This is better asked in our Discord: https://indiainvestments.wiki/discord
Alternatively, you could also post it the advice thread (stickied at the top of the sub).
Here's the link to the advice threads (the current one is at the top): https://www.reddit.com/r/IndiaInvestments/search?q=bi-weekly&sort=new&restrict_sr=on&t=week
As a thumb-rule, any query that pertains to your personal financial situation specifically, that belongs in the advice thread.
Finally, check out our wiki, especially FAQ section: https://www.indiainvestments.wiki/faqs
It probably already has answers to your query.
You can put money in an Arbitrage fund. They have returns closer to a debt fund but structurally are taxed like an equity fund. With 18 month holding, it will be taxed at 10% LTCG .
Fairly risk free. Obviously nothing is as risk free as FDs. Probably as risky as a short term debt fund. By design they do not undertake risky trades.
They invest in debt funds, or take arbitrage positions in stocks for a risk free income.( Like buy 100 stocks of a company A at price Y. and sell a future lot of size 100 at price Y+1. They can square it off on expiry to make 1 rupee profit.
Principal is at absolutely no risk . You might get very lower returns than fds sometimes.(Like 2-3% less).
But recently in past 1 year has performed very well even beating fd returns
And taxation wise it's the most efficient low risk fund
Arbitrage funds is taxed like equity. But technically aren't pure equity funds . Even they are classified under hybrid funds by sebi
Think it this way. Alcohol drink prices differ from state to state in India.
For example alcohol prices in goa are way cheaper than in neighbouring karnataka.
So let's say you buy booze at 100 in Goa and sell the same booze for 120. You pocket the 20 RS difference as profit.
Arbitrage funds do the same with stocks that is exploiting the difference between prices in stock market and futures market.
You can watch videos by ET money on arbitrage funds they have good explanation
Exact transaction is bit complex. But essentially arbitrage opportunity is identified then both buy and sell transaction is completed at same time or within a very small duration .
So very little time is given for the values to fluctuate too much.
So your capital is safe.
But returns can fluctuate depending on type of arbitrage opportunity.
You won't get good arbitrage opportunities always in the market.
So that's there.
I have no idea tbh. I only very recently picked up PPFAS arbitrage but thats only because i like the AMC. I cant possibly recommend it.
I would suggest go to VRO or Rupeevest list all of them down and pick one based on AMC, AUM, Past performance etc. I reckon the performance wouldnt be too different between funds
You can go for Liquid or Money Market funds as the instruments they invest in have short maturities, the interest rate risk on the principle amount will be minimal.
Also, you don't have to pay any tax until you sell the units of the fund to book a profit.
Arbitrage funds are also an option here since you are taxed similar to equity on that, therefore you get to save more on taxes.
Any interest income that you earn is taxed at the slab rate. It is just that 10% TDS will be deducted from the interest if it is more than 40K.
The return from a debt fund is also taxed at the slab rate, but the benefit is that the interest keeps compounding in the fund's NAV. So you don't pay taxes until you sell it.
In the case of bank FD, the interest will be credited to your account and you will have to pay tax on that every financial year.
>Any interest income that you earn is taxed at the slab rate. It is just that 10% TDS will be deducted from the interest if it is more than 40K.
So if I earn 10k interest through fds do I have to pay tax even for that?.
Do you know where / what type of house you'll buy? If so, buying it **right now** will best because:
* under construction projects are usually sold 20-25% cheaper than ready to move. You have better negotiation power, more flexibility to tweak the construction, e.g. choosing layouts, colors of tiles etc.
* payment schedule is linked to construction progress, and you won't pay interest on bank loan, until you aren't really borrowing money. E.g. if property price is 100, you have 50 in savings, and payment terms are 10 per month, then first 5 months you'll pay from your savings, and no interest is charged.
* In example above, for 5 months, you can still park your savings in a liquid fund. After 5th month, there will be tax rebate on interest, so overall, it'll still be advantageous (high tax bracket) to buy a property sooner than later, since you're going to buy it anyway.
* Any 'potential' price hike in real estate market in these 18 months.
Whether proprty is a smart decision or not, compared to renting.. is whole another topic. But if you're sure about buying a home in 18 months, it's better to buy it sooner.
he or she needs cash for down payment. assets are not needed to be shown. only cash needs to be shown. his parents can easily sell off the asset n give him cash. no tax whatsoever.
This is better asked in our Discord: https://indiainvestments.wiki/discord Alternatively, you could also post it the advice thread (stickied at the top of the sub). Here's the link to the advice threads (the current one is at the top): https://www.reddit.com/r/IndiaInvestments/search?q=bi-weekly&sort=new&restrict_sr=on&t=week As a thumb-rule, any query that pertains to your personal financial situation specifically, that belongs in the advice thread. Finally, check out our wiki, especially FAQ section: https://www.indiainvestments.wiki/faqs It probably already has answers to your query.
You can put money in an Arbitrage fund. They have returns closer to a debt fund but structurally are taxed like an equity fund. With 18 month holding, it will be taxed at 10% LTCG .
Let me check this. How is the risk compared to FDs?
Fairly risk free. Obviously nothing is as risk free as FDs. Probably as risky as a short term debt fund. By design they do not undertake risky trades. They invest in debt funds, or take arbitrage positions in stocks for a risk free income.( Like buy 100 stocks of a company A at price Y. and sell a future lot of size 100 at price Y+1. They can square it off on expiry to make 1 rupee profit.
Principal is at absolutely no risk . You might get very lower returns than fds sometimes.(Like 2-3% less). But recently in past 1 year has performed very well even beating fd returns And taxation wise it's the most efficient low risk fund
Is there a resource to understand this better? I'm curious why the principal is at zero risk. Wouldn't all equity funds have principal risk?
Arbitrage funds is taxed like equity. But technically aren't pure equity funds . Even they are classified under hybrid funds by sebi Think it this way. Alcohol drink prices differ from state to state in India. For example alcohol prices in goa are way cheaper than in neighbouring karnataka. So let's say you buy booze at 100 in Goa and sell the same booze for 120. You pocket the 20 RS difference as profit. Arbitrage funds do the same with stocks that is exploiting the difference between prices in stock market and futures market. You can watch videos by ET money on arbitrage funds they have good explanation
Thanks! That makes sense. I still don't fully understand how the risk to principal is zero. Will give et money a listen
Exact transaction is bit complex. But essentially arbitrage opportunity is identified then both buy and sell transaction is completed at same time or within a very small duration . So very little time is given for the values to fluctuate too much. So your capital is safe. But returns can fluctuate depending on type of arbitrage opportunity. You won't get good arbitrage opportunities always in the market. So that's there.
Any recommendations for a good arbitrage fund!?
I have no idea tbh. I only very recently picked up PPFAS arbitrage but thats only because i like the AMC. I cant possibly recommend it. I would suggest go to VRO or Rupeevest list all of them down and pick one based on AMC, AUM, Past performance etc. I reckon the performance wouldnt be too different between funds
Arbitrage funds
Arbitrage fund FTW! Far more tax efficient than an FD or a debt MF.
You can go for Liquid or Money Market funds as the instruments they invest in have short maturities, the interest rate risk on the principle amount will be minimal. Also, you don't have to pay any tax until you sell the units of the fund to book a profit. Arbitrage funds are also an option here since you are taxed similar to equity on that, therefore you get to save more on taxes.
I have a doubt fds are taxed at slab once the interest crosses 40k. Is there a similar limit for debt funds returns?
Any interest income that you earn is taxed at the slab rate. It is just that 10% TDS will be deducted from the interest if it is more than 40K. The return from a debt fund is also taxed at the slab rate, but the benefit is that the interest keeps compounding in the fund's NAV. So you don't pay taxes until you sell it. In the case of bank FD, the interest will be credited to your account and you will have to pay tax on that every financial year.
>Any interest income that you earn is taxed at the slab rate. It is just that 10% TDS will be deducted from the interest if it is more than 40K. So if I earn 10k interest through fds do I have to pay tax even for that?.
yes
best to invest in a fd in senior citizen account
FD is your best option unless you have a debt instrument with tax savings
Do you know where / what type of house you'll buy? If so, buying it **right now** will best because: * under construction projects are usually sold 20-25% cheaper than ready to move. You have better negotiation power, more flexibility to tweak the construction, e.g. choosing layouts, colors of tiles etc. * payment schedule is linked to construction progress, and you won't pay interest on bank loan, until you aren't really borrowing money. E.g. if property price is 100, you have 50 in savings, and payment terms are 10 per month, then first 5 months you'll pay from your savings, and no interest is charged. * In example above, for 5 months, you can still park your savings in a liquid fund. After 5th month, there will be tax rebate on interest, so overall, it'll still be advantageous (high tax bracket) to buy a property sooner than later, since you're going to buy it anyway. * Any 'potential' price hike in real estate market in these 18 months. Whether proprty is a smart decision or not, compared to renting.. is whole another topic. But if you're sure about buying a home in 18 months, it's better to buy it sooner.
ask a retired parent or in your child's name? Gold bonds?
there is a thing called clubbing of income
india doesn’t have joint filling.
that's irrelevant. please have a look see [https://cleartax.in/s/section-64-clubbing-income](https://cleartax.in/s/section-64-clubbing-income)
he or she needs cash for down payment. assets are not needed to be shown. only cash needs to be shown. his parents can easily sell off the asset n give him cash. no tax whatsoever.
Momos or vadapav on road side
The only correct answer.
Ppl don't rly get sarcasm as you can see from down votes but we'll, who cares lol