Monthly Archives: October, 2012

Understanding Wealth Tax and its applicability

What is Wealth Tax?

 Wealth tax is a relatively lesser known direct tax which is levied if the total value of “unproductive assets” of an individual exceeds Rs 30 Lakhs in a financial year. The percentage of tax is 1 % of the value of the assets exceeding Rs 30 Lakhs. For eg. – If the assets covered under this tax are worth  Rs 50 Lakhs, wealth tax payable is  Rs. 20,000 – 1 % of ( 50 Lakhs-30 Lakhs).

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How big should your retirement corpus be?

Retirement Savings

A couple of days back, one of the leading financial newspapers had a detailed article on the captioned subject including the method to calculate your required retirement corpus. One of my very close friends did so and was shocked to find that for her the amount worked out to be close to Rs 6 crores; far more than what she had expected. With this revelation comes the next worry – of finding some way to save this amount.

Let us understand this in detail.

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Fidelity and L&T AMCs’ Merger-Should you use the exit option?

Fidelity Asset Management Company has been recently acquired by L&T Mutual Fund. As a result, a few schemes of Fidelity MF are all set to merge with L&T MF effective 16th November 2012.

The following are the schemes to be merged –

Fidelity Flexi Gilt Fund with L&T Gilt Fund

Fidelity Wealth Builder Fund-Plan A with L&T Monthly Income Plan

Fidelity Wealth Builder Fund-Plan B & Plan C with L&T MIP – Wealth Builder Fund

L&T Contra Fund and Fidelity India Value Fund to form “L&T India value Fund”

L&T Hedged Equity Fund, L&T Growth Fund and L&T Opportunities Fund and Fidelity India Growth Fund to form “L&T India large Cap Fund”

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When a ULIP was sold to a pre retiree

                                                                                    Buyer Beware!   

Such articles usually start with a disclaimer which goes like “All the characters in this example are imaginary and the incidents are purely fictional”. But this is a real life case which happened to a close family friend and client last year and nothing about this incident is even remotely fictional!

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How much risk should you take on your investments?

Golden Guy Balancing Risk

If you approach any financial advisor/planner for advice on where to invest your money, one of the first questions posed by them would be if you are comfortable investing in riskier avenues for better appreciation of your wealth. Some of the well established financial planning outfits would also have you fill up a risk profiling questionnaire asking questions like how would you react if you lose money on your investments etc. to find out how much risk you would be willing to take in order to get better returns on your investments. In other words, they are trying to understand your risk appetite.

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Capital Protection Oriented Funds- A safe bet in uncertain times

Consider the domestic investment scenario – Indian stock markets have returned a single digit  average annualized return  since 2008 and the future course is unpredictable. Similar is the case with debt markets with high inflation and uncertain interest rate movement. So where does a person invest in such a situation to protect himself from interest rate risk and volatility of the stock markets. Capital Protection Oriented Funds could be one of the solutions.

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