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Sunday, March 31, 2013

How to get started on next year Income Tax Planning ?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)


Check and review last year's return. This is to ensure you won't miss out on any deductions and credits in the current year.


Get organized by setting up a simple file system, and separating your information by type, income, deductions, credits and so on.


Keep track of all your expenses and retain receipts even though you don't necessarily have to submit them with your return.


Keep more of your year-end pay cheques by equitably distributing the deductions across the 12 months.


Make your tax payments on time if you are self-employed and required to pay tax instalments during the year. This way you'll also avoid interest and penalties.

 

Perform a check-up on your financial health by reviewing your overall financial plan. It's easier to measure your results against objectives when every aspect of your financial life is laid out before you.


Consider taking help of a professional tax preparer. It does cost some money but consider the amount you can save in taxes and anxiety. And in case of a dispute, your preparer can represent you at the Income Tax department.


One tax-saving strategy you shouldn't ever overlook: Be sure to talk to your professional adviser to ensure you take full advantage of every tax-reducing opportunity available to you.


Well, maybe it's a little too late to practise early tax preparation this fiscal. But try it out next year and you will certainly keep more of what you earn.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Insurance Plans to Save Tax - Do not Rush to Invest

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

Investments should be made only after evaluating the return on investment scenario, including potential tax gains


You hardly have two weeks to finalise your tax saving plan before the deadline on March 31. If financial advisors are to be believed, many individuals think of tax planning only in the last two weeks of the month of March. They also quickly add that these individuals often fall for unscrupulous tactics of their insurance agents or personal bankers. It is only much later that they realise the folly of buying wrong products.


Many people look at such investments merely as tax-saving tools. Also, as they have very little time to evaluate the product features, they are bound to make mistakes. The right approach is to make investments that are suitable for you, after you evaluate them from a return on investment perspective, including the potential tax benefits. In other words, the obsession with preventing the tax dent on your savings could, in fact, cause long-term harm to your finances. If you are in this group, here are some tips that may help to avoid some common mistakes this year.


IGNORING ELIGIBLE TAX BREAKS


Thanks to extensive campaigns and incessant calls from distributors, most tax payers are aware of the tax deduction of up to . 1 lakh that they can claim under Section 80C. Most individual focus entirely on this deduction and overlook other investments or expenses that qualify for tax breaks. For example, many people don't include Employees Provident Fund (EPF) contribution or tuition fees paid for their children in their tax planning. Take a look at your salary statement and tax statement given by your company before finalising your tax plan this year. In fact, according to experts, many individuals may not be required to make any large additional investment if they take into account their EPF contribution and life insurance premiums.


Remind yourself that the Income Tax Act provides several other avenues to save taxes. For instance, if you are paid house rent allowance (
HRA), but do not pay rent as you live with your parents, you can still claim the deduction. You can enter into an agreement with your parents and pay the rent. However, remember, the amount will be treated as their income. Moreover, you can also avail of deduction up to . 15,000 (. 20,000 in case of senior citizens) under Section 80D if you are paying your parents' health insurance premium.
You can even claim tax breaks on your expenses on preventive health check-up for yourself and family. Although it is a part of section 80D, this deduction deserves a special mention as it was introduced only this year. If you have receipts of any preventive health check-up expenses undergone this year, make sure you preserve them. This year onwards, such check-ups will earn you deductions of up to . 5,000. Since this is a new tax-saving avenue, introduced in last year's Budget, many people may not be aware of this deduction.


THE LURE OF COUNTLESS INSURANCE POLICIES


If you look at the portfolio of most individuals who subscribe to last minute tax planning, you would really think that buying life insurance policies is their favourite pass time. In fact, many of these individuals fall for the sales pitch of "tax saving plus insurance cover plus return". Remember, buying a life insurance policy is not a one-time affair, unless it is a single premium policy. It may help you save taxes this year, but you will have to shell out the premium every year for the next 10-20 years. If you fail to pay the premiums on time, your policy will lapse depriving your family of the life cover.


Besides, it is a long-term product which will yield decent returns only after, say, 10 years. Therefore, if you surrender it after the mandatory lock-in period of five years, you may not get a satisfactory corpus. If you have dependants, go for a term policy. It will provide a large sum assured at a very reasonable cost, in addition to tax benefits. However, in case you are convinced about the insurance-cum-investment policies, buy them only if you are confident of paying premiums every year.


FAILING TO MAXIMISE RETURNS


Public provident fund (PPF) --- one of the favourites with tax-payers ---is widely accepted as an ideal retirement planning tool for conservative individuals. After all, it fetches a tax-free return of 8.8% today. However, many make the mistake of investing money into PPF at the last minute. If you do so, you lose the opportunity of maximising the return. If you want to maximise returns from PPF, ensure that you invest before the 5th of every month to earn interest for that month.


If you are putting a lump sum amount in tax saving mutual fund schemes, or ELSS, this year, you could remember this principle next year. If you open a systematic investment plan in an ELSS in the beginning of the month, you will benefit from averaging of your purchase cost and it will help you maximise your returns.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Sell Mutual funds that do not perform well

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

  

More than 6,000 crore of investors' wealth is in 10 underperforming Mutual funds



Vaibhav Sharma is hoping that the mutual fund he invested in, in July 2007, will turn around some day and he will be able to recoup his money. The NAV of the SBI Infrastructure Fund (originally SBI Infrastructure Series 1) has never risen above its NFO price of 10 ever since it became open-ended in July 2010.


He is not the only one waiting for a miracle. Millions of people, who invested in the SBI Infrastructure Fund and other underperforming schemes, are making the same mistake. Even though these funds have underperformed their benchmark indices and their respective categories in the past 3-5 years, investors continue to cling on to these in the hope of better days ahead. More than 6,000 crore of investors' wealth is languishing in just 10 of these laggards (see table). An equal amount may be stuck in scores of smaller funds that have not generated significant returns for investors in the past 5-6 years.


It's something that market regulator Sebi is also concerned about. It has pulled up fund houses for the underperformance and even hinted at stricter norms for laggard funds. It wants to know why these underperforming schemes should charge an expense ratio if they have failed to generate even the same returns as their benchmark indices.


As far as underperformance goes, infrastructure funds are the biggest villains. To be fair, the sector has performed poorly in the past 5-6 years, which is reflected in the poor returns of infrastructure funds. However, some schemes have managed to buck the trend. The Franklin Build India Fund, for instance, has churned out a return of 17.5%, even as the average fund has lost 2.2% in the past year. However, critics point out that some infrastructure schemes have done well largely because they have invested in non-infrastructure stocks as well. They should not be seen as thematic funds but quasi-diversified schemes.


If the infrastructure sector has not done well, does it make sense to remain invested in it? After all, the CNX Infrastructure index has fallen nearly 11% every year in the past five years. Shifting out when the sector is at a low can be risky because you may end up redeeming at the bottom. We see better days ahead for the infrastructure and capital goods sectors.


While patience is certainly a virtue when it comes to equity investing, it should not mean that investors lose sight of their funds' performance compared with their peers and the broader market. Choosing a good fund with a brilliant track record doesn't imply that your work has ended. In 2007, Reliance Vision was among the most highly recommended diversified equity funds. Today, it is floundering, having consistently underperformed its benchmark in the past 1, 3 and 5 years.


They should also remember that there is a fundamental difference between exiting an underperforming fund and selling a loss-making stock. A stock may be down because of a number of reasons—fundamental, technical and sentimental. If the fundamentals are intact, any dip in the price is likely to be short lived and the stock will eventually bounce back. If you sell a stock when it is down and reinvest elsewhere, you could miss out on the gains when it rebounds. Besides, there is no guarantee that the scrip in which you reinvest the proceeds will also rise. It could be a double whammy if this scrip falls even as the stock you had exited takes an upward trajectory.


However, none of this applies when you move out of an underperforming mutual fund. If it has been consistently lagging the benchmark and category, it is time to get rid of it and shift to another scheme. If you transfer the investment to another plan, you will not miss out on the gains when the market moves up. In fact, there is a greater chance that a good scheme will outperform the market while the laggard will fall behind. So, dispose of the loss-making investment before you pile up further losses.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual Funds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Stocks Buying low & sell high a tough call

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

If past history was all there was to the game, the richest people would be librarians –Warren Buffett


I had once heard that the reason they make huge windshields and small rear view mirrors in cars is to indicate where the driver should be looking most of the time — right ahead. The same is majorly applicable to investing.


Unfortunately, in general, investors end up doing precisely the opposite. So if a friend of mine has recently shared with me how he made money in gold and real estate, then that would weigh on my mind and I would feel like having missed the bus. At the same time if the last news article I read was about how the global economy is in a poor shape and India too has not been spared, with GDP growth at a decade low of sub 5%, it is very unlikely that I would invest in equities. While making an investment, our recent memory tends to be a major guiding force.


In fact, that's how we make even our non-monetary decisions. So if there has been a robbery at our neighbour's place, then we will suddenly get more careful about security for our own house and might end up buying insurance or increase cover in our existing one. We will most likely also add some security equipment. In any such instance, the probabilities of the event affecting us before or after do not change. However, we suddenly become more aware of it and pay more attention to it. Over time, the memory fades. We have included a table here which indicates collective investor behaviour.


What explains investors putting in more and more money as equities become more and more expensive? Do we even know how to evaluate cheap and expensive assets while investing? It seems recent history overrides everything. So as returns become more dramatic, people get dazzled more and start investing more of their money. In many cases, this is not just an increase in absolute sums but also an increase in percentage of their overall portfolio.


So even an investor who was making money initially loses it by the end of the cycle as the gain is on a smaller exposure and the loss later on is on a much higher investment value. It is no surprise then that the people who have lost money in stocks far outnumber the ones who have made money. It seems that the problem is not with the market but with us as investors. It is likely that the same problem permeates other asset classes too. It definitely gets accentuated in equities. Buy low and sell high is easier said than done.


This behaviour leads to an average investor's investing experience being different from the data and records shown by a fund house or an asset class. So even though the sensex has grown at a compounded annual rate in excess of 16% (dividends excluded) since its inception in 1979, it is difficult to find investors who have experienced the same in their portfolio. In fact, there is an annual study Quantitative Analysis of Investor Behaviour (
QAIB)' done by Dalbar which repeatedly suggests that an average investor's return is far lower than the returns of an asset class or what a mutual fund might suggest.


What I am trying to drive home is that we should not get overawed by the recent performance of any investment or asset class at the time of making an investment. Instead, we should evaluate each situation and investment objectively. The question here is what can go wrong and the probabilities of it going wrong. What are we basing our decision on? Facts and data, or something else? If it is indeed facts and data, then is the source credible? Can the data be skewed for a certain reason?


Focus on maintaining a certain asset allocation based on your ability to take risks than on trying to time the market. It is boring and difficult to stick to such a strategy, but it will help you avoid lot of regret.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund