Tuesday, September 2, 2014

With close-ended funds, mutual fund industry is inviting big trouble

With practically all the mutual fund companies already having multiple equity funds to offer, there is simply no justification whatsoever for them to launch new equity-oriented fund offers... and that too close-ended ones.

Firstly, where is the need to launch new equity funds, when there are so many excellent existing schemes to choose from? In terms of returns, it makes absolutely no difference to the investor, whether it is new fund or an existing one. 

In fact, an existing scheme is better, as you get a chance to evaluate its performance. Moreover, with a portfolio known beforehand, you can check whether it will complement your other investments or end up as a mere clone bringing in no value-addition.

Monday, September 1, 2014

Employees Provident Fund evolves into a 5-star investment

You would have noted from my earlier posts such as 'Provident Fund Permanent Account No. and Portability soon to be a reality', 'EPFO's journey from apathy to dynamism' and others, that our highly troublesome Employees Provident Fund (EPF) has transformed into a highly lucrative, beneficial and convenient investment.

Now, this metamorphosis, takes a few more positive turns.

Thursday, August 28, 2014

Becoming the best investor in the world is not our aim

I repeat... our objective is not to become the best investor in the world... or for that matter, in India or in our town.

That may a goal pursued by professional investors, who acquire professional degrees to support their aim and then spend years in the market gaining experience and honing their skills.

The vast majority, however, aspires to lead a pleasant and enjoyable financial life, provide good education to their children, marry them off graciously, buy a serene house and retire to a safe and contended lifestyle.

Wednesday, August 27, 2014

Your emergency fund is utterly useless if...

There is no denying the importance of an emergency fund. These are highly uncertain times. Job loss, accident, natural disaster, medical emergency, car breakdown, etc. can happen to anyone, anytime, anywhere. And such unfortunate incidents may require large sums of money that can upset our financial balance.

Having money handy to meet such unforeseen, irregular and unexpected expenses
- spares us the mental agony of arranging money at a very short notice
- protects our long-term investments from such shocks and
- gives us time to realign the long-term finances in line with the new financial realities, if need be.

Tuesday, August 26, 2014

Cancel your credit card the correct way

Nowadays, credit cards are quite common. Also, as quite a few banks offer lifetime free cards, people collecting a bunch of them is quite common too.

And when some of these become redundant and unused, it is common for people to merely leave them in their drawers or cut it into pieces and throw them away in the dustbin.

You are taking a big risk if this is how you discard your unwanted credit cards. There could be some amount due that you may unaware of. So you will keep receiving the bills; which will keep ballooning month after month due to interest charges. Even if their are no annual charges to pay, there is a risk of theft, misuse or fraud.

Monday, August 25, 2014

Why has RBI made borrowing against shares more difficult?

Financial prudence demands that you should keep away from personal loans and also not create any credit card outstanding. As lenders do not have any underlying security against these advances, they charge you a higher rate of interest. Therefore ideally, whenever you need money, you should offer some security to the lender and pay comparatively much lower interest. [Read '11 Salient Features of Loan Against Securities']

Gold, insurance policies, fixed deposits, mutual funds and shares are among the varied assets against which you can avail your loans at highly competitive rates.

Friday, August 22, 2014

Varishta Pension Bima Yojna is an ideal gift for your parents

In his recent 2014-15 budget, Finance Minister Shri Arun Jaitley has announced reviving the Varishta Pension Bima Yojna (VPBY), an immediate annuity scheme for the senior citizens.

VPBY is a good scheme for the elderly... of age 60 and above... who desire to earn some safe, assured and regular income without too much of hassles.

Of course, regular readers of my blog would be shocked that I am recommending an annuity plan after repeatedly advising not to buy one. I clarify this U-turn later.

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