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Milaap and Rang De

January 24, 2012 15 Comments

Philanthropy is of interest to me.But I have my own preferences when it comes to giving viz.:

1.When it comes to giving money I prefer to do it anonymously.When it comes to giving of skills I prefer to do it personally.

2.It is very important to me to in no way demean or belittle the recipient.

3.I want to empower people by my assistance,not cause dependency.

4.I dislike cold charity.

5.I dislike competitive giving.

6.I abhor hard selling by charities .

7.I dislike super exclusive philanthropic cliques.

8.I hate profiteering off the poor and self-serving , hypocritical philanthropy.

9.I would love to have the option to give as little or as much as I can or want without being judged.

Milaap and Rang De are my 2 new discoveries.I haven’t test driven them yet,But I promise I will blog about my experiences with them later.In the meanwhile you can find out more about these microfinance organizations from their respective websites here:http://www.milaap.org/ and http://www.rangde.org/ .In case you have wished for an Indian version of Kiva here is your chance to be a social investor.Rang De has been around for a while but Milaap is newer.So be warned and start with just what you won’t mind writing off as a mistake.I repeat I have not personally tested either site as yet.

Filed under Philanthropy, Tool Kit Tagged with anonymous giving, Charity, empower, giving, giving money, Kiva, microfinance, microfinance organizations, Milaap, Philanthropy, postaday, Rang De, social investor, social sector lending

Last Chance ELSS

January 22, 2012 Leave a comment

wealthymatters.com ELSS =Equity Linked Savings Scheme ,is a special category of mutual funds that invest predominantly in stocks. They are very comparable to diversified equity funds. The only differences between regular diversified equity funds and ELSSs are the 80C tax benefits on investments upto 1 lakh and the lock-in period of 3 years,incidentally the least among all 80C tax-saving avenues. It means that once you invest in an ELSS , you cannot withdraw your investment for a period of 3 yearsHowever,the DTC proposes to phase out the tax breaks on ELSS , so this avenue may be closed in the coming years.But, you can still invest in it this year and get tax breaks.

The best ELSSs have not done too badly during downturns and have given excellent returns in boom times.The reason has been the lock-in period. These funds have not suffered due to large scale redemptions when the market sentiments have tanked.Moreover, fund managers keep a portion of the mutual fund corpus, around 7-10%, as cash,even in good times, so that they can meet all redemption requests. This cash is invested in very short term debt investments, generating meager returns. This impacts the overall returns of the mutual.Since the fund manager of an ELSS knows that funds cannot be withdrawn for 3 years, he can invest all the funds in equities and keep less money as cash and provide good returns in the long term. Read more of this post

Filed under Paper Assets, Theory Tagged with deversified equity mutual fund, dividend, ELSS Equity Linked Savings Scheme, equity markets, fluctuating returns, infinite loop, laddering, lock in period, market risks, mutual fund, negative returns, postaday, redemption, SEBI, section 80C, stock markets, tax benefit, tax shelter

Of Bonds And Capital Gains

January 18, 2012 Leave a comment

wealthymatters.com For 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.

Filed under Paper Assets, Theory, Tool Kit Tagged with bond investing, bonds, capital gains, hold to maturity, interest rates, NHAI Bonds, postaday, SBI Bonds

Balanced Mutual Funds

January 18, 2012 2 Comments

wealthymatters.com

Balanced funds are mutual funds that invest in both equities and debt instruments.They normally keep their equity component in the range of 60%-75% and the rest in debt products or cash.Some balanced mutual funds are considered to be more aggressive in that they have a larger equity component.For example, HDFC Prudence keeps its equity allocation around 75% in most of the cases and rest 25% in debt or cash. However,others like Reliance Regular Savings Balanced are considered less aggressive and have a lower equity component around 60-65% .

From the taxman’s point of view, any mutual fund which has equity component more than 65% is considered as an “Equity Fund” and so long term capital gains from sale of balanced mutual fund units too are exempted from tax after one year just like in the case of pure equity mutual funds . Read more of this post

Filed under Paper Assets, Theory Tagged with asset allocation, balanced fund, debt, equities, equity funds, HDFC Prudence, HDFC top 200, long term capital gains tax exempt, long term investment, lump sum investment, Mutual Funds, postaday, rebalancing portfolio, Reliance Regular Savings Balanced, SIP

……. and the Pursuit of Happiness

January 18, 2012 Leave a comment

wealthymatters.com The Institute of Economic Affairs,UK, has brought out an interesting report recentlycalled ‘……and the Pursuit of Happiness’.You can download your copy from here: http://www.iea.org.uk/publications/research/and-the-pursuit-of-happiness

Following are the excerpts I found particularly interesting:-

‘Contrary to popular perception, new statistical work suggests that happiness is related to income. This relationship holds between countries, within countries and over time. The relationship is robust and also holds at higher levels of income as well as at lower levels of income. This calls into question the assertion that people are on a ‘hedonic treadmill’ that prevents them becoming happier as their income rises beyond a certain level of income.’ Read more of this post