#best demat account for minors

[investmentspect]

5 Things to Know Before Opening a Demat Account

To enter the world of investing has become as easy as making tea. With just a few right ingredients your tea is ready, likely with just taking into consideration a few facts you are ready to dive into the pool of trading by opening a demat account. So, hurry up and pull your sleeves up to know amazing whereabouts before sailing the ship of trades for an enchanting voyage.

Here are 5 interesting facts for you to know the fundamentals of Buying low and selling high.

Open in Different Modes

Demat accounts can be opened in various modes that are in online and offline presence. Online mode provides more convenience and comfort, allowing you to complete the process from the comfort of your home. Whether hills or beach you can with a proper internet connection you can easily open a demat account online at your comfort. You can also open a demat account offline by physically visiting the Depository participants' office and submitting the required documents in person in order to open the demat account. Choose the mode that suits your preferences and comfort and acts more reliable to your senses.

Different from a Trading Account

It's crucial to note that a Demat account is different from a trading account. While a Demat account is like a digital warehouse for your securities, a trading account is where the actual buying and selling of securities takes place. When you buy or sell securities or basically hold trade of securities, the transactions are made through your trading account, but the securities are held in your respective demat account. These two accounts work in accordance together to open the door to your investment opportunities.

Cost and charges

You can open a free demat account but maintaining a Demat account comes with specific costs and charges. These can include account annual maintenance charges (AMC), transaction fees, and many more. Kindly understand to gain a clear understanding of these charges before selecting the right depository participant. It's wise to compare fee structures across different  Depository participants to find one that fits your appropriate budget.

You Need a Broker

To open a Demat account, you need to opt for the services of a broker because you cannot open a Demat account in India directly with the depository participant. A broker performs as an intermediary between the individual and the stock exchange. They usually facilitate the buying and selling of securities on your respective behalf. So, in order to open a demat account select a broker wisely, as they play a pivotal role in your investment journey.

Minor

If you're below 18 years old and hence considered a minor, fret not, you can still open a Demat account right away. However, you'll need a guardian person to handle or operate it until you hit maturity. Generally, the father of the child or in his nonappearance a  mother is considered. In the absence of both father and mother, the guardian can be easily appointed by court. Once you turn 18 and enter adulthood, you'll have full control and access to your demat account.

Summing  up

Now that you know how to sail the ship by taking a few facts into consideration, hoist the flag high signifying embarking on the beautiful voyage of investments for a brighter future. So choose the Best Demat account in India for long-term investment aligned perfectly with your investment goals.

Here's to smooth and abundant treasures, and a prosperous financial future. Happy investing, mates!

[margin-trading]

How to Invest in Stocks: Quick-Start Guide for Beginners

A stock exchange is a place where stocks are publicly issued and traded. A share serves as a tradable document that confirms your ownership of a company. On the exchange, buyers and sellers also exchange these documents. To facilitate public trading, a formal market has been developed where investors can buy and sell their shares.

The Indian stock market is a great place to start investing, especially for beginners. It presents an excellent opportunity for people who want to get into the market without having to worry about the technicalities of buying and selling stocks. The Indian stock market offers investors many advantages. The procedure of investing in stock market for a newbie is quite easy and simple. It is important to know your investment horizon and financial goals before you start investing in the stock market. As a newbie to the stock market, having advanced tools, expert recommendations, and detailed real-time stock analysis data at your fingertips is a huge factor in minimizing risk.

As a beginner, you can start trading shares with as little as 10 rupees. But it is convenient to invest a decent sum as a newbie, say 10,000 rupees. After you know the market and gain more confidence, you can gradually increase the amount.

You can also invest in Multibagger shares available from Rs.100. Buying undervalued stocks can be beneficial as the returns you will earn are greater than any large or mid-cap company. Anyone can invest in stocks under Rs. 100 in NSE as the stock prices are very doable.

The process of how beginners invest in the stock market also involves understanding the process of buying and selling securities.

The first step is to choose the type of investment from several available options, e.g. stocks, mutual funds, bonds, derivatives, etc. It is best to understand each option before deciding.

A Demat account is essential for storing your securities electronically. Therefore, it is mandatory to open a Demat account before investing. It is advisable to compare and analyze several brokers before choosing one to open a Demat account.

Research into your chosen investment type is necessary to mitigate losses and increase profit potential. You can research and study your chosen value through newspapers, TV stations or information provided by the stockbroker.

You should invest in stocks or other investment products after setting an investment objective. The goal ensures you select an ideal investment horizon, investment amount, security and risk tolerance. Once you have invested in a security based on an investment objective, it is important to regularly monitor the portfolio. Monitoring helps you understand the performance of your investments, reduce losses and identify the stocks that are best suited for future investments.

The stock market goes through periodic changes that increase or decrease the price of listed securities. Understanding the direction (trend) of the market is essential to staying up to date with current developments in the stock market. This can enable better decisions regarding existing securities and future investments.

Trading has the potential to become a full-time career and more and more candidates are looking for jobs in the stock market. There is no minimum age to invest in the stock market; both minors and adults can invest.

[stockifyinvestment]

101 Guide To Buy Unlisted Shares In India

Unlisted shares are newfag among Indian equity investors. The shift from listed to unlisted stocks can easily be seen in the last two to three years. As the demand for unlisted shares in India is surging, many companies/ firms are preparing to become public. Since unlisted stocks are neither recorded on stock trade nor monitored and regulated by the Securities And Exchange Board Of India (SEBI), they come with higher risk, unlike listed stocks. However, unlisted stocks come with excellent growth opportunities for investors who want long-term gains to diversify portfolios. 

If you are a potential investor looking to buy unlisted shares, this will be a helpful guide for you. Here we will talk about how to buy unlisted shares in India. 

What is an unlisted share? 

Unlisted shares or over-the-counter (OTC) securities or any other financial instruments are shares that are available for sale on over-the-counter marketplaces. Investing in equities in unlisted markets/ grey markets is riskier than listed stocks; however, it can be profitable for long-term investment per the market analysis. Moreover, unlisted or pre-IPO stocks are not traded on any recognized stock market. It is because similar or younger businesses may not be able to comply with specific standards like market capitalization, listing costs, etc. 

Many big companies like BYJU’s, OLA, Flipkart, and PhonePe are offering unlisted shares for potential buyers to invest in to gain maximum profit. 

Investing in unlisted companies is not a cupcake process; you need proper guidance when you route towards such an option. 

How to buy unlisted stocks? 

As aforementioned, you can’t buy unlisted stocks on the stock exchanges. So, if you want to buy unlisted shares online, you must follow the ways mentioned below. 

Buy directly from promoters 

There are many private companies that allow investors to invest directly in their firms by purchasing unlisted shares from promoters. For that, you will make connections with the promoter, investment bank, and wealth manager in allocating funds so they can assist you with price discovery. 

Buy from existing employees 

Undoubtedly, many companies offer stock ownership to their employees, and you can connect with these employees willing to sell their shares at a specific price. Further, you can take help from unlisted shares brokers to connect with employees of the companies who are willing to sell their shares. This is one way of buying unlisted shares in India from top companies. 

Investing in pre-IPO shares 

Pre-IPO refers to the buying and selling of shares of a company before it goes public or gets listed on the stock exchange. There are plenty of companies that offer platforms for potential investors on which they can trade unlisted shares. This way, you will be able to get the unlisted shares of the company directly delivered to your Demat account even if the transaction is off the record. Want to learn more about pre IPO or unlisted shares, check out the frequently asked questions here.

Invest in PMS and AIF schemes 

PMS stands for Portfolio Management Services, and AIF stands for Alternative Investment Funds. PMS refers to a customised portfolio of stocks that are operated by professional portfolio managers based on specific investment objectives. 

AIF, on the other hand, refers to a pooled investment for high-net-worth individuals and institutional investors. Today, many companies offer PMS and AIF schemes to capture pre-IPO valuations and profits from a rise in valuation following a listing. 

The aforementioned are some of the best ways to invest in unlisted shares in India. Whichever method you like, just follow it. 

Mistakes to avoid when buying unlisted shares 

Undoubtedly, unlisted shares come with risk; if you’re not careful about your investment, you will end up making huge losses due to horrible mistakes. Whether it’s a minor or a big mistake, they tend to be costly and risky. Therefore, we’ve mentioned major mistakes that you must avoid making while investing in unlisted shares in India. 

Avoid following ‘the herd’ mentality. Firstly, do your homework and research well about the company before investing. 

If you’re getting shares at a low rate, don’t jump all of a sudden. There might be a chance that an existing investor would be taking an exit at a lower price. 

Do not plan to invest in the unlisted shares for a short-term investment horizon. Do not forget that unlisted shares prove to be profitable at the time when the company grows and establishes itself in the market. Have patience and a long-term perspective. 

Also, do not invest in unlisted shares without taking advice from a trusted unlisted shares broker. In case you need advisory services, Stockify is the best service provider for you. 

To conclude, unlisted shares are considered risky, but they offer the potential to earn a profit/ significant return upon the company’s listing on the stock exchange. Further, if you’re looking for the best place to buy unlisted stock online, Stockify is your top solution. Connect with them now. 

[greenportfolioo]

What Is A "Smallcase Investment"?

For ordinary investors, smallcase is an interesting new phenomenon. A smallcase invests in a diversified portfolio of equities or ETFs selected by the smallcase team, outside advisers, or portfolio managers. Know all about the best smallcase investment for long term.

Create or subscribe to a smallcase and acquire the whole portfolio with a single click. Track the transaction in real-time and keep tabs on performance.

Changes to the portfolio are announced by email and a notice on the smallcase app. The user signs in, selects 'Rebalance,' and then clicks 'Confirm.' The smallcase platform uses your regular trading account to make the relevant buy and sell orders and notify you when the trades are completed.

Describe small cases:

Minor cases are collections of securities or ETFs (marketplace funds) chosen according to an investment strategy, theme, or goal. Investors can examine numerous small cases and participate in the bundle of funds that best meets their needs through a Demat account of one of the several brokerage houses.

Who oversees the small cases?

SEBI Registered specialists that pick and shortlist each basket's components using strict proprietary filters create Small cases. Finding the ideal small case is like looking for a needle inside a haystack with over 250 options. Before you complete the best performing small case, you must consider the subject, technique, volatility, bare minimum, free or commercial (fee-based), etc.

What is the difference between smallcase and mutual funds if they both invest in stock portfolios?

Smallcases and mutual funds have four main differences

You hold mutual fund units but not the underlying equities in the mutual fund. If you purchase a smallcase, you own the stock in the company.

Equity, The holdings of mutual funds,are only required to be disclosed once a month, so you may not always be aware of what your fund holds. Because your assets are in a Demat account, you always know precisely what you possess with Smallcase.

An investor who buys and sells mutual funds does not make any money in the short or long term. In the instance of Smallcase, all earnings are subject to capital gains taxes since you are purchasing and selling stocks directly.

The most noticeable distinction between mutual funds and smallcases is the user experience

Investors in mutual funds often have the following experiences: Order before the cutoff time for that day's NAV, then wait two days for the units to show up in your Demat or on the AMC's website. To leave, use the same steps you used to enter. Most investors use a monthly email with a passcode pdf to follow the NAV's movement.

A comparison between streaming Netflix shows on-demand and waiting for DVDs in the mail to arrive may be likened to the smallcase user experience against mutual funds for digital natives. This was the initial Netflix business strategy for those born after 2000.

For many first-time investors, the conventional narrative would be that smallcases are preferable to mutual funds because of their user-friendly design and clever marketing.

That's precisely what they are in a variety of ways. Remember that this isn't always true for everyone or in every situation. Consider the following five factors before making an investment decision in a smallcase, whether you plan to subscribe to one or already have.

[truemindcapital]

Where do we stand in the equity market cycle?

Sentiments of greed, fear, and confusion are transient in the equity market. The sentiment cycles are permanent.

Most of us have come across the following chart of the sentiment cycle. For those who are uninitiated, the below chart represents the cycle of greed and fear in any asset class with varying degrees of emotions.

Sentiment cycles move from one extreme of greed to another extreme of fear which takes valuations also to extremes from their long-term averages.

At the extreme of greed sentiment (which coincides with steep valuations), the risk-reward ratio of investments is highly unfavorable i.e., lower potential upside with higher potential downside risk.

At the extreme of fear sentiment (which coincides with dirt-cheap valuations), the risk-reward is highly favorable i.e., higher potential upside with lower potential downside risk.

In this blog, I am attempting to understand where do we stand in the current market cycle.

In my previous blog on market cycles, I highlighted the following 5 observations during market peaks:

Retail participation is huge. People with very less knowledge about stocks and most risk-averse FD investors start putting money in equity markets.

Newspaper headlines scream with euphoria about new peaks achieved by markets (and prediction of higher peaks).

There is utter rejection/ridicule of thought or statement that markets can decline by more than 20%.

The majority of the stocks start trading at valuations much above their historical averages.

A melt-up rally (usually more than 50% from the lowest market level in the last one-two-year period).

Now, let us see how many observations points we are checking currently.

Observation 1

Huge Retail Participation: This is something we all have observed in our circle over the past few months. Many of our friends, colleagues, or neighbors who have always preferred FDs and safe investment options have started investing in the stock market – either directly or through mutual funds.

A lot about it has been written in news with data on the surge in new demat/trading accounts being opened in the last 1 year. Some people who were earlier in jobs have now become full-time traders.

According to the industry data, retail participation in stock market trading has gone up from 33% in FY16 to 45% in FY21.

Not just equity, a huge participation of retail can be witnessed in speculative assets like futures & options, and cryptocurrencies to name a few.

Thus, we can safely say, the first point is checked.

Observation 2

Newspaper headline scream with Euphoria: Any regular reader of the business newspapers can validate that the news of strong bull run and predictions of the market achieving further highs are quite regularly over the past few months. Here is the front page of Economic Times, 1st Sept 2021 edition.

Do I need to say more? So, this checks our second observation point.

Observation 3

Complete rejection of any thought of market correction: Relentless market run creates a recency bias in the minds of many people. They assume that the trend over the last few years will continue and any major correction in the market is a distant possibility. That’s why many investors prepare a trap for themselves as any minor correction is looked like an opportunity to invest more and overexpose the portfolio to already expensive valuations. Sometimes, what is considered to be a minor correction snowball into a major correction, and then there is nothing left on the table to take advantage of extremely cheap stock prices.

I used to hear from investors before the covid crash last year that 20% correction is not possible (and that actually didn’t happen for almost 4 years) and I am hearing the same over the past few weeks.

If one has to look at the PE ratio graph, there is an absence of volatility on the downside from long-term averages since 2016. The trend only briefly got disturbed for a few months last year. If we see the period prior to 2016, there was good enough volatility in the market around long-term averages which is how markets normally behave.

Observation 4

Extreme Overall Market Valuations: Market valuations are expensive is very common knowledge now. Though, some might not be knowing how expensive they are and others justifying the case for sustained higher valuations.

Let me share some valuation metrics to get a sense of high expensive today’s markets are.

a) Sensex is currently trading at 30x TTM (trailing twelve months) PE multiple, much above its long-term average of 19-20X. Any investments that are done in Sensex at PEs of more than 25x have delivered abysmal returns even over a 10 years horizon.

b) P/BV multiple is at the highest level in the last 13 years.

c) Indian equity market is the most expensive in the world.

d) Global Market cap to GDP ratio is at a record high. All the observations at market peaks are not just for the Indian markets but it’s a global phenomenon. The global market cap to GDP ratio is the highest in the last 20 years.

Aggressive money printing by central banks has inflated many asset classes all around the world.

Bank of America has projected negative returns over the next 10 years on US Equity Benchmark Index – S&P 500 owing to expensive valuations. You can look at the forecasted return vs actual return till 2011.

Global markets are very closely intertwined with each other. Any decline in US markets will have an impact on all the equity markets globally.

Observation 5

A melt-up rally: The Indian equity market is up 124% from its March low last year. Past two bubble bursts have been preceded by a sharp melt-up rally. How far it will go before the burst is anybody’s guess.

We are mostly checking all 5 observation points which are indicative of market peaks. The observation list is definitely not exhaustive but captures some of the most common key parameters.

Although it is very difficult to put a finger on exactly where we are in the market cycle, my best guess is we are in the zone of euphoria.

Many of us nod in affirmative to the logical sense of investing in the market cycles but most of us continue to invest and not reduce our equity exposure when markets are extremely expensive.

Why most of us do not follow the logical steps of buying low and selling high as represented by market cycles? Why do the majority of people end up investing at high market levels and exit at low market levels? Because we tend to think that emotion of greed & fear affects others and what we are doing makes perfect sense at the moment. And also, the majority of us lack the patience to implement logical investment plans with discipline. Without patience and discipline, long-term investment success is just a mirage.

Unfortunately, emotions of greed and fear of missing out (FOMO) are so strong during a relentless market rally, especially when our friends, neighbors, and strangers are sharing how they have made quick money from the stock market, that our mind starts justifying getting on the bandwagon. Our emotions possess our minds at extremes, take over our ability to think logically and we justify our actions of investing with such reasons:

– The market will not fall. Even if it does, it would be a minor correction and we will be back on the uptrend.

– I am investing for the short term and when I will sense a correction, I will exit immediately.

– This time it is different. High market valuations will sustain for a long time to come.

– I am in for the long term and not bothered by minor short-term corrections.

These are the exact reasons given to justify investing during every market peak and before every market crash.

“History does not repeat itself but it does rhyme.” Mark Twain.

Please note that when we say the markets are in a very expensive zone or closer to their peak, it doesn’t mean that it will correct sooner or it won’t get more expensive. Markets can continue to remain expensive for a long time and reach more dizzying heights. The key point is that any investments at current market valuations have very limited upside potential but very high downside risk.

And guess how many could successfully exit at the very top every time – I am yet to find that person. Perfect exit is an illusion we entertain by overestimating our abilities to time the market. Those who believe in a perfect exit, I wish them good luck.

For others, it’s important to follow a tactical asset allocation plan with utmost discipline to protect the portfolio on the downside and enjoy the upside returns.

Truemind Capital Services is a SEBI Registered Investment Management & Personal Finance Advisory platform. You can write to us at connect@truemindcapital.com or call us on 9999505324.

[akankshasmishra]

What Are Shariah Compliant Mutual Funds?

Shariah Law is a law for Muslims mentioned in the Quran and the hadith. It restricts its followers from doing a specific kind of business. Investing in mutual funds might be a breach of certain rules.

To encourage this minority to invest in funds, multiple companies have come up with mutual funds that completely abide by the Shariah Law. So, here we will read all about the Shariah Compliant Mutual Funds that fulfill their interests.

India has 6 main religions with Muslim, Sikh, Jain, Christian, Buddhist, and Zoroastrians having minority status. Each minority has its own beliefs and rituals, which they follow. Even in investing, there might be some situations where putting money in a scheme might be a breach of a rule/law mentioned in any of the religious texts.

Which Shariah Compliant Mutual Funds Are Available In India?

S&P was among the first to launch Shariah Mutual funds in India with the following names

S&P CNX 500 Shariah

S&P CNX NIFTY Shariah

But currently, three schemes are offering Shariah Complaint Mutual Funds:

Tata Ethical Funds: – The scheme from TATA is best for investors looking for diversified investments. This is also great for people with less or no stocks and banking exposure. These funds give good returns in the long term. It is excellent for people wanting to invest in Equity and Equity related funds complying with Shariah law.

Taurus Ethical Funds: – Similar to TATA ethical funds, these funds also comply with shariah law and invest according to the rules mentioned. They give great returns in long terms and also bear the low risk.

Nippon India Shariah Bees: – Nippon India ETF generates money by investing in indexes similar to Nifty 50 Shariah Indexes. People seeking to invest for medium to long-range invest in these funds to obtain good profits. As these are ETF funds, for investing in it you need to have a Demat account. They are almost a carbon copy of S&P Nifty 50 Shariah; people having prior investments in it will be quite happy to invest in Nippon India Shariah Bees.

Which Of The ETF/Mutual Funds Is Right For Me?

Each of the mutual funds has its own set of features, making it usable for different kinds of people. Nippon India Shariah Bees is the ideal for choice for people who want to invest in Nifty 50 and wanting to get stable results for an extended period of beating inflation.

Nippon India Mutual funds require you to make a Demat account, and it is also low on liquidity because of the low trading values in ETF.

The other two Taurus and TATA ethical funds comply with the Shariah Law and give good returns. The investments are diversified with equity and equity-related funds with different market caps. You also don’t need to open a DEMAT account for investing in Shariah Mutual Funds.

Who Can Invest In Shariah Compliant Mutual Funds?

Shariah Compliant Mutual funds are compliant with shariah law. There are restrictions implied which are to be followed by every Muslim.

These are brought up mostly by the people following Shariah law or Muslims, but there are no restrictions as per the funds rule. Any Indian Citizen, NRI, or HUF’s are permitted to invest.

Minimum And Maximum Investment For Shariah Compliant Mutual Funds?

If you are trying to invest a lump-sum amount, then the minimum investment is 500Rs, and if you are trying to invest in SIP, then the minimum investment is 100Rs, which is invested monthly.

With respect to the maximum amount, there is no limit howsoever, on how much money you can invest.

What Is The Benchmark?

The benchmark used to compare Shariah mutual funds is S&P BSE 500 index. It compares the performances of the shariah funds with other funds.

They are specially designed to track the market performances of Shariah Mutual Funds.

Features Of Shariah Compliant Mutual Funds

According to Shariah Law Muslims cannot invest in all types of mutual funds; it has some restrictions for them to follow. Shariah-compliant mutual funds invest under Islamic boundaries.

1. Muslims are not allowed to invest anywhere involving harming people, either physical or emotional, or companies selling weapons, companies that harm the environment. Hence, Muslims are forbidden from investing in companies making a large amount of income using the sale of tobacco, drugs, alcohol, or weapons.

2. Muslims are also bound to avoid interest or Riba. Earing interest through any unfair means is considered as an engagement of war against god. So shariah funds avoid all the types interest, and the appointed Shariah Board distributes the interest to the poor and needy one’s

3. Mutual funds with a high level of risk are completely avoided, equity debt funds are also not included.

4. Shariah Mutual Funds also does not include investment in fixed -income streams.

5. Any individual is permitted to invest in Shariah mutual funds. It is a common misconception that only Muslims are allowed to invest.

Restrictions According To Shariah Law

For a mutual fund to be considered as a Shariah Compliant Mutual fund, certain restrictions have to be followed by the funds.

Debt to Asset Ratio: – It cannot be invested in funds where the total debt is one fourth or greater than its total assets.

Interest-Free Companies: – There are no companies that do not earn any income through interest; however, companies earning up to 3% interest are considered eligible to get invested.

Restricted Business: – The funds are not eligible to get shares of the company getting a major portion of their income through the sell of liquor, drugs, gambling, nightclubs activity, etc.

Tax Benefits On Shariah Compliant Mutual Funds

Shariah-compliant mutual funds currently do not enjoy any tax benefits and the interest earned is taxed normally according to the prevailing tax rates.

Interest earned within 1 year is considered as short-term gains and are taxed at an interest rate of 15%. For gains up to 1,00,00Rs, they are treated tax-free. In the case of long-term gains where the period of holding is greater than 1 year, the earnings are taxed at an interest rate of 10%

In the case of investments in gold funds, the earnings are considered as long term if the period of holding is greater than 3 years. If the time of holding is less than 3 years, then they are considered as short-term investments.

Shariah Compliant Mutual Funds Schemes In Detail

1. TATA Ethical Funds:

This scheme was launched in 1996. The TATA funds invest in a diversified company based on the shariah law. All the mentioned schemes have a benchmark of Nifty 50 Shariah TRI.

Scheme strives to provide medium to long- term capital gains by investing in equity and equity-related instruments following shariah laws of well-researched value and growth-oriented companies.

Types Of The Plan You Can Select

Regular Plan (For applications brought by the Distributors):

Growth

Dividend

Direct Plan (For applications not availed through Distributors):

Growth

Dividend

The minimum amount for transactions:

Regular Plan & Direct Plan:

Minimum Amount for Purchase: Dividend Option: Rs. 5,000/- and in multiples of Re. 1/- after that. Growth Option: Rs. 5,000/- and in multiples of Re. 1/- after that.

For additional investment Rs. 1,000/- and in multiples of Re. 1/-.

The repurchase or switches from one scheme to another request can be made for a minimum of- Rs. 500/ or minimum of 50 units.

2. Taurus Ethical Funds:

Taurus Ethical funds are also popular due to its hassle-free application and easy terms

Types Of Plan

They come with 2 plans

Regular Plan: This Plan is for investors who wish to do their investment via any distributor.

Direct Plan: It shall be available for such investment applications that are not routed through a distributor.

All the features of the Direct Plan under Scheme like the investment strategy, risk factors, facilities offered load structure, investment objective, asset allocation pattern, etc. will be all the same except for a lower expense ratio in the scheme.

Brokerage to distributors will not be charged under the Direct Plan

Minimum Amount For Application:

Purchase: 5000/- and in multiple of 1/- after that

Additional purchase: 1000/- and in multiple of 1/- after that

Redemption can be done for any amount or any number of units

Nomination Facility:

Investors should use for the nomination facility to avoid hassles or any problems in case of unprecedented events about to happen in the future. The nominee shall receive the Units only after the death of the owner

3. Nippon India ETF India Shariah BeES

Similar to the previous two schemes they also comply with the Shariah principles.

The aim of the Nippon India ETF Shariah BeES scheme is to provide returns that closely represent to the total returns of the Securities and companies as represented by the Nifty50 Shariah Index. They do so by investing in the same proportion as done in the index.

Minimum Investment:

Through Stock exchanges:– 1  unit and then in it’s multiple

With mutual funds:– In creation unit size viz 10,000units and it is multiple;

In accordance with its investment objective, Nippon India ETF Shariah BeES only invests in Securities or funds, which are represented in the Nifty50 Shariah Index.

However, Nippon India ETF Shariah BeES is not a Shariah-compliant scheme. In some regard, Nippon India has not appointed a Shariah board and currently does not follow any process for purification of the Shariah dividend.

What Is Shariah Law?

Shariah is the fundamental concept of Muslims, can be said as its law. It is looked upon as the god’s expression for Muslims i.e. how they should behave, and for that certain duties are to be followed by all the people believing the religion.

Ritual practices such as daily prayers, almsgiving, fasting, pilgrimage are the main constituents of Sharīah. They are ethical standards for Muslims on what one shall do and what one should refrain from doing.

What Does Investing Means as Per Shariah Law?

Shariah Law puts specific rules for Muslims on Investing:

High risk: – Muslims are not permitted to gamble or do any sort of gambling where high risk is involved, and if anyone does so, this act is considered as a sin. In short, Muslims are not permitted to enter business with high risk or gamble your money.

Restricted business: – Muslims are not allowed to carry or get involved in some specific business. These businesses include gambling, smoking, tobacco, and drugs. Even investing in companies manufacturing them is considered an immoral and sinful act.

Ban On Payment of Interest: – According to Shariah Law, taking a loan against interest is considered unlawful, and it is considered unfair and unjust to pay interest. Solutions for this can be a partnership or ownership of a business to get funds.

Frequently Asked Questions(FAQs)

1. What are the people who can invest in Shariah-compliant Mutual Funds?

Although Shariah Mutual Funds comply and abide by the rules mentioned in Shariah Law. There are no restrictions that laid on the person investing in the funds. Any Indian Citizen, NRI, or HUFs are eligible to invest.

2. Are Their any Tax benefits under the scheme?

No, currently there are no tax benefits to be availed under the scheme and are taxed similar to any other mutual funds scheme.

3. What is the minimum amount that has to be invested in the scheme?

The minimum amount ranger from company to company, but generally, this amount is Rs 500 for a lump-sum amount and Rs 100 in SIP investments.

4. Can a person from other religions invest in Shariah complied Mutual funds?

There are no restrictions on the caste, creed, or religion on the person investing in the funds. Any Indian citizen NRI or HUFs can invest in Shariah Mutual Funds.

5. What is Nippon India Shariah Bees?

Nippon India ETF generates money by investing in indexes similar to Nifty 50 Shariah Indexes. People seeking to invest for medium to long-range invest in these funds o obtain good profits. As these are ETF funds, for investing in it you need to have a Demat account.

6. What is Tata Ethical Funds?

TATA Ethical Funds is best for investors looking for diversified investments. This was also great for people with less or no stocks and banking exposure. These funds give good returns in a long term. It is great for people wanting to invest in Equity and Equity related funds complying with Shariah law.

7. Which is the best scheme among Tata Ethical Funds, Taurus Ethical Funds, and Nippon India Shariah Bees?

Limited schemes are abiding by the Shariah law and Nippon India Shariah Bees, Tata Ethical Funds, and Taurus Ethical Funds are among them. You should deeply look upon each of the schemes before deciding to invest in one of them.

8. What are the main restrictions for Muslims to invest in?

Muslims are not allowed to invest anywhere involving harming people, either physical or emotional, or companies selling weapons, companies that harm the environment. Hence, Muslims are forbidden from investing in companies making a large amount of income using the sale of tobacco, drugs, alcohol, or weapons.

9. If the debt to asset ratio is greater than 25%, will the companies invest in it?

According to restrictions by Shariah Law, the companies cannot invest in companies that have a debt to asset ratio greater than 25%.

10. How are Shariah-compliant mutual funds taxed?

Interest earned within 1 year is considered as short-term gains and are taxed at an interest rate of 15%. In the case of long-term gains where the period of holding is greater than 1 year, the earnings are taxed at an interest rate of 10%. For gains up to 1,00,00Rs, they are treated tax-free.

Bottom Line

The total AUM(Assets under Management) for all the three companies are very less as compared to the total market value of mutual funds and the total number of investor is also very less. In the future, multiple companies need to step upbringing in multiple schemes attracting people to invest in it.

Shariah-compliant mutual funds abide by all the rules mentioned in the Shariah Law. They do not invest in companies dealing with prohibited products. Earning interest and speculation is also not done by the fund providers. They are very good mutual funds, giving a good option for investing for Muslims without violating any religious laws

source http://invested.in/shariah-compliant-mutual-funds/

source https://investedindia.wordpress.com/2020/09/29/what-are-shariah-compliant-mutual-funds/

[sunshineweb]

7.75% Government of India Bond Vs PMVVY Vs SCSS – Which is the best?

Many retirees are now in a confusing mode of which one to choose among 7.75% Government of India Bond Vs PMVVY Vs SCSS. Which is the best option to select?

Before judging the products, let us first understand the features of 7.75% Government of India Bond, PMVVY and SCSS in detail.

Features of 7.75% Government of India Bond Vs PMVVY Vs SCSS

# Features of 7.75% Government Of India Savings Bonds (Taxable)

# HUF and Individual (Single, Jointly, Either or Survivor, or on behalf of minor as a Guardian are allowed to invest in these bonds.

# This bond is not available for NRIs.

# Minimum amount is Rs.1,000 (face value of the bond) and there is no maximum limit for investment.

# The Bonds will be issued, in Demat form and credited to the Bond Ledger Account (BLA) of the investor/s on the date of tender of cash or the date of realization of draft/ cheque.

# Interest will be payable on half yearly basis. There is a cumulative option also available.

# It is a 7 years bond. Premature withdrawal is available only for those whose age is 60 years and above (that also with certain conditions) like-Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue, Lock-in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue, Lock-in period for investors in the age of 80 years and above shall be 4 years from the date of issue.

# Interest income from 7.75% Government of India Savings Bonds will be taxable. However, there is no wealth tax you have to pay. Tax will be deducted at source (TDS) while interest is paid.

Refer a detailed post at “How to buy or invest in 7.75% Government of India Savings Bonds?

Features of Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Let us now discuss about the features and eligibility of Pradhan Mantri Vaya Vandana Yojana (PMVVY) 2020- 2023.

Some other features of this product are as below:-

# You can surrender this policy during the policy period under certain exceptional circumstances like pensioner requires money for treatment of any critical/terminal illness of self or spouse. Surrender value payable will be 98% of the purchase price.

# You can avail the loan facility after completion of 3 policy years. The maximum loan payable will be 75% of the purchase price. Interest on the loan will be recovered from the pension amount.

# Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.

# Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme does not provide tax deduction benefit under section 80C of the Income Tax Act. Returns from this scheme will be taxed as per existing tax laws.

# There is no TDS on this product.

# During the policy period, the pensioner will receive the monthly, quarterly, half-yearly, or yearly pension as he has opted during the time of buying. On the death of the pensioner during the policy term, the Purchase Price will be refunded to the nominee (or legal heirs in the absence of nominee). If the pensioner survives up to the end of the policy term, Purchase Price and final installment of the pension will be paid to the pensioner.

# You can buy this through LIC (either online or offline).

Read a complete detailed post “Pradhan Mantri Vaya Vandana Yojana (PMVVY) 2020 – 2023 – 5 Changes you must know“.

Features of Senior Citizen Savings Scheme (SCSS)

# Anyone who attained the age of 60 years or above can invest in this product.

# NRIs and HUF are not allowed to invest.

# You can open Senior Citizen Savings Scheme either in the post office or with recognized 24 PSU banks and one private bank.

# Minimum investment is Rs.1,000 and maximum is Rs.15,00,000.

# The current interest rate is 7.4% and will change on quarterly basis.

# Interest will be payable on quarterly basis.

# Premature withdrawal is allowed but with certain conditions. In case the account is closed after the expiry of 1 year but before the expiry of 2 years from the date of opening of the account, an amount 1.5% of the deposit shall be deducted and the balance paid to the depositor. In case the account is closed on or after the expiry of 2 years from the date of opening of the account, an amount equal to 1% of the deposit shall be deducted and balance paid to the depositor.

# Account will not be extended automatically.

# You can extend for a period of 3 years after 5 years maturity period. However, you have to submit Form B within one year from the date of maturity.

# Also, such extended accounts can be closed after one year of extension without any penalty. Means after completion of 6th year, one can withdraw the amount without any penalty.

# Interest rate during such extension period will be as per prevailing rate of interest after 5 years maturity.

# Only one extension is allowed to the old account. Means after 5 years completion of SCSS, you can extend only for once. After that, the account will be matured.

# However, you are free to open one more account during the old account tenure or after maturity of old account subject to the maximum ceiling of Rs.15 lakh.

# Loan is not available.

# One can avail up to Rs.1,50,000 as a maximum benefit under Sec.80C by investing in SCSS scheme.

# Interest Income-Interest income is treated as taxable income. Hence, there is no tax benefits. It will be taxed as per your tax slab. TDS can be deducted on interest earned if it exceeds the minimum limit prescribed by the Government.

Read the complete post about SCSS at “Post Office Senior Citizen Scheme (SCSS)-Benefits and Interest Rate“.

7.75% Government of India Bond Vs PMVVY Vs SCSS – Which is the best?

Now let us understand which is the best among 7.75% Government of India Bond Vs PMVVY Vs SCSS. I will try to compare all these products with respect to the features for your benefit.

# Tenure

7.75% Government of India Bond offers you 7 years. PMVVY is for 10 years and SCSS is for 5 years.

# Minimum and maximum investment

In case of 7.75% Government of India Bond, the minimum investment is Rs.1,000 and there is no maximum limit. However, in case of PMVVY, the minimum investment is Rs.1,56,658 for a yearly pension of Rs.12,000 and maximum investment is Rs.15,00,000. In case of SCSS, the minimum amount is Rs.1,00,000 and the maximum is Rs.15,00,000.

# Interest rates

In the case of 7.75% Government of India bond, the coupon is 7.75%. In the case of PMVVY and SCSS the current interest rates are 7.4%.

# Frequency of interest rate payment

In case of 7.75% Government of India Bond, the interest payment is either on a half-yearly basis or cumulative (at maturity). However, in case of PMVVY it is monthly, quarterly, half-yearly, or yearly. In case of SCSS, it is on a quarterly basis.

# Frequency of change in interest rates

There is big misconception about this. In case of 7.75% Government of India Bond, there will not be any change up to 7 years period.

However, in case of PMVVY, the interest will be revised on yearly basis. For SCSS, it is on quarterly basis.

However, if you invested in PMVVY and SCSS now, then the same interest rate will be applicable for you throughout the end. Even though the interest rate on PMVVY and SCSS change on a yearly and quarterly basis respectively, it is for NEW INVESTORS but not for the existing investors.

# Minimum Age

There is no such mention of minimum age limit. However, in case of PMVVY and SCSS, the minimum age limit is 60 years.

# Liquidity

In case of 7.75% Government of India Bond, Premature encashment in respect of the Bonds shall be allowed for individual investors in the age group of 60 years and above, subject to submission of document relating to date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below:

Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.

Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.

Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue.

In case of PMVVY, you can surrender this policy during the policy period under certain exceptional circumstances like pensioner requires money for treatment of any critical/terminal illness of self or spouse. Surrender value payable will be 98% of the purchase price.

In case of SCSS, in case the account is closed after the expiry of 1 year but before the expiry of 2 years from the date of opening of the account, an amount 1.5% of the deposit shall be deducted and the balance paid to the depositor. In case the account is closed on or after the expiry of 2 years from the date of opening of the account, an amount equal to 1% of the deposit shall be deducted and balance paid to the depositor.

# Loan facility

In case of 7.75% Government of India Bond, it is not be eligible as collateral for availing loans from banks, financial Institutions and Non-Banking Financial Companies.

In case of PMVVY, you can avail the loan facility after completion of 3 policy years. The maximum loan payable will be 75% of the purchase price. Interest on the loan will be recovered from the pension amount.

In case of SCSS, you are not allowed to avail the loan by pledging it. Because this scheme is meant for regular income from your investment.

# Tax Benefits while investing and the returns

Let us discuss the tax benefits of 7.75% Government of India Bond Vs PMVVY Vs SCSS during investment and the tax treatment of interest income.

Tax Benefits during investment

In the case of 7.75% Government of India Bond and PMVVY, there are no tax benefits. However, in the case of SCSS, you can avail the tax benefits of up to Rs.1,50,000 under Sec.80C by investing in this product.

Tax Benefits on interest income

In 7.75% Government of India Bond, Interest on the Bonds will be taxable under the Income Tax Act, 1961 as applicable according to the relevant tax status of the Bondholders. The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.

In case of PMVVY and SCSS, returns from these scheme will be taxed as per existing tax laws.

# TDS Facility

In case of 7.75% Government of India Bonds, Tax will be deducted at source while making payment of interest on the Non-Cumulative Bonds from time to time and credited to Government Account. Tax on the interest portion of the maturity value will be deducted at source at the time of payment of the maturity proceeds on the Cumulative Bonds and credited to Government Account. However, by submitting the Form 15G/H, you can avoid the TDS.

In case of PMVVY, there is no TDS. But in case of SCSS, TDS can be deducted on interest earned if it exceeds the minimum limit prescribed by the Government.

How to buy?

You can buy 7.75% Government of India Savings Bonds from designated branches of SBI and Associate banks,18 Nationalized banks, 3 Private Sector banks (like HDFC and ICICI Banks) and Stock Holding Corporation of India Ltd.

You can buy PMVVY through LIC (either online or offline). However, in the case of SCSS, you can open the Senior Citizen Savings Scheme either in the post office or with recognized 24 PSU banks and one private bank.

Conclusion:-There is nothing called the best. However, with comparison to 7.75% Government of India Bond Vs PMVVY Vs SCSS, you can easily decide which is the best for your requirement. All three products are SAFE. Hence, choose the products based on your actual requirements.

Refer our latest posts:-

7.75% Government of India Bond Vs PMVVY Vs SCSS – Which is the best?

Best Investment Options for Senior citizens in 2020 to generate regular income

Pradhan Mantri Vaya Vandana Yojana (PMVVY) 2020 – 2023 – 5 Changes you must know

HDFC Senior Citizen CARE FD Vs SBI WeCare FD Vs Senior Citizens Savings Scheme (SCSS) – Which is the best?

Mutual Funds Inter-Scheme Transfer – Hybrid Funds are risky now?

SBI WeCare Deposit Vs Senior Citizens Savings Scheme (SCSS) – Which is the best?

The post 7.75% Government of India Bond Vs PMVVY Vs SCSS – Which is the best? appeared first on BasuNivesh.

7.75% Government of India Bond Vs PMVVY Vs SCSS – Which is the best? published first on https://mbploans.tumblr.com/

[sunshineweb]

How to buy/invest in 7.75% Government of India Savings Bonds?

How to buy/invest in 7.75% Government of India Savings Bonds? What are the things we have to take care of before blindly buying this 7.75% Government Of India Savings Bonds?

Features of 7.75% Government Of India Savings Bonds (Taxable)

# HUF and Individual (Single, Jointly, Either or Survivor, or on behalf of minor as a Guardian are allowed to invest in these bonds.

# This bond is not available for NRIs.

# Minimum amount is Rs.1,000 (face value of the bond) and there is no maximum limit for investment.

# The Bonds will be issued, in demat form and credited to the Bond Ledger Account (BLA) of the investor/s on the date of tender of cash or the date of realization of draft/ cheque.

What is the return of 7.75% Government of India Bonds?

The Bonds will bear interest at the rate of 7.75% per annum. Interest on non-cumulative Bonds will be payable at half-yearly intervals from the date of issue (The date of issue of the Bonds in the form of Bonds Ledger Account, will be opened (issued) from the date of tender of cash or the date of realization of draft/cheque.) or interest on cumulative Bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal.

In the cumulative Bonds, the maturity value of the Bonds shall be Rs.1,703 for every Rs.1,000 face value of the bond.

Interest to the holders opting for non-cumulative Bonds will be paid from the date of issue up to 31st July OR 31st January as the case may be, and thereafter half-yearly for a period ending 31st July and 31st January on 1st August and 1st February.

Interest on Bonds in the form of “Bonds Ledger Account” will be paid, by electronically by credit to bank account of the holder as per the option exercised by the investor/holder.

The advice of payment of interest will be issued to the investor one month in advance from the due date. Maturity intimation advice will be issued one month before the due date of the bond.

Facility for payment of interest and principal by ‘demand draft free of cost or at par cheques’ for up country customers is available. The facility of the intra-bank branch and interbank branch transfer of the bonds is available.

Do remember that you can’t change the bond option in middle from Non-Cumulative to Cumulative and vice versa.

Note:-You have to receive the redemption procedure at maturity or as and when the interest is payable. The government will not pay any interest on such interest income which is not claimed or any principal amount that also not claimed by investors.

Temf of the 7.75% Government of India Bond

The bond tenure is 7 years from the date of issue. However, you can opt for premature redemption as per the Govt. Notification dated July 29, 2013, and subsequent amendment vide Notification dated August 16, 2013. It is discussed as below.

Premature encashment in respect of the Bonds shall be allowed for individual investors in the age group of 60 years and above, subject to submission of document relating to date of birth of the an investor in support of age to the satisfaction of the issuing bank, after minimum lock-in period from the date of issue as indicated below-

(a) Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.

(b) Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.

(c) Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue.

In case of joint holders or more than two holders of the Bond, the above lock-in period will be applicable even if any one of the holders fulfills the above conditions of eligibility.

After aforesaid minimum lock-in period from the date of issue, an eligible investor can surrender the bonds at any time after the 12th, 10th and 8th half year corresponding to the respective lock-in period but redemption payment will be made on the following interest payment due date.

Thus, the effective date of premature encashment for eligible investors will be 1st August and 1st February every year. However, 50% of interest due and payable for the last six months of the holding period will be recovered in such cases, both in respect of Cumulative and Non-cumulative bonds.

The Bonds are nottransferable.  The Bonds are nottradeable in the Secondary market and are noteligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.

An earlier version of the bond period was 6 years.

Nomination facility in 7.75% Government of India Bonds

The sole Holder or all the joint holders may nominate one or more persons as a nominee. Non-Resident Indians (NRIs) can also be nominated. However, remittance of the interest/maturity proceeds will be subject to the foreign Exchange regulations prevailing at the time of remittance.

If the nomination has been made in favour of two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly.

In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination. You can make a separate nomination for each investment.

The nomination is not allowed where the bonds are held in the name of the minor. A nomination made by a holder of a Bond can be changed by a fresh nomination in Form B, or as near thereto as may be, or may be canceled by giving notice in writing to the Receiving Office in Form C,

If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/amount due in the event of his / her / their death during the period the nominee is a minor.

You can change the nomination as and when you need.

Taxation of 7.75% Government of India Savings Bonds

Interest income from 7.75% Government of India Savings Bonds will be taxable. However, there is no wealth tax you have to pay. Tax will be deducted at source (TDS) while interest is paid.

The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.

I explained basic features in below image for your easy understanding.

How to buy/invest in 7.75% Government of India Savings Bonds?

You can buy 7.75% Government of India Savings Bonds from designated branches of SBI and Associate banks,18 Nationalised banks, 3 Private Sector banks (like HDFC and ICICI Banks) and Stock Holding Corporation of India Ltd. I have listed them as below.

# State Bank Of India

# Allahabad Bank

# Bank of Baroda

# Bank Of India

# Bank Of Maharashtra

# Canara Bank

# Central Bank Of India

# Dena Bank

# Indian Bank

# Indian Overseas Bank

# Punjab National Bank

# Syndicate Bank

# UCO Bank

# Union Bank of India

# United Bank Of India

# Corporation Bank

# Oriental Bank Of Commerce

# Vijaya Bank

# IDBI Bank

# ICICI Bank Ltd.

# HDFC Bank Ltd.

# Axis Bank Ltd.

# Stock Holding Corporation of India Ltd.

The application form looks like below.

Download the Application form to buy/invest in 7.75% Government of India Savings Bonds.

Where to complain in case of 7.75% Government of India Savings Bonds?

If you have any issue with Bank regarding this bond, then you can contact RBI directly using below details.

THE REGIONAL DIRECTOR, RESERVE BANK OF INDIA, CUSTOMER SERVICE DEPARTMENT/ BANKING OMBUDSMAN (LOCATION)

Otherwise, you can also use the below address.

THE CHIEF GENERAL MANAGER IN-CHARGE DEPARTMENT OF GOVERNMENT AND BANK ACCOUNTS CENTRAL OFFICE BYCULLA, OPP. BOMBAY CENTRAL RAILWAY STATION MUMBAI- 400 008, MAHARASHTRA

7.75% Government of India Savings Bonds -Should you invest?

Let us now discuss about who should consider this bond.

# SOVERIGN GUARANTEE

The biggest positive point is that SECURITY of Government of India. No question of default risk in such bond. Hence, you can invest blindly without any doubt.

# INTEREST RATE

If you look at SBI FD Rate for 5 Yrs to 10 Yrs deposit, it is at 6%. Also, the current Post Office 5 Yrs FD rates are lower. Hence, I think this bond is definitely the BEST option who are looking for SAFETY and also the GUARANTEED return.

# GOAL-BASED INVESTMENT

I compared the interest of similar tenure products. Hence, do remember that invest in such bond only if your goal is 5 years or so. Also, if you are looking for some constant stream of income, then also you can look at such bond.

But never invest for the sake GUARANTEE and RETURN.

If your goal is more than 5 years or so, then use the products like LIC’s Jeevan Akshay VI or Pradhan Mantri Vaya Vandana Yojana. If you are a senior citizen, then you can opt for Post Office SCSS Scheme.

# TAXATION

Whatever the return you will receive from this bond is taxable and also TDS is applicable. Hence, don’t rely on 7.75% return. But try to consider the post-tax return.

Suppose your income is less than Rs.2,50,000 then the effective return will be 7.75%.

Suppose your income tax slab is at 10%, then the effective return will be 6.975%

Suppose your income tax slab is at 20%, then the effective return will be 6.2%

Suppose your income tax slab is at 30%, then the effective return will be at 5.425%

#INTEREST RATE RISK

Even though there is no default risk, there is always an interest rate risk. We don’t know the applicable interest rate after 7 years of maturity. Hence, this interest rate risk is always there.

However, considering the past trend, I am not sure that the Government will close the subscription within 4-5 years.

Go ahead to buy these bonds based on the above points. Blindly for the sake of GUARANTEE and RISK-FREE return always not works.

For a complete post, refer my old post “7.75% Government of India Savings Bonds -Should you invest?“.

Conclusion:-Due to credit Risk or Default Risk many are looking for safe investment. In such a situation, where debt products are risky and equity market down, the best option is to go for such the safest product. However, consider your actual requirement, taxation, and liquidity issue also before BLIND JUMPING.

Refer our latest posts:-

Berkshire Hathaway Annual Meeting 2020 – Warren Buffett on Index Fund

How to buy/invest in 7.75% Government of India Savings Bonds?

LIC Term Insurance Plans 2020 – Features and Benefits

Franklin India’s six closed Funds – When you will get back the money?

Franklin Templeton India Closed 6 Debt Funds – What investors can do?

Top 5 Best Health Insurance Plans in India 2020

The post How to buy/invest in 7.75% Government of India Savings Bonds? appeared first on BasuNivesh.

How to buy/invest in 7.75% Government of India Savings Bonds? published first on https://mbploans.tumblr.com/

[sunshineweb]

How to buy/invest in 7.75% Government of India Savings Bonds?

How to buy/invest in 7.75% Government of India Savings Bonds? What are the things we have to take care of before blindly buying this 7.75% Government Of India Savings Bonds?

Features of 7.75% Government Of India Savings Bonds (Taxable)

# HUF and Individual (Single, Jointly, Either or Survivor, or on behalf of minor as a Guardian are allowed to invest in these bonds.

# This bond is not available for NRIs.

# Minimum amount is Rs.1,000 (face value of the bond) and there is no maximum limit for investment.

# The Bonds will be issued, in demat form and credited to the Bond Ledger Account (BLA) of the investor/s on the date of tender of cash or the date of realization of draft/ cheque.

What is the return of 7.75% Government of India Bonds?

The Bonds will bear interest at the rate of 7.75% per annum. Interest on non-cumulative Bonds will be payable at half-yearly intervals from the date of issue (The date of issue of the Bonds in the form of Bonds Ledger Account, will be opened (issued) from the date of tender of cash or the date of realization of draft/cheque.) or interest on cumulative Bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal.

In the cumulative Bonds, the maturity value of the Bonds shall be Rs.1,703 for every Rs.1,000 face value of the bond.

Interest to the holders opting for non-cumulative Bonds will be paid from the date of issue up to 31st July OR 31st January as the case may be, and thereafter half-yearly for a period ending 31st July and 31st January on 1st August and 1st February.

Interest on Bonds in the form of “Bonds Ledger Account” will be paid, by electronically by credit to bank account of the holder as per the option exercised by the investor/holder.

The advice of payment of interest will be issued to the investor one month in advance from the due date. Maturity intimation advice will be issued one month before the due date of the bond.

Facility for payment of interest and principal by ‘demand draft free of cost or at par cheques’ for up country customers is available. The facility of the intra-bank branch and interbank branch transfer of the bonds is available.

Do remember that you can’t change the bond option in middle from Non-Cumulative to Cumulative and vice versa.

Note:-You have to receive the redemption procedure at maturity or as and when the interest is payable. The government will not pay any interest on such interest income which is not claimed or any principal amount that also not claimed by investors.

Temf of the 7.75% Government of India Bond

The bond tenure is 7 years from the date of issue. However, you can opt for premature redemption as per the Govt. Notification dated July 29, 2013, and subsequent amendment vide Notification dated August 16, 2013. It is discussed as below.

Premature encashment in respect of the Bonds shall be allowed for individual investors in the age group of 60 years and above, subject to submission of document relating to date of birth of the an investor in support of age to the satisfaction of the issuing bank, after minimum lock-in period from the date of issue as indicated below-

(a) Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.

(b) Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.

(c) Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue.

In case of joint holders or more than two holders of the Bond, the above lock-in period will be applicable even if any one of the holders fulfills the above conditions of eligibility.

After aforesaid minimum lock-in period from the date of issue, an eligible investor can surrender the bonds at any time after the 12th, 10th and 8th half year corresponding to the respective lock-in period but redemption payment will be made on the following interest payment due date.

Thus, the effective date of premature encashment for eligible investors will be 1st August and 1st February every year. However, 50% of interest due and payable for the last six months of the holding period will be recovered in such cases, both in respect of Cumulative and Non-cumulative bonds.

The Bonds are nottransferable.  The Bonds are nottradeable in the Secondary market and are noteligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.

An earlier version of the bond period was 6 years.

Nomination facility in 7.75% Government of India Bonds

The sole Holder or all the joint holders may nominate one or more persons as a nominee. Non-Resident Indians (NRIs) can also be nominated. However, remittance of the interest/maturity proceeds will be subject to the foreign Exchange regulations prevailing at the time of remittance.

If the nomination has been made in favour of two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly.

In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination. You can make a separate nomination for each investment.

The nomination is not allowed where the bonds are held in the name of the minor. A nomination made by a holder of a Bond can be changed by a fresh nomination in Form B, or as near thereto as may be, or may be canceled by giving notice in writing to the Receiving Office in Form C,

If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/amount due in the event of his / her / their death during the period the nominee is a minor.

You can change the nomination as and when you need.

Taxation of 7.75% Government of India Savings Bonds

Interest income from 7.75% Government of India Savings Bonds will be taxable. However, there is no wealth tax you have to pay. Tax will be deducted at source (TDS) while interest is paid.

The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.

I explained basic features in below image for your easy understanding.

How to buy/invest in 7.75% Government of India Savings Bonds?

You can buy 7.75% Government of India Savings Bonds from designated branches of SBI and Associate banks,18 Nationalised banks, 3 Private Sector banks (like HDFC and ICICI Banks) and Stock Holding Corporation of India Ltd. I have listed them as below.

# State Bank Of India

# Allahabad Bank

# Bank of Baroda

# Bank Of India

# Bank Of Maharashtra

# Canara Bank

# Central Bank Of India

# Dena Bank

# Indian Bank

# Indian Overseas Bank

# Punjab National Bank

# Syndicate Bank

# UCO Bank

# Union Bank of India

# United Bank Of India

# Corporation Bank

# Oriental Bank Of Commerce

# Vijaya Bank

# IDBI Bank

# ICICI Bank Ltd.

# HDFC Bank Ltd.

# Axis Bank Ltd.

# Stock Holding Corporation of India Ltd.

The application form looks like below.

Download the Application form to buy/invest in 7.75% Government of India Savings Bonds.

Where to complain in case of 7.75% Government of India Savings Bonds?

If you have any issue with Bank regarding this bond, then you can contact RBI directly using below details.

THE REGIONAL DIRECTOR, RESERVE BANK OF INDIA, CUSTOMER SERVICE DEPARTMENT/ BANKING OMBUDSMAN (LOCATION)

Otherwise, you can also use the below address.

THE CHIEF GENERAL MANAGER IN-CHARGE DEPARTMENT OF GOVERNMENT AND BANK ACCOUNTS CENTRAL OFFICE BYCULLA, OPP. BOMBAY CENTRAL RAILWAY STATION MUMBAI- 400 008, MAHARASHTRA

7.75% Government of India Savings Bonds -Should you invest?

Let us now discuss about who should consider this bond.

# SOVERIGN GUARANTEE

The biggest positive point is that SECURITY of Government of India. No question of default risk in such bond. Hence, you can invest blindly without any doubt.

# INTEREST RATE

If you look at SBI FD Rate for 5 Yrs to 10 Yrs deposit, it is at 6%. Also, the current Post Office 5 Yrs FD rates are lower. Hence, I think this bond is definitely the BEST option who are looking for SAFETY and also the GUARANTEED return.

# GOAL-BASED INVESTMENT

I compared the interest of similar tenure products. Hence, do remember that invest in such bond only if your goal is 5 years or so. Also, if you are looking for some constant stream of income, then also you can look at such bond.

But never invest for the sake GUARANTEE and RETURN.

If your goal is more than 5 years or so, then use the products like LIC’s Jeevan Akshay VI or Pradhan Mantri Vaya Vandana Yojana. If you are a senior citizen, then you can opt for Post Office SCSS Scheme.

# TAXATION

Whatever the return you will receive from this bond is taxable and also TDS is applicable. Hence, don’t rely on 7.75% return. But try to consider the post-tax return.

Suppose your income is less than Rs.2,50,000 then the effective return will be 7.75%.

Suppose your income tax slab is at 10%, then the effective return will be 6.975%

Suppose your income tax slab is at 20%, then the effective return will be 6.2%

Suppose your income tax slab is at 30%, then the effective return will be at 5.425%

#INTEREST RATE RISK

Even though there is no default risk, there is always an interest rate risk. We don’t know the applicable interest rate after 7 years of maturity. Hence, this interest rate risk is always there.

However, considering the past trend, I am not sure that the Government will close the subscription within 4-5 years.

Go ahead to buy these bonds based on the above points. Blindly for the sake of GUARANTEE and RISK-FREE return always not works.

For a complete post, refer my old post “7.75% Government of India Savings Bonds -Should you invest?“.

Conclusion:-Due to credit Risk or Default Risk many are looking for safe investment. In such a situation, where debt products are risky and equity market down, the best option is to go for such the safest product. However, consider your actual requirement, taxation, and liquidity issue also before BLIND JUMPING.

Refer our latest posts:-

How to buy/invest in 7.75% Government of India Savings Bonds?

LIC Term Insurance Plans 2020 – Features and Benefits

Franklin India’s six closed Funds – When you will get back the money?

Franklin Templeton India Closed 6 Debt Funds – What investors can do?

Top 5 Best Health Insurance Plans in India 2020

Top 5 Best Online Term Insurance Plans in India 2020

The post How to buy/invest in 7.75% Government of India Savings Bonds? appeared first on BasuNivesh.

How to buy/invest in 7.75% Government of India Savings Bonds? published first on https://mbploans.tumblr.com/