July 2014 – OneMint

Weekend Links 25th July

Weekend links is late by a day because the links post I started out with yesterday got rather depressing because of what has been going on around the world, and I decided people have probably had enough of that, and looked for some other links to share. In that sense, this is probably the first time where the links post contains articles that I haven’t necessarily read during the last week.

Anyway, first up, Japan’s floating trains sound like a fascinating concept.

A good article on Buffett’s Achilles’ heel.

Next generation electric cars may not need a battery swap.

Dr. Bibek Debroy on how correlation can sometimes be causation.

Who doesn’t like Maggi, right? 15 different ways to make Maggi.

NY Times has a great article that shows how much it matters when you started investing. I will have a full post on this later.

Finally, 35 great images this week. Some of these will stop you in your tracks. Have a good Sunday.

How to Find a U.S. Rental While Abroad

Guest Post By Jennifer Riner of Zillow

Moving to a new city is always intimidating, especially without ever visiting prior to relocating. Even more difficult is relocating across international borders to an entirely different country, complete with alternate customs, language barriers and cultural divides. While exciting, apartment hunting remotely can be complicated and somewhat intimidating.

Most U.S. residents have general knowledge of major cities throughout the country, including a city’s characteristic weather patterns, crime reputations and local economies. Luckily, international individuals can access these data points online. Once long-distance renters determine their destinations of choice, finding rentals within desired locations might be more complicated than it seems.

Implement the following strategies to ease the process of international rental searches, specifically avoiding contractual obligations with inadequate rentals.

Research Neighborhoods

Individuals from overseas should begin by researching the communities in their relocation areas. Selecting specific neighborhoods based on budget and lifestyle narrows the vast scope of options. Focusing searches reduces stress for overwhelmed shoppers who can only find future homes through limited pictures and online rental listings.

First, determine price point and scan through listings to gauge which regions are realistic based on budget. Delve into specific neighborhoods by scrutinizing accessibility, demographics and, if applicable, school ratings. For more in-depth analysis, research local restaurants, parks, fitness facilities, bars and coffee shops. If being close to these amenities is important for an easy transition, it might be worth stretching the budget to move closer to them.

Time Searches Based on City

Depending on long-distance destinations, recommended start times for rental searches vary. For instance, Orlando apartments for rent typically aren’t listed very far in advance from their vacancy dates. Lack of down time between listing units and signing new tenants is potentially due to competitive rental markets. Renters in major metros are abundant and eager to sign leases, so high-quality apartments at fair prices don’t sit on the market for very long.

Visit Potential Apartments or Enlist Help

When budget allows, renters should visit potential residences first-hand to find apartments in optimal locations that fit their needs. Obviously, flying out for showings isn’t practical for most people who want to avoid extra expenses or endure long hours of additional travel. Lessees who can’t afford, or don’t have time, to travel to view rentals ahead of their scheduled move dates can use professionals and friends to streamline their rental pursuits.

Leasing Agent

Not only do leasing agents help narrow down standard apartment searches, their city-specific expertise is especially useful for individuals moving from foreign countries. Be prepared for agents to ask about timeline, flexibility, potential neighborhoods, budget range, size preferences, pet accommodations, parking and must-haves or deal breakers such as in-unit washers and dryers or hardwood floors.

Some agents can accommodate international applicants by facilitating the entire process remotely. After they receive information about their clients’ wants and needs, they’ll send prospective listings via email. When clients settle on one or two properties, agents can contact property managers to take pictures, collect floor plans and determine final pricing based on availability. Unemployed renters should prepare to list cosigner(s) who are citizens of the continental United States. Property managers considering international lessees will also inquire about visas and citizenship before moving forward. To simplify the entire process, international apartment seekers can electronically sign their applications, offer letters and leases for most properties; otherwise they must mail notarized documents, depending on property policies.

Friend

Networking with existing residents benefits initial searches and helps new residents get acclimated thereafter. Residents have insight on their current housing and location, and can potentially attend showings, take high quality photos and provide unbiased descriptions of units on non-nationals’ behalves. Ask distant relatives or old associates for help, provided they currently live in the targeted region. Those relocating for work who don’t know anyone might want to ask new coworkers for their help, or join online communities dedicated to linking newcomers.

Sublet or Rent Short-Term

After exhausting all resources, sometimes searches fail to yield appropriate results. Temporary housing is a good option for renters in a bind, at least until suitable dwellings hit the market. Leasing agents can often set their clients up with sublets to consider. If searching solo, online classifieds feature extensive roommate-wanted advertisements, but be weary of the potential dangers of living with strangers, especially when strong language barriers exist. Websites including Airbnb and VRBO offer vacation rental listings to users, but also provide monthly rentals within popular metro regions. Individuals can narrow their searches based on estimated durations and see if owners offer extended-stay housing.

Staying alert throughout the process is the best way to avoid scams or other issues. Most scams come from users in distant countries who claim to be landlords that are renting out a home. Be wary of claims from people who are communicating from abroad because they are missionaries, U.N. workers or in the military. Always be wary of giving personal information, financial information or payments of any kind to unfamiliar people.

Although it presents increased risk, renting apartments from a distance can be simplified – as long as prospective leaseholders use available resources to the fullest degree.

Weekend Links July 7th 2014

Let’s start this week with a very interesting story about a floating solar power plant that India is building. I haven’t seen much coverage of this but I would feel that this is the kind of news that people want to hear about.

Next up, India’s role in the nuclear race.

Did you know that 30 million people live in caves in China?

It is disturbing, how much a could weighs.

A brief editorial on the recent budget.

A bitter sweet story about an elephant who was recently rescued in Mathura.

Finally, Bill Gates on his favorite business book.

Budget 2014: Hits & Misses for a Retail Investor

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at [email protected]

It was Modi Government’s first budget on Thursday and it made the investors sit on a roller-coaster ride in the stock markets. Some must have enjoyed the ride, but some would have found themselves caught at a higher level even after having a so called “Excellent Budget”.

Before we find out why the markets fell even after having a good budget, let’s first look at some of the hits and misses of Budget 2014 from a retail investor’s perspective.

Hits:

* Basic tax exemption limit has been increased to Rs. 2.5 lakhs as against Rs. 2 lakhs earlier – The proposal will help you save Rs. 5,150 in tax irrespective of the tax bracket you are in.

For Senior citizens, the limit has been hiked to Rs. 3 lakhs from Rs. 2.5 lakhs earlier. So, even if you are a Senior citizen or a taxpayer in the 30% tax bracket, the benefit will be of Rs. 5,150 only.

* Exemption under section 80C has been increased to Rs. 1.5 lakhs as against Rs. 1 lakh earlier – The proposal will help you save Rs. 5,150 if you are in the 10% tax bracket, Rs. 10,300 if you are in the 20% tax bracket and Rs. 15,450 if you are in the 30% tax bracket.

* Exemption limit under section 24 on account of interest on home loan in respect of self-occupied property has been increased to Rs. 2 lakhs as against Rs. 1.5 lakhs earlier – If you have taken a home loan and the property is a self-occupied property, then this proposal will help you save another Rs. 5,150, Rs. 10,300 and Rs. 15,450, if you are in the 10%, 20% and 30% tax brackets respectively.

* Investment limit in PPF has been hiked to Rs. 1.5 lakhs as against Rs. 1 lakh earlier – The proposal will help the Senior citizens or investors who are saving for their retirement years or the conservative investors in building up a healthier corpus for achieving their financial goals.

Misses:

* LTCG Period & Tax Rate on Debt Mutual Funds Hiked – This is one bad news for the debt fund investors, especially the fixed maturity plan (FMP) investors. April 1, 2014 onwards, your investment in a debt mutual fund will have to wait for 36 months (or 3 years) to qualify for the status of a long term capital asset as against the 12 months period earlier.

Though the step has been taken to stop the corporate investors from using these debt fund schemes as a tax arbitrage opportunity, this proposal is definitely going to reduce retail participation in debt mutual funds in a substantial manner. Overall, it is going to hit the mutual fund industry very badly as they have majority of their assets under the debt category.

Moreover, this financial year onwards, the tax rate has also been hiked to 20% from 10% earlier. So, it will be a double blow for the debt fund investors.

* RIP Tax-Free Bonds – In his budget speech, Finance Minister Arun Jaitley did not mention anything about tax-free bonds which got extremely popular with the investors in the last 2-3 years. So, like Infra Bonds which used to carry tax exemption u/s 80CCF till a couple of years back, I think fresh issuance of tax-free bonds has also been discontinued now. So, now onwards, the investors will have to explore some other investment opportunities which could earn them a tax free income.

* RGESS Left Untouched – UPA’s fractured investment scheme, Rajiv Gandhi Equity Savings Scheme (RGESS), got no treatment from the NDA either. In fact, Arun Jaitley did not even mention the scheme in his budget speech. So, all those investors, who were expecting the Finance Minister to make some changes in this scheme, got nothing but a big disappointment.

* Infrastructure Bonds u/s 80CCF Not Reintroduced – After getting ignored by the former Finance Ministers, investors were hoping for a revival of exemption for infrastructure bonds which used to give Rs. 20,000 exemption under section 80CCF or a new investment opportunity with a separate tax exemption. But, their hopes were dashed by Mr. Jaitley as no new exemption got introduced by the new Finance Minister.

So, why the stock markets fell even after having the so called “Excellent Budget”?

It is not the budget disappointment which caused our markets to fall equally sharply after zooming up 475 points intraday, it was the fear & fall in the European markets which caused such a panic selling by the smart money here.

The panic was caused due to concerns of a possible default by the Espírito Santo Group and a sharp fall in the share price of Banco Espirito Santo, Portugal’s leading financial institution, which later got suspended for trading.

Most of the European stock indices were trading lower when our markets got closed for trading at 3:30 p.m.

Coming back to our budget, I think, with no tax-free bonds around this year and a quite unfavorable tax treatment for the debt mutual funds, the investors will find it very unattractive to deploy their money in some of the fixed income investments. Also, as it is termed as a progressive budget by most of the market experts, it was the best that Finance Minister Arun Jaitley could have done for the economy in such a short period of time.

Every clue is guiding the investors to invest their money in equities this year, what we need is a smiling Rain God. So, after a very long time, will the markets oblige with some healthy and steady returns this year? Only the time will tell.

Weekend Links: July 4th 2014

I was quite amazed to first learn that a footballer can run as much as 10 kms in the course of a game, and this new stat that they often show during the current world cup is fascinating. My first impression was that the players wear some kind of a GPS which tracks the distance, and while this is one way of doing it, it isn’t the only one. A simple and fascinating explanation of how this is measured.

Even more fascinating was this news item about BMW 3-D printing augmented thumbs for their factory workers!

Chinese invented a lot, fireworks amongst one of those – 14 fun facts about fireworks.

Hangovers, what to do about them?

Google’s interesting technique to keep meetings productive.

If you haven’t already read about Facebook’s experiments to manipulate user’s emotions, read it now.

Finally, a very good explanation on the goods and service tax.

Have a good weekend!

Shriram Transport Finance 11.50% NCDs – July 2014 Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at [email protected]

Shriram Transport Finance Company Limited (STFC) is launching its public issue of non-convertible debentures (NCDs) from tomorrow, July 2, 2014. This will be the first public issue by the company in the current financial year and the same will remain open for three weeks to close on July 22, 2014.

Though the base size of this issue is Rs. 500 crore, the company has filed the draft shelf prospectus for Rs. 3,000 crore. So, even if the company gets a demand of more than Rs. 500 crore for these NCDs, it will retain the oversubscribed portion to the tune of Rs. 3,000 crore.

Here are some of the features of the issue worth considering:

Credit Rating of the Issue – CRISIL has given a rating of ‘AA’ to the issue with a ‘Stable’ outlook, whereas CARE has assigned a rating of ‘AA+’, which is a notch above the rating of the NCD issue of ECL Finance. Moreover, this issue is ‘Secured’ in nature, unlike the ECL Finance issue which was ‘Unsecured’.

Categories of Investors & Allocation Ratio – The investors have been classified in the following four categories and each category will have the below mentioned percentage fixed in the allotment:

Category I – Institutional Investors – 10% of the issue is reserved

Category II – Non-Institutional Investors – 10% of the issue is reserved

Category III – HNI Individual & HUF Investors investing more than Rs. 5 lakh – 30% of the issue is reserved

Category IV – Retail Individual & HUF Investors investing Rs. 5 lakh or below – 50% of the issue is reserved

Allotment will be made on a first-come first-served (FCFS) basis.

Coupon Rate & Tenor of the Issue – Individual investors, including HNIs, will be incentivised to invest in the issue with the company offering them an additional coupon of 1.15% to 1.35% over and above the base coupon rates applicable for the non-individual investors. These NCDs will be issued for a period of 36 months, 60 months and 84 months.

For 36 months, 60 months and 84 months, the individual investors will earn 11%, 11.25% and 11.50% per annum respectively. Apart from the annual and cumulative interest payment options, this time around the company has decided to offer monthly interest option as well. But, the monthly interest payment option will not be there with the 36 months maturity period.

Additional Coupon for Senior Citizens – Like some of the fixed deposits, senior citizens will get an additional interest rate of 0.25% p.a., but only the first allottees. If any of the senior citizen investors buys these NCDs through secondary markets post the initial public offer, he/she will not be entitled to this additional 0.25%. For monthly interest payment option, this rate would be 0.23% extra. For Series VI, VII and VIII, senior citizens will get Rs. 1,377.29, 1,723.87 and 2,177.70 respectively at the end of the tenure.

Minimum Application Size – STFC has fixed Rs. 10,000 as the minimum amount to invest in this issue. So, if you want to invest in this issue, you need to apply for a minimum of ten NCDs worth Rs. 1,000 each.

NRIs Not Allowed – Non-Resident Indians (NRIs), foreign portfolio investors (FPIs) and qualified foreign investors (QFIs) among others are not eligible to invest in this issue.

Demat/Physical Option – Investors can apply for these NCDs either in physical form or demat form, whichever they are comfortable with, except for Series IV and Series V NCDs i.e. NCDs which offer to pay monthly interest. Series IV and Series V NCDs will be allotted compulsorily in the demat form.

Taxability & TDS – As these are not tax-free debentures, the investors will be liable to pay tax on the interest income as per their individual tax brackets. Also, though the interest income is taxable, NCDs taken in demat form will not attract any TDS.

Listing, Lock-In Period – These NCDs will get listed on both the stock exchanges i.e. Bombay Stock Exchange (BSE) as well as National Stock Exchange (NSE) and the listing will take place within 12 working days after the issue gets closed.

Also, there is no lock-in period with these NCDs i.e. as and when these NCDs get allotted, the investors can sell their holdings on any of the exchanges whenever they want.

Conclusion

As compared to the NCD issue of ECL Finance which offered an effective annualised interest rate of 12.68%, the effective interest rate of 11.25% for 60 months seems a bit unattractive to me, despite of the fact that Shriram Transport Finance is a big company and quite superior fundamentally and even as these NCDs are ‘Secured’ in nature.

Having said that, STFC is a good company fundamentally. All those investors who could not invest in the past NCD issues and are willing to park their money for long periods of 36 months to 84 months can consider investing in this issue. These NCDs are way superior than company NCDs in terms of liquidity, safety and returns.

If I were to park my money in this issue, I would have opted for a tenure of 60 months with the monthly interest payment option or for a tenure of 60 months with the annual interest payment option.

Application Form of Shriram Transport Finance NCDs

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in STFC NCDs, you can reach me at +91-9811797407