  | | November 29, 2013 | | | | | | | Weekly Facts | | | Close | Change | %Change | | BSE Sensex* | 20791.93 | 574.5 | 2.84% | | Re/US$ | 62.41 | 0.5 | 0.84% | | Gold Rs/10g | 30,435.00 | (395.0) | -1.28% | | Crude ($/barrel) | 112.33 | 4.0 | 3.70% | | FD Rates (1-Yr) | 8.00% - 9.00% | Weekly change as on November 28, 2013
*BSE Sensex as on November 29, 2013 | |
Impact 
Everybody of us wants to retire with adequate savings. As inflation in food articles and medical care is going out of roof, many of you must have recognised the importance of retirement planning. However, merely keeping aside money wouldn't be enough in today's time; one has to intelligently make money work for oneself. There are many investment avenues which cater to your retirement planning needs but not all may find place in your portfolio for variety of reasons.
Conventionally, people have been relying on provident funds, Public Provident fund and retirement policies provided by life insurance companies. Nowadays there is a growing acceptance to market linked products. Realising this mutual funds are focusing on retirement planning needs of investors. HDFC Mutual Fund, Reliance Mutual Funds and Pramerica Mutual Funds may soon launch dedicated retirement products.
Are these funds for you?
Basically, distinguishing factor between a retirement fund and any other equity fund or a hybrid fund is lock-in period. Since retirement funds are meant for very long term; they discourage premature withdrawals and attract higher exit loads. There can be various options on offer under a retirement fund each having different asset allocation pattern. Few funds also follow a life stage approach to asset allocation wherein equity exposure goes down by certain percentage points every year. Apart from aforementioned factors, the funds function more as other equity oriented funds.
PersonalFN is of the view that, although it is absolutely necessary for you to invest regularly for your retirement; assessment of available options is important. You can always customise your retirement plan to make it more tuned to your circumstances and risk-return preferences. Opting for dedicated retirement plans offered by mutual funds is an inflexible option. If the retirement fund fails to perform in say 3 years on all parameters, you may not be able to exit it due to higher lock-in period or may have to exit at higher cost due to higher exit loads. Taking holistic view of your financial needs is the key to financial planning. Asset allocation plays important role in getting you closure to some of important life goals such as retirement planning. PersonalFN is of the view that you don't require a dedicated retirement fund.
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Impact
Medical bills are capable of giving you rude shocks. Although you might safeguard yourself by buying health insurance plans; sometimes bill amount can be so high that it would simply be in excess of the amount you are covered with. This can happen in case you are either underinsured or the hospital charged you excessively. Chances of later being correct are high these days. Commercialisation of medical industry and proliferation of morally corrupt hospitals and nursing homes has made medical treatment a costly affair. But there is a ray of hope as things might get better now.
Recently, the Insurance Regulatory and Development Authority (IRDA) revealed that it would issue unique identity number to hospitals for comparing cost structure of different hospitals for various diseases. IRDA has considered a sample set of 30,000 hospitals associated with insurance companies across the country. The regulator is also compiling the data on frauds. This would cover, hospital frauds, frauds perpetrated by the middlemen, customer and the insider.
PersonalFN is of the view that, the initiative taken by IRDA would help get a better idea about the cost structure of hospitals for the treatment of the same disease. Moreover, This will bring in homogeneity in healthcare pricing, which at present is highly discriminatory and adds to woes of many patients and their family member when they are already in troubled times. The Bombay High Court last month issued notices to non-life insurers seeking pre-packaged rates for 42 ailments on the basis of the sum insured and the type of hospitals. PersonalFN believes initiative taken by IRDA may help curtail wrong practices in the healthcare industry.
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Released Session 6: Introduction to various asset classes - Equity, Debt, Gold
As an investor you need to be well aware about the investment instruments before investing your hard earned money.
This Money Simplified session talks about three major asset classes Equity, Debt and Gold, which are popular amongst investors & explains the merit and demerits and their suitability for investors.
We strongly recommended you to watch this Video Now. Its Free!
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Impact 
Indian equity markets heavily rely on Foreign Institutional Investors (FII). FII holding in Nifty companies stood at 18.1% in July-September quarter. As per data published by the Securities and Exchange Board of India (SEBI), FIIs raised their ownership in about 30 of 50 companies comprising CNX Nifty index. FIIs have poured in close to Rs 41,000 crore (net) in India during the current fiscal. While equity markets recently scaled to a new high; FII flows have still remained positive although have become less robust in November. Indian mutual funds have rarely turned net buyers in the market this fiscal. Retail investors have lost confidence in the market. Whenever markets rise, investors exit. About 5,50,000 accounts from equity oriented mutual funds were closed in October. Under such a scenario market looks vulnerable to a fall should FIIs start pulling out money.
FIIs vs. Mutual Funds
# Figures for the current month are till November 25, 2013
(Source: AMFI, PersonalFN Research)
As depicted in the graph above, FII flows have been erratic. In the first two months of the Financial Year (FY) 14, the flow of foreign capital was strong but thereafter FIIs started exiting Indian markets for variety of reasons. Cooling growth, widening current account deficit and elevated retail inflation were some of the most obvious fundamental factors that triggered a selloff in the market. However, there has been one more crucial factor that affects the flow of foreign capital in Indian equity markets - global liquidity. Indian markets have witnessed sharp selloffs whenever the global liquidity situation has turned even slightly negative. Just few months ago there were speculations that Federal Reserve (Fed), the central bank of the United States, would roll-back the stimulus measures. The rally that has happened over last 2 months has largely been a relief rally happened due to decision of Fed to continue with its bond buying programme.
To read more about this news and the view of PersonalFN over it, please click here.
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Impact
Taking only painkillers without going to the root cause of the ailment is nothing but fooling your own self for temporary relief from pain. What if government does so? Recently, the finance ministry has decided to purposefully delay the payment of income tax refund. This comes as a move to contain fiscal deficit at 4.8% in the Financial Year (FY 2013-14). Moreover, the government is mulling over using the budget of the next fiscal to foot the oil subsidy bill of the current year. This may make fiscal deficit number of the current fiscal looks better but would put strain on the budget next year.
From the beginning of the current fiscal there was a huge pressure on government finances. The budget announced for FY 2013-14 was the last full budget before Lok Sabha elections. As a part of its image building programme, the government loosened up its purse and unexpectedly pegged up the spending. The government was expected to spend about 16% more this fiscal. It also assumed huge revenue growth. However, on the contrary to expectation of 19% rise in direct tax income, revenue from direct taxes in the first 6 months of the current fiscal has been up only by 13%. On the other hand, the government utilised around 76% of the full year fiscal deficit target in first 6 months of FY14.
To read more about this news and the view of PersonalFN over it, please click here.
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- At present, insurance companies have to file all products with Insurance Regulatory and Development Authority (IRDA) before introducing them in the market. However, the regulator would soon allow companies to launch products first and send product information later. While doing this, they (insurance companies) have to comply with standard norms. IRDA is of the view that, insurance companies need to develop simpler and innovative products. The new use-and-file regime would ensure that products are launched in a faster way. The regulator also believes that simpler product may be easy to understand which would help reduce grievances.
PersonalFN is of the view that although use-and-file route may make it easy for insurance companies to launch products faster, it may not ensure simplicity of the product. Before, allowing companies to access this route, the regulator has asked companies to standardise types of products and policy wordings. This may result in fewer conflicts as standardisation of products and policy wordings may eliminate the ambiguity.
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Unlimited Bond Purchase: "A program undertaken by the European Central Bank in October 2012 under its president, Mario Draghi, to buy large quantities of government bonds from financially struggling eurozone countries, such as Spain and Italy. The unlimited bond purchase program was considered a crisis-averting measure amid fears that the euro would fail because of widespread economic turmoil. The program was considered by some observers to be a move toward greater central control in the European Union. The EU central bank's original purpose was simply to keep down inflation."
(Source: Investopedia)
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Quote : "The individual investor should act consistently as an investor and not as a speculator." - Benjamin Graham
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