Personal Finance
Make systematic monthly investments in equity funds if the investment horizon is in excess of 8-10 years
Updated : Sep 21, 2017, 07:25 AM IST
Your query in many ways represent all that is wrong about how investors seek out a proper investment avenue. You seem to be asking for a formula for a magic potion which unfortunately nobody has. The quest for a short-term good return almost invariably leads to investors being cheated out of their money. You have one of the two ways in which to find out how and where to invest. The first more-advisable method is to consult an investment adviser and draw up a comprehensive financial plan that will encompass all your goals, your risk profile, your investible surplus, your existing assets and liabilities and your insurance needs and then work out an appropriate investment pattern after providing for expenses, insurance premium and emergency funds.The second less-advisable method is to decide your investment between equity and debt depending on your investment horizon and risk profile alone. Here it is best that you make systematic monthly investments in equity funds if the investment horizon is in excess of 8-10 years and you have the ability to see the invariable loss of capital while you are making the systematic investment. As they say, if you cannot stand the heat stay out of the kitchen. Even if you make systematic investments in an equity fund over long periods of time, the probability that you will see a loss in your capital value is quite high in as late as the seventh year also. But if you can manage to continue the systematic investment during these periods invariably in the past (after November 3, 1995), the returns have been pretty good with the minimum return in the Nifty itself for a 10-year systematic investment plan being 6% and the average return being around 16%. The distinctive feature of this investment style is the ability to continue investing systematically when the going is rough. Please remember the dictum though – Past results are not necessarily indicative of future performance.
Most tax payers have a mistaken notion that for capital gains to be taxed some money has to be actually received. That is simply not true. Capital gains tax is payable if there is transfer of a capital asset. Redemption of a mutual fund is clearly a transfer. Whether the redemption proceeds are actually received or are used to buy another scheme from the same fund is completely immaterial to the taxability of the capital gains that may occur on the redemption of the debt scheme.
The interest on your employee provident fund account stops two years after the contribution stops. So, your employee provident fund account will not accrue any interest after January 2017. Please withdraw it immediately as your money is sitting without drawing any interest at all. Please make sure that you also start off the family pension fund to the extent allowed.
The liability to deduct tax at source is on the licensee and not on the landlord. Hence, it is something that your licensee has to worry about and not yourselves. In any case, since neither of the two licensee are paying rent exceeding Rs 50,000 per month, they are also not required to deduct any tax at source under the newly-introduced provision. Also, since you are a senior citizen and have no income from business, you are not required to pay advance tax during the year. Please make sure you take the rental income into account while filing your income tax return and pay the tax, if any, on the amount of taxable income including the rent from the two premises.