It is a unique initiative and readers have called it an innovative product.

RupeeCamp is not just about education and financial literacy. It’s totally outcome oriented where you will take financial decisions and set up your financial plan. Check out the website for more details

RupeeCamp details are embedded below and you can download the details. I will be happy to answer questions.

I would be delighted if you decide to attend the first RupeeCamp at Mumbai. Please send me a mail to me on ranjan@ranjanvarma.com for a special discount coupon code. Thanks.

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Blogger friend Manish Chauhan who writes a blog on creating awareness among Indian investors on the importance of personal finance has a thoughtful post on the Four Pillars of Success for a Strong Portfolio.

Manish writes:

There are some good traits of portfolio which makes it better than others . A good and strong portfolio has some strong elements or parameters which it must meet . These are the Pillars for a strong Portfolio or Investments.
1. Capital Appreciation
2. Liquidity
3. Risk Management
4. Goal Oriented

Lets take each of these points one by one :

Capital Appreciation

This is one of the biggest reason to invest.Isn’t it very obvious? Yes , it is . But the main point is not just its growth in numbers but its real worth . We are talking about Post-tax and post inflation returns .

Liquidity

Another important aspect of a good portfolio is that its provide enough liquidity , so that in case of need , you can get the money .

What is Liquidity ? Liquidity is how fast and easily asset can be sold and you can get cash . For example Mutual funds and Shares are highly Liquid , If you have them and want to sell, you can get the money soon . Where as Real estate is not a Liquid asset . So if you need urgent cash , you might not find right price and or buyer.

Every portfolio must have some element of Liquidity, as per the requirement of the investor.

Risk Management

Every portfolio or investment must be to some level insured or have element of risk management

Goal Oriented

“A good investment is one which has a purpose”

Each and every investment should be done because of a strong reason . I see people who take Insurance policies to save tax at the last rush hour of the year !!! . Better loose the tax benefit and don’t take that policy . That kind of investment is nothing more than a waste or burden. On the top of it these people don’t even need insurance !!!

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Now, coming back to the question about the best retirement plan, the answer would be a combination of the following products:

Mutual Funds, Public Provident Fund, fixed deposit (FD) and fixed maturity plan (FMP), etc to build the retirement fund while you are young and can take risks.

As the fund grows, the investments can be deployed in avenues like FDs, senior citizens scheme, Post Office Monthly Income Scheme, MF investments with a systematic withdrawal option, FMPs in the dividend distribution mode and monthly income plans, etc to get periodic returns.

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While some of the charges may stick, it is striking that apart from the sophistication of new financial products and the growth in disposable income, there has been very little effort at boosting financial literacy levels.

Financial literacy, going by the definitions adopted in some of the major economies, would mean the ability or understanding to make informed judgments about money or financial services that is suited for one’s needs. Recently, IIMS Dataworks, which had carried out an income and savings survey, said in its report that unwillingness on the part of individuals to save was the most adverse of financial literacy markers. Its data showed that of the over 320 million paid workforce in India, close to 60% do not set aside any money to save in financial instruments, including gold and property.

The data provider and analyzer also said that there is a major misconception on the primary nature of an insurance product with most people viewing insurance products as an investment (read Ulips). Many investment advisers have indeed attempted to dissuade investors from this but the success of Ulips demonstrates that such isolated efforts have not worked.

India’s pensions regulator PFRDA had said a while ago that mounting a campaign across the country to inform and educate the vast number of citizens on the need to save for retirement incomes would be a priority. That may well kick off sometime. It may be facile to suggest that regulators in the financial sector that also have the mandate to develop markets besides oversight ought to do this. Some have gone one step further to say that these regulators should be tasked with this job considering that their corpus built through fees levied from intermediaries is substantial enough to run financial literacy campaigns.

Some regulators have done a bit of that but not sustained enough or across the country to leave any deep impact yet. Several years ago, when dematerlisation of securities, especially shares, was being encouraged, India’s leading depository, National Securities Depository (NSDL), did a lot of road shows to push the concept. It was also helped in this effort by a few depository participants.

A point that IIMS made, and rightly too, is that it cannot be left to the government or the regulator alone to carry out such literacy campaigns. Rather, in the short term, it is the financial services industry which should take on the burden of this responsibility. Players in the financial services segment, be it insurance, pensions or mutual funds, have a stake, selfish as it may sound, in this endeavour considering that a better informed citizenry can help them grow their business.

According to RBI data, as a percentage of financial savings, mutual funds constituted 7.7% of the financial savings of the household sector while insurance accounted for 17.5% and provident funds and pensions funds made up for 8.2% of the total financial savings during 2007-08. The predominant share fo savings was still parked in banks (55%). This goes to show how much ground providers of financial products have to cover.

One way out, IIMS said, would be to revisit agent training and the certification process of agents in retail finance sales by individual firms and the financial sector and by financial regulators. The aim would be to thus promote greater financial literacy among the agents themselves and ultimately firms would reap the benefit of higher sales.

Financial regulators could also perhaps nudge the players whose activities they police to start investing in this endeavour. The benefits to be had are enormous for the industry.

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Gains and losses are a part of the investment game. But while gains always bring a smile to the face, losses make one cringe. But then, losses are not too bad, especially if you know how to take advantage of them. Avoid the blues by proper tax planning.

As far as the capital market goes, if you are holding loss-making shares for over a year, it won’t be possible to set them off against any income. However, a slew of other financial transactions can used to reduce the tax outgo when losses are incurred.

For instance, loss on sale of property, dwindling salaries or falling profits – a simple rule for the taxpayer is to play off losses against gains. You can carry forward losses for eight long years. And even a fall in share prices or net asset values (NAVs) of mutual funds can be carried forward for four years.

In the income tax returns forms, there are schedules for showing carry forward of losses. The income tax (IT) department studies them, allows carry forward and adjusts the income tax to be paid in the current financial year. Besides this, here’s how you can book losses and bask in profits:

DWELL, ON THIS:
First, in case you have sold a house in distress, the loss incurred can be set off against the capital gains in the future. Also, a self-occupied property can also fall in value because the notional income is nil or zero and the interest payout on a home loan results in negative income. Further, one house’s income loss can be set against another’s income (profit), if there are two dwellings. However, remember to pay the municipal taxes without fail, or claims would be rejected. Where one property is rented out, you can set off the interest portion of the equated monthly instalment (EMI) against rent earned.

BUSINESS LOSSES:
If you have two businesses or more, it’s easy to neutralise losses from one against the other’s profits. In fact, the tax rules allow carrying forward of losses, with intention of setting them off against a new business too. The business income of spouse, clubbed together can be also used to offset business losses. If there are bad debts, like forfeiture of advance for raw material supply, you can classify them under losses.

OTHER INCOME:
It is essential that any losses under income form other sources is adjusted in this financial year. Otherwise, they would lapse. For example, an insurance agent can offset commission loss against rent from plot from land. Letting out machines or furniture, interest on bank deposit and examination papers checking are examples of income from other sources.

MAKE CAPITAL FROM FALLS:
If the value of shares, worth Rs 5 lakh fall to Rs 2 lakh after a sharp market fall, selling them at a loss of Rs 3 lakh would lead to short-term capital loss. This amount can be set off against any other short-term capital gains.

A word of caution – do not set off short-term capital losses against long-term capital gains. It would be bad tax planning. For instance, a short-term capital loss, say in shares, should not be set against long-term gains from mutual fund units or profitable listed shares. This is because there is no tax on them. However, if unavoidable, try to adjust them against long-term gains on gold, estate or debt mutual funds because they are taxed, but at a lower rate.

Don’t sell listed shares and equity mutual fund units, if you have held them for more than one year. Long-term capital losses in either category can’t be set off or carried forward, at all. However, long-term losses on debt funds and exchange-traded funds, if required can be set off against long-term gains from gold.

In case of fall in mutual funds after it has been held over a year:

Book losses and cut tax outgo by selling it to a relative, friend or spouse, at market rate at a loss. This can be shown and claimed as losses.

Debt funds, if sold after a year, attract 10 per cent capital gains tax (without indexation) or 20 per cent (with indexation). Holding them for five years and choosing the 10 per cent option would that reduces the tax outgo. (see table: Benefits of long term)
CUT LOSS THROUGH DEPRECIATION:
Make sure to claim depreciation, as they can be easily set off against your business profits. They would effectively reduce income from business. During the current financial year, if business earnings/profits are not sufficient, remember to carry depreciation forward for next assessment year. The advantage is that unabsorbed depreciation can be set off in subsequent years against any head, like house or income from other sources, and not just business alone.

Apparatus, fixtures or machinery – all suffer erosion in value and are covered. Computers (including software), cars and furniture also show depreciation. Mobile phones too can be placed under the depreciation head. The most important advantage is that any unabsorbed dip in depreciation can be filed, for years, and years. In fact, they can be carried forward, indefinitely. All other miscellaneous expenses like stamp duty, registration charges in house property transactions and legal and travel fees in share deals can be claimed when losses are set off or carried forward. Indexation is a great tool when selling property. It must be diligently calculated and availed to keep pace with inflation. It reduces the tax liability as well.

Always remember that there are tax laws that allow you to reduce the burden when you are in financial distress.The lesson here is simple – don’t get scared when losses are staring at you. Instead, work your way out of it.

Source: Business Standard

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It’s a story about a guy who got a car ( worth almost 7 Lakhs) out of just 70,000 which he invested a decade ago and left with some good money too!!On the contrary lets look at a person who buys a car on EMI. he pays almost 15% as interest. By making money work for you ..you tend to gain in the long run. But this requires tremendous patience and a systematic approach.

Check out the full story

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