51% investors withdraw from equity funds within a year

*51% investors withdraw from equity funds within a year*

Experts recommend investors to hold on to their equity mutual fund investments for a time period of at least five years

Although more investors are putting their money in mutual funds (MFs) through systematic investment plans (SIPs), they are not necessarily staying invested for the long term. Data from the Association of Mutual Funds of India (Amfi), the MF industry’s trade body, shows that just 29% of equity assets stay invested for more than two years. A huge 51% of equity assets get withdrawn before a year gets over.

The Indian mutual fund industry may be boasting about increased SIP inflows over these past two years, but if investors don’t stay invested for the long-term, have they really benefited?

The prospect of an economic turnaround and a sustained ‘Mutual Funds Sahi Hai’ campaign by the Indian MF industry in the past two years have resulted in more investors coming to MFs. The note ban of 2016 also resulted in an increased financialisation of savings wherein investors shifted from real estate and gold investments to MFs. Falling bank fixed deposit rates at the time also nudged investors to move and invest in MFs, particularly balanced funds and in some cases, debt funds.

From getting around ₹3,122 crore every month through the SIP route in April 2016, a little more than ₹7,500 crore poured into equity funds in July 2018, as per Amfi data. The number of investor accounts have gone up from 47.7 million to 74.6 million in the same period. To be sure, an investor may open more than one account in a single fund or across funds; so the increase in the number of investor accounts may not necessarily indicate an increase in the number of investors.

“Traditionally, investors have been used to investing in one-year FDs. That explains why so many investors withdraw from MFs within a year. But if you look deeper in the number of investors who do stay invested beyond two years, some of them would stay for a really long time,” said Chandresh Nigam, managing director and chief executive officer, Axis Asset Management Co. Ltd.

But surely, rising equity markets would tempt investors to stay on for a little longer given the potential gains they are likely to make? “On the contrary, many investors tend to churn more in rising markets. When their funds don’t go up as much as some other funds, very quickly they get a feeling of being left out. This has been especially so in the past year when many large-cap funds underperformed the equity markets. Equity markets have gone up, but the reality is that very few stocks have pulled the markets up. A broad section of stocks have underperformed actually, and that has also resulted in many equity funds underperforming,” said Tarun Birani, founder and CEO, TBNG Capital Advisors.

Experts recommend investors to hold on to their equity MFs for a time period of at least five years. A Mint-Crisil Research study on the effectiveness of SIPs published in November 2017 pointed out that if you stayed invested for shorter time periods such as 1-4 years, your chances of making losses are higher. The study pointed out SIPs that run for at least seven years or more have bare minimum to no chance of making a loss .

“Too many investors have come into MFs—presumably for the first time ever—in these past two to three years based on recent past performances. They expect to make similar returns over the next 2-3 years. But that is a wrong approach. A majority of investors invest haphazardly and without planning for any financial goals. Then, if they don’t get a good experience, they exit,” said Mrin Agarwal, a financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra.

One way to develop patience, said Agarwal, is to invest keeping financial goals in mind.

If the goals are long term, then you need to check periodically, at best once or twice a year, as to how close you are getting to your goal. If you are on path, then it doesn’t matter whether your fund gives 15% return as opposed to some other fund that has given, say, 20% return.

Courtesy
(Live Mint :Last Published: Thu, Aug 23 2018. 12 58 PM IST)

Insurance Claims: LIC Tops in Individual Claims while Private Insurers Settled More Group

Insurance Claims: LIC Tops in Individual Claims while Private Insurers Settled More Group

State-run Life Insurance Corporation of India (LIC) has once again, outnumbered private insurers in terms of the number of claims settled for individual customers.

However, in terms of group insurance claim settlement, LIC is found lagging behind private insurance companies, especially during the past two years.

While responding to a question in the Lok Sabha, Shiv Pratap Shukla, minister of state in the ministry of finance, said, “As per Regulation 14 of Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interest) Regulations, 2017, certain procedures such as immediate processing upon receiving a death claim, adhering to timelines for settlement of a death claim, reasons to be stated on rejection or repudiation of the claim, and interest to be paid due to delay on the part of insurer are required to be followed by insurers for claim settlement in respect of a life insurance policy. Regulation 17 of the said Regulations states that every insurer shall have in place proper procedures and effective mechanism to expeditiously resolve complaints and grievances of policyholders and claimants efficiently." 

During FY17-18, LIC settled 725,000 insurance claims upon death of the insured, while all 24 private insurance companies settled only 104,000 claims. However, in terms of group insurance, these private insurers settled 477,000 claims while LIC settled 284,000 claims. Interestingly, till FY15-16, there was marginal difference between private insurers and LIC, in terms of settling group insurance claims. However, from next year onwards private companies have settled almost double claims each year compared with LIC. This also means that private insurers could be focussing more on groups insurance business than individual insurance policies. 

SBI Life Insurance Co Ltd (SBI Life) settled maximum number of individual claims at (18274,)
Bajaj Allianz Life Insurance Co Ltd (13,176),
HDFC Standard Life Insurance Co Ltd (12,289),
ICICI Prudential Life Insurance Co Ltd (11,216)
Max Life Insurance Co Ltd at 10,125. However, absolute figures could be misleading.

 

According to the reply given in Lok Sabha, during FY2017-18, there were 519 complaints filed against private insurance companies compared with just 66 against LIC.

According to the minister, based on the analysis of claims data of life insurers, if any variation or abnormal discrepancies are noticed, they are taken up with the insurers. "These variations, deviations, discrepancies noticed are also thoroughly checked by the inspection department of Insurance Regulatory and Development Authority of India (IRDAI), during regular onsite inspection. The Authority also conducts focussed online inspection. In case any grave irregularity is noticed in the claim settlement by the insurer, regulatory and corrective measures are initiated accordingly," he said in a written reply.

Legal Heir Registration under income tax:

Legal Heir Registration under income tax: –

Step 1 – Login to e-Filing portal using Legal Heir Credentials

Step 2 – My Account -> Register as Legal Heir

Step 3 – Select the Type of Request – New Request

Step 4 – Enter the details of Deceased

PAN
Date of Birth
Surname
Middle Name
First Name

Step 5 – Select the files to upload

Step 6 – Attach a Zip File with the below scanned documents

Copy of the Death Certificate
Copy of PAN card of the deceased
Self-attested PAN card copy and
Legal Heir Certificate Or Affidavit in presence of a Notary Public

Step 7 – Click Submit

Note: Following documents will be accepted as Legal Heir certificate.

The legal heir certificate issued by court of law
The legal heir certificate issued by the Local revenue authorities.
The certificate of surviving family members issued by the local revenue authorities
The registered will
The Family pension certificate issued by the State/Central government.

Approval Process of Legal Heir on Income Tax e-Filing Website

Step 1 – Legal Heir New request will be sent to the e-Filing Administrator.

Step 2 – The e-Filing Administrator will verify the request and approve / reject as applicable.

Note: e-Filing Administrator may approve as Temporary Legal Heir or Permanent Legal Heir, based on the documents uploaded. An e-mail is sent to the registered e-mail ID with the details of approval / rejection.

Temporary Legal Heir

A person is treated as a Temporary Legal Heir when fails to submit any one of the five Legal Heir certificates as specified.

Permanent Legal Heir

A person is treated as a Permanent Legal Heir when the person submits any one of the five Legal Heir certificates mentioned above.

Steps involved in Legal Heir Registration – Upgrade to Permanent Legal Heir

Step 1 – Login to e-Filing portal using Legal Heir Credentials

Step 2 – My Account -> Register as Legal Heir

Step 3 – Select the Type of Request – Upgrade to Permanent LH
Step 4
– Select the Legal Heir Certificate

Step 5 – Upload the Scan document of any one of the Legal Heir Certificate.

Step 6 – Click Submit

Upgrade to Permanent Legal Heir request will be sent to the e-Filing Administrator.
The e-Filing Administrator will verify the request and approve / reject as applicable.
To view the status of the request
Login using Legal Heir Credentials
My Request List —> Select Add Legal Heir Request.
The Legal Heir should add his/her PAN in the verification part of the ITR Form, validate and generate the xml of the return (if using offline forms) and upload the return of the deceased using the Legal Heir login.

Key Points to be noted:

Documents in regional language ( other than Hindi) should be translated to  English . The translated document should be notarized (Both the original and translated document should be uploaded).
The uploaded documents should be scanned in PDF format with 300 dpi.
The zip file attachment should not exceed 1Mb.

Tax authority (CBDT) extends deadline for filing Income Tax returns by 31 August

Tax authority (CBDT) extends deadline for filing Income Tax returns by 31 August

The Central Board of Direct Taxes (CBDT) has extended the due date for filing of Income Tax Returns from July 31, 2018, to August 31, 2018, for certain categories of taxpayers.

The Central Board of Direct Taxes (CBDT) has extended the due date for filing of Income Tax Returns to August 31, 2018, for categories of taxpayers who were to file their returns by July 31.

 
The decision comes days ahead of the July 31 deadline, which several groups had requested the government to push to later.

CBDT had notified the new income tax return forms for assessment year 2018-19 on April 5. Experts said the introduction of new forms was leading to delays in filing of returns.

Further, the CBDT had said non-filing of ITR Before The Due Date from this assessment year would lead to a penalty of Rs 1,000, 5,000 and Rs 10,000, depending on when the returns were filed after the deadline. The fine for taxpayers having income under Rs 5 lakh remained at Rs 1,000.

If you are still unclear in choosing the appropriate ITR for disclosing your income earned during the previous year, here's a quick guide on the various ITR forms.

ITR 1 Sahaj:

Applicable to individuals that are an ordinary resident in India deriving income from salaries, one house property, other sources and having total income upto Rs 50 Lacs.

ITR 2:

It is applicable to any individual having total income exceeding Rs. 50 Lacs or having foreign asset/income or having more than one residential house property or income from capital gain or HUF.

ITR-3:

It is applicable to individuals and HUFs deriving income from profits and gains from business or profession along-with any income from salaries or house property or capital gains or other sources.

ITR-4 SUGAM:

It is for resident taxpayers (Individual, HUF, Firm other than LLP), who have opted for presumptive income scheme as laid down under section 44AD, 44ADA and 44AE of the Income Tax Act, 1961.

ITR-5:

This form can be used by a person being a Firm, Limited Liability Partnerships (LLP), AOP/BOI, Private discretionary trust, an Artificial juridical person referred to in section 2(31)(vii), Cooperative Society and Local authority.

ITR-6:

This form is being used by Company, other than a company claiming exemption under section 11 of the Income Tax Act. The ITR also introduces a new Schedule for Ind AS Compliant companies wherein they are required to disclose the balance sheet and P/L account in the same format as prescribed under the Companies Act, 2013

ITR-7:

Required to be filed when individuals including companies fall under section 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F). This ITR form is basically meant for trusts claiming exemptions u/s 11 of the Act, Political party, Mutual funds, Securitization trust, and other specified assesses.

For Tax Planning
Damodaran K
Financial Counselor
9940857995

.... enlighten yourself and enlighten others.

Read this, understand the value of insurance , enlighten yourself and enlighten others.

1. We buy gold for our children's education and marriage, but we don't buy a child plan.

2. We get fear on seeing an insurance agent, rather than getting a feeling of protection.

3. Only "20 crore" Indians have got insurance policy out of "130 crores" population.

4. We buy a screen guard to protect our mobile worth 10k, but we don't insure our life which is worth more than 10 Crores.

5. We get our daughter married to an unknown person. But we think a lot when a known person advices us about taking an insurance policy.

6. We fight among ourselves on Bhagavath Githa and Khuran, but we don't realise death is "FATE"

7. We place our chappal very carefully  in a stand paying Rs.5/-.  But we don't feel like paying Rs. 50/- a day to insure our life.

8. We believe Babas who do "magic" but we don't believe insurance agent who guides us with "Logic".

9. We envy Govt employees for their pension facility. But  we don't like saving some amount every month in a Pension policy and get pension for life time.

10. As per world census, more than 10k people everyday , do not wake up from sleep on their alarm set previous night.
Please remember only " FIRE ENGINE" comes with alarm, but "DEATH ENGINE" does not ...

11. We buy invertor to have light in our home during power off.
But you are the light to your family. Insurance policy is the invertor for your family to have light even when are not there.

12. When we die, it's LAST DAY only for us. But for family, it's just another day. They continue to live next day too.. Protect THEIR life with insuring YOUR life.

13. You know the balance in your mobile card, you know the balance in your Debit card ....  Do you know ... what is the balace in your life card?

RECHARGE" your life card with insurance..,,,

Dhamodharan.K
Financial Counselor
9940857995

Why It Is Important To Invest In Health Insurance plans In 2018?

Why It Is Important To Invest In Health Insurance plans In?

In India health care expens is increased day by day, health care is actually becoming a pain for a lot of Indians. The pain is further aggravated by the fact that we still don’t efficient public health care services which should have been providing services at a discounted rate which has lead to more dependence on private facilities and which is quite unbearable for lot of households and makes it tough for them to manage financial turmoil in a state of health emergency. The most effective way the to take this  problem can be by building effective financial reserve for handle the emergency .The cost effective option to build that reserve is to buy a health insurance plan. In fact if you don’t have a health insurance plan in place then it should be the most important commitment that you should make for 2018...This supposedly should be the most effective investment which you should plan for the year 2018.

So if you are planning to fulfill your Health Insurance this year, below is the list of thing that you should look into in your health insurer’s plans so that you make the most effective decision:

Hospitalization benefits: In the earlier days the only way you can raise a claim with your health insurer is when you have gone through a 24 hour hospitalization. Though the concept has changed drastically but still a lot of policies do have certain limitations which defines what would be covered and what is the amount that would be covered so while buying a health insurance do look at the various clauses governing which this part of the  benefit.

Day to Day care related benefits:  With recent advancements in medical science today a lot medical treatment doesn’t even require somebody to get a hospital admission. All a lot of ailments can be handled by OPD services provided by various hospital. While planning for your health insurance in 2020 you should look at guidelines regarding day care health procedure and check is there any limitation governing the same.

Cashless facility: Today all health insurance plans offer cashless facility but the challenge lies in understanding are there any hospitals under your insurer's network present in current city of residence. Though cashless is an efficient way  to settling claims and you don’t have panic for financial aid when you are faced with a medical emergency but the factor regarding presence of hospitals through which you can access this facility is also very important.

Room rent: This is actually bit tricky benefits. A lot of health insurer limits the type of services that you can opt under a specific plan and hospital room facilities in one of them. A  better of this very important because it's misinterpretation can put you in a state where your others claims can also be denied.

Ancillary benefits : You should understand the during the state of a medical emergency other than the major cost like hospitalization , doctor advise and medicine cost there are a lots of ancillary cost involved which we often ignore. One of the most common of them is Ambulance services which can be at times can become very costly. While investing in a health insurance plan do check at things relating how claims would be settled by your insurer against all these costs.

Other than these important things which are defining factors to identify which policy to buy and which not , you can always take tax benefits on Sec 80D on the premium that you would pay this year and in the future years subject to the conditions the regulation don’t change. Another thing is that important is that you always do an online comparison of all Health Insurance Plans before investing so that the decision that you take this year should have long term benefits.

Invest little today for tomorrow huge expence

Call me for more

DHAMODHARAN K

Financial Planner

+91 7358210672

GOOD INVESTMENT MADE BY LIC

GOOD INVESTMENT MADE BY LIC

LIC could still make some money from it if IDBI Bank turns around in the next two or three years.

The consensus about Life Insurance Corporation of India’s proposed investment in beleaguered IDBI BANK is that it is a bad, very bad idea.

Stock market pundits, banking and insurance experts, economists and the media have uniformly dubbed it a retrograde move, one that is bound to fail given the insurmountable problems at IDBI and LIC’s lack of expertise in turning around failing banks.

IDBI shares have bounced back somewhat immediately after the deal’s announcement at the end of June, though they are still far away from the March levels.

The fall could be a reflection of the tough road ahead for B Sriram, the newly-appointed managing director of IDBI Bank, and his team who have to grapple with shrinking market share, rising bad loans and the absence of a credible retail strategy to take on the might of the NBFCs and smarter private sector bank rivals.

IDBI Bank is now under the prompt and corrective action (PCA) mode of Reserve Bank of India which bars it from lending though it can still collect deposits so the first step will be to convince RBI that IDBI is ready to do normal business again.

The primary argument against the LIC-IDBI deal is that it is a gross misallocation of resources. Policyholders’ money should not be used to bail out ailing banks especially when there is no clear turnaround strategy.

Returns to policyholders will suffer as these investments lag the broader market or worse, collapse sparking a government bail-out.

While the argument about government’s over reliance on the LIC may be on the mark, the fears about LIC’s financial performance suffering due to the IDBI deal are grossly exaggerated. Let’s examine the argument one by one.

The IDBI investment of just over Rs 10,000 crore (including investments before 2018) is less than 2 per cent of LIC’s equity assets under management (AUM) of over Rs 5 lakh crore. Equity is only 20 per cent of the total assets. The percentage of its holdings in PSU banks may be higher but one should note not all these investments are struggling. State Bank of India, Bank of Baroda, for instance, are neither under PCA, nor is their financial position as bad as IDBI or some of the PCA banks.

Secondly, there is the question of LIC’s products and its status as a government-backed insurance company. A small, negligible portion of its policies are unit-linked insurance plans or ULIPs. The majority of its products are traditional protection plans.

A sovereign guarantee on all LIC products ensures that the policyholders get sum assured and vested bonus as most of the plans are participating plans, where 95 per cent of the surplus is allocated to policyholders. This guarantee ensures that policyholders don’t lose out in the unlikely event LIC fails to discharge its obligations.
.

LIC attempts to generate surpluses which can be used to make payouts for claims or endowment policies have to be closed. A small portion of its massive equity portfolio underperforming for some periods is unlikely to have a significant impact on such payouts especially when there also exists the Corporation’s debt portfolio which is several times larger than the equity portfolio.

Of course, an insurance company’s investment portfolio can go wrong and clobber its financials but LIC seems an unlikely candidate at this point given the size of its overall investment in PSU banks as a percentage of its equity AUM.

This, however, does not mean that the government has done something fantastic by persuading LIC to buy into IDBI. The problem with the transaction is less about LIC’s ability and financial clout and more about the government’s own readiness in dealing with bank recapitalisation and disinvestment.

IDBI Bank was among the earliest candidates for disinvestment. It was supposed to be privatised a few years back as selling down the govt stake did not involve amending the Bank Nationalisation Act. Despite the best efforts of the PMO and the finance minister, Arun Jaitley, it did not happen.

You can blame the usual ills for this — red tape bureaucratic inertia and an unwillingness to take risks but the problem is that the first failure has now come back to haunt the government.

A private investor would have been far more nimble-footed in recognising the problem of NPAs and taken steps to tackle it if it had been sold two years ago. The management would have got sufficient breathing room, if early and timely recognition had happened, to tackle issues relating to the bankruptcy court and the RBI’s February 12 circular.

Today, IDBI Bank is in a far worse shape and private investors are unwilling to even come close. With elections looming and the bad loan problem only becoming bigger, the government, in desperation, has palmed it off to LIC.

Now, LIC could still make some money from it if IDBI Bank turns around in the next two or three years. It is difficult but not an impossible task, but the whole saga shifts the limelight onto the government’s approach to disinvestment which has been tentative, wary and devoid of strategic intent. It is almost as if the government is unsure of what to do.