A continuing series that describes how MProfit handles specific asset classes and how you can benefit from it.

The current and maturity values for bonds are calculated based on the interest rate, frequency of interest payout and cumulative or payout option.

The current and maturity values of remaining bonds will be adjusted when you sell some bonds from your total holdings. The closing balance of bonds will be calculated based on the original purchase price and the remaining quantity. This balance cost will match with the balance in your books of accounts.

You can add transactions to your existing bond investments. The terms related to interest rate, frequency of interest pay-out, cumulative or pay-out options and maturity value will remain the same as original first investment. The current values and maturity values will be adjusted based on subsequent purchases.

There is also an option to add transactions related to interest payout, which will not have any affect on the current or maturity values. This transaction is helpful in computing the total gain from the investment and when calculating your annualised returns (XIRR).

You can decide to calculate the values of bonds based on two options:

1)    Set the value based on the interest rate

2)    Set the value by manually adding the bond price

The option to add cumulative interest is provided via the bonds transactions screen. Investors may want to pass this entry for tax calculation purposes. The accrued interest up to 31^st March can be passed as a cumulative interest entry in MProfit.

MProfit is designed in such a way that there will not be any difference in current and maturity values of bonds even if you pass the cumulative entry at the end of any period.

Lastly, you can set the alert for the lock-in period (if any) as well as the maturity date for your bonds.

A continuing series that describes how MProfit handles specific asset classes and how you can benefit from it.

The current value and maturity value of bank fixed deposit’s (FDs) are calculated based on the interest rate, frequency of interest payout and cumulative or payout option. MProfit has provided the option to enter transactions for partial withdrawals to take care of FDs which are linked to your bank accounts. If partial withdrawal has occured, you will need to enter the principal amount as well as the interest payout (optional) on this withdrawal.

The assumption is that the bank pays out interest on this partial withdrawal. Usually bank gives less interest for partial withdrawal as opposed to holding the FD till full maturity. After a partial withdrawal, MProfit will calculate daily gain, overall gain, current and maturity value based on your balance principal amount with the same terms of your original FD.

MProfit has provided the option to add cumulative interest in terms of FDs. Although, banks do not show this entry in their FD statement, investors may want to pass this entry for the tax calculation purposes. The accrued interest up to 31st March can be passed as cumulative interest entry in MProfit, so as to tally the balance with the books of accounts. MProfit is designed in such a way that there will not be any difference in current and maturity value of this FD even if you pass the cumulative entry at the end of any period.

Lastly, you can set the alert for the lock-in period (if any) as well as the maturity date for FDs created in MProfit.

Unit Linked Insurance Plans (ULIPs) are very complex products from the data management perspective. There are more than 25 insurance companies and each has many ULIP products and each ULIP product has 4 to 8 associated funds. ULIP holder can switch between the funds and the units are reduced to recover the mortality charges and other charges. We currently do not provide the NAV of each ULIP product. We will try to incorporate the same in future if we find it feasible.

In spite of the complexity, we have tried to provide the complete ULIP management module in MProfit. We believe that each investor would have one or two ULIP products to manage in his portfolio. How data should be entered and managed for ULIP products in MProfit is explained below in details.

Once you create the ULIP plan manually, fill out all the details about your policy (one time) and you can create the associated funds by going into Edit Fund Allocation. You can create the funds as per the plan you have chosen.

There are couple of ways you can set the current policy value to be reflected in your net worth summary.

Go to Transaction list of ULIP product and Click on the Set Current Value button and choose the appropriate option.

a) Periodically, (suggested monthly), you can go to Transaction List and Click on Other Transactions and click on Edit Fund Allocation and change the Quantity of units and NAV of your funds. The policy value will be calculated based on these data.

b)     Second option is to calculate the policy value as per the total premium paid – withdrawal (Use Set Current Value feature)

c)      Third option is to set the policy value manually. You can directly enter the policy value periodically (say monthly) based on the statement of your ULIP policy and this will be reflected in your net worth of your portfolio (Use Set Current Value feature). You do not need to enter the fund details and this is the simplest method to capture your policy value to be included in your net worth.

ULIP products are very long term in nature and we recommend them to update the policy value every month as per the statement of your ULIP policy based on your choice of setting. By doing this, you can almost capture the true value of your ULIP investments in your net worth summary.

You can manage the Unit Linked Pension Plans in the same manner, which will be without insurance details.

You can add all Exchange Traded Funds (ETFs) in MProfit. ETFs fall under the category of Mutual Funds.

A Mutual Fund/ETF scheme is classified as an equity-oriented scheme if it has holdings in the equity of domestic companies, amounting to 65 per cent or more, on an average, during the year. A scheme that does not fulfil this condition is considered as a debt-oriented scheme. All Gold ETFs fall under Debt MF category.

Some of the ETFs listed in MProfit are

• Gold Benchmark Exchange Traded Scheme (Gold BeES)
• Reliance Gold Exchange Traded Fund-Dividend Payout Option
• SBI GOLD EXCHANGE TRADED SCHEME
• UTI GOLD Exchange Traded Fund
• Liquid Benchmark Exchange Traded Scheme (Liquid BeES)
• Nifty Benchmark Exchange Traded Scheme- Nifty BeES
• Nifty Junior Benchmark Exchange Traded Scheme (Junior BeES)
• Sensex ICICI Prudential Exchange Traded Fund
• PSU Bank Benchmark Exchange Traded Scheme (PSU Bank BeES)
• Banking Index Benchmark Exchange Traded Scheme (Bank BeES)
• Reliance Banking Exchange Traded Fund-Dividend Option

Many of the users have asked us how they can compare their own individual portfolios as well as family (group) portfolios for different periods.

One of the easiest way to do this is to save asset allocation reports for individual portfolios and group portfolios in pdf or excel format, say monthly or quarterly. You can then always compare your portfolio values of past and current date.

You need to go to Analytical Reports and select Asset Allocation Reports. In stead of printing this report, you need to click the ‘Save’ button on the top panel of your report window. Select the format in which you want to save your reports and save it with the appropriate name ending with date, for e.g. Name1-NetWorth-31-Mar-2009, Name2-NetWorth-30-Jun-2009. Once you do that, it would be extremely easy to compare your net worth reports for different dates. Please let me know if you have any suggestions or better ideas.

We have received many queries asking how various updates are provided in MProfit.

We provide end of the day closing prices of BSE stocks as well as Mutual Funds NAVs. The prices are updated automatically in MProfit when you start the application. Apart from price updates, we provide following automatic updates through internet.

1) Database Updates (which are addition of newly listed stocks, Mutual Funds and Company Name Change updates)
2) Software Updates (We keep improving the software functionality and keep adding new features & reports)

When new database updates are available, you will see the ‘ U ‘ symbol at the bottom of the summary screen. If you click on ‘ U ‘ and accept the updates, application will be restarted to update your database with these new updates. When new software update is available, you will receive the message about the new version availability.

Please keep accepting these new updates to enjoy the full benefits of MProfit application. You need internet connectivity to receive all the updates.

MProfit gives separate capital gain reports for Equity MF and Debt MF, because taxation is different for both the types. When you create MF scheme for the first time, you need to assign it as Equity MF or Debt MF. Exchange Traded Funds (ETFs) are also included in MF list and you need to assign ETF scheme as Debt MF as capital gain calculations for ETFs are same as Debt MF.

MProfit follows First in First Out (FIFO) method for capital gain calculations. MProfit also takes care of Dividend Reinvestment in calculating capital gains. Dividend Reinvestments are considered as new buy transactions for that particular scheme. When you sell (Redeem) units, all new subscriptions (buys) and dividend reinvestment transactions are taken into account and as per FIFO rule, short term and long term capital gains are calculated. I will explain the same with example below:

Here, the short term capital gain is calculated as Rs. 5200 on 15-Dec-08, because the cost of total 1050 units will be (10000 + 50*11) = 10550 and redemption (sale) value is 15750, and since this redemption has happened within 12 months of subscription (buy) of units, it will be a short term capital gain. Similarly, on 02-May-09, Rs. 450 is the long term capital gain as cost value is 50*11=550 (dividend reinvestment is considered as buy transaction) and redemption (sale) value is 1000, and redemption has happened after one year.

MProfit provides capital gain calculation reports after users add buy and sell transactions.

Below is the detailed explanation about how MProfit handles capital gain calculations.

MProfit follows First In First Out (FIFO) method while computing capital gain calculations. MProfit provides Intra-day Profit/Loss, Short Term Capital Gain and Long Term Capital Gain Reports. Buy and Sell transactions of same share in the same contract note are considered for Intra-day calculations. Short Term Capital Gain will be calculated if shares are sold within one year from the date of purchase and Long Term Capital Gain will be calculated if shares are sold after one year from the date of purchase.

One of the most important features of MProfit is to handle capital gain calculations after the corporate actions like Bonus, Split, Merger and De-merger. Capital gain calculations are adjusted automatically based on these actions as per the income tax rule, with effective from the date of this corporate action. MProfit handles multiple Bonus, split, Merger and De-merger action for any stock.

Long term and Short term capital gain calculations are calculated for different corporate actions as follows. Please note that this explanation is for those who need to know how capital gains are handled for various actions like Bonus, Split, Merger and De-merger. MProfit handles all of these automatically after the user adds the Bonus, Split, Merger and De-merger details.

Bonus:
The new bonus shares will be treated as purchased at zero value and the effective date of bonus will be treated as purchase date for capital gain calculations. The old shares will be treated same as before bonus, with no change in purchase price and date. So, when you sell the shares of this company, first the original shares will be sold as per FIFO method and then the bonus shares will be sold. If you sell Bonus shares within one year of receiving bonus, the gain/loss will be treated as short term capital gain and so on.

Split:
Only the purchase price will be automatically adjusted based on the split ratio. Date of purchase will remain the same. Capital Gain Calculations will be calculated based on this adjusted purchase price. The new adjusted price will be displayed in capital gain reports as well as in closing balance report.

Merger:
The new merged company will retain the original purchased date of the original company and the purchase price will be adjusted based on the merger ration. Recent example is Reliance Petro to Reliance (16:1), so for e.g. if 160 Rel Petro were purchased on 01-09-08 at Rs. 100, for the total amt of 16,000. The new 10 Reliance shares will have a purchase price of 1600 with the same purchase date as 01-09-08 and if you sell Reliance within one year from 01-09-08, the gain/loss will be short term in nature and if you sell them after one year, it will be long term in nature.

De-merger:
The new company will have the purchase date as effective date of de-merger. The parent company will retain the original date and purchase price for capital gain calculations. If you break down the purchase price between Parent company and new company, the purchase price will be automatically adjusted as per the allocated amount for each company.

Double click on any of your stock name and you will see the box containing all the transactions of this stock. On top, right hand side, you will see Other Transactions button. Click on this button and select Bonus, Split, Merger or De-merger action and fill out the details.

It should be noted that purchase price and capital gain reports will be automatically adjusted based on these corporate actions like Split, Merger and De-merger as per Income tax rules.

You can record all your SIP transactions in MProfit. SIP is a regular buy transaction (subscription) of MF scheme at a regular interval with the same fixed amount.

Right click on the MF icon on the left hand side of the summary screen or Right click on the Buy/Sell button on the right hand side of the summary screen. Select Generate SIP Entries. You can select this from Activity Menu as well.

You will see the MF SIP form. You need to select the MF name, SIP starting date, SIP ending date, frequency of SIP transactions, like monthly, quarterly, etc., and the amount for SIP.

Click on Generate button to generate all the entries for the selected period. The dates will be selected automatically. The dates will be adjusted for Saturdays and Sundays as SIP transactions do not happen on weekends. You can change the dates if you desire. Now, you need to only fill out the units as per your MF statement for all the respective dates. The amount for each transaction will remain the same.