Click Here to Subscribe For FREE SMS Calls on India Stock Market

We recommend

Sunday, May 10, 2015

ELSS: Combine tax savings with sound returns

If you wish to combine tax savings with wealth creation, start an SIP in an ELSS fund early in the financial year
Atul Kumar, 44, a government offi cial, has taken to heart ET Wealth's advice to get down to tax saving investing right from the beginning of the financial year.One instrument he is keen to invest in is equity-linked saving schemes (ELSS), also known as tax-saver funds. Before he takes the plunge, Kumar is keen to learn more.

Why invest in ELSS funds

When investors put their money in a taxsaving product, they are usually concerned with the amount of tax they will save. They should also pay attention to the returns that these tax-saving investments will yield. ELSS funds score highly on this count. "ELSS is one of the instruments under Section 80C that takes 100% exposure to equities. Hence, along with tax saving, it also offers the benefit of wealth creation," says Renu Pothen, Research Head, The ELSS category has given an average return of 43.48% over the past one year and 22.99% over three years. Fixed-income schemes like PPF, EPF and NSC pay an interest rate of 8-9% while Sukanya Samriddhi Scheme pays 9.2%. The returns from NPS are lower than from ELSS funds as the former allows a maximum of only 50% investment in equities, and that too only in Nifty stocks. Traditional insurance plans give a return of 5-6%.And while Ulips do invest in equities, a part of the premium goes into offering insurance cover. The higher returns in ELSS funds will, of course, come with higher volatility .

Conservative investors should, however, remember that the risk in equities declines as your investment horizon increases. If you are going to have your money locked up for three years, you may as well invest at least a part of your tax-saving portfolio in an equity-based instrument like ELSS. The returns will be higher, and the interim volatility won't matter due to the lock-in. Pothen suggests that investors keen on wealth creation should leave their money invested in an ELSS fund even after the three-year lock-in so as to earn optimal returns from it. The risk of making a loss in equities becomes very small if you stay invested for 5-7 years.

The lock-in allows fund managers do a better job. According to Jinesh Gopani, Fund Manager, Axis Long Term Equity Fund, "To deliver steady returns, a fund manager needs a steady and predictable inflow of AUM. The lock-in period in ELSS funds gives fund managers the leeway to thoroughly analyse companies and invest with a longer time horizon because they know the money is going to stay with them for at least three years."

Choose the right fund

Before investing in an ELSS fund, check its track record. Compare its returns over the short (six-month and one-year), medium (three-year) and long-term (five-year) horizons vis-a-vis its benchmark and the category average. Ensure that the fund has been ahead over all or most of these time horizons.

Besides high returns, look for consistency . Not only should the fund have beaten its benchmark in rising markets, it should also have fallen less than its benchmark in declining markets. Gopani suggests that investors should pay heed to a fund's risk-adjusted return rather than just the return. The fund's expense ratio, level of churn, and level of risk should also be lower than the category average. Look up the websites of rating agencies like Morningstar and Value Research for these data.

There should also be consistency at the helm. The fund manager who was responsible for creating the fund's fine track record should still be managing it.

What should you avoid?

Avoid making a lump sum investment in ELSS funds. If the market is at a high level and it falls right after you invest--the sort of conditions that prevail today--you will see massive erosion in your portfolio value.Instead, use the SIP approach and take advantage of rupee-cost averaging to garner good returns from these funds.

When selecting an ELSS fund, take into consideration your own risk appetite. "Conservative investors should avoid ELSS funds that take large exposure to midand smallcap stocks. They should stick to funds that invest primarily in large-cap stocks," says Vidya Bala, head of research, Aggressive investors may opt for funds with a higher midand small-cap exposure.

Finally, since in all likelihood your purpose is to build up a corpus to meet various financial goals, avoid the dividend option and go for growth.

Sunday, April 26, 2015


7.9-Intensity Quake Nepal's Worst in 81 Years Heritage Structures Flattened IAF Evacuates Over 300

Cross-Border Trauma Kills Over 1,500

A powerful 7.9magnitude earthquake epicentred near Kathmandu ripped through the upper part of the South Asian peninsula on Saturday , rattling the landscape from Myanmar to Punjab, leaving more than 1,500 dead and thousands injured in Nepal alone and flattening cities and towns. As rescue operations, mostly aided by Indian armed forces, were mounted in the Himalayan foothills, the toll in In dia crossed 50.

Nepalese police spokesman Kamal Singh Bam said the quake, with its epicentre around 80km from the resort town of Pokhra and 200km west of Kathmandu, was Nepal's worst since 1934. It was close to the earth's surface, making it deadlier than those which convulse the earth deeper down.

The temblor began rumbling across the densely populated Kathmandu Valley around noon before spreading toward the Himalayas, Tibet, northern and eastern India, Bangladesh and eastern Pakistan. While two deaths were reported from Bangladesh, agencies said at least 12 people were killed in Tibet.No casualties were reported from Myanmar or Bhutan. "The Himalayan tectonics underneath are really writhing, so many shocks one after another. Aftershocks is a misnomer,'' tweeted Nepalese writer Kanak Mani Dixit.

Himalayan Times editorial adviser Joseph Nathan said tremors were on at 9pm but were getting milder. "Fear has gripped Kathmandu and people are all out in the streets and open areas for fear of another round of major tremors.It is dark and chilly , with no power, rather total blackout, no piped gas supply and no water supply,'' he said.

"The biggest worry in the city now is about the sanitation problem that is going to hit by tomorrow (Sunday) morning. Even the big hotels which have piped gas supply are without it.'' PM Narendra Modi, in remarks made at the Jnanpith Award ceremony , said India's 1.2 billion people shared Nepal's grief and were with them in this hour of need. The first IAF rescue aircraft landed at Palam around 10.40pm on Saturday with 55 on board, including four infants. BJP's M J Akbar, who was among the evacuees, said the situation in Nepal was "scary". Two more IAF planes with over 250 Indians were expected later in the night.

As the convulsions subsided and the dust cleared, what emerged was a battered Kathmandu. The city's biggest tourist draw, Durbar Square, was a pile of bricks with a few temples standing.

Nathan said surprisingly the new buildings survived better than the old constructions. "...200 to 300 year old temples have been reduced to the ground." The 1832-built Dharahara tower, built as a viewing post for Nepal's queen, was reduced to a 10m stump. TV visuals showed clouds of dust swirling as panicked residents ran out of homes and buildings while walls tumbled, trees swayed and power lines came crashing down. Around 200 people, who had climbed the 60-metre Dharahara to get a bird's eye view of the Valley, were buried under the debris. Several bodies were extracted from the rubble of the landmark.

The casualties among tourists were not clear as the dead had not been counted or identified. But the numbers could be high given around 300,000 foreign tourists are estimated to be in Nepal for the trekking and climbing as the season opened.

The quake left large cracks on streets, craters pock-marking the ground, collapsed walls, broken windows and fallen poles along with streets filled with harried survivors. The first aftershock — magnitude 6.6 — hit about an hour after the big quake.

Reports said isolated mountainous areas in Nepal were badly hit. But the extent of the damage was unclear due to inaccessibility and breakdown of communications that hampered relief efforts as well. Many remote villages were feared to have been almost wiped out as houses there were either buried by landslide or damaged by shaking near the epicenter.

"Over large parts of rural Nepal, houses built with mud mortar are down. Glad it's not winter & not yet monsoon,'' tweeted author Kanak Mani Dixit. "Don't know enough about Bhaktapur. From the Valley rim my brother saw a pall of dust rise over Bhaktapur.

I think it has been badly hit.'' Rain and thunderstorms were forecasted for Saturday night and Sunday adding to rescue concerns and the woes of homeless survivors. A news agency quoted an Indian tourist saying she was having coffee with her friends in Kathmandu when "suddenly the tables started trembling and paintings on the wall fell on the ground''.

She added they screamed and rushed outside and were collecting bodies and rushing the injured to hospitals. "We are being forced to pile several bodies one above the other to fit them in." The tourist said she saw three bodies of monks trapped in debris of a collapsed building near a monastery. "We are trying to pull the bodies out and look for anyone who is trapped."

"Saddest was to stand on the mound of what used to be the Dharahara landmark tower, and see the citizens, police and army pull the bodies out,'' tweeted Dixit. Hospitals in Kathmandu were teeming with wounded with mostly broken limbs. Volunteers formed human chains to clear the way for ambulances

Akbar Badruddin Jiwani  
Mobile: 09323500008
Please consider your environmental responsibility. Before printing this e-mail message, ask yourself whether you really need a hard copy.


blogger templates | Make Money Online