म्यूच्यूअल फण्ड में नुकसान होने पर क्या करें

अगर आप म्यूचुअल फंड में पैसा खो रहे हैं तो क्या करें?

 अंतर्निहित प्रतिभूतियों और व्यापक बाजारों का प्रदर्शन दो कारक हैं जो यह तय करते हैं  कि आपका म्यूचुअल फंड पोर्टफोलियो हरे या लाल रंग में होगा या नहीं।

 म्युचुअल फंड किसी भी रिटर्न की गारंटी नहीं देते हैं और प्रतिकूल परिस्थितियों का सामना करने की संभावना हैl ऐसे दौर से बचने के लिए आपको निवेश करने से पहले म्यूचुअल फंड की बेहतर समझ होनी चाहिए।

फंड मैनेजर, म्यूचुअल फंड का प्रबंधन, कई शेयरों, वस्तुओं और बॉन्ड में निवेश करते हैं, जिससे अंतर्निहित प्रतिभूतियों द्वारा खराब प्रदर्शन के प्रभाव को कम किया जाता है। हालांकि, म्यूचुअल फंड में लाभ या हानि स्टॉक के प्रदर्शन, बाजार की अस्थिरता, आर्थिक विकास आदि पर निर्भर करता है।

तो, अगर आपको लगता है कि आप म्यूचुअल फंड में पैसा खो रहे हैं, तो यहां आप क्या करने पर विचार कर सकते हैं

 म्यूच्यूअल फण्ड में पैसे की हानि हो तो क्या करें?

 आप म्यूचुअल फंड के सभी पहलुओं और उनके कामकाज से अच्छी तरह वाकिफ हों, लेकिन कुछ प्रतिकूल परिस्थितियों से नुकसान हो सकता है।
 अगर आप भी इस समस्या का सामना कर रहे हैं, तो यहां आपकी मदद करने के लिए कुछ सुझाव दिए गए हैं।

1. जल्दबाजी में रिडीम करने से बचें

भले ही आप म्यूचुअल फंड में पैसा खो रहे हों, आपको अपना पैसा रिडीम करने से पहले दो बार सोचना चाहिए।

ज्यादातर लोग म्यूचुअल फंड से अपना पैसा निकाल लेते हैं और फिर से निवेश करने से पहले बाजार के फिर से चढ़ने का 
इंतजार करते हैं। लेकिन समय हमेशा सही नहीं हो सकता है। यह आपको उस स्थिति में ले जा सकता है जहां आप म्यूचुअल 
फंडों को बेचने की तुलना में अधिक कीमत पर निवेश करना समाप्त कर देते हैं। यह समग्र धन सृजन प्रक्रिया के लिए अच्छा
नहीं है और इसलिए इस तरह का निर्णय जल्दबाजी में नहीं लिया जाना चाहिए।
इसके अलावा, मौजूदा बाजार स्थितियों के आधार पर मोचन का फैसला नहीं किया जाना चाहिए क्योंकि बाजार में और नीचे जाने
की प्रवृत्ति होती है। इसके अलावा, ऐसे मामलों में बचत करने का एक बेहतर विकल्प एसआईपी मार्ग के माध्यम से म्यूचुअल फंड
में निवेश करना है जो आपको बाजार के समय से मुक्त करता है।

2. उसी श्रेणी के अन्य फंडों के साथ प्रदर्शन की तुलना करें

यदि बाजार अच्छा नहीं चल रहा है या आपके म्यूचुअल फंड आपके म्यूचुअल फंड में खराब प्रदर्शन कर रहे हैं, तो आप अपने 
म्यूचुअल फंड के प्रदर्शन की तुलना उसी श्रेणी के अन्य समान फंडों से कर सकते हैं।
यदि आपके फंड का प्रदर्शन अन्य फंडों के समान है, तो आपको अपने निवेश को लेकर धैर्य रखने की जरूरत है। यहां तक   
​​कि अगर आपने अपने म्यूचुअल फंड और अन्य के प्रदर्शन में केवल थोड़ा सा अंतर पाया है, तो आपको स्विच करने पर विचार 
करने की आवश्यकता नहीं है।
यह सलाह दी जाती है क्योंकि इस तरह के प्रदर्शन में अंतर केवल छोटी अवधि के लिए ही स्पष्ट होता है। लंबे समय में, एक
ही श्रेणी के सर्वश्रेष्ठ म्यूचुअल फंड ज्यादातर समान रिटर्न देते हैं।

3. अलग-अलग अलग-अलग प्रकार के दृश्य अलग-अलग होते हैं।

कुछ म्यूचुअल फंड अधिक अस्थिर होते हैं, जिसका अर्थ है कि वे उच्च जोखिम के साथ-साथ अधिक रिटर्न भी दे सकते हैं।
अगर आपको लगता है कि आप शामिल जोखिम का प्रबंधन नहीं कर सकते हैं, तो आपको म्यूचुअल फंड और प्रदर्शन की
अन्य श्रेणियों को देखना चाहिए।

4. क्षेत्र पर गहन शोध करें 

जब आपके निवेश क्षेत्र-केंद्रित होते हैं (वे फंड जो केवल कुछ विशिष्ट उद्योग या क्षेत्र में निवेश करते हैं) तो आप म्यूचुअल फंड में पैसा
खो सकते हैं। भले ही कुल मिलाकर बाजार अच्छा चल रहा हो, लेकिन कुछ क्षेत्रों में गिरावट आ सकती है। इसलिए, यदि कोई क्षेत्र अंडरपरफॉर्म करता है, तो

आपको उस पर अच्छी तरह से शोध करना चाहिए  
अन्य विविध इक्विटी म्यूचुअल फंड की तुलना में सेक्टर फंड सबसे जोखिम भरा है और भविष्यवाणी करना बहुत कठिन है। इस 
प्रकार, यदि आप सेक्टर फंड में निवेश के कारण पैसा खो रहे हैं, तो आपको उद्योग के स्वास्थ्य और संभावनाओं पर ध्यान देना चाहिए।
यदि आपको लगता है कि उद्योग/क्षेत्र का भविष्य आशाजनक है तो निवेश जारी रखना उचित है। अन्यथा, आप अपने पैसे को 
भुनाने और किसी अन्य म्यूचुअल फंड में निवेश करने की योजना बना सकते हैं। इसके अलावा, आप म्यूचुअल फंड में विविधता
लाने पर भी विचार कर सकते हैं और विभिन्न फंडों का मिश्रण बना सकते हैं।

निष्कर्ष

आर्थिक, भू-राजनीतिक तनाव में शामिल हैं। यह आपके प्रभावी प्रभावी हो सकता है, और आप पैसा बनाना शुरू कर सकते हैं।
लेकिन आपको हमेशा स्थिति को शांति और समझदारी से संभालना चाहिए और जल्दबाजी में कभी नहीं। बेहतर होगा कि आप
कोई भी कदम उठाने से पहले किसी पेशेवर की मदद लें और इस तरह आपको कोई बड़ा नुकसान नहीं उठाना पड़ेगा।
यह ब्लॉग विशुद्ध रूप से शैक्षिक उद्देश्यों के लिए है और इसे व्यक्तिगत सलाह के रूप में नहीं माना जाना चाहिए। म्यूचुअल
फंड निवेश बाजार के जोखिम के अधीन हैं, योजना से संबंधित सभी दस्तावेजों को ध्यान से पढ़ें।



                                                     AMFI Registered Mutual Fund Distributor  
                                                                        6306522855
                                                          Hazratganj, Lucknow, 226001
                                                  customercare@vsix.co.in || www.vsix.co.in
       



     

                        What to do if there is a LOSS in Mutual Fund  

 What to Do if You Are Losing Money in Mutual Funds?

The performance of the underlying securities and the broader markets are two factors that decide whether your mutual fund portfolio will be in green or red.

Mutual funds don’t guarantee any returns and there is a possibility of facing adverse scenarios.

.

To avoid such a phase, you must have a better understanding of mutual funds before investing.

Fund managers, managing mutual funds, invest in several stocks, commodities, and bonds, reducing the impact of poor performance by the underlying securities. However, the profit or loss in the mutual funds depends on stock performance, market volatility, economic growth, etc.

So, if you think you are losing money in mutual funds, here is what you can consider doing.

What to do if there is a loss of money in mutual funds?

Even if you are well-versed with all the aspects of mutual funds and their working, some adverse scenarios might lead to losses. If that is what you are facing, here are some tips to help you.

1. Avoid Redeeming in Haste

Even if you are losing money in mutual funds, you must think twice before redeeming your money.

Mostly, people take their money out of mutual funds and wait for the market to climb again before re-investing. But the time might not always be perfect. It could lead you to a position where you end up investing at a price higher than what you sold the mutual funds for. This isn’t good for the overall wealth generation process and so such a decision must not be taken in haste.

Moreover, redemption must not be decided based on current market situations as markets tend to go and down. Furthermore, a better option to be saved in such cases is investing in mutual funds via the SIP route which frees you from the timings of the market.

2. Compare Performance with Other Funds of the same category

If the market is not going well or your mutual funds are performing poorly in your mutual funds, in such instances, you can compare the performance of your mutual fund with other similar funds of the same category.

If your fund’s performance is similar to the other funds, you need to be patient with your investments. Even if you found only a slight difference in the performance of your mutual funds and the others, you do not necessarily have to consider switching.

This is advised because the difference in such performance is only evident for a shorter period. In the long run, the best mutual funds of the same category mostly give similar returns.

3. Compare Performance with Other Funds of the different categories.

Some mutual funds are more volatile, which means that they might offer greater returns along with higher risk. If you think you cannot manage the involved risk, you must look at other categories of mutual funds and performances.

4. Research the Sector Profoundly

You might also lose money in mutual funds when your investments are sector-focused (the funds that only invest in some specific industry or sector). Even when the overall market is going well, some sectors might suffer a fall. Therefore, if any sector underperforms, you must research it well.

Sector funds are riskiest and are very hard to predict as compared to other diversified equity mutual funds. Thus, if you are losing money due to an investment in sector funds, you must focus on the industry’s health and prospects.

It is advisable to continue investing if you think that the industry/sector has a promising future. Otherwise, you can plan to redeem your money and invest in some other mutual fund. Furthermore, you can also consider diversifying the mutual funds and have a mix of different funds.

Conclusion

There are plenty of reasons that may lead to setbacks in an economy, including elections, geopolitical tensions, or recessions. This can adversely affect your mutual funds, and you might start losing money.

But you must always handle the situation calmly and wisely and never hastily. It would be best if you take the help of a professional before taking any action, and in that way, you will not have to bear signify cant losses.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

                                         

                                               AMFI Registered Mutual Fund Distributor  

                                                                 6306522855

                                                   Hazratganj, Lucknow, 226001

                                             customercare@vsix.co.in || www.vsix.co.in

7 Myths about mutual funds

 

  

7 Mutual Funds Myths That You Should Ignore

Do you want to invest in mutual funds? But you don’t have enough understanding about it or do you think that mutual funds are not for you based on what others have said? Well, don’t worry. We are here to bust some of the myths associated with mutual funds.

Myth #1 – SIP Is An Investment Product

Nowadays, a lot of people assume that the Systematic Investment Plan (SIP) is a different investment product, unrelated to mutual funds. However, it is not true. SIP is just another way to invest in mutual funds. There are two main ways to invest in mutual funds: lumpsum or one-time investment and SIP or regular purchases. In SIP, investors can regularly invest in a fund of their choice. Once the SIP mandate is set up, a predefined amount is automatically deducted from your savings account on a pre-defined date.

For example, if you have a SIP of Rs 1,000 in Fund A on the 10th of every month, then on the 10th of each month, Rs 1,000 will be deducted from your bank account and will get invested automatically.

Myth #2 – You Need A Lot Of Money To Invest In Mutual Funds

There is a general misconception that mutual funds are only for people who have a six-figure income and business class people. However, it is entirely false. Many fund houses have made it easier to invest in mutual funds by reducing the minimum investment amount made through lumpsum and the SIP route. You need Rs.100 to invest through SIP and Rs.1,000 for additional investments.

Myth # 3: Investing In Mutual Funds Means Investing In Stock Market

    Mutual funds invest in stock markets. However, there are other categories of mutual funds that don’t invest in the equity markets. Debt mutual funds invest in the bond market (corporate bonds and government bonds) and money market instruments (treasury bills, commercial papers, certificate of deposit, collateral borrowing & lending obligation (CBLO)). The objective of these funds is to protect capital along with stable returns.

 

 

     Myth #4: You Need To Be An Expert In Mutual Funds

While direct equities are meant for experts, mutual funds are meant for everyone. You don’t need to be an expert or have investment knowledge to invest in mutual funds. It is because expert fund managers manage these funds. A strong research and investment team backs the fund managers. It is an inexpensive way to get professionals to manage your money.

Myth #5: You Should Only Invest In Mutual Funds 

If You Have A Long-Term View  If you want to invest in equity mutual funds, then you need to take a long-term view of more than five years. It does not apply to all types of mutual funds. Debt funds especially overnight funds,  liquid funds, and ultra-short-term funds allow you to park your money for a short period from a day to three months. You can invest in different types of mutual funds based on your investment horizon and objective.

      Myth #6: Investing In A Top-Rated Mutual Fund Ensures Better Future Returns

Relying solely on the star rating of a mutual fund is the wrong way to predict future returns. The ratings are dynamic and are likely to change. If a fund is rated five stars by various organizations, it does not mean that the fund will deliver better returns than other funds. There have been instances where the value of five-star funds has tumbled due to credit defaults of the invested company.

The best way to track the performance of the fund should be against its benchmark. Evaluate the performance of the mutual funds periodically against the benchmark and other funds in the category to decide whether you should stay invested or not.

      Myth #7: It Is Better To Invest In A Fund With A Low Net Asset Value (NAV)

 Many investors believe in the myth that investing in a fund with a low unit price (NAV) is better as the appreciation will be more in a fund with a low NAV. It is irrelevant because it only represents the market value of the securities held by the fund and inflows from investors. The capital appreciation will depend on the increase in the value of the underlying securities. These were the seven popular mutual fund myths. If you want to invest in mutual funds and want to get clarity between myths and facts, a financial advisor will be able to help you with that.  

5 Mistakes of Investors

 

5 top financial mistakes to stay away from

To err is human. We make mistakes all the time, whether it is in our professional life or personal life.

These mistakes help us to make the right decisions.

We also make a number of financial mistakes as well. Here are the top five financial mistakes that

you should avoid when investing.

1. Spending before investing

There is a popular notion that we should save the money that is left. The money left with us after

we take away our expenses. But, if this was the case, then most of us would have never had

enough money to save or invest. According to a rule of thumb, one should earmark at least 20% of

the income for saving or investing. If you are not able to invest 20% of your income, then start at

5%. Once you are comfortable or you are able to invest more, then you can gradually increase the

allocation to 20% or 30%.

Automating your investments is a simple and easy way that will help you do to invest a certain

proportion every month. Investing in mutual funds through a systematic investment plan is one such

way to automate your investments and build wealth over the long term.

2. Waiting for the right time to invest

It is seen that most individuals believe that they don’t earn enough money to start investing. They

keep postponing their investments to a later date. Waiting for the right time to invest is another

financial mistake.

Studies have shown that how much money we can invest, depends on how rich we ‘feel’. The focus

word is ‘feel’ not how much money we actually have. Hence, you may earn Rs. 1 lakh a month and

still not feel rich enough to invest. On the other hand, person B with a monthly income of Rs.20,000

might be investing Rs. 5,000 to Rs.10,000 per month.

Hence, there is no right time to start investing. When you invest in mutual funds through a systematic investment plan(SIP), now is the right time to start investing. Moreover, you need a large amount of money to invest through SIP. You can start a SIP with Rs.5,00 per month.

3. Not investing in financial goals

Goals keep us motivated and make us work harder to achieve them. Investing without financial goals is like a ship without its rudder. The ship will easily sway in the direction of the wind or sea currents without having a sense of purpose or direction. Investing is no different. The financial goals can be early retirement, having a sizeable retirement corpus, buying a house or a car, etc. It varies from person to person. Financial goals will make us focused. As a result, we are less likely to take the wrong decision based on short-term news.

4. Constantly jumping to the best performing fund

We all work hard to earn money. Hence, it is logical that we will look for the best funds and the top-performing funds to invest in. However, it is more important to choose the right fund than the best fund. It may not be easy for individual investors to understand the reason behind its spur in performance.

Looking for the top-performing funds to invest in is a common mistake that many people do. Shifting from one fund to another is also an expensive affair, as depending on the fund, exit load and taxation may be applicable.

Instead of focusing on the one-year or one-month performance, look at its long-term performance, consistency, and how well the fund has performed against the benchmark and peers.

Also, concentrate on financial goals rather than chasing the highest performing funds.

5. Redeeming or stopping your investment due to short term volatility

Redeeming or stopping SIP because of short-term volatility are the two most common mistakes that investors make. In the case of equity investment, the ups and downs in the market are a common feature. Hence, you have to take it as a part-and-parcel of your investing life. Sometimes the best thing to do is to do nothing. Instead of being bogged down by the short-term volatilities, focus on your goals.

These were the top five financial mistakes that people make when investing. Talk to a financial advisor if you have any queries.

HOW TO ACHIEVE FINANCIAL FREEDOM

   

Freedom sounds sweet. While we have achieved political freedom way back in 1947, many still struggle with financial freedom. Everyone wants to be financially free and it is not something that is exclusive for just a few people. Having said that, financial freedom is not a child’s play. It is a series of steps.

So, here are some of the steps that you need to take towards financial freedom:

SET YOUR GOAL 

Having a goal gives a sense of direction and purpose. You will also be able to track your progress. In this aspect, it is essential to understand what financial freedom means to you. Much associate financial freedom with early retirement. Here are some of the other instances of what financial freedom may look like:

• Freedom to choose a career without worrying about money
• Freedom to go on frequent vacations without straining your budget
• Freedom to take care of the needs and wants of other people the way you want Freedom to retire early.

 HAVE AN EMERGENCY CORPUS : 

The second step in this journey is having an emergency fund. It is a crucial step, as it will help you to tide over emergencies. No one can predict crises and hence, it is always better to be prepared. Emergencies can include job loss, car repairs, house repairs, etc. Without an emergency corpus, you may have to dip into your savings, which may adversely delay your goals. Or worse, take a loan. Hence, one needs to have an emergency corpus with 3 to 6 months of expenses. The best way to park in an emergency corpus is in a liquid fund. It is crucial to keep a different account, out of your sight so that you are not tempted to use it.

BUDGET :

Having a budget is a crucial part. And this is one step that requires trial and error. A simple yet effective thumb rule is the 50-30-20 rule. According to this thumb rule, you may allocate 50% of your income towards needs, 30% for wants, and save the rest 20%. You can also tweak it according to your convenience. However, it is better to have a higher allocation of investment and savings in the budget.

Secondly, you can also identify your monthly expenses based on the past six months. Later divide your expenses into essential, non-essentials, and junk. Use this list to prioritize and cut whatever is possible. You can also use budget apps to track your expenses. Also, invite every family member to share their concerns regarding the budget.

PAY YOURSELF FIRST: 

If you read financial blogs and books, you must have come across the concept of paying yourself first. Even before we receive our salary, many of us start planning ways to spend it. If you want to be free, you should consider paying yourself first. By this, we mean that you should earmark a certain amount of money for investing. You can also automate your investments. Set up a systematic investment plan (SIP), and you can see your money grow over time.

Another way to pay yourself is by investing in yourself through reading books, going to workshops, etc. This will help you to increase your earning potential and to build a second source of income.

SAY BYE TO DEBT : 

While people like to segregate debt into good or bad, there is nothing good about debt. There are harmful debt and less harmful debt. Having debt is one of the most significant impediments to financial independence. If you have many loans, look at reducing loans that don’t carry tax benefits. Otherwise, look at repaying the debt with the smallest principal. Once you can repay the smallest loan, you will be more charged up to clear your other debts.

GET A FINANCIAL ADVISOR : 

Last but not at least, having a financial advisor can immensely help you in this journey of financial independence. Everything you need to know about finance is available online. But, can you be sure that you will remain disciplined even when the market tumbles or when you are tempted to buy an expensive car to show off to your neighbor instead of focussing on early retirement? Let’s face it that controlling our emotions are a lot harder. And that is why you need a financial advisor.

All you need to know about Asset Allocation

 

                Things you always wanted to know about asset allocation

Imagine that you have a pizza in front of you. But the pizza has six different types of toppings with different crusts. Would not that be awesome?

Now think that the pizza is your investment portfolio with different assets. This is called asset allocation, which describes where you have put your money. Although there is a high probability that you will like all the different pizza slices, in the case of investment, you need to be sure about where you have put your money and in what proportion. We don’t want you to invest blindly indifferent assets just because your colleague suggested you.

Asset allocation is essential as it helps to reduce the risks associated with an investment option through diversification. Different asset classes such as equities, debt, or commodities react differently to a particular event. While one asset may outperform during a specific time frame, other assets may underperform.

Here are some of the questions that you need to ask yourself to come to the right asset allocation.

When are going to need the money?

This question will determine which asset class you should put in money. If you are likely to need the money within 2 to 3 years, you can invest in conservative investment options such as debt mutual funds. It will be better to stay away from equities as the equity market can be volatile in the short run. But it has been historically seen that equity markets give attractive returns in the long term. Hence, if you won’t need this money for five years or more, investing a higher proportion of inequities would be the right approach.

What are your financial goals?

In addition to your timeline, your financial goals are also essential to determine your ideal asset allocation. For your short-term financial goals, debt mutual funds such as liquid funds, ultra-short-term, and short-term funds are good investment options. Invest in pure equity funds for your long-term financial goals.

How much risk can you take?

What will be your reaction if your investment value drops by 15% in a single day? If you are okay seeing your portfolio swing from one extreme to another, you can digest volatility; equities will be a better investment option. However, you can minimize the risks associated with equities by taking the mutual fund approach. High-risk investment options have the potential to give higher returns.

Now, that you have answered the questions, you begin thinking about allocating your money among the different asset classes. According to a thumb rule, your equity allocation should be 100minus your age. E.g., if you are 25, 75% of your portfolio should be inequities. The younger you are, the higher should be your equity proportion. As you grow older, you can add more debt instruments or cut your equity proportion. It is because as you get older, your risk-taking capacity also decreases.

It is also important to keep a specific proportion of your investment proportion (at least three months) as liquid cash for emergency purposes.

These were a few basics of asset allocation. But asset allocation does not stop with equity, debit, or cash. Sophisticated or seasoned investors can include alternative investment funds in their portfolios. It is becoming a popular asset class among HNI and UHNIs. It has the potential to deliver higher risk-adjusted returns. Alternative investment funds include start-ups, private companies, and hedge funds among others.

Among precious metals, gold is used as a hedging instrument. Gold performs better when the equity markets are in red. Geopolitical tensions and continuous rupee depreciation has made gold one of the must-haves in the investment portfolio of HNIs. However, ideally, gold should not constitute more than 5% of the investment portfolio.

Real estate is another asset that investors can look at to diversify their portfolios. Besides investing in real estate, investors can now invest in real estate investment trust(REIT). Through REITs, investors can invest in high-end commercial real estate.

Conclusion:

Coming up with the optimal asset allocation may not be an easy task as there are various factors at play. Prudent asset allocation can help you to achieve your financial goals, fetch maximum returns, minimize risks, and have sufficient liquidity. If you are not sure where to begin or need further clarity, your financial advisor will be able to help you out.

Tax on SIP

 

Know how SIP investments taxed

For the last few years, Systematic Investment Plans (SIPs) have become one of the popular ways to invest in the markets through mutual funds. However, before the reintroduction of Long-TermCapital Gains (LTCG) tax in the budget of 2018, long-term SIP returns from equity funds were completely tax-free, as equity funds were exempted from Long Term Capital Gains (LTCG).

Now, after the change in this law, several investors are unsure of how they should calculate their returns and tax liability. To ease out this problem, let’s see the tax angle of SIP investment. Basically, the tax on SIP currently depends upon whether the investment was made in a non-equity or an equity fund, as they have different tax rates.

How Does SIP Taxation Differ?

Unlike lump sum investments that are only one investment, SIP is made multiple times over a period. While you may consider a one-year-long SIP as one investment, when it comes to taxation, every installment is regarded as an additional investment.

This way, the holding period of every installment gets calculated.

Tax on SIP Investments on Equity Funds

For instance, suppose you started a monthly SIP in the equity scheme on 1st January 2020. On2nd January 2021, you decided to redeem the investment.

In such a scenario, only the capital gains on the purchased units from your first installment, the one made on 1st January 2020, will be considered as the Long TermCapital Gain (LTCG) as you have held the same for a period of more than one year. There is no tax on long-term capital gains below.1 lakh. Capital gains above Rs. 1 lakh are taxed at 10%.

For the rest of the installments, the holding period will be considered less than one year. Thus, the gains will be short-term. Short Term Capital Gains(STCG) of 15% will apply to these units.

Here, the ‘first in first out rule is followed. This means the units purchased first will get redeemed first.

Tax on SIP investments on Debt Funds

However, if you had invested through SIP in a debt or debt-oriented hybrid funds, LTCG will apply on units that were invested for over 36 months and the profit is taxed at a rate of 20% after indexation.

For investments below 36 months, the capital gains are added to income and taxed as per the income tax slab.

How are the Gains on SIP Investment Calculated?

Put simply, tax on the total investment of SIP is the total sum of tax payable on every installment. To calculate the same, an individual calculation of tax on each installment has to be done. Jotted down below is the entire step-by-step procedure.

First of all, the classification of equity and the non-equity fund is done

Second, the holding period is computed to discover whether the gains are long-term or short-term capital gains

Then, the cost of purchase is noted for every installment

In case the funds are equity, it has to be checked whether the grandfathering clause is going to be applicable (this is for investments that have been made before 31st January 2018).

However, if it is a debt fund, it has to be figured out whether LTCG will be applicable. If yes, adjustment for indexation will be made

Next, the calculation of applicable tax for every installment will have to be done

Short-term and long-term gains will be separated

Approximate tax rates will be applied to find the payable tax amount.

Conclusion:

Tax on SIP investments depends on the underlying securities and is taxed as per the current taxation rules on equity and non-equity investments. However, in the case of SIP, every installment is considered an additional investment.

Consult us to know more.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.