Issue of new banking licences may be delayed

The large corporate houses eyeing a pie of the banking sector in India may have to wait a little longer, as the Government is of the view that corporate houses should be allowed to open new banks in the country only after the banking laws are amended to empower sector regulator -Reserve Bank of India (RBI), to monitor the parent or subsidiary companies of a bank.

This follows concerns raised by the central bank that the ownership structure of large business groups may lead to a turf war among regulators if they were given licences to run banks.

RBI in its report has urged that business houses have the entrepreneurial and managerial talent of running mutual fund and insurance companies. They (business houses) have successfully penetrated into rural India, and that their talent could be harnessed in the banking sector. However, existing banks are wary about corporate houses getting banking licences as this may create an uneven playing field due to the large capital buffer that would be available to banks sponsored by industrial or business houses.

Orginal News source:
PersonalFN.com

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Money Simplified is Back!

Dear Reader,

We are glad to inform you that your favorite financial planning and investing guide, Money Simplified is back.

As you know, the guide was originally started in 2003 and was published till 2007. It covered topics from Financial Planning, Insurance, ULIPs, Retirement Planning, Tax Planning, Planning for Children’s Future and NRI Investing.

However, we took a break in between. But that is over now.

The Guide is now out again with the very first issue on "Your Guide to Insurance Planning and Protecting your Financial Future".

We at PersonalFN have come across many cases where investors have been mis-sold insurance policies by unscrupulous Insurance agents.

They have been fallen into one of the many traps that unscrupulous insurance sellers use to get out money from you.

Insurance is a critical aspect of one’s life and is very important to ensure that you do not dent your finances in facing life’s uncertainties.

PersonalFN wants to help you in this endeavor of yours.

Our latest Money Simplified issue on "Your Guide to Insurance Planning and Protecting your Financial Future" is all about that.

We write this guide to help you become more aware about what is insurance and how do you have to use insurance to ensure that you continue to live a stress free life, that you have control over.

With every chapter, you will know what exactly RIGHT for you!

So claim your right to control your own MONEY!

Download your FREE copy now! Click here!

Warm Regards
Team PersonalFN

How to Select Right ULIP?

ULIPs are the most miss sold products in the Personal Finance domain. ULIP plans are revolutions for those who are looking for insurance and assured return on their insurance investments. These insurance products along with assured tax returns are also linked with tax benefits. The assured return on insurance investments has impressed many investors.


In the conventional Insurance products, the insurance component takes edge over the saving component, but in ULIPs insurance cover is secondary focus, while focusing mainly on return pert of your investment. ULIP offers opportunity for investor to select a product which matches their risk profile. Depending upon the risk factor of the investor he can select any ULIP product.


ULIPs are more like Mutual Funds, in term of their functioning, payment of premium and declaration of units in terms of NAV.


Whenever you are going for ULIPs, you should be well informed about ULIPs. ULIPs are most evolved investment avenues, and thus making well informed decisions is the key if you want to invest in ULIPs.
Read following tips which can be informative for your ULIP investments.


1. Understand ing ULIPsIn market there is a wide range of ULIPs available and which makes ot difficult for the investor to choose correct ULIP.Before investing in any ULIP try to get as much as information on ULIPs. Be aware of what product you are choosing for your investment.

Understand all the terms and conditions clearly before investing in ULIPs. You should try to gather information on ULIPs from various source of information including web, and print media information from Insurance companies.

2. Focus on your need and risk profileChoose a plan which focuses on your need and risk. Risk profile should be deciding factor in choosing a ULIP. Depending upon your risk profile you should go for ULIPs option which suits you better.

3. Comparing ULIPs from various companies:All the insurance companies offer many ULIPs, and ULIPs varies on parameters like expenses,premium payouts and performance etc. ULIPs work on premium payments as opposed to sum assured in the case of conventional insurance products.Before investing in any ULIP you should compare it on the basis if performance of ULIP. You should evaluate ULIPs on the basis of what's performance of debt, equity and balanced schemes and performance of various portfolios. Expenses play a major role in ULIP so an assessment on this parameter is also necessary.Make some enquire about the top-up facility offered by ULIPs i.e. additional lump sum investments which can be made to enhance the policy's savings portion. This way policyholders will be able to increase the premium amounts, thereby providing presenting an opportunity to gainfully invest any surplus funds available.

 4. Go for an experienced insurance advisorBefore doing any kind of major investments you should always select and financial advisor, who is having a through knowledge of insurance instruments. But make sure that the advisor who you are seeking is unbiased and independent; he should not be broker of some insurance company. You should also look for reviews of the financial advisor, from his previous clients and also check standards of his services.
It is very important that you should get a unbiased and independent advice on your ank kind of investments, so its always better to look for an advisor who asks for payments for his advice, because in that case, he will be working for your welfare not for the insurance company, whose products he will advice you. It is also very important that you should ask your advisor to provide you more services, rather than just filling and submitting the required forms.

Inflation on its northbound journey

After mellowing down in the month of November 2010 to 7.48%, the Wholesale Price Index (WPI) jumped to 8.43% in December 2010. This sudden spurt in the headline inflation was due to the upward trend in prices of certain food and non-food items.

As per the official WPI data, prices of prices of primary articles; food, non-food articles and minerals shot up by 16.46% on an annual basis. Manufactured goods too became expensive by 4.46% on an annual basis. Also, during the month of December 2010 fuel and power prices scaled up by 11.19%.

Considering the northbound journey of the headline inflation, the Prime Minister's Economic Advisory Council's (PMEAC) Chairman said that the WPI for the fiscal ending March 2011 may end up higher at 7.00%. Also now the Finance Secretary - Mr. Ashok Chawla too expects the WPI for the fiscal ending March 2011 to be at 6.5%.
PersonalFN.com View:

We believe that the headline inflation would still remain above the comfort levels of the RBI, and is expected to remain stiff as the impact of spiralling food and crude oil prices would start creeping in the headline WPI inflation. As an effect of this we may see RBI increasing policy rates by 25 basis points in third quarter review of monetary policy 2010-11 (scheduled on January 25, 2011), despite the drop in the Index of Industrial Production (IIP) to 2.7% (for the month of November 2010).

Your mutual fund investments at Risk!!

The recent multi-crore advertisement campaigns undertaken by some of the large mutual fund (MF) houses like HDFC Mutual Fund and Franklin Templeton Asset Management have raised several eyebrows on whether these companies are using investors' funds to boost their "brand equity".

Though these multi-crore ad campaigns are not illegal, they have raised ethical issues when the regulator - Securities & Exchange Board of India (SEBI) has been working to cut costs for investors, including banning of entry loads. And, it is noteworthy that all mutual fund schemes' advertisements go through the SEBI before going public.

Billboards and signs at traffic lights across Mumbai and Delhi that have sprung up display the companies prominently instead of individual funds, which normally is the case. One such advertisement reads - "choose a healthy investment-HDFC Mutual Fund SIP." The other - "Invest in Franklin Templeton Mutual Fund." At the bottom of the boards, one of their funds' name is written in a small font, the corpus from which possibly the cost of promotion is met.

Read More:

Financial News Simplified by PersonalFN

Top investments to get higher interest rates

Interest rates on Fixed deposit instruments and on other investment avenues are decreasing continuously, and inflation is increasing on regular basis. Where should one park is hard earned money so that he can get a good value for his invested money. As an investor you have to plan a strategy, that where you should preserve your money so that you can make most out of it. I am listing top 3 safe investment avenues where you should park your money, to get optimum returns on your investments.

1. Liquid funds
Liquid funds are an uncertain investor's biggest ally. Whether the investor is uncertain with regards to the interest rate scenario or uncertain about what he wants to do with his money is immaterial; liquid funds are an answer to both these uncertainties. Liquid funds are ideal for investors who have a very short investment time frame, as short as a day. So you can invest your money in a liquid fund till such a time that the uncertainty (with regards to interest rates in this case) is dispelled.

Since liquid funds usually have very similar portfolios (consisting of money market instruments and call money), there is not much product differentiation over there. However, given that liquid fund returns are wafer-thin, it is imperative to select the ones with the lowest expense ratios.

2. Short-term debt funds
Another fund that fits the bill for an uncertain investor's portfolio is the short-term debt fund. While liquid funds do the job of insulating the investor's portfolio from high interest rates well enough, short-term debt funds do it as well and can even give a slightly higher return. The difference between a liquid fund and a short-term debt fund is the investment tenure. Liquid funds are ideal for investors with an investment tenure ranging from 1 day to 30 days. While investors can remain invested in liquid funds for longer than that, the return may begin to look a little unattractive compared to the next product on the maturity parameter i.e. short-term debt funds

Like liquid funds, short-term debt funds are predominantly invested in low-risk debt instruments (both from interest rate as well as credit risk perspectives) like short-term corporate debt, money market instruments, call money. Only difference is that short-term debt funds can invest in slightly longer dated paper. That makes them ideal for investors with investment tenure in the 30 days - 90 days range. So if investors have an investment tenure of more than 30 days, they should typically be investing in short-term debt funds as opposed to liquid funds.

Investors must note that the short-term debt fund category is quite varied; you have short-term debt funds, short-debt floating rate funds, short-term gilt/gsec (government securities) funds. We recommend that investors select short-term debt funds and short-term floating rate funds. Again, keep an eye on the most inexpensive funds.

3. Floating rate funds
This is the only long-term debt fund we would recommend investors to consider in a rising interest rate scenario. This is mainly due to the fact that floating rate funds are better geared to take on rising interest rates. Floating rate funds invest in debt instruments that have their coupon rates linked to a reference/benchmark like the MIBOR (Mumbai Interbank Offered Rate) for instance. The MIBOR is a good barometer of the prevailing interest rate scenario in the country. The coupon rate on the debt paper is revised regularly in line with changes in the MIBOR. So at the end of the day, the floating rate debt instrument (and the floating rate debt fund) captures the interest rate mood fairly well, at least a lot more effectively than the fixed rate debt instrument.

Floating rate funds are ideal for investors with investment tenure of at least 12 months. Again there is little to choose from within floating rate funds since they invest largely in floating rate paper, which is usually rated highly (in terms of credit-worthiness) and carries lower interest rate risk since coupon rate is revised periodically. So the investor has to keep a tab on the expense ratios of these funds while making a selection, because this can make a significant difference to your returns over a 12-month period.

Top Reasons to Recommend PersonalFN

PersonalFN is a division of Quantum information Service P Ltd (QIS), is focused on providing financial Planning and research solution to indivduals. Beside proving Financial Planning services, PersonalFN is doing research in Mutual Funds, from last 10 years and has always been unbiased in prviding recommendations to Mutual Fund investors to invest in Top Mutual Funds in India, and many of the investors who had invested in Mutual Funds through PersonalFN's recommendations have been benifitted from PersonalFN.

Today as we enter to the last month of 2010, I thought that it is a good time to reflect on why I am thankful to PersonalFN.

1. Unbiased recommendations:  PersonalFN have been consisitent with their recommendations to investors, in provding unbiased advice to investors. In Market many of the financial advisors, Mutual Fund Research firms have been influenced by the various Fund Houses,for their own benifits, but PersonalFN has always been stand up for  the cause of Investors.Their recommendation have always been unbiased irrespective to the reputation of Mutual Fund houses.

2. Expertise in Mutual Fund Research:  In a market where star ratings have been a trend by most of the Mutual Fund Research firms, PersonalFN has always been stuck to their own baiscs.Star rating can be a sure shot method, but for the Advisory Firms, it should be a detailed analysis, why fund is rated higher than other ones or vice versa. PersonalFn brings that Expertises in Mutual Fund research where they give a solid reason for their recommendations.

3. Educating Investors: PersonalFN has taken different initiatives in educating investors on the subjests of Personal Finance, Mutual Funds, Financial planning etc. Money simplified was one such initiative by PersonaFN, which has its own kind of following in investors. The quality of content on their website and sound research theory behind every article on their website is another intiative. Many investors have been benifited by their recommendations earlier, and the same process countinues.

4.Quality of Service: The quality of Services to their clients through either direct commnications or through online media, is another milestine. Most important the quality of recommended Mutual Fund schemes, is another highlight of PersonalFN.

5. Experiecne: PersonalFN is the firm Financial advisory Firm in India, which have taken the intiative of educating investors on their Investments. They are standing in the market for last 10 years.

So if you are looking for some advice on your Investments, then probably PersnalFN is your destiny.