DTC and effects on ELSS MF

DTC draft seemed to propose removal of Sec 80 C benefits for ELSS MF.
Since DTC will kick in from the next financial year, you can still buy them this year and get tax benefit under 80C this year.

However, if folks buy in Dividend re-investment option, not only will they be in a 3 year lock in (for every investment) but also not get any benefit [your new units are locked for a further 3 years].
With that in mind, change your dividend reinvestment option to a simple dividend or growth option.

My thoughts:
Most new investors used ELSS option to tap the market and get tax benefits.
Won't investors whose ELSS mature this year redeem and not invest next year?
Wouldn't this reduce the popularity of ELSS + reduce the assets?
Won't this have any effect on the performance of these funds?

For existing ELSS schemes, I would definitely want to try and change my option from Divident Re-investment to either Growth or Dividend payout.
Once 3 years lock-in period completes, exit.

Instead of investing in a new ELSS scheme this year, shouldn't we look at other options?
Await the DTC to become an act, see the impact and take a calculative decision?

These are my thoughts? I could be wrong....what do you think?

Pipavav Defence.....

Pipavav Defence.....

http://www.livemint.com/2011/09/12134610/Mazagon-Dock-Pipavav-to-joint.html

. Picked by state-run Mazagon Dock Ltd as its joint venture partner to build warships for the Indian Navy.

. Plans to list company overseas

. Will float an independent company to be named Mazagon Dock Pipavav Ltd (I don't like this until existing shareholders get a stake)

. Company will be executing the current order book of Mazagon Dock worth Rs1 lakh crore (Rs1 trillion) and look for new orders jointly

. Pipavav Defence owns India’s biggest dry dock used for building and repairing ships and has a licence from the government to build warships

. The company proposes to convert an existing wet dock into a second dry dock to enhance its capability to build warships for the Indian Navy and the export market

. Pipavav is currently executing orders worth a combined $1.5 billion, with defence work accounting for some 42% of the total value

Rakesh JhunJhunwala has a stake in this company.
In Pipavav, Rakesh Jhunjhunwala and his family holds 10 mn convertible warrants issued at Rs 78 a share

What more does one want? Will you invest?

UPDATE (13th Oct) -
As per
http://www.moneycontrol.com/news/business/i-t-searches-at-pipavav-group-firmmumbai-delhi_598355.html#toptag

It seems the fate of the JV is unclear.

Health Care -- A good investment?

I was at a famous hospital (in Blore) for a lot of time last 2 weeks.
Have been frequenting there and visiting doctors for some health issues.

Couldn't believe the rush......costs of blood tests, xrays have grown...no complaints
Consultations fees of doctors in OPD go close to 300 Rs for a couple of minutes...
Credit cards get swiped one after the other...people are in queue waiting to pay.....drawers full of cash...500 Rs notes seem so little .....wads and wads of them....

Made me wonder....shouldn't health care stocks be on everyone's radar?

Just like when I got hit by a bolt of lightening when I realized the kind of money made by titan (tanishq).
Its the same bolt now.....I think I made a good decision by buying Titan... unless gold goes to such high levels that people stop buying...
Will it happen in India? Could be ....one never knows.

Going forward...people will still make families...and with growing income people will go to hospitals
And the way the hospitals are charging..they will break even and make profits...

Health care stocks now are appealing to me....something like Fortis HealthCare.

I will hope some schools (not everonn/educomp) come in IPOs ...they are minting money and will be a good investment.....

Till then..I will look @ Fortis Health Care a bit more closely.
What do you think?

Debt Instruments or FD - Use as Retirement plan?

Debt Instruments or FD - Use as Retirement plan?

Have heard many times the statement that -- "if you are a ling term investor with a horizon of 10+ years, you will reap benefits."
OR
"In the long term invest in equity MF"

But all of us would like to have a debt (read fixed guarantee) income scheme as well isn't it?

Here is what I was thinking and need your opinion on the same. (I haven't taken the taxation part into account.)

Fixed Deposit as a tool for retirement plan:

SBI current term deposit rate is 9.25%
20,000 INR invested now will give you close to 50,000 INR in 10 years.

Picture this:

Make a FD of 20,000 INR every month (till interest rates are high).
10 years later, you will get 50,000 INR per month (guaranteed) + your additional income at that time.


Recurring Deposit:

An RD of 2K per month for 10 years @ SBI (@ 9.25%) will generate income of 4L odd after 10 years.

Make a RD of 2K (or 1K) per month for 10 years @ SBI (assume 12 RDs)
Yearly - 24K (or 12 K). -- 2k * 12 or 1K * 12
At the end of 10 years, monthly one will get 4L (or 2L) per month for the next 12 months + your additional income at that time.

Debt MF:

Pick a MF with more or less guaranteed income
e.g. HDFC Monthly Income Plan - LTP - Dividend Re-investment (Monthly)
This scheme gives 0.06 INR per month as dividend.
Buy 17000 units (each @ 12.5 means 2.12L).
Monthly dividend on 1000 INR which can be re-invested.
This is 5% return

But after this, without doing anything, due to consistent dividend (note: if it continues that way)...
After 10 years one would have 28690 units.
Even if the NAV is same, it comes to 28690 * 12.5 = 3.58L
That comes to 6.8% yearly + any gains due to rise in NAV

What do you think? Makes sense?

Mayhem

Mayhem -

BHEL does a stock split.....great...will you buy?
ONGC - no FPO as yet .....great...will you buy?
TATA Steel - < 400 .....great...will you buy? (remember it has huge debt @ high interest rates)
RIL/Larsen/SBI ....just one way .....great...will you buy?

Some stocks just seem to hang on
I have seen HDFC and HDFC bank just holding on to 600+ and 450+
They just dont seem to go down ..obviously due to large institution holdings. What if they decide to offload?

They say the best time to buy is when everyone panics.....is this the time.

Personally I want to wait and see a reversal (would be a big one when it comes).
But it gives a comfort factor to buy @ that time

However, rest assured no analyst will say dont buy SBI/Larsen/ONGC etc

Alternate options:
- Index Funds [eventually will give index based returns when market rises]
+
- FD @ 9.25% [SBI/Corporation bank]

All of us who have invested in stock and have tasted blood (profits) always seem to think 9.25% of FD is crappy.
Think again....