There are many types of mutual funds. Each fund has its own tax benefits. Therefore, Savepro, a financial advisor suggests that mutual fund investments should be made wisely. For example, investors can earn 8% to 9% interest rate through a fixed deposit scheme; however, these types of schemes are taxable. Therefore, post-tax return; investors will get 5% to 6% returns only. However, with the rising inflation rates, the returns might substantially decrease. But, mutual funds are much more tax-friendly. The tax on mutual funds arises only on the sale of the funds.
For example, portfolios with 65% equity funds but are sold before 1 year charged 15% plus 4% cess rate. On the other hand, long-term equity funds (funds that are kept for a year) are charged a 10% tax and 4 % cess. But, long-term equity funds are only taxed if the gains exceed more than 1 lakh. Therefore, Savepro suggests you should keep funds for the long-term and thereafter, sell them to maximize your profits. Similarly, tax on long-term debt mutual funds depends upon the applicable tax rate for the investor. Short-term debt mutual funds have a holding period of 3 years. On the other hand, long term debt funds have a period of more than 3 years. Therefore, you could have a 30% tax and 4 % cess on short-term debt funds but long-term funds are charged 20% tax and have 4% cess. So, Savepro suggests you to attain knowledge about your debt funds and buy long-term funds to decrease your overall tax and cess. Lastly, the fund house pays dividends distribution tax (DDT) before distributing it to the investors. Therefore, dividends are tax-free for investors. So, Savepro suggests investing in dividends to save as much as 29.120% tax paid by the fund house. So, investors should learn about these benefits before making any investment decisions. To read more Follow Us on ISSUU
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Mutual funds returns don’t get compounded daily or even monthly, but only annually. The interest is shown as a compounded annual growth rate (CAGR). Savepro states that CAGR is a global standard for comparing different types of assets across geographies. For example, if you are told that you will earn 10% on bonds and 15% on equities. Then you will know that annually you will earn 5% more in equities than in bonds.
According to Savepro, the reason that CAGR is followed annually and not bi-annually or every three is because it makes comparing asset classes impossible. For example, if you knew that you will receive 6% interest every 6 months on bonds and 40% every 3 years on equities then comparison becomes unrealistic. As per Saverpro if you are told that an asset will give 12% returns after 3 years, then it will mean that the interest will be compounded the second year accounting the interest earned and initial investment. Also, by the end of the year, the compound interest for the first two years will be added to the initial investment and then you will get to find returns. The accounts get compounded in the 2nd and 3rd year because you have already earned the interest. This is similar to your fixed deposit investment that provides interests every quarter. Both positive and negative returns from a fund are reflected in the fund value. Therefore, the return that you accrue will be on the return that you have already earned. Conclusively, mutual fund returns are compounded just like FD's. But, before making any financial plans, you should definitely take advice from a financial consultant or adviser like Savepro, so that the right investment plans are made. Also, since returns are accrued annually, therefore, it would be best to re-balance your asset allocation at the beginning of the year. This will be beneficial for you and the health of your financial plans. At the same time, one should always review the financial balance sheet to know the assets and liabilities. This will make the person aware of the right type of mutual funds investments. So, contact Savepro before making any financial plans or decisions in the upcoming years. For Updates Follow Us On pinterest Let’s give you a situation. Imagine:
You are the only person who is working in the family. As a responsible individual, you are out with your family on a much-needed vacation that is absolutely a luxury and a long-awaited one too! Suddenly a mishap happened, and one of your family members met with an accident. Now you are helpless and have no clue with any money at hand! You are stuck in this emergency situation. Would you be lost? We are sure that your answer would be no! And that’s the major reason why you need to know the value of emergency funds. Savepro will help you get into the insight! What are Emergency Funds? The term emergency funds are somewhat similar to back up plans. At times of trouble or in situations like that, this becomes your savior. Emergencies can knock your door any time without being evitable, and it is your duty as a breadwinner to rectify and solve them. For the ones who have no life savings or even do minimal ones, Life can turn out to be hell! Hence emergency funds play an important role at such moments. The most important reason to invest in such funds is that you can access the money whenever you are in need. The emergency can varies from anything, like loss of a job to a minor, but it has to be an immediate need. The stability of the regular income is not assured. This is the lifesaver, and Savepro definitely recommends it is as a supporting salary. Things that you should consider before investing in emergency funds are as follows: 1. The Plan There are many investment schemes such as ELSS, NPS, PPF, etc., but they have lock-in periods And does not help at the time of the emergency. Some of the top alternatives for such situations are: 1. Liquid Funds 2. Savings Account 3. Ultra-short debt funds 2. The Amount Savepro says that your emergency fund should help you to cover at least three months of your expenses. Having three months to 8 months of your expenses covered would seem to be a nice idea! If an individual loses his/her job, these funds will help them pay their loans, EMIs, and other expenses. It doesn’t stop with this. Every time an individual’s salary and lifestyle changes, their allotments in emergency funds should keep on changing accordingly. It’s your choice to live with feeling all your life or to have a backup plan for all the forthcoming emergencies. For all your financial needs visit savepro. Plan wisely, and well in advance! Also Read : How To Improve Your Credit Score ? Know These 3 Easy Tips Well, every adult knows the importance of a good credit score. This cannot be overstated. You will be glad to know that if your credit score is good enough then it will easily increase the chances of the approval of your loan application. This score is dependent upon your repayment history, outstanding debt, number of active loan accounts and frequency of loan applications, basically. It has its own perks. But the question arises here on how to improve the credit score and make it good.
You can easily check your credit score on one of the bureaus, i.e., Experian, CIBIL, CRIF and Equifax and know what factors are affecting it. Then you may decide all the regular efforts taken in a flow. Here in this blog, Savepro will tell you 3 easy tips: 1. Don’t miss out on EMIs It’s the first week of the months when all the EMIs are going to alarm! Paying all the loan instalments and credit card bills timely will assure that you have got a healthy credit score. This will help to maintain a good score in the longer run. The lenders before giving out any loans will rely upon your repayment history such that, they can gauge your likelihood to pay loans in the future. If you don’t pay it on time and prefer rolling over the outstanding balance; that can affect your credit score negatively. It’s considerate to take note that even the bill payment history can affect your credit score. Make sure that you pay all the bills such as phone bill, electricity and other utilities bills on time. The easiest way is to make sure that bill payments are automated. 2. Pay attention to credit utilisation ratio What is Credit utilisation ratio? It is that ratio of the outstanding credit card balance to the total credit limit. Let’s help you understand this with an example, if Riya’s balance is INR 20,000/- on a credit limit of INR 50,000/-, and the credit utilisation ration is 40%. The highest utilisation implies at the maximum dependency upon credit which, in turn, can hurt your credit report. When you swipe your credit card for even a menial expense, then it’s a sign that you are alarmed at a high credit utilisation ratio every month. 3. Don’t apply for too many loans Don’t apply for loans for every little need as that will showcase a bad credit report to these lenders. This stands true for credit card applications. It will make you look desperate for credit with restricted resources to payback. Now that you are aware of how one can improvise on their credit score, it is ideal to say that you can depend upon Savepro for any relative queries. Have a higher credit limit but no outstanding balance! :) A lot of young professionals today understand and know the importance of having the right retirement plan. However, given the wide variety of investment options, the selection of the desired retirement plan can be a bit confusing. For investors, who don't wish to put themselves through a massive risk profile, provident fund schemes like the PPF, VPF or EPF, can be great options.
The awesome part is that these schemes are incredibly secure and assure stable returns throughout. As a result, they are ideal for people with long term investment goals like merely saving for the retirement plan. If you understand the difference between the available schemes, it gets relatively more accessible for you to pick the best scheme. So, here we at Savepro will help you see through the differences between VPF and PPF and based on that, you can decide which one of these schemes is most beneficial for you. However, before we jump to the difference, let us understand in brief, what is VPF and PPF. 1. PPF PPF is the Public Provident Fund. It is a scheme that isn’t related to your employer. So, PPF is a government offered scheme. It assures you a fixed return and is targeted towards helping people develop a retirement portfolio. Both non-salaried, as well as salaried individuals, can invest in PPF account. 2. VPF VPF is the Voluntary Provident Fund. It is a voluntary scheme that lets the employees make a voluntary contribution to their PF account after giving away 12% as per the EPF guideline. The interest rate in both EPF and VPF is same, and employees can contribute up to 100% of their salary. Differences between PPF, and VPF a) Applicability In the case of a VPF, only salaried working professionals can invest in this. On the other hand, in the case of PPF, everyone is eligible to open a PPF. You can avail a PPF facility in almost every bank and post office. Further, you can also start your PPF account online. All you've to do is to visit the website of the bank wherein you wish to open the account.Follow the process that follows, and you are ready. b) Contribution For the VPF, the employer has the right to contribute any amount up to a maximum of 100% of their salary and dearness allowance. On the other hand, for the PPF account, the contribution is voluntary, but it has an upper capping of 1.5 lac for a year. c) Returns At present, the interest rate that you get by banks on the PPF account is 8.7%. Since the interest that you get on PPF investment is related to a decade of government bond yields, you’ll experience a change in the interest rate, now and then. For the VPF, the interest rate that is currently offered by the bank is 8.75%. However, here again, there is a revision seen in the interest rate almost every year. d) Investment Duration For the PPF, the duration of the investment is 15 years. Once this period ends, you can further invest your period of investment to another five years. For the VPF, the account stays active until the time you resign or retire. If you happen to make a job switch, your account can be easily transferred to another employer. Related Information - Basic Questions to Ask Before Investing In a Mutual Fund e) Tax Benefits The returns that you get from the investment in PPF are exempt from tax under Section 80C. On the other hand, the gains from the VPF post the maturity are eligible for a deduction as per the Section 80C. Please note that for you to get a deduction, it is essential that you worked with your employer for at least five years. f) Loan Facility The best plausible benefit of the PPF is its loan facility. If you have a PPF account, you can quickly get a loan against investment. If you need a loan, you can apply for it post the completion of 3 years of the investment. The maximum loan amount that you can get is equivalent to 25% of the remaining amount towards the end of the second year. Further, a second loan can also be availed before the completion of the 6th financial year of the investment. Please know that you can apply for the second loan only if you have repaid your first loan. On the VPF, partial withdrawal is permitted, and mortgage can be availed up to 100% of the amount. Making the Decision To be able to accentuate your retirement portfolio, it is a good idea to invest in both VPF and PPF. For opening an account of PPF online, you can opt for any of the top banks in India that gives you this facility. For any more queries, feel free to contact us anytime! Also Visit Listly For More Info Our parents, grand parents, and all of our seniors have always advised to “Know your priorities well!”. In all our growing years, each one of us has heard this while growing up. However, priorities may ping your door anytime, at any age!
Let’s explain this by a simpler example that a CA or a doctor can easily afford a holiday to the next tourist spot, but a struggling musician may not. He/she has to work harder to achieve the goal. Henceforth, he/she can further pursue their passion. Savepro makes sure that you meet your financial requirements and you can do future investments easily. #1. If travelling around the world is your calling a) Exotic trip to abroad: Most of us are impulsive travellers, aren’t we? Now that you have become a regular traveller lately, and savings become a little difficult to handle every single time! Hence, you can create an Indulgence Fund which will gain from a monthly SIP from your salary. b) All of you would agree to this that our parents wish to go on a pilgrimage. It can be Mecca or Kashi; you can now easily create a small Pilgrimage fund and gift it to your parents wherein you put 3% of your savings into Debt Mutual Funds. #2. Pre-paying your home loan Emergencies can happen at any unspecified time, to fulfil that you may require a large sum of money and each one of us rely upon loans to purchase things like home or car. Start saving all your money into a Loan Repayment Fund that invests in Equity Mutual Funds. #3. Children's education Every parent wishes to give their child the best education they can provide. This required well-advanced planning. The ideal way to go about this is to create an Education Fund and invest in Equity Mutual Funds. You are then looking at 14-15% returns in less than 10 years' time. Start saving at an early age, so that you can fetch the gains early. You are your own life-saver! For any queries, you may contact us at (+91) 9810634314 or Email us at [email protected] Also Read: Which Option Is Better Mutual Fund/Fixed Deposits ? Many Indian investors look upon FD as a haven for their hard earned income, even though the latest trend shows that India is heading for a measly interest of 2.5-3.5% on savings deposits and 5-7 % on other bank deposits. However, mutual funds ensure higher returns along with lower tax outgo as compared to banking products, thereby giving attractive returns on your investments. Savepro will give us a detailed explanation. Tune in!
Returns FDs offer fixed returns at a predetermined rate of interest over a specific period, whereas returns on mutual fund investments have an inherent potential to grow depending upon the performance of stocks in the market. Risk FD investments are risk-free, though they earn comparatively less returns. The amount of risk involved in mutual funds is spread over a range of stocks within the fund, but the investor stands a chance to gain more in favourable market conditions. Costs Investments in mutual funds incur expenses in the form of fees to be paid to the fund managers to take care of your investment portfolio. FD investments do not incur such expenses as no intermediaries are required to take care of the investment process. Liquidity Premature withdrawal of fixed deposits calls for a penalty along with forfeiting a portion of returns earned. The same is easy in case of mutual funds as long as the investment completes a stipulated minimum holding period, if not, incurs load charges of 1% of the investment amount. Tax Benefits In the case of FD, all earnings on the deposits are taxable depending on the tax slab to which the individual belongs. In case of the mutual fund, long-term equity funds over INR 1 lakh are subject to 12% tax and short-term capital gains will be charged 15%, while long-term debt funds will be charged 20% after indexation and short-term capital gains fund will be charged as per the tax slab. Also Read : Mutual Fund Vs Sip The buzz around tax and investments starts every year around January. We are well aware of the many means of investments, but still, at this crucial time, we tend to make mistakes by putting all the money either in one instrument or investing in a scheme that does not give us cost-effective returns. If we are considering building a fortune that keeps on multiplying, then the mutual fund is the best bet. To know more about this profitable scheme, let’s hear the fix from Savepro.
Yes, it might be confusing and can put you in a fix because different people give different suggestions. Hope this blog clears all your doubts. Mutual funds are the ideal scheme. Mutual Fund is an investment instrument that enables you to invest hassle-free. You can initiate with a small amount like 500 rupees per month. Even if you’re a salaried individual or just a normal day individual who wish to invest some amount of their incomes. Let’s quote it this way; you can invest a fixed amount, say ₹1000, every month in mutual funds. This is known as SIP (systematic investment plan). You can go for long-term plans like for 5 years, 10 years, or even perpetual. Perpetual SIPs have no ending date. It continues forever. Choose the suitable plan, the amount you want to invest, fix a date (mainly at the start of the month when you have your salary/enough funds), and your SIP will get started. The best part is you can discontinue or increase/decrease your SIP anytime as per your wish. Don’t confuse SIP investment with EMI. Seems like EMI is your liability that has to be fulfilled. However, SIP is a means of creating wealth, which is voluntary. You can stop your SIP midway as your money is not locked in the mutual fund unless of course in a tax saving mutual fund, where it's locked for a period of 3 yrs. This is the lowest among other tax saving instruments. However, exit load is levied in some cases when an investor takes out the money before the stipulated time frame. The main motive is to discourage investors from redeeming their money for some emotional reason. Which scheme would yield higher results, SIP or a lump sum? In some cases, SIP has outperformed while at other times, lump-sum investment has scored higher. Both types give good returns. However, lump-sum beats SIP when the market is continuously soaring high. On the other hand, SIPs provide the best results in the case when the market falls initially and recovers subsequently. The safest way would be to keep regular SIP investment in mutual funds and top up your investment with a lump sum amount when the market falls. Start with choosing a plan from the options. If your focus is long-term investment to grow your wealth over time, and you do not require money in between, then go for the growth option. Keep in mind that you have to have tolerance for risk and a holding period of five to 10 years in this plan. If you want some part of the money invested in returning to you in the form of dividends, like regular income, then go for the dividend option. These funds safeguard your wealth in a falling market and hence, are best-suited for risk-averse investors. Value funds deliver a superior risk-adjusted return in the long run as the funds are mainly invested in stocks which are undervalued. Funds like opportunities invest in companies which can withstand the changing economy. Many times fund managers invest in companies that are not in good shape currently but have the capacity to outperform in in the coming future. This is known as contra fund You can also opt for multi-cap/Flexi-cap; large-cap; mid-cap; and small/micro-cap funds. These are dependent on market capitalization. Cap here means the total share of products available for trading by its present price. Mutual Funds promises high returns. Is it true? Yes, you heard that right. There are two types of mutual funds, equity and debt. Returns defer depending on which fund you choose among these. Equity mutual funds have proven to be best than every other asset class in the long-term. They have provided huge earnings beating inflation. In the last two decades, equity mutual funds have given returns in the range of 14-18% per year. In the case of debt mutual funds, returns in the range of 9-11% are promised to depend on the type of debt fund. The returns are higher by around 2-4% than the other fixed asset instruments like PPF or FD. Register for free on SEBI which takes care of all your complaints and grievances online. SEBI regulates the stock market and develops SCORES (SEBI Complaints Redressal System). You can file complaints against the brokers, depositories, registrars, transfer agents, mutual funds, portfolio managers, and even against the stock exchanges. The best mutual fund depends on your goals and your investment style. Just research the risks associated and the returns promised. For any more queries, you may also contact Savepro anytime! Also Read : Are You Financially Ready To Get Married Walking the aisle with a special someone can be whimsical, but as the vows are necessary to be exchanged, so does the finances.
Stepping onto the new lifestone may seem enthralling, and knowing how to share a new life with your future spouse can be exciting. Along with that comes the responsibilities of finances. Have you asked this question to yourself: Am I financially ready to get married? Savepro gives a quick guide to determine if you are ready or not. 1. List your goals There must be some aspirations such as building a new home for yourself or say, starting a new business, thinking to get married. There can be a lot of goals that require funds, so you need to plan at an early stage to achieve these goals. 2. Figure out what should be the role of each person. YES! This is important that financial planning is necessary. Be it your honeymoon, or the succeeding life after that; you need to decide what role everyone is going to play, where you or your partner should invest and how much. It will give you clarity, and there will be no issues regarding the finances. Hence, you can handle it like boss!!! 3. Make a strategy A plan is necessary to eliminate unnecessary expenses and save some funds for the future. We would recommend that you should have an action plan for the next 5-10 years so that you don’t stuck in the debt trap. Things will be easier to follow by with strong action plan. 4. Schedule the money-talks! You have to live your life with the person for the rest of your life, so you don’t need to be hampered by the judgements coming after. At the end of the day, you don’t need to exist under financial baggage. A couple who schedules financial talks strive in the long run! 5. Combining your Assets Now that you have vowed to each other, cementing your commitment in the financial is one thing you could gift to each other. If you’re comfortable with having joint accounts, then create one and get the money flowing. Make sure discuss & plan everything beforehand to have a happy and secure life ahead. For any queries, you can give us a call at +91-9810634314. |
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