Five lessons for investors from the Modi govt’s cabinet reshuffle

[ad_1]

The Narendra Modi government rejigged its Cabinet, inducting new ministers asking some old ones to go. It also formed a new Ministry of Cooperation. Head of key ministries–home, finance, external affairs defence–were retained.

Just like the central government assessed made changes to its ministers, investors need to relook rebalance their portfolios.

EVALUATE PORTFOLIO PERFORMANCE REGULARLY

Regularly evaluating your portfolio is the key to achieving financial goals. If you have a mutual fund scheme in your portfolio that you believe has not been performing well, evaluate it exit. But before you withdraw, assess it on a few parameters.

First, check whether it has better returns than its benchmark. Then, compare the scheme to its peers evaluate its performance. Finally, give it four quarters before finalising your decision. See if the underperformance is temporary whether the fund manager isn able to make the course correction. If things don’t look up for four quarters, exit the scheme keeping taxation exit load in mind.

You should also focus on maintaining the asset allocation. Suppose an investor has a portfolio of 70% equity 30% debt. If equities run up significantly, his asset allocation can go for a toss. Therefore, you must review your portfolio regularly restore the balance.

VENTURE INTO NEW PRODUCTS OVER TIME

The National Democratic Alliance (NDA) went for cabinet expansion after completing half of its second term. It also added the Ministry of Cooperation after being in power for over seven years.

As investors, you must also start with the traditional, tried tested, plain vanilla products like diversified equity mutual funds, bank fixed deposits, liquid funds, provident funds, so on. After you mature as an investor get comfortable with different asset classes, only then you must add other products after thoroughly knowing their risks benefits. For example, investors should look at thematic funds, sectoral funds, or strategy-based funds only after they have some experience of investing in equities.

GOALS AND OBJECTIVES ARE MOST IMPORTANT

During the cabinet expansion, not all ministers were asked to leave because of underperformance. Some were replaced to achieve particular objectives.

Similarly, if you are close to achieving your goal, start exiting your equity investment slowly. Don’t delay it because equities are performing well. The greed could prove costly. Keep your goal objective of investment over above returns.

CHOOSE PRODUCTS BASED ON GOALS

Each new minister that the NDA government has inducted is for a purpose. Every minister is chosen with a specific objective in mind. Similarly, investors should be particular about the products they want to use for their goals.

For example, don’t start investing in technology mutual funds because they have better returns than diversified equity fund categories. Have a clear objective of choosing each product.

CORE OF THE PORTFOLIO MATTERS

Ministers heading the important portfolios were not touched during the cabinet reshuffle. Similarly, investors need to have a strong core portfolio that would help them over the long term. The few funds in the core portfolio should be stable, diversified with a strong track record.

For example, if you have made an index fund as part of the core portfolio, you may not need to change it unless the scheme continues to have a high tracking error.

(Do you have personal finance queries? Send them to [email protected] get them answered by industry experts)

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected informed with Mint.
Download
our App Now!!

[ad_2]

Source link

Know when you can claim both home loan HRA deduction

[ad_1]

I stay in a rented house in Delhi because I want to avoid a long commute to work. I have also bought a house in Greater Noida where my family lives. I am paying interest on the home loan taken for this property. Can I claim tax deduction for house rent allowance (HRA) home loan interest simultaneously?

– Rohan Shah (Delhi)

Income Tax Act allows a deduction for HRA as well as interest paid on the home loan. However, both deductions can be claimed in the same financial year in certain situations.

HRA is an allowance paid by employers to employees to meet the cost of a rented house. Income Tax Act allows exemption in respect of HRA only if the employee is staying in a rented house. To claim tax exemption, an employee must be paying rent for the house that he actually occupies. In case an employee lives in his own house or does not pay any rent, he cannot claim an exemption for HRA.

Income Tax Act allows a deduction for interest on home loans paid by an individual taxpayer. This deduction of interest is available for every housing loan taken for purchase, construction, renovation or reconstruction of a residential house. The amount of tax deduction depends upon the purpose for which the house has been occupied – i.e. whether the house is occupied for one’s personal use or for renting out to others.

In certain situations, a taxpayer may stay in a rented house may also be paying interest on a home loan. This situation may arise where a taxpayer works in a city that is different from his home town or he pays interest on a home loan taken to buy or construct a house for the parents, spouse or children, etc.

One can claim HRA exemption as well as the deduction for interest on a home loan if one owns a house but lives in a rented house. Both these tax deductions are allowed only if the house one owns the house one lives in are at different locations there is a genuine reason for not living in one’s own house.

Therefore, you can claim a deduction for HRA as well as interest since your workplace is in a different city, or that your office is too far from your house. But it should be noted that sufficient explanations need to be provided to the employer or the Income Tax authority in case there is a scrutiny of the details provided.

– Tarun Kumar, is a Delhi-based chartered accountant. Queries views at [email protected]

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected informed with Mint.
Download
our App Now!!

[ad_2]

Source link

How much you need to deposit per month to become a crorepati

[ad_1]

PPF calculator: Public Provident Fund (PPF) is one of the high yielding income tax saver option, which is 100 per cent risk-free. Currently, PPF interest rate is 7.1 per cent but it’s announced on quarterly basis by the Government of India (GoI). So, the PPF interest rate may change in future but for those who have low risk appetite, PPF is one of the most favoured assured guarantee return investment tool. According to tax investment experts, if invested in a smart manner, one can become a crorepati by choosing monthly investment mode availing the PPF account extension facility after the maturity period of 15 years.

PPF account deposit rules

Speaking on the PPF investment in monthly SIP format Amit Gupta, MD at SAG Infotech said, “As per the PPF account rules, one can do a maximum of 12 deposits in one’s PPF account. So, if an investor, who has low risk appetite don’t have a huge lump sum amount for investment, he or she can choose the monthly investment mode like mutual funds monthly SIP style. But, the investor is advised to invest in one’s PPF account by 5th of every month so that the PPF account holder can get PPF interest of that month as well.”

PPF account extension rule

Advising investors with low risk appetite to take advantage of PPF account extension rule; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “PPF account has maturity period of 15 years, but one can extend one’s PPF account by submitting PPF extension form in the 15th years of account opening, choosing interest with investment option. One can extend one’s PPF account for infinite number of times but in teh block of 5 years. So, if someone wants to go long in PPF, they need to keep extending their PPF account in the maturity year.”

PPF calculator

Assuming an investor invests 9,000 per month by 5th of every month, the investor would be able to invest 1,08,000 per annum in one’s PPF account. Keeping average PPF interest rate at current 7.1 per cent, one can go on investing in one’s PPF account for around 30 years. If a PPF account holder invests 9,000 per month for 30 years assuming 7.1 per cent average annual PPF return, the PPF calculator says that one’s PPF maturity amount will be 1,11,24,656.

View Full Image

Source: Groww PPF calculator

Out of this 1,11,24,656 or 1.11 crore PPF maturity amount, the net investment done by the investor throughout the investment period will be 32,40,000 or 32.40 lakh while the net PPF return earned by the PPF account holder in this period will be 78,84,656.

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected informed with Mint.
Download
our App Now!!

[ad_2]

Source link

State Bank of India provides these services via phone, SMS

[ad_1]

SBI online: The State Bank of India (SBI) has been quite pro-active in promoting contactless banking help its customers beat Covid-19 pandemic’s further spread any chances of banking fraud. The largest commercial bank of India has made some of its urgent banking services available in its contactless banking services that SBI customers can avail by a simple call on the toll free number 1800 112 211 or 1800 425 3800. One can avail these services by simply sending a SMS to the bank from their registered mobile number.

SBI informed about its contactless service to its customers through a tweet said, “Stay safe at home, we are there to serve you. SBI provides you a contactless service that will help you with your urgent banking needs. Call our toll free number 1800 112 211 or 1800 425 3800.”

In this SBI contactless banking service, a SBI account holder will be able to execute urgent banking needs like balance check last five transactions at IVR. The SBI customer just needs to dial on the given toll-free number ask for the current balance last five transactions. The banking executive on the other side will give details of the information sought after the disconnection of the phone call; the same answer will be text via SMS.

Here are some of the important SBI contactless services available for SBI customers:

1] Balance check last five transactions at IVR;

2] ATM card blocking re-issuance request; and

3] Generation of new ATM or Green card PIN.

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected informed with Mint.
Download
our App Now!!

[ad_2]

Source link

‘Mid-cap segment is highly fertile for alpha generation’

[ad_1]

White Oak Capital group, which was founded in 2017, provides investment management advisory services for India equity assets of more than $4.5 billion as of 30 June. Besides segregated managed accounts for leading global institutions, White Oak offers investment services through a wide array of fund vehicles domiciled in India, Ireland, Mauritius the UK to individual institutional investors in India abroad. White Oak has investment research teams based in India Singapore, additional sales distribution offices in Switzerlthe UK. Over the past 10 years, the alternative investment fund (AIF) industry’s assets under management (AUM) has grown rapidly to around 2 trillion. Prateek Pant, executive director chief business officer at White Oak Capital Management, spoke to Mint about the impact of covid-19 on the AIF industry the top investment themes. Edited excerpts:

Take us through the investment philosophy of White Oak Capital Management.

We have a simple yet powerful philosophy of investing in businesses based on stock selection rather than betting on macro. We believe outsized returns are earned over time by investing in great businesses at attractive values. A great business is one that is well-managed scalable, with superior returns on incremental capital. Valuation is attractive when the current price is at a substantial discount to the intrinsic value. We are always looking for companies that will deliver to our expectation basis, valuation framework investing philosophy.

On average, AIFs have lagged Nifty returns over the past few years. Given the decent performance of passive funds, what makes alternative investing a good bet?

India is still one of the most attractive destinations for alpha generation. Over the last 10 years, the AIF industry’s AUM has grown rapidly from almost nowhere to around 2 trillion today. Alternative investments are proving to be a better platform because they are not fettered by mandates, they have performance potential, pricing options, latitude in managing money better engagement.

Retail investing has seen a major uptick due to covid-19. What was its impact on the portfolio management services (PMS) or AIF industry?

More more smart money is getting allocated to PMS, but still, the exposure to PMS remains a satellite strategy rather than a core strategy. Many consider PMS as diversification within their existing asset allocation. With innovations in PMS to offer differentiated products such as allowing systematic investment plans (SIPs) to invest in small staggered instalments (provided it meets the designated threshold), online schemes will ensure faster growth of AUM for PMS.

Do investors now have to take extra risk for better returns, given that interest rates are low stock valuations are high?

At White Oak, we don’t take any macro or top-down kind of bets. The idea is to remain fully invested at any point. The base case assumption for us always is that the market should deliver its time value of money in terms of return over any given period.

Mid-cap small-cap-based strategies have been consistent outperformers during the second wave of the pandemic. What is your outlook for these categories?

We always seek to maintain a balanced portfolio to ensure that portfolio performance is driven by stock selection rather than non-stock-specific risk factors such as market timing, beta, sector or other such factor exposures. We do not make any top-down allocation decisions on sector weights or thematic exposures. The sectoral or factor weights are an outcome of our bottom-up stock selection process. In general, from a market cap perspective, while we invest across the spectrum, we find a greater number of opportunities in the mid-cap segment, which is highly fertile for an alpha generation due to greater inefficiencies that exist in this area. We believe these segments of the market are typically less well-researched hence more inefficient, thereby providing strong alpha generation potential.

What is your view on the introduction of a framework for accredited investors by Sebi?

This is a move in the right direction, which will help develop the capital markets. Flexibility in investment decisions would allow asset management companies AIFs to work closely with well-informed investors to create bespoke proposals. They will be free from restrictions imposed for the protection of the retail investor to mitigate risks in the capital market.

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected informed with Mint.
Download
our App Now!!

[ad_2]

Source link

1 140 141 142 143 144 231