Mutual fund investment in the name of minors

How can you invest in Mutual Funds in the name of a Minor?

Mutual fund investments are fast becoming popular in India. As an increasing number of people learn about mutual funds and understand their benefits, there is also a growing inquisitiveness about investing in the name of a minor (that is, a child under 18 years of age). This is because many parents wish to invest for their child’s future in avenues that can generate stable returns. The idea is that the investment grows as the child grows. Mutual funds are one such avenue that is being increasingly preferred as a tool for meeting long-term goals such as children’s future education.

Here, we will explain the possibility, merits, demerits, and also the process of investing in mutual funds on behalf of minors. (more…)

Ethereum – The rising star among cryptocurrencies

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What’s going on here?

Looks like cryptocurrencies are grabbing eyeballs everywhere, from the rise of Dogecoins, to Non Fungible Tokens, to Elon Musk’s tweets setting the tone to rise and fall of Bitcoin. There is something else that’s quietly rising up. It’s none other than Ethereum or Ether for short. 

What’s behind the phenomenal rise of Ethereum? 

Like Bitcoin, Ethereum is also a cryptocurrency that has remained on the sidelines since 2018. It’s the second-largest cryptocurrency after bitcoin by market capitalisation as well value. 

Ether has raised like a phoenix from the ashes. To put this statement into some perspective, the traded volume for Ether in 2020 was $231 million and it jumped to $2.7 billion in 2021, and the price in 2021 moved up 385%  to $4028 versus 96% for bitcoin. Are you thinking if there is another meme mania behind the rise like the Dogecoin? No, No, there something more substantial with Ether that is commanding that value. 

Here’s what

  • Ethereum is based on a blockchain technology that is more scalable and efficient. 
  • Developers use this to build decentralised apps based on decentralised finance (Defi)
  • There is increased interest in building decentralised apps (#dapps). These apps are not controlled by a single entity like Apple or Google for iOS or Android. Dapps are hosted on hundreds and thousands of computers across the globe totally decentralising its control. 

In addition

  • There are more and more institutions that are accepting the use of cryptocurrency. The European Investment Bank recently issued bonds worth $120m on the Ethereum network.
  • The widely popular NFTs which is making the world of collectibles and art go crazy is also based on Ethereum.
  • The launch of Ethereum futures on the Chicago Mercantile Exchange has given more credibility and risk management options to Ether investors.

The donation announcement made news splashes everyone but then people started wondering about how will this aid reach India without the involvement of the Indian banking system and as you know banks in India do not deal with crypto currency.

Vitalink made the donation to India Covid Crypto Relief Fund. Sandeep Nailwal the man behind the fund said that these currencies would be liquidated over a period of time to avoid a sudden drop in price. There is an entity set up in UAE to convert coins into fiat currency through various exchanges. These funds come into the banking system and are then transferred to FCRA compliant NGOs for carrying out relief work.

You ask – We Answer

Are ELSS investments subject to Long Term Capital Gains (LTCG) Tax? – Rithika Bhargav

Investing in ELSS mutual funds is an excellent way of saving taxes and growing your wealth over a long period of time.

Mutual funds are capital assets. So if you make gains/profit when you sell them, the gains are subject to capital gains tax.  The category of the asset decides the rate of capital gains tax and the period of holding of any investment decides whether the gains are subject to long term or short term capital gains tax. 

For equities, gains on investment held for a period of more than one year are subject to long-term capital gains. As ELSS funds invest majorly in equities and related securities, they fall under the category of equities. As the holding period is more than one year, ELSS funds are subject to long–term capital gains tax. 

Long-term capital gains for equities over Rs 100000 in a year are taxed at 10%. But remember, this ceiling of Rs 100000 is inclusive of all equity investments (direct investments in equities, if any + equity mutual funds). 

💡 Do you have questions on personal finance & investing? Shoot them in the comments below and get featured in our upcoming issues.

Quiz Bite

Just like ATMs for cash, there are ATMs for cryptocurrencies where you can buy or sell them. Do you know which was the first city in the world to install a Bitcoin ATM? (Leave your answers in comments below)

a. London

b. New York

c. Vancouver

d. Seattle

Security precautions for digital transactions

Measures you should adopt while carrying out digital transactions

Digital transactions can be conducted through different mediums such as credit cards, mobile wallets, bank NEFTs, etc. These are increasingly being preferred by consumers considering the convenience and ease of conducting transactions. Digital transactions have become all the more important with the current situation where everyone is working at home and looking at carrying out all transactions online. 

Digital transactions also tend to have some risks, including data breaches, security risks, thefts, and the likes. Therefore, consumers must ensure to take extra precautions while using digital mediums for monetary transactions.

Although online transactions offer cashless modes of transferring funds and making payments, an increasing number of cyber-attacks are proving to be a challenge in maintaining financial security. Today, cyber-attacks are commonplace and bank robberies are conducted digitally. 

To help users carry out digital transactions safely, we have listed here some of the precautions that you can take. (more…)

Key takeaways for you from the Berkshire Hathaway AGM

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Berkshire Hathaway AGM 2021

Image source: Yahoo Finance

The famed Annual General Meeting of Berkshire Hathaway was held last weekend. For the uninitiated, Berkshire Hathaway is a massive holding company many other famous companies like Fruit of the Loom, Duracell,  and a shareholder in Apple,UPS, etc. Let’s tell you some absolutely eye-popping😲 facts about Berkshire –    (more…)

Blue chip stocks

What are Blue Chip stocks?

Blue-chip stocks are stocks of well-established large-sized companies that have strong financials and have been operational for many years. These belong to companies with market capitalization running in billions, often market leaders, or at least are one of the top three companies in their respective sector. 

Here, we will learn more about blue-chip stocks and explore various aspects surrounding this investment option. (more…)

What is portfolio rebalancing?

All that you should know about portfolio rebalancing

Risk management plays an important role in setting up an effective portfolio irrespective of an investor’s style or approach towards investment. Many investors take risk management seriously and proactively realign their portfolios to prevent the significant impact of market fluctuations. This is when portfolio rebalancing comes into the picture as it plays an extremely important role in the investment approach of an investor.

Here, we will explore the concept of portfolio rebalancing and unravel some of the important aspects surrounding it. This will help investors to learn the concept and also implement it in their day-to-day portfolio construct. (more…)

Be money-ready during the pandemic

How to be money-ready as the pandemic rages on

At the dawn of 2021, India almost started believing that Covid-19 has passed over us and life can slowly start getting back to normal, just like the pre-Covid days. Little did we know that the new wave would come back stronger and with a magnitude that very few had imagined. This has gotten all of us worried about our health and that of our loved ones. As we brace ourselves for a potential impact on our health, a lot of us also worry about how it could hamper our financial planning. 

In 2020, people were worried about job losses as they directly affected their income. This year, however, the scale of worry has risen because of the cost of hospitalisation and other medical needs that a large number of the younger population is incurring. With this two-fold impact of Covid, we must revisit our financial planning. Here’s how. (more…)

Should you shift your investments to NPS/Mutual funds due to change in tax structure on EPF

With taxation on EPF interest should you move your investments to mutual funds or NPS?

What is the first investment option that comes to the mind of any salaried person? It is undoubtedly EPF. Employees Provident Fund (EPF) has long been a preferred investment option of the salaried class in India.

Multiple benefits like tax exemptions, building a corpus fund for retirement benefits, etc. and easy deductions from the salary of the person make it a very lucrative and easy investment destination. Another important advantage of EPF is that it belongs to the  Exempt-exempt-exempt (EEE)  category where the contribution made, the interest earned and the amount received at the end of maturity is not taxable under the Income Tax Act, 1961. 

Recent amendments to EPF in Budget 2021 and its impact on investors

(more…)