Don’t park money in your savings account

What comes to your mind first when you think of your savings? Chances are that you will try to do some quick math to see how much money you hold in your bank savings accounts.

A huge bank balance may give you a sense of security, but be warned that the purchasing power of your money parked in savings accounts is declining.

PENDING REFORMS

One of the biggest advantages of savings accounts is liquidity, but it comes at a heavy price. Interest rate on savings deposits had remained unchanged at 3.5 per cent per annum since 1 March 2003 until recently. Despite the Reserve Bank of India (RBI) increasing the interest rate for savings bank accounts to four per cent in its annual policy review for the current fiscal, the real rate of return after factoring in inflation has persistently remained negative over the past decade.

Savings deposits interest rate is the only deposit rate that is still regulated in India. In order to go ahead with complete deregulation of interest rates, the RBI is toying with the idea of giving banks the freedom to set their own rates. In end-April, the RBI released a discussion paper on deregulation of savings bank deposit interest rate and invited comments from the public on it.

Due to regulated interest rates, depositors have not been able to benefit from the increasing demand for money over the years despite the fact that current account and savings accounts (Casa) constitute a large chunk of low- cost funds for banks. Once banks are free to set the interest rates, many of them will vie for a larger share of Casa funds by offering higher rates.

On the flip side, deregulation of interest rates also means that the returns can go below the present four per cent if the system is flush with liquidity.

However, such occasions are likely to be very few.

As has been the immediate result of interest rate deregulation in other Asian economies such as Indonesia and the Philippines, the gap between inflation and interest rate may become narrow or real interest rate may turn positive, which in turn will make savings deposits more attractive.

Even after the deregulation, your bank account is unlikely to transform into the best place to park your surplus cash.

BETTER AVENUES

Financial planners advise on maintaining enough liquidity to take care of unforeseen requirements. The level of liquid assets required in your portfolio depends on your cash flow requirement.

"A thumb-rule would be to have six months expenses in cash or cash equivalents at all times. From a portfolio allocation point of view, five to ten per cent of cash helps to take advantage of special investment opportunities as and when they arise," says Sutapa Banerjee, chief executive officer, Ambit Private Wealth.

If you can afford a delay of a few hours to a day in getting your money back, you can consider options such as the savings account 'sweep' facility and liquid funds.

"The simplest option would be to opt for a sweep facility on the savings account wherein funds above a predetermined threshold automatically get converted into fixed deposits, which offer better returns and can be liquidated in a few hours or a day at the most," says Richa Karpe, director, investments, Altamount Capital Management, which provides wealth management services to multiple families.

Liquid funds, which are open-ended mutual funds that invest in fixed-income securities, are an attractive alternative as these offer higher post-tax returns compared with savings deposits along with reasonable security of investment.

"Liquid funds can be redeemed within 24 hours and have no exit load. These funds invest in securities with a maximum maturity of 91 days, which cuts down the credit risk," says Mukesh Agarwal, senior director, CRISIL Research.

"In June, threemonth money market rates (interest offered on certificates of deposits and commercial papers) were above nine per cent," Yogesh Kalwani, director and head of investment advisory, BNP Paribas Wealth Management, points out.

You can also invest in ultra shortterm bond funds, also known as liquid plus funds. These funds also invest in fixedincome instruments, but if these are redeemed within a specified period, you may have to pay an exit load.

"Liquid plus funds have tax- efficient daily dividend options. Dividend distribution tax is 13.52 per cent, against marginal tax rate of 30.90 per cent on interest payment on savings deposits," adds Kalwani.

Liquid funds are not totally risk- free. Carry out basic checks such as reputation of the fund house and performance of the funds over the long term and transfer your surplus cash in instruments that offer you a better value of your money.

Tax saving in a gift pack

Do you have some excess cash that you want to invest? Maybe you can think of an indirect method of investing (that is not in your own name), and save some tax on the income. Investing in assets or financial instruments directly in your own name will increase your tax liability and could also push you into a higher tax bracket.

You can take a slightly circuitous route on investments for better mileage. One way of saving on taxes is to gift your children and parents assets and cash for investments.

As per the current laws, any gift received in cash or kind exceeding Rs 50,000 is taxed in the hands of the recipient as "income from other sources". However, this rule does not apply to gifts received from relatives. Additionally, any gift received on the occasion of your marriage, under a will or inheritance is not taxed in your hands.

So who is a relative and what is a gift for the purpose of claiming tax benefits? "Relatives, for the purpose of taxation, include spouse of the individual, siblings, brothers and sisters of the spouse, brothers and sisters of the parents, and any lineal ascendant or descendant of the individual or the spouse," says Vikas Vasal, executive director, KPMG India.

As for gifts, the income-tax (IT) laws say any transfer of money in cash or through a cheque as well as transfer of movable or immovable assets, such as property, shares and securities, jewellry, paintings and sculptures, is considered as a gift. When you transfer a property, you may have to get the transfer registered, which attracts stamp duty and registration charge.

"The Indian tax laws do not contain mandatory provisions to have a gift deed (a registered legal document with appropriate witnesses) in case of transfer by way of gifts. However, it is always preferred to have a gift deed so as to avoid any gift being considered as taxable or being considered as unexplained cash, investments or assets," says Sonu Iyer, partner, tax and regulatory services, Ernst & Young, India.

Though there is no tax on gifts, all gifts in excess of Rs 50,000 (other than those from relatives) and income generated through them get clubbed with the recipient's taxable income. However, income earned by assets gifted to minor children, spouse and son's spouse are included in the income of the donor for taxation.

If you want the money earned to be treated as independent income of your minor children, spouse or son's spouse, you will have to prove that the recipients had used their own acumen for making money from the gifted assets. It might not be easy to satisfy the taxman that the income through the asset you gifted is not a passive investment income and has been earned independently by your spouse or minor children. So the easiest way of saving tax is by gifting money or assets to your major children and parents who don't have any income of their own.

Let's assume that your parents are senior citizens (above 60) and have no income. You can gift them any amount of cash for investing in high- return instruments such as senior citizen's savings scheme.

As senior citizens do not have to pay any tax for annual income up to Rs 2.5 lakh, the interest income does not become taxable unless it exceeds this exemption limit. This means you can invest up to Rs 25 lakh through each of your senior parents without any source of income if the annual interest or return is 10 per cent.

You can invest up to Rs 50 lakh through your senior parents and have a tax-free annual income of Rs 5 lakh. If your parents are above 80, they are entitled to tax- free income up to Rs 5 lakh per year for "very senior citizen" category introduced in the 2011-12 Union Budget. You can invest up to Rs 50 lakh through each of your "very senior citizen" parents in instruments that give 10 per cent annual return and avoid the taxman for interest income up to Rs 10 lakh earned by both of your parents together.

You can save a total of Rs 3 lakh (30 per cent of Rs 10 lakh earned as interest income) in tax each if you are in the highest tax bracket. So you can invest a total of Rs 1 crore through your parents and save up to Rs 6 lakh in taxes on the interest income of Rs 10 lakh. If you gift the money to your major daughter for investment, the interest earned from the amount will be taxable only after it crosses the exemption limit of Rs 1.9 lakh annual income.

The income from money invested through your son above 18 will become taxable when it exceeds Rs 1.8 lakh annually. Even when the interest income brings the recipient into the tax net, you still have the advantage of paying less tax then what you would have paid on investing directly.

If you have both parents above 80 and two major daughters, you can invest up to Rs 1.88 crore and have a tax-free income of up to Rs 18.8 lakh. Even if you don't have major children, you can still save taxes by creating a trust for benefiting your minor children.

Now, when you start planning your taxes for the current financial year, make use of this provision to save big on taxes. Make use of the gifting provisions to optimise taxes while making your family financially secure. As you will be giving money on the basis of mutual trust, be sure that the recipient won't take undue advantage of your trust.

How to Disable USB Ports Enable them again

A desktop computer equipped with a CD writer or a DVD burner is a rare sight is most companies. But a much larger security threat is posed by the open USB ports where mischievous office workers can just plugin the Flash Pen Drive, External Hard Disk or their ipod and transfer corporate data or even copy licensed software to their memory sticks in seconds.

Also, USB keys are not just a popular way to sneak data out from companies, unhappy employees may use USB ports for delivering trojans or spyware into the company networks.

Now some smart admins disable usb drive by changing the BIOS settings and then lock the BIOS using passwords. Some not so-smart admins fix tapes over the USB ports to prevent employees from inserting any USB device into their computer.

However, both these approaches can prove to be counter-productives as your staff can no longer use USB keyboards, wireless mouse, digital cameras, camcorders, scanners, printers or even USB microphones to their computers.

So a more reasonable option for sysadmins is to disable write access to USB port so that data files cannot be written to the mass storage device. The USB thumb drive will be read-only.

Open the Windows Registry and open the following key
HKEY_LOCAL_MACHINE\System\CurrentControlSet\ Control\StorageDevicePolicies

Now add a new DWORD called WriteProtect and put the value as 0 to disable write privileges to the USB port. To reverse the step, either delete the WriteProtect REG_DWORD or toggle the value to 1 which will enable the port.

Remember that the above trick works only with Windows XP SP2.

If you like to go a step further and disable users from connecting USB storage devices to their computers, here's the trick:

Open registry and navigate to the following registry key:

HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet \Services\UsbStor

Now in the right pane, double-click Start and type 4 in the Value data box (Hexadecimal) and quite the registry editor. To enable the USB storage devices, change the Start value back to 3.

No matter how good the protection tricks are, determined people always find workarounds. Here are some of the tricks that may render the above methods unusable:

» Employee may boot computer using a LiveCD like Knoppix or Ubuntu so the USB drives are again available to him for writing.

» They could open the computer chasis, take the battery out to reset the BIOS settings.

» Some may even invest in a PS2 to USB port converter.

» If he manages to get admin access for a temporary period (like installing software), he may undo the registry edits.

The cat-mouse game will never end. USB drives will remain a headache for the sysadmins for some time. However, Windows Vista will make life much simpler for IT administrators. There's a new Policy in Vista that allows USB keyboards or mouse to be used but not any USB devices.





note:u cant find HKEY_LOCAL_... as in folders...
you need to go to the Windows registry.
For that click on Start Run.
type regedit in the text box..now you can see that HKEY_LOCAL.....etc in the left pane..

Best options to invest a lump sumof money

1. Pay off a debt

Make a list of all of your debts and their interest rates. This includes housing loans, credit cards and student loans. If the interest on the debt is high you should pay off this debt before investing the money.

2. Park your funds into a fixed deposit

A person can invest an amount for a fixed duration. The banks provide interest rates depending on this loan amount and the tenure of deposit. Pick a bank that offers the highest interest rate and invest your lump sum.

3. Invest in the stock market

Indian private equities promise satisfactory returns and have more than 365 equity investments firms functioning under it. Investing in the share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. Do, remember that even old experienced hands have lost out on massive sums of money with one miscalculation, so tread carefully.

4. Invest in Mutual Funds

A mutual fund company pools the money of many investors and invests it for them in a collection of securities by purchasing stocks, bonds, money markets and/or other securities. Mutual funds are subject to market risks so be prepared in case you find your NAV lower than the sum invested. Conduct a thorough research on the best mutual fund and select a well balanced fund (in case you are risk averse) before you invest. The advantage you have when investing in a mutual fund is that an expert makes the investments for you.

5. A good down payment for real estate

Everyone should think of their home as an investment and if you have a sizeable enough chunk to make a down payment for a house. This is probably the largest and best asset to look at. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. There are, of course, blemishes on the face of what seems like an ideal investment. When you invest in real estate, money is made or lost behind the scenes, not when the final deal is made.

6. Invest in government securities

These are government debt obligation backed by the credit and taxing power of a country with very little risk of default. This includes short-term Treasury bills, medium-term Treasury notes, and long-term Treasury bonds. Government securities are one of the safest in the market. G-secs can be bought either in the primary market (through RBI auctions) or from the secondary market. G-secs are available for tenure of three months (counting T-bills) to 30 years.

7. Investments in National Saving Certificate (NSC)

National Savings Certificate is a post-office savings scheme, backed by the government. The minimum amount of investment is Rs 100, with no upper cap. NSCs are sold in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. The rate of interest is 8 percent per annum compounded half yearly. The amount invested in NSCs is eligible for tax deductions under Section 80C; however, the interest you earn would be taxable.

8. Investments in Public Provident Fund (PPF)

PPF is a government-guaranteed fixed income security. It provides regular savings by ensuring that contributions (which can vary from Rs.500 to Rs.70,000 per year) are made every year. An interest rate of 8% p.a. (compounded annually) is credited to the PPF account at the end of each financial year. The account matures in 15 years from the date of initial investment. One can then exercise an option of continuing the account for an additional block of 5 years or closing it.

in my dream last night

Friends that was a different but fantastic dream last night i was in. I couldn't even think how i even dreamt about that. the thing i was talking about is my marriage. It was on the day of my last exam(don't know weather 4-2 or not) and i didn't even saw my queen till the second i was tying the holy yellow thread to her neck(varudu effect). But the saddest thing is that how could i had married an unknown to me....does that mean i believe in my parents so much or am i waiting for that moment......Oh My God what are you doing with me. she didn't talk to me till i woke up(7:40am) which i was thinking about. fuck my excretory system, because of which i had to wake up. Any way my queen was fabulous but the only thing i am sad about is i didn't talk to her. off what am i now thinking about now.......don't want to share this. I want this also to come true but with no constraints(about the character of my wife). I am also thinking of my last dream which i would never forget, it was my appointment with our P.M MANMOHAN SINGH, in which were discussing on my views in making my mother INDIA one among the best in the world and also on T state. At last i thank all of them because of whom/which i am thinking of all this things.

Am i thinking of living in dreams(fantasy) which i thought i would never do. But am in ecstasy, when ever i think of these things, is this wrong or right, i cannot decide....... its ok but...... I hope these things to happen in real life ......and also this should not be my last dream of this kind.............

Forgot to say this is my first post on my BLOG. Please ignore the grammatical/spelling mistakes