FLAME Newsletter - February 19, 2014


QUOTE OF THE WEEK:

"Inflation is often the heaviest tax on the poor. Its places the heaviest burden on the poor in countries"Gerry Rice, IMF

YOUR FINANCE DEMYSTIFIED:

Which is the best performing mutual fund now?

During my TV interviews, either the anchor or one of the callers will surely ask the question, “Which is the best performing mutual fund now?” There is not a single show in which the question about best performing mutual fund is not asked.

Everyone is interested in knowing which is the best performing mutual fund now. The reason behind this is they would like to check whether the scheme in which they have already invested is the part of the best performing mutual fund schemes or not. If it is not the part of best performing mutual fund, they would like to switch their investments to the current best performing mutual fund.

There are so many websites which rate the mutual fund schemes, list down the best performing mutual fund schemes in each and every category... Read more

Understanding the basics of mutual fund deadlines

Before an asset management company (AMC) launches a scheme, it has to file a draft offer document with market regulator SEBI (Securities and Exchange Board of India) and get its approval.

The draft offer document is available on the SEBI website for public comments for 21 days from the filing of the document with SEBI. The regulator may specifies changes, if any, in the draft offer document and the AMC or the lead merchant banker shall carry out such changes in the draft offer document before filing the offer document with ROC (Registrars of Companies) / stock exchanges.

However in reality, if SEBI doesn’t give feedback in 21 days, then it is likely to take more time to approve the scheme. Hence, the AMC should wait for the regulator’s approval... Read more

DID YOU KNOW?

Why is it difficult to part with your possession?

You have a large number of your favourite Reader’s Digest that you collected right from your childhood. Now you hear that Reader’s Digest has gone bankrupt and you fear you may not get more of your favourite reading material. However, you were afraid to lend them to your friend as they may not return the books after reading them. Will you be willing to sell your collection if you get a reasonable price? You may do so only if you get a desired premium; unless you have space constraints and want to dispose them anyways.

According to a research in behavioural psychology, all of us suffer from a bias called “endowment effect”. This simply means you will demand a higher price to give up your comics’ collection than the amount you will be willing to pay to buy a similar collection. Why does this happen? It is not easy for people to part with their possession. Hence, they need a premium to compensate for the pain of parting with their valuable possession... Read more

TERM OF THE WEEK

What is a fractional share?

All of us know that a share is a single unit of ownership in a company. A person who buys a portion of a company’s capital becomes a shareholder in that company’s assets and receives a share of the company’s profits in the form of an annual dividend. Smart investors may also reap a capital gain as the market value of the shares increases.

But, what happens when there is a company merger, bonus issue or stock split and you get ‘less’ than one share of stock, that is, one-third or one-half of a share. What are these shares called? How are they paid to you and what is their tax treatment. This article provides you information on the above mentioned questions... Read more

IN THE NEWS THIS WEEK

RBI to conduct term Repo auctions to address liquidity tightness

RBI releases survey on global trade in banking services

IRDA allows insurers to invest in banks' new instruments

ABOUT FLAME

FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India’s spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation’s economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL’s FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

Our objective is to light a FLAME, as the name suggests, which will set ablaze a chain of FLAMEs across the country. The new-found light of knowledge will undoubtedly dispel the dark clouds of financial illiteracy and ensure the bright sunshine of financial growth and prosperity.

This portal is but one of the various IIFL initiatives that would be part of FLAME.



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