Sebi’s High-Risk, High-Reward Asset Class
Key Features of the New Asset Class
Higher Risk, Higher Reward: With a minimum investment of ₹10 lakh, this option is ideal for those willing to embrace higher risk for the possibility of greater rewards.
Innovative Strategies: Unlike traditional investments, this new vehicle allows for advanced strategies, like long-short equity funds and inverse exchange-traded funds (ETFs). If managed well, these can help you benefit even when the markets are down.
Flexible Guidelines: The guidelines are more relaxed compared to mutual funds. For instance, you can invest up to 15% in a single company, and there’s room for investing even in distressed assets.
Enhanced Diversification: This new class offers a middle path between the cautious approach of mutual funds and the bolder strategies of PMS, aiming to provide higher returns with a carefully balanced risk.
As you can see above, this new yet-unnamed class is aiming for higher risk profile investors without the large Rs 50 Lakh minimum limit of PMS. Let us see how it plays out finally.
(Contributed by Abhinandan Singh, Relationship Manager, Team Arjun, Hum Fauji Initiatives)
Money: The Double-Edged Sword of Happiness and Stress
The Positive Power of Money:
- Having enough financial resources provides peace of mind, allowing you to cover basic needs, save for the future, and handle emergencies without constant worry.
- Money can unlock experiences that enrich your life, such as pursuing a dream career, traveling, or engaging in hobbies that bring joy and fulfillment.
- Financial stability enables you to help those you care about and contribute to causes you believe in.
The Negative Power of Money:
- Financial difficulties are strongly linked to mental health issues such as anxiety and depression.
- Money problems can create even serious friction in relationships.
Navigating the Balance: Strategies for Managing Financial Stress
- Create a Comprehensive Financial Plan: Set clear, attainable goals and outline steps for paying off debt, saving, and managing expenses.
- Budget Effectively: Track your spending to identify areas where you can cut back. Living within your means can significantly reduce financial stress.
- Build an Emergency Fund: Save for unexpected expenses to create a financial cushion that protects your stability.
- Monitor Progress and Celebrate Achievements: Regularly review your financial situation and celebrate small victories to stay motivated and reinforce positive habits.
By understanding and managing the dual nature of money, it is quite easy to harness its power to enhance your well-being and lead a more balanced life.
(Contributed by Mausam Gupta, Relationship Manager, Team Prithvi, Hum Fauji Initiatives)
NPS Gets Twin Boost: Vatsalya Scheme and Tax Benefits
The National Pension System (NPS) is poised to receive a significant boost with the introduction of the Vatsalya Scheme and potential tax benefits, as given out in the recent budget. These developments are aimed at encouraging long-term savings and retirement planning among Indian citizens who are not likely to get a pension from their employer and thus need to accumulate their own retirement fund for a decent living in later part of their lives.
Here’s a breakdown of the key changes:
Enhanced Tax Benefits for NPS
Budget 2024 proposes to raise the tax deduction limit on employers’ contribution to NPS for private sector employees from 10% to 14% of basic salary. This translates to increased tax savings and a larger retirement corpus for private sector employees opting for the new tax regime. This move will help employees build a bigger retirement corpus.
Vatsalya Scheme: A New Chapter in NPS
This new scheme, NPS Vatsalya, allows parents and guardians to contribute towards a child’s retirement savings. The scheme has a long lock-in period and limited withdrawal options for child’s education. Upon reaching adulthood, the plan can be converted to a regular NPS account.
What is our take for our Investors?
Armed forces personnel, serving or retired, have no ‘employer contribution’ in NPS as they get pension. Hence the tax benefit extension given now has no relevance to them.
Vatsalya scheme focuses on long-term growth by restricting withdrawals. However, we feel that the Children’s Gift scheme of Mutual Funds offer much better liquidity and better returns than the NPS where the equity percentage is restricted and one needs to go all along with one single fund manager only. Also, there is no liquidity available in NPS in case of any emergency requirement. Lastly, NPS
Vatsalya funds are locked-in until retirement, whereas mutual funds can be redeemed after 18 years of age of the child and can be used for education or marriage expenses too.
(Contributed by Anjali Tomar, Financial Planner, Team Prithvi, Hum Fauji Initiatives)
What Did Our Clients Ask Us in the Last 7 Days?
Question: How is the profit/capital gains from my bond sale taxed under the post-budget rules?
Our Reply: Understanding how your bond sale profits are taxed can be a bit tricky, especially with the recent changes from the budget. Here’s a simple breakdown to help you navigate this.
Categories of Bonds and Their Taxation
The taxation on profits from bond sales largely depends on whether the bond is listed or unlisted, and how long you have held it. Here’s a breakdown:
Remember, the interest you earn from bonds, including SGBs, is taxable as per your income slab. Also, no capital gains tax applies if you hold SGBs till maturity.
(Contributed by Team Vikrant, Hum Fauji Initiatives)
