[rishab.k]

Originally Posted by lambuhere1

OT : Infrastructure Bonds

As per the current income tax laws, we can invest upto 20K INR in infrastructure bonds ..... I am planning to invest in the same to save some tax.

Well, these tax free infrastructure bonds will have a long tenure of ten years with a lock-in period of five years.

[lambuhere1]

Originally Posted by rishab.k

Well, these tax free infrastructure bonds will have a long tenure of ten years with a lock-in period of five years.

I dont mind saving and investing it for 5-10 years if I can save tax. Who knows may be I can buy a new headunit for my vehicle at that time

[ghodlur]

Expert BHP investment gurus, Need your advise.

I have a SIP in Kotak 30 for the past 1.5 yrs. The returns have not been attractive, hence thinking of exiting the Mutual fund. Is this a right decision? If so which alternate MF scheme do I need to check where I can start the SIP. I can invest upto 10K pm.

Also if I exit from Kotak 30, how and where do I invest the lumpsum amout recd?

[Jaguar]

A question related to capital gains.
I have a couple of stocks purchased in 2008 and which are making a combined loss of about Rs.15,000. If I sell them now, will I be able to adjust this 15k against any capital gains I make this year?

[download2live]

Guys need your help on this.

Clock is ticking and I have to make Tax saving investments.
My favorite used to be ELSS, e.g. Tax saving Mutual funds.
But heard that DTC will be coming in force 2012. And it excludes the ELSS as a part of 80C.

I might be wrong but I feel that post 2012 the ELSS schemes will lose their charm(once the tax benefit is gone) and we might see massive withdrawals also once the respective lock in period gets over.

Won't it reduce the price (in 2012) of the units I will be getting now as a part of investment??

If so what are the other options I have?
Also does the return on tax saving FD gets taxed?? Is it a good option??
PPF has a long 15 yrs locking period so not really interested in that.

Experts, please chip in with your suggestions.

[kalpeshc]

This is THE BIGGEST problems with most of us. We end up waiting for the last quarter to make the investments. All of you should make a resolution of starting your investments from the start of the financial year. SIPs, PPF, etc. should definitely be started right from Apr onwards. Compounding really works.

PS: And PPF really is one of the best investment mechanism. Do everything else but after putting in the max 70K in PPF. It's entirely risk free and will help you when you retire

[roadie_swift]

Originally Posted by kalpeshc

PS: And PPF really is one of the best investment mechanism. Do everything else but after putting in the max 70K in PPF. It's entirely risk free and will help you when you retire

Although choice of investing instruments is as personal as taste in clothes, I would like to disagree with the quoted point here.

Reason being, look at the returns - 8.5% sounds like really good return, especially when it's fully backed by Govt. But...

BUT, look at the inflation adjusted returns. With the national economists actually preferring a slightly heated-up and more than mildly inflationary state of economy, one can reasonably expect the inflation to be hovering around the two-digit mark for quite some time to come. In this scenario, your PPF investments would actually be generating a negative return!

I think if we had to generalize at all, it would be best to go by the "100 minus age" rule of investing -

Deduct your present age number from 100, and what remains, is the percentage you need to have invested in equities. Conversely, the percentage you need to have invested in debt instruments, among which the PPF would rank really high, should ideally be equal to your age.

So I do not think utilizing the full 70k limit of PPF investing would really make sense for a guy having, let's say, a 100k to invest and who is 30 years of age.

Also, I do not know to what extent we can wholly rely on the so-called Govt. guarantee - with the politicians out to ruin this country for their petty interests, you may never know if they'll do to your PPF reserves what they have already done to the pension funds. If it can happen in the US, I am sure it can happen in India. (But maybe I am too much of a cynic).

Cheers,
R_S

PS: But I really do agree with KalpeshC regarding the fact that all of us need to start investing right from the start, and not leave it till the end, which will finally end up with us making hasty decisions. Compounding works magic with your money, truly.

[kalpeshc]

Completely agree with you.

I do end up investing at least 3 times more than 70K during a year in equities (at least that's the target). I meant that try and fill up that PPF as much as possible in a year. I am looking solely at PPF as something which is an absolute rock solid investment for my retirement (nothing earlier). Equities is definitely something that should be ignored at your own risk. They are the way to go if you want to 'create' wealth. But for pure 'forget it' investments, I'd still recommend that people start putting in their money in PPF (as much as possible). The rest can definitely go in equities.

PS: I am really bad at finances and hence PPF works best for me. I also have exposure to equities with a ratio of 4:1 to debt.

[Abeer]

Originally Posted by kalpeshc

This is THE BIGGEST problems with most of us. We end up waiting for the last quarter to make the investments. All of you should make a resolution of starting your investments from the start of the financial year. SIPs, PPF, etc. should definitely be started right from Apr onwards. Compounding really works.

PS: And PPF really is one of the best investment mechanism. Do everything else but after putting in the max 70K in PPF. It's entirely risk free and will help you when you retire

I already have a PPF account in my name. Can I open a PPF account in my minor son's name also? Will the PPF contribution limit be 70K in each of the accounts or will it be 70K as the combined limit?

[roadie_swift]

Originally Posted by Abeer

I already have a PPF account in my name. Can I open a PPF account in my minor son's name also? Will the PPF contribution limit be 70K in each of the accounts or will it be 70K as the combined limit?

Yeah, sure you can open an account in the name of your minor child, but you will not be able to take tax advantage on the full combined amount of 1.40 Lacs.

The 70k limit to contribution has been set by the PPF Act, which mentions that the total amount an earning individual may contribute towards PPF is limited to 70k only. So, you will need to divide the total sum of 70k between your own PPF account, and that of your child's, so long as you are the only one among the two who is earning and depositing the money.

Also, the IT Act (u/s 80C) has a stated limit (as on date) of 1 Lac for all tax-saving investments, including PPF. So, irrespective of the PPF contributions, the total tax deduction can be claimed only on 1 Lac, out of which you may contribute only a combined total of 70k towards PPF.

Hope this helps.

Cheers,
R_S

[Abeer]

Originally Posted by roadie_swift

The 70k limit to contribution has been set by the PPF Act, which mentions that the total amount an earning individual may contribute towards PPF is limited to 70k only. So, you will need to divide the total sum of 70k between your own PPF account, and that of your child's, so long as you are the only one among the two who is earning and depositing the money.

Thanks. Could you elaborate more on the above statement?

[roadie_swift]

Originally Posted by Abeer

Thanks. Could you elaborate more on the above statement?

Basically, the PPF Act seeks to clarify one thing -

One earning person may contribute only 70k p.a. into the PPF.

If one person is earning, he may put the entire 70k in his PPF account.

Alternatively, he may open an account in the name of his minor child also, and deposit 35k to his own account and 35k to the child's account.

Or, further alternatively, he may open an account for himself, and two separate accounts for his two children - even then, the total investible corpus allowed to him remains only 70k. Then he will have to divide the money, may be like, 20k each to his two children's accounts, and balance 30k to his own account.

No matter how you split the pie, if You are contributing the money - to your own account, or to someone else's account on behalf of them - the total money you are allowed to contribute per annum is only 70k.


Cheers,
R_S

[Gansan]

Originally Posted by roadie_swift

Reason being, look at the returns - 8.5% sounds like really good return, especially when it's fully backed by Govt. But...

BUT, look at the inflation adjusted returns. With the national economists actually preferring a slightly heated-up and more than mildly inflationary state of economy, one can reasonably expect the inflation to be hovering around the two-digit mark for quite some time to come. In this scenario, your PPF investments would actually be generating a negative return!

Not exactly! We should actually add the amount of tax saved to this 8.5%!

It really is rock solid, can't be attached even by a court of law, except towards tax dues.

I haven't gone through the whole thread, so no idea if this was mentioned, but we can legally make annual withdrawals from the PPF from the fifth year, and put it back in PPF (may be adding some more amount) and still get IT relief.

[Devrishi]

Yeah, PPF is ROCK solid. I invest elsewhere only after filling up all my family PPF accounts.

I hope everyone here knows that we can have PPF account in our HUF also.

[roadie_swift]

Originally Posted by Gansan

Not exactly! We should actually add the amount of tax saved to this 8.5%!

This is absolutely correct, but does this mean that the said tax-savings can ONLY be achieved through PPF contributions?

No.

There are a lot of ELSS mutual funds which have a judicious mix of debt and equity, and which provide a lot more inflation-adjusted returns than PPF, AND offer the tax-break as well. So why not go for it? Of course, this will depend on the individual's risk-appetite, too.

If you read the first line of my earlier post, I have said that investment choices are as much a matter of personal choice as taste in clothes. So of course, to each his own.

But there is no harm in being aware of other avenues which offer higher returns for your money WITH the tax-breaks, and then opting for it depending on one's own risk appetite. There is no point in limiting one's investment horizons to just PPF.

Don't you agree?

Cheers,
R_S

PS: As for PPF being Rock Solid, the politicians are not giving us a lot of reasons to rest easy with our hard-earned money in their hands. You never know if your PPF cheque, which you'll want to cash at retirement, may be bounced... Remember the US-64?