Housewives!! Best Time to put your Hidden Savings to Work!

Housewives!! Best Time to put your Hidden Savings to Work!
by Nutan Gupta 11/10/2016

Attention! All the husbands in India are the happiest people since the last two days. After the news broke out that the denominations of Rs. 500 and Rs. 1,000 will no longer be considered as a legal tender, husbands can finally get to know about all the money their wives have hidden from them and saved over the years. Now, this is something very special about India. No matter what your age is, Indian women have this habit of saving money, not in bank accounts or mutual funds, but in their cupboards!

As soon as we saw this announcement on the television, the first question that my father asked my mother was, ‘Kitne paise hai humare cupboard mein?’. Though all of this may sound funny, the truth is that all this money will now be infused into the banking system or will be invested in the right direction.

The Government has clarified that it will take a note of deposits in bank accounts over Rs. 2.5 lakh. Any deposits lower than Rs. 2.5 lakh will not come into scrutiny. So, women who have up to Rs. 2.5 lakh of savings have an option to deposit their money in the bank. However, women who have saved over the years and have more than Rs. 2.5 lakh will have to divert their money in the right direction. This money can be invested in equity mutual funds and liquid funds. Equity mutual funds depend upon the performance of the equity market. In the past, equity mutual funds have given returns of 12-14%. Liquid funds are debt mutual funds that invest in very short-term instruments — commercial papers, treasury bills, certificates of deposit, and so on for a tenure of 91 days. The return given by liquid funds is 7-8%. On the other hand, a savings bank account gives a return of 4%. Clearly, there is not point parking your money in the savings account. It is always better to park your money where you get a good rate of return.

Its time that housewives move over the traditional way of saving money in their cupboards and make their money earn some good return for them in a smarter way!

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All About Sovereign Gold Bond Scheme

All About Sovereign Gold Bond Scheme
by Divya Nair 24/10/2016

If you are one of them who consider gold as a necessary investment, gold bond is for you. Gold bonds have all the qualities of gold investment except for shine of gold. These are backed by the government of India and undoubtedly are very secure.

What Are Sovereign Gold Bonds?

Sovereign Gold Bonds (SGB) are substitutes for holding physical gold. These are issued by Reserve Bank Of India (RBI) on behalf of government of India. When people invest in gold bonds, they get a paper against their investment instead of a gold coin or a gold bar. Sovereign Gold Bonds are also available in digital and demat form, and can be used as collateral for loans and can be sold or traded on stock exchanges.

Next Tranche Of Sovereign Gold Bonds From October 24

Government of India is launching Sovereign Gold Bonds 2016-17 - Series III from October 24 - November 2, 2016 for subscription. The bonds will be issued on November 17, 2016. In the sixth tranche of the gold bond, people can buy securities worth up to 500 grams.

The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and stock exchanges; NSE and BSE.

Features Of Sovereign Gold Bonds 2016-17 - Series III:

Maximum Limit:

The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.

Eligibility For Investment:

Gold bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.

Tenure

The tenure of the bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.

Joint Holder

In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

Issue Price

Price of bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period. The issue price of the Gold Bonds will be ' 50 per gram less than the nominal value.

Payment Option

Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.

Redemption Price

The redemption price will be in Indian Rupees based on previous week's (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.

Interest Rate

The investors will be compensated at a fixed rate of 2.50%/annum payable semi-annually on the nominal value of investment.

Benefits Of Investing In Gold Bonds:

Available both in demat and paper form

  • Value of your investment in gold bond increases with the increase in gold prices

  • Gold bond gives a better return than the physical gold as it gives interest as well

  • No worries about safekeeping as a gold bond can be kept in digital form

  • No expense of locker as gold bond can be kept in house or demat account

  • Nil chances of cheating or impurities in gold bond. Investors would always get 100% pure gold bond, which may 100% value

  • Bonds can be used as collateral for loans

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Top 2 ELSS Mutual Funds to Invest This Diwali

Top 2 ELSS Mutual Funds to Invest This Diwali
by Nutan Gupta 25/10/2016

The auspicious festival of Diwali is round the corner. This Diwali, we give you top 2 ELSS mutual fund schemes to invest in, which will help you save a lot of tax.

Axis Long term Equity Fund

Axis Long Term Equity Fund aims to generate long term capital growth from a diversified portfolio of equity and equity related securities. The scheme invests in companies with strong growth and a sustainable business model. The fund is managed by Jinesh Gopani since April 2011. The fund has given returns of 19.09% since launch. The fund has a total of 39 stocks in its portfolio. There is no exit load associated with this fund. The fund has outperformed its category returns over a 2-year and 3-year time frame.

Trailing Returns (%)
Fund Category
YTD 7.24 12.69
3-month 2.03 5.85
6-month 10.33 15.76
1-year 5.56 11.29
2-year 14.6 13.74
3-year 28.61 23.75

Birla Sun Life Tax Relief 96

Birla Sun Life Tax Relief 96 seeks long-term capital growth and invests approximately 80% of its assets in equity, while the balance would be invested in debt and money market instruments. The fund is managed by Ajay Garg since October 2006. The fund has given returns of 25.97% since launch. Moreover, if an investor chooses to redeem his investments, there is no exit load that he has to bear. The fund has outperformed its category returns over a 2-year and 3-year time frame. The fund has a total of 51 stocks in its portfolio.

Trailing Returns (%)
Fund Category
YTD 10.11 12.69
3-month 5.06 5.85
6-month 12.83 15.76
1-year 10.95 11.29
2-year 17.80 13.74
3-year 27.37 23.75

Axis Long Term Equity Fund and Birla Sun Life Tax Relief 96 have the capability of generating higher returns over a 3-year period. We wish you a very Happy Diwali & Prosperous New Year!

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Liquid Funds Or Savings Bank Accounts? Where To Park Your Surplus Funds!

Liquid Funds Or Savings Bank Accounts? Where To Park Your Surplus Funds!
by Divya Nair 25/10/2016

Both savings bank account and a mutual fund liquid account are considered as ideal routes to park money for a short period of time. Each one of us want some amount of idle money for our day-to-day expenses. But it is critical to determine how much money is sufficient to meet our short-term needs to enable our idle money to earn returns for us. Without a proper analysis, both liquid funds and savings accounts might look alike. But if looked closely, there can be a number of significant differences between the two that may give you solid reasons to choose one over the other.

The first step towards evaluating these two is to understand what exactly they are.

What Are Liquid Funds?

Liquid funds are debt mutual funds that invest in very short-term instruments — commercial papers, treasury bills, certificates of deposit, and so on for a tenure of 91 days. As the term implies, liquid funds are highly liquid. A person can invest today in liquid funds and can redeem the money tomorrow. There may not be any exit load and the amount will be transferred into his bank account.

What Are Savings Accounts?

These accounts are one of the most favored money saving instruments among Indians. People park money in a savings account for short-term in order to use it for day to day needs. Savings accounts are maintained by banks and post offices where people have the flexibility to deposit and withdraw money at any time.

A Relative Comparison Between Savings Accounts And Liquid Funds -

Factors Liquid Funds Savings Funds
Rate of Return 7-8% 4%
Tax Implication Short-term capital gains tax is levied based on investors’ applicable income tax slab tax rate Interest earned are taxable as per investors’ applicable income tax slab
Ease Of Operation No need to go to a bank to get cash. If there is some amount that needs to be paid, it can be done online Money gets deposited to bank account first
Suitable For Who want to invest their surplus to earn higher return than saving account rates, but seek high liquidity Who want to just have a storage to park money

Conclusion - While it entirely depends on investors’ preference whether to go for liquid funds or sticking to their savings bank accounts, shifting their idle money in savings account to higher returns yielding liquid funds can always be a smart decision.

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What do you mean by Support & Resistance in a Technical Analysis Chart?

What do you mean by Support & Resistance in a Technical Analysis Chart?
by Nilesh Jain 29/10/2016

Support

A straight line that connects three or more data points of a stock’s closing price or low price is called a support.

Support is the point where buying pressure is more than the selling pressure or you can say demand is greater than the supply. When stocks trades near support level it can be utilized as buying opportunity by keeping support as stop loss for your trade. Support is the psychological point where traders are willing to buy on the expectation that the stock price won’t drop more.

Resistance

Resistance is the point where selling pressure is more than the buying pressure or you can say supply is greater than the demand.

Resistance is the psychological point where traders are willing to sell with the expectation that the stock price won’t increase more. It is also considered as ceiling because these price levels prevent the stock from moving the price upward. When the stock trades near resistance level, trader/investor can liquidate his buy position or he can use this as a selling opportunity by keeping the resistance line as stop loss.

Note: Once a resistance or support level is broken, its role is reversed. If the price falls below support level, that level becomes resistance, if the price rises above resistance level, that level will act as a support level.

Support & Resistance in Technical analysis of stocks

Support and resistance in technical analysis of stocks

As you can see from the above chart, the stock of DWARKESH has taken a support at around 182 levels and resistance at the level of 216.

Rules to determine importance of Support & Resistance

1. The more number of times the price halts or bounces from a particular price, the greater is its importance as support & resistance level.

2. The greater volume traded at a support & resistance level, greater is its importance.

Summary:

Support and Resistance are areas on the chart where price reverses temporarily or permanently. Hence it can be utilized to initiate buy and sell positions subsequently.

Support level occurs when the belief is that price will not fall further, while resistance level occurs when the belief is that the price will not move higher.

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Popular Technical Analysis Charts

Popular Technical Analysis Charts
by Nilesh Jain 29/10/2016

1. Line Chart

A single line that connects closing price of stock is called Line chart. It is the simplest type of chart. The line chart can be plotted for different time frames; hourly, daily, weekly and monthly. The advantage of line chart is that it presents a generic trend of a specific security.

Technical Analysis Charts- Line chart

Technical Analysis Charts - Line chart

2. OHLC Bar Charts:

Technical Analysis Charts- OHLC Bar Charts

Technical Analysis Charts - OHLC Bar Charts

As the name implies, bar chart consists of bars. These bars are vertical lines with the bottom representing the low price (L) and top representing the high price (H). The bars also have a horizontal dash on both the sides of the vertical line. The open price (O) is shown on the left side, while the close price (C) is on the right side. OHLC is more accurate than line charts because they show the price movement for the day. This helps traders to predict the day’s trend.

For example - if open = 47, high = 51, low = 46 and close = 50, it will be a Bullish candle represented in green as follows:

Likewise, if open = 50, high = 51, low = 46 and close = 47, it will be a Bearish candle represented in red as follows:

3. Candlestick Chart

In a candlestick chart, candles can be easily identified as bullish or bearish candle usually represented by green and red or black and white colors. The colors can be easily changed as per your convenience.

Technical Analysis Charts- Candlestick Chart

Bullish Candle:

For example- If open = 47, high = 51, low = 46 and close = 50, it will be a Bullish Candle represented in green as follows

Bearish Candle:

Likewise, if open = 50, high = 51, low = 46 and close = 47, it will be a Bearish candle represented in red as follows: