A steady increase in economic prosperity in recent years has given a fillip to consumption-related sectors such as automobiles, white goods and travel and tourism. We are also beginning to witness the emergence of a class of investors willing to look beyond the traditional arenas of fixed deposits, bonds and equities and invest money in real estate, art, and so on.

While art has limited investment options, realty has been a favourite asset class for Indians. The options to take exposure to it is only increasing.

Apart from traditional avenues like land, apartments, farm houses, and commercial property, today you can also invest through Real Estate Venture Capital Funds (REVCFs) and portfolio management services (PMS).

REITs/REMFs, the most suitable vehicles for small investors, have not been launched in India. However, PMS let's you invest in similarly structured schemes at a higher ticket size.

NOT LIKE STOCKS

Physical investment in Indian real estate differs from investment in stocks in certain aspects. Prominent among these are :

Transparency: It is a fragmented, unregulated and opaque sector, whereby aprospective investor does not have access to reliable data regarding demand & supply, price points and authenticity of title. This is a shock for investors used to dealing in the well-regulated stock market.

Marketability: A lay observer may get the impression that there is unlimited demand for real estate, considering the ever-increasing prices. Yet, many have experienced great difficulty when trying to undertake sale of property at short notice. In other words, matching of buyers and sellers does not happen as smoothly as in the stock market.

Liquidity: As a consequence of poor marketability, liquidity suffers. Hence, only invest that amount which you will not be requiring at short notice.

Ticket size: Unlike stock markets, which welcome small investors, the real estate market caters only to high net worth individuals, as the minimum investments required run into several lakh or, in the metro cities, crore.

REVCFs are a relatively easier route to invest in real estate, as a lot of effort pertaining to due diligence of the property is obviated. The ticket minimum ticket size in these is `25 lakh. These are usually structured in the form of seven to 10-year closed extend the tenure by a few years to allow for orderly liquidation of their investments. While investing in REVCFs, be careful about:

Pedigree of the promoter: This helps in two ways. A promoter with good credentials will be able to source good deals for the fund and one with good credibility could ensure the interests of small stakeholders are protected.

Interim liquidity arrangements:

Choose a fund where the promoters offer interim liquidity by either offering concrete buy-back arrangements or commit to sourcing a buyer from the market. However, also be aware of the valuation methodology used while undertaking the buy-back.

GENERAL TIPS is no compelling need to invest. Do not get swayed by any alluring tax benefits on such borrowing.  

Buy early: Entering a property during initial stages of construction lets you get better appreciation by the time it gets completed. However, buy the property only if it is a reputed builder. This will cut the risk of project completion and delays.

Thanks to the Insurance Regulatory and Development Authority (Irda), customers now know the various charges insurers levy on unit-linked insurance products (Ulips). Irda had tightened Ulip norms in September this year. Yet, most people investing in are unaware how the total charges add up.

Premium Allocation Charge (PAC) is a common charge that buyers look out for. They would easily fall for products which do not have any premium allocation charge. Yet, an insurance company will compensate its absence by levying a Policy Administration Charge. As a rule, policy administrative fee is a fixed sum like Rs 40 per month. As the name suggests, it should be charged on the expenses incurred to service a policy and should, consequently, not have anything to do with the amount of premium paid.

Yet, some insurers link it to the premium paid. Some link it to the first annual premium, if the premium varies each year.

Now, there are two problems. Take this example. If the annual premium is `15,000 and if the policy administrative fee is 0.5 per cent a month, the annual charges come to six per cent yearly. In this case, it will come to 900 per annum. Now, if the premium were `30,000 per annum, this charge would be `1,800 per annum. If the premium is much higher, like `3 lakh, the charge would be `18,000 per annum. Does the company really spend more on servicing higher premium paying polices as opposed to those with lower premiums? The problem is that most Ulip investors look only at the returns they get. Charges are spelt out in the brochures which the client needs to understand.

FURTHER JOLTS

Another problem with policy administration is the charge continues even if you have stopped paying the premiums. In the earlier example, if an investor has stopped paying the premium after three years, policy administrative fee would continue until maturity or the period mentioned in the policy conditions.

There are other charges, too. A guarantee charge for the highest Net Asset Value plans could be 0.1 to 0.5 per cent per annum. A fund management charge depends on the fund your money is being invested into. These would be about 1.3 per cent yearly for equity funds today, lower from the 2.25 per cent, in the past.

Then, there is the mortality charge. This is a charge levied to cover the expected cost of benefit payment due to death. Most Ulips charge very competitive rates on this front.

You need, though, to look into this, too, as mortality charges do not come under any overall cap. Creativity on the charges cannot be ruled out and it is a good idea to check the mortality rates and assure oneself that it is in-line with their normal charges. Else, one would have a very costly insurance product, which may not even be a good investment product.

The other charge is surrender charge. These have come down dramatically since September this year. It used to be extremely high in the first three to five years, earlier. In some cases, one could not even surrender in the first three years.

HOMEWORK

Insurance is a long-term product. Whether a Ulip or an endowment product, it should be bought after careful thought. Ulips are transparent as compared to other products. Insurance should be bought for risk coverage. If Ulips are looked at as investment vehicles, one should be willing to stay invested for 12-15 years or more. Only then will it make sense.

In summary, these are what an investor needs to look at while going for a Ulip plan:

What are all the charges that will be levied and for what period of time? Are these justified?

What are other competitive products charging?

What are the charges levied on (surrender charge is on the fund value, mortality charge is on sum assured and PAC is on modal premium)?

What is the tenure for which you would want to invest there?

Performance of the funds under that Ulip plan

As the Indian stock market gyrates to the tune of global uncertainties investors are looking out to invest their moneys in safe haven. Gold, in virtual form, can obviously be one of those safe havens.

But if you are not convinced here are 7 reasons why you must invest in gold exchange traded funds.

All that seems to be glittering these days is gold. As risk aversion takes the sheen off stocks and other investment avenues, the yellow metal's shine is only becoming more lustrous. Although the old and the wise of your family have been persistently pestering you to hoard as much of gold as you can, you're not biting the bait.

In this day and age of daylight robberies, you're unwilling to turn your house into a gold storehouse. And you just can't shake the feeling of being taken for a ride every time your local jeweller hands you the bill amid wide fake grins.

But these fears don't mean you should shy away from making a neat sum of great investments. Turn to gold exchange-traded funds instead.

Simply put, gold ETFs are instruments that invest in 99.5 per cent purity gold. These are listed and traded on stock exchanges. Every unit of gold ETF you buy lets you own 1 gram of physical gold.

All you need for investing in gold ETFs is a demat account and a trading account with a registered broker. It's as simple as trading in stocks and is a much better option that going for real gold. Here are 7 benefits of investing in gold ETFs...

1. They're virtual...

And so much easier to store and unlikely to be stolen. They need no lockers, no security guards, no TV cameras and no police control room numbers.

When you buy gold ETFs, though you own a certain amount of gold, you don't actually get delivery of the yellow metal. You can store the units virtually in your demat account and save yourself the trouble of having to protect your gold from prying eyes of greedy relatives, robbers and looters.

But do remember to protect the login and password to your demat and bank accounts. Just like you would to your e-mail.

2. They're pure...

And so, there's no chance of you being fooled by that smooth-talking jeweller. Unless you're a goldsmith, gauging the purity of physical gold is hard.

Gold ETFs only deal in 99.5 per cent purity gold. So by choosing them over physical gold, you spare yourself the consequences of misplaced trust. The jeweller is no longer king when it comes to gold.

3. They're priced right...

And so, you're not likely to buy gold at inflated prices. The problem with precious metals is that there is a lot of scope for price disparities (read overpricing). While one jeweller may offer the same quantity of gold at a certain price, another would have a different tag attached to it.

If your bargaining skills are not good enough, gold ETFs are the way to go.

4. They're more tax efficient...

The taxation system for gold ETFs is the same as for non-equity mutual funds. If you hold gold ETFs for more than a year, you pay a long-term capital gains tax of 10 per cent without indexation or 20 per cent with indexation, whichever is lower, on the profits made.

But in case of physical gold, you have to hold it for at least three years for the long-term capital gains tax to kick in.

Gold ETFs held for less than a year attract short-term capital gains tax. Meaning the profits are added to your annual income and taxed according to the bracket your income falls in. Twelve months is far easier to wait for than 36 months, isn't it?

5. They're easier to sell...

And get you the right price. Physical gold bought from banks cannot be sold back to them. That bought from jewellers comes with an unfair 'commission' charged when you decide to sell.

With gold ETFs, you don't have to go to 10 different jewellers who will fuss over the quality and the price before handing you your spoils. They're more liquid than physical gold and fetch you the market price.

6. They're available in small sizes...

If you ask your local jeweller to give you half a gram of gold, chances are he'll snigger. But gold ETFs are available in small denominations and you don't have to have lots of spare cash to invest in gold anymore.

One gold ETF unit represents 1 gram of gold. You can even buy half a gram of gold if that's all you can afford this month. And watch your gold pile and investments grow at the rate you choose. This isn't a benefit you will get if you go to buy physical gold -- as coin or biscuit or jewellery.

7. They're wealth tax-free...

Physical gold attracts wealth tax if you're holding more than a certain amount. At the moment, that amount is Rs 15 lakh. But there is no such taxation for gold held through gold ETFs. The cash you save on tax you can always invest in more gold... ETFs, of course.

While gold ETFs score in so many ways over physical gold, they do not give you the satisfaction of seeing and feeling the yellow metal. If it's family heirlooms that you are collecting, by all means go for real gold. But if the sought-after metal is only an investment avenue for you, gold ETFs may be the way to do it.

Using the nomination option in mutual funds is very simple and beneficial

   Mutual fund investors should opt for the nomination facility to avoid hassles in case of unforseen events. Though nomination is not essential under the MF rules, it helps avoid inconveniences and hassles in future. With the nomination, fewer documents are required to transmit the investments in the Mutual Fund, should the unfortunate need ever arise. Sometimes, you can nominate up to three persons and indicate their differential shares to the funds.

   To nominate, the account holder(s) must fill up and sign the nomination form along with the signatures and photographs of the nominee and signatures of two witnesses. If the nominee is a minor, then the signature and the photograph of guardian will also be required. This form can be submitted to AMC at the time of initial investment or anytime after the investment is made. The nomination can be changed by the account holder/s anytime, by filling up a new nomination form and submitting the same to the fund house.

   Legally, the immediate family will be entitled to inherit the money in case of the unfortunate death of the investor, though this entails a lot of legal procedures. Nomination helps surviving family members inherit the wealth more easily. The nominee can be any person - related or unrelated. However, only an individual can be a nominee. A nominee should not be a society, trust, body corporate, partnership firm, karta of Hindu Undivided Family (HUF) or a power of attorney holder.

   Further, only individuals holding beneficiary accounts either singly or jointly can make a nomination. Non-individuals including society, trust, body corporate, karta of Hindu Undivided Family, holder of power of attorney cannot nominate. Nomination for joint holders is permitted, however in the event of death of one of the holders, the mutual fund units will be transmitted to the surviving holder's name. In the case of death of all holders, the units will be transmitted to the nominee.

   An NRI can nominate directly, but the power of attorney holder cannot nominate on behalf of the NRI. An NRI can be a nominee, subject to the exchange control regulations in force. A minor cannot nominate though a minor can be a nominee, through his guardian. In such a case, the guardian will sign on behalf of the nominee and in addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be submitted to the Fund house.

   To claim the funds, the nominee has to produce Identity proof such as ration card, passport, election card, or PAN to the company along with the other requisite documents.

   A small procedural formality can go a long way in making life easy for survivors.

YOU need a depository or demat account if you want to buy or sell shares. When you buy shares, a stock broker transfers the shares to your depository account. And when you sell them, your shares are transferred to the broker's account. Investors keep shares in the electronic form in two depositories: the Central Depository Services Limited (CDSL) or National Depository Services Limited (NSDL). Depositories receive shares from depository participants who could be brokers like Religare, Geojit BNP Paribas, India Infoline or banks like HDFC Bank, ICICI Bank and so on. Many a times we open multiple depository account, without realising that there are annual maintenance charges levied for every account that we hold. So here is how you could close or transfer your demat account.

The Process:

If you have no shares lying in your depository account (because you sold them off) or if you are unhappy with the services of your depository participant you can consider closing your account. However, to close your depository account first and foremost there should be no shares lying in it. If there are shares lying in the account, you need to transfer them to some other account or remat them (get them back in physical form). Besides this, you also need to ensure there is no negative cash balance in your account. Negative cash balances may arise due to non-payment of annual maintenance charges or past transfer charges not paid up. If you request for an account closure without settling the negative balance, the depository can reject your application.

   To transfer your depository account to another depository of your choice you need to submit an application in the prescribed format, along with annexure Q to your depository participant. The details of the new depository account have to be mentioned in the application form. Along with that you also have to submit all the unused delivery instruction slips issued by the depository participant. Once this request is received the depository will transfer all the shares to the new depository account within 3-5 working days.

   If your current depository account is in the name of Mr A and Mrs B and if the new account is also in the same order i.e. Mr A and Mrs B, then there are no charges which will be levied by the depository for the transfer. However if the new account order is not the same but in a different order say Mr A and Mr C, then the depository participant could levy a charge for transferring each stock to that account, based on the rate that he charges.

Ways to make a claim

 One must proceed according to insurer's norm while making a health insurance claim; else one is likely to encounter delays in the processing of the claim. 

Documentation must be correctly prepared:

 One must provide original and authentic documents for:

 1.    Final bill. Break up of various bill heads need not be specified.

2.    Authentic and whole discharge care document which must mention the entry and exit time of the treatment.

3.    Original investigation reports attached along with the prescription and requests.

4.    One must also present pharmacy bill attached along with signed claim forms.

Claims must be made in time:

One must submit the documents within 30 days after the patient is discharged so that compensations can be duly made. In order to avoid delays, one must their claims on timely basis.

Procedure for cashless settlement:

When one buys a cashless health plan from a policy maker, one must be issued an ID card mentioning the name of a third party administrator (TPA). TPA aids you in processing of a claim and helps in rightful billing at the medical organization where one has got treated or has been examined for a critical illness or disease.

There may be two cases when it comes to hospitalization. Namely:

Planned Hospitalization

One needs to contact the Third Party Administrator in order to inform them for the planned hospitalization. It is essential to check for the coverage terms of one's policy and make certain that the hospital or medical facility where you plan to get treated is in the Insurance companies set of connections.

In cases, where the medical facility or the hospital is not in the insurance company's area of network, then it is difficult for the cost to get covered. And, if your insurance company provides you with cash-less ability then it is a must to inquire from the TPA in order to follow the due process.

Unplanned Hospitalization

It is important to update the TPA quickly in order to obtain the claim forms and to understand the measure while filing for a claim. Bear in mind that all your claims and related documents must be filed within 7 days of treatment.

One needs to get all the essential documentation, once the treatment is complete. This can be obtained from the hospital and the surgeon. One needs to settle all the bills from his or her own pocket in order to get the compensation from the insurance company. One needs to tally with their policy in order to cover both- pre hospitalization and post hospitalization expenses.

In some cases, your claim might not be passed if at all the treatment of the critical illness or disease is not supported by your health insurance policy. However, if your claim is rejected, make sure you are writing to your insurance company within a time span of 15 days, in order to lodge a complaint.

One needs to check with their TPA, in cases of partial payments. However, mostly in all the cases offering additional documents will help in recovering the left over claim.