Corona Virus

We are seeing the impact of corona virus on equity market across the world . India is off course no exception as well . 

The coronavirus outbreak halted trade , tourism , consumption and many other activities. The effect of this outbreak may push China’s economy into a period of dull growth for some time.  Will it impact other economies further?  …Yes if it spreads further…..Will market falls further? …..certainly if virus stays longer.  

Markets alway give knee jerk reactions for any positive or negative events . It is always overdone in the market . 

Long-term investing is often best disconnected from short-term economic reactions. 

We have seen such epidemic outbreaks in the past . Below table provide the sense of market reactions following major epidemics in recent history.

corona virus

Carl Richard has nicely depicted current scenario in his famous sketch BehaviorGap 

WhatsApp Image 2020-02-28 at 6.05.31 PM

We have written on couple of times on different events whenever the market corrected in past .

 

CoronaVirus will be history after few months .  You need to decide where to focus  on CoronaVirus or Karo Na Invest !!!

Happy Investing !!!!

The First Step Towards Financial Independence

– Meghashyam Sinkar

The group of retirees was interviewed once in Boca Raton , one of the Florida’s wealthiest retirement communities . Interviewer asked the people – mostly in their seventies – If they had beaten the market over their investing lifetimes .  Some said yes, some said no , most were not sure . Then one man said “Who cares? All I know is , my investments earned enough for me to end up in Boca .

Could there be a more perfect answer ? After all , the whole point of investing is not to earn more money than average or others  , but to earn enough money to meet your own needs . The best way to measure your investing success is not by whether you are beating the market but by whether you have put in place a financial plan and a behavioural discipline that are likely to get you where you want to go . If you have made enough money and met your goals then you are a successful investor.

Carl Richard – A financial planner from New Zealand in his book ” The Behaviour Gap” nicely given below sketch which is reality .

Carl richard - Money vs Income

Ask yourself these questions ” Why money is important to you? What does money do for you ?  What is the purpose of doing the investment? Take a time and write down the answers .

No doubt, money is an important part of life.  But it is easy to fall into trap of money to worry endlessly about how to make more .How much is enough ? And the more you have the more you need . It is better to think about what do you need money for ? What is your goal? But goals should not be influenced by external forces like peer or social pressure . Find out what gives you a happiness . What makes you to jump out of bed ? what gives you  peace ? So , it is important to have money but not more than the goal it serves. Make your financial plan , prepare cash flow , know yourself in terms of where are you now and where you wish to go ? And finally get into action accordingly . It does not matter whether Rakesh Jhunjhunwala, Warren Buffett, a fund manager, your friend, bunch of other strangers have beaten the market and you don’t . No one’s gravestone reads ” HE BEAT THE MARKET. 

“Financial Planning is not about the markets , not about the products . Its about you & your journey.”

Benjamin Graham in his book “The Intelligent Investor” quoted that Investing isn’t about beating others at their game . It’s about controlling yourself at your own game.” 

Happy Independence Day and Happy Investing !!

Market is falling …Again ???

– By Meghashyam Sinkar

If you are a member of active equity investors group or watching the business channels or following any brokers or any particular reports by experts , then you are bound to follow everyday market movement & end up looking at your portfolio to become more worried and anxious . Latest news senses that terrifying things are going to happen around due to poor budget, FII outflows, automobile and other industries slowdown,  poor monsoons, higher taxes on the rich, bad loans & so on . One news talks about the probability of 2008 type crisis hitting to the markets  .

First, Let us tell you that this is not the first time it is happening . For the new investors and just to brush up for our old investors , please read our earlier blogs during such challenging times .

  1. market-crashed-be-happy . written on August 2011 – fear over European Crisis 
  2. It’s different this time …….Time will only prove it !!. written on July 2012 – fear over a prolonged recession signals from developed nations and no sign of improvement at Indian Economy .
  3. Part II : ” It’s different this time …….Time will only prove it !!  Written on September 2015 –  fear over a slowdown in China.

It is always said that markets have short term memory and hence the investors .

We need to understand that the stock market moves in cycles, and thus fluctuations are inevitable.  Bhagavad Gita says – the very texture of life is of duality – pain and pleasure, success and failure , birth and death. So investing can’t be left out . It also has duality – Bulls and Bears , ups and down .

What should you do now ?

  1. Go back to your investment objective and time decided for that investment . If you have come to equity for 1 to 2 years to get quick returns …. Then loose , suffer , learn ,  and then come back as matured investor . If you have invested for long term ( Say 5 to 10 yrs ), then need not to worry .
  2. For direct stock investors – If you have bought the stocks based on the news like jet airways will be takeover by someone, Yes Bank can’t be doomed  ,Modi has got a strong mandate then particular industry and stock will outperformed , the stock is trading 52 weeks low and you got into it , your relative or friend given you a TIP ,So you can pocket  handsome profits in really short time…… Then loose ,suffer, learn , and then come back as matured investor . But if you have bought a stock at reasonable price with sound analysis and that stock is available at lower price than your purchase price , then go & buy more if you have funds or else need not to worry . Just hold it for reasonably long period of time . You get your rewards .
  3.  For MF investors specially regular investors , it is anyways good as you can buy the units at lower price (NAV) . In fact SIP investors should pray for such periods . Because they make more money in cyclic movement of markets and make less returns if market is straight northward direction.  If you are the SIP investors who have come to market after seeing the returns of 2017 – basically 1 to 2 yrs old SIP investors then continue it for more than 5-7 yrs because equity is for long term . Understand the risk in equity and learn to manage it . Read more on the risk in equity and how to manage it here .
  4. If you are still worried and nervous , then simply sell everything and go back to bank deposits or post office . Equity is not meant for you . Because a long-term view requires an ability to stomach extreme short-term market volatility.

If you wish to curtail your worries, first please stop watching/reading such media.  That will give you ample time and sense to think and you will wisely sail through it .

Market always swing between irrational exuberance to unjustifiable pessimism and this is the only reason you can make superior returns in equities . Certainly does not bring superiors returns from any asset class . Please note that if everything is certain , your returns will shrink to normal or below normal level .

If you think you get out of the market now and re-enter at lower level as it is going to fall , then you can try it that way but make sure you enter back to market . Time will prove whether the decision is right or wrong . If get it right , then don’t try it every time . It was just a luck . Don’t succumb to over confidence bias or illusion of control . If get it wrong , then loose ,suffer, learn , and then come back as matured investor.

Don’t accept anything at face value. The future is uncertain and that is only certainty about it . Listed some of the forecasts that have gone down in history books for the wrong reasons.

  1. A famous cover story run by Business Week magazine in August 1979, after the United States had struggled with about a decade of high inflation, low growth and poor stock market returns. The story appeared three years before the market set off for an 18-year rally, a period in which stocks multiplied 15 times.

27forecasts2- business week

2. The August 2000 edition of the Fortune magazine ran a famous story picking 10 Stocks to Last a Decade.

Ten years later, a portfolio comprising the 10 stocks  lost 70 per cent of its value, with only one stock posting a gain, while two firms on the list went bankrupt, one of them being Enron.

27forecasts6

3. “We’re going to reach a point where stocks are correctly priced, and we think that’s 36,000… it’s not a bubble. Far from it. The stock market is undervalued.” by James Glassman, author of the unfortunately-titled Dow 36000, who made the bold call when the benchmark was at 11,500, in October 1999.
Ten years later, the Dow was still hovering around the 11,000 mark.

James

4. In mid-1999, after earning  117.3% return in just the first five months of the year , Monument Internet fund portfolio manager Alexander Cheung predicted that his fund would gain 50% a year over the next 3 to 5 years and an annual average of 35% ” Over the next 20 years”.  The fund received more than $100 million over the next year.  But $10,000 shrunk to roughly $2,000 after the internet burst .  The fund no longer exits in its original form and is now named as Orbitex Emerging Technology Fund .

5. Silver price prediction touching Rs 100,000 level when it was Rs 70,000 level in 2012 on the ground of industrial use , consumer preference over gold , limitation of supply and so many reasons by all analysts .

There are so many such forecasts like Brexit , US election 2016  , India winning recent cricket World Cup etc .

Instead of getting panic on bad news or overoptimistic on good news , it is better to define your goals , do proper financial planning , prepare cash flow and then invest accordingly .

And remember that “Investing in Uncertain Times is almost always more profitable than investing when everything seems certain”.

Happy Investing !!!

How to manage the Risk in Equity?

– By Meghashyam Sinkar

The general definition of risk in dictionary is : ‘a situation involving exposure to danger.’

However ,Risk in investment decisions is defined as the possibility that what is actually earned as return could be different from what is expected to be earned .

The definition talks the possibility of “deviation”. Deviations from expected outcomes can be positive or negative : Both are considered to be risky .

Let me share a simple day to day example quoted by my mentor . The elevator in any building is “expected” to halt at the same level as that of particular floor . However , it halts slightly above the floor level it will be considered as a deviation from the expected results . And same way if it halts slightly below on another floor , will also be considered a deviation . Both the deviations contribute positively to the risk of the elevator.

Let’s explore the risk in terms of Finance.

There are two types of risk in Finance. 

  1. Pure Risk &
  2. Speculative risk

Pure risk leads to financial loss, if invoked . E.g. Natural calamities like flood or earthqualke which leads to losses only and no measurable benefits .

However speculative risk will lead to either profit or loss or nothing ( no gain / no loss ) if invoked . Investing falls in this category specially in equity market .

E.g. Buying a share may lead to either profit or loss or nothing .

  • How will you manage this risk in equity ?

You can either avoid it completely or reduce it . Unfortunately you cannot transfer it by buying insurance like you do with life , car , health , shop , factory , fire & many more .

Though there is a concept of hedging wherein you can limit it but you can’t completely eliminate the risk .

But can you avoid the risk ?

We are currently living in the country of inflation where value of money gets eroded over a period of time if not earned more than inflation rate .
As time goes by, inflation increases the cost of money while reducing the value of money.

inflation

**Inflation assumed to be 6% p.a. for the above calculations for Illustration purposes.

Equity is one of the assets which gives higher return than inflation. Logically ,it will always give you higher than inflation rate for any business to sustain . So avoiding the risk in equity means putting yourself in inflation risk and fleeing away from wealth creation .

Please refer the below performance of different assets wherein equity is the clear winner over a longer time frame .

Equity returns

And the good part is that you can certainly manage the risk in equity .

The best way to manage is to diversify the risk . You can create the stock portfolio across all sectors if you have enough resource in terms of time , knowledge , information etc or simply invest into diversified equity mutual fund .

Now most of the investors have learned to manage the risk by investing into diversified equity mutual fund but still make losses .This is mainly because of impatience . Equity risk can be completely reduced if you invest it for minimum period of 10 years in a diversified portfolio .

Please refer the below table wherein we have taken the rolling CAGR ( Rolling returns ) across time frame i.e. 1 , 3 ,5 , 7 , 10 , 12 and 15 years . (You can refer the earlier blog on understanding the CAGR returns ; https://pentagraphcapitals.wordpress.com/2018/08/18/understanding-returns-on-investments/)

So , rolling CAGR of  year means the returns you generate exactly after one year say Nov 2003 if you invested on Nov 2002 which is 74.29 % , returns on Nov 2008 if invested on Nov 2007 which is -55.98% & so on  .

Similarly for 3 yrs like rolling CAGR on Nov 2003 if invested on Nov 2000  which is 11.57 % , Nov 2008 if invested on Nov 2005 which is -3.74 % .

And for 10 years like returns on Nov 2008 if invested on Nov 1998 which is 14.13%.

 

Slide21

So , if you stay invested in diversified managed portfolio of mutual fund , you are unlikely to lose money . In fact you will certainly make more than inflation returns .

The easiest way to define the goals with time frame and park the funds in equity diversified mutual fund for the goals which are beyond 10 yrs and above .

Remember the great long term risk of equities is not owning them  .

Happy Investing !!!

 

 

 

Smart or Disciplined ???

-By Meghashyam Sinkar
Everybody knows the benefit of being self discipline in physical, mental, personal & professional life . You can achieve lot of many things being self – disciplined . One of such benefit is self control which enables to withstand temptations. 

Markets are full of temptations , predictions , emotions ( mainly fear & greed ) which can take you off the track and prevent you from remaining disciplined . This is especially relevant for investors as the impact of our decisions are typically felt over years and decades rather than just days and weeks.

Please refer the below data

PHOTO-2019-05-22-10-19-48

The above data talks a lot about time , patience , discipline & commitment and of course all of these characteristics to be in Right Asset Class which is equity .

The Legendary Investor Warren Buffet rightly said  “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” 

You can refer our old blog written on the same line in November 2011 https://pentagraphcapitals.wordpress.com/2011/11/30/time-or-timing-in-the-market-2/

Happy Investing !!!!

Questions that baffle me !!!

– By Meghashyam Sinkar
Sometimes observing people make you ponder , make you learn, make you laugh but sometimes make you puzzle .

On my recent vacation ,I observed people trying to break the line and enter in between while boarding the plan . The question came to my mind why such strange action /confusing behaviour inspite of having allotted seats .

That made me thinking of such confusing behaviour in investment world . Listed down some of such questions which baffle me .

During first interaction with the new client at his office , he mentioned that equity is risky and hence he has stayed away from it since last 10 yrs . After 30 mins , he goes out for smoking . When I enquired further about the number of cigarettes he smokes in a day . He said ten (10) and he finds investing in equity risky. What is more risky smoking cigarettes  or investing in equity ? I am confused .

Lot of investors get into LIC policies that to number of them and keep on investing in  it after agents convince them with the name of LIC brand or sovereign security . If the product is really good then why do you really need so many agents /middlemen inspite of having offices across most of the cities and need to pay them hefty commissions . LIC could have easily done it at least in the current age of technology.  I am confused.

When investors are advised to do 15- 20 years of long term SIP to get best risk adjusted returns then they are not sure of their future income for commitment . But the same investors take the home loan of 20 years wherein EMI is mandatory and investment is voluntary which can be paused , reduced or stopped completely unlike EMI. I am Confused.

Investors are obsessed with higher fixed interest rate and risk their principal amount for few percentage higher interest rate . Dont they ask these questions to themselves … Why someone is offering such higher interest rate ? Is that company in love with you ? Is trustworthiness questionable ? I am confused .

There are lot of trading classes which advertise  “ Earn Rs 1000 daily from stock market with capital investment of Rs 1 L   . Then why the class owners running the classes on Saturday & Sunday’s at the course fee of Rs 5000/- per person . Why don’t they earn these returns themselves without revealing the secret to become billionaire . I am confused .

Does it confuse you too ? Please share your thoughts if any or any strange behaviour . Meanwhile observation continues ……

Happy Investing !!!!

Be Careful

– By Rahul Mone

We receive almost on regular basis news like ……

  • Bank employee cheats senior citizen of a crore……..
  • Hackers steal Rs.20K from bank account……..
  • Company loses Rs. 24 lakhs to phishing scam…….
  • Retired Judge loses Rs.18k to card cloning…….
Fraudsters play with our psyche and lure us to go for easy money.The way we protect our Life by taking a Life and Health Insurance policies, we should protect our hard-earned money by not getting tempted by such easy traps.

Below are some of the Dos/ Dont’s  recommended to protect our Money.

BUT NO ONE CAN SAVE US IF WE REVEAL OUR OWN DATA.

For Bank Accounts:

  • Keep your Card/ Cheque Book in safe place.
  • Don’t keep signed cheques in a cheque book.
  • Never handover blank signed cheque to your Bank Relationship Manager as well. Always give crossed and mention Payee’s name on it before handing it over to anyone.
  • Always note the details on the counter slip in cheque book and do regular reconciliation with Bank statement.
  • Don’t log in to your Net Banking Account from unknown computer. Always log in through official bank website. (starts with https:// and not http://). Remember to log off from the website once you complete the transaction. Don’t close the browser window before logging out.
  • Check your last login date and time each time you log in.
  • Check if you are receiving SMS alerts for all the transactions, if not check with Bank immediately.
  • Don’t share password to anyone.
  • Memories your PIN, never write it anywhere.
  • Don’t take assistance from stranger at ATM.
  • Always press cancel key before moving away from the ATM.
  • Never use auto password saving option while logging in /out – the Banking website during/ after the transaction as almost all the website ask for the same.( Google Chrome/edge etc )
  • Some Banks offer option of switching transactions on / off for ATM Withdrawal / Online transactions / International Transaction etc.You can switch off the modes which you are not using to reduce risk.

For Credit Cards :

Card fraud basically involves theft of identity or information on your cards. This information is then used to make ATM withdrawals or conduct online or offline transactions.

No. Of cases of Debit / Credit frauds also termed as Vishing, increased fromv880 in 2017 to 2446 in 2018.

  • Always keep it in a safe place.
  • Don’t share your card details.
  • In some Banks, there is a facility of setting a cap on your limits even though you have a higher limit. Set that limit as per your regular purchasing habits. Make International limit as ZERO if you are not travelling abroad.
  • Check all the details in your monthly Bills.
  • Don’t get your card out of your sight during any transaction.
  • Please note that your Bank, Card issuing authority or any Govt. agency will never ask for details to be given over phone or submit on an email link.
  • Be discreet on social media. Don’t reveal your critical data like DOB, Home address, phone number.
  • Beware that someone who approaches you for your details for a ‘lucky draw’ may be data vendors, looking to sell your details. Shred boarding passes, phone bills, bank statements etc as they may carry a lot of your personal data.
  • Guard your email with a strong password that is changed regularly. The 2nd password authentication is also crucial. As an OTP is generated every time one logs from a new device, thereby alerting against any risk.
  • Experts advise caution as most data is now leaked through apps. Apps demand permissions and seek access to contact list, camera, sms, location etc. These apps also mine other people’s data stored in your phone. While you cannot stop using all apps, you can revoke permission given to apps.
  • Always keep your Bluetooth off when not in use. Avoid public Wi-Fi.

Customer Protection Policy – Electronic Banking Transactions

What to do when you find that some fraudulent transaction has happened in your Account or with your Card.>>>>>>> You need to immediately report the same to the concern bank and keep record of the same as the communication systems used by banks to send alerts and receive their responses there to record the time and date of delivery of the message and receipt of customer’s response, if any, to them. This shall be important in determining the extent of a customer’s liability.

Keeping in mind the increasing thrust on financial inclusion & Customer protection, RBI had issued a circular on Customer Protection – Limiting liability of Customer in unauthorized electronic Banking transactions. i.e. RBI/2017-18/15DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 6,2017.

Unauthorised Transaction due to Bank’s negligence
Time taken to report the fraudulent transaction from the date of receiving communication from the Bank Customer’s Maximum Liability (Rs.)
Customer to report as soon as possible to prevent future losses Zero Liability
Unauthorised Transaction due to Customer’s negligence
Time taken to report the fraudulent transaction from the date of receiving communication from the Bank Customer’s Maximum Liability (Rs.)
Customer to report as soon as possible to prevent future losses 100% liability till it is reported to Bank
Maximum Liability of a Customer in case of unauthorized Electronic Transaction where Responsibility is neither with the Bank nor with the customer but lies elsewhere in the system & customer has reported unauthorized transaction from transaction date within working days specified in following table:
Type of Account Within 3 working days (Rs.) Within 4 to 7 working days (Rs.)
BSBD Accounts Zero Liability 5000
All other SB accounts 10000
Pre-paid Payment Instruments and Gift Cards 10000
Current/ Cash Credit/ Overdraft Accounts of MSMEs 10000
Current Accounts/ Cash Credit/ Overdraft Accounts of Individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs.25 lakh 10000
Credit cards with limit up to Rs.5 lakh 10000
All other Current/ Cash Credit/ Overdraft Accounts 25000
Credit cards with limit above Rs.5 lakh 25000
Please Note : Any unauthorized electronic banking transaction reported after 7 working days will be treated as 100% customer liability.You should always stay SAFE in the ONLINE world ! So, now you have an Insurance policy which can protect you from risks such as risk of damage to your e-reputation, fraudulent  transactions with your credit cards, debit cards, theft of your personal information etc.for you and your family.

Please write us on support@pentagraph.co.in or call us on 74100-97093 to know more on this insurance if interested .

We are sharing the short video from famous serial on Sony – Crime Petrol which is on similar line . If not seen earlier , then worth watching it.

Please click here to see the video Hope you find this information useful .

Safe Investing !!!!

Tax Planning OR Investment Planning OR Both

– Meghashyam Sinkar
Last month , we have written on NPS  ( All About NPS – National Pension System). We have received lot of queries on it mainly regarding tax saving . We would like to tell you that NPS was having tax benefit for last couple of years under section 80CCD(1B) , over and above 80C limit of Rs 1.5 L . The main reason on advising it now is due to its change of tax treatment on its maturity .

There is too much focus on tax savings while investment aspects hardly get addressed . This leads to bad choices of instrument without understanding its risk , suitability & need.

In fact that some of the worst investment decisions that individual takes are with their tax savings investments .

Investors choose Equity Linked Saving Schemes (ELSS ) over other tax savings instrument just because it has least lock in period (3 years) amongst other available instruments in this space . But it is pure equity instrument which should be considered only when you are willing to stay put for 7 years & above. Lot of investors then get disappointment and never invest again . Then they commit long term savings into traditional insurance plan which hardly give any real rate of return .

Therefore , one should ideally plan for their financial goals first and then choose the investment instrument which is aligned with your goal and also gives the tax benefit simultaneously .Tax saving should be byproduct of the investment .

Avoid Last minutes tax planning . Planning in advance releases time pressure which will reduce the mistakes ultimately .

We are sharing the tax saving sheet which can be accessed by clicking on below link . You can download to see the gap and plan accordingly if any .

Pentagraph – Income Tax FY 19-20

Please feel free to write or call us for any assistance.

Happy Investing !!

HRITHIK Super Hit But in Stock Market and not in Bollywood

–  By Meghashyam  Sinkar

Bollywood actor Hrithik didn’t appear in movie screen last year . But it looks like he was busy at the Share Market . Here HRITHIK stands for HDFC Bank , Reliance , Infosys, TCS , HUL , ICICI Bank and Kotak bank . These stocks have contributed more than 70% return of entire Nifty Index . The last one year rally was concentrated to few stocks only . Rest of the stocks have lost significant amount of market cap . Due to such polarisation of Nifty stocks returns  , most of the large cap oriented diversified mutual funds have underperformed against the Nifty . Correction in Mid-caps and small-caps have made the performance of other categories of the funds also dismissal. This is the main reason of sub optimal returns across portfolios inspite Nifty surging at new heights. .

Fund Category 1-Y
Equity: Large Cap 9.36
Equity: Large & MidCap 0.42
Equity: Multi Cap 3.10
Equity: Mid Cap -5.68
Equity: Small Cap -12.00
NIFTY 12%

Source – Value Research

The basic advantage of mutual fund is the diversification which reduce the risk and generate better risk adjusted return .They do invest across 30 to 50 stocks in their portfolio which resulted the non performance over last one year .  But , if you compare the fund category returns over 5 years and above , then active funds have delivered much better returns against the benchmark generating alpha in the range of  2 – 7 %.

We , at Pentagraph, always communicate that equity returns are never linear in nature & it is the long term patience game .

Happy Investing !!!

 

 

 

 

All About NPS – National Pension System

– By Meghashyam Sinkar

NPS has been evolving continuously over last decade . Recently , Government has proposed to make the eligible withdrawal amount at the age of 60 completely tax free which makes it worth considering as a tax saving option . There has been lot of changes in investment choices as well which makes it suitable option for creating retirement corpus specially for investors who are below 50 yrs age .
  • About NPS
• Voluntary defined contribution pension system regulated by PFRDA .
• The Central Government has introduced the National Pension System (NPS)   with effect from January 01, 2004
• NPS was made available to All Citizens of India from May 01, 2009
• Similar to USA 401(K)
  • Type of accounts

•Tier I &
•Tier II

  • Investment Asset Classes and Choices
There are 4 asset classes

1)Asset class E – Equity and related instruments – Max 75% exposure one can take  – Only equities with market cap of 5000 cr and above
2)Asset class C – Corporate debt and related instruments – only in AA (PSU) and above at least by two rating agencies with maturity of 3 yrs and above.
3)􏰀Asset class G – Government Bonds and related instruments ( 90% in G sec must , 10 % across securities guaranteed by centre & states and gilt MF .
4)Asset Class A – Alternative Investment Funds including instruments like CMBS, MBS, REITS, AIFs, Invltsetc. – restricted to 5% only

There are two choices

Active Max 75 % upto 50 yrs age and then further reduced by 2.5 % every year till 60  age .

AutoAggressive (75%), moderate(50%) and conservative (25%) life cycle fund.

  • Pension Fund Manager (PFM) choices

1. Birla Sunlife Pension Management Limited
2. HDFC Pension Management Company Limited
3. ICICI Prudential Pension Funds Management Company Limited
4. Kotak Mahindra Pension Fund Limited
5. LIC Pension Fund Limited
6. Reliance Capital Pension Fund Limited
7. SBI Pension Funds Private Limited
8. UTI Retirement Solutions Limited

Note : These managers can change any time . Bidding process happen once in very 5 years.

  • Taxation

  • Charges and costing

• Initial Subscription – one time registration fee – Rs 125/- ,
• Annual maintenance cost – Rs 95/-
• Contribution charges – 0.1% of amount invested – Min Rs 10/- and max Rs 10,000/-
• Non financial request – Rs 20/- per request
• Custodian charges – 0.0032% p.a
• NPS Trust charges – 0.005% p.a.
• FMC – 0.01% p.a. which is the big plus point of this instrument .

  • Nature of NPS
  1. Minimum Contribution – Rs 1000/- p.a. ( If not done , the account gets frozen and can be reactivated with Rs 500/-)
  2. Active and Auto mode can be changed twice in a year  & PFM can be changed once in a year ( Such switches are not treated as withdrawal and hence will not be taxed)
  3. But one fund to another fund is taxed as it attracts capital gain
  4. No early exit , can do so only after completing 10 yrs .
  5. After 10 yrs and before 60 yrs , you get only 20% of the corpus and rest 80% will be converted to annuity.
  6. Partial withdrawal is allowed but with certain conditions which are    (a) You should have completed 3 yrs  (b) you can withdraw maximum 25% of your contribution amount and (3) only in below situations with requisite declaration – illness, building house , kids education and marriage , disability or starting your own venture .
  7. You get only 3 such partial withdrawals through your lifetime.This partial withdrawal are not taxed
  8. If you wish , you can defer maturity till your age of 70 yrs
  9. 60% lumps withdrawal- tax free and 40% annuity is always taxable
  • Others

• You can check the returns of NPS on www.valuereasearchonline.com  Or  www.npstrust.org.in for different choices and PFM.
• You can open the NPS account with nationalised bank or online on NSDL website.
• Once the account is activated , you can mobile app for contribution , statements , valuation etc .

Please write back to us for any query or additional information.

Happy Investing !!!!