Category: Personal Finance

Post Office Vs Bank Deposits: Why Post Office Is Better Choice?

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Investment

oi-Sunil Fernandes

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Interest rates on the larger bank deposits are dangerously low and at best avoided. While not that post office are offering significantly higher interest rates, but, even a 1 to 2 per cent higher rates are good enough in the present context.

Quick compasion:

1-2 years 2-3 years 5 years and above
State Bank of India 4.90% 5.20% 5.40%
HDFC Bank 4.90% 5.15% 5.50%
ICICI Bank 4.90% 5.15% 5.25%
Post office time deposit 5.50% 5.50% 6.80%
PPF 7.10%
KVP 6.90%
NSC 6.80%
Senior Citizens Savings Scheme 7.40%

Even the time deposits of the post office are much better, if you consider a medium to longer term duration. The 5-year deposit in the post office fetches an interest rate of 6.8%, compared to a maximum of 5.5% offered by some of the larger banks in the country.

Some of the schemes of the post office like the Kissan Vikas Patra, Public Provident Fund and the National Savings Certificate also offer tax benefits under Sec80C, while under the PPF even the interest is exempted from tax.

Post Office Vs Bank Deposits: Why Post Office Is Better Choice?

Interest rates unlikely to go up in a hurry

Interest rates in the economy are unlikely to go up in a hurry, though investors are advised to stick to a duration of not more than 2 years when investing. As inflation starts edging up with economic growth gathering pace, we will see interest rates trending higher. When that happens investors who have invested for a longer term might get trapped. It is therefore advisable to stick to a shorter duration.

Conclusion

If you have to choose between post office and bank deposits, the obvious choice should be post office deposits. Yes, there are issues with regards to service, ease in opening and closing the account etc. However, if you are investing large sums of money it would be worth going through the effort.

Post office still have some way to go in order to offer investors ease and flexibility. We are living in a current regime, where interest rates are exceedingly low. This is unlikely to change anytime soon, though we expect interest rates to go higher in the next 2 years or so.

GoodReturns.in



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Why Mutual Funds Are Showing 1-Year Returns of 70-80%?

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Investment

oi-Sunil Fernandes

|

If an investor is investing in equity mutual fund schemes and is looking at the track record of the last 1-year, he is going to be stunned. There are many equity mutual funds that are showing returns of 50, 60, 70, 80, 90 and even 100% returns in the last 1-year. Let’s take a look at some of these, though the list is not exhaustive.

Name of the fund 1-year return
SBI Small Cap Fund 99.91%
Union Small Cap Fund 98.51%
Axis Small Cap Fund 88.47%
Tata Midcap 75.20%
Mirae Emerging Bluechip 78.71%
UTI Flexi 72.20%
Tata Largecap 62.20%
DSP Flexi 64.41%

Now, let’s see one of the biggest reasons for mutual funds generating such a stellar rally over the last 1-year.

Sensex closing May 18, 2020 Sensex closing May 14, 2021 % Change
30028.98, 48,732.55 62.29%

At the same time last year, the Sensex was hovering around the 30,028 points mark, while the Sensex now is around 48,732.5, which itself is a gain of 62.29%. So, the Sensex has rallied 62.29%, thanks to the slump in the markets last year, due to the lockdown after Covid-19 infections surfaced.

Honestly, there is nothing much to read into the stupendous returns of equity mutual funds over the last 1-year, except the fact that there has been crazy buying by FPIs in the last 7-10 months, which has pushed benchmark indices higher.

Will the solid returns continue for equity mutual funds?

Markets are over priced at these levels as the price to earnings multiples for the Sensex and the Nifty are way above historical averages. However, the world is flush with money from low interest rates and easing, which should continue to push stocks higher. These days liquidity matters and fundamentals take a back seat. It will not be a surprise to see markets moving even higher from here, given the low interest rates across the globe. Unless inflation surfaces and interest rates rise, stock markets are not going to fall in a hurry. This means that the returns from mutual funds would continue.

Why Mutual Funds Are Showing 1-Year Returns of 70-80%?

As far as investors are concerned, it would be advisable not to invest large sums in the stock markets. A better option would be to invest money through SIPs as you would be able to hedge your risks. Investors with a long term perspective may stay invested, however, it is also not a bad idea to take a little bit of money and keep liquidity, so as to invest at lower levels.



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Tax Query: How will spouse of NRI be taxed on stock trading gain funded by joint bank account in India?

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I am an NRI and I have an NRE trading account and savings account with one of the private banks of India. I have a regular resident bank account, jointly with my spouse. Can I open a stock trading account in my spouse’s name (an income tax payer, working in state government) and start paying for the trades from the resident joint savings bank account? If so, how will my spouse be taxed on the gains in such transactions?

S Nagarajan

Our response below is based on Income Tax Act, 1961 and doesn’t include the applicability of FEMA regulations relating to investment in equity scrips by NRIs in India.

Under the Income Tax Act 1961 (Act), characterisation of income earned from sale of shares shall depend up on the motive behind the investment in such shares and accordingly taxed either under the head ‘Profit and Gains from Business’ (BI) or ‘Capital Gain’ (CG). Thus, sale proceeds from shares held as stock in trade (trading) shall be taxable as business income (BI) while the proceeds from shares held as investment (capital asset) shall be taxable as capital gains (CG) under the Act.

Assuming that the shares would be held as investment, Long term CG in excess of ₹1 lakh from sale of listed shares are chargeable to tax at the rate of 10 per cent. Short term CG (STT paid) shall be taxable at the rate of 15 per cent. Besides, surcharge (if applicable) and health & education cess at 4 per cent shall apply.

It may be noted that effective from FY 2020-21 (1 April 2020 to 31 March 2021) dividend distribution tax has been abolished, consequently, dividend income from shares are taxable in the hands of the shareholders at the applicable tax slab rates. As per Section 64 of the Act, any income from investment made or assets purchased in the name of close relatives (spouse, minor child or daughter-in-law) is clubbed with the income of the person making the investment and taxed accordingly. This applies to all types of investments such as shares, fixed deposits, etc.

Accordingly, the income earned from investment in shares shall be clubbed in your total income and taxed at the applicable rates as discussed above.

The writer is Partner, Deloitte India.

Send your queries to taxtalk@thehindu.co.in

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Should you go for rooftop solar power?

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India has the world’s cheapest solar power, suggests a survey by the International Renewable Energy Agency. Even amidst a raging global pandemic, climate change worries still continue to make the headlines. Carbon emissions can be reduced by moving from coal to renewable power such as solar. In the spirit of doing what is in your power to do, should you install a roof-top solar unit? Let’s find out.

Ownership costs

Buying and installing a rooftop unit and associated components is typically how home owners or apartment communities generate solar power. There are various incentives and subsidies provided by Central and State Governments towards the capital cost. For example, the Ministry of Renewable Energy (MNRE) has proposed a subsidy for rooftop solar power plants under the ‘Sustainable Rooftop Implementation for Solar Transfiguration of India’ (SRISTI) scheme. States such as Tamil Nadu also have similar subsidy schemes. For home owners, banks provide loan for setting up solar units, under the home improvement category.

Based on the rooftop area available and your budget, you can choose the capacity to install. You can assume that 1 KW capacity requires 220 sq. feet of area. This can potentially produce 5 units in a day (with 5-6 hours of sunshine), assuming good solar intensity–– that varies across states. For example, in states such as Gujarat, the intensity is high, versus that of others such as Himachal Pradesh.

The average price of panels is about ₹35,000 to ₹50,000 per KW (depending on the overall capacity). This forms about one half of the cost. Inverters needed to convert DC power to AC, wiring and other components and installation may take the cost to ₹60,000 to ₹75,000 per KW. These can be purchased as a kit, along with mobile apps to monitor power generation.

Costs, however, increase substantially if you go for battery backup – which may be skipped for grid-connected solutions. Data from the MNRE shows that the benchmark per Watt cost is only ₹60 for grid connected system without battery, but shoots up to ₹100 if a 6-hour battery storage is added for off-grid usage.

Do the math

Your return on investment depends on your cost, subsidy and the cost of electricity. Based on data from the MNRE’s calculator in its website, if we assume ₹8 per unit of power, a 1 KW unit would save you about ₹12,000 per year. This mitigates 41 tonnes of carbon per year and is equivalent to planting 49 teak trees. If the cost was ₹60,000, you can get your return in five years and continue to reap the benefits for 20 or more years (as the lifetime is about 25 years).

The practical math is not so simple and the return is based on the use case as well. For example, if you face frequent power-cuts in your area, a rooftop solar unit may be a good investment, because the alternatives such as diesel generators or large capacity inverters to store electricity are far more expensive.

However, if there is grid power which is somewhat assured for most parts of the day, the primary reason for installing will be to go green and reduce the power bill. In this case, the cost saving depends on the power policy in your State. For instance, some states use gross-metering – where you pay normal rates for the power you use and get paid a lower amount for the power you generate. In this case, the return on investment tends to be much lower.

Some states such as Karnataka have net metering – you are billed the difference between what you use after deducting what you generated. This often gives a better payback. Even in these, be aware of various caps on the amount of power you can export to the grid. In Gujarat, for example, it is capped at 50 percent of the contract load or the limit sanctioned for the first two years of the agreement.

More caveats

Besides power policy, there is lack of support from the Government for capital cost subsidies. For instance, Tamil Nadu caps capacity to 1 KW for subsidy (₹20,000 per kW). There is often a long queue involved in getting subsidy in nearly all states and you must plan on making full payment.

There may also be delays and onerous procedures to follow for being paid for power generation – completion of site inspection and getting net meters installed by the authorities.

If ownership is too expensive but you still wish to be green, consider renting out your terrace space to a Government or private entity to install the equipment. In return, you get financial benefits. For example, in Kerala, if you go with the utility-owned model, you can get 10 percent of the electricity produced, for free. Alternatively, you can buy any quantity of electricity produced at a fixed rate.

The author is an independent financial consultant

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How to manage your non-bank deposits in Covid times

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The corporate deposit ecosystem, like many others in our country, previously involved physical steps when it came to managing it. Ordinarily, tasks such as physical document submission and branch visits are not difficult, but the same has become unsafe during Covid times. To help customers, NBFCs have stepped up their digital game in the deposit management space. Right from opening fresh deposits, to renewals and top-ups, almost all the processes can now be done online.

Opening accounts

Depositors can open new corporate deposit accounts with many NBFCs such as Bajaj Finserv, Mahindra Finance and HDFC completely online. In case you are a new customer, electronic KYC (e-KYC) becomes central to this process. e-KYC can be done by providing PAN or Aadhaar. Or else, you can simply upload documents. To get more clarity, you can check the demo videos either on the company websites or YouTube channels.

Once KYC is done, you can enter the deposit amount, choose tenor and interest payout type, and submit bank account details. Then, the payment needs to be done. Do note that payments above ₹1 lakh need to be done by net banking. In case of third-party bank transfers, the depositors’ individual banking limits should be known before effecting transfers. Upon successful payment, your deposit will be booked and you’ll receive an acknowledgement. Mahindra Finance allows a rapid investment feature where a new investor, registered in central KYC, can invest in six steps.

Top-up deposits

For existing customers, the online management becomes even easier. This is because the system already knows you. Depending on the company, you can log in credentials. For instance, Bajaj Finserv asks for customer ID or email ID or mobile number. The deposit platform of HDFC asks for PAN and date of birth. In this case, an OTP comes to your registered mobile number and you need to submit it to proceed.

NBFCs such as Sundaram Finance recently launched online renewals and acceptance of additional deposits only for existing deposit holders. In case of Sundaram, existing customers have to send an email to avail this facility along with their customer ID so that the company can enable access. After a one-time registration, one can open additional deposits. “Individual depositors can place an additional deposit to their existing deposit account(s). The order of names, bank details and nominee details of the existing deposit must be the same when placing an additional deposit,” reads a Sundaram Finance communique.

In case you have not registered your bank account, NBFCs provide the facility to email the details along with scanned copy of cancelled cheque/first page of passbook. Also, if there are joint holders of an existing deposit, any additional deposit creation process will require authentication from both parties.

For continuity of matured deposit without any break in interest, top-up should be made within maturity date.

Online renewals

When filling FD application form, one can choose to auto-renew one’s deposit, spared from the hassle of renewals. In fact, in some companies, auto-renewal earns an additional interest rate benefit for deposits.

But industry sources indicate that just about 50 per cent of depositors tick the option of auto-renewal.

This is because customers may choose to be nimble on their feet and decide from among options that give good rates for a certain risk profile, rather than renew with the same entity.

However, for those looking for the convenience, NBFCs allow individual depositors to renew their existing deposits online.

The online process is user-friendly, and designed in such a way that customers will take not more than 2-3 minutes to complete their transaction, says Dilip Shetty, associate member of executive management, HDFC.

After entering the website as an existing customer, depositors can, with a few clicks, choose to renew the deposit(s) from their personal dashboard.

Some NBFCs also allow existing depositors to use the online system to submit Form 15 G/H, inclusion/modification of bank details by uploading necessary documents, view/download interest estimation for advance tax and modification of registered mobile number.

Besides, some also allow online premature deposit withdrawal, loan against deposit, download of account statements, etc.

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How you can claim domiciliary hospitalisation benefit

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Santosh and Sophia logged on to their regular morning Zoom call at work and finding that their other colleagues had not joined in, they struck up a conversation while waiting for others.

Santosh: Hope all’s well at home, Sophia? Didn’t see you on the call for the last one week.

Sophia: I did have a problem, Sandy, but compared to what’s happening around us, it’s not so bad.

Santosh: Hey, sorry to hear. What’s up?

Sophia: You know I live with my 85-year-old grand-dad right? He suffered a fall on his morning walk on the terrace and fractured his ankle.

Santosh: Goodness! What did you do? Its quite risky to take him to the hospital in these times.

Sophia: Yes, and the doctor also felt it was inadvisable to attempt to move him and advised us to treat him at home.

Santosh: Hope you were able to treat him at home. But what about the expenses? Our office health insurance only covers actual hospitalisation.

Sophia: Well, I have a separate floater health cover personally, that covers domiciliary hospitalisation. That is taking care of it.

Santosh: What’s that? It’s the first I’ve heard of it.

Sophia: If your health insurance policy covers domiciliary treatment, the insurer will reimburse you for any hospital-like treatment taken at home. A doctor must certify that it is not advisable to move the patient to the hospital. If the patient is unable to get a bed in time, domiciliary hospitalisation covers that too.

Santosh: Very useful in these times! I wish I had known about this last year, when I had a bad case of food poisoning after hogging biriyani and was laid up at home.

Sophia: Haha, not really Sandy! Health insurers don’t offer domiciliary treatment cover for everything. First, your health insurance policy should specifically cover domiciliary treatment. While this feature is in-built in some health covers, in some you have to opt for it separately. Two, for you to apply for reimbursement of domiciliary cover, the treatment needs to last for a minimum of three days. Three, the doctor needs to certify that your condition needed hospitalisation, but you couldn’t go to a hospital either because of your condition or because of beds being unavailable. You can’t simply refuse to go to the hospital and hope to get the money. Your food poisoning episode wouldn’t have met any of these conditions.

Santosh: I should’ve known there will be a million strings attached. Any other stuff that’s excluded?

Sophia: Yes, plenty. Most insurers list out set of illnesses for which domiciliary cover won’t be offered. Usually, they won’t reimburse you for home treatment for asthma, bronchitis, cough, cold,flu, diabetes, hypertension, epilepsy, diarrhea, arthritis, rheumatism, respiratory infections and psychiatric disorders. And yes, I forgot ayurvedic and homeopathic treatment – that’s not covered either.

Santosh: Looks like only life-threatening conditions such as Covid will be covered. Will all the expenses you incurred towards your grandad’s treatment be paid by the insurer? Or do you have to pay out of pocket too?

Sophia: No, I’m afraid. You see, as I didn’t see foresee not being able to go to the hospital, I opted for domiciliary cover as an add-on. My policy covers such treatment only to the extent of 10 per cent of the sum assured. As my health policy is worth ₹10 lakh in total, I’ll get about ₹1 lakh as reimbursement towards domiciliary treatment. But something is better than nothing.

Santosh: Well, I’ll be glad to help you out. This was one useful chat, Sophia. Far more useful than most of our office Zoom calls, I must say!

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Insurance claims for loss of loved ones now made easy

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The loss of a loved one is irreplaceable and is difficult for the family to cope with, but life insurance helps soften the financial blow. In the unfortunate event of the death of a policyholder, the nomineeis required to carry out certain procedures to receive the claim amount. Here is how one needs to go about the process.

Making death claims

Every claim from a life policy starts with claim initiation, then processing and settlement. Considering the restrictions on movement due to Covid-19, many insurers, including SBI Life, Tata AIA Life, ICICI Pru Life and Exide Life, have made the entire process online.

If you are a nominee, then you can raise the claim request to the respective insurer through any one of the modes — email, Whatsapp or Chatbot. You can call the customer service or your agent for the same. Insurers like PNB Met Life and SBI Life have set up dedicated helpdesks to handle Covid-19 death claims requests.

Once you have notified the insurer, the next step is to submit the documents.

There are a few basic documents that are to be submitted irrespective of the type of claims — maturity, accidental or death. These include original policy document, bank account statement or cancelled cheque leaf, nominee’s or life assured’s ( in case of maturity or accident claim) identification proof such as PAN card or Aadhaar.

In case of death claim, in addition to the documents mentioned, the claim form (available with the insurer online), death certificate from competent authority (usually Government officials), doctor’s certificate, medical records or test results should be signed and submitted.

Given the current pandemic situation, many insurers like SBI Life and ICICI Pru Life have made this process digital. Policyholders/nominees can upload claim-related documents through WhatsApp, Mobile App, Chatbots (LiGo in case of ICICI Pru Life) and company website.

Ease of documentation

A few insurers have eased the documentation requirements due to restrictions in place across the country on account of Covid. For instance where death has occurred in a hospital, instead of requiring death certificate mandatorily from municipal authority, LIC has allowed alternate proofs of death such as death summary containing clear date and time of death issued by Government/ESI/Armed Forces/Corporate Hospitals and counter-signed by LIC’s class I officers or Development Officers along with Cremation/Burial certificate.

Similarly, SBI Life and Tata AIA have also waived the requirement of submission of a death certificate from civic authorities in cases where death has happened in a hospital, and the hospital issued (medical cause) death certificate or death discharge summary can be provided as proof of death.

Claim settlement

As per insurance regulator IRDAI, life insurers must settle death claims within 30 days of claim intimation. But if a claim warrants an investigation, then the insurer should conduct such investigation within 90 days from the date of receipt of the claim intimation and the claim should be settled within 30 days thereafter. That said, many insurers settle claims within seven working days or less.

For instance, Tata AIA Life and Exide Life settle the claim within two days (48 hours) upon receipt of the mandatory documents, while ICICI Pru Life claims to settle death claims within a day. PNB Met Life has a three-hour turnaround time for approval of death claims upon receipt of required documents.

Other claims

Norms have been eased up for other claims with life insurers too.

In the case of pension policies (annuities), the insured or the annuitant has to produce life certificate.

Normally, it would require their physical presence as proof of life. Given the current Covid situation, many insurers accept digital life certificate. LIC, for instance, has waived of production of life certificate for annuities with return of capital options due up to October 31, 2021.

Besides accepting life certificates sent through email, in other cases, LIC has also introduced life certificate procurement through video call process.

Private insurers such as SBI Life and Bajaj Allianz Life too, have started accepting digital life certificate and have made the entire process online.

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How to build a resilient equity portfolio amid market volatility

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The bull run since March 2020 has been unprecedented by historical standards – a bull run in the midst of the worst recession since World War 2. It resembles a rooftop party when the hotel lobby is on fire under full conviction that the fire men (central bankers and governments) have the tools (monetary and fiscal stimulus) to douse the fire and fix the mess.

It is often said that markets look to the future and this phrase has been oft-repeated to justify market movements contrary to current fundamentals. Same time last year (April/May 2020) many market observers were agog with opinions that Covid-19 would be under control in a year, setting the stage for economic recovery. Well, here we are one year later in May 2021, witnessing a deadlier second wave.

Given the uncertainties, markets have remained volatile in recent times. Have you assessed whether your portfolio is bear market proof? Bear market proofing does not mean building a portfolio will not decline in a bear market, but building one which is well positioned to withstand the phase and reap benefits, when the cycle turns favourably. Here’s what you can do.

No aggressive averaging

Painful investment stories include cases of investors buying stocks first while it is in triple digits in a bull market, averaging aggressively in double digits in a bear market and finally selling it in single digits! As correction in certain stocks increase, investors tend to increase allocation to that stock out of belief that is more attractive and overall portfolio positions may become concentrated.

When a bull market ends and bear market plays out, many stocks you thought were built to last, become history. Our own bellwether indices – Sensex and Nifty, had quite a few stocks that turned out this this way after three-digit or four-sigit share prices– JP Associates, Unitech, ADAG Group stocks, Suzlon. Yes Bank etc are examples. If that is the case with bellwether stocks, you can only expect a larger rout in mid- and small-cap stocks. Geodesic, Tulip Telecom, Educomp, Everonn, Karuturi Global, IVRCL etc. are just a few examples from a large universe of stocks that were touted as next big guns of the market in the earlier decade, but mis-fired.

A rule for each bucket

So, which stocks should you average and which ones you shouldn’t ?

Thematic/high risk bets (10-15 per cent of principal invested) – These can become potential multibaggers if the theme plays out successfully and the stock becomes a bellwether of the theme. If you had bet on electric cars as a theme in the early part of last decade and bought Tesla, it may have paid off. But this pay-off came after multiple near bankruptcy situations for Tesla. Similarly, in early stages it will not be clear who would be the ultimate winner of a theme. If you are looking to make 10-20x return on a stock, there is no reason for you to average if the stock goes to x/2 as the risks are higher when you average, given the theme/stock may not play out. Hence to manage the risk here, what investors can do is to make a one-time investment and resist the urge to average during corrections. Besides your research, if you are lucky your investment will pay off. If not, you would not have lost more.

Quality/value stocks (60-70 per cent) – Companies with best-in-class managements and corporate governance, strong balance sheets (very marginal debt or net cash in balance sheet) can be placed in this category. If any company is going to survive a bear market, it would be these companies. Companies in this category can be averaged periodically through the bear market phase like you would do in the case of a mutual fund SIP.

Cyclical stocks (20-25 per cent) tend to be most volatile to changes in macro backdrop and hence can give outsized returns or losses as this backdrop changes. Naturally in a bear market, their performance will be far worse than the broader index. If you are a long-term investor, this category of stocks you can buy or average when they are trading at levels closer to historical trough valuation levels.

Keep powder dry

While definitely at every point in time, including times of euphoria, markets offer opportunities for long-term investors, there is no case to go all out into the markets when it is trading at levels significantly above historical mean.

At a broader level, markets keep giving slam dunk opportunities to enter from time to time as, what is known as the ‘Minsky Moment’ plays out in every market cycle. Excessively speculative periods in bull markets are usually followed by a collapse. Shares fall well below fair value as the speculation involving extreme levels of leverage gets unwound when the economic expectations shift to the negative. For example, if you had missed the 2004-2007 bull market rally, you would have again got an opportunity to enter the markets at 2005 levels in 2009. Similarly, if you had missed the 2013 to 2020 rally, you would have again got an opportunity to enter the market at 2014 levels in 2020.

As per recent data, FPIs own around $575 billion in Indian equities,of which 75 per cent is concentrated in just 40 stocks. Any threats to the dollar carry trade due to inflation concerns in the US, combined with leverage taken by Indian investors as well, may trigger Minsky Moments. So, in case you have missed the 2020 rally, keep calm. You are likely get an opportunity to enter at attractive levels in the future.

(This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)

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Crypto News Roundup; Bitcoins Slips Below $50K, Ether Dips Below $4K, Other Crypto News

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Planning

oi-Sneha Kulkarni

|

Bitcoin volatility is largely driven by differing perceptions of the cryptocurrency’s intrinsic value as a store of value and method of value transfer. There are currently over 4,000 different cryptocurrencies, but should you invest? Investing in cryptocurrencies has both advantages and disadvantages, and the answer to this question will be different for everyone.

Crypto News Roundup; Bitcoins Slips Below $50K, Ether Dips Below $4K, Other Cryp

Bitcoin

Bitcoin (BTC) is a peer-to-peer cryptocurrency that was first described by the pseudonymous Satoshi Nakamoto in a 2008 paper. Following a series of negative tweets from Elon Musk, the world’s second-richest man, Bitcoin (BTC), and most crypto markets suffered a massive loss this week. At the time of the press, the world’s largest cryptocurrency was at $48,901, down 3.34%.

Ethereum

Ether, on the other hand, continues to climb toward $4,000 as institutional interest in the altcoin grows and investors get excited about the upcoming London hard fork. While, at the time of press, Ether dipped below $4k and was seen at $3,905.

Dogecoin

Elon Musk’s most recent foray into crypto markets came only a few hours ago, when he tweeted that he is working with Dogecoin developers to boost the cryptocurrency’s performance.

In response to Musk’s tweet, TradingView noted that Dogecoin’s market capitalization had risen to $10 billion in the aftermath. The market capitalization of Dogecoin was around $49 billion at 6 a.m. on Friday, but it has since risen to $66.7 billion as of this writing, an increase of nearly $18 billion.

Crypto ransomware Attacks

According to Chainalysis, a blockchain data company, ransomware attacks were responsible for at least $81 million in stolen cryptocurrency this year.

Argentina

Argentina’s regulatory framework is being updated to include more controls on financial transactions involving cryptocurrencies.
As a result, Argentina’s tax authority, AFIP, has issued Form 8126, which requests monthly reports on client data from crypto exchanges in the country.

North Dakota

By accepting cryptocurrency payments, a city in North Dakota is joining the cryptocurrency adoption race in the United States. It has partnered with BitPay, a cryptocurrency payment company, to begin accepting Bitcoin (BTC) as payment for utility bills.

UK

With the potential rise of non-bank actors issuing currency, the deputy governor of the Bank of England has argued that public money in digital form could serve as a crucial anchor for confidence in money as a social convention.

Turkey

Turkish customs officers busted an illegal smuggling operation in what is said to be the country’s largest bust of illegal Bitcoin (BTC) mining equipment.

Goodreturns.in



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2 Investments That Can Give Better Returns Than Fixed Deposits

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Investment

oi-Roshni Agarwal

|

In a low interest rate environment that is likely to continue for some more time given the economic conditions currently in the wake of the world’s worst health crisis that India confronts what maximum return you get on your bank FDs or for that matter by keeping your deposits in the post office are sub 6 percent. So, amid an already gloomy scenario, if you want to add up to your wealth and gain substantial returns that fetch better returns than bank or post office time deposits you may consider the following investment options:

2 Investments That Can Give Better Returns Than Fixed Deposits

2 Investments That Can Give Better Returns Than Fixed Deposits

1. Fixed Maturity Plans (FMPs):

What are Fixed Maturity Plans (FMPs)?

Fixed Maturity Plans are close-ended debt plans which deploy funds in debt securities including government securities, high-rated NCDs or non-convertible debentures, money market securities, certificate of deposits (CDs), corporate bonds and commercial papers or CPs. The FMPs are offered for different maturity timeframes; that may be as short as three months or as long as 3-4 years

Note- Returns from the FMPs which are reflected in their NAVs fluctuate depending on the movement of the interest rate in the economy and hence there can be volatility in them.

Who should invest in FMPs?

• Low-risk investors (investors who can afford some degree of risk) or investors who have surplus money with no liquidity constraints can typically invest in FMPs. This is because these FMPs come with low liquidity.
• Also as the returns from them depend on the interest rate in the economy, investor should be willing to accept the fluctuation in their NAV value. So, those looking for a higher return than usual bank FDs can park their money in FMPs.

How FMPs offer better return than FDs?

The FMPs allow its investors to lock in the current market yields for a medium term of say 3-4 years with a substantial tax benefit. In the case of FMPs maturing after 3 years there is provided indexation benefit on computation of tax liability. But fixed deposits regardless of the maturity term attract tax implication on interest made depending upon the slab of the investor.

Real all about FMPs here.

2. Debt mutual funds:

What are Debt mutual funds?

These are mutual funds that invest in fixed income securities including corporate bonds, government-securities, corporate debt securities and money market instruments among others. These are also referred as bond funds or fixed income funds.

Who should invest in Debt mutual funds?

Rise-averse or low risk investors looking for steady income stream can opt for debt funds as these are less volatile in nature. So, those of you who until now took to conventional fixed income options such as FDs can consider debt funds for higher returns as they are more tax efficient.

Comparison of Debt mutual funds and Bank Fds on various parameters

Parameter Debt fund Fixed deposit
Return 7-9 percent 6-8 percent
Risk level Low to moderate Low (fixed deposits insured by the DICGC up to the limit of Rs. 5 lakh)
Liquidity And early redemption High. Allowed and exit load charges depend on the AMC Low (pre-maturity withdrawal entails a penalty)
Expense ratio Nominal amount No such charges
SIP facility SIP and lump-sum investment options both are available Only lump sum investment can be made

How debt funds can offer a higher return than Bank FDs?

Typically returns from debt mutual funds depend on the interest rate trajectory. And they may produce higher return than Bank FDs by way of capital appreciation as well as by providing regular income in the form of dividends.

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