MOVING TO WWW.CHINTAMONEY.COM

I AM MOVING THE BLOG TO WWW.CHINTAMONEY.COM

ONLY THE NAME HAS CHANGED

Financial Concepts Simplified

Now a days we have so many creative financial ballet dancers playing around that everybody is creating new names for the same old basic products.

You can do only 2 things in financial space.

You can either loan or you can Own.

All equity products mean you own the investment & Debt product means you loan the Investment.

So When you invest in PPF or provident Fund you LOAN your  money to Government @8.5 % or8.8%

when you make as FD you loan money to the banks @ 9% or whatever....

When you keep money in savings bank account you loan the money to banks @ 4%

this is very important point which normally people miss, when you are doing nothing with your money you are actually giving the money on loan to banks on which they make money.....

Why I am saying this is because if you keep the money in the Bank savings account it means you are making money for banks.so do not keep money in savings bank account........

 

 ------------------

When you buy a share you pay money to OWN part of the company. which means you will get part of the money which company makes after

Selling a product  

Less: Expenses to make& market the product

Less: Salaries of all workers & managers

Less: Interest paid to all loan providers (normally banks)

Less : Government taxes.

Just thought this will be useful & simple.

HOW NOT TO TAKE LOAN?

Well yes, I want to discuss how you should not take loans.

A.You must not take a loan for anything which Looses Value.

This means you must not take a loan for CAR,LCD TV,TWO Wheeler,Travel Etc. You should take loan only on Items which will increase in value over time.

B.You must not take loan because You are eligible.

Loan must not be taken just because you can take it.So if you have the money you should use it instead of taking loan, the only exception to this rule is If your investments are earning more than the Interest being paid on the loan.

C.You must not take the wrong loan.

Well this is a stupid one but. if you need to take the loan it must be from the cheapest source.so if you have to take a loan it should be A personal Loan or a loan against gold instead of Credit card loan....

D.You must not take loan because it is easy.

Believe me if you take a loan because it was easy to take you are Dooooomed.it is worthwhile to make the extra effort & take the loan which has more formalities for a few days... if you are not able to handle the extra formalities for a few days/weeks initially , then you are going to going to pay a lot of extra money over the years through various charges etc, because you will be too lazy to notice..........

How to budget your monthly expenses easily

Do you know how much you spend in the month at least on a gross basis?

This is actually the most important part of financial life.unless you know how much you are spending or saving you will not be able to plan anything in life!

But this is a very tedious job & normally after initial few days we stop writing down the expenses.

I use a very simple solution for this purpose.

 

I know from my experience that It is very difficult to keep track of expenses & is very tedious so I found a simple way of doing it, I maintain 2 inter-linked bank accounts, 1^st account is only for incomes (Salary, Dividends, Interest Etc.) & Investments, 

 2^nd account is only for monthly cash expenses, EMIs, credit card bills & other small purchases etc., 

So every month I transfer amounts to A/c no.2 from my Income Account,as long as you keep the discipline of making all the expenses from the A/c No 2 it is allright.

by 2nd or 3rd month you will know exactly how much you are spending,

Let me know how this works out for you.....

How to Find Your income Tax officer & Ward Number

We need to file various letters or requests to our ITO for purposes like Refund request, Revalidation of Refund Cheque, Correction of  Details in The Cheque. Bu we do not know the exact details about where our file is registered.

The following link will provide you all the details about the concerned ward,Area Code, Assessing officer grade, Range etc. which is necessary for various request letters.

https://incometaxindiaefiling.gov.in/portal/common.do?screen=jurisdiction

How to track Your Investments

Are you always worried about the renewal date of FD or you are confused when you want to know about the current value of your Mutual fund holding or you always keep forgetting about your Insurance Policy number or Your FD/bank account Number.

Well this is a normal problem faced by all the investors, this in fact makes people forget about some of their holding for example deposit kept with the bank for Vault....

There is a very simple solution to all this Use a portfolio manager.I have searched Internet for this purpose & I feel the best portfolio manager is provided by Moneycontrol.com The link is given below.

http://www.moneycontrol.com/portfolio_plus/sso/portfolio_signup.php  

the best thing about this portfolio manager is it is free of cost & I think everyone should make use of this facility, it also secure because you need to log in for this purpose.I personally keep even the PF Account numbers etc in this account.....

So go ahead & create your portfolio & reduce your anxiety. it is free.............

Investing for Beginners

I will now explain how to start basic investing in Mutual Fund.

First you need to check if you have completed your KYC formality for Mutual Fund Investing refer to this link.

http://www.cvlindia.com/inquiry_kyc01.asp

Input your PAN in the field & Submit ,

If the status is Invalid then Download this form.  http://www.cvlindia.com/include/pdf/KYCIndividual.pdf  & fill up along with the next form

if the status is verified  you can download the ULTRA LIQUID MUTUAL FUND FORM From SBI   

The scheme That I invest is SBI SHDF-ULTRA SHORT TERM FUND. You only need to take the printout of Page number 31 & 32. (back to back printout)

While filling up the form when you come to column Number 8
Tick the options Dividend Reinvestment  & Frequency as Daily.

You can start with 11,000/- Rupees for this scheme. Once you get comfortable with the Return it is generating you should be putting in all the excess money which you are holding in Savings bank account(over the Minimum balance required) & invest here. the biggest benefit is you can withdraw the money in 2 working days without any issues but you still get around 8% returns.

You can submit this form in any SBI Mutual Fund Investment office find the nearest Location through this link.

http://www.sbimf.com/ContactUs/Investor_Service_Centers.aspx

Prepay Homeloans without penalty

RBI has officially banned the Prepayment Penalty as of 5th June 2012, so now it is a CRIME to charge Pre-payment penalty on Home Loans.  At last...........................

here is the notification number.

RBI/2011-12/589
DBOD. No. Dir. BC.107/13.03.00/2011-12

How to Start Investing

The first step of investing is always the hardest & most people falter at this stage itself, now a days we hear & read so many things about Finance from websites & News channels that our brain stops us from taking any actual action at all - The main problem here is CHOICE, Human brain goes on the defensive when it has to choose from multiple choices as compared to Yes or No CHOICE.

Too many people advise about Equity - Equity all the time, I have a different perspective on this, but first a question Would you have succeeded in your life if you had directly taken the admission in 10th Standard at the age 16? No you would have failed miserably & that is what is happening in the Personal Finance space now you can not jump you will fall on your face & hurt yourself similarly Equity investments are risky & the risk capacity needs to be built overtime & can not happen overnight,

Personally I would recommend starting with small steps,Most of us will have money lying in Savings bank Account & or Short Term Fixed Deposit Receipts You can shift this to ULTRA LIQUID MUTUAL FUNDS, These funds yield approx 8.25% interest but you can withdraw money anytime which is a fantastic benefit, so you get the liquidity of Savings bank Account & Returns of Fixed Deposits.This is a good thing to start off with.
Stay with this thought I will be shortly uploading the necessary forms etc. on the website http://www.chintamoney.com/ so you can start your financial journey  easily.

80-20 Rule For Personal Finance

This is a very Important Rule which means 80% of your results are due to 20% of your efforts, but the sad part of this rule is it means for the remaining  20% result we need to spend 80% of your time, I believe this rule applies to Investments very much.and the rule applies more as 90/10 rule.where you have to make only a small effort to start out on a good financial life.It takes only 1 working day to start a mutual fund  & PPF account also a Term life policy/Health Insurance policy would take you not more than 1 week to decide but we keep giving excuses to delay this & loose the 90% of our Financial benefits by not doing anything because we are afraid of loosing that 10% benefit.  

The most important thing about investments is to start the same but most of us will falter at that step.....

You can start your investment/Financial Planning through only 4 things,

1.MutualFund

2.PPF.

3.Term Life Insurance plan.

4.Good Health Insurance Plan.

believe me you do not need anything more than this for a good & secure financial life.I will be providing articles on the above steps as i get time.

So start your Financial journey today, if you need any help ask, post a comment & I will try to answer,

Best of Luck.................

Tips on Taking Loans/Mortgage

TAKE LOANs CORRECTLY:

Personally I do not approve of taking heavy loans but for those who want should try to DO IT BETTER, giving some tips on how to do things differently.

TOTAL FUNDING: Normally people take the flat in under construction projects & get the disbursement amounts as per the Completion of project this results in PRE-EMI payment which actually not allowed for interest claim in Income tax, however if the builder has good reputation in market for timely completion of projects, you can negotiate with the bank to Disburse the full amount of loan at one go. But only after you negotiate with the builder for Receiving interest on the money paid in advance-you should negotiate for at least 50% above the interest charged to you by the bank. other way round you can get the Sq Footage rate down or negotiate for better amenities.

GO FOR THE MAXIMUM: You should get the approval/Disbursal for the maximum amount possible even though you have money in hand, it helps if you make the same payment as Prepayment later you can claim the same in Income tax J especially now since the prepayment penalty is no-more. 

INCREASE THE ELIGIBILITY: While we know that Loan eligibility is restricted to 70-80% of Home Value, It can be extended by giving additional securities e.g. NSC certificates, Other Valuables as collateral securities for the Home loan, this aspect works because the Home loan rates are normally the cheapest. (I repeat - I am personally against taking Heavy loans)

SOME SMART PRODUCTS: SBI & HSBC have a very different Home loan product, where at the cost of small increase in interest rate you get access to a SMART LOAN, In this product Along with Loan you also open a Current account with the bank where you can deposit all the excess money lying with you, The bank will reduce the outstanding loan amount equivalent to the balance in the current account e.g. Home Loan 30 Lac-balance in Current account 5 Lac then bank will charge interest only on 25 Lac Rupees , this helps in reducing the payment period significantly at the same time having the cash at disposal for any emergencies (product names SBI MAXGAIN,HSBC SMART LOAN)

LOANS FROM NATIONALISED BANKS: While I know that dealing with nationalized banks can be real pain, pl. note you are taking liability for almost entire earning life, I suggest that you take the loans from nationalized banks as their Prepayment & Interest rate calculations are better for the individual buyer in the long term.

Will do an detailed article later on for how Smart loans & Nationalized Bank loans save you money

Income Tax Calculator

For Income Tax Calculator Click on below link...

Income Tax Calculator

Hidden Opportunity in Share Markets

Everybody follows share markets with or without the KNOWLEDGE so there is always a learning opportunity.... I came across some very special class of shares a few days ago while going through the listings on share market transactions, and was suprised why I did not see them earlier.

These shares are called DIFFERENTIAL VOTING RIGHTS SHARES, these are special class of shares where the voting rights for the shares are low, but all other conditions remain same as normal shares,

However the price of these shares is very low compared to the normal shares.there are 3 such shares available right now in indian shares market.

Pantaloon.
Gujrat NRE Coke,
Tata Motors

These shares are available @ significant discount to the normal share price & so the Dividend to be received is very good in terms of %

Shares	Market Price	Market price to DVR Difference	Dividend	Dividend Yield
Pantaloon -Normal	152		0.9	0.6%
Pantaloon-DVR	112	26%	0.9	0.8%
Tata Motor-Normal	293.5		4	1.4%
Tata Motor-DVR	154	48%	4.2	2.7%
GUJ NRE COKE-Normal	17.15		1	5.8%
GUJ NRE COKE-DVR	12.05	30%	1	8.3%

Psychopath CEO

Over the weekend, Got to read this article really extraordinary, what do you think.

Can Performance Pressure Do this ?http://www.psyfitec.com/2012/05/is-your-ceo-psychopath.html

Where to Invest Your Bonus

BONUS 

This is the time when most people will get their Bonus in the banks & start thinking about how to invest/Spend.

Well here are some ideas.

Create a Emergency Fund: The basic rule for any financial planning is to create an emergency fund which is an amount equal to around 3-4 times your normal monthly expenses (including all the EMI) to kept separately in avenues where they can be withdrawn in very short notice, You can create such fund by investing in Sweep In FD or Investing in Ultra Liquid Mutual Fund. 

Prepay Loans: Any Expensive Loans which you are currently paying e.g. Credit Card debt etc where the interest rate payable is higher than what you can earn by investing can be repaid.

Tax investments: You can make that tax investment, which normally is done in last months;  You can take the Term Insurance plan which you were planning, The health insurance plan which you were planning can be purchased in this money.

Plan for Future: Do you have any specific goals to be achieved over long term for which you want to save,start saving for them, If the goal is less than 5 years away invest in Debt Mutual Funds/Monthly Income Mutual Funds in one go, But For goals More than 5 Years away, you can go for Equity Mutual Funds, But pl. note You must never invest in Equity in one go, what  you can do is to invest the Amount in a debt Fund  & transfer the  amount over next 6 months in equal installments.

Spend: in case you want none of the above.

Make Money with Credit Card

Making Money from use of Credit Card!

This may sound very farfetched to anybody but it is true, you can actually make money by utilizing the credit card properly.

First the Rules if you follow these rules then only you will be able to make the money.

·          Never Pay late,

·          Never Utilize the EMI options

·          Never Withdraw Cash through Credit Card

·          Never make a purchase because you have credit card.

Things you need to know.

Your billing Date: this is the date on which your billing stops for the month & new Billing cycle starts (mine is 23^rd of the month)

Your Credit period: This is the time difference between your billing date & your Due Date (Mine is 12^th of next to next month) so around 50 Days

So to put an Example, My Billing Cycle date is 23 March 2012 & My due date for this billing cycle is 10^th May 2012 this gives me 50 Days of Credit.

Now if you make a purchase through credit card on 25^th Of March 2012 for let us say Rs.15, 000/- then you have to pay this amount on 10^th May 2012 so you have 15,000 Rs. As free cash for 48 Days if you invest this amount in a decent Ultra Liquid Mutual Fund you will earn Rs.156/- on this amount without spending a single Paisa.

Though it is very difficult to time the purchase exactly as given above, in my experience you can time at an average of around 40 Days, below is the table which shows you the possible earnings through credit card for various scenarios, this can go up seriously if you do regular company travels etc from your credit card. 



Additionally you get points on these purchases which you can redeem for various items, though miniscule this is earnings without too much of an effort.

Table of Money Earned.

	Days
Amount	45	40	35	30	25	Points Earned
5,000	51	45	40	34	28	50
7,500	76	68	59	51	42	75
10,000	102	90	79	68	57	100
12,500	127	113	99	85	71	125
15,000	153	136	119	102	85	150
25,000	254	226	198	170	141	250

GOLD BUYING OPTIONS & TAXATION

BEST WAY TO BUY GOLD & TAXATION ON GOLD.

Everybody today is talking about buying Gold, this article will discuss various ways of buying gold & a comparison of various options.

Possible ways of Buying Gold are listed below:

1.       GOLD buying through Jewelry etc.

2.       GOLD Coins, Biscuits & Bars From Jewelers

3.       GOLD Coins, Biscuits & Bars From Banks or Post Office.

4.       GOLD ETF (Exchange Traded Funds)

5.       GOLD MF (Gold Mutual Funds)

6.       E-GOLD from NSEL (National Spot Exchange Ltd.)

EVALUATION CHART OF GOLD PURCHASES

	Sources
Factors	Jewelry	Coin-Jeweler	Coin-Bank	Gold ETF	GOLD MF	E-GOLD
Purity-Guarantee	Low-Medium	HIGH	HIGH	HIGH	HIGH	HIGH
Making Charges	10-15%	Nil	Nil	Nil	Nil	Nil
Premium over Spot Price	2-5%	0%	6-10%	0%	0%	0%
Other Costs of Buying	Nil	Nil	Nil	1.5% of Purchase	2.5% of Purchase	1.5% of Purchase
Maintenance Cost	Locker Cost	Locker Cost	Locker Cost	1% of Total value	2% of Total value	1% of Total value
Physical Delivery	Yes	Yes	Yes	No	No	Yes
Ease in Selling	Low-Medium	Medium	NO	HIGH	HIGH	HIGH
Long Term Cap Gain Applicable in	3 Yrs	3 Yrs	3 Yrs	1Yr	1Yr	3 Yrs
Wealth tax Applicable	Yes	Yes	Yes	No	No	Yes
Sales Tax Applicable	Yes	Yes	Yes	No	No	Yes-if you take physical Delivery
Recommendation	AVOID		AVOID		AVOID

 Looking at the above chart, if you are buying less than 100 GM (10 Tola) worth of gold in a year, it is better to go for COINS OR BISCUITS From Good Jeweler, But if you are purchasing more Quantity than this then go For the ETF fund with low expense ratio.