Financial service is always one of the most dynamic sectors as changes in regulations are integral part of the sector. As an investor, it might be difficult to keep track of innumerable changes, which have gathered momentum in the last few years.
While certain products like insurance allow you to enjoy the old rules or features, a number of other products carry fresh set of rules. So, here is a ready reckoner, which should help you with your investment options:
Mutual funds:
The entry load has been removed for mutual fund schemes with effect from August 2009. Earlier, investments made through distributors carried an entry load of 2.25%. Instead, the advisory fee can be paid to the advisor directly depending on the willingness of the customer.
Is equity trading bad for your financial health?
For direct investments, there is no entry load as earlier. So, if you have signed up for an SIP for long tenure prior to this cut-off date, you can stop the same and sign up for a fresh SIP. At the same time, a number of funds have introduced exit load for varying period. So, keep an eye on the same when you redeem your investments.
Demat and trading account:
There have been plenty of changes on the trading account for stocks but some of the key features are relating to payments and receipts. For instance, stocks cannot be purchased with the help of third party cheques, which means an investor who wishes to invest should organise funds.
Are MIPs of mutual funds a safe bet?
Again, one of the sectors which has been in the news in recent times and almost all insurance companies have introduced products with features which carry lower cost. So, it is not a bad idea to take a re-look at some of your old investments and this can also be the time for stepping up your insurance cover through term plans.
There have been certain changes with respect to ULIPs with respect to discontinuance of premium. While the investor has the option of not paying up the premium after 3 years, a letter needs to be given if you want the life cover to continue from the policy.
Remember the lessons learnt from the gloom
Post office schemes:
Change has been all-pervasive and it holds good for post-office schemes too. In the last couple of years, there have been many changes with respect to many POS schemes. For instance, public provident fund, which carried an upper limit of Rs 70,000 in a year, is now raised to Rs 1 lakh. Similarly, upper limit has been hiked to Rs 4.5 lakh per individual in the case of post-office MIS as against an earlier limit of Rs 3 lakh.
Now, an individual can jointly hold Rs 9 lakh in this account. Another change is with respect to loyalty bonus on the same product. Now it has been slashed down to 5% from 10% for deposits held till maturity (six years).
RBI Bonds:
These were associated with tax-free income earlier and were one of the prominent options for investors looking for no risk options. The interest earned is taxable as any other product and hence you don’t have tax-free RBI Bonds any more.
Changing times:
- Mutual funds: No entry load
- Insurance: No automatic cover continuance after the stoppage of premium
- Post-office schemes: Change in upper limit and reduction in loyalty bonus
- RBI Bonds: No more tax-free returns
The author can be reached at srikala.bhashyam@gmail.com
The views expressed in the article are the author's and not of Sify.com
