Home Loans i.e Home Purchase Loans, Home Improvement Loans

Real estate is currently one of the fastest growing sectors in India. Banking sector is also registering profitable business since the last few decades, with the growth of real estate. Majority of the banks are also offering easy home loans at attractive rates to their customers. Now that getting a home loan is so easy, it seems everyone can fulfill his / her long cherished dreams of purchasing lands, building their houses and expanding their homes. Different types of home loans are tailored to suit the heterogeneous requirements of the customers. The description of some of the most common types of home loans is given below.

Types Of Home Loans

Home Purchase Loans: This is the basic home loan for the purchase of a new home.

Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you.

Home Construction Loan: This loan is available for the construction of a new home.

Home Extension Loan: This is given for expanding or extending an existing home. For instance, you may apply for a loan for the addition of an extra room in your home and for similar cases.

Home Conversion Loan: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: This loan is available for purchase of land for both construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home.

Balance Transfer Loans: Balance transfer loans help to pay off an existing home loan and avail the option of a loan with a lower rate of interest.

Refinance Loans: This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.

Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.

Features of Home Loan

Home loans are available on fixed rate of interest as well as floating rate of interest. In fixed rate loans, the interest rate remains fixed over the life of the loan, irrespective of the interest rates in the open market. The plus point of fixed rate loans is that they remain steady over the years, making at least one aspect of your monthly cash flow predictable. However, the flip side is that the lenders charge a higher rate of interest for fixed-rate loans because if interest rates shoot up, they lose the opportunity to make more money on the funds they are lending.

In floating rate loans, the rate of interest changes according to a set formula as interest rates fluctuate in the open market. The plus point is that lenders charge a lower rate for such loans because you are taking on some of the interest-rate risk. The downside is that interest rates may rise anytime and you can end up paying more than fixed rate loans. The type of interest you opt for will entirely depend on your personal preferences.

General Information
The loan amount is based on the repayment capacity of the customer. However, it cannot be more than 85% of the cost of the property (including the cost of the land).

The minimum term of home loan is 5 years, while the maximum duration for the loan is 20 years, subject to the retirement age of the applicant.

Home Loans can be applied either individually or jointly, with spouse, children (son or daughter) and even earning parents (father or mother), but if staying with the applicant and having regular income.
Home loan eligibility can be enhanced by repaying the outstanding loans, clubbing the income, increasing the home loan tenure and opting for a step-up loan.

The amount of loan sanctioned varies from bank to bank. Generally, the maximum loan amount granted for the applicant would be 80% to 85% of the cost of the home.

The eligibility for the applicant depends upon his/her capacity of repayment. It stiffens with the increase in home loan rates.
Processing charge, pre-payment penalties, commitment fees and miscellaneous costs accompany a home loan, in many of the cases.
Providing additional security, like bonds, fixed deposits and LIC policies, or having a guarantor can enhance your eligibility for a home loan.

Eligibility Criteria
The minimum age limit for the person applying for loan is 21 years.

For Government employees and those working at public limited companies, the maximum age limit for applying for home loan is 60 years, while for salaried individuals, it is 58 years.. For self employed people, the maximum age limit is 65 years.
The applicant should be graduate.

The applicant should have a stable source of income, at the time of availing the loan and should have a saving history as well.

Documents Required

Salaried Individuals
Salary slip/Form 16 A

A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills

A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents supporting the financial background of the borrower

A photocopy of LIC policies with the latest premium payment receipts (if any).

Two passport size photographs

A photocopy of bank statement for the last six months

Self-Employed/Businessmen

A brief introduction of Business/Profession

Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years, certified by a CA

A photocopy of Advance Tax payments (if applicable)

A photocopy of Registration Certificate of establishment under shops and Establishments Act/Factories Act

A photocopy of Registration Certificate for deduction of Profession Tax (if applicable)

Bank statements of Current and Saving accounts for the last 6 months

A photocopy of Certificate of Practice(if applicable)

A photocopy of any bank loan (if applicable)

A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills

A photocopy of LIC policy (if applicable)

A photocopy of investments (FD Certificates, Shares, any other fixed asset

Two passport size photographs

Why Can’t I Get Approved For a Private Loan?

Ever since the credit crisis hit the student loan industry, it’s gotten harder to get private loan funds. Let’s face it – credit is tight these days. That means that banks are being much more selective in their lending decisions. Without any significant credit or income of their own, college students can experience some difficulty in getting private loans.

If you are in need of private loan funds for college, make sure you know what lenders are looking for in deciding whether to make a private loan to a student:

1.Your Credit

Although you probably don’t have much of a credit history, lenders will always check your credit record to make sure you don’t have any student loan defaults, credit defaults, or serious delinquencies (like on your credit card, for example).

2.Your School

Believe it or not, your school now has an impact on your ability to get a private loan. If your school has a high graduation rate, lenders believe you are more likely to graduate and find a good job, and therefore more likely to be able to pay back your loan. If you are finding that lenders do not work with your school, you need to check with your financial aid office to see if they can point you to a private loan lender who does.

3.Your Co-signer
Perhaps the most important factor in the equation is your co-signer. Lenders are looking for someone to share responsibility for the loan with you, should you not qualify for the loan on your own. That could be a parent, relative or friend who has a good credit history and documentable income. If you are having trouble finding someone to co-sign the loan for you, read our section on Finding a Co-signer.

If you are have applied for a private loan, but were denied due to your co-signer’s credit record, you can always find another co-signer and try again. We know it’s difficult to find someone that wants to have your student loans on their credit report. If a private loan really is your only option, read up on the best ways to approach someone to become your co-signer.

Your school is a great place to start if you are looking for a private loan lender. If you are having difficulty getting approved for a private loan, make sure to keep your financial aid counselor updated. If you can’t get approved for a private loan, you’re going to need to find other options to pay your school bill. Don’t wait to discuss any problems with your financial aid department!

How to get the best alternative loan easier.

What is the best alternative loan? For most students the “best” loan is the one that costs them the least amount of money. In addition, you probably want to have convenient product features that make repaying your alternative loans easier.

Step 1: Research alternative loan lenders & products

The first step to getting the best alternative loan is to do the research and find the product that makes sense for you. Here are some important questions to answer when looking at an alternative loan product:

•What repayment plans do you offer?

•Are payments required in-school or not until I graduate?

•What is the range of fees and interest rates I can expect?

•Do you offer a co-signer release program?

If you don’t know what these questions mean, make sure you read about the basics of alternative student loans before you start looking at lenders that offer these loans.

Step 2: Find a credit-worthy co-signer

Unless you have sufficient income and a good credit history, chances are you will not qualify for an alternative loan without a co-signer. A co-signer can be anyone over 18 who is willing to share the responsibility of the loan with you. We’ve put together some helpful information on finding an alternative student loan co-signer.

A co-signer not only helps you get approved for the loan, they can also lower your interest rates and fees, and increase the amount you can borrow. In summary: the better the co-signer, the more you can borrow to help cover your cost of education and the less you’ll pay.

Step 3: Getting the lowest interest rate and fees

Now that you have 1) selected a lender that has the alternative loan product you want and 2) found someone who is willing to co-sign the loan for you, it’s time to apply. After you complete the application process with your co-signer, and are approved, you will be given your loan terms.

Review the loan terms carefully. The two most obvious things you will want to look at are the interest rate and fees being charged. Remember that alternative loan rates are most likely variable and will likely be calculated based on the Prime Rate or LIBOR plus a margin.

Even though rates are low today, they will fluctuate during the time that you repay your student loans. For example, if the Prime Rate is at 2% today and your margin is Prime + 5%, your rate today is 7%. If the Prime Rate goes up to 6%, your rate will increase to 11%. Make sure that you can afford your student loan payments at either possible scenario.

If the interest rate and fees on your loan are too high, you and your co-signer can try applying with another lender, or you can try applying with another co-signer.

Remember that each time you apply for an alternative loan, your credit will be run and an inquiry will show up on your credit report. Make sure you read as much as you can about alternative loan approval and before you start the application process. Good luck finding the best alternative loan!

New Law Offers Tax Relief to Military Families

A new federal law may have a big impact on the state income tax bills of clients who are married to members of the Armed Services. Under the new law, these clients may be able to avoid paying income taxes in the state they are currently living in.

As a general rule, under most state laws, an individual who spends more than 180 to 183 days in a state is deemed to be a resident of that state. However, a member of the U.S. Armed Services (a “servicemember” in the language of the bill) does not automatically become a resident of the state where he or she is stationed.

Instead, the servicemember can remain a resident of his or her home state. This means the servicemember can continue to vote in the home state and be treated as a resident for other purposes.

Significantly, it also means that the servicemember’s military income is not subject to tax in the state where he or she is stationed. The Servicemembers Civil Relief Act specifically provides that compensation of a servicemember for military service shall not be deemed to be income for services performed or from sources within a tax jurisdiction of the United States if the servicemember is not a resident or domiciliary of the jurisdiction in which the servicemember is serving in compliance with military orders.

A new law that was enacted late last year extends similar relief to the spouses of servicemembers. The Military Spouses Civil Relief Act (P.L. 111-97) provides that a military spouse won’t be treated as having lost residence in one state or acquired residence in second state solely because he or she moves to the second state to accompany a servicemember spouse to a new duty station. Moreover, the law says that a military spouse’s earned income can’t be taxed by a state if the military spouse is living and working in the state solely to be with the servicemember spouse. Instead, the military spouse remains a resident of his or her original state for tax purposes.

Example: Jenna and Jordan, a married couple, are legal residents of Texas when Jordan enlists in the military and is sent to a duty station in California. Jenna moves with Jordan to California, where she finds a job with a software company. Result: Under the new law, Jenna’ s income from her job is not subject to tax in California. Instead, Jenna remains a “tax resident” of Texas (which, conveniently for Jenna, has no state income tax).
The new law applies retroactively to calendar year 2009. Consequently, military spouses whose 2009 earnings qualify for exemption from tax under the new law may be eligible for a refund.

REFUND OPPORTUNITY. According to the Federation of Tax Administrators, states plan to deal with 2009 withholdings by having eligible military spouses file a claim for refund directly with the state. So there will be no need for retroactive withholding adjustments. In fact, a number of states have issued preliminary guidance on how eligible spouses can claim refunds of 2009 withholdings. For example, California has indicated that eligible spouses can file for refunds using FTB Form 540NR, California Nonresident or Part-Year Resident Income Tax Return.

For 2010, eligible military spouses can claim exemption from income tax withholding in the duty station state. You can check with the state tax authorities and alert clients who are eligible military spouses to the proper procedures for submitting withholding exemption requests. Some states have indicated that eligible spouses should use existing exemption certificates, while other are revising their forms or developing special forms to be used for this purpose.

As a general rule, to qualify for the exemption, three basic conditions must be met:

The military spouse currently resides in a state different than the state of his or her domicile.
The military spouse resides in the state solely in order to live with the servicemember spouse.
The servicemember is present in the state in compliance with military orders.
However, the Federation of Tax Administrators makes it clear that each state will make its own interpretations of how and when the new law applies. The Federation says state regulations will differ on whether the military spouse and the servicemember have the same original domicile for the law to apply. For example, preliminary guidance from California indicates that a military spouse will be considered a nonresident for tax purposes if the servicemember and spouse have the same domicile outside California and the spouse is in California solely to be with the servicemember who is serving in compliance with military orders.

By contrast, both Maryland and New Jersey have indicated that a military spouse qualifies for exemption from state income tax if the servicemember is present in the state in compliance with military orders, the spouse is present in the state solely to be with the servicemember, and the spouse maintains a domicile in another state.

Key Point: The new law does not create an overall exemption from all state income taxes for military spouses. The exemption from tax by a duty station state applies only to wages or income from services performed in the state. It does not apply to non-service income, such as income from rental property. Moreover, a military spouse remains liable for income tax (if applicable) in his or her home state — including tax on income earned in the duty station state.
Under the Servicemembers Civil Relief Act, a servicemember declares a “legal residence” for purposes of withholding state income taxes from military pay. However, it remains to be seen whether states will require a residence declaration from military spouses or will require reporting of earnings to the military spouse’s state of residence. A task force of states is currently collaborating to establish common guidelines for implementing the new law.

Reach Out to Clients

So you can reach out to military spouses explaining the refund potential for 2009 and the withholding exemption opportunity for 2010, we have prepared a client letter that you can adapt as needed.

Quick Tax Relief for Clients with Net Operating Losses

For your individual and corporate business clients with net operating losses (NOLs), a new tax law offers potential relief.

The Worker, Homeownership, and Business Assistance Act of 2009 (P.L. 111-92) extends and expands a provision enacted early in 2009 that allowed certain small businesses to maximize their refunds from a 2008 net operating loss (NOL). The new law extends the refund provision to 2009 NOLs and expands its scope to cover almost all businesses.

Looking Up? Your clients who were ineligible for the earlier refund provision may now qualify for a quick cash infusion. Clients who were eligible for the earlier provision may now qualify for additional refunds.

A Little Background: Prior to the New Law

Generally speaking, an NOL (the excess of business deductions over gross income) may be carried back two years and carried forward 20 years to offset taxable income in those years. NOLs offset taxable income in the order of the taxable years to which the NOL may be carried.

How It Has Worked: A business can claim a refund for the carryback years by filing amended returns for those years (Form 1040X for individuals, Form 1120X for corporations). In the alternative, a business can file for a “quickie” refund by applying for a “tentative carryback adjustment” on Form 1045 (individual) or Form 1139 (corporation). The IRS must act fast on a claim for a tentative carryback adjustment within 90 days after the date it is filed. A tentative carryback adjustment claim must generally be filed by the end of the year following the year the NOL arises.

The American Recovery and Reinvestment Act of 2009 (ARRA), enacted by Congress last February (P.L. 111-5), contained a special relief provision for “eligible small businesses” (ESBs). At an ESB’s option, the NOL carryback period was increased to three, four, or five years. This provision, in turn, increased the chances that an NOL could be fully offset in carryback years (generating immediate refunds) instead of the ESB having to carry the NOL forward (and wait for tax reductions).

Example: An ESB elected a 5-year carryback period, the NOL would first be applied against the fifth year preceding the NOL year. If the NOL exceeded the fifth year’s taxable income, the excess would be carried forward to the fourth preceding year, and so on until it was exhausted. Only if the NOL exceeded the taxable incomes of the five preceding years would it be carried forward to years after the NOL year.
The special relief provision was available only for an NOL arising in a tax year ending in 2008, or, at the ESB’s election, a tax year starting in 2008. A business qualified as an ESB if it met a $15 million gross receipts test.

New Law Changes

The Worker, Homeownership, and Business Assistance Act generally allows all businesses, not just ESBs, to increase the carryback period to three, four or five years for an “applicable NOL” [IRC Sec. 172(b)(1)(H)]. An applicable NOL is a business’s NOL for a tax year beginning or ending in either 2008 or 2009. Any businesses can file a tentative carryback adjustment claim to get a quick refund from the new law change.

Note: The extended carryback period is not available to TARP recipients and certain other businesses receiving government assistance under the Emergency Economic Stabilization Act of 2008.
Also: The amount of an NOL that may be carried back to the fifth tax year preceding the loss year is limited to 50 percent of taxable income for the fifth year (computed without regard to the NOL).

Only One NOL: Choose Your Carryback Period

A business may generally elect an extended carryback period for only one NOL. So a calendar-year business client with an NOL in both 2008 and 2009 will have to choose the extended carryback period for the year that produces the better tax results. The NOL for the other year will be limited to the regular two-year carryback period. For fiscal-year clients, the choice will be from among the 2007-2008 year, the 2008-2009 year and the 2009-2010 year (assuming there are NOLs in all three years).

One Exception. An ESB that elected the extended carryback period under the original ARRA provision for an NOL from 2008 may choose a second extended carryback period under the new law for an NOL from 2009.

We have prepared a letter you can send to clients explaining this new tax relief provision; see below.

Electing the Extended Carryback Period

The IRS has announced the procedures to be followed to elect the extended carryback period [Rev. Proc. 2009-52, 2009-49 IRB] There are two ways to go about it.

Method 1

A client may make the extended carryback period election by attaching a statement to the original or amended return for the tax year in which the NOL arises. The statement must provide that the client is electing to apply IRC 172(b)(1)(H) under Rev. Proc. 2009-52, and that the client is not a TARP recipient nor, in 2008 or 2009, an affiliate of a TARP recipient. The statement must specify the length of the NOL carryback period the taxpayer elects (3, 4, or 5 years). The election statement must be filed with the return on or before the due date for filing the return for the client’s last tax year beginning in 2009.

A copy of the election statement must be attached to the client’s claim for tentative carryback adjustment (Form 1045 or Form 1139) or to the amended return applying the NOL to the carryback year. The due date for filing a claim for tentative carryback adjustment for the extended carryback period has been extended to the due date (including extensions) for filing the return for the client’s last tax year beginning in 2009.

Method 2

A client may elect the extended carryback period by attaching the statement specified in Method 1 directly to the tentative carryback adjustment claim or to the amended return for the carryback year. Again, the client must file the tentative carryback adjustment claim or amended return on or before the due date (including extensions) for filing the return for the taxpayer’s last tax year beginning in 2009.

Reach Out to Clients

So you can reach out to clients and prospective clients on these expanded benefits for NOL relief, we have prepared a client letter that you can adapt as needed.

How to select Tax Saving mutual Fund

Selecting the right tax-saving fund is easier said than done. PersonalFn has an article on the various tax saving Mutual Funds available and the factors that you should weigh in before signing the cheque. When it comes to investing to save tax, most of us are gurus already. After all, we have been investing to

save tax for many years and that too profitably. The Public Provident Fund (PPF) has been delivering

attractive post-tax returns. The equity heavy ULIP has done phenomenally well on the back of rising

markets. And then of course the tax-saving mutual funds have had a fantastic run in the last few years.

In short, the results have been brilliant. So why tinker with this ‘traditional’ approach of investing to save

tax?

In our earlier message to you we dealt with the PPF as a tool to save tax [Read]; now we focus on stock

market linked instruments which are so popular today.

A rising tide lifts all boats.

Here’s a fact – everyone who invested in a tax-saving mutual fund has made a lot of money over the last

few years. And this should not be surprising given that the Indian stock markets have recorded their

biggest gains in recent years.

No matter which mutual fund you invested in, irrespective of whether well-managed or not, as long as

the underlying asset was equities, you made money.

In rising markets, the more risk you take, the more returns you make In fact, the more risk you took, the

more returns you made. If you had more equity in your portfolio or if you invested in the more

aggressively managed mutual funds, you made more money as compared to someone with a more

moderate exposure.

And why not…the average return of all tax-saving funds over the last 3-Yrs (15 schemes) was an

unbelievable 45% CAGR!

In short, the going has been great! The returns are fantastic. But…

While you may actually deserve the credit for these gains in your portfolio, frankly, for most of you, most

of this success can be attributed almost entirely to the one-way surge in the stock markets.

Over the last few years you have taken unnecessary risk by first increasing your exposure to equities

beyond the desired level, and second, by investing in equity linked assets which are not-well managed

or are not suited to your risk appetite. If you persist with what you have been doing in the past, you may

be in for some unpleasant surprises.

Understand the risk of making a poor investment decision…

The range of returns from all tax-saving funds which have a 3-Yr track record is very wide from 67.6%

CAGR to 28.1% CAGR. So, even if you were in the 28% CAGR fund, you did well. Undeniably, there has

been a cost for having made a poor investment decision, but it has not pinched as much, since you still

made good money.

But the fact is that adjusted for risk, you definitely made a poor investment decision. In other words you

could have achieved a lot more, and too by investing sensibly, with your money!

This is not to say that the top-performing fund would have been the right choice. Quite to the contrary, if

you were advised by Personalfn, you would have actually given the top-performing fund a miss too… for

various reasons.

At present there are 23 tax-saving funds out there (and more on the way). Which fund suits you best, will

depend on your risk appetite, expectation of return and your overall asset allocation.

The future will reward smart fund managers

As stock markets turn more volatile, and the choice of funds increases, it will become pertinent to make

the right investment decision to start with. Going forward, the well-managed fund will outperform the

‘more-risk-you-take-the-more-return-you-make’ type of fund.

Understanding this is an important step to building a smart investment plan that is geared to saving tax.

Personalfn can help you save tax. Smartly. . We will guide you on the asset allocation that suits you

best; and we will also tell you which tax-saving funds are best for you.

Top Five Equity Linked Saving Schmes (ELSS) which also save Tax

Rajesh Soni takes a look at the top 5 tax saving Mutual Funds for the purpose of claiming tax benefits under Sec. 80C of Income Tax Act. He has analysed them on their returns as well as the risk profile (standard deviation)

The top five based on return and risk profile is as under:

1.SBI Magnum Tax Gain

2.HDFC Long term advantage Fund

3.HDFC Tax Saver

4.Birla Equity

5.Franklin India Tax Shield

Value of Net Asset Value of a Mutual Fund

A number of people think that the unit price of a mutual fund matters when they purchase; i.e. that a cheaper unit price is better. Why? They say that they will get more units for the same money, and isn’t that better? Deepak Shenoy shatters this myth in his blog.

The “Number of units” does not matter at all. It is all about gain percentages. The best funds have gained some 750% in five years. What does that mean? That means if you bought that fund at Rs. 10 in 2001 its NAV will now be Rs.75 .

If you bought it at Rs. 20, NAV will be Rs. 150. There are lots of such funds whose NAV is greater than 100 or 150 because they have performed very well. What’s the NAV?

The total NAV, or “Net Asset Value” is a simple concept – First you get the “Net Assets”, which is the sum total of all the assets minus any liabilities of the fund. Meaning, add the current market value of all the shares, minus any open redemption requests and any applicable charges (like Daily fund management fee etc.) and you get the Net Assets. Divide the Net Assets figure by the total number of outstanding units and you get the unit price (called the “NAV Unit Price” or simply, the NAV).

Most web sites and newspapers call the unit price “NAV”. It’s actually the NAV unit price, so the phrase is confusing. Let me not confuse you any further: I will call the total assets as the “Net Assets” and unit price as the “NAV”.

Now you might think, if you have a 10,000 rupees, is it better to buy 1,000 units of one fund quoting at Rs. 10 NAV, or 100 or those quoting at hundred? Frankly it’s dependent on how the fund performs. If the second fund grows at 20%, your units are worth Rs. 12,000 at an NAV of Rs. 120. If the first one grows at 10%, your units are worth Rs. 11,000 at Rs. 11 NAV.

What is better? Obviously the second one, but over here the NAVs are still Rs 11 vs. Rs. 120! Lesser number of units is like small change

But what if you have a 1000 Rs. NAV? That’s a problem, you think; if you want 2,500 rupees, you have to sell three units! That means you take out more than you want, right? Also what if you have 1200 rupees to invest? You can only buy one unit, right?

Wrong. In Mutual funds you also get “fractional” units. So if you invest Rs. 1000 in HDFC Taxsaver, whose nav is Rs. 149.44, you will get 6.692 units. (Some funds even go to fourth decimal) You can then sell fractional units also, like 1.212 units etc! Growth is important, not unit price.

What you care about is how much your money grows, not the number of units you have. It is just as difficult for a Rs. 10 fund to move to Rs. 12, as it is for a Rs. 50 fund to move to Rs. 60.

Why should we invest in Mutual Funds?

Investing in the equity market directly is exciting and glamorous. You are in the thick of things and are able to take responsibility for yourself. Though the volatility and the information overload makes it a daunting task. The present subprime quagmire makes it even more daunting.

How about investing through Mutual funds? Doesn’t it have its own loading and administrative charges and the fund managers making merry on your hard earned money? And can’t we see the best performing mutual funds and follow their portfolio? The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. NAV of mutual funds are required to be published in newspapers.

Here are some points to ponder:

•We should allocate our time to investment decisions in proportion to our income generation goals.

•Convenience and hassle free investing should be a major factor.

•Fund managers are into it full time. If we able to identify fund managers who have consistently performed over last 3-5 years, nothing like it.

•The fund manager also has the muscle power of crores of Rupees and is able to take entry and exit decisions impartially.

•MFs continuosly churn their portfolio. When MFs buy and sell stocks, they don’t have to pay capital gains as you do when you churn.

•We are likely to panic over market crashes. MFs can take advantage of a crash!

•With Systematic Investment plans (SIP), you can start investing with as low as Rs 500 per month.

The NAVs are also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) www.amfiindia.com and thus the investors can access NAVs of all mutual funds at one place.

The mutual funds are also required to publish their performance in the form of half-yearly results which also include their returns/yields over a period of time i.e. last six months, 1 year, 3 years, 5 years and since inception of schemes.

Investors can also look into other details like percentage of expenses of total assets as these have an affect on the yield and other useful information in the same half-yearly format. The mutual funds are also required to send annual report or abridged annual report to the unitholders at the end of the year.

Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis.

Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the performance of various schemes of different mutual funds.

Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE Sensitive Index, S&P CNX Nifty, etc. On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme.

Five Tips For Determining Your Business Insurance Needs

There are several types of insurance you can acquire for your business. Choosing the right type is often difficult, but there are questions you can ask yourself that will help you when doing so. When you start a new business, one of your most basic needs is insurance. While many small business owners see this is an unaffordable option, it can save a business in the most crucial of times. At any given time, a disaster can strike, and when it does, you want to be well prepared. Since it’s lot easier to rebuild than it is to start from the ground up, your insurance becomes one of your most necessary acquisitions.

There are many types of business insurance, and the type you need can vary widely, depending on the type of business you own. This first means understanding your own business needs, and then how the type of insurance you choose will pertain to them. Below are five tips that will help you choose the proper type of insurance, and insure you have the right coverage.

KNOW YOUR INSURANCE REQUIREMENTS

By learning as much as you can about your business and the local requirements, you will be able to properly assess your insurance needs. Check with insurance agents in your area to get an estimate, and to learn of any state, bounty, or city requirements you might need to follow.

RESEARCH INSURANCE COVERAGE

By researching the various types of insurance coverage available, you will be better equipped to make a decision on what type will be right for your business. Because there are so many types, and because they work in different ways, this research can save you further difficulty on down the road.

INCORPORATE YOUR BUSINESS

While it is certainly not necessary to incorporate your business, and while you may prefer not to do so, it can actually benefit you where liability is concerned. While doing so requires more paper work then sole proprietorship, it does give you that added protection which you may appreciate in the long run.

INSURE YOUR BUSINESS AGAINST NATURAL DISASTERS

By purchasing insurance for your business that will cover natural disasters, or disasters such as fires or floods, you will protect yourself from having to completely rebuild should something like that occur. You can never be too careful, and it is important to keep such factors in mind.

DETERMINING YOUR COVERAGE

Any time you purchase insurance, no matter what type it is, one of the most common questions you ask yourself is how much coverage you actually need. While this can be hard to determine, it can be done by evaluating your needs and weighing them against what will happen if they aren’t insured and disaster strikes. There are many ways to do this, and your insurance agent can help you by answering any questions you may have, and pointing you in the right direction.

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