As institutions folded and markets tumbled in 2008, the legendary investor saw an opportunity nobody else did.

A few days ago, the IMF warned that the recession triggered by the outbreak of Coronavirus <a href="https://economictimes.indiatimes.com/news/international/world-news/imf-warns-coronavirus-recession-could-be-worse-than-2009/articleshow/74781718.cms" rel="noopener noreferrer" target="_blank">“could be worse than 2009”</a>. Like every round of market crash, the current correction and loss of investor wealth has also brought back memories of the 2008 financial crisis. Expectedly, there are memes and jokes around a famous statement: be greedy when others are fearful.Considering all this, it is a good time to revisit an episode where the man behind the statement saw an opportunity when everyone else saw fear.***On Thursday, September 11, 2008 -- exactly 7 years after the WTC towers collapsed -- the American financial system was headed in the same direction. Lehman Brothers, shockingly leveraged at 30 dollars of debt for every single dollar of equity, had lost 42% of its share price during the day even as its CEO was scrambling to find buyers.&nbsp;As the real estate bubble began to deflate, the dire situation was best summed up by Paul Giamatti in the movie Too Big To Fail -- we don't do this now, we won't have an economy on Monday.With nobody to take over its "toxic assets", Lehman Brothers filed for bankruptcy after midnight on Sunday, thus becoming the largest bankruptcy in the US. By Monday morning, the impact was felt on mutual funds and even working capital of firms like GE even as the Dow kept tumbling.&nbsp;A few streets away, the heads of America's largest financial institutions including Merrill Lynch and AIG were looking to sell stake to stay afloat. If left unchecked, the ripple effect would have led to ATMs running dry, people hiding "cash under their mattresses", and a collapse of the American banking system with effects all around the globe.Just a few days after it refused to bail out Lehman Brothers, the Federal Reserve stepped in with $85 billion to rescue AIG, once the world's largest insurance company. To many, it seemed like the world's capitalist paradise was turning socialist.&nbsp;<h2>Enter Warren Buffett</h2>Of course nobody knew all this better than Warren Buffett, CEO of Berkshire Hathaway, who would later describe the system as "dominoes placed to each other." He had already turned down the offer of buying Lehman Brothers and AIG and cautiously avoided pumping money into financial institutions while many others did.&nbsp;<img src="https://i.wlycdn.com/articles/buffet.jpg" style="width: 800px;" class="fr-fic fr-dib" alt="DescriptionWarren Edward Buffett is an American business magnate, investor, and philanthropist, who is the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of US$88.9 billion as of December 2019, making him the fourth-wealthiest person in the world.">However, when he was approached by Goldman Sachs, Berkshire Hathaway agreed to invest $5 billion, a decision described by a prominent publication as "an offer Goldman couldn't refuse". Given how the shares of the bank had been falling for a year and Berkshire's own shareholders didn't seem to support the move, it was a surprising decision.. For many, it seemed like a departure from Buffett’s own investing values.But the Oracle of Omaha, who had studied the assets of Lehman Brothers, saw value in his investment at a time when the market made everything look risky.&nbsp;In the middle of a bear market, during the collapse of the asset bubble, and months before a new President took office, Buffett went against popular opinion and invested in an "ailing" investment bank. He saw opportunity in a panic-stricken market.Of course, it also helped that he extracted a pretty good deal: preferred shares worth $ 5 billion and warrants for 43.5 million additional shares. Buffett knew only too well that his decision was not only a financial lifesaver, but also a seal of approval for other investors. Basically, it was Buffett practising what he preached - be greedy when others are fearful.<h2>So how much did he make?</h2>His decision was vindicated in the first 2.5 years in March 2011 when Goldman decided to buy back its shares and pay back the money. By then, even without counting his warrants, he had already made 35% ($1.75 billion) in dividends and payment from the bank. As for warrants, although Goldman renegotiated the offer before Berkshire could exercise the warrants, Berkshire was still granted 13.1 million shares and $2 billion in cash. All in all, it was a great investment, even by Buffett standards.In doing so, he also gave yet another example of one of his investing virtues: buying wonderful companies at a fair price.

When Buffett bought gold for the price of silver

A few days ago, the IMF warned that the recession triggered by the outbreak of Coronavirus <a href="https://economictimes.indiatimes.com/news/international/world-news/imf-warns-coronavirus-recession-could-be-worse-than-2009/articleshow/74781718.cms" rel="noopener noreferrer" target="_blank">“could be worse than 2009”</a>. Like every round of market crash, the current correction and loss of investor wealth has also brought back memories of the 2008 financial crisis. Expectedly, there are memes and jokes around a famous statement: be greedy when others are fearful.Considering all this, it is a good time to revisit an episode where the man behind the statement saw an opportunity when everyone else saw fear.***On Thursday, September 11, 2008 -- exactly 7 years after the WTC towers collapsed -- the American financial system was headed in the same direction. Lehman Brothers, shockingly leveraged at 30 dollars of debt for every single dollar of equity, had lost 42% of its share price during the day even as its CEO was scrambling to find buyers.&nbsp;As the real estate bubble began to deflate, the dire situation was best summed up by Paul Giamatti in the movie Too Big To Fail -- we don't do this now, we won't have an economy on Monday.With nobody to take over its "toxic assets", Lehman Brothers filed for bankruptcy after midnight on Sunday, thus becoming the largest bankruptcy in the US. By Monday morning, the impact was felt on mutual funds and even working capital of firms like GE even as the Dow kept tumbling.&nbsp;A few streets away, the heads of America's largest financial institutions including Merrill Lynch and AIG were looking to sell stake to stay afloat. If left unchecked, the ripple effect would have led to ATMs running dry, people hiding "cash under their mattresses", and a collapse of the American banking system with effects all around the globe.Just a few days after it refused to bail out Lehman Brothers, the Federal Reserve stepped in with $85 billion to rescue AIG, once the world's largest insurance company. To many, it seemed like the world's capitalist paradise was turning socialist.&nbsp;<h2>Enter Warren Buffett</h2>Of course nobody knew all this better than Warren Buffett, CEO of Berkshire Hathaway, who would later describe the system as "dominoes placed to each other." He had already turned down the offer of buying Lehman Brothers and AIG and cautiously avoided pumping money into financial institutions while many others did.&nbsp;<img src="https://i.wlycdn.com/articles/buffet.jpg" style="width: 800px;" class="fr-fic fr-dib" alt="DescriptionWarren Edward Buffett is an American business magnate, investor, and philanthropist, who is the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of US$88.9 billion as of December 2019, making him the fourth-wealthiest person in the world.">However, when he was approached by Goldman Sachs, Berkshire Hathaway agreed to invest $5 billion, a decision described by a prominent publication as "an offer Goldman couldn't refuse". Given how the shares of the bank had been falling for a year and Berkshire's own shareholders didn't seem to support the move, it was a surprising decision.. For many, it seemed like a departure from Buffett’s own investing values.But the Oracle of Omaha, who had studied the assets of Lehman Brothers, saw value in his investment at a time when the market made everything look risky.&nbsp; In the middle of a bear market, during the collapse of the asset bubble, and months before a new President took office, Buffett went against popular opinion and invested in an "ailing" investment bank. He saw opportunity in a panic-stricken market.Of course, it also helped that he extracted a pretty good deal: preferred shares worth $ 5 billion and warrants for 43.5 million additional shares. Buffett knew only too well that his decision was not only a financial lifesaver, but also a seal of approval for other investors. Basically, it was Buffett practising what he preached - be greedy when others are fearful.<h2>So how much did he make?</h2>His decision was vindicated in the first 2.5 years in March 2011 when Goldman decided to buy back its shares and pay back the money. By then, even without counting his warrants, he had already made 35% ($1.75 billion) in dividends and payment from the bank. As for warrants, although Goldman renegotiated the offer before Berkshire could exercise the warrants, Berkshire was still granted 13.1 million shares and $2 billion in cash. All in all, it was a great investment, even by Buffett standards.In doing so, he also gave yet another example of one of his investing virtues: buying wonderful companies at a fair price.

From emergency fund to asset allocation, the Coronavirus has been a stinging reminder of some fundamental tenets of Wealth Management.

As the country goes into a lockdown and an uncertain economic future looms, we can be sure that the next few months won’t be kind to our wealth. As we begin a new financial year, here are a few lessons on Wealth Management that Covid-19 has reminded us so far.<h2>Emergency fund is non-negotiable</h2>Many of those around us, particularly those in their early 20s, often wonder if an emergency fund equal to 12 months of expenses is an overkill. For those folks and others who think how they could be jobless for months due to the economy, they only need to look at sectors like aviation, travel, hospitality, event management, and others. As the country goes into a lockdown, some major airlines have already asked employees to take a pay cut or go on leave without pay even as predictions of bankruptcy looms on others.During this economic hibernation, the worst affected will be the poor who couldn't afford an emergency fund and those who didn't find it important enough. <h2>Insurance Sahi Hai</h2>As with many things in life, it takes a lifetime to build wealth and barely anything to lose it. A single event, whether external or personal, is enough to wipe out one's savings.While the importance of medical insurance is obvious, its complexity isn't. With inclusions, exclusions, varying premiums, and a long list of clauses, even the simplest plan needs time to understand. Most importantly, even a small error in reading the fine print can result in years of premium going waste when you need it the most.&nbsp;However, this shouldn't be a reason to avoid or delay getting insurance. The next few weeks will probably be a good reminder of why insurance should be the first in your wealth management checklist.&nbsp;<img src="https://i.wlycdn.com/articles/india-money.jpg" style="width: 800px;" class="fr-fic fr-dib" alt="From emergency fund to asset allocation, the Coronavirus has been a stinging reminder of some fundamental tenets of Wealth Management."><h2>Wealth lies in your Health</h2>As our elders have often told us during dinner-time, eating right and taking care of the body is our primary need. The only thing more important than wealth in deciding the quality of life is the health of your body. At the very least, a healthy body will save you money in premium paid and sick leave you didn't need. Most of all, like wealth, one just needs to look at a healthy 70-year-old to see the compounding effect of a healthy lifestyle. &nbsp;<h2>Don't put all your eggs in one Savings A/c</h2>In the wake of depositors being restricted from withdrawing their money, be it PMC bank or Yes Bank, this needs to be repeated. There is no major benefit in keeping most of your wealth in a savings account, regardless of the bank you choose. The main reason is that your wealth shouldn't be exposed to any risk that comes from a stolen wallet or a compromised debit card.Besides, from liquid funds to FDs, there are many other products that offer better safety, higher returns, and almost the same level of liquidity as savings accounts. In short, there is no reason to let too much money lying idle in a savings account, even during the time of Coronavirus. <h2>The falling stock market</h2>This period will be a test of your asset allocation. Sensex has seen its biggest fall in a single day while the numbers for Nifty50 aren't looking good either. In a few weeks, people have lost wealth built over the last few years.If you were studying the Sensex numbers or the irrational euphoria late last year, you would know that this was an overdue correction triggered by a pandemic. Even if you didn’t, the rise and fall of markets is an essential feature of our economy.&nbsp;More than ever, correct asset allocation is your best bet in times like these as it would have minimized your losses and insulated your life goals from the moods of the market.&nbsp;<h2> Track your purchases</h2>If the start of a new calendar year is a good time for resolutions, the start of a new financial year is the best time to start tracking your expenses. The lockdown and ongoing economic hibernation is pushing people to reduce their consumption to the bare minimum. Those who track their expenses will be surprised by how little they actually need to maintain an acceptable lifestyle.As an experiment, try to record all your expenses until the month-end and compare it with the last month. You will be surprised by what the numbers say. After all, what you measure is what you manage.&nbsp; The article was first published in <a href="https://timesofindia.indiatimes.com/blogs/voices/how-to-manage-wealth-during-coronavirus/" rel="noopener noreferrer" target="_blank">Economic Times on March 24</a>.

Managing wealth during Coronavirus

As the country goes into a lockdown and an uncertain economic future looms, we can be sure that the next few months won’t be kind to our wealth. As we begin a new financial year, here are a few lessons on Wealth Management that Covid-19 has reminded us so far.Emergency fund is non-negotiable Many of those around us, particularly those in their early 20s, often wonder if an emergency fund equal to 12 months of expenses is an overkill. For those folks and others who think how they could be jobless for months due to the economy, they only need to look at sectors like aviation, travel, hospitality, event management, and others. As the country goes into a lockdown, some major airlines have already asked employees to take a paycut or go on leave without pay even as predictions of bankruptcy looms on others.During this economic hibernation, the worst affected will be the poor who couldn't afford an emergency fund and those who didn't find it important enough. Insurance Sahi Hai As with many things in life, it takes a lifetime to build wealth and barely anything to lose it. A single event, whether external or personal, is enough to wipe out one's savings.While the importance of medical insurance is obvious, its complexity isn't. With inclusions, exclusions, varying premiums, and a long list of clauses, even the simplest plan needs time to understand. Most importantly, even a small error in reading the fine print can result in years of premium going waste when you need it the most.&nbsp;However, this shouldn't be a reason to avoid or delay getting insurance. The next few weeks will probably be a good reminder why insurance should be the first in your wealth management checklist.&nbsp;<img src="blob:https://www.wealthy.in/df56c721-fee5-4db1-8111-5ebfae7f71d0" style="width: 500px;" class="fr-fic fr-dib"> Wealth lies in your Health As our elders have often told us during dinner-time, eating right and taking care of the body is our primary need. The only thing more important than wealth in deciding the quality of life is the health of your body. At the very least, a healthy body will save you money in premium paid and sick leave you didn't need. Most of all, like wealth, one just needs to look at a healthy 70-year-old to see the compounding effect of a healthy lifestyle. &nbsp;Don't put all your eggs in one Savings A/c In the wake of depositors being restricted from withdrawing their money, be it PMC bank or Yes Bank, this needs to be repeated. There is no major benefit in keeping most of your wealth in a savings account, regardless of the bank you choose. The main reason is that your wealth shouldn't be exposed to any risk that comes from a stolen wallet or a compromised debit card.Besides, from liquid funds to FDs, there are many other products that offer better safety, higher returns, and almost the same level of liquidity as savings accounts. In short, there is no reason to let too much money lying idle in a savings account, even during the time of Coronavirus. The falling stock market This period will be a test of your asset allocation. Sensex has seen its biggest fall in a single day while the numbers for Nifty50 aren't looking good either. In a few weeks, people have lost wealth built over the last few years.If you were studying the Sensex numbers or the irrational euphoria late last year, you would know that this was an overdue correction triggered by a pandemic. Even if you didn’t, the rise and fall of markets is an essential feature of our economy.&nbsp;More than ever, correct asset allocation is your best bet in times like these as it would have minimized your losses and insulated your life goals from the moods of the market.&nbsp; Track your purchases If the start of a new calendar year is a good time for resolutions, the start of a new financial year is the best time to start tracking your expenses. The lockdown and ongoing economic hibernation is pushing people to reduce their consumption to the bare minimum. Those who track their expenses will be surprised by how little they actually need to maintain an acceptable lifestyle.As an experiment, try to record all your expenses until the month-end and compare it with the last month. You will be surprised by what the numbers say. After all, what you measure is what you manage.&nbsp; The article was first published in <a href="https://timesofindia.indiatimes.com/blogs/voices/how-to-manage-wealth-during-coronavirus/" rel="noopener noreferrer" target="_blank">Economic Times on March 24</a>.

On 23 March, 2020, the Sensex fell by nearly 4,000 points as the country went into a lockdown to prevent the outbreak of Covid-19. Should you keep investing?

In March 2020, Sensex, Nifty50, and shares of India's most valuable companies tumbled. But is there an opportunity hiding somewhere?

When Sensex reaches 2014 levels, what should you do?

To contain its economic fallout, we will have to anticipate second-order effects of Covid-19 that may not be obvious now.

Even though it doesn't fit the textbook definition, the outbreak of Covid-19 can be now considered a Black Swan event. This was reiterated by Sequoia Capital in a recent note to its CEOs and founders. The note advised them to "question every assumption about their business" and quoted Darwin's words to remind them that only "the most adaptable to change" will survive.What is true for businesses is equally true for economies. By now, it is clear that there will be a wide-ranging impact that will permanently alter the balance of the economy and persist long after the pandemic is contained. In fact, we are seeing the first signs of what could be a long economic hibernation.&nbsp;These include scaling down of wedding plans, shutdown of temples, theatres and the Taj Mahal, postponement of the IPL, and reduction in sale of commodities like wheat from Gujarat and cardamom from Kerala. Amidst all this, some patterns are also appearing.<h2>Made in China goes missing</h2>When a country that accounts for 27% of global manufacturing goes into lockdown in a few weeks, it is a shock to the global supply chain. As things stand, the shipping ministry has prevented more than 700 ships from disembarking on Indian shores. Apart from delaying raw materials to Indian firms, it increases the cost of anchorage, blocks other ships from coming in, and slows down the entire system.<h2><img src="https://i.wlycdn.com/articles/coronavirus.jpg" style="width: 800px;" class="fr-fic fr-dib" alt="To contain its economic fallout, we will have to anticipate second-order effects of Covid-19 that may not be obvious now."></h2><h2>Nobody is immune, but immunity still matters</h2>Like the disease itself, the economic impact will leave nobody untouched and hurt those businesses which are already doing badly. To illustrate, given the poor state of the aviation industry, an industry body has predicted the bankruptcy of many airlines in the next two months. Offline retailers, already losing to e-commerce giants, will see a drop in footfall even as they spend more in sterilizing their premises. Restaurants, already ceding market share to food delivery, might be temporarily forced to pivot to a takeout-only model. Put simply, theatres, event management firms, or any establishment that runs on footfall will have to weather the storm or perish.<h2>Social distancing = Economic distancing</h2>Although "Social Distancing" is the best way to contain the disease, it also comes at a huge cost to the economy. After all, one man's expenditure is someone else's earning. And those who avoid people and cancel their engagements usually spend a lot less than others. In the US, the Federal Reserve has cut interest rates to nearly 0% even as the Trump administration considers the idea of sending checks of $1000 each for Americans.<h2>Necessity for some, luxury for others</h2>One major airline has asked its staff to go on unpaid leave while some luxury hotels have asked their employees to fend for themselves during the lockdown. Millions of households which lack the security of an emergency fund will have to seek work or risk starvation even as others practise social distancing.<h2>All of the above will feed into each other</h2>While all of the above are direct, first-order effects, each consequence will result in other consequences or second-order effects. Therefore, unless the economic fallout is contained with the same alertness as the disease itself, all of the above will combine to form a vicious cycle that will pull the economy downwards. To reiterate what others have been saying, social distancing is the best protection and measure to contain the spread of Covid-19. From an economic perspective, it will be short-term pain and a small price to pay in our fight against this disease. This article was first published in Businessworld&nbsp;<a href="http://www.businessworld.in/article/Unpacking-The-Impact-Of-A-Black-Swan-Event/18-03-2020-186545/" rel="noopener noreferrer" target="_blank">here</a>

Coronavirus is a Black Swan event that will have multiple higher order effects.

Unpacking the impact of a Black Swan Event

Even though it doesn't fit the textbook definition, the outbreak of Covid-19 can be now considered a Black Swan event. This was reiterated by Sequoia Capital in a recent note to its CEOs and founders. The note advised them to "question every assumption about their business" and quoted Darwin's words to remind them that only "the most adaptable to change" will survive.What is true for businesses is equally true for economies. By now, it is clear that there will be a wide-ranging impact that will permanently alter the balance of the economy and persist long after the pandemic is contained. In fact, we are seeing the first signs of what could be a long economic hibernation.&nbsp;These include scaling down of wedding plans, shutdown of temples, theatres and the Taj Mahal, postponement of the IPL, and reduction in sale of commodities like wheat from Gujarat and cardamom from Kerala. Amidst all this, some patterns are also appearing.<h2>Made in China goes missing</h2>When a country that accounts for 27% of global manufacturing goes into lockdown in a few weeks, it is a shock to the global supply chain. As things stand, the shipping ministry has prevented more than 700 ships from disembarking on Indian shores. Apart from delaying raw materials to Indian firms, it increases the cost of anchorage, blocks other ships from coming in, and slows down the entire system.<h2><img src="https://i.wlycdn.com/articles/coronavirus.jpg" style="width: 800px;" class="fr-fic fr-dib"></h2><h2>Nobody is immune, but immunity still matters</h2>Like the disease itself, the economic impact will leave nobody untouched and hurt those businesses which are already doing badly. To illustrate, given the poor state of the aviation industry, an industry body has predicted the bankruptcy of many airlines in the next two months. Offline retailers, already losing to e-commerce giants, will see a drop in footfall even as they spend more in sterilizing their premises. Restaurants, already ceding market share to food delivery, might be temporarily forced to pivot to a takeout-only model. Put simply, theatres, event management firms, or any establishment that runs on footfall will have to weather the storm or perish.<h2>Social distancing = Economic distancing</h2>Although "Social Distancing" is the best way to contain the disease, it also comes at a huge cost to the economy. After all, one man's expenditure is someone else's earning. And those who avoid people and cancel their engagements usually spend a lot less than others. In the US, the Federal Reserve has cut interest rates to nearly 0% even as the Trump administration considers the idea of sending checks of $1000 each for Americans.<h2>Necessity for some, luxury for others</h2>One major airline has asked its staff to go on unpaid leave while some luxury hotels have asked their employees to fend for themselves during the lockdown. Millions of households which lack the security of an emergency fund will have to seek work or risk starvation even as others practise social distancing.<h2>All of the above will feed into each other</h2>While all of the above are direct, first-order effects, each consequence will result in other consequences or second-order effects. Therefore, unless the economic fallout is contained with the same alertness as the disease itself, all of the above will combine to form a vicious cycle that will pull the economy downwards. To reiterate what others have been saying, social distancing is the best protection and measure to contain the spread of Covid-19. From an economic perspective, it will be short-term pain and a small price to pay in our fight against this disease. This article was first published in Businessworld&nbsp;<a href="http://www.businessworld.in/article/Unpacking-The-Impact-Of-A-Black-Swan-Event/18-03-2020-186545/" rel="noopener noreferrer" target="_blank">here</a>

House Rent Allowance is the easiest and perhaps the most powerful tax-saver of all. Here is a guide to help you make the most of it.

If you are a salaried employee and you stay in a rented house, then paying rent every month can be stressful. More so in urban India where rents are quite high. But the good thing is that the rent you pay gets you not only a roof over your head but <a href="http://wealthy.in/articles/tax-saving-guide-23" rel="noopener noreferrer" target="_blank">income tax deductions</a> as well.&nbsp;Our tax authorities are benevolent enough to give us tax breaks on house rent. This falls under House Rent Allowance, commonly known as HRA.<img src="http://i.wlycdn.com/insights-new-release/articles/tax-benefits-hra-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Tax Benefit on House Rent">Salaried individuals can claim House Rent Allowance to lower their income tax outgo, partially or wholly, if they pay rent out of their salaries. The allowance is provided for expenses related to rental accommodation. This allowance is fully taxable if the salaried individual does not live in rented accommodation.<h2>How is the HRA tax exemption calculated?</h2>HRA is a component of your salary. This amount, which is subject to deductions, is a minimum of the following amounts:<ul style="list-style-type: disc;"><li>Actual HRA received</li><li>50% of basic salary (+ Dearness Allowance) for employees living in metro cities (40% if living in non-metros)</li><li>Actual rent paid minus 10% of salary</li></ul> Let us try to understand this component by considering an example.Suppose there is a salaried employee ‘A’ who works for a company X in a metro city like New Delhi. ‘A’ stays in a rented flat for which he pays Rs 15,000 a month as rent. If he gets a basic salary of Rs 40,000, the calculations will be as follows.<ul style="list-style-type: circle;"><li>A’s Basic Salary (including DA) = Rs 40,000</li><li>HRA received from company = Rs 15,000</li></ul>Now his HRA might not be fully exempted from taxes. Instead, the HRA exemption that he would get would be the least of the following:<ul style="list-style-type: disc;"><li>Actual HRA received = (12 x Rs 15,000) i.e. Rs 1,80,000</li><li>50% of basic salary = (50% of 12 x Rs 40,000)i.e. Rs 2,40,000</li><li>Actual rent paid less 10% annual salary = (12 x 15,000 - Rs 48,000)i.e. Rs 1,32,000</li></ul>The minimum of the above three amounts is Rs 1,32,000. This is the HRA amount that will be available for tax exemption.The remaining amount of Rs 48,000 will be taxed normally.<img src="http://i.wlycdn.com/insights-new-release/articles/tax-benefits-hra-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="HRA tax exemption calculation">If you are self-employed or do not get HRA, you can still claim some HRA under Section 80GG of the Income Tax Act if you stay on rent. This would be the minimum of the following:<ul style="list-style-type: disc;"><li>Rs 5000 per month</li><li>25% of total income</li><li>Actual rent minus 10% of the total income</li></ul> <h2 style="box-sizing: border-box; color: rgb(34, 34, 34); font-family: Avenir-Book; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">HRA claims under Special Case:</h2>HRA can be claimed under certain special situations as well. Let us consider them one by one.<ol><li>If you are getting HRA as part of your salary and are staying in your parents’ self-owned house, you can still get an exemption on HRA - by paying rent to your parents. In this case, however, you need to have a rental agreement with your parents and you need to transfer money to them every month, providing proof of the same. Also, though this may result in a tax deduction for you, your parents will necessarily have to show this rental income in their tax returns.</li><li>It is possible to claim HRA exemption, plus deductions on home loan repayment. This is by <a href="http://wealthy.in/articles/best-tax-saving-options-3" rel="noopener noreferrer" target="_blank">Section 80C</a> and 24B simultaneously. This means you can also claim the HRA exemption even if you are claiming tax benefits on a home loan that you have taken. However, you should not be living in the house that you bought with the home loan, otherwise, you can only claim tax benefits on home loan repayment and not on HRA. You might be required to provide a reason with proofs to your employer as well as the income tax department, whenever asked.</li><li>In the case of shared accommodation, you may live with your friends and split the rent. In this case, you need to have a rent agreement made which has the names of all the people paying the rent and the amount of rent paid mentioned against individual names. In the absence of any such agreement, a declaration from the landlord specifying the amount of rent (contribution to the total rent) you're paying, will also help.</li><li>In case of job relocation and changing of accommodations twice or thrice in one financial year, you need to get your rent receipts monthly instead of asking for them collectively at the end of the year. To claim the HRA, one must have the rental receipts and rental agreement. Also, get the PAN details of all the landlords of the houses where you have been staying.</li></ol><img src="http://i.wlycdn.com/insights-new-release/articles/tax-benefits-hra-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="These are some of the examples of HRA claims under Special Case.">This is how you can claim tax exemption on HRA. Remember to keep all your documents and rental proofs ready before filing your income tax returns. You also need to get your landlord’s PAN details if the total rent exceeds Rs 1 lakh annually.

House Rent Allowance or HRA is the easiest and perhaps the most powerful tax-saver of all. Here is a guide to help you get the most tax benefit out of HRA.

Your Guide to Make the Most of HRA for Tax Benefits

Most salaried people are aware of the term HRA, i.e. House Rent Allowance.It is a part of the salary - an allowance for expenses related to rented accommodation of the employees.Paying rent every month is stressful indeed. Isn&apos;t it? But fortunately, our tax authorities are benevolent enough to give some tax breaks on this House Rent Allowance.These tax breaks can make HRA completely or partially exempt from taxes, thereby lowering your tax outgoes.How? Let&rsquo;s explore it in detail.How to calculate your HRA tax Exemption?HRA amount subject to deduction is minimum of the following amounts:<ul><li>Actual HRA received</li><li>50% of Basic salary (+ DA) for employees living in metro cities (40% if living in non-metros)</li><li>Actual rent paid minus 10% of salary</li></ul>An example:Aditya works in an IT firm in Bangalore. He stays in a rented flat for which he pays Rs 12,000 a month as rent.Aditya&rsquo;s Basic Salary (including DA) = Rs 30,000HRA received from company = Rs 12,000Now his HRA might not be fully exempted from taxes. Instead, HRA exemption that he would get would be the least of the following:<ul><li>Actual HRA received = Rs 1,44,000 (12 x Rs 12,000)</li><li>50% of Basic Salary = Rs 1,80,000 (50% of 12 x Rs 30,000)</li><li>Actual rent paid less 10% salary = Rs 1,08,000 (12 x 12,000 - Rs 36,000)</li></ul>So the least of the above three is Rs 1,08,000 - This HRA amount will be available for exemption.The remaining amount of Rs 36,000 (Actual Rs 1.44 lac - exempted part of HRA) will be taxed normally.Now if you are living in your own house (and not on rent), then entire HRA component of your salary will be fully taxable. Remember, it is House &lsquo;RENT&rsquo; Allowance.:relaxed:But hold on. There are ways.Can I get HRA exemption if I am staying with my parents?Yes its possible.If you are getting HRA as part of your salary and are staying in your parent&rsquo;s self-owned house, you can get exemption on HRA - by paying rent to your parents.You also need to put proper documents in place to prove this. You need to do a rental agreement with your parents and transfer money to them every month (with proof).But remember, then your parents will necessarily have to show this rental income in their own tax returns.So what you save at one end (through your HRA exemptions) goes out partially from other end (parent&rsquo;s tax increase). Though not as much as what you save in most cases.Can I claim HRA exemption if I am already claiming tax-benefits on home loan?Yes. Its possible to claim HRA exemption, plus deductions on home loan repayment (under section 80c and 24b) simultaneously.But there are certain conditions that need to be fulfilled:<ul><li>If you live in the house you bought using home loan, then you can only claim tax benefits on home loan repayment and not on HRA.</li><li>If you are staying on rent in one city (lets say Bangalore) and servicing a loan on a house in another city (maybe Jaipur), then you can claim tax benefits on both.</li><li>If you are staying on rent (lets say in Bangalore) and also servicing a loan on a house in the same city (Bangalore), then its tough to claim HRA related tax benefits. You need to have a good reason* (like under-construction house, far from workplace, etc.) to prove why you are not staying in your own house.</li></ul>*You might have to provide reason / explanations / proofs to your employer as well income tax department, if asked for.What if I don&rsquo;t get HRA?If you are not getting HRA as part of your salary or if you are self-employed, then this can be your main concern.After all, why should you lose out on tax-saving opportunity if you too are staying on rent?Luckily, there is some relief available under Section 80GG - for those who don&rsquo;t get HRA and stay on rent.But that is subject to certain conditions. As per law, the least of the following can be claimed for tax-exemption:<ul><li>Rs 5000 per month</li><li>25% of total income</li><li>Actual Rent minus 10% of total Income</li></ul>Don&rsquo;t want to lose HRA Tax Exemption? Don&rsquo;t Forget ThisIf you are staying on rent, your landlord will never forget to take rent from you (for obvious reasons). But even you should not forget to obtain your landlord&rsquo;s PAN details if the total rent exceeds Rs 1 lac annually.Its because if you don&rsquo;t do so, you will possibly lose out on your HRA tax exemptions. This PAN related requirement has been put in place by tax authorities to stop landlords from hiding rental income in their tax returns.So that is all about how you can claim tax exemption on HRA.Most often than not, your employer&rsquo;s HR department would be after your life to submit rent receipts, agreement copies, PAN details of landlord, etc. And you would have wondered as to why they keep bothering you.So now you have all your answers, as you know everything about HRA related tax exemptions.

HRA, a tax-saving machine

A wealth manager is a financial advisor who assists you in various financial needs. The scope of such consultant extends from investment to retirement planning

All of us know about the old age: Health is wealth. Sure, it is. But just health isn’t wealth. The assets that you own are also your wealth.These assets could be in the form of cash, land, property, gold, shares, and even bonds. You can create wealth by buying these assets and holding onto them. As their value appreciates, your wealth grows. You don’t necessarily have to sell these assets to be wealthy; your wealth is calculated based on the market value of these assets when you are holding them.Of course, if the value of your assets goes down, then your wealth decreases. This is why it is important to carefully analyze an asset before you invest in it. You also need to keep periodic checks on your assets and get rid of the ones that are doing poorly so that you don’t incur higher losses in the future.Basically, much like your health, you need to manage your wealth as well.<h2>What is wealth management?</h2><a href="http://wealthy.in/articles/what-is-wealth-management-50" rel="noopener noreferrer" target="_blank">Wealth management</a> is an investment-related discipline that includes financial planning, investment portfolio management, and many other financial services.It is a judicious combination of both financial planning and specialized financial services. This can include personal retail banking services, estate planning, legal and tax advice, and investment management services.&nbsp;<img src="https://i.wlycdn.com/insights-new-release/articles/who-is-a-wealth-manager-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What is wealth management?">Wealth management is executed to sustain and grow long-term wealth for the investor. It is a lifelong process, and financial planning is just one part of it.<h2>Who is a wealth manager?</h2>A wealth manager is a financial advisor who assists you in various financial disciplines. The scope of such a financial consultant extends to myriad functions like financial and investment advice, legal or estate planning, accounting, and tax services, and retirement planning. A wealth manager offers a full range of financial services and products in a consultative manner.<img src="https://i.wlycdn.com/insights-new-release/articles/who-is-a-wealth-manager-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Who is a wealth manager?">A good wealth manager meets a client without any pre-assumed biases about financial products, and provides appropriate ones as per the client’s needs and wants.Keeping this in mind, the profile of a wealth manager becomes crucial to an investor’s financial well-being.<h2>What can a wealth manager do for you?</h2>A wealth manager would:<ul style="list-style-type: disc;"><li>Determine the client’s financial status, which includes income, expenses, insurance coverage, tax status, financial objectives, and other information needed to develop a financial plan</li><li>Recommend strategies in cash management, insurance coverage, and investment planning, to help them achieve their financial goals</li><li>Recommend financial products, such as stocks, bonds, mutual funds, or insurance</li><li>Analyze financial information to develop strategies for meeting the client’s financial needs</li><li>Manage the client portfolios, keeping the client up-to-date with future plans</li><li>Review the client’s accounts and plans regularly to determine if any reassessment is required</li><li>Keep a tab on any changes in the financial status</li><li>Investigate available investment opportunities&nbsp;</li><li>Guide the client in the gathering of information and keeping records like bank account records, income tax returns, insurance records, pension plans, wills, etc</li></ul>With such a vast variety of functions at hand, the necessity for employing a wealth manager becomes important for you as an investor.<h2>Why is a wealth manager necessary?</h2>On the face of it, you would think that you could easily be your own wealth manager. However, managing wealth is not as easy or straightforward as it seems. You need a wealth manager because:<ol><li>Markets are subject to fluctuations, and unexpected factors usually change the returns from your financial products. Wealth managers can utilize their expertise and experience to change your investment profile based on market conditions</li><li>A wealth manager can offer a detailed analysis of your financial health, and can thus give you a clear perspective about your financial situation and standing. They can help you in determining which investment is good for you and which is not</li><li>They can help you allocate investments based on life’s realities, prepare you for your retirement or any inheritance issues and transfer of assets. They help you to preserve and manage wealth</li><li>They also help you in determining your tax benefits and what you can do to minimize tax deductions on fair lines</li><li>Wealth managers also help you in the long-term strategic planning of your financial goals. They can help you align your plans and objectives, and set goals and strategies to achieve your targets</li></ol>With such comprehensive management, wealth managers can prove to be quite beneficial to a prospective investor.One must understand that wealth managers are different from investment bankers. Wealth managers are focused on the personal service of clients, while investment bankers assist corporations. There is some overlap between the operations of investment bankers and wealth managers, but the two are distinctly different.<img src="https://i.wlycdn.com/insights-new-release/articles/who-is-a-wealth-manager-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Why is a wealth manager necessary?">Wealth managers maintain cordial relationships with clients, analyze information and evaluate results to choose the best solution to solve problems. They are experts in their field and establish long-range objectives. At the same time, they specify the strategies and actions to achieve them. They judge the qualities of funds, stocks, investments and other financial products of the client to create wealth and investment plans.Overall, a wealth manager can help a client protect their wealth by minimizing fees and taxes. They will ensure that their client’s wealth is distributed well and managed as per his needs and objectives.If your health deteriorates, you go to a doctor. But in the case of your wealth, prevention is better than cure. Hence, a wealth manager is important to help you take care of your wealth before things turn awry. At Wealthy, our wealth managers prioritize the need of our clients. <a href="https://calendly.com/team-wealthy/lets-meet" rel="noopener noreferrer" target="_blank">Schedule a meeting</a> with one of the wealth managers to discuss all your financial needs.

Who is a Wealth Manager and Why Everyone Need One?

No, A wealth manager is not an investment banker!

Life Insurance premiums are eligible for tax saving under section 80C. It is recommended not to purchase unnecessary insurance just to save tax.

If you are a cricket fan, you must have watched the India versus West Indies series in December 2019. Apart from the remarkable performance by the Indian team, led ably by Virat Kohli, what was interesting about the series was the launch of the “Sabse Pehle Life Insurance” campaign.A joint initiative by the Indian life insurance industry, the purpose of this mass media campaign is to raise awareness about the importance of life insurance. And understandably so.&nbsp;Life insurance is one of the most critical parts of your financial health. In fact, true to what the campaign says, life insurance is something that you should get first, even before you begin investing.&nbsp;<h2>Here are three reasons why you should get life insurance as early as possible</h2><ol><li>It provides your dependants with a financial cushion in the event of your untimely death</li><li>Insurance premium for the same cover gets expensive as you grow older</li><li>You can save income tax on the insurance premium you pay</li></ol><h2>Tax benefits on life insurance premium</h2>The life insurance premium you pay in a financial year is tax-deductible under the Rs 1.5 lakh limit of Section 80C of the Income Tax Act.This means that if you pay Rs 50,000 as a premium for your life insurance cover, then this amount can be deducted from your annual taxable income. The limit here is Rs 1.5 lakh under Section 80C.<img src="https://i.wlycdn.com/insights-new-release/articles/life-insurance-save-tax-1.webp" style="box-sizing: border-box; cursor: pointer; padding: 0px 1px; max-width: 100%; color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial; width: 800px;" class="fr-fic fr-dib" alt="Tax benefits on life insurance premium">What’s more, it’s not just the premium you pay for your own life insurance that is tax-deductible. The premium you pay for your spouse’s and child’s life insurance can also be deducted to save taxes under Section 80C.&nbsp;One caveat here is that the entire premium will not be tax-deductible if it exceeds 10% of the sum assured of your life insurance policy. This means that if you have a life insurance policy with sum assured of Rs 5 lakh and your annual premium for the same is Rs 60,000, then the entire Rs 60,000 will not be tax-deductible. Only 10% of the sum assured, which is Rs 50,000 in this case, will be tax-deductible.For policies issued on or before 31 March 2012, an annual premium up to 20% of the sum assured can be used to save taxes.Nevertheless, the life insurance premium can easily help you meet the Rs 1.5 lakh limit under Section 80C. The other options to save taxes under Section 80C include ELSS funds, PPF, 5-year FDs, school tuition fees, etc.<h2>Insurance policies that qualify for under Section 80C</h2>In India, life insurance is almost synonymous with LIC - the Life Insurance Corporation of India. Life insurance policies are often referred to as LIC policies. This has also led to the misconception that only the premium paid for LIC policies can be used to save taxes under Section 80C.<img src="https://i.wlycdn.com/insights-new-release/articles/life-insurance-save-tax-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Insurance policies that qualify for under Section 80C">The truth is that premium paid to any IRDA-approved life insurance company is eligible for tax saving under Section 80C. This includes private insurance providers as well.&nbsp;Apart from this, the premium paid for the following types of policies qualify for tax deduction:<ul style="list-style-type: disc;"><li>Term insurance</li><li>Endowment plans</li><li>Unit linked insurance plans&nbsp;</li></ul><h2>Can tax benefits of life insurance be overturned?</h2>Yes, this can happen. As a policyholder, you have to pay premium regularly for a minimum number of years to retain the tax benefit. In case the policyholder is unable to pay a premium as required then the tax benefit can get overturned.<img src="https://i.wlycdn.com/insights-new-release/articles/life-insurance-save-tax-3.webp" style="box-sizing: border-box; cursor: pointer; padding: 0px 1px; max-width: 100%; color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial; width: 800px;" class="fr-fic fr-dib" alt="Can tax benefits of life insurance be overturned?">Here’s the fine print:<ul style="list-style-type: disc;"><li>Generally, the premium has to be paid for at least 2 years&nbsp;</li><li>Deductions are not allowed on the premium paid in the year in which the policy is being surrendered or terminated</li><li>Deductions claimed in the earlier years will be considered as income for the year in which the policy is surrendered or terminated&nbsp;</li></ul>In a nutshell, life insurance is important because it brings you protection for your loved ones and tax-saving for yourself. Get it as early as you can and start taking advantage of this dual benefit.

How to Use Life Insurance to Save Income Tax?

Before we delve deep into the tax-saving aspect of life insurance, lets be very clear about the real purpose of purchasing a life insurance policy.It compensates the dependents of the insured person in case of unfortunate event like death. This is the exact reason why you should have a life insurance cover.But since there is an added advantage (tax saving) of buying a life cover, people tend to forget the primary reason and focus on this added advantage instead.Result is that instead of trying to maximize the insurance cover at low cost, they try to save maximum possible tax by paying a larger premium.This is the reason why most people consider insurance to be a primarily tax-saving product!We don&rsquo;t deny that tax saving on life insurance policies is an important additional advantage. But purpose of insurance is not just saving taxes. Its bigger than that.But for this article, let us focus only on tax angle of life insurance.How can I save tax by buying life insurance?Under the Section 80C, there are several investment options eligible for tax benefits - like PF, PPF, NSC, ELSS, 5-Year FDs, home loan repayments, etc. (Read more about Section 80C here).Another option is - premium paid for a life insurance policy.So the amount paid towards life insurance premium for yourself, spouse and children qualifies for deduction under Section 80C.Premiums paid for parents, siblings, etc. are not eligible for deduction.The overall limit of Section 80C (of Rs 1.5 lac) is applicable. So total deductions that can be claimed by investing in all other options + life insurance premiums cannot exceed Rs 1.5 lac.Some people have this misconception that only policies sold by LIC are eligible for deduction. This is not true. All policies from LIC as well as other private insurance companies are treated equally.How much tax can you save on insurance premiums?As already mentioned, you can claim the amount paid as life insurance premium for deduction under Section 80C.But even within the limit of 80C, the entire premium amount may NOT be eligible for deduction.Yes. That is right. Unfortunately, very few people know about it.As per rules, annual premium only upto 10% of the sum assured are eligible for tax deduction.So lets say that you have a traditional (endowment or moneyback) policy with sum assured of Rs 5 lac. The premium you are paying is Rs 60,000.Now the entire premium amount will not to be eligible for tax deduction.Only 10% of sum assured, i.e. 10% of Rs 5 lac = Rs 50,000 will be considered.Remaining Rs 10,000 will not qualify for tax deduction under section 80C.Note - If policy is issued on/ before March 31st, 2012, annual premium upto 20% of the Sum Assured is tax deductible.We already knew that traditional insurance plans are bad as investments. And now, its known that there can be instances that these plans don&rsquo;t even offer the tax benefits that were expected of them (as illustrated in the 10%-Rule above).This is the reason why term plans are best choice for insurance. Low premiums and high sum assured (insurance cover) take care of the 10%-Rule. And best part is that you get a much bigger life cover at very low cost.Can tax benefits be overturned?Unfortunately yes.As an insurance policyholder, you have to pay premiums regularly for a minimum* number of years so as to retain the tax benefit claimed. Else, these benefits will be revoked as follows:<ul><li>No deduction allowed for premium paid in the year in which policy is being surrendered or terminated.</li><li>Deductions claimed in earlier years to be considered as income (from previous years) for the year in which policy is surrendered or terminated and taxed accordingly.</li></ul>*Generally, the premiums have to be paid for atleast 2 years to avoid revoking tax benefits.ConclusionIt is natural to try and save as much taxes as possible. After all, it&rsquo;s our hard earned money and we don&rsquo;t want to part with it easily. But it doesn&rsquo;t mean that in an attempt to save taxes, we end up buying wrong financial products and repent later (as most endowment and moneyback policy buyers do when they get to know about term plans).So ofcourse, you should understand the tax implications of all investment options before investing.But never purchase a product only to save taxes.Always have a &lsquo;real&rsquo; primary reason (like investing for future, insurance protection, health protection, etc.) to purchase a financial product. Secondary reason can be tax savings.If you are a young earner looking to save tax, don&rsquo;t look at buying endowment or moneyback insurance plans. Simply purchase a term plan for your insurance needs. As for the investments needs, it&rsquo;s best to stick with either PPF for safety or/and with equity ELSS funds, for higher long-term returns.

Don't go for Life Insurance just to Save Taxes!

The new decade is here! We hope 2019 was great for you and 2020 ends up being even better. It is time to begin the new year with resolutions.

The new decade is here! We hope 2019 was great for you and 2020 ends up being even better. It is the dawn of a new era and as is tradition, it is time to begin the new year with resolutions.Often, the problem with New Year Resolutions is that they are easy to procrastinate. There’s an entire year ahead to fulfill them, after all. Most of us start out enthusiastically, but our enthusiasm towards the resolutions wanes as January turns into February and March and the year keeps trickling on.This is why we decided to bring you money resolutions that you can take and implement in January itself. These are actionable resolutions that will help you improve your personal finances right away. And since taking care of your personal finances should be an ongoing affair, we have also elaborated on how you can keep reaping the benefits of these resolutions all through the year as well.So, without further ado, let’s go right to the money resolutions that you can fulfill today. <h2>1. Buy insurance online</h2>This may seem obvious, but a lot of people in their 20s and 30s don’t have insurance--life or health. Traditional financial wisdom says you should <a href="http://wealthy.in/articles/choose-health-insurance-10" rel="noopener noreferrer" target="_blank">buy insurance</a> even before you begin investing. Insurance can stop your finances from derailing due to unexpected circumstances. What’s more, insurance premiums get costlier the older you get. Hence, the sooner you buy insurance, the better off you will be in the long run.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Buy insurance online">To do:&nbsp;Head to a portal like PolicyBazaar.com or CoverFox.com where you can easily compare different insurance products and purchase a policy that fits your needs. Insurance bought online is much cheaper. Check the insurer’s claim settlement ratio and compare the premium with other policies before you make the final decision.Next steps: Claim income tax benefits at the time of filing returns on the insurance premiums you pay. Life insurance premiums are tax-deductible up to <a href="http://wealthy.in/articles/best-tax-saving-options-3" rel="noopener noreferrer" target="_blank">₹1.5 lakh under Section 80C</a> and health insurance premiums up to ₹25,000 under Section 80D. <h2>2. Book that Summer holiday</h2>Most people with families head out on a vacation during the summer or Diwali holidays. Most of these vacations are planned at the last minute in a rush. So obviously, you end up spending a lot and probably even compromise on the bookings you end up making. And that is if you’re lucky. Most of the times you will have to dump the idea of going on a vacation because everything good is either booked or too expensive to consider.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Book that Summer holiday">To do:&nbsp;Sit down with your family and pick a place you want to visit. Check out the calendar to figure out the holidays you would have and make the bookings right away. Flights are usually cheaper when you book in advance and you will be able to get the hotels of your choice as well.Next steps: Depending on where you’re going, you will need money to spend on vacation. Plan for that now itself by setting aside a little money every month. This way you’ll have the money to spend without having to dig into a single month’s savings. <h2>3. Delete Shopping Apps</h2>How often have you found yourself surfing through shopping apps on your phone out of sheer boredom? Quite often, right? And invariably, you will like something that you don’t really need. So you go ahead and splurge on it. That’s fine as long as this happens once in a while. But in reality, we end up spending a lot of money on purchases that we don’t really need.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Delete Shopping Apps">To do: Delete the shopping apps from your phone. When you need to buy something, you can log-in from a computer. Even if you don’t want to delete the apps, you can at least remove the saved cards from the apps. Having to enter your card details will make you think twice about whether you really need to make that purchase or not.Next steps:&nbsp;Make a note of the things you need to buy and if you can wait till the discount and sales seasons. Offline, as well as online vendors, periodically have sales that you can take advantage of to get things cheaper. <h2>4. Open a new bank account for emergency funds</h2>Having an <a href="http://wealthy.in/articles/emergency-financial-planning-17" rel="noopener noreferrer" target="_blank">emergency fund</a> for exigencies is a sound financial decision. This is the amount you have set aside for unexpected occurrences like medical emergencies, loss of a job, natural disasters, etc. But when this money is kept in the bank account you use on a regular basis, you run the risk of using it for anything other than an emergency. If it is easily and readily accessible, it invariably gets spent.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-4.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Open a new bank account for emergency funds">To do: Open a new savings bank account and park the emergency money there. Make sure this account is not linked to any of your regular spendings. Don’t carry the account’s debit card with you either; leave it in a drawer at home and take it out only in case of an emergency.Next steps: As your income increases or a member is added to your family, top up the emergency fund. Once or twice a year, you can even make a small transaction from the account to ensure it doesn’t become dormant. <h2>5. Stop Automating Bill Payments</h2>Giving your credit card a mandate to pay your card, phone and utility bills automatically every month is convenient. But automating payments can mean you are not able to keep a tab on how much of your money is getting spent on these items. Credit card bills typically have different kinds of charges and interests as well, which people end up paying without being aware of.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-5.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Stop Automating Bill Payments">To do: Pay the bills by yourself every month. It will take up a bit of your time but you will be able to figure out if you’re spending more than you need to on any of the items. This will help you keep your monthly budgets in check and <a href="http://wealthy.in/articles/track-expenses-16" rel="noopener noreferrer" target="_blank">control expenses</a>. Your phone bill, for example, might have services that you don’t actually use.Next steps: Keep a track of your bills and see if your spends increase in any particular month. Paying the bills yourself will also allow you to immediately notice a wrongful charge and have it reverted as soon as possible. <h2>6. Learn to cook</h2>If you think cooking doesn’t have anything to do with money, just go through the long list of taxes and charges that make up your restaurant bills. It is estimated that we pay around 30% over the cost of the food we order when we eat out. The various taxes and charges often outnumber the items we order. This makes eating out not only unhealthy but expensive as well.<img src="https://i.wlycdn.com/insights-new-release/articles/wealth-resolution-6.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Learn to cook">To do: Learn how to cook so that you eat out less. You can begin with the basic types of dishes that are easy to prepare. The next time you feel the urge to eat out or order in from outside, just head over to the kitchen and cook something that will be easy on your stomach as well as the wallet.Next steps: As you get better at cooking, you can turn it into a hobby and start experimenting with different kinds of dishes. This will make a big difference to your savings as well as health, Happy new year. :-)

The new decade is here! We hope 2019 was great for you and 2020 ends up being even better. It is time to begin the new year with resolutions

6 Wealth Resolutions for 2020 that You Can Take Today

New Year, New Resolutions!

PPF has been the favorite of everyone, old and young, to save taxes. But with changing the economic environment and better returns given by equities, is it time for a re-look?

Yes, it’s that time of the year again. Tax saving season is just around the corner and your CA or company’s HR will be knocking on your door very soon for investment proofs.Ideally, one should start investing to save taxes at the beginning of the financial year, but typically, most of us do it towards the end. Nonetheless, irrespective of when you do it, you must invest to save taxes.And usually, the choice a taxpayer has to make under the Rs 1.5 lakh limit of <a href="http://wealthy.in/articles/best-tax-saving-options-3" rel="noopener noreferrer" target="_blank">Section 80C&nbsp;</a>is between the Public Provident Fund (PPF) and Equity Linked Savings Scheme (ELSS). Before we give you a breakdown of these two tax-saving investments, let’s begin with a short introduction of both.<h2>What is PPF?</h2>The Public Provident Fund is a government-backed investment product. It was introduced way back in 1968 and has served generation after generation as a savings plus tax-saving investment instrument. PPF is a debt-oriented investment option and is entirely safe.<img src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What is PPF?">The government offers a guaranteed return on PPF investments, which is usually modified every quarter and has hovered in the 7-8% range over the past few years. PPF investments have a lock-in of 15 years.<h2>What are the ELSS funds?</h2>Equity Linked Savings Schemes are equity-oriented <a href="http://wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">mutual funds</a> that offer tax-saving benefits. ELSS funds are relatively newer products that are offered by mutual fund companies (also known as asset management companies).Since ELSS funds invest in the stock markets, they don’t offer guaranteed returns. But they are typically used to generate higher returns (in the range of 12-15%) and <a href="http://wealthy.in/articles/long-term-investment-22" rel="noopener noreferrer" target="_blank">create wealth over the long-term</a>. ELSS funds come with a lock-in of 3 years.<img src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What are the ELSS funds?">This, in a gist, is what PPF and ELSS are. The table below is a comparison of both tax-saving investments on different parameters.<h2>Comparison between PPF and ELSS</h2><table style="width: 100%;"><thead><tr><th style="width: 31.5059%;"> </th><th style="width: 28.5557%;">PPF</th><th style="width: 39.9082%;">ELSS</th></tr></thead><tbody><tr><td style="width: 31.5059%;">Returns</td><td style="width: 28.5557%;">7.9% (as on Dec 2019)</td><td style="width: 39.9082%;">12% to 15% (historical average)</td></tr><tr><td style="width: 31.5059%;">Lock-in period</td><td style="width: 28.5557%;">15 years</td><td style="width: 39.9082%;">3 years</td></tr><tr><td style="width: 31.5059%;">Tax-saving potential</td><td style="width: 28.5557%;">Rs 1.5 lakh under Section 80C</td><td style="width: 39.9082%;">Rs 1.5 lakh under Section 80C</td></tr><tr><td style="width: 31.5059%;">Tax on interest/returns</td><td style="width: 28.5557%;">Zero</td><td style="width: 39.9082%;">Zero</td></tr><tr><td style="width: 31.5059%;">Tax on withdrawals after maturity</td><td style="width: 28.5557%;">Zero</td><td style="width: 39.9082%;">10% on returns of over Rs 1 lakh in a financial year</td></tr></tbody></table>As you can see, PPF and ELSS stand head-to-head on taxability parameters. You can invest up to Rs 1.5 lakh under Section 80C in either of the two instruments to save taxes.&nbsp;But, saving taxes should not be the only purpose of making these investments. Because of their long-term nature, both of these tax-saving investments can help you create the wealth of your goals and objectives. And for that, ELSS funds trump PPF.<h2>3 reasons to choose ELSS over PPF</h2><ol><li>Potentially higher returns</li><li>Lower lock-in period</li><li>The existence of EPF</li></ol><h3>Potentially higher returns</h3>The interest rate on PPF has been in decline over many years. Years back, it was 12%, which has now come down to 7.9%. On the other hand, ELSS funds have given an average yearly return of 12% to 15%.&nbsp;Here’s what would have happened if you had Rs 1 lakh in both ELSS funds and PPF between January 2015 to December 2019.<img src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="3 reasons to choose ELSS over PPF: Higher Returns">As is apparent, the difference in returns is startling. PPF may be risk-free, but with a few calculated risks, ELSS funds can help you create real wealth and comfortably beat <a href="http://wealthy.in/articles/actual-inflation-rate-20" rel="noopener noreferrer" target="_blank">inflation</a> over the long-term.&nbsp;<h3>Lower lock-in period</h3>15 years seems like a lifetime, doesn’t it? Especially when you compare it to 3 years. A lower lock-in period means you have quicker access to your money. Sure, in times of dire needs, you can withdraw prematurely from PPF, but that comes with its own penalties.&nbsp;Hence, if 15 years seems like too long a period for you to invest in one instrument, it’s best that you choose ELSS funds instead.<h3>The existence of EPF</h3>If you are a salaried individual, you already will be having the <a href="https://en.wikipedia.org/wiki/Employees'_Provident_Fund_Organisation" rel="noopener noreferrer" target="_blank">Employee Provident Fund (EPF)</a> component in your salary package. EPF is similar to PPF. Your employer would be deducting a part of your salary as your EPF contribution and making an equal contribution on your behalf as well.This pretty much takes care of the debt component of your tax-saving investments and you don’t really need to invest in PPF over and above that as well.&nbsp;<img src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-4.webp" style="width: 800px;" class="fr-fic fr-dib" alt="The existence of EPF"><h2>The final word</h2>In a nutshell, if the choice is between PPF and ELSS funds, for most taxpayers, the latter would make more sense. Investing to save taxes should serve the dual purpose of tax-saving and wealth-building. And since ELSS funds can earn you higher returns as compared to PPF, they should be a major part of your Section 80C investments.

PPF has been the favorite of everyone as a tax saver. But, ELSS may be a better option with the changing economic environment.

PPF or ELSS - Where Should You Invest to Save Tax?

Whenever you ask people about tax-saving options, chances are high that they would recommend either of these 2 products:<ul><li>PPF (Public Provident Fund)</li><li>ELSS (Equity Linked Saving Schemes)</li></ul>But what is the difference between these two? And how to actually decide whether to go with PPF or with ELSS? We help you answer these questions in this article.Saving Taxes (More The Better)As a young salaried person, you already contribute a portion of your salary towards EPF (or Employee Provident Fund). EPF helps you build your savings as well as gives you tax benefits under Section 80C.But more often than not, your EPF contributions alone are not enough to use up the full limit (Rs 1.5 lacs) of Section 80C. Isn&apos;t it?So how do you save more taxes?If we were to ignore other expenses like insurance premiums, home or education loan EMIs, you are left with two more options - PPF and ELSS funds.Both products score heavily as far as tax-savings is concerned. Your contribution in both (upto Rs 1.5 lac) is eligible for deduction. But that is where the similarity ends.PPF Vs. ELSSBroadly speaking, this is how both products compare on basic parameters:<img class="fr-dib" src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-1.png"> No doubt both have some great investor friendly tax benefits. So there is not much to compare on tax parameters.But tax-saving is not the final goal of investments. Isn&apos;t it?We want to earn high returns too.Returns - ELSS Vs. PPFPPF is a government-backed debt product and hence very safe. The returns are guaranteed. ELSS on other hand is a diversified mutual fund of stocks. So naturally, ELSS is riskier than PPF in broader sense.The rates of PPF have been declining for many years now. Years back, it was 12%. Then it came down to 11%, 9.5% and now it stands at 8.1%. And chances are that it will go even lower than 8% soon.On other hand, many ELSS funds have given much returns of 12 to 15% - which is much higher than PPF returns. Infact, some really good ELSS schemes have given more than 15-18% for many years now!So even with increased risks, ELSS give much higher returns as would be proven in examples below:What would have happened if you had invested Rs 1 lac in 2010 in both PPF and ELSS funds (part of Wealthy&rsquo;s portfolio - <a href="https://app.wealthy.in/tax-saver/product">details</a>)?<img class="fr-dib" src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-2.png"> By the end of 2015, the original investment of Rs 1.5 lac would have become Rs 2.5 lac in PPF and Rs 4.1 lac in ELSS funds.And what if you allow your money to remain invested for 15 years (which is the lock-in period for PPF)?<img class="fr-dib" src="https://i.wlycdn.com/insights-new-release/articles/ppf-vs-elss-3.png"> The difference in returns is startling.And this is what a good selection of ELSS funds can help you achieve. The final wealth will be many times more than what a plain PPF can achieve.So even though PPF is risk-free, its low returns (about 8.1%) make it a less attractive product, as far as returns are concerned.And between you and us, its obvious that had it not been for the similar tax benefits, people would not even think about comparing the two.Can You keep your money locked up for 15 Years?No one wants that. And that is the problem with PPF.PPF has a lock-in of 15 years. Yes. That&rsquo;s true. Though partial withdrawals are allowed after 5th year, there is no doubt that liquidity of the product is extremely low.In comparison, ELSS funds have much shorter lock-in period of 3 years.So if you cannot remain invested for 15 years, then PPF is not the right product for you.Finally&hellip;Should you invest in PPF or ELSS?We have already proven that ELSS has shorter lock-in period and higher returns when compared with PPF. Here are few quick pointers to help you finally decide:<ul><li>As a salaried individual, you anyways contribute towards EPF (which is similar to PPF in returns, risk, etc.)</li><li>If you don&rsquo;t have EPF, then you can consider investing in PPF</li><li>But being young, you should invest more in high-return assets like equity-linked products</li><li>ELSS gives you access to such high returns with additional benefit of tax savings</li><li>And don&rsquo;t forget about lock-ins: PPF has a lock-in of 15 years whereas ELSS has it for just 3 years</li></ul>We don&rsquo;t deny that PPF is a great tax-saving product. But tax-benefits alone won&rsquo;t make you wealthy. For that, you need higher returns. Disclaimer -For young individuals having long investment horizons (10-15 years), equity should form a major part of their portfolio. For debt portion of asset base, exposure can be taken by mandatory EPF contributions or periodic PPF contributions (but on basis of individual&rsquo;s risk appetite &amp; advised asset allocation).

PPF is the tax-saving darling of everyone. But could equities (ELSS) be a better choice?

Section 80C is a way to pay less tax and increase take-home salary. If you are not close to retirement, ELSS is a must-do for tax-saving.

Come January and your company’s HR will start knocking on your door. If you work in a company with an open office, they will be knocking on your desk. But knocking, they will be. It will be time to furnish your tax-saving proofs, after all.The last quarter of the financial year, which is January-February-March, is typically when salaried employees have to submit proofs and documents of their tax-saving endeavors. This is also the time when most people make their tax-saving investments.<img alt="Best Tax Saving Options Under Section 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-0.webp">They rush to do them. Which, of course, is not the best way to invest. Investment decisions should be taken after adequate understanding and planning, not to just meet a deadline.If this is your first time-Saving Tax then you must read: <a href="https://www.wealthy.in/articles/tax-saving-guide-23" rel="noopener noreferrer" target="_blank">A Beginner's Guide To Tax Saving In 2019</a><h2>Investing in ELSS funds</h2>With that in mind, we suggest that you start investing to save taxes at the start of the financial year. Or even anytime during the year, not merely at the end. This is especially true if you are investing in Equity Linked Savings Schemes (ELSS).&nbsp;These are tax-saving mutual funds that invest primarily inequities. And spreading your investments in them over a few months is the best way to invest in ELSS funds.<h2>What are ELSS funds?</h2>Let’s understand ELSS funds in more detail. ELSS funds are equity-oriented mutual funds. Just like other equity funds, ELSS funds can also have a portfolio diversified across market capitalization and sectors. The difference being that investments of up to Rs 1.5 lakh made in ELSS funds are tax-deductible under Section 80C of the Income Tax Act. Another benefit of ELSS funds is that they come with the lowest lock-in period of only 3 years.With ELSS funds, you get the best of both worlds: tax-saving and equity returns. When you invest in ELSS funds through SIPs, you also benefit from rupee cost averaging and safeguard your investments against catching a market peak.To get into more details read: <a href="https://www.wealthy.in/articles/ppf-vs-elss-better-tax-saver-29" rel="noopener noreferrer" target="_blank">PPF vs ELSS - Which one is a Better Tax Saver?</a> <h3>ELSS funds versus other tax-saving investments</h3>While ELSS funds are recommended by investment experts, the other popular investment options under Section 80C are <a href="https://en.wikipedia.org/wiki/Fixed_deposit" rel="noopener noreferrer" target="_blank">fixed deposits&nbsp;</a>(FD), <a href="https://en.wikipedia.org/wiki/National_Pension_System" rel="noopener noreferrer" target="_blank">National Pension System&nbsp;</a>(NPS), <a href="https://en.wikipedia.org/wiki/Public_Provident_Fund_(India)" rel="noopener noreferrer" target="_blank">Public Provident Fund&nbsp;</a>(PPF) and <a href="https://en.wikipedia.org/wiki/Unit-linked_insurance_plan" rel="noopener noreferrer" target="_blank">Unit Linked Insurance Plans</a> (ULIP). The table below details how they compare.<table style="width: 100%;"><thead><tr><th colspan="4" style="width: 99.8983%; background-color: rgb(209, 213, 216);"><div style="text-align: center;">Investments under Section 80C</div></th></tr></thead><tbody><tr><td style="width: 16.6534%; background-color: rgb(239, 239, 239); text-align: center;">Investment </td><td style="width: 23.8762%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Lock-in p<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">eriod </td><td style="width: 20.2139%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Expe<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">cted returns </td><td style="width: 39.1961%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Tax o<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">n returns </td></tr><tr><td style="width: 16.6534%; text-align: center;">ELSS</td><td style="width: 23.8762%; text-align: center;">3 years</td><td style="width: 20.2139%; text-align: center;">15-20%</td><td style="width: 39.1961%; text-align: center;">10% on gains over Rs 1 lakh</td></tr><tr><td style="width: 16.6534%; text-align: center;">FD</td><td style="width: 23.8762%; text-align: center;">5 years</td><td style="width: 20.2139%; text-align: center;">5-6%</td><td style="width: 39.1961%; text-align: center;">Interest is taxable</td></tr><tr><td style="width: 16.6534%; text-align: center;">PPF</td><td style="width: 23.8762%; text-align: center;">15 years</td><td style="width: 20.2139%; text-align: center;">7-8%</td><td style="width: 39.1961%; text-align: center;">No tax</td></tr><tr><td style="width: 16.6534%; text-align: center;">NPS</td><td style="width: 23.8762%; text-align: center;">Until retirement</td><td style="width: 20.2139%; text-align: center;">10-12%</td><td style="width: 39.1961%; text-align: center;">Partially taxable</td></tr><tr><td style="width: 16.6534%; text-align: center;">ULIP</td><td style="width: 23.8762%; text-align: center;">5 years</td><td style="width: 20.2139%; text-align: center;">8-10%</td><td style="width: 39.1961%; text-align: center;">No tax</td></tr></tbody></table>As the table shows, ELSS funds make a very strong case in terms of the shorter lock-in period and higher returns. You can begin your tax-saving investments in a few clicks right away with Wealthy. <h2>Understanding Section 80C</h2>Under Section 80C, the Income Tax Department has listed several investments and expenses that can be used to reduce your overall taxable income for a financial year. The upper limit to avail tax deductions under Section 80C is Rs 1.5 lakh.&nbsp;<img alt="Tax Saving Options: Investments under 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-1.webp">The following investments and expenses qualify for deductions under Section 80C:<h2>Investments under 80C</h2><ol><li><h3>Equity Linked Savings Scheme (ELSS)</h3>ELSS are open-ended equity mutual fund schemes, allowing you to invest in equities and get high returns. At the same time, they offer you tax savings. Returns:&nbsp;15–20% (Market returns, Long term historical average) Tax on Returns: Long term - 10% Lock-in Period: 3 years</li><li><h3>Employee Provident Fund (EPF) and the Voluntary Provident Fund (VPF)</h3>Money for your PF gets deducted from your salary. As per PF laws, you and your employer both contribute to it. However, only the employee’s contribution (i.e. your contribution) is counted towards Section 80C investments. Your employer’s contribution isn’t taken into account. VPF is the option to voluntarily make additional contributions to your PF. Returns: 7.9% (2019–20) Tax on Returns: No tax Lock-in Period: Till retirement</li><li><h3>Public Provident Fund (PPF)</h3>PPF is one of the most popular small saving schemes with assured returns. You must note here that the returns are not fixed and can vary from year to year depending on government policies. Returns: 7.9% (2019–20) Tax on Returns: No tax Lock-in Period: 15 years</li><li><h3>Sukanya Samriddhi Account</h3>This scheme is quite popular with parents looking to invest in their daughter’s financial security. This account can be opened at any time from the birth of a girl child till she attains the age of 10 years. The opening amount for this account is Rs 1,000. Thereafter a multiple of Rs 100 can be deposited to the account with a minimum of Rs 1,000 per year. Returns: 8.60% for FY 2016–17 (Yearly compounded) Tax on Returns: No tax Lock-in Period: 21 years (Partial withdrawal, maximum up to 50% of the balance standing at the end of the preceding financial year can be taken after Account holder’s attaining the age of 18 years)</li><li><h3>National Savings Certificate (NSC)</h3>This tax-saving instrument has a maturity period of 10 years. The minimum investment amount is Rs 100 and there is no upper limit. Only in specific cases such as the death of the holder, premature withdrawals are allowed. Returns: 8% (2016–17) Tax on Returns: Accrued interest is taxable in the year in which it has accrued Lock-in Period: 10 years</li><li><h3>Infrastructure Bonds</h3>Popularly called Infra Bonds, these are issued by infrastructure companies and not the government. Returns: (Varies from year to year) Tax on Returns: Interest accrued is taxable. Lock-in Period: 3 to 10 Years</li><li><h3>5-year bank fixed deposits (FDs)</h3>These are widely available. All you need to do is walk into any bank branch, comply with their KYC norms and invest your money in their tax-saving fixed deposit. Returns: 5–6% post-tax (varies) Tax on Returns: Interest is taxable Lock-in Period: 5 years</li><li><h3>Senior Citizen Savings Scheme (SCSS)</h3>This scheme is very popular among senior citizens. According to the scheme, the interest is payable quarterly. The interest is not compounded. Returns: Increased to 9.30% wef 01/04/2015 for FY 2015–16 Tax on Returns: Interests are taxable Lock-in Period: 5 years</li><li><h3>5-year post office time deposit (POTD) scheme</h3>This scheme is very much like a bank fixed deposit. However, they are available for varying time duration: 1 year, 2 years, 3 years and 5 years. Point to note here is that only the 5 years Post office time deposit qualifies for tax saving under section 80C. Interest is paid annually and compounded quarterly. Returns: 7.8% for FY 2015–16 Tax on Returns: Interests are taxable Lock-in Period: 5 years</li><li><h3>Unit Linked Insurance Plan (ULIP)</h3>A ULIP is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan. Returns: 8% *(average of five-year return for top-5 performing funds) Tax on Returns: No tax Lock-in Period: 5 years</li></ol> <h2>Expenses under 80C</h2><img alt="Tax Saving Options: Expenses under 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-2.webp"><ol><li><h3>Life Insurance Premiums</h3>The amount paid towards life insurance premium for yourself, your spouse or your children are allowed to be included in Section 80C deduction. You should note that premiums you pay for your father/mother/both or your in-laws are not eligible for deduction under this section. Returns: 0–6% Tax on Returns: No tax Lock-in Period: 5 years In case you are new to tax-saving, you also wanna read:&nbsp;<a href="https://www.wealthy.in/articles/save-tax-with-life-insurance-27" rel="noopener noreferrer" target="_blank">How to Save Taxes with Life Insurance</a></li><li><h3>Tuition fees for children</h3>Payments towards education fees i.e tuition fees, including admission fees or college fees, for full-time education of any two children, qualifies for an income deduction.</li><li><h3>Stamp Duty and Registration Charges for a home:</h3>The amount paid as stamp duty during the purchase of a house and the amount paid for the registration of the documents of the house can be claimed as a deduction under Section 80C. The claim should be made in the year of purchase of the house.</li><li><h3>Home Loan Principal Repayment:</h3>Your home loan repayment EMI that you pay every month consists of two components — Principal and Interest. The principal component of the EMI can be claimed as a deduction under Section 80C. To know more about the tax benefits of home loan read: <a href="https://www.wealthy.in/articles/tax-benefits-home-loan-26">Know the Tax benefits of your Home Loan</a></li></ol> These are the various options that you can use to save taxes under Section 80C. But remember that the entire limit under 80C is Rs 1.5 lakh. Hence, even if the cumulative amount of the investments or expenses that you choose goes beyond the limit, you will be able to claim deductions for only Rs 1.5 lakh. Get started with your tax-saving right away!

What are the Best Tax Saving Options Under Section 80C

Come January and your company’s HR will start knocking on your door. If you work in a company with an open office, they will be knocking on your desk. But knocking, they will be. It will be time to furnish your tax-saving proofs, after all.The last quarter of the financial year, which is January-February-March, is typically when salaried employees have to submit proofs and documents of their tax-saving endeavors. This is also the time when most people make their tax-saving investments.<img alt="Best Tax Saving Options Under Section 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-0.webp">They rush to do them. Which, of course, is not the best way to invest. Investment decisions should be taken after adequate understanding and planning, not to just meet a deadline.If this is your first time-Saving Tax then you must read: <a href="https://www.wealthy.in/articles/tax-saving-guide-23" rel="noopener noreferrer" target="_blank">A Beginner's Guide To Tax Saving In 2019</a><h2>Investing in ELSS funds</h2>With that in mind, we suggest that you start investing to save taxes at the start of the financial year. Or even anytime during the year, not merely at the end. This is especially true if you are investing in Equity Linked Savings Schemes (ELSS).&nbsp;These are tax-saving mutual funds that invest primarily inequities. And spreading your investments in them over a few months is the best way to invest in ELSS funds.<h2>What are ELSS funds?</h2>Let’s understand ELSS funds in more detail. ELSS funds are equity-oriented mutual funds. Just like other equity funds, ELSS funds can also have a portfolio diversified across market capitalization and sectors. The difference being that investments of up to Rs 1.5 lakh made in ELSS funds are tax-deductible under Section 80C of the Income Tax Act. Another benefit of ELSS funds is that they come with the lowest lock-in period of only 3 years.With ELSS funds, you get the best of both worlds: tax-saving and equity returns. When you invest in ELSS funds through SIPs, you also benefit from rupee cost averaging and safeguard your investments against catching a market peak.To get into more details read: <a href="https://www.wealthy.in/articles/ppf-vs-elss-better-tax-saver-29" rel="noopener noreferrer" target="_blank">PPF vs ELSS - Which one is a Better Tax Saver?</a> <h3>ELSS funds versus other tax-saving investments</h3>While ELSS funds are recommended by investment experts, the other popular investment options under Section 80C are <a href="https://en.wikipedia.org/wiki/Fixed_deposit" rel="noopener noreferrer" target="_blank">fixed deposits&nbsp;</a>(FD), <a href="https://en.wikipedia.org/wiki/National_Pension_System" rel="noopener noreferrer" target="_blank">National Pension System&nbsp;</a>(NPS), <a href="https://en.wikipedia.org/wiki/Public_Provident_Fund_(India)" rel="noopener noreferrer" target="_blank">Public Provident Fund&nbsp;</a>(PPF) and <a href="https://en.wikipedia.org/wiki/Unit-linked_insurance_plan" rel="noopener noreferrer" target="_blank">Unit Linked Insurance Plans</a> (ULIP). The table below details how they compare.<table style="width: 100%;"><thead><tr><th colspan="4" style="width: 99.8983%; background-color: rgb(209, 213, 216);"><div style="text-align: center;">Investments under Section 80C</div></th></tr></thead><tbody><tr><td style="width: 16.6534%; background-color: rgb(239, 239, 239); text-align: center;">Investment </td><td style="width: 23.8762%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Lock-in p<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">eriod </td><td style="width: 20.2139%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Expe<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">cted returns </td><td style="width: 39.1961%; background-color: rgb(239, 239, 239); text-align: center;"><span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">Tax o<span style="color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(239, 239, 239); text-decoration-style: initial; text-decoration-color: initial; display: inline !important; float: none;">n returns </td></tr><tr><td style="width: 16.6534%; text-align: center;">ELSS</td><td style="width: 23.8762%; text-align: center;">3 years</td><td style="width: 20.2139%; text-align: center;">15-20%</td><td style="width: 39.1961%; text-align: center;">10% on gains over Rs 1 lakh</td></tr><tr><td style="width: 16.6534%; text-align: center;">FD</td><td style="width: 23.8762%; text-align: center;">5 years</td><td style="width: 20.2139%; text-align: center;">5-6%</td><td style="width: 39.1961%; text-align: center;">Interest is taxable</td></tr><tr><td style="width: 16.6534%; text-align: center;">PPF</td><td style="width: 23.8762%; text-align: center;">15 years</td><td style="width: 20.2139%; text-align: center;">7-8%</td><td style="width: 39.1961%; text-align: center;">No tax</td></tr><tr><td style="width: 16.6534%; text-align: center;">NPS</td><td style="width: 23.8762%; text-align: center;">Until retirement</td><td style="width: 20.2139%; text-align: center;">10-12%</td><td style="width: 39.1961%; text-align: center;">Partially taxable</td></tr><tr><td style="width: 16.6534%; text-align: center;">ULIP</td><td style="width: 23.8762%; text-align: center;">5 years</td><td style="width: 20.2139%; text-align: center;">8-10%</td><td style="width: 39.1961%; text-align: center;">No tax</td></tr></tbody></table>As the table shows, ELSS funds make a very strong case in terms of the shorter lock-in period and higher returns. You can begin your tax-saving investments in a few clicks right away with Wealthy. <h2>Understanding Section 80C</h2>Under Section 80C, the Income Tax Department has listed several investments and expenses that can be used to reduce your overall taxable income for a financial year. The upper limit to avail tax deductions under Section 80C is Rs 1.5 lakh.&nbsp;<img alt="Tax Saving Options: Investments under 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-1.webp">The following investments and expenses qualify for deductions under Section 80C:<h2>Investments under 80C</h2><ol><li><h3>Equity Linked Savings Scheme (ELSS)</h3>ELSS are open-ended equity mutual fund schemes, allowing you to invest in equities and get high returns. At the same time, they offer you tax savings. Returns:&nbsp;15–20% (Market returns, Long term historical average) Tax on Returns: Short term (less than 1 year) - 15% and Long term - 10% Lock-in Period: 3 years</li><li><h3>Employee Provident Fund (EPF) and the Voluntary Provident Fund (VPF)</h3>Money for your PF gets deducted from your salary. As per PF laws, you and your employer both contribute to it. However, only the employee’s contribution (i.e. your contribution) is counted towards Section 80C investments. Your employer’s contribution isn’t taken into account. VPF is the option to voluntarily make additional contributions to your PF. Returns: 7.9% (2019–20) Tax on Returns: No tax Lock-in Period: Till retirement</li><li><h3>Public Provident Fund (PPF)</h3>PPF is one of the most popular small saving schemes with assured returns. You must note here that the returns are not fixed and can vary from year to year depending on government policies. Returns: 7.9% (2019–20) Tax on Returns: No tax Lock-in Period: 15 years</li><li><h3>Sukanya Samriddhi Account</h3>This scheme is quite popular with parents looking to invest in their daughter’s financial security. This account can be opened at any time from the birth of a girl child till she attains the age of 10 years. The opening amount for this account is Rs 1,000. Thereafter a multiple of Rs 100 can be deposited to the account with a minimum of Rs 1,000 per year. Returns: 8.60% for FY 2016–17 (Yearly compounded) Tax on Returns: No tax Lock-in Period: 21 years (Partial withdrawal, maximum up to 50% of the balance standing at the end of the preceding financial year can be taken after Account holder’s attaining the age of 18 years)</li><li><h3>National Savings Certificate (NSC)</h3>This tax-saving instrument has a maturity period of 10 years. The minimum investment amount is Rs 100 and there is no upper limit. Only in specific cases such as the death of the holder, premature withdrawals are allowed. Returns: 8% (2016–17) Tax on Returns: Accrued interest is taxable in the year in which it has accrued Lock-in Period: 10 years</li><li><h3>Infrastructure Bonds</h3>Popularly called Infra Bonds, these are issued by infrastructure companies and not the government. Returns: (Varies from year to year) Tax on Returns: Interest accrued is taxable. Lock-in Period: 3 to 10 Years</li><li><h3>5-year bank fixed deposits (FDs)</h3>These are widely available. All you need to do is walk into any bank branch, comply with their KYC norms and invest your money in their tax-saving fixed deposit. Returns: 5–6% post-tax (varies) Tax on Returns: Interest is taxable Lock-in Period: 5 years</li><li><h3>Senior Citizen Savings Scheme (SCSS)</h3>This scheme is very popular among senior citizens. According to the scheme, the interest is payable quarterly. The interest is not compounded. Returns: Increased to 9.30% wef 01/04/2015 for FY 2015–16 Tax on Returns: Interests are taxable Lock-in Period: 5 years</li><li><h3>5-year post office time deposit (POTD) scheme</h3>This scheme is very much like a bank fixed deposit. However, they are available for varying time duration: 1 year, 2 years, 3 years and 5 years. Point to note here is that only the 5 years Post office time deposit qualifies for tax saving under section 80C. Interest is paid annually and compounded quarterly. Returns: 7.8% for FY 2015–16 Tax on Returns: Interests are taxable Lock-in Period: 5 years</li><li><h3>Unit Linked Insurance Plan (ULIP)</h3>A ULIP is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan. Returns: 8% *(average of five-year return for top-5 performing funds) Tax on Returns: No tax Lock-in Period: 5 years</li></ol> <h2>Expenses under 80C</h2><img alt="Tax Saving Options: Expenses under 80C" class="fr-fic fr-dib" style="width: 800px;" src="https://i.wlycdn.com/insights-new-release/articles/tax-savings-2.webp"><ol><li><h3>Life Insurance Premiums</h3>The amount paid towards life insurance premium for yourself, your spouse or your children are allowed to be included in Section 80C deduction. You should note that premiums you pay for your father/mother/both or your in-laws are not eligible for deduction under this section. Returns: 0–6% Tax on Returns: No tax Lock-in Period: 5 years In case you are new to tax-saving, you also wanna read:&nbsp;<a href="https://www.wealthy.in/articles/save-tax-with-life-insurance-27" rel="noopener noreferrer" target="_blank">How to Save Taxes with Life Insurance</a></li><li><h3>Tuition fees for children</h3>Payments towards education fees i.e tuition fees, including admission fees or college fees, for full-time education of any two children, qualifies for an income deduction.</li><li><h3>Stamp Duty and Registration Charges for a home:</h3>The amount paid as stamp duty during the purchase of a house and the amount paid for the registration of the documents of the house can be claimed as a deduction under Section 80C. The claim should be made in the year of purchase of the house.</li><li><h3>Home Loan Principal Repayment:</h3>Your home loan repayment EMI that you pay every month consists of two components — Principal and Interest. The principal component of the EMI can be claimed as a deduction under Section 80C. To know more about the tax benefits of home loan read: <a href="https://www.wealthy.in/articles/tax-benefits-home-loan-26">Know the Tax benefits of your Home Loan</a></li></ol> These are the various options that you can use to save taxes under Section 80C. But remember that the entire limit under 80C is Rs 1.5 lakh. Hence, even if the cumulative amount of the investments or expenses that you choose goes beyond the limit, you will be able to claim deductions for only Rs 1.5 lakh. Get started with your tax-saving right away!

Nobody likes Taxes!

A Systematic Investment Plan, commonly known as an SIP, is widely considered to be the best way to invest in equity mutual funds. But how often?

A Systematic Investment Plan, commonly known as a SIP, is widely considered to be the best way to invest in equity <a href="http://wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">mutual funds</a>. This isn’t debatable, because data has proven that SIPs trump lump sum investments over the <a href="http://wealthy.in/articles/long-term-investment-22" rel="noopener noreferrer" target="_blank">long-term</a>.&nbsp;What is debatable is the frequency of one’s SIPs. When you think or read or listen about SIP, the frequency that naturally comes to mind is monthly. But is a weekly SIP something worth considering? What about a quarterly SIP?Before we get into the larger debate about SIP frequencies, let’s try to settle this argument with numbers. Let’s say you plan to invest Rs 1,20,000 in a year in a diversified <a href="https://www.wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">equity mutual fund</a>. You can do this by investing Rs 2,500 every week for 52 weeks, Rs 10,000 every month for 12 months or Rs 30,000 every quarter for 4 quarters.<img src="http://i.wlycdn.com/insights-new-release/articles/sip-frequency-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="SIP Frequency: Investment graph">Taking a step back, we can consider investments in HDFC Equity fund between 1 August 2017 and 1 July 2018. Here’s how the three different SIPs would have performed.<table style="width: 100%;"><tbody><tr><td style="width: 25%; background-color: rgb(239, 239, 239);">Frequency </td><td style="width: 25%; background-color: rgb(209, 213, 216); text-align: center;">Weekly </td><td style="width: 25%; background-color: rgb(209, 213, 216); text-align: center;">Monthly</td><td style="width: 25%; background-color: rgb(209, 213, 216); text-align: center;">Quarterly</td></tr><tr><td style="width: 25%; background-color: rgb(209, 213, 216);">Amount invested (INR) </td><td style="width: 25%; text-align: center;">1,20,000</td><td style="width: 25%; text-align: center;">1,20,000</td><td style="width: 25%; text-align: center;">1,20,000</td></tr><tr><td style="width: 25%; background-color: rgb(209, 213, 216);">Worth of amount invested (INR) </td><td style="width: 25%; text-align: center;">1,30,410</td><td style="width: 25%; text-align: center;">1,30,712</td><td style="width: 25%; text-align: center;">1,27,330</td></tr><tr><td style="width: 25%; background-color: rgb(209, 213, 216);">SIP return (%) </td><td style="width: 25%; text-align: center;">4.74%</td><td style="width: 25%; text-align: center;">4.90%</td><td style="width: 25%; text-align: center;">3.22%</td></tr></tbody></table>Source: Value ResearchAs the table shows, the same amount invested in the same equity fund at different frequencies results in monthly SIPs doing the best. While the difference in returns between weekly SIP and monthly SIP is marginal, the difference in returns of quarterly SIP is quite stark.&nbsp;Of course, this data is from one period. If we consider the data of some other period, we might see weekly SIPs doing slightly better than monthly SIPs. But the difference will always be marginal. A weekly SIP is not going to earn you substantially higher returns than a monthly SIP.&nbsp;<img src="http://i.wlycdn.com/insights-new-release/articles/sip-frequency-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="SIP Frequency comparision graph">A quarterly SIP means that your <a href="https://www.wealthy.in/articles/never-save-money-in-banks-6" rel="noopener noreferrer" target="_blank">money is just lying idly in your bank account</a> when it should be invested and working to earn returns for you. So, that makes the least sense. Hence, between a weekly SIP and monthly SIP, what should you pick?<h2>Why go for a monthly SIP?</h2>From the perspective of the way we live our lives, a monthly SIP can work out the best for us.<ol><li>It fits into our routine: Most of us earn a monthly salary. We also pay our rent, utility bills, EMIs, etc on a monthly basis. Hence, we should be investing monthly as well</li><li>It is easier to maintain: Investing should be as simple and straightforward as possible. A monthly SIP is easy to remember and fulfill</li><li>It helps avoid over management: If you invest too frequently, you are likely to review and analyze your investments too frequently, which is unnecessary for most long-term investors</li></ol>An argument that is often made in favor of weekly SIPs is that they save you from timing the market. But this argument doesn’t stand when you have a fixed monthly SIP date. The idea of setting a date for your SIP is that you don’t time the markets and invest at different levels every month. This helps you benefit from rupee cost averaging, especially when you are investing for the long-term.<img src="http://i.wlycdn.com/insights-new-release/articles/sip-frequency-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Why go for a monthly SIP?">On the whole, because SIPs should be a habit that you persist with for long periods of time, a monthly cadence is ideal and adequate for most investors. Remember - when it comes to investing, the simpler, the better.

How Frequent Should Your SIP Be? Quarterly or Monthly or Weekly?

Which is better? Any guesses?

A mutual fund is an investment tool. Many investors get together and pool their money into a mutual fund and are managed by an expert fund management team.

Let’s say you wish to go from Place A to Place B. The most efficient way of going from Place A to Place B is by air. To make this travel, do you fly by a passenger plane or do you book a private jet of your own? For most of us, the answer is the former--we’ll go by a commercial airline.Now, think of this commercial plane as a mutual fund. Just as the airplane helps you go to Place B, a mutual fund helps you reach a specific investment goal in the most efficient manner. A commercial plane is cheaper than a private jet because you are sharing the flying costs with many others. Similarly, a mutual fund is a cost-effective investment tool because you share the fund management fees with other investors.<h2>What is a mutual fund?</h2>A mutual fund helps you reach your goal or objective by allowing you to benefit from the expertise of a fund manager and his or her team. That too, without burning a hole in your pocket.In simplest terms, a mutual fund is an investment tool that is used together by a group of investors. Many investors get together and pool their money into a mutual fund. All of this pooled money is managed by an expert fund management team in alignment with the common goal set for the mutual fund.<img src="https://i.wlycdn.com/insights-new-release/articles/mutual-fund-type-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What is a mutual fund?">This is simply how a mutual fund works. Different mutual funds have different fund objectives. Let’s dig deeper into these types.If you are new to investing then you should also read: <a href="https://www.wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">What is Mutual Fund and Why You Should Care About It?</a><h2>Different types of mutual funds</h2>Mutual funds can broadly be categorized into three segments: equity, debt, and hybrid. This categorization is made in terms of the mutual fund’s underlying asset.<ol><li>Equity mutual funds invest primarily in <a href="https://en.wikipedia.org/wiki/Stock" rel="noopener noreferrer" target="_blank">stocks or shares</a> of listed companies</li><li>Debt mutual funds invest primarily in government papers, corporate bonds or treasury bonds</li><li>Hybrid funds invest in a mix of these assets mentioned above</li></ol><h3> </h3><h3>Equity mutual funds</h3>The shares of companies listed on <a href="https://www.investopedia.com/articles/stocks/09/indian-stock-market.asp" rel="noopener noreferrer" target="_blank">Indian stock exchanges</a> like NSE and BSE are called equities. When you buy shares, you get ownership of the company and you participate in the company’s growth. However, investing in shares is risky and requires a large amount of time, knowledge and expertise. It also requires a lot of money. The answer to these problems is equity mutual funds.&nbsp;<img src="https://i.wlycdn.com/insights-new-release/articles/mutual-fund-type-02.webp" style="width: 800px;" class="fr-fic fr-dib" alt="The shares of companies listed on Indian stock exchanges like NSE and BSE">The fund management team does the hard work of choosing the shares for you and since you don’t buy the shares directly, you can invest as little as Rs 500 in an equity mutual fund as well.<h3>Debt mutual funds</h3>An asset class less risky than equities is debt. These are <a href="https://www.investopedia.com/terms/c/commercialpaper.asp" rel="noopener noreferrer" target="_blank">papers and bonds</a> taken out by the government or corporate companies to raise money. When you buy a bond or paper, you don’t get ownership of the company. You just lend money to the bond issuer for a specific period and the issuer promises to pay you back the money along with interestDebt mutual funds allow you to invest in such government or corporate bonds. Here, once again, you don’t get direct ownership, which is why you are able to buy different kinds of bonds at smaller amounts.<h3>Hybrid mutual funds</h3>Hybrid funds invest in equities as well as debt. Aggressive hybrid funds invest a major part in equities while conservative hybrid funds invest a majorly in debt.&nbsp;Hybrid funds allow you to participate in the growth from equities as well as benefit from the stability of bonds. If chosen right, hybrid funds can give you the best of both worlds.<h2>What do I get when I invest in mutual funds?</h2>All mutual funds allot units to their investors. The investors don’t get direct ownership of the underlying assets of the mutual funds. They get units, which are priced accordingly to the assets owned by the mutual fund.<img src="https://i.wlycdn.com/insights-new-release/articles/mutual-fund-type-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What do I get when I invest in mutual funds?">Mutual funds begin with a unit price of Rs 10, which is called the fund’s NAV (<a href="https://www.investopedia.com/terms/n/nav.asp" rel="noopener noreferrer" target="_blank">Net Asset Value</a>). But remember that a lower NAV does not mean a cheaper fund. The NAV is just the fund’s <a href="https://www.investopedia.com/terms/a/aum.asp" rel="noopener noreferrer" target="_blank">assets under management</a> (AUM) divided by the number of units created. As the fund gets more investments, it creates more units and hence, the NAV fluctuates. This is why the NAV should not be a determining factor in choosing a fund.&nbsp;<h2>Are mutual funds safe?</h2>Yes, mutual funds are safe. Mutual funds are regulated by a government body called the <a href="https://www.investopedia.com/terms/s/sebi.asp" rel="noopener noreferrer" target="_blank">Securities and Exchange Board of India</a> (SEBI). This government body ensures that only trustworthy companies are given the license to run mutual funds. Hence, your mutual fund company will not disappear with your money in the middle of the night. In that aspect, mutual funds are safe.<img src="https://i.wlycdn.com/insights-new-release/articles/mutual-fund-type-04.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Are mutual funds safe?">However, your invested money in mutual funds is subject to market and economic risks. No mutual fund guarantees return. The returns are dependent on the investments made by the mutual fund. Hence, the returns could go up and down, even in the negative. From that perspective, mutual funds are riskier than other investments like fixed deposits, but the higher risk also comes with higher return potential.&nbsp;<h2>Benefits of investing in mutual funds</h2><ol><li>Diversify risks by spreading your investment across asset classes</li><li>Allow a team of experts to take investment calls on your behalf</li><li>Begin your investment journey with small amounts</li><li>Pay only a nominal fee in the form of an annual expense ratio (ER)</li><li>Choose from a range of mutual funds to meet your investment needs</li><li>Redeem investments when you need the money</li></ol><h2>How can you invest in mutual funds?</h2>Mutual fund investments can be made both offline as well as online. The offline route can be taken through a mutual fund distributor or by visiting a fund company’s office. The easier way, of course, is by investing online. Online investments in mutual funds are safe, secure and straightforward. Get started by creating an account on <a href="https://www.wealthy.in/" rel="noopener noreferrer" target="_blank">Wealthy.in.</a>

Types of Mutual Funds And Why it's a Great Investment Tool?

What is a mutual fund? Well, think of a plane.

3 Types of Mutual Funds And Why it's a Great Investment Tool?

In Short, having the right allocation to different asset classes makes a portfolio balanced. The balance here is between risk and reward

One of the most common investment-related advice that you will come across is regarding rebalancing. “Investors should periodically rebalance their portfolio,” is what investment experts advise.&nbsp;Of course, they are right. Periodic rebalancing is very important. But what does rebalancing really mean, why is it so important and how can you do it? Well, these are the questions that we are here to answer.<h2>What makes a portfolio balanced?</h2>Before we get into what rebalancing is, let’s first try to understand why your portfolio should be balanced. A balanced portfolio is one that is invested in <a href="https://www.investopedia.com/terms/a/assetclasses.asp" rel="noopener noreferrer" target="_blank">different types of asset classes</a>. These asset classes could be equity, debt, gold and real estate. For most regular investors, a balanced portfolio would have exposure to equity as well we debt.<img src="https://i.wlycdn.com/insights-new-release/articles/portfolio-rebalance-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Different Assets: What makes a portfolio balanced?">The split across equity and debt would be determined by your <a href="https://www.investopedia.com/investing/figure-out-your-investment-goals/" rel="noopener noreferrer" target="_blank">investment goals</a>, risk appetite, and time horizon. Typically, investors who have long-term goals and more time on hand should have a higher exposure to equity. Conversely, investors with short-term goals should have more of their portfolio in debt.&nbsp;Having the right allocation to different asset classes makes a portfolio balanced. The balance here is between risk and reward. Higher risks can result in higher rewards, which will help you build wealth. But the wealth that has been built needs to be protected as well, which is why your portfolio needs to be balanced.In short, your portfolio should be spread across asset classes and investment types for you to be able to get the best of all worlds.<h2>How does a portfolio get unbalanced?</h2>Obvious question, right? Well, there are many reasons that can lead to your investment portfolio getting unbalanced:<ul style="list-style-type: disc;"><li>Fluctuations in investment values: Let’s say your portfolio is worth Rs 100, out of which Rs 70 is invested in <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">equities</a>. Now, if the value of your equity holdings goes down to Rs 50, then the 70:30 balance that you had set out to achieve will change</li></ul><img src="https://i.wlycdn.com/insights-new-release/articles/portfolio-rebalance-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="How does a portfolio get unbalanced?: Fluctuations in investment values"><ul style="list-style-type: disc;"><li>Changes in mutual fund objectives:&nbsp;<a href="http://wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">Mutual funds</a> sometimes change their investment objective, which can lead to an equity turning into a hybrid fund, for example. Such a change can shake the balance of your portfolio of your have invested in the fund</li><li>Unplanned redemptions or investments:&nbsp;There can be times when you will redeem a part of your portfolio or make a lump sum investment. Such instances will usually not be planned for and can disrupt the balance of your portfolio</li></ul>If you are investing for the first time then you must also read: <a href="https://www.wealthy.in/articles/avoid-investment-mistakes-41" rel="noopener noreferrer" target="_blank">The 5 Step Guide to Avoid Making Investment Mistakes</a><h2>How to rebalance your portfolio?</h2>The best way to keep a tab on your portfolio’s balance is by checking the asset allocation every six months or once a year, depending on your investment horizon. Check where you are invested, across assets and types. If you see an imbalance, then change the asset allocation to meet the initial portfolio balance you had in mind.<img src="https://i.wlycdn.com/insights-new-release/articles/portfolio-rebalance-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="How to rebalance your portfolio?">Here’s how to rebalance your portfolio:<ol><li>Review the asset allocation: Check whether your portfolio still has the mix of asset classes and investment types that you had initially planned to begin with. You can do this either manually or by using a portfolio management tool like <a href="https://play.google.com/store/apps/details?id=in.wealthy.android.wealthy" rel="noopener noreferrer" target="_blank">Wealthy’s Portfolio Tracker</a></li><li>Buy and sell investments: If you have a higher equity exposure than what you’re comfortable with, then the best thing to do is sell some of your equity shares or mutual funds and invest the amount in debt. And vice versa</li><li>Check back after a year: Or six months, if you have a shorter time period. The idea is to not rebalance your portfolio too often, but also to not leave it unbalanced for too long either. For most investors, an annual rebalance would suffice</li></ol>This, essentially, is all that there is to rebalance your investment portfolio. It’s one of those investment-related things that is easy to procrastinate, but also something that you shouldn’t do.

Having the right allocation to different asset classes makes a portfolio balanced. The balance here is between risk and reward.

The Beginner’s Guide to Re-balancing Investment Portfolio

Re-balancing? What is that?

Sensex is at an all-time high is a great newspaper headline. And as an investor, you should treat it exactly like that rather than an event that changes your investment plans.

Sensex and Nifty are making new lifetime highs regularly these days. As an investor, this is great news as the value of your investments is going up.But many are sitting on the sidelines thinking whether to enter the markets now or once it undergoes a correction (maybe 10-20% kind of fall). These people are afraid that they might suffer losses if they end up investing immediately before the markets fall.No doubt markets are sitting at new highs and might make a few more in the coming months. But does it make sense to wait for a significant correction before investing? Or is it wiser to just continue investing?History often repeats itself and presented below is an analysis of historical data to arrive at an objective answer to this question.<h2 dir="ltr">All-time highs are common. Don’t worry.</h2>Is the market for making a new high for the first time? Not!&nbsp;Have a look at the history of Sensex since 1991.<img style="width: 800px;" class="fr-dib fr-bordered" src="https://lh3.googleusercontent.com/--4xEODWE5xFUUBRCNmcTMxEOtrhHd34gqSTXoD79qmfYc8JrSvNjpN6r4QqonJP-mzxaVcGZifOspkrgsUlD9vUQbR7RxFtlSgKDQv4EpknxttsVOVk4OLJYcgJoCt6b7mJv5du9kTQtAnXYg" alt="The history of Sensex since 1991"> Now statistically speaking, Sensex has made 350+ new highs since 1991. So it is not that uncommon at all.But, if we were to look at the bigger picture, then there have been 6 major time-periods when the SENSEX achieved all-time highs after a considerable period&nbsp;(highs achieved within a short period were considered as part of the larger period).&nbsp;<img style="width: 800px;" class="fr-dib fr-bordered" src="https://lh5.googleusercontent.com/dtrf6JMpzTtY8d8jIFA1cpwBDrelGAnnNfy_oTRkZOGA-6cxFVfuta6D-GhtRGKBBULrpuerMFZ3lJtEqOPEONg5Jir-dKws4MYVWeNwvgsq-fr-SRrRnmC0o30QF6Sq4HbQLE1ezoFhUtiNJw" alt="Sensex highs achieved within a short period were considered as part of the larger period"> Of course, it’s not guaranteed but generally, all-time highs are followed by new all-time highs shortly. And investors who exit the market at new highs or stay out because they feel markets are due for a correction, generally don’t get it right&nbsp;(unless of course, they have an oracle by their side).Probabilistically speaking, you shouldn’t worry too much about markets reaching new highs and being destined for big falls.&nbsp;As investors, you need to focus instead on the bigger picture.Think about the choices that you have - savings account, FD, equity, real estate, gold, etc. And which among these has proven itself to deliver the highest returns when invested in the long term? (there is another subject of asset allocation which we will discuss separately on how too allocate your savings over different asset classes)The answer is <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">equity</a>. And we have enough proof for that.&nbsp;So if you are a <a href="http://wealthy.in/articles/long-term-investment-22" rel="noopener noreferrer" target="_blank">long-term investor</a>, put your efforts in finding the right portfolio that will grow your wealth in years to come. And a portfolio that is made up of equity funds is best suited to do that:<img style="width: 800px;" class="fr-dib" alt="Long Term investments" src="https://lh6.googleusercontent.com/jgRa4Kg3OUgF4EXflJ0Y0CR_M0WknLlcrL87CHUgUSC5G2puYTsjjgZ-xiHh3t99tZ0e18xhfZ4W6gtK0eE92MTLBlVLnGh5D4UwDUlBxgzOHA0YWlHYACkUc2UFygKxojyysn0I"> And don’t worry even if there are small falls in the near term. The long-term outlook is still blindingly bright.The only way to benefit from equity’s phenomenal growth potential is to participate in it; and not by sitting on sidelines predicting the next crash.<h2 dir="ltr">Don’t wait for a Crash to Start Investing</h2>One of the greatest investors ever, Peter Lynch said,<blockquote>“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in corrections themselves.”</blockquote>And this is 100% true!&nbsp; If people had exited the markets predicting a crash (after the fresh highs made in 2004), they would have missed the entire bull run of 2004-2007. There is no guarantee that the market will fall once they cross old highs.Remember that in investing, money is made by being in the market and not by being on the sidelines.If you have a long investment horizon, then waiting for the right time to invest doesn’t help. By trying to time the market and getting ready to make an all-or-nothing kind of investment decision, you’re bound to stress yourself out by waiting alone. It just doesn’t work for most people. And it is an approach destined to ruin your money’s wealth creation potential.<img src="https://i.wlycdn.com/insights-new-release/articles/high-sensex-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Don’t wait for a Crash to Start Investing">Proof that You Profit even if Investing near All-Time HighsHere are three examples where your investments start near new lifetime highs:&nbsp;Example 1: You start investing Rs 5,000 monthly (in Sensex) after the Sensex made a new lifetime high in July 1999 You invested a total of Rs 10.7 lacs which is now worth Rs 40.2 lac (in May-2017) with a rate of return (XIRR) of ~13.4%Example 2: You start investing Rs 5,000 monthly in Sensex after it made a new high in January 2004 You invested a total of Rs 8 lacs which is now worth Rs 18 lac (in May-2017) with a rate of return (XIRR) of ~11.4%Example 3: You start investing Rs 5,000 monthly in an&nbsp;<a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">equity mutual fund</a>&nbsp;immediately after the Sensex made a new high in January 2004 You invested a total of Rs 7.7 lacs which is now worth Rs 30.4 lac (in May-2017) with a rate of return (XIRR) of about 19.8% *The mutual fund referred for this analysis is ICICI Prudential Value Discovery FundEven if you started investing near the all-time highs, you would still have done pretty well. The returns in the above examples, i.e. 13.4%, 11.4%, and 19.8% easily beat the post-tax returns of so-called risk-free instruments like banks FDs (5-7% after-tax returns).&nbsp;<h2 dir="ltr">Action Plan for You</h2>So as investors, what should you be doing?<ul><li><h3>Waiting to start investing? </h3>If you are waiting to start investing to make small monthly contributions, then you should just start without worrying about highs or lows being achieved by the market.&nbsp;If you have large lump-sum, then you should stagger your investments and transfer partial amounts periodically (monthly, quarterly, etc.) into the portfolio of your choice till all the money is invested. &nbsp;</li><li dir="ltr"><h3>Already investing regularly? </h3>Don’t stop your monthly contributions. Automatic monthly deposit (SIP) is perhaps the best way to invest, even at all-time highs.&nbsp;Just ensure that you stick to your portfolio (or your own chosen funds) and monitor that they are at least growing in line with the overall market’s rise. &nbsp;</li><li><h3>Need money in 6-12 months? </h3>Start booking your profits slowly and move out the required money into safer liquid or ultra short-term funds (like Wealthy’s short term conservative portfolio).</li></ul><h2 dir="ltr">Final Thoughts</h2>When markets are making new highs, it might be tempting to book all profits and wait for a correction (to buy again at lower prices). But this approach is about timing the markets and 99% of the people cannot do it.<img src="https://i.wlycdn.com/insights-new-release/articles/high-sensex-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Investing during stock market crash">Market history tells those new all-time highs are nothing to worry about. It’s a perfectly normal market phenomenon.So keep your focus on the Indian economy’s long-term growth and don’t sit on the sidelines endlessly. Participate in this story, invest in your financial goals and make wealth for yourself. And finally, a good rule to control those emotions:&nbsp;“Best time to invest is whenever you have the cash to spare”

Sensex is at an all time high. And as an investor, you should treat it exactly like that rather than an event that changes your investment plans.

Sensex is at an All Time High - Invest Or Not?

Sensex and Nifty are making new lifetime highs regularly these days. As an investor, this is great news as the value of your investments is going up.But there are many who are sitting on the sidelines thinking whether to enter the markets now or once it undergoes a correction (maybe 10-20% kind of fall). These people are afraid that they might suffer losses if they end up investing immediately before the markets fall.&nbsp;No doubt markets are sitting at new highs and might make few more in coming months. But does it really make sense to wait for a significant correction before investing? Or is it wiser to just continue investing?&nbsp;History often repeats itself and presented below is an analysis of historical data to arrive at an objective answer to this question.<h2 dir="ltr">&nbsp;All time highs are common. Don’t worry.</h2>&nbsp;Is the market making a new high for the first time? Absolutely not!&nbsp;Have a look at the history of Sensex since 1991.<img src="https://lh3.googleusercontent.com/--4xEODWE5xFUUBRCNmcTMxEOtrhHd34gqSTXoD79qmfYc8JrSvNjpN6r4QqonJP-mzxaVcGZifOspkrgsUlD9vUQbR7RxFtlSgKDQv4EpknxttsVOVk4OLJYcgJoCt6b7mJv5du9kTQtAnXYg" class="fr-dib fr-bordered" style="width: 719px;"> Now statistically speaking, Sensex has made 350+ new highs since 1991. So it is not that uncommon at all.&nbsp;But if we were to look at the bigger picture, then there have been 6 major time-periods when the SENSEX achieved all-time highs after a considerable period of time&nbsp;(highs achieved within a short period were considered as part of the larger time period).&nbsp;<img src="https://lh5.googleusercontent.com/dtrf6JMpzTtY8d8jIFA1cpwBDrelGAnnNfy_oTRkZOGA-6cxFVfuta6D-GhtRGKBBULrpuerMFZ3lJtEqOPEONg5Jir-dKws4MYVWeNwvgsq-fr-SRrRnmC0o30QF6Sq4HbQLE1ezoFhUtiNJw" class="fr-dib fr-bordered" style="width: 763px;"> Of course it’s not guaranteed but generally, all-time highs are followed by new all-time highs in near future. And investors who exit the market at new highs or stay out because they feel markets are due for a correction, generally don’t get it right&nbsp;(unless of course they have an oracle by their side).Probabilistically speaking, you shouldn’t worry too much about markets reaching new highs and being destined for big falls.&nbsp;As investors, you need to focus instead on the bigger picture.&nbsp;Think about the choices that you have - savings account, FD, equity, real estate, gold, etc. And which among these has proven itself to deliver the highest returns when invested for long term? (there is another subject of asset allocation which we will discuss separately on how too allocate your savings over different asset classes)&nbsp;The answer is equity. And we have enough proof for that.&nbsp;So if you are a long-term investor, put your efforts in finding the right portfolio that will grow your wealth in years to come. And a portfolio that is made up of equity funds is best suited to do that:<img src="https://lh6.googleusercontent.com/jgRa4Kg3OUgF4EXflJ0Y0CR_M0WknLlcrL87CHUgUSC5G2puYTsjjgZ-xiHh3t99tZ0e18xhfZ4W6gtK0eE92MTLBlVLnGh5D4UwDUlBxgzOHA0YWlHYACkUc2UFygKxojyysn0I" alt="Screen Shot 2017-06-10 at 2.45.43 PM.png" class="fr-dib" style="width: 716px;"> And don’t worry even if there are small falls in near term. The long-term outlook is still blindingly bright.&nbsp;The only way to benefit from equity’s phenomenal growth potential is to participate in it; and not by sitting on sidelines predicting the next crash.<h2 dir="ltr">&nbsp;Don’t wait for a Crash to Start Investing</h2>&nbsp;One of the greatest investors ever, Peter Lynch said,“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”&nbsp;And this is 100% true!&nbsp; If people had exited the markets predicting a crash (after the fresh highs made in 2004), they would have missed the entire bull run of 2004-2007. There is absolutely no guarantee that market will fall once they cross old highs.Remember that in investing, money is made by being in the market and not by being on the sidelines.&nbsp;If you have a long investment horizon, then waiting for the right time to invest doesn’t help. By trying to time the market and getting ready to make an all-or-nothing kind of investment decision, you’re bound to stress yourself out by waiting alone. It just doesn’t work for most people. And it is an approach destined to ruin your money’s wealth creation potential.Proof that You Profit even if Investing near All-Time HighsHere are three examples where your investments start near new lifetime highs:&nbsp; <ul><li dir="ltr">Example 1: You start investing Rs 5,000 monthly (in Sensex) after the Sensex made a new lifetime high in July 1999</li></ul>You invested a total of Rs 10.7 lacs which is now worth Rs 40.2 lac (in May-2017) with a rate of return (XIRR) of ~13.4%<ul><li dir="ltr">Example 2: You start investing Rs 5,000 monthly in Sensex after it made a new high in January 2004</li></ul>You invested a total of Rs 8 lacs which is now worth Rs 18 lac (in May-2017) with a rate of return (XIRR) of ~11.4%<ul><li dir="ltr">Example 3: You start investing Rs 5,000 monthly in an equity mutual fund immediately after the Sensex made a new high in January 2004</li></ul>You invested a total of Rs 7.7 lacs which is now worth Rs 30.4 lac (in May-2017) with a rate of return (XIRR) of about 19.8% *The mutual fund referred for this analysis is ICICI Prudential Value Discovery Fund&nbsp;Even if you started investing near the all-time highs, you would still have done pretty well. The returns in the above examples, i.e. 13.4%, 11.4% and 19.8% easily beat the post-tax returns of so-called risk-free instruments like banks FDs (5-7% after tax returns).&nbsp;Action Plan for You So as investors, what should you be doing?<ul><li>Waiting to start investing? &nbsp;If you are waiting to start investing with the intention of making small monthly contributions, then you should just start without worrying about highs or lows being achieved by the market.&nbsp;If you have large lump-sum, then you should stagger your investments and transfer partial amounts periodically (monthly, quarterly, etc.) into portfolio of your choice till all the money is invested. &nbsp;</li><li dir="ltr">Already investing regularly? Don’t stop your monthly contributions. Automatic monthly deposit (SIP) is perhaps the best way to invest, even at all-time highs.&nbsp;Just ensure that the you stick to your portfolio (or your own chosen funds) and monitor that they are are atleast growing in line with overall market’s rise. &nbsp;</li><li>Need money in 6-12 months? Start booking your profits slowly and move out the required money into safer liquid or ultra short-term funds (like Wealthy’s short term conservative portfolio).</li></ul>&nbsp;Final ThoughtsWhen markets are making new highs, it might be tempting to book all profits and wait for correction (to buy again at lower prices). But this approach is about timing the markets and 99% of the people cannot do it.Market history tells that new all-time highs are nothing to worry about. It’s a perfectly normal market phenomenon.So keep your focus on Indian economy’s long-term growth and don’t sit on the sidelines endlessly. Participate in this story, invest for your financial goals and make wealth for yourself. And finally, a good rule to control those emotions:&nbsp;“Best time to invest is whenever you have cash to spare”

Absolutely, yes!

There are multiple ways to Save Tax and Investment is a Major one. But not all investments fall under Tax Savings.

The simplest financial advice that you can get is:<blockquote>Invest to increase your wealth and reduce your taxes.</blockquote>It cannot get simpler than that. Can it? But it is easier said than done.In their over-excited efforts to save taxes, people end up choosing tax-saving investment options that are unsuitable for long-term wealth creation.Result?They save taxes, no doubt. But they fail to create real wealth.In this article, we analyze some of the popular investment + tax saving options for their wealth creation potential.<h2>Section 80C to Your Rescue</h2>Section 80C of Income Tax allows you to claim a deduction for investments made in various financial instruments.<img src="https://i.wlycdn.com/insights-new-release/articles/tax-saving-investment-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Tax Savings Investments under 80C">It also allows you to claim deductions for life insurance premiums, home loan repayments, tuition fee payments, etc. (Read more about <a href="http://wealthy.in/articles/best-tax-saving-options-3" rel="noopener noreferrer" target="_blank">Section 80C</a>). But these are expenses and cannot be linked to wealth building. So we focus specifically on investment options that help you create wealth.Note 1 - There is a limit of Rs 1.5 lac on deductions that can be claimed under Section 80C.Note 2 - Your EPF contributions too form part of Section 80C. But since this is mostly mandatory, there is no point comparing it with other options. Returns are similar to PPF returns.<h2>Investment Options to Save Tax</h2><h3>1. PPF</h3>PPF is a good option for conservative investors looking for certainty in returns.It is one of the most popular long-term investment options that are backed by the Indian Government.<ul><li>Current interest rate is 8.0% - subject to revision every quarter</li><li>PPF account matures after 15 years and the maturity amount is tax-free</li><li>Amount of up to Rs 1.5 lac can be invested in a financial year - which is fully tax-deductible</li><li>Loan facility is available and partial withdrawal is possible after 7th year</li></ul><h3>2. ELSS</h3><a href="http://wealthy.in/articles/ppf-vs-elss-better-tax-saver-29" rel="noopener noreferrer" target="_blank">ELSS or Equity Linked Savings Scheme</a> is an open-ended equity mutual fund that invests in stocks to get higher returns.<ul><li>Good ELSS funds have given more than 15% average returns in the long term</li><li><a href="http://term.It"></a>It offers comparatively higher returns (but not guaranteed) than all other options within Section 80C</li><li>ELSS funds have a lock-in of 3 years and returns after 1 year are tax-free.</li><li>Any amount can be invested in a financial year but a maximum of Rs 1.5 lac can be claimed for deduction</li></ul>ELSS is a good option for investors who want high long-term returns but understand that returns might be volatile in the short-term.<h3>3. Tax-Saving FDs</h3>Bank FDs need no introduction. Tax-saving FDs are a variant of regular FDs that come with a lock-in.<ul><li>Interest rates range from 6-8% before taxes</li><li>Interest is fully taxable and you have to pay taxes on interest annually even though you don’t get the interest in-hand</li><li>After taxes, the returns are reduced substantially to 5-7% - much lower than other options</li></ul><h3>4. NSC</h3>NSC or National Savings Certificate is a fixed income product issued by post offices and backed by the Indian government. Since its fixed-income, one can earn a predefined interest during the holding period.<ul><li>Current interest rate is 8.0%, which is compounded half-yearly but paid on maturity</li><li>The interest rate for an NSC gets locked at the time of investment and stays the same during the holding period</li><li>NSC matures after 5 years</li><li>Interest earned every year is not paid out (and hence no TDS) but is reinvested. So the interest too can be claimed as deduction under section 80C. So NSC interest is taxable but becomes tax-free as it is deemed to be reinvested under Section 80C</li><li>NSC can be purchased in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000</li></ul><h3>5. NPS</h3>NPS or National Pension System is the Indian government’s defined contribution pension plan. NPS allows investors to invest in 3 options - <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">Equity</a>, Government Securities and other non-government Fixed Income securities.<ul><li>NPS is structured as follows:<ul><li>Tier-I Account - Amount invested cannot be withdrawn before the investor reaches 60 years of age</li><li>Tier-II Account - Voluntary. Allowed only with active Tier-I accounts and withdrawals can be made as per subscriber’s requirements</li></ul></li><li>Returns are not guaranteed but depend on the allocation chosen - from amongst the three available options</li><li>On attaining the age of 60, a minimum of 40% of the accumulated corpus has to be used to purchase an annuity. Another 40% of the accumulated corpus can be withdrawn tax-free. Rest 20% can be withdrawn in a lump sum but is taxable. Or one can even withdraw this remaining 20% over 10 years</li><li>With so many restrictions on withdrawal, it's clear that NPS by design discourages subscribers from withdrawing their corpus</li><li>Investments of up to Rs 1.5 lac are eligible for tax benefits under Section 80C. But this benefit is capped at 10% of basic salary</li><li>Additional tax benefit of Rs 50,000 is offered to NPS subscribers</li></ul><h3>6. Ulips</h3>Ulips or Unit-Linked Insurance Plans are hybrid products that combine investment with insurance.<ul><li>ULIP returns are not guaranteed but can range from 5-11% depending on the exact scheme</li><li>Since ULIPs are generally high expense products, it takes a very long time to get good returns from these products (typically several years)</li><li>ULIPs allow investors to switch between equity and debt components easily</li><li>Since ULIPs mix investment with insurance, these are not an ideal investment option</li></ul><h3>7. RGESS</h3>RGESS or Rajiv Gandhi Equity Savings Scheme was launched to incentivize small investors’ participation in stock markets. It offers certain tax breaks to first-time investors.<ul><li>50% of a maximum investments amount of Rs 50,000 qualifies for tax benefits</li><li>Tax benefits of RGESS are available only for first-time investors whose annual income is less than Rs 12 Lac</li><li>One can invest in BSE100, NSE100 stocks, Major PSU stocks or RGESS mutual funds or ETFs</li><li>Since investments are in direct stocks (and MFs that too invest in them), returns are not guaranteed</li></ul><h3>8. Sukanya Samriddhi Account</h3>This government-sponsored scheme was launched specifically for the girl child. Sukanya Samriddhi Account (SSA) can be opened for a girl up to the age of 10 years.<ul><li>The scheme offers 8.5% returns</li><li>The amount can be withdrawn 21 years from account opening date or when the girl gets married, whichever is earlier</li></ul>So many options. Which one(s) to choose?So many investment + tax saving options can leave you confused.But these are not the only ones available. We have only discussed the most popular ones until now. There are others like Sukanya Samriddhi Account, Infrastructure bonds, Post-Office deposits, and whatnot.<h2>Which investment + tax saving option is the best for you?</h2>Before you try to find the answer to that question, remember the main aim of investing your money is not tax savings. Rather, it is to earn good returns at low risk.<img src="https://i.wlycdn.com/insights-new-release/articles/tax-saving-investment-02.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Which investment + tax saving option is the best for you?">There is no point in investing if the only thing you are getting is low returns with tax benefits?Wealthy believes that the path to wealth creation should be simple and offer good returns with low risks.There is no need to clutter your investment portfolio with several products.So what exactly do we recommend for investment + tax savings?If you are young and can accept short-term volatility, then you should invest in just two products:<ul><li>ELSS - Invest a major part of your investible surplus in ELSS funds that give good long-term returns.</li><li>PPF - A smaller part of investments can be made into PPF (or EPF if your employer provides it).</li></ul>This ELSS + PPF portfolio will provide you with adequate diversification as well as give you reasonably good returns in the long term. And of course, you get tax benefits of up to Rs 1.5 lac. Thank the government for that.

How to Maximize Savings with Tax Saving Investments

The simplest financial advice that you can get is:<blockquote>Invest to increase your wealth and reduce your taxes.</blockquote>It cannot get simpler than that. Can it? But it is easier said than done.In their over-excited efforts to save taxes, people end up choosing tax-saving investment options that are unsuitable for long-term wealth creation.Result?They save taxes, no doubt. But they fail to create real wealth.In this article, we analyze some of the popular investment + tax saving options for their wealth creation potential.<h2>Section 80C to Your Rescue</h2>Section 80C of Income Tax allows you to claim a deduction for investments made in various financial instruments.<img src="blob:https://www.wealthy.in/292c9e36-f920-4af5-8900-e0c176c7e003" style="width: 800px;" class="fr-fic fr-dib" alt="Tax Savings Investments under 80C">It also allows you to claim deductions for life insurance premiums, home loan repayments, tuition fee payments, etc. (Read more about <a href="http://wealthy.in/articles/best-tax-saving-options-3" rel="noopener noreferrer" target="_blank">Section 80C</a>). But these are expenses and cannot be linked to wealth building. So we focus specifically on investment options that help you create wealth.Note 1 - There is a limit of Rs 1.5 lac on deductions that can be claimed under Section 80C.Note 2 - Your EPF contributions too form part of Section 80C. But since this is mostly mandatory, there is no point comparing it with other options. Returns are similar to PPF returns.<h2>Investment Options to Save Tax</h2><h3>1. PPF</h3>PPF is a good option for conservative investors looking for certainty in returns.It is one of the most popular long-term investment options that are backed by the Indian Government.<ul><li>Current interest rate is 8.0% - subject to revision every quarter</li><li>PPF account matures after 15 years and the maturity amount is tax-free</li><li>Amount of up to Rs 1.5 lac can be invested in a financial year - which is fully tax-deductible</li><li>Loan facility is available and partial withdrawal is possible after 7th year</li></ul><h3>2. ELSS</h3><a href="http://wealthy.in/articles/ppf-vs-elss-better-tax-saver-29" rel="noopener noreferrer" target="_blank">ELSS or Equity Linked Savings Scheme</a> is an open-ended equity mutual fund that invests in stocks to get higher returns.<ul><li>Good ELSS funds have given more than 15% average returns in the long term</li><li><a href="http://term.It"></a>It offers comparatively higher returns (but not guaranteed) than all other options within Section 80C</li><li>ELSS funds have a lock-in of 3 years and returns after 1 year are tax-free.</li><li>Any amount can be invested in a financial year but a maximum of Rs 1.5 lac can be claimed for deduction</li></ul>ELSS is a good option for investors who want high long-term returns but understand that returns might be volatile in the short-term.<h3>3. Tax-Saving FDs</h3>Bank FDs need no introduction. Tax-saving FDs are a variant of regular FDs that come with a lock-in.<ul><li>Interest rates range from 6-8% before taxes</li><li>Interest is fully taxable and you have to pay taxes on interest annually even though you don’t get the interest in-hand</li><li>After taxes, the returns are reduced substantially to 5-7% - much lower than other options</li></ul><h3>4. NSC</h3>NSC or National Savings Certificate is a fixed income product issued by post offices and backed by the Indian government. Since its fixed-income, one can earn a predefined interest during the holding period.<ul><li>Current interest rate is 8.0%, which is compounded half-yearly but paid on maturity</li><li>The interest rate for an NSC gets locked at the time of investment and stays the same during the holding period</li><li>NSC matures after 5 years</li><li>Interest earned every year is not paid out (and hence no TDS) but is reinvested. So the interest too can be claimed as deduction under section 80C. So NSC interest is taxable but becomes tax-free as it is deemed to be reinvested under Section 80C</li><li>NSC can be purchased in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000</li></ul><h3>5. NPS</h3>NPS or National Pension System is the Indian government’s defined contribution pension plan. NPS allows investors to invest in 3 options - <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">Equity</a>, Government Securities and other non-government Fixed Income securities.<ul><li>NPS is structured as follows:<ul><li>Tier-I Account - Amount invested cannot be withdrawn before the investor reaches 60 years of age</li><li>Tier-II Account - Voluntary. Allowed only with active Tier-I accounts and withdrawals can be made as per subscriber’s requirements</li></ul></li><li>Returns are not guaranteed but depend on the allocation chosen - from amongst the three available options</li><li>On attaining the age of 60, a minimum of 40% of the accumulated corpus has to be used to purchase an annuity. Another 40% of the accumulated corpus can be withdrawn tax-free. Rest 20% can be withdrawn in a lump sum but is taxable. Or one can even withdraw this remaining 20% over 10 years</li><li>With so many restrictions on withdrawal, it's clear that NPS by design discourages subscribers from withdrawing their corpus</li><li>Investments of up to Rs 1.5 lac are eligible for tax benefits under Section 80C. But this benefit is capped at 10% of basic salary</li><li>Additional tax benefit of Rs 50,000 is offered to NPS subscribers</li></ul><h3>6. Ulips</h3>Ulips or Unit-Linked Insurance Plans are hybrid products that combine investment with insurance.<ul><li>ULIP returns are not guaranteed but can range from 5-11% depending on the exact scheme</li><li>Since ULIPs are generally high expense products, it takes a very long time to get good returns from these products (typically several years)</li><li>ULIPs allow investors to switch between equity and debt components easily</li><li>Since ULIPs mix investment with insurance, these are not an ideal investment option</li></ul><h3>7. RGESS</h3>RGESS or Rajiv Gandhi Equity Savings Scheme was launched to incentivize small investors’ participation in stock markets. It offers certain tax breaks to first-time investors.<ul><li>50% of a maximum investments amount of Rs 50,000 qualifies for tax benefits</li><li>Tax benefits of RGESS are available only for first-time investors whose annual income is less than Rs 12 Lac</li><li>One can invest in BSE100, NSE100 stocks, Major PSU stocks or RGESS mutual funds or ETFs</li><li>Since investments are in direct stocks (and MFs that too invest in them), returns are not guaranteed</li></ul><h3>8. Sukanya Samriddhi Account</h3>This government-sponsored scheme was launched specifically for the girl child. Sukanya Samriddhi Account (SSA) can be opened for a girl up to the age of 10 years.<ul><li>The scheme offers 8.5% returns</li><li>The amount can be withdrawn 21 years from account opening date or when the girl gets married, whichever is earlier</li></ul>So many options. Which one(s) to choose?So many investment + tax saving options can leave you confused.But these are not the only ones available. We have only discussed the most popular ones until now. There are others like Sukanya Samriddhi Account, Infrastructure bonds, Post-Office deposits, and whatnot.<h2>Which investment + tax saving option is the best for you?</h2>Before you try to find the answer to that question, remember the main aim of investing your money is not tax savings. Rather, it is to earn good returns at low risk.<img src="blob:https://www.wealthy.in/8d3b1548-82f2-4191-89da-deeb122c02d3" style="width: 800px;" class="fr-fic fr-dib" alt="Which investment + tax saving option is the best for you?">There is no point in investing if the only thing you are getting is low returns with tax benefits?Wealthy believes that the path to wealth creation should be simple and offer good returns with low risks.There is no need to clutter your investment portfolio with several products.So what exactly do we recommend for investment + tax savings?If you are young and can accept short-term volatility, then you should invest in just two products:<ul><li>ELSS - Invest a major part of your investible surplus in ELSS funds that give good long-term returns.</li><li>PPF - A smaller part of investments can be made into PPF (or EPF if your employer provides it).</li></ul>This ELSS + PPF portfolio will provide you with adequate diversification as well as give you reasonably good returns in the long term. And of course, you get tax benefits of up to Rs 1.5 lac. Thank the government for that.

How to master your taxes

Mutual Funds are a very good investment option. MFs bring the benefits of large numbers to your side; they are diversified to optimize the profit with minimum risk, and they are managed professionally.

Mutual Funds are like the new restaurant that’s just opened up in your neighborhood. You know that it serves six different cuisines, but you aren’t sure which all taste good there. And there’s no feeling worse than choosing the wrong dish and having to finish it up!Wouldn’t it be awesome if you could sample a little of all the different things they have to offer and then choose for yourself? Yep, except for one annoying thing: you have to buy the dishes whole. You can’t ask for a fifth of the Fondue and a third of the Dumplings. And your wallet doesn’t have enough for you to afford all the dishes and let them go waste.But you&nbsp;want to try the restaurant out. So, what do you do?You call your friends! You call up six or seven of them, tell them about the new place and go out for dinner. Now, with seven wallets on the bill, you can go ahead and try out all of those dishes you wanted to check out. Each of you gets to sample a little of each of the dishes and you’re all happy because even if you came across that one thing which sucks, the other five were decent enough to offset this.<img src="https://i.wlycdn.com/insights-new-release/articles/what-is-mutual-fund-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="What is a Mutual Fund?">Mutual Funds are just like that. Only here, you are more often than not, the friend who gets called over. The person who calls you over is an expert who knows which seven dishes are the best bet you got from a menu of over a hundred.Say Hi to Ms. Simran. She has a lot of experience when it comes to understanding the market and investing wisely. Now, she comes out and tells people that she has a portfolio of stocks, bonds, and cash that she thinks is great and wants to invest in.For that, though, she needs to pool in money from different people so that she can have the benefit of large numbers on her side. To each one who puts their money into this pool, she promises to share the profits in the proportion of their contribution.Suppose ten people decide to go along with her plan and give her some money. One person gives 18,000, another gives 10,000, while someone else gives just 1,000. Overall, she gets 1,00,000 in total, which is a good enough amount for her to invest in the portfolio.She now splits the whole basket of money, which she calls a Mutual Fund (MF), into small units worth 10 each. So, the person who put in 18000, now owns 1800 units of Simran’s MF and is entitled to the profits that come from them. So, in this way, they are similar to owners of shares.<img src="https://i.wlycdn.com/insights-new-release/articles/what-is-mutual-fund-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Who Manages the Mutual Funds?">Understand here that she is a pro at this. She is dead serious about making the most money out of this whole exercise. Maximizing her profit is the only motive she has. And the only way she will make money for herself is when she makes money for all the people who have contributed to the MF. So if you are one of those investors, she is working hard to make sure you get the most money out of it too. Hence, the word “mutual”.&nbsp;Now, at the end of each day’s trading, Simran sits down and figures out how much the MF is worth. One of these days, let’s say she sees that the value of the MF is 1,20,000. This means each of the units of the MF has a value of 12, giving a return of 2 bucks per unit for all the investors. Everyone’s happy. Of course, if the MF goes into losses, everyone shares that as well, in the proportion of the units they own. The “mutual” in the name makes people sink or swim together.In short, the whole process boils down to this:<ol><li>A lot of people pool in money towards a common fund</li><li>Each investor gets units of the fund in the proportion of their contribution</li><li>The fund is well-diversified and is professionally managed</li><li>And finally, the investors share the profits or losses</li></ol><img src="https://i.wlycdn.com/insights-new-release/articles/what-is-mutual-fund-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="couple more things you should know before investing in Mutual Fund">There are a couple more things you should know too:<ul><li name="a98e">You can enter and leave an MF at any time, but you might have to pay a small “exit load” on the way out if you are leaving the MF too early.&nbsp;</li><li name="aca4">Before splitting the profits or losses, the managers of the MF will keep for themselves a profit margin and fee for their services. That is, the investors share in the gains from the MF minus the managers’ cut. SEBI has a cap on the profit margin, though, so you need not worry about the managers taking an over-large cut.&nbsp;</li></ul>So, all-in-all, Mutual Funds are a very good investment option when you are constrained by the restaurant-like problems we started the article with. MFs bring the benefits of large numbers to your side; they are diversified to optimize the profit with minimum risk, and they are managed professionally.&nbsp;A final word of caution:&nbsp;Deciding to invest in mutual funds is the easy part. It becomes tricky when you have to pick the ones you want your money in. Mutual Funds come in all shapes and sizes, which makes things a little complicated if you don’t know how to make out one from the other. So, take a few days to learn more about this.

Mutual Funds are a very good investment option. Mutual Funds are diversified to optimize the profit with minimum risk and they are managed professionally.

What is Mutual Fund and Why You Should Care About It?

Mutual Funds are like the new restaurant that’s just opened up in your neighborhood. You know that it serves six different cuisines, but you aren’t sure which all taste good there. And there’s no feeling worse than choosing the wrong dish and having to finish it up!Wouldn’t it be awesome if you could sample a little of all the different things they have to offer and then choose for yourself? Yep, except for one annoying thing: you have to buy the dishes whole. You can’t ask for a fifth of the Fondue and a third of the Dumplings. And your wallet doesn’t have enough for you to afford all the dishes and let them go waste.But you&nbsp;want to try the restaurant out. So, what do you do?You call your friends! You call up six or seven of them, tell them about the new place and go out for dinner. Now, with seven wallets on the bill, you can go ahead and try out all of those dishes you wanted to check out. Each of you gets to sample a little of each of the dishes and you’re all happy because even if you came across that one thing which sucks, the other five were decent enough to offset this.<img src="blob:https://www.wealthy.in/9279f3cc-ca8a-4430-a355-5fd2b8881c88" style="width: 800px;" class="fr-fic fr-dib" alt="What is a Mutual Fund?">Mutual Funds are just like that. Only here, you are more often than not, the friend who gets called over. The person who calls you over is an expert who knows which seven dishes are the best bet you got from a menu of over a hundred.Say Hi to Ms. Simran. She has a lot of experience when it comes to understanding the market and investing wisely. Now, she comes out and tells people that she has a portfolio of stocks, bonds, and cash that she thinks is great and wants to invest in.For that, though, she needs to pool in money from different people so that she can have the benefit of large numbers on her side. To each one who puts their money into this pool, she promises to share the profits in the proportion of their contribution.Suppose ten people decide to go along with her plan and give her some money. One person gives 18,000, another gives 10,000, while someone else gives just 1,000. Overall, she gets 1,00,000 in total, which is a good enough amount for her to invest in the portfolio.She now splits the whole basket of money, which she calls a Mutual Fund (MF), into small units worth 10 each. So, the person who put in 18000, now owns 1800 units of Simran’s MF and is entitled to the profits that come from them. So, in this way, they are similar to owners of shares.<img src="blob:https://www.wealthy.in/4995d026-9cf9-4821-98ab-f1aaf58010a3" style="width: 800px;" class="fr-fic fr-dib" alt="Who Manages the Mutual Funds?">Understand here that she is a pro at this. She is dead serious about making the most money out of this whole exercise. Maximizing her profit is the only motive she has. And the only way she will make money for herself is when she makes money for all the people who have contributed to the MF. So if you are one of those investors, she is working hard to make sure you get the most money out of it too. Hence, the word “mutual”.&nbsp;Now, at the end of each day’s trading, Simran sits down and figures out how much the MF is worth. One of these days, let’s say she sees that the value of the MF is 1,20,000. This means each of the units of the MF has a value of 12, giving a return of 2 bucks per unit for all the investors. Everyone’s happy. Of course, if the MF goes into losses, everyone shares that as well, in the proportion of the units they own. The “mutual” in the name makes people sink or swim together.In short, the whole process boils down to this:<ol><li>A lot of people pool in money towards a common fund</li><li>Each investor gets units of the fund in the proportion of their contribution</li><li>The fund is well-diversified and is professionally managed</li><li>And finally, the investors share the profits or losses</li></ol><img src="blob:https://www.wealthy.in/aa03804f-2693-49df-b6b1-b5b4c65d5cd4" style="width: 800px;" class="fr-fic fr-dib" alt="couple more things you should know before investing in Mutual Fund">There are a couple more things you should know too:<ul><li name="a98e">You can enter and leave an MF at any time, but you might have to pay a small “exit load” on the way out if you are leaving the MF too early.&nbsp;</li><li name="aca4">Before splitting the profits or losses, the managers of the MF will keep for themselves a profit margin and fee for their services. That is, the investors share in the gains from the MF minus the managers’ cut. SEBI has a cap on the profit margin, though, so you need not worry about the managers taking an over-large cut.&nbsp;</li></ul>So, all-in-all, Mutual Funds are a very good investment option when you are constrained by the restaurant-like problems we started the article with. MFs bring the benefits of large numbers to your side; they are diversified to optimize the profit with minimum risk, and they are managed professionally.&nbsp;A final word of caution:&nbsp;Deciding to invest in mutual funds is the easy part. It becomes tricky when you have to pick the ones you want your money in. Mutual Funds come in all shapes and sizes, which makes things a little complicated if you don’t know how to make out one from the other. So, take a few days to learn more about this.

See what’s beyond ‘subject to market risks’

In the long-term, market crashes are a good opportunity to give your portfolio a boost. The markets will revive sooner or later. And so will your portfolio.

Stock market crashes can be scary. After all, who would want to see their portfolio come down by 20%, 40% or even 50% in&nbsp;a&nbsp;matter&nbsp;of months?But crashes are inevitable. Sooner or later, the markets do crash.The last major crash was in 2008-09. In just a year, markets were down by more than 50%. And some stocks had lost more than 95%. But don’t worry. We don’t want to scare you. Stock market crashes should be welcomed. Sounds strange? Or even stupid?&nbsp;It is not.Stock market crashes can give your portfolio a big boost if you are smart about it.Let’s try and prove that by taking examples of some of the biggest crashes in recent times.<h2 dir="ltr">Recession of 2008-09</h2>All of us remember the <a href="https://www.history.com/topics/21st-century/recession" rel="noopener noreferrer" target="_blank">recession of 2008-09</a>. The credit crisis that started in the US (due to the housing bubble burst) caused Indian markets to fall dramatically too.In just a little more than a year, the Sensex was down from almost 21,000 to 8,100 - a fall of more than 60%! &nbsp;This is how it looked.<img src="https://i.wlycdn.com/articles/Stocks.png" class="fr-dib" style="width: 800px;" alt="Recession of 2008-09"> So if you had a portfolio of say Rs 10 lac at the start of 2008, it would have been reduced to just Rs 3.9 lac if it behaved like Sensex.&nbsp;This was unprecedented.But what happened after the crash? This.<img src="https://i.wlycdn.com/articles/stock2.png" class="fr-dib" style="width: 800px;" alt="After Recession of 2008-09"> After the fall to 8100, Sensex rose to cross 29,000. And all this happened between 2009 and end-2014. That’s a rise of more than 250% in 5 years.<h2 dir="ltr">What exactly does this mean?</h2>Let's compare it with an FD (with post-tax returns of 6.4% - assuming 20% tax on 8% - yielding FD).<img src="https://i.wlycdn.com/articles/stock3.png" class="fr-dib" style="width: 800px;" alt="What exactly does Stock Market Crash mean?"> An investment of Rs 1 lac made in both Sensex and FD at the same time (early 2009), gives dramatically opposite results.Amount invested in Sensex turned into Rs 3.45 lacs whereas that in FD became just Rs 1.4 lac.And this is what we are trying to highlight:When the stock markets crash, it is the best time to invest more. The markets will revive sooner or later. And so will your portfolio.Let’s see another crash that originally forced investors to shun the markets. But which too made money for those who decided to remain invested (and bought more) during the crash.<h2 dir="ltr" style="font-weight: bold;">Dot-Com Bubble of 2000-01</h2><a href="https://www.investopedia.com/terms/d/dotcom-bubble.asp" rel="noopener noreferrer" target="_blank">The dot-com crisis of 2000-01</a> was soon followed by the 9/11 terrorist attacks. Both these events led markets across the world to the tank. Indian markets too fell a lot (see graph below). <img src="https://i.wlycdn.com/articles/stock4.png" class="fr-dib" style="width: 800px;" alt="Dot-Com Bubble of 2000-01"> What happened after that big crash?<img src="https://i.wlycdn.com/articles/stock5.png" class="fr-dib" style="width: 800px;" alt="After Dot-Com Bubble of 2000-01">The markets kept rising like anything.If someone had invested when Sensex had crashed to 3,000 levels in September 2001 (remember 9/11), money would have<ul><li dir="ltr">Doubled by 2004,</li><li dir="ltr">Tripled by 2006, and</li><li dir="ltr">Become 6 times by 2007 (i.e. in 6 years)</li></ul>Let’s not even compare it with FDs this time. And you know why? ;-)And this happens after every big crash. After the crash, markets might remain low for some time. But eventually, the recovery happens and those who stay invested (or invest more during the crisis), make tonnes of money.<h2 dir="ltr" style="font-weight: bold;">What about Recent Big Falls?</h2>During August 2015-February 2016, Sensex came down from its ~28,000 levels to about 23,000, a fall of 18% in six months. Since then the market has regained its losses and as of November 2016 is again close to 28,000 levels.Many smart investors bought more during this crash. And when markets recovered, they were sitting on nice juicy profits.<h2 dir="ltr" style="font-weight: bold;">How to Act Smart in Market Crashes?</h2>No one can predict when the next crash will happen. But it will happen for sure.And when it does happen, it is the best time to invest more (either in stocks or through <a href="http://wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">Mutual Funds</a>). The best course of action during a stock market crash is to:<ul><li dir="ltr">Continue regular SIPs no matter what</li><li dir="ltr">Invest any surplus money that is not required for a few years, in <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">equity mutual funds</a> or stocks</li></ul>If you know how to pick direct stocks, do so. But understand the risks involved. If you don’t know how to do it, there is no shame in admitting it. Stick to mutual funds where expert fund managers know what they are doing and know how to pick a diversified portfolio of stocks.A stock market crash is an opportunity to invest more and profit from the future recovery of the market.Now that you are smarter, don’t look to survive the next crash. Instead, take advantage of it and become Wealthy.

An Investors Guide to Stock Market Crash

Stock market crashes can be scary. After all, who would want to see their portfolio come down by 20%, 40% or even 50% in&nbsp;matter&nbsp;of months?But crashes are inevitable. Sooner or later, the markets do crash.The last major crash was in 2008-09. In just a year, markets were down by more than 50%. And some stocks had lost more than 95%. But don&rsquo;t worry. We don&rsquo;t want to scare you. Infact, stock market crashes should be welcomed. Sounds strange? Or even stupid?&nbsp;It is not.Stock market crashes can give your portfolio a big boost if you are smart about it.Let&rsquo;s try and prove that by taking examples of some of the biggest crashes in recent times.Recession of 2008-09All of us remember the recession of 2008-09. Credit crisis that started in US (due to housing bubble burst) caused Indian markets to fall dramatically too. In just a little more than a year, the Sensex was down from almost 21,000 to 8,100 - a fall of more than 60%! &nbsp;This is how it looked.<img class="fr-dib" src="https://i.wlycdn.com/articles/Stocks.png"> So if you had a portfolio of say Rs 10 lac at the start of 2008, it would have been reduced to just Rs 3.9 lac if it behaved like Sensex.&nbsp;This was unprecedented.But what happened after the crash? This.<img class="fr-dib" src="https://i.wlycdn.com/articles/stock2.png"> After the fall to 8100, Sensex rose to cross 29,000. And all this happened between 2009 and end-2014. That&rsquo;s a rise of more than 250% in 5 years.&nbsp;What exactly does this mean?Lets compare it with a FD (with post tax returns of 6.4% - assuming 20% tax on 8%-yielding FD).<img class="fr-dib" src="https://i.wlycdn.com/articles/stock3.png"> An investment of Rs 1 lac made in both Sensex and FD at the same time (early 2009), gives dramatically opposite results.Amount invested in Sensex turned into Rs 3.45 lacs whereas that in FD became just Rs 1.4 lac.And this is what we are trying to highlight:When stock markets crash, it is the best time to invest more. The markets will revive sooner or later. And so will your portfolio. Let&rsquo;s see another crash that originally forced investors to shun the markets. But which too made money for those who decided to remain invested (and bought more) during the crash.Dot-Com Bubble of 2000-01Dot-com crisis of 2000-01 was soon followed by the 9/11 terrorist attacks. Both these events led markets across the world to tank. Indian markets too fell a lot (see graph below). <img class="fr-dib" src="https://i.wlycdn.com/articles/stock4.png"> What happened after that big crash?<ol><li> </li></ol><img class="fr-dib" src="https://i.wlycdn.com/articles/stock5.png">The markets kept rising like anything.If someone had invested when Sensex had crashed to 3,000 levels in September 2001 (remember 9/11), money would have<ul><li dir="ltr">Doubled by 2004,</li><li dir="ltr">Tripled by 2006, and</li><li dir="ltr">Become 6 times by 2007 (i.e. in 6 years)</li></ul> Let&rsquo;s not even compare it with FDs this time. And you know why? ;-)And this happens after every big crash. After the crash, markets might remain low for some time. But eventually, the recovery happens and those who stay invested (or invest more during crisis), make tonnes of money.What about Recent Big Falls?During August 2015-February 2016, Sensex came down from its ~28,000 levels to about 23,000, a fall of 18% in six months. Since then the market has regained its losses and as of November 2016 is again close to 28,000 levels.Many smart investors bought more during this crash. And when markets recovered, they were sitting on nice juicy profits.How to Act Smart in Market Crashes?No one can predict when the next crash will happen. But it will happen for sure.And when it does happen, it is the best time to invest more (either in stocks or through MFs). Best course of action during a stock market crash is to:<ul><li dir="ltr">Continue regular SIPs no matter what</li><li dir="ltr">Invest any surplus money that is not required for few years, in equity mutual funds or stocks</li></ul> If you know how to pick direct stocks, do so. But understand the risks involved. If you don&rsquo;t know how to do it, there is no shame in admitting it. Stick to mutual funds where expert fund managers know what they are doing and know how to pick a diversified portfolio of stocks.Stock market crash is an opportunity to invest more and profit from future recovery of market.Now that you are smarter, don&rsquo;t look to survive the next crash. Instead, take advantage of it and become Wealthy.<ol><li> </li></ol>

Welcome Stock Market Crashes with a Big Hug

Selling underperforming stocks and mutual funds is as important as giving away that old pair of denims that you do not wear anymore.

Diwali is right around the corner. And how do most of us prepare for it? By cleaning our homes, of course. It’s one of the many things we do just before the festive season begins.It is not uncommon to receive promotional messages from cleaning services providers during this time of the year as well. Diwali cleaning is a big deal in most parts of the country.The significance of Diwali cleaning stems from the belief that Lakshmi, the Goddess of Prosperity, enters only clean homes. This festive cleaning also signifies letting go of the old and making room for the new in our homes and lives.While we’ll clean our homes this Diwali, wouldn’t it make sense to do the same to our investment portfolios as well? Quite a lot of investors are hoarders when it comes to their investments.<img src="https://i.wlycdn.com/insights-new-release/articles/Diwali-Cleaning-1.png" style="width: 800px;" class="fr-fic fr-dib" alt="Portfolio Cleaning ">Letting go of stocks and mutual funds is difficult for many. Even when their investments are underperforming, investors tend to be unreasonably hopeful and shy away from getting rid of them. But, of course, selling underperforming stocks and <a href="https://www.wealthy.in/insights/articles/What-is-Mutual-Fund-7/" target="_blank">mutual funds</a> is as important as giving away that old pair of de that you don’t wear anymore.So, if you’re ready to give your investment portfolio a thorough Diwali cleaning, here are a few tips and ideas that you would find useful.<h2>1. Be hopeful, but not overly hopeful</h2>It’s very good if you <a href="https://www.wealthy.in/insights/articles/how-can-equities-grow-your-wealth-upto-5-times-5/" target="_blank">invest in equities</a> with a long-term view, but that doesn’t mean that you should continue holding onto an underperforming investment for eternity. If a stock or fund that you’ve invested in keeps doing poorly, then it’s better to book losses and sell it before it keeps getting worse.<img src="https://i.wlycdn.com/insights-new-release/articles/Diwali-Cleaning-2.png" style="width: 800px;" class="fr-fic fr-dib" alt="Clean Portfolio - Book losses and sell it before it keeps getting worse">A 10% loss is better than incurring a 30% or more loss in the hope that the investment might someday turnaround. So, this Diwali, sell the underperformers and reinvest the money in investments that are doing better.<h2>2. Check if your asset allocation is in place</h2>If you invest with specific goals and objectives in mind, and you should, then you would have your investment portfolio allocated to different asset classes. Equity is great for <a href="https://www.wealthy.in/insights/articles/Long-term-Investment-27/" target="_blank">long-term investment strategy</a>, but a short-term goal might call for investments in debt.It’s a good idea to spread your investments across assets in general as well, since every asset type has its own pluses. Equities can help you build wealth while debt can help you protect wealth.<img src="https://i.wlycdn.com/insights-new-release/articles/Diwali-Cleaning-3.png" alt="Clean Portfolio - Book Profits" style="box-sizing: border-box; cursor: pointer; padding: 0px 1px; max-width: 100%; color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial; width: 800px;" class="fr-fic fr-dib">So, review your portfolio this Diwali and check if your portfolio is as balanced as you’d want it to be.<h2>3. Book profits in some cases</h2>When you check how your investments are performing, you might come across some cases where the investment is doing exceptionally well. This would particularly be the case with long-term investments. Since the markets have been volatile, such cases would probably be rare, which makes it even more appealing to book profits.<img src="https://i.wlycdn.com/insights-new-release/articles/Diwali-Cleaning-4.png" style="width: 800px;" class="fr-fic fr-dib" alt="Clean Portfolio - Book Profits">You can even use some of the profits to gift something to your family members or take them out on a vacation.It’s Diwali, after all.These are some of the ideas that you can use to get some portfolio rebalancing and cleaning done.But when you are selling investments, be mindful of the income tax implications on your profits. Long-term capital gains from equities and equity mutual funds of over Rs 1 lakh in a year are subject to 10% tax.If you have held the investment for less than a year, then there might be short-term tax implications. Consider both before you sell.Happy Diwali!

Letting go of stocks is difficult for many. Even when they are underperforming, investors tend to be unreasonably hopeful and shy away from getting rid of them.

How about Some Diwali Cleaning? But, for Your Investment Portfolio

Clean your Portfolio in 3 Simple Steps

Picking multi-bagger stocks is not easy. It takes intensive research and a deep understanding of the business to identify the right stocks.

You probably won’t like to hear this, but we’ll be blunt about it anyway. For your own good, of course. Investing directly in stocks is not a great idea for most of us.That’s right. You’ll ask why, since you might have heard stories about how rewarding stock investments have been to someone or the other. However, such cases are few and far between. The stories of people losing their entire life’s earnings in stocks are even more. And scarier, of course.<img src="https://i.wlycdn.com/insights-new-release/articles/picking-stocks-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Picking Stocks is Best Left to the Professionals">The success stories you might have heard would be about <a href="https://en.wikipedia.org/wiki/Rakesh_Jhunjhunwala" rel="noopener noreferrer" target="_blank">Rakesh Jhunjhunwala</a>&nbsp;multiplying his money about 82 times with his 13-year investment in Titan. Or about the stock market exploits of <a href="https://en.wikipedia.org/wiki/Warren_Buffett" rel="noopener noreferrer" target="_blank">Warren Buffett</a>. These stalwarts have, without doubt, been super successful stock market investors. But there’s a reason for that. Three, actually.<h2>1. How do experts make money from stocks?</h2><ul style="list-style-type: disc;"><li>They spend a lot of time in research: Warren Buffett spends as much as 5 hours every day reading business news and research</li><li>They have a diversified portfolio: Rakesh Jhunjhunwala has over 80 stocks in his portfolio</li><li>They invest long-term: The average holding period for Mr. Jhunjhunwala is 3.5 years while he has held onto some of his most successful investments for more than 10 years</li></ul>And let’s not forget the kind of money they have to invest. These are rich blokes who can afford to let a couple of bets go away.<img src="https://i.wlycdn.com/insights-new-release/articles/picking-stocks-2.webp" style="width: 800px;" class="fr-fic fr-dib" alt="1. How do experts make money from stocks?">Regular people like us, on the other hand, cannot afford to lose any of what we have invested. Most of us work hard to not only earn what we do, but also to save what we do. Saving money to invest every month is not easy, which is why it makes it even more important that we invest in instruments that we can rely upon to deliver.In case you are struggling to savings then, here's an article that can help you: <a href="https://www.wealthy.in/articles/track-expenses-16" rel="noopener noreferrer" target="_blank">Track Expenses - How to Know Where Your Money Goes?</a><h2>2. What is required to invest directly in stocks?</h2>To invest in direct stocks, you need time, knowledge and expertise. Researching companies is a full time job. It requires deep knowledge of the financial world and the kind of expertise that can only come with experience.On top of that, you also need huge amounts of money to build a diversified portfolio of stocks. And of course, let’s not forget the importance of periodic monitoring of your investments.<img src="https://i.wlycdn.com/insights-new-release/articles/picking-stocks-3.webp" style="width: 800px;" class="fr-fic fr-dib" alt="2. What is required to invest directly in stocks?">You can do all of this if you’re willing to give up your day job and do just this. On the other hand, you can avail the services of a fund manager whose day job is this--by <a href="http://wealthy.in/articles/investing-in-equity-2" rel="noopener noreferrer" target="_blank">investing in equity mutual funds</a>.<h2>3. What is the better alternative to direct stocks?</h2>Every equity mutual fund is managed by a professional fund manager and his or her team of research analysts. It is their job to spend time and effort in researching companies. They understand how companies function and the way the stock markets work. They spend huge amounts of time researching and analysing companies to invest in.&nbsp;<img src="https://i.wlycdn.com/insights-new-release/articles/picking-stocks-4.webp" style="width: 800px;" class="fr-fic fr-dib" alt="3. What is the better alternative to direct stocks?">With equity mutual funds, you also don’t need huge amounts to invest. You can begin investing in a diversified mutual fund with as little as Rs 500. This makes equity funds a better way to gain exposure to the stock markets for most lay investors.<em style="box-sizing: border-box; color: rgb(34, 34, 34); font-family: Avenir-Book; font-size: 20px; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Wondering what are mutual funds? Read here:&nbsp;<a href="https://www.wealthy.in/articles/what-is-mutual-fund-32" rel="noopener noreferrer" target="_blank">What is Mutual Fund and Why You Should Care About It?</a> <article><main><section name="1834">You might still want to invest in stock market, perhaps just for fun. You can do that, but please dedicate only a small part of your funds to dabble into stocks. Make equity mutual funds the core of your portfolio.</section></main></article>

Picking stocks to invest in is not easy. It takes intensive research and a deep understanding of the business to identify the right stocks.

Picking Stocks is Best Left to the Professionals

<article><main><section name="1834">You probably are not going to like us for saying this. But it&rsquo;s true and we care enough to tell you upfront that being romantic about stock-picking is not a great idea.&nbsp;Yes, putting your money directly in stocks is very rewarding, at least for a few top guys. Rakesh Jhunjhunwala multiplied his money 82 times with his 13-year investment in Titan. And let&rsquo;s not get started about Warren Buffet. That guy is the Einstein of stock market. But, the great results are usually limited to few people like them.Let&rsquo;s see what they have got that makes them so good at this.<ul><li name="f22c">They spend a lot of time in research:&nbsp;Warren Buffet spends as much as 5 hours every day reading business news and research.&nbsp;</li><li name="457f">They have a diversified portfolio:&nbsp;Rakesh Jhunjhunwala has over 80 stocks in his portfolio. (Yep, that takes a lot of money.)</li><li name="25a7">They invest long-term:&nbsp;Average hold-period for Mr Jhunjhunwala is 3.5 years while he has held onto some of his most successful investments for more than 10 years.</li></ul>So, when experts say that successful investing is simple, they&rsquo;re right. But simple isn&rsquo;t easy.&nbsp;It takes intensive research to understand individual businesses and figure out how much value they can build for your money in future.It takes a lot of cash to diversify your portfolio like Rakesh Jhunjhunwala. On top of that, you have to monitor the investments regularly and re-allocate money in case things change and your assumptions have to be corrected.&nbsp;To do all of that with a regular day job, where sometimes we end up spending several hours in bad city traffic, is almost impossible.That does not mean we are telling you to stay away from the stock market. That would be just as romantic and stupid. What we are saying is this:Buying equity mutual funds is a better alternative to realize gains of stock market.&nbsp;It not only spreads your bet over tens or hundreds of stocks but you also get a professionally trained and experienced team to pick stocks for you.&nbsp;Fee-structure of mutual funds has also rationalized over last few years and the fee that you pay to mutual funds is a very small percentage of your total investment.It&rsquo;s easier for you and it gets better results.&nbsp;You might still want to invest in stock market, perhaps just for fun. You can do that, but please dedicate only a small part of your funds to dabble into stocks. Make equity mutual funds the core of your portfolio.Wondering what are mutual funds? They are like restaurants. (<a href="https://www.wealthy.in/insights/articles/what-is-a-mutual-fund-and-why-you-should-care-about-it-7" target="_blank">What&rsquo;s a mutual fund?</a>)&nbsp;</section></main></article>

Unless you are Warren Buffett of course!

Gold has been a favourite of Indian households as an investment instrument. If you look at returns then the gold picture doesn’t look great.

For most of us, buying gold is almost a ritual. Depending on which part of the country we belong to, there is at least one day on our cultural calendar, when our parents go out and buy gold.&nbsp;It’s mostly so because gold has always been seen as the safest investment for most middle-class households. It’s been so for thousands of years, and even recently, when gold was on a bull run for over 12 years, the trend compounded our belief.But 2015 is not a good year for investing in gold.&nbsp;Gold prices are on a downward spiral. In global markets, they are at five-year lows and are expected to slide further by the end of this year. In Indian markets, gold prices are down by almost 20% since the highs of 2012.<img src="https://i.wlycdn.com/insights-new-release/articles/dont-invest-in-gold-1.webp" style="width: 800px;" class="fr-fic fr-dib" alt="Should You Even Consider Gold as an Investment?">Goldman Sachs, one of the leading investment banks of the world, predicts gold prices to slide by another 10% before the end of this year.We know that gold has lost its sheen when traditional countries like India and China, who hold gold in high cultural regard and have been the two largest consumers of gold, have started showing a decline in demand.&nbsp;Indians bought 25% lesser gold in 2015 as compared to the same period in 2014.What makes things a little more sucky for us is that we have to pay more per unit of gold than what our friends globally have to. Yeah, all thanks to a 10% duty that Indian government charges on all gold that is imported in India. If you’re wondering if that duty is going to go away soon, a quick look at our current account deficits will tell you that the duty is here to stay for a long long time.&nbsp;The smarter investors amongst us saw this trend and stopped buying gold three years back. They chose other options to invest their surplus.If you had invested 1,000 rupees in gold three years ago, it would have reduced to about 820 in 2015. You would have lost money, that too quite a bit. That money, when invested in a 3 year FD, would have become 1,300 rupees. And if you had invested it in a basket of top-rated equity mutual funds, you would have had 1950 rupees.&nbsp;<img alt="In last 3 years, 1000 INR invested in gold lost 18% in value" src="https://i.wlycdn.com/articles/avoid-investing-in-gold.jpg" class="fr-dib">Seeing these numbers, why would you ever go for Gold today?There’s one reason we can think of. With wedding season coming up and gold prices going down, it’s cheaper now to buy that exquisite piece of gold jewelry for your friends and family.&nbsp;For any reason other than this, don’t invest in Gold.

Gold has been a favorite of Indian households as an investment instrument. If you look at returns then the gold picture doesn’t look great.

Should You Even Consider Gold as an Investment?

For most of us, buying gold is almost a ritual. Depending on which part of the country we belong to, there is at least one day on our cultural calendar, when our parents go out and buy gold.&nbsp;It&rsquo;s mostly so because gold has always been seen as the safest investment for most middle-class households. It&rsquo;s been so for thousands of years, and even recently, when gold was on a bull run for over 12 years, the trend compounded our belief.&nbsp;But 2015 is not a good year for investing in gold.&nbsp;Gold prices are on a downward spiral. In global markets, they are at five-year lows and are expected to slide further by the end of this year. In Indian markets, gold prices are down by almost 20% since the highs of 2012.Goldman Sachs, one of the leading investment banks of the world, predicts gold prices to slide by another 10% before the end of this year.We know that gold has really lost its sheen when traditional countries like India and China, who hold gold in high cultural regard and have been the two largest consumers of gold, have started showing decline in demand.&nbsp;Indians bought 25% lesser gold in 2015 as compared to the same period in 2014.What makes things a little more sucky for us is that we have to pay more per unit of gold than what our friends globally have to. Yeah, all thanks to a 10% duty that Indian government charges on all gold that is imported in India. If you&rsquo;re wondering if that duty is going to go away soon, a quick look at our current account deficits will tell you that the duty is here to stay for a long long time.&nbsp;The smarter investors amongst us saw this trend and stopped buying gold three years back. They chose other options to invest their surplus.&nbsp;If you had invested 1,000 rupees in gold three years ago, it would have reduced to about 820 in 2015. You would have actually lost money, that too quite a bit. That money when invested in a 3 year FD would have become 1,300 rupees. And if you had invested it in a basket of top-rated equity mutual funds, you would have had 1950 rupees.&nbsp;<img class="fr-dib" src="https://i.wlycdn.com/articles/avoid-investing-in-gold.jpg" alt="avoid investing in gold"> Seeing these numbers, why would you ever go for Gold today?There&rsquo;s one reason we can think of. With wedding season coming up and gold prices going down, it&rsquo;s cheaper now to buy that exquisite piece of gold jewellery for your friends and family.&nbsp;For any reason other than this, don&rsquo;t invest in Gold.&nbsp;

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