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Latest Personal Finance News (and Views) Updates

A lot is happening in the world of personal finance.

Most developments have already been covered in my detailed blog posts published regularly.

Here's an overview of some of the other KEY developments, with regards to your every day money matters.

1. Interest Rate on Gold Monetization Scheme announced

Salient features of the Gold Monetization Scheme (which is nothing but the Revamped Gold Deposit Scheme) were discussed earlier in my blog post Deposit your Gold to strengthen the Indian Economy.

As mentioned, there would be three types of deposits based on the tenure i.e. Short Term, Medium Term and Long Term.

The interest rate for the Short Term Gold Deposits would be decided and announced by each bank separately.

However, for Medium and Long Term deposits of gold, the Govt. of India will decide upon the interest rates. Presently, the interest rates have been fixed as under:

a. On medium term gold deposit – 2.25% p.a.
b. On long term gold deposit – 2.50% p.a.

Since you earn nothing on the gold lying in your home or the bank lockers, it makes ample sense to avail of the Gold Monetization Scheme. This, not only makes your gold safe and secure; but also earns you some regular income.

Bringing you the latest updates from the world of Personal Finance. 

2. Abridged IPO Prospectus

At present, an IPO prospectus typically runs into 300 to 500 pages. This is too bulky and detailed for an ordinary investor to read, digest and make an informed investment decision.

Hence, SEBI (Securities and Exchange Board of India) has decided to suitably amend the disclosure requirements for the companies intending to raise money through public issue of equity shares. 

As per the amended regulations:
- Material and appropriate information, essential for investors to decide, shall be disclosed in the abridged prospectus
- This would be in the exact format as prescribed by SEBI from time to time
- The abridged prospectus, including the application form, shall not exceed 5 sheets
- Both the sides, of this five-sheet abridged prospectus, would be printed
- It would be printed in the form of a booklet of A4 size paper
- The font size in the abridged prospectus will not be less than Times New Roman Size 11
- The line spacing would be 1.0
- Information to be given in tabular format shall not be in the running text form
- Tearing off the application form shall not mutilate the abridged propectus
- Generic information, not specific to the issuer, will be brought out as a General Information Document (GID) as specified by SEBI  

These regulations will apply with effect from December 1, 2015.

By the way, what you should look for in any IPO / FPO prospectus has been covered in my blog posts:
4-P Formula To Buying GOOD Shares
What Warren Buffett Asks Before Buying Stocks

3. NRIs allowed to invest in National Pension System

RBI (Reserve Bank of India) has, vide its notification dated Oct 29, 2015, permitted NRIs (Non Resident Indians) to subscribe to the National Pension System (NPS).

Accordingly, henceforth, NRIs can invest in NPS, provided
a. they are an 'eligible person' as per the Pension Fund Regulatory and Development Authority (PFRDA) Act
b. the amount is paid, either through inward remittance, or from the NRE / FCNR / NRO accounts held by them

An important point in this regards, is that the annuity or the accumulated savings can be fully repatriated without any restrictions.

However, as I have often stated, NPS is not a good investment and should preferably be skipped.


Must Read:
Nine serious limitations in NPS
Tax benefit on NPS is all bogus and sham

4. Insurance policies will no longer lapse

Till recently, if you defaulted on your insurance policy premium payments, your policy would have lapsed.

This is history:

IRDAI (Insurance Regulatory and Development Authority of India) has issued a notification — Acquisition of Surrender and Paid Up Values Regulations, 2015 — which makes a significant change in this regards.

Henceforth, the non-linked type of insurance policies such as moneyback or endowment plans will not lapse. If the policies have acquired a Surrender Value as per the policy terms, non-payment of further premiums will not result in the policy being terminated automatically.

Instead, it would be kept in force, to the extent of Paid Up Sum Assured (plus the subsisting bonuses and guaranteed additions).

For the insurance policies having a fixed and uniform premium, the Paid Up Sum Assured would be calculated as under:

Paid Up Sum Assured = (No. of premiums paid / Total no. of premiums) * Sum Assured on Death / Maturity - Benefits already paid

(For policies where premiums are non-uniform / non-fixed, IRDAI may approve a different formula.)

This regulation will, however, not apply to the policies
a) where the paid up sum assured works out to less than Rs.1250
b) where the annuity works out to less than Rs.250 per month
c) unit linked insurance plans.

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