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Mutual Fund
"Wealth Creation is easier than you thought… "
Who doesn’t want to be rich, to have control over finance? Who doesn’t want to stay financially future-ready?
Put in the simplest sense, your desire to be well off, be financially strong and ready for cloudy days, to command respect need more than sufficient funds. Wealth creation is the answer to all the above. Through mutual funds you can create wealth by a technique called ‘Averaging’ and you can also minimize the market risk factor. It is generally achieved through 'Systematic Investment Plan (SIP)' and 'Systematic Transfer Plan (STP)'.
A SIP or STP investment over a long period of time can make you financially strong and independent. To sum up, you can make your money work for you.
It is a rather inexpensive way for any investor to get full-time Professional Management to make and monitor investments.
Diversification plays the role here. By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out and hence much less.
Economies of Scale applies here as a mutual fund buys and sells large amounts of securities at a time, thus lowering the transaction costs than what you would pay buying as an individual.
Liquidity is super smooth with mutual funds. Just like an individual stock, a mutual fund lets your shares be converted into cash at any time.
Since most of the companies have their own line of mutual funds, buying a mutual fund is easy and the minimum investment also stays small.
Insurance
Insurance is the armor to manage your unforeseen risks. An insurance policy works for protection against unexpected monetary losses. The insurance company pays you or your defined nominee in your absence, the amount as promised in the policy. With no insurance, if any accident happens, you may be responsible for all related costs. Having the right insurance for the risks you may face can make a big difference in your life.
An insurance policy is a written contract between the policyholder (the person or company that gets the policy) and the insurer (the insurance company).
Insurance can reduce your financial risk
God forbid, if you ever damage your car while driving, with right kind of ‘auto insurance policy’, the insurance company will pay the costs of the car repairs. Now, isn’t that reassuring!!!
Common type of Insurance
Life policy generally pays the nominated person a set amount of money in case of policy holder's demise. The money from such policy can help the bereaved person/family cover living expenses and continue with normal monetary life to a certain limit.
LIFE
This policy takes your back in case of accident of vehicle / or damage of property from an unforeseen situation such as a fire breakout. It also ensures theft situations are covered. The insurance company pays the full cost for vehicle repairs and medical expenses etc. in such cases.
GENERAL
Corporate FD
Corporate FD is a term deposit which is held over a fixed period at fixed rates of interest which are offered by Financial and Non-Banking Financial Companies (NBFCs). Such deposits, issued by Housing Finance Companies (HFCs) / Non-Banking Financial Companies (NBFCs), come with higher interest rates than regular fixed deposits with banks, especially the public sector banks and major private sector banks. However, corporate FDs are not secured under the insurance cover offered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary unlike FDs opened with scheduled banks. Therefore, it is extremely important to carefully examine the ratings assigned by recognized ratings agencies like CRISIL, CARE, ICRA, etc. while selecting the corporate FDs.
Fixed Income
Fixed-income e.g., Bond is a kind of loan given by an investor to a borrower such as corporate or government bodies. Such loans are taken by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
The aim is to generate returns by investing in bonds and other fixed-income securities which means that these funds buy the bonds and earn interest income on the investments. The investment yield received by the investor is based on this. This is very similar to how a Fixed Deposit works. When you deposit money in a bank, you technically lend the money to the bank in return of which the bank offers you interest.
However, there are various nuances to fixed income funds. For example, a liquid fund can buy securities of maturity upto 91 days and a Gilt fund can invest only in government bonds. Also, fixed income MFs do not offer assured returns as the returns are market linked and can fluctuate.
Fixed income mutual fund schemes which invest in debt and money market instruments like Commercial papers, debentures, T-Bills and government securities etc. These instruments pay interest during the investment tenure and pay the principal amount upon maturity. The yields of many of these instruments may be higher than bank FD interest rates with similar maturities. That is why the trailing returns of different debt fund categories are higher than that of bank interest / fixed deposits over different time horizons.
Income Tax Planning & Solution
In India, we are actually not accustomed to the concept of tax culture. Despite numerous efforts have been made to streamline the tax system, nothing had been much fruitful. In fact, the number of taxpayers in our country, which is around 82.7 million people, makes for only 6.25 percent of the 132 plus crore population of our country.
The Finance Act, 2020 has also introduced a new optional tax regime for Individual and HUF
Tax is payable on income upto Rs. 2.5 Lakhs annually
Regardless to which tax category you belong to, at Seeman Fiintouch LLP we are ready with a solution for you.
| Annual Earning (in Lakhs) | Annual Taxation (%) |
| 5 - 7.5 | 10 |
| 7.5 - 10 | 15 |
| 10 - 12.50 | 20 |
| 12.50 - 15 | 25 |
| 15 and above | 30 |
Stocks & Equity
The most familiar and frequent handle that common people use to invest in the stock market is Equity shares. What plays a major role here is the hope of earning high returns that stocks have historically offered. Equity investing is a business of purchasing stock in companies. Sometimes they are purchased directly; at times these equities are bought from another investor, with the expectation of earning dividends or reselling them later for a capital gain.
Difference between Share and Equity
The equity of the company refers to Capital invested by the Owners of the Company and Profit accumulated by the company during the tenure of business which is also called Reserves and Surplus. Equity is also called the net worth of the company. In accounting language, Equity is the value of assets that are left after paying off the Liabilities.
When owners of the company do not have sufficient funds, they go to the public for raising the money. The amount of money that is to be invested is divided into portions. This portion is called Share. When we go to the dictionary meaning of share, it is “have a portion of (something)” Likewise Shares of the company are a division of the capital of the company into various portions.
Equity
Equity = Assets - Liabilities
It is shown at the Liability side of the Balance sheet. And, it always carries a credit balance. At the same time, preparation of Financials Statements of Business, capital contribution by owners, and profits are written differently according to the formation of Business. If Business is in the form of Private Limited Company or Public Limited Company “Equity” is written. In the case of Partnership Firms and Proprietorships, it is written as “Capital”. The Equity of the Company consists of: Shareholder’s Equity and Reserves and Surplus (For Example, Profit and Loss Reserves, Security Premium Reserve, Capital Reserves, Retained Earnings, etc.) Every Owner of the business invests in his company for the expansion of the business. When a company requires more for expansion, it can bring equity on its own, or it can go to the Public for raising the money. People who invest in the company become Shareholders of the company. Shareholders of the company are also called as the Owners of the company as they have invested in companies like owners. And, as owner’s they share the Profit and Loss of the company also. In the balance sheet, it is written as “Shareholder’s Equity”. “Reserves and Surplus” is the second component of Equity. Reserves and Surplus is profit accumulated by the business for various purposes. All profit is allocated according to specific reserves. This is used for business in the future. This is also one of the components of Equity. If we are talking about the Equity of a Company, we are talking about the shareholders’ equity and Reserves and Surplus it has. The Equity can be Positive Equity, or it can be Negative Equity. Positive Equity means a company has sufficient Assets to repay its all Liabilities. Negative Equity means a company has Liabilities more than its Assets. Whenever there is negative equity, it does not give a good sign of the company’s growth.
It is shown at the Liability side of the Balance sheet. And, it always carries a credit balance. At the same time, preparation of Financials Statements of Business, capital contribution by owners, and profits are written differently according to the formation of Business. If Business is in the form of Private Limited Company or Public Limited Company “Equity” is written. In the case of Partnership Firms and Proprietorships, it is written as “Capital”. The Equity of the Company consists of: Shareholder’s Equity and Reserves and Surplus (For Example, Profit and Loss Reserves, Security Premium Reserve, Capital Reserves, Retained Earnings, etc.) Every Owner of the business invests in his company for the expansion of the business. When a company requires more for expansion, it can bring equity on its own, or it can go to the Public for raising the money. People who invest in the company become Shareholders of the company. Shareholders of the company are also called as the Owners of the company as they have invested in companies like owners. And, as owner’s they share the Profit and Loss of the company also. In the balance sheet, it is written as “Shareholder’s Equity”. “Reserves and Surplus” is the second component of Equity. Reserves and Surplus is profit accumulated by the business for various purposes. All profit is allocated according to specific reserves. This is used for business in the future. This is also one of the components of Equity. If we are talking about the Equity of a Company, we are talking about the shareholders’ equity and Reserves and Surplus it has. The Equity can be Positive Equity, or it can be Negative Equity. Positive Equity means a company has sufficient Assets to repay its all Liabilities. Negative Equity means a company has Liabilities more than its Assets. Whenever there is negative equity, it does not give a good sign of the company’s growth.
Shares
Let’s take an example for understanding; there is a Company named as ABC Limited, it needs the capital of Rs. 100 Crores for expansion. It will go to the public for raising the capital. The capital of ABC is divided into 1,000,000 shares of Rs. 1000 each amounting to Rs. 100 Crores. So, if a person wants to invest, he has bought from 1,000,000 shares at a rate of Rs. 1000 each. Let us say Mr X wants to invest Rs. 500,000/- in the company, for this he has to buy 500 shares of Rs. 1000 each. Let’ say Mr. Y buy 700 shares of Rs. 1000 each which means that Mr. Y is having shares of Rs.700,000. Here, Mr. X & Mr. Y become the shareholders of the company, and they will share the Profit and Loss of the company proportionate to their holdings.
From this example, it is clear that Shares is a division of Capital. There are various types of Shares Company can issue for raising capital like Ordinary Shares, Preference Shares, Redeemable shares, non-redeemable shares, Cumulative Preference shares, etc.
From this example, it is clear that Shares is a division of Capital. There are various types of Shares Company can issue for raising capital like Ordinary Shares, Preference Shares, Redeemable shares, non-redeemable shares, Cumulative Preference shares, etc.
Comparison Chart
| Equity | Shares |
| Capital invested in the business | Division of equity into portions |
| No categories or types | Types are: Ordinary, Preference, Redeemable, etc |
| Equity = Assets - Liabilities | Shares= (Assets-Liabilites-Reserve & Surplus) |
| Equity means addition of Shareholder's Equity + Reserve & Surplus | Shareholder's Equity only |
After recovering from a medical emergency, hospital bills become a major concern. ‘Health Insurance Policy’ becomes an emergency saver. Depending on the health insurance policy you buy, your health insurer agrees to pay a part/all of your medical expenses.
HEALTH Insurance