MoneyVedam

These are closed ended mutual funds that predominantly invest in debt instruments. They can be subscribed through the NFO (New Fund Offer) and redeemed only upon maturity. They are relatively stable and specify in the Scheme Offer Document (SOD) the category of debt instruments in which the fund manager would place your funds. They have gained popularity in the recent 2-3 years due to high yields in Indian bond market. Their tax efficient nature makes them a preferable choice when compared to liquid/debt funds. The only disadvantage is that the funds are illiquid for the entire tenure of the fund. Taxation of FMPs Fund houses issue FMPs with fixed tenure such as 370 days, 500days or 730days. As the tenure is more than 365days / 1year, these securities qualify as long term investments and hence could avail a lower capital gain tax. Long term capital gain tax for FMPs is the lower of 10% without indexation or 20% with indexation benefit. Due to the indexation benefit, the tax realize...

These are long term bonds that provides tax free returns to the investor. This financial instrument falls under fixed income asset class that is issued almost every year by select institutions with the approval of government of India. These bonds carry relatively stable ratings and are considered to be sovereign bonds due to the covering of default risks by government of India. Who issues these bonds? In the previous two fiscal years, the total issue of tax free bonds were about Rs.25,000 to Rs.30,000 crores. For the current fiscal (FY13-14), the approved total sum of such tax free bond issues is Rs.50,000 crores. As the government is fighting the twin deficit of CAD (Current Account Deficit) and Fiscal deficit this year (FY13-14), several institutions such as PFC, REC, IIFCL, NHPC, HUDCO, NHB, NTPC, IRFC, Ennore Ports, Airport Authority of India and Cochin Shipyard Ltd have been granted the approval to issue tax free bonds. What is the nature of the bond? Long term - 10, 15 and 20 ...

Over a 10-15 years time, a working adult typically purchases a variety of policies from his insurance agent. However buying too many insurance policies at different points in one's life for a short term objective (eg.tax saving for 80c) without having a long term goal would only leave you with a mixed portfolio of policies with different premium paying terms, different maturity amounts, maturing at different times. Also most people do not realize that even after putting together all their policies they are under-covered with respect to their life - this is simply because they were not sold the right policies in the first place (most insurance agents sell endowment and moneyback policies as they are earn high commissions on them). The classic conflict.. The objective of insurance is to provide compensation for loss and no more than that. Whereas the objective of investment is to provide the best returns commensurate with risks undertaken. As you could see these two products are ...

Most people start buying insurance policy as a means to buy life cover, as small savings and to avail tax benefits. Some others buy children policy, joint-life policy and health insurance. Those who have a home loan would get a home loan cover for the outstanding loan amount. These days getting a health cover is more prevalant. Pension plans and annuities too have gained popularity in recent times. Infact a good majority of the 400 million Indian urbanites have bought some form of insurance or the other (apart from the mandatory motor insurance). So, why do we buy insurance? There is widespread belief among us that the sum assured in a policy means premiums paid are returned with assurance. In a way it is ingrained in our minds that insurance is some form of a "capital-protected" investment compared to other financial products such as mutual funds or equities. And given how religiously the Indian middle class pays their premiums over the last 30 years, insurers have been ...

In India, the medical and hospitalization costs have spiraled thru the roof in the last decade. While access to medicines and hospitals have become more prevalent, their costs have soared to unaffordable levels. The opening up of the insurance sector to private insurers in 1999 by IRDA (Insurance Regulatory and Development Authority) paved the way for more people to be covered by health insurance policies popularly known as "Mediclaim". The coverage could be obtained either through corporate group health insurance policies or by an individual directly purchasing a health insurance policy. Similarly with the unprecedented growth of the pharmaceutical industry in the country, a wide range of medicines is made available locally. Why then have the prices soared so much? Let us look at the background. The Indian pharma industry.. The Indian pharmaceutical industry is the world's third largest in terms of production volume and has received $11.3bn in FDI last year. It is ex...

More and more hospitals are opening up across all cities and towns in India. The good news is that it increasingly provides access to medical facilities for a higher percentage of our population. However the cost of availing these services have increased manifold which is covered either by insurance policies or personal savings. According to NSSO (National Sample Survey Organization), escalating medical costs are pushing more people into indebtedness across all income groups. In India, the government finances only 6% of the medical costs, while a whopping 75% comes from the individual's personal savings. In contrast, the Brazilian government takes up 48% of the cost and an individual shells out a far lesser 45%. How much does it cost? Broadly the medical conditions fall into four groups: Lifestyle diseases - Diabetis, Cholestrol, respiratory, internal medicine Geriatric conditions - Eye, ear, Ortho & Neurological Unknown/new conditions - Cancer, Infections (antibiotic ...

Ten years ago, the cost of an engineering course was Rs.5-20k p.a - today it costs Rs.1-3L p.a. A medical degree that costed Rs.10-25k p.a a decade ago now costs Rs.2.5-3L p.a, while a business degree that costed Rs.10-50k is now costing Rs.5-15L p.a. Put in financial perspective, over the last decade, "education inflation" in engineering is 30% p.a, 40% p.a in medicine and 50% p.a in business courses - way way higher that our CPI inflation which is at sub-10% p.a. The scenario overseas is equally bad - if you consider US, the education inflation over the last decade has been 5% p.a - what costed $150k ten years ago is now $240k. However the dollar-rupee conversion rate further deteriorates it, so a 2-year course that costed Rs.80L a decade ago in US (including living expenses) would now cost Rs.1.5 crores. What do the numbers say? Per AICTE (All India Council for Technical Education) India produces 15Lac engineers p.a thru its 3300+ engineering colleges - more than a thi...