Tax Savior - Wealth Creator

 

While some people are comfortable handling their own investments, many are not. Indian investors are already struggling between the 8-10% interest rates from the bank which merely beats the inflation.  If the long term goals are taken into consideration, then the below mentioned ELSS fund can prove to be one of the best in the basket. It simply saves tax up to Rs.1,50,000 and also manages to outperform the benchmark returns.

Individual investors are facing many emotional and financial conflicts which if left unresolved could put their future at risk. When there is no time to monitor the investments and lack of expertise, under such circumstances mutual funds come into picture directly cutting the confusion. If goals are clear with unique objectives then it is our responsibility to help you make more assured decisions about your financial future.

Birla Sun Life Tax Relief 96 – Growth Weekly Chart

Birla Sun Life Tax Relief 96 is an open ended Equity Linked Saving Scheme (ELSS) with 98.61% exposure to equity.

Portfolio Analysis: The fund aims to generate returns by investing in complete equity with maximum exposure to Banking/Finance and Automotive sector.

Sector Allocation:

Sector         % Banking and Finance 19.90 Automotive 16.85 Pharmaceuticals 9.18 Miscellaneous 6.13 Chemicals 6.11 Returns as on 19th October 2016

Period Returns (%) 1 year 12.91 3 year 27.41 5 year 20.08

Top Stock Holdings

Company	PE	% Assets
Sundaram-Clayto	52.29	6.81
Bayer Crop Science	48.94	5.10
Honeywell Automation	57.81	4.81
Kotak Mahindra Bank	35.71	3.89
ZEE Entertainment	48.79	3.88

Risk Profile: This fund is considered as “High Risk Fund” due to complete exposure to equity instruments, therefore it’s suitable for investors who are looking for Tax benefits.

Taxation Perspective: Birla Sun Life Tax Relief 96 is ELSS fund is where investor is eligible for tax exemptions up to 150,000 INR under section (u/s) 80C of the Indian Income Tax Act, 1961 if they stay invested for three years or more. ELSS Funds are also eligible for Long Term Capital Gains which will be treated tax free as the holding will be more than one year. The Dividend earned from ELSS funds is also treated as tax free.

Investment Rationale: Birla Sun Life Tax Relief 96 fund has shown some outperformance despite of no clear trend in the Indian Equity Markets.  We can expect the same in this fund to continue for next few weeks and one leg is still pending on downside which should provide excellent buying opportunities for lump sum investors.

Save Taxes instead of Paying them and switch to Online Investments with us HERE

Layman in Mutual Funds? Read this.

Today there are a number of investment options available for an investor through which an individual can generate good profit and fulfil their future goals. One of such investment option is Mutual funds.

Now the question arises What is Mutual fund? Basically, it is a group which pools together the capital of various investors and makes investment into various asset classes. It is managed by professional fund managers. So lack of knowledge to the investor will also not be a concern. The different asset classes in which the fund manager parks the money of the investors are Equity, Debt, Money market, other mutual fund scheme etc.

Now the question arises, why one should invest in Mutual fund rather than investing in Shares, Debt fund or Fixed deposit. The answer for this is explained below - 

-  Professionally managed funds: This is a most important benefit that an investor gets when he/she invests in a mutual fund scheme. The fund invested by the investor is professionally managed.

  

-    Diversification of the funds: The another reason why an investor should prefer

Mutual fund over shares is that the funds which are invested in mutual fund is diversified in different sector, different shares and different assets class.

-  Less Risky: The funds are diversified and professionally managed by the fund managers these makes investment in Mutual fund less risky than investment in equity.

-   Amount of Investment: One can start his investment with a small amount say 500 Rs and there is no discrimination in mutual fund whether you invest Rs500 or Rs 50000 the fund managers will manage your capital in the similar way as they manage the money of the large investor.

-   Different Schemes: Mutual fund provides different schemes to invest according to their risk capacity. For example an investor who as the capacity to take more risk can invest in equity scheme whereas the investor who wants to take less risk can invest in debt scheme. But one should remember “Higher the risk, higher the returns”.

-     Liquidity:  In open ended scheme an individual can buy and sell mutual funds units whenever he/she wants to do so. On withdrawal within one year exit load is charged around 1%.

-   Tax Saving: Mutual funds can be used as an instrument for saving tax under section 80c upto 1,50,000. The minimum holding should be for 1 year to save tax. If units are redeemed (sold) before one year the investor will be liable to pay tax on his/her investment. 

 So these are the basic advantages and reasons why an individual can prefer Mutual funds   over other investment options. To fetch more knowledge on the same feel free to reach us - HERE

Where to invest- Growth or Dividend?

While you put your money into any investment portal for money multiplication, always keep in mind a few check points which need to be confirmed before the investment is made. Like:-

- Is the investment Tax-efficient?

- Does it reduce or increase the tax liability?

- Does it grow in value?

- Does it provide regular returns like dividend or interest?

If you choose an investment that provides regular returns, like a bond or a deposit, you get no appreciate in the value invested. If you choose an investment that has potential to appreciate, there is no regular income in the form of dividend.

But Mutual Fund enables best of both worlds. They give investor an option to choose Dividend or growth. Investor can buy a debt fund and choose a growth option, thus opting for capital appreciation in a debt portfolio. Whereas investor can buy equity fund and choose dividend option, to get regular income.

Actually, all Mutual funds provide dividend and growth option to the investors. The dividend option aims at paying periodic dividends to the investor provided the fund has earned returns. The dividend payment may be at regular intervals like quarterly, half‐yearly or annually. The growth option provides long‐term capital appreciation to the investor which can be realized at any time the investor chooses.

One additional factor to focus on dividend and growth fund is the Tax implication. Both the option dividend and growth have different tax treatment. Dividend received from the equity fund is not taxable. Capital gains are taxed based on whether they are realized within a year or after a period of a year. Therefore investors have a choice, to decide on the option they need.  If they need income, they can choose the dividend option.  If they need growth they can choose the growth option.

Therefore any difference in return to the investor comes only from the tax implication.  Investors need to choose growth, dividend payout, or dividend reinvestment, on the basis of the needs and tax preferences.

To select a fund appropriate for your needs and necessities, right to us HERE and get Expert Advisory to enhance your Mutual Fund Portfolio.