Knowledge Hub

<p style="text-align:center"><img alt="Fixed Maturity Plan (FMP) - UTI Mutual Fund" src="/documents/media/image/FMP.jpg" style="width:100%;" /></p>

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As we enter the month of December we become just that bit more aware of ticking of time. The change of year beckons. It is customary to reminisce over the events of the year gone by. But remember that while value compounds over time; the actual passing of a year or a quarter matters very little if at all in the markets. This has been a good year for equity investors around the globe. The MSCI* All Country World Index is at a lifetime high.

Discussions in the investor fraternity tend to usually focus on markets, politics and money flow, with a few perfunctory hats doffed to topical issues such as the pollution in Delhi weather or the holiday season. This would, of course, be typical of the community, as a largely self-obsessed fraternity, focussed on the here and now and hence predominantly biased by an urban-centric view of the world.

Budget guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors

General highlights

Senior citizens have plenty of reasons to cheer post the Union Budget. One of the biggest is the increase in deduction limit under Section 80D of the Income Tax Act.

Section 80D limit hike

The Union Budget 2018 has given emphasis on strengthening the rural economy and boosting consumption. It ticks all the right boxes with its slew of benefits including higher minimum support prices (MSPs) for kharif crops, upgradation of rural haats to give farmers better access to formal mandis, enhancing the agricultural marketing infrastructure, and promoting organic farming.

Here are 14 ways in which Budget 2018 has come to the rescue of the rural economy:

<p dir="ltr"><span id="docs-internal-guid-767e76d0-7a98-7c43-b3c1-3ba81f701250">The long-term capital gains tax (LTCG tax) has made a comeback. Gains from the sale of equity shares and <a href="https://www.utimf.com/mutual-fund-products/equity-mutual-funds/">equity mutual funds</a> will now be taxed at 10%, if the total gains in a year exceed Rs. 1 lakh. Long Term Capital Gains from such investments below Rs. 1 lakh will not be taxed.

<p><strong>Question: </strong>How do you define Value?</p>

<p><strong>Answer:</strong> Value in my book is buying things for less than their intrinsic value. <strong>Intrinsic value</strong> is simply the current value of the cash flows that the company generates for its shareholders over time. Of course there could be situations where value could be unlocked by way of asset sales but those are by definition special situations and don&rsquo;t come by every day.</p>

Question: You have a preference for companies that generate healthy operating cashflow and free cash flow. Why do you emphasize this factor?