Need regular income: SWP or Dividend?

SWP or dividend

Changes in taxation on dividends:

MF category

Dividend is no longer a great option for investors. Systematic withdrawal plan is a better option for all investors  since it is taxed at a much lower capital gains tax structure.

What is the alternate for investors seeking regular income?

Systematic withdrawal plan is a better option for all investors since it is taxed at a much lower capital gains tax structure.

What is Systematic Withdrawal Plan?

Systematic Withdrawal Plan allows an investor to withdraw a fixed or variable amount from his mutual fund scheme on a present date every month, quarterly, semi-annually or annually as per his needs.

How do you differentiate SWP option visa vis Dividend option?

SWP Dividend parameter

Let us understand the difference with an illustration:

Summary is as follows:

data sheet 2

Key takeaways:

1. Equity investors irrespective of its tax bracket should opt for systematic withdrawal plan (SWP) for regular income.

2. As far as debt-oriented funds which were subject to DDT at 25% (plus surcharge & cess) are concerned, investors falling in lower slab rates would gain by this announcement. Conservative investors especially those nearing retirement can opt for a growth option in debt funds and can consider SWP after 3 years making that option more tax efficient.

(Information gathered and material used in this document is believed to be from reliable sources. We, however, does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments)

RBI offers cushion to shaky debt mutual funds


Last week, Franklin Templeton Mutual Fund shut six of its high-yield credit funds. The shutdown was majorly attributable to continuously thinning volumes in the high-yield fixed income securities segment and incremental redemption pressure given the current state of our pandemic-stricken markets.


While the Franklin Templeton episode is largely considered as a one-off event, there is an equivalent and pronounced worry about more funds packing up soon. However, one point most seem to miss that the threat looming over the FT funds was that of liquidity which emanated from an aversion to credit risks – which was anyway around since the IL&FS crisis.

Because of the pandemic-struck economy, investor perception of credit risk worsened considering the additional stress on already stressed companies with sub-AAA rated debt. Lack of buyers led to a lower trading volume, hence creating a problem for Franklin Templeton Mutual Funds holding such papers when they could not sell holdings to meet redemption requirements.

What’s RBI doing here?

Like Franklin Templeton, there’s a possibility that other mutual funds may face a similar situation where liquidity is too thin to be able to offload holdings to meet redemption requests.

To help contain mass panic and support mutual funds, RBI announced a liquidity facility of INR 50,000 Cr. Mutual Funds can dip into this facility and try tiding over the situation before succumbing to the pressure and moving funds into liquidation – which will lead to further deterioration of markets & investor sentiment.

Mutual fund may need money in their hand in case of extreme redemption pressure. It is the preventive measure and not that every mutual fund faces the redemption pressure.

How does this work?

Like every other measure, this is not so straightforward. Under this facility, the RBI will provide funds to banks at lower rates and banks then can access this money to exclusively meet liquidity requests by mutual funds.

Banks can extend loans to mutual funds, undertaking outright purchase of and/or repos against the collateral of investment grade corporate bonds, commercial papers (CPs), debentures and certificates of deposit (CDs) held by mutual funds.

The RBI shall conduct repo operations of 90 days tenor at the fixed repo rate. This liquidity facility is on-tap and open-ended, and banks can submit their bids to avail funding on any day from Monday to Friday (excluding holidays).

What should a debt fund investor do?

While RBI’s intervention offers sufficient cushion to mutual funds to ensure the FT episode is not replayed in another form by any other fund house, it is essential an investor must shift allocation towards much safer sovereign and AAA-rated (higher sovereign preferred) debt funds at least till there’s more clarity around the state of the economy.

When Mark sends Mukesh a Friend Request worth $5.7 bn!


Facebook picks 9.99% stake in Reliance Jio

Key Synergies

  •  Sigh of relief to RIL as Saudi Aramco infusion comes under question given the recent rout in oil prices; could support RIL’s aspirationsto be net debt free by 2021
  • At a broader level, there’s a lot that can be done with Facebook (Facebook, WhatsApp, Instagram) Group’s high Daily Average User brands & Reliance Jio’s Content-Communication-Carrier business. We’re thinking right from high Rol ads, to perhaps integrating social, financial & communication ecosystems into a seamless lifestyle ecosystem
  • Facebook’s Whatsapp (including WhatsApp Pay) & RIL’s JioMart share enough synergies to capitalise on and enhance the value expected to be derived from JioMart (think of it as Amazon/Flipkart having local grocers & Reliance Retail as sellers).

Franklin Templeton Mutual Fund winds up six schemes

Franklin templeton

Dear Investor

Yesterday, Franklin Templeton Mutual Fund announced winding up of six of its yield-oriented, credit funds.

Considering the continuously thinning volumes in the high-yield fixed income securities segment and incremental redemption pressure given the current state of our pandemic-stricken markets, the fund house has decided to be proactive and wind up operations in the following six schemes:

  1. Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
  2. Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
  3. Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
  4. Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
  5. Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
  6. Franklin India Income Opportunities Fund (No. of Segregated Portfolios – 2)

24th April 2020 onwards, all forms of transactions in these schemes will be suspended and unitholders will receive the value of their units per the Net Asset Value of the scheme in line with liquidation proceedings.

Investors are requested to take note of the following and infer it in the spirit meant to be conveyed.

  • The decision of winding up these schemes must be looked at as an act of responsibility and understand that winding up of these schemes was perhaps the best way to preserve value for unitholders.
  • The sale proceeds after discharge of all liabilities and expenses will be paid to the Unit holder(s) in proportion to their respective interests in the assets of Schemes. The liquidation process will be undertaken in line with regulatory guidance.
  • This event does not change our stance on other funds managed by Franklin Templeton AMC.
  • We continue to maintain our view of fixed-income investors shifting towards Sovereign-grade securities and consider AAA-rated securities per risk appetite. Even with AAA-rated securities, steering clear of stressed segments like NBFCs and HFCs till further revision in view should augur well for investors in the time to come.
  • We have been continuously identifying and triggering a rebalancing campaign for investors exposed to credit risk beyond a threshold. Those accepting the rebalancing request would have effectively exited the affected schemes and continue to benefit from our active surveillance.
    For those who continued to invest in the affected schemes, there is no reason to panic as the fund house continues to focus on preserving maximum possible value for all unitholders and paying out the same.

(Link to Notice by Franklin Templeton Mutual Fund:



5 Mysterious Gold Artefacts from Around the World

Gold Artefacts

You do not have to be an adventurer to know how quests and hunts for gold treasure make up for most of the adventure stories that we have heard. As an investor in Gold, it is quite riveting to find out that people were as obsessed with Gold even in the ancient recorded history. Let’s take a look at some of the most interesting gold artefacts with intense back-stories.


Gold Rings of the Griffin Warrior

In 2015, the tomb of a 30-year-old Greek warrior was discovered by archaeologists in Southwestern Greece. Carbon-dating suggests that warrior belonged to 1500 BC and was known as the “Griffin Warrior.” The tomb contained 4 mysterious gold rings and had Minoan mythological imagery etched on it and were made of multiple layers of gold. Many believe that these rings were used to stamp official documents at the time. It is interesting because these rings mirror cultural communication between Minoans and Cretians and perhaps may not have powers like, ‘The Lord of the Rings’ but sure symbolize power. 

Great Golden Bell of Dhammazei

The Bell of Dhammazei located in Myanmar belongs to the 1500s. It was made out of an alloy of silver, copper and gold. It is said to weigh about 300 tons. However, a Portuguese mercenary Felipe de Brito dragged it to the Bago River, unlawfully. Due to the weight, the bell sank into the river. The bell was lost ever since and no amount of innovation has helped to locate it as the river changed its course for over 400 years ever since.

The Golden Rhino of Mapungubwe

The Golden Rhino of Mapungubwe is a gold artefact from South Africa is composed of thin sheets of gold foil that had been literally hammered delicately on a frame made out of wood. Of course, 9 kilos of golden jewellery and other artefacts have also been found. The figurine was discovered in 1932, with confusions about which race of people in Soth Africa were responsible for it as it was considered contradictory to the apartheid ideology. However, experts believe that the Rhino of Mapungubwe was made during the precolonial period, regardless.

Gold Plates of The Wind Gods

22 small golden plates were discovered in the Java island. Dating far back as 800s AD, the plates have carvings depicting religious and spiritual symbols of Javanese version of Hindu religion. The artefact of these plates was found by temple workers in the remains of a candi, or temple, found in Ringilarik village. The inscriptions give the cardinal directions of the wind gods of Javanese Hinduism. There are 8 different wind gods mentioned in the tablets. While the country is predominantly followers of Islam it was interesting to find hidden proofs of diversity.

Golden Crown of The Greek Goddess of Love

This is a hilarious tale because the artefact was found in the most unexpected place. In Britain, an old man found this under his bed inside a cardboard box that he had inherited from his grandfather. The artefact is approximately 2300-year-old and made of pure gold. Experts guess that it was made around 300 BC. The crown weight about 100 grams and was determined to be a myrtle wreath related to the goddess of love Aphrodite. The grandfather had supposedly travelled around in the 1940s and 1950s with a lot of interest in Alexander the Great. While were or he found this artefact will always be a mystery, such inheritance is considerably pleasant.

We wish that you too find such inheritance under your bed, left by your grandparents but it doesn’t happen often. However, building wealth with Digital Gold is not just a possibility but very convenient as well. 24K Digital gold is available for investment without any added costs, hassles of security, thanks to MMTC-PAMP’s gold custodian services and is easy to sell and even track online.

Chance’s Garden: Even You’re Seeking Growth, Aren’t You?

Short term loss long term gain

Investing is an act of faith.

Might some unforeseeable economic shock such as now can trigger another recession so severe that it would destroy our faith in the promise of investing? Excessive confidence in smooth seas can blind us to the risk of storms. There is little certainty in investing. As long term investor, however, we cannot afford to let the short term events frighten us away from the markets. For without risk there is no return. Another word for “risk” is “chance”. Here’s a dialogue by Chance, The Gardener that stuck.

As uncanny as it may seem, the word “chance” struck a chord that reminded me of ‘Chance, The Gardener’. For the ones who have never had the fortune to read this gem of book, ‘Being There’ by Jerzy Kosinski or watch the movie based on it, the plot revolves around a rather simple man – Chance, the gardener whose knowledge about the world is defined by what he has watched on TV and everything he has observed while tending to his garden. By twists of fate, he reaches a situation where he has high-ranking state officials seeking advise from him and interpret his simple words as a metaphor about the economy.

Back to the scene that stuck with me for long – When asked about the stressed state of economy, he said – “In a garden, growth has its season. There are spring and summer, but there is also fall and winter. And then spring and summer again. As long as the roots are strong, all is well and all will be well”.

Well, when you look at markets, economies (and also gardens), you would appreciate the simple yet profound truthfulness of the statement.

In an attempt to draw a parallel, I started rummaging through the internet ocean and found a beautiful illustration (Courtesy: Visual Capitalist) that clearly reflects that as long as the world economy is healthy, financial crises may come and go, but the economy will only bounce back stronger – offering a much larger opportunity each time.

blog 3

Perhaps, the fact that the global economy has gone through a longer period in economic crises than uninterrupted growth. However, like Chance put it right, economies and markets only continued to push upwards with periods of crises seeming like nothing more than simple seasonality in hindsight.

I remember reading about at least ten black swan events where the S&P 500 declined by a quantum of anywhere between -5% to -60% only in the past fifty years. Events include the Oil Embargo ’73, Iranian Hostage Crises ’79, Black Monday ’87, Gulf War ’91, 9/11 Attacks ’01, SARS ’03, Sub-Prime Crisis ’08, Intervention in Libya ’11, Brexit ’16, and Pandemic’19. However, it is interesting to note that $100 invested in 1973 in S&P 500 is worth almost $3,000 today – which seems pretty healthy considering the number of financial crises we just recounted.

As an investor, you may choose to focus on the periods where people lost money and redeem with a higher probability of converting notional losses into real losses, or ride the tide only to emerge victorious as the world pushes ahead towards progress.

7 Quotes Worth Keeping in Mind For Gold Investment

7 Quote for Gold investment

We are mesmerized by Ted Talks and webinars but unfortunately, less than often do we actually are able to  implement it in our lives for real. However, with quotes, it is slightly easier because we are able to focus on a single point with each quote. The best part, however, is if they are backed by experience, they often become a way of life or a fact. One of the most contradicting and yet hard candy truth was sid by Gertrude Stein. She said, ‘Whoever said money can’t buy happiness simply didn’t know where to go shopping’. While we don’t want to believe this about happiness, it stands true for gold. But this is not it, for Gold, there is more.

7 Motivational Quotation Posts on Gold Investment

Perhaps nothing is more influential than a belief system that is backed by practical facts and statistics. Here are some famous quotes about Gold that Gold investors should  keep in mind when investing in Gold:

1. “Commodities such as gold and silver have a world market that transcends national borders, politics, religions, and race.”

Robert Kiyosaki, American Author

2. “The desire of gold is not for gold. It is for the means of freedom and benefit”

Ralph Waldo Emerson, American Autho

3. “Gold is a treasure, and he who possesses it does all he wishes to in this world and succeeds in helping souls into paradise”

Christopher Columbus

4. Water is best, but gold shines like fire blazing in the night, supreme of lordly wealth.

Pindar, Ancient Greek Philosopher

5. “Gold and silver is money, everything else is credit.” 

– J.P. Morgan

6. “O Gold! I still prefer thee unto paper, which makes bank credit like a bark of vapour.”

Lord Byron, English Poet

7. Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort. — Antony C. Sutton, British-American economist

One thing common about all the above quotes is the fact that all their beliefs are believed on facts, research and experience. Gold is indeed in every possible way. For example, over the last 30 years, gold prices have shot up by 423% or the fact that during the recession in 2008-2009, while the Sensex had crashed almost 38%, Gold was able to generate a return of 24.58%. Hence, if you think that Gold is truly the gold standard of investment, you too can invest in Digital Gold or simply buy it to build wealth. 4K Digital gold is available for investment without any added costs, hassles of security, thanks to MMTC-PAMP’s gold custodian services and is easy to sell and even track online.


Being Dravid: Investing is all about staying in the game long enough to build enough

Dravid in investing

Comparison between the batting averages of two cricket legends Rahul Dravid and Virendra Sehwag for various formats of the game is quite interesting. Dravid was a great defensive batsman with an effortless batting style which lacked flamboyance – these characteristics are perfect for a test match which are generally played for 5 days.

Sehwag on the other hand, was an aggressive batsman, ready to take unimaginable risks and looking to hit almost every ball a boundary or six – these characteristics sound perfect for a ODI (one day international) match and T-20 international matches with 20 overs.

Both these cricketers have their own style, while Dravid is perceived to be accumulator of runs Sehwag is perceived to be prolific scorer of runs. However, the table shows an interesting comparison. Not only does Dravid outperform Sehwag in every version of cricket, Dravid’s outperformance which is measured by batting average is the widest in T20 and narrowest in test cricket.

Rahul dravid

“Dravid has a simple game founded upon straight lines. Reasoning that runs cannot be scored in pavilion; he sets out to protect his wicket. Curiously this thought does not seem to occur to many batsmen, a point any coach can confirm”- says Peter Roebuck, one of the world’s greatest cricket writers.

Here are some parallels from the book “Coffee Can Investing” having a set of loyal investors as readers who would swear by the efficacy the principles shared therein.

Rahul dravid 1

(Note: Period consideration is from 1st Jan 1990 till 31st Dec 2019. The investment horizons are calculated on a rolling basis)

The above chart shows that a defensive investor with longer average has better chance to earn profits. As compared to the speculative investor who is trying to hit the ball out of boundary every time.

Today, the choice is yours. Do you want to go down in your social history as a Dravid investor who managed to build a fortune by investing right? You know what to do; or rather what not to do during times like now – stick to it.

The Yang in Indian Economy’s Yin

Yang in Indian Economy’s Yin

Yin & Yang

Two complementary principles of Chinese philosophy; Yin is negative, dark, and
feminine, Yang positive, bright, and masculine. Their interaction is thought to maintain the
harmony of the universe and to influence everything within it

Indian equity markets have corrected significantly over the last one month (Nifty down ~38% from its 52- week high of 12,362 to the lows of 23rd Mar’20) in tandem with global equity markets due to headwinds from the Covid-19 outbreak across multiple countries. Well, we all might have heard negativity, concerns approximately from everyone around due to covid-19, lockdown extension resulting business impacts, subdued economy, etc.

The fall across the world is reminiscent of 2008. However, we note that such significant corrections have typically opened significant investment opportunities, especially in countries like India.

Let us understand why India is better placed during this volatile time:

Stable foreign exchange reserve:

The International Monetary Fund (IMF) defines foreign reserves as external assets that a country’s monetary authority can use to meet the balance of payments financing needs, affect currency exchange rates in currency exchange markets and other related purposes. India maintainsits foreign exchange reserve in US dollar.

Finally, US federal reserve offered RBI the currency swap facility to help them fund their dollar requirements. With the currency swap option, RBI can now enter repurchase agreements with the Fed and can restrict the rupee depreciation.


trading economics

It provides an ammunition to stabilize trade and forex outflows during volatile times such as the current crisis. The central bank’s dollar reserves fell to $437 billion as on 27 March from $447 billion a week earlier, due to the selling in the markets but remain robust, according to RBI data.

India can do this as we are in the top 10 nations who are having the highest foreign exchange reserves

India’s Export & Import:

India importing nearly $40-$50 Billion worth oil every year; also, oil contribution in balance sheet is high followed by gold. Currently oil prices slashed down to nearly to $24.28% from its 60’s level in


As we know India imports more than exports. If we see Feb-March comparison, we have still saved $100 million. As due to lockdown extension we may see another drop-in export-import trade in the month of April.


Though the import looks higher, major contributor to India’s import is oil as India’s 85% of the oil demand is met through import, which is trading at its low level right now. Typically, India benefits to a tune of ~$1.4 bn with every single dollar drop in oil prices. Brent oil prices have fallen by over 60% in 2020 till date.

A reduced bill implies more economic firepower for India to fight the current economic situation.

Market Capitalisation to GDP Ratio:



M-cap to GDP ratios indicates us the valuation of markets I.e. whether undervalued or overvalued. Undervalued means that the market prices are cheaper and attractive to do investment and vice versa. Currently Market cap to GDP is hovering at 51.8% (18th Apr 2020) to its lower level since 2003 and looking undervalued after a very long time. There is an opportunity to invest now at cheaper valuation to ride the imminent economic recovery.

FIIs are sellers but domestic money is here to grow:

It looks like FII and DII inflows have inverse relationship. Foreign institutional investors are typically risk-averse – most of them by mandate. Foreign institutions include large pension funds, endowment funds, etc. which have a mandate to generate certain bps more than what their home markets can offer and hence diversify into emerging markets like India. An outflow of foreign capital is in no way indicative of a development in their outlook on Indian Capital Markets. Also, one would notice, the same has happened with global capital markets.


FII DII flow

As illustrated in the above graph, Domestic inflows have a strong negative correlation with foreign inflows (-0.9) indicating that domestic investors are capitalising on every decline created by foreign money outflow and that this outflow is not indicative of a change in fundamentals.



Key Takeaways for Investors:

• Equity investors must capitalise on the situation by buying more on dips. Those investing equities via SIP/STPs can accelerate by increasing periodic deployment by 10%-15%.
• Debt fund investors must try stick to funds with sovereign/AAA-rated underlyings.

Why is Gold everyone’s favourite precious metal?

Does Gold possess some mystical powers where it even leaves expensive metals such as Titanium and Platinum less wanted? Is it a creation of divine to help us move from civilization to technological advancements and even beat the ruthlessness of the economy. It may not be dramatic as people think, but Gold indeed stands out when it comes to people’s demands from precious metals.

5 Reasons Why Gold Is The Most Popular Precious Metal 

1. One of the rarest precious metals:

While the number of gold mines or ores might contradict with this point as against others but it’s true that finding gold among all the natural resources is the most difficult as it is not only very difficult to mine because of its composition but rarely is it found in huge clusters.

2. It does not erode:

Gold is one of the least erosive metals in the periodic table. It might have a thin layer of dust but because of its non-reactive nature, it lasts longer than any animal’s lifetime.

3. Unique esthetically:

It has one of the most unique colours among precious metals and shinier than any. While some may mix other precious metals such as copper to create rose gold or silver to make white gold, the colour of gold simply stands out.

4. Gold prices always rise with inflation:

An undying demand for gold exists especially in the Indian market where it is considered auspicious and we have festivals solely dedicated to buying gold such as Dhanteras. In fact, over the last 30 years, gold prices have shot up by 423%.

5. Gold is one of the most reliable instruments for investment.

While it looks great at Indian weddings, delightfully brightening up the smile on a bride’s face and her in-laws, it is a very stable investment in the market. During the recession in 2008-2009, while the Sensex had crashed almost 38%, Gold was able to generate a return of 24.58%.

There is an added benefit or proof of gold’s powers but it stands true when you invest in it online, with us. 24K Digital gold is available for investment without any added costs, hassles of security, thanks to MMTC-PAMP’s gold custodian services and is easy to sell and even track online. If you want to use this gold for your personal requirements such as a family wedding or an everlasting gift for someone special, instead of getting their name tattooed on your body permanently, you can withdraw the gold in the form of gold coins. 

Please note that the delivery of these gold coins will be possible after the lockdown has been lifted completely, but we are guessing no one is getting married or finding special people in their lives to want to withdraw their gold investment at this time. Our experts recommend you to ‘buy’ and ‘hold’ your gold investments because, in these unsettling times, the only truth we are settled with is gold is here to stay.