Today Update

What is a Covered Call Strategy? Let’s consider that you are an investor or you own a property  Now  We will go over a Covered Call Strategy to see how you can profit. In property contest : Imagine you own a  property  and  want to rent it out and even ready to sell the property at predefined price. In this case you will bet on a particular price  and if the price is  achieved  or over  achieved  then you have to sell the property at predefined price.    Imagine you own shares of a company. You feel the stock may rise in the long run but not much in the near term. You would still like to earn an income from the shares in the near term though.  Suppose you are holding 100 shares of ABC company trading at Rs 50 in May. You are bullish on your holdings but are also worried about the downside i.e losses if there is fall in the price. In such a scenario, you can implement a Covered Call option strategy by selling...

What is IDCW in Mutual Funds? Recently I have been answering the query regarding new abbreviation in Mutual fund i.e., IDCW ‘IDCW’ is abbreviation of ‘Income Distribution cum Capital Withdrawal’. Mutual fund investors have come across this new term IDCW when SEBI changed the term “Dividend Option” in mutual funds to “IDCW” in April 2021. If you had invested in any mutual fund scheme under dividend Option, you will now notice IDCW next to the mutual fund scheme name in your statement of account (SOA) sent by the AMC. This is only a change in terminology and as such there is no impact on investors. Why SEBI changed Dividend to IDCW? Income Distribution cum Capital Withdrawal or IDCW  refers to distribution of income of a mutual fund scheme, which may include both dividends paid by stocks and capital gains made by selling underlying stocks from the scheme portfolio. However, SEBI also wanted to emphasize that this income is coming out of the investor’s investment val...

What are SIPs and how it helps in wealth creation? As we have already discussed in my previous blog about SIP Investments, I am sharing below post as reminder. Over the past twenty years or so, mutual fund  systematic investment plans  have gained tremendous popularity and have one of the most favored investment choices for retail investors in India. There are a number of advantages in the SIP mode of investing:- The biggest advantage SIP is enabling disciplined investing from your regular monthly savings. You do not have to wait to accumulate a large savings corpus to start investing in mutual funds. You can start with a SIP of just Rs 1,000. Investing small amounts systematically over long periods of time can create substantial wealth for investors through the  power of compounding . We will discuss power of compounding in more details later in this post. The second major advantage of SIP is the  convenience ....

REIT (Real Estate Investment Trust) is just like mutual funds that collects money from investors and invest in real estate properties both commercial and residential to generate fixed income through rents. Simply put, with REITs, investor can invest in real estate without owning it physically. REIT can earn rent on monthly, quarterly, half yearly or yearly basis. In India, REITs pay dividend on half yearly basis. REITs can invest in properties that are completed or 80 percent completed. REIT is relatively new in India but well known in developed markets such as US. In 2014, SEBI came out with regulations on REITs, which was last amended in April 2018. Recently, SEBI has reduced minimum investment amount in REITs from Rs.2 lakh to Rs.50,000 to attract retail investors. REITs are liquid as investors can buy or sell units of REITs on stock exchange platforms such as NSE and BSE. Structure of REIT Like an AMC, REITs too require sponsors to establish the trust. Other key stake...

If you are averse to taking risk (a conservative investor) and want to earn assured returns from a tax-saving instrument, these are your options: Public Provident Fund The  Public Provident Fund  or PPF is a scheme is framed under the Public Provident Fund Act, 1968 and is a government-backed long-term saving scheme. It is one of the safest investment instruments---the money invested in a PPF account remains safely yours for life! For this reason, PPF is one of the most popular investment avenues in India today, not only for tax planning but even for retirement planning. PPF enjoys a favourable tax status, i.e. Exempt-Exempt-Exempt (E-E-E). This means, contributions are eligible for tax deduction under Section 80C, the interest earned is tax-free, and maturity proceeds are exempt from tax. However, money invested in PPF is subject to a lock-in period of 15 years. During this tenure, you earn a decent tax-free rate of return (currently 8.0% p.a. compounded annually) ...

Here are 10 things to about income tax benefits, interest rate, maturity and other features of National Savings Certificate (NSC) and 5-year tax-saving bank fixed deposit : moneywiseamc.com 5-year income tax saving bank fixed deposits (FDs) and NSC or National Savings Certificate are among the savings options that offer income tax benefits under Section 80C. Investment in 5-year tax-saving FDs and NSC up to Rs 1.5 lakh a year qualifies for tax deduction. The amount so invested is deducted from gross total income to arrive at taxable income. The interest rates on small savings schemes like NSC and PPF are reviewed every quarter. Both NSC and tax-saving FDs have a lock-in period of five years. Some banks like SBI offer income tax saving bank fixed deposits for up to 10 years. But the lock-in period is five years. 10 things to know about NSC and 5-year tax-saving bank fixed deposit (FDs): 1) Currently,  NSC fetches an interest rate of 7.6% , compounded annually. In other wo...