[sgiitk]

I was once told by a very senior executive of an Insurance Co that the percentage of your assets in debt ot money funds, or FDs should be the same as your age!

[vina]

Originally Posted by sgiitk

I was once told by a very senior executive of an Insurance Co that the percentage of your assets in debt ot money funds, or FDs should be the same as your age!

sir

that is what they tell everybody, and that is so far away from truth ... But it makes sense for their sales guys.

The fact is it depends almost always on personal circumstances.

The part of the cash you can not afford to lose must always go to debt (and jewellery is a very poor investment) - some of it liquid debt (Money market funds ...) other long term (FDs, PPF), corporate debt (bonds, debentures)

In this regard Debt mutual funds work out the best - give best of both worlds (and opportunities not available to individual investors) if you are not reasonably well informed about your options. Though for long term PPF always trumps them.

Rest of the money should be in diversified equities.

Also keeping some money in the bank (even at low interest) never hurt anybody - at the very least it'll help you make a downpayment when a neighbour is forced to sell his house at 80% of market price due to family emergencies - at best you have the luxury of helping him (or yourself) avoid such distress sales.


There are very few people with too much money to worry about any of the above - and for them debt is not good anyway whatever be their age.


also for guys in their early 20s debt makes little sense unless market is where it was in 2006. And for guys in their 70s, equiteies are best avoided completely unless they have so much money they can afford to lose some.

[penpavan]

Hi there, I want to share my views on mutual funds. I have been into MF for quite sometime now (6-7 years). And I feel,

1. When the markets are bad, be it stock or MF, they both are bad.
2. If you are in MF, treat it as stock, that is, if you see a 30 percent gain, redeem it, dont dream of long term because of the next point
3. The Indian market was good so far, upto 2007 and from 2008 to 2010.
Now it is obscenely bad. Some stocks have hit values that they never deserve. Both on upside and downside. A small bad news about a company, you see an avalanche in all the companies related to the stock along with beating down of the company in question itself. And worst part, they are not rising.

Hence I have lost complete faith in Indian stock market. Long term investing has become a joke. Cannot exit at "no profit no loss" levels leave alone SB kind of interest.

Since FD rates are high now, I advise everyone to take the FD and PPF route.

Of course, stock specific action and trading continues for quick gains with the known rider of risk.

[sbala]

Folks - Since we are talking about $$, I would like to post a query. I am sure that every married folks might have had this thought at a point of time in his life. Its about child investment plans. i am blessed with a boy and he is turning 1 this week. As a caring parent, i would like to get some $ saved for him for his education, marriage etc. etc.

Any suggestions? I am confused between traditional plans Vs. ULIPs Vs. Mutual Funds..

[tsk1979]

Originally Posted by sgiitk

I was once told by a very senior executive of an Insurance Co that the percentage of your assets in debt ot money funds, or FDs should be the same as your age!

I think it would be a personal choice.
Whether you would want to be a very rich 80+ guy, or you want to live life richly and be a pauper when you are old.
In the Indian system, it basically boils down to, earn for yourself or earn for your kids

[vina]

Originally Posted by sbala

Folks - Since we are talking about $$, I would like to post a query. I am sure that every married folks might have had this thought at a point of time in his life. Its about child investment plans. i am blessed with a boy and he is turning 1 this week. As a caring parent, i would like to get some $ saved for him for his education, marriage etc. etc.

Any suggestions? I am confused between traditional plans Vs. ULIPs Vs. Mutual Funds..

Whatever you do, don't get a ULIP

Since you are looking at a 15-20year kind of horizon, given the state of Indian economy, equity MFs work best for you. Take some SIPs with mutual funds and you should be good to go.

[Gautam Misra]

Originally Posted by sbala

I am blessed with a boy and he is turning 1 this week. As a caring parent, i would like to get some $ saved for him for his education, marriage etc. etc.
Any suggestions? I am confused between traditional plans Vs. ULIPs Vs. Mutual Funds..

It is great that you have thought about it so early. Presuming that you are the only earning member of your family I would suggest that you are adequately insured and for that go for term insurance. It is the same way as we insure cars.

A ballpark figure of the amount of insurance you would require is 10 times your annual income.

After term insurance you can start a SIP in either HDFC Equity or Birla Sunlife Frontline Equity.

By going for term insurance + MF (Equity) you will have your "own" ULIP and it will work wonders.

[babaops]

Hi,

Can anyone let me know the tax implications of below

a) Transferring money from outside to India. Tax had already been paid as per the foreign country taxation system, do I need to pay tax again on this in India.
Do I need to declare this amount while filing tax returns.

b) Do we need to pay taxes on company shares that we receive as bonus, or does that happen only after we sell them

c) If we sell some property (house), what is the duration within which we need to reinvest to avoid capital gains tax. Is it fine to purchase a plot with that money as investment or do we necessarily need to construct a house on it to avoid Capital gains tax.

[ghodlur]

Originally Posted by vina

Whatever you do, don't get a ULIP

Since you are looking at a 15-20year kind of horizon, given the state of Indian economy, equity MFs work best for you. Take some SIPs with mutual funds and you should be good to go.

+1 to that. I would suggest apart from SIP's, also invest some amount every month in PPF in your son's name so that by the time he is 15, you would have some addtional funds too.

[ghodlur]

Originally Posted by babaops

Hi,

Can anyone let me know the tax implications of below

a) Transferring money from outside to India. Tax had already been paid as per the foreign country taxation system, do I need to pay tax again on this in India. No you do need to pay tax again in India if your conmpany is deducting tax a s per the tax equalization policy which means you will taxed at Indian rates in foreign country.
Do I need to declare this amount while filing tax returns. In India no, but in foreign country as per the country return filing.

Did you apply to the Indian IT department for an IT certificate (Form 30C) before you went overseas?

b) Do we need to pay taxes on company shares that we receive as bonus, or does that happen only after we sell them.
It happens only after you sell them or encash the options.

c) If we sell some property (house), what is the duration within which we need to reinvest to avoid capital gains tax. Is it fine to purchase a plot with that money as investment or do we necessarily need to construct a house on it to avoid Capital gains tax
You can use the sell proceeds to reinvest in another house till 3 yrs. You cannot use the proceeds to buy a land but a constructed house to avoid the capital gains tax. The house such purchased/built cannot be sold before 3 years or else you will have to refund the capital gains you saved.

Please see my replies in bold. However it would always be better to consult a CA for more indepth details.

[vina]

Originally Posted by Gautam Misra

It is great that you have thought about it so early. Presuming that you are the only earning member of your family I would suggest that you are adequately insured and for that go for term insurance. It is the same way as we insure cars.

A ballpark figure of the amount of insurance you would require is 10 times your annual income.

After term insurance you can start a SIP in either HDFC Equity or Birla Sunlife Frontline Equity.

By going for term insurance + MF (Equity) you will have your "own" ULIP and it will work wonders.

I agree with the insurance part, though I would have assumed you took insurance after you got married.

Any life insurance policy you take must cover accidental death (there are riders that pay 2x the insured amount), death by suicide (Metlife offers it - this rider comes into force one year after commencement), prolonged illness waiver etc.

Take term insurance only. This is so important I'll repeat it - takt term insurance only. Insurance is not an investment product. ULIPs are bad because the fees are so high, it is as if whatever taxes you save you just pay it to the insurance company. Also there is very limited liquidity. Whatever money you want to invest, invest it into pure investment schemes.

As far as requirement of insured amount is concerned - I'll tend to disagree a little with Gautam (My apologies ) 10 times your annual income may be too much when you compute the premium even for a term insurance policy.

A better way if to figure out the annual expenses your family is expected to have 5yrs from now (this should account for inflation etc.), and then multiply it by 3 (so that your family can sustain 3 yrs on the insurance money alone, 5yrs from now. You can change this factor based on your circumstances). Add to any outstanding loan amounts (house, car etc.) and you have the number.In addition buy a house, make some investments etc. and plan such that in 10yrs or 15yrs your family wouldn't need insurance money to pay rents etc.

One major thing you need to keep in mind - the earlier you get insured the better it is - the premium depends on the age of the insured.

And shop around before you take a policy, not just the premiums but the features of the policies offered are different between different insurance companies.

[sbala]

Thanks Vina, Gautam & ghodlur for your overwhelming response. This really gives me an insight on how to proceed further. I will go with term insurance + MF route as it makes more sense when compared with ULIPs. Let me get started immediately..

I do have a PPF account for long term needs. Investing in it for past 4 years. Just wanted to create some riskless, reliable income. Is there any way to have auto debit facility from savings account to PPF account??

[carlosTHEjackal]

Originally Posted by babaops

Hi,

Can anyone let me know the tax implications of below

a) Transferring money from outside to India. Tax had already been paid as per the foreign country taxation system, do I need to pay tax again on this in India.
Do I need to declare this amount while filing tax returns.

You don't have to pay tax again in India. You don't have to declare this amount while filing tax returns even in case if you claim refund of tax.

Originally Posted by babaops

b) Do we need to pay taxes on company shares that we receive as bonus, or does that happen only after we sell them

Only after you sell them that you can calculate profit or loss. No need to pay tax on Shares held.

Originally Posted by babaops

c) If we sell some property (house), what is the duration within which we need to reinvest to avoid capital gains tax. Is it fine to purchase a plot with that money as investment or do we necessarily need to construct a house on it to avoid Capital gains tax.

I assume you have held the property for more than 3 Years. If the property is held for less than 3 years, you can't avoid Short Term Capital Gains Tax.
If you had held this property for more than 3 years and then sold, Long term Capital Gains (LTCG) comes into picture.
To avoid LTCG tax, you need to buy or build a property within 2 years from the date of Sale of the older property.

[neoonwheels]

Guys,

My wife and I, have taken a home loan. We have the flat registered in our names. I would like to ask, can we BOTH, take the reabte of 1.5L interest paid on home loan per annum? The interest component would be close to 3L.

My company says for joint loans, I can avail max 75K benefit, if my wife is also claiming it. So overall we can avail max 1.5L benefit on interest paid.

Please let me know if I can avail 3L interest rebate (combined) and share the govt links on the same so that I can talk to my company finance guys.

[vina]

Originally Posted by neoonwheels

Guys,

My wife and I, have taken a home loan. We have the flat registered in our names. I would like to ask, can we BOTH, take the reabte of 1.5L interest paid on home loan per annum? The interest component would be close to 3L.

My company says for joint loans, I can avail max 75K benefit, if my wife is also claiming it. So overall we can avail max 1.5L benefit on interest paid.

Please let me know if I can avail 3L interest rebate (combined) and share the govt links on the same so that I can talk to my company finance guys.

Your company is telling you correct story. You two can avail 1.5L combined.