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Friday 28 April 2017

Submit the FATCA declaration in For investments by April 30th, 2017

FATCA stands for Foreign Account Tax Compliance Act. . It is an intergovernmental agreement between the government of United States of America and Government of India.It is introduced in the USA in 2010 to prevent tax evasion through offshore investments that some US residents may have. As per this Act, financial institutions in many countries (all those with which the US has an agreement regarding FATCA) including India are required to disclose details of their client's income and if they are residents of the US .On 9 July 2015, India signed Model 1 Inter-Governmental Agreement (IGA) with the US IRS for implementation of FATCA.

FATCA/CRS Declaration:
FATCA compliance simply requires a declaration giving information such as:

  1. Name and Permanent Account Number (PAN)
  2. Type of address in KYC
  3. Place (city/state) of birth, Country of birth and Nationality
  4. Gross Annual Income or Net worth
  5. Occupation
  6. Whether Politically Exposed Person (PEP) or related to PEP
  7. Whether resident of another country
  8. Country of Residence, Tax ID number and Type

As per a Finance ministry release issued on April 11, 2017, all accounts/Folios with mutual funds, opened between July 1, 2014 and August 31, 2015 , must be FATCA compliant by April 30th, 2017. if you fails to do this before then financial transactions like purchase and redemption will not be allowed in that particular mutual fund account. It will be allowed only after the declaration.

Most of the fund given the online option to update the declaration. We can also update the declaration on registrar site like CAMS and KARVY. If we update on registrar site then it would normally update the declaration for all the MFs registered with it.



We need to also update it for our NPS account. For this we need to download the self-certification form and submit the duly filled up physical self-certification (along with evidence) to NSDL -CRA with signature on below address. 

      NSDL e-Governance Infrastructure Limited, 
      1st Floor, Times Tower, 
      Kamala Mills Compound, 
      Senapati Bapat Marg, 
      Lower Parel, Mumbai - 400 013 

Sunday 23 April 2017

Cut Your Losses Short

Warren Buffett said there were only two rules to follow with your investments:

  • Rule #1: Don’t lose money.
  • Rule #2: Don’t forget Rule #1.

As a normal investor, no one wants to sell for a loss or book the loss. Most of the time we are not ready to admit that we made a mistake. The problem is that market doesn't care who we are, what we think or how much we believe in a stock before investment. Market is really cruel in this respect, so keep your ego aside and take a small loss before it turns bigger.

But if a stock drops 15%, 20% or 25% from our initial purchase price, isn’t it simply a better buy at lower prices with same fundamentals? Why would someone actually sell just because the stock temporarily falls? If it falls we should ask ourselves that why it fell? It may fall due to reasons below

  • Market correction
  • Fundamental changed for the company or industry.

If the stock fall without market correction then it is the time to think about your holding. We have to limit our loss. The limit can differ person to person and sock to sock. Once you decide to limit say 8% or 10% then go for it. If you don’t cut your loss then it will impact your portfolio return.

Suppose you have exited form a stock which has fell 8% from your purchased price and reinvest the sum in some other stock i.e. 92% amount of your initial investment. Then this new investment must earn 8.69% for break even. Similarly if you book your loss at 15% then the next investment should earn 17.65% which is more than double…

Cutting losses is like having insurance so please cut your loss short and invest again.

Saturday 22 April 2017

Sovereign Gold Bond : Buy Gold with Triple Benefits

Government of India launches the 8th Tranche of Sovereign Gold Bond on the occasion on akshaya tritiya. Issue will open from 24th April 2017 to 28th April comes with three benefits as capable to earn interest, theft proof and guaranteed by GOI. This time we have 50rs discount per gram :)

Key Features :

  • SGBs are Government securities denomination in grams of gold (1 unit = 1 gram)
  • Issued by the Reserve Bank of India on behalf of the Government of India
  • Investor will earn returns linked to gold price
  • Additionally fixed interest of 2.50% p.a. Payable semi-annually on the issue price
  • Bonds will carry sovereign guarantee both on redemption amount and on the interest
  • Minimum investment: 1gram . Maximum investment: 500 grams
  • Available in DEMAT & Paper form
  • Tradable on National Stock Exchange of India Limited (NSE)
  • Tenure: 8 years with an exit option from 5th year onwards
  • Issuance through trading members of NSE

Tuesday 18 April 2017

Retirement Calculator

As in last post I have discussed about the financial freedom. I have created a excel calculator which tells that if we have saved our 30% of household income then it would be sufficient to replace household income in 15 years. Shocked? But it true that it will be enough to generate income same as our salary in just fifteen years.

For this calculation, I have consider continuous 8% growth in income per year and 15% return on investment per year which quite possible with equity exposure. And I have assume 8% safe return on investment after retirement.

As you can see that I have taken 10000 as starting salary per month in second column. In fourth column there is compounded value of saving assuming we have invested the savings with a return of 15% per year. And in fifth column there is monthly income if we have kept our corpus as 8% per year to generate regular income. And in last column shows the balanced amount need to be generated for income.

You can download the file here.

Sunday 16 April 2017

Financial freedom

Robert Kiyosaki the author of Rich dad Poor dad describes the concept of the "Rat Race” as a self-defeatist cycle:  an employee works hard for an employer to receive a raise or a promotion and as their income increases, their expenses increase as well. As the employee’s debt increases, he becomes further tied to their job and more reliant upon their paycheck. Furthermore, they are forced to work harder for their next promotion to offset their debts.

Now all off already trapped in this rat race. We have increase our debts in the form of Credit Card, Personal Loan, Car Loan and Home Loan. How we get out of this rat race and achieve the financial freedom. This is when your passive income i.e. income generated by your own saving/investment, exceeds what your expenses are. Robert Kiyosaki calls it "out of the rat race".

Once financial freedom is achieved, you don’t need to work for money, you have all the time you need to do whatever you want. That could be continuing to set new lifestyle goals and objectives to achieve them, or service work, whatever.

We can achieve financial freedom with following action points:

  • Start Saving and Investing Early and Regularly
  • Spend At least 30% Less Money Than You Earn
  • Never default on Bills or EMI
  • Create Emergency Fund
  • Get Life Insurance, Term plan only
  • Pay Off Your House Loan Early
  • Invest on yourself
  • Start second source of income

Saturday 15 April 2017

One more step from cashless payment to cardless payment

Prime Minister Narendra Modi on Friday launched BHIM-Aadhar platform in Nadpur on 14-apr-2017. It is a a biometric-based payment system.BHIM-Aadhaar Pay app will allow us to make and get payments through the fingerprint scanner, by authenticating the a user with Aadhaar database.Means if it works well then we would have a cardless ecomony.

BHIM Aadhaar can be used by individuals and retail merchants and not for corporate merchants. To make or receive the payment with Bhim-Aadhar we have below requirements

Customers Requirement

  • Aadhaar number
  • Aadhaar linked bank account

Merchants Requirements

  • Smart Phone with aadhaar Payment App
  • Fingerprint scanner
  • Bank account linked with Aadhaar

Aadhaar Payment App is the  Low-cost solution for Instant payment. Merchants need to buy Fingerprint scanner which comes under rs2000 and MDR is also as low as 0,25% where Credit card charges much more.

This program helps the us to get the commission of Rs 10/- per download. And if you refer BHIM APP download (all mobile phones) and other people performs three transactions, then he/ she also gets Rs 25/-  INR.

PM also started BHIM App Referral Bonus scheme for this pay system. It will be managed by NITI Aayog. It is Rs 10/- per download and usage (who provide refer link) and Rs 25 who do a digital transaction using BHIM App.

Rules & Regulation

  • Rs 10/- commission for per download/ installation.
  • Rs 25/- for the person using BHIM App for transaction who have used a referral code.
  • Scheme duration is from 14 April 2017 to 14 October 2017

Tuesday 11 April 2017

Linking PAN Card and Aadhaar Card

In order to link PAN and Aadhaar cards, tax payers have to first register on the Income tax e-Filing portal. Now Log in to the e-Filing portal of the Income Tax Department by entering the log-in ID, password and date of birth. After this you will get a pop up window will appear, prompting you to link your PAN card with Aadhaar card as

If you don’t get the pop up then follow the below steps….

Monday 10 April 2017

Muthoot NCD and earn return upto 9.00% p.a.

Muthoot Finance Ltd is coming out with a public issue of secured NCDs for an amount up to Rs1,950 crore and unsecured NCDs for an amount up to Rs50 crore of face value of Rs1,000 each

Salient features of the NCD issue: 

  • The issue offers annual yields ranging from 8.0% to 9.06%, depending on the category of investor and the series applied for
  • Rattings "AA (Stable)" by ICRA and "AA/Stable" by CRISIL
  • Minimum application is Rs10,000 (10 NCDs) and in multiple of Rs1,000 (1 NCD) thereafter across all series
  • 400 days going up to a maximum of five years
  • Interest on the refund amount is 5.00% per annum
  • The NCDs will be listed on the Bombay Stock Exchange
  • No TDS on interest for NCDs held in demat form; NCDs in physical form will be subject to tax at the applicable rates of income tax
** unsecured redeemable NCD

Real estate investments

 In India, our old people have only two options for investment. These are Real State (house or Plot) and Gold. We will talk about gold some ...