All is Money

  The Provident Fund (PF) balance can be a good avenue for fund raiser for a salaried person looking to purchase property. As per the PF withdrawal rules for property purchase, one can withdraw from the PF up to 90 per cent of one's PF balance for buying a home or for home construction on a land. But, the land has to be owned by the PF account holder, or by his wife or by both. However, to become eligible for the PF withdrawal for property purchase, one must have contributed in its PF account for at least five years. This PF withdrawal facility is also available for all EPFO members working in the private sector. So, all PF and EPF account holders are eligible for provident fund finance for property purchase. Speaking on the condition for PF withdrawal for property purchase Mumbai-based tax and investment expert Balwant Jain said, "PF withdrawal from the PF balance is allowed for property purchase if the salaried person has completed five years of continuous contribution ...

  How Citi gave away $900 Million by mistake In a court battle that is likely to send ripples across the global banking system,  Citigroup Inc.  unexpectedly lost a legal battle to recover half a billion dollars that it sent to Revlon Inc.’s lenders “by mistake". A 30-year-old legal precedent that essentially says “finders keepers" in certain financial transactions will now make it hard for Citigroup to get the transaction overturned. The bank has said it will appeal the court ruling—issued this week by a federal judge in New York—that rejected its attempt to recover $504 million it accidentally sent to asset managers for Revlon lenders last summer. Citigroup had made the transfer to fulfil its role as Revlon’s “loan agent". However, instead of the interest amount that was due, the whole loan amount got transferred as a result of a back-office blunder. The recipients of this largesse include Brigade Capital Management, HPS Investment Partners and Symphony Asset Managemen...

  Is this the right time to buy gilt mutual funds? Over the past few days, several readers have asked, “Is this the right time to start buying gilt mutual funds?”. This is because of our repeated stress on gilt funds being a suitable choice or accompaniment to EPF/PPF for long-term goals.  Let us start with the basics. Gilt mutual funds predominantly invest in govt. bonds (aka gilts because historically govt bonds were printed on gilt/gold-edged paper ). Although the credit risk in such funds is minimal (govt bonds cannot be rated for a resident investor!), the NAV of such funds will fluctuate wildly! The longer the duration (date until maturity) of the bonds in the portfolio, the more will be the NAV fluctuations. This because of demand-supply fluctuations in the bond market.  In many gilt funds (and dynamic bond funds) the fund manager will change the duration of bonds held in the portfolio as per present bond market conditions and their reading of the future. Let us re...

  What does LIC do with its money? LIC is India’s largest financial institution. It manages close to ₹30 lakh crore in assets (out of India’s ₹40 lakh crore insurance industry). It sells  3 out of 4 life insurance policies sold in the country. It’s much bigger than the  23 private sector life insurance companies put together. And it is a profitable entity which has consistently delivered value to its only shareholder — the  Government of India . We wrote all of this when we covered how the government could IPO LIC. It was a fairly  complicated piece talking about the policy and financial challenges involved in taking the company public. But the thing is, we never really talked about the elephant in the room — LIC's investments. So today we thought we’d look into this subject and see how LIC manages its money. For starters, as we already noted, LIC manages a lot of it. Like close to ₹30 lakh crores. Most of these investments are attributable to LIC’s non-linked p...

  Check your progress to financial freedom with this formula! Here is a simple formula to check your progress to financial freedom. It can tell you how long you need to be a salaried employee and shift the focus of portfolio review from returns to the corpus worth and, in the case context of retirement, how long would it last. It will work in any spreadsheet application, but with any formula depends on what we put it and how much we appreciate the calculation. Retirement planning is about answering two questions. One, for a given inflation assumption before and after retirement, and a given overall after-tax portfolio return after return, what is the corpus required upon retirement. A corpus from which we can draw an income each month or each year. This income should grow with inflation each year. The rest of the corpus is assumed to increase at the rate of return assumed and drops to zero only in the year we expect to die. So the first question is,  how much corpus do I need ...

  A Tax for Working from Home? A few days back, Deutsche Bank’s research desk  published  a report titled —  “What we must do to Rebuild” . The report charts out possible measures governments across the world ought to consider while rebuilding the global economy and it prescribes solutions that could offset the devastating effects of the pandemic. However, there was one interesting proposal that caught everybody’s attention. As the author of the report notes — For years we have needed a tax on remote workers — Covid has just made it obvious. Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society. Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced. He further goes on to add that  "work from home"  is here to stay and so it’s imperative to tax the privileged folk and repatri...

  Tax Havens and why they exist? What are offshore financial centres? Well,  according to an article  published in the International Consortium of Investigative Journalists — There is no universal definition, but tax havens, or offshore financial centres, are generally countries or places with low or no corporate taxes that allow outsiders to easily set up businesses there. Tax havens also typically limit public disclosure about companies and their owners. Because information can be hard to extract, tax havens are sometimes also called  secrecy jurisdictions . And these jurisdictions can be very enticing if you are looking to stash money outside. But not all funds are created equal and not everybody has the same objective. For starters, you have money held by rich people — Income that’s not taxed and routed to off-shore financial centres. This money could be legal income made through honest work or illicit wealth amassed using criminal activities. And while using an ...