First reaction on Union Budget 2016-17

First reaction on Union Budget 2016-17

The finance minister has proposed the budget for financial year 2016-17 in the Lok Sabha today. However, it is very early to provide reaction without reading in detail about the budget. Overall it is balance budget and truly reflects to PM Modi’s vision of India’s growth.

In this budget, it has been clearly seen that government has totally focused towards rural economy and boosting infrastructure like highway, roads. It is very good that 20,000 crore has been allocated for irrigation. Irrigation is very vital thing for our county’s farmer and I myself come from farmer background can know its importance very well. It is very good step towards improve agriculture yields which directly benefit to farmer and our economy also.

Apart from irrigation there is 2.7 lakh crore allocated for village which is highest ever allocation in Indian budget history and 288% more from last year budget provision. By May 2018 all village would be electrified and all village roads connected with states both f these are very impressive mandate in this budget.

There are insurance scheme and LPG connection scheme for poor families. It shows the seriousness of the government for social sector. There is also scheme to open 3000 generic medical shop across India to provide medicine in cheap rate for common citizen.

There are many tax reform has been introduced in this budget which would make life easier of tax payers. There is no change in tax slab but introduce additional tax rebate of Rs 3000 up to Rs 5 lakh income slab. HRA limit has been increased from Rs 24,000 to Rs 60,000 which is big relief for employees. There is also additional Rs 50,000 tax exemption for first time home buyer within Rs 35 lakh loan provided the home cost within Rs 50 lakh.

There is minor hike in service tax earlier it was 14.5% and now it would be 15%. There is increase of tax on tobacco products except Bidi. There has been hiked in surcharge up to 15% for the income of above Rs 1 crore. The above Rs 10 lakh cars would be costly now.

The most important things are that FM has been stick on fiscal deficit target and no increment in non plan expenditure. It will increase govt’s credibility among foreign , institutional and domestic investors. There are many other points in budget which we will discuss in next article.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Do not stop SIP now

Do not stop SIP now

Dear investors, I request you to please do not stop your mutual fund SIP. Avoid redemption unless it is very urgent. I have got many calls in these days regarding stop SI and redemption as our market indices Nifty and Sensex are going down. Retail investors who have invested in equity through SIP should not end their investment. Many investors may close their SIP plans as they realize that market has not given them returns over the past 12 months.

If retail investor stay invested and continued with their SIP plan, they will end up very good return by compounding power. Since March, 2015 the benchmark indices have lost 18% from their record highs. Investing in SIP like a bamboo tree, which does not grows in the first four years, but goes and touches sky in the fifth year.

During Modi wave, market had grown 30% so now there may be some wait for next rally. Now FIIs are pulling out money but DIIs are pumping money in the market. Central government is taking so many initiatives to get fund which will deliver growth. It is very prudent decision if you stay invested in equity in these tough times.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Year 2016 – Financial Resolution

Dear readers,

Wish you very happy new year 2016. I pray that this year bring more and more happiness in your life. All of you should achieve financial freedom. I have seen that many person makes many type resolution like quitting alcohol, joining gym, healthy diet etc. Let us talk about financial resolution for this year.

• Set your financial goal on long and short term basis and also set their priority.

• Do not idle your cash in your saving bank account. 4% interest rate don’t beat even inflation and your saving actually shrunk.

• Know your financial product very well before investing in anyone. You should know about risk and return both about the product in which you want to invest.

• Do not ignore your insurance needs. Buy any term insurance plan and disclose all your material fact. It will make claim process easy if and bad event happen. You should have a proper mediclaim policy.

• Make an emergency funds by investing in liquid fund. The amount should be equal to six month salary at least.

• Make your tax planning well ahead. Do not postpone it for last rush. At the time of last date you often make wrong decision in hurry.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

3 Gold Schemes Lauched by Modi Sarkar

Gold schemes launched by Modi Sarkar

To curb the gold import and to control investors to invest in gold, the PM Narendra Modi has launched three schemes of gold. These schemes are known as gold monetization scheme, gold sovereign bond and gold coin and gold bullion scheme. According to government of India, gold bonds would be more beneficial than physical gold. Interest earned on gold monetization scheme will be exempt from income, wealth and capital gain tax. Now we will highlight main point of these schemes.

Gold Monetisation Scheme:

Under this scheme the minimum deposit at any one time shall be raw gold(bars, coins, jewellery excluding stones and other metals) equivalent to 30 gram of gold of 995 fineness. There is no maximum limit  for deposit under this scheme. The designated bank will accept gold deposit for the short term (1-3 year), medium term (5-7 year) and long term (12-15 year) under this scheme. Interest on deposits under the scheme will start accruing from the date of conversion of the gold deposited into tradable gold bars after refinement or 30 days after receipt of gold.

The gold will be accepted at the collection and purity testing centres (CPTC) certified by Bureau of Indian Standards and notified the central government. The RBI has notified the interest rate 2.25% for medium term and 2.5% for long term deposit. The bank will issue the certificate of gold deposit to the depositors. Premature withdrawal is allowed with minimum lock-in period and penalty determined by banks.

Gold Sovereign Bond Scheme:

The RBI (Reserve Bank of India) will issue gold bonds on behalf of the central government of India. RBI has fixed the price of first tranche of gold bond at Rs 2,684 per gram of gold. The minimum investment limit is 2 gram and maximum investment limit is 500 gram per person in one financial year.

The bond tenure will be 8 years with exit option beginning the 5th years onwards. These bonds will also listed in exchanges for trading. These bonds can be used as collateral for loan purposes. The rate of interest will be 2.75% per annum payable semi annually on the initial value of investment. These bonds will be available only to resident Indian individuals, HUF, trusts, universities and charitable institutions.

Indian Gold Coin and Bullion Scheme:

These coins will be the first ever issued by government and will be bear Ashok Chakra. It is being launched ahead of Dhanteras, a auspicious occasion for purchasing precious metals. These coins will be available in denomination of 5 and 10 grams. A 20 gram gold bars has also been launched. These coins will be available on all MMTC outlets.

The investor can earn some interest benefit for their idle gold which the investors kept in house or banks and gain nothing. However, gold bond will be taxable as per current income tax act. It has been stated the capital gain treatment will be similar as per current physical gold norms. Some experts says that the current scheme will not bring out much gold as people are more concern about tax provision and in future the tax department inquiry about the source of gold.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Increase in lot size of F&O

Increase in lot size of F&O

The next month means November expiry there would be increase in lot size of index and stock future and option segment. For controlling the speculative trading of retail trader in F&O segment, market regulator SEBI has issued some guidelines to increase the lot size. The value of minimum derivative contract will increase to Rs 5 lakh. Earlier this limit was Rs 2 lakh.

Now the expert says the volume of future contract may be shift towards option segment. In option you have to pay only premium amount not the whole margin. So the expectation is there may be 5% drop in turnover of future segment. Option contract have some complex calculation for valuation so it is very difficult to participate the retail trader in this segment. The other problem is liquidity, the stock option is not much liquid. Only index options may witness the some increase in turnover.

In the last one month, the average daily turnover of option segment has been 1.5 lakh crore whereas in future segment it was just only Rs 43,000 crore. Some future contract lot size has increased up to 3 times. The lot size of nifty is 25 at present which would be 75 from next November month. So the margin would be also triple. Many stocks lot size got doubled so needed margin has also become double. The participation of retail obviously would be come down.

Overall, now the trading in derivative segment would be much costlier for retail trader.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Different Financial Goals

Different Financial Goals

What are financial goals? When an individual make financial plan for self then he/she try to find out what responsibilities in future he/she has to fulfilled. To set the financial goal is very important process of one’s financial planning. It should be practical and achievable.

Although, Indians are good savers but not so smart in investment. Only 4% of household saving comes into stocks and mutual fund. It is because of lack of awareness. Systematic Investment Plan (SIP) route is the best way to achieve your future financial goal. For example if you invest Rs 33,000 per month in equity SIP till 20 years, it would be Rs 5 crore with 15% CAGR. It is a good retirement corpus at the time of you will get retirement. The important factor is time. If you delay 5 year to start a SIP for your retirement, then you have to invest Rs 66,000 (just double from above mentioned Rs 33,000) per month till 15 year to achieve the same Rs 5 crore retirement corpus.

Another important financial goal is child education which is equally important for every person. I will give you a simple example to achieve your child’s education goal. Please start Rs 5,000 every month till 15 year you will get around Rs 30 lakh with 15% CAGR return and if you invest the same amount 5 more years means total 20 year then you get around Rs 66 lakh with the same rate of return.

In general, parents spend more than half of their income on their children’s education and it prove significant burden on their family budget. According to a survey, majority of parents spend on average more than 18-20 lakh for raising a child from 10^th standard to graduation.  

So it would be better if you plan for the same before the time in prudent manner.

There may be many financial goal for a person so make investment separate for each financial goal with the help of financial expert.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Are you first time MF investor?

Are you first time MF investor?

I dedicate today’s blog to my new mutual fund investors. India has less invested in mutual funds if compare with other asset class like fix deposit, real estate, post office saving etc. Although the mutual fund has been the great wealth creator in long run and outperformed to all asset class but still it is not very famous among investors.

Since last 2 years the scenario has been changed, many new investors have started to invest in mutual fund. The problem is many investor do not know the basic of mutual fund schemes and often choose wrong schemes, so now it is more important to educate the investors about mutual fund which is new to these investors. There are many types of mutual funds are available in the market but what is your requirement you should know first.

First of all if you are planning to invest for 1-5 years, never go with pure equity plan. You should go with debt mutual fund or balance plan depend on your time horizon and risk appetite. In debt plan, there are many types of plan which are good for different time horizon investor. So investment time plays vital role to decide the mutual fund scheme.

After deciding the investment time frame, you should also know the expected return, fund’s track record, fund manager and where the fund investing your money. All the information is also available with your adviser and online also. You should know the real rate of return after adjusting taxes and inflation. After all, your investment must beat the inflation at all.

Never go after scheme’s NAV. It does not mean that the lower NAV scheme is better than high NAV scheme. Old schemes often have higher NAV and new investor think it is very costly. It is wrong assumption after all rate of return is important not the current NAV figure. Always choose growth option if you are going for long term investment.

When you plan to invest in mutual fund, please follow the old golden rule that never put all eggs in one basket. It means never invest all money in one particular scheme. You should diversify your portfolio and review it time to time.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com