Saturday, 20 May 2023

"Duniya me bharosa aise ek hunar , mil jaya ho to mitti hai , Kho jaya to sona hai.

 "Duniya me bharosa aise ek hunar , mil jaya ho to mitti hai ,

Kho jaya to sona hai.


As a certified financial planner, I can explain the given quotation in the context of financial planning and include some financial calculations specific to the Indian content. The quotation suggests that trust is a valuable skill or quality, comparing it to the transformative nature of clay and gold. In financial planning, trust plays a crucial role in building and maintaining relationships with clients and financial institutions. When trust is established, it lays the foundation for effective financial decision-making and collaboration. Clients trust their financial planners to provide them with reliable advice, guidance, and solutions to achieve their financial goals. To demonstrate the importance of trust in financial planning, let's consider an example: Suppose Mr. Sharma, an individual seeking financial planning assistance, invests INR 1,00,000 in a mutual fund recommended by his trusted certified financial planner. Assuming an average annual return of 12%, let's calculate the potential growth over a period of 10 years. Using the compound interest formula: A = P(1 + r/n)^(nt) Where: A = Final amount P = Principal amount r = Annual interest rate (in decimal form) n = Number of times interest is compounded per year t = Number of years Let's assume the interest is compounded annually (n = 1): A = 1,00,000(1 + 0.12/1)^(1*10) A ≈ INR 3,13,842 So, with an initial investment of INR 1,00,000 and assuming a 12% annual return, Mr. Sharma's investment could potentially grow to around INR 3,13,842 over 10 years. This calculation highlights the potential growth that can be achieved with proper financial planning and the trust placed in a certified financial planner. In summary, the given quotation emphasizes the value of trust, which is essential in the financial planning profession. Establishing trust allows clients to have confidence in their financial planner's recommendations and fosters a successful partnership in achieving their financial objectives.
Raja Bhattacharjee
MBA , CFP

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Monday, 1 May 2023

can NRIs invest in Mutual Funds in India ?

Can NRIs Invest in Mutual Funds in India?
Are you an NRI looking to invest your money in mutual funds in India? Look no further!

In this blog, we will cover in detail if you can invest in mutual funds as an NRI, the process to invest, and the taxation and redemption process.

Are NRIs allowed to invest in mutual funds in India?
The short answer is yes, of course. The Foreign Exchange Management Act of 2000 has allowed Foreign Institutional Investors and Non-Residents of India to invest in mutual funds. The Reserve Bank of India (RBI) has put forward the rules for investing and redeeming from mutual funds in India. So if you follow certain rules/conditions, you can invest in mutual funds as an NRI.

Procedure to invest in Mutual Funds for NRIs
The procedure to invest in mutual funds for NRIs is not complicated. Let's have a look at it.

Setting up an account

If you're an NRI wanting to invest in mutual funds in India, you must set up an NRO or NRE account. Fund houses don't accept foreign currency payments, and you can't park your money in savings accounts, so you'll have to open one of the above-mentioned accounts.

Investing (either of 2 methods)

As an NRI, you have two methods to invest in mutual funds, i.e. direct method and through power of attorney.

  • Direct method: You can directly invest in MFs in India through this method. You may be asked to furnish your KYC details and other documents, such as recent photographs, bank statements, resident proof of other countries, copies of PAN cards, etc. An in-person verification can also be asked for and done via the Indian embassy.
  • Power of Attorney: You can invest in MFs through Power of Attorney by allowing a third party to make transactions on your behalf. You may need your and Power of Attorney's signature on KYC papers for this.

Getting the KYC done

Your KYC process must be completed as an NRI to invest in MFs. To complete your KYC process, you may be asked to submit a few documents, such as photographs, current address details, copies of passports, etc. It is also possible that you will be asked to complete an in-person verification process.

Note: If you're in Canada or USA, you may be asked to submit additional documents. Also, a few fund houses do not accept investments from NRIs in these countries. Hence, check for those who accept investments from these countries too.

Redeeming your investments

There is no one fixed redemption process that all mutual fund houses in India follow. Hence, it would help if you read the policies related to redemption before investing your money.

A basic process that each fund house follows is to credit your entire corpus, including the invested amount and gains, to your respective NRE or NRO bank accounts. The amount credited will be done after deducting taxes.

Taxation on Mutual Funds
The gains from mutual funds are taxable. The rate of tax depends on the holding period and asset class.

Taxation on equity-oriented funds

STCGs are taxed at a 15% rate when these funds are redeemed within 12 months.

LTCGs are taxed at a 10% rate (without indexation for amounts exceeding Rs 1 lakh) if withdrawn after 12 months.

Capital gains on debt funds

STCGs (i.e. when debt fund units are redeemed within three years) are taxed at your income tax slab rate.

LTCGs (i.e. when such funds are redeemed after three years) are taxed at a 20% rate after indexation and surcharges and cess as applicable.

If India has signed a DTAA, i.e. Double Taxation Avoidance Treaty Agreement with your country, you won't have to worry about paying double taxes on your gains. However, TDS is deducted from capital gains when you redeem your investments.

Final words

As an NRI, you are allowed to invest your money in mutual funds in India, provided that a certain fund has allowed investments from your country. Hence, you must invest in mutual funds as an NRI only after performing detailed research.

Raja Bhattacharjee

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.

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Importance of having a will


Don't Leave Your Family's Future to Chance: The Importance of Having a Will

Imagine you have worked hard throughout your life for your family so that they can benefit from your hard work, but due to not clarifying which part of your estate will go to whom, there is a clash among your family members. Now, no one is utilizing your estate because of legal disputes.

You never want that, right? But how can you protect your family from these disputes in your absence? There is a simple answer for the same, write a will.

What is a will?

A will is a legal document that indicates a clear direction to the beneficiaries of your wealth's ownership in the case of your demise. It includes how you want your assets distributed and the methods used.

There are mainly five reasons why you must have a will:

Avoid disputes

Your sudden demise might also leave your beneficiaries in shock and financial confusion. So that no beneficiary gets unjustified assets, creating a will mentioning each and every detail will help your beneficiaries save time, legal proceedings, a clear sense of responsibility, and asset ownership.

Take care of your minor children

Creating a will helps you nominate guardians for your minor children who will take care of them in the case of your unfortunate and sudden demise. A guardian will be responsible for your children's needs, like clothing, education, food, housing, and healthcare. If you do not create a will and do not nominate a guardian for your minor children, the court will have to do it for the same. This will take a lot of time, and your children might get mentally and emotionally disturbed if not given proper care.

Assets management

After your demise, someone must take care of your bank accounts, liquidate assets if required, business-related operations (if you have one), and your real estate. You should choose a person who is capable of handling all the financial operations after your demise so that your loved ones can get the best out of it. You need a person whom you can trust when it comes to finances.

If you do not create a will directing a person you trust, the court will have to do so on your behalf, and the person you like might not get selected or not be the right person for the good of your loved ones.

Expensive court process

As we all know, court processes are time-consuming and expensive, and it might get tiring for your family to get what you have built for them when you are alive in the absence of a will. Due to long-lasting legal proceedings, your family might become out of money and make wrong financial decisions. To prevent such a situation, you must create a will.

Protect your digital assets

In this digital era, you also need to take care of your digital assets so that no one can misuse the personal information contained therein. In the absence of a will, the court will give liberty to the person to take care of digital assets as well. Such a person might misuse your data for their own personal gain. If you create a will, it will become much more helpful for you to protect your personal and business-related information as well by directing a person to utilize your digital assets in a particular way.

Maintain healthy cause

Some of you might dream of leaving some portion of your assets for a good cause or charity. If you sincerely want to do something for society by contributing to charity, it becomes necessary to create a will. If you do not have a will, no one would know what you actually want to do with your estate. Even if someone knows, why would they tell the court to do the same?

Creating a will is a financial planning component; if you think it is only for rich people to pursue, you might be wrong. Family disputes for even a small estate might lead to cause long-lasting conflicts among family members.

Raja Bhattacharjee

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