June 20, 2010

Dear friends, here is an interesting article on the subject of  Govt. debt. Although it’s not directly related to us, as the subject matter is the US Govt. but in a sense it’s applicable to any govt. in the world.

So read & enjoy.




Should I redeem my MFs before DTC

June 20, 2010

In DTC,LTCG is likely to be taxable,may be @5% or 10%.I have investments in funds like R.Growth,H Top200,D Top100etc for last, say about five years.Should I redeem & then reinvest to avoid tax.Should I switch from R.Growth to RSF Equity?Kindly reply in detail.Thanks,urs sincerely


Dear Dr. Lal, First of all. Plz. note these are mere proposals not the act as of now for DTC. The final picture may be different from what we are seeing today.

Regarding your query for redemption – Sample this –
Say you have total basic investment of 5L Rs. as on date where the with profit value is say 8L Rs. It means 3L Rs. is your profit. Now if you redeem these 8L Rs. in full & reinvest the same in same funds. your holding period ‘ll be counted from the reinvestment date. So in case in future, just after implementation of DTC, you require money due to any reason, the gains if any ‘ll be STCG & these STCG ‘ll be taxable at your marginal slab rate. Now If we consider that you are going to hold these units for a long term & ‘ll redeem after 4-5 more years in DTC, the LTCG ‘ll be discounted based upon your holding period. In the example given in the new proposals, it seems, higher the holding period, higher ‘ll be the discount for calculation of LTCG.
Now interestingly If you don’t take any action, the holding period is already eligible for LTCG & as the period is already more than 5Y (by the time, DTC is implemented), the resultant Tax liability ‘ll be very low. As now after 8-10 years (5Y current holding + 3-5 year more in DTC), your total holding period ‘ll invite a high %age discount & thus lower tax outgo.
One more Question I want to ask – Due to these DTC proposals, ‘ll you stop investing from now onwards? In any case, the future is EET.
Your query is similar to public behavior – Fill the fuel tank of vehicle just b4 the hike in fuel prices. “ll this tank fill last for life long? NO. In any case we ‘ll continue to use now so called high priced fuel. Same is here in your query.
Plz. don’t worry for now & future. Keep Investing. Yes redemption due to under performance should always be done.
Bye Bye & happy investing.


Revised proposals of Direct Tax Code

June 16, 2010

Income Tax

Dear Friends, here is a quick view of the new proposals of Direct Tax code.

1. PF, PPF, GPF, EPF, NPS & Annuity Plans as well as proceeds from Term plans (Pure Life insurance) ‘ll be Tax free as per E – E – E. So no Tax at withdraw from these instruments.

2. Home loan Interest benefit on 1.5L Rs. for self occupied property, is retained.

3. The list of permitted savings intermediaries now includes most of the current saving instruments lile – apart from the instruments listed in point 1 above, NSC, ULIPs & Traditional Plans,  ELSS, Bnak Tax saver FDs, Bonds (Possibly Infrastruture bonds)  etc.

4. Long Term capital Gains from shares & Eq. MFs ‘ll become taxable.

5. No clarity as of now for the earlier proposed Tax slab rates.

This Revised Discussion Paper is available on the following websites: and
Responses to the Revised Discussion Paper should be sent online through the link provided at these websites or at the following e-mail address: Responses are solicited upto 30th June, 2010.



Reliance Infrastructure (D) Fund

June 15, 2010

i have invested in Reliance infra fund (D) now my 1 yr locking going to over… but return is not good….

plz guide me shall i continue to hold or do STP

if i do STP then give me better fund name of Reliance grp for STP…

i have invested 5K in reliace infra fund….



Dear Cshah, In the light of under-performance of Rel. Infra fund, my choice ‘ll be to switch your money to Rel. RSF Eq. in Growth Option.



Investing for Daughter’s marriage

June 14, 2010

I’ m long term invester through mf via sip n top up time to time when market got corrected 5-6 pc from high i have –rel growth rel.regular saving hdfc top 200 Hdfc prudance birla front n mid cap mainly n one sectorial fund rel banking i m 50 years old n have invested in mf since 2004-5 till i have invested 14L n have handsome gain today i need my money after 4 -5 years for my daughter’s marriage at present i have very little responsibility n can invest 30k every month more. pl check my portfolio n advise me–when we start withdrawl , can invest more 1-2 years 30-40k every mone in the above mf or any other pl advise my son got job in this years n start to invest in mf for next20-25 years n start with very small amount –rs 3000pm pl dvise mf for him


Ramesh Sahu

Dear Ramesh, To create a corpus specially for your D’ter’s marriage, here is my take.

First calculate what ‘ll be your expenses, if marriage is 2day in 2010? Say the figure comes out around 10L Rs. Now calculate down the line after 5 years, what ‘ll be the expenses due to impact of inflation say @ 7% rate. For example the figure comes out around 15L Rs. so that’s your cut off point for exclusive corpus with a exclusive goal.

The moment, your current fund value reaches that cut off point, redeem at least 50% of your holdings & invest the same in debt funds. I.e. out of your 15L fund value redeem at least 7-8L Rs. & invest the same in debt funds. On the other hand, keep on investing your fresh SIPs in the funds chosen by you.

When the goal is just one year away, redeem sufficient amount from the funds to create the final corpus with out any problem & invest the same in debt fund.

Regarding your choice of funds, I w’d like to replace Birla Midcap with Quantun LTEF.

For your son, you may ask him to invest 1K Rs. each in following funds thru SIPs

HDFC Top 100
Quantum LTEF



Investment by huf in post office schemes like nsc and kisan vikas patra

June 14, 2010


I understand that Huf can claim deduction U/s 80 C for nsc. But post office accept applications from individual only. More over now copy of Pan card of applicant is required .Now to claim deduction whose Huf`s Pan card or Karta` s pan card is to be submitted.



Dear Friend, Plz. note, now a days only individuals can apply/purchase NSC & KVPs.

HUF under it’s own name can’t invest.

If a HUF, wants to invest in NSC or KVP, it may do so only under the name of it’s members. In this case, the PAN of the member should be produced while applying for NSC or KVP.



How to buy a house

June 14, 2010

Please suggest me how to buy a house within next 2 years about 35 -40 lakhs cost. How much do I have to invest monthly and which modalities? I am a 35 year old lady and earn about 1 lakh/month, no dependents, have LIC and mediclaim.



Dear maitricee, If you can save 50K Rs. per month from now onwards for next 2 years, the basic principal amount with you ‘ll be 24m*50k = 12L Rs. With the addition of some return on your investment, you may expect your corpus value around 14L Rs.

For a house costing 40L Rs. balance 26L Rs. can be availed from a bank home loan.

You should invest in the following fund – Birla MIP II Savings 5 Plan to save for your target amount.