Why can't we stick to our budget plan?

Why can't we stick to our budget plan?

Did you know that the word budget comes from the French word 'bougette', which means a small leather purse? While most of you would not have known the antiquity of the term, most of you would understand the concept of budget, which is a financial plan of income and expenses over a specified period. The problem, however, is that most of us cannot stick to our budget plan as we might like. In this article, we try to understand the primary reasons for this mismatch and hopefully learn from these mistakes and improve our budgeting skills.

Mistakes in budgeting

The first and foremost mistake that most of us make is that we do the budgeting incorrectly. Most of this would be on the expense side. For instance, you might forget that you have an upcoming payment towards insurance that is not accounted for in the expenses. Similarly, you may decide to take a spur-of-the-moment trip with your friends and family, which throws your budget into disarray. There might be some mistakes in accounting for your income as well. Some of the major ones could be not accounting for the tax deducted from your income, especially for salaried individuals.

Thus, you must get your budgeting right cause that's the foundation of your budget, failing which the entire plan goes topsy turvy. It is like the quote from Aristotle, 'Well began is half done.'

Not having an emergency fund/insurance

Calamity, natural or unnatural, can occur to anyone at any time. The classic case was seen during the Covid-19 pandemic and lockdown when scores of people lost their incomes due to being laid out from work or business losses. This temporary income loss strains your entire budget, especially if you don't have an emergency fund. In terms of essential financial planning, it is always important to keep at least six months to 1 year of expenses in this fund to ward off such turbulent times.

Similarly, it is also essential to have insurance for oneself, both life and medical insurance. This protects yourself and your family from the financial loss of either outflows or loss of income because of medical emergencies. Again, going back to the Covid-19 health scare, hospitalization caused a financial burden to the affected. A health insurance policy reduces the overall cash flow and thus reduces its impact on the budget.

Inactive monitoring

The third important aspect of not sticking to the budget is the lack of active monitoring of your budget plan. You must have a hands on approach to the budget plan by not only planning the budget but also regularly monitoring the progress through new-age applications or going old school and jotting it down in a notepad. This helps you keep track of the budget and keep you involved with the activity, helping you remain excited and motivated during the entire process.

Active monitoring also helps in tweaking the budget plan basis the income and expense activity, thus fine-tuning it to the ongoing situation. However, it would help if you did not make significant changes to the original budget plan.

It is essential to stick to the original thought-out plan while also actively monitoring it to remain agile to the changing dynamics.

Summing up

Budgeting is an important aspect of any individual's life. It helps an individual remain aware of their financial situation and thus be in control of it. Without a budget, the entire financial journey can turn haphazard, affecting an individual's life journey. However, just budgeting is not enough. It is important to stick to the plan and avoid the mistakes outlined in the article to remain on track with your budget.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

 

Value Investing vs. Growth Investing: Which of These is Right for You?

When looking at stocks and shares, there are two main strategies you can use to invest. They are value investing and growth investing.

Value versus growth, which is it? There's no right or wrong when it comes to investing methods. Each method has its pros and cons, but we need to define them to understand these investment methods.

Let's take a closer look at these two stock investment techniques, examining their advantages and disadvantages.

What is Value Investing?

A value investor seeks companies that are undervalued and invest in them. Typically, these businesses are undervalued and progress at a snail's pace. They do, however, have strong fundamentals. These investors believe that the market will quickly understand the value, and the stock's share price would 'catch up,' resulting in substantial gains.

If we look at metrics like the Price to Earnings Ratio, value stocks have a lower PE ratio than other stocks, making them attractive to value investors.

The low PE ratio can be because of multiple factors such as economic conditions, consumer behavior, and the industry's cyclical nature. During market highs and lows, value equities often have reduced price volatility.

Features of Value Stocks

• The stock price of value stocks is lower than the general market. The premise behind value investing is that if other investors recognize the inherent value of a company, the stock will rise in price.
• It carries a lower risk than the overall market.
• Value stocks may be better suited to long-term investors because they take longer to turn around.

What is Growth Investing?

A growth investor seeks companies with a higher-than-average growth rate. Revenues, balance sheets, cash flows, and profitability all reflect consistent and substantial growth. Growth stocks can be large-cap, mid-cap and small-cap stocks. These companies have new products, services, and prices that beat their competitors.

Growth stocks have a sound track record of profit growth and are projected to continue with this trend in the foreseeable future. This steady rate of growth is essential for attracting potential investors. Furthermore, because of their greater price-to-earnings ratio, these stocks are more 'expensive' than other stocks. It is because investors are willing to pay a higher price for these equities than they are currently earning. After all, they believe future earnings will justify the price.

Features of Growth stocks

• The price of the stocks is higher than the average market. Investors are willing to pay high price-to-earnings multiples hoping to sell the company at even greater prices as they grow.
• These stocks have higher earnings growth. While some companies' earnings may suffer during periods of slower economic recovery, growing companies may be able to maintain high earnings growth regardless of economic conditions.
• Growth stocks may be more volatile than the broader market. When buying a growth stock, there is a possibility that the high price will plummet if the company receives bad press, especially if earnings disappoint their investors.

What Are the Differences Between Growth and Value Stocks?

It's important to think about how long it took and how much risk was involved in getting the results you want when comparing the performance of growth and value stocks.

Because they are frequently found among larger, more established companies, value stocks are at least theoretically regarded as having a lower level of risk and volatility. Even if they don't return to the analyst or investor's target price, they may still provide some capital gain, and these companies frequently pay dividends.

On the other hand, growth stocks typically do not pay dividends and instead reinvest retained earnings to help the firm grow. Growth stocks have a higher risk of losing money for investors, especially if the company fails to meet growth projections.

For example, a company with a hot new product may have its stock price drop if the product is a failure or has design defects that prevent it from functioning correctly. Growth stocks, in general, offer the greatest potential profit while also posing the most risk to investors.

Conclusion

So, if we have to summarize, we can say that growth stocks can outperform when interest rates are down, and company earnings are growing. However, growth stocks may take a hit when the economy is contracting.

They may do well when the market recovers, but value stocks are more inclined to underperform in a long-term bull market.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

 

What Is Digital Rupee?

What Is Digital Rupee?

The demand for private cryptocurrency has witnessed tremendous demand in the last few years. Many illegal activities and money laundering have taken place through private cryptocurrency transactions. And the government of India sees the mushrooming of these private cryptocurrencies as a threat to the formal financial system.

To tackle these issues and more, the Indian government has clearly mentioned that cryptocurrencies will never be legal tender. In this year's budget, the finance minister announced RBI would launch a digital rupee that will work on blockchain and act as a legal tender.

This article will talk about the digital rupee and how it differs from other cryptocurrencies.

Countries around the world are planning to launch their cryptocurrency. The cryptocurrency that a country's central bank launches is the Central Bank Digital Currency or CBDC.

The digital rupee, when introduced, would be India’s CBDC.

Digital rupee, as the word sounds, will be the digital version of the rupee. Currently, the Indian currency is available as paper notes and coins. After introducing the digital rupee, the digital rupee will be another form of Indian currency. So, people can exchange a paper note of Rs.100 for Rs.100 for the digital rupee.

The Reserve Bank of India will issue the digital rupee, and the central bank will decide on the supply of the digital rupee just like it does for regular paper currency.

Benefits of Digital Rupee

The government and experts believe that the digital rupee will bring about a change in payments and make digital transactions faster and safer. 

Move towards a cashless economy: Compared to other developed countries, cash is widely prevalent in India. There is a cost associated with paper currency, such as printing, storing and transportation. It is estimated that the cost of a paper note is 17% of the value of the paper note. Moreover, the paper notes don't last forever, and new paper notes have to replace soiled paper notes.

The introduction of the digital rupee may reduce our dependence on paper notes. The government may end up saving money in this way.

The introduction of the digital rupee may be the first step towards an ultimately cash-free India.

Prevent money laundering and illegal activities

Many money laundering and illicit activities are currently taking place through cash and private cryptocurrencies. The anonymity of cash and private cryptos lets people continue with the dealings without getting caught. But, as the digital rupee will be in the digital format, the government may be able to track each rupee. The wide adoption of the digital rupee may make it harder for people to carry out money laundering and other illegal activities.

Difference between the digital rupee and digital transactions

One of the key differences between the digital rupee and digital transactions like UPI and net banking is the underlying technology. CBDCs use distributed ledger technology (DLT), often combined with traditional central bank and payment infrastructure in a hybrid architecture.

Moreover, an intermediary, such as a bank or a platform like Google Pay, is needed to carry out digital transactions. However, in the case of the digital rupee, the RBI can directly issue a digital rupee through a new platform without the help of a bank or another company.

UPI payments are now made with the digital equivalents of current cash notes. This means that every rupee sent via UPI is backed by paper currency.

Difference between the digital rupee and private cryptocurrency

The digital rupee or any other central bank digital currency (CBDC) isn’t a cryptocurrency in the truest sense.

A CBDC will be created and stored in a more centralised manner than other cryptocurrencies, which are stored on a decentralised blockchain network.

This means that the digital rupee can be monitored and regulated, unlike a private cryptocurrency. Your personal information will be 'linked' to your CBDC and may be subject to examination and regulation by the authorities.

Conclusion

While the RBI may come out with the digital rupee in the financial year 2022-23, it may go through a series of trials before the citizens at large can actually access the digital rupee.

It would be interesting to follow the developments of the digital rupee.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

Time for Review your Investment

 

While investing for any specific goal, we always assume some rate of return from the investment based on some rationale. Actual return may vary from time to time from assuming return, so it becomes very important to check whether we are getting that return or not. We also need to check how various asset class and schemes are performing in our portfolio. This exercise is known as review and it should be done on periodic bases. Ideally once in a year, you must review your portfolio.

Reviewing doesn’t necessary means frequent buying and selling based on performance. The return which we assume is for the CAGR return for the entire period of investment and need not to be equal to the assumed CAGR every year.

How to review your mutual fund schemes:

You can review the performance of your scheme and compare it with the performance of benchmark. Apart from benchmark you can also compare it with peer group performance.

Performance of good scheme also may lag in some times, so short term performance should not be given too much of weight while doing the review of the portfolio. Rather than short term performance, you must consider long term return and consistency in performance.

Apart from return you also need to compare your portfolio on other parameters like risk, risk adjusted return and quality of portfolio while reviewing the scheme.

If scheme underperforms on all the above parameters you should exit the same and invest in some other scheme.

But, remember review doesn’t necessary means buying and selling every time while you review. The decision of exiting should not be based on short term underperformance noticed during review. You need to adapt holistic approach of reviewing the scheme by taking in consideration of other important parameters also apart from short term return.

Once you know where you are going by setting appropriate investment objectives, your portfolio review will help you reach your destination. How? By identifying problems and mistakes that you can correct midcourse. Much like a pilot, your job is to stay on course so that you can reach your destination safely and in a timely manner.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

Debt fund vs fix deposit

Capital safety, the rate of returns, lock-in period and taxation are some of the key features those can help you select between debt mutual fund and fixed deposits.  

When it comes to investing, for many of us safety comes first and returns come second. After all, no one wants to play gamble with his or her much hard-earned money. Hence, fixed deposits and gold became our favourite investment options. In this craze of safe investment options, we forget that fixed deposits may not be the most ideal investment option. 

However, for investors whose priority is capital safety along with inflation-beating returns can look at debt mutual funds. Debt mutual funds is a category of mutual fund that invests in fixed income securities issued by the various companies and governments.

Now, let us understand the difference between debt mutual funds and fixed deposits that can help you to compare the two investment options and choose your pick accordingly.

Interest rate/Rate of returns

Return from Fixed deposits are fixed and are in the range of 7% to 7.5% currently. While interest rates remain the same during the fixed tenure but it may change through the years. Hence, when you want to reinvest the fixed deposit’s maturity amount, interest rates might be different at that time. With the interest rates moving south, banks may trim the interest rates on deposits going forward.

On the other hand, the returns on debt mutual funds are not assured and are linked to the debt market. Debt mutual funds have the potential to deliver higher returns than fixed deposits as fund managers make investment decisions based on the current debt market scenarios and select papers based on credit ratings and internal research. The expected returns from debt mutual funds are normally the Yield to Maturity minus expense ratio, if one remain invested till the duration of the fund keeping all other parameters same. Also, debt funds stand to gain from the lowering of interest rates as the price of a mutual fund unit i.e. net asset value rises when the interest rate falls.

Debt mutual funds has potential to generate higher real returns. Real returns are the returns given by an investment option above the inflation rate. E.g. if the average rate of inflation in that year was 5% and the interest rate on fixed deposits was 7%, the real rate of return is 2%.  A higher real return helps in fulfilling financial goals.

Capital safety:

When it comes to capital protection, bank fixed deposits have an edge over debt mutual funds. However, fund houses cannot guarantee capital safety. In the case of FDs, capital protection differs from the issuer of the fixed deposits. Non-banking financial companies give higher returns on fixed deposits but it also comes with higher risk than a bank deposit. Though capital erosion risk is very less in debt funds as the portfolio consist of well researched securities and also due to diversification.

Liquidity:

Fixed deposits have a maturity period and you have to pay penalties if you want to redeem your fixed deposits before the maturity date. However, you can redeem from your debt funds anytime you want. However, a few debt funds may have exit loads if you redeem within the specific time frame. Hence, debt funds are more liquid than fixed deposits.

Taxation: The taxation structure of debt funds is better than fixed deposits as it comes with indexation benefits. There are two types of taxation on debt mutual fund i.e. short-term capital gains and long term capital gains. Short-term capital gains are applicable if the units are redeemed before three years and gains are taxed as per the income slab. If you stay invested for more than three years, you are eligible for long-term capital taxation at 20% with indexation. Indexation is nothing but accounting for the rise in inflation. In this case, you only pay tax on gains if the rate of returns is higher than the inflation rate. However, in the case of FD, the entire gains are taxed according to the tax bracket of investor.

Conclusion: Debt mutual funds are a good investment option if you are looking for a relatively stable investment option along with inflation-beating returns. Investors who are in the higher tax brackets can also look at debt mutual funds for tax-efficient returns.

This blog is purely for educational purposes and not to be treated as a bit of personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully. 

Raja Bhattacharjee

  Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 website: https://www.investmentjunctions.com

 

 

As the classic proverb says, ’Don’t put all eggs in one basket’, Investor also must diversify his/her portfolio into different asset classes. Why? Reason is very obvious – to reduce the risk.

There are mainly 5 asset classes, namely; Equity, Debt, commodity, real estate and cash. One must allocate his/her savings into different asset classes based on the various parameters and their own risk appetite. Dividing your investment in different asset class based on different parameters, is called asset allocation.

Considering ease of investing and liquidating, we shall focus on two asset classes – Equity & Debt, to understand the process of asset allocation.

Deciding right Asset Allocation Mix:

One of the most important criteria while selecting the asset class is time horizon.

• Short Term - If you are looking to invest for less than 3 years, your portfolio should consists of mainly Debt investment as equity is very volatile and market risk is higher in short term.
• Medium Term - If you are looking to invest for a  period of 3 to 5 years, your portfolio should be mix of equity and debt both.
• Long Term - In case of investment for longer than 5 years, you can invest more into equity. Equity as an asset class is lesser volatile in long term.

Rebalancing Asset Allocation:

Investment horizon keeps on changing over a period of time. So as the years passed by, asset allocation needs to be re adjusted based on the remaining numbers of years till you need to withdraw. So for example, if you are going to need money in year 2027, you must start shifting money gradually from equity to debt by year 2024.

Other important Parameters:

Risk appetite, required rate of return to achieve your financial goals, tax implications etc. are other parameters which are also crucial while deciding the right asset allocation mix.

One must be able to control GREED in bull market and FEAR in bear market to ensure the right asset allocation mix in the portfolio. One must be focused and disciplined to save from the emotional decisions which might deviate himself/herself from the asset allocation.

“Most important key to successful Investing can be summed up in just two words Asset-Allocation.” Michael LeBoeuf .

This blog is purely for educational purposes and not to be treated as a bit of personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully. 

Raja Bhattacharjee

  Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 website: https://www.investmentjunctions.com

 

power of compounding

If you want to go around the earth and start with 100 metres on first day and double the distance every day, How long do you think it will take?

1 year?

10 Year?

Let’s find out, within 19 days you would have covered 39,321  Kilometers, while the equatorial circumference of Earth is about 40,075 km. you would have travelled around the world in less than 20 Days.

But, What if you stop after 10 days? You would have hardly covered a little less than 77 km.

This is the power of compounding. Power of compounding can help you to create a great wealth as well.

How to leverage the power of compounding for maximum benefit to create a wealth!

Start Early & Invest Regularly

Key ingredient to avail the benefit of power of compounding is TIME. You need to keep investing regularly for long term. The sooner you start investing in your life, more wealth you will be able to create.

For Example,

Nisha invests 5000 rupees every month since the age of 25, while Nilesh invest 7000 rupees every month since the age of 35. Both of them kept investing till the age of 60 years with the objective of creating a corpus of retirement.

By the age of 60 both would have invested 21 Lac rupees. Assuming a return of 12%, How much wealth both of them would have created for their retirement?

Nisha will accumulate 2.75 Crore rupees, while Nilesh will get only 1.19 Cr rupees, which is 59% lesser than Nisha’s corpus.

This is why starting early is important.

Challenge:

"I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” Bruce Lee

One requires a lot of discipline in doing the same things again and again for long term, though it is the most proven method to create a great result in any area.

To avail the benefit of the power of compounding the biggest challenge is to keep investing every month with discipline. And as human being, most of us lack discipline, when it comes to following he  same routine with the absence of instant gratification. For creating wealth in long term, one needs a lot of discipline to start early and keep investing regularly.

Solution:

Start a SIP (systematic investment plan) in Equity Mutual Fund for the long term to automate the process of investing. You need to exercise your willpower just once to decide the amount and tenure to start your SIP. The biggest benefit of investing in mutual funds through SIP is that it helps you in investing with discipline regularly. You need not do paperwork or pay every month manually. This automation makes this long-term powerful process of wealth creation easier for you.

So remember, to avail of the power of compounding starting early and remaining invested for long term is the Key.

This blog is purely for educational purposes and not to be treated as a bit of personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully. 

Raja Bhattacharjee

  Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 website: https://www.investmentjunctions.com

 

Understanding Return

Understanding Return

Calculating return would have been easier, if we had been investing exactly for one year. But that doesn’t happen in practical world. Investment is normally done in staggered manner and each investment is not kept for same period of time. Withdrawal also might happen over a period of time.

To compare the return from various investment plans, it is necessary to have a common parameter which can be used for all types of investments with different investment amounts and different holding period. That common parameter is to assume that all investment returns get compounded annually.

If investment is held for lesser  than one year, then we need to calculate the return in percentage terms by assuming that the investment is held for one year.

CAGR – Compounded Annual Growth Rate

If you want to calculate the return for one time investment then CAGR (Compounded Annual Growth Rate) is used. But when the investment is done  periodically or staggered over a period of time, CAGR is not useful to calculate the return.

In case of staggered investment, either IRR or XIRR can be used.

IRR – Internal Rate of Return

If the investment is done in strict periodic manner, you may use IRR to find out the rate of return. For example, if the investment is done at fix intervals (Monthly/quarterly/yearly) and withdrawal  only at the end of the entire tenure, IRR can be used to find out the return.

XIRR

If cash flow includes frequent inflow as well as outflow over a period of time, we need to use XIRR for calculating the rate of return. XIRR gives you the flexibility to assign specific dates for each cash flow, making it a much more accurate calculation.

Though Return is one of the most important criteria we should also look at other parameters like consistency, portfolio quality, risk, risk-adjusted returns, etc.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

Phone: 09830146206

 Office : 09681518774   /  7449858289

 website: https://www.investmentjunctions.com

 

All That You Need to Know About Tax on Cryptocurrency

All That You Need to Know About Tax on Cryptocurrency & NFT

Taxes on digital assets were pretty vague up to Budget 2022. The finance minister didn't notify the tax structure on corporate or individual levels. But, under new norms, all profits from cryptocurrencies are to be taxed at 30%. It is quite a steep rate and one that might lead you to think twice about investing in digital assets. To understand this move from the government, we have broken down the entire subject of taxes on digital assets into three main sections: tax on income, tax on gifts and the 1% TDS.

People who make money from digital assets must pay tax on that money

In Budget 2022, the finance minister said it would tax digital asset profits at 30%. That doesn't mean that digital assets are legal just because they are taxed. The legality of cryptocurrency as an asset class is still not clear.

Government officials say digital assets include cryptocurrency and NFTs. 

At 30% tax, the people who make different amounts of money will pay the same tax rate.

They would calculate this tax on income after subtracting the cost of acquisition, which could be the price of the cryptocurrency and the fees for transactions.

Moreover, crypto investors can’t set off their losses against any capital gains of other asset classes. However, it's not clear if the profits from one type of digital asset can pay for the losses of another digital asset.

If you use the foreign exchange, a peer-to-peer marketplace like Local Bitcoins or mine your own, you'll have to pay 30% of your profits. On the other hand, miners may be able to write off the cost of things like electricity, the depreciation on their mining computers, and so on.

Moreover, it is crucial to note that you still have to pay tax on your cryptocurrency gains made before April 2022.

Tax on digital assets as gifts

The budget also said that digital assets that were given as gifts would also be taxed. Concerned authorities may include digital assets as ‘property’.

Free digital assets that you receive, such as airdrops, learn-to-earn schemes, and games where you can earn money by playing games, are also included as gifts.

However, under the Income-tax Act of 1961, gifts made to specific relatives or as a wedding gift are not taxed, no matter how big the gift is. Parents, siblings, and other relatives who give money to you don't have to pay tax on it. Gifts that are given at weddings, through a will or inheritance, or in anticipation of the donor's death are also not taxed, no matter how much they are worth.

But, if your friend gets you a gift that costs more than Rs. 50,000 on your birthday, you will have to pay tax on it.

So now, the question is whether the same gift taxation rules that apply to real things would also apply to virtual digital things.

As part of their pay package, people who got digital assets like cryptocurrencies or NFTs will have to pay a 30% tax because, as per the new tax law, it will be considered a gift.

They will have to pay the tax even though they have sold none of the coins yet. Not only that, but in many cases, employees may have to pay tax on more money even though the value of the coins they got has gone down since they got them.

Impact of the 1% TDS

Taxes on income and gifts aren't the only things the government announced in this budget. They also announced a charge of 1% tax on all crypto transactions.

The new section 194S of the Income Tax Act says that crypto exchanges will have to withhold 1% TDS for most transactions starting July 1, 2022. People who use crypto will have to tell the government about all of their transactions to track them.

This TDS may be applicable only if the total amount of cryptocurrency transactions in a year reaches Rs. 50,000 for the following individuals:

• Each person, as well as Hindu Undivided Families (HUF), who have annual sales, gross receipts, or turnover above Rs. 1 crore.
• People who make more than Rs.50 lakh a year.
• People or HUFs who don't have a job or business to make money.

For the other individuals, this TDS may apply if the total amount of crypto transactions in a year is more than Rs. 10,000.

Moreover, as crypto trading takes place all over the world, the foreign cryptocurrency exchange will not deduct 1% TDS, but it is still not clear if and how TDS would be deducted if the transaction took place between an Indian buyer and a seller from another country.

What is your opinion on the taxation of digital assets? If you have any doubts, it will be best to consult us.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

Raja Bhattacharjee

  Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

 

 

4 Things That Couples Should Keep in Mind While Investing In Mutual Funds

4 Things That Couples Should Keep in Mind While Investing In Mutual Funds

If you are married, you may spend a lot of time with your better half, helping them solve their problems, planning vacations, or just relaxing at home.

However, couples also need to discuss investments as well. And, mutual funds are a popular investment option.

This article will look at the four main aspects that couples need to take care of while investing in mutual funds.

Do you want to maintain a joint account or an individual account?

You can use a joint account or a regular account to invest in mutual funds.

Many mutual fund platforms provide mutual fund joint holding accounts. You and your spouse must both be KYC compliant to invest under a joint account.

However, keep in mind that if there are any ELSS funds in the portfolio, only the primary account holder would be eligible for tax benefits.

How do you want to take care of goals?

The second factor to examine is your objectives. Goals help you to understand why you're investing in the first place. And, because you're investing as a couple, you'll have two types of goals: your joint goals as a couple and your different individual goals.

Examples of joint goals

• Purchasing your first home
• Saving money for your children's college education
• Putting money aside for retirement

Examples of Personal goals

• Creating your home gym 
• Investing in a high-end camera to pursue your photography passion
• To increase your professional possibilities by taking a course or going back to college

There are two ways to tackle joint goals: Investing together and separately. 

The first technique allows you to pool your resources and invest in a common objective. For example, if both of you are saving for retirement, you and your spouse together would buy three high-performing equity funds. If you own funds 'A' and 'B,' your spouse might invest in 'C' to supplement your portfolio. If the funds overlap, then you or your spouse can trim some of the holdings. 

You and your partner can pursue separate goals in the second strategy. You can, for example, invest in your child's schooling while your spouse invests for retirement. Because you and your spouse are investing for distinct purposes with this technique, it isn't a big problem if your portfolios coincide.

If you are investing for the same goals, keep an eye for portfolio overlap with your spouse

If you and your spouse are investing for the same goal, the funds must complement each other. It's because too many similar funds, after a certain point, don't add much to diversification.

Assume you have three large cap equity funds A, B, and C in your portfolio, and your spouse has three additional large cap funds, say schemes D, E, and F. If this is the case, diversification will not affect your portfolio.

Reach a mutual consensus for financial goals

It is natural for two people to have opposing view points on specific issues. Similarly, your partner may have different plans for specific significant financial goals in your life, such as retirement or a child's schooling. Assume your partner desires a luxury retirement, however you want a conventional or frugal one. These factors influence the amount of money needed for both of your retirement goals.

As a result, it is critical for you and your partner to communicate the visions for various financial goals in your lives to reach a mutual consensus and effectively plan investments to achieve common goals.

Conclusion:

Investing together as a couple can be tricky. So, it is essential to find a middle ground that can help fulfill the common financial goals. This post discussed the top four aspects that you need to consider as a couple when investing in mutual funds.

This blog is purely for educational purposes and not to be treated as a bit of personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully. 

Raja Bhattacharjee

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