Sovereign Gold Bonds – I’ll Pass

wealthymattersThe first I heard of the Sovereign Gold Bonds was on Dhanteras day when my bank tried to get me to purchase some of them.At the time , I was on my way out shopping  and my first thought was: Do I really want to postpone my gold purchases for a year to earn an additional 275 rupees per Rs10,000/-?Yaar, I could haggle with the jeweller and easily get that much and more off my purchases. And then, I love wearing jewellery.Do I want to give up on that pleasure and experience, multiple times a year, for as little as 275 rupees? That too in the days when one simple restaurant meal, or a taxi ride might cost that much and more? The answer then was an easy “NO”.

Later, I was to learn worse about these bonds. They are priced higher than the price of physical gold on the street. So there goes any notional interest a person might have earned! Read more of this post

The Importance Of Capital Gains


Ths IRS releases a list of the 400 highest returns filed in the US.They are known as the Fortunate 400.So how do they get there?-Their money works for them.

The Fortunate 400 make as much as half of their incomes (in blue) from investments, and their household incomes have swung very similarly to the S&P 500 (in red) over the past 100 years.The S&P 500 is a broad mix of 500 stocks across multiple sectors, it is a much more accurate gauge of market sentiment than the more well-known Dow Jones Industrial Average – which tracks only 30 stocks.At the very top of the economy, the 400 richest tax returns analyzed by the IRS take home about 50 percent of their income from capital gains i.e they sell at the top of the market.Capital gains are income earned through investments, and they have shot up 1,300 per cent since 1992.

So are there any repeat names on the list ?-73% of the people make it to this list just once.Only four households appeared every year in the last 2 decades.So who are they?Your guess is as good as mine.For privacy reasons the IRS doesn’t publish these names.

Gift Deed Or Relinquishment Deed?

wealthymattersWhen it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems.You must understand the purpose of each document before getting it drafted. Know the benefits as well as drawbacks of each.

Gift deed

This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.

However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed. The process is slightly different if you are gifting company shares. You have to fill out the share transfer form and submit it to the company or registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to complete the transfer, but the document need not be registered. Read more of this post

CRISIL And Its Ratings

wealthymattersCredit Rating and Information Services of India Ltd. (CRISIL) is India’s leading Ratings, Research, Risk and Policy Advisory Company based in Mumbai .CRISIL pioneered ratings in India more than 20 years ago, and is today the undisputed business leader in India.CRISIL’s rating experience covers more than 45000 entities, including 30,000 small and medium enterprises (SMEs).

Now if you buy bonds,NCDs have probably come across CRISIL Ratings.The table below explains them. Read more of this post

Of Bonds And Capital Gains

wealthymatters.comFor any drop in interest rates by 100 basis points, or 1%, very broadly you can see a capital appreciation of 5% on a 5-year bond, 7% on a 10-year bond and 10% on a 15-year bond.The higher the duration of the bond, the greater the capital appreciation.

Since bonds like NHAI and SBI come from the government, they track benchmark 10-year Gsec rates.The 10-year yield now stands at 8.25%. Suppose this were to drop by 100 basis points over the next one year, then it is possible that the NHAI 10-year bonds with a face value of Rs 10,000 could gain Rs 700 per bond and trade at Rs 10,700 and the 15-year bonds will trade at Rs 11,000. Thus for a 15-year bond, an investor could make a capital gain of Rs 1,000, or 10%.

However it is better to buy these bonds with an objective of holding till their maturity, and not merely for capital gains. This is because bond markets are not well developed in India and show very little activity. So, exiting many bonds could be a problem. Also there are very few products with a maturity of 10 to 15 years, hence the market prices may not reflect the true price.

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