Income Tax laws in India provide several tax benefits and incentives to the taxpayers. Tax deduction under Section 80C of the Income Tax Act, 1961 is one of the most commonly used tax benefits. The section provides a deduction of up to Rs. 1.50 lakh to the taxpayers from their taxable income for making certain eligible payments and investment options.
Mutual funds have been steadily emerging as preferred investment options for retail investors and have become one of the attractive avenues to invest money. Such preferences arise from the convenience of investing in mutual funds and a wide range of mutual fund schemes investors may choose from. While investing in mutual funds is the primary step towards wealth creation, reaping the benefits of wealth created over time is equally crucial.
When investing in mutual funds, investors can invest under different options, such as growth option, payout of income distribution-cum-capital withdrawal option, income distribution-cum-capital withdrawal reinvestment option, etc. Each of these different options carries its respective pros and cons. This article aims to discuss each of these three options briefly to help the investors decide on choosing amongst these three options:
It is often said that investing is an art. One often thinks that the job of prudent financial planning is over by making regular savings. However, it is easier said than done since it is not only about saving but also saving and investing money in the right pockets. Markets today provide a wide range of investment options to investors across different asset classes. Still, one tends to go overweight in a single asset class, thereby creating a skewed investment portfolio.
Mutual funds are investment products that create a portfolio of securities from the money invested by different investors. The investors can invest in mutual funds by submitting the application form physically at any official Points of Acceptance, through the website/ mobile app of the mutual fund house, or digital options provided by Registrar & Transfer Agents or any other online aggregator’s platform.
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) voted unanimously to hike the repo rate by 50 bps to 4.90%. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65% from 4.15% and the marginal standing facility (MSF) rate to 5.15% from 4.65%. The MPC maintained its “withdrawal of accommodation” stance while dropping the phrase “staying accommodative”, signaling a shift towards “neutrality”. The Governor reiterated that further monetary measures will be needed suggesting further rate actions to move towards a positive real rate in near term.
In the current market construct, there are some questions often on top of mind for fixed income investors:
Since the last RBI policy meet, global growth-inflation dynamics have changed drastically with increased risks of a synchronized global slowdown due to tight financial conditions & weak consumer sentiment. The US economy registered two consecutive quarters of negative growth. Global commodity prices have fallen meaningfully with Bloomberg commodity & agriculture spot index dropping by 11.3% & 18%, respectively in INR terms since June 8th, the last RBI policy (Source: Bloomberg).
We have often heard this phrase in relation to sports, especially when top-notch players seem to be going through a rough patch. Many of us may recall how the same was said about former cricketer Sachin Tendulkar when he was going through a similar phase. It was only after he scored his 100 th century that his critics accepted that ‘class is permanent’.
