The much anticipated Budget announcements are over. The entire Opposition walked out from the Lok Sabha in protest terming the Budget as 'inflationary'.
The FM changed the slabs cutting the rate to 10 per cent for income up to Rs 500,000. The tax concession the FM said will give more money in the hands of the people.
But raising the duties on petro products will automatically hike the cost of petrol and diesel, which will not only hurt vehicle owners, but prices all around will also rise.
What effect will the Budget have on your investments?
Is it the right time to make new investments?
In a chat on rediff.com on Tuesday, investment expert Harsh Roongta offered some valuable tips. Here is the transcript:
Harsh Roongta says, Hello and welcome everyone. Firstly the disclaimers. Niether I nor Apnapaisa is a insurance broker or agent and it is advisable for you to seek indiviudal professional guidance from a personal finance expert or an insurance agent or broker before buying or selling or surrendering any investment product or insurance policy. With that out of way let's get started
PratibhaPatil asked, Is it good to Invest in stock market (long term) and pay taxes... or is it good to invest in 3 yrs locked investments and save tax.. I personally feel that the first one is better. What about u?
Harsh Roongta answers, at 2010-03-02 15:07:50I have not understood your question. At least as per current laws any capiatal gains on sale of equity shares in the stock market (if held for more than 12 months) or units in an ELSS of a mutual fund are both exempt from tax. So tax wise the situation is similiar. You are perhaps referring to the fact that you do not get any deduction while making an investment directly in the share markets whilst if you invest in ELSS of a MF you get deduction under section 80C. Normally unless you have expertise in the stock market i would recommend investing in the markets through a mutual fund and the ELSS gives you a substantial tax break especially if you are in the high tax bracket.
joby asked, Hello Sir, My monthly savings is Rs 15000. How should I plan to invest this money to accumulate 1 crore in 20 years?
Harsh Roongta answers, You need to get a return of 9% p.a. for Rs. 15,000 a month for 240 months to accumulate to Rs. 1 crore in 20 years. As long as you are willing to take exposure in equity you should easily be able to achieve this onjective by making a systematic investment in a equity oriented mutual fund scheme. You can consider any exchange traded index fund (Benchmark Nifty fund being one) or any index fund or perhaps a large cap equity fund. If you are willing to take a little more risk you can also consider putting a part of the monthly amount in a middle cap or small cap fund on a regular SIP basis.
AMARJEET KUMAR asked, hello i want to save 20k per Annum and already deducted provident fund 27K per annum. I want more beneficial return u/s 80c.could you suggest more avenues for me in future
Harsh Roongta answers, You have not stated your tax position. But if you are a long term investor and can take market risks would recommend an ELSS scheme from a mutual fund.Among debt instruments PPF is a great option (liquidity is poor though as you cannot withdraw for 5 years and that too only 50% and in installments thereafter). You can also consider NSC's.
vishnu asked, what are infrastructure bonds?
Harsh Roongta answers, The FM has proposed a new section number 80CCF in the Finance bill which will provide an additional deduction of upto Rs. 20,000/- in respect of investments made in "notified long term infrastructure Bonds". The notifications will be issued after the finance bill is passed sometime at the end of the budget session and is approved by the President. we will have to wait for details till such notifications come out. It is not clear who will be allowed to issue such bonds, what will be the interest rates, whether they will be credit rated, what will be the redemption process, whether pledging of such bonds will be allowed or not, etc.....
shiree asked, hello Harsh,which investment is better NSC or PPF?or any mutual fund?for tax saving and investment purpose
Harsh Roongta answers, All investement is about 3 parameters. Yield, liquidity and safety and these parameters are inversely related. So NSC and PPF are low risk instruments but ELSS from a MF has relatively higher risk so the return expected from a NSC/PPF is lower than what is expected from a ELSS. Between NSC and PPF NSC has better liquidity and hence a relatively lower yield as compared to PPF 9especially if you consider the tax free nature of PPF interest). What you should invest in depends on your income and tax position, the financial goals you want to achieve, your risk tolerance capacity, etc. and the only generalised advise that can be given is that both PPF and NSC are good instruments and if youdo not have liquiidity issues then perhaps PPF scores over NSC.
hari asked, Sir, I want to invest Rs. 50,000/- in my daughter name, who is 5 1/2 year old now. What is best option to get maximum return on long term investment for her future studies i.e., at the age of 18 + when she reaches ?
Harsh Roongta answers, It is great that you are planning your daughters future well in time. firstly make sure that you have adequate life insurance cover so that any financial goals you have regarding her are not jeopardised by anything unfortunate happening to you. Secondly for a long term like 13 years it is advisable (subject to specific advise from your own personal finance consultant) to have exposure to equity by investing in an appropriate mutual fund scheme. Normally would not advise you to invest a lump sum in the market but since your investment period is 13 years+ you can llok at any ELSS (if you have a need for tax deduction) or a large cap mutual fund scheme or an index fund.
rtib asked, Do u suggest taking money off the ELSS schemes because DTC do not have mention of these?
Harsh Roongta answers, do not atke any hasty decision. Firstly monies invested in an ELSS is locked in for 3 years so you cannot take it out before that date anyways. Also the tax department has promised to look at various current deductions and make necessary transition provisions for them in the DTC.
ASTUI asked, Hello Sir How safe to invest in SIP
Harsh Roongta answers, SIP only referes to the mode of invetsment (Systematic Investment plan - normally fixed monthly amounts invested in a mutual fund scheme). Safety depends on what kind of mutual fund scheme you are investing it in and what your investment horizon is. Normally If you are investing in a fixed income scheme of a mutual fund for a period of at elast around 1-2 years then your money is reasonably safe. Over long etrms (10+ years) a equity schemes have been known to give excellent returns beating fixed income schemes but obviously it hs relatively higher risk.
meghna asked, What is the max limit on interest on housing loan eligible for tax benefit.
Harsh Roongta answers, Well if you are using the house property for your own residence than the interest payable is subject to a limit of Rs. 1,50,000/- per annum. If the property is rented out the entire interest payable is allowed as a deduction. The principal deduction is nallowed upto Rs. 1 lac in either case.
sdfasfd asked, Hi Harsh, Which is the best short term investment (1LAcs) for about 1-2 years that can give good returns?? is fixed deposit right option?
Harsh Roongta answers, Yes - low risk and decent returns. You can also consider good fixed maturity plans from mutual funds especially if you are in high tax bracket.
Sripada asked, I'm 30. I have floater coverage for 2 L from my company for me and my family. should i still go for another mediclaim policy?
Harsh Roongta answers, For most people Rs. 2 lac floater policy would be way to low. You should be definitely looking for additional individual cover of at least Rs. 3 lacs for all your dependents. For reasons why i recommend individual plans rather than family floater plans please see this article
Harsh Roongta says, Ok folks it was great cahtting with all of you. If you still have any queries please login to www.apnapaisa.com. Bye and take care.
The much anticipated Budget announcements are over. The entire Opposition walked out from the Lok Sabha in protest terming the Budget as 'inflationary'.