Sell gold around Rs 30,450-30,500 before Budget

Sell gold around Rs 30,450-30,500 before Budget says Emkay

 Budget this year would be very crucial not only for the commodities markets, but also for other financial markets and for the economy as whole as it is a last budget before 2014 elections.

Ashok MittalEmkay Commotrade

What can be the impact of Budget on Gold?

Budget this year would be very crucial not only for the commodities markets, but also for other financial markets and for the economy as whole as it is a last budget before 2014 elections. It is expected to be the most rigorous budget this time as India is trying to reduce its fiscal deficit and trying to skip the major credit downgrade. The prime target is to focus on reducing the spending by the government which has already been started and has reached almost 9 percent from the initial target. 

Out of these spending cuts the prime focus would be to reduce the imports of Gold and Oil which has been increasing the Fiscal deficit of the country tremendously. Already steps have been taken to reduce the imports of Gold and Oil, however the major factor which will play role to determine the direction of gold prices would be the fluctuation in Indian rupee after reforms announcements and demand for Gold in India, checking its safe haven appeal and inflation hedge appeal.

The rupee fluctuation has always been a crucial factor in determining Gold prices and it is well known that a weaker rupee can support the gold prices and vice versa. As expected if there are more spending cuts and reforms taken to boost the equity markets and debt markets we would see a possibility of rupee strengthening and pushing gold prices down.

Recently after a series of reforms taken by the government on gold import duty, rate cut and partial deregulation of diesel prices we saw a good fall in gold prices along with the strengthening of Indian rupee. The reforms opted to reduce the Fiscal Deficit will make INR stronger and gold prices weaker; at the same time the level and ways of reforms will also form a crucial part in deciding the fate of gold. In pre-budget discussion among the party the finance minister assured that by the spending cuts and other reforms economy can see a growth level of 6-7 percent in the coming fiscal year. Also, FinMin has already committed to a fiscal deficit of 4.8 percent of GDP in 2013-14 which indicates lesser spending and tightening of imports and stronger rupee. This means, more open markets for investors abroad, reduced spending, reduced fiscal deficit and stronger rupee. As this fiscal consolidation can improve the outlook of the economy it will also reduce the safe haven appeal for gold and reducing the demand for gold.

A positive outlook for an economy is always been an eye for an investors to go for riskier assets. Investors will focus more on open markets and will go with the flow. This means that an investor who was more prone to safe investment such as gold before would then opt for riskier assets such as equities, derivatives etc. to increase their disposable income. Gold's inflation hedge appeal and safe haven appeal would be dull marginally due to which prices can be moving down.

However, in India gold buying is a tradition. So buying will be seen in the later weeks when prices reach to an optimum level. So does this mean we should buy gold now? The clear answer would be, No. As budget is expected to be not Bullion friendly we recommend being on selling side rather than buying. Stronger rupee, lesser demand, reduced safe haven appeal, improving economy, expected controlled inflation and more open markets is expected to come from FinMin in the budget which can surely dent the gold prices. Adding fuel to the fire could be introduction of Commodity Transaction Tax(CTT), it will increase the cost to transact in commodities and reduce the demand for major commodities. At the same time we do not expect a boost in the gold demand as physical demand of gold in India and abroad is in slack. The demand for gold in 2012 was stagnant due to overall economic slowdown and in 2013 the demand for gold isn't looking that great either.

So our recommendation would be to Sell gold before budget at the price range of around INR30,450-30,500 and wait till prices reach near INR30,000-29,800. A possible buying can be seen at these levels post budget. As bargain hunters can support the prices at these levels along with the international gold price pressure. However if prices go beyond INR30,800 fresh buying can emerge.

Some instruments are more tax efficient

Some instruments are more tax efficient

FMPs or debt funds are more efficient than fixed deposits, but the risk is marginally higher

 

Starting December, mutual fund houses and insurance companies will begin to aggressively promote tax saving instruments. And as usual, taxpayers who have not completed the process of investing in tax-saving instruments will end up buying some of them out of desperation. But they need to remember a few things about taxation.

Since, for many, the investment and tax advisor are two different people, there isn't a proper plan in place. The tax payer collates information on all the income and investment transactions during a year, pays the relevant taxes on the same and files the return. However, investing is a year-round activity. More often than not, investors look out for tax-efficiency in every investment they do, whether it is in the form of tax deductions, tax-free income or tax-free maturity. Thus, investors keep evaluating and executing different investment options round-the-year and file returns only once in July / September. Also, very rarely, does it happen that an individual’s investment advisor/planner and tax professional are the same. Typically, a tax payer dumps his/her income and investment data with the tax professional, who in turn, files the returns.

In this process, many a times, investors lose out on claiming the different tax-advantages available with the investments in their returns. It is mainly because of lack of knowledge about the tax treatment of specific investment products by the tax professional or simply through oversight. Some common instances that a tax payer should keep in mind to optimise the available tax advantages are as follows:

Fixed Maturity Plans (FMPs)

FMPs score over bank fixed deposits mainly on account of their differential tax treatment. As per the income tax provisions, the gains made on a FMP, which matures after 12 months, is liable to tax as long-term capital gains. Further, the cost of investment can be indexed as per the cost inflation index applicable for the year. The resulting capital gains are then taxed at 20 per cent. The tax outgo on these indexed gains provides good tax-efficient gains for the investor.

In many cases, this favourable indexation benefit is ignored at the time of tax filings, thus, depriving the investor of tax-savings. This saving is more pronounced for FMP investments made in the month of March and maturing in April next year as it gives a double indexation benefit.

Debt mutual funds
Similar to FMPs, debt mutual funds are also subject to taxation in a manner that is different from equity mutual funds. Short term capital gains are taxed at the applicable slab rates and long term capital gains are taxed at 20 per cent after cost indexation. Not to omit that the long term gains on debt funds can be taxed at 10 per cent without cost indexation too. Most debt funds’ returns range between 8 and 9 per cent and as per the last declared cost inflation index for 2012-13 (852), the cost indexation between financial years 2001-12 and 2012-13 stands at 8.5 per cent. It may be noted that the indexation can, thus, help investors earn tax-free returns from debt funds for periods ranging beyond 1 year.

Private management funds
A lot of private institutions that offer investment opportunities to investors in the form of real estate funds or private equity funds are often guised as trusts. These trusts are responsible for managing the funds as per the objectives and distribution of the surpluses to investors.

Under the income tax provisions, trusts are further classified as discretionary trusts. A discretionary trust is a trust in which the individual shares in income or corpus of the beneficiaries are indeterminate or unknown. As a general rule, such trusts are taxed at the maximum marginal rate. The law further provides that where a trust is taxed at maximum marginal rates or at a higher rate, share of income from the trust is not to be included in the hands of the beneficiary for computing tax liability.

In other words, any dividend or any other form of income distributed by a discretionary trust to investors is tax-free in the hands of investors. In case this benefit is ignored, the investor will be paying double tax on the same income.

Bonus and dividend stripping
Many investors look to make a quick fortune in the markets by buying shares of companies or units of a mutual fund just before the due dates of a large dividend payout. Their idea is to sell these shares immediately after the share/ unit price gets adjusted for dividend and incur a capital loss.

The income tax act has separate provisions to avoid this undue benefit; wherein it is provided that if any shares are bought within a period of three months prior to the record date and sold within three months (in case of shares) or nine months (in case of mutual fund units), then the losses are not allowed to be claimed to the extent of dividend earned.

A similar provision exists for losses arising out of buying and selling mutual fund unit to take advantage of a bonus issue by a mutual fund. In such cases, the loss accounted for is then deemed to be the cost for the bonus units.

Tax payers must ensure that the advantages (of tax saving), which they evaluated while selecting an investment product, are actually utilised at the time of filing of returns.

The instances mentioned above are only illustrative. It is advisable to have the investment advisor run through the income tax computation to ensure that no tax benefits are unutilized  - source BS

List of Eligible Shares / Mutual Funds (MFs) & Exchange Traded Funds (ETFs) under Rajiv Gandhi Equity Saving Scheme (RGESS)

List of Eligible Shares / Mutual Funds (MFs) & Exchange Traded Funds (ETFs) under Rajiv Gandhi Equity Saving Scheme (RGESS)

The investment options under the scheme will be limited to the following categories of equities?*:

Listed equity shares

a. The top 100 stocks at NSE and BSE i.e., CNX-100 / BSE -100 (This does not mean that one has to trade through NSE or BSE only. If the securities constituting BSE 100 or CNX 100 are listed and traded in any new stock exchange that may come up on a later day, the same will be eligible for RGESS.)

Download / ViewList of Top CNX-100 from the link given below :-

http://www.nseindia.com/products/content/equities/indices/cnx_100.htm

Download /view List of Top BSE-100 from the link given below :-

http://www.bseindia.com/indices/IndicesWatch_Weight.aspx?iname=BSE100&sensid=100&type=SENS&graphpath=/applet/images/graf_appBSE100.gif

b. Stocks of public sector enterprises which are categorized by the Government as Maharatna, Navaratna and Miniratna

List of Maharatna, Navratna and Miniratna CPSEs  (as on February, 2013)

Maharatna CPSEs

1. Bharat Heavy Electricals Limited
2. Coal India Limited
3. GAIL (India) Limited
4. Indian Oil Corporation Limited
5. NTPC Limited
6. Oil & Natural Gas Corporation Limited
7. Steel Authority of India Limited

Navratna CPSEs

1. Bharat Electronics Limited
2. Bharat Petroleum Corporation Limited
3. Hindustan Aeronautics Limited
4. Hindustan Petroleum Corporation Limited
5. Mahanagar Telephone Nigam Limited
6. National Aluminium Company Limited
7. NMDC Limited
8. Neyveli Lignite Corporation Limited
9. Oil India Limited
10. Power Finance Corporation Limited
11. Power Grid Corporation of India Limited
12. Rashtriya Ispat Nigam Limited
13. Rural Electrification Corporation Limited
14. Shipping Corporation of India Limited

Miniratna Category – I CPSEs

1. Airports Authority of India
2. Antrix Corporation Limited
3. Balmer Lawrie & Co. Limited
4. Bharat Dynamics Limited
5. BEML Limited
6. Bharat Sanchar Nigam Limited
7. Bridge & Roof Company (India) Limited
8. Central Warehousing Corporation
9. Central Coalfields Limited
10. Chennai Petroleum Corporation Limited
11. Cochin Shipyard Limited
12. Container Corporation of India Limited
13. Dredging Corporation of India Limited
14. Engineers India Limited
15. Ennore Port Limited
16. Garden Reach Shipbuilders & Engineers Limited
17. Goa Shipyard Limited
18. Hindustan Copper Limited
19. HLL Lifecare Limited
20. Hindustan Newsprint Limited
21. Hindustan Paper Corporation Limited
22. Housing & Urban Development Corporation Limited
23. India Tourism Development Corporation Limited
24. Indian Railway Catering & Tourism Corporation Limited
25. IRCON International Limited
26. KIOCL Limited
27. Mazagaon Dock Limited
28. Mahanadi Coalfields Limited
29. Manganese Ore (India) Limited
30. Mangalore Refinery & Petrochemical Limited
31. Mishra Dhatu Nigam Limited
32. MMTC Limited
33. MSTC Limited
34. National Fertilizers Limited
35. National Seeds Corporation Limited
36. NHPC Limited
37. Northern Coalfields Limited
38. Numaligarh Refinery Limited
39. ONGC Videsh Limited
40. Pawan Hans Helicopters Limited
41. Projects & Development India Limited
42. Railtel Corporation of India Limited
43. Rashtriya Chemicals & Fertilizers Limited
44. RITES Limited
45. SJVN Limited
46. Security Printing and Minting Corporation of India Limited
47. South Eastern Coalfields Limited
48. State Trading Corporation of India Limited
49. Telecommunications Consultants India Limited
50. THDC India Limited
51. Western Coalfields Limited
52. WAPCOS Limited

Miniratna Category-II CPSEs

53. Bharat Pumps & Compressors Limited
54. Broadcast Engineering Consultants (I) Limited
55. Central Mine Planning & Design Institute Limited
56. Ed.CIL (India) Limited
57. Engineering Projects (India) Limited
58. FCI Aravali Gypsum & Minerals India Limited
59. Ferro Scrap Nigam Limited
60. HMT (International) Limited
61. HSCC (India) Limited
62. India Trade Promotion Organisation
63. Indian Medicines & Pharmaceuticals Corporation Limited
64. M E C O N Limited
65. National Film Development Corporation Limited
66. National Small Industries Corporation Limited
67. P E C Limited
68. Rajasthan Electronics & Instruments Limited

c. Combinations of stocks in (a) and /or (b) which are listed and traded on a stock exchange and settled through a depository system (eg. Exchange Traded Funds (ETFs)or Mutual Fund (MF) schemes with RGESS eligible securities as mentioned in (a) and / or (b) as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism)

Following are the RGESS compliant Mutual Fund schemes available for subscription :

RGESS COMPLIANT MUTUAL FUND SCHEMES AVAILABLE FOR SUBSCRIPTION

Open Ended:

Name of the Mutual Fund	Name of the Scheme
Birla Sunlife Mutual Fund	Birla Sun Life NIFTY ETF
Goldman Sachs Mutual Fund	GS Junior BeES
	GS Bank BeES
	GS S&P Shariah BeES
	GS Nifty BeES
India Infoline Mutual Fund	IIFL Nifty ETF
Kotak Mahindra Mutual Fund	Kotak Nifty ETF
	Kotak Sensex ETF
Motilal Oswal Mutual Fund	Motilal Oswal MOSt Shares M50 ETF
Quantum Mutual Fund	Quantum Index Fund
Religare Mutual Fund	Religare Nifty Exchange Traded Fund
SBI Mutual Fund	SBI Sensex ETF

Close Ended:

Name of the Mutual Fund	Name of the Scheme	Available for Subscription up to
DSP BlackRock Mutual Fund	DSP BlackRock RGESS Fund	08-Mar-13
IDBI Mutual Fund	IDBI Rajiv Gandhi Equity Savings scheme	09-Mar-13
LIC Nomura Mutual Fund	LIC Nomura MF – RGESS Fund	25-Feb-13
UTI Mutual Fund	UTI Rajiv Gandhi Equity Savings Scheme	08-Mar-13

d. Follow-on Public Offers (FPOs) of (a) and (b)

e.       New Fund Offers (NFOs) of (c) above

Unlisted equity shares

f. Initial Public Offers (IPOs) of PSUs, which are scheduled to get listed in the relevant financial year and where the government holding is at least 51% and whose annual turnover is not less than Rs. 4000 cr for each of the immediate past three years.

(*Investment criteria as applicable at the time of investment)

To give the benefit of diversification and consequent risk minimization, investments into Exchange Traded Funds (ETFs) or Mutual funds, set up as per the criteria laid down in the scheme, are also allowed under the Scheme.

Policyholders, too, need to be responsible

Policyholders, too, need to be responsible

 By R Venugopal

 

Recently, I came across a lot of articles in the media warning the general public regarding mis-selling by life insurance agents. There are many instructions on how not to fall prey to the “sweet” words of the salesperson. I fully agree with the precautions buyer should be aware of and avoid different pitfalls by signing the documents blindly. The legal dictum also says: caveat emptor (buyer beware).

However, does this mean that only insurance agents are responsible for proper selling? What about the customer? Does he not have any obligation of selecting a proper product? Further, does the customer have no responsibility in maintaining the policy? Here are a few thoughts on what life insurance customers should do on their part.

 

On receipt of policy bond

How many customers spend at least a few minutes in verifying this bond: checking the correctness in the name, nominee’s name, address and sum assured, among other details.

All these are important details as even a minor mistake may lead to a lot of delay at the time of claims settlement. No doubt, it is the duty of the agent to give correct particulars and it is expected of the insurance company to print out the correct details. But still is it not in our own interest to cross-check such information before putting the policy in the drawer? If some more time can be spent on reading all the terms and conditions printed on the back of the policy (no doubt, printed in a very small font, which may need a magnifying lens at times), it would be even better.

Free-look period: The Insurance Regulatory and Development Authority has provided for a free-look period of 15 days from the date of receipt of the policy bond. This permits the customer to return the policy to the insurer and claim full refund in case he finds that a wrong product has been delivered, among other reasons.

 

Change of details such as address

When we shift our residence in the same city or we move to some other town, we dutifully inform the postman, domestic gas agency, bank, rationing authority, among other authorities, but we conveniently forget the insurance company. Only when the policy lapses, we pounce on the insurer for not sending the premium notice.

Even when you change your employer, which is quite common now, you are supposed to inform the insurer if your premium payment is done by your employer under the payroll scheme or the salary savings scheme. Your policy number has to be removed from the demand list of the ex-employer and included in the list of the present employer. These things can happen only if you inform the insurer. 

 

Nomination

This is a “must” under every policy as it enables the insurer to settle the death claim to the nominated person. If there is no nominee, the claimant may have to produce a succession certificate or legal evidence of title, which may be a problem.

Nomination assumes much importance in the case of assignments in favour of banks or housing companies for loan, because any assignment cancels the nomination already under the policy. So when the loan is repaid and the policy is reassigned to the customer, he must nominate a person immediately. Many policyholders omit this, thinking that they have nominated at the time of taking the policies.

 

Keeping the policy in force

It is not enough if a person takes a life insurance policy. To keep it in force, the customer needs to pay premiums regularly. Usually, the insurer permits a grace period of 30 days for payment of premiums under the yearly, half-yearly and quarterly modes, from the due date of premium. For the monthly mode, the grace period is 15 days.

It is the business courtesy of the insurance company to remind the customer by sending a notice in advance. But this may or may not happen due to different reasons. It is the responsibility of the client to remember the date and month of the premium and pay it to the insurer. Again, no doubt, it is the duty of the agent to contact the policyholder and help him/her in paying the premium as the insurer pays commission to the agent for doing this service. But there are good and bad apples in every field, including life insurance. But on that score, we can’t afford to ignore to pay the premiums as ultimately we would be the losers.

Any transaction is a joint responsibility of all the stakeholders. In case of life insurance, all three parties to the contract—the policyholder, agent and the life insurance company—are responsible.

 

R.Venugopal is retired executive director, Life Insurance Corporation of India.

What is Commodity Market?

What is Commodity Market?

A market that transacts business with commodities of all nature referred as commodity markets. Commodity market was initially meant only for agricultural products and that too in the local market. Industrializations, globalizations, technological advancements, increasing demand from consumers and intense competition from other players has paved way for commodity markets to cross boundaries and break barriers with regards to the commodity traded.

Commodity markets deal in the trade of commodities like gold, cotton, crude oil, pepper etc. Many items both perishable non perishable, finished goods, raw materials and semi finished goods will be traded in this market at the international level. Commodity market does not necessarily require you to buy or sell the commodities but you can even exchange them.

Commodity market works on certain principles. Firstly the trading has to be done only for standard products. Secondly the transaction takes place through a future contract. According to this contract the commodities will be sold or bought on a future date. However the price at which they are sold will be the price agreed during the contract. Similarly commodity marketing also makes use of another type of contract called spot contract. In this contract the goods are to be transferred as soon as the contract is made. However it has also been argued that the purpose of a spot contract is to exercise a future contact in due course of time. Some of the commodities investing market are commodity food market, commodity petroleum market and commodity fund investing.

Investing in Commodities

Commodity investing was initially received well only by a few sectors. Commodities investing were first restricted to the trade and exchange of commodities meant for regular and day to day use. However the awareness in the subsequent stages has brought all sectors into the manifold of commodity investing and has enabled speedy movements, transfer and transaction of goods and services. The following are the benefits of investing in commodities market:

Reduced Risks

As an investor your chances of risks are very less if you choose to invest in commodity. Therefore the gains from commodity investing will be helpful for you to balance other losses due to other financial instruments in your portfolio. The chances of risks are lower because commodity investing primarily deals with diverse items. Moreover when the contracts are entered for a future date at the current time you can exercise reasonable care and see to it that the chances of risks are reduced or nil.

Helps to Fix Price Easily

The performance of commodity market can be monitored by analyzing the performance of bond and share market because in most cases a commodity market will perform well when the others don't perform and vice versa. It is therefore possible to easily predict the prices and make the contracts by considering the ups and downs in other markets. A prerequisite for this is that the assets in the commodity market should not be correlated with the stock and bond market.

 

Factors to Look Upon Before Planning for Commodity Investing

there are certain factors you need to look upon before planning for commodity investing such as follows

Everyone can Obtain Everything

Certain countries are famous for producing certain goods while other countries may not have a surplus produce or even the quantity to meet the basic needs. Before the advent of commodity marketing and investment it was not possible for exchange of such goods and services. Commodity marketing has not only facilitated that but as a result also helped in the flow of international currencies to different countries.

Check Inflation

Commodity marketing and investment has effectively helped to control the growth of inflation in individual nations. Inflation is a result of excess cash reserves in a nation. High rates of inflation can even destabilize the nation's economy. On the contrary the excess cash is now used to buy the deficit goods from other nations in the international commodities market.

 

Diversifies your Portfolio

The presence of commodities investment itself shows that your portfolio is widely diversified. It is a well known fact that commodities investment is extremely opposite to the other popular financial instruments namely stocks and bonds. Since you have already invested in commodities you will also think of choosing other financial instruments that resemble commodities investment to make sure that they give you the required profit in combination. This means your portfolio will perform well over the year and you can concentrate on the relevant financial instruments seasonally and pertaining to the market performance.

Commodity Price Index

When you wish to engage in commodity trading you must be able to anticipate and calculate the expected prices and other financial outcomes. You must do a technical analysis of the commodities market to achieve this. Commercial price index is an important concept that plays a role in making these decisions. Index refers to the average taken in terms of specific commodities / sectors like oil and gold.

These indexes represent the trend and the direction in which the demand and supply curve is moving for that particular product.

Commodity market has grown to a large extent. There are numerous opportunities and scope for growth in the field. Lots of courses have been designed to help individual and institutional investors. In addition you can use the services of a charted accountant or financial planner. You must have a sound knowledge about the various commodities traded and the fluctuation in their prices for investing in commodity is not an easy task.

Baby food for thought

Baby food for thought

·          

Let mothers feed their babies for as long as they could. Efforts to feed every new-born baby with a ‘scientific’ formula instead of the God-given mother’s milk should stop for the common good. When governments are in cahoots with the industry mankind suffers

“Successful people are always looking for opportunities to help others.
Unsuccessful people are always asking, “What's in it for me?”— Brian Tracy

 

I understand that there are efforts to feed every new-born baby with a ‘scientific’ formula instead of the God-given mother’s milk. In the unholy nexus between the greedy industry and the corrupt government agencies to try and sell this new idea to the gullible public, the real unsuspecting victims are the yet to be born future generations. When something is advertised in the name of the holy ‘science’ especially of the western variety that we, Indians, venerate as gospel truth, truth and reality take a back seat. Let us, for a change, examine the reality behind the new-born babies and their natural food. Let us not fall a prey to this heavy industrial advertisement. Advertisement is the bane of mankind’s present misery. There have been thinkers even in the west who had warned us against falling prey to advertisement from time to time. John Kenneth Galbraith was one such giant in the field who had warned us as far back as 1958 in his book, The Affluent Society thus:

 

Galbraith argued that in our societies’ wants and desires are created by the very process through which they are satisfied. Galbraith feels that corporations do not advertise to inform us about products that might satisfy our own pre-determined desires. Rather, they use advertising and marketing “to bring into being wants that previously did not exist.” Galbraith describes this “the dependence effect,” and argues that this is an indictment of the entire system of capitalistic production, which is “no more defensible than a town doctor routinely running over pedestrians in order to keep the hospital beds full”.

 

Poor Galbraith, may his soul rest in peace, did not know that disease mongering by various cunning methods is what the medical business does these days to fill their hospital beds and their coffers. In a full issue of the famous medical science journal, PLOSmedicine, the editor Ray Moynihan, had published eleven articles on this art of disease mongering. The above-mentioned efforts to sell infant formulae for baby feeding are another one of that disease mongering efforts right from the time of birth! Makes very good business sense. Every new born will, per force, become a patient. What better method could be there to fill the hospital beds and our coffers than this novel idea?

 

Human beings do not have milk digesting enzymes after weaning from mother’s milk. Mother’s milk is specially designed for the new born babies with special qualities. It is the only method that the mother transfers her own immune bodies to her baby to keep it safe during infancy. An infant does not have pancreatic lipase enzyme to digest fat. So mother’s milk is one of those fats that could be digested by salivary enzymes in the mouth. As the infant sucks the breast the milk gets digested in the mouth and then gets absorbed. The ONLY other fat that can be digested by salivary enzymes in the mouth is the fat in cocoanut oil. Mother’s milk and cocoanut oil contain the same fatty acids—sodium mono-laureates. Mono-lauric acid is the fatty acid that goes to make immune bodies to protect us against diseases. Any infant feed should and can only have cocoanut as the fat base. Other fats, if used, might damage the baby’s system. Moral of this story is that mother’s milk is the only sane and healthy food for an infant. No food, however scientifically prepared by our industry, can ever replace mother’s milk. The best alternative would be to create breast milk banks to collect excess milk from those that have too much milk to feed babies who either have lost their mothers or whose mothers do not make enough milk. Ideally the baby could be fed breast milk for as long as possible. If a baby gets mother’s milk for more than two years it should remain healthy all through its life.

 

Milk from other animals is not good food and is threatening to be a time-bomb, provoking powerful anti-bodies against many of our organs, especially the pancreas. One of the important causes of excess diabetes in society could be traced to drinking milk from other species. Our village cows, without the hump on their back, are less antigenic compared the large Jersey cows. Milk needs to be curdled before being consumed to reduce the antigenicity in denatured protein in curds and butter milk. If we learn to observe nature we will soon realize that no animal drinks the milk of another species in nature. How could man alone drink other animal milk with impunity? From altruistic sense also it looks bad. We are robbing the calf of its share of its mother’s milk. For the lay readers one fact could make lots of sense in this area.

 

Observe a calf as soon as it is born. It jumps out and runs. Human baby needs almost a year and more to do that. If we give our infants the milk with such powerful enzymes that make the calf walk away almost after birth the long-term results could be dangerous. In addition, today one does not get natural cow’s milk in the market, thanks to the new white revolution. The greedy industry encourages dairy farmers to use powerful hormones to boost milk out put. Most of the former are growth hormones which will have disastrous consequences in human youngsters! In addition, mastitis is a common disease in dairies. On an average 10% of the cows get mastitis every day. The present algorithm for treatment is to put ciprofloxacin, a powerful antibiotic worth nearly Rs8,000, into the cow’s udder to contain the germs there. The milk of that cow shall not be used for at least a week after the cow gets better. How many farmers would do that with their greed for more money? So our milk could be full of antibiotics and growth hormones! It is not surprising that we generate dangerous superbugs in society which are now posing a great threat to human life.

If one treats nature as mother, nature feeds and protects us; if we, on the contrary, use nature as our mistress, she will kick us in the teeth. That is what she is doing now, thanks to man’s proclivity for comfort and his greed! Let mothers feed their babies for as long as they could. Their shape does not go bad. In fact, they get better health by breast feeding. Breast cancer incidence does go down. More babies one feeds better would be one’s health and longer will be the life. Let us bring forth a healthy generation with natural resources. Science can never win over nature and make better products any day.
Western science shall not be our master; rather let us use it for our good only. Industry could still make money ethically. Let them not gang up with the governments to harm the populace. When governments are in cahoots with the industry mankind suffers. Formula feeding should stop for the common good.

 

“He who is not contented with what he has, would not be contented with what he would like to have” —Socrates

More from Dr BM Hegde

 

(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also Editor-in-Chief of the Journal of the Science of Healing Outcomes, Chairman of the State Health Society's Expert Committee, Govt of Bihar, Patna. He is former Vice Chancellor of Manipal University at Mangalore and former professor for Cardiology of the Middlesex Hospital Medical School, University of London.)

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Top up your Health Insurance Plan and get addition benefits

Top up your Health Insurance Plan and get addition benefits

A top-up health insurance policy is an additional insurance cover for an existing health insurance. This means in addition to a basic mediclaim policy, you can purchase a top-up cover, which will give you coverage over and above what is available in your original policy. This usually works out to be cheaper than if you enhance limit of the same policy or purchase a new health policy. 

Criteria 

The main difference between a top-up cover and a regular health insurance policy is that top-up plans can be used only in case expenses incurred are beyond a certain limit. This limit, known as the deductible is decided beforehand and premiums are calculated accordingly. A top-up plan with a higher deductible has a lower premium attached to it. 

Another criterion is that a top-up plan normally works only on a single incidence of hospitalisation. This means that you can use the top-up plan only if your medical bills exceed the deducible during a single hospitalisation by a single member. 

How it Works 

Let us assume you have an existing health insurance policy with your employer which covers you and your family to the extent of Rs 3 lakh. If your wife is hospitalised during the year and expenses amount to Rs 4 lakh, then you must bring in Rs 1 lakh from your savings.

 

Now, let us assume you have taken a top-up insurance for Rs 5 lakh with a deductible of Rs 3 lakh. In this case, the extra Rs 1 lakh, which is over and above the limit of Rs 3 lakh from your existing policy, will be paid by the top-up policy. If you incur expenses of Rs 8.5 lakh, then the maximum amount that can be claimed is Rs 8 lakh (Rs 3 lakh from the existing policy and Rs 5 lakh from the top-up policy). The extra Rs 50,000 needs to be paid from your savings.

 

Now, assume another scenario. You have an existing policy of Rs 3 lakh and a top-up policy of Rs 5 lakh with a deductible of Rs 3 lakh. Your wife gets hospitalised twice in a year with bills of Rs 2.5 lakh and Rs 2 lakh each. Then the top-up will not be triggered in both cases. Further, if both your wife and son are hospitalised with expenses of Rs 2.5 lakh each during the year, even then the top-up will not be triggered.

 

Features 

The top-up policy can be bought from the same or different insurers. 

Top-ups are available for both individual and family floater policies. 

Pre-existing illnesses are generally not covered for a certain number of years. Basic exclusions, coverage and age limits depends on each insurer. 

Premium paid towards top-up policies are eligible for tax deduction under section 80D.

Top-up plans are not riders which usually can be bought with health insurance policies, which include hospital cash, personal accident and critical illness covers. Top-up plans have similar features as a regular health insurance plan, except for the higher amount of deductible.

 

A top-up plan is a cheap and easy option to increase your health cover, rather than being burdened with many health insurance policies.

Note: For more details please contact your Insurance Agent or Insurance Company

Financial Planning – Music for your retired life or bag full of regrets

Financial Planning – Music for your retired life or bag full of regrets

I entered my house and saw a pair of shoes, which looked familiar and the sight almost choked me. They were my dad's shoes, and he had passed away a few months ago. So what are these shoes doing here, I wondered? As I calmed down I realized that my mom had cleaned up the shoe rack and had forgotten to keep the shoes inside.

One thought led to the other and I remembered the first few weeks after his death when I had to sort out his finances and realized that his asset allocation was suboptimal over the years. It was his frugal habits that allowed him to accumulate wealth and not optimal asset allocation.

Do you ever wonder, what would ones family do if one passed away today? I did, and realized that I had to be better planned. I am not as frugal as my dad but I have some of his habits and managed to save. But was this enough?

Was the asset allocation optimum? It was not.
Did I put a financial number to all financial goals or commitment I had? No I had not.
Did I have adequate life insurance? No I did not.

How about medical insurance and home insurance? What about money for my child's education, with her aspirations are increasing by the day.
The difference between a lucky outcome-like in my case and an unlucky outcome could be disastrous in terms of terminal wealth.

Can you imagine how much that family has to go through in order to pay their bills, if one does not leave enough for them?

So what did I do? I took some expert advice on financial planning.

What is Financial Planning?

Financial Planning is a solution which converts your goals into action plans and provides the direction and discipline to achieve these goals.

Why is Financial Planning Necessary?

 

If you have certain life goals, such as you wish to have a worry free retirement, you wish to educate your children at the best schools and colleges, you wish to purchase a house or a car, or any other life goals, then building a Financial Plan can help you to achieve these goals.

Your Financial Plan will work towards achieving goals such as retirement planning, child's education planning, marriage funding, house purchase, debt management and insurance planning.

Financial planning could help you in:

Categorising your risk appetite

Putting a number to your goals- broadly tells you what is
achievable and what looks difficult to achieve

Map your current and future cash flows to your financial goals

While some banks do offer financial planning service - I found their approach to be less thorough. I would advice going to an independent financial planner. You could even Google "financial planning" or "personal finance" and get a list of websites that offer this service.

The importance of financial planning (especially in the present scenario) cannot be overstated. Among others, two factors are responsible for its importance i.e. inflation and changing lifestyles.

Inflation is a situation where too much money chases a limited number of goods. This leads to a fall in the value of money. It is also expressed as a rise in the general price level. For example, a product that costs Rs 100 at present would cost Rs 105 a year from today, assuming that prices rise at 5%. This is the impact of rising prices over one year; over a 30-Yr period, assuming that inflation continues to rise at 5%, the same product will be available at Rs 432!

Financial planning can ensure that you are better equipped to deal with the impact of inflation, especially in phases like retirement when expenses continue but income streams dry up.

The second factor is changing lifestyles. With higher disposable incomes, it is common for individuals to upgrade their standard of living. For example, objects like cars that were considered luxuries not too long ago, have become necessities today. Financial planning has a role to play in helping individuals both upgrade and maintain their lifestyle as well.

Finally, there are contingencies like medical emergencies or unplanned expenditures that an individual might have to cope with. Sound financial planning can enable you to easily mitigate such situations, without straining your finances.

Source:Quantumamc

Four principles to help simplify wealth creation for long term

Four  principles to help simplify wealth creation for long term

Wealth creation for the long term need not be complex. Some readers seem to be caught in the web of multiple financial goals, numerous investments designed to meet those goals, and the stress of monitoring and managing with too much math. Young earners, who have just begun their financial lives, worry about too many choices before them; retired investors, who have built wealth over a lifetime, stress about its adequacy. Those in the middle like to be sure about being on the right track. Here are four simple principles to help build long-term wealth.

 

First, your savings are likely to be held in five major categories—property, equity, debt, precious metals, and cash. Whatever the investment product, however complex it's terminology and working, it is likely to fit into one or more of these categories. Equity shares, IPOs, equity funds, PMS, are all equity. If you have your own business or profession, and money is invested in it, you should classify it as equity, even if it is not a listed company. It is risky capital invested for long-term growth based on the profitability of your venture. Simplify it as equity anyway.

Your investment in the PF, PPF, deposits, bonds, post office, and everything else that returns the principal after a particular time and pays interest, is debt. Your diamonds, gold, silver, inherited jewellery, and coins can all be classified as precious metals. Whatever lies in your savings account, or in your vault, is cash. Property includes everything in real estate that you buy—residential, commercial or land. As long as you are not spending all that you earn and are putting something aside in any one of these, you have begun well.

 

Second, you are unlikely to build wealth to a formula. The trick is to diversify, or ensure that your wealth is spread well across these categories. You might buy a house early in your career. You may not be conscious about your PF deduction building up as your debt portfolio. You may be churning your money in stock trading and IPOs without a specific plan. You could be investing via SIPs in a dozen funds, hoping they turn out fine in the end. Every time you make an investment, rather than focus too much on it in isolation, try and see what it does to what you already have.

For example, if you have bought a property and it represents all the wealth you have, be conscious about building other categories of wealth before jumping in to buy one more. If all your savings are in deposits, PPF and such products, make sure you add some equity funds. If you are obsessed with gold, ensure you don't invest all your savings in it. It is fine if you have spent a few years of your life building one type of asset; focus on others in the next few. Building debt in the first five years, adding a home in the next 10, adding equity in the next five, and spending the rest of your earning life building each one of these into a bigger size is not bad at all. You don't have to do everything at the same time.

 

Third, learn to focus on making good the imbalances, in a steady manner. In the early days of earning, you may have time and attitude to take risks in equity. However, without the cushion of wealth, that would be risky. In the middle age of low expense and high saving, buying property might become an obsession. In the retired phase, there may be an overt focus on protecting capital and getting an income.

Long-term wealth building needs balance. Always look at your wealth to ask if you have too much or too little of something. If an investment product is offered to you, look at it in terms of how it would add to, or take away from the balance between all the components you already have. Have a target for making corrections and work on it. If all your saving is going back into your business, and you have bought property with all the gains you could stash away, recognise the lack of debt in your portfolio, and begin to build it.

Do not worry too much about actual proportions. That keeps changing. Look for extreme positions, such as 80 per cent in property, 90 per cent in gold, 80 per cent in equity. It is fine to keep these for some time, as long as you have a plan to balance it out and implement such plan. For example, by the time you retire, if you have 30 per cent of your wealth in property, 30 per cent in equity, 30 per cent in debt and 10 per cent in cash, you have balanced your wealth well.

 

Fourth, do not allow your wealth to be a victim of your attitudes. Protect and fence your wealth from your emotions, insecurities, overt optimism, and mistrust. Whether you bought equity shares, or set up your business, you would face a crunch from the ups and downs of equity. Not all of us can lose our shirts and start all over again. Do not stake your wealth to win by trading in stocks. Set aside a portion of your wealth in debt products before pursuing your dream, or even your whim, so that your family is protected. If you invest only to save taxes, your wealth will suffer the long-term peril of poorly chosen products.

If your wealth is in a property that you are adamant about passing on to your children, who may or may not need it, you may be holding unproductive assets. If you buy gold only because it makes you feel good, you may have too much of an asset that earns no income. Recognise emotions that may lead you to overdo something and keep a check on those that harm your wealth.

Building wealth is about persisting over time in allocating your savings across diverse products, ensuring a balance, and keeping emotions in check. Everything else is detail. Do not miss the woods for the trees, trying to search for the next best thing to buy, or panicking about economic cycles. You have at least 45 years or more after you turn 21 to build and enjoy your wealth. That is long-term orientation for you.Source: Economic Times