Showing posts with label Tax. Show all posts
Showing posts with label Tax. Show all posts

Monday 4 December 2017

ETF vs Mutual Funds



ETF vs Mutual Funds



Nowadays, Mutual Funds are the favorite one among most of the people. Bank Interest rates are ticking down and the India Inflation rate also around 3 - 4 %. Many of us, keen to invest in mutual funds with a simple knowledge or as plain (Not known). Last week, one of the reader requested an answer in Quora.com , Is it the time to invest in mutual funds and how the mutual funds differ from ETF (Exchange Traded Fund). I had posted my answer on reply. So, that's why i am looking here to share the related information in my blog about ETF and mutual funds.

Generally, Mutual funds categorized as Two:


  • Debt Funds
  • Equity Funds


Debt funds are good, if you are looking like as a Bank FD (Fixed Deposit) or RD (Recurring). It gives a solid returns more than the Bank deposits. Indexation Benefit also available on LTCG (Long term Capital Gains), if you hold more than 3 years.

Similarly, Equity funds have a LTCG benefit, if you hold on your investment more than one year. Recently, BSE (Bombay Stock Exchange) is making a case for reinstating of long term capital gains on equity investments. (See here:  Remove long-term capital gains tax exemption: BSE )
Popularly, Equity funds are very helpful for the long term and gives a better return, stick with your financial goals.

( image courtesy: Daria Shevtsova@pexels.com )


However apart from mutual funds, ETF is also a fashionable word for the new comers on investing. ETF is nothing but, an exchange traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism. ETF are also based on market index (Sensex, Nifty), Sector wise, Gold etf, and few more.


ETF vs Mutual Funds - How it differ ?


You should understand this,
  • Exchange Traded Funds (ETF) will trade throughout the day (Trading) like shares, but mutual funds trade only at the end of the day at its NAV (Net asset value).
  • ETF have a charge of trading or broking commision, while buy or sell. on the other hand, mutual fund comes with the charge of Expense ratio on your investment.
  • Most ETFs track to a particular index and therefore have lower operating expense than actively invested mutual funds.












Kindly, share your views or comments with a smile :)



Sunday 27 August 2017

Adjusted Returns on Investment


Adjusted Returns on Investment


If someone asking you,  What is your monthly pay check or Salary ?

Then, we are hesitated to tell or show the exact numbers on salary, even after our deduction from salary :) . We are thinking about that we are protecting our income numbers !

That's not a matter, either showing the pay slip or not. But, on our Investment info, we have to be careful about the returns on numbers we earned it. We just enjoying to show this much returns i had on my investments or I had a profit of XXXXX from my investments. But, do you know what is your real returns received on your hand ?

Returns on Investment can by type of:

  1. Inflation Adjusted
  2. Tax Adjusted
  3. Risk Adjusted

From the previous article, we have seen that about the difference between Real Rate and Nominal Rate of Return. It clearly indicates that we must aware about the Inflation, it hurts our retirement planning and Goal based investments.


For Example, 


If our Return is 10 % from the investment amount of Rs. 100 /- then our Nominal return amount would be Rs. 10 /- but it should be Adjusted by Inflation. If inflation @ 4 %, then our real rate of return is:

(1.10 / 1.04) - 1 X 100 = 5.76 %



Tax Adjusted:


It is the return earned after taxes paid. It also hurts you on paying taxes from your earned income or returns, so reducing the return ratio that comes to your hand.

Usually, Tax Adjusted Returns are lower than the Nominal Returns due to the tax have been paid.


For Example,


If we had a return of 10 % by an investment amount of Rs. 100 /- and the Tax implication at 30 % (Higher), then

Earned Interest Rate - 10 %
Tax to pay                 - 30  % of Rs. 10 =  Rs. 3 /-  [ i.e  10 X 30 / 100 = 3]

So, our Post Tax returns would be approx. 7 %

We can go through this below formula for Tax Adjusted Returns:


Tax Adjusted Returns (TAR):   Earned Interest Rate X (1 - Tax Rate)


10 % X ( 1 - 0.30) = 7 %


Why we need to do this calculation ?

When you are going to choose an investment product, we have so many products like Bank FDs, Bonds, Stocks, Mutual Funds, Realty, Gold, etc. We should aware about our Tax Status also to get the Real rate of return.

Suppose, A Bank FD pays you 8 % per annum and the Tax Free bond gives you 7 % p.a, and the Stock pays you 10 % Dividend yield for your investment amount of Rs. 100 /-


Post Tax Returns are:

Bank FD           -   5.6 %   (After Tax bracket of 30 % at higher)

Tax Free Bonds -  7 %    (Totally Tax Free)

Stocks               -   10 % (Dividend is free on investor's hand)


Tax Adjusted Returns are depend upon the investor's Tax Status. So we can compare the different type of investments and put our money on good-self.



Risk Adjusted:

It depends on how much risk we can make on our investments. Usually, Higher Risk indicates to High risk adjusted return, so he will be able to earn a higher return. The Risk Free rate of return is also followed, where the Risk Adjusted returns have the excess return. Excess Return is used to calculate as the excess of the investment return over this risk free rate. Technically in financial markets, there are two types of Risk Adjusted Ratio (measuring) are,


  • Sharpe   Ratio
  • Treynor Ratio

It really helps the investors' to pick up the investments based on Performance or Rank wise



Be clear on your Adjusted Returns next time :)


Great Investing on richinvesting.blogspot.com



Tuesday 1 August 2017

How to E-file ITR 1 online ?


How to E-file ITR 1 online ?



What is ITR- 1 ?


The Income Tax Return (ITR) - 1 is a document or form that required to file by an individual whose total income for the Assessment year includes,


  • Income from Salary or Pension (or)
  • Income from House Property (or)
  • Income from other sources.
ITR- 1 also known as 'Sahaj' meaning easy in Hindi Language.


The following individuals who cannot file this ITR- 1:

  • If an individual's total income exceeds Rs. 50 Lakhs
  • If agriculture income is more than Rs. 5000
  • If you have any foreign assets
  • If you have any taxable capital gains
  • If income from more than one House property
  • If you have income from Business or Profession.

For Filing a return ITR- 1, we can get this form from online or offline, filled the details required and send it to your nearest Income Tax Department's office.

Here, we are going to see, 'How to file the ITR - 1 form online ?


Step by Step:


  1.  Go to https://incometaxindiaefiling.gov.in/    (or) Google it, 'incometaxindia efiling' and follow the link


2. If you are not registered, you can register yourself. Go to the link: https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html

[ It showing in the right side top of the page ]




You can select User Type, as an 'Individual' and continue...


Enter your PAN following with your surname, middle name, first name and date of birth. Kindly note while entering the PAN, your surname and the date of birth is mandatory.

After registering the required details, you should be go to the next page with the basic information of you, your address, email and mobile number. On completion of registration process, you have to be verify your mobile number and email by the authentication sent by the Income tax India E-filing website.

3. Now, you can login:  https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html

[ It showing in the right side top of the page ]



Enter you userid, i.e. your PAN and the password and fill with the captcha and login now.

Now, you can view a Dashboard for you. you can see some menus in the top. Click the  'e-file' menu  >  Prepare and Submit online ITR 



After clicking that, you can now see an info... ITR - 1 - Assessment year - 2017 -18

Structure of ITR - 1:

you can read the 'General instructions' under instructions of the ITR - 1 and there are 5 parts in the structure of ITR - 1 form.


  • PART A GENERAL INFORMATION
  • INCOME DETAILS
  • TAX DETAILS
  • TAXES PAID AND VERIFICATION
  • 80 G 
Kindly read everything on all the 5 parts in the ITR - 1 and fill the details, whatever you required and want. On Data entry, you can click 'save draft' to avoid the loss of data entered. Don't be rush to click the 'Preview and Submit'. Fill it everything and finally you can preview the information you entered and submit there.

After submission / uploaded, you must e-verify your filed returns. You can have more option to verify




On Successful upload of Returns, you can use your Aadhaar OTP receiving on your mobile number to e-verify for the easiest way. You can have also other options like sending the ITR - V by post, EVC, validating through your bank account.

After Completion of the above process or not, you can just go the 'Dashboard' in the left side top of the page. In the Dashboard, you can check it out the returns / forms, any pending actions, cash transactions 2016.



If you have any comments related on this article, you can share your views here...

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