Finance / Investment | Equity-linked Savings Schemes

Hello

Equity-linked Savings Schemes are a smart way to save tax.

The following links will be helpful for you.

 

Equity-Linked Savings Schemes are by far the most exciting of all the tax-saving schemes: the returns offered by some of the mutual fund schemes over the past 12 months have been more than 100 per cent. But be warned: if the returns are high, so are the risks..... Read more at http://in.taxes.yahoo.com/taxelss.html

 

Statistics have proved that over the long term, equities are known to have outperformed other forms of investment.

Some other tax savings instruments like PPF, NSC, NSS, bonds etc do offer tax benefits but now at lower returns. Hence ELSS is an attractive investment avenue for those who seek tax savings coupled with the potential of high returns.

One interesting investment option that emerges for the great Indian middle class salaried Indian in these resurgent times are the Equity Linked Saving Schemes (ELSS) of Mutual Funds. ELS schemes offer tax rebate under Section 88 for an investment upto a maximum of Rs. 10,000. These schemes typically bestow on their investors two distinct advantages namely – tax exemptions under Section 88 and capital appreciation due to investment of at least 80 per cent of their corpus in the equities markets. An investment that could reap rich dividends in resurgent times!.................. Read more at http://www.indiainfoline.com/mufu/feat/idb1.html

 

One technical term used in these is "Lock in period-which means the minimum time the shares/stocks/mutual fund units have to be kept. If sold before that period, tax will be calculated . Some complications abt which rates will be taken (but the second link should help in this too)"

 

Regards

Kanuj

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Finance | Investing | 'Risk-free' just got riskier. Give your portfolio a healthy dose of equity

Investing

'Risk-free' just got riskier. Give your portfolio a healthy dose of equity.

by Rajesh Gajra, Tejas P. Bhope and Vishal Chhabria (@outlookmoney.com)     1998. You have your financial plan all charted out, and you’re sitting pretty. Not for you the horrors of a stock market scam (1992 is still fresh in investing memory) or a company deposits scam (the CRB case). You’re pretty well insulated even from the overall recession in the economy, thanks to your investments in a clutch of small savings schemes and infrastructure bonds. You not only get double-digit returns from these investments, you get preferential tax treatment–interest on your PPF investment is totally exempt from tax, and that from post office schemes, NSC and bank deposits gets relief of up toRs 12,000 under Section 80L. Even better, the 20 per cent tax rebate under Section 88 means that your investments in NSC and PPF give you returns of 15.5 per cent instead of the official 12 per cent. Things are going great and likely to stay that way, you think, and go into a virtual coma for the next six years as far as investing is concerned. 2005. The buzz is so loud, you wake with a start. Have you gone mad or has the world turned topsy-turvy? Policy changes, new regulations, newer trading mechanisms... In a little over half a decade, there have been so many developments in the investing world that virtually every aspect of your personal finance–from the way your salary is structured, to how much tax you’ll pay, to your choice of tax-savers, to the returns you get on investments–must be reviewed. Thanks to changes in income tax rules, your small savings investments now fetch returns of 8 per cent, so you get Rs 8,000 on a Rs 1 lakh investment in NSC (seven years ago, you got Rs 12,000). And even that is taxed, so you effectively get Rs 5,600. Factor in inflation (currently at 5 per cent), and your returns will dwindle further. Standard deduction has been scrapped, and thanks to the new fringe benefits tax, your employer has hastily restructured your salary to exclude all tax-free perquisites. Deductions of up to Rs 1 lakh are now available under Sec. 80C against equivalent amounts invested in thePPF, NSC, life policies, equity-linked savings schemes (ELSS) and other qualifying instruments. And people across income levels and tax slabs get the same benefit. In the highest tax bracket, this means you’ll save Rs 30,000 instead of Rs 15,000 you would have saved earlier via rebates under Sec. 88. You may wonder where things will go from here. Quovadis? Historians say that to know the future, you must study the past. For the past seven years, we’ve been predicting these changes and have tried to prepare you for them. Now, we look at recent developments, and predict where we are headed.   Read more

Courtesy : http://www.outlookmoney.com

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Finance | Investment | The Physics of bubbles

The Physics of Bubbles

3-5 per cent gains over a short period is equivalent to a much larger annual return

by Devangshu Datta(@iinvestor.com)

As kids growing up in pre-TV Calcutta, we often invented our own little games. One of our pastimes was attaching a balloon to the exhaust pipe of a parked two-wheeler. As the bike started, the balloon inflated; within seconds, it exploded. We considered it a bonus if the biker fell off in surprise.

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Some analogies from this little game apply to stockmarket bubbles. A stock-bubble occurs when too much money is pumped into too few stocks. In a low-growth, low-quality economy, the bubble explodes quickly. In a high-growth economy, the bubble expands more. If there are really high-quality stocks around, the bubble may slowly deflate instead of bursting.

Every bull market turns into a bubble at some point; stock prices balloon to an extent which cannot be justified even by the most optimistic projections. And, sometime or the other, the bull-run bubble bursts or deflates

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Read more

 

Courtesy : http://iinvestor.com

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