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Budget 2022 for Cryptocurrency Investors: Income Tax rule changes Finance Minister should announce

Budget Expectations for Cryptocurrencies: The cryptocurrency market in India has grown at an exponential rate in recent years. By 2030, there is anticipation that Indians holds an investment of $241 million in cryptocurrencies. According to a recent survey by Nasscom and WazirX, India now has the biggest number of crypto owners in the world, with 10.07 crore.

Budget 2022 for Cryptocurrency Investors: Income Tax rule changes

A law to regulate cryptocurrencies was scheduled to be introduced during Parliament’s Winter Session. However, the session did not have any discussion on the bill. Moreover, the government may take up this issue during the Budget Session. “We anticipate the government to adopt a regressive tax structure for cryptocurrencies if it does not restrict Indians from trading in cryptocurrencies,” says Naveen Wadhwa, DGM, Taxmann.

Given the magnitude of the market, the volume, and the risk associated with cryptocurrencies, the government may implement the following modifications to cryptocurrency taxes:

1) Provisions for TDS/TCS

Tax experts feel that the sale and acquisition of cryptocurrencies beyond a certain level should be subject to TDS/TCS regulations. This will assist the government in obtaining investor footprints.

cryptocurrency taxes

2) SFT Reporting

Both the selling and purchase of cryptocurrencies should come under the Statement of Financial Transactions. Trading companies already record the sale and acquisition of mutual fund shares and units.

3) Increased tax rate

The revenue derived from the sale of cryptocurrencies should have a higher tax rate of 30%; similar to profits from lotteries, game shows, puzzles, and so on.

4) Loss cannot be set off.

The losses from the selling of cryptocurrencies should not go to other revenue sources. Any such activity should come under jurisdiction.

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Investing in a RE asset can return twice of 10-year Fixed Deposit: RenewShare CEO Animesh Damani | Interview

Artha Energy Resources (AER) has created RenewShare, an online platform for renewable energy (RE) investing that allows for fractional ownership of RE assets in the nation. It is an independent investment platform to cater to investors looking to diversify their existing portfolios by investing in India’s rapidly growing RE environment.

Investing in a RE asset can return twice of 10-year Fixed Deposit: RenewShare CEO Animesh Damani | Interview

According to a corporate release, it has already reached an initial AUM of Rs 7 Crore. It also receive an early investment commitment of Rs 10 Crore from investors, with RE assets scattered across four locations.

In an e-mail conversation with FE Online, Animesh Damani, Founder, and CEO of RenewShare discuss the new investment option, dangers, and potential for RE investors. Excerpts with Edits:

What are the renewable energy investment prospects for consumers and small investors?

The existing investment options in renewable energy (RE) for small and individual investors are almost non-existent. The only option to gain exposure to the industry is to invest in listed RE stocks or an InVIT Co. Due to the significant upfront cost required, consumers and small investors cannot directly own enterprises.

What is RenewShare offering?

Renewshare is India’s first investment aggregation platform, facilitating investments in renewable energy assets. The RE sector has a reputation for being an extraordinarily expensive asset class to acquire and manage on one’s own. As an aggregator, our goal is to tackle this problem by making it easier to reduce the ticket size for investors.

A portfolio of renewable energy projects is thematically grouped together to form an SPV that is listed on the marketplace. Each SPV has a theme, and each asset adheres to the concept of that SPV. Moreover, investors can opt to invest in one or more SPVs, depending on their preferences.

The minimum investment ticket size is Rs 20 lakh.

Do you have the authorisation from regulators to provide financial products?

As an online site, we are not subject to the jurisdiction of any approved authority. Before investing in the platform’s products, investors must undertake their own due diligence.

How will you use the funds?

The money pooled by the investors goes to the SPV they have chosen. The ownership stake is assigned in proportion to the funds invested. The funds are then invested in different real estate assets by the SPV. The returns on RE assets are dispersed to investors in proportion to their ownership stake. The platform charges a fee for completing the whole transaction and guiding investors throughout the investment’s life cycle.

Investing in a RE asset can return twice of 10-year Fixed Deposit: RenewShare CEO Animesh Damani

Why do you believe RE could be a lucrative asset class?

RE Assets are long-term enterprises that demand a big initial investment but yield periodic returns over a very long period of time. Depending on the length of the power selling agreement, a brand new RE asset can earn profits for up to 25 years. Furthermore, the asset’s maintenance costs are modest, and it is simple to monitor remotely. Because the raw material is a natural resource, there are few operating challenges.

In terms of statistics, the returns on a RE asset are typically about 11-12 percent; which is greater than an A+ rated corporate bond and doubles the current 10-year FD rates from prominent Indian banks. The returns from the RE category are just marginally lower when compared to the NIFTY 500 Index during the last ten years.

How can small investors make the most from RE investments?

Because of the high ticket sizes of RE assets, it is currently impossible to reduce ticket sizes for a small investor. Their best chance would be to consider an InVIT Co or equity investment.

What is the potential for growth in renewable energy investment over the next five years?

The government takes three years to install the first GW of roof-top solar plants. In only one year (during a pandemic year), India added 1 GW of rooftop projects. Furthermore, to fulfill the government’s entire renewable energy objective of 2030. The yearly investment in new renewable energy assets across the solar, wind, and hydro would be Rs 1.40 Lakh crores ($18 Billion) every year; totaling $90 Billion in only the next five years. These figures show the enormous potential of the real estate investment sector!

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Balanced advantage funds are becoming the flavor of the season! Should you invest?

Balanced Advantage mutual fund scheme, dynamically handles investment between equities and debt asset classes. The schemes under the Balanced Advantage category are unique among all the mutual fund categories. According to the SEBI’s classification of mutual fund schemes, Balanced Advantage is fundamentally a Hybrid category. It is also known as Dynamic Asset Allocation.

Balanced advantage funds are becoming the flavor of the season!

Balanced Advantage Funds (BAFs) have just become the flavor of the season. They may soon become a part of your MF portfolio. But, before you invest in a Balanced Advantage fund, you need to understand how it works and how it differs from other equity and debt funds.

How Balanced Advantage funds work?

BAFs are distinguished by the fact that they can be either 100% equity or 100% debt funds. According to SEBI guidelines, the fund manager of a dynamic asset allocation fund or balanced advantage fund may invest entirely in stocks, entirely in debt, or a combination of the two asset classes.

Balanced advantage schemes seek to capitalize on the potential upside in stock markets. Meanwhile, it also mitigates the downside by dynamically managing the portfolio through investments in equities and equity-related instruments as well as active users of debt, money market instruments, and derivatives. They can move between the two asset classes in severe scenarios; unlike balanced hybrid funds (40-60% stocks) or aggressive hybrid funds (65-80% shares).

How Balanced Advantage funds work?

In practice, BAFs will have variable mixes of equity and debt allocated to them. Before investing, double-check the allocation. If you’re seeking a BAF with bigger equity exposure, you might have to search elsewhere. Investors seeking larger debt exposure may need to evaluate whether the given BAF has a higher debt allocation or not. Making an informed investment selection is beneficial.

However, this may not always be the case. The fund manager can change the allocation of stock and debt in Balanced Advantage funds over time based on market circumstances. A comparison of BAFs is likewise a difficult undertaking. If the distribution between stock and debt vary, a return comparison may not be the best option.

Market values are now high, and BAFs may be considering a restricted position in stocks. The function of the fund manager will be critical in BAFs, therefore choose these funds based on their long-term consistent performance.

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Best investment options for tax benefits and financial security

Making better financial decisions is undoubtedly at the top of the list of resolutions people make at the start of a new year. Tax breaks are an important part of financial planning since they are a wonderful way to start saving money. Most individuals usually don’t think about saving taxes until the deadline is right in front of them. However, it is usually preferable to prepare ahead of time so that you may properly plan your financial future throughout the year.

Best investment options for tax benefits and financial security

It’s critical to invest in solutions that not only guarantee a wonderful investment portfolio but also improve financial stability. This is why investment-cumulative-insurance products are developing as a wonderful investment alternative. Given the present market conditions, they not only provide larger yields but also assist in tax savings. Furthermore, when the third COVID wave gains traction, the insurance component in these products has the potential to give extended financial stability to not only the investor but also the dependents.

Let’s take a deeper look at the tax-saving investing options available to you.

Unit Linked Insurance Plan (ULIP)

The tax-free income by ULIPs is what makes them popular among investors. Because of its transparency and low fees, new-age or fourth-generation ULIPs are very popular. These plans have policy terms ranging from 5 to 30 years. Policyholders can opt to withdraw after 5 years or after maturity and walk away with a tax-free fund value. Furthermore, they provide greater flexibility by allowing you to effortlessly transfer money between debt and equity based on your needs. These plans can provide returns of up to 12-15 percent; they allow policyholders to avoid tax under Sections 80C and 10(10) D of the Income Tax Act of 1961.

Unit Linked Insurance Plan (ULIP)

Also, as per Section 10(10)D, the investor should take advantage of the fact that investing in ULIPs is tax-free for yearly premiums of up to Rs 2.5 lakh. Investing at least Rs 2.5 lakh is thus a smart move as compared to mutual funds; which would suffer a 10% tax on amounts over Rs 1 lakh. ULIPs can potentially generate a return of up to 12-15 percent. As a result, if a 30-year-old invests Rs 10,000 over 20 years, he or she may create a tax-free corpus of about Rs 1 crore which is taxable in the case of mutual funds.

Guaranteed return plans

Guaranteed return plans are best recognized for providing financial certainty to an investor’s hard-earned assets. They enable policyholders to lock in their money for extended periods of time without having to worry about market volatility influencing their profits. However, these goods might also help you save money on taxes.

Best investment options for tax benefits and financial security

Guaranteed return plans have a life insurance component equal to 10 times the annual premium. Furthermore, these premiums, along with the maturity amount, are tax-deductible under Section 10. (10D).

Most significantly, they are a considerably better option than declining FD interest rates; which now stand at roughly 5% and are taxed. Guaranteed return plans, on the other hand, may earn you up to 6% interest depending on parameters such as age and lock-in term. For example, if a 30-year-old invests Rs 10,000 in the Tata AIA Fortune Guarantee Plus plan for ten years. They would receive 5.92 percent tax-free interest as well as life insurance of about Rs 14 lakh; which is not accessible with an FD.

Term insurance

Term insurance is another popular way to save taxes and ensure the future of your loved ones during these trying times. The premiums paid on the policy are tax-deductible under Sections 80C and 10(10) D of the Income Tax Act of 1961. The maximum amount is Rs 1.5 lakh, and you can also save tax on plans acquired for parents, spouses, or children in addition to yourself. In addition, in the event of the policyholder’s untimely death, the sum assured paid to the dependents is tax-free.

Child plans

When it comes to investing in your child’s future, it’s always best to start early. In such instances, many investors choose to go with a safe and assured choice. This is where unit-linked kid plans come in. You can begin investing in these programs as soon as 60-90 days after the birth of your kid. The benefit of investing early is that you will have a larger corpus when you need it. Another incentive to choose these policies is the premium waiver feature, which assures the payment of future premiums in the event of the policyholder’s untimely death. The investor might benefit from tax breaks under Section 80C of the Income Tax Act of 1961, which allows for a maximum tax break of Rs 1,50,000 per year for various kid plans.

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Your Money: Steps to reach your retirement corpus milestone

Retirement planning is all about gaining an understanding of the “future you” based on your current aims, desires, and desires. Estimating your post-retirement activities can give your retirement plan more meaning. For example, you could desire to travel more, get active in humanitarian activities, or set up money for emergencies.

Your Money: Steps to reach your retirement corpus milestone

It is better if you are motivated by your post-retirement objectives. Quantify the expenditure to an approximate amount based on current value, and inflate the expenses to your retirement age.

Someone who needs Rs 2 lakh per month in present value may need to plan for Rs 5.3 lakh per month after 20 years at a 5% inflation rate. With a life expectancy of 35 years, the required corpus would be Rs 13.7 crore; with a real rate of return on the post-retirement corpus of 3% (investment return – inflation). Without the right foundation for your retirement goals aim, it may be difficult to continue your present lifestyle after retirement.

Efficient retirement plan

To build an effective retirement plan, you must have an optimal pre and post-retirement portfolio composition in order to get closer to your retirement corpus milestone and efficiently monetize withdrawals afterward. Someone with more years till retirement may afford to assume a significantly greater risk asset exposure than someone retiring in a few years. Consider leaving everything to risk assets for the “long term” without portfolio rebalancing. Additionally account for the market falls by 30% in the year of retirement.

This depletes about one-third of your portfolio during the time in which you were to begin withdrawals from the corpus. Following an asset allocation strategy comprising diversely connected funds and rebalancing at regular intervals helps to mitigate such risks. Equity mutual funds have historically shown to be particularly efficient compounders of your investment.


Plan for contingencies

Being prepared for emergencies is essential in any financial plan, especially one for retirement. An unexpected medical bill is the one item that may chew a significant hole in your nest egg. It is critical to ensure that your medical insurance covers you throughout retirement to preserve your retirement corpus from rapid depletion. Mutual funds may be helpful in covering unexpected bills.

Investment portfolios aim to meet several objectives throughout the course of a person’s life. One must manage risk and returns effectively to ensure enough finances are accessible for each objective while still saving enough for retirement. Efficient portfolios are those that can cater to numerous lifecycle goals while maintaining a constant flow of capital in and out of them.

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How much life insurance do you need? Find out

It’s the uncertainty in life that makes us worry more about our loved ones’ financial stability. One of the first things that come to mind when considering how to cover such demands is life insurance. With the current COVID-19 outbreak, the demand for sufficient insurance coverage has risen. On the other hand, the underinsured Indian population is in extreme confusion.

How much life insurance do you need?

In retrospect, it is a lack of awareness of the sum covered that leads to financial difficulties. As a result, it is critical to assess the criteria that should be used to answer this looming question.

Here are a few factors to consider;

Life Goals

Most major life objectives, both yours and those of your loved ones, demand adequate financial aid. The 30s are a good age group for an individual to obtain insurance since they have a long enough tenure to build a substantial nest fund for the future. When we examine the impacts of compounding and average lows and highs; money tends to multiply in greater proportions over time. The final objective here is to provide the family with financial stability in the case of the breadwinner’s untimely death.

Make a list of your major life objectives to estimate how much money your family needs to fulfill their ambition.

Current financial liabilities

According to industry experts, one should consider all of the items obtained with loans and contemplate how their family would bear a load of these debts if the breadwinner was no longer there. “One should compile a list of all the debts that they’ve taken out and look at numerous term insurance policies that can give enough coverage at a low rate,” Rathi says. Even the most basic term insurance may help a family in a financial emergency.

life insurance

The age

Your age is an important factor since it has a direct influence on the maximum amount of life insurance premium. When one is young, he or she is able to purchase a sufficient sum insured at cheap premiums, as opposed to later in life, when the premiums are higher and the sum promised is lower.

Estimated working years

Taking care of your financial duties throughout your working years is a critical component of your retirement preparation. It is important to note that the level of coverage you select must correspond to the premium you can pay throughout these years.

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Govt initiatives giving a boost to affordable housing

According to an Investing Reviews survey, India is one of the top ten nations in the world where purchasers find it simpler to purchase their first house and go on the property ladder. Investing Reviews examined several characteristics such as average income, average home prices, and utility expenses to determine which nations are the most and least affordable for first-time buyers.

Govt initiatives giving  affordable housing

India has the most inexpensive housing of any G20, OECD, or European Union country, with a score of 9.33. Turkey is standing second in the list in terms of housing affordability, with a score of 9.29. Despite the country’s low average wage, Bulgaria finished in third with an 8.88 property affordability score; making it a great option for prospective buyers, as the country offers reasonable property costs and cheap expenses.

Property in lower-wage nations is much cheaper for locals than property in higher-wage countries. This indicates that, while house values in the most industrialized nations have increased significantly over the previous several decades, earnings have not kept pace; resulting in an affordability issue for many young people and first-time purchasers.

Govt initiatives giving a boost to affordable housing

On the other hand, those who own property in those nations, have earned substantial financial gains; that they would not have gotten in many other parts of the world.

Moreover, with the government’s emphasis on ‘Housing for All’ projects, the situation is changing in India. According to Real Insight (Residential) – July-September (Q3)2021, home sales in India’s eight main markets increased dramatically during the July-September (Q3)2021 period; as demand for dwellings increased during the second wave of the coronavirus epidemic. During the three-month period, sales increased by around 59% compared to the same period in 2020. Units priced under Rs 45 lakh contributed the most to quarterly sales, accounting for 40% of overall sales.

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How to make the most of your Systematic Withdrawal Plan (SWP)

SWP, or Systematic Withdrawal Plan, is a mutual fund investing feature that allows investors to withdraw from their current assets in the form of preset sums at regular intervals. One can withdraw on a monthly, quarterly, semi-annual, or annual basis, as determined by the investors. It guarantees a consistent cash flow for your income requirements.

How to make the most of your Systematic Withdrawal Plan (SWP)

SWP is the opposite of the Systematic Investment Plan (SIP). In SIP, a fixed sum is sent from your bank account to the mutual fund on a regular basis, whereas for SWP the transaction flow reverses. SWP is a useful tool for investors who want consistent cash flows to cover their costs.

How does SWP work?

An SWP allows you to take a set amount from your mutual fund assets on a regular basis. When an investor chooses an SWP, he obtains his own money from the ongoing investment in a methodical manner. The money is received back by redeeming certain mutual fund units.

Simply put, a portion of your mutual fund units will be sold on a regular basis to honor the dividend you have set. If no time frame is specified for the SWP, payments will continue as long as you have units in your holding.

Suppose you began an SWP for Rs 1000 on a lump sum investment of Rs 1 lakh in an equity mutual fund plan for 5 years. Assume the projected rate of return is 10%. Over the course of 5 years (60 months), you will receive a total dividend of Rs 60,000; while the value of the remainder of your investment will be Rs 84,490. So, in essence, investors continue to get their normal monthly cash flow by redeeming units. While the remaining units appreciate in line with the market price.

 Systematic Withdrawal Plan (SWP)

How to make the best use of SWP?

SWP assures consistent cash flow. If an investor has a large lump sum to deposit for immediate recurring withdrawal, choose SWP right after making the investment. However, experts recommend that investors initiate an SWP in their equity scheme at least one year after investing to avoid paying the 15% short-term capital gains tax.

One should implement SWP features after a couple of years, say 5-7 years if one is better financially organized. Since this time period improves capital appreciation. It is advantageous to have a bigger volume of consistent cash flows.

Furthermore, investments made in the SIP mode can further receive help with the SWP option at any time. If you have been saving through a SIP until retirement and do not wish to invest anymore, you should consider terminating the SIP but not completely redeeming it. Rather, SWP is the greatest method to realize the benefits of the sizable corpus. This approach, a regular monthly flow will be more like a pension for you and will be able to meet your demands for a much longer period of time because the remainder of the corpus will remain invested and continue to increase.

It’s worth noting that, despite the SWP, you may redeem more whenever you want.

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Equity Mutual Fund: Should you go for a concentrated investment portfolio?

Concentrated portfolios are typically recommended above extensively diversified portfolios. This is due to the fact that the asset allocation method of diversification has a long track record. However, if the focused investment accounts for a modest percentage of your entire portfolio, it makes sense and may be worth exploring. A concentrated section of a portfolio functions as a satellite investment surrounding your core portfolio, adding value to your wealth-building process.

Equity Mutual Fund: Should you go for a investment portfolio?

One of the finest and easiest methods to build long-term wealth from stock markets is to invest in equity mutual funds using a systematic investment plan (SIP). One should invest in Equity funds according to one’s risk appetite and investment horizon. There are several types of funds, some of which may not be suited for all investors. Hence, investors should carefully choose any investment funds and/or investment plans.

Several fund institutions provide equity plans with a concentrated portfolio, believing that too much diversity will cut into the potential profits. Such an investment opportunity may out to be more than profitable at times, but the contrary is also conceivable.

What Is A Concentrated Portfolio?

A concentrated portfolio is an equity plan featuring a small number of high-conviction equities in its portfolio. At any given time, the number of firms in which the program would invest may be as low as 20. Furthermore, because they have a limited investment scope, an equity plan focusing on only one industry or topic is classified as a fund managing a concentrated portfolio. Typically, such scams are incredibly dangerous, but they may also be quite lucrative. Schemes with titles like focused, select, or sectoral and thematic funds manage a concentrated portfolio.

Equity Mutual Fund

Who Should Opt For Such Schemes?

Because concentrated portfolio equity schemes have a relatively limited investment universe, they do not provide investors with the needed diversification. However, this does not negate the fact that it is an investment worth making. Schemes that limit the amount of space available to build portfolios may not be suitable for all investors. Investors with a long-term investment perspective and a high-risk appetite might select concentrated portfolio plans.

Concentrated portfolios should account for no more than 15-20 percent of the whole portfolio. Moreover, in such types of funds experts recommend SIP investments. However, if the value of your portfolio drops by 5-10%, you should search for further acquisitions to take advantage of the drop, as this investing approach averages out your investment costs.

There are benefits and drawbacks to equity mutual fund schemes with concentrated portfolios. If you have a high-risk tolerance, there is no harm in investing in such funds. Investors with a high or low-risk appetite, on the other hand, should limit their investments in these types of funds to no more than 20% on the upper end. Seasoned investors who have weathered many market cycles should feel at ease with schemes that have concentrated portfolios.