NPS: Does it make sense to invest?

NPS: National Pension Scheme  Does it make sense to invest Rs 50,000 in the NPS to get additional tax deduction? It doesn't as equity mutual funds can get you more... An additional tax deduction of  R 50,000, introduced by the finance minister in the last budget, under Section 80CCD(1B) on the contributions to the National Pension Scheme (NPS) is a major draw for some investors. This was over and above  R 1.5 lakh tax deduction permitted under Section 80C of the Income Tax Act. However, many investors can't make up their mind whether they should go ahead with the investment because of their lack of familiarity with the NPS and its rather rigid structure. Many of them are wondering whether it is better to let go of the tax benefit and invest the money in an equity mutual fund. The strategy is worth a serious consideration as it gives an investor full control over his investment and the accumulated corpus. It is also tax-efficient. The NPS is open to all the India


ULIP V/S MUTUAL FUND  I believed that discussion between ULIP Vs  Mutual Fund  was settled long back but I was wrong. In all of my sessions we have clearly mentioned and explained to keep investment and insurance separate. But to my surprise, a few days back one of my regular investor asked me– Which is better ULIP or  SIP ?  This confusion came because his banker told him that Ulip vs Mutual Fund + Term Insurance is a gimmick by mutual fund industry. Now if someone  depends on his banker for financial advice  how anyone can help. We always suggest  don’t mix investment and insurance  but let’s still check ULIP vs Mutual Fund comparison. What is Unit Linked Insurance Plan? Unit Linked Insurance Plans also known as ULIPs are insurance products that combine investment and protection against  risk . A ULIP holder pays a periodic premium. Part of the premium is for life insurance and part of it is invested just like in a mutual fund scheme. This continues for many years.

Five key Rules in the world of Investing

Five key Rules in the world of Investing 1.     Start investing today – Investing is a choice that you must make at the right time and history has shown that the time is always right. Especially for growing economies like India, long term value investing is a great tool for wealth creation. It is a disciplined approach of wealth creation that builds foundation for your future.  Example- At age of 25, if you start investing 5000 per month and money grows at 12% per year, then at age of 60 you have 2.70 crores. Just a delay by 1 year (or 60000 less), will make your savings to be 2.40 crores at the age of 60 years. That is you have 30 lakhs less, just because of 1 year delay. This is because of power of compounding. 2.      Nurture the habit of investing - If you had invested 1 lac in sensex in 1984, it would have become 1 crore in 30 years, i.e 100X multiplication. In equity market, compounded interests are boosters in your long term wealth creation process. Just like we s


BENEFITS OF CHOSSING ELSS        Tax Benefit - One of the primary reasons to invest in ELSS is to save tax.   Investments in     ELSS qualify for tax deduction under section 80C of the income tax   act of 1961. Also any dividend or long term capital gain earned by the investor is   exempted from income tax. Simply, your returns from ELSS become tax free. You can   invest into ELSS and deduct upto Rs. 1,50,000/- from your taxable income to   effectively reduce your tax liability. 2.       Lock in period – It has dual benefits. Firstly the lock in period of ELSS is shortest as compared to other 80 C deduction options. Secondly, Pertaining to the performance of the mutual funds, good mutual fund portfolios are constructed for long term investments, however, they are not bound with the lock in periods. But in case of ELSS, the funds are locked in for at least 3 years. Which means, in ELSS fund you are obligated to stay invested for 3 years or more to exempt from taxes ap

Emotions in mutual funds

Emotions in mutual funds Emotions plays an important role in every facet of our life. It also does in our investment decision. What we have seen is that entry in mutual fund or equity for that matter is very easy. The day you decide to buy a fund, you take entry. But the more important question is when you exit the fund or how to decide when to exit the fund? Human is a greedy creature. That is very basic characteristics of all of us. When market is rising we seem to buy more equity, more our existing portfolio is doing good.  And when market is not doing good, we focus on selling everything. One of the perfect example for this is what actually happened with me. One of the investor came to me in 2016 starting. At that time I forcefully asked him to allocate atleast 50% to equity. But he insisted to allocate maximum 20% to equity. I persuaded him and just because we were connected from like last 10 years he agreed to me. It took me 1 hour to convince him for the same. He h

Importance of involving your family in your investment decisions

Importance of involving your family in your investment decisions These days a lot of financial decisions are to be made in day to day life. Even we have a lot of bank accounts, investments and med claim policies. In this scenario it is very critical for your family, specially your better half to have an idea about these. Pointers to be discussed with your family – 1.    Your financial advisor – Your family should be known to your financial advisor. They should perfectly know where to contact to just in case an emergency arise. Investments although is always done for long term perspective, but at times can be life saver at important points of life. EG there was one of my client who was well of in his living and was maintaining a health investment with me. One day he was critically ill, family had no idea where to get funds from. But his wife and son was connected with me via FB. They contacted us and their investments with us proved to be quite helpful to them. It probably ma

Various stages of Investing

Various stages of Investing Starting your career This is the first time in your life, when you are earning money and are financially independent. You put your salary or income from business in a savings bank account and spend from it, to meet your living expenses (like food, rent, transportation etc.) and other lifestyle needs. The most important financial requirement for you at this stage is to meet your expenses from your income; if your expenses are more than your income then you will run into debt. If your expenses are higher than your income, then you must either cut down on expenses or find additional income. Finding additional income is not always within your control, expenses on the other hand are within your control. Once your expenses are within control, not only you will be debt free but also be able to save. It is important to make savings a habit; even relatively small savings every month can grow to a huge corpus in the future through the power of compounding. W