Posts Tagged ‘budget’

Take Control Of Your Golden Years Financial Planning Final Part:)

Continuing the final part 🙂

Sumit’s colleague, Ankit, who is 30 years old, commences his retirement planning at the same time. Given that he also aims to retire at the age of 60 years, he has an investment horizon of 30 years. Assuming, like Sumit, he invests Rs 50,000 every month @ 10% per annum, he will accumulate Rs 11.30 crore at retirement. On the same lines, Piyush, Sumit’s other colleague, commences investing at the age of 35 with an investment horizon of 25 years to accumulate Rs 6.63 crore at the age of 60 years (at Rs 50,000 per month @ 10% per annum).

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Given that all three of them have the same monthly investment (Rs 50,000), which is invested at the same rate (10% per annum), the difference can be attributed completely to Sumit’s early start vis-Ă -vis his colleagues. Ankit who has an investment tenure that is lower than Sumit’s by only 5 years accumulates a corpus that is nearly 40% lower than Sumit’s. Piyush, whose investment tenure is lower than Sumit’s by 10 years, accumulates approx 65% lower than him on retirement. A 5-Yr delay in retirement planning sounds like a small difference, but the power of compounding magnifies it to gigantic proportions.

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CHALK OUT YOUR CORPUS 🙂

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You’ll have to keep a realistic goal that you can realise in the time you have. Don’t expect that the zeroes will multiply automatically in your savings. See how much you can afford to save every month. Of course, if you start at a late age you will have to increase your savings substantially, so cut down on any superfluous expenses.

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Prepare a budget which lists what you spend on necessities so that you know how much your monthly/annual expenditure will be in the future. Account for inflation too. Keep a rough estimate of 7-8% inflation every year. Also, consider expenses that are bound to increase, such as medical and transport expenses. Then again, calculate the expenses that may cease to exist, such as your children’s education.

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DON’T TOUCH THOSE SAVINGS

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More often than not, people have combined savings, that is, they save money for all their financial goals together— retirement, children’s education, their marriage, buying a home, etc. Invariably, you spend more on your initial financial goal and end up depleting your savings. By the time you retire, you have barely any money left. Overcome this obstacle.

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Build your retirement corpus separately, and do not touch it. It’s always better to earmark the time period for your goals and make separate portfolios for each of these goals. For instance, your children’s education may be a short-term goal (compared with retirement, that is). Since retirement is a long-term goal, if you are starting early you can afford to take risks and invest primarily in equities. But if retirement is a short-term goal, that is, only 5 years away, you won’t be able to take any risks. You’ll be more concerned about security. In that case, invest primarily in debt instruments.

MAKE A PLAN

Before you embark on saving for retirement, you must have a plan in place. While a plan may sound fancy and even intimidating, rest assured it is not all that complicated. Your retirement plan is simply your wish list of how you wish to spend your twilight years. Among other expenses, when you plan for retirement, you must make it a point to set aside money for medical expenses and contingencies, as any retirement plan without them is incomplete.

While you have to decide how you wish to lead your life in retirement, your financial planner will help  you translate that dream in numbers. He will put a number to everything i.e. your dream house, vehicle, post-retirement income, medical expenses and contingencies among other inputs. He will tell you how much you need to save and where to invest your savings so as to achieve your retirement corpus. In other words, he will outline a roadmap and more importantly, will implement the same for you.

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TRACK AND REVIEW YOUR PLAN

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Once the plan is outlined and implemented you have to still ensure that you are on track at all times to meet your targeted return at the desired level of risk. This calls for a periodic review of your investment plan. Over time as you approach retirement; reduce allocation to risky assets like stocks and/or equity funds in favour of more conservative avenues like fixed deposits.

The future is closer than you think. Pick targets early and give them the right kind of support to take control of those golden years.

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For any financial planning queries, email us at financialplanning@smcwealth.com

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BUDGET OUTCOMES COMMODITIES :)

·Finance minster reaffirms commitment to introduce GST along with DTC in April, 2011. 🙂

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¡A Nutrient Based Subsidy policy for the fertiliser sector has since been approved by the Government and will become effective from April 1, 2010.

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¡To extend the green revolution to the eastern region of the country & propose to provide Rs.400 crore for this initiative.

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¡Propose to organize 60,000 “pulses and oil seed villages” in rain-fed areas during 2010-11 and provide an integrated intervention for water harvesting, watershed management and soil health, to enhance the productivity of the dry land farming areas.

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¡Propose an allocation of Rs.200 crore for launching this climate resilient agriculture initiative.

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¡FCI has been hiring godowns from private parties for a guaranteed period of 5 years. This period is now being extended to 7 years.

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¡Targets set for agriculture credit flow has been raised to Rs.3,75,000 crore from Rs.3,25,000 crore in the current year.

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¡Propose to extend by six months the period for repayment of the loan amount by farmers from December 31, 2009 to June 30, 2010.

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¡Provided an additional one per cent interest subvention as an incentive to those farmers who repay their short term crop loans as per schedule.

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¡External Commercial Borrowings will henceforth be available for cold storage or cold room facility.

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¡Customs duty on silver raised to 1,500 rupees from 1,000 rupees per kg.

Stay Tuned for More updates :)

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Points Discussed in Budget :)

  • Excise duty on silver rose to 10%
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  • Surcharge on domestic cos reduced to 7.5% from 10%..
  • Excise duty on oil rose to 10%.
  • Fiscal deficit will be at 5.5% in 10-11, at 4.8% in 11-12 and 4.1% in 12-13
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  • Revised income tax slabs 🙂
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  • Net market borrowing for 2010-11 at Rs 3, 45,010..
  • Extended 1% interest subsidy scheme for affordable housing.
  • Rs 5400 cr of funds allocated for urban development..
  • Defense allocation rose to Rs 147344 cr.
  • Rs 48000 cr allocated for Bharat Nirman.
  • Farmer loans extended for 6 months to June 30th 2011.
  • Allocated Rs1.73 lakh cr for infrastructure..
  • Agriculture credit flow targets at Rs. 375000cr.
  • FDI worth $20.9 bn in April to Dec 2009.
  • Proposed Rs 16500 cr for PSU banks.
  • Challenge for a 9% growth, need to review stimulus.
  • Stay Tuned for More updates 🙂

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    BUDGET PREVIEW 2011 – Part 1 :)

    At last the much talked topic “BUDGET” among AAM ADMI, CORPORATES or INVESTORS that comes to INDIA – is approaching. “The million dollar question is that will 2010 budget be another year to cheer the economy by giving some relief in indirect taxes, personal income tax and by implementing various schemes to induce social & infrastructure sector in order to maintain high trajectory growth”.

    Generally, it is seen that the incentives which are given in the period of recession or slow down and moreover, when the government in power is about to complete its tenure, are above from expectations. It is seen that budget in two years usually comes good when the Govt. is in the last year of power & in the first year of the rule as a vote of thanks.The mid three years out of the five year term usually remains tight on the policies.

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    For the common man, we expect that Finance Minister may raise the exemption limit in personal income tax & investment limit Under Sec.80C. The reason to our belief:

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    1. The rocketing prices of food articles like sugar, pulses and vegetables have been cutting the pockets of a middle class.

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    2. By coming out with these measures (above mentioned) the government will lower the tax incidence on the common man & will also help it to put the opposition on backfoot.

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    By & large everyone is aware of the level of fiscal deficits globally and many of us know that it is essential to minimize deficits & returning to fiscal consolidation is necessary. The main question is why it is so important. Let’s look at the consequences of high fiscal deficit:

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    A risk to high government borrowings leads to more debt servicing that cuts expenditure on various social welfare schemes, if TAX revenues do not matchup. In the current financial year, out of the 4 lakh crore borrowing, more than 50% has gone towards interest payments.

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    Secondly, the higher government borrowing from market means less availability of funds to private borrowers. In the current Fiscal year, due to dismal credit growth, we haven’t seen pressure on Interest rates. But going forward we foresee normal credit growth in the next financial year. However as the government borrowing is expected to remain at same level in the next fiscal, pressure on interest rate is expected.

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    So, this year the theme of Budget would any way be to maintain economic recovery through investment for building infrastructure rather than funding the expenses/consumption. But at the same time focus will be to bring down the fiscal deficit.

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    The catch here is bringing down deficit by cutting expenditure means risk to growth & the other alternative is to increase revenues. While the direct tax collections are encouraging, on the indirect taxes front the government is still struggling to get desired revenues. This is because after September 2008, when the global financial system collapsed, the government came out with stimulus packages to keep up the desired growth pace.

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    Excise rates since December 2008 had been progressively cut from 16, 12 and 8 per cent to 10, 8 and 4 per cent respectively depending on the product in question. Service tax was also reduced from 12 to 10 per cent.

    Set Up New Financial Plans After A Divorce !!

    Set Up A New Financial Plans After A Divorce

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    You need to do long term financial planning when you are going through a divorce.

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    It’s important that you recover from the split by assessing your situation as singles and setting up new financial plans with a focus on longevity.

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    Here are five simple steps for building your financial future after a divorce:

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    1. Start with a plan.

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    Take a look at your finances before the divorce and then subtract what you’ve lost to give you a good perspective on your fiscal situation.

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    Be realistic with yourself and set a budget that you can easily manage with your new single status.

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    2. Check your credit.

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    Maintaining your credit is an important step in walking away from a divorce financially intact.

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    Examine your credit reports and ensure that any name changes or card closures are accurate and taken care of.

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    3. Ensure your retirement.

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    Confirm that all of your retirement arrangements are intact and that any assets or funds you are entitled to have been taken care of.

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    Division of savings and accounts should be paramount in your review.

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    4. Obtain the necessary insurance.

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    Examine your insurance policies and make sure that you and your property are still covered.

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    5. Review your taxes.

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    Understanding the tax ramifications of your divorce is a key part of planning for your financial future.

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    Confirm that all tax responsibilities between you and your spouse are coordinated appropriately.

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    🙂

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    Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

    Global cotton output may rise over 8%: ICAC

    Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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    Global cotton output may rise over 8%: ICAC

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    Global cotton output may rise over 8%: ICAC


    Cotton production world-wide is likely to rise by over 8% in the 2010-11 season on higher output in the US and China following high prices, a global cotton body says.

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    The global cotton production in the 2010-11 season (October-September ) is projected at 24.1 million tonnes (mt), up 8.5% from 22.2 mt estimated for the ongoing 2009-10 season.

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    Above figures were put forth by the International Cotton Advisory Committee (ICAC).

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    According to ICAC, cotton production in China is likely to surge by a million tonne to 7.7 million tonne, while in the US it may climb by one tenth to 3 million tonne.

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    However in India, production estimates are not changed much from 2009-10 season, it said.

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    ICAC had earlier said that India is estimated to harvest 5.3 mt of fibre in this season.

    Currently, harvesting is in progress across the country.

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    🙂

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    In Other major Commodities Updates we can read about the news of fertiliser ministry urging the finance ministry to release the due subsidy payments and the decline of the natural rubber production rate, last year.

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    Fertiliser ministry too seeks subsidy payments:

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    The fertilisers ministry has urged the finance ministry to urgently resolve the liquidity problems faced by the country’s fertiliser industry following no payment of subsidy dues by the government since October 2009.

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    The demand for subsidy payments comes even as the government is trying to resolve the issue of subsidy to petroleum companies.

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    Industry estimates are that subsidy /concession for the October-March 2010 period will be around Rs 30,000 crore plus, bringing up the total subsidy for the fiscal to well over Rs 70,000 crore.

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    The centre has allocated only Rs 49,980.25 crore towards fertiliser subsidy for 2009-10 (BE), including carryovers from 2008-09.

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    The industry has argued that non-import of urgently needed raw materials and inputs may be jeopardized if the matter of the subsidies is not tackled on priority.

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    Making matters worse, according to procedure, the industry cannot expect any further payment until the third supplementary to the Budget due only in end March.

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    🙂

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    Rubber Output declines on dry weather:

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    Natural rubber production in India, the world’s fourth-biggest producer, dropped 7.3 per cent last year after dry weather lowered yields in the main growing region, the state-owned Rubber Board said.

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    The driest monsoon since 1972 lowered latex yield in rubber plantation in the southern Indian state of Kerala, Chandran said.

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    Production also dropped because of  intense harvesting and ageing plantations,  Rubber Board Chairman Sajen Peter said on November 4.

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    Stockpiles jumped 26 per cent to 261,400 tonnes at the end of December after exports last year slumped to 14,752 tonnes from 77,004 tons in 2008.

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    🙂

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    Did IPO Grading Fail to Catch the Fancy of Investors??

    ipo grade system

    The grading system of initial public offers (IPO) is in need of an upgrade, say market participants.

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    Two years after it was first introduced by market regulator SEBI, the system has failed to catch the fancy of investors as share price trends of newly listed companies have shown little or no correlation to the grading given by rating agencies.

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    “IPOs with grading 4 have shown returns that are much lower than IPOs with grades 1 and 2.
    So, this is raising the question whether it is time to look at amendments to the existing structure or maybe SEBI can think of completely scrapping the system,” said Jagannadham T, equity head of SMC Capitals.

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    However, one can’t deny the importance of the IPO grading system not only is it beneficial for retail investors who don’t have the time or skills to go through an entire prospectus but it also acts as a deterrent for fly by night promoters who wish to access the primary market solely for their gains.

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    Not only financials of a company is looked at but also people at the business head level are contacted to see what the company is up to.

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    As per few experts, IPO grading doesn’t have anything to do with the price post listing. A lot of things apart from fundamentals drive the stock.

    The reservation of comment on pricing is a sore point, but even more, is the grading of a SEBI barred company like Austral Coke at Grade 2 by CARE above Orbit Corporation at 1 by the same rating agency.

    :O 😦

    And this makes one wonder if a thorough due diligence is done by all rating agencies that’s ground enough for a review.

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