I BELIEVE !!

I Believe

I believe -
… that we don’t have to change friends if we understand that friends change.

I believe -
… that no matter how good a friend is, they’re going to hurt you every once in a while and you must forgive them for that.

I believe -
… that true friendship continues to grow, even over the longest distance. Same goes for true love.

I believe -
… that you can do something in an instant that will give you heartache for life.

I believe -
… that it’s taking me a long time to become the person I want to be.

I believe -
… that you should always leave loved ones with loving words. It may be the last time you see them.

I believe -
… that you can keep going long after you think you can’t.

I believe -
… that we are responsible for what we do, no matter how we feel.

I believe -
… that either you control your attitude or it controls you.

I believe -
… That heroes are the people who do what has to be done when it needs to be done, regardless of the consequences.

I believe -
… that money is a lousy way of keeping score.

I believe -
… that my best friend and I can do anything or nothing and have the best time.

I believe -
… that sometimes the people you expect to kick you when you’re down, will be the ones to help you get back up.

I believe -
… that sometimes when I’m angry I have the right to be angry, but that doesn’t give me the right to be cruel.

I believe -
… that maturity has more to do with what types of experiences you’ve had and what you’ve learned from them and less to do with how many birthdays you’ve celebrated.

I believe -
… that it isn’t always enough to be forgiven by others. Sometimes you have to learn to forgive yourself.

I believe -
… that no matter how bad your heart is broken the world doesn’t stop for your grief.

I believe -
… that our background and circumstances may have influenced who we are, but we are responsible for who we become.

I believe -
… that just because two people argue, it doesn’t mean they don’t love each other. And just because they don’t argue, it doesn’t mean they do.

I believe -
… that you shouldn’t be so eager to find out a secret. It could change your life forever.

I believe -
… two people can look at the exact same thing and see something totally different.

I believe -
… that your life can be changed in a matter of hours by people who don’t even know you.

I believe -
… that even when you think you have no more to give, when a friend cries out to you - you will find the Strength to help.

I believe -
… that credentials on the wall do not make you a decent human being.

I believe -
… that the people you care about most in life are taken from you too soon.

I believe -
… that you should send this to all of the people that you believe in. I just did.

Topping-up on your home loan? There's a catch

If you are a home loan customer, top-up loans are for you in case you have additional requirement of loan for extension, renovation, modification, painting or even for additional features like buying a parking lot.

So all you home loan customers, you can get this topping in the form of incremental loans on top of your home loans known as top-up loans.

The top-up loans have some simple conditions to fulfill. As you pay your home loan, your loan outstanding (what you owe to the your lender) decreases, which makes you eligible for these top-up loans. Lenders find it easier to grant these loans as there is very little documentation requirement. Moreover you are adding up more loans into your home loans.

But every lender has a criteria to consider to grant you these loans like you should have serviced (begun repayment) the home loan for a particular period of time. For some lenders it is not compulsory, they exercise their own discretion. It goes without saying that you should have an excellent repayment record.

So how do lenders decide on the amount?

It is dependent on the following factors:

• Your loan outstanding (the amount your need to repay to the lender)
• Your property value (current market value of your property)
• Your repayment capacity (earning and savings)

Another advantage is that you can use this amount even for meeting other financial emergencies as these can be treated as personal loans, where interest rate is better than personal loan.

But you cannot use such loans for speculative purposes. Ideally you should utilise them for modifying, renovating or acquiring add-ons to your existing home as only then you can claim the tax benefits for the top-up loans.

Like if you have utilised the amount for buying the parking space or painting the house then you will be entitled for tax benefit but if you have utilised the funds for buying furniture, fixtures or furnishings then tax benefit will not be available.

These deduction are same as home loan deductions of Rs 100,000 for principal repayment and Rs 150,000 for the interest payment.

What's the catch, then?

Many private sector and PSU banks offer the top-up loans. However, the home loan outstanding and the top-up together cannot exceed 70 per cent of the market value of your property. Added to this, there is a maximum cap, which differs from lender to lender.

But not all is that hunky dory, there are few catches involved which you should know about.

Lenders have certain in-built conditions like that in the first year of availing the top-up, any prepayments made towards your home loan (partial or full) will be adjusted towards only your top-up loan. This way your housing loan stays put for that year.

Another factor to consider is while you may end up getting a substantial amount at a great rate with minimum documentation, you will be able to repay the loan for the same tenure as your home loan.

So till now you were thinking that these are unsecured loans at great rates but remember you lender already has the security, that is in the form of your house.

Most importantly do not forget that you are raising another debt against your home, so you should evaluate all the pros and cons before going for these.

Impact of Union Budget 2010 on our Economy and Markets

Impact on the Economy:

The Union Budget 2010-11 presented on Friday has several important implications for the

economy as well as equity and debt markets for the year ahead. Broadly speaking, the

government aims to improve its finances by reducing subsidies and normalizing indirect taxes

even as it has reduced income taxes on individuals. Over the last couple of years, because of

the macro-economic crisis and rise in subsidies due to high commodity prices, the

government’s finances weakened considerably and the government has announced a multiyear

road map to improve its finances. Specifically this budget aims to reduce the gap between

the government’s overall revenue and expenditure, called fiscal deficit, from 6.7% in FY2010 to

an estimated 5.5% in FY2011.

The most important driver of improving long-term finances, and indeed generating surpluses

necessary for investment, is growth in economic activity. The budget has either maintained the

momentum, or increased it, as far as demand drivers of the economy are concerned with more

allocations to various development and infrastructure segments. We believe that reduction in

income taxes on individuals, will put more money into the hands of consumers who in turn will

provide a boost to private sector demand. This will also partly neutralize the impact of the rise

in prices that will happen in various segments, such as petrol and diesel prices, on account of

reduction in subsidies. GDP which is on an improving trend overall, notwithstanding the impact

of weak monsoon, will maintain the momentum in FY2011 and will show a higher GDP growth

rate than FY2010. As such the budget for the overall economy is growth enabling even though it

is likely to be mildly inflationary.

Impact on Equity Markets:

What is good for economy is usually good for equity markets. We believe the budget will

provide an additional boost to the already strong domestic demand, particularly in the

consumption-oriented segments. From corporate revenue and earnings perspective, the

budget has positives for consumer sectors such as Auto, negatives for cement and realty

sectors and is neutral for banking sector. Also this budget is likely to enable a positive

environment for infrastructure and capital goods sectors, given the increased outlays and

additional tax break on infrastructure bonds. Overall the budget does not alter our view that

FY2011 will be a year of economic revival, and also a year of strong growth in corporate

earnings which is a significant improvement from the flattish trend observed over last two

years.

While growth in earnings will remain robust, however the market valuation multiple is likely to

remain capped, closer to the long-term trend line levels of 14-15 times one-year forward

earnings, given the government’s planned disinvestment target of Rs 40,000 Cr for next year.

We believe that there is a case for range bound markets in the short-term driven by factors like

current valuations and likely supply of paper on account of fresh issuances in the backdrop of

resurgent economic growth and capital flows.

Impact on Fixed Income markets:

The government has taken the first step towards fiscal consolidation by reducing the deficit to

more sustainable levels in the Union budget for FY2011. The government announced a fiscal

deficit target of 5.5% of GDP for FY2011 compared to a deficit of 6.7% of GDP registered in

FY2010. The government aims to achieve this through:

•  Improvement in tax to GDP ratio by increasing excise duty rates, Minimum Alternative Tax paid by corporates and increasing the scope of service tax
• Less than expected increase in overall expenditure
• Higher receipts through disinvestment and auction of 3G telecom licenses

As a result the net market borrowing program for the FY 2010-11 has been reduced to Rs.

345,010 cr compared to Rs. 398,411 cr for the FY 2009-10. The commitment by government to

further reduce its fiscal deficit to 4.1% of GDP by in FY 2012-13 is likely to lead to lower interest

rates in medium term.

However there may be some pressure on government security yields in the near term as the

government hits the market with next year’s borrowing program in an environment

characterized by rising inflation, possible interest rate hikes by RBI and possibly no support

from RBI in the form of Open Market Operation (OMO) purchases of government securities. As

a result yields may gradually drift higher from current levels and peak out some time in the first

half of next fiscal.

Overall this as an economy friendly budget in the medium to long term due to positive intent

shown by the government in the areas of social spending, fiscal consolidation and tax reforms.

While the view on equity markets is one of range-bound markets or on debt markets is one of

pressure on yields in the near term, no long-term savings or investment decision should be

taken based on short term outlook of the markets. India remains one of the fastest growing

economies in the world, least impacted by global crisis, and therefore Indian equity and fixed income securities remain an attractive investment opportunity in the long-term savings

portfolio.

Health insurance plans: New kind of tax benefits

With the tax planning and investment season coming to an end this month, many are running around to get the best of the plans available in the market. Most of the limit available under Section 80C would have been over by now.

Are there other ways to get tax benefits from taking up useful investments/expenses? Yes, there is always the health insurance plans.

Health Insurance Premium: Expense or Investment?

Health insurance premium is technically an expense, as it does not buy any assets. However, it does buy one something more precious than any physical or financial asset - 'Peace of Mind'. We can have the confidence that in case of a medical emergency, there is the insurance plan to take care of the expenses - to a larger extent if not to the fullest extent.

Looking at health insurance from the point of view of stress free living, it is an investment.

Tax Benefit from Health Insurance Plans

Health insurance plans get benefit under section 80D in the form of deduction from taxable income upto Rs.15,000/- for non-senior citizens and upto Rs.20,000/- if senior citizens are covered. But many a times for a normal household with parents under the age of 45 and 2 children, the premiums may not come upto the levels at which one can maximise the Section 80D benefits.

New Plans in the Market

Several companies have come up with plans to meet the needs of those who to have health insurance and also make use of the Section 80D benefit to the full. Companies like ICICI [ Get Quote ] Prudential Life Insurance, ICICI Lombard General Insurance and Star Health Insurance have come up with health insurance plans where the premium is fixed at Rs.15,000 or nearby values. The benefits from the plans in terms of medical cover and number of people covered can be determined as per the requirements of the insured.

All these plans also give cash-back facility for out-patient treatment. Normal health plans do not cover out-patient treatment except for some special surgeries. The out-patient claim per year is fixed based on the number of people covered and also the overall medical cover for the family.

These are useful plans to consider.

Higher Insurance Covers

Companies like United India [ Images ] Insurance and Star Health Insurance have come up with plans one can take very high covers for health (above Rs.5,00,000). These companies are offering such plans as extensions to existing plans from their own companies or any other company.  Supposing Ramesh has a cover for Rs.3,00,000  from a company and has had the plan for the past 2 years, he will not want to shift from that company, as he will get cover for any pre-existing disease form the 3rd year onwards, also he would have got no-claim benefits.

Supposing he wants to increase the cover to Rs.10 lakh now, his original company may not have a plan to give such high covers. This is the place that the new plans come in, they will provide cover to Ramesh for any claim above Rs 3,00,000 till Rs.10 lakh (1 million).

The premiums for these plans are relatively less compared to the base health insurance plans.

Section 80D

Till last year there was not much choice for tax savers to maximise the benefits under Section 80D. This year a number of companies are offering innovative plans specifically for this purpose. It is no doubt that these plans will be useful in the long run. Hope the tax savers find the money to spend on these plans. These are expenses to get an asset called 'Peace of Mind'!

How to improve your credit rating

Credit Score is a relatively new term in India after the CIBIL (Credit Information Bureau India Limited) came into effect in 2000, and it is catching up fast. CIBIL -- India's first credit information bureau contains the credit history of commercial and consumer borrowers.

A Credit Information Report (CIR) is a factual record of a borrower's credit payment history compiled from information received from different credit grantors (eg banks). Its purpose is to help credit grantors make informed lending decisions -- quickly and objectively.

The CIR includes the following information:

• Basic borrower information like:
• Name
• Address
  In case of individuals:
• Identification numbers
• Passport ID
• Voters ID
• Date of birth
  In case of non-individuals:
• D-U-N-S Number
• Registration Number
• Legal Constitution
• Records of all the credit facilities availed by the borrower
• Past payment history
• Amount overdue
• Number of inquiries made on that borrower, by different Members
• Suit-filed status

It is important for both the borrower and the lender. It will provide borrowers with fast and easy access to the lending resources they need. The use of CIRs will enable loan officers to make objective and informed credit decisions quickly and cost-effectively. This would result in lower cost to the lender and a part of these reduce costs will be passed to consumers with good credit performance in the form of lower interest rates.

How can you improve it?In order to ensure a good credit history, it is important to re-pay your loans on time. Financial discipline coupled with prudent credit management and a good payment history will ensure that you enjoy all the benefits associated with having a good credit record.

• Making your payments on time will have the most significant impact on your credit record. It is important for you to maintain appropriate, reasonable and affordable levels of credit and ensure regular and timely re-payment of loans.
• Keep your total debt under control. If your total borrowings are significantly high, use some of your savings to repay some of your debt.
• When you are seeking for a new loan or credit card, do it in a relatively short amount of time. You don't want to have your report show that you are constantly looking for credit!

You can access your CIR report at www.cibil.com/accesscredit.htm.

Ten things you must never do

• Make a late payment
• Pay only the "minimum amount due"
• Apply for new loans/ credit cards if you already have existing ones with a lot of debt
• If there's a late payment/ incorrect entry on the card, ignore it
• Leave old outstanding amounts as they are
• Not check your credit limits
• Use multiple credit cards and not track them
• Spend even while you are in the 'red zone' (negative cashflow)
• Pay for today's expenses with future incomes' expectations
• Carry forward loans from one card to another

Claiming tax deduction on education loans?

Income Tax Act provides a direct deduction on account of fees paid for the education of your dependent children and interest on loans taken for higher education of your children.

Since the last 25 years we have been noticing that cost of educating our children is rising consistently and today it is quite steep in all respects.

Education has geometric effect not only on the growth of an individual but also on the growth of a country. Hence it is a matter of concern for all of us, how to educate our children with steep pricing in urban centres and nearly non-existent infrastructure in rural centres.

But now that the HRD minister is on the mission to reform Indian education, it has paved the way for better value education for our children.

Thus while imparting education to your children, you are also benefited in certain ways. This way we see that fringe benefits are immense and so are tax benefits. Firstly the Income Tax Act provides a direct deduction of up to Rs 1 lakh on account of fees paid for the education of your dependent children.

In addition to the direct benefit, the act also provides for deduction on accounts of interest on loans taken for higher education of your children.

Benefit in respect of fees paid for children:

This deduction in respect of school fees paid is covered under Section 80C of the Income Tax Act. A parent can claim a deduction of payment made for the tuition fee to any university, college, school or any other educational institution. The deduction in respect of payments made towards tuition fee can be claimed upto Rs 1 lakh together with deduction in respect of life insurance premium, PF and PPF contributions and pension etc.

But there are certain conditions for being able to get this deduction.

This deduction can only be claimed in respect of two dependent children of an individual. An important point to be noted is that this deduction can only be claimed in respect of fees paid to any educational institution within India.

Any fee paid for education of a dependent child for education outside India is not allowed for deduction.

It is also worthwhile to note that the deduction upto Rs 1 lakh is allowed only for tuition fees paid. Any payment as donation to any of the educational institution does not qualify for deduction under this provision.

In addition to donations to educational institution payments made to the educational institutions towards development fee by under whatever head can not be claimed under this provision.

Benefit in respect of interest paid on loan taken for education of children:

Not only this you can also get the benefit of direct deduction in respect of interest paid for loan taken for the purpose of higher education of certain relatives. This deduction is available under Section 80E of the Income Tax, Act. This benefit can only be claimed in respect of interest paid on loans taken for higher education which implies educational course done after completion of Senior Secondary Examination.

This deduction in respect of interest can be claimed in respect of loan taken for education of yourself, your spouse, your children and the child for whom you are a legal guardian. This deduction can be claimed for eight years in a row beginning from the year when the interest payment starts.

As the benefit can be claimed by the parent as well as the child, the person taking the education can start claiming this deduction, once s/he starts earning and paying the interest himself. There is no cap on the amount up to which the deduction can be claimed.

In order to take the benefit of interest payment under Income Tax provision, the loan can be taken from any financial institution or any approved charitable institution recognised by the central government. But deduction under this section is allowed for payment of interest only. The interest can be claimed in respect of loan taken for education anywhere in the world.

This way educational reforms complimented with tax benefits can surely remove the woes related to education and all of us can look forward to quality education for our children at value for money prices.

All you need to know about Portfolio Management Services

Portfolio Management Services (PMS) is a specialised service that offers a range of specialised investment strategies to capitalise on the opportunities in the market.

Investing requires knowledge, time and the right mind-set. This is besides constant monitoring. PMS gives you professional managers who strategise to deliver you consistent returns keeping your risk appetite in mind. Every portfolio manager has a well-defined investment philosophy and strategy that acts as a guiding principle.

PMS relieves the investor from all the administrative hassles of investments. You receive periodic reports on your portfolio performance and other aspects of your investments. Investments are tracked continuously to maximise returns.

In a PMS setup, your relationship manager defines your financial goals and advises you the right product mix. They give personalised service and ensure that you receive periodic updates and account performance reports.

Here are some of the most frequently asked questions about PMS, answered!

What are the advantages of investing in PMS vis-a-vis mutual funds? 
You have greater control over the asset allocation in PMS, whereas it is automatic in mutual funds. The portfolio can be customised to suit your risk-return profile.

The PMS portfolio manager also has relatively greater flexibility to move in and out of cash as and when required depending on the market view.

How can I introduce my initial corpus to portfolio management services (PMS)? The initial corpus can be brought into the PMS ambit by way of either cash and/or securities. The initial portfolio of securities will be re-aligned as per the desired investment model.

Does PMS guarantee the initial corpus and any return thereon?
Returns cannot be guaranteed as per regulations governing portfolio management services in India [ Images ].

What is the difference between discretionary and non-discretionary Portfolio Management Services?The discretionary portfolio manager will independently manage the funds of each client in accordance with the needs of the client. The non-discretionary portfolio manager will provide advisory services enabling the client to take decisions with regards to his portfolio.

Is the payment upfront?
Yes, payment is upfront.

Does portfolio management services have any lock-in period?
There is no lock-in period according as per regulations. But some companies may have a lock-in period depending upon their company polices.

What are the tax implications of investments in PMS?
Each PMS transaction is considered an independent trade and capital gains will be applied on each depending upon whether the relevant stock was held long-term or short-term. At present, 10 per cent tax is chargeable for short-term capital gains and no tax is chargeable on long-term capital gains. Securities transaction tax (STT) is also applicable.

What is the fee structure for PMS?
The fee structure depends from company to company. There may be many options such as:

• A fixed proportion of the fund amount (for eg 2 per cent of the initial corpus)
• A fixed proportion of the fund amount + variable depending upon the performance of the portfolio (2 per cent above 10 per cent of the returns)
• Variable depending upon the performance of the portfolio

Can I withdraw my profit any time?
It completely depends if your PMS has a lock-in period or not. If not, you can withdraw your profit as and when you want, provided you maintain the minimum ticket size. If you have a lock-in period, you will have to either wait till the end of the lock-in period or pay the exit load.