Month: December 2009

Quick post on ULIPs

I have never written about ULIPs here because I don’t like them one bit, and as a result don’t read or pay any attention to them. But last week a friend told me about a ULIP plan he was interested in, and I went in and checked it out a bit. That post is still work in progress, but I read this piece about SEBI issuing a show-cause notice to an insurance company, and thought I’d do a quick post about why I don’t like ULIPs.

From Moneycontrol:

Capital markets regulator Securities and Exchange Board of India, or SEBI, has issued a showcause notice to an insurance company, learns CNBC-TV18 quoting sources. This comes in the wake of insurance companies transgressing into the mutual fund territory, report CNBC-TV18’s Mrinalini Krishna and Avni Raja.

SEBI has sought an explanation from the company asking why one of its insurance products does not have an insurance cover and whether this amounts to selling mutual funds.

This is the reason I dislike ULIPs. Insurance and mutual fund investment are two different things, and they really don’t go well together at all.

People like ULIPs because they don’t like wasting money on insurance. Most people I speak to think of ULIPs as insurance that will get them at least some money back at the end of the plan, instead of term insurance which is just sunk cost.

The fact of the matter is – term insurance is significantly cheaper in terms of pure insurance and while you may think you are getting something back with ULIPs, you end up paying a lot more for insurance, and the investment portion of it is subject to market fluctuations anyway, so there is no real gain there either.

I am going to take a closer look at ULIPs next year because a lot of people are interested in them, but I strongly suggest that before buying a ULIP, you check out the term insurance rates from LIC to see how much you would have to pay for just insurance. That might just change your mind. Here is the link to check that out.

Photo Credit: Wheat_in_your_hair

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My predictions for 2010

Image by Melissa Gray

I have successfully stayed away from reading any 2010 predictions of so far, but there are just too many to stay away from forever. So, I decided that instead of wasting my time on reading predictions, — I will waste my time on making them.

So here are my top five predictions for 2010.

1. Your postman is going to give you a stock tip soon: I have been hearing the phrase “cautiously optimistic” a lot lately, and I know it doesn’t take long to get rid of the “cautious”. After that it’s only a short time from when everyone jumps on the stock market bandwagon. I think you will get at least one stock tip from your postman in 2010.

2. You will buy at least one financial product you don’t understand this year: Good I came up with this, — I am going to use this every year.

3. Who lets these idiots appear on TV? You will say this phrase several times during 2010, and you will be watching CNBC or any other business network with stock market gurus on most of those occasions.

4. There will be several ETFs launched in 2010: A lot of new ETFs will be launched in 2010, most of them will be completely useless, but that won’t stop people from buying them.  There won’t be many people questioning the need for such funds because that doesn’t do anybody any good, and a lot of these will shut shop when the next crisis happens. (Yes, it will happen)

5. You will only remember those 2010 predictions that match with your own views (apart from this one): You have likely read several predictions about 2010, but I bet you will remember only those that match closely with your own views. The others you just ignore. You will remember this one, because as soon as you read it, — you spent some time thinking to yourself – I don’t do that.

So, there goes, my top non predictions for 2010, do you have any predictions for the next year? Leave a comment below.

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Best Buy Gift Card Review

While it is always a great feeling to get just the right gift for a close friend, a loved one or a family member, there is a lot of stress that accompanies trying to find that perfect gift, also.  After all, knowing exactly what people are hoping for is easier said than done, especially if you have not been able to keep up on the changing interests of those you buy gifts for!  Even if you do, there is still the danger of buying something that they already have, or worse yet, buying a gift that someone else is also getting them!

That’s one of the reasons, gift cards gained currency, and why we are reviewing the Best Buy gift card here.

Best Buy is now possibly the most well-known electronics retailer you could find, with a reputation for having both a huge selection and prices that are hard to beat.  With locations all over the United States, as well as in Mexico and Puerto Rico, there is almost always a store near you.  If not, Best Buy’s website offers an even bigger selection of items than the physical storefronts can offer, and ships quickly and conveniently to the United States, Guam and the Virgin Islands alike. Therefore, no matter what your gift recipient is into, they will be sure to find something great to buy with a Best Buy gift card.

Not only can gift cards from Best Buy be purchased both at physical Best Buy stores or the store’s website, — you can also use Best Buy gift cards at both the website and store locations.  Furthermore, you can select a wide range of denominations, from $5 to $500, and there are 16 denominations in all (8 of which are $50 and under).  Therefore, you can always spend just the right amount to get an appropriate gift and stay under your gift buying budget when you buy a Best Buy gift card.  Also, when you buy gift cards online, the shipping is free, which is always a great value.

Best Buy gift cards come with a multitude of designs and styles, so that they will be perfect for any occasion, including weddings, graduations, holidays, birthdays, or even just because you are thinking of someone special.  They even have gift cards in Spanish, if you prefer.  Also, the gift card that you buy someone does not have to be tossed aside after its value is depleted- you can reload money onto the card at any Best Buy store in the United States.

Unlike some types of store gift cards, Best Buy’s gift cards have no expiration dates or maintenance fees, so it won’t “cost” anyone money to take their time using their gift card to buy something that they really want.  If the card holder decides that he or she wants to know the exact amount left on the card at any time, they can also do that quite easily.  You can use the Best Buy website to find out in seconds, or ask any cashier at a Best Buy store, who can tell you the balance left on the card just as quickly.

There are some other great aspects of Best Buy gift cards to explore, too.  For instance, recycled gift cards are available from Best Buy for those that are environmentally conscious, and again, you can reload money onto gift cards at any time to get even more use out of them.  Best Buy gift cards are also great for companies and schools to reward employees, students or customers, and their compact size make them perfect stocking stuffers, of course.

When it comes down to it, you always want to get a gift that the recipient will enjoy.  With Best Buy gift cards, you can do just that, as a gift card there can be used for anything from the hottest video games and music CDs to the newest movies, electronics or appliances.  When you get a Best Buy gift card for someone, you are allowing them to take the time to really think of themselves for once- all while ensuring that they will get the perfect gift for any occasion…the one that they really wanted.

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Interesting Reads December 27th 2009

The big news yesterday was the foiled attack on the airplane landing in Detroit. It would have been a terrible tragedy which has been thankfully averted. I read this news in the morning and felt all the holiday spirit sucked out of me, as it slowly dawned what it could have meant. Thankfully nothing happened.

Now, on to some personal finance links this week.

Let it breathe @ Cash Money Life

College education costs @ The Digerati Life

My African Safari Tour: Travel Africa on a Budget @ The Smarter Wallet

How I chose my rewards credit card for my honeymoon @ Ask Mr Credit Card

The time value of money @ Weakonomics

A loss does not have to be realized to be real @ Options for Rookies

Insurance myths debunked @ Financial Highway

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Can you use Amazon gift card to buy another gift card?

According to Amazon’s policy, you cannot use your Amazon gift card to buy another gift card. This is broader than you may think. Most people understand this to mean that you can’t buy another Amazon gift card, and that is true, but in addition to that, — you can’t buy any other gift card such as a Target gift card also.

The Consumerist had this interesting piece about a reader who wasn’t able to use his gift card on something that was discounted by being bundled with another gift card. For example, if Amazon was giving you a $50 gift card on buying a Kindle, — you couldn’t use your existing Amazon gift card to make this purchase.

So, two gift cards don’t go together. In summary, you can’t use it in the following ways:

  1. You can’t use an Amazon gift card to buy another Amazon gift card.
  2. You can’t use it to buy any other gift card.
  3. You can’t use your gift card to buy anything that is discounted by being bundled with a gift card.

At first I was a little surprised at how so many people are interested in swapping gift cards, but as I read more about this, — I realized there are many situations where it makes perfect sense to do this. The reason I found most interesting was to try and get around expiry dates. This of course, isn’t applicable to Amazon any more, since their cards don’t have an expiry date. I read a couple of forum threads where people were discussing about what to do with their cards that were about to expire soon. They were talking about the expiry date coming soon, and since they couldn’t think of buying anything, — they were wondering if they could get another gift card, and in turn — extend their expiry period. I thought this was really clever, but unfortunately it isn’t allowed by most retailers.

It is a good idea to be aware of how you can’t use your gift cards because a lot of times they remain unused, and that is just a waste. Using it to buy another gift card doesn’t work, so if that was something you were planning on, then you need to think of another way of using it.

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Tata Gold Fund: Gold ETF for Indian Investors

Tata is coming out with a new fund offer for its own gold ETF – Tata Gold Fund. The new units will be priced Rs.100, and trade in stock exchanges like other ETFs.

The Tata Gold ETF will hold physical gold or gold related instruments as the majority of its holdings. They plan to hold at least 90% of their assets in gold, and the remaining in money market instruments, bonds, securitized debt, and other debt instruments permitted by SEBI.

This is a passive fund, which means that the fund manager will not try to beat the returns of gold, but try and replicate it for the most part.

The recurring expense ratio of the fund is expected to be 2.50% of average weekly assets for the first Rs.100 crore. This is similar to what most other gold ETFs in India have to offer, with the exception of Benchmark mutual fund’s gold ETF, which charges an expense ratio of 1%, and Quantum gold fund’s gold ETF, which charges an expense ratio of 1.25%.

The minimum application amount during the Tata Gold NFO will be Rs.10,000 for retail investors. It is worthwhile to keep in mind that since this is a mutual fund NFO, and not a stock IPO, investors shouldn’t think about any sort of listing gain from this.

If you were looking for a gold ETF, then there is one more option for you to invest in. This fund is not really all that different from other gold ETFs that hold physical gold, so I wouldn’t really be all that excited about its launch.

I can only hope that all these new gold ETFs that are getting launched in the market bring down the fees that mutual funds charge investors. At 2.50%, this is quite high compared to the western gold ETFs, and one can only hope that time and competition brings this charge down.

Disclosure: This is just a summary of the new fund that will be launched, and not a buy or sell recommendation.

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Target Gift Card Review

Target gift cards are a popular choice for people looking for gift cards because Target stores have it all, including everything from men’s clothing, women’s clothing and kids apparel to toys, electronics, and even groceries at many locations.

Target is truly a one stop shopping center, where you can find a new outfit, pick up a bestselling book (and the movie adaptation on DVD!), and get some milk for home all in one trip.  Furthermore, Target’s prices on great brands makes their stores very popular among shoppers of all ages and types.  Target’s website provides a huge selection as well, with all of the convenience of online shopping.  So, as you can tell, a Target gift card will really enable the recipient to pick out anything that suits them.

How to buy a Target Gift Card?

You can buy Target gift cards either at the stores that are located just about everywhere imaginable, or from Target.com, if you prefer the convenience of online shopping.  Furthermore, gift cards are redeemable at any Target store or the Target website, too, which is very helpful for those who sometimes like to shop online, but also like to look at items up close and in person.

Target Gift Card Denomination

There are a wide variety of denominations you can buy the gift cards in, from $10 all the way up to $1,000 in set amounts that are available at Target.  Meanwhile, if you go to a Target store to buy a gift card, you can select your own denomination between $5 and $2,000, assuring that you spend just the amount that you wanted to.

You may have heard of some drawbacks of many gift cards, which can expire over time, or have fees if you hold onto them too long.  However, Target’s gift cards never expire and have no fees whatsoever, so you won’t have to worry about such factors at all.

You can also reload money onto a Target gift card at any Target store, so that you can keep your gift card and continue using it as long as you want!  And you will probably want to, as there are an innumerable amount of designs for all occasions available, including birthdays, holidays, weddings, graduations and even just to say “thank you”!

Shipping Charges

Shipping on gift cards bought online is very affordable, at just $1.95.  If you prefer, though, you can send an “e-Gift Card”, which will arrive in the recipients e-mail promptly and allow them to spend the amount gifted at Target.com quickly and easily, without having to print anything out or wait to receive a physical card!  These versions of Target gift cards are available in fully personalized denominations from $5 to $5,000.  If you prefer a physical card, it is easy to include some personalized sentiments to that special person, as you can quickly include a short note to the gift recipient that will be included with the card in the mail.

Of course, even though it is called a “gift card”, Target’s cards are perfect for many uses.  The features and versatility of Target gift cards make them great not just for gifts, but also for prizes, rewards and incentives for companies, schools, clubs, church groups and more.

When you just aren’t sure what to get someone, you definitely do not want to end up getting the wrong gift.  Instead, a Target gift card really gives someone the chance to take some time to go on a little shopping spree whenever the feeling strikes them.  With the ability to personalize the cards with extra notes or by picking from a large variety of designs, you can find the perfect Target gift card for any occasion, and it is guaranteed that the gift recipient will find something they will love.

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ICICI Direct Brokerage Options

On Saturday I received an email from ICICI Direct informing me about a new choice in their brokerage plan.  A brokerage plan is a set of terms and conditions about the commissions you pay ICICI Direct for your trades.

Till now, there was only one plan, and everyone using ICICI Direct used to pay fees according to that plan. However, from January 1st 2010, ICICI Direct has introduced a new plan, and now you have an option of selecting the plan which makes most sense for you.

The two plans are called:

  • I-Saver
  • I-Secure

The main difference between the two plans is the brokerage commission on cash. The – I-Secure — plan charges a flat brokerage of 0.55%, while the – I-Save plan has a tiered rate, where the more you trade, — the lesser commission you pay.

I switched my plan from I-Saver to I-Secure, because the new one will work out cheaper for me. I will never trade the volume necessary to get my rate lower to 0.55% under the I-Saver plan, so the flat rate plan is best for me.

Here’s a look at the two plans for cash:

ICICI Direct I-Saver Plan

Total Eligible Turnover

(per calendar quarter)

Brokerage %

Second Leg of Trades

Effective brokerage on Intraday Square-off
Above Rs. 5 Crores

0.25%

Nil

0.125%
Rs. 2 crores to 5 crores

0.30%

Nil

0.150%
Rs. 1 crore to 2 crores

0.35%

Nil

0.175%
Rs. 50 lakhs to 1 crores

0.45%

Nil

0.225%
Rs. 25 lakhs to 50 lakhs

0.55%

Nil

0.275%
Rs. 10 lakhs to 25 lakhs

0.70%

Nil

0.350%
Less than Rs. 10 lakhs

0.75%

Nil

0.375%

ICICI Direct I-Secure Plan

Total Eligible Turnover

(per calendar quarter)

Brokerage %

Second Leg of Trades

Effective brokerage on Intraday Square-off
Irrespective of turnover

0.55%

Nil

0.275%

For someone who predominantly trades less than 50 lakhs in cash in a quarter, the flat rate option is going to be cheaper. I fall under that category and so I selected that plan.

Apart from this commission, there are other charges that apply. Here is a list of those other charges:

  • Service Tax (ST) will be charged at 10.30% on total value of brokerage.
  • Securities Transaction Tax (STT) at 0.125% on turnover.
  • SEBI turnover charges at 0.0001% on turnover.
  • Transaction Charges will be charged @ 0.0031% for NSE and 0.0035% for BSE on turnover.
  • Applicable State wise Stamp Duty charges as per delivery and non-delivery would be levied on turnover.

The minimum trade value accepted is Rs .500.  The minimum brokerage for transactions upto Rs 3335 is Rs 25 or 2.5% whichever is lower. All statuary charges would be levied over and above minimum brokerage.  Brokerage rate mentioned above would be levied for trade value exceeding Rs. 3335.

The charges for options, futures and margin trading for both plans are same, so that doesn’t come into play while selecting a brokerage plan.

If you use ICICI Direct for trading, then take a look at your investing habits, and select the brokerage plan that works out cheapest for you. This will be applicable from 1st January 2010 onwards.

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Economy and your finances carnvial 20 December 2009

Welcome to the December 27, 2009 edition of OneMint – Economy and your finances.

Silicon Valley Blogger presents Free Savings Account For Your Savings Goals: SmartyPig Review posted at The Digerati Life

Dividend Tree presents Case of Dividend Growth in Emerging Economies posted at Dividend Tree, saying, “I view multinational companies are potential opportunities for dividend growth, hedge against dollar fluctuations, and proxy for emerging markets.”

Debt

Silicon Valley Blogger presents No Credit Credit Cards: Are Prepaid or Secured Cards The Way To Go? posted at The Digerati Life

Economics

Tom Tessin presents 5 Ways to Avoid Bankruptcy posted at FSC Blog, saying, “5 tips that you can use in order to avoid bankruptcy today.”

John Hunter presents The Biggest Manufacturing Countries in 2008 with Historical Data posted at Curious Cat Management Improvement Blog, saying, “China’s share of the manufacturing output has grown dramatically the last 20 years but USA output has grown over that time and the USA share of global manufacturing is down only slightly.”

Investments

Sun presents The End of the Year Means It’s Time to Rebalance Your Portfolio posted at The Sun’s Financial Diary.

Mike Piper presents Imputed Rent: Calculating Return on Home Purchases posted at The Oblivious Investor, saying, “How do you calculate the return on the purchase of a home if you use it yourself rather than renting it out?”

Jeff Rose presents 401k Rollover to IRA: How To Consolidate Your Retirement Accounts posted at Jeff Rose.

Personal Finance

The Dough Roller presents The Great Debate: 30-Year Mortgage vs. 15-Year Mortgage posted at The Dough Roller.

Tom @ Canadian Finance Blog presents Book Review – The Secret Language of Money – Canadian Finance Blog posted at The Canadian Finance Blog, saying, “The Secret Language of Money is as much a psychology book as it is about personal finance.”

FMF presents Fourteen Tax Management Techniques posted at Free Money Finance, saying, “Tips for making the most of your tax planning.”

Keith Morris presents Money Resolutions: Stick To It This Time! – LifeTuner Blog Posts posted at LifeTuner, saying, “We recently hosted a chat on Twitter with a few experts and bloggers to talk about 2010 money resolutions. These are some highlights from the chat.”

Roshawn Watson presents Is Bigger Better? Scaling Down The American Dream posted at Watson Inc, saying, “Today’s post-crash buyers are not willing (nor able in some cases) to extend themselves like before, and the impact on the housing market is substantial.”

Arohan presents Ideas for Holiday Tipping on a Budget | Personal Dividends posted at Personal Dividends.

Stocks

DCTrader presents Financial Bloggers Traders Insights posted at DCTrader.

That concludes this edition. Submit your blog article to the next edition of OneMint – Economy and your Finances using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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