What the new Vikram Samvat year 2071 holds for us.

Season Greetings

The new govt. has delivered more than expected impetus to our slowing down economy to turn it into recovery mode. GDP projections nos. is being upgrade from 4.5% (six month back) to 5.75% to 6% for the current Fin yr. ending March 31 2014.

Apart from investments commitment from Japan, China, U.K. & USA other countries are coming forward to explore abundant opportunity (minus redtapism) provided by this govt.

Deregulation of diesel prices is one big decision taken in right direction. As a result it’s not only being cheaper by 6% to 8% but has also brought down subsidy by Rs. 15000 cr.

Government initiates coal reforms with ordinance to facilitate e-auction of coal blocks for private cos; also opens door for commercial mining by private players in future.

Government panel asks the Department of Telecom to work out a mechanism for allocating airwaves to successful bidders within 90 days of payment.

The multi-billion exploration auction of Eastern Ghat has again taken centre stage. Once successfully through will itself be in position to add another couple of percentage in GDP nos.

From investor perspective, all these initiatives are going to be generating very healthy returns from the equity market, if one decides to stay invested at-least, for next 4-5 years. On the other hand debt fund will continue delivering handsome post tax returns for investment horizon of more than a year.

Regards

How to maximize your Tax savings Under Section 80C of Income Tax Act of 1961

TOTAL REBATE ALLOWED IS 125000

(I)                100000 through investment qualified under section 80C as defined below

Options:

·                  Market Linked – ELSS / ULIP

·                  Fixed Income - PPF / NSC / Senior Citizen Savings Schemes / EPF / NABARD BONDS / Tax Savings Fixed Deposit.

·                  Others – Life Insurance Premium /Repayment of House Loan (Principal)/Children Tuitions Fee’s

Details also available at our website www.i2isolutions.org/tax_savings.htm

TAX SAVINGS OPTION RECOMMENDED UNDER 80C FOR REBATE OF EQUAVALENT AMOUNT UPTO ONE LAKH UNDER 80C OF INCOME TAX ACT 1961

1-      FIXED DEPOSITS – Investment tenure 5 years

National Housing Board (NHB) Suvridhi Tax Savings (Under 80C) Fixed Deposit Scheme

Investor Category	Period	Interest Rate(%.p.a)	Maximum Deposit	Maturity Value	Yield (%.p.a)	Effective Annual Yield(%.p.a.) –including Tax Saved in Highest Slab of30%
General	60 Months	9.25	100000	157970	11.59	17.77
Sr. Citizen	60 Months	9.85	100000	162670	12.53	18.71

2-      Mutual Fund – Investment tenure 3 years

 Tax Savings Equity Linked Savings Scheme’s

Scheme 1 year 2 year 3 year AXIS EQUITY LONG TERM FUND 17.70 15.60 13.60

Performance Track Record of suggested scheme as on date.

(II)             Additional Rs. 25000 through investment in RGESS qualified under section 80CCG

RAJIVE GANDHI EUITY SAVINGS SCHEME Under section 80CCG

·         Investment Tenure 36 months

·         One time investment opportunity in life time for additional exemption of Rs. 25000 income(over & above one lakh) if the applicant has never traded Shares via DMAT account & has gross Annual Income less than 12,00,000/-

·         The exemption is available to invest up to Rs.50000 to get rebate of Rs. 25000.

·         Eligible Scheme available only at the moment is HDFC RGESS from HDFC Mutual Fund & LIC NOMURA RGESS from LIC Nomura Mutual Fund

What is - U.S. Fed Tapering - very much in news in recent times

An interesting story will make it understand better…

Mr. Chintamani owns a small sweet shop in Delhi. His wife Bhagyawanti is a home maker and takes care of their two kids Arnab and Barkha who study in college.

Chintamani with great difficulty sets aside Rs. 15,000 a month for household expenses. This amount is sufficient to run the house but not enough to fulfill Arnab and Barkha's growing needs of entertainment and extra-curricular activities.

Arnab and Barkha remain dejected and left out from their peers as they don't have enough pocket money to spend.

Chintamani cannot withstand his kids' sadness and decides to increase the monthly household expenses. He sets aside an additional Rs. 5,000 a month as pocket money as long as the kids behave well, study diligently and score good marks in exams. He wanted to fulfill all their wishes and hobbies even though he had to put an extra effort to earn that incremental Rs. 5,000 every month.

This made Arnab and Barkha happy as they could now do everything that their friends could do or afford. This positive energy reflected into their studies and they scored well in their college exams.

Chintamani and Bhagyawanti knew that their kids are now ready to take on the challenge to earn their own livelihood and become financially independent. So, they decide to gradually reduce Arnab and Barkha’s pocket money by 5% every month till the time they find a part-time job for themselves of their choice.

This process of gradual roll back of pocket money is similar to tapering under way by the U.S. Federal Reserve (popularly known as Fed).

What is tapering?

Tapering refers to the reduction in the quantum of the bond buying programme by the Fed.

The bond buying, also known as the Quantitative Easing (QE) program was launched to kick-start hiring and growth in the US economy. The Fed's first QE program was launched in the midst of the 2008 financial crisis.

But why is Fed tapering now?

The Fed's decision to taper its massive bond buying is due the recovery in the US job market and the confidence that the economy will continue to grow inspite of the tapering.

Hope the above explanation would have given you an idea of the Fed tapering.

Excerpts from TATA MUTUAL FUND. Just name of the character has been changed…

Why do we accept possitives immediately while try to find loopholes in negative news...ANY ANSWER ?

Our friend Mr. Herman Brodie  owner of cognitrend Gmbh, Prospecta Ltd explains its better.. thought of sharing with all of us.

Sure...cognitive dissonance. Leon Festinger had the answer to that in the 1950s

On the contrary, cognitive dissonance explains why investors cherry-pick information to justify decisions they have already made. It explains why the "Wall of Worry" exists. It even provides an explanation for the disposition effect. 

My experience with investment teams is that as soon as they learn about how cognitive dissonance manifests itself in decision-making and how to recognize it, the subsequent group discussions change. Decision makers become more critical and more willing to challenge one another. If I had 30 minutes to teach an investment team just one behavioural topic, it would be about cognitive dissonance.

Your opinion on same if any is welcome…