What is a Home Saver Loan

Pre-payment of home loan is a double-edged sword. It reduces the future obligation but at the same time, also incurs opportunity cost and risk in case of an emergency when you urgently need cash. This is exactly where a home saver loan helps.

Understanding KYC, eKYC and CKYC

[Last Update : 12-Nov-2017]

As the financial industry in India evolves, it is easy to get lost in the complexity of  this evolution. Know Your Customer (KYC) has many facets today - KYC, eKYC, CKYC, KIN being some of them. A simple and clear explanation will help you set things in perspective...Read on..

The evening hugs and the morning byes

It is 5:30 pm in the evening. I am able to successfully avoid all the traffic congestion and reach my parking lot from office for a safe and comfortable parking. The car is parked. I switch off the music system, pick up my laptop and head towards my house's entrance door. I open the door and here you go... Two beautiful and adorable angels come running towards me - the elder one behind the younger one. This is one race where the younger one always beats the elder one, without any exception.


I have to take off my laptop bag faster than i am prepared for. If i don't do this fast enough, it might be difficult to balance the laptop with the high jump leap that the younger is about to launch on me. The destination of her high jump is straight in my laps, perfectly dovetailing her legs around my waist. I better be ready. This is usually followed by 50-60 seconds of a deep hug sprinkled with a few kisses flying around from both ends. These 60 seconds can easily beat the rest of the 23 hours and 59 minutes of the day anytime and every time. After about 60 seconds, we see each other face to face. Both of us are smiling while we glance at these pleasurable moments of life. While i slowly descend the younger one to the ground, it is time for the elder one to enjoy the next 60 seconds flight in my lap and for me to relish the beauty of life once again for 1 more minute. Daughters are a delight to have, and we are undoubtedly blessed and are also the  privileged ones.

As with many families, both my daughters are so different from each other - whether it is their nature, attitude or studying pattern and style, but when it comes to the evening hug, i see all differences relinquished to dust. Have the evening hugs always been like that? Not really. There was a period of time in our life when we were all running for money - not that we did not realize the importance of love and family - but simply because that is what we saw happening all around us - and therefore, we thought that if everyone is chasing money, they must be correct and this may be the only option in life. If everyone believes that money can buy physical comfort, then they must be right. If everyone believes that physical comfort will give us emotional happiness, then they must be right. How wrong I was. I had just descended the 2nd bundle of happiness on the floor, and trust me, the feeling of bliss had nothing to do with all the physical comfort that we possess today.

It is 5:30 am in the morning, and it is time for me to cajole with my kids and wake them up for school. As my wife prepares breakfast for them, i have selfishly made sure that i do not let this privilege of waking up the kids go to her. I go from one bed to another, waking up each baby, cajoling them for a few secs, taking them in my lap to the washroom to begin the morning chores. Their sub conscious hug, while in sleep, is worth a million dollars that is needed for financial freedom. As they get ready for school and i go to drop them up to the school bus stand, i make sure that i spend at least 5-10 minutes chatting with them while waiting for the bus. That one-one personal chat, which sometimes turns into making them revise their maths tables and sometimes into listening their extended version of the latest song they have heard or even the latest riddle they heard from their classmates at school, gives enough energy to take on any challenge during the day. The school bus arrives and they make sure that they depart with a "good-bye" that continues from the rear glass window of the bus even after they are gone hundreds of meters physically away.

Of all the money in the world, of all the promotions at work, of all the achievements in life, the "evening hugs and the morning byes" stands time tested and not worth losing out for anything else. All this has come with some effort, some sacrifice - a decision to do away with the rat race, treading my own path, and refusing to just follow what "successful" others around me are doing. I have realized that the time is my most important asset.

All you need to do is to find ways to "buy time" for yourself, spend enough time with your kids, play with them, study with them, struggle with them, before you can have the pleasure of those evening hugs and morning good byes.

It is definitely possible, anyone can do it. You need to setup clear priorities in life and then do not budge from your priorities just because others around you have a different set of priorities. Have a mission, have some dreams, and then chase those dreams. You do not need to be a millionaire to be happy, but you definitely need to be clear of your dreams and insulate them from being destroyed. You need to fiercely protect them at all costs.

Happy evening hugs !! Happy morning good-byes !!

All the best !!

Cheers

Manoj Arora

What are National Savings Certificate (NSC)

About National Savings Certificate (NSC)
National Savings Certificate (NSC) is a fixed income/debt long term investment option offered by the Indian Government through postal department.
National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines adequate returns with high safety, in fact safety sometimes overshadows the returns potential. NSCs are an instrument for facilitating long-term savings. A large chunk of middle class families use NSCs for saving on their tax, getting double benefits. They not only save tax on their hard-earned income but also make an investment which are sure to give good and safe returns.


How to Invest?
National Savings Certificates are available at all post-offices. The application can be made either in person or through an agent. Post office agents are active in nooks and corners of the country.

Types of NSC Certificates
Following types of NSC are issued:
(a) Single Holder Type Certificate: This can be issued to: (a) An adult for himself or on behalf of a minor.
(b) Joint 'A' Type Certificate: Issued jointly to two adults payable to both holders jointly or to the survivor.
(c) Joint 'B' Type Certificate: Issued jointly to two adults payable to either of the holders or to the survivor.

Who can Invest?
Based on the types of NSC certificates as listed above, it is clear that the following can invest in NSC
(a) An adult in his own name or on behalf of a minor
(b) Two adults jointly 

Non-resident Indian/HUFs are NOT eligible to purchase NSCs.

Denominations and Limit
National Savings Certificates are available in the denominations of Rs.100, Rs. 500, Rs. 1000, Rs. 5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for you to decide how much you want to put in the NSCs. This is of course a huge benefit for you can decide as much as your budget allows.

Maturity & Interest Rate
Period of maturity of a certificate is 5 years or 10 years.
(a) NSC VIII Issue (5 years) – Interest rate of 8.6% per annum w.e.f. 01.04.2012
(b) NSC IX Issue (10 years) - Interest rate of 8.9% per annum w.e.f. 01.04.2012
Interest is half yearly compounded. Maturity value of a certificate of any other denomination is at proportionate rate.

Premature Encashment
Premature encashment of the certificate is not permissible except at a discount in the case of :
(a) Death of the holder(s)
(b) Forfeiture by a pledgee
(c) when ordered by a court of law.
So, liquidity is definitely a constraint with this kind of investment.

Tax Benefits
(a) Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested. This is exactly the way the accrued interest is chargeable on a Fixed Deposit.
(b) Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under NSC - section 80C of IT Act.
(c) No Tax deducted at source.
(d) The interest accruing annually but deemed to be reinvested will also qualify for deduction under NSC - section 80C of IT Act, again up to a total limit of Rs 1,00,000/- per annum.
(e) Income Tax rebate is available on the amount invested and interest accruing under Section 88 and Section 80L of Income Tax Act, as amended from time to time.Tax rebates under Section 88 are not available to those earning above Rs. 5 lakh a year.
(f) All the interest on maturity is fully taxable.

Other benefits of National Savings Certificate (NSC)
(a) Certificates can be kept as collateral security to get loan from banks.
(b) There is a facility of reinvestment on maturity.
(c) There is a facility of encashment of certificates through banks. Certificates are transferable from one Post office to any Post office. Certificates are encashable at any Post office in India before maturity by way of transfer to desired post office.
    

Considering various factors, NSC can be an ideal investment for those who want to safe long term investment options that give guaranteed returns; do not need liquidity and who sought for tax benefits.

Cheers

Manoj Arora

What is Rajiv Gandhi Equity Savings Scheme (RGESS)

What is RGESS?

Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity tax advantage savings scheme for equity investors in India. The scheme got it's approval on September 21, 2012. It is exclusively for the first time retail investors in securities market.

Who can invest?

Any new retail investor can start investing in this scheme. An investor is defined as a new investor if he or she satisfies the following terms before investing in the scheme.

• Demat Account Not Opened
• No transactions in Equity or F&O
• Resident Individual
• Annual Income < =Rs. 10 lakh
• If Demat Account already Opened, No transactions in Equity or F&O
• 2nd & 3rd holder of an account can open a new account as 1st holder

How much can you invest?

There is no limit to the amount of money that you can invest but the maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.

Exclusive Tax Rebate Features

(a) This Scheme provides for claiming deduction in the computation of total income of the assessment year relevant to a previous year on account of investment in eligible securities under subsection (1) of section 80CCG of the Income-tax Act,1961. 

(b) Deduction u/s 80 CCG, is available on 50% of the amount invested. 

(c) The benefit is in addition to deduction available u/s Sec 80C.

(d) Interest earned is also non taxable in the hands of the investor.

Lock In Period

The eligible securities brought into the demat account will be automatically locked-in from the date of investment till one year from the date of last purchase of RGESS eligible securities. This period is called ‘Fixed Lock-in’ during which you cannot pledge or sell these securities.

• Holding Period = 3 Years
• Fixed lock-in Period = 1 Year from the date of credit
• Flexible lock-in Period = 2 Years from the end of Fixed lock in period

During subsequent two years called as Flexible Lock-in, you can sell and buy RGESS securities. However, you will have to maintain the value of RGESS investment for cumulative period of 270 days during each of these two years.

RGESS Vs ELSS Vs PPF

	RGESS	ELSS	PPF
Eligibility	Annual Income less than 10 lakh.	None	None
Lock-in Period	1+2	3 years	15 Years
Tax Benefits	50% (80 CCG)	100% (80 C)	100% (80 C)
Maximum Investment for Deduction	Rs.50,000	Rs.100,000	Rs.100,000
Minimum Investment	NA	Rs.500 to Rs.5000	Rs.500
Need for DEMAT	Yes	No	No
Equity Linked	Yes	Yes	No
Annual Return	Market Based	Market Based	8.8%
Interest Earned	Non Taxable	Non Taxable	Non Taxable
Risk	Medium to High	Medium to High	Low

RGESS tries to encourage a new investor to come into the world of equities but what remains to be seen is that whether a new investor who has never invested in equities would be ready to take the risk plunge for saving a maximum of 50% rebate on a max investment of Rs. 50,000.

Cheers

Manoj Arora

What is Equity Linked Savings Scheme (ELSS)

Majority of us rush up to our auditors and financial planners during the month of March for tax planning in order to invest up to INR 1.5 Lacs that qualifies for tax exemption under section 80C of the Income Tax Act. We end up buying a new insurance policy, dumping and blocking the money in PPF or NSC, getting into highly tax inefficient 5 year bank FDs, and other traditional tax savings instrument. There is another exciting option available to all of us to save taxes and get good returns, which often remains unexplored - Equity Linked Savings Scheme (ELSS)...Read on...

Source or Sink

There is a hero in each one of us !!

The fact is that most of us are looking for some heroes in life, someone whom we can follow, someone whom we admire, someone whom we know is making a difference out there in the world "in spite" of all the challenges and is not sitting down and out "because of" all the reasons, someone who can show us the direction. 


People follow leaders who are sure where they are headed. This, perhaps, justifies our long standing attachment to movies, other than the entertainment aspect. Even today, if we associate with the subject of the movie, we root for the hero of the movie. We want him to win. We want him to fight against all odds and come out victorious.

Over a lazy weekend, i was sitting with my family watching Spider man - 2 (perhaps for the 3rd time). Kids love it, and so do we. The movie again re-kindled this topic. Peter Parker was unable to take a decision whether to go for his love OR to dedicate his life for the people of his country. He had to chose between the two. The situations always aligned in a way that he is unable to do justice to both these aspects of his life. 

He stayed confused till his grand mom gave him the answer that he was looking for. He had to be "the Hero", a hero which people can only aspire for, a hero for whom people are ready to stand in a queue for hours just to get one glimpse, a hero who has the power and also the responsibility to utilise the power in the right way. With great power, came great responsibility. After hearing all this, it was much more easier for him to take the "right" decision.

It is one thing to look for your own comfort and strive for doing things for yourself. It is completely another thing to come out of your comfort zone and do something for others. Heroes are less - they are one in a million because only one in a million have the guts to do something for others so that others can get to see their hero, get inspired from them and perhaps, follow them as well.

Have some mission of your life. Have some dreams. Make some goals. Make them for yourself and then make them so that you can do something for others. At the end of your life, it is what you do for others that would give you the bliss that is ultimate and satisfying to the core.

Be a source, not a sink. 

Are you a source of love for your entire family or you are yourself looking for love? Are you a source of inspiration for your friends and colleagues or are you looking for inspiration?  Are you a source for doing something for your society or your country or are you waiting for your country and society to do something for you? Are you setting a moral example for your children or are you compromising on your values to earn more money? Are you spending time with your children or buying gifts to compensate for the lack of time? Are you ready with 100 things to do before you die or the life is just passing by?

Are you are being driven by your life or are you the one who has taken charge of your life? Are you the source of energy or a sink waiting for energy from others.

Be a source, not a sink. Someone will get inspired from you and take the torch forward.If you are a source, you will inspire others. If you are a sink, you might only get sympathy.

Steven Gorden once said : “I’m not afraid of dying, I’m afraid of not trying.” 

For all the beautiful ideas that you keep getting during the best part of your day, and before your mind rejects them after 10 min of negative thinking, bring your inspiration to work before the mind can get enough time to reject it,.. you can make it happen..you can be a hero for someone in life.

You can be a source of power, energy and passion for so many around you.

Cheers

Manoj Arora