Regular readers know that I’m trying to create a directory of financial services providers here, and from time to time I invite financial advisers who have been answering questions on the comments section sincerely to create a profile for themselves. There are presently just 3 profiles on the site, and Jitendra’s is the fourth one.

This number is so low because the profiles are invitation only, and the only way to get an invitation is to answer questions sincerely in the comments section.

With that said, here is Jitendra’s profile.

Jitendra P.S.Solanki, Certified Financial Planner^CM   and IIT-Roorke  Alumni

Employment Status: Self Employed

Organization: JS Financial Advisors

Blog: www.yourpocketmoney.com

Services Offered: Fee-based Financial Planning, Services on Various Elements of Financial Planning, Consultation including Hourly Fee Based Services.

Email: jsfadvisors@gmail.com

About:

Jitendra P.S. Solanki is Founder of JS Financial Advisors. A management graduate from IIT Roorkee he has 10 years of experience in financial services and started his venture after becoming a CFP in 2010.

Professional. He is amongst the few financial planners in India who are actually into creating comprehensive financial plan for their clients.

Financial Planning: Is not a rocket science but a very dynamic process which not only provides a direction to financial decisions but also help in accommodating changes in your life easily. The concept has been highly misunderstood by most people which need to be clarified so that Financial Planning is accepted in the right manner. I always believe “More than physical health, financial health is the key to manage your financial well-being”.

Services: JS Financial Advisors specializes in fee based comprehensive financial planning services to people across the globe. For meeting needs of various individuals we also offer services on various elements of financial planning like Retirement,Insurance,Investment, Portfolio Review ,estate Planning and Consulting. Recently we have added hourly based services. One of the niche service we are going to add is Financial planning for families of special children’s in association with my spouse who is a doctor in the concerned area. The services will be announced soon.

Experience:  After completing my MBA from IIT Roorkee , I have been associated with brands like DCB Bank, HDFC Bank,MotilalOswal wealth Management. My last assignment was with a broking outfit KassaFinvest in Delhi as Head –Distribution.

Beyond Financial Planning:

Doing research & analysis of various financial products is my keen interest. I have been been conducting various training programmes for IFAs and Students pursuing CFPs. I was also involved with one of the large AMC for imparting training to their IFAs in northern India on various personal finance topics.

Financial Literacy: I have started www.yourpocketmoney.com to generate awareness on various financial planning issues.  I have been writing numerous articles on my blog to help people understand and take important financial decisions without getting trap in the misseling prevailing in the industry. Also, I have been conducting workshops in various corporates for their employees and have tied up with various institutions to spread financial literacy through such programmes.

Media: I have written numerous articles, case studies and answered queries of readers in various publications to spread financial planning Awareness. Business Bhaskar, Indian Express, Money Mantra Magazine, Rashtriya Sahara are the prominent ones. The details can be viewed at http://www.jsfinancialadvisors.com/js-media.html

Memberships and Association: Currently, I am amember of The Financial Planners’ Guild, India, a professional body of practicing Financial Planners with the motto of creating awareness on Financial Planning among the public.

Fees: I currently charges Rs 12000-15000 for comprehensive financial planning; Rs 1500-6000 for various elements of financial planning and hourly fees for consultancy services is Rs 1000/hr.Fee for niche services will be announced soon.

Mohan posted an excellent comment on the Suggest a Topic page the other day, and I’m reproducing it here.

Dear Manshu,

I read your blog before taking any financial decision and i thank you a lot as your blog has really educated me regarding the various financial products. Thanks a lot for your untiring work . However, of late, i have been thinking and worked out a way / plan for the financial benefits which are likely to be received against my policies , god forbid, if something happens to me during the tenure of these policies. I want some one/ some trusted agency/ to handle any benefits received from my policies and benefits given by my employer/ in a particular manner . Are there any such agencies? if not, what steps should i take to ensure that the funds received are deployed gainfully in fd’s/ MF’s etc, as my wife is a housewife and is not very knowledgable about financial products and she may have to take care of my 2 kids and my old mother.

If I understand this correctly, there are two concerns here – one is how do you ensure that your family gets all due benefits and then the second one is how do you ensure that the money is deployed gainfully.

This is a great thought, and while I hope none of us have to go through such an ordeal it’s wise to prepare for this.

I have never thought of this question deliberately till now so let me pen down my thoughts on how I’d like this to be handled and then I’m sure a lot of you will have great thoughts of your own on this too.

I must admit that no single person knows about all my investments and insurance but I think between my dad and wife – they will know all of them.

So, the first step should be to make sure that both of them know about everything and get a complete picture.

I think that’s the first step, to have someone you trust know about all your investments. If they don’t know about these investments, then there’s not much they can do beyond that.

The most practical way of doing this is create a list somewhere that’s easily accessible and can serve your purpose as well. I have a Google Spreadsheet which has these type of details and since it is a snapshot of what I own at what price – it’s very useful for me and I update it regularly. Sharing such a thing with my wife and dad will take care of the first thing.

The second step is to specify what should be done with each of the investments. So, if there are fixed deposits then let those fixed deposits mature, and if there are shares then sell off all those shares and get cash for them. This is probably a very uncomfortable thing to talk about and quite honestly I don’t see myself bringing up this conversation but it seems to be the right thing to do.

To claim all of this money – you would need paperwork and this brings me back to Bemoneyaware’s post on succession certificates and wills that I shared some time earlier.

Now, let’s come to the heart of the question which is if there is an agency or organization that handles this money on your behalf and which can invest it properly.

I don’t think there is anything like that at all. The closest I can think of is a financial planner, but I don’t think there is someone who specifically does this type of work only.

I think that if someone finds themselves in this unfortunate circumstance – they should go the ultra conservative and simple route of investing all their money in fixed deposits only.

It is easy enough to understand and administer and while there may be other products that give a higher yield – their complexity may make them unwieldy for someone not too familiar with financial products.

The other reason I say this is probably something a lot of you can very easily relate to and that’s the sad reality of the financial landscape.

A lot of people are out to screw you financially and invest your money for their selfish gains and not your benefit. Given that these type of people are a much larger proportion of the adviser / agent community – I feel that the chances to falling prey to one of these people is very high for someone who is not financially savvy and has no one to fall back on. Losing your loved one is a big enough tragedy and compounding that problem by investing precious little resources in crappy products is the worst that can happen to somebody.

In thinking about this I feel that the extra two or three percentages that someone can earn by investing in some other debt instrument is not worth the risk that comes with shopping for such products without having someone savvy to look out for your interests.

These are my thoughts on the subject – what do you think? Have I become too cynical or would you say the same thing?

Just a short post to say that I’m off on a vacation for about a month as two of my cousins are getting married and I have a lot of traveling to do.

In the past I’ve written posts in advance and invited guest posters but this time I just decided to take a break and write only if there is time and there is a topic I am thinking about at the time.

So expect very few posts in this month, and a fair bit of delay in answering comment as well.

A few people have commented about receiving an SMS for the Demat allotment of NHAI tax free bonds, and if you applied for these bonds, and haven’t got any notification yet, you should check your Demat account in the next few days and they will most probably show up there.

In the past I’ve seen people not getting to know about these kind of allotments till a long time because their phone number is wrong or something like that and unfortunately none of these companies seem to think it is important to tell people when they are going to allot the bonds or when they are going to list so people have to just keep an eye out for news sources and depend on others to see when others get it and then check their accounts.

The NHAI bonds haven’t started trading yet of course since they were just allotted yesterday and Shiv found out that PFC bonds were listed in the wholesale segment which is a bit unusual. So watch out on Monday to see how they list and where the trading occurs.

Thanks to Amlan Basak, Shiv, Ravi and Bhaskar for sharing this information in comments here. Bhaskar and Shiv also mentioned that they got full allotment – I am not sure if this is applicable to everyone in the retail category but that might well be the case.

If not too much trouble can others who applied for the NHAI issue also leave comments to let everyone else know if you got the allotment or not and what percentage did you get. This not only helps keep track of what happened in this issue but helps make guesstimates for future issues as well.

Let’s start with Bemoneyaware’s post on mis-selling and mis-buying which is a comprehensive article with takes from many people on the subject. It has links to a lot of articles and viewpoints about the topic and the one thing that I’d like to say about this issue is that usually not enough responsibility is placed on buyers. I was thinking about this recently when people were making indignant remarks about the Reliance buyback, but the very same folks will be happy to buy shares from the market and flip it to Reliance for a small profit. Your greed is someone else’s opportunity.

Hemant has an excellent article on LIC Jeevan Ankur.

He is associated with the Financial Planners Guild and they are organizing a financial planning clinic in Gurgaon on the 5th February. This is an event where you can meet with some of the financial planners and ask questions and get inputs on financial planning. Here is the link with registration details.

An interesting look on North Korea as an investment destination. I had no idea that so many companies from different parts of the world were interested in investing in North Korea and was really surprised to hear that they have casinos for tourists.

Ajay Shah writes about his personal experience with an unusual way of charging his debit card at the petrol pump in consumer protection issues with payments.

HBR has a useful post on networking for introverts.

Finally, an interesting take on why are people friendly. 

Enjoy your weekend!

Last week I wrote about the heavy imports from Switzerland and how gold forms the majority of it, and I went to look for the other countries that India imports its gold from.

Switzerland is by far the biggest exporter of gold and the next biggest exporter – UAE is just about a third of Switzerland.

South Africa, Australia and USA are the other big exporters but when compared with Switzerland – they are quite small.

Here is a chart that shows the top 5 countries that India imports its gold from, the figures are for 2010 – 11 and the numbers are in millions of dollars.

Which countries does India import its gold from

As you can see Switzerland exports more gold than the other 4 combined, and  the countries after that are even smaller.

Here is a list of the top 1o countries that India imports its gold from.

Now, here is a pie chart that shows the relative share of some of the biggest gold exporters to India.

Relative share of countries that export gold to India

India of course has very negligible gold production, but more than a year ago I wrote a post about gold mining in India and while researching that I was surprised to find that the Ministry of Mines estimates quite a high amount of gold ores in India. With soaring gold prices, it is perhaps time for some tax sops in this sector and allowing the private sector to try to develop gold mines in India.

Late last year RBI deregulated the interest rates on savings accounts and allowed banks to set their own rates. This resulted in banks raising their interest rates and creating two slabs of under a lakh and over a lakh.

For example, Yes Bank offers 6% on the saving bank balance of under Rs. 1 lakh and 7% on balances of over a lakh. Similarly, Kotak pays 5.5% for balances of less than a lakh and 6% on balances of over a lakh.

There were a few comments at the time asking about how interest will be calculated and if banks will take the lowest bank balance in a month to calculate that or something else like that.

I was reminded of this discussion when I came across a RBI notification that issues some clarifications on the way interest is calculated.

From reading the second point in there it’s quite clear that the banks will pay you the interest on the basis of your daily balance. So, they will see what your balance was at the end of the day and pay you interest based on that.

The second aspect of that is slightly unclear to me. I read it to understand that if you have a balance of Rs. 1,25,000 in your savings bank account at Yes Bank – they will pay you 6% for Rs. 1,00,000 and 7% for the Rs. 25,000 after that. They are not going to pay  you 7% for the whole amount, which is what I originally thought.

Does anyone have practical experience with this or knows for certain how this is going to be calculated? Please leave a comment or email me if you do as this is going to be of interest to a lot of people.

Like Indian Railways, HUDCO is also going to come up with tax free bonds starting on the 27th January and they offer a slightly higher rate, just a little bit higher than the Indian Railways tax free bonds.

While Indian Railways offered 8.15% for the 10 year series  and 8.30% for 15 years, HUDCO is going to offer 8.22% for the 10 year series and 8.35% for the 15 year series.

There is a difference in rating as well and HUDCO is rated Fitch AA+ by Fitch and CARE AA+ by CARE which is a notch lower than the Indian Railway issue.

The minimum investment needed is Rs. 10,000 and you can invest in multiples of Rs. 1,000 after that.  The bonds will list on both NSE and BSE and the bond issue size is Rs. 4,684.72 crores.

This issue also has what’s being called the step down feature which means that the higher interest rate that the retail investors get is only applicable as long as they hold the bonds. If they sell the bonds on the stock exchange then the person who buys it from them will not get the higher rate but will instead get the rate decided for the other categories.

Now, let’s take a look at some questions that came up on yesterday’s post and are relevant here as well.

Can NRIs invest in the HUDCO tax free bonds? 

Yes, NRIs can also apply to this offer and can either buy it in the retail category or the other category.

Are these tax free bond issues better than fixed deposits?

I have done fairly detailed (perhaps a bit too detailed) calculations to compare the returns between a SBI fixed deposit and a tax free bond and that shows that bond returns are better than the fixed deposits. You can look at the post to see the detailed numbers.

Who falls under the retail category?

Individuals and NRIs who are going to invest less than Rs. 5 lakhs will fall under the retail category.

How will the shares be allotted – first come first serve or proportional allotment to everyone?

I couldn’t locate this information but MoneyVriksh left a comment yesterday stating that it will be first come first serve. I think it makes sense to apply early since there is a chance of over-subscription.

What is tax free: Is the principal tax free or the interest tax free?

This is not like the 80CCF infrastructure bonds that are open right now so don’t confuse these bonds with them. This is truly tax free in the sense that the interest you receive from these bonds will not be taxed.

The infrastructure bonds are called tax saving bonds but are not tax free. They save tax because when you invest in them then you can reduce the amount of investment (up to a maximum of Rs. 20,000) from your income and lower your tax incidence. But the interest income on them is taxable, so they are not tax free.

As far as the principal being tax free is concerned – the principal is always tax free. That’s your money anyway and tax is charged only on the income by the way of interest or capital gains.

This is all I can think of to write about the HUDCO tax free bonds but if you have any more questions then please leave a comment.

Indian Railways announced the details of their tax free bond issue, and Shiv emailed me the term sheet today.

There is one new and interesting thing about this offer which I’ll come to in a while but before that let’s take a look at the other regular details of these bonds.

There will be two series – one with a 10 year maturity, and the second one with the 15 year maturity, and the interest on both options will be paid annually.

The issue is going to open on January 27th 2012 and is planned to close on the February 10 2012. You have to invest a minimum of Rs. 10,000 and since one bond has a face value of Rs. 1,000, you can invest in Rs. 5,000 multiples after that.

The issue size is Rs. 6,300 crores and the issue has been rated CRISIL AAA and CARE AAA by CRISIL and CARE respectively; this of course is their highest rating. ICRA has rated it AAA as well.

30% of the issue is reserved for the retail investors and this is important because retail investors will get a higher interest rate than other class of investors. An individual investing less than Rs. 5 lakhs will fall under the retail category.

The bonds will also list on the NSE and BSE.

Here are the details of the issue in a snapshot.

As you can see the interest rate that retail investors get is a tad higher than the other categories and they have put in a condition to say that only the first allottee will get the higher rate. So, if you want the higher interest you must subscribe to the issue. If you buy it from the stock exchange then you will not get the retail investor interest rate even if you are a retail investor. You will get the lower interest rate.

This is a clever way of first of all giving an incentive to retail investors to subscribe to the issue and then reduce the overall interest burden because some people will end up selling the bonds in the market and then Indian Rail will not have to pay the higher interest rate for them.

I think this should speed up the subscription of the retail part which was lagging so far in the other issues, and I think this will catch the interest of NRIs as well who can invest in these bonds under either category.

The tax free offers that are coming out right now are fairly good deals and if you are looking for fixed income products then you can consider this issue.

Update: Corrected the face value from Rs. 5,000 to Rs. 1,000 and added ICRA’s credit rating per Shiv’s comment below. 

Reliance Industries Limited (RIL) announced a share buyback plan along with their quarterly results on Friday, and the main thing to remember about that buyback plan is that Reliance Industries is going to execute it through an open offer and buy the shares from the open market.

This means that the company will go and buy the shares from the stock exchange, and there is no way for a shareholder to offer their shares to Reliance Industries and ask them to buy it for a certain price.

The price of Rs. 870 that’s being discussed is the upper limit at which the company will buy shares, and that in no way indicates that the stock price will reach Rs. 870 in the near future or that you can get Rs. 870 for a share any other way.

Reliance Industries Share Buyback Details

Over a period of time Reliance will buy its own shares from the market as long as the price is below Rs. 870. If the price rises beyond 870 then they won’t buy any more shares. They are not going to keep buying as long as the price reaches 870 – that’s not their intention at all.

The third aspect of this buyback announcement is the Rs. 10,440 crore upper limit, and this is the maximum the company will spend on the buyback. They are not obligated to spend all of Rs. 10,440 crores, and they will probably not use all of that either. That’s just my guess based on what they did last time and the fact that they have debt worth Rs. 74,503 crores and cash worth Rs. 74,539 crores and they did spend Rs. 1,899 crores on interest payments in the first 9 months of this fiscal so the cash can be used to reduce this debt as well.

I can’t think of anything that’s been announced in this buyback that makes such a material difference so as to start an investment position in Reliance. If you want to speculate for some short term gains then I don’t have any input on that but Business Line has a great article on the currently open buyback offers and they found that out of the 15 offers that are currently open, 14 are much below the maximum price offered by the company, so that gives you an indication of how other offers have recently fared.