Small savings set to fetch higher returns

There is finally some good news for individuals in a season of duty hikes and provident fund rate cut. The government is raising interest rate on small savings schemes such as National Savings Certificate (NSC) and post office deposits by 20-50 basis points.

The new rates will, however, be applicable on investments that you make from April 1 and not on those that you park over the next 10 days to meet your tax saving requirements.

As a result, NSC and public provident fund (PPF), which is a voluntary deposit as opposed to employee provident fund, will earn you 8.8-8.9% instead of 8.6% a year. The shorter tenure deposits, such as term deposits in post offices, are expected to fetch you more than the longer tenure products such as PPF or the 10-year NSC. Savings bank accounts in post offices will, however, not see any change as the 4% return is in line with what most banks pay at present.

The increase in small savings rates, which is expected to be notified by the finance ministry, is in sync with the new policy to link returns on the popular savings instruments with the interest rate on government bonds.

Bank deposits may, however, look more attractive to many as they offer 9% return. But a scheme like PPF, which has a minimum term of 15 years, comes with additional tax sops. Not only is it part of the 80C benefits which entitles tax payers to get a concession of up to Rs 1 lakh a year, but the interest earned on the deposits is also tax-free. So, at the revised rates, the actual return for someone in the 30% tax bracket will work out to 12%.

In addition, the rate of return on small savings schemes that will be notified will be for the full financial year, while bank deposit rates are expected to come down with the Reserve Bank of India widely predicted to begin the rate cut cycle. Even before lending rates come down, banks will start pruning returns on deposits to lower their cost of funds.

The move to raise small savings rates comes barely a fortnight after the Employees Provident Fund Organization (EPFO) slashed the annual return from 9.5% last year to 8.25% for the current financial year based on a decision taken by the finance ministry. In the budget, finance minister Pranab Mukherjee decided to increase the excise duty and service tax rates from 10% to 12% which will put a burden of Rs 35,000 crore on anyone buying a matchbox or a car. He, however, offered some concession by way of an increase in exemption limit for direct tax from Rs 1.8 lakh to Rs 2 lakh.

How to Sell Yourself at a Job Interview

Do you Know How to Turn Tough Interviewer Questions Into Knock Out Strengths?

  

Once at the interview, you are going to be asked a lot of questions by your potential employer. They will ask about you in particular such as what your strengths and weaknesses are. You might want to prepare for answering questions by listing some of your attributes. Talk to former co-workers with whom you worked closely. Ask them to list some traits about you that they most admired -- work related, of course.

Try to find some faults as well. You won't, obviously, spontaneously tell a prospective employer about these faults, but you may be asked to. One question that sometimes comes up in an interview is "What is something that has been a problem for you at work?" By studying your faults, you will be able to choose one that is somewhat innocuous or could be turned around into a positive.

For example, I’ve always been a very organized person – almost to the point of obsessiveness. However, employers look at organizational skills as assets not liabilities. So in an interview, I would tell them one of my shortcomings was that I wanted to be too organized.

How to Answer Any Question A Interviewer Could Possibly Throw At You! 

Practice how you will answer possible questions in an interview. You want to seem somewhat spontaneous, but you also want to appear self-confident. The way to do that is to rehearse, not exactly what you will say, but how you will say it.

A great method is to rehearse in front of a video camera. Study your posture, the way you make eye contact, and your body language. If you don't have a video camera, a mirror will do. Have a friend do mock interviews with you. The more you repeat a scenario, the more comfortable you will begin to feel with it.

When it comes down to it, isn't this the main point of the interview? Speak slowly and clearly. I tend to speak very quickly, so this is something I must pay careful attention to when I am on an interview. Pause before you answer a question. Your answers will seem less rehearsed and it will give you a chance to collect your thoughts. Keep in mind that a very brief pause may seem like an eternity to you. It's not.

Since the interviewer's job is to make sure that not only your skill, but your personality as well, is a good match, you must establish rapport with the person or persons interviewing you. That begins the instant you walk in the door. Let the interviewer set the tone.

Nothing is as awkward as offering your hand and having the gesture not returned by the other person. Therefore you should wait for the interviewer to offer his or her hand first, but be ready to offer your hand immediately. Some experts suggest talking at the same rate and tone as the interviewer. For example, if the interviewer is speaking softly, so should you.

It’s alright for you to show your true personality, but be careful not to go too over-the-top. I am a very bubbly, naturally outgoing person who tends to get a little hyperactive in stressful situations. I also have a gift for humor which tends to make people feel comfortable with me.

In job interviews, I’ll try to tone down the excessive energy that I usually have and inject some humor into the conversation. This helps relax both me and the person doing the interview and we’re able to communicate much easier.

They say that body language gives more away about us than speech. Eye contact is very important but make sure it looks natural. A smiling, relaxed face is very inviting. Hands resting casually in your lap rather than arms folded across your chest also is more inviting. If you normally move your hands around a lot when you speak, tone it down some. You don't want to look too stiff, but you don't want to look like you're a bundle of nervous energy.

So what kind of questions can you expect during your job interview? Here are a few to think about along with some possible answers:

• Tell me about yourself. (They are not looking for personal information here)

My background to date has been centered on preparing myself to become the very best _____ I can become. Let me tell you specifically how I've prepared myself...

• Why should I hire you?

Because I sincerely believe that I'm the best person for the job. I realize that there are many other college students that have the ability to do this job. I also have that ability. But I also bring an additional quality that makes me the very best person for the job--my attitude for excellence. Not just giving lip service to excellence, but putting every part of myself into achieving it. In ... and ... I have consistently reached for becoming the very best I can become by doing the following...

• What is your long-range objective? Where do you want to be 10 or 15 years from now?

Although it's certainly difficult to predict things far into the future, I know what direction I want to develop toward. Within five years, I would like to become the very best _____ your company has. I would like to become the expert that others rely upon. And in doing so, I feel I will be fully prepared to take on any greater responsibilities that might be presented in the long term.

• How has your education prepared you for your career?

As you will note on my resume, I've taken not only the required core classes in the _____ field, I've also gone above and beyond. I've taken every class the college has to offer in the field and also completed an independent study project specifically in this area. But it's not just taking the classes to gain academic knowledge I've taken each class, both inside and outside of my major, with this profession in mind. So when we're studying _____ in _____, I've viewed it from the perspective of _____. In addition, I've always tried to keep a practical view of how the information would apply to my job. Not just theory, but how it would actually apply. My capstone course project in my final semester involved developing a real-world model of _____, which is very similar to what might be used within your company...

• What is your greatest weakness?

I would say my greatest weakness has been my lack of proper planning in the past. I would over-commit myself with too many variant tasks, then not be able to fully accomplish each as I would like. However, since I've come to recognize that weakness, I've taken steps to correct it. For example, I now carry a planning calendar in my pocket so that I can plan all of my appointments and "to do" items. Here, let me show you how I have this week planned out...

• What attracted you to our ad over others?

I approach my job hunting strategy pretty much like I approach my work. I took some time to think about the skills I want to use on my next job, the industry I'd like to work for and the location I want. I did some research on companies that were advertising and knew this company had the qualities I am looking for in my career and future.

If you are interviewing for a sales job, it’s entirely possible that the interviewer will ask you to sell him or her something. For example, I had one prospective boss who laid a pen on the table between us and told me to “sell” him the pen. What he wanted was to see how my persuasive skills were and if I could point out the great aspects of that pen to motivate him to “buy” it.

Usually toward the end of the interviewer, the person conducting it will ask you if you have any questions. You should have some. As in every other aspect of the job search, you are trying to show the employer how you can fill their needs. By asking certain questions, you are putting yourself in the job and showing the employer how you will satisfy the employer's needs. Here are some questions you may want to ask of the interviewer:

DIRECT TAXES

While the DTC has been delayed, (due on-going work on the same done by the Parliamentary Standing Committee on Finance), the Budget 2012 has move a step closer to DTC by increasing the base exemption limit to Rs 2,00,000 (from the present Rs 1,80,000). Similarly the DTC rates have been proposed to be introduced for personal income tax. Thus now personal income tax slabs are proposed to be as under for general category of individual tax payers which will provide a relief of Rs 2,000 for individual tax payers: 

Income-tax rates in Budget 2012
Taxable Income	Tax Rate
Upto Rs 200,000	Nil
Rs 200,001 to Rs 500,000	10%
Rs 500,001 to Rs 10,00,000	20%
Rs 10,00,001 & above	30%

Some numbers will help us better recognise the impact of this move. 

2011-12 Taxable Income (Rs)   10,00,000 Upto Rs 180,000 Nil   Rs 180,001 to Rs 500,000 10% 32,000 Rs 500,001 to Rs 800,000 20% 60,000 Rs 800,001 & above 30% 60,000 Tax payable   152,000 Education Cess 3% 4,560 Total Tax (Rs)   156,560

2012-13 Taxable Income ( Rs )   10,00,000 Upto Rs 200,000 Nil   Rs 200,001 to Rs 500,000 10% 30,000 Rs 500,001 to Rs 10,00,000 20% 100,000 Rs 10,00,001 & above 30%   Tax payable   130,000 Education Cess 3% 3,900 Total Tax (Rs)   133,900

Let's take the case of a male individual whose net taxable income is Rs 10,00,000. As per the current tax laws his income tax liability will be Rs 1,56,560 (for FY 2011-12), while in the FY 2012-13, once the new base exemption limit applies, his tax liability will work out to Rs 1,33,900, i.e. a saving of Rs 22,660. 

For Senior citizens nothing has changed, the base exemption stands at Rs 2,50,000 while the qualifying age for senior citizens stands at 60 years. Also in the previous budget 2011-12 a special category called "Very Senior Citizens", age 80 and above with the base exemption limit at Rs 5,00,000 still prevails. 

In addition to this, the Budget 2012 has also laid down a few sweeteners: 

• Deduction of upto Rs 10,000 for interest from savings bank accounts for individual tax payers
• Deduction of upto Rs 5,000 for preventive health check up
• Senior citizens not having income from business proposed to be exempted from payment of advance tax
• Reduction in Securities Transaction Tax (STT) by 20% to 0.1% on cash delivery transactions
• Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.

Corporate Tax
As far as corporate taxes are concerned the rates have been kept unchanged but the rate of withholding tax on interest payment on ECBs is proposed to be reduced to 5% from 20% for 3 years for certain sectors. 

In order to moderate the outgo of profit-linked deductions a proposal to extend the levy of Minimum Alternative Tax (MAT) to all persons, other than companies, has been put forth. 

We think the proposed increase in the base exemption limit, would provide some relief to a large number of individual tax payers, as it means more disposable income in the hands of consumers, which may drive the consumption story. 

Vigilance on tracking unaccounted money:

• Introduction of compulsory reporting requirement in case of assets held abroad
• Allowing for reopening of assessment upto 16 years in relation to assets held abroad
• Tax collection at source on purchase in cash of bullion or jewellery in excess of Rs 2 lakh
• Tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold
• Tax collection at source on trading in coal, lignite and iron ore increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value
• Taxation of unexplained money, credits, investments, expenditures etc. at the highest rate of 30% irrespective of the slab of income

5-minute guide to the Union Budget proposals

The finance minister slashed securities transaction tax (STT) by 20% to from 0.125% to 0.1% which will help bring down transaction cost.

Below are some of the key highlights of the budget: 

• GDP growth in 2012-13 pegged at 7.6 per cent. 
• Disinvestment target at Rs. 30,000 crore for FY2012-13.  
• Fiscal deficit at 5.1 per cent of GDP in FY 2012-13.
• Income tax slab proposed for FY 2012-13
  

Income	Tax Rates
Up to 2 lakhs	NIL
2 lakhs- 5 lakhs	10%
5 lakhs- 10 lakhs	20%
More than 10 lakhs	30%

Changes

• The exemption limit has been enhanced from
  Rs. 1,80,000 to Rs. 2,00,000.

• The upper limit of the 20 per cent tax slab has been escalated from
  Rs. 8 lakh to Rs. 10 lakh.

• Securities transaction tax (STT) reduced 20% to 0.1% for delivery transactions in cash market.

• The government is striving to come at a consensus on bringing FDI in multi-brand retail up to 51 per cent.
• Rs. 15,888 crore to be infused to capitalize public sector banks and financial institutions. A financial holding company will be created to raise resources to raise capital requirements of PSU banks.
• A central KYC depository will be created to avoid duplication of registration
• External commercial borrowing (ECB) will be allowed to part finance rupee debt of existing power projects.
• A proposal will be placed for a white paper on black money in the current session of parliament.
• Net market borrowing to finance deficit is set at Rs. 4.79 lakh crore in FY 2012-13.
• Proposal to allow deduction of up to Rs. 5,000 for preventive health check up.
• Senior citizens not having income from business will be exempted from paying advance tax.
• Proposal to raise service tax from 10% to 12%, with exemption of service tax to some sectors.
• Corporate tax remains unchanged.
• Excise duty of 1% on branded precious jewellery to be extended to include unbranded jewellery.
• Branded Silver jewellery exempted from excise duty.
• Proposal to increase basic customs duty on imports of gold and other precious metals.

Trivedi’s Maiden Rail Budget : A nice blend of smart politics and good economics….

The youngest child of a Gujarati family and the Rail Minister, Dinesh Trivedi, did a fairly well job with his debut budget on March 14. This time, after so many years, industry saw a budget that was aimed at the welfare of 14 lakh people of India rather than a few ministers. Right from the start, and till the end, he stressed over hundred times on ‘Safety Concerns’ in the Indian Railways. He proposed, for the first time in Indian history, to set up an independent Railway Safety Authority to parallel the international standards of safety.

Taking the theme of safety to next level, he introduced the need for modernization of Indian railways and proposed setting up of expert group under Sam Pitroda. The group plans to spend Rs 5.6 lakh crore in the modernization of Indian Railways in the next five years.

Amidst such big-ticket plans, the rail minister didn’t miss the silver lining in expectation of gold. Taking a bold step and daring to go against the wishes of his party chief Mamata Banerjee, he raised the passenger fares for the first time in last ten years, aiming to help the government to rein in ballooning fiscal deficit. He also showed his eagerness to ‘bite every possible bullet’ in order to bring down the operating ratio from 95 per cent now to 84.9 per cent in 2012-13 and 74 per cent by 2017. The operating ratio shows the amount spend to earn every single rupee.

However what made him better Rail worker from few of his predecessors was the smart economics he tried to mix with politics. He planned to go slower in expansion for the upcoming fiscal year, paving way for the government to control deficits, inflation as well as give some room to RBI to start reversing the monetary policy.

Moreover, he understood the need to revive the creaky infrastructure of India and hence chalked out an investment plan of USD 1 trillion in the infrastructure sector with half the investment or Rs 25 lakh crore expected from private sector, and remaining Rs 25 lakh crore being planned by the government from its own resources. He desired Rs 14 lakh crore investment from the government in the next ten years to take the Indian Railways ahead of the time.

7 Steps To A Successful Investment Journey

The most successful investors were not made in one day. Learning the ins and outs of the financial world and your personality as an investor, takes time and patience, not to mention trial and error. In this article, we'll lead you through the first seven steps of your expedition into investing and show you what to look out for along the way.

1. Getting StartedSuccessful investing is a journey, not a one-time event, and you'll need to prepare yourself as if you were going on a long trip. What is your destination? How long will it take you to get there? What resources will you need? Begin by defining your destination, and then plan your investment journey accordingly. For example, are you looking to retire in 20 years at age 55? How much money will you need to do this? You must first ask these questions. The plan that you come up with will depend on your investment goals.

2. Know What WorksRead books or take an investment course that deals with modern financial ideas. The people who came up with theories such as portfolio optimization, diversification and market efficiency received their Nobel prizes for good reason. Investing is a combination of science (financial fundamentals) and art (qualitative factors). The scientific aspect of finance is a solid place to start and should not be ignored. If science is not your strong suit, don't fret. There are many texts, such as "Stocks For The Long Run" by Jeremy Siegel, that explain high-level finance ideas in a way that is easy to understand.

Once you know what works in the market, you can come up with simple rules that work for you. For example, Warren Buffett is one of the most successful investors ever. His simple investment style is summed up in this well-known quote: "If I cannot understand it, I will not invest in it." It has served him well. While he missed the tech upturn, he avoided the subsequent devastating downturn of the high-tech bubble of 2000. 

3. Know Yourself
Nobody knows you and your situation better than you do. Therefore, you may be the most qualified person to do your own investing - all you need is a bit of help. Identify the personality traits that can assist you or prevent you from investing successfully, and manage them accordingly.

A very useful behavioral model that helps investors to understand themselves was developed by Bailard, Biehl and Kaiser. 
 



The model classifies investors according to two personality characteristics: method of action (careful or impetuous) and level of confidence (confident or anxious). Based on these personality traits, the BB&K model divides investors into five groups:

• Individualist - careful and confident, often takes a "do-it-yourself" approach
• Adventurer - volatile, entrepreneurial and strong-willed
• Celebrity - follower of the latest investment fads
• Guardian - highly risk averse, wealth preserver
• Straight Arrow - shares the characteristics of all of the above equally

Not surprisingly, the best investment results tend to be realized by an individualist, or someone who exhibits analytical behavior and confidence, and has a good eye for value. However, if you determine that your personality traits resemble those of an adventurer, you can still achieve investment success if you adjust your strategy accordingly. In other words, regardless of which group you fit into, you should manage your core assets in a systematic and disciplined way. 
4. Know Your Friends and Enemies 
Beware of false friends who only pretend to be on your side, such as certain unscrupulous investment professionals whose interests may conflict with yours. You must also remember that, as an investor, you are competing with large financial institutions that have more resources, including greater and faster access to information. 
Bear in mind that you are potentially your own worst enemy. Depending on your personality, strategy and particular circumstances, you may be sabotaging your own success. A guardian would be going against his or her personality type if he or she were to follow the latest market craze and seek short-term profits. Because you are risk averse and a wealth preserver, you would be affected far more by large losses that can result from high-risk, high-return investments. Be honest with yourself, and indentify and modify factors that are preventing you from investing successfully or are moving you away from your comfort zone.

5. Find the Right Path
Your level of knowledge, personality and resources should determine the path that you choose. Generally, investors adopt one of the following strategies:

Don't put all of your eggs in one basket. In other words, diversify.

Put all of your eggs in one basket, but watch your basket carefully.

Combine both of these strategies by making tactical bets on a core passive portfolio.

Most successful investors start with low-risk diversified portfolios and gradually learn by doing. As investors gain greater knowledge over time, they become better suited to taking a more active stance in their portfolios (i.e. tactical bets).

6. Be Disciplined
Sticking with the optimal long-term strategy may not be the most exciting investing choice. However, your chances of success should increase if you stay the course without letting your emotions, or "false friends," get the upper hand.

7. Be Willing to Learn 
The market is hard to predict, but one thing is certain: it will be volatile. Learning to be a successful investor is a gradual process and the investment journey is typically a long one. At times, the market will prove you wrong. Acknowledge that and learn from your mistakes. When you succeed, celebrate.

The Bottom LineWhat you achieve as an investor will depend on your goals, but sticking to these seven simple steps will help keep you on the right path. Bon voyage!