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BASICS
- Manish Chauhan
22nd Sept , 2008
Thesafestway
Thesafestway todoubleyourmoneyistofolditandputitin
yourpocket.
Objective
Understanding of terminologies.
To Enjoy
Agenda
Basic Terminologies
Break
Insurance
Retirement
Home Loans
Suggestions
Locking Period :
Whenever you make an investment which is under Sec 80C , that money is locked in for
a certain period of time . You can take out your money before the locking period , you
will have to pay back the money you saved because of tax exemptions. Sone of them
may allow partial withdrawal after some time.
ELSS : 3 years
NSC : 6 years
ULIPS : 3 years
: 8%
: Market linked
: Market linked
: 8%
ELSS :
- Easy transfer
- No tax on returns because of long term capital gain
- Efficient service, especially in the case of private mutual funds
ELSS Minuses
- Difficult to choose the right fund
- High risk
Terminologies
Entry Load
MF benchmark
Exit Load
Balanced Fund
Open Ended MF
NFO
Close Ended MF
NAV
Correction
Growth option in MF
Fund House
Demat A/C
SIP
Equity Fund
Debt Fund
Sectoral Fund
Market capitalization
Fund of Fund
Fund Manager
Portfolio
DONT's
DO's
Ones
Behalf
Overestimating Returns
Professionals
The pay which you get has many components , like HRA , conveyance allowance and others.Out of this incom
some things are deductible on your hand and after deducting you arrive at a amount called Taxable income ,
which you have to pay tax.
Taxable Income = Your Gross Salary - (HRA) - (Investments under Sec 80 C) - (Conveyance allowance) (Health insurance Premium , Sec 80D) and some more things which you may claim.
For financial year 2005-2006 your total tax liability was Rs 60,000. Tax deducted at
source by the employer was Rs 70,000. Therefore, you have paid more than your tax
eligibility and can claim a refund of Rs 10,000.
Since the refund amount is more than
10 per cent of your tax liability {10,000 > (60,000 X 10 per cent)} you would be eligible
to receive interest on your tax refund.
Let's say the refund is issued to you in February 2007. Then
the total interest on refund would be (10,000 * 0.05 per cent X 11 months) = Rs 550.
Therefore, the total amount of refund including interest would be Rs 10,550.
Which is better : Investing for 10 yrs and then stop for 30 yrs and let
money grow OR Stop for 10 yrs and then Invest same money for 30 yrs
regularly ... this is an eye opener :) .. coming soon :)
BREAK :)
Fact : You can understand Stock market if you understand Women
Conclusion : You can never understand Stock market
1 BMW car
on your own.
2008 .
Ans : WIPRO
BREAK :)
Fact : You can understand Stock market if you understand Women
Conclusion : You can never understand Stock market
Bill Gates)
66 lacs
1.64 crore
And what about Robert? investing 10 yrs and stoping after that
and enjoying for next 20 years
See compounding.xls
Life Insurance
What Insurance is NOT?
Insurance is not a investment product.
Only your financial dependents can benefit from Insurance and not you ,
If that is not the case you have taken something wrong.
Endowment Policies a.k.a LIC Policies : You are insured for some amount for
certain tenure , If you die during Tenure , your dependents get the money , if
you survive you get the money back + some BONUS .
You pay high premium for this .
Term Insurance : This is the Best form of Insurance , you are insured for high
amount , but pay very less for premium . This is best form for Insurance .
Always take this . The premium are almost 90% cheaper compared to
Endowment Plans
What If you just want to invest for 10 years and then leave it for 25 yrs , but still
want to generate 7.43 Crores. ?
Ans : Rs 6240 / month (Rs 1240 more)
What if you can invest for only 2 years , but a lot of money per month , like Rs
20,000 Per month . And leave it for 33 years ? What will happen in that case ?
Tax Treatment
HOME LOANS
- Interest : Upto 1.5 lacs under Sec 24(b) (loans taken after March 1, 1999)
- Principle : Upto 1 lacs under sec 80C
- You get 85% amount as loan. generally 15% is the down payment.
- House must be self occupied to claim tax benefit under Sec 80C.
- Spouse can be the co-applicant in the loan and both can claim tax benefits seperately
which will save a lot of tax for both.
- Fixed rate and Floating rate of payment.
Example :
Your taxable Income: Rs 5,50,000
Principal repayment : Rs 1,10,000 and Interest payable : Rs 1,60,000
Total Deductions allowed: Rs 2,50,000 (Rs 1,50,000 towards interest payable & Rs
1,00,000 for principal repayment of the loan)
Thus, your taxable income will reduce to Rs 3,00,000 ( Rs 5,50,000 - Rs 2,50,000 ).
CASE:
Loan
: 10,00,000
Interest rate : 9%
Tenure
: 20 years
Now if interest rate goes up by 1.5% ... There are two options :
Case 1 : Pay more EMI every month, ie : 11.7% more or Rs. 1130 , total Rs. 10830 per/month... Extra
burden : 1130*12*20 = Rs. 2.71 lacs
Case 2 : Increase the tenure with same EMI . Can you guess how much more time you will have to
pay?
Its 9.8 more years !!! , which will cost 9.8 * 12 * 9700 = 11.4 lacs ..
Learning : Take the loan for minimum tenure and maximum EMI you can afford... After some years of taking
Home laon , if its possible increase the EMI and decrease the tenure...
ELSS
Non-ELSS
Magnum Taxgain
UTI Infrastructure
Magnum Contra
Magnum Global
Suggestions
Invest in ELSS and other MF's with high exposure in equity through SIP.
Top sectors for future are Power , Infrastructure , Energy , Real Estate (and
all of them are related to each other).
Make sure ideal cash is not in bank account, try out new things like
Commodities and Futures and Options.
I am planning to invest some money in mutual funds. Whats the best mutual fund based company to
invest in ? what are the formalities involved in that ?
On wat basis do u see which company to invest in or not (I mean buy shares) some key points to be
kept in mind or which areas to do research on before investing.
I am really interested in real estate/property. So can u suggest some strategic locations etc for the
same and how to go about it from process of looking for the property till we actually buy it?
And in general how to handle the money we earn , like ways to invest , put in MF etc etc in order to
have max gains.
TODO
Plan you taxes Early , Dont be part of March Rush . Good Tax
planning happens automatically with good investment planning and
not vice versa
Q&A