Conflict of interest is the biggest impediment in success of EV

Conflict of interest is the biggest impediment in success of Electric Vehicles in India

What is making some of the biggest names in India's auto industry go slow on electric vehicles? Probably the lack of infrastructure to charge these electric vehicles?

No.

Not really. Instead, it is the conflict of interest that is making vehicle makers to go slow.

Vehicle makers who have already spent billions of dollars in developing an ecosystem of dealerships, vehicle service and spare parts sales are reluctant to give it up for a much more economical solution of electric vehicles.

The biggest challenge for electric vehicles is the conflict of interest in the minds of vehicle makers who are currently making internal combustion (IC) engine products. What one can see around the world is that large successful organisations which make petrol and diesel vehicles who have enormous resources have been generally very slow in developing EVs.

 Why So?

 A dealer clocks a margin of 2.5-3 percent on vehicle sales but for vehicle service the operating margins range between 10-15 percent. Vehicle service is the main profit driver for any dealer. An electric vehicle has around 10-20 moving parts compared to more than 2000 in an IC engine vehicle thereby resulting in greater wear and tear. And thus higher service earnings to the dealer and the manufacturer.

"Service and spare parts are huge part of a dealer's revenue. After the introduction of EVs it will become almost unheard of. There will hardly be a need for service or part replacement. This is why there is a reluctance on the part of existing incumbents to move quickly in this direction. Whereas those who are new and have nothing to lose are steadfastly moving in that direction. So these are the two extremes,"

Publicly, almost every vehicle maker has cited lack of charging stations as one of the main reasons for them going slow on electric vehicle adoption. The other reasons being high vehicle acquisition cost, limited driving range and dearth of battery makers.

However this is not so.

"When CNG was first introduced auto-rickshaw drivers used to wait for 6 hours in the queue for filing the fuel. But demand for it gradually became so strong that now there is abundance of CNG pumps. Same way infrastructure for EVs will also come up. We should not get caught in the chicken and egg situation because nobody is going to put the infrastructure for anything unless they actually see demand. Once demand is created everything else will fall in place,"

So who will drive the Electric Vehicle growth. 

Interestingly, at the same time young startups are not only building but launching electric vehicles at a rapid pace. And everyday there is a new start up which is willing to burn cash to do the same,as they do not have a legacy of dealership, service and other infrastructure to worry about.

Startups such as Ultraviolett Automotive, Evolet, Ather Energy, Emflux, Tork Motors and Yulu Bikes are some of the companies which have either launched electric two-wheelers in the market or are in advanced stages of launching them.

Electric Vehicle are the future of automotive industry and sooner than later everyone will have to cross this bend.

Happy Investing

Source:Moneycontrol.com

Some simple retirement products suitable for most savers in India

Some simple retirement products suitable for most savers in India

You need to start early and invest in the right retirement savings products.

Unlike other financial goals, Retirement Planning is a peculiar one. Unless you are lucky to have an inflation-protected pension from the government, you are really on your own. You need to save for your retirement, properly.

And you have just one shot at it. If you get it wrong, then the realization of being wrong will generally occur so late that it would be difficult to get your retirement savings back on track. It’s like running a marathon, where if you decide to get serious only in the last few kilometers, you won’t win or be able to change the outcome of the race by running very fast very late.

So you need to start early and invest in the right retirement savings products.

Of course, the products suitable for saving before retirement may or may not be suitable for the post-retirement period, as money planning differs for the timeframes before and after retirement.

Retirement products


That said, let’s have a look at products suitable for retirement savings:


EPF (Employee’s Provident Fund):


It is one of the most popular retirement saving instruments amongst the salaried class in India. And this is as good a debt product that you can ever have when saving for retirement in a tax-free manner. In addition to your contributions, the employer too puts in money. The interest earned is tax-free and, most importantly, the EPF corpus at retirement is also tax-free. This works best if you don’t withdraw money while changing jobs and avoid dipping into this retirement savings for other goals.


Voluntary Provident Fund (VPF):


There are certain organization-specific limits to how much an employee (and employer) contribute towards EPF. But if you are a risk-averse retirement saver, you can increase EPF savings by additionally opting for VPF. VPF is a voluntary contribution (and hence not matched by the employer) and increases your contributions in EPF.


Public Provident Fund (PPF):


If you aren’t salaried or don’t have an option to save via EPF (and VPF), then PPF can be a good option. The returns are slightly less than EPF and there is an upper limit on how much you can invest every year (Rs 1.5 lakh). But still, it is a good option on the debt side for the retirement portfolio.


Equity Mutual Funds:


The above products are debt instruments. But when it comes to goals such as retirement that are several years away, it is advisable to have a reasonable component of equity in the savings portfolio. And for most people, investing in equity is best done via regular SIPs in equity funds. Equity funds can deliver inflation-beating returns in the long run. But they are volatile (as is the nature of equity) and hence, should be invested for long. Ideally, the funds should be reviewed every year. If need be, you must switch to better funds. That said, regular rebalancing is also advised.


NPS(National Pension System):


The NPS is a retirement-dedicated savings product. Many organizations have this option instead of the EPF. Since this single product allows savers to take exposure to both equity and debt and also control asset allocation, it makes NPS a good option for retirement saving. If you are not comfortable choosing proper asset allocation (mix of equity and debt), then you can go for NPS Auto choice. But unlike EPF and PPF, where the accumulated corpus at maturity is tax-free and allows unrestricted usage, the NPS requires mandatory purchase of annuity worth a minimum of 40 per cent of accumulated corpus. And the pension from this annuity is taxable. The remaining 60 per cent is tax-free and available as one-time lump-sum payment. Mandatorily having to take an annuity  makes NPS suitable for only a section of the retirement savers. Many who don’t want to be bound by any restrictions (including those targeting early retirement) are better-served by a simple combination of EPF, VPF and/or PPF and Equity Funds.


Different people have different retirement planning needs. So it’s possible that for a few others, some other products might also work. For example: If one is investing a comparatively larger amount for retirement and EPF deductions are capped ( and VPF unavailable) and PPF limit is exhausted, then debt funds and tax-free bonds can also be considered.


When saving for retirement, it’s important to have proper asset allocation and diversify across products (but not diversify too much). And unless you know the exact amount you need to save for retirement and other goals, you will never be sure whether you are on track of retirement or not.

 

Happy Investing

Source: Stableinvestor.com

Are you a senior citizen? Know the special tax benefits you can avail in India

Are you a senior citizen? Know the special tax benefits you can avail in India

 

A person is considered to be a senior citizen under the Income Tax Act on attaining the age of 60 in a financial year, even if for one day. Once he attains 60 years, his status as senior citizen in that financial year, gives him some relief. There are a few income tax exemptions available for senior citizens.

These are listed below:

Higher exemption limit

Exemption limit is the quantum of income up to which a person is not liable to pay tax. A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2019-20 available to a resident senior citizen is Rs 3,00,000. The exemption limit for non-senior citizen is Rs 2,50,000.

A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2019-20 available to a resident very senior citizen is Rs 5,00,000.

Tax benefits on medical insurance

A senior citizen can avail of higher of higher deduction of Rs 50,000 under Section 80D in respect of medical insurance premium for FY 2019-20. Further, senior citizen can claim deduction of Rs 50,000 in aggregate in respect of medical expenditure incurred on the health of assessee, himself, his/her spouse or dependent children or parents. This deduction is available if amount is paid for benefit of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Generally this deduction is available up to Rs 40,000 . However, if the patient is a senior citizen, then deduction of Rs 1,00,000 is allowable.

Deduction under Section 80TTB

Section 80TTB allows tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount up to Rs 50,000 earned by the senior citizen. Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.

Relief from TDS

Section 194Agives corresponding provisions that no tax shall be deducted at source from payment of interest to a senior citizen up to Rs 50,000.

As per Section 208, every person whose estimated tax liability for the year is Rs 10,000 or more, shall pay his tax in advance, in the form of "advance tax". However, Section 207 gives relief from payment of advance tax to a resident senior citizen. As per Section 207, from 2012-13, resident senior citizens, not having any income chargeable under the head "profits and gains of business or profession", shall not be liable to pay advance tax and such senior citizen shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax.

Senior citizens receive a higher interest (up to 50 bps) on a 5-year fixed deposit, which is eligible for deduction from the total income under Section 80C. Senior citizens can claim exemption on TDS on interest income earned on deposits. It can be done by submitting Form 15H under Section 197.

Happy Investing

Source: Taxguru.com

 

7 Signs That You Are Not Earning Enough To Retire Comfortably

7 Signs That You Are Not Earning Enough To Retire Comfortably

Salary is never enough, appraisals or job switches make you hungrier, which is quite natural for the kind of luxury it brings along. However, when one is younger, retirement planning is often postponed as a task for the future, and conscious efforts to create a corpus are never made. Which lands the retirees in a situation of being retired without a financial support system, and a lifetime liability for their immediate family. This is especially true if you are not earning enough to save, which makes retirement planning all the more difficult.

 

If you exhibit at least 3 of these 7 signs, chances are you're Not Earning Enough To Retire Comfortably

1) You runout of money even before the month ends

You're living hand-to-mouth towards the end of the month. A single day's delay in crediting your salary could shake up daily life-sustaining tasks. Before retirement, ask if you're making it to the month-end?

So, what do I do? If you have a skill-set that could help you earn an additional income beyond traditional working hours, look at ways to monetize it. If your expenses are all over the place, and you're still feel like you're missing out on life -simply choose your experiences more judiciously and your expenses too will come down. The money saved is money earned. The money earned can be money grown.

2) You spend more than you earn

If you fully utilize your credit card limit, or you somehow need to borrow money by the end of the month, you're living by the skin of your teeth. Get your pencils out and start planning before it is too late. Because it already is.

So what do I do? Spend, but don't get spent. Prioritize your outgoings in 3 steps. First, pay off any debts (like EMI for your home loan). Second, calculate your monthly income and set aside money for basic needs like rent or buying household items. And third, always save a portion and invest so that you could spend when you need it most. You'll pat yourself on the back for this.

3) You do not have an emergency fund

Ideally, one should have 3 months' salary set aside for unexpected situations, like loss of job due to the company's liquidation or an unfortunate medical emergency.

So what do I do? Turn emergencies into opportunities to say "I got this". Invest a small portion of your savings in a good protection plan.

4) You do not have any investments If the only investment you've made is your provident fund, remember the mantra: the future isn't half as fun without funds.

So what should I do? The good news is, it's never too late. If you plan to start saving, do some digging and find out what kind of investment plans really suit your style. And of course, meet your needs. SIPs in Mutual Funds is one of such plans, where you can invest as per your goals and risk appetite. Besides this, you can also ask for advice from your colleagues. Invest long enough and pretty soon you'll be the one giving advice.

5) You keep borrowing money

According to the G20/OECD INFE Report on Adult Financial Literacy in G20 Countries, 54% of Indian respondents turned to friends and family for informal borrowing.

If you fall into this category, it's time to live life on your terms, not those of others.

Pray tell, what do I do? There are various financial instruments in the market which enable investment according to your budget. Once you make up your debts, you can build on your own investments and perhaps build your own legacy too.

6) You have no provisions for a holiday or a bigger expense

You may be a person of bare means, but sometimes the heart wants what it wants, doesn't it?

What do I do then? Just like you, your finances need a little me time. It's not much but it adds up to a lot. Take time out to plan for something exciting. What's the worst that can happen? The plan will work out and you'll end up having the time of your life.

7) "I'll save when I make more money"

If you believe you don't earn enough to save, you're mistaken. Remember that tomorrow comes today. So take a good look at your expenses and get your act together.

What should I do? The wisest of men have said, 'you only regret the things you didn't do'. So if you don't have the time or patience to make more money, the very least you can do is to save what you've got. If years from now, you've saved enough for you and your loved ones, you'll be okay.

 Happy Investing

Source: Yahoofinance.com

What is mutual fund NAV?

What is mutual fund NAV?

Get to know about what is Net Asset Value (NAV) it's importance & how NAV is calculated in mutual funds.

One of the most frequent terms associated with a mutual fund is net asset value (NAV). The performance of a particular scheme of a mutual fund is determined by NAV.

NAV reflects the value of assets of the mutual fund minus its liabilities divided by the number of mutual fund units outstanding.

As the market value of securities changes every day, NAV of a scheme also varies on a day to day basis. An investor can view the mutual fund NAV history in order to check how a particular scheme has been performing.

To illustrate, if the market value of securities of a mutual fund scheme is Rs 100 lakh and the mutual fund has issued 10 lakh units of Rs 10 each to the investors, then the NAV per unit of the fund is Rs 10 (i.e.100 lakh/10 lakh).

 

As per SEBI regulations, NAV is required to be disclosed by the mutual funds on a daily basis.


Mutual fund NAV helps the investors to evaluate their investment by comparing the current NAV with the NAV at which they purchased units of the scheme. Mutual fund NAV history of a scheme is available for download on the website of the Association of Mutual Funds of India (AMFI) as well as the website of the mutual funds.

 

Importance of mutual fund NAV

 

Mutual fund NAV plays an important role in the investment decisions made by an investor as it represents the market value of a mutual fund unit. However, the growth of NAV depends on the performance of the underlying assets. Therefore, it is important to look at the performance of a scheme as opposed to just looking at the absolute value of the NAV.


To illustrate, you are investing in two schemes that have the same portfolios. One scheme has is older and has a higher NAV. The other scheme has a lower NAV. The investment amount is identical in both the funds.  You would get a number of units in the scheme with lower NAV and fewer units in the scheme with the higher NAV.


However, you would earn the same returns as the underlying assets of both the schemes are identical. Therefore, any appreciation or deprecation of investments of those assets will have identical impact on both the schemes.
In case the amount of investment in the different schemes (with different portfolios) is the same, the mutual fund NAV cannot be the guide to make an investment decision. In such cases, the investor should look at the returns given by the scheme.  In the case of open-ended mutual funds, mutual fund NAV is an important factor for tracing the share price movements. However, it is not the best tool for assessing overall fund performance.

 

How to calculate mutual fund NAV?

 

It is very easy to calculate NAV. You can obtain the mutual fund NAV by dividing the total net assets by the total number of units issued. To calculate the total net assets of a fund, subtract the liabilities from the current value of the mutual fund’s portfolio of assets. Divide the figure by the total number of units of the mutual fund which are outstanding. The number you obtain represents the NAV of the mutual fund.


The formulaic representation of NAV is:
Net asset value (NAV)= Assets – Debits / Number of outstanding units


The mutual fund NAV is calculated on a daily basis. All mutual fund houses make an estimation of the portfolio once the stock market closes for the day at 3.30 pm. When the market opens on the next day, it starts with the previous day’s closing share prices. The fund houses need to deduct every expense or liability for the day to calculate Net Asset Value of the day using the above formula.


The NAV per unit of all mutual fund schemes is updated on the website of the AMFI as well the website of the mutual funds by 9 pm of the same day.

 

FAQs

 

Does the time of investment or redemption of a mutual fund have an effect on its NAV?

 

Yes, it does. If you invest before 3 pm on a working day, you will be able to get the same day’s NAV. But if you purchase after 3 pm, you will get the subsequent day’s NAV for your mutual fund units.

 

I have invested in a debt mutual fund. Will the NAV fluctuate on a day to day basis?

 

Mutual fund NAVs of debt schemes keep changing due to the changes in interest rates. It is also affected by the profits fund managers make by selling and buying fixed income instruments like bonds and debentures. Having said that, daily changes in mutual fund NAVs are not so drastic as in equity funds.

 

Can mutual fund NAV history give me a better sense of the performance of a particular scheme?

 

Yes, it can give you an idea about how the scheme has been performing and how long the scheme has been around. But be mindful that NAV is dependent on the changes in the underlying asset and cannot serve as your only guide to evaluate a scheme.

 

What is the difference between the NAV of a mutual fund and share price?

The share price represents the value of equity of a company as quoted on the stock exchange. The demand-supply and company’s projected performance has a bearing on the share price. This is why the market value and book value of shares matter.


Book value represents the value of the company according to its balance sheet. On the other hand, market value is the value of a stock or a bond, based on the traded prices in the financial markets. That’s why the stock market price of a share is different from its book value.

However, in the case of a mutual funds, there is no market value for the mutual fund unit. Therefore, if the units of a mutual fund are purchased at its NAV, it is similar to purchasing it at its book value.

Happy Investing
Source: Moneycontrol.com

11 Things That a Wealth Manager Can Do For You

11 Things That a Wealth Manager Can Do For You

We ought to think that a wealth manager is someone who only gives you investment advice, but the truth is that a wealth manager’s role is far more comprehensive than that. There is so much more that a wealth manager can help you with. They provide you with a holistic approach that takes into account all of your financial life. This includes managing your investments, financial planning, accounting, tax-related concerns, retirement planning, property planning and much more.

Here’s what your wealth manager can do for you...

A wealth manager’s services are personalised according to your needs and goals. Whether you are ready for retirement or struggling with tax woes, a wealth manager can provide a comprehensive plan for both and everything in between. Here are some of the things a wealth manager can help you with.

● Investment advice

● Financial planning

● Banking services

● Legal planning

● Retirement planning

● Risk management

● Philanthropy planning

● Family legacy advice

● Tax strategies

● Trust services

● Estate planning

Other than that, a wealth planner also acts as the sole point of contact who coordinates through all the communications and relationships with your financial experts, advisors, attorneys, and accountants.

If a wealth manager is provided by your bank and he/she ends up becoming an integral part of your finances, it’s always wise to opt for a bank that is trustworthy and one that has a good reputation in the market.

And if your financial advisor is your wealth manager, be very diligent in choosing one and go step by step in taking his help and advice over a period few years as your trust and confidence grows based on his performance and loyalty.

Happy Investing 

 

Public Provident Fund: Target Rs 1 crore?

Public Provident Fund: Target Rs 1 crore? You need Rs 362 for 365 days For 25 Years

 

How to become a crorepati with Public Provident Fund (PPF)?

Is this question on your mind?

To achieve this financial goal, you may need a lot of patience and an investment of at least Rs 1,32,000/year for 25 years at the current rate of interest. To accumulate this annual investment amount, you need to save at least Rs 362 per day (1,32,000/365=361.64). Currently, PPF is offering 7.9 per cent interest, which is compounded annually. This interest is revised by the government quarterly. It has remained around 8 per cent in the last five years.

Calculation shows that by investing Rs 1,32,000 per year in PPF for 15 years, you can get around Rs 38 lakh if the interest rate remains at 7.9 per cent during the investment period.

PPF: How to reach Rs 1 crore?

Fifteen years is the mandatory lock-in period for PPF. However, rules allow further extension of the account in blocks of five years each. PPF account can be extended within one year of the date of maturity. You should apply for extension of the account by 1st April of the 16th Financial Year in Form-H. After completion of the five years, you can once again apply for extension.

"A subscriber may, on the expiry of 15 years from the end of the year in which the initial subscription was made but before the expiry of one year thereafter, may exercise an option with the Accounts Office in Form H, or as near thereto as possible, that he would continue to subscribe for a further block period of 5 years according to the limits of subscription …," say PPF rules 1968.

If you open the PPF account today (November 27, 2019), it will mature on March 31, 2034. You will be allowed to apply for extension between April 01, 2033 and March 31 2034.

The application for extension of PPF account is first verified for authenticity of the subscriber by the post office or banks before proceeding the request further.

’If you don’t withdraw the lump sum of approx Rs 38 lakh and continue to invest Rs 1,32,000 for another 10 years, your total lump sum will grow over Rs 1 crore at the current rate of interest.

PPF Extension without deposits

As per the PPF rules, the account can also be extended beyond the maturity period without further deposits. Such accounts continue to earn interest. Also, the depositor is allowed to make one withdrawal in a financial year with no restriction on the amount.

In case the account has been extended with deposits through Form-H, PPF rules allow withdrawal of maximum 60 per cent of the balance at the time of extension of the account. This limit continues to apply on commencement of every extension of five years.

 

 Happy Investing

What is Section 80C of Income Tax Act 1961?

What is Section 80C of Income Tax Act 1961?

 

Section 80C explained:

Did you know that Section 80C, under the Income Tax Act 1961, helps you reduce the tax burden by allowing a deduction from the total taxable income in a financial year?

Section 80C is a popular choice if you want an answer to the question: How can I save tax on salary? Under Section 80C of the Income Tax Act 1961, taxpayers can claim deduction benefit on payments, contributions, or investments in a way specified by the Income Tax law.

These include payment for life insurance premium, contribution to any recognised provident fund and superannuation fund, subscription to National Savings Certificate, contribution to ULIP, Public Provident Fund (PPF), Sukanya Samriddhi Yojana, 5-year tax-saving fixed deposit plans offered by banks, among others."

What is Section 80C limit?

In one financial year, the maximum amount of deduction under Section 80C or the Section 80C limit is Rs 1.5 lakh. To make the most of the provision, you need to limit your total contribution to specified products eligible for deduction under Section 80C.

What investments are covered under 80C?

Does a fixed deposit come under 80C? Deduction list: Some of the popular investments/payments eligible for tax deductions under Section 80C are:"Some of the popular investments/payments eligible for tax deductions under Section 80C are:

Investment in five-year bank fixed deposit, with a maximum deposit limit of Rs 1.5 lakh in a financial year

Investment in five-year post office time deposit, Senior Citizens Savings Scheme

Investment in EPF or into voluntary provident fund

Investment in PPF

Investment in National Savings Certificates

Contribution to NPS Tier II account made by Central Government Employees

Contribution to Sukanya Samriddhi Account

Payment for Life Insurance Policy (including ULIP) premium of an individual and/or his or spouse or any child

Contribution to any approved superannuation fund

Contribution to Unit-linked Insurance Plan (ULIP) 1971 and ULIP of LIC Mutual Fund; Contribution to an approved annuity plan of LIC

Payment for subscribing to ELSS of a mutual fund; Contribution to notified pension fund set up by mutual fund or UTI

Repayment of Housing Loan Principal; the amount paid for stamp duty, registration fee etc.

Payment of tuition fees – For full-time education of his/her children (maximum of two children.) in any university, college, school, or other educational institution located in India.

How can I save Tax under 80C?

Section 80C is the most popular provision available in the Income Tax Act 1961 for tax saving. The tax benefit is available at the investment stage; however, the maturity proceeds of not all investments eligible under Section 80C are tax-free. The taxation of Section 80C investments at the investment stage, growth stage, and maturity stage can be primarily denoted as E-E-E or E-E-T, where E and T stand for "exempt" and "taxed," respectively. One example of an investment that comes under the "EEE" category is PPF. An investment in PPF qualifies for the deduction, and both the interest earned and maturity amount are tax-free for the investor.

 

Happy Investing