 |
| April 28, 2017 |
|
|
|
|
Impact 
From May 01, 2017, your mutual fund investments might be frozen for the non-compliance with investment guidelines.
The Government recently announced that investors who have not submitted self-declarations as required under FATCA, on or before April 30, 2017, for their investments made between July 01, 2014 and August 31, 2015, won’t be able to transact from May 01, 2017.
To be precise, the Central Board of Direct Taxes (CBDT) issued a press release addressing financial institutions in India. According to which, “The financial institutions are advised that all efforts should be made by the financial institutions to obtain the self-certification. The account holders may be informed that, in case self-certifications are not provided till 30 April 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts. The transactions by the account holder in such blocked accounts may, thereafter, be permitted once the self-certification is obtained and due diligence completed.”
The last line is important. Since the blockade is only temporary and will be lifted soon after the submission of self-declaration. This is probably why mutual fund houses are not worried.
For those who are not aware of FATCA (Foreign Account Tax Compliance Act) here’s a quick update.
What’s FATCA?
Money laundering and terror funding are the biggest problems that almost all major economies of the world face today. The world’s largest economy—the US is also not an exception to this. The US Government signed various treaties with other nations to step up vigilance and increase transparency in tax matters at a global stage. Nearly 100 countries have signed agreements with the US including India.
You might ask why you will have to comply…
Simply because, Indian Government has agreed to collect financial declarations from all investors about their investments in the US, and then share the information with the US authorities. Financial institutions that are expected to obtain FATCA declaration from their clients include banks, mutual funds, insurance companies, and stock brokers.
What should you do in case you haven’t submitted a self-declaration?
Needless to say, you should submit your declarations as soon as you can. As far as the question of mutual fund investors goes, they have two options—either to contact their brokers or use the online facility provided by the registrars and transfer agents.
Compliance is an indispensable part of any legit investment. Therefore, you shouldn’t feel annoyed even though you might occasionally be inconvenienced because of it. To save time, you should take advantage of the online facility wherever you can.
You should focus on investing in avenues that suit your investment objectives and are in line with your risk appetite and financial goals.
PersonalFN offers unbiased mutual fund research services. If you are a long-term investor, you might be delighted to know more about its latest offering: Strategic Portfolio for 2025, which is designed exclusively for smart and visionary investors like you.
|
Impact
Buying a dream home is out of reach for many since the housing prices are skyrocketing with every passing day.
As you know, banks grant a home loan for only upto 75% to 80% of the value of property. In other words, before you could even think of buying a house, you need to raise about 20% -25% of the funds to be able to make a down payment. And sometimes, more than securing a home loan, ensuring you have the down payment becomes a herculean task.
People who are in their mid-40s often face a common problem of liquidity. Meaning, it isn’t that they don’t have money to buy a house, however, their funds are locked due to withdrawal restrictions. In some cases, their investments may incur mark-to-market losses if they happen to sell them to raise money.
In such situations, people have no other option but to opt for expensive personal loans or turn to private moneylenders who charge them usurious interest rates. Being considerate about this practical difficulty, the Government recently relaxed norms dealing with the withdrawal from Employee’s Provident Fund (EPF).
Employees Provident Fund (EPF) Scheme, 1952, has inserted a new para under 68 BD allowing its subscribers to withdraw upto 90% of their accumulated corpus to make a down payment while buying a home or pay EMI through an EPF account.
However, there are some conditions attached to make such withdrawal:
- Only a person becoming a member of a co-operative or housing society having at least 10 members can avail this facility.
- He/she should have contributed to EPF at least for 3 years.
- This facility can be availed once in a lifetime by any member of EPFO.
- A subscriber and his/her spouse, both together shall have at least Rs 20,000 of balance in their accounts.
While this is a welcome move, it has a flipside as well which should be considered too. Allowing subscribers of EPFO to utilise upto 90% of their retirement savings to buy a home may prove to be catastrophic. Considering the social structure that we have in India, this facility can be ill-utilised. And in the absence of any other social security system, an elderly person may end up spending his entire life-savings on buying a house for his children and not saving enough for his/her retirement.
The Government should try to clamp down bully real estate developers who jack up property prices. The impact of implementation of Real Estate Regulation and Development Act (RERA Act) will be crucial to the housing market.
Instead of utilising your retirement savings to buy your dream home, consider fulfilling your financial objectives through meticulous financial planning. If you are struggling to find a competent and ethical financial planner, you should meet a Certified Financial Guardian in your vicinity.
|
Impact
With the advancement of technology, your shopping destination has moved from brick and mortar stores to online marketplaces. In the US, retailers are shutting their physical stores with the rise in online shoppers. Just a couple of days ago, global retailer Bebe Stores said it would close all its 175 shops and may move to an online-only model. Many others are following suit.
Similarly, in the financial world too, your mode to invest is shifting from signing and submitting paper forms to simply entering a transaction password. With a push from the market regulator, distributors are now playing the role of investment advisors.
Presently, we have computer algorithms (also known as robo-advisers) that offer personal financial and investment advice on submitting your personal finance details. And there’s no need to fix an appointment, you just need to log in to your account, submit your info and voila!—your financial plan is generated in an instant.
To read more about this story and Personal FN’s views over it, please click here.
|
Impact
Securing a good job is becoming increasingly difficult.
Work satisfaction and right compensation are two critical components of any job. If any of these factors are missing, people tend to switch your job.
But in the challenging economic environment, sometimes, good opportunities don’t come your way so quickly.
Unless you make a timely move, you may get stuck in job with no satisfaction.
To add to your trouble, the notice period at your current organisation could be long, say 3 months, and your new employer may insist you on joining either immediately or within a month
To read more about this story and Personal FN’s views over it, please click here.
|
Impact
You can forget about your past. But sometimes your past doesn’t let you forget it.
It continues to introduce itself into the future.
Something similar has happened to real estate developers.
They had a free run until now.
There wasn’t any regulator to penalise them for their wrongdoings.
Not all builders are alike, but many developers have bullied the homebuyers by not giving them timely possession of properties and diverting funds collected from them into other projects.
However, this is in the past.
The good news is, as of May 01, 2017 the Real Estate Regulation and Development Act (RERA Act).
To read more about this story and Personal FN’s views over it, please click here.
|
Impact
Asset management is a lucrative business, isn’t it?
Investors may or may not earn high returns, but mutual fund houses enjoy hefty valuations.
The latest case in point is L&T Mutual Fund. It is believed to be on the block for Rs 2,000 crore, approximately 5% of its Assets Under Management (AUM).
L&T Mutual Fund had acquired Fidelity Mutual Fund’s India business in 2012, and before that, it had also picked up DBS Cholamandalam Mutual Fund back in 2009.
Do you know how much it had paid for these acquisitions?
To read more about this story and Personal FN’s views over it, please click here. |
The Securities and Exchange Board of India (SEBI) has been working incessantly to attract individual investors to mutual funds. Recently, it nodded Asset Management Companies (AMCs) to issue mutual fund units against the payments through digital wallets. However, this is a conditional approval.
- Mutual fund investors using their wallet can purchase mutual fund units upto Rs 50,000. It’s noteworthy that, it’s an umbrella limit per mutual fund.
- They can utilise balance transferred to the wallet through their own earnings. Meaning, debit cards and net banking facility would be allowed but the purchase of mutual fund units through cash back balance, credit cards won’t be accepted.
- Digital wallet companies are prohibited from offering any promotional discount or cashback on such purchases.
In another development, the capital market regulator allowed mutual funds to provide instant withdrawal facility to their investors in liquid schemes. The only condition is such facility would be restricted to Rs 50,000 or 90% of the investment corpus, whichever is lower.
AMCs won’t be able to borrow money to make such payments and will have to utilise the available funds. These changes may improve the convenience of it, but to make mutual funds popular among investors, educating them and creating awareness is the only way. |
SIPs Vs. EMIs: Which Is Better?
5 Ways to Ensure That Your Dream Vacation Won't Leave You Bankrupt
5 SIP Features That Every Mutual Fund Investor Should Know
|
Tax Haven: A tax haven is a country that offers foreign individuals and businesses a minimal tax liability in a politically and economically stable environment, with little or no financial information shared with foreign tax authorities. Tax havens do not require individuals to reside in or businesses to operate out of their countries to benefit from local tax policies. Due to the globalization of business operations, an increasing number of U.S. corporations, including Microsoft, Apple and Alphabet, are keeping cash in offshore tax havens to minimize corporate taxes. |
Quote :"All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out." - Peter Lynch
|
|
|
|
© Quantum Information Services Pvt. Ltd. All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of PersonalFN is strictly prohibited and shall be deemed to be copyright infringement.
Disclaimer: Quantum Information Services Pvt. Limited (PersonalFN) is not providing any investment advice through this service and, does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. All content and information is provided on an 'As Is' basis by PersonalFN. Information herein is believed to be reliable but PersonalFN does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. PersonalFN and its subsidiaries / affiliates / sponsors or employees, personnel, directors will not be responsible for any direct / indirect loss or liability incurred by the user as a consequence of him or any other person on his behalf taking any investment decisions based on the contents and information provided herein. This is not a specific advisory service to meet the requirements of a specific client. Use of this information is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. All intellectual property rights emerging from this newsletter are and shall remain with PersonalFN. This is for your personal use and you shall not resell, copy, or redistribute this newsletter or any part of it, or use it for any commercial purpose. The performance data quoted represents past performance and does not guarantee future results. As a condition to accessing PersonalFN's content and website, you agree to our Terms and Conditions of Use, available here.
Quantum Information Services Private Limited Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 16 Jolly Maker Chambers II, Nariman Point, Mumbai 400 021 . Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 CIN: U65990MH1989PTC054667
SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013
|