Sunday, June 28, 2009

Double dipping on the cost of inflation index

Our economy has the concept of cost of inflation index that allows the common man to factor in inflation on long term asset sales. The way it work is by leveraging a Cost of inflation index (CII) that is a number that is notified each year by the government starting from year 1981-1982. The way to use this number to calculate your inflated cost is as follows

  • Inflated cost of purchase = original cost of purchase *(CII for the year of purchase/CII for the year of sale)
  • Capital gains tax = 20% * (Actual sale price - Inflated cost price)

Now I did a quick math to see what is the inflated cost price for a two year window and you can see the results yourself below. The cost price varies between 22% increase to a lowest of 7%. So what is the big deal do you say? Well if you consider the fact that if you have say a debt investment for a period of > 365 days timed right say buy on March last week and then sell on April of the following year in the first week, you can double dip on the CII effectively allowing you to get this fabulous 7% to 22% inflation of your purchase cost. Given that debt funds will return about 8%-10% in that time period, we have effectively managed to avoid the tax to be paid on this return.

Sunday, June 14, 2009

Last date for tax filing for AY2009-10

The last date for filing income tax this year is July 31, 2009 - I think!  I have been trying to determine this date but there is no "official" place where I can confirm this.  None of the income tax websites provide this information so easy enough for me.  I did see another blogger mention the date as 31st July but I am not sure.  Anybody who can provide me with the link on the Income tax website?  Thanks

Saturday, June 06, 2009

Planning your personal backup

Planning a backup of all important aspects of your life is an activity that we all have to perform for our lives to ensure that information pertaining to us is easily available and accessible to key family members and ourselves at the time of need.  The aspect of backup sounds daunting but it is really a one time effort that you can invest into and the incremental keeping track is very minimal in nature.  The peace of mind and returns in provides us far outweigh the time and effort we have to invest into getting ready.  Let us explore the mechanisms of backup and then understand specific aspects of our life and how you can back them up.

Scan all original documents
Always scan all original documents and keep good quality color scanned images secure and easily accessible.  Refer to my past post on truecrypt, specifically on points 3 and 4 in that post for further details on how to store this information securely.  Ensure that you have a scanned copy of the entire document and store
that away for all future use (for example, to make photostat copies, all you have to do is take a black & white print out of the scanned
image and viola you are done!)

First, when you buy the property ensure that you apply for a registered copy of the title deed.  This is typically a duplicate copy of the title deed except the document is registered by the registrar and has a unique document ID similar to your original document.  This registered copy is a useful backup for the original document.    The second step as soon as you complete the registration is to follow the scan all documents paradigm.  After completing the two, you need to store this document in a secure location like a safe deposit box in the bank.

Financial Information
A while back I had outlined a method for managing one's financial data in a secure fashion.  The process and the tools outlined there would be best served.  Secondly, in many cases you can dispense with the physical delivery of statements and opt for electronic delivery so that managing them and archiving physical statements can be completely dispensed with.  Electronic delivery also helps in easy management including creating of backup copies.

Insurance plans dont require a special backup beyond the usual scan and store paradigm.  What is key is the fact that such information storage should be documented and made available to various members of the family.

Your home
We all tend to collect expensive and not so expensive artifacts around our home.  While many of us understand the importance of taking an insurance coverage to cover this risk, we probably dont take adequate steps to catalog and manage information related to these assets.  One of the best ways to keep track is thorugh Photo+video log of your entire home. All rooms, all expensive items such as furniture, jewelery and other items that you have listed in your insurance. Catalog the pictures using a simple database and add market values to each item.   Whenever you buy something expensive, take a picture and add it to the database along with its value so that this list of items is kept up to date and managed constantly.

Your vehicles
Most of the original paperwork related to your vehicle such as the title and the RC book should be managed digitally. 

Your work
Most of our work has its own enterprise class backup systems (right?) so I am not really referring to your work here but more along the lines of your benefits at work.  For example your last PF statement or the VPF statement or the pension plan or medical benefit plan that you have whose details must be stored at home and information about where it is kept and how it should be used should be shared with your spouse in case there is a reason to use these plans and you are not around.

Your education
Sit down one of these days and scan all those old marksheets and degree certificates.  Your better half will have all sorts of comments to pass about your marks and maybe even help you in the scanning process!

Your PC/Laptop

You should buy one of those massive drives that sells for peanuts these days to backup your home computer/laptop.    Just use something as simple as synctoy and the Windows scheduler to do data backups completely.  Now that is the easy part.  The harder part is that when your PC crashes and you end up re-installing the operating system, you dont have a clue where those pesky driver disks are for your favourite USB based paintball shooter device!  Now either you can save up all the driver disks carefully your look at Drivemax I have personally not used this software but I have heard people sing praises about it on how it saved their lives.   This does make OS re-installation easier.

So there it is folks.  My idea of making sure you have adequate backups for various things in life.  Do you think there should be more?  Do comment and let me know.

Tuesday, June 02, 2009 is it really worth it

Well I received an invitation from to join in as an affiliate partner. Apparently I am one of the lucky chosen ones :). I did go ahead and join them and in the process I found that they didn't care to find out anything about me except my email address and a password. They did provide me with the banner ad for showing up on my blog. Now isnt that a bit funny for an affiliate marketing tie-up site? They do not explain the basic rules of the game such as
  1. What are the click through programs and when will I get paid (Yes they do have it on their website but you have to look around to find it. Not something that is laid out when an affiliate joins them
  2. No personal details about me (where do I live? How do we send you payments ? etc., etc.)
  3. No Information on their rules for click through ad placements, competition etc.
Either they are very new to the affiliate program business ( in which case I dont want to be the first beta bakra) or else they are really not interested or planning to do a good job of tracking and paying affiliate traffic. Both of these are just worrying enough that I have not displayed their ads on my website.

So Why am I writing about them? Their cause is a good cause, they want to get into micro lending business which eventually helps the poor but given that they claim to be professionally run "for - profilt" organization, I would expect more. Hope they are reading this one.

Have you had any experience with them? Please share your thoughts and experiences as comments to the rest of the readers can benefit from it.

this article was posted on by Vivek