MyWay Wealth Weekly Update (Issue #24): The Great Indian Borrowing Programme & More

“The gross borrowing is higher because of the repayment programme. My recollection on net borrowings is that we are not even touching the highest that was touched in the last five years.” -S C Garg (Economic Affairs Secretary, Government of India)

Below is the government’s borrowing plan for the next fiscal year. If this starts seeming too technical for you, advisable to skip straight to the “What does this mean for you as an investor?” section.

The Government of India announced its borrowing calendar yesterday. Last month in its budget, the government had estimated that it would need to borrow ~INR 7 Lakh Crore in the next fiscal. However, seems like the government is prepping to borrow the same quantum only within the first six months of the upcoming fiscal year.

Here’s what the borrowing plan looks like in a nutshell:

 

Borrowing Split Mode Maturity Tranches
 

 

 

INR 7.02 LCr.

 

INR 4.42 LCr.

 

GoI – dated securities

 

Varying maturity
of from 1 to 4 years to 25 years and above.

 

first six weeks – 6 tranches of
INR 17,000 Cr. each;
over 6 months – 26 tranches of
INR 17,000 Cr. each

INR 2.6 LCr. T-bill auction 91d, 182d, 364d INR 1.2 LCr. Through
91 day T-Bills

(Source: financialexpress; GoI announcement | LCr. = Lakh Crore)

What does this mean for you as an investor?
We can expect a marginal impact as yields increase, albeit marginally. The opportunity still continues to be around debt funds with an average effective maturity below ~3 years – lower, the better. It would be best to ensure a high credit quality till there’s not further clarity around the liquidity situation in India.

Meanwhile, call it a relief rally or perhaps the build-up to a bigger story, Indian equities seem to be reflecting really strong growth in the time to come. Here’s how nifty move in the week that went by:

Explore More

If you have any concern, please write to us at ask@mywaywealth.com or call at 080 48039999we would be happy to answer your query.

Thanks,
Nirav (Head of Research)
MyWay Wealth

MyWay Wealth Weekly Update (Issue #23): What Moved My Market?

Indian markets opened on a positive note this week for the sixth consecutive session on the back of energy & financial service sector positive performance but settled lower on Friday as investors booked profits.

Both Sensex and nifty went up by 0.37% and 0.26% respectively during this week.

(more…)

MyWay Wealth Weekly Update (Issue #22): Here’s how RBI is trying to kill two (or more) birds with a single stone!

“There is always the potential for a central bank to engage in discretionary monetary policy and to break the one-to-one link between changes in foreign reserves and changes in the money supply.”- Steve Hanke (American Economist)

Late evening, this Wednesday, RBI announced that it would conduct a USD/INR swap auction for $5 billion. We view this as an exceptionally well-thought implementation by RBI to infuse liquidity and manage INR rates with a single move.

How does the swap work?

Eligible banks will bid a premium (an additional amount they are willing to pay RBI) to avail the opportunity to exchange their US Dollar reserve for a Rupee equivalent from RBI. This swap allows the bank to utilise the INR for banking activities and are expected to return this INR amount to RBI along with the committed premium at the end of three years to get their USD reserves back.

How does this help India?

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MyWay Wealth Weekly Update (Issue #21): Geopolitical tensions and your portfolio

“Be fearful when others are greedy & greedy when others are fearful” -Warren Buffett

Amidst rising military escalations between India & Pakistan, it is only natural for Indian investors to worry. But, a closer look at how the Indian markets reacted in similar situations should lend a better perspective to today.

As evident by the above graph, markets have reacted negatively but for a brief period. Looking at these periods from a different perspective, one would realise that investors who held tight or perhaps purchased more during the slump emerged as the biggest winners in only a year.

But, what about the coinciding elections? Does it add fuel to the fire?

‘Elections’ are often misquoted as a major investor concern. However, the real fear is always about a change in the policy along with the government. But regulatory risks continue to exist, irrespective of the political party in power.

Think of it this way, businesses do not stop functioning post-elections, the general public do not stop demanding goods & services; then why should the value of a company deteriorate?

Sure, there will be a temporary adjustment but in the long term, equities reflect the real value of a company. (more…)

Did you forget why today is important?

Dear Customer,

More than ever, women are living longer than men. Women are assuming greater professional and leadership responsibilities, while still managing their personal and family finances.

Questions that we need to ask ourselves:

● What  do I own? – Assess where you are currently, with your investments/ assets – physical and financial.

● What do I owe? – Bring down bad loans, if any.

● What are my goals for my money? – Write down your financial goals; short term, medium term and long term financial goals with amounts and the year in when you need them. Prioritize those goals and start with the first three more important ones.

Key points to keep in mind.

1.  Invest in retirement –  The National Pension System is not talked about enough, with it, you can create a corpus dedicated towards your retirement & also avail tax benefits on payment above 80C.

2.  Protect against the unknown – Take term insurance, there are several tools to help you assess the exact values. Be involved in family finances, it doesn’t mean that you have to be involved in the day-to-day aspect of it. But even just starting with understanding where are the assets, how are they invested, what’s out there? The last thing you want is something unexpected to happen, and you being unprepared to handle it. So even just understanding what your situation is a good start.

3. Get financial education – Getting a better understanding of money takes work, but it doesn’t have to be overwhelming. Equipped with the right attitude and education, women can feel empowered and confident about their financial future.

I am a strong believer in the live well and save smart philosophy. Investing is not as hard as it is made to sound. You can educate yourself on your investments through the journey. Equip yourself to ask the right questions and don’t fall into any sugar traps of returns and multiplied money.

Women’s investments are no longer an option, however a reality and a priority. Invest for you.

Watch our video on Women and Money

If you have any concern, please write to us at dipika@mywaywealth or call at 7975755821we would be happy to answer your query.

Thanks,
Dipika J (VP, Business development)
MyWay Wealth

Looking for Retirement Plans? Choose from the two Government initiatives, NPS or SCSS

Retirement

“Retirement is when you stop living at work and start working at living.”

A frequent question in the minds of people today is: Do I have enough funds to retire? What will I do when I retire?

The whole point of getting high degrees, building a decent career, aiming for high salaries, saving incomes, making a wise investment and various other activities in our life are done with the intention to have a peaceful lifestyle once we retire.

We commonly hear our parents say, “I don’t want to be dependent on my children when I retire” or “I want to go on a European trip when I retire” and many such aspirations. Some have financial desires and some just want to be financially independent rather than being a burden to anyone.

Besides, retirement is a stage everybody goes through in their life, be it a government or a non-government employee.  

To provide for all these needs, it is genuine that retired or senior citizens wish for post-retirement income. This is when small saving schemes provided by the Government of India becomes absolutely necessary.

One such Scheme is:

“Senior Citizen Savings Scheme”.

The Senior Citizens Savings Scheme (SCSS) is a scheme protected and backed by the Government of India to provide regular income for senior citizens of India. Since it is provided by the Government, this scheme is a risk-free tax saving investment, which is generally preferred amongst the retired audience.

“National Pension System (NPS)”

The National Pension System (NPS) is yet another instrument provided by the Government of India, with the intention to provide pension opportunity to every Indian and to inculcate the habit of saving especially for retirement.

This article aims at answering a few typical questions that senior citizens would have about SCSS and why one should consider NPS as a better option.

Who can invest in these instruments?

  • One has to be a citizen of India to be eligible for SCSS.
  • Must fulfill any one of the below age criteria:

a). Senior citizen aged 60 years or above.

b). Retirees who have opted for the Voluntary Retirement Scheme (VRS) or Superannuation with the age between 55-60.

c). Retired defense personnel with a minimum age of 50 years.

Note: HUFs and NRIs are not allowed to invest in this scheme.  

With NPS, the criteria are simple: Any person between the age of 18 – 65 years can open an NPS account.  

What should my investment amount be?

  •    The minimum amount required for an investment in SCSS is Rs.1000.
  •    The maximum amount should be the lower of the two:
  1. An individual can invest up to 15 lakhs
  2. An individual can invest the amount received as a retirement benefit.

If it’s a joint account with a spouse, then the maximum amount is 30 lakhs.

The investment amount of NPS varies between 500 to 1000, depending on the type of NPS (Tier 1 or Tier II) you belong to. And there is no upper limit to the amount you can invest in NPS. Read More on: Types of NPS options?

The investment should be done by cheque or cash?

The SCSS account can be opened by cash or cheque. In the case of cash, the amount is below Rs.1 lakh and by cheque, the amount is above Rs.1 lakh.

You can invest in NPS within minutes using the paperless process of MyWay Wealth. All you need is to key in information with the amount you can invest and MyWay Wealth shows you the top recommended funds.  

What is the tenure of my investment?

The tenure for SCSS is 5 years. However, an extension of another 3 years is permitted.

An extension of three years is possible only on completion of the 5-year tenure. In addition, the investor needs to submit the duly filled Form B, which is regarding the extension of the scheme.

Note: Only one extension is allowed. But after one year, extended accounts can be closed and there would be no penalties charged for it.

With  NPS, there is of fixed maturity tenure and one can contribute to the account till the age of 70.

When can I withdraw my money?

The ideal withdrawal of funds for SCSS is after the tenure of the investment. However, premature withdrawal can be done but is subjected to penalties.

The penalty varies based on the period of the investment.

  • If the withdrawal is after the first year and before the end of the second year, then 1.5 % of the amount deposited is deducted as penalty.
  • If the withdrawal is on or after the second year, then 1% of the deposited amount is deducted.

NPS allows withdrawal only after 3 years of subscription and the account holder can make withdrawals up to 25% of the contributions. NPS has two types of account Tier I and Tier II, wherein:

  • Tier II account works like a savings account and hence the account holder is free to do withdrawals anytime.
  • Tier I has not withdrawal option until the account holder turns 60 except for specific situations like critical illness, child’s marriage and construction/ purchase of a property.

What are the Interest rates on my account?

The above table provides the historic interest rates on SCSS. The government has decided to review these rates quarterly and the interest is paid on the last working day of April, July, October, and January.

With NPS, there are chances of making high returns as the scheme invests a certain amount in equities as well, so investors are capable of receiving interest rates as high as 12 – 14%, which is more than the interest rates provided by other savings schemes.

Can I have multiple accounts?

The answer is Yes for SCSS. One can have an individual account, Joint account with spouse and hold multiple accounts. Though the answer is No for NPS, the point is, there is no necessity to open multiple or a second account with NPS as it is portable across locations and sectors.

What are the tax implications?

As mentioned before, SCSS is a tax saving scheme.

  • The sum invested on or after April 1, 2007, is eligible for tax deductions up to 1.5 per annum under 80C of the Income Tax Act.
  • The interest earned is fully taxable.
  • Tax is Deducted at source if interest is more than 10,000 per annum.

For NPS:

  • With NPS you can save tax up to 1.5 lakhs every year under Section 80(CCD).
  • You receive an additional tax deduction of Rs. 50,000 p.a. under Section 80CCD(1B) to save Rs. 15,480 in taxes!
  • Starting 1st of April this year, NPS on withdrawal will be totally tax exempt (like PPF and EPF, but with better returns thanks to equity exposure).

How do I Open an Account?

One has to opt for a bank to open an SCSS account after which you would have to open a Savings bank account. You would require the following documents:

  •    Two passport size photographs
  •    Aadhar card. (Absence of which one must provide a copy of the acknowledged Aadhar card application)
  •    Address and identity proof such as PAN, Aadhar card, passport or declaration is Form 60 or 61.
  •    Fill the “account opening form” provided by the bank.

Note: Have your original identity proof for verification purpose.

For NPS:

  • You can visit a point of presence (PoP), fill the prescribed form and submit the KYC documents.
  • You can also do it online at enps.nsdl.com.
  • Or simple, do it easily on your phone with MyWay Wealth app and experience the paperless KYC process by just sitting at home.

Is Nomination facility available?

Yes, the facility is available for SCSS by submitting an application as part of Form C, accompanied by the passbook of the Branch, at the time of opening an SCSS account.

NPS also provides the facility of nomination.

But in which bank do I open the account?

The SCSS account can be opened at any head post office or general post office.

The banks which offer SCSS are Allahabad Bank, Andhra Bank, Bank of Maharashtra, Bank of Baroda, Bank of India, Corporation Bank, Canara Bank, Central Bank of India, Dena Bank, IDBI Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, State Bank of India, Syndicate Bank, UCO Bank, Union Bank of India and Vijaya Bank.

The only private bank to offer SCSS is ICICI Bank. List of Pension Fund Managers for NPS are:

  • Birla Sun Life Pension Scheme.
  • HDFC Pension Fund.
  • ICICI Prudential Pension Fund.
  • Kotak Pension Fund.
  • LIC Pension Fund.
  • Reliance Capital Pension Fund.
  • SBI Pension Fund.
  • UTI Retirement Solutions.

Also, like SCSS, NPS account can also be opened through several banks as mentioned above. But why do it yourself when an app can do it for you? MyWay Wealth- India’s first and only app provides the facility of NPS for its investors. All you need is a few minutes to complete the paperless KYC process and then follow the steps below, you are all set to begin your retirement journey with NPS on MyWay.

 To sum it all up, the very objective of these Government Initiatives is to protect senior citizens from risks, cover their needs by means of assured returns.

It’s clearly seen that NPS can provide all the features that the Senior Citizen Savings Scheme can provide. Also additionally, it has tax benefits, way higher returns than usual retirement options and you can get it done easily with MyWay Wealth.

Everyone deserves a peaceful retired life after working so hard. Let your investments work for you now.

Invest in NPS on MyWay Wealth and enjoy a tension free Retirement Life!!

What are Public Provident Funds (PPF)?

Everyone wishes for a peaceful retirement. You have worked hard throughout your life, all you want to do now is probably travel to places, watch your grandchildren play, get together with old buddies or simply spend time gardening for which you couldn’t spare time during your employment years. But to do all of this, it’s important that you are financially secure and independent. To achieve your goal, you have to start early.

“Never too late to start. Anything can happen anytime.”

–Avery Neumark

 

The words of Avery Neumark (CPA and Partner in Tax Group at Marks Paneth LLP), is very true, the future is a treasure box of unseen mysteries. Old age can also be unpleasant due to uncertain events like health issues or unexpected emergencies. You want to be prepared for that. Right? Hence, it’s vital that you back your retirement age with assured income to meet all your needs, both planned and unplanned.  There are various schemes that help you create a good corpus to keep you prepared for your golden days to come. One such scheme is our topic for discussion today – “Public Provident Fund”

 

Let me explain about Public Provident Fund (PPF) with the help of “5 Ws”.

  1. What

What is PPF?

On July 1, 1968, the Central Government of India introduced the voluntary Public Provident Fund that would assure income security for resident Indians (both salaried and self-employed) during their retirement. The PPF rate for January – March 2019 (Q4 FY19) is 8%. However, the Indian Government revises these rates every quarter.

 

  1. Why

Why should I opt for PPF?

  • PPF provides assured returns during your old age, thereby providing financial security.
  • PPF is highly reliable and risk-free as it is a Government scheme thus ensuring capital protection.
  • Helps you face inflation, provided the inflation rate is below the interest rate provided by PPFs. Additionally, the Government reviews the PPF rates quarterly.
  • PPF provides tax benefits – Exempt, Exempt, Exempt (EEE):
  • The maturity amount, interest earned and deposits are completely tax-free.
  • Also, the sum invested in PPF is eligible for tax deduction under Section 80(C) up to a maximum of 1.5 lakhs.

 

If EEE is the tax status you are looking for your investments, then why do it for 8 % returns when you can receive the same status for returns between 9-14% or more? Yes, with MyWay Wealth you can invest in National Pension Scheme (NPS), which was started by the Indian Government under the Pension Fund Regulatory and Development Authority (PFRDA), with the initiative to provide pension opportunity to every Indian and inculcate the habit of saving for retirement. NPS also receives tax exemptions on the deposits made, interest earned and the maturity amount.

Read more on NPS in the blog post: How to plan your retirement with National Pension System (NPS)?

 

  1. When

When can I withdraw my funds?

Though PPF has stringent lock-in period and withdrawal protocols, it still provides Liquidity:

  • The entire amount can be withdrawn only after the PPF tenure (15- year lock-in + 5-year extension). However, loans are offered against the PPF from the third to the sixth year.
  • Premature closure of PPF takes place in the event of the account holder’s death only. However, to support the needs of medical emergencies or cater to child’s higher education, PPF has also proposed early closure after 5 years of its completion.
  • To provide cover in cases of financial crises partial withdrawals are permitted. Such withdrawals are allowed once a year, from the 7th year onwards and are subject to conditions such as:
  • withdrawals must not exceed 50 percent of the balance at the end of the fourth year, or
  • 50 percent of the balance at the end of the immediately preceding year, whichever is lower.

 

The major objective of a PPF account is to create long term savings because the minimum investment tenure is 15 years. In this case, investing in Mutual Funds makes more sense because you can earn returns more than 15% as opposed to 8% with PPF. Some of the funds that give >15% returns for a 5-year investment are:

At the same time, liquidity is also a crucial factor for investment. After all, it is your money and you must be able to access it when there is a need or an emergency. If you have objectives that need a smaller time period, then you can invest your savings in Short Duration Mutual Funds.

Here are some short term funds (between 1- 3 years) that provide returns more the 8%:

Curious to know Top Funds in other Mutual Fund categories? You can do so by reading: Top Rated Mutual Funds in Different Categories

 

  1. Who

Who is eligible for a PPF?

You are eligible to open a PPF account if you are a resident of India. And there is no age barrier for enrolling yourself with PPF. This is generally seen as a good option for investors who have a low-risk appetite and are looking for definite returns.

A minor can also hold a PPF account through the guardian.

 

  1.  Where

Where do I open a PPF account?

You can open a PPF account from:

  • State Bank of India (SBI) and branches of its associated banks.
  • Nationalized banks such as Bank of India, Bank of Maharashtra and Bank of Baroda.
  • Head or general post office.
  • ICICI Bank, Axis Bank and various such as private sector banks

All you need is:

  • Aadhar card or acknowledgment of your Aadhar application, in case of its absence.
  • Identity proof: Aadhar card, passport, PAN, driving license, voter’s ID, ration card or Form 60 or 61 as per Income Tax Act 1961.
  • Account opening form.
  • Two passport size photos.

Or, if your end goal is just to save up for retirement and you don’t like this tedious offline process and cumbersome paperwork, then you can sign up on MyWay Wealth and complete the paperless KYC in 5 minutes to build your retirement corpus by investing in National Pension Scheme (NPS) or Retirement Funds.

Pointers:

  • You can start your PPF account with just Rs. 100/-.
  • The minimum deposit is of Rs. 500 and the maximum is Rs. 1,50,000 in a financial year.
  • You have the flexibility to make deposits in one go, or through installments made monthly, quarterly, half-yearly or yearly.
  • Remember to carry your original identity proof at the time of opening the account for verification purpose.
  • Don’t forget to choose a nominee.

It’s necessary to have a fund for your retirement as it is essential to take care of your expenses when you retire and continue to cover the needs of your family or dependents. At the same time, what happens to your family in case of your untimely death? That is also an unseen possibility in the future. Right? To secure your family in such an event, it’s necessary you also consider Term Insurance as an investment option in which the beneficiaries of your term insurance policy will get the guaranteed amount that would help them continue the lifestyle you had provided them financially.

With MyWay you will be able to provide a cover of 1 crore to your family by just paying more or less the same amount you require to get your Netflix subscription. All you need is a few minutes to input your personal details, annual income and choose the life cover your family requires.

Why should I consider an alternative for PPF?

Though Public Provident Fund is one of the most trusted instruments to build your retirement corpus, it also has its drawbacks. And to overcome these drawbacks you choose Mutual Funds or NPS as an ideal investment option. Let’s see why:

  • The amount that can be invested in a PPF account is limited to Rs. 1.5 lakh per year. But with Mutual Funds and NPS, there is no limit on the amount you can invest.
  • PPF offer less liquidity. You cannot withdraw your funds until the completion of 7 years. But with Mutual Funds, you can retrieve your money at any time from most of the investment plans.

Want to read more on Retirement? Check: Retirement Planning

Mutual Funds are best known to provide plans that suit your investment horizon, risk appetite and financial need. To gain access to these tailor-made funds, you can invest in MyWay Wealth, India’s most trusted app for Direct Plan Mutual Funds. MyWay specifically provides funds for your retirement goal. All you need to do is choose the year you would retire, pick your retirement lifestyle and begin investing small amounts every month through SIPs (Systematic Investment Plans). Signup up on MyWay now: Invest Now.

So begin your investment with MyWay Wealth app.

Start today, and reap the benefits in the days to come!

Fixed Deposits v/s Mutual Funds

“The biggest risk is not taking any risk… In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks. “

–Mark Zuckerberg

Though risk and return are two sides of the same coin, the risk is still the most feared factor amongst Indian investors today, especially the amateur investors. The fact that Mutual Funds are subjected to market conditions, makes investors so skeptical regarding investments with Mutual Funds. Fearing market volatility and safety of funds, investors find it safer to invest in Fixed Deposits rather than in Mutual Funds. But to overcome this conventional practice, it’s important for us investors to understand why and how Mutual Fund investments are a better option than Fixed Deposit and this article will help with that.

Here’s a table that lists the key differences between Mutual Funds and Fixed Deposits.

Characteristic

Fixed Deposits

Mutual Funds

1. Meaning Fixed Deposits are offered by both banking and non-banking financial institutions, where you deposit money for a fixed period and for a predetermined rate of return. Mutual Fund is an investment vehicle that collects money from multiple investors and invests the money, on their behalf, to buy securities.
2. Fund Management Decisions regarding Fixed Deposits have to be made by the investor himself. Mutual Funds are managed by professional funds managers who actively work on the portfolio to earn higher returns on the investment.
3. Schemes
  • Cumulative – Interest is compounded quarterly.
  • Non- Cumulative – Interest is paid at fixed frequencies.
  • Regular Plans: Charges distribution or transaction fee from your investments to pay commission to brokers.
  • Direct Plans: MyWay Direct Plans charge No Fees and No Commission on your investments. Read More: Why Direct Plans?
4. Minimum Investment The minimum investment for Fixed Deposits is INR 1000. (Varies from bank to bank). One can invest in Mutual Funds with as low as INR 500.
5. Maximum Investment Fixed Deposits have no upper limit. Mutual Funds have no maximum limit to the amount you can invest.
6. Investment Tenure Fixed deposits come with a pre-stated maturity period. It varies between 7 days to 10 years. The minimum tenure for Mutual funds is a day. And you can remain invested for more than 20 years too. It purely depends on your investment horizon.
7. Returns Fixed Deposits comes with a fixed interest rate that ranges between 7-8%, so one cannot make more than the projected returns. Since Mutual funds are subjected to market conditions, you can earn returns between 9-15% or even more. Thus, the potential to earn returns are higher and never fixed. Read More: Funds that provide >15% returns.
8.Withdrawals Premature withdrawals are permissible but are subject to fines. You can either break your Fixed Deposit or take a loan against it, to access your money. Mutual Funds are highly liquid instruments. With MyWay, you can access your funds anywhere and anytime. You have the freedom to access your funds for any financial requirement. Read More: How do I utilize my funds?
9. Deposits Fixed Deposit allow only one-time lump sum deposit. For more deposits, one has to open another account, leading to the hustle of handling many accounts. With Mutual Funds, you can invest through lump sums or monthly installments called SIPs (Systematic Investment Plan), and increment these contributions as and when your income increases. Read More: Benefits of SIP
10. Risk Fixed deposits have zero risks this is because the money is locked in the bank. Mutual funds let you invest in various assets or financial instruments (debt, equities, etc) thereby, diversifying the risk. Besides, fund managers rebalance the portfolio on a regular basis and help in reducing the risk. Read More on Fund Categorization
11. Flexibility The sole purpose of a Fixed Deposit is to keep your money safe in the bank and earn fixed returns, more than that of savings account. With Mutual Funds, you have a wide range of options to invest. Right from Gold Funds, Monthly Income Funds, Sectoral Funds, Arbitrage Funds, NFO, etc.
12. Tax- Saving Variants There is a kind of Fixed Deposit known as Tax Saver Fixed Deposit, that have fixed interest rate of 7-7.75%, in which the investor can claim a tax deduction up to 1.5 lakh under Section 80(c) and has a lock-in period of 5 years. With Mutual Funds, MyWay provides top saving ELSS Mutual Funds which can claim a tax deduction up to 1.5 lakh under Section 80(c). They come with a lock-in period of just 3 years and the returns are over 15%. Read More on Tax Saving Mutual Funds.
13. Tax Benefits The returns from Fixed Deposits are taxable according to the tax slab you fall into, regardless of the investment period. Banks also deduct TDS (Tax Deducted at Source) between 10-20%. So the post-tax return is more like 5%-6% Mutual Funds have great Tax Benefits:

  • Tax deductions up to 1.5 lakh under Section 80(c).
  • Long Term Capital Gains (>1 year) from Equity Mutual Funds are tax-free.
  • Short Term Capital Gains (<1 year) from Equity Mutual Funds are taxable at 15%. Read More: Tax Benefits with Mutual Funds.
14. Retirement Fixed Deposits are popular amongst retirees, just because of its convenience and ease of operation. However, the returns are minimal.   With MyWay, you can make better returns (12 – 14%) on your retirement corpus by investing in the National Pension System (NPS). Read More: My Retirement with NPS
15. Inflation cover Fixed Deposits interest rate is between 7 – 8% and the average inflation rate in India is about 4%. It implies that Fixed Deposits don’t actually provide for inflation, making them a risky investment. Mutual Funds let you invest in plans that have provided returns more than 15%, thus helping you beat inflation.

 

Hope this article helped you to understand the differences between Fixed Deposits and Mutual Funds. After all, you have worked hard to receive your income, it only makes sense to make an investment in which the income can work for you.

Don’t Delay! Start investing in Mutual Funds today with MyWay.