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Monday, October 10, 2011

Systematic Investment Plan (SIP) units redemption

We all invest in mutual funds.

Many of us who try to save our hard earned money from being taxed by  investing in Tax Saving Mutual Funds, with a lock in period of 3 years.

What is Systematic Investment Plan SIP?

SIP is a mode of investing in a mutual fund.

For example, You can invest Rs. 1,00,000 in any mutual fund of your choice, in two ways:  
  • The lump sum way, where you buy units for a cost price of Rs. 1,00,000 in a single transaction.

  • The SIP way, where you choose to buy units for a cost price of Rs 10,000 for 10 months i.e., in 10 transactions.

So in a way, SIP is similar to a Recurring Deposit. Every month on a specified date an amount you choose is invested in a mutual fund scheme of your choice.

People can choose the one that suits them the most or which they find less risky.

This is how you invest Rs. 1,00,000 through SIP:

Month


Investment Amount


Units Purchased


Jan,2011


Rs. 10,000


50


Feb,2011


Rs. 10,000


20


Mar,2011


Rs. 10,000


40


Apr,2011


Rs. 10,000


60


May,2011


Rs. 10,000


100


Jun,2011


Rs. 10,000


70


Jul,2011


Rs. 10,000


50


Aug,2011


Rs. 10,000


20


Sep,2011


Rs. 10,000


30


Oct,2011


Rs. 10,000


10


SIP units redemption:

Unlike other  mutual funds where units can be sold or redeemed at any point of time (not intraday), in Tax Saving mutual funds the units can be redeemed only after they have matured, i.e., after the lock in period of 3 Years.

This is how the units purchased through SIP will mature after a period of 3 years:

Month


Matured/Redeemable Units


Jan,2014


50


Feb,2014


20


Mar,2014


40


Apr,2014


60


May,2014


100


Jun,2014


70


Jul,2014


50


Aug,2014


20


Sep,2014


30


Oct,2014


10


 As a majority of the mutual funds are open ended schemes, you can choose to either stay invested or sell/redeem the matured units.

There are specific Unit Redemption forms for all mutual funds, mostly available on their website, where you need to fill in the redeemable units you wish to sell and submit at their offices.

Or

Most of the mutual funds have now come up with their online portals where investor can create account using their mutual fund folio no, login and do the buying/selling of units.

Copyright © 2011 randomchores.

Fixed Deposit (FD) Vs Post Office Monthly Income Scheme (POMIS)

The current rate of interest on FD is 9.25 %( @ State bank of India for 5 years and up to 10 years).

The advertised effective rate of interest on Post office MIS is 10.94 %(Maturity Period for POMIS is 6 Years).

“Why would I put my money in FD ? ”,  would be an obvious question at this point.

But to understand the difference in an efficient way, let’s do some simple math and see how they perform in  1 year duration.

======================================================

Scenario 1a: Fixed Deposit

Let’s start with a sum of Rs. 3,00,000.

Using the compound interest formula:

Principal: Rs. 3,00,000

Interest Compounded: Quarterly

Rate of Interest: 9.25

Time in Years: 1

You earn an interest of Rs. 28,727.5

======================================================

Scenario 2a: Monthly Income Scheme

Principal: Rs. 3,00,000

Interest Compounded: Annually (sad but true)

Rate of Interest: 8

Time in Years: 1

You earn an interest of Rs. 24,000

======================================================

The key difference between MIS and FD lies in how you get back this earned interest .

On investing an amount of Rs. 3,00,0000 in Post Office MIS scheme, you get an income of Rs 2,000 every month, hence the name Monthly Income Scheme. This adds up to an annual interest of Rs. 24000 calculated in Scenario 2a.

Having this understood, let’s see how they perform in 6 years duration. 

======================================================

Scenario 1b: Fixed Deposit

Principal: Rs. 3,00,000

Interest Compounded: Quarterly

Rate of Interest: 9.25

Time in Years: 6

You earn an interest of Rs. 2,19,290.02 at the end of 6 years.

======================================================

Scenario 2b: Monthly Income Scheme

If you decide to invest this monthly income of Rs. 2,000 in Post office Recurring Deposit at the current Rate of interest of 8%, this is what future holds for you.

Monthly Deposit Amount: 3,00,000

Interest Compounded: Quarterly

Rate of Interest: 8

Time in Years: 6

You earn an interest of Rs. 182015.65

+

5% bonus on principal(on Maturity): Rs.15,000 .

You earn a total interest of : Rs. 182015.65 +  Rs. 15,000 = Rs. 197015.65 at the end of 6 years.

======================================================

Conclusion:   

Rs. 2,19,290.02 > Rs. 197015.65

=Fixed Deposit > Monthly Income Scheme

=Fixed Deposit is better than Monthly Income Scheme

Hence proved.

“But where is the 10.94% rate of interest, which is being advertised on the Indian Post office website?

One way of representing this interest earned above is to divide it by the duration in years.

Rs 197015.65/6 = 32,835 i.e., the interest earned per year.

Now let’s find the per year interest rate on this (32,835/300,000)* 100 = 10.94%.

This is the rate being advertised.

If calculated the same way, the interest rate on Fixed Deposit comes out to be 12.18%.

Copyright © 2011 randomchores.

Sunday, October 9, 2011

HDFC Credit Card bill payment through other bank account

Transferring money to HDFC credit card from any account through Visa Money Transfer costs money.

The  best option is to use your Salary Account for such payments and transfer money through NEFT. Usually, you are not charged any extra amount  if you use your Salary Account for NEFT.

So this is how it goes.

Step 1: Adding a Payee

Add a payee with this info

Account no: HDFC Credit Card No (16-digit card number).

Name: As it appears on the credit card.

Bank: HDFC Bank

Account Type: Savings

IFSC Code: HDFC0000128

Note: Verify the IFSC code from the latest Bill statement. If you receive bill statement through email there's a mention of IFSC code in the e-mail under

Instructions for making payments

  • If you are an HDFC Bank account holder, you can pay your Card outstanding through NetBanking/ ATM Funds Transfer.

  • If you do not hold an account with HDFC Bank, you can pay your Card outstanding through NEFT (Use IFSC code HDFC0000128)/ Visa Money Transfer

  • Alternately, you can pay your card outstanding through cheque. Please draw the cheque favoring your “HDFC Bank credit Card No. xxxx xxxx xxxx xxxx” (16-digit card number).

  • Write your name and telephone/Mobile No. at the reverse of the cheque and drop it in an HDFC Bank drop box placed at your nearest HDFC Bank Branch.

Step 2: Paying the Payee

Once the payee is added you can transfer the bill amount to the payee.

Unlike Credit Card payment, in NEFT transfer the amount field doesn't take decimal digits so while paying the bill amount of Rs 500.70 you are required to round it off to Rs 501. You will be credited Rs 0.30 in your HDFC credit card account.

That's it.

Copyright © 2011 randomchores.

Saturday, October 8, 2011

How to know your EPF balance online

Now you can know your Employee Provident Fund (EPF) balance online

Go to  http://www.epfindia.com/MembBal.html

and click on "Click Here"



or go directly to

http://59.180.233.228/epfo/member_balance/member_balance_office_select.php

Step 1: Select PF Office State



Step 2: Select your EPF Office



Step 3: If your EPF account no is in the format:

BG/BNG/12345A/45678

then

  • Establishment Code is 12345,

  • Extension Code is A,

  • and Account Number is 45678.


and this is where this info goes:



Leave the extension code field blank, in case your account does not have one.

In the fields below enter your name (as it appears in EPF Slip) and mobile number. The given mobile number will be recorded along with the PF Account Number.

On successful submission of above information, the details will be sent through SMS to the given mobile number.

Copyright © 2011 randomchores.

How to transfer Indane LPG Gas connection



If you have shifted within the same city and your old Indane Gas Agency doesn't deliver at your new address, you need to transfer the connection to a nearby agency.

Here are the steps to get it right the first time.

You would be required to visit both the Gas Distribution Agencies.

@ Old Indane Gas Agency:

What you need:

1. Domestic Gas Customer (DGC) Card: All domestic users of subsidized LPG are issued with Domestic Gas Consumer Card (Blue Book or

Gas Card or Gas Book). This is a very important document which the gas consumer must keep in his/her possession at all times.

2. Transfer Subscription Voucher: Transfer Subscription Voucher (TSV) is issued to a customer when he/she enrolls as a
customer of an INDANE distributor, upon shifting within the same city and on surrender of Transfer Termination Voucher.

TSV is a very important document and must be retained by the customer till such time the INDANE connection is being used.

If the TSV is in your name you are required to be at the old Indane Gas Agency in person.


To avoid the rush hours, be there half an hour before it opens.


3. Regulator: You need to show the pressure regulator at the old agency and get it verified.

Make sure the Make No and Serial no. on the Transfer Subscription Voucher match with the ones on the regulator.


Make No and Serial no. on TSV:


Make No on Regulator:





Serial no. on Regulator



4. Request Letter: You are required to submit a letter addressed to Indane requesting a change of LPG Gas Agency.

Letter Format:

From,


ABC,


Consumer No: 12345


To Indane,

Sir/Madam,

Subject: Change of Indane Gas Distributor to XYZ Gas Agency

I have recently relocated to

New Address

from

Old Address

Please allow the transfer of the LPG Gas Connection to

New Gas Agency Address

from

Old Gas Agency Address

Thanks and regards,

ABC,

Consumer No: 12345

(Signature)


Once the verification is done, you will be issued a new TSV (2 copies).Your new address and the address of the new Gas Agency will be updated in the new TSV issued.

Make sure the Regulator’s Make no. and Serial No. are correctly updated on the new TSV.

@ New Indane Gas Agency:

Along with the new Transfer Subscription Voucher (both copies) and Domestic Gas Customer (DGC) Card ( Blue Book or Gas Card or Gas Book), you are required to carry a copy and the originals of the following:

1.  Current Address Proof(Rental Agreement, BSNL Bill, etc)

2. ID proof(PAN Card, Passport, etc)

3. Electricity Bill (from your new address)

After submitting the documents a new Consumer/Customer No. is issued and is updated on the DGC card.

Copyright © 2011 randomchores.