Hyundai's low-cost small car

Friday, June 25, 2010

Hyundai's upcoming low-cost small car is the big competitor of Maruti's Alto, the country's biggest-selling model. The car will be priced higher than Nano but lower than Alto. It is expected to hit the roads around 2012, with a petrol engine of over 800cc, bigger than Nano's 624cc.

At around Rs 2 lakh, the car will be priced lower than Santro's current entry price of Rs 2.73 lakh (ex-showroom Delhi, non AC), giving Hyundai an entry into one of the big volume segments. The Alto has a starting price of Rs 2.28 lakh. Companies like Hyundai and GM are eyeing the Alto segment and are working at products that can dent into its market share.

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Home loan benefits in new Tax System

Wednesday, June 16, 2010

Home loan benefits in new Tax System

The revised discussion paper on the Direct Tax Code (DTC) has proposed to continue with the existing system of deducting interest payment (up to Rs 1.5 lakh) against home loan from total income before calculating the tax liability.

The discussion paper released on August 2009 had proposed to do away with all the exemptions, including the tax benefit on interest payment against home loan. This, if implemented, could discourage home buyers.

However, the department had also increased the exemption limit to Rs 3 lakh from the present level of Rs 1.1 lakh against investments in select instruments like PPF, pension funds and life insurance schemes. The Rs 1.5 lakh interest benefit against home loan will be included under 3 lakh ceiling.

In the DTC, the government had earlier argued that as the exemption limit against investments has been increased, taxpayers will not be affected if benefit on interest payment against home loan is withdrawn. However, the withdrawal attracted a lot of criticism. And the government finally decided to get back to the earlier system.

Even if the interest payment against home loan is not treated as a separate category and will be the part of the exemption limit of Rs 3 lakh, taxpayers will still benefit. According to the original DTC proposal, interest payment against home loan was not allowed for deduction from the income. As many middle-income taxpayers will find it difficult to exhaust the 3 lakh ceiling,inclusion of interest payment of Rs 1.5 lakh in the total exemption limit will be beneficial.

According to experts, government should continue with the deduction against interest payment on home loan as a separate category, considering contribution of the housing sector to the gross domestic product.

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NRIs Investment mistakes

Sunday, June 6, 2010

NRIs Investment mistakes

Absence of a goal: Not chalked out a goal yet? What’s holding you? Before you park your money blindly in stocks, fixed deposits or the like ascertain when you’d need it. Do you have atleast three to five years? Or would you need your money before that?

For, your money will be able to work more for you that way. If you have a time period of atleast around a year, consider investing in equities. If you think you’d need your money before that, liquid funds are for you. Equities outperform all other investment avenues easily in the long run. And if age is on your side and you’re considering a long time horizon, plunge into equities head on.

Absence of an emergency fund: No emergency fund yet? Life is unpredictable. Set aside funds for an emergency right away. Put aside atleast three months of your monthly expenses if you’re single. And if you have dependents, invest a minimum of six months of your monthly expenses in a liquid fund. You could park your money in flexi deposits, liquid mutual funds to name a few. But take into account the tax implications.

No insurance cover: Not given a thought to insurance yet? You’re not alone. For most, insurance is just another tax saving avenue. But reality dawns when illnesses or death strikes. And by then its too late. Insurance is your safety net that’ll help you handle uncertainties of life with ease. Insure yourself right away if you have dependents. Buy a pure risk cover for the maximum term possible. It’s the cheapest insurance you can buy. A pure risk cover is a must if you have liabilities such as a loan. If you’re a male aged 25 years of age you would be able to easily get a pure risk cover of Rs 10 lakh for an annual premium of around Rs 2,600/- for a 20 year term.

Being too greedy: Who doesn’t want to rake in the most moolah from his investments? But then, opines Bijal Bakhai, certified financial planner, “When your investments have already raked in high returns, it makes sense to slice and book profits. If you wait further to make more, chances are you may end up losing even what you’ve earned. So be contented. If you’ve invested in equity for a year, expect around 18% to 24% and in case of debt expect returns of about eight and a half percent”.

Selling at panic: Collective selling, acting on rumours without basis is akin to herd mentality and can prove dangerous. The stock market is not for the weak hearted so analyse the situation and decide whether to stay invested or ship out.

Borrowing for speculative gains: Banks do offer loans on securities no doubt, but borrowing heavily for speculative gains may mean taking high risks and can ruin your future financially.

Timing the market: Its time in the market and not timing the market that helps you gain the most. Experts have time and again stressed on how even the so-called veterans have not been able to succeed at this one. So don’t ever time the market. Believe in long term investing and watch your investments grow.

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Debt MFs : NRI Investment

For person of Indian origin
Need an Indian passport or apply for an OCI (Overseas Citizen of India) card, or a PIO (Person of Indian Origin) card. For this he needs to show that he was born in India, or any of his previous two generations (parents and/ or grandparents) were born in India.

The process takes anywhere from 3 weeks to 2 months. Simultaneously, the person looking to invest in India needs to apply for a PAN (Permanent Account Number) online.

For NRIs, the cost of transacting directly stocks is higher than that for resident Indians.

NRIs must use their equity accounts to build a long term portfolio as active trading turns out to be expensive.

While every NRI seems to be focusing on equities, they seem to miss out a simple trick of improving their returns without enhancing risks considerably. The long-term trend for the rupee is expected to be stronger. The investor is sitting with थ्10,000 in his bank earning less than 2% pa. In fact, yields on 5-year bonds are 2.25% pa.

At the current exchange rate, Rs 6.75 lakh will be transferred to India and can be invested in 5-year government bonds which yield 7.40% pa. At the end of 5 years, the Indian investment will be worth Rs 16.27 lakh, and the UK investment of थ्10,000 will have risen to थ्21,175. That essentially means that, even if the exchange rate was to weaken for the rupee to Rs 76.84, the investor will have achieved break even.

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Loan Against Property by HDFC

HDFC has said it will give loans only up to 50% of the property’s market value, The loan value can go up to 60% if the borrower is an existing home loan customer. HDFC’s loan against property is available at an interest rate of 11.25% for loans up to Rs 1 crore and 11.00% for loans above Rs 1 crore. The loan term can be up to 15 years for both residential properties and non-residential properties.

Loans

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Euro crisis

With Euro crisis the stock markets developed a risk aversion expecting an implosion with the Greek crisis turning into a 'Lehman II' like situation. world economy is in problem due to heavy debt both on private and government balance sheets. Debt levels is more than 10 times their equity.

Developed economies like the UK, Japan and to an extent the US have too much debt

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