Wealth = EFFORT * TIME
A Wealth is created through a continuous journey of EFFORT over a period of TIME.
When you create a wealth, you expect the wealth to pay back through
SYSTEMATIC WITHDRAWAL PLAN can turn out to be an excellent investment option to save TDS compared to Dividend funds. In a dividend option, you pay tax upfront. In a SWP option, you will have to pay tax when you withdraw – LTCG.
Individuals looking for a regular income from their investments often go for regular dividend funds. But TDS deducted at source in these funds. So choose SWP.
We have two major options:
As the name goes Hybrid funds are a combination of Debt funds and Equity funds. In a
debt Hybrid, Debt funds will be more than 65% and the balance will be equity. Here you
Get Indexation benefit when you stay invested post 3years. This means you have to pay
tax based on your income slab post inflation.
Say your interest income is 8% average for 3yrs and the inflation index’s average inflation is 5%. You pay tax only for that 3%. In fixed deposits, you pay for the entire 8%.
Additionally, since you have exposure upto 35% Equity, you can get higher returns than Fixed deposits over a medium to longterm tenure. These are called Conservative hybrid funds
In case of Hybrid funds, Equity funds will be more than 65% and the balance will be
debt. Here you have to pay LTCG – Long term capital gain tax when you withdraw.
Now upto 1lakh gain tax is exempted. Above 1Lakh it is taxed at 10% irrespective of your tax slab. Even if you are at 20% or 30% tax slab, only 10% is your LTCG.
As the is equity exposure is high, return potential is high. But at the same time look at a minimum 5 to 7years horizon. These are called Aggressive hybrid funds.
This category is Dynamic asset allocation strategy. In this fund, a portfolio is
invested in equity and debt mutual funds of the respective AMC’s. Here the fund
managers has no capping of 65% equity or debt. Depending on market valuation, a fund
manager can even decrease equity or debt to even to 0%.
Additionally, this is classified under Debt taxation. So if you stay for more than 3years, you can get indexation benefit.
Following the 3 things you should always remember before investing in Mutual Funds :
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