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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RELIANCE GOLD SAVINGS FUND

NEW WINE IN NEW BOTTLE

Investing through SIP is advisable. Avoid LUMPSUM.





 Reliance has come out with a New Fund Offer, Reliance Gold Savings Fund.
Should you invest??. Let us check it out...



Reliance Gold Savings Fund is a Fund of Funds., meaning your money in this Fund will actually be invested in another fund, namely Reliance Gold Exchange Traded Fund. And, this Fund in turn invests in Gold.

An Exchange Traded Fund (ETF) cant be invested through Sip., and so is Reliance Gold ETF., and here's where Reliance Gold Savings Fund steps in.
You can invest as little as Rs.100 per month!!!


Positives :
No Demat Account.
Can invest as little as Rs.100 per month.
Long Term Capital Gains after holding period of 1 year compared to 3 years holding period in Physical Gold.
Very Liquid compared to Physical Gold.


Negatives :
Being a Fund of Funds, charges could be higher. Gold ETF charges 0.75% whereas Reliance Gold Savings Fund could charge upto 1.5%.
Equity has and will continue to outperform Gold in the Long Run.

RECOMMENDATIONS:
While "experts" are shouting about Higher Expenses, one should not forget that the Expense is fixed at 1.5% by SEBI and moreover, your SIP investment would be working at Rupee Cost averaging and will actually help you gain more than Gold Returns. (Just like a equity sip would give you more returns than a Lumpsum investment).

Prudent Asset Allocation will tell you that you should have a 5-10% Gold exposure depending on your profile and based on this, you should decide how much you should invest in Reliance Gold Savings Fund (or whether you should invest at all).

People in India tend to invest in Gold not as an investment, but more for creating a corpus for their children's marriage, for them, this Fund is God send.
I would still stick my neck out and say that Equity is the Best Asset to Invest, especially if your Time frame is more than 5 years.


If you want to have a Gold Exposure, then investing through SIPs in Reliance Gold Savings Fund is the BEST way to do it.




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IDFC INFRASTRUCTURE FUND - OLD WINE IN OLD BOTTLE!!

 There is nothing new on offer in the NFO of IDFC Infrastructure Fund.

IDFC has surprisingly launched an Infrastructure fund when the entire sector is avoided like plague by Fund Managers and Investor alike.

Do the IDFC people found something that many have not been able to???
Well, only time will tell the answer.

But, their guts has to be appreciated to have bought out such a Theme Fund in these difficult times.

I met Mr.Kenneth Andrade recently and he explained, "Infrastructure stocks are valued attractively and Cash Flow visibility is very strong and Investors will flock to these very same stocks sooner rather than later. We want to be there earlier than others and give alpha returns to our investors".

Mr.Kenneth Andrade reasoned that the Infrastructure Stocks were over-hyped during the 2008 highs and and under-performing due to over skepticism and is overdoing by investors on both fronts.
He expects Infra stocks to bounce sharply and lead the Next rally, especially now that many of these infra projects are getting executed and should be monetized sooner.



Infrastructure Sector as a whole has been going tough times and the future does not look too bright with high inflation and hardening interest times.

COMMENTS AND RECOMMENDATIONS: 

A Sector Fund is a strict no-no, especially if you are investing in Lump-sum.
One bad policy decision, and lo, the entire sector looks down and out and you will be left holding a drowning boat.

And yes, there are more than a dozen infrastructure funds in the market today and there is no particular reason for you to pick this Fund over the others unless you have a leaning towards IDFC brand name or you love Mr.Kenneth Andrade.



However, to this Funds benefit, I must add here that Infrastructure Stocks constitute more than 50% of the Nifty, which makes this Fund more diversified than a pure play Theme/Sector Fund.

But,
but,
but,

I would still say...


Go for Diversified Funds as there is nothing that prevents a Fund Manager in investing in Infrastructure sector if he finds the sector attractively valued.


ONE FINAL THOUGHT.....

By the way, I had this thought, that probably the AMC guys at IDFC thought they could piggyride on the IDFC Bond Ad wave which has been doing the rounds for more than 6 months now and would be easy to suck in gullible investors.

Maybe it also is that IDFC people are following the classic saying 'Buy when others are selling"!!  and launching Infra fund when other AMCs are wary of talking about their Infra funds performance.
Best of luck,

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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FIDELITY INDIA CHILDREN'S PLAN

FIDELITY INDIA CHILDREN'S PLAN

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FIDELITY INDIA CHILDREN'S PLAN - A REVIEW

It’s Different!

While most Child funds in the mutual funds are hybrid in nature with very little to differentiate each other, Fidelity has tried to create its own space by adding unique options hereto unavailable in child plan by Mutual funds.

The Fidelity India Children's Plan has provided investors with a good variety of unique investment options.

OPTIONS....

The Fidelity India Children’s Plan will have three sub Funds which you can choose…

1. Education Fund : Asset allocation under the Education Fund will comprise of 70 per cent equity and 30 per cent debt to provide funds over the long-term for children''s education.
2. Marriage Fund : The Marriage Fund will have asset allocation of 70 per cent equity, 20 per cent gold ETFs and 10 per cent in debt.
3. Saving Fund : The Savings Fund will have only Debt exposure and the asset allocation will be up to 100 per cent in debt and money market instruments to provide stability. 

You can watch the Video of how the Fund works …………

Here..  

http://www.indyarocks.com/videos/Fidelity--Cake-exhibition-053avi-2029858

Fidelity India Children’s Plan (FICP) is a hybrid fund which combines equity, fixed income instruments and gold ETFs. The fund offer three distinct funds under it viz. Education Fund, Marriage Fund and Savings Fund, where one can invest in, and each of them are intended to achieve their stated objective. Investors can opt for any of the funds for their investments, depending upon their financial goal – being children education, marriage or mere savings.

The FICP “Education Fund” exposes its investors to two asset classes – equity and debt, while the FICP “Marriage Fund” exposes its investors to three major asset classes – equity, debt and gold. The FICP “Savings Fund” on the other hand invests only in debt and money market instruments.

These Hybrid options give investors exposure to low co-related assets. So, when you feel that Gold is not looking attractive as investments, Equity will take care of your returns.

 In contrast to most hybrid mutual funds in the market, Fidelity India Children's Plan will have dedicated fund managers for both the equity and debt portions of the portfolios. The Equity Portion will be managed by Nitin Bajaj who also has a good track record in managing Fidelity Special Situations Fund.

RECOMMENDATION :

Fidelity has understood the physic of Indian investors well and has included "Gold" also in its Marriage Fund. Gold has been long considered a natural hedge against inflation and Indian Marriages do have more than 20% of their expenses directed towards Gold.

The Fidelity India Children's Plan can be considered with a long term view. The Fund has all the potential to ensure good returns. Its Gold Exposure should ride out volatility and beat inflation over the long term.  The auto balancing would ensure that downside is protected.

Savings Fund which invests predominantly in debt and money market instruments suitable for conservative investors and those nearing their financial goals and

Instead of looking at Child ULIPs, you should seriously consider investing in this Fund, as the costs are not only cheaper, but also the withdrawal are easy and returns should be far superior.

So, the vote is INVEST.

NOTE :

There will be no charge for switching between different options of the same fund or between funds within the plan and for transfers under STP.

Srikanth Matrubai

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IFCI INFRA BONDS.... SHOULD YOU INVEST??

Infrastructure Bonds are back as they allow you to claim extra 20000 as Deductible from your Income. But, are they worth it??

Hi,
As you are aware, the Finance Minister in the recent budget has announced a special Income Tax rebate, wherein investment made upto Rs.20,000/- in Bonds issued by Infrastructure Companies will be eligible for Income Tax benefit u/s 80-CCF.


Following this, IDFC, L&T had earlier come out with Infrastructure Bonds and now IFCI too has come with a public issue of such Tax Saving Bonds.

On an investment of Rs.20k, an individual in the Top Tax Bracket of 30% can make a saving of Rs.6000 and also earn an interest of 85 to 8.25%. However, for the Highest Bracket Tax Payer, the effective yield works out to 14.25%…..
These Bonds typically have a minimum tenure of 10 years and will be locked for 5 years. Since, the Bonds are expected to be listed on the Stock Markets, liquidity concerns are negated to some extent.


Those Tax payers who have exhausted their Exemption for Investments of Rs.1 lakhs in Sec 80c, 80ccc, 80ccd can look at these Infra Bonds.


HOW MUCH TO INVEST?


Even though there is no upper limit for investing in these bonds, since a maximum of Rs.20000 is deductible from your Taxable income, do NOT invest more than Rs.20000 in these Bonds.

Features of the present IFCI Bond open for subscription :

Face Value Rs. 5,000/- per bond
Issue Price At par (Rs. 5,000/- per bond)
Minimum Subscription 1 Bond and in multiples of 1 Bond thereafter,
Tenure 10 years, with or without buyback option after five years
Options for Subscription The Bonds are offered under the following 4 options-
• Option I – Non-cumulative and Buyback after 5 years
• Option II – Cumulative and Buyback after 5 years
• Option III – Non-cumulative and no Buyback
• Option IV – Cumulative and no Buyback
Redemption / Maturity At par at the end of 10 years from the deemed date of allotment. For Cumulative Option, at par with cumulated interest thereon.
Coupon rate • Option I & II – 8% p.a.
• Option III & IV – 8.25% p.a.
Option II and Option IV will have cumulative payment at the end of the Buyback period or 10 years, as per the option opted by the Investor.
Rating : BWR AA- by BRICKWORK RATINGS INDIA PVT LIMITED implying these Bonds carry high credit quality
Listing Proposed to be listed on BSE

Interest from IFCI BONDS are not subjected to TDS , but it is TAXABLE at the hands of investors.


The IFCI bonds are issued with section 80CCF benefits which means that they will get you a tax benefit of reducing your taxable income over and above the Rs. 100,000 under Section 80C with a cap of Rs.20,000.

These IFCI 80CCF bonds will not attract TDS, however the interest itself is taxable at your hands. So, the bonds don’t attract TDS, but it doesn’t mean they are tax free.

LET ME ALSO CLARIFY....
If you have already bought another infrastructure bond, and exhausted the limit of Rs. 20,000 then you won’t get any further tax benefit by buying this bond. There are also several banks that offer 8% interest for terms less than 5 years, so you won’t get much value out of locking your money in this instrument for 5 years.

ONE MORE IMPORTANT NOTE.....
LIC is also expected to come out with its Infra Bonds...
This bonds from LIC is expected to not only give MORE interest but also OFFER FREE TERM INSURANCE.
So, you can wait for some more time...

Regards,

Srikanth Matrubai
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