Last Updated: Sunday, August 13, 2017

7 Ways to Get Monthly Income after You Turn 60


What would you do when you turn 60 and they declare you officially as a senior citizen? Of course, your first concern will be your financial security. This is crucial because when you retire you are cut of from regular sources of income. Therefore, it is important you have a plan to survive the winter of your life in peace and happiness To tide over the loss of income you need to substantiate it with other sources of income. The government offers many options for us to invest and get regular monthly incomes. Many of us are still unaware of these products:

Senior Citizen Saving Scheme: This is a saving scheme started by the government of India designed specifically for senior citizens. The age limit is 60 years and 55 years for those who have retired by other methods. It gives a 9% interest rate per annum computed quarterly. The maturity period is 5 years and can be extended by 3 years. The interest is fully taxable but there is no tax deduction at the source.
Reverse Mortgage: This is a relatively new option announced in 2007 specifically targeted for senior citizens to receive a regular amount of income. Reverse mortgage works by pledging your house with the bank. The bank pays you a fixed amount of money for the house. Once you have moved out or in case of death, the bank gives an option to your heirs to close the loan. If not, the bank can sell the house and recover their loan amount and interest there of. The rest is given to your heirs.
Only people who have reached 60 years can opt for this option. If the co-applicant is your wife, she must be of 58 years. This age bars makes this specifically suited for senior citizens. The payment is credited to your account monthly or quarterly or in one go. Reverse mortgages are not taxed as it is considered as a loan and not as income.
Some of the banks that provide Reverse Mortgage in India now are State Bank of India, Central Bank of India, Union Bank of India, Bank of Baroda, LIC Housing Finance, Punjab National Bank, Canara Bank etc. Reverse mortgage is not popular at the moment because people are yet to take note of it. Till now only 7000 reverse-mortgages have been sold.
Immediate Annuity: Opting for an immediate annuity is another option when we are retired. It is a fixed income generating scheme, in which we pay a lump sum as single premium with the insurance agent and then receive a steady flow of income periodically. The payment amount and the annuity depend on your age and the product you choose.
You will receive annuity or the income from the next year of paying premium and it will be paid to you as long as you are alive. The annuity received increases with every year. There is an option for annuity to extend till the death of the spouse as well. Immediate Annuities are a good monthly income plan after retirement because it is secure and definite.
Nonetheless, in life long annuity plans sometimes the principal is not recovered because of immediate death of the individual. It is advisable to go for fixed tenure plans if you want to recover your principal. A popular annuity plan is LIC’s Jeevan Anand.

Senior Citizen Fixed Deposits: The most common and convenient method a senior citizen can receive a monthly income is by investing in senior citizen fixed deposits. At present, banks provide interest rate up to 9%. They can invest also in corporate fixed deposits, but they are riskier than bank deposits. Banks also provide monthly income plans. These are tax free at source. But, the interests are taxed.

Post Office Monthly Income Scheme: The Indian Post office department provides some secured investment plans which provide a monthly income for those investing in it. The rate of interest is 8.2% with a maturity period of 5 years. However, there is a ceiling on investment of Rs. 4.5 lakhs for an individual. Jointly an amount of Rs. 9 lakhs can be invested. Though, the tax is not deducted at the source, the returns are taxed.

Mutual Funds: Just like post offices, mutual funds also provide monthly income schemes to individuals. Senior citizens can also invest in these funds to get a monthly payment. However, these funds carry with it an element of risk because these are invested in equity markets. Therefore, you must be extra cautious when you invest in these funds. One can earn crores by investing in mutual funds.


To Know the magic of compounding in SIP must watch this video;


Triple A Rated Bonds: Would your retired life be peaceful if you stay awake all night thinking about a risky investment? Definitely, it would be an awful way to spend your post retirement life. At that age what you need is a steady flow of income that is very low on risk. Triple A rated bonds are a good choice. Triple A is a rating given by the government, which means that the bond is highly secure and safe. The returns are pretty good with corporate AAA bonds fetching about 9.70%. Having an assured and pre-determined income enables you to plan ahead for future expenses.
Getting old is not such a bad thing. After a life’s hard work you really need some time to rest and be at peace with yourself. Only at old age could you actually get the time and opportunity to find that inner peace and happiness. This happiness lies in the fact how you prepare yourself before you grow old. The most important thing that we must consider is the options that can bring monthly income so that all of our expenses are easily met.

Last Updated: Monday, July 17, 2017

Top 10 Low Priced Stocks with Sound Fundamentals

Image:Top 10 Low priced Stocks-Small-Mid-cap-stocks-Sound-Fundamentals

Tags: Top 10 Small Caps 2017 | Top 10 Low priced Stocks | Top 10 Mid Cap BSE | Top 10  | Top 10   | Top 10  | Top 10 multibagger stock in 2017 | Top 10 Sound Fundamentals Stocks | Top 10 penny stock BSE-NSE | Multibagger Stocks | Hidden Gems | 
Today we will check "Top 10 Low priced Stocks with Sound Fundamentals", these stocks are currently unnoticed to institutional buyers and common traders/investors; once they come to the notice; their sound fundamentals and growth potential will help them to fly like anything. After checking their fundamental and shareholding patterns we have shortlisted some of the bullish Low priced Stocks for you;
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"Present post is for education purpose only and should not be taken as stock recommendation. The price targets mentioned in this post are given by respective brokerage houses, read disclaimer at the footnote of this blog page before making any position in the stock."
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Top 10 Low priced Stocks with Sound Fundamentals



1. PTC India Financial Services Ltd (PFS) @ 40.90

2.     Future Enterprises Ltd - FEL @ 33.45

7. Firstsource Solutions @ 33.45
8. Genus Power @ 50.20
9. Sintex industries ltd @ 31.95
10. South Indian Bank @ 28.47




"Please feel free to comment for any inquiry/suggestion on present post "Top 10 Low priced Stocks with Sound Fundamentals".


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Last Updated: Saturday, July 15, 2017

Why you should avoid high dividend paying companies

"High dividend yield is an indication of lack of opportunities"

What is Dividend yield?

Dividend yield is a financial ratio indicating how much dividend is paid to it's shareholders each year in relation to the price of each share of the company. The dividend yield is expressed as a percentage and can be calculated by dividing the money value of dividends paid in a given year per share of a company held, by the market value of a share. 

Image: Avoid high dividend paying companies invest in growth stocks,

Why companies pay high dividend?
The main reason why companies pay high dividends is because management can not find better growth opportunities within its own company to invest its undistributed profits. As a result, management returns excess profits to shareholders in the form of dividends or share buyback. If a company pays a dividend equivalent to a 5% return, management is basically telling investors that they can not find better investments in the company that are more than 5%. Their growth will largely be determined by exogenous variables, namely the state of the economy.

To understand it in a better way let's consider following two cases;
1. Imagine that you are the CEO of a high-growth company like Tesla Motors (TSLA), the manufacturer of high performance electric cars. Do you think Elon Musk, the current CEO will start paying a dividend with his profits instead of resorting to research and development for new models with a longer battery life? Of course not! It would be absolutely pathetic if Elon Musk could not beat a 5% return on his capital. Tesla Motors is up 500% since its opening in mid 2010 and now Elon is a billionaire.
2. On the other hand, telecommunications company like AT&T (T) which has the largest wireless network in USA. According to Pew Research, mobile penetration is over 85% in USA , and AT & T has the largest subscriber base in the industry. Since AT&T is like a utility the generation of cash flow is high but accelerated growth prospect is low. Due to strong cash flow and the absence of better investment alternatives, AT&T pays a huge dividend of $ 1.80 per share, which equates to a 5% dividend yield with the stock To $ 35.  AT & T has increased merely by 50% since the low of 2009 while S&P 500 increase by 140%.

I now hope you understand why high dividend yield should not be a single stock selection parameter.

Keywords; Dividend yield, high dividend stocks, growth stocks, dividend paying companies, avoid high dividend



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How to Invest Windfall Gain to Make more money out of it?

Windfall gain is the exceptional gain (or exceptional profit) is an unexpected gain in income that could be attributable to a lottery, unexpected inheritance or supply shortage. Exceptional gains are transitional in nature.
Invest Windfall Gain, unexpected profit investment, Managing casual income, how to earn from windfall gain,

Sometimes, when fortune smiles down on you, it is not difficult to get hands on a windfall gain. There are countless ways you can acquire it. It might be from a lottery you took, an inheritance from a dead aunt you never knew, it might be from the game show “Kaun Banega Crorepati…” or whatever. Never mind where you get it.
 

How to Invest Your Windfall Gain

The main issue is what will you do with such a windfall gain?

Now, the problem here is not how to invest windfall gain to make more money out of it but to maintain it and to make it grow. This is where many of you ‘lucky’ people suddenly get unlucky again. We just don’t know how to handle large sums of money at one time and we get confused a lot. When the confusion overwhelms us, we begin to spend money in the most unproductive manner. Before long, you will find yourself in your old unlucky state.
Therefore, be smart with your money and invest windfall gain smartly. We found following ways to invest your windfall gain. If you follow these investment ideas, you can, of course, stretch your legs and retire early in peace.


1. Invest in Tax Saving Schemes: First, invest in tax saving schemes that give you moderate returns such as Public Provident Fund or National Saving Certificates etc. This helps you to save on the tax and also will give you a moderate return. Tax saving schemes are safe investments and so you can reduce your risks while making money on your money.

2. Invest in Mutual Funds: The tendency to take risk rises when you get a windfall because you did not feel the hardship in making it. To make money many squander their windfall gains at the stock exchange. If you do not have any prior knowledge about the market, do not invest in shares directly. Many will advise you to do it but once you are in it, it is hard to escape the lure and you will end up with nothing. Nevertheless, without taking risks you cannot make your money grow. So, the best option is to invest in Mutual Funds. There are highly respected fund houses like HDFC, ICICI etc. that gives you good returns. These fund managers know what they are doing and definitely knows a whole lot more about the markets than what you do. Therefore, let them do the trading and you can sit back and relax while you get handsome returns.
However, Mutual Funds are highly risky and you must be ready to take that risk. Anyway, this risk is much lower than if you had invested in stocks directly. Plan how much risk you are willing to take for the returns the fund managers are promising and invest only that much into it.


3. Invest in Insurance: Though insurance comes under tax saving schemes, this is added as a separate point in order to emphasise its importance. Taking insurance might not be an investment option but it makes sense when considering it as an investment against unfortunate events. Remember, your windfall gain was good fortune, likewise, unfortunate events might also happen.
Taking life insurance policy alone is not enough. You must also go for medical insurance that covers against diseases and accidents. There are schemes, which insure the health of your whole family too.
The most unexpected and huge expenses are usually related to medical care. Therefore, taking medical insurance will actually see to it that your money is not spent unnecessarily on medical bills. Besides, don’t worry that you will be losing money on medical insurance. There are offers that give you free check ups and treatment if you don’t claim any medical bills. This helps you to be aware of your health and also to maintain a healthy lifestyle.



3. Invest in Debt Instruments: Bonds, Government Securities, Corporate bonds etc. are all debt instruments. The purpose of investing in these instruments is to get continuous and moderate income. Debt instruments are not risky except for corporate bonds. So you can be sure that you will be getting a regular flow of income without being tensed.
Do not invest in long term bonds that might run for 20 or 30 years. Invest in medium term bonds because interest rates keep changing and you need to change your holdings in bonds, occasionally, to bonds that give you lower rates.

4. Invest in Bullion: Gold and Silver are shining like never before. As Indians, we have this penchant for bullion. However, the good news is that you can spend your money on this weakness. Gold has been growing rapidly these last few years and has given abnormal profits for those who were invested in it. Besides, this serves as a store of value and shields your money from inflation and weakness in the economy.
Buy jewellery for you wife and children, but make sure you invest more in gold coins and bars than in jewellery. This is because jewellery costs you more in making charges and sometimes the gold is not pure, so you would not get your money’s worth.

5. Invest in Small Business: If you have the entrepreneurship bone in your body, then use the money to start a business of your own. Study the pros and cons of your venture very thoroughly before starting. In addition, don’t invest all that you got in it. Put in an amount and keep the rest for other investments and as reserve money. Try to get funding from banks or from friends and relatives. Now there are Venture Capitalists who might be interested in giving you the extra funding.


6. Invest in Entertainment: What is life without some fun? Enjoy yourself with the money you got. Investing in entertainment gives you a feeling of well being and it reflects in your happiness and peace. Therefore, go out and dine in the most expensive restaurant or go for a tour. There is no harm in it. However, you must not indulge in it. This is why this point is the placed at the bottom.
When we get a windfall gain, most of us make entertainment the first priority. The downfall begins there. Once having fun is your priority, then maintaining your money will be an impossible thing to do. So have fun within your limits.

Making the best of the opportunities that providence gives us is what smart people do. A windfall gain is an opportunity to change your life forever. If you play it smart, you can live the rest of your life the way you want. However, if you don’t, then you are going to regret it every single day that you live on this planet.

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Last Updated: Friday, July 14, 2017

Untapped Investment Potential of Gold Purchase Plans

Why to invest in gold, Gold Purchase plans, Benefits of gold purchase plans, Investment in gold

Why you should invest in Gold Purchase Plans?

Indians appetite for gold is unbelievable. It doesn’t matter to us if the price sky rockets, or if the Government imposes a ban or even if gold suddenly starts to bite us! We need gold to survive. The price of gold is amazingly higher than anyone ever had expected. Yet, the demand for it isn’t waning. India consumed 963.1 tonnes of gold in 2010, which is likely to increase to 1200 tons by 2020.
With prices all set to go higher, middle class Indians are opting for a way to bypass this irritant. The new found love in Gold Purchase Plans is a reflection of this.

Gold Purchase Plans Explained
So how does a Gold Purchase Plans actually work? There are two ways in which these plans operate;


1. Regular Investment Method: In this type of plan the jewelry companies accepts a regular monthly payment from customers usually as low as Rs. 1000 for a period of 12 months to 24 months. The customer is entitled to receive interest and bonus for the money invested.
Typically, for a customer who pays instalment for one year gets one month bonus. For example if you invest Rs. 1000 for one year your fund adds up to Rs 12,000. However, with one month bonus you get extra Rs. 1000 increasing your fund amount to Rs. 13,000. For two years investment some jewellers offer two month bonus.
At the end of maturity, the customer can opt for either gold coin for the amount or go for gold ornaments. If the customer chooses gold ornaments the jewellers discount charges on designing.
2. Systematic Gold Investment Plan: Some companies offers to credit an equal amount of gold to the customer’s account at the price prevailing when an instalment is paid. On maturity she can purchase the gold in the form of gold coins or ornaments. This way she can bypass increasing price of gold if she buys gold at a later date.
SIP method helps to average the cost of gold over the year. This is very useful as prices are going up. However, it also helps the customer to buy up gold when the price comes down on a correction. At lower prices more gold is purchased and at higher price fewer amount of gold is bought. This helps in averaging the cost of your gold purchase.
Overall, SIP method helps gold investors in the same manner as it helps investors in equities.

To Know the magic of compounding in SIP must watch this video;




How Customers and Jewellers’ Benefits from Gold Purchase Plans

These plans are provided by jewellers to attract more customers and make them spend more, even if the prices are high. However it is a win-win situation with both the consumer and the jeweller gaining from the transaction.

Benefits to Customer


1. Rupee Cost Averaging: For the customer Gold Purchase Plans works like a Systematic Investment Plan. Every month she can invest a part of her income into this plan. At maturity she gets gold worth the price of money invested. The money gains interest and jewellers also provide bonus for the investment. This makes it a good investment plan in gold especially for those who cannot pay at one go.
2. Helps Low Income Group to Invest in Gold: Considering the fact that gold is very important to our lives and is embedded in the cultural psyche of the Indians, most of us are forced to invest in gold. Thus, it forces people with limited income to purchase gold formarriages and other occasions. With Gold Purchase Plans people with low income can slowly make a corpus and purchase gold.
Benefits to Jeweller

1. Increased Flow of Money: A jeweller is benefited by having a regular flow of money every month. This helps the jeweller to buy gold and build inventory. Before the maturity date the jeweller can make use of the money invested for other investments or expenditure.

2. More Customers More Sale: More customers are attracted to jewellers who provide attractive Gold Purchase Plans. Furthermore, the prospect of buying lump sum gold through small systematic investments can make customer purchase more than they would have otherwise. All this contributes to the overall sale to rise thus profiting the jeweller.

Conclusion
Gold Purchase Plans are a good investment. Gold is now not only a hedge against inflation but is fast turning in to a safe investment asset. This makes it worthwhile to invest in gold in any form.