MeraFunds

Bank FD & Bond Fund both are fixed income securities. The most ignored part while investing in fixed income securities is the effect of taxation. This blog highlights the differences Tax Effect on Bank FD Taxes are paid on accrued interest and payable as per the individual tax brackets. Ex Mr X invest Rs 10 Lac in a bank FD yielding an interest rate of 6% ; Mr X is in a 30% tax bracket; then Mr X has to pay an average tax of Rs 18,000/Annum. The effect of tax over 5 year is as shown below Year 1 Year 2 Year 3 Year 4 Year 5 Total Interest Income 60,000 60,000 60,000 60,000 60,000 3,00,000 Tax Effect Income Income Income Income Income Tax Payable rate 30% 30% 30% 30% 30% Tax Payable (18,000) (18,000) (18,000) ...

Indian Equity markets have witnessed a roll coaster ride in FY 2018. Nifty is down by 5.37% (till date for FY 2018); Nifty started positively with a gain of +4.72% for the month of Jan 2018, since then the index is down more than 9% over last two months on the back of TDP exit, banking scams, fed rate rise and increased global trade fears. • Are you a long term investor? Equity Investments are suitable for long term investor. Assume you are investing for retirement; kids educational needs which might have an investment horizon of 5-20 years. Should you be really concerned about short term fall. The below chart depicts nifty performance over short and longer time frame.      Investor behavior tends to change based on the market movement. Investor are comfortable holding on to long term perspective when markets are trending up; however, as markets trend downwards, panic sets in. Please note if your retirement is 15 years away, its still 15 years...