THE VOLATILITY CUP

A friend has written about yesterday's match.  I have taken it a step further into the realm of the stock market. Would like to have your reactions, friends.

(1) India scored 85/5 against Pak's 83 all out, but 3 Indian batsmen got out for a duck; none for Pak,

(2) In a low scoring match, India's best bowler Ashwin was the worst of all Indian bowlers 3-0-21-0. Only Wahab Riaz was worse than him in the match. Easy (but completely unfair) to conclude from a single match that Ashwin was the worst bowler

(3) The second highest score in both teams was "extras". If we total up the runs in both innings, "extras" was second highest score after Virat. "Extras" accounted for more than 17% of total runs scored n the match.

(4) Only 18 boundaries were scored in the entire match. Virat hit 7 of those, just one less than the entire Pakistan team's 8. Not a single six in the whole match.

NOW HERE IS MY INTERPRETATION FROM A 'MARKETS PERSPECTIVE'.

What happened yesterday was a complete and unexpected 'sell off' causing severe volatility.

Hence even class players (companies) looked like duds.

Had Rohit Sharma, Ajinkya Rahane, Suresh Raina and Ashwin been companies, would an astute investor write them off???

Similarly when the companies in a mutual fund scheme lose value unusually in a 'sell off' causing the NAV ( total score ) to fall sharply, be smart, be astute, gain the maturity. Never write them off.

Instead think about yesterday's game.

For they will all rise without a warning. Look at Yuvraj and Ashish Nehra. Despite age catching up with them, they continue to deliver.

Invest in the Indian Inc if you believe in them. Ignore volatility caused by some unusual results.

If you believe in the story of India, keep fears of the market in your closet, lock it and throw away the keys.

SPEND TOO MUCH DURING DIWALI ? HERE'S HOW YOU CAN LIMIT EXPENSES

The festive season has begun and it’s time to celebrate Diwali with sweets, gifts, purchases, crackers and lots of happiness. This festival brings families together and people not only enjoy to their heart’s content but also spend in the same manner! We have no control over our expenses and it is only once Diwali is over do we realise the pinch in our pockets.

We list some simple tips which will help you curb expenses during this season without taking away its excitement and grandeur:

1. Prepare a detailed list:
This should be your foremost step before you start shopping for Diwali. Majority of individuals hesitate to do it but making a realistic list is the best way to get a rough picture about the amount of money which will be needed. Invest 30 minutes of your time and note down names of people who would be given Diwali gifts, shopping expenditure, any renovation to be done in the house, vacations, domestic salaries including bakshish and the corresponding amount required. Adhere to this list sincerely.

2. Use your credit/debit cards wisely:
These modes of payments are an individual’s best friend during Diwali shopping! We shop and swipe without even realizing the huge bills these cards will generate. The best way to restrict expenses is to leave your cards at home and carry cash. In case you are out of money, you can always withdraw some from the nearby ATM. For those who can’t do without plastic money should take cards which have lower credit limit or less balance.

3.Do smart shopping:
Whether online or offline, many brands offer tremendous discounts/offers during the festive season. You can save a lot of money by availing these offers. However, you should always compare the prices quoted by different retailers so that you can save maximum money. Banks too come up with attractive schemes for their credit/debit card customers. Keep a watch on promotional e-mails, text messages which we normally ignore and turn into a smart shopper.

4. Keep the larger picture in mind:
Diwali is no doubt a festival where you desire to shop for your favourite merchandise. Nonetheless, you should not purchase goods which you are not going to use or don’t require. For example, you may not require a new washing machine for the next 1 year at least but it’s being offered at jaw-dropping prices so you buy it. The same money can be used to purchase other important things such as sweets or lights.

These guidelines are simple to follow and will surely help in controlling unnecessary expenditure during the festive season. Moreover, Diwali is not just about splurging, it is more important to experience memorable times with your family and friends.

Source : Axis Mutual Fund

TWO LIES THAT KEEP YOUR JAIL DOOR LOCKED

TWO LIES KEEP YOUR JAIL DOOR LOCKED -

 

The jail door has two locks. And both locks are lies.
The first lie is that we're powerless to live our lives fully.
The second lie is that "living for others" justifies our resignation.

Both lies protect us from confronting our fear. Both lies rob us of the opportunity for choosing courage and exercising our creativity.

"I can't leave my abusive husband  because I have no work skills." (I'm powerless.)
 "I should stay with him for his sake, for the sake of the children, in order to set a good example for others, and for the sacrament of marriage." (I'm doing it for others.)
 "I can't move out of my parents' home because I must obey them." (I'm powerless.)
 "I should stay with my parents because I don't want to upset them." (I'm doing it for others.)

 "I can't get the job I love because it's not out there." (I'm powerless.)
 "I should just accept my situation and not expect to have it  better than others." (I'm doing it for others.)

"I can't find the partner I want  because all the good ones are already taken." (I'm powerless.)
 "It would be unfair to go after just any person I want."  (I'm doing it for others.)
 "I don't have enough free time to enjoy my life because I have too many things to do." (I'm powerless.)
 "I can't just cancel out or change my commitments.That would be unfair to others." (I'm doing it for others.)

 In what area of your life do you feel stopped or tied up?

 Can you identify the two locks that keep you in this jail?
 What opportunities for courage and creativity,  if taken, might open these locks and set you free?

Courtsey - Sanjeev Agarwal - Brainbow (AMI)

Expert Take - `Illogic' of Profit-booking in MF Play

May 04 2015 : The Economic Times (Mumbai)

Dhirendra Kumar CEO, Value Research

Booking profits is an equity traders' concept that mutual fund investors must leave behind

Is it time for profit-booking? It's a typical question most investors often ask. If you are a mutual fund investor and you are asking this question, you could be making a big mistake.To be fair, this question is an obvious one in a time like the current one. The stock market has slackened in 2015 after a strong surge in the previous year. This idea of profit-booking (or profit-taking) is an integral part of equity investing culture the world over. Investopedia defines it as “The act of selling a security in order to lock in gains after it has risen appreciably.“ You buy a stock, and when you feel it has risen as much as it is going to over whatever the time period you are interested in, you sell it. That `locks in' the gains.

It is a common saying among equity investors that no one ever lost money by booking a profit. That statement sounds like a clincher, and makes profit-booking a no brainer. The problem is that investors in equity mutual funds have also adopted this idea. Here's a typical query among the ones that I've been receiving from equity fund investors, “I've been investing in XYZ fund for a long time. Now that the market has stopped rising, I have redeemed all my units in order to book profits.Where should I invest the proceeds now?“ What do you think is the correct answer to this question? Here's mine. If the investor has something to spend the money on, he should do so. Otherwise, he should invest it in an equity fund. And since XYZ fund has given him good gains, that's probably a good choice.Sounds like I'm making a joke, but that's probably because in equity funds, profit-booking just for the heck of it is a no brainer, but in a different sense of the phrase.

Booking profits means that you think that an investment has reached a point when it has nothing further to offer in your time-frame, and you would need to move the money to some other stock. It doesn't mean that just because a certain amount of profit has been made, you must `book' it. If you immediately move the money to another investment, then you've un-booked the profit. This makes sense only if, for some reason, it's important for you to count the profitability of each stock separately. If you are thinking of your investments as a portfolio whose gains matter as a whole, then it doesn't make much sense.

In any case, in equity funds, there is already someone -the fund manager -who's mov ing in and out of stocks that are there in the portfolio of the fund, as needed. Selling funds just because the market went up and has now had a bit of a pause makes no sense as an investment strategy.

Apart from a slavish adherence to a misapplied principle, I think the roots of this profitbooking in funds lie in simple nervousness.There is a special breed of investor who gets nervous at every uptick in the nervous at every uptick in the market. Every paisa gained brings to them heightened nervousness about whether it's about to be taken away. And when the markets pause even a bit, they scuttle away like a surprised mouse.

I guess every investor is a slave to his or her own psychology, but the nervous types' behaviour is especially self-destructive. It's likely that most of these people will pull out their money now. At every fluctuation in the market, they'll feel happy that they've saved their profits. However, eventu ally, when the market is much higher, they'll invest again. At that point, they might well be at a higher risk.

At the end of the day, this profit-booking is a way of trying to time the markets -something that rarely works out for investors.

Aadhaar Holders Don't Need to Submit ITR-V After E-filing

New forms also seek more detailed declaration on bank accounts held by taxpayers here and abroad
 

In a change that will impact millions of Indians, the new tax forms released on Thursday have exempted taxpayers with Aadhaar cards from submit payers with Aadhaar cards from ting their ITR-V by post after filing their returns online.This will make the online filing procedure truly paperless even for those who don't have digital signatures. The income tax (I-T) department intends to link the electronic verification code (EVC) system-endorsed Aadhaar card to the ITR (income tax return) form submitted by a taxpayer and the authentication of the return will take place electronically. Till now, online filing was paperless only if the person had a digital signature. Taxpayers who did not have it had to post a physical copy of the ITR-V to the Central Processing Centre in Bengaluru within 120 days of filing tax returns online. This physical submission of the ITR-V acknowledgement slip prevented e-filing from becoming a completely online process. The new forms have removed this anachronism and made e-filing easier.

“A large number of e-filers skipped this very important process, assuming the job was done once their return was e-filed, whereas the I-T department doesn't consider a return filed unless the ITR-V re filed unless the ITR-V reaches them on time,“ said Archit Gupta, CEO and co-founder, ClearTax.in, a Delhi-based online tax filing portal. Moreover, ITR-V had to be signed and printed properly so that the bar code was clearly visible. ITR-Vs that did not conform these specifications got rejected. There have been complaints of postal delays and losses in transit as well.

“It was unfair, to say the least, to expect every single tax payer to have access to a printing facility and then make the time to go to the post office to send the speed post. We're glad the process is being done away with for those who have an Aadhaar card and with this the e-filing process will become fully electronic,“ said Gupta. The refund process should get faster and smoother. “One of the possible mechanisms for EVC could be through an OTP sent on the mobile number of the taxpayer,“ Gupta said.

The new forms also seek a more detailed declaration from taxpayers. It's now mandatory to list bank accounts held at any time during the year in ITR-1, includ ing those that have been closed during the period. Tax payers will also have to provide ac count numbers, name of the bank, IFSC code and list any joint holders along with the closing balance on March 31 of the assessment year.

ITR-2 now seeks particulars of foreign bank accounts and assets held, details of overseas travel and expenses on the trip. travel and expenses on the trip.It also seeks utilisation details of amounts deposited in capital gains account schemes for the year. Unutilized amounts from such schemes are taxed as short-term capital gains when not invested within the specified period. “With this disclosure, the department has eased its process of collecting tax by putting the onus of disclosure on the tax payer,“ Gupta said.

Source : The Economic Times -  April 2015

Retirement - An Unavoidable Event in our Life

Diwali Wishes

GET DETAILS OF UNCLAIMED INSURANCE ONLINE

Come April, You Can Get Details of Unclaimed Insurance Online

 

This will also help nominees not having access to relevant documents - Preeti Kulkarni (The Economic Times – 25/02/2014)

Insurance customers and their nominees don’t have to suffer inordinate delays in claim settlement anymore. A new circular from Insurance Regulatory and Development Authority (Irda) is going to change the current opaque scenario from April 1. 

“While unclaimed amount is not uncommon in insurance sector, a steep increase in unclaimed amount is a cause of concern,” the regulator said in the circular that put out the figures of unclaimed insurance proceeds in the public domain for the first time. The unclaimed amount swelled from . 3,037 crore in 2011-12 to . 4,865 crore in 2012-13 — an increase of over 60%. The unclaimed money is the result of insurance proceeds that have failed to reach policyholders or their nominees in time for various reasons. Needless to say, it completely defeats the entire purpose of buying an insurance cover. 

Transparency in Procedure 

From April, a policyholder or nominee will be able to access information about the policy. Irda has asked insurance companies to display details like policyholders’ names and address, maturity proceeds, death benefit and premium due for refund, among other things, unclaimed for over six months, on their websites. 

“Several thousands of crores of unclaimed amount might be lying with insurance companies. There is no reason why insurers should absorb this amount,” says P Nandagopal, MD and CEO, IndiaFirst Life Insurance. “Now, policyholders or their nominees will be able to access information pertaining to their own policies and claim the amount due to them,” he adds. 

Insurers may not allow unfettered access to their database to prevent frauds, but if you have a cover, you can run a check and obtain the details of your policy. 

Many policyholders often misplace original policy documents, and this could result in them forgetting about a policy. It also could lead to their nominees not having access to the relevant documents when they need them. 

These problems will be solved once companies start displaying details on their website. Once they get the information, they can go ahead with claiming the due amount . “The nominees have to intimate the insurance company about the policyholder’s demise, specifying the reason for the death. Then, the insurer will send across the claim form relevant to the cause of death. The claim processing begins after the nominees furnish the documents asked for in the form,” said certified financial planner Harshvardhan Roongta, CEO, Roongta Securities. 

Benefits of Direct Transfer 

Irda has also asked insurance companies to transfer proceeds from policies to the registered bank accounts of policyholders and nominees. Even existing policyholders will be given the option of receiving the funds electronically. For new policies, insurers will seek these details at the time of buying the policy. In case of non-life insurance policies, these details will be collected at the time of renewals or claims. “This is a very good move. It will curb frauds, where unclaimed cheques are discounted and encashed by others. This is a rampant practice,” says Roongta. 

It will also help claim amounts — maturity proceeds, death benefits, or reimbursement claims in health and motor insurance — to reach you sooner. “The move will improve the efficiency and accelerate the pace of claim disbursal, as the claim amount will be directly transferred to the bank accounts,” says Arvind Laddha, CEO, Vantage Insurance Brokers.  

DEDUCTION IN RESPECT OF MEDICAL TREATMENT UNDER INCOME TAX

Section 80DDB. Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board—

          (a)  for himself or a dependant, in case the assessee is an individual; or

          (b)  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :

Provided that no such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form, as may be prescribed^89-90, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital :

Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :

Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words “forty thousand rupees”, the words “sixty thousand rupees” had been substituted.

Explanation.—For the purposes of this section,—

           (i)  “dependant” means—

      (a)  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

      (b)  in the case of a Hindu undivided family, a member of the Hindu undivided family,

                dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

          (ii)  “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants;

         (iii)  “insurer”⁹¹ shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

         (iv)  “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.]

Specified diseases and ailments for the purpose of deduction under section 80DDB.

11DD.  (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

               (i)   Neurological Diseases where the disability level has been certified to be of 40% and above,—

        (a)   Dementia ;

        (b)   Dystonia Musculorum Deformans ;

        (c)   Motor Neuron Disease ;

        (d)   Ataxia ;

        (e)   Chorea ;

         (f)   Hemiballismus ;

        (g)   Aphasia ;

        (h)   Parkinsons Disease ;

              (ii)   Malignant Cancers ;

            (iii)   Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

             (iv)   Chronic Renal failure ;

              (v)   Hematological disorders :

         (i)   Hemophilia ;

        (ii)   Thalassaemia.

(2) The certificate in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists working in a Government hospital—

(a)     for diseases or ailments mentioned in clause (i) of sub-rule (1) - a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;

(b)     for diseases or ailments mentioned in clause (ii) of sub-rule (1) - an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;

(c)     for diseases or ailments mentioned in clause (iv) of sub-rule (1) - a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;

(d)     for diseases or ailments mentioned in clause (v) of sub-rule (1) - a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :

Provided that where in respect of any diseases or ailments specified in sub-rule (1), no specialist has been specified or where the specialist specified is not posted in the Government hospital in which the patient is receiving the treatment, such certificate, with prior approval of the Head of that hospital, may be issued by any other specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine, which is recognised by the Medical Council of India.

(3) The certificate from the prescribed authority to be furnished along with the return of income shall be in Form No. 10-I.]

DON'T GET LURED BY LOW PREMIUM, CHECK CO'S SETTLEMENT RECORD TOO....

Claim settlement ratio and other data tell you which insurer is more reliable. Would your life insurance policy really take care of the financial needs of your dependents as insurers promise to do after your death? Don’t take them for granted. Insurance regulator IRDA’s annual reports for 2012-13 reveal that of the total 23 private life insurers, only five have a claim-settlement ratio of over 90% (in terms of number of policies), despite many of them having completed 10 years of operations. The figure tells you that many insurers are tight-fisted when it comes to passing on the benefits to nominees. According to financial advisors, it’s time insurance buyers, especially those considering pure protection-term covers, take their eyes off the claims of lowest premium and highest benefits, and pay a more attention to the claim settlement record of the insurance company. “Claims settlement ratio, along with related data, is the only objective yardstick for the consumer to determine which insurance company is preferable and more reliable,” says consumer activist Jehangir Gai. IRDA’s data reveals LIC had the best claim settlement ratio of 97.73% among life insurers in the country. Private life insurers’ average settlement record was at 88.65%. Of the 23 private life insurers, only five — ICICI Prudential Life, SBI Life, HDFC Life, Max Life and Kotak Life — have a claim settlement record of over 90%. Shriram Life, Aegon Religare, Edelweiss Tokio and DLF Pramerica Life are at the bottom of the list. Insurers say wrong information provided by policyholders in the proposal form or non-disclosure of facts are the key reasons for rejection of claims. Often, they claim, this is because many policyholders leave the paperwork to agents. So, apart from completing the form yourself when you have zeroed in on an insurance product, next time ask your insurance advisor for the claim settlement record of the insurer. Even before asking him for details, you can visit the website of the insurance regulator and go through the industry data to ensure the advisor doesn’t take you for a ride. “Customers should exercise caution while buying a policy. They should select a company which has a claims settlement ratio of above 95%,” says Kalpana Sampat, chief of branch operations (underwriting and claims), ICICI Prudential Life. However, please note the distinction: new companies typically tend to have a high claim-rejection ratio. As older companies see more of non-early claims, their overall rejection ratio seems lower. Insurers are not allowed to reject claims citing non-disclosure of facts, if the policy has been in force for more than two years. For a newer company, which is bound to have more early claims, the overall repudiation ratio seems higher as most claims are likely to be early claims, requiring investigation. However, do not stop at just examining the claim-settlement record. Claim pending ratio would help you in ascertaining the time taken by insurer to settle claims. According to the IRDA annual report, private insurers’ claim-pending ratio stood at 7.68% (pending for 3-6 months). LIC’s ratio was higher at 15.47%. A high claim pending ratio usually points to the company’s inefficiency in processing claims, particularly, if the proportion of claims pending for more than six months is higher. “While considering claims-pending ratio, ageing of claims pending should be considered. There are three bands — within three months, three to six months and greater than six months. As per policyholder protection guidelines, all claims should be decided within six months. There should not be too many claims pending for more than three months,” says P Ravi Kutumbarao, head-technical, Bajaj Allianz Life Insurance. Turnaround time for claim settlement is crucial as well. You will get an indication of the time taken by a company to settle claims. While choosing an insurer, check whether a huge proportion of claims has been settled after a delay of more than 180 days. Source : Preeti Kulkarni – The Economic Times – 16/01/2014