Dhananjay Banthia, PhD’s Post

𝐔𝐒 𝐅𝐞𝐝 𝐨𝐧 𝐡𝐨𝐥𝐝 𝐚𝐭 5.25%, 𝐛𝐮𝐭 𝐡𝐢𝐧𝐭𝐬 𝐚𝐭 𝐫𝐚𝐭𝐞 𝐜𝐮𝐭𝐬 𝐥𝐚𝐭𝐞𝐫 𝐢𝐧 2024: 𝐀 𝐛𝐨𝐨𝐧 𝐟𝐨𝐫 𝐈𝐧𝐝𝐢𝐚𝐧 𝐦𝐮𝐭𝐮𝐚𝐥 𝐟𝐮𝐧𝐝𝐬? The US Federal Reserve's recent decision to hold interest rates steady at the current range of 5.25% to 5.50% might seem distant from your Indian investment portfolio. But hold on! Their announcement, while maintaining current rates, subtly hinted at potential rate cuts later in 2024. Here's how: 𝐅𝐞𝐝'𝐬 "𝐃𝐨𝐭 𝐏𝐥𝐨𝐭": This economic chart showcased anonymous projections from Fed officials for future interest rates. This year's dot plot indicated expectations for three quarter-percentage point cuts by the end of 2024. (𝘪𝘮𝘢𝘨𝘦 𝘣𝘦𝘭𝘰𝘸) 𝐂𝐡𝐚𝐢𝐫 𝐏𝐨𝐰𝐞𝐥𝐥'𝐬 𝐒𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭: While holding rates steady, Chair Powell explicitly stated the Fed's intention to "begin dialing back policy restraint at some point this year" if economic data continues on a positive trajectory. This suggests future rate cuts are likely. These potential cuts could have a positive ripple effect on both equity and debt mutual funds in India, but could also impact Fixed Deposits (FDs). 𝐏𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐧 𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝𝐬: 𝐄𝐪𝐮𝐢𝐭𝐲 𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝𝐬: Cheaper borrowing for US businesses, signaled by the Fed, can translate to increased investment, expansion, and potentially higher profitability for Indian companies as well. Anticipating this, investors might be more willing to invest in the Indian stock market, leading to a potential rise in equity mutual fund returns. 𝐃𝐞𝐛𝐭 𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝𝐬: Remember, interest rates and debt fund returns have an inverse relationship. When interest rates fall, the market value of existing bonds with higher interest rates becomes more attractive compared to new bonds with lower rates. This increase in bond value translates to a potential rise in debt fund returns. 𝘈 𝘞𝘰𝘳𝘥 𝘰𝘧 𝘊𝘢𝘶𝘵𝘪𝘰𝘯: 𝘛𝘩𝘦 𝘮𝘢𝘳𝘬𝘦𝘵 𝘮𝘪𝘨𝘩𝘵 𝘩𝘢𝘷𝘦 𝘢𝘭𝘳𝘦𝘢𝘥𝘺 𝘧𝘢𝘤𝘵𝘰𝘳𝘦𝘥 𝘪𝘯 𝘴𝘰𝘮𝘦 𝘰𝘧 𝘵𝘩𝘦 𝘦𝘹𝘱𝘦𝘤𝘵𝘦𝘥 𝘳𝘢𝘵𝘦 𝘤𝘶𝘵𝘴. 𝘚𝘰, 𝘵𝘩𝘦 𝘪𝘮𝘱𝘢𝘤𝘵 𝘮𝘪𝘨𝘩𝘵 𝘣𝘦 𝘨𝘳𝘢𝘥𝘶𝘢𝘭. 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐧 𝐅𝐢𝐱𝐞𝐝 𝐃𝐞𝐩𝐨𝐬𝐢𝐭𝐬 (𝐅𝐃𝐬): Generally, when interest rates fall, banks tend to lower the interest rates offered on FDs. This could potentially lead to lower returns on your FD investments if you lock into a fixed rate during a period of falling interest rates. Staying informed about global financial news is crucial for making informed investment decisions. Remember, consulting experts can help you understand how these developments might affect your specific investment portfolio and make adjustments to your asset allocation strategy. #investment #FedRate #Investment #MutualFunds #MMWealthVridhi 𝘔𝘶𝘵𝘶𝘢𝘭 𝘍𝘶𝘯𝘥 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘢𝘳𝘦 𝘴𝘶𝘣𝘫𝘦𝘤𝘵 𝘵𝘰 𝘮𝘢𝘳𝘬𝘦𝘵 𝘳𝘪𝘴𝘬𝘴, 𝘳𝘦𝘢𝘥 𝘢𝘭𝘭 𝘴𝘤𝘩𝘦𝘮𝘦 𝘳𝘦𝘭𝘢𝘵𝘦𝘥 𝘥𝘰𝘤𝘶𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘳𝘦𝘧𝘶𝘭𝘭𝘺.

Yes You Heard me Right on 5 out 100 for Stock Market.... 1. The Current Market Scenario Market Cycles: The "bubble" of 2020-2021 in the Indian market was driven by liquidity, low interest rates, and the pandemic recovery rally. As global conditions tightened (e.g., higher interest rates, inflation concerns), market corrections became inevitable. SEBI Regulations: Recent regulatory actions aim to increase transparency and reduce speculative trading, but they can also limit excessive leverage, impacting short-term traders. Bad Loans & Leverage: Excessive borrowing, whether by individuals or businesses, can lead to financial stress. Leverage in trading amplifies losses, making it a high-risk strategy. 2. Who Should Invest in the Stock Market? Mindset: Investors need a clear, disciplined mindset. If you can accept the possibility of losing your investment and still stay focused on long-term growth, you may be ready for the stock market. Financial Cushion: Investing should only begin after securing an emergency fund and ensuring basic financial stability. Emergency Fund: Cover 6-12 months of essential expenses in liquid assets (savings accounts, FD, or money market funds). Debt Management: Avoid investing if you're carrying high-interest debts like credit card loans. 3. A Practical Approach to Investing Suppose you have ₹100. Here's a balanced financial allocation: - ₹30 as Emergency Fund: Always keep this liquid and accessible for unforeseen circumstances. - ₹70 for Lifestyle & Savings: Cover monthly expenses, insurance premiums, and other obligations. From this, if you can save (e.g., ₹20), consider dividing it further: ₹15 for Safe Investments: Use for low-risk instruments (FDs, PPF, bonds). ₹5 for the Stock Market:Only invest if you are willing to take risks. Treat it as money you can afford to lose. 4. Stock Market Risks Volatility: Stock markets can fluctuate due to economic conditions, global events, or regulatory changes. Diversification: Mitigate risks by investing across sectors or asset classes (e.g., equities, gold, mutual funds). Knowledge is Key: Don't invest in stocks without researching the company, industry, and overall market conditions. 5. Recommendations for Beginners Start Small: Begin with mutual funds or index funds, which are less risky than direct stock trading. Learn First: Use tools like demo trading platforms to practice before investing real money. Avoid Leverage: Trading with borrowed funds can lead to catastrophic losses. Stick to cash markets initially. Key Takeaway Investing in the stock market isn't for everyone. It's crucial to: 1. Build a financial safety net. 2. Adopt a mindset that accepts potential losses. 3. Start with amounts you can afford to lose and gradually build exposure as you gain experience. This disciplined approach ensures that your financial health isn’t jeopardized by the inherent risks of stock market investing.

In my last post I talked about Taxation on Debt products. But there are some debt funds that I haven’t talked about yet. So what are they? Let’s find out! The first in the list is Domestic Fund of Funds. This is basically a fund that invests in other mutual funds instead of directly in stocks or bonds. It’s a great way to diversify without selecting multiple funds yourself. 🎯 Next comes International Funds. These mutual funds invest in global markets, either directly or as funds of funds, giving you access to international opportunities. 🌍 And the 3rd type of Debt Funds is Commodity Mutual Funds As the name suggests, these funds invest in commodities like gold or oil, offering you a way to benefit from commodity price movements without owning physical assets. 💰 Now comes the big question- How are these taxed? Long-term holdings (more than 24 months): Your gains will be taxed at 12.5% without indexation. Short-term holdings (up to 24 months): Your gains will be taxed at your personal income tax slab rate. Simple enough? I hope so! If you still have any confusion about taxation on Equity or Debt products, please feel free to ask me. I’ll be more than happy to help! Learnt something new today? 🤩 Do share your thoughts & questions below! 👇 -------------------------------- In this series, I’m covering 30 Things you MUST know before investing in Mutual Funds. Check the link in comments to see more posts from the series. 👇 Pennywise™ India #MutualFunds #bePennywisewithAkshat

Corporate Bonds Shine as Yields Fall and Investor Demand Rises In 1HFY25, fundraising via corporate bonds reached Rs 4.98 lakh crore, a notable 6% YoY increase. One of the primary drivers is the prevailing environment of lower yields. As yields on other fixed-income instruments decline, investors are increasingly seeking alternative avenues for generating returns. Beyond the allure of lower yields, the need for diversification is also pushing investors towards corporate bonds. In an uncertain economic climate, spreading investments across different asset classes is a prudent strategy to mitigate risk. Corporate bonds provide an effective means of diversifying portfolios and reducing overall volatility. The regulatory landscape has also played a role in shaping the current dynamics of the corporate bond market. The Reserve Bank of India's (RBI) decision to increase risk weights on bank lending to Non-Banking Financial Companies (NBFCs) has inadvertently boosted the appeal of corporate bonds. Faced with higher borrowing costs from banks, NBFCs have turned to the bond market as a more cost-effective source of funding. This has led to a 3% increase in borrowings from NBFCs, reaching Rs 1.64 lakh crore. Interestingly, even lower-rated NBFCs are actively tapping the bond market, as it provides a lower cost of funds compared to bank loans based on the Marginal Cost of Funds-based Lending Rate (MCLR). While the overall number of bond issuances has decreased by about 7% to 566 in 1HFY25, the total amount borrowed has actually increased. This suggests that companies are opting for larger individual issuances, potentially reflecting a greater appetite for debt financing in the current environment. Looking ahead, the corporate bond market appears poised for continued growth. The combination of lower yields, diversification needs, and robust investor demand creates a favorable backdrop for further expansion. Disclaimer: Personal View #corporatebonds #investing #fixedincome #finance #bonds #India

How to compute period of holding to decide Long term Capital gains for Various assets. 1. Listed share and units if s.t.t. paid 12 months. 2. units of mutual fund having equal to or more than 35% invested in domestic Companies shares 12 months. 3. Units of Mutual fund having less than 35% in domestic companies shares and debt fund, Purchase before 01/04/2023 36 months 4. units of Mutual Fund having less than 35% in domestic companies shares and debt funds, purchased from 01/04/2023 irrespective of holding period short term. 6. debentures of any company irrespective of period of holding always short term. 5. bullions like gold and silver 36 months. 6. immovable property 24 months. 7. unlisted shares 24 months. 8. ulip if equity on maturity all.long term if premium above 2.50 Lakh Identifying few Mutual fund whether debt or equity ,listed on stock exchange. 1. Liquid bees - debt fund 2. zerodha bees-liquid -debt fund 3. nifty 50 bees -equity fund 4. banknifty bees-equityfund. SGBs SGBs are government securities issued by the Reserve Bank of India, and are denominated in grams of gold. Capital gains arising on redemption of the bonds on maturity would be considered as an exempt transfer under section 47(viic) of the Income Tax Act, 1961 and hence, not liable to tax. Surcharge on Cap. gain Surcharge rates of 25% or 37%, will not be applicable to the income which is taxable under sections 111A ( Short Term Capital Gain on Shares ), 112A ( Long Term Capital Gain on Shares ), and 115AD ( Tax on income of Foreign Institutional Investors ). Therefore, the highest surcharge rate on the tax payable for such incomes will be 15%. the complexity to decide is huge and needs to kept in mind. Kindly verify at your end before using this and amendments if any subsequent or ommission. #periodofholding #capitalgain #complexcapitalgain

https://lnkd.in/dDP3YApR With the US Federal Reserve signalling possible rate cuts in September 2024, the Reserve Bank of India (RBI) may follow suit by December as central banks around the world usually take cue from Fed rates. In that scenario, debt funds, which invest in fixed-income instruments, may see fluctuation in yields. So far, India’s bond market has been insulated despite the global monetary easing, thanks to stable macroeconomic fundamentals and favourable demand-supply dynamics. *Demand-Supply Dynamics Favouring Bond Prices* As the domestic policy rates peaked, it created favourable demand-supply dynamics. Explains Venkatakrishnan Srinivasan, founder of Rockfort Fincap LLP, a financial advisory firm: “The demand-supply dynamics in the Indian government bond market have shown marked improvement, driven by a combination of factors. Firstly, the inclusion of Indian government bonds in the JP Morgan Emerging Market Bond Index has significantly boosted foreign portfolio investor (FPI) inflows. This inclusion has enhanced India’s visibility on the global stage, leading to increased demand from international investors who are attracted to India’s growth story. “On the supply side, while the government continues to issue bonds to fund its fiscal needs, the increased demand from FPIs and domestic investors, including banks, mutual funds, and insurance companies, has helped absorb the supply. This has contributed to a more balanced demand-supply equation, reducing the pressure on yields.” This demand-supply equation favours bond prices, with minimal spread between repo rates and 10-year G-Sec yield.

Balancing Equity and Debt: A Timeless Investment Principle✨✨ By Dhirendra Kumar, CEO of Value Research When it comes to investments, many Indian investors have traditionally favored fixed-income instruments like bank deposits, PPF accounts, and post office schemes. This conservative approach, often passed down through generations, has been a cornerstone of our financial behavior. However, the investment landscape has undergone significant change in recent years, pushing the pendulum towards equity investments. Understanding the Shift in Investment Trends:- - Traditional Preference for Fixed-Income: Fixed-income instruments offer stability and predictable returns, making them a go-to option for savings. They also provide tax-saving benefits, making them attractive for long-term wealth building. - The Rise of Equity Investments:Young investors, empowered by easy access to information and online platforms, are now leaning heavily towards equity investments, sometimes allocating 100% of their portfolios to equity. While this shift promises higher returns, it also comes with substantial risks, especially during market downturns. Why Balance is Crucial The article highlights that both asset classes—equity and fixed-income—serve unique purposes: 1. Equity Investments:These are ideal for wealth creation through capital appreciation over the long term. However, equity markets are inherently volatile, and returns can fluctuate based on market conditions. 2. Fixed-Income Investments: These provide stability, predictable returns, and act as a cushion during turbulent market periods. They are particularly useful for meeting short-term financial needs and preserving wealth. The recent volatility in Indian stock markets, marked by a 10% decline, has reinforced the importance of diversification. A balanced approach protects investors from extreme losses and ensures steady growth over time. Key Lessons for Investors 1. Proper allocation between equity and fixed income is the cornerstone of a well-structured portfolio. For example: - A young investor might allocate 70% to equity and 30% to fixed income. - A retiree might reverse this allocation, prioritizing stability. 2. Fixed-income investments act as a stabilizing force, providing safety when equity markets face downturns. 3.Instruments like #PPF not only offer stability but also provide tax-saving benefits, making them appealing for long-term investors. By combining the growth potential of equity with the stability of fixed-income investments, investors can achieve financial success while navigating market uncertainties. #InvestmentTips #FinancialPlanning #WealthManagement #EquityInvesting #FixedIncome #AssetAllocation #StockMarketInsights #PortfolioManagement #InvestmentStrategy #FinancialGoals #RiskManagement #MarketTrends #LongTermInvesting #MoneyMatters #SmartInvesting

Mutual Fund series SEBI (Securities and Exchange Board of India) categorizes mutual funds into several types based on their investment objectives, asset allocation, and risk profiles. Some common types include: 1. Equity Funds: These invest primarily in stocks or equities, aiming for long-term capital appreciation. 2. Debt Funds: These invest in fixed-income securities like government bonds, corporate bonds, and debentures, offering stable returns with lower risk. 3. Hybrid Funds: Also known as balanced funds, they invest in a mix of equities and debt instruments to balance risk and return. 4. Money Market Funds: These invest in short-term debt instruments like Treasury Bills, Commercial Papers, and Certificate of Deposits, providing liquidity and stability. 5. Index Funds: These replicate the performance of a specific market index like the Nifty or Sensex, aiming to match the returns of the index. 6. Sector Funds: These focus on specific sectors like IT, healthcare, or banking, offering investors exposure to particular industries. 7. ELSS (Equity Linked Savings Schemes): These are tax-saving mutual funds that invest primarily in equities and offer tax benefits under Section 80C of the Income Tax Act. These are just a few examples, and there are many other types of mutual funds available in India catering to different investor preferences and goals. Simplified Explanations of different types of mutual funds: 1. **Stock Funds**: These invest in stocks, aiming for long-term growth. They can be riskier but offer higher potential returns. 2. **Bond Funds**: These invest in bonds, offering steady income with lower risk compared to stocks. 3. **Balanced Funds**: They invest in a mix of stocks and bonds to balance risk and return. 4. **Money Market Funds**: They invest in short-term, low-risk securities like Treasury Bills and offer stable returns. 5. **Index Funds**: These mirror a specific market index, making them low-cost and suitable for long-term investors. 6. **Sector Funds**: These focus on specific industries like technology or healthcare, offering targeted exposure. 7. **Tax-Saving Funds (ELSS)**: These invest in equities and offer tax benefits under Indian tax laws. These descriptions provide a basic understanding of the main types of mutual funds available. #amc#mutualfund#mutualfundsahihai#investing#mutualfundseries

Here are the different types of investment that you should know: 1. Fixed Deposits: A safe investment option where you deposit a fixed sum for a set period, earning a guaranteed interest rate. 2. Bonds: Debt instruments where you lend money to a government or company in exchange for periodic interest payments and the return of the principal at maturity. 3. Gold: A traditional investment in physical gold or gold-based securities, offering a hedge against inflation and market volatility. 4. Stocks: Buying shares of a company, giving you ownership and the potential for capital gains or dividends. 5. Mutual Funds: Pooled investment vehicles managed by professionals that invest in a diversified portfolio of stocks, bonds, or other assets. 6. Exchange-Traded Funds (ETFs): Similar to mutual funds, but traded on stock exchanges like individual stocks, offering flexibility and diversification. 7. Public Provident Fund (PPF): A long-term government savings scheme in India offering tax benefits and a fixed return over time. 8. National Pension Scheme (NPS): A retirement-focused investment plan that combines equity and debt instruments, designed for long-term wealth accumulation. 9. Real Estate: Investing in property, either for rental income or long-term capital appreciation. Follow @nevergobrokeinc for more knowledge! #financialliteracy #financialliteracyforkids #financialliteracy101 #literacy ##literacyforlittles #students #fyp #explore #explorepage #financialliteracyforteens #money #debtfree #empowerment #budgeting #investing #credit #saving #learning #nevergobroke

A bond is a fixed-income instrument that represents a loan made by an investor to a borrower, typically a corporation or government. When you invest in bonds, you lend money to the institution issuing the bond. In return, you receive interest; upon maturity, your initial investment is returned. Bonds are vital in a balanced portfolio, offering a predictable income stream and preserving capital. . So, why are bonds important? 🤔 . Bonds provide a predictable income stream, and if held to maturity, you get back the entire principal, making bonds a way to preserve capital while investing. They are less risky than market-linked instruments like equities, making them an ideal choice for conservative investors. . But what’s the difference between bonds and government bonds? 🧐 . While corporations and governments can issue bonds, they are often considered low-risk investments since the issuing government backs them. Conversely, corporate bonds entail higher default risk but compensate investors with higher interest rates. . How can you get bonds? 🛒 . You can buy bonds from the bond market via a broker, through an ETF, or directly from the government. In India, you can start investing in bonds at various securities firms. . How can bonds help you? 🚀 . Investing in bonds can supplement your primary income and preserve your capital. They can help offset exposure to more volatile stock holdings. Moreover, bonds can help diversify your portfolio, reducing risk and potentially increasing returns. . Remember, bonds are more than just financial instruments - they’re tools that can help you achieve your financial goals. So, are you ready to embark on your bond investment journey? 💼💰 . #Bonds #Investment #FinancialPlanning #Bonds #Governmentbonds #finances