tag:blogger.com,1999:blog-20409331520582397752024-03-07T01:29:31.262+05:30Karmayog Knowledge AcademyMahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.comBlogger372125tag:blogger.com,1999:blog-2040933152058239775.post-14815365555478423392018-07-03T18:08:00.001+05:302018-07-03T18:08:40.003+05:30Take a bow Air Vistara!<div dir="ltr" style="text-align: left;" trbidi="on">
Last month I was traveling from Mumbai to New Delhi by Vistara airlines, as I was traveling to Agra. After getting down from the plane and after collecting my checked-in bag, I got into the car arranged for further travel from Delhi airport to Agra. By the time we reached Noida, I realised that I had left my Kindle e-book reader in the flight. Just to be sure, I checked my laptop bag, but did not find the Kindle. It was then confirmed that I had left it in the flight. The same carrier was to fly to Srinagar from Delhi, and the chances are it might have already left Delhi by this time.<br />
<br />
Immediately, I called up Vistara's call centre. The person on the phone was very courteous and sounded very professional. He took down all the details. He confirmed that it would take at least 3 to 4 days.<br />
<br />
Since nothing happened for 3 days, I called up the call centre. I was also a bit nervous since I was not given any complaint number. To my surprise, the person on the phone could locate my complaint only by taking down my name, flight number and date of journey. He did not need any other details. He said that their team was working on the issue and that they would need some more time. I was asked to call up again the next day.<br />
<br />
The next day when I called up, there was a different person on phone. He also could locate my complaint with just the basic details. he asked me to note down a phone number. My experience with customer service and call centres in the past has not been good, so I was a bit irritated when he asked me to note down the number. However, he assured me that this was the mobile number of a person at the security office of Vistara at New Delhi airport, and that he had my Kindle with him. I was requested to go and collect it from him.<br />
<br />
I told the guy that I live in Mumbai and at the time of the call I was in Mumbai. He said I should tell this to the person whose number was shared with me, and he would arrange to send the Kindle to Mumbai.<br />
<br />
When I called up the guy in the security office at New Delhi airport, I had to only mention my name and he said that he had my Kindle with him. I told him that I was a resident of Mumbai. He immediately said he would send the Kindle through the next flight and confirm to me. Within 15 minutes, I got an email from this gentleman confirming that the Kindle was shipped to Mumbai. The mail was addressed to his colleague in the security office at the Mumbai airport. The phone numbers of that colleague as well as mine were mentioned in the mail. I was asked to carry the boarding pass and a photo ID with me when I reach there. The arrival time of the flight was also mentioned in the mail.<br />
<br />
After some time I called up the person at Mumbai. He immediately recognised me on the mention of my name. He asked me when would it be convenient for me to visit the airport. At the agreed time, I reached the airport and went to the ticketing office (as instructed) outside the Mumbai airport and inquired about this person. The person at the booking window asked me why I wanted to meet this person, which I mentioned. He asked me to wait for a minute and called up the office inside the airport. After talking on the phone for a minute or so, he hung up and told me that someone was on the way with the Kindle and asked me if I wanted a glass of water or something.<br />
<br />
Within 15-20 minutes someone came out with the Kindle nicely put in an envelope. He asked for a copy of the boarding pass and my photo ID, which I handed him over. He then requested for my signature on a form (confirming the receipt of the Kindle).<br />
<br />
When I thanked the person on the counter, who had placed the call, he said, "Sir, we should thank you for patiently waiting."<br />
<br />
I was amazed at the whole experience. It was not just an individual, but the whole system - entire staff that was professional and courteous. They were nice, prompt and exhibited that they meant "The customer is king".<br />
<br />
Take a bow team Air Vistara. When two great institutions - the Tata group and Singapore Airlines get together, you create a world class company.</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com5tag:blogger.com,1999:blog-2040933152058239775.post-32176968176902496762018-02-19T07:40:00.001+05:302018-02-19T07:41:15.741+05:30For regular income - equity funds or balanced funds sahi nahi hai ...<div dir="ltr" style="text-align: left;" trbidi="on">
Are you seeking regular income from your mutual funds? In that case, please do not look at equity funds or balanced funds. Do not consider regular dividends or even systematic withdrawal from such funds.<br />
<br />
Read my article to know more ...<br />
<br />
<a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/19022018/19022018-md-gm-17.pdf">For regular income, equity and balanced funds sahi nahin hai ...</a><br />
<br />
Read the English translation below:<br />
<br />
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<span lang="EN-US">Recent budget proposed by the Finance Minister introduced a tax on dividends
from equity-oriented mutual funds. Some mutual fund investors and distributors
were upset with this proposal. Some of them had opted for balanced fund seeking
monthly dividend. Now these dividends have become taxable. The tax would impact
the net amount received in hands.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">First of all, let us understand the tax on dividends. This is not
the regular income tax that is payable on the income received in hand. However,
this is dividend distribution tax, which would be deducted before the dividend
is paid out. The dividend that one receives remains tax-free in the hands of
the recipient. This means that although the recipient does not have to add the
dividend income in the taxable income and calculate the tax on it, it is
received AFTER deduction of tax, which would mean that the investor’s returns
are reduced. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This is what has upset those who invested in the balanced mutual
funds seeking regular income. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">We will not discuss about the merit of introducing such a tax.
However, the focus of our discussion would be on the choice of equity or
balanced funds to seek regular income. Before we launch the discussion, let us
also add that now that the dividend is subject to distribution tax, many have
started considering regular withdrawal, known as SWP (Systematic Withdrawal
Plans) to get regular income. On paper, such a regular withdrawal strategy
looks highly tax-efficient in comparison to dividends. This happens since the
entire dividend amount is subject to tax, but in the withdrawal case, only the
capital gains are taxable and not the capital withdrawn. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The question to consider should be: is it prudent to invest in
equity funds or balanced funds for regular income? Very often, people get carried
away with the taxes and try to save taxes, forgetting the true nature of the
investment category. In the offer document of equity and balanced funds, an
important item is called the “investment objective of the scheme”. In all such
cases, the investment objective is “to provide long term capital appreciation”
and not “to provide regular income”. In fact, even the nature of the asset does
not support the ability to pay regular income. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">We do not look at liquid funds when the objective is to create wealth.
However, liquid funds are ideal when “liquidity” is the prime objective.
Exactly in the same manner, if “long term growth” is the objective, equity
could be a suitable asset category, but it is not suitable for short periods of
time, or for liquidity, or for regular income.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">- Amit Trivedi</span></div>
<br />
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-89954360439880795632018-02-16T12:43:00.001+05:302018-02-16T12:43:24.823+05:30Banks and the risk of NPAs<div dir="ltr" style="text-align: left;" trbidi="on">
Punjab National Bank is in the news over last few days for wrong reasons. There has been a major fraud, which may lead the bank to lose a whopping amount of more than Rs. 10,000 crores. A slew of jokes and messages have started doing rounds.<br />
<br />
One of the messages was: "Bank deposits are subject the the NPA risks."<br />
<br />
It highlights that there is risk of NPAs in banks. Was it already there or has the risk surfaced only after the recent event came to light?<br />
<br />
This is not about whether the risk is present, but the way we look at risk. We do not see it till something happens. We wrote about this in our article some days back. Click on the link below to read it:<br />
<br />
<a href="http://karmayog-knowledge.blogspot.in/2018/02/heres-how-investment-risk-and-cricket.html">Here’s How Investment Risk and Cricket are Similar… </a></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com0tag:blogger.com,1999:blog-2040933152058239775.post-46083488304071038782018-02-14T15:01:00.002+05:302018-02-14T15:01:14.467+05:30Here’s How Investment Risk and Cricket are Similar…<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<i>In the 3<sup>rd</sup> cricket test match between India and South Africa,
we saw something unusual. Both the teams played 5 fast bowlers each.
The decision of both the teams was vindicated when the pitch started
playing tricks – there was unusual bounce, with some deliveries rising
too much and some remaining too low. the pitch kept the batsmen
guessing. On the 3<sup>rd</sup> day of the match, towards the close of
play, one delivery from Jasprit Bumrah shot up from just short of length
and rose much more than normal. The batsman Dean Elgar was hit on the
head. The umpires stopped the play for the day and the players returned
to the pavilion.</i><br />
<br />
What has this got to do with investment risks? Click on the link below to read further: <br />
<a href="http://www.networkfp.com/heres-investment-risk-cricket-similar/">Here’s How Investment Risk and Cricket are Similar…</a></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-76823770229636942732018-02-06T11:30:00.001+05:302018-02-06T11:30:56.508+05:30A letter to the Finance Minister<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US">Dear Sir,</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In your budget speech, when you introduced tax on long term capital
gains from equity and equity mutual funds, you also introduced tax on dividends
from equity mutual funds to bring <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">parity</i></b> between growth plans and
dividend reinvestment plans. That was great thinking on the part of you and
your team. <span style="mso-spacerun: yes;"> </span>The tax law should not
provide undue advantage to any section due to tax arbitrage, unless there is a
social agenda like promotion of a backward area, or supporting an employment
generating industry, etc. Tax incentives can also be used to promote a certain
good behavior, e.g. saving for retirement or buying health insurance, or
investing in one’s own house, etc.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Removal of disparity should be part of the strategy. However, there
is a possibility of missing out on some disparities, which should be brought to
the notice of the competent authorities. This is a humble attempt at that:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">Disparities within the Income
Tax Act:</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">While the budget introduced
long term capital gains tax on equity shares and equity mutual funds,
Unit-Linked Insurance Plans still remain outside the ambit of the same. There
is a need to restore parity here. In the absence of that, there is a
possibility of investors getting wrong investment products</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">All investment advisors and
academicians understand that diversification is a good investment strategy. The
income tax act needs to be amended to nudge investors towards diversification.
One area that stands out is the bonds v/s bond funds. Capital gains arising out
of investing in bond funds (or debt funds, essentially non-equity oriented
funds) would be considered long term if the investment has completed three
years. On the other hand, if one sells individual bonds or debentures on stock
exchanges, the gains are long term on completion of one year. This actually
means that a concentrated investment receives better tax treatment as compared
to a diversified portfolio. This disparity may be removed through appropriate
changes.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">c.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">The withdrawals from NPS are
taxed, but those from pension some other products are tax exempt, e.g. Public
Provident Fund or pension plans launched by insurance companies</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">d.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">Let us look at some examples to
see how the tax laws are applicable to Long Term Capital Gains:</span></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 36.0pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-yfti-tbllook: 1184; width: 413px;">
<tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Investment</span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Minimum holding period</span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Tax rate</span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Indexation benefit</span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Tax saving
through investment in capital gains bonds</span></b></div>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Equity shares and equity mutual funds</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">One year</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">10%</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not available</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not Available</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Unit linked insurance plans</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">One year (though, there could be longer lock-in periods)</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Nil</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not Applicable</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not Available</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Debt funds</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Three years</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">20%</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Yes</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not available</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 4;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Listed Debentures</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">One year</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">20%</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Yes</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not available</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 5;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Real estate (land or buildings)</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Three years</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">20%</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Yes</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Available</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 6; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 91.1pt;" valign="top" width="91">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Other assets like jewelry, gold bars, coins, etc.</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 89.7pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Three years</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 36.3pt;" valign="top" width="36">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">20%</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 75.55pt;" valign="top" width="76">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Yes</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 120.75pt;" valign="top" width="121">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Not available</span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Additionally, equity shares and equity mutual funds also attract
STT, which is not applicable for the other avenues.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There are too many disparities in case of only capital gains. The
purpose behind such disparities does not seem to be clear.</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">While the following are not
about income tax, but these come within the purview of the Ministry of Finance:</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">The sales and marketing
guidelines or the advertising code applicable to mutual funds is extremely
stringent, but the same for investment-linked insurance products or the pension
products is not so stringent. The law should be the same for all categories of
products reaching a particular section of the investors. There should be no disparity.
</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 108.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level3 lfo1; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -108.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>i.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">Take for example: Mutual funds are subject to market risks v/s
insurance is a subject matter of solicitation. While the former generates fear
in the minds of investors, the latter makes no sense to the reader. The Unit
Linked Insurance plans do not have to talk about market even if they invest in
equity, but mutual funds must highlight the market risk even if the investments
are in money market securities.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">While discounts are not allowed
for mutual fund and insurance products, the same are offered when the
Government of India disinvests its stake in various companies, or when the ETFs
(like the CPSE ETF or the Bharat 22 ETF) are launched.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">I would only think of just a few at this juncture. Can there be
more? I am not sure, as I haven’t spent enough time. I propose an expert
committee may be formed to study all disparities and then the same may be
discussed among the various constituents including the ministry, various
regulators, market intermediaries, investors, et al.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The committee’s objective should be to bring parity across all
sections.</span></div>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com5tag:blogger.com,1999:blog-2040933152058239775.post-85264281529011119332018-02-05T07:48:00.001+05:302018-02-06T08:19:24.723+05:30It is important to spend more time on one’s household budget than the Union Budget.<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">A lot of people routinely ask the common question, “budget kaisa
hai?”</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">So, let us see if someone has to watch the budget, what
are the important things one may look for that may impact one’s personal
finances.</span></div>
<br />
<br />
<a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/05022018/05022018-md-gm-14.pdf">Pay attention to your household budget ... it is more important than the union budget</a><br />
<br />
The English translation of the article is as under:<br />
_________________________________________________________________________________<br />
<br />
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">It is that time of the year when the Finance Minister
presents the Union Budget in the Indian Parliament. A few days before and after
are then spent by lots of people trying to analyse the budget proposals.</span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 26.0pt;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">At the end of all the analysis, one may be left with a
feeling that <i style="mso-bidi-font-style: normal;">“The budget has nothing for
those who can analyse it, since it tried to give lots to those who cannot.”</i>
Very often, the most common comment is that the budget was a non-event. The
game has been going on for years and still presentation of the Union Budget
remains one of the most awaited annual ritual. Union budget is a great business
for the financial media. The common man also gets infected and starts to bother
about the proposals of the budget.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Some of the financial planning experts have a sarcastic
view of this situation that people spend more time discussing the Union Budget
than they spend on their household budget.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Yet, a lot of people routinely ask the common question, “budget
kaisa hai?”</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">So, let us see if someone has to watch the budget, what
are the important things one may look for that may impact one’s personal
finances.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Let us start with understanding what the budget is.</span></b><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">The Union Budget of India, referred to as the Annual
Financial Statement in Article 112 of the Constitution of India, is the annual
budget of the Republic of India, presented each year on the last working day of
February (for last two years, the date is changed to 1dst February) by the Finance Minister of India in Parliament. The budget, which is
presented by means of the Financial Bill and the Appropriation bill, has to be
passed by the House before it can come into effect on April 1, the start of
India's financial year.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">This is essentially an account of how the money of the
public was spent last year and how the Government proposes to spend the same in
the coming year. The whole exercise is an opportunity for the Government to
announce various means to raise resources to fund the expenses. It is here that
the Government may modify certain tax heads either with the objective of increasing
the Government receipts or with an objective to promote certain behaviours like
spending. The changes in taxation may also be done with an objective to promote
or support certain sections of the industry.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">It is these changes in the tax structure that the people
are interested in. what kind of taxes would be introduced, whether there would
be any increase / decrease, which industries may be impacted, which companies
may be impacted.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">The financial planning experts discourage small investors
doing such intense analysis of the Union Budget. Such detailed analysis may be
carried out by expert investors, but those who may not possess the expertise
may be better off with a diversified portfolio. In a diversified portfolio such
changes by the Government may have positive impact on some part while some
other part may be negatively impacted.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Then, is the budget of any relevance for personal
finances? Yes and no. The union budget will not change one’s lifestyle or one’s
responsibilities towards the family. One’s dream also would not be impacted by
the budget proposals. At the same time, any changes in the personal income tax
rates or slabs would have a bearing on the take home salary, thus impacting the
cash flow for the family. Apart from that, the Income Tax Act already
incentivizes people to take care of their personal finance needs.</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">To cover basic household expenses,
the Income Tax Act has a provision for standard deduction</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">We need life and health insurance. There
are provisions in the Act that help us save tax when we pay premium for these insurance
policies.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">We need to build a corpus for
retirement. Investment in retirement plans; PPF, NPS, etc. have tax saving
features.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Buying a home is almost every
family’s dream. The EMIs paid on loan can bring down your tax liability. Both
the components of the EMIs, viz. principal repayment as well as the interest
paid offer tax deduction under different sections of the Act.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Every family wants to get the
children educated. There is a tax deduction on the amount of fees paid for the
education.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">You look at various needs and there are provisions in the
Act.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Given that, one has to forget about the Union Budget while
planning one’s finances. It is only at the product buying stage that one may
need to check the budget provisions. Consider the following questions after
one’s plan is ready:</span></div>
<div class="MsoListParagraph" style="margin-bottom: 12.0pt; margin-left: 54.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo3; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Is there a more tax-efficient product?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">2. Does the budget provide for launch of some new scheme,
e.g.,</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">One of the earlier year’s budget made
announcement for launching inflation-indexed bonds or</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">In another year tax-saving
infrastructure bonds were introduced, which were later replaced by
infrastructure bonds giving tax-free interest income</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Few years ago, Rajiv Gandhi Equity Saving
Scheme was introduced, which was modified later, and then discontinued</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">3. Are there any changes in the tax laws that may have an
impact on one’s income for the current year or any of the future years?</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo4; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Long term capital gains tax has been reintroduced. Should one be
concerned? Yes, the returns from equity would be lower to the extent of the tax
from now onwards. At the same time, should one reduce the allocation to equity
due to this? Well, allocation to an asset class should be considered based on the
investor’s need and the product’s characteristics and not on the basis of
taxation.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 72.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo4; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">Similarly, dividend distribution tax has been introduced on
equity-oriented schemes. In one of our previous articles, we have highlighted
why one should consider growth option and not dividend while investing in
equity-oriented schemes. So, once again the budget changes nothing.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">These are the basic questions that one may consider. Else,
Union Budget should be a non-event for most of us and life should go on
irrespective.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: #262626; font-family: "arial"; font-size: 11.0pt;">It is important to spend more time on
one’s household budget than the Union Budget.</span><span lang="EN-US" style="font-size: 9.0pt; mso-bidi-font-size: 12.0pt;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-61830606120363651152018-02-04T09:15:00.000+05:302018-02-04T09:51:08.456+05:30Deewar - the wall<div dir="ltr" style="text-align: left;" trbidi="on">
Last few days reminded of this word - Wall (दीवार in Hindi) at least twice. One of course was when the Indian under-19 boys lifted the ICC U-19 Cricket World Cup - a lot of people gave due credit to the coach - the wall, Rahul Dravid.<br />
<br />
Another time I remembered this was while reading (or listening to) the reactions of many people about the reintroduction of tax on long term capital gains on equity.<br />
<br />
Since the finance minister made the announcement regarding the LTCG Tax on equity, there is a wild reaction from a few. One of the most common reactions is to demand tax on income from agriculture.<br />
<br />
This reminded me of the scene from the film Deewar:<br />
<br />
"Bhai, tum sign karte ho ki nahin?"<br />
"Jao, pehle uss aadmi ka sign le ke aao ..."<br />
<br />
Incidentally, the third example is the Wall Street that saw heavy selling.<br />
<br />
Over all, February seems to have started with a strong wall. Seems there is something about walls this February.</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-43762666074298599542018-02-02T11:33:00.001+05:302018-02-02T11:38:40.350+05:30Union Budget 2018 - A satirical interview<div dir="ltr" style="text-align: left;" trbidi="on">
<div dir="ltr" style="text-align: left;" trbidi="on">
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Union Budget 2018 - </span></b>A satirical interview </span></b><br />
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">After the union budget was presented in the parliament, there was an
interview on a TV channel. This was conducted by an Interviewer (I), who was
answered by a Market Expert (ME). In other terms, this was a discussion between
I and ME. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Below is an excerpt of the interview:</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: What is your overall assessment of the budget?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: I am very happy. This budget has taken some very bold steps. There
are some big positives from this budget. It generated employment, was
environment friendly and also in line with Indian ethos. I salute the finance
minister.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Could you please elaborate on this environment friendly bit?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: I am referring to the introduction of standard deduction in lieu
of medical and conveyance reimbursements. It is an environment friendly move.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: I did not understand. Please explain.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: Oh, it is simple. You see, the budget proposes to reintroduce
standard deduction in lieu of the reimbursement of medical and conveyance
expenses. Now, there is no major benefit to the employees, one may argue.
However, look at the impact on the environment. In the earlier regime, the
employees had to submit the bills – paper. Now that would not be required. You
see, so much paper would be saved. Isn’t that good for the environment? </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: And what about employment?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: Oh, this is actually not new. Almost all the finance ministers
have succeeded at that. You see, before the budget day, on the day itself and
for a few days thereafter, so much temporary employment is generated for
armchair economists and analysts. You can see it for yourself. If in doubt,
please look at any business TV channel.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Ah, that’s a smart one. However, I am most intrigued by your
statement regarding the Indian ethos. Please throw some light on that.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: How could you miss that? The budget was so much in line with
Indian traditions. I must make a special mention to the Guru-Shishya parampara.
Modi ji offered guru dakshina through the budget proposals. The budget offered
many benefits to senior citizens and the members of parliament. One of the most
senior parliamentarian happens to be the Guru of Modi ji.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: That was really enlightening. There are reports that corporate
employees are not happy since they did not get any tax reductions.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: It amazes my to see the perseverance of the employees. They do not
give up the hope. I think India has a bright future.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Sorry, what about hope? They did not get tax incentives and they
are unhappy.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: Yes, that they are. However, this happens with the employees twice
a year. They still continue to keep their faith intact. Isnt’ that amazing?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Twice a year? But the budget is presented only once a year.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: You have to see the bigger picture. See these employees expect the
finance minister to roll out some sops for them every year. Even if the budget
repeatedly ignores them, they still keep the hope – that is once a year. The
second time in the year is their appraisal time. They expect high ratings, high
bonuses and large increments. The bosses do not give and the hope still springs
eternal.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Now, let us come to some stocks and sectors. Please let me know which
sectors are likely to be negatively impacted?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: FMCG should have a negative impact. Especially, the sales of
“anti-aging” creams should go down, since many benefits are offered to senior
citizens.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: In light of this budget, what is the best tax saving strategy
according to you?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">ME</span></b><span lang="EN-US">: File an affidavit in the court to change your date of birth.
Become a senior citizen. Alternately, contest and win an election and become an
MP. And if you really want a big one, become a senior citizen and an MP.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">I</span></b><span lang="EN-US">: Thank you sir for your valuable insights.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><u><b>Message for the readers: </b></u></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Dear readers, as you can see. This was just a satire on the entire
process of discussions on the union budget – a great activity pursued by so
many people. Please do not take the above interview seriously.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For majority of us, the budget proposals do not mean much. We do
not stop living our life just because the finance minister tweaks the tax code.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">You know what, the government must keep doing something as they
struggle to balance their budget. They can’t, in spite of hiring the best minds
in the country. We are better off. It is far easier for individuals and
families to live within our means and generate surplus.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">So, forget the union budget and enjoy your life. </span></div>
<br />
<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com3tag:blogger.com,1999:blog-2040933152058239775.post-77008714427583904982018-01-18T08:26:00.000+05:302018-01-18T08:26:07.088+05:30‘C’ Is For Crypto-currency<div dir="ltr" style="text-align: left;" trbidi="on">
<div style="margin-top: 20px;">
<div class="big_article_summary" itemprop="disambiguatingDescription">
<i>What are cryptocurrencies and how have they become so valuable?Click on the link below to read ...</i></div>
<div class="big_article_summary" itemprop="disambiguatingDescription">
<i><br /></i></div>
<div class="big_article_summary" itemprop="disambiguatingDescription">
<i>The article carries my quote, too.</i></div>
</div>
<br /><br />
<a href="http://businessworld.in/article/-C-Is-For-Crypto-currency/16-01-2018-137436/">‘C’ Is For Crypto-currency</a></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com7tag:blogger.com,1999:blog-2040933152058239775.post-16283152307580378672018-01-17T21:28:00.000+05:302018-01-17T21:28:45.731+05:30Beware of framing, as it affects behavior<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<br />
<div style="text-align: justify;">
Is the glass half-full or is it
half-empty? We have grown up with this question. It is said that an
optimist sees the glass half-full, whereas a pessimist sees it
otherwise.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
However, look at the other way. Instead
of just seeing the glass, what would happen if you have to explain about
this point on optimism/pessimism to someone? Psychologists have done
various experiments on questions similar to this and concluded that the
way you present a message can change its interpretation.</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Click <a href="http://cafemutual.com/news/guestcolumn/323-beware-of-framing-as-it-affects-behavior">here to read the full article</a> </div>
<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-90545225316356613122018-01-15T04:22:00.001+05:302018-01-15T04:22:20.541+05:30Mutual funds to participate in commodities derivatives - will it help?<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">Some time back, SEBI issued a consultation paper
inviting comments from the public on permitting mutual funds and portfolio
managers to participate in commodity derivatives market. </span><br />
<br />
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">Click <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/15012018/15012018-md-gm-15.pdf">here to read further</a> ... </span><br />
<br />
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> __________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> _________</span><br />
<br />
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">The English translation is as under:</span><br />
<br />
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Some time back, SEBI issued a consultation paper inviting comments
from the public on permitting mutual funds and portfolio managers to
participate in commodity derivatives market. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Currently mutual funds are permitted to participate in equity and
interest rate derivatives markets. Many funds have taken advantage of this
provision by launching various products, e.g. arbitrage funds, dynamic funds
and equity savings funds.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As per the present regulations, the only commodity that mutual funds
can invest in is gold. Mutual funds have launched gold ETFs (Exchange Traded
Funds). And gold savings funds. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The recent consultation paper issued by SEBI seeks to allow mutual
funds to launch schemes not just investing in silver, but also many other
commodities. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">One of the highlights of the consultation paper is the positioning
of commodities as an asset class that has low correlation with equity markets,
as can be seen from the table below:</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-no-proof: yes;"><img height="307" src="file://localhost/private/var/folders/t_/gysc3fzs4vl_zmhvdfbwkn800000gn/T/TemporaryItems/msoclip/0/clip_image002.png" width="417" /></span><span lang="EN-US"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The above table is taken from point no. 4 of the consultation paper.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As can be seen, all the commodities mentioned here have a negative
correlation with equity markets. Even among the commodities, the correlation is
quite low, especially between gold and crude or between gold and copper. This
provides for good diversification. This could be one of the most important uses
of commodity derivatives markets for the mutual funds.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">If the proposal goes through, we may soon see many mutual fund
launching either pure play commodities funds or asset allocation schemes that
can offer a diversified portfolio. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The second use of derivatives could well be in the form of arbitrage
opportunities. Many of you must be familiar with the arbitrage mutual fund
schemes, which take the advantage of arbitrage opportunities between cash
equity markets and the equity derivatives markets. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">These provisions may also mean a lot for the commodities derivatives
markets, which do not have a large institutional presence so far. If these
proposal go through, we may see a different commodities derivatives market,
too. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is important to note here is that this is just a consultation
paper, seeking feedback from the investors as well as market participants, and not
a regulation. </span></div>
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> </span>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com3tag:blogger.com,1999:blog-2040933152058239775.post-9658177292721960962018-01-01T11:55:00.003+05:302018-01-01T11:55:52.057+05:30If you choose right, mutual funds sahi hai ...<div dir="ltr" style="text-align: left;" trbidi="on">
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In the last article, we saw that many investors are flocking to
mutual funds since the interest rates on fixed deposits have come down. So
often, the investors do not understand the risks and invest in equity related
mutual fund schemes, while shifting money out of fixed deposits, where the risk
levels are very different. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Someone wrote to us asking if the money may be shifted from fixed deposits
to debt mutual funds. Good idea. Both debt mutual funds and fixed deposits may appear
to have similar risk profile as both are debt assets. However, it would be
important to understand whether such an assumption is safe enough. ...</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Click on the link below to read <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/01012018/01012018-md-gm-10.pdf">my article on this subject</a></span><br /><span lang="EN-US"><span lang="EN-US">__________</span></span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span><span lang="EN-US">__________</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The English translation is as under:</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /><span lang="EN-US">
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">In the last article, we saw that many investors are flocking to
mutual funds since the interest rates on fixed deposits have come down. So
often, the investors do not understand the risks and invest in equity related
mutual fund schemes, while shifting money out of fixed deposits, where the risk
levels are very different. </span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">Someone wrote to us asking if the money may be shifted from fixed deposits
to debt mutual funds. Good idea. Both debt mutual funds and fixed deposits may appear
to have similar risk profile as both are debt assets. However, it would be
important to understand whether such an assumption is safe enough.</span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">The big difference between debt mutual funds and bank fixed deposits
is the flexibility of investing. In case of fixed deposits, the tenure is
fixed, which means money is invested in a fixed deposit for a predefined time
period. On the other hand, an open-ended fixed income fund (or debt fund) does
not have a fixed term and hence money can be invested in a debt fund for any
time horizon. In the same scheme of a debt fund, an investor may come in for
one year, whereas another might have invested for two years. This has some major
implications: each fixed deposit is treated as a unique product, whereas debt
funds are pooled investment vehicles. </span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">When investors can come in and get out of the scheme on any business
day, there must be a mechanism to offer fair price to each. This price is
linked to the NAV of the scheme, which is calculated on a daily basis. Since
the NAV is dependent on the daily market prices of the securities in which the
scheme has invested, the same may be subject to fluctuations as per the
investments made. </span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">This exposes a debt fund investor to daily fluctuations. Due to
this, the investment returns are unpredictable for an investor in a debt fund.
On certain occasions, some schemes may also see drop in the NAV for brief
periods of time – yes, it is true even for debt funds. (We have written about
this in some of our earlier articles and hence one should take care to choose a
debt fund scheme that is appropriate for one’s situation).</span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">An investor does not witness such uncertainties or fluctuations in a
bank fixed deposits. An investor coming in a debt fund must understand this. </span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">This is where it becomes crucial to understand that all mutual funds
are not the same, and also that all debt funds are not the same. There are
various types of debt fund schemes, suitable for different needs of investors.
If you make a proper choice, there are reasonably good chances that you would
get good results.</span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">Knowledge is power – understand debt funds and then invest. After
all, if you understand and choose well, mutual funds sahi hai.</span></i></div>
<i>
</i><div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"></span></div>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-86204629474015061772017-12-27T17:51:00.003+05:302017-12-27T17:51:47.966+05:30Habits of successful financial advisors<div dir="ltr" style="text-align: left;" trbidi="on">
Most financial advisors and mutual fund distributors recommend their
clients to start investing once they identify their life’s goals. Why
should it be any different for the financial advisors?...<br />
<br />
Read <a href="http://cafemutual.com/news/guestcolumn/320-habits-of-successful-financial-advisors">my article entitled "Habits of successful financial advisors"</a> on www.cafemutual.com </div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com3tag:blogger.com,1999:blog-2040933152058239775.post-68796899996764519852017-12-18T12:33:00.000+05:302017-12-18T12:33:15.675+05:30Mutual funds sahi hai, but when?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, "Times New Roman", serif;">The AMFI campaign "Mutual funds sahi hai" is making waves. Many investors are seriously looking at mutual funds.</span><style><span style="font-family: Georgia, "Times New Roman", serif;"><!--
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--></span></style><span style="font-family: Georgia, "Times New Roman", serif;"><span lang="EN-US"> However, what is disturbing about this is that some investors may be
coming in mutual funds with unreasonable expectations. </span></span></div>
While mutual funds sahi hai, but it is important to understand when. Read <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/18122017/18122017-md-gm-13.pdf">my article published in Mid-day Gujarati</a> edition today.<br />
<br />
The English translation of the same is as under:<br />
<br />
<br />
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Interest rates have come down in the recent past. This has also
impacted the fixed deposits in the banks. With such reduction in the interest
rates, many are now looking for alternative investment avenues as their fixed
deposits mature. In such a scenario, mutual fund has appealed to many such
investors as the investment option of choice. As the industry advertisement
goes, “Mutual funds sahi hai!”</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">However, what is disturbing about this is that some investors may be
coming in mutual funds with unreasonable expectations. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There are still many out there, who do not understand what a mutual
fund is. It just appears to be yet another investment option, and it can
deliver high returns only because it has done so in the past. This is the
problem. A lot of mutual fund schemes have, over the long term, delivered
returns far in excess of what fixed deposits have done. It is important to
understand the schemes before taking a decision solely based on historical
returns.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As we have already mentioned earlier, mutual fund is a vehicle that
helps you invest in various securities – these could be equity, fixed income,
money market or even a commodity like gold. Mutual fund by itself is not an
investment avenue, but it is an investment vehicle.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This background is important to understand as some of the investors
mentioned earlier are unknowingly shifting their money from fixed deposits to
equity mutual funds – thus taking risk they may not be in a position to handle.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Equity has the potential to deliver superior returns in comparison
to fixed deposits. However, such returns have come with a lot of ups and downs
along the way. Any investor must understand this. In case one needs money when
the values are down, you may end up getting less than the amount invested. Even
when you may not need money for a long period, seeing your investments losing
value for extended periods of time could be hugely challenging. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">While mutual funds are good investment vehicles, one must understand
what one is getting into and only invest in schemes based on one’s own unique
requirements. If you are unable to find the schemes suitable for you, take
professional help.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-20546566561110304752017-12-12T07:25:00.003+05:302017-12-12T07:25:38.937+05:30Equity investments simplified - transcript of chat on www.moneycontrol.com on 11th December 2017<div dir="ltr" style="text-align: left;" trbidi="on">
Click here to read <a href="http://www.moneycontrol.com/news/mgmtinterviews/chats/detail_new.php?chatid=2987">the transcript of chat</a> on www.moneycontrol.com on 11th December 2017</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-21002512249522193362017-12-04T06:56:00.004+05:302017-12-04T06:56:50.428+05:30Diversification is not about investing in mutual fund schemes with different names<div dir="ltr" style="text-align: left;" trbidi="on">
What exactly is diversification? Can I have a diversified portfolio by simply spreading my money across different mutual fund schemes?<br />
<br />
Read my article on the above subject <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/04122017/04122017-md-gm-10.pdf">here ...</a><br />
<br />
_________________________________________________________________________________<br />
The English translation is as under:<br />
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Diversification</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">“I diversify my investments across many mutual fund schemes. I have
investments across different fund houses.” Mentioned an investor. Very often
you come across investors, who use technical terms without understanding the
real meaning of the term. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In this case, one needs to check whether the objective
diversification was really achieved. For that purpose, let us look at what
diversification means.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Diversification is a strategy to allocate the investments across
investment options, which are inherently different from one another. This
difference must be in the behavior of the investment option. Different
investment options exhibit different behavior patterns due to the influence of
various external factors. Let us understand this through some examples:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">When the Indian Rupee
appreciates against global currencies, import-oriented companies benefit,
whereas export-oriented companies see reduction in their revenues per unit
sold. When the Rupee depreciates, the export-oriented businesses do well, but
costs of import-oriented businesses go up, thus reducing their margins. </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">When interest rates move up,
short-maturity bonds lose less and start earning higher soon. During such a
period, long-maturity bonds lose a lot of money. The long-maturity bonds gain a
lot when interest rates move down.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">When the economy is doing very
well, stocks rise in price, whereas bonds suffer as interest rates start to
move up. However, when the economy goes down, stocks plummet and the central
banks get into action. They reduce interest rates, which push bond prices up.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As you can see in the above examples, there are different investment
options that have opposing influence of the same external factors.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">When you invest in such different alternatives, you are immune to
changes in that particular factor. For example, if you invest in an import unit
and an export unit, you are immune to changes in the exchange rate (assuming
the foreign currency is same). </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Since we are discussing investing through mutual funds, the investor
need not get into the details of the business of each and every company; as
that job is done by the fund management team. However, if one wishes to invest
through mutual funds and ensure proper diversification, one may look at
different types of mutual fund schemes, e.g. invest across market
capitalization, viz. large-cap schemes, mid-cap schemes, etc. or invest across
asset categories, viz. equity funds, debt funds, liquid funds, gold funds, or
across geographies, viz. funds investing in Indian markets as well as fund
investing in global markets, etc. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Simply diversifying across different schemes may not be a true
diversification.</span></div>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-81938797646124379992017-11-22T15:18:00.000+05:302017-11-22T15:18:13.477+05:30Transcript of chat about mutual funds<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<br />
<br />
<a href="http://www.moneycontrol.com/news/mgmtinterviews/chats/detail_new.php?chatid=2966">Equity investments simplified</a></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-6577645130260980822017-11-20T08:04:00.001+05:302017-11-20T08:04:35.919+05:30How are equity savings funds different from monthly income plans?<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US">In some of our earlier articles, we have covered various hybrid
funds. One such category was the MIP or the Monthly Income Plan – a hybrid fund
that invests predominantly in debt securities and marginally in equity. Such a
combination offers stable, but potentially higher than debt fund returns over
long periods.</span></div>
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<span lang="EN-US">In the last few years, a new variant has been introduced that works
very similar to an MIP, but comes with a small difference. These products are
known as the “equity savings funds”, popularly. </span></div>
<a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/20112017/20112017-md-gm-14.pdf">Click here </a>to read more about these funds ...<br />
<br />
__________________________________________________________________________________<br />
The English translation of the article is as under:<br />
<br />
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<span lang="EN-US">In some of our earlier articles, we have covered various hybrid
funds. One such category was the MIP or the Monthly Income Plan – a hybrid fund
that invests predominantly in debt securities and marginally in equity. Such a
combination offers stable, but potentially higher than debt fund returns over
long periods.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In the last few years, a new variant has been introduced that works
very similar to an MIP, but comes with a small difference. These products are
known as the “equity savings funds”, popularly. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">These funds are a hybrid of three portfolios, instead of two in case
of MIP. The three parts of an equity savings fund are: equity portion, debt
portion and arbitrage portion. The exposure to the debt securities is kept
below 35% in these cases, to ensure equity exposure (combined between pure
equity and through arbitrage positions) at all times is above 65%. As we
discussed in case of the arbitrage funds, keeping equity exposure above 65%
gives these funds the status of equity-oriented funds for the purpose of income
tax. Due to that, the dividends from these funds are tax-exempt in the hands of
the investor as well as exempt from dividend distribution tax. The short term
capital gains are taxable @ 15%, if the gains are booked within one year. If
the holding period is longer than one year, the capital gains are qualified as
long term and hence such capital gains are tax-exempt.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This offers a wonderful investment option for the conservative
investor – stable portfolio returns with high tax-efficiency.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">However, one must keep certain points in mind about this portfolio. </span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">This is not a debt fund, but a
hybrid fund, having exposure to equity</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">The fund has net positive
exposure to equity, unlike arbitrage funds, where open equity exposure is
covered by derivatives. Such a net positive equity exposure means the fund can
exhibit higher volatility than arbitrage funds.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">The net equity exposure may be
higher than in case of MIP, such schemes could deliver higher long term returns
with high volatility in the short term. The risk is higher.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Given this, it is advisable to consider these funds only if you have
money to be invested for medium to long term periods. These funds are not
suitable for short term investments. Given the tax advantages, these funds
could be a better option in comparison to MIPs.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">- Amit Trivedi </span></div>
<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-90254428728440332082017-11-19T12:05:00.002+05:302017-11-19T12:05:56.338+05:30Avoid falling prey to insurance mis-selling ...<div dir="ltr" style="text-align: left;" trbidi="on">
<h2 class="alternativeHeadline">
<span style="font-weight: normal;">While IRDAI can nudge the sector towards
better practices, buyers need to view this as an instrument that
provides risk cover, not as a tax saving or investment product</span></h2>
Read my article in today's Business Standard below ...<br />
<br />
<a href="http://www.business-standard.com/article/pf/avoid-falling-prey-to-mis-selling-of-insurance-117111800907_1.html">Avoid falling prey to mis-selling of insurance</a></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-39939309381713260422017-11-13T12:15:00.000+05:302017-11-13T12:15:07.561+05:30Did the markets go up 21% due to demonetization?<div dir="ltr" style="text-align: left;" trbidi="on">
Amit Trivedi examines if the Nifty rise of 21% for the one-year period
since the announcement of demonetization is a coincidence, correlation
or cause.<br />
<br />
<a href="http://cafemutual.com/news/guestcolumn/318-did-the-markets-go-up-21-due-to-demonetization">Click here</a> to read the article ... </div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com0tag:blogger.com,1999:blog-2040933152058239775.post-33165282328753442242017-11-12T17:47:00.001+05:302017-11-12T17:47:23.966+05:30What is Bitcoin and How does it Work?<div dir="ltr" style="text-align: left;" trbidi="on">
Is Bitcoin a good investment? <a href="http://www.networkfp.com/should-i-invest-in-bitcoins/">Click here to read on</a> ...</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-16479245307199489862017-11-06T06:48:00.001+05:302017-11-06T06:48:37.663+05:30What are arbitrage funds? When are these funds appropriate for you?<div dir="ltr" style="text-align: left;" trbidi="on">
<span lang="EN-US">In the last couple of years, one category among the mutual funds has
gained popularity – the arbitrage funds. It is important to understand what
these funds are, how they work and what purpose these serve. One must also
understand the risks involved in these funds. Click <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/06112017/06112017-md-gm-15.pdf">here to read my article published in Mid-day Gujarati edition</a>.</span><br />
<br />
___________________________________________________________________________________<br />
The English translation of the article is as under:<br />
<br />
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">What are arbitrage funds?
When are these funds appropriate for you?</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In the last couple of years, one category among the mutual funds has
gained popularity – the arbitrage funds. It is important to understand what
these funds are, how they work and what purpose these serve. One must also
understand the risks involved in these funds.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">We covered this category in our column on February 6, 2017 with
proper example. However, we feel that there are a few misconceptions around
this category that need to be clarified, especially looking at the amount of
money getting parked in these funds. Many consider this as safe as liquid
funds, with the benefit of lower (or zero) taxation.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Arbitrage is a strategy to generate returns due to the price
difference between two different markets for the same (or similar) securities.
This often happens between the cash segment and futures segment of the stock
markets, on account of what is technically known as the “cost of carry”. This
“cost of carry” is akin to interest charged for short term borrowing. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">However, since the money is invested in stocks (at least 65% of the
scheme’s corpus), the fund is treated as “equity oriented fund” according to
the Income Tax Act. This means the dividend is tax exempt in the hands of the
investor, as well as exempt from the dividend distribution tax. Capital gains
are tax-exempt, if the holding period is more than one year. Even when the
capital gains are booked for a holding period of less than a year, the same is
taxed at a lower rate of 15% and not clubbed with the income.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This tax arbitrage is drawing a lot of money towards these funds. However,
it is important to understand the investment before getting on to the
discussion of taxation. The investment theory must precede considerations of
tax and the investment theory would help one analyse the risk-reward trade-off.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">First of all, let us make one point clear: as per the classification
for purposes of income taxes, arbitrage funds may be classified as
equity-oriented funds, but in terms of investment theory, these are
alternatives of liquid funds. Hence, please do not expect returns in line with
equity funds. These funds can generate investment returns very similar to those
generated by liquid funds. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">At the same time, while liquid funds invest in money markets and
debt markets; arbitrage funds exploit arbitrage opportunities between two
different segments within the equity markets. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Pure arbitrage is considered to be an almost zero risk strategy,
since the prices converge on expiry of the futures contract. However, there is
a possibility that the spreads widen before the contract expires. In such a
case, there could be negative returns, temporarily. One must be aware of this. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Such short term negative returns may coincide with your parking
horizon and thus, you may end up with very low or even negative returns, if you
have parked money for very short periods of time. This only means that one
should not treat arbitrage funds as a total replacement of liquid funds, but
use these only when the time horizon is slightly long, say at least one month.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In spite of the risk highlighted, the arbitrage fund could be a good
place to park your fund and enjoy the reduced taxation.</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ascii-font-family: Cambria; mso-bidi-font-family: Cambria; mso-fareast-font-family: Cambria; mso-hansi-font-family: Cambria;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">Amit Trivedi</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<br /></div>
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<br /></div>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com0tag:blogger.com,1999:blog-2040933152058239775.post-17799359678306189602017-10-23T07:32:00.001+05:302017-10-23T07:32:26.976+05:30Understanding exit loads in mutual funds<div dir="ltr" style="text-align: left;" trbidi="on">
What is an exit load? How does it affect an investment's returns?<br />
<br />
Click <a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/23102017/23102017-md-gm-13.pdf">here to know the answers</a>...<br />
<br />
_______________________________________________________________________________<br />
The English translation of the article is as under:<br />
<br />
<br />
<br />
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 16.0pt; mso-bidi-font-size: 12.0pt;">Exit load</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">What is exit load?</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Certain mutual fund schemes carry an exit load. This is the charge
levied when an investor exits the fund scheme, or redeems the money. However,
this charge is levied if the exit is made before a certain pre-defined time
period. If the investor stays beyond this period, there is no exit load. Let us
look at some examples. Various mutual fund schemes may have exit load
structures like this: </span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">(1)<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">1% exit load if redeemed before completing 1 year; Nil thereafter.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">(2)<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">1% exit load if redeemed before completing 1 year; 0.5% exit load if
redeemed after completing 1 year but before completing 2 years; Nil thereafter</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">(3)<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">0.5% exit load if redeemed before completing 6 months; Nil
thereafter</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">(The above are only some examples. You may check the exit load
applicable in the scheme of your choice.)</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Which schemes have exit
load?</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Close-ended funds and ETFs do not have exit loads. Any open-ended
mutual fund scheme can have an exit load. However, normally, liquid funds do
not have it. Whereas all other schemes may have exit load, the same is not
necessary. There are many equity and debt mutual funds that do not have any
exit loads. It is also important to keep in mind that the same scheme may have
different exit load structure at different points in time. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Though the exit load may be different at different times for the
same scheme, in case of any investment the applicable exit load would be the
one that was prevailing at the time of investment and not at the time of
redemption. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In case of SIP too, the applicable exit load would be the one that
were prevailing at the time of each of the SIP installments and thus, different
installments may have different exit loads applicable.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">How does this exit load
work?</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The exit load is charged by adjusting the redemption amount for the
same. The amount payable to the investor would be less to the extent of the
exit load. Let us see that with a calculation:</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Let us assume that the exit load is 1%; NAV at the time of
redemption is Rs. 20; the balance in the folio is 25,000 units and the investor
has opted for redemption of all units..</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In that case, the redemption price = NAV X (1 – exit load)</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Redemption price = Rs. 20 X (1 – 1%) = Rs. 20 X (0.99) = Rs. 19.80</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Amount received on redemption = no. of units X redemption price</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 205.55pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">= 25,000 X Rs. 19.80</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 205.55pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">= Rs. 4,95,000</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Consider this amount in relation to the money that the investor
would have got in the absence of exit load. (Rs. 20 X 25,000 units = Rs.
5,00,000).</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Due to the exit load, the investor got Rs. 5,000 less than the value
of investments on the day of redemption. This Rs. 5,000 is the exit load or the
exit charge paid. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Then again, Rs. 5,000 is 1% of Rs. 5,00,000.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This is how exit load works.</span></div>
<div class="MsoListParagraph" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ascii-font-family: Cambria; mso-bidi-font-family: Cambria; mso-fareast-font-family: Cambria; mso-hansi-font-family: Cambria;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US">Amit Trivedi </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
</div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com1tag:blogger.com,1999:blog-2040933152058239775.post-53184819256472697372017-10-19T09:23:00.000+05:302017-10-19T09:25:55.658+05:30Wish you a Happy Diwali ...<div dir="ltr" style="text-align: left;" trbidi="on">
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<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Diwali, the
festival of light, is when Hindus perform a Laxmi pooja. What are we asking for
when we pray to Goddess Laxmi? We ask for prosperity, not just money. There is
a difference between the two. In order to understand the same, let us look at
the photo of the goddess we use for the pooja.</span><br />
<br />
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">One of my
favourite Diwali posters is one that shows Goddesses Laxmi and Saraswati along
with Lord Ganesh. It is not for no reason that these three are shown together. </span></span><br />
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;"> </span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://www.blogger.com/blogger.g?blogID=2040933152058239775" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDlkDKk1QvYrjWEhOJlp0Yo39EZZkBVhfIcNI73kiZ2OzGe3xzRK20D_dULKtmYKdjvFaSMf71buOx7JgAdo5682EiKuvys-TUd1olZuLiP2a0KFNFCpPegXmQVOL7ku1W3s8co3PT6-8/s1600/Laxmi-Saraswati-Ganesh.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="153" data-original-width="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDlkDKk1QvYrjWEhOJlp0Yo39EZZkBVhfIcNI73kiZ2OzGe3xzRK20D_dULKtmYKdjvFaSMf71buOx7JgAdo5682EiKuvys-TUd1olZuLiP2a0KFNFCpPegXmQVOL7ku1W3s8co3PT6-8/s1600/Laxmi-Saraswati-Ganesh.jpg" /></a></div>
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">While we all need
blessings of Goddess Laxmi to be successful in life and grow, she must come in
our life flanked by Goddess Saraswati – the goddess of knowledge and Lord
Ganesh – the god of wisdom. If Laxmi comes along with these two, it stays and
brings bliss in life. And that is true wealth – not mere financial wealth. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Trying to earn
more and more money without proper knowledge and wisdom can lead to ruins.
Money may come but that would not bring bliss in life.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">The difference
between “knowledge” and “wisdom” also must be understood at this juncture.
“Knowledge” is to know something – to be aware of something – to understand and
being able to explain it. “Wisdom” is intelligence – it is about being able to
judge – to use discretion – being able to separate the good from the bad – the
right from the wrong. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">First, let us
address the knowledge part. It is critical to know what one is doing. “Look
before you leap” is not just a proverb; it’s a great advice. Whether it is income,
expenses, loans or investments, it is important to know. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Questions on income:</span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">How sustainable is the income?</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">How stable is the source of income? This is
especially critical for self-employed persons and small business owners.
However, in the present times, even jobs are also not guaranteed.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Do you understand the taxes on the income?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Questions on expenses:</span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Know the monthly budget – the expenses you incur</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">How much of the monthly budget is spent on necessities
and how much on luxuries? Which of the luxuries can you cut down? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Is it possible to reduce some expenses through
finding alternatives?</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Have you kept provision for these expenses in case
there is an emergency, e.g. health issue or loss of job?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Questions on loan:</span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Have you understood the terms of the loan? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">What is the interest rate on the loan? Is it too
high or too low? If it is too low, is there a catch? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">What are the various penalty clauses? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">What are the flexibilities? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Can you terminate the loan earlier without any
penalty, in case you get funds suddenly? </span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">What is the security required by the lender?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Questions on investments:</span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Have you understood the terms of the investment? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">What is the (expected) rate of return? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Is it too high or too low? If it is too high, is
there a catch? </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Is the risk too high? Understand the risk involved.
If you do not understand the risk, please avoid the investment. Every
investment carries some risk. </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Is there a lock-in or is the investment liquid? </span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; mso-add-space: auto; mso-list: l4 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "symbol"; font-size: 11.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">At what rate would the earning be taxed?</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">This is not an
exhaustive list, but only an indicative one.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Discretion is
required both while earning as well as spending. Is the money coming in through
the right means or are you taking some actions, which may be incorrect ethically
or morally? Are you spending too much money for luxuries than fulfilling your
responsibilities? </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">Wisdom and
discretion must be applied to the assets and liabilities, too. Are you
borrowing wisely? Is it really required? Is it a good loan? Are you investing
smart? Or are you acting on tips without understanding the risks? There have
been many instances when one has asked “Is it safe?” or “I hope there are no
risks” in stead of asking “Please tell me about the risks present. And how do
we manage those”. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;">So, this Diwali,
make sure to pray for Laxmi to arrive at your place – but the right type and
through the correct means. Pray to Goddess Laxmi to stay in your life forever.
Make sure your life is worth for her to stay forever.</span></div>
<div class="MsoListParagraph" style="mso-list: l1 level1 lfo5; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "arial"; font-size: 9.0pt;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="font-family: "arial"; font-size: 9.0pt;">Amit Trivedi</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-family: "arial"; font-size: 9.0pt;">The author runs Karmayog Knowledge Academy. Recently,
Amit has authored a book titled <i style="mso-bidi-font-style: normal;">“Riding
the Roller Coaster – Lessons from Financial Market Cycles We Repeatedly Forget”</i>.
The views expressed are his personal opinions. </span><span lang="EN-US" style="font-size: 11.0pt; mso-bidi-font-size: 12.0pt;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<br /></div>
Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com2tag:blogger.com,1999:blog-2040933152058239775.post-30496669078226218702017-10-11T08:15:00.000+05:302017-10-11T08:15:46.567+05:307 ½ lessons in personal finance from the screen life of superstar of the millennium<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US">Today is the 75<sup>th</sup> birthday of
Superstar Amitabh Bachchan. On this day, we pay a tribute to the biggest
entertainer and superstar of the screens – he started with films and is making
waves on television through his popular show Kaun Banega Crorepati. `</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On his 75<sup>th</sup> birthday, we pay tributes to Mr. Bachchan by
taking some clues from his many roles on screen. Here is a list of 7.5 lessons,
one each for every decade of his life. ...</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><a href="http://epaper.gujaratimidday.com//epaperpdf/gmd/11102017/11102017-md-gm-37.pdf">Click here</a> to read our tribute to the superstar of the millennium ...</span></div>
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<span lang="EN-US"><br /></span></div>
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The English translation of the article is as under:<br /><span lang="EN-US"><span lang="EN-US">____________________</span></span><span lang="EN-US">____________________</span><span lang="EN-US">____________________</span><span lang="EN-US">____________________</span><span lang="EN-US">________________________________</span></div>
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<br /><span lang="EN-US">
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">7 ½ lessons in personal
finance from the superstar of the millennium</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On 11<sup>th</sup> October 2017 is the 75<sup>th</sup> birthday of
Superstar Amitabh Bachchan. On this day, we pay a tribute to the biggest
entertainer and superstar of the screens – he started with films and is making
waves on television through his popular show Kaun Banega Crorepati. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On his 75<sup>th</sup> birthday, we pay tributes to Mr. Bachchan by
taking some clues from his many roles on screen. Here is a list of 7.5 lessons,
one each for every decade of his life.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Lessons from his famous
dialogues</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">1. Deewar</span></b><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> – <i style="mso-bidi-font-style: normal;">Main aaj bhi phenke
hue paise nahin uthata </i></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Earn money with respect. Even when Amitabh’s role was played
by a child artist, he tells Iftikhar Ahmed, “Mein pheke hue paise nahin uthata,
saab.” Later, Amitabh Bachchan reminds him of the incident and repeats the same
lines.</span></div>
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<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Whether he had money or not, he never picked up money that
was thrown at him. He respected money and he expected the others to respect
labour of anyone. Money must be earned in a respected way, and not otherwise.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2. Kaalia</span></b><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> – <i style="mso-bidi-font-style: normal;">Hum jahan khade
hotey hain, line wahin se shuru hoti hai</i></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">In a famous scene in the movie Kaalia, Amitabh Bachchan
speaks these lines in a jail. Every time I have watched this movie in theatres,
the audience goes wild when he says this. Now, let us understand very clearly.
He is Amitabh Bachchan. He has the right to utter these lines. He is the
superstar. How many of us can claim to be even good at investing? None. So we
tweak this above dialogue and say “Jahan line hoti hai, hum wahan khade ho
jaate hain.” So many investors queue up to buy (or sell) something only because
all the others are doing it. We call it herd mentality. This is seen across
centuries, across countries and across investment options – we have seen it
happening in equity shares, IPOs, real estate, gold, and currently Bitcoins.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Standing is queue may be good in certain situations – man is
a social animal, after all. However, in financial markets, those in queue may
end up buying costly or selling cheap.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Learn about an investment and take independent decisions. If
you cannot, take the help of wise experts. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">3. Satte pe Satta</span></b><span lang="EN-US"> </span></div>
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<i style="mso-bidi-font-style: normal;"><span lang="EN-US">Ek dost ki party mein gaya
tha, wahan jabardasti chaar baatli pila diya</span></i></div>
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<span lang="EN-US">Many of us remember this scene for what follows next in the dialogue
– “Daaru peeney se liver kharab hota hai”, but we are focusing on the above
line for a specific reason. </span></div>
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<span lang="EN-US">There are so many instances when the investor says that someone came
and sold a product. Well, that may be true, but it is exactly like saying what
Amitabh said in the lines mentioned above. While someone may come and offer any
product or service, it is our duty to always remember “Caveat Emptor” or “Buyer
Beware”. Ask questions till you do not understand the pitch. There is no hurry.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">4. Trishul </span></b></div>
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<i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Aaj aap ke paas aap
ki saari daulat sahi, sab kuch sahi, lekin maine aap se jyaada garib aaj tak
nahin dekha. Good-bye, Mr. R. K. Gupta.</span></i></div>
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<span lang="EN-US">Trishul was an epic battle between a father and the son of his
discarded lover. After Sanjeev Kumar strains his relationship with his family
and is left alone at his luxurious house, with all his wealth, Amitabh utters
the above words. </span></div>
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<span lang="EN-US">Wealth is nothing if the family is not with one. After all, what do
we earn the wealth for, if that does not make us happy and fulfilled in life?</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">5. Laawaris</span></b></div>
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<i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="font-size: 14.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Apun woh kutte ki dum hai, jo baara baras nalli ke andar
daal ke, nalli tedi hoti, apun seedha nahin hota! </span></i></div>
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<span lang="EN-US">This is superb depiction of human nature. Our experiences have
shaped the way we take decisions. It is not just one lifetime, but the
cumulative experiences accumulated since the birth of the first humans that we
have learnt how various things work and those lessons influence our decisions
and actions.</span></div>
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<span lang="EN-US">Many of those actions, and biases are reflected in the way we deal
with money – sometimes such biases protect us and on other occasions, put us
into troubles. Very often, it is our limited abilities that we do not know
which lessons to apply when.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Lessons from the movies</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">6. Chupke Chupke</span></b></div>
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<span lang="EN-US">Dr. Parimal Tripathi, played Amitabh Bachchan was asked to pretend
to be Dr. Sukumar Sinha in the movie. However, when he went in front of
Vasudha, played by Jaya Bachchan, he fell in love and was in two minds: whether
to play the role of Sukumar Sinha or that of Parimal Tripathi – his original
self in the movie. This confusion lands him into trouble.</span></div>
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<span lang="EN-US">In the world of money, a large number of people are confused of
their own role – whether they are investors or speculators. While they try to
be investors in the beginning, the moment they see Vasudha – be it financial
news; or any hot tip; or simply their own emotions of greed, hope or fear –
they forget that they are supposed to be investors and start acting like
speculators. This gets them into trouble.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">7. Baghbaan<span style="mso-spacerun: yes;"> </span></span></b></div>
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<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">The whole movie is around an old couple that spent their
life and their life’s savings on their kids, only to find in their golden years
that the kids were not in a position to help them at all.</span></div>
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<span lang="EN-US" style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Many parents have assigned a lower priority to their own
retirement years and spent every bit of saving on education and marriage of
their kids. The lesson in the movie is very powerful. You are on your own in
your retirement years. Please plan properly.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">And now the message # 7 ½:</span></b></div>
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<span lang="EN-US">It is a half message as it is taken from the small screen. This
lesson is from the popular game show – <b style="mso-bidi-font-weight: normal;">Kaun
Banega Crorepati</b>. </span></div>
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<span lang="EN-US"><span style="mso-spacerun: yes;"> </span>As you know, the time
allotted for each question is 45 seconds in the beginning. Once you cross the
first “padaav”, the time available for each question goes up to 60 seconds. On
crossing the second “padaav”, there is no time limit and in the words of Mr.
Bachchan, “kaantaben shaant ho jayegi”. This is the real meaning of wealth –
the significance of wealth in life. As you get wealthy, you should have more
time available. If wealth is not releasing your time, you are living a life of
bartering life for money – a really bad deal.</span></div>
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<br /></div>
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<span lang="EN-US">There are many more lessons that we can learn from Mr. Bachchan’s
life on screen as well as his real life. </span></div>
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<span lang="EN-US">In the end, let us remember another great movie, where he played a
second lead. “Anand” in the movie “Anand” tells Dr. Bhaskar, Amitabh Bachchan,
“Babu Moshay, zindagi badi honi chahiye, lambi nahin.” We wish Mr. Bachchan a
“badi” and “lambi” zindagi. Thank you Sir. We wish you many more years of
happy, healthy and wealthy life.</span></div>
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<i style="mso-bidi-font-style: normal;"><span lang="EN-US">- Amit Trivedi</span></i></div>
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<i style="mso-bidi-font-style: normal;"><span lang="EN-US">The views expressed here
are the personal views of the author. He has written a book titled “Riding The
Roller Coaster – Lessons from financial market cycles we repeatedly forget”.</span></i></div>
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<span lang="EN-US"></span></div>
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<span lang="EN-US"><br /></span></div>
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Mahesh C Trivedi - The Karmayogihttp://www.blogger.com/profile/01456216853817828756noreply@blogger.com13