The "Ache Din Waale" Budget.....

With the coming of the new Government in May 2014, India has witnessed a number of changes. One of these can be seen in the proposal of the new Union Budget. The current finance minister, Arun Jaitley, has brought about a refreshing and much needed change in the budget. It hopes to help the common man in his daily struggles while also greatly reviving our country’s economy. It has called for certain surprising and positive changes, making us realize the faults in previous finance policies. This has become especially evident in the reaction of the masses. Within just a few days of its declaration, it has elicited a murmur of approval from them.

Budget 2014 - The aam admi wala budget

The new budget does not propose any changes in the tax rate. However it does propose an increase in the personal income tax exemption limit by Rs. 50,000.Therefore, those below the age of 60, whose earnings come within the tax slab of Rs. 0 to Rs. 2,50,000 are exempted from taxes. For senior citizens, the same has gone up to 3 lakhs. 

He also attempts to encourage more savings. He did so by increasing the limit for investments under section 80C to 1.5 lakhs. The Public Provident Fund (PPF) limit too was raised similarly. The reintroduction of the Kisan Vikas Patra profited the small investors. Life Insurance was declared tax free, making it more affordable. The New Pension Scheme also brought relief to several people. It deducts from one’s monthly salary. But after the age of 60 it provides a lump sum as well as a monthly pension. It therefore reduces the fear of working into old age.

The budget has also promised the construction of nearly 100 small cities, redevelopment of slums and an increase in allocation for the National Housing Bank. This, coupled with the reduction in interest rates on housing loans would directly impact the common man. It would greatly increase the demand for housing. It would also positively impact the real estate and construction sectors.

There is a welcome increase in the Foreign Direct Investment (FDI) limit for banks from 26% to 49%. The increase in the FDI limit would help insurance schemes to penetrate even the rural areas. It would allow more people to be insured, preventing sudden accidents from becoming financial handicaps. The budget also allows banks to raise long term funds. These could be lent to the infrastructure sector with minimal regulatory obligations.

A part of the budget focuses on the agricultural sector and rural development. There is an attempt to reduce wastage of crops. With the building of warehouses and soil testing facilities, it tries to increase and preserve the crop yield. The ‘Price Stabilization Fund’ attempts to give agricultural workers the right price for their efforts, preventing their exploitation.

The budget also allocates funds for setting up rural health care facilities and health research centres. This allows for the studying of local health problems, leading to better solutions. 

The budget seems to have an overwhelmingly positive effect upon the masses, especially the investor. It has introduced various schemes and tax exemptions in order to encourage investments and savings. Its increase in the percentage of FDI brings relief to various sectors. The rapid economic growth it plans for is intended to bring about a more hopeful future.

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How to profit on your Mutual Fund investments

In India, saving money is always something we are taught to do from a young age. We are not a society that lives on credit. We firmly believe that being cautious with our money is the best route towards success. However, due to this nature, we are not prone to invest in financial products that do not provide a good measure of security. It is for this reason that mutual fund investments are a big part of the financial market in our country. They allow us to generate some income from the money we invest, while still providing a lower level of risk when compared to other investment products.

The reason for the success of mutual funds in India is that the risk to individual investors is lowered simply because he is not investing alone. The funds operate by obtaining capital from multiple investors and then investing the total amount into various equities and securities. The rate of return on the funds depends entirely on how the fund is managed and where the money is being invested. Usually funds that invest either entirely or mostly in equity, yield a higher rate of return but are also higher in risk due to the fact that they are affected by changes in the market. Meanwhile funds that invest in long term security, such as government bonds, offer a much lower risk but also offer much lower rates of returns to the investors.

In order to determine the rate of return for investors, mutual funds sell units within the fund to investors, based on the money they put in. The value of each unit is known as the net asset value or the mutual fund NAV. The more units an investor purchases, the higher are the returns he receives. The value of these units may fluctuate based on market conditions and on how well the fund is doing due to these conditions.

The funds also vary in terms of time-period. It is therefore very important for the investor to know before he invests how long he can invest his money for. Usually, most equity funds are of a shorter term than those that invest in long term securities. In fact, investors should take a lot of factors into consideration when investing, such as how much they are willing to invest in total, whether they can invest regularly in the fund, if they choose an SIP fund and also the amount of risk they are willing to take with their investments.

Mutual funds are usually managed by fund management companies or by fund managers, and they provide with a prospectus that contains all the details of the fund. The objective and goals of the funds are all mentioned in this document and it is important for an investor to understand every aspect of the document so that they know how the fund operates and how their money is being invested.

It is important for investors to get professional advice before investing in the funds because they are not as well versed with the market conditions as professionals. However, they should be aware that it is their financial objectives that are important and that it is their money that is being invested and so should insist on courses of action they best feel realises these goals.

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The Insurance Market in India

The insurance market in India has grown by leaps and bounds since the beginning of the new millennium. This is primarily because the insurance sector was liberalized on the recommendation of the Malhotra Committee, and private players were allowed to enter the market. Before this phase, LIC and GIC had a monopoly in this sector. The insurance industry has witnessed an excellent annual growth of almost 20% each year in the last decade. The insurance sector still has ample scope for growth in the coming years, especially in a developing country like India. Hence it’s not a surprise that many private players have forayed into this sector.

Life insurance forms a major chunk of the overall premiums collected in the insurance sector. Premiums from this segment grew at an average annual growth rate of 20% over the last decade. The entry of the private players in the sector and their aggressive marketing strategies has made this possible. The share of private sector has grown from a mere 2% in financial year 2003-04 to almost 29% in financial year 2011-12. The total business has grown four-fold in the same time-period. This fact alone speaks volumes about how fast is the industry growing. Rise in disposable incomes coupled with aggressive marketing tactics by insurance players have made individuals secure their family through life covers. This gives a sense of security to the individual, that even after he is gone, his family would be in safe hands at least monetarily. Even post liberalization, LIC still continues to enjoy a lion’s share of 70% of the life insurance segment.

The non-life insurance segment has also grown four-fold in the last decade.  Health insurance is the fastest growing section of this segment and forms around 22% of the total non-life insurance business. The reason for its speedy growth is that the target audience has realized that medical expenses generally prove to be very expensive in nature.  Any medical ailments or even accidents can cause sudden hospitalization and without an insurance cover these costs can run into lakhs of Rupees. Hence, by choosing health insurance and paying yearly premiums, one can easily avoid huge monetary costs and live life with a sense of peace and security. Health cover has the option of not only covering the individual but also covering the whole family. Choosing between a health cover and a life cover can get confusing sometimes. For a young bachelor whose family is well settled, choosing a health cover makes more sense. It is only post marriage that he should opt for a life cover.

Nowadays insurance policies can be easily availed and can even be purchased online. The segment of General Insurance (Car + Travel Insurance + Home Insurance) has also witnessed considerable growth. The motor insurance segment forms the largest chunk of the non-life segment. The main reason for this is that having motor insurance is a mandatory requirement in India. Two of the prominent reasons for the robust growth of the insurance sector are the setting up of new distribution channels and the entry of foreign players in this sector. Distribution of insurance through banks which is termed as bancassurance is an excellent way to promote insurance growth further.

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Top 5 Banks in UAE

The United Arab Emirates is made up of 7 different emirates. Even though all 7 are united to form one country on a world map, the Emirates are generally very competitive amongst themselves. Once Dubai made the tallest flagpole, Abu Dhabi made the largest flag. These small competitions are always taking place, but banking is especially competitive. Each emirate is trying to make more money than the other, and want to promote them as the best emirate in the country. Banks all over the country are doing well, and they have been improving year after year.

As of 2013, the best bank in the U.A.E. is the Emirates NBD bank. There was a merger between the National Bank of Dubai (NBD), and Emirates bank, which then formed Emirates NBD. This is a bank from Dubai, and at the end of 2012, their net assets were over 83 Million USD. They experienced a growth rate of 8.31% in the year, and the net profit from just 2012 was 695,350 USD.

Coming in a close second, with assets of around 82 Million USD is the National Bank of Abu Dhabi, or NBAD. While the net assets were less than that of NBD, they experienced a growth rate of 17.56%, and made a net profit of over 1 Million USD. 

Abu Dhabi Commercial Bank (ADCB) came in third, with their total assets at the end of 2012 amounting to a little over 49 Million USD, and a growth rate of 3.33%. The net profit made in the year was 765,133 USD.

The 4^th bank on the list is another Abu Dhabi bank, First Gulf Bank. This bank saw a growth rate of 11.13%, and at the end of the year, their assets amounted to over 47 Million USD. The net profit made in just one year was 1,130,956 USD. 

Dubai Islamic Bank is the 5^th top bank in U.A.E. This bank from Dubai is the only bank in the U.A.E., which follows Sharia law completely and does not charge interest. At the end of 2012, the bank’s net assets were worth nearly 26 Million USD, and the bank saw a growth rate of 5.27%.

The banking sector in the U.A.E. sees tough competition among banks from Abu Dhabi and Dubai. It is possible to avail of Internet banking for all banking accounts in every one of these banks. Banks like First Gulf Bank, NBAD and ADCB also allow people to put money in fixed deposits. Every bank has a series of gold and platinum credit cards, and based on which card you have, you can avail of a number of discounts and offers. Certain bank debit cards can also give you certain discounts at stores. These banks are well equipped whether you want a savings account or a current account. 

Dubai Islamic Bank is by far the most unique bank, with services just for ladies, and a salary-in-advance option. The bank has a dedicated service for remittance to Pakistan, and is deemed one of the most ethical banks in the Middle East. No matter which emirate the banks are from, banking in general in the country has seen a definite improvement since the economic slump of 2008.

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Top Medical Insurance Companies in India

Relatively recently, there has been a rise in the participation of private financial institutions in the insurance business in India, particularly in the medical insurance field. The activities of every single one of these companies is monitored by the Insurance Regulatory Development Authority or IRDA in short. There are twenty four companies in India which act as health insurance providers. The insurance sector was opened up for investment in 2000 by the IRDA, and a total of twenty six percent is allotted for foreign investment in India within the insurance field.

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