bank details There would be no need to enter bank details.Transaction can be authorised by entering either Aadhar card number or mobile phone number. It can be used for shopping, Bill payments etc.

Prepaid cards - It is nothing but your own money loaded in the card, can be used like a debit card, howeve unlike your debit card it is not attached to your savings account

Sunday, November 13, 2016

Women! Be financially aware, even if you are non-earning member

Financial freedom hidden in 10 questions



It's been a common feature with women friends across, they are updated with the latest accessories, dresses, perfumes, best hobby classes for their children, best smartphones, best discount shopping sites, best restaurant apps, deals for everything under the sun and the moon! But, ask her about what is she doing with her hard earned salary? the reply will be simple - let it go please, my husband takes care of all that.

Great! if your husband is sharing this great responsibility, even better if he is independent and not influenced by the brokers and insurance sellers, but isn't it high time that you give financial planning a chance or do atleast some basic transactions to get a perspective of things? What if you need to make some financial choice in his absence?

In this post I request all women out there my full time working friends, full time home maker, part time bakers, yummy mummies, aunts and the cute little freshers at work, you all do the hard work of earning money, saving it, managing it as well as spending smartly, you all have the basics of home budgeting on your fingertips, isn't it necessary to look at your future goals and actively take part in financial planning hands on. I know and understand that things are easier said than done, so we can always take small steps toward a it.

If you are not hands-on, ask your partner/ father/son these 10 QUESTIONS

1. Do you have a contingency fund? where do we look in emergency?
2. How are we saving for future education of our children? what is the investment vehicle? would the investment yield adequate return? What are life goals and time frames- buying property, child education, child marriage, vacations etc
3. Are you a working women, do you have a term-insurance plan?
4. if you are a non-earning member why you require a life insurance? in this case it is an unneccessary expense.
5. Does your aging parents, you, your children have health insurance?
6. Do you use credit cards? what are the due dates? Are you aware of the charges it attracts as penalty on delayed payments?
7. What are the EMI dates for home/personal loan repayments?
8. What are the regular/ monthly investments through mutual funds, reccuring deposits, insurance premiums, PPF contribution etc.
9. Which asset to liquidate first and when? In simple terms which fund to withdraw first from the various investments you have made?
10. Do you know how to invest in mutual funds, fixed deposits, recurring deposits, paying insurance premiums, buying health insurance online?

If you have affirmative answers for the 10 questions above, you are well aware of many things in financial management and well equipped to take informed financial decisions.

If you see scope for improvement, which we all have, we all are human beings, work on it. Do write to me incase you would like me to elaborate on specific topics. In my next post, I will explain the easy way to invest and track your mutual funds.



Stay good. Stay healthy.

#empowered women #financially aware, #financial independence, #moneymanagement #financialfreedom


Friday, November 11, 2016

Don't evade tax, save tax! there is nothing like a relaxed mind and happy soul!

There are many way of looking at a single topic. The currency exchange is definitely tedious with the limit on transactions and long cues. But we salaried and tax payers need not worry much, it i just the currency crunch and loose change crisis, which will eventually solve and change our currency management habbits.

As law abiding taxpayers of India, we can take some learnings from the situation and do some introspection. You may say, I am paying taxes on salary, goods as well as services, then what kind of introspection we need to do?

We create the blackmoney pool with our hard earned taxed money

1. To avoid paying high amounts of taxes on gold jewellery purchase, often encourage cash transaction paving a way to make the whole white money into black by the jeweller

2. To stay away from high fee and taxes we partner with real estate developers to transact in part cash

So, basically our fear of paying taxes create the option for creation of black money.


Apart from avoiding these transactions in future, we should take Tax saving instruments
seriously to get higher, less taxed or complete tax free returns. Apart from the 80c instrument, there are many investment instruments which are tax efficient.


  • Debt Funds - More efficient for the hiher tax bracket segment
  • Equity - Return on equity shares as well as mutual funds investments n long term (more than 1 year) period is cmpletely tax exempted, whatever the amount is.
  • Dividend on equity, equity mutual funds are tax free in the hands of the investors
  • D-mat Gold - Handling cost, making charges are nil, making it much efficient investment compared to the physical gold. So, it is advisable to go for gold ETFs, or the sovereign gold funds
#save tax #black money #invest in Equity mutual funds


Be a smart investor, stay clutter free, there is nothing like a relaxed mind and happy soul!

Thursday, November 10, 2016

The 17 special and secured features of the new Rs. 2000 note

The new #Rs. 2000 is in circulation. Here we welcome it with all love and respect. Chances are nil that the note is a fake, as it is just 2 days old, however, there is no harm in understanding the special and security features to get to know the new denomination.



Here's introducing the new Rs. 2000

Obverse

1. see through register with denominational numeral 2000 can be seen when the note is held against light.

2. Latent image with denominational numeral 2000 which can be seen when the bank note is held at 45 degree angle at the eye level

3. Denominational numeral 2000 in Devnagri

4. Potrait of Mahatma Gandhi in the centre

5. Micro letters 'RBI' and 2000

6. Colour shift windowed security thread with inscription '' भारत", RBI and 2000. Colour of thread changes green to blue when the note is tilted

7. Guarantee clause, governor's signature with promise clause and RBI emblem towards right

8. Mahatma Gandhi potrait and electrotype (2000) watermarks

9. Number panel with numerals growing from small to big on the top leftside and bottom rightside. 

10. Denominational numral with the Rupee symbol, Rs. 2000 in colour changing ink (green to blue) on bottom right


11. Ashoka Pillar emblem on the right

For visually impaired 

Intaglio or raised printing of Mahatma Gandhi potrait, Ashoka Pillar emblem, bleed lines and identification mark

12. Horizontal rectangle with raised print on the right

13. Seven angular bleed lines on left and rightside in raised print


14.  Year of printing of the note

15. Swachh Bharat Logo with Slogan

16. Language panel towards the centre

17. Motif of Mangalayan - reflecting country's first venture in the interplanetary space.

Source - Advertisement by Ministry of Finance

What to do with your Rs. 500, and Rs. 1000 notes

What to do with that #Rs. 500 and #Rs.1000 note

Just came back from long struggling process of exchanging the old notes of Rs. 500 and Rs. 1000 rom #AXIS Bank. I will just give a small download based on my experience to help you to be a bit prepared for it.


What do you get (My note is for SAVINGS ACCOUNT HOLDERS)
1. You can exchange upto Rs. 4,000 on the counter
2. You can withdraw upto Rs. 10,000 on cheque
3. You can deposit amount below 50,000 without any hassle

The notes you will be getting
4. The currency you will be getting in denomination of #Rs. 2000

5. Also, Rs. 100, Rs. 50, and Rs. 10 will be available 
(No notes of 500, 1000 in circulation)
Today, ATMs aren’t functioning
6. If you are unable to visit bank, you can send your representative with authorisation letter and his/her valid if prof

Be prepared for
1. Very long queues in the banks
2. Carry a water bottle and some munchies to give you company
3. Carry your ID Card along with photocopy, mention that the of proof is for exchanging old notes, duely sign with data to avoid misusing your id proof
4. Carry a pen and note book for convenience

Relax –
1. You have 50 days in hand

2. After the initial hitch, the processes will get better with ATMs functioning and review on deposits and withdrawals 
3. It will be accepted in Government Hospitals, Airport for atleast next 36 hours.
4. If you don't have unaccounted money, you don't need to worry  

Wednesday, November 9, 2016

10 reasons Why we are obsessed about ELSS mutual funds

#ELSS is a clear winner amongst the Tax saving instruments in India 

Under section #80c of the Income tax act, there are many instruments one can opt for to save tax and create a wealth kitty. In the last post on Tax saving instruments under section 80C, I have listed down all the options of investments, insurance and expenditures. Here, I would like to elaborate on the specific product “Equity Linked savings scheme” Mutual Funds, and a basic comparison with the other options in terms of liquidity, lock-in, potential return etc.
Let me begin with the table of popular investment tools under 80C and their features.


Instrument
Maximum investment amount
Lock-in
Potential return
Actual tax benefits
#PPF
Rs. 1,50,000
15 years.
8-9% per annum, compound interest
Triple exemption benefit
Sukanya Samrudhi Yojana
Rs. 1,50,000
Only for daughters, the lock in depends on the daughters age
8-9%, compound interest
Triple exemption benefit
NSC
Rs. 1,50,000
5 years
8-9% per annum, compound interest
Returns are taxed as per laws
#Tax saver Deposits
Rs. 1,50,000
5 years
7-9% per annum, compound interest
Returns are taxed as per laws
#ULIP
Rs. 1,50,000
10 years onwards.
As per equity market movement. After deducting various charges
Triple exemption benefit
#ELSS mutual funds
Rs. 1,50,000
3 years
As per equity market movement.
Triple exemption benefit
#RGESS
Rs. 50,000
3 years
As per equity market movement.
50% tax relief on returns

1. The mutual fund has minimum #lock-in period of 3 years amongst the tax saving instruments.
2. Though it has a lock-in period, the open ended #ELSS funds, don’t have a maturity date.
3. The funds come with multiple options of growth, dividend option (dividend reinvestment is currently discouraged by the regulator in recent times, hence getting discontinued for the new investment options, because of its complex nature of 3 year llock-in for every purchase)
4. The ELSS schemes enjoy triple tax exemption benefits on redemption
5. Unlike PPF, ULIP, ELSS mutual funds don’t carry an obligation of investment amounts, hence it could be an one time investment or repeat depending on investor’s wish. 
6. Unlike insurance plan, investor can buy different plans basis his research and recommendations
7. Minimum investment is as low as Rs. 500/-
8. The dividend earnings are tax-free in the hands of the receivers  
9. It can be held as long as the investor wants; hence, the potential of high returns of 12-15% can be easily achieved in long-term, 5-7 years period.  
10. The cost of investment is very low compared to the insurance products (<3%) which doesn’t reflect  too much as the returns on the investment over a long term compensate well beyond the cost implications and inflation.  


A hypothetical return graph of tax saving instruments over 3, 5, 7.10 year period

initial investment
3 YEARS
5 YEARS
7 YEARS
10 YEARS
PPF
1,00,000
130864
156568
187320
245135
NSC
1,00,000
127023
148984
174742
221964
ELSS
1,00,000
156394
210718
283911
444021
Assuming a 15% return on ELSS for the period

Top 5 #ELSS Mutual funds for reference purpose -
Scheme name
1 year
2years  
3 years
5 years
ICICI Pru RIGHT Fund (G)
10.9
7.2
24.4
21.2
Axis Long Term Equity Fund (G)
8.8
9.2
26.5
21.0
Reliance Tax Saver (ELSS) (G)
13.9
6.2
29.9
20.4
DSP-BRTax Saver Fund (G)
20.1
12.7
25.5
19.7
Birla Sun Life Tax Plan (G)
12.6
12.3
24.5
18.1

Suggestion for the young investors would be to buy ELSS fund, and treat it like  a PPF account, invest regularly, preferably through SIP, for 15 years and stay invested through the term. You will end up saving a big amount for yourself. :) Happy investing. Happy Saving! 

Saturday, November 5, 2016

Is it Indian PSU banks, who will bleed the streets? Just a thought!

 #Banking in India will be the next Boom n Bust story??

#Stock market fall is an effect and not a cause! What happens when there is too much of excitement and attention to one sector/industry/company/ business idea? everybody starts appreciating, following, taking extra effort to get into the scheme of things etc.. untill there is a there is a peak and BOOM! And a sharp slope slides down n BUST! and a parallel line leveling the fields and world moves on towards a new exciting subject. In financial market or the larger context of economy, it is extremely evident.

Strangely we all keep looking back at history all the time, yet fail to gauge the impending risks. Time and again it repeats itself, we all educated investors close our eyes and follow whatever the markets leads us to.

In the world history of economic crisis, since 13th century, 2/3rd of the crisis started at bank failures or debt crisis, barring a few which were due to trade deficits, industrial revolutions and a few wars. The amazing fact remains that though there were so many debt driven crisis in last 8 centuries, we just don't stop repeating ourselves.

Yes we do try. By creating central banks, but, sovereign debts fail too. We have credit rating agencies, then happens the SUBPRIME CRISIS.

Then come more regulations, more tightening by the central banks! Banks seem to become victims of these regulations and the business targets and margins as well. Then the greed takes over bankers race to aggresive lending to stretch the balance sheets.

The recent developments in the Indian Banking sector is alarming, a little better than what it was two years back though. Two important parameters of performance is leaving the especially the PSU banks high and dry! would they survive?

1. The Basel III norms - a very difficult set of guidelines set by the central bank on capital adequacy to brace for crisis, is an extreme stressful for banks. Banks of India have been issuing the Perpetual Bonds to meet tier I capitalas per Basel norms. coupon rrates of few bonds have been as high as 11%. With no maturity dates ateacher on thad a bones,  could easily become a excess burden of interest payout as interest rate continues to fall.

2. Greed of bankers to inflate the balance sheets - Mounting NPAs caused by disbursing loans to less credit worthy entities is showing signs of failures, unending restructure and failure to get adequate risk cover through collateral.

Thanks to the watchdogs of Indian financial sector, it may not just do a Boom n bust and averted a crisis just in time! but an area to trade carefully. just a thought!

Friday, November 4, 2016

Include Dynamic Asset Allocation Funds in your portfolio to create wealth and cushion against equity market volatility

Ideal for moderately conservative investors who wish to have some equity exposure, can build a retirement kitty with mutual fund using #SIP to invest and Systematic withdrawal plan to get a monthly income) reap maximum benefit of this fund category.

In my previous posts I have written about #debt and #equity mutual funds and the advantages of investing in #mutual funds. In this post I would like to share some insight about the equity oriented hybrid funds which offers best of both worlds. These equity oriented balanced funds/ hybrid funds/ dynamic allocation funds should be part of core investment portfolio of an individual investor of any age



What investors can expect from these funds?
1. Tax free returns after 12 months, and exit load free after 12-18 months depending on the fund house
2. Much higher return than Bank FD with lower downside risk compared to pure equity funds, mostly matching index returns over long term
3. Doesn’t matter you are 22 or 42, Ideal as long term wealth creation with moderate risk, can build a retirement kitty with SIP and use SWP (Systematic withdrawal plan) to reap maximum benefit of this fund
4. Even the worst fund in the category has given 10% return in five years. The top 5 have averaged return over 15%
5. This category is expected to deliver less volatility with consistency compared to the equity market
What investors should not do?
1. Not compare it with a largecap/ midcap/ thematic funds, they may swing higher both sides and have a different investment approach and objective
2. Do not consider hybrid funds to be risk-free, all investment instruments come with own share of risks, however, due to its diversification between asset class, it generally experiences less downside compared to benchmark. Not to get lured by past performance and very high returns, it is possible that fund management is taking higher risk than the fund mandate and may expose you to risks you do not wish in this category

What are #dynamic allocation/#balanced funds?
Here, I am focusing on equity oriented balanced funds. These funds have about 65% exposure in equity and rest in debt and cash. Thumb rule good investment practice, buy at low and sell at high is automatically adhered to because of its scheme mandate, mitigating risk for the investor. And during low phases it adjust its portfolio with higher equity buy and lower exposure in debt. The USP of the product category is capturing the downside risk. The chart defines how it actually benefits the investors.


Debt oriented balanced/hybrid funds also part of the hybrid funds category which is ideal for conservative and retired investors. These funds are treated as debt instrument for taxation purpose.

Who should buy equity oriented dynamic allocation funds (#balanced funds)?
The category is for everyone. This carries lower risk compared to pure equity plays, still enjoys tax free returns as any #equity fund. The investment philosophy is simple but extremely effective “buy low and sell high”, as the equity market sees a upswing, fund managers book profits to rebalance the portfolio and vice versa when market falls. This is much easier said than done but the investment mandate is such, that automatically fund managers follow the rules and avoid temptation of exposing the fund into higher risk area.
ICICI Prudential balanced advantage fund, the fund with the largest AUM in the category has beaten the category average and nifty 50 returns in the past 5 years and given return of 16% annualised return.
Portfolio allocation of ICICI Prudential Balanced Advantage Fund shows higher commitment towards protecting the investor’s money along with generating surplus return. The equity portfolio is dominated by largecap companies and debt category has maximum exposure in govt securities of about 12% of the portfolio, most debt investments are in high credit score category of AA and above.

The graph of 5 years return of a hypothetical investment of Rs. 10,000 in balanced funds of the top 5 mutual fund companies viz-a-viz Nifty


Graph source – Moneycontrol.com


Disclaimer - Mutual Fund investments are subject to market risks, read all scheme related documents carefully