Post office schemes get life again

The government has at last done something to revive interest in Post office saving schemes.

1)The Government on Friday announced that the benefit of Section 80C of the Income Tax Act, 1961 will be extended to investments under Five Year Post Office Time Deposit Account and Senior Citizens Savings Scheme. The benefit of the deduction will be available in respect of investments made under these schemes with effect from April 1.

2)Also, 5% bonus will be payable on the deposits made under Post Office Monthly Income Account Scheme upon maturity. This benefit will be available on investments made in respect of new accounts opened under the Post Office Scheme on or after December 8.Together with bonus, the effective yield will be 8.9% as against 8.3% presently available under the Post Office Scheme.(POMIS).

This is definitely a good news for all of the post office investors.

Index Funds

Index funds refer to equity funds that concentrate on a specific index such as Nifty, BSE. The key aim in investing in such index funds is to get returns that equal the returns of the index during a specific time period. The funds invest the money in stocks which are a part of the particular index. The ratio of money invested in various stocks is equal to the ratio of the shares in the index.

During any trading session, ETF index funds can be purchased and sold at the prevailing rates and so are similar to purchase and sale of shares. Demat account is compulsory for transacting in Exchange Traded Index funds ( ETFs). For non ETF index funds, demat account is not required and investment can be made with just a bank account as in case of normal MFs.

Tracking error is the differentiator when it comes choosing one index fund against the other. Tracking error is the extent to which the NAV of the index funds move in a manner that is inconsistent with the movements of their respective indices during a given period.

Average 1 year return from index funds as of 6th Dec 07 45.42%*

Returns proportionate to index

* returns data from valueresearchonline

ELSS -Good way to start

For salaried class who pay income tax and not investing in equity/ equity MF, ELSS fundwould be the best way to start investing in MFs.

This is because.

1) You start an investment for tax saving and straight away get a return equal to your income tax rate notionally. This takes you off the initial fear of investing in equity.

2) The Lock-in period of 3 years allows you to get a feel of equity market.both ups and downs.

3) The confidence you gain by investing in ELSS can then be extended to equity investing.

SIP should be the preferred way to invest in ELSS too. More on ELSS

ELSS= Equity Linked Savings Scheme. Investment in this fund upto Rs.100000 can be used for availing tax exemption.

Know your taxes when investing in GLOBAL funds.

EARN A CRORE

Fund house with a difference

Quantum AMC follows a direct-to-investor model. Brokers are not used by the fund house to collect investment.

This fund house doesn't charge an entry load as entry load is primarily used to pay commissions to mutual fund agents or distributors.

If you are willing to invest directly either in bulk or SIP without paying brokerage/ entry load on it, you can do it through Quantum fund. ( 100% of your money will be converted into fund units)

Investors should appreciate the intention of QUANTUM AMC in eliminating brokers . Those who are willing to invest can look into quantumamc.com for more details.

AMC= Asset management company.

SIP and entry load

SEBI's proposal on entry load

Earn a crore

Small fund - NFO

"DBS Chola Mutual Fund has announced the launch of its three-year close-ended fund DBS Chola Small Cap Fund. The fund will invest in equity and equity related instruments of companies with small market capitalisation. The offer is open from November 20 to December 20. The minimum application amount is Rs. 5,000."- news

our views-Lot of proven mid caps available in the market. Pure small cap oriented funds are very few ( DSPML Small companies fund and Sundaram BNP paribas select small cap). Investors who have a big time horizon and want to have smaller companies in their portfolio can look at this fund.