IIFL NCD - GRAB THIS LUCRATIVE OFFER

The carnage in the Equity, Gold, Real Estate and even the Debt markets have shattered investors faith.
They are now looking at "fixed" returns and to cash in on the same, India Infoline Limited's NBFC subsidiary, India Infoline Finance Limited (IIFL) has launched a Public Issue of Secured Redeemable Non-Convertible Debentures (NCD) of Face Value of Rs.1000/- each aggregating to a total of Rs.1050 crores today.
The NCD will carry a coupon rate of 12% interest annually.
The face value of each NCD is Rs 1,000 and the minimum application amount is Rs 5,000 (5 NCDs). The NCDs have an investment horizon of 3 years and 5 years. Allotment is on a first-come-first-served basis except on the last day where, in case of an oversubscription, the allotment would be made on a proportionate basis. The issue will close on October 4, 2013.
Investment can be made for a period of 3 years and 5 years.

MERITS :
1. This issue, unlike its 2012 avatar, is SECURED. So, in case of company going bust, your money is SAFE. Consequently, the claims of NCD holders will be superior to the claims of unsecured creditors (like company FD holders, which are unsecured deposits). The NCD is secured and shall rank pari passi with other credit holders. Even Banks and Company FDs do not offer this safety.

2. Rating too has gone up to "AA" from CARE, implying high degree of safety.
3. No TDS will be deducted if you invest via Demat, thus investor will get full cash flow of 12%. Though, you should note, the interest should be added to your overall income and will be taxable as per your tax slab
4. Good Liquidity due to listing of the NCD in both NSE and BSE. Though, NCDs are not traded regularly, IIFL's previous NCDs have good trading interest.
5. Monthly interest payment available, wherein annual yield works to 12.68%.
6. Company cannot prematurely redeem the NCDs as there is NO Call and Put option.
7. Company is in excellent financial condition and has among the lowest NPA in the industry. In fact, the NPA is progressively getting lower and lower from 0.36% in FY11 to 0.17% in FY13.
8. If you sell at the stock exchange after 12 months, your gains will be treated as long-term capital gain and will be taxed at 10 per cent without indexation. If you sell in less than 12 months, your gains will be treated as short-term capital gains and taxed at the marginal income tax rate.



DEMERITS :
1. For someone in the highest tax bracket, the yield will reduce to a paltry 8.4% from a lucuratively attractive 12%. They are better off investing in Tax Free Bonds of HUDCO which opens on the same day. However, please note that IIFL is for a maximum of 5 years, whereas HUDCO Tax Free bonds, your money could be locked for 10,15, 20 years.

CONCLUSION :
The company enjoys sound fundaments with low NPAs and High Capital Adequacy Ratio, which means that the Company has higher amount of capital held as compared with the value of risky assets

If you are a HNI and fall in the Highest Tax Bracket, you can skip the issue and look at HUDCO Tax Free bonds.
If you are a retail investor then, you may go for the Bonds in moderation.
Senior Citizens too can take advantage of the high interest and lock in at these rates and are advised to go for Monthly Interest Option.
Unless you have a monthly commitment or are sure of reinvesting the Monthly interest you receive, I strongly advocate investors to go for Annual Option.
SHOULD YOU INVEST??

YES!!! OF COURSE!!!
Even for a risk-averse saver bitten by ever falling Bank FD rates, NCDs are great alternative. After all, a three-year fixed deposit will earn you 9-9.5% interest, but a three-year NCD will fetch 12%, a clear gap of 250-300 basis points.
Investors can definitely take up the offer as they not only offer Returns higher than Bank FDs but their money is also secured by the Assets of the Compnay.
The markets are volatile, be it Equity, Gold, Debt, Real Estate. And among Fixed instruments, IIFL NCD is an attractive offer which retail investors should seriously consider investing.

Not only will you be locking your returns at a higher rate than a Bank FD but also liquidity is easy due to its trading in the Stock Markets!!! If you want to get out, you can get out any time.

Best of luck,
Srikanth Matrubai



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ASSOCHAM MEET

Recently, ASSOCHAM arranged a Conferance on Investor Education.
The Conferance was held at the Bharat Hotels' THE GRAND ASHOK. (now the LALIT ).
The conferance was attended by Shri. Salman Kurshid, besides other dignitaries.
some clips from that meet.

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INVEST IN GOLD THE BEST WAY.....

While there are many ways to invest in Gold, the Mutual Fund route is the best due to transparency, low cost, liquidity, tax benefits and more.

The Ever rising Gold and Silver prices has triggered a rush to invest in these commodities and let us see which is the best way to make maximum returns through the mutual fund route.
Before that, it would be worthwhile to note what experts have to say on the future Gold outlook.

While everyone knows about the Gold ETFs like Reliance Gold Fund, Gold Bees, etc.(Gold ETFs are funds which track the value of Gold by investing in Physical Gold),  not many investors seem to be aware the difference that two Gold Funds have.
These two funds, namely AIG World Gold Fund and DSPBR World Gold Fund are actually Fund of Funds which invest in Gold Mining Companies Worldwide

The DSPBR World Gold Fund invests in the units of Black Rock world gold Fund whereas AIG World Gold fund invests in Falcon Gold Equity  Fund.
The point to be noted here is, that Gold Experts are unanimous in their opinion that the mines in South Africa are saturated and over a period of two-five years, may lose their dominance due to high cost of production.
This point makes it clear that for a LONG term investor, AIG World Gold Fund may give better returns than DSPML World Gold Fund.
Note, the Falcon Gold Equity Fund has been awarded THE BEST FUND for the THIRD Consecutive year at the Lipper Fund Awards 2011.
Another very good way to get a Gold Exposure is through Reliance Gold Savings Fund.
For more details on this you can click here………
http://goodfundsadvisor.blogspot.com/2011/02/reliance-gold-savings-fund.html

The price correlation between the Gold prices and the NAVs of the AIG/DSP World Gold Fund is not direct and tend to vary.
This is because these Funds invests in Equities of Gold Mining Funds and tend to have a time lag between the Gold price variation and Stock price variation.
These stocks normally rise than Gold price rise and fall steeper than Gold price fall.
But, regarding their Gold Fund, the performance is linked to Falcon Gold Equity Fund which in turn invests in equities of Gold Mining companies.

The difference between the DSP Black Rock World Gold Fund and the AIG World Gold Fund is this.
AIG World Gold Fund typically invests in Gold Mining Companies based in Canada and prefers mid caps.
DSP World Gold Fund typically invests in Gold Mining Companies based in South Africa and prefers Large Caps.

So, obviously, a SIP investor would make more money in AIG World Gold Fund as its NAV is more volatile.
Finally, to sum up,
My vote for the BEST way to make gains through Gold investing is through a SIP investment in Reliance Gold Savings Fund.
Best of luck,
Srikanth Matrubai

Read more: http://bizcovering.com/investing/investing-in-gold-the-mutual-fund-way/#ixzz1KAMMxVMK

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GOOD TIME TO BUY SILVER

Strong reason to buy Silver.

Silver has been a blockbuster for more than a year now. It has doubled in comparison to its more illustrious cousin, Gold.

My personal feeling that Silver will continue to outperform Gold and I have my reasons for the same.


11 important Reasons why Silver trade will out perform Gold

1) Shift in Monetary reserve policy to Gold & silver from Dollars

2) Commodities are in a secular long term bull market, More so Gold, Silver
Individuals, Central banks & governments across the globe are shifting their reserves in to tangible assets like Gold & Silver

3) Silver production deficit for straight 15 years now!
From last 15 years silver usage in Electronic & Electrical industry has hot up many fold & still the supplies are no where near demand

4) Gold demand almost near to its supply – Silver down from 2 billion ounces to 367 million ounces / annum
2 billion ounces in 1990 & still the same in 2010 – Silver 2 billion ounces in 1990 & 367 million ounces in 2010 in-spite of silver being mined 8 times more than gold !

5) Silver is severely under valued
Historically silver is greatly undervalued compared to gold, silver prices have not kept rising to their historic high’s of 52$/oZ even when adjusted against inflation for several decades now

6) Gold silver ratio is unrealistic & is set to rise
Current Gold silver ratio is @ 1/45 which experts like UBS, Berkshire Hathway, and David Morgan Etc believe in the next decade the ratio will come down to between 1/16-1/10 of the gold prices

7) Silvers real value is far more than what it really is today
Purchasing power of dollar through 1913-2010 has almost gone down 95% as a result dollar denominated ratio for gold & silver has disproportionately grown hence the rise in Gold & silver prices, but silver is far too behind even @ of $ 29/oZ

8) Silver yet to reach its peak price: Silver’s historic high was $ 52 / oZ during 1980, if this price were to be adjusted against inflation over these 30 years; silver price should be $ 153/ oZ ! @ $ 29 current market price, prices of silver has a long way to go!!

9) 51 country heads across Europe & South American counties have agreed to
Make silver as their Money: Economic crisis across Europe & USA has made several
Country heads Opt for time tested real money reserves in the form of Gold & Silver

10) Ratio of silver recycling is far too less compared to Gold: Digital technology is
Creating unprecedented demand for silver which cannot be recycled, almost all digital
Technology products use silver as one of the main component.


11) China factor: China is discreetly converting its several 100 billions of dollars
In to Gold & Silver & nearly 50% of silver is consumed by its industries





While there are very few opportunities to invest in Silver through mutual funds.

For Gold you have gold ETFs and also Funds like Reliance Gold Savings Fund, etc, but for silver there is virtually no option.



Birla Precious Metal Fund is one option where you can get a Silver Exposure.

More options are sure to come, especially in the wake of the sizzling rise in Silver price.



Regards,

Srikanth Matrubai





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INVESTOR AWARENESS SEMINAR

Srikanth Matrubai recently arranged a Investor Awareness Seminar at KSCA Chinnaswamy Stadium.

The Presentation was by Srikanth Matrubai and NJ South Zone Mr.Tushar Bhajantri.

The Meet was primarily targetted towards newcomers to the Investment World and was aimed to dispel myths regarding Mutual Fund Investment.

To begin with, Srikanth Matrubai spoke on the importance of saving and ensuring returns being above Inflation Rate at the Least.

He also emphasised the virtues of "Systematic Investment Plan" and extolled the investors to invest through SIP to 'SLEEP IN PEACE'.

He warned investors not to fall in the mode of 'INVEST AND FORGET".

Regular review of a Portfolio is a must, even if the Fund has a 5 star rating.

Click here…

http://goodfundsadvisor.blogspot.com/2010/11/little-drops-of-water-make-mightly.html

Thereafter, Mr.Tushar took over and created a lasting impact with his interactive question and answer session. He emphasised that 'investors should have a Definite Goal and think only about Long Term".

To see the video click here…….

http://www.indyarocks.com/videos/Tushar-Sir-making-Presentation-2259135

This was followed by an interactive session on mutual funds, insurance, savings and other avenues.

The Experts, besides Mr.Srikanth Matrubai and Mr.Tushar, included representatives from Birla Mutual Fund, DSP Black Rock Fund, Religare Mutual Fund, Axis Mutual fund, Escorts Mutual fund, HDFC Mutual Fund, L&T Mutual Fund, DWS Mutual fund, etc.

The Event was a grand success with a Full House of over 75 attendees.

In between, in his true witty style, Srikanth Matrubai held a Quiz contest on general investment matters like Inflation, etc  and "Prizes" were given to winners. 

After the meet, investors enjoyed the Dinner.

Video link…

http://www.indyarocks.com/videos/Investors-enjoying-Lunch-2259123

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All you wanted to know about Public Provident Fund

A Guest asked :

Can i open a PPF account for me and my minor daughter (i will be the guardian) at the same time? This is just for investment purposes and not for any tax rebates.

REPLY :
Dear Friend, u can open PPF account for you as well as your Daughter. Even if you want to claim Tax benefit you can claim a maximum of  Rs.70K between these 2 accounts.

In fact you can open total 3 PPF accounts.
1 for yourself
1 for your wife
1 for your Daughter
Try to Avoid Investment in PPF.

Start SIP of Rs.1000 P.M.or more in any Equity / Balance Fund like DSPBR Balance Fund/Religare Business Leaders Fund/HDFC Prudence Fund.


Best of luck,
Srikanth  Matrubai


LET US STUDY IN DETAIL ABOUT PPF:

Conservative investor’s first choice has been the Bank Deposits and the Public Provident Fund (PPF). This is due to their guaranteed returns even though these are lower than Mutual funds.
PPF is the most risk free form of investment in India and is quite tax efficient too. And, so, it is not surprising that this is the most popular investment option across the earning class.
Self employed persons who are not covered by Employee Provident Fund should seriously look at PPF as a retirement planning option.

PPF can be opened in any Post Office or with any branch of the State Bank of India and its associates.

The Effective duration of a PPF account is 15 years plus the year of Account opening, so 16 years.


Tax Angle:
1)All investments in PPF (subject a ceiling of Rs.70000) is eligible for Tax Rebate under Sec80c
Contribution to non-earning spouse and/or minor child will be clubbed as your contribution under Sec 64.

2)Though the term of PPF account is 15 years, the contribution made in 16th year (even on the last day) also qualifies for section 80C tax benefit

3)The New Direct Tax Code has recommended that PPF withdrawal on maturity will attract Tax. Not sure, whether this will be recommended. If yes, returns will be drastically affected. But thankfully, the Tax Code has also clarified that only new contributions made on or after the commencement of the code will be subject to tax. So, those withdrawing before 31March 2011 stand to gain.
4) The interest earned in the PPF is exempt from Tax.



Who can invest?
PPF can be opened in your name, your spouse and even children. It can be opened by an individual on behalf of a HUF. Bachelor or married, dependent or otherwise. The only restriction is that total aggregate contribution in all the PPF accounts should not exceed Rs 70,000 in a financial year (i.e. 1st April to 31st March)(The limit of 70k is applicable to individual and minor combined together. Spouse and children who have attained majority are excluded from the 70k limit.

Non Resident Indians may also open a PPF account out of the funds in the applicant's non-resident account in India in banks subject to the following conditions -

The account is marked as non-resident account
All credits therein or debits thereto are made subject to the same regulations as are applicable to non-resident accoun

How to operate?

The maximum you can invest in the PPF in a financial year is fixed at Rs.70000/-. You can contribute as many times you want in a year. The minimum is Rs.500 and the amount need not be fixed and can vary. It must be ensured that your instalments does not exceed 12 in a year.

A minimum of Rs.500 must be compulsory be invested/contributed to keep the PPF account active.


ON MATURITY :
If you do NOT require the PPF money immediately after the mandatory 15 years, you have 3 options :
1)Close the PPF account and withdraw the entire amount
2)Continue the PPF account with fresh subscription. This however, compulsory extends the PPF for another 5 years. Note, you can still have access to 60% of the accout balance at the commencement of each year during this 5 years. And most importantly, you will continue to get 80c benefits.
3) Continue the PPF account without making any further contribution and continue to earn the same of interest. This can be carried for a indefinitely.
If you choose this option, you can withdraw the entire PPF amount either in a lump sum or in installments. However, you’re not allowed more than one withdrawal in a financial year and the balance will continue to earn interest.
4)At the time of withdrawal, if the PPF account holder has become a major, then the proceeds will be deemed as his income and taxed accordingly.







Points to Note :
1) Never forget to appoint a nominee. This applies to all your financial investments, let it be PPF, Mutual Funds, etc.

2).Invest regularly (if possible, monthly) and do not wait for the year end to invest in the PPF.

3) Invest before 5th of every month. Interest is calculated on the lowest balance between the close of the 5th day and the end of the month.

4) Let the money grow. Even though PPF allows Partial Withdrawal from the 7th year and also facility of loan from the 3rd-6th year, try to avoid this unless it is inevitable.

5) A monthly contribution of 5000 in the PPF account for the period of 35 years, will get you 1, 07, 87, 000. Yes, you will become a crorepati.


For calculation of interest and maturity value of PPF click here """""http://www.themoneyquest.com/2009/09/ppf-calculator-interest-maturity-value.html"""

6) PPF ACCOUNT CANNOT BE ATTACHED BY COURTS EVEN IN CASE OF DEFAULT/BANKRUPTCY. Your PPF is always for YOU.

7) Interest on the PPF is currently @ 8%. This is compounded annually. Interest is calculated on the Lowest Balance between the 5th day and the last day of the Calendar month and is credited on 31st March every day.


LOOK AT OTHER OPTIONS TOO:

But, whichever investor you are, if the real returns post inflation is a pittance than it makes little sense to invest in PPFs or FDs.Liquidity is severally affected in PPFs as your money is blocked virtually for 15 years.If you are very conservative investor and do not want even a iota of risk and prepared to forgo returns for sake of safety, you can also look at NSCs as NSCs have a lower lock in period(6 years)  and interest is compounded half yearly increasing the effective yield. However, the BIG factor to note is that NSC returns are taxable. If you are in non-tax bracket and very conservative investor, you can go for NSC rather than PPF.
Also, the interest rate on the PPF is NOT FIXED.

Investing through the time tested way of SIP and being patient ensures you excellent real returns.

12% is a very realistic return that one can expect from Mutual Funds. So, if you instead of PPF invest in Safe/Conservative/Defensive Mutual Funds, then @12%, the difference of your PPF investment of Rs.6000pm,will give a huge positive difference of Rs.8,16,917!!!!!!.

PPF = 2,038,671

Mutual Funds = 2,855,588

Moreover, I have assumed Mutual Fund returns at a very conservative 12%.

The Choice is yours.

Regards,
srikanth matrubai
--

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DSP BLACKROCK QUIZINDEX

The DSP BLACKROCK Mutual Fund people recently organised a Get together for Independent Financial Advisors of Bangalore in a star hotel. The programme was well organised and was hosted by the ever smiling Harsha Bhogle.

Thankfully, the Quiz was not restricted to Mutual Funds but included topics ranging from Cricket, Movies to even Politics.

Harsha Bhogle ensured that there was never a dull moment.

Here are some photos of the event.













Harsha Bhogle was at his wittiest best. See the Video here..........

http://www.indyarocks.com/videos/Harsha-Bhogles-jokes-415794

Yours Truly answered quite a few of the questions posed and Harsha even pulled my leg saying "anyone can answer this question expect Mr.Srikanth".









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