Here’s Why Aadhaar Will Become Your Main Id…    Mar 24, 2017

March 24, 2017
Weekly Facts
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S&P BSE Sensex* 29,421.40 -227.59 -0.77%
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BSE Sensex value as on March 24, 2017

Do you file an income tax return?

If yes, then you must consider the next question.

How much do you value your privacy?

The Government wishes to make it mandatory for the income tax assesses, who must quote their Aadhaar card number while filing the Income-tax (IT) return. Moreover, even to obtain a a PAN cardyou are expected to have an Aadhaar card.

In the past, the honourable Supreme Court of India asked the Central Government to call back all notifications that made Aadhaar mandatory while opting for benefits under any Government run scheme. Not only that, even various high courts have reprimanded the State Governments for making Aadhaar compulsory

In 2014, Justice B.S. Chauhan told the Solicitor General, Mohan Parasaran,"I have received a lot of letters which say that Aadhaar card is mandatory despite court orders. We had already passed orders saying no one should suffer for not having Aadhaar card. How can you insist on Aadhaar card? If there are any instructions that Aadhaar is mandatory, it should be withdrawn immediately."

"Biometric data cannot be shared without the consent of the resident and as per its current data-sharing policy and guidelines. The right to privacy is one of the basic human right of an individual and the UIDAI is committed to protect this aspect," he added.

Opponents of this move have 3 concerns. They say…

  1. Why do we require an Aadhaar when there are so many other identities and address proofs which can be submitted to the income tax authorities;
  2. The Government is impeaching every single assessee as a tax dodger; and
  3. The Government is indirectly disrespecting the right to privacy

However, the Government has defended its decision suggesting that it will help in curbing the tax evasion.

In fact, the Government strategically introduced these changes in the Finance Bill 2017 and got the Bill passed in the Lok Sabha, where the Modi-led-NDA Government is in the majority. A "Money Bill" needs approval only of Lok Sabha, and not of the upper house, the Rajya Sabha, where the current dispensation is short of numbers.

While speaking to the media about making Aadhaar mandatory Finance Minister, Mr Arun Jaitley said,"One person has made five PAN cards. These are then used for tax evasion. That is why we have made Aadhaar mandatory. This reduces the possibility of this kind of tax fraud and evasion."

The principal architect of Aadhaar, Mr Nandan Nilekani came out in Mr Jaitley's support. "It is a good idea. Linking Aadhaar to PAN will make the PAN number unique," he said.

Speaking about the 'privacy' concerns raised by the critics of the decision, Mr Nilekani stated that,"The NDA Government's Aadhaar Bill has enough safeguards and this is probably the most stringent law on privacy till date in India."

"In fact, this (the Bill on privacy) is stronger than the original Bill. The Bill has very robust privacy protection beyond what any other legislation has ever provided in India. It is as good as it gets,"
he added further.

This makes the matters more complicated.

At the outset, the arguments Mr Jaitley and Mr Nilekani made don't seem to be off beam. It will help curb malpractices and tax evasion. But the issue lies in how it is being made compulsory. The Government should try to address the genuine concerns of those who are opposing the move.

If it wants to go ahead with its decision of making Aadhaar mandatory for filing tax returns, it must accept the responsibility for the safety of biometric and other crucial details of assessees.The Government must fix the responsibility on its concerned departments and must pay compensations for breaches of data privacy.

As far as your tax return is concerned, as of now, you can only protest if you dislike the move, but you will still have to comply with the new rules (even though they appear to be a contempt of Court).


PersonalFN believes sector funds are too risky to bet on. And it has always suggested its readers and investors to refrain from investing in sector or thematic funds

The Securities and Exchange Board of India (SEBI) seems to be echoing what PersonalFN has been advocating for years.

Recently, the capital market regulator decided to stop issuing fresh approvals for sectoral ETFs (Exchange Traded Funds).

Lately, SEBI discovered that Nifty Bank Index is dangerously skewed in favour of the top 3 stocks. A glimpse of the index suggests that these 3 stocks constitute close to 45% of the index, while the bottom 5 stocks, in a 12-stock index, make up only about 5%. This implies that remaining 4 stocks form 50% of the index. The S&P BSE Bankex is a highly concentrated index wherein, top 5 out of 10 stocks make up 80% of the index.

Such concentrated exposure, even through ETFs, may be highly risky, at least going by the fundamentals of the sector —which potentially could result in steep losses for you, the investor.

Let's see what industry insiders say about the sectoral ETFs.

"Typically, when you construct an ETF, you don't want a large weight sitting somewhere, as it is against the principle of portfolio allocation. The aim should be to get reasonable returns through diversification, not the case with some of the sectoral ETFs in India," expressed a fund manager on the condition of anonymity.

What's the remedy?

Some experts believe that creating an equal weight index may solve the problem of concentration resulting from the current method of creating an index on free-float market capitalization method. While a few other experts believe, "broad basing the index will lead to better diversification and result in a higher weight to high growth stocks, both beneficial to investors."

As you may be aware, investing in ETFs is a passive investment strategy which tries to avoid risks of misjudgements associated with active portfolio management. However, PersonalFN believes, if a mutual fund exercises stringent risk management and stock selection processes and refrains from following the market momentum, active management can fetch higher risk-adjusted returns over long term.

Invest in diversified equity mutual funds that come from the stables of a process-driven fund house and carry a reliable track record. If you are unsure about which funds to invest in, you may try out PersonalFN's unbiased mutual fund research services. And if you need guidance to select best mutual fund schemes for your portfolio and plan your life goals, don't hesitate to reach out to a Certified Financial Guardian who stands as a symbol of trust and respect. Be moneywise and be an empowered investor.


A new dawn in technology has robots replacing humans in the workplace, and to a greater or lesser extent, this trend has been catching on across all industries.

How can financial services be an exception to this?

Globally, robo-investing is a buzzword these days.

In simple words, robo-investing is the investment advisory managed by software-based platforms that use human-made algorithms.

Now, you must be wondering why use an auto-pilot mode when you can take the help of a financial advisor?

There are four main reasons why robo-investing is gaining popularity…
  1. Unlike financial advisors who often have discriminating policies for smaller investors, robo-investing platforms treat all investors the same.
  2. They offer a reasonable level of customisation in portfolio construction at an affordable cost.
  3. Robo-advisors construct and review portfolio taking into account one's risk appetite and time horizon to stay invested.
  4. Since the portfolio construction and review doesn't involve human intervention, there's no room for speculation.
In other words, robo-advisory platforms are created to iron out the shortcomings of the financial advisors and investment consultants. As you'll acknowledge, many times financial advisors fail to prove the value of their services. They either charge you a fat fee and offer average advice, or charge no fee but provide biased advice that earns them huge commissions. It's the investors' loss, in either case.

Long story short, robo-advisors score high on affordability and convenience; and hence, have been gaining popularity.

But you can't take anything at face-value and you should always conduct a thorough analysis. Therefore, you must be careful while selecting a robo-investing platform.

Every advisory platform may offer you convenience in transacting, but you must be sure of its superiority, integrity, and longevity.

It's unfortunate that in India, the robo-advisory models are proliferating, but investors are not bothering to check their track-record. Virtually, no one is raising a question about their integrity. Longevity of the platform is not even a consideration for many investors.

To read more about this story and Personal FN's views over it, please click here.


Gold and U.S. Dollar (US$) share an inverse correlation. To be precise, interest rates in the U.S. and US$ denominated gold prices share a negative correlation.

If you are a seasoned investor, you would know this.

If you are not, now you do.

But an unusual thing is happening these days.

Despite the US Federal Reserve's firm move to increase rates, gold prices are rising.

Interestingly, India too, has been importing more gold since the beginning of 2017. India imported 50 tonnes of gold in January, and this ascended to 80 tonnes in February. As per the industry estimates, India's gold imports for the Jan-March quarter are pegged at 200 tonnes.

The upsurge in gold imports…

# Estimated
(Source: Business Standard, dated March 20, 2017)

What are the reasons for such a rise in the demand?

Let's try to decode this mystery...

To read more about this story and Personal FN's views over it, please click here.

If you stay away from mobile wallets fearing frauds or misappropriation of funds, your worries might be overrated.

Recently, one of the most popular mobile wallets, Paytm, introduced an insurance scheme for its wallet holders. “All customers will be insured up to a limit of Rs 20,000 or their wallet balance, whichever is lower. In case of phone loss or theft, the customer must report to Paytm via e-mail or by calling its customer care within 12 hours,” the company said in its press release. 

Algorithmic Trading: Algorithmic trading, also referred to as algo trading and black box trading, is a trading system that utilizes advanced and complex mathematical models and formulas to make high-speed decisions and transactions in the financial markets. Algorithmic trading involves the use of fast computer programs and complex algorithms to create and determine trading strategies for optimal returns.

(Source: Investopedia)

Quote: "Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't, pays it." - Albert Einstein


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