Rajiv Gandhi Equity Savings Scheme (RGESS)

Benifits

Rajiv Gandhi Equity Savings Scheme, 2013 (RGESS) is a new equity tax advantage savings scheme for equity investors in India, with the stated objective of "encouraging the savings of the small investors in the domestic capital markets.” Vide notification dated December 18, 2013 the scheme has been notified by the Department of Revenue, Ministry of Finance (MOF)... It is exclusively for the first time retail investors in securities market.

The objective of the scheme is to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market

• A new section 80CCG under the Income Tax Act, 1961 on ‘Deduction in respect of investment under an equity savings scheme’ has been introduced to give tax benefits to ‘New Retail Investors’ who invest up to Rs. 50,000 in ‘Eligible Securities’ and have gross total annual income less than or equal to Rs.12 Lakhs. The investor would get a 50% deduction of the amount invested from the taxable income for that year.
• The new retail investor may invest in one or more financial years in a block of three consecutive financial years beginning with the initial year.
• Gains, arising of investments in RGESS, can be realized after a year. This is in contrast to all other tax saving instruments.
• Investments are allowed to be made in instalments in the year in which the tax claims are filed.
• Dividend payments are tax free.
• This scheme has a long run benefit of educating the retail investment segment and thereby moving towards financial inclusivity in the country.
• Success of this scheme can lead to transfer of assets from traditional savings instruments such as bank deposits and FDs to the capital markets, leading to diversification in retail investor portfolio and also leading to more productive "capital formation" assets.

Eligibility

The deduction under the Scheme will be available to a ‘new retail investor’ who complies with the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to twelve lakh rupees.

The deduction under the Scheme shall be available to a new retail investor who:-

• Is a resident individual (the benefit cannot be availed by HUF, corporate entities / trusts etc).
• Has not opened a Demat account and has also not done any trading in the derivative segment till RGESS account opening date or the first day of the “initial year” in which he brings in the RGESS eligible investment into the account, whichever is later.
• Has opened a Demat account and has not made any transactions in equity and /or in the derivative segment till designating such account as RGESS or the first day of the “initial year” in which he brings in the RGESS eligible investment into the account, whichever is later.
• In case the demat account is opened as a first holder, but there are no transactions in the equity or derivative segment, then the first account holder is eligible to be a new retail investor.
• For taking the benefits under RGESS, the new retail investor will have to submit a declaration, as in Form ‘A’, to the Depository Participant (DP) at the time of account opening or designating his existing demat account.
• In case of joint accounts, only the first account holder will not be considered as a new retail investor. All those existing account holders other than the first demat account holder (eg. second / third account holders or other joint holders) or nominees of the existing account holders will be considered as new retail investors for the purpose of opening of a fresh RGESS account, if otherwise eligible.
• Has gross total income for the financial year less than or equal to Rs. 12 Lakh.

Process

A new retail investor can make investments under the Scheme in the following manner:

• Open a demat account with a Depository Participant by providing an undertaking Revised link (Form A) that he wishes to designate his existing account or open a new account as RGESS account.
• An investor can invest in eligible securities in one or more transactions during the year in which the deduction has to be claimed.
• An investor can make any amount of investment in the demat account but the amount eligible for deduction, under the Scheme will not exceed fifty thousand rupees.
• The eligible securities brought into the demat account, as declared or designated by the new retail investor, will automatically be subject to lock-in during that year, unless the new retail investor specifies otherwise and for such specification, the new retail investor will submit a declaration in Revised link Form B / Application indicating that such securities are not to be included within the above limit of investment.
• An investor will be eligible for a deduction under subsection (1) of section 80CCG of the Act in respect of the actual amount invested in eligible securities, in the first financial year in respect of which a declaration in Revised link Form B / Application has not been made, subject to the maximum investment limit of fifty thousand rupees.
• The investor would get under Section 80CCG of the Income Tax Act, a 50% deduction of the amount invested during the year, upto a maximum investment of Rs. 50,000 per financial year, from his/her taxable income for that year, for three consecutive assessment years.
• An investor will be permitted a grace period of seven trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account and such securities will be deemed to have been purchased in the financial year itself.
• An investor may also keep securities other than the eligible securities in the demat account through which benefits under the Scheme are availed.
• An investor can make investments in securities other than the eligible securities covered under the Scheme and such investments will not be subject to the conditions of the Scheme nor will they be counted for availing the benefit under the Scheme.
• The investment under the Scheme will consist of an investment in any of the eligible securities covered under the Scheme.
• Deductions claimed will be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the Scheme is violated.

10 tips to become a SMART stock market INVESTOR

Morningstar.in

We've boiled down some of our most salient observations into 10 suggestions we think will make you a better stock investor.

At Morningstar globally, our analyst staff has about a thousand years of collective investment experience. Here, we've boiled down some of our most salient observations into 10 suggestions we think will make you a better stock investor.

1. Keep it simple

Keeping it simple in investing is not stupid. Seventeenth-century philosopher Blaise Pascal once said, 'All man's miseries derive from not being able to sit quietly in a room alone'. This aptly describes the investing process.

Those who trade too often, focus on irrelevant data points, or try to predict the unpredictable, and are likely to encounter some unpleasant surprises when investing.

By keeping it simple -- focusing on companies with economic moats, requiring a margin of safety when buying, and investing with a long-term horizon -- you can greatly enhance your odds of success.

2. Have the proper expectations
Are you getting into stocks with the expectation that quick riches soon await? Hate to be a wet blanket, but unless you are extremely lucky, you will not double your money in the next year investing in stocks.
Such returns generally cannot be achieved unless you take on a great deal of risk by, for instance, buying extensively on margin or taking a flier on a chancy security. At this point, you have crossed the line from investing into speculating.
Though stocks have historically been the highest-return asset class, this still means returns in the 10 per cent to 12 per cent range. These returns have also come with a great deal of volatility.
If you don't have proper expectations for the returns and volatility you will experience when investing in stocks, irrational behavior -- taking on exorbitant risk in get-rich-quick strategies, trading too much, swearing off stocks forever because of a short-term loss -- may ensue.

3. Be prepared to hold for a long time
In the short term, stocks tend to be volatile, bouncing around every which way on the back of Mr. Market's knee-jerk reactions to news as it hits. Trying to predict the market's short-term movements is not only impossible, it's maddening.
It is helpful to remember what Benjamin Graham said: In the short run, the market is like a voting machine -- tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine -- assessing the substance of a company.
Yet all too many investors are still focused on the popularity contests that happen every day, and then grow frustrated as the stocks of their companies -- which may have sound and growing businesses -- do not move. Be patient, and keep your focus on a company's fundamental performance. In time, the market will recognize and properly value the cash flows that your businesses produce.

4. Tune out the noise
There are many media outlets competing for investors' attention, and most of them center on presenting and justifying daily price movements of various markets. This means lots of prices -- stock prices, oil prices, money prices, frozen orange juice concentrate prices -- accompanied by lots of guesses about why prices changed.
Unfortunately, the price changes rarely represent any real change in value. Rather, they merely represent volatility, which is inherent to any open market. Tuning out this noise will not only give you more time, it will help you focus on what's important to your investing success -- the performance of the companies you own.
Likewise, just as you won't become a better football player by just staring at statistical sheets, your investing skills will not improve by only looking at stock prices or charts. Athletes improve by practicing and hitting the gym; investors improve by getting to know more about their companies and the world around them.

5. Behave like an owner
We'll say it again -- stocks are not merely things to be traded, they represent ownership interests in companies. If you are buying businesses, it makes sense to act like a business owner.
This means reading and analyzing financial statements on a regular basis, weighing the competitive strengths of businesses, making predictions about future trends, as well as having conviction and not acting impulsively.

6. Buy low, sell high
If you let stock prices alone guide your buy and sell decisions, you are letting the tail wag the dog. It's frightening how many people will buy stocks just because they've recently risen, and those same people will sell when stocks have recently performed poorly.
Wake-up call: When stocks have fallen, they are low, and that is generally the time to buy! Similarly, when they have skyrocketed, they are high, and that is generally the time to sell! Don't let fear (when stocks have fallen) or greed (when stocks have risen) take over your decision-making.

7. Watch where you anchor
If you read our article on behavioral finance, you are familiar with the concept of anchoring, or mentally clinging to a specific reference point. Unfortunately, many people anchor on the price they paid for a stock, and gauge their own performance (and that of their companies) relative to this number.
Remember, stocks are priced and eventually weighed on the estimated value of future cash flows businesses will produce. Focus on this.
If you focus on what you paid for a stock, you are focused on an irrelevant data point from the past. Be careful where you place your anchors.

8. Remember that economics usually trumps management competence
You can be a great rally driver, but if your car only has half the horsepower as the rest of the field, you are not going to win. Likewise, the best skipper in the world will not be able to effectively guide a yacht across the ocean if the hull has a hole and the rudder is broken.
Also keep in mind that management can (for better or for worse) change quickly, while the economics of a business are usually much more static. Given the choice between a wide-moat, cash-cow business with mediocre management and a no-moat, terrible-return businesses with bright management, take the former.

9. Be careful of snakes
Though the economics of a business is key, the stewards of a company's capital are still important. Even wide-moat businesses can be poor investments if snakes are in control. If you find a company that has management practices or compensation that makes your stomach turn, watch out.
When weighing management, it is helpful to remember the parable of the snake.
Late one winter evening, a man came across a snake on the path. The snake asked, 'Will you please help me, sir? I am cold, hungry and will surely die if left alone.'
The man replied, 'But you are a snake, and you will surely bite me!'
The snake replied, 'Please, I am desperate, and I promise not to bite you.'
So the man thought about it, and decided to take the snake home. The man warmed the snake up by the fire and prepared some food for the snake. After they enjoyed a meal together, the snake suddenly bit the man.
The man asked, 'Why did you bite me? I saved your life and showed you much generosity!'
The snake simply replied, 'You knew I was a snake when you picked me up.'

10. Bear in mind that past trends often continue
One of the most often heard disclaimers in the financial world is, 'Past performance is no guarantee of future results.' While this is indeed true, past performance is still a pretty good indicator of how people will perform again in the future. This applies not just to investment managers, but company managers as well.
Great managers often find new business opportunities in unexpected places. If a company has a strong record of entering and profitably expanding new lines of business, make sure to consider this when valuing the firm. Don't be afraid to stick with winning managers.

Courtesy 

The Top 17 Investing Quotes of All Time

When it comes to the world of investing, three words come to mind: overwhelming, intimidating, and scary. For us "regular Joes," the questions seem never-ending. On that note, let's revisit what experts have said over the years on the topic of investing. The quotes date back to Ben Franklin, and some are from modern pundits like Dave Ramsey and Warren Buffett. Though markets may change, good investing advice is timeless. (For more information, see This Is Your Brain On Stocks)

1. "An investment in knowledge pays the best interest." - Benjamin Franklin
When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research, study and analysis before making any investment decisions.

2. "Bottoms in the investment world don't end with four-year lows; they end with 10- or 15-year lows." - Jim Rogers
While 10-15 year lows are not common, they do happen. During these down times, don't be shy about going against the trend and investing; you could make a fortune by making a bold move - or lose your shirt. Remember quote #1 and invest in an industry you've researched thoroughly. Then, be prepared to see your investment sink lower before it turns around and starts to pay off.

3. "I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful." - Warren Buffett
Be prepared to invest in a down market and to "get out" in a soaring market. (For more, read Think Like Warren Buffett.)

4. "The stock market is filled with individuals who know the price of everything, but the value of nothing." - Phillip Fisher
Another testament to the fact that investing without an education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.

5. "In investing, what is comfortable is rarely profitable." - Robert Arnott
At times, you will have to step out of your comfort zone to realize significant gains. Know the boundaries of your comfort zone and practice stepping out of it in small doses. As much as you need to know the market, you need to know yourself too. Can you handle staying in when everyone else is jumping ship? Or getting out during the biggest rally of the century? There's no room for pride in this kind of self-analysis. The best investment strategy can turn into the worst if you don't have the stomach to see it through.

6. "How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." - Robert G. Allen
Though investing in a savings account is a sure bet, your gains will be minimal given the extremely low interest rates. But don't forgo one completely. A savings account is a reliable place for an emergency fund, whereas a market investment is not. (To learn more, see Savings Accounts Not Always The Best Place For Cash Assets.)

7. "Invest in yourself. Your career is the engine of your wealth." - Paul Clitheroe
We all want wealth, but how do we achieve it? It starts with a successful career which relies on your skills and talents. Invest in yourself through school, books, or a quality job where you can acquire a quality skill set. Identify your talents and find a way to turn them into an income-generating vehicle. In doing so, you can truly leverage your career into an "engine of your wealth."

8. "Every once in a while, the market does something so stupid it takes your breath away." - Jim Cramer
There are no sure bets in the world of investing; there is risk in everything. Be prepared for the ups and downs. (To read more on how Cramer makes his pick, see Cramer's 'Mad Money' Recap: Tools of the Trade.) 

9. "The individual investor should act consistently as an investor and not as a speculator." - Ben Graham
You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.

10. "It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." - Robert Kiyosaki
If you're a millionaire by the time you're 30, but blow it all by age 40, you've gained nothing. Grow and protect your investment portfolio by carefully diversifying it, and you may find yourself funding many generations to come.

11. "Know what you own, and know why you own it." - Peter Lynch
Do your homework before making a decision. And once you've made a decision, make sure to re-evaluate your portfolio on a timely basis. A wise holding today may not be a wise holding in the future.

12. "Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this." - Dave Ramsey
By being modest in your spending, you can ensure you will have enough for retirement and can give back to the community as well.

13. "Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." - Paul Samuelson
If you think investing is gambling, you're doing it wrong. The work involved requires planning and patience. However, the gains you see over time are indeed exciting! (For more reasons to be patient, check out Patience Is A Trader's Virtue.)

14. "I would not pre-pay. I would invest instead and let the investments cover it." - Dave Ramsey
A perfect answer to the question: "Should I pay off my _____(fill in the blank) or invest for retirement?" That said, a credit card balance ringing up 30% can turn into a black hole if not paid off quickly. Basically, pay off debt at high interest rates and keep debt at low ones.

15. "The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton
Follow market trends and history. Don't speculate that this particular time will be any different. For example, a major key to investing in a particular stock or bond fund is its performance over five years. Nothing shorter.

16. "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
In the beginning, diversification is relevant. Once you've gotten your feet wet and have confidence in your investments, you can adjust your portfolio accordingly and make bigger bets. (For more reason to reduce your diversification, read The Dangers Of Over-Diversifying Your Portfolio.)

17. "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch
When hit with recessions or declines, you must stay the course. Economies are cyclical, and the markets have shown that they will recover. Make sure you are a part of those recoveries!

The Bottom Line
The world of investing can be cold and hard. But if you do thorough research and keep your head on straight, your chances of long-term success are good. Refer back to these quotes when you're feeling shaky or are confused about investing. How are they relevant to your experience? Do you have any favorite quotes to add? (To learn more from great investors, read Greatest Investors.)

 Sources:- Investopedia

Take Advantage of Nomination Facilities

Registering a nomination facilitates easy transfer of funds to the nominee on the demise of the investor.

What is a Nomination?

An investor can nominate a person(s) called nominee(s) to whom his/her Mutual Fund Units will be transferred on his / her demise.

Mutual Fund units get transferred to the nominee registered in the folio on the demise of the Investor.

What are the benefits of registering a nomination?

Registering a nomination facilitates easy transfer of funds to the nominee(s) on the demise of the investor. In the absence of the nominee, a claimant would have to produce a host of documents like a Will, Legal Heir-ship Certificate, No-objection Certificate from other legal heirs etc. to get the units transferred. The process is simple if a nominee is registered in the folio.

How can an investor make a nomination?

Nomination can be registered at the time of purchasing the units. While filling in the application form, there is a provision to fill in the nomination details.

Alternatively, an investor may register a nomination later through a form which may be submitted with relevant particulars of the nominee.

The forms are available on the mutual fund websites.

Investors may also request the registrar and transfer agent to send a form.

Can an investor make multiple nominations?

Yes! An investor may make up to three nominations and even specify the percentage of the amounts that will go to each nominee.

If the percentage is not specified, equal shares will go to the nominees.

Can a minor be a nominee?

Yes! A minor can be a nominee. However the guardian will have to be specified in the nomination form.

Can a nomination be changed?

A nomination can be changed and even cancelled. The relevant form should be filled and submitted to the Registrar or Mutual Fund Office.

If an investor has different schemes in a folio, will all units of all schemes be transferred to the nominee?

A nomination is at folio level and all units in the folio will be transferred to the nominee(s).

If an investor makes a further investment in the same folio, the nomination is applicable to the new units also.

Who can nominate and who is eligible to be a nominee?

Nominations can be made only by individuals applying for / holding units on their own behalf, singly or jointly.

Non-individuals, including societies, trusts, body corporates, partnership firms, the karta of an HUF, and the holder of a power of attorney (POA) cannot nominate.

Nomination can be in favour of individuals, including minors, the Central Government, State Government, a local authority, any person designated by virtue of his office or a religious or charitable trust.

A non-resident Indian can be a nominee, subject to the exchange control regulations in force from time to time.

Source:- The Hindu