The Investment Thread

[Apoorv SHarma]

If health care premiums are high then sometimes funding your own health care expense fund may be a better option. All you have to do is setup your own health care expense fund and have you and your parents contribute towards the fund on monthly basis. The benefit of having such a fund is that you still get to keep the unspent money. With health insurance premium the money is gone for ever. The whole idea behind health care insurance is that you are covered for huge sudden expense. However, if premiums are very high and your parents are healthy then may be setting up a health care fund may be a better idea. I think there may be a point where if you have something like 25 lakhs in a low risk fund then you may not need health care insurance.

Nice idea. But the thing is that if large amount of funds are required so soon(before a big enough amount is saved) then I will have a problem. Both my parents are fit enough as of now, they do morning walks and all, hell my dad is even more fit than I am right now. This can be a good option for me.

I think there will be a US recession around March 2014. The reason is Obamacare. My monthly premium has doubled and many people across US got their health plan policies cancelled. Some people will get fired from their jobs because businesses cannot afford to pay for health care for their full time employees. The high cost of health premiums will take the bite out of the economy.

I have been preparing for all this beginning from this year. I increased my gold holdings and short term bond holdings. Next year, if market falls significantly or there is a recession then I will be buying stocks. Also, I am waiting for China real estate bubble to burst because I am also looking for buying some international real-estate REITs.

How will it affect IT, bad???

 

[Big Daddy]

How will it affect IT, bad???

India will be fine this time around. With the number of bugs in the health care web site, it will take an army of Indians to fix it. The web site has a complicated architecture of verifying applicant data from numerous Federal databases (Hackers can't get much from the Obamacare site - Nov. 5, 2013 ). Most likely this will be US and China problem driven by lack of disposable income of US consumers. Large US business may be fine because they will cut the benefits of US employees.

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Nice idea. But the thing is that if large amount of funds are required so soon(before a big enough amount is saved) then I will have a problem. Both my parents are fit enough as of now, they do morning walks and all, hell my dad is even more fit than I am right now. This can be a good option for me.

Do Indian banks offer home equity loans? If your parents own a house then you can always get a home equity loan to take care of large unexpected expense and then pay monthly payments at fixed rate to pay the loan off.

 

[Yogesh Sarkar]

If health care premiums are high then sometimes funding your own health care expense fund may be a better option. All you have to do is setup your own health care expense fund and have you and your parents contribute towards the fund on monthly basis. The benefit of having such a fund is that you still get to keep the unspent money. With health insurance premium the money is gone for ever. The whole idea behind health care insurance is that you are covered for huge sudden expense. However, if premiums are very high and your parents are healthy then may be setting up a health care fund may be a better idea. I think there may be a point where if you have something like 25 lakhs in a low risk fund then you may not need health care insurance.

While that is a good idea, emergencies rarely come when you have all the funds in place. And that is where the benefit of Health Insurance comes in, since it is active from day 1 (though it doesn’t covers known diseases for first couple of years). Plus money that you contribute for it exempt from income tax under 80D (over and above 1 lakh 80c limit).

 

[zack2137]

Has anyone heard about this multi level marketing company called QNet?
I've been getting some calls about it and media reports say its a scam, which is quite convincing looking at the business model of the Company.

 

[Big Daddy]

Bitcoin is slowly transforming the world.

Why China wants to dominate Bitcoin - Nov. 18, 2013

It is also creating law enforcement nightmare.

http://money.cnn.com/2013/10/02/technology/silk-road-shut-down/index.html?iid=EL

 

[joie de vivre]

If you’ve exhausted the PPF limit, you can consider investing in these bonds......

that's 9 % tax free return. ( equivalent to 13 % taxed return of FDs)

and For more better return one can plan for combination of MF...for example.....start SIP ( in good diversified equity-growth plan) from that tax free interest every year you get, and it will be huge lump sum amount after 20 yrs.

ICICIdirect.com's report on HUDCO Tax Free Bond .........
Housing and Urban Development Corporation Ltd (HUDCO) has come out with Tranche II public issue of tax free bonds to raise up to | 2439.20 crore. For retail investors, the annualised coupon offered is 8.76 percent, 8.83 percent and 9.01 percent for tenure of 10, 15 and 20 years, respectively. The coupon rate on this bond is the highest ever rate offered on any tax free bond since their launch. Interest received on these bonds is fully exempt from income tax. The pre-tax yield on the bond for the highest tax bracket investors, therefore, works out to 12.67 percent, 12.78 percent and 13.03 percent for 10, 15 and 20 years, respectively, significantly higher than 9-10 percent on bank fixed deposits and other stable fixed income instruments. CARE and IRRPL have assigned AA+ rating for the bond issue, which is just a notch below the highest AAA rating. The rating signifies a low credit risk. HUDCO is a wholly owned government company conferred with a Mini Ratna status. Increased focus of the government on the infrastructure space, going forward, may further augment government support and focus in development of HUDCO. Also, the secured nature of the bond makes it less risky making it an attractive fixed income investment option.

Read more at: HUDCO Tax Free Bond: Tax free income at 9.01% for 20 years - Moneycontrol.com

 

[Yogesh Sarkar]

Nice find Bharat, thanks for sharing this.

 

[Big Daddy]

This HUDCO Tax Free Bond is scary. Low risk - High return is contrary to conventional financial thinking. The government will probably end up raising inflation to pay high interest on these bonds. While investing in these bonds may be a good idea, government is not doing the right thing by offering such high interest for high quality bonds.

I think every investment in India must be benchmarked against inflation. If inflation is 10% then HUDCO Tax Free Bond is a bad investment because it is giving returns less than inflation (despite tax exempt status). In other words, you are giving more money than you are getting back over time. With all the government handouts and dollar account promises to NRIs, India is doomed. There is not place an Indian investor can invest to make more money to fight inflation. Gold imports are taxed, real-estate is hardly worth the investments. For taxable investments, the minimum return should be inflation+taxes+management expenses. Assuming taxes=1% (of dividend & cap gains) and 1% management/transaction expenses, which are both conservative and inflation of 10%, any investment must give a 12% risk free return just to break even. The fact is there is hardly any risk-free investment that gives such a return. I think best strategy for any Indian is to convert money into dollars and invest outside India. Even if it is illegal, do it because if government does not follow rules then why should any Indian? High inflation is precisely the reason why foreign investors have pulled money out of India. Investments must give returns above prevailing inflation to attract money because of the riskiness of investments. Higher the risk should result in higher returns.

 

[citymonk]

I want to ask , Is it wise to take loan against FDRs.
Charged interest rates very from DIFFERENCE OF 0.5% TO 2% OF WHAT BANK IS PAYING TO YOU.

Is there some catch here or I can simply get loan at rate of say 1% (difference amount) per annum for short term or long term.

 

[Prasham]

I want to ask , Is it wise to take loan against FDRs.
Charged interest rates very from DIFFERENCE OF 0.5% TO 2% OF WHAT BANK IS PAYING TO YOU.

Is there some catch here or I can simply get loan at rate of say 1% (difference amount) per annum for short term or long term.

AFAIK its called OD against FD. I am using it since many years now. There's no catch.