The Mutual Funds Investment Thread

[TheSloth]

While checking the MF on Groww, under the Tax Implcations they have mentioned that :
Returns are taxed at 15%, if you redeem before one year. After 1 Year, you are required to pay LTCG tax of 10% on returns of Rs. 1 lakh+ in a financial year.

Could any one explain about the bold part in detail?
Do i need to pay this tax of 10% every year or only when I redeem entire amount, say after 10 year?
If it is every year, then do i need to mention this on income tax website when I file tax online every year?

 

[whitestar_999]

While checking the MF on Groww, under the Tax Implcations they have mentioned that :
Returns are taxed at 15%, if you redeem before one year. After 1 Year, you are required to pay LTCG tax of 10% on returns of Rs. 1 lakh+ in a financial year.

Could any one explain about the bold part in detail?
Do i need to pay this tax of 10% every year or only when I redeem entire amount, say after 10 year?
If it is every year, then do i need to mention this on income tax website when I file tax online every year?

Tax is always paid on something you receive in a tangible form(aka cash/electronic money/service etc) so you pay any tax on any MF/share only when redeeming/selling & not the unrealized gain showing in your dashboard in your online broker/MF site/app.

 

[Vyom]

Tax is always paid on something you receive in a tangible form(aka cash/electronic money/service etc) so you pay any tax on any MF/share only when redeeming/selling & not the unrealized gain showing in your dashboard in your online broker/MF site/app.

Which is great, since it forces people to invest for long term!

 

[Neo]

which app do i use to invest for long term? i want to invest rs 1000

 

[TheSloth]

which app do i use to invest for long term? i want to invest rs 1000

Groww, Zerodha Coin and Upstox seems to be trending. I personally liked Groww and Coin UI. I havent used 3rd one. Groww doesnt have annual fee. Try all 3 and then decide which you like most.

 

[TheSloth]

Hi guys, I am interested in making short term investments for personal goals like shopping and all. What kind of things I should look for when doing short term investments?
Currently ICICI Prudential Technology MF is going with 134% of 1yr return, so is it good for short term investment?

 

[whitestar_999]

Hi guys, I am interested in making short term investments for personal goals like shopping and all. What kind of things I should look for when doing short term investments?
Currently ICICI Prudential Technology MF is going with 134% of 1yr return, so is it good for short term investment?

AVOID! For "short term" investment just put your money in IDFC First bank savings acc at 6% interest rate. Learn how to use a good credit card efficiently & you can save 4-5k easily in a year on spends.

 

[Vyom]

Agree. For short term of around 1 year, I use ICICI bank's iWish feature (recurring deposit), that allows me to name a goal and make an SIP towards fulfilling that goal for x months. Longer the period, longer the rates it would give me.
iWish interest rates are here: iWish Interest Rates - Check Latest iWish Flexible RD Interest Rates Online - ICICI Bank

But yes, even with those recurring interest rates, it doesn't match IDFC First bank's 6% rates!

 

[TheSloth]

Any particular reason long term plans like I mentioned above will not be good for short term investment even though it has such high return rate?

 

[Neo]

Hi guys, I am interested in making short term investments for personal goals like shopping and all. What kind of things I should look for when doing short term investments?
Currently ICICI Prudential Technology MF is going with 134% of 1yr return, so is it good for short term investment?

Isn't that amount of return too good, even for long term

 

[TheSloth]

Isn't that amount of return too good, even for long term

yes. These Technology related funds, mostly invested in Indian IT sector, were not doing so well until Covid I am guessing. After the dip during Mar-Jun2020, these have risen up since then by huge margin and overtook some long term Blue chip funds.

 

[Vyom]

yes. These Technology related funds, mostly invested in Indian IT sector, were not doing so well until Covid I am guessing. After the dip during Mar-Jun2020, these have risen up since then by huge margin and overtook some long term Blue chip funds.

There's something called sector rotation. Not every sector performs better all the time.
The tech sector which rose in last year, was only because of the lockdown. Since lockdown caused every job which required physical presence at job location unsustainable, the jobs which didn't have an impact were IT related jobs. Those who could WFH, saw no impact. Tech sector even saw resurgence due to this immunity from the pandemic.
But now, tech sector have already became overpriced. So next few months/years might not see much growth. Hence tech sector might take a back seat now, and other sectors like metal, steel might be better going forward.

I really like Invest for Aaj kal channel on YT. The guy Anant Laddha really tells about such things in great detail. I highly suggest checking out his videos:

*www.youtube.com/c/InvestAajForKal/videos

I am following his videos since few months now, and self promotion aside, I really like his methodologies and clear cut rules in investing/trading.

 

[rockfella]

Any particular reason long term plans like I mentioned above will not be good for short term investment even though it has such high return rate?

The returns you are seeing now is because of V shape recovery that happened after covid related market crash in march april 2020. Since then the sensex went up on an unprecedented rise and peaked on Jan 22nd 2021. In-fact if you one invested 1 lakh in march 20 the value of it now would be around 1.4 L. Now the market is unpredictable. A 1 L invested now might fetch extra 15 k by april 22.

PFB:

Post covid hit:

 

[rockfella]

yes. These Technology related funds, mostly invested in Indian IT sector, were not doing so well until Covid I am guessing. After the dip during Mar-Jun2020, these have risen up since then by huge margin and overtook some long term Blue chip funds.

Mutual funds overall went up by 41% since last year.

 

[TheSloth]

what market gurus are telling? Should normal salaried person should invest in MFs or stick to PPF with fixed return rates? I am still new to investments and getting familiar with things.

 

[Vyom]

what market gurus are telling? Should normal salaried person should invest in MFs or stick to PPF with fixed return rates? I am still new to investments and getting familiar with things.

Normal salaried person should do SIPs in a MF that invests in good diversified funds, irrespective of past performance.
You can follow the 50-30-20 rule, which says spent 50% of your salary towards things you 'need', 30% towards things you 'want', and the rest 20% should go into investments.
Although I like to invest more than 20% in investments. Due to corona, last year I managed to invest/save around 40% of my income. But I know this year that won't be possible.
I suggest to watch this nice video for someone new to investing, have been helpful for me:

 

[TheSloth]

Normal salaried person should do SIPs in a MF that invests in good diversified funds, irrespective of past performance.
You can follow the 50-30-20 rule, which says spent 50% of your salary towards things you 'need', 30% towards things you 'want', and the rest 20% should go into investments.
Although I like to invest more than 20% in investments. Due to corona, last year I managed to invest/save around 40% of my income. But I know this year that won't be possible.
I suggest to watch this nice video for someone new to investing, have been helpful for me:

I did come across this rule and have been planing to follow this rule and have decided to shuffle 30%-20% between Savings and Wants based on situations I face.
The problem I am facing is how do I diversify my investment with the limited amount I have.
I want to do some investment which will save me tax so I am sure I have to invest in ELSS and NPS.
Then comes the MF from blue chip funds where I won't save tax but still will be my long term investment.
Should I invest in several blue chip funds or just 1 or 2 and rest of the money should go in ELSS.
Then I am also seeing that some part of investment should be in debt funds which I am yet to explore.
For all of this how do I distribute my investment for "safe and secure" returns in long terms.

The videos shared by everyone in this thread sure helps a lot in all of this. So keep sharing!

 

[Neo]

If you can save (and invest) more than 50 % of your salary, you can have financial independence in like 15-20 years.

 

[rockfella]

If you can save (and invest) more than 50 % of your salary, you can have financial independence in like 15-20 years.

*www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp

Ultimate goal of investing.

 

[Neo]

yeah, I like the idea financial independence and might pursue it. I would be cool to see what I will do if i'm not a burden on myself (financially)