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Investing

Introduction

As an investor, you have a lot of avenues to invest your hard-earned money. However, the array of available investment options makes the decision-making process chaotic. So, what are the factors you must consider before you invest? And where should you invest?

Let us explore and understand mutual fund v/s equity investing and the factors to consider to make smarter investment decisions and meet your financial goals. 

Understanding Mutual Funds and Equity Investing

Mutual funds and equities are popular investment options to generate wealth over time. To make well-informed decisions regarding which investment option benefits you the most, you must understand the differences between the two.

What is a Mutual Fund?

A mutual fund is an investment vehicle wherein a group of investors with a shared goal pool in funds to create a diversified portfolio of equity, bonds, or other securities. A financial expert, the Fund Manager, manages the investment to ensure the scheme’s and its investors’ goals are met. 

What is Equity Investing?

Equity investing refers to investing your money directly in the shares or stock of a specific company. Unlike mutual funds, you must conduct thorough research on the stock and the market before you invest in any stock. 

Differences between mutual funds and equity investing

Mutual funds and equity investing differ from each other on the following grounds:

ParametersMutual FundsEquity Investing
Decision-makingThe Fund Manager makes the decisions regarding the fund investment, the companies to invest in, and the purchase and sale of stocks.The decisions related to stock selection and the purchase or sale of the stock are entirely your choice.
ResearchMutual funds are professionally managed. The Fund Manager is in charge of researching the stocks that comprise your portfolio.You must conduct extensive research to identify equities that have the potential to deliver the desired returns.
DiversificationThe Fund Manager designs and manages the portfolios. They make decisions regarding investments across various asset classes and sectors.You are responsible for ensuring your portfolio is well-diversified by evaluating and investing in profitable sectors.
Asset AllocationWith mutual funds, you can choose from a wide range of mutual fund schemes, such as equity funds, debt funds, and balanced funds, to name a few. This helps in effortless asset allocation.When investing in equities, you invest in a single asset class. You must research and explore the available stock options to diversify the portfolio. 
RisksMutual funds are a haven for low-risk investors. This is because the risk is spread across various participants investing in the scheme.Equity investing can be risky due to the unpredictable nature of the stock market. Investors investing in equity do not mind taking higher risks to earn higher returns.
ReturnsInvestments in mutual funds can give you a decent return if you stay invested for the long term.Investment in equities can give you higher returns in a short duration (depending on the market conditions and risks).
ConvenienceInvesting in a mutual fund does not require constant monitoring, as the Fund Manager regularly assesses the markets and stock performance.Investing in equities requires you to be well-read about the markets, the stock, and the factors impacting them.
VolatilityMutual funds offer stability even when the market is volatile. This is because the investments are spread across various asset classes and sectors.Equities go hand-in-hand with the market movements. The stock price can rocket up or plummet in a matter of seconds, thereby requiring you to monitor your investments constantly.
CostsMutual funds involve additional costs such as exit loads and management fees. These fees are lower in comparison with that of stock investments.Investing in equities involves brokerage fees and transaction fees that vary according to trades. If you are careless with your trades, the costs might surpass the profits.

Key factors to consider before making an investment

Though mutual funds and equity investing differ on various grounds, they are equally attractive investment options. Before investing, an investor must identify which option aligns with your goals and requirements.

Below are some crucial factors to consider when deciding between mutual funds and equity investing.

1. Understand your financial situation

Create a budget to understand your income, expenses, loans, and savings. This gives you a clear picture of the amount available for investment. Furthermore, evaluate your liquidity requirement to ensure your investment matches the time horizon and helps you achieve your goals.

2. Identify your investment goals

Before you decide to invest, have a clear idea about your investment goals. You must identify your long-term and short-term goals and plan your investments accordingly. It is essential to understand if you want a regular income, capital appreciation, or a mix of both. This helps simplify your decision-making process. 

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3. Investment time horizon

Once your financial goals are set, you can create an investment strategy involving investing in instruments for different time horizons. You can opt for long-term or short-term investments depending on your liquidity requirements.

4. Understand your risk appetite

Assess your comfort zone and understand your risk tolerance level. It is important to note that a high-risk investment has the potential to generate higher returns. This makes equities a high-risk investment in contrast to mutual fund investments. Thus, ensure that your investment aligns with your risk tolerance levels.

5. Asset allocation

Asset allocation is an essential step in investment planning. You diversify your portfolio by distributing your funds across asset classes like equity and debt and various sectors like pharmaceuticals and banks. This helps minimize the risk and maximize the returns. Depending on your risk appetite, you can shift the percentage of investment across classes and sectors.

6. Evaluate the fundamentals

Whether you invest in equities or mutual funds, assessing the fundamentals is crucial. Before investing in equities, you must conduct a fundamental and technical company analysis. This will help you understand the intrinsic value of the company and the market trends. When investing in mutual fund schemes, evaluate their historical performance, the Fund Manager’s experience, and the credibility of the mutual fund house.

7. Evaluate the costs

Investing in equities involves brokerage costs. Based on your trading patterns, the transaction cost can even exceed the profits you earn on your trades. When investing in mutual funds, you must watch for the expense ratio, which covers various expenses associated with the fund, transaction fees charged by the brokerage platform, exit load, and other charges.

8. Understand the tax implications

While making an investment decision, you must be aware of the associated tax implications and tax benefits. This will help you reap maximum benefits from your investments. Two types of taxes apply to investment gains – Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG).

In mutual funds, the capital gains taxation rate (STCG and LTCG) depends on the type of mutual fund and its holding period. The following is a summary of the same:

Type of Mutual Fund Holding Period for Short-Term Capital Gain (STCG)Tax LiabilityHolding Period for Long-Term Capital Gain (LTCG)Tax Liability
Equity or Hybrid Equity-Oriented Mutual FundLess than 12 months15% + cess + surcharge12 months or longerTax on gains exceeding ₹1 lakh is 10% + cess + surcharge. The benefit of indexation does not apply to the seller.
Debt or Hybrid Debt-Oriented Mutual FundLess than 36 monthsAs per the tax slab of the investor,*36 months or longerAs per the tax slab of the investor,*

Note:

  1. *The tax implication for debt funds is as per the amended income tax laws for FY2023-24 and is applicable for redemptions on investments made on or after 11 April 2023. Indexation benefit is not applicable.
  2. Redemptions on investments made till 31 March 2023 will be taxed according to the mutual fund scheme holding period. If the holding period of the specific debt mutual fund is less than or equal to 36 months, it will be taxed at the income tax slabs applicable to your income. If the holding period exceeds 36 months from the investment date, it will be taxed at 20% along with indexation benefit.

If you invest in equities or stocks, the tax implication based on the holding period is as follows:  

Type of InvestmentHolding period for Short-Term Capital Gain (STCG)Tax LiabilityHolding Period for Long-term Capital Gain (LTCG)Tax Liability
Equities / StocksLess than 12 monthsTaxed at 15% + cess + surcharge12 months or longerTax on gains exceeding ₹1 lakh is 10% + cess+ surcharge. The benefit of indexation does not apply to the seller.

Mutual funds and equity investing come with their sets of merits and drawbacks. Mutual funds offer the benefits of professional management, affordability, and portfolio diversification. Equity investing offers the benefits of having control, ownership, and the potential to earn high returns over the long term.   

As an investor, you can emerge victorious in this timeless debate of mutual fund v/s equity investing by developing an investment strategy that aligns with your goals, current financial situation, and risk appetite.

FAQs

  1. Can I make investments in mutual funds for the short term?

    Yes, you can invest in mutual funds for the short-term or long-term. This depends on your investment goals and liquidity requirements. Like liquid funds, mutual funds have a short maturity period of 91 days or less. Ultra short-term bond funds come with a 3-6 months maturity period. 

  2. What are the different modes of investing in a mutual fund?

    You can invest in a mutual fund through either of these modes:
    ·   Systematic investment plan (SIP)
    ·   Lump sum investment plan
    ·   Systematic transfer plan (STP)

  3. Is it better to invest in mutual funds or equities?

    Both mutual funds and equities are equally attractive investment avenues. You can invest in either combination depending on your risk appetite, financial situation, investment time horizon, and investment goals.

Mahatma Gandhi, the revered father of the nation, left behind a legacy of not only non-violent resistance but also invaluable lessons in personal finance.

Gandhi Infographic 1

In this article, we’ll delve into the financial wisdom imparted by Gandhiji and how we can apply it to lead a prosperous life.

Avoiding Impulsive Investments

Gandhiji’s famous words, “The world has enough for every man’s need, but not everyone’s greed,” hold true in personal finance. It’s easy to be enticed by promises of quick riches, but these often lead to financial ruin.

Instead, take the time to research and choose investments wisely. Look for stable opportunities with proven track records rather than being swayed by the allure of overnight success.

The Power of Discipline and Budgeting

Gandhiji was a paragon of discipline, a virtue of immense relevance in managing our finances. Creating and adhering to a budget is paramount. It ensures that we live within our means and channel resources effectively.

By tracking income and expenses meticulously, you gain a clear understanding of where your money goes. This empowers you to make informed decisions about saving and investing, ultimately leading to financial stability and growth.

Small Steps, Big Returns

Following in Gandhiji’s footsteps, start with modest investments. Even dedicating a nominal amount each month, like ₹ 1000 or ₹ 500, lays the foundation for substantial growth in the future. This approach allows you to learn the ropes of investing without taking undue risks.

Over time, as your confidence and knowledge grow, you can gradually increase your investment portfolio. Remember, it’s not the initial amount but the consistency and discipline you contribute.

Weathering Financial Adversities

Mahatma Gandhi faced monumental challenges, yet his unwavering faith and resilience saw him through. Similarly, in finance, setbacks are inevitable. Market fluctuations, unexpected expenses, and economic downturns are all part of the journey.

Patience and dedication are vital during these times. Resist the urge to make impulsive decisions based on short-term market movements. Instead, stay committed to your long-term financial goals, knowing that perseverance will ultimately lead to success.

Perseverance: The Key to Financial Success

Mahatma Gandhi’s perseverance was instrumental in securing India’s freedom. Likewise, unwavering determination in pursuing financial goals can surmount seemingly insurmountable obstacles. Setting realistic, achievable objectives and working steadily towards them is important. Remember, financial success is a marathon, not a sprint. Stay focused, stay committed, and you’ll see the fruits of your labor over time.

Define Your Financial Journey

Mahatma Gandhi had a crystal-clear vision for India’s freedom struggle. Similarly, a well-defined goal and a clear roadmap to attain it are imperative in finance. Start by asking yourself what you’re saving or investing for. Is it a comfortable retirement, a down payment on a home, or your child’s education?

Knowing why you’re allocating your resources and having a specific target in mind provides the necessary impetus to stay disciplined and focused.

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Timely Financial Choices

Mahatma Gandhiji’s adage, “The future depends on what you do today,” rings true for financial decisions. Procrastination in critical financial choices, like starting a SIP or obtaining life insurance, can have far-reaching consequences. Take action now for a secure tomorrow.

Understand that every financial decision you make today sets the stage for your future financial well-being. Whether building an emergency fund or starting a long-term investment, the sooner you begin, the more you’ll reap the benefits.

Though rooted in a different context, Mahatma Gandhi’s principles offer timeless and practical financial guidance. With steadfast goals and adherence to these principles, managing finances becomes more attainable.

FAQs

  1. Can following Gandhian financial principles really make a difference?

    Absolutely. Gandhian principles emphasize discipline, patience, and long-term thinking, which are fundamental to achieving financial stability and success. They provide a solid foundation for making informed financial decisions.

  2. How can I start with small investments?

    Begin by allocating a small portion of your income towards investments. Even a modest sum, consistently invested over time, can yield significant returns. Consider options like mutual funds, which allow you to start with a minimal investment.

  3. How can I define clear financial goals?

    Start by identifying your objectives, whether saving for a home, retirement, or education. Then, outline the steps needed to achieve each goal. Be specific about the amount you aim to accumulate and your working timeline. Regularly revisit and adjust your goals as needed to stay on track.

Equity Investing

Equity investing means investing in the shares of a company traded in the stock market after quantitative equity analysis. If you buy shares or stocks of a company, you are essentially a shareholder or part of the company. The company’s success will potentially benefit you in the form of dividends and capital appreciation.

Benefits of equity investments

  • It allows the possibility of earning money through dividends and capital gains.
  • It is a diversified investment option with minimum initial investment.
  • Though riskier, you can earn better returns than investments like savings accounts or fixed deposits. The risks can be minimized with the help of a share market research analyst.

Why Equity Research Matters

A crucial role of equity research is filling the gap in information between the sellers and buyers of shares. Most investors do not have the expertise or resources to assess and analyze every stock.

Stock market research analysts dedicate a lot of energy, time, and expertise to analyzing relevant stocks out of the pool of stocks. These researchers help you make better-informed decisions for your investment.

Equity research guides analysts in identifying trading strategies, patterns, etc., and using this data to identify profitable stocks for investment opportunities.

Fundamental Analysis: Understanding the Business

Fundamental analysis offers a holistic approach to understanding a company profile for investment. It is considered a guiding compass for equity investment. It provides details of a company’s fundamentals and industry dynamics, like growth prospects, earnings reports, management team, current financials, and competitive advantages. 

Below are some critical factors offered by fundamental analysis:

  • It evaluates the health and performance of the company through income statements, balance sheets, and cash flow statements. These financial statements help investors assess profitability, cash flow stability, revenue growth, and debt levels.
  • Fundamental analysis of the earnings reports is like viewing a company’s report card. One can check if they’re growing their earnings, regularly making profits, or facing challenges.
  • Understanding a company’s competitive position in the market is imperative. Knowing the company’s market share, advantages, and industry dynamics helps assess future growth.
  • Fundamental analysis provides insight into the expertise and quality of the management team. Strong leadership indicates a healthy company capable of making smart decisions.
  • The analysis of industry and market trends by stock market research analysts can predict if the industry will benefit from or face challenges with changes in the global financial market.

All these smaller pieces of information help an investor gauge the bigger picture and evaluate the core of a company’s financial health. So, investors should let the expert share market research analysts guide them.

Qualitative Factors: Beyond the Numbers

Having sound financial data to back investment decisions is crucial, but many other factors must be considered. Non-quantitative factors like competitive advantage, management quality, corporate governance, etc., are equally vital in deciding.

CREATIVE Qualitative Factors In Valuation 1

These are the qualitative factors in valuation. They cannot be directly quantified from annual reports, financial models, relative valuation tools, etc. These non-tangible elements also impact a stock’s worth.

A few qualitative factors are: 

  • Company’s core business
  • Competitive analysis
  • Quality of management
  • Corporate governance
  • Market share
  • Customers and geographic exposure
  • Competitive advantage
  • Industry growth trends 
  • Disruptive technologies 
  • Government regulations

Technical Analysis

Technical analysis helps investment research analysts and traders predict the stock’s future prices. The analysts look for patterns and base their predictions on the study regarding when investors should buy or sell stocks. Thus, technical analysis provides a better understanding of the intrinsic value of a stock, the innate value, and the market price. 

There are two main approaches to technical analysis

  • Top-down: In this approach, the share market research analysts first examine the overall economy. They study how the economy will impact the business sectors, local markets, and individual stocks. This approach typically works for short-term investors.
  • Bottom-up: This is the opposite approach and is mainly used for long-term investments. Here, the stock market research analysts look at a specific stock to understand if it is undervalued and then decide on the ideal time to trade this particular stock. 

Different technical analysis techniques help investors make informed decisions of entry and exit for each stock in their portfolio.

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Valuation Methods: Determining Fair Value

In simple terms, stock valuation is like determining the fair price of a product. Investors might become overwhelmed by the different valuation techniques when deciding on the ideal valuation method. 

This is when stock market research analysts use their expertise to value a stock. These valuation methods might be straightforward or complicated. Unfortunately, there is no one particular method that suits all. Each stock has unique characteristics, strengths, and weaknesses, which may require various valuation methods.

Types of stock valuation techniques

Primarily, there are two types of stock valuation methods:

  1. Absolute: This stock valuation method is based on a company’s fundamental analysis and not comparing it with peers. It bases its valuation on financial information like financial statements, cash flow metrics, dividends, and growth rates. This method of calculating a stock value involves the computation of the dividend discount model (DDM) and discounted cash flow model (DCF).
    • Discounted Cash Flow (DCF): It estimates a company’s value by considering its expected cash flows in the future based on revenue growth, profit margins, and the cost of capital. Money to be received in the future is less valuable than today’s. DCF analysis calculates a value by discounting future cash flows. As the DCF method involves projecting forecasts and making assumptions, it is crucial to evaluate the inputs.
    • Dividend Discount Model (DDM): This technique uses the present value of the dividends expected in the future to calculate a stock’s value. This assumes that the stock’s value is equivalent to the sum of all dividends expected in the future, discounted from their present value.
  2. Relative: The term indicates that financial reports of companies like the focus company are compared. This approach uses the P/E (Price-to-Earnings) method. In cases where the P/E ratio of the focus company is lower than its competitors, it means the stocks of the focus company are undervalued.
    • Price-to-Earnings (P/E): The stock’s market price is compared to the earnings per share (EPS) the company generates. A higher P/E ratio indicates better future growth, whereas a lower ratio implies a lower valuation.

Building a Robust Investment Strategy

Building equity investment portfolios can often feel daunting. However, stock market research analysts offer tips on creating a well-rounded equity investment portfolio through quantitative equity analysis and strategy. Without due diligence, your investments can collapse

A few critical factors involved include the following:

  • Ascertain your risk tolerance and investment time range
  • Plan how active you want to be
  • Pick an account that meets your goals
  • Choose your investments wisely with the help of stock market research analysts
  • Fix a budget
  • Review and adjust your investments.

To Conclude:

CREATIVE Investment Types

Equity research by a stock market research analyst is a crucial piece that investors use to make better-informed decisions when investing in different share types. This research is often funded by institutional investors who use investment research analysts mainly on a fee basis. The credibility of a research firm or stock market research analyst depends on their efforts in providing reliable research.

Research and analysis benefit stock market research analysts seeking insights and finance enthusiasts understanding equity details.

FAQ

What does a stock market research analyst do?

Research analysts conduct financial analyses, examine data, build financial models, and submit research reports with investment recommendations.

What skills are required for a stock market research analyst?

An investment research analyst requires a thorough understanding of financial markets, strong analytical abilities, and proficiency in financial modeling.

What are the different types of analysis in equity research?

Quantitative equity analysis has various types, such as – 
fundamental analysis
technical analysis
sentimental analysis

Read more:  How Long-term investing helps create life-changing wealth – TOI.

Introduction

In a world where financial stability is paramount, even low-income earners can build a secure financial future by investing strategically. Knowing the long-term investment options for low-income earners can make all the difference in India, where opportunities and challenges abound. This article will explore five investment strategies to help low-income individuals pave the way for a brighter tomorrow.

Investing for the long term is an essential step toward financial security, regardless of your income level. While higher-income earners may have more savings available, lower-income earners can participate in the wealth-creation process by making informed investment choices. We will explore high-quality strategies that help low-income individuals build successful futures.

Investment TypeMinimum Investment
Systematic Investment Plans (SIPs)It can start anywhere around Rs 500
Public Provident Fund (PPF)Minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year
Equity Linked Savings System (ELSS)Can start from Rs 500
Recurring Deposit (RD)It can start anywhere around Rs 500
National Pension Scheme (NPS)Mandatory to invest a minimum of Rs.6000 in a financial year

1. Systematic Investment Plans (SIP)

Systematic Investment Plans (SIPs) are an excellent choice for low-income earners. SIPs allow you to invest a fixed amount of money in mutual funds at regular intervals (monthly or quarterly). This approach encourages discipline and enables you to benefit from rupee cost averaging. Over time, your investments can potentially grow significantly, even with small contributions. You can start investing as low as 500 rupees for SIPs. Here’s more:

  • Affordability: SIPs allow you to start with small amounts, making them suitable for low-income individuals.
  • Rupee cost averaging: Investing a fixed amount regularly helps reduce the impact of market volatility on your investments, as you buy more units when prices are low and fewer when they are high.
  • Power of Compounding: Over time, your investments grow exponentially due to the power of compounding, helping you accumulate wealth.

2. Public Provident Fund (PPF)

Public Provident Fund (PPF) is a government-backed savings scheme that offers attractive interest rates and tax benefits. This is ideal for low-income earners who want to secure their financial future. Contributions to PPF accounts are tax-deductible and interest-free, making it an attractive option for long-term investors.

  • Tax Benefits: Contributions to PPF are eligible for tax deduction under Section 80C of the Income Tax Act.
  • Lock-up Period: The PPF has a lock-in period of 15 years, which encourages disciplined savings.
  • Benefits: PPF offers competitive interest rates, often higher than conventional savings accounts.

3. Equity Linked Savings System (ELSS)

ELSS is a tax-saving mutual fund scheme that offers the potential for high returns. Low-income earners can start with an investment as low as Rs. 500 monthly. ELSS has a lock-in period of three years, making it a relatively short-term commitment. While these funds carry some risk, they can offer significant rewards over the long term. Here’s why ELSS is a viable option for low-income earners:

  • Tax Benefits: ELSS investments are eligible for tax deduction under Section 80C.
  • Long-term wealth creation: Equity mutual funds have the potential to generate high returns over a long period.
  • Management: Fund managers make investment decisions, reducing the need for detailed market knowledge.
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4. Recurring Deposit (RD)

Recurring deposits (RDs) are another low-risk savings option for low-income individuals. Banks issue RDs and allow investors to save a certain amount each month for a set period of time, typically from 6 months to 10 years. RDs offer guaranteed returns and are safe if they build a corpus over time.  Here are more reasons to consider:

  • Flexibility: RD allows you to choose the amount and timing of investments according to your financial capacity.
  • Stable Income: RD offers stable returns, making it easier to plan your finances.
  • Accessibility: RDs are available in most banks, making them accessible to many investors.

5. National Pension Scheme (NPS)

The National Pension Scheme (NPS) benefits low-income earners seeking retirement. It is a voluntary long-term pension savings scheme that offers tax benefits under sections 80CCD(1) and 80CCD(2) of the Income Tax Act. NPS allows investors to choose their investments, giving them flexibility and control over their retirement. Here’s why:

  • Flexibility: NPS allows you to choose your investments based on your risk appetite.
  • Tax Benefit: Contribution to NPS is eligible for tax deduction under Section 80CCD(1B).
  • Fixed income at retirement: NPS provides a steady income during your retirement years

Conclusion:

In conclusion, low-income earners in the Indian market have several viable options for long-term investing. By starting small, diversifying their investments, taking advantage of government schemes, considering equity investments, and seeking professional guidance, they can pave the way for a financially secure future. Remember that the key to successful long-term investing is discipline, patience, and a commitment to your financial goals.

FAQs

  1. How can I stay informed about investment options and market trends as a low-income investor?

    To stay informed, you can attend financial workshops, read books, follow reputable financial news sources, and seek advice from certified financial advisors who can provide personalized guidance based on your financial situation.

  2. What is the minimum investment in a Systematic Investment Plan (SIP)?

    The minimum investment requirements for a SIP may vary depending on the mutual fund structure and asset management company (AMC). Usually, it starts as low as Rs. 500 per month, making it accessible to low-income earners.

  3. How does the National Pension Scheme (NPS) help low-income earners?

    NPS provides tax benefits under Sections 80CCD(1) and 80CCD(2) of the Income Tax Act. This means that contributions to NPS can reduce an investor’s taxable income, helping them save tax in building their retirement pool.

  4. Are there any government schemes specifically designed for low-income individuals in India?

    Yes, there are several government schemes, such as the Public Provident Fund (PPF), National Savings Certificates (NSC), and the Atal Pension Yojana (APY), which are tailored to provide financial security and tax benefits to low-income earners.

In the dynamic Indian financial landscape, JSW Infrastructure, a maritime services provider, made a significant entrance into the world of initial public offerings (IPOs). The anticipation was high, and investors were eager to know if they had secured a piece of the JSW Infra pie.

JSW IPO Listing Date

The wait will be finally over! JSW Infra’s shares were set to debut on the stock exchanges on October 3. Investors could soon see their investments come to life in the dynamic world of the stock market.

Here’s a quick snapshot of the JSW Infrastructure IPO:

JSW Infrastructure IPO Details
Total Issue Size₹2,800.00 crores
Face Value₹2 per share
Fresh Issue Size23.53 crore shares
Price Band₹113 to ₹119 per share
Lot Size126 Shares
IPO Open DateMonday, September 25
IPO Close DateWednesday, September 27
Basis of AllotmentThursday, September 28
Initiation of RefundsWednesday, October 4
Listing DateFriday, October 6

So, we created a step-by-step guide below on how to check JSW IPO allotment status.

Three Ways to Check IPO Allotment Status

Option 1: Through The Website

KFintech
  • Go to the registrar’s website. Click here. 
  • Find five helpful links for checking status.
  • Select JSW Infrastructure Limited in the Kfintech IPO allotment status
  • Choose from three options: Application No, Demat Account, or PAN.
    • For Application No, enter it along with the captcha code, then click “Submit.”
    • For Demat Account, provide the captcha code and account details, then click “Submit.”
    • To use PAN, enter the PAN number and captcha code, and click “Submit.”

The result? You can see your application status, including the number of shares applied for and the number allotted to you.

Option 2: Through Bombay Stock Exchange

BSE
  • Go to BSE’s official website allotment page. Click here.
  • Select ‘Equity’ under ‘Issue Type.’
  • Pick the IPO from the drop-down menu under ‘Issue Name.’
  • Input your PAN or application number.

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Option 3: Through the National Stock Exchange

NSE
  • Go to NSE’s official website. Click here. 
  • Sign up by selecting the ‘Click here to sign up’ option and register with your PAN.
  • Input your username, password, and captcha code.
  • Visit the IPO allotment status on the subsequent page.

As the IPO journey unfolded, investors watched with bated breath. The IPO allotment status was a crucial piece of this financial puzzle. And now, armed with the knowledge of how to check their status, they eagerly awaited the listing date, ready to embark on their investment journey with JSW Infra.

How should I check my IPO allotment status?

You can check the IPO allotment status through the registrar’s or BSE and NSE websites. Read the blog for more details.

What information do I need to check my IPO allotment status?

Depending on your chosen method, you will need your Application Number, Demat Account details, or PAN (Permanent Account Number) to check your allotment status.

Can I check my JSW IPO allotment status without the application number?

Yes, you have multiple options to check your allotment status, and you can use your Demat Account details or PAN if you don’t have the application number readily available.
 

Introduction

On 30th June 2023, ICICI Bank announced that it would delist its broking arm, ICICI Securities, in a share-swap deal worth about ₹5,100 crores.

After NCLT approves the scheme of arrangement for delisting, ICICI Securities shareholders would be allotted 67 ICICI Bank equity shares of face value ₹2 each for every 100 equity shares. As of 31st March 2023, ICICI Bank held a 74.85% stake in ICICI Securities, and the public has the remaining 25.15% stake. This exercise will likely be completed in the next 12-15 months.

Four Reasons Why ICICI Securities is Delisting

Since its listing on the stock exchanges in April 2018, the shares of ICICI Securities have underperformed the market and not moved significantly higher. Its ₹4,017 crore IPO received a poor response, with only 78% of the issue being subscribed. So, the company reduced the IPO size to 3,500 crores, and the stock was listed at a 16.35% discount.

ICICI Sec
Stock Price Movement of ICICI Securities Since Listing

Declining Market Share

The dismal IPO performance of one of the largest full-service brokerage firms was unexpected, especially when new-age discount brokers were slowly gaining ground due to their simple client onboarding process.

The stock-broking ecosystem has changed in the past five years, and discount brokers today have a lion’s share of 60% of NSE active clients. At the end of FY23, Zerodha, Groww, Angel One, and Upstox were the country’s top four ranked stock brokers.

During this period, the market share of ICICI Securities declined from a 10% share of active NSE clients at the end of FY20 to 7% at the end of FY23.

Weak Financial Performance

On a consolidated basis, ICICI Securities’ total income in FY23 was flat at ₹3,425 crores compared to ₹3,438 crores. And, net profit declined by 19% to ₹1,117 crores from ₹1,382 crores in FY22. Since its listing, ICICI Securities did not do well financially as well as the other listed subsidiaries of ICICI Bank.

Total Income
Net Profit

The company’s revenue share of total income from cash broking has decreased from 31% in FY22 to 20% in FY23. Meanwhile, the revenue share of derivatives broking increased by four percentage points to 15%. The revenue share from broking & commission was over 90% at the end of FY20.

Overlap of Businesses

Over the last five years, ICICI Securities significantly diversified its operations, moving from a broking-led business to a complete wealth-tech platform and financial marketplace. Between FY22 and 25, the company planned to scale up its non-broking revenue streams like MTF, PMS, loans, insurance, distribution of mutual funds, etc.

This diversification led to a significant overlap in business activities with ICICI Bank, which also has a presence in wealth management, mutual fund distribution, insurance, etc.

Affecting Valuation

As the largest shareholder of ICICI Securities, the underperformance of the broking company’s shares was affecting ICICI Bank’s valuations.

If you look at ICICI Bank’s earnings, the five-year compounded profit growth is 35%. And, as of 5th September 2023, the stock gave a compounded Annual Growth Rate of 24% in the last five years.

While ICICI Bank is growing rapidly, ICICI Securities fell behind in financial performance while facing multiple challenges to shore up its core broking business.

By delisting ICICI Securities, the stock will no longer be subject to market volatility and value dilution. The delisting will help ICICI Bank have more control over its valuation as it will fully control the broking business, reducing the accountability of being listed in the market.

ICICI Securities Will Become A 100% Subsidiary of ICICI Bank

ICICI Bank, in an official statement, said that the decision to delist ICICI Securities and transform it into a wholly-owned subsidiary was driven by the pursuit of synergies between the two entities.

The bank intends to keep ICICI Securities as a wholly-owned subsidiary because of regulatory limitations that restrict it from undertaking securities broking business departmentally.

Dilution of ICICI Bank Equity Base

The issuance of ICICI Bank equity shares to ICICI Securities shareholders will reduce the equity capital of ICICI Bank. At the proposed share swap ratio, ICICI Bank will issue around 54.5 million of its equity shares to ICICI Securities’ public shareholders, who currently hold 81.45 million, which may affect ICICI Bank.

For ICICI Securities shareholders, the delisting arrangement holds potential benefits. Over the long term, they may gain from any positive returns of ICICI Bank. After delisting, ICICI Securities’ business model may be restructured to align with ICICI Bank’s wealth management product offering and the company’s long-term goals.

FAQs

  1. What will happen to ICICI Securities after delisting?

    After delisting ICICI Securities shares from the stock exchanges, it will become a wholly-owned subsidiary of ICICI Bank.

  2. What is the share swap ratio for ISec delisting?

    Shareholders of ICICI Securities will receive 67 shares of ICICI Bank for every 100 shares of ICICI Securities they hold.

  3. When are ICICI Securities shares delisting from stock exchanges?

    The ICICI Bank Board of Directors approved the delisting of ISec shares on June 30, 2023, with the shares expected to be delisted within the next 12 to 15 months.

Introduction

In the dynamic economic environment, multi-generational families should adopt sound financial strategies that could stand the test of time. Long term investments are key to securing your family’s financial future and leaving a lasting legacy. Financial security helps generations, and long term investments are the cornerstone of financial security and wealth preservation.

Many generations, even today, do not have to worry about the generation of wealth as their elders have focused on building a lasting legacy. But how can you plan that? What are the right steps to take while thinking about multi-generational families?

This article explores six long-term investment strategies for multigenerational families to preserve wealth or build a solid financial foundation.

Table: A Comparison of Long-Term Investment Options

Investment OptionRisk LevelPotential ReturnsLiquidityDiversification
Real Estate InvestmentModerate to HighHighLow to MediumYes
Stock Market InvestmentsHighHighHighYes
Bonds and Fixed IncomeLow to ModerateLow to ModerateMedium to HighYes
Trust Funds and EstateLow to HighVariesLow to HighYes
Gold and Precious MetalsLow to HighVariesHighYes
Allocation for RetirementLow to ModerateModerate to HighMedium to HighYes

1. Investing: Use the power of compounding

Investing in the stock market is a time-tested way to build long-term wealth. Multigenerational families can access the returns by buying stocks from well-established companies or investing in index funds. The key is to be patient and ride the ups and downs of the market, as stocks have historically delivered high returns over long periods.

Diversification is a cornerstone of long-term investment success. This helps mitigate risk and ensure your family’s wealth is not tied to the fate of a single asset class.

2. Real Estate: Creating intergenerational wealth

Real estate investing has always been a cornerstone of wealth for families for generations. Not only does property ownership generate free income, but it is also a tangible asset that will appreciate in value over time. Multi-generational families can diversify their portfolios by owning various properties, including residential and commercial rentals.

Investing in real estate through direct property ownership or real estate investment trusts (REITs) is a time-tested strategy for building long-term wealth.

3. Bonds and fixed-income investments

Fixed-income mortgages and investment savings are ideal for multi-generational families looking for a steady income. These investments generate regular interest payments and a return on the principal as it comes due. Bonds are less risky than stocks, making them a valuable addition to a diversified portfolio. There are many types of bonds you can explore for investing.

4. Trust funds and estate planning

Protecting future generations’ trust funds is essential in multi-generational wealth management. By establishing a trust, families can minimize estate taxes and ensure their assets are distributed as they wish. Trusts can protect assets from creditors and lawsuits, giving future generations a solid financial foundation.

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5. Gold and precious metals

In India, gold has always symbolized the preservation of wealth. Investments in physical gold, gold ETFs, or domestic gold can act as a hedge against inflation and currency depreciation. Multi-generational families often pass gold down through generations as valuable heirlooms.

From marriages to auspicious occasions, Indian families prefer investing in gold and precious metals, giving good gains after many years.

6. Allocate for retirement

For multi-generational families, planning for retirement is paramount. Long term investments in retirement-focused instruments like the Employee Provident Fund (EPF), the Public Provident Fund (PPF), and the National Pension System (NPS). These investments offer tax benefits and provide financial security during retirement, ensuring that each generation is secured.

It is important to note that the right mix of these investments can vary depending on your family’s financial goals, risk tolerance, and timeframe. Consider consulting a financial advisor about your personalized budget that meets your needs.

Long term investments are the cornerstone on which durable assets are built. Real estate investments, savings accounts, bonds, trust funds, and long-term pension accounts each offer unique benefits and can be combined to create a strong, diversified portfolio

As you embark on this journey, remember that patience and a long-term perspective are your best friends. Combined with diversification, the power of compounding will help grow your family’s long term investments across generations. By carefully planning your financial assets through savings and estate planning, you can ensure that your hard-earned assets will benefit your descendants for many years.

In conclusion, multigenerational families’ long term investment strategies involve a thoughtful asset mix that balances risk and reward. With these strategies, you can pave the way for financial security, prosperity, and a lasting legacy that will benefit your family for many generations.

What are the benefits of long term investments for multi-generational families?

Long term investments create wealth, preservation, and the opportunity to maximize returns, making them ideal for securing a family’s financial future for multiple generations. These investments can be fruitful for your family to build a future.

2. How do I determine the right mix of long term investments for my family’s needs?

The ideal mix depends on your financial goals, risk tolerance, and time frame. Consulting with a financial advisor can help you create a personalized financial plan.

3. Why are estate plans and trust funds important for multigenerational wealth planning?

Estate planning and trust funding allow you to protect your assets, minimize estate taxes, and ensure that your money is distributed the way you want it to be for future generations.

4. How can I ensure my family’s future generations’ financial well-being through long term investments?

Prioritize education and health planning, invest in assets that appreciate over time, and seek professional financial advice to create a solid financial foundation for future generations.

Read more:  How Long-term investing helps create life-changing wealth – TOI

Introduction

Were you sad when you saw your portfolio was all red? Or held the stock exchanges responsible for your losses? Don’t be concerned. Gain and loss are inherent in this game, but what separates champions from others is the ability to turn losses into gains. Tax Loss Harvesting is a strategy where you capitalize on your stock market losses to save on taxes.

In this post, you will discover everything there is to know about Tax Loss Harvesting, from what it is to the best tactics to use to maximize your tax savings. You will additionally learn how to use this fantastic strategy to increase your long-term benefits. So, let us begin!

Tax Rules for Stock Market Transactions

When you embark on a journey, you prepare to pack your clothes, bring vital medications, etc. Similarly, before we go on our adventure to learn about Tax Loss Harvesting, it is important to grasp the tax regulations that regulate stock market investing.

Potentially, there are two types of taxes in stock markets-

1. Short-Term Capital Gains Tax (STCG)

STCG is the tax on the gains realized by selling stocks or equities mutual funds within one year after purchasing them. In such cases, you must pay 15% of the gain tax.

2. Long-Term Capital Gains (LTCG)

LTCG is levied on gains realized when selling stocks or equities mutual funds held for more than a year. In these cases, you must pay tax on your gains at a rate of 10%. The only relief here is that you must pay LTCG taxes only if your gains exceed Rs. 1 Lac in a financial year.

Real-Life Example to Understand Taxes

To simplify it, let us consider a case where you bought 100 shares of ABC Ltd. at Rs. 500 per share on 1st January 2022. You sold 50 shares on 30th June 2022 at Rs. 600 per share and the remaining 50 shares on 31st December 2022 at Rs. 700 per share. How will you calculate your STCG and LTCG for the financial year 2022-23?

In this case, the first transaction of selling 50 shares on 30th June 2022 is an STCG, as the holding period is less than 12 months (6 months). The second transaction of selling 50 shares on 31st December 2022 is an LTCG, as the holding period is over 12 months (12 months).

In this case, your STCG is: STCG = (600 – 500) x 50 x 0.15 = Rs. 750

In this case, your LTCG is: LTCG = (700 – 500) x 50 x 0.1 LTCG = Rs. 1000

(Though LTCG is only payable if your gains exceed Rs. 1 lac, we have not taken this into account here to simplify the computations.)

Therefore, your total capital gain for the financial year 2022-23 is:

Total capital gain = STCG + LTCG

Total capital gain = Rs. 750 + Rs. 1000

Total capital gain = Rs. 1750

Tax Loss Harvesting- Way to Reduce Your Tax Burden

We’ve all bought some stocks we’re not proud of, either because we followed bad advice or because we bought at the wrong moment when valuations were sky-high.

The performance of these dud stocks hurts the performance of your portfolio. So, the ideal strategy is to post losses on these floundering stocks and offset them against capital gains from good stocks. This is the essence of Tax Harvesting. 

Tax loss harvesting is selling some investments at a loss to offset the gains from other investments. By doing so, investors can lower their taxable income and pay less tax on their capital gains. It can be especially useful for investors with short-term capital gains, which are taxed more than long-term ones.

Say you invested Rs. 2 lacs in the stock market in Jan 2022. This comprises Rs. 1 lac invested in shares of Company A and Rs. 1 lacs invested in shares of Company B. You decide to sell these stocks in September 2023.

In the current scenario, company A shares are valued at Rs. 2.5 lacs and shares of Company B are valued at Rs. 25,000/-.

 Now, see how tax loss harvesting works-

  • You can sell the shares of Company B at Rs. 25,000, which will result in a long-term capital loss of Rs. 75,000 (since you held them for more than 12 months).
  • Then, you can use this loss to offset the long-term capital gain of Rs. 1.5 lacs (Rs. 2.5 Lacs – Rs. 1 Lacs) that you invested in the shares of Company A, which will reduce your taxable gain to Rs. 75,000 (Rs. 1.5 Lacs – Rs. 75,000 = Rs. 75,000/-).
  • You can save tax on the long-term capital gain at 10%, which amounts to Rs. 7,500 (Earlier Taxable Gain was 15,000/-)

Don’t fret if you haven’t offset your capital losses against your earnings this year. The best side of tax harvesting is that losses can be carried forward for up to eight assessment years.

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Benefits of Tax Loss Harvesting

  • Helps you reduce your tax liability and enhance your post-tax returns.
  • Helps you diversify your portfolio, as the proceeds from the sale can be used to buy different securities that suit their risk and return objectives.
  • Tax loss harvesting can also create new investing opportunities, as you can buy back the same or similar securities at a lower price after a certain period and benefit from their future appreciation.
  • Tax loss harvesting can also enhance the compounding effect of investing, as investors can reinvest the tax savings to generate more returns over time.

Limitations of Tax Loss Harvesting

  • Tax loss harvesting may involve transaction costs and market risks that can reduce or eliminate the tax benefits. For example, selling a security at a loss may incur brokerage fees, commissions, or spreads that can affect the tax savings.
  • Tax loss harvesting may increase the investor’s taxable income if they sell the replacement security at a higher price. This is because the replacement security will have a lower cost basis than the original security and, thus, a higher capital gain when sold.

How Tax Loss Harvesting Can Be Helpful in Long-Term Investing?

Tax loss harvesting is a strategy that can be helpful in long-term investing, as it can help investors reduce their tax liability and increase their after-tax returns. It involves selling securities that have declined in value to offset the taxes on capital gains or income.

By doing this, investors can lower their taxable income and pay less tax in the current year. However, tax loss harvesting does not eliminate the capital gain or loss but only defers it to the future.

Therefore, investors can use the tax savings from tax loss harvesting to reinvest in the market and generate more returns over time. This can enhance the compounding effect of investing, as investors can grow their wealth faster by reinvesting the tax savings.

Moreover, tax loss harvesting can also help investors diversify their portfolios, as they can use the proceeds from the sale to buy different securities that suit their risk appetite and return objectives.

This can improve their portfolio performance and reduce their volatility in the long run. Therefore, tax loss harvesting can be useful for long-term investors who want to optimize their tax efficiency and maximize their wealth creation.

Key Takeaways

Tax loss harvesting should enhance long-term investing, not as a way to time the market or chase short-term returns. While putting this technique to practical implication, have a clear investment plan and objective.

However, tax loss harvesting may be ineffective for investors with low tax brackets or no capital gains to offset. Tax savings in such instances may be minimal or inadequate.

But, you can use Tax Harvesting to effectively rebalance your portfolio and maintain their desired asset allocation. Doing so allows you to take advantage of market fluctuations, cut down your tax bill, and reinvest your tax savings to earn good returns over time.

FAQs:

How often should I do tax loss harvesting?

There is no fixed rule on how often you should do tax loss harvesting. It is advisable to periodically monitor your portfolio, such as quarterly or annually, and look for opportunities to harvest losses when they arise.

Is Tax Loss Harvesting risk-free?

No, it’s not so. Some of the risks involved are:
●  You may lose the opportunity to benefit from the recovery of the security that you sold at a loss if it rebounds in price before you can buy it back.
●  You may incur higher taxes in the future if you sell the repurchased security/stock at a higher price than the original security.
●  You may incur transaction costs and market risks that can reduce or eliminate the tax benefits of tax loss harvesting.

Can I do tax loss harvesting in any type of account?

No, you cannot harvest tax loss in any account. Tax loss harvesting only applies to taxable accounts, where you must pay capital gains or income taxes. Tax loss harvesting is not relevant for tax-deferred or tax-exempt accounts like PPF or NSC, where you do not have to pay taxes on capital gains or income until withdrawal or never.

Read more:  How Long-term investing helps create life-changing wealth – TOI

NSE (National Stock Exchange of India) is India’s leading and largest stock exchange. As per the World Federation of Exchanges (WFE), it is positioned third in the world in the equity segment. NSE runs daily, from Monday through Friday, except for stock market holidays and weekends (Saturday and Sunday).

A market holiday list is important as trading and investing require careful planning and analysis. Like every year, the list of stock market holidays in 2023 is based on cultural and national holidays. As most investors trade daily, the share market holiday calendar helps them stay up-to-date while planning and executing investment strategies.

Stock Market Holidays List 2023

India is a nation of multiple languages and religions, and the system of holidays is quite complex. A single list of holidays will not work for different segments or industries. Typically, the list of share market holidays is exclusive and updated every year.

As a trader or an investor, you must keep track of the stock market holidays and plan your trading accordingly. The official list of Indian stock market holidays is published on the NSE website at the beginning of every year. 

DateDayHolidays
26 January 2023ThursdayRepublic DayTrading & Clearing Holiday
07 March 2023TuesdayHoliTrading & Clearing Holiday
22 March 2023WednesdayGudi PadwaClearing Holiday
30 March 2023ThursdayRam NavamiTrading & Clearing Holiday
04 April 2023TuesdayMahavir JayantiTrading & Clearing Holiday
07 April 2023FridayGood FridayTrading & Clearing Holiday
14 April 2023FridayDr. Baba Saheb Ambedkar JayantiTrading & Clearing Holiday
01 May 2023MondayMaharashtra DayTrading & Clearing Holiday
05 May 2024FridayBuddha PournimaClearing Holiday
29 June 2023WednesdayEid-ul-adha (Bakra Eid)Trading & Clearing Holiday
15 August 2023TuesdayIndependence DayTrading & Clearing Holiday
16 August 2024WednesdayParsi New YearClearing Holiday
19 September 2023TuesdayGanesh ChaturthiTrading & Clearing Holiday
28 September 2024ThursdayEid-e-MiladClearing Holiday
02 October 2023MondayMahatma Gandhi JayantiTrading & Clearing Holiday
24 October 2023TuesdayDussehraTrading & Clearing Holiday
14 November 2023TuesdayDiwali BalipratipadaTrading & Clearing Holiday
27 November 2023MondayGurunanak JayantiTrading & Clearing Holiday
25 December 2023MondayChristmasTrading & Clearing Holiday
Source: NSE Holiday List

Additionally, there are a few share market holidays that fall on weekends.

DateDayHolidays
18 February 2023SaturdayMahashivratri
22 April 2023SaturdayEid-Ul-Fitr (Ramzan Eid)
29 July 2023SaturdayMuharram
12 November 2023SundayDiwali Laxmi-Pujan
Source: NSE India
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Muhurat Trading

On the auspicious day of Diwali (otherwise a share market holiday), an event known as muhurat trading takes place for an hour. This year, 12 November 2023, has been set for this muhurat trading.

Mahurat Trading SessionCapital Market
Block Deal Session17:45 – 18:00 hours
Pre-Open Market18:00 – 18:08 hours
Normal Market18:15 – 19:15 hours
Call Auction Session18:20 – 19:05 hours
Closing Session19:25 – 19:35 hours
Source: NSE India

Conclusion

Today, with India’s GDP growth rate of 7.2%, the country has moved up the rankings as the fifth largest in the world. This year is likely to be an exciting year for Indian stock markets. So, if you are a serious investor, you will want to track the stock market holidays to plan and be well-prepared for the entire year.

The NSE offers a wide range of investment opportunities. Thus, prior knowledge of the share market holiday list will help investors make informed investment strategies and stay ahead of the competition.

FAQs

  1. What time does the stock market open today?

    The stock market opens today at 9:15 AM (Indian Standard Time), Monday to Friday

  2. What time does the stock market close today?

    The stock market closes today at 3:30 PM (Indian Standard Time), Monday to Friday

  3. What happens if a share market holiday falls on the weekly expiry of equity options contracts?

    As per the regulations, when a stock market holiday overlaps with the weekly contract expiry day, the NSE shifts the expiry to the day before the holiday.

  4. What is a settlement holiday?

    In simple terms, a day when the stock markets are closed but investments can be traded in through your online platform is known as a settlement holiday. These are also called transfer holidays.

  5. Can NSE modify any share market holidays after the announcement?

    The stock market holidays 2023 list announced by NSE is subject to change at any time. This is done in advance by releasing a memo with the relevant changes.

Have you ever wondered how to claim unclaimed money in any bank account you have forgotten or lost track of? If yes, then you are not alone.

According to the Reserve Bank of India (RBI) data for 2021, 31.08 crores are lying unclaimed in various bank accounts across the country. Data suggests the Number of Accounts With ‘Unclaimed Deposits’ in ‘Public Sector Banks’ Crosses 10 Crore.

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Source: Factly. in

But there’s no need to overthink how to claim unclaimed deposits when there’s an easy and fast way to find out about your unclaimed deposits right now. The Reserve Bank of India has recently launched a centralized web portal called UDGAM (Unclaimed Deposits – Gateway to Access information) for the public to search their unclaimed deposits across multiple banks in one place.

In this article, we will go over all you need to know about how to claim unclaimed deposits, kicking off with the basics. We will also go through how to use the RBI website efficiently and provide some ideas and suggestions to help you keep track of your deposits in the future. So, let’s get this party started!

What are Unclaimed Deposits?

Have you ever opened a bank account just to forget about it? Or have you ever deposited money in a bank and not claimed it for years? If you answered yes, how to claim these unclaimed deposits is more important to you than to anybody else.

Unclaimed deposits are the money lying idle in bank accounts that have not been operated or claimed by the customers for a long time. According to the RBI, a deposit is classified as ‘unclaimed’ if the customer hasn’t made any transaction using that account for at least 10 years. These deposits may include savings accounts, fixed deposits, recurring deposits, current accounts, or any other type of deposit account.

You may wonder why people leave their money unclaimed in banks. Now, there could be various reasons for this, such as:

  • The customer may have passed away without informing the nominee or legal heir about the account.
  • The customer may have changed their address, phone number, email, or other contact details without updating the bank.
  • The customer may have lost or misplaced their passbook, checkbook, ATM card, or other documents related to the account.
  • The customer may have multiple accounts in different banks and may not remember all of them.
  • The customer may have no need or interest in using the account.

Whatever the reason, unclaimed deposits are a massive loss for both the customers and the banks. The deposits lying unclaimed after the expiry of 3 months after 10 years must be transferred to the RBI’s Depositor Education and Awareness (DEA) Fund monthly.

The balances in the DEA Funds may be used by the RBI for depositor interest or other purposes connected to depositor interest as authorized by the RBI. The customers lose their hard-earned money and the interest on it. The banks lose their potential business and goodwill. Moreover, unclaimed deposits are also vulnerable to fraud and misuse by unscrupulous elements.

Therefore, the customers and the banks need to track and know more about how to claim unclaimed deposits in the Bank.

Overview of the UDGAM Portal

The number of unclaimed deposits transferred to the RBI has decreased from 48,262 crores in March 2022 (in FY 2021-22) to Rs. 35,012 crores in February 2023 (in FY 2022-23) as a result of the RBI’s proactive activities to raise awareness about ‘how to claim unclaimed deposits.’

Among these initiatives to help customers learn how to claim unclaimed deposits, the RBI launched UDGAM (Unclaimed Deposits – Gateway to Access Information) on August 17, 2023.

UDGAM is a centralized web portal accessible to the public to search their unclaimed deposits across multiple banks in one place. Currently, only seven banks are included in the UDGAM site; however, this service will be extended to other Banks by October 15, 2023.

The seven Banks in the list include-

  1. State Bank of India (SBI)
  2. Punjab National Bank (PNB)
  3. Central Bank of India (CBI)
  4. South Indian Bank Ltd
  5. Dhanlaxmi Bank Ltd
  6. DBS Bank India Ltd
  7. Citibank

The “unclaimed deposits” that are covered under the umbrella of UDGAM include-

  1. Savings Account
  2. Current Account
  3. Fixed Deposits
  4. Credit account
  5. Loan account
  6. ATM Balances
  7. Unpaid Demand Drafts/ Banker’s Cheques
  8. Margin Money issued against Letter of Guarantee
  9. Unadjusted NEFT Credit Balances

You may simply identify and track your unclaimed deposits on the UGDAM site by entering the appropriate user credentials. UDGAM employs industry-leading AI technology to enhance the user experience.

How to Find Unclaimed Deposits from the UDGAM Portal?

If you’ve learned what constitutes an unclaimed deposit but are still unsure how to claim unclaimed deposits, follow the steps below-

Step 1: Register as a user on the UDGAM portal. Put in your-

  • Name
  • Date of birth
  •  PAN
  • Aadhaar
  • Mobile number
  • Email, etc.

Then, create a password. You will also receive an OTP on your mobile number and email for verification.

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Step 2: Log in to the UDGAM portal using your registered mobile number, email, and password. You will see a dashboard with various options: search, view, edit, download, etc.

image 70

Step 3: Click on the search option and enter your search criteria, such as name, date of birth, PAN, Aadhaar, etc. You can also select the bank or branch names from the drop-down list if you know them.

You can also use the advanced search option to refine your search by entering more details such as account type, account number, deposit amount, etc.

Step 4: Click on the search button and wait for the results. The results will show you a list of all the banks where you may have unclaimed deposits and the account details such as account number, account type, deposit amount, last transaction date, etc.

Step 5: Verify the results and select the accounts that belong to you. You can also download or print the results for your reference.

Step 6: Contact the respective banks where you have unclaimed deposits and follow their procedures to claim your deposits or make your accounts operative again. You may need to provide documents such as identity proof, address proof, passbook, chequebook, etc., to prove your ownership of the accounts.

Tips and Suggestions to Avoid Losing Track of Deposits in the Future

We have given some efficient ways with which you will never have to worry about “how to claim unclaimed deposits” because all of your accounts will be sorted and organized-

  • Update your contact details with your bank regularly. Ensure your bank has your address, phone number, email, and other contact information. This will help you receive timely notifications and alerts from your bank about your account activity and balance.
  • Check your bank statements regularly. You can access your bank statements online or request them from your bank branch. Review your statements carefully and look for any errors or discrepancies. If you find any, report them to your bank immediately.
  • Consolidate your accounts if possible. If you have multiple accounts in different banks, you may consider consolidating them into one or a few accounts. This will help you reduce the hassle of managing multiple accounts and avoid losing track of any of them.
  • Use your accounts regularly. Make some transactions using your accounts at least once a year. This will help you keep your accounts active and prevent them from becoming dormant or unclaimed.
  • Nominate a beneficiary for your accounts. You can nominate someone who will inherit your deposits in case of death. This will help you ensure that your money reaches the right person and does not remain unclaimed in the bank.

Key Takeaways

You can quickly claim unclaimed deposits if you have money in bank accounts you don’t remember or use. Just log in to the UDGAM site, a web platform by the RBI that allows you to search for unclaimed deposits for various banks.

But be careful; the banks may also have different rules and processes to settle the claims. You may also face some legal issues or disputes if there are multiple claimants for the same deposit.

The good news is that you can avoid these hassles by regularly updating your contact details with your bank, checking your bank statements, consolidating your accounts, using your accounts, and nominating a beneficiary. You should also use the UDGAM portal periodically to search and claim your unclaimed deposits.

We hope this article has helped you understand how to claim your unclaimed deposits and why it is essential.

FAQs

What is the Depositor Education and Awareness (DEA) Fund?

The RBI creates the DEA Fund from the unclaimed deposits the banks transfer monthly. The fund is used for promoting depositors’ interest and awareness.
If a claim is made on the deposit after the stipulated period of 10 years, the banks may settle and pay back the funds to the depositor and later claim it back from the DEA Fund.

What are the legal issues or disputes that arise while claiming unclaimed deposits?

The legal issues or disputes that may arise while claiming unclaimed deposits are related to the claim’s ownership, identity, or validity. For example, multiple claimants for the same deposit may exist, such as nominees, legal heirs, joint holders, etc.
There may also be cases of fraud or forgery of documents or signatures. In such cases, the banks may require additional proof or verification before settling the claims.

What are unclaimed deposits?

Unclaimed deposits are the money lying idle in bank accounts that have not been operated or claimed by the customers for a long time. According to the RBI, a deposit is classified as ‘unclaimed’ if the customer hasn’t made any transaction using that account for at least 10 years.

How to claim unclaimed deposits from the UDGAM portal?

To claim unclaimed deposits from the UDGAM portal, you need to verify the results and select the accounts that belong to you. You can then contact the banks where you have unclaimed deposits and follow their procedures to claim your deposits or make your accounts operative again.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

Ganesh Chaturthi 2023 is here, and the festivities have just begun. Popularly celebrated as Vinayaka Chaturthi, the festival of Ganesh Chaturthi commemorates Lord Ganesha’s birth, the deity of new beginnings, good luck, and prosperity.

Lord Ganesha symbolizes financial wellness, economic security, and wealth generation and is always invoked by devotees before the beginning of a new venture. If you have not been able to meet your financial goals for this year, this would be a great time to revamp your investment strategy. And, who better than the God of Wisdom to guide you through?

Lord Ganesha is fondly called ‘Vighnaharta’, which means he is also worshipped as the remover of all troubles. Ganpati is a scholar who possesses knowledge of 14 vidyas and 64 kalas. And every bit of the divine deity exudes education, expertise, and enlightenment. There are unique and distinctive ways in which you can learn a lot from Lord Ganesha’s physical form if you observe keenly.

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We bring you the most important financial lessons you can pick from the divine as the Ganesh Chaturthi 2023 celebrations begin.

Lessons To Learn

Sr. No.Lord Ganesha’s FormImportance
1.Big HeadThink big; plan your goals meticulously and long-term
2.Wide EarsBe open to listening; cut through the market clutter
3.Small Sharp EyesKeep a sharp, attentive, and focused approach
4.Huge StomachAccept your decisions and improvise
5.Flexible NoseNever put all your eggs in one basket
6.Strong ToothTimely identify bad investments and replace them

Start today

Lord Ganesha, the harbinger of good luck, holds the unique distinction of being worshipped first in every new beginning. The first step that you need to take to create wealth is to start investing your money. All you must do is start. What better time could it be for you than Ganesh Chaturthi to begin your investing journey?

The power of compound growth will help you significantly if you invest long-term. Remember, the sooner you begin, the better it will be.

GANPATI Gajanana

Project the large picture ahead

Lord Ganesha, worshipped as the God of Wisdom, is devotedly called ‘Gajanana’ by devotees. The big head signifies broad-mindedness and patience. It tells us to look at the bigger picture ahead. You should not have a myopic mindset while setting your financial goals and the roadmap to achieve them.

The elephant-faced head of Ganesha tells you to plan your finances carefully and not rush your crucial financial decisions on hearsay and emotions.

GANPATI Lambakarna 03

An ear that listens is followed by blessings

Another striking feature of Lord Ganesha’s supreme form is the wide ear. He is also revered as Lambakarna by his disciples. Taking a cue from his willingness to listen, one should not get swayed by the market noise. Keep your ears open and learn new strategies to invest your hard-earned money.

The wide ears signify the importance of listening and tell us to separate knowledge and facts from the market clutter.

GANPATI Chinteshwara

If you keep your eyes closed when you buy, be ready to pay

If you focus on Lord Ganesha’s eyes, you will see they are small. But when you observe them, you will see that they are sharp, and hence, devotees call their beloved deity ‘Chinteshwara’. One needs to know the importance of having an eye for detail while investing. Remember, all that glitters is not gold.

A sharp, attentive, and focused approach will help you work unwaveringly and steadily toward achieving your financial goals.

GANPATI Lambodaraya

Hunger, work, and sweat are the best herbs (or) Whet your appetite

Lord Ganesha is revered as ‘Lambodaraya’ as he sports a huge belly. It tells you that you should know, or rather, learn to stomach the uncertain market risks. To create wealth, you should have an adequate risk appetite. A well-diversified portfolio will protect your capital in the long run while mitigating risk factors.

Ganpati’s large stomach tells us that no matter how good or bad your investment decisions are, you should have the gumption to accept it, learn from it, and improvise better to achieve your goals.

GANPATI Vakratundaya

Have a nose for something

Affectionately called ‘Vakratundaya’, Lord Ganpati also signifies strength and flexibility. Ganesha’s trunk tells us you should be strong yet flexible when adapting to uncertain market situations. Well, nothing is a certainty when it comes to investing. Its biggest example is the Global Financial Crisis in 2008.

The elephant-like trunk teaches us to have a nose for contingencies. You should never put all your eggs in one basket. One should always focus on building a well-diversified portfolio.

GANPATI Ekadantaya

Fight tooth and nail

Lord Ganesha’s followers call the deity ‘Ekadantaya’ due to its broken tooth. It reminds us that even the strongest things can break if not handled with care. It also underscores that despite having only one tooth, one can bounce back from any significant loss and achieve their goal if one adopts the right approach.

The broken tooth – Ganpati’s tusk – signifies that no matter how highly your stocks are performing if they are not well-monitored, they might incur huge losses as well.

There are so many lessons and success mantras that you can learn from Lord Ganesha. The deity’s supreme form embodies intelligence, wisdom, and vital learning. It is up to individuals how they learn these teachings and apply them in real life. However, with Ganpati’s blessings (and lessons), you are bound to succeed sooner or later.

We hope this financial wisdom will help you grow this Ganesh Chaturthi.

FAQs

Can I start my investing journey this Ganesh Chaturthi?

You should start investing during this Ganesh Chaturthi as it can be a meaningful way to begin your financial journey. However, you should remember that investing is a long-term commitment, and starting to invest is just one small step towards achieving your goals.

What are the most important financial learnings from Lord Ganesha?

Lord Ganesha, a beloved deity in Indian culture, is associated with several life lessons attributed to financial management and success. While these (above article) financial lessons may not be explicit, they offer valuable teachings on beginning your investing journey.

Can I achieve my financial goals by starting my investing journey this Ganesh Chaturthi?

Starting your investment journey, this Ganesh Chaturthi would be a positive gesture. However, the key to achieving your goals depends on your commitment and understanding of the market. Remember, timing the market is not what matters, but the time you invest in the market does.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

Introduction

International stock markets offer investors a unique opportunity to grow their money internationally. It enables them to diversify their investment portfolios away from domestic borders. These financial markets allow people to buy/sell shares of companies headquartered abroad.

Smart investors have been wisely diversifying their portfolios by investing a portion of their money abroad and taking advantage of the Indian government’s Liberalised Remittance Scheme (LRS).

This scheme allows resident Indian individuals to send up to $2,50,000 abroad per financial year. Over the years, the RBI has consistently increased the limit of this scheme, which started at a meager $25,000 in 2004.

In these times of globalization, many investors in India have recognized the importance of diversification and adding foreign equities to their portfolios. This international exposure provides investors various benefits with the potential to earn higher returns in foreign stock markets. Have you begun investing abroad?

If you plan to invest abroad, learn about investing in the international stock market. It covers everything you need to know about foreign stock investing.

What is Investing in the Foreign stock market?

Investing in foreign stock markets is about buying/selling shares of companies listed on stock exchanges in countries other than your home country. It enables investors to invest in global markets, helps them mitigate risk, diversify their portfolio, and allows them to be a part of a company’s success story outside their country.

Reasons to invest in the foreign stock market

It has been more than 15 years since Indian investors were allowed to invest in foreign equities. International stocks sometimes present an array of growth opportunities unavailable to domestic companies. Several reasons would lure any investor into thinking about foreign stock investing. Here are the top 5 reasons:

  • Better Portfolio Diversification
  • Grow Exponentially, But Internationally
  • Builds Local Wealth
  • Less Volatile Markets
  • Opportunity to Invest in Top Companies

How much can I invest in the international stock market?

There is no lower limit to investing in the international stock markets. However, there is an upper limit for investing abroad as per the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS). The RBI’s LRS mandates that any Indian citizen can invest up to $250,000 (approx. Rs 2 crore) only in a year.

If the investments are under this cap, individuals do not need to ask permission and invest without informing the RBI. Also, one should know that the investment cap of USD 250,000 covers all expenses of overall investments while investing in foreign countries.

Different charges while investing in a foreign stock market

Indian citizens interested in investing abroad should also be wary of the different kinds of charges levied on buy/sell transactions in foreign financial markets. For example, The RBI’s LRS mandates that a 5% TCS would be charged on remittances above Rs 7 lakh. The tax is levied on the amount above Rs 7 lakh, not the entire amount. Also, the Indian taxpayer can claim it as a refund during their income tax filing.

Furthermore, there are other charges while dealing in stocks abroad. For example, foreign exchange rates, bank charges, capital gains & dividend tax, and brokerage fees, among additional charges that depend on the regulatory bodies of the countries the investor chooses to invest in.

Risks associated with international stock market investing

There are several risks associated with investing your money in global markets. And as much as it is beneficial, it also comes with its share of risks and vulnerabilities. However, these are the crucial factors that you should consider:

Risks Associated with International Stock Market

  • Fluctuation in Currency
  • International Regulatory Changes
  • Unstable Political Sphere
  • Tax Complications

India & Indians Investing in the International Stock Market

As per the Reserve Bank of India (RBI), Indians invested $19,611 million in FY22, a significant increase from the previous year’s investment of $12,684 million. As per the data released by the Department of Economic Affairs in 2021, there were 8 crore Demat accounts in India, of which only 3 crore were active. Of them, only 30 lakh Indians were investing in foreign stock markets.

For Indians, Singapore remains their top investment destination, with US $ 1,138 million of the total investments. US and Mauritius held the second and third spot, accounting for US $780 million and US $ 124 million investments, respectively.

Investing in international markets comes with both pros and cons. On one hand, you get to invest in the top companies like Google, Meta, and Eli and Lilly, among others, and be a part of their success story. On the other hand, several geopolitical and multiple other risks are involved.

It ultimately boils down to two factors when you think about investing in foreign markets, i.e., how much diversification you need in your portfolio and your risk profile. If you can manage and balance these questions, you should sincerely consider investing beyond domestic markets. 

FAQs

Are international stocks riskier than investing in Indian stocks?

Being aware of the risks is essential when investing in international stocks. These risks may include currency fluctuations, regulatory changes, and geopolitical affairs. It is also important to remember that additional risks exist, such as complex tax structures and market volatility. To make an informed decision, you must conduct thorough research before investing in equities in international and Indian stock markets.

What are some of the top international stock exchanges?

There are several stock exchanges worldwide that you can think of investing in. Some of the top examples are the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), Tokyo Stock Exchange (TSE), Shanghai Stock Exchange (SSE), and Toronto Stock Exchange (TSX), among others.

How much international exposure should my portfolio have?

Investing in the international stock market is not a decision that can be made lightly. However, the recommended allocation for investing abroad is based on your risk appetite and tolerance. You must thoroughly study the business before making any investments.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

In a highly price-sensitive market like India, where a slight difference in airfare and hotel charges leads to users switching to other online platforms, Yatra.com has maintained its leadership position in the online travel market despite the entry of heavily funded new players. Its parent, Yatra Online, recently got approval from SEBI to raise ₹602 crores through IPO and have its stock publicly traded in India after being listed on Nasdaq in 2016.

This article will share details of the Yatra Online IPO.

Yatra Online IPO Date, Lot Size & More

Yatra Online filed a draft red herring prospectus (DRHP) with SEBI on March 25th, 2022, for a fresh issue of ₹602 crores and an offer for sale (OFS) from existing investors. SEBI approved it on November 19, 2022.

The OFS will be 12,183,099, off which the promoter- THCL Travel Holding Cyprus Limited, will sell 11,751,739 equity shares, and Pandara Trust will sell the remaining 431,360 equity shares.

The company has raised 62.01 crores from its Rights issue and allotted 26,27,697 shares to THCL at an issue price of Rs. 236 as a part of the pre-IPO placement. So the fresh issue of Rs. 750 crores has been reduced by Rs. 148 crores, including the pre-IPO placement of 62.01 crores, which is why the fresh issue will now be ₹602 crores

IPO StatusApproved
IPO Date15th-20th September
Face ValueINR 1 per share
Issue Price BandINR 135 – 142 per share
Lot Size105 Shares
Fresh issue[.] shares
(aggregating up to ₹602.00 Cr)
OFS1,21,83,099 shares of ₹1
(aggregating up to ₹[.] Cr
Issue TypeBook built
IPO listing atNSE & BSE
Face Value₹1 per share
Source: DRHP

ReservationsShare
QIB 75%
Retail10%
HNI15%
Source: DRHP

Yatra Online IPO SWOT Analysis

Yatra Online has established itself as a trusted name in the Indian travel industry, a space in a few large players, like MakeMyTrip, IRCTC, and EaseMyTrip, who dominate many other small online and offline players.

Strengths

  • Large and loyal user base: 90% of the total traffic source comes from direct and organic traffic, with a 98.7% booking success rate. Over 12 million cumulative travel customers as of September 30, 2021.
  • Strong presence in the B2B segment: Tie-up with 700 large corporates and over 46,000 registered SME customers. The B2B segment in Indian OTA is expected to grow at a Compounded Annual Growth Rate of 12% to 14%
  • A comprehensive selection of products and services: Provide booking facility in over 93,500 properties – hotels and homestays on the platform across 1400 cities in India.
  • Integrated technology platform: Developed a single standard user view across B2C and B2B channels, enabling smooth inventory integration. Have a dedicated in-house advanced technology infrastructure and data analytics capability.
  • Multi-Channel GTM: Yatra has a multi-channel go-to-market approach for Business and Leisure Travelers

Weaknesses

  • High dependency on air ticketing revenue: The company depends on ticketing revenue. A drop in air ticketing revenue could impact the company’s financial position.
Performance Creative 1

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Risks

  • Highly competitive industry: The Indian online travel industry is a highly competitive industry, with almost all players working on razor-thin margins
  • Macro and geopolitical risks: The performance of the travel and tourism industry largely depends on the state of the economy.
  • Health emergencies: A pandemic-like situation severely impacts the travel and tourism industry and is the last sector to witness a rebound.

Opportunities

  • Improving outlook for air travel in India: With record-breaking aircraft orders from Indian airlines and the government’s push to increase the number of airports from 140 to 220 by 2025, online OTA platforms have enormous growth potential.
  • THE B2B segment is expected to drive growth: The B2B category’s share of the overall OTA industry is expected to increase from ₹33 billion in FY20 to ₹62-66 billion in FY25.
  • Strengthening its presence in the holiday packages segment: Being a higher-margin segment, Yatra may benefit if it can strengthen its presence in the holiday packages segment, currently dominated by large TTAs.

What will Yatra Online do with IPO Money?

The proceeds of the IPO will be used for the following items:

  • ₹150 crores will be utilized for strategic investments, acquisitions, and inorganic growth
  • ₹392 crores will be utilized for investment in customer acquisition and retention, technology, and other organic growth initiatives
  • The remaining sum will be utilized for general corporate purposes

Yatra Online: Overview of the Company

Yatra Online is India’s most prominent travel service provider and second-largest online travel company in gross bookings and operating revenue. The company was founded on 1st August 2006 by Dhruv Shringi (CEO), Manish Amin (CTO), and Sabina Chopra (COO).

Currently, Yatra Online provides comprehensive travel-related services, including flights, hotels, train and bus bookings, holiday packages, and other activities, on its website, www.yatra.com, and mobile application.

Yatra Online focuses both on B2B and B2C segments. It provides travel-related services to over 700 large corporate customers that employ over 7 million people. In addition, Yatra is also an integrated technology provider that helps aggregate customer demand from over 28,000 travel agents in more than 840 cities.

In the hotel booking space, Yatra provides access to room bookings in over 93,500 hotels, homestays, and other accommodations in about 1400 cities and towns in India. Yatra Online has raised a total funding of $2.1 billion in over 11 rounds from 12 investors, according to data from Crunchbase.

Yatra Online Financials

According to DRHP filed with SEBI, Yatra Online reported total revenue from operations at ₹380.16 crores in FY23, increased from ₹198.06 crores in FY22.

image 54
Source: DRHP
image 55
Source: DRHP

Segment-wise Revenue Breakup

Yatra Online has four reportable segments – Air Ticketing, Hotel & Packages, and Others. Let’s check out the segment-wise revenue breakup for FY23, FY22, and FY21.

SegmentFY21FY22        FY23
Air Ticketing (in cr.)₹89.31₹115.05₹177.99
Hotel & Packages (in cr.)₹15.66₹51.21₹144.56
Others (in cr.)₹3.14₹14.62₹15.43
Source: DRHP

Yatra Online Share Price Performance in Nasdaq

Yatra Online was listed on Nasdaq in December 2016, through a reverse merger with Terrapin 3 Acquisition Corporation valuing the enterprise at $218 million. Yatra raised more than $92.5 million as a part of the process.

Since its listing on Nasdaq, Yatra Online share price has not given positive returns to investors over the long term, falling from a high of $12.85, which it made in July 2017, and is currently trading at $2.39.

image 56
Source: TradingView

Conclusion

Despite its presence in the high-growth travel and tourism industry, the cost pressure will likely persist with new players entering the market. However, you must thoroughly study the company and read the DRHP before you decide.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

How much is Yatra Online raising through IPO?

Yatra Online plans to raise ₹602 crores through a fresh issue and an OFS for 1,21,83,099 shares of ₹1 from promoters and existing investors.

When will the Yatra Online IPO be launched?

The company will launch the IPO on 15 September 2023.

Read more: About Research and Ranking

It is that time of the year when the country is amid the monsoon season, and households deck their homes to welcome one special guest – Lord Ganesha- on the auspicious occasion of Ganesh Chaturthi 2023.

Many people wait for this auspicious day to start something new, and many consider it an excellent time to make new stock market investments.

Investors and financial analysts often speculate about the market’s behavior during this festive season. Using historical data and trends, let’s look at how the market has traditionally performed during Ganesh Chaturthi.

Ganesh Chaturthi 2023: Historical Stock Market Trends

To see how the stock market has performed during Ganesh Chaturthi, we have analyzed the last five-year performance of the Nifty50 index. What was the Nifty 50 level on the day of Ganesh Chaturthi, 30-days before and after? As the Indian stock market is closed on Ganesh Chaturthi, we took the Nifty 50 closing level one day before Ganesh Chaturthi.

Last Five Years Performance Nifty 50 Index During Ganesh Chaturthi

Nifty 50
Ganesh Chaturthi30 Days Before ChaturthiClose Before Chaturthi30 Days After Chaturthi1-Year Return
13th Sept 2018 113551136910472 (7.88%) 
2nd Sept 2019109971102311359 (3.04%)3.04%
22nd Aug 2020111321137111153 (1.91%)3.15%
10th Sept 2021162801736917895 (3.02%)52.75%
31st Aug 2022171581775917094 (3.74%)2.24%
Source: TradingView

The table above shows that the market’s performance in the past during Ganesh Chaturthi has been mixed. The stock market gave negative returns in three of the last five years. The market experienced a significant downturn, with a decline of more than 7% in the 30 days following the festival in 2018.

The mixed returns before and after the festival show that the performance depends on factors like ongoing domestic and global market trends, corporate earnings, and the economy’s condition.

However, the market’s chances of providing a higher return increase over time. The table above shows that the returns have been largely positive over more than one year.  The Nifty 50 index increased by more than 50% between August 22, 2020, and September 10, 2021.

Investment Strategies During Ganesh Chaturthi 2023

The day of Ganesh Chaturthi is considered auspicious for beginning anew and revamping your investment strategy. Here are some investing strategies to follow in Ganesh Chaturthi 2023

Invest Systematically with a Long-term View

Your investment decisions and strategies should not be based on short-term trends of the market, tips, and recommendations. Much like Lord Ganesha’s head symbolizes wisdom and intelligence, trust in your discernment when making investment choices. Invest in companies with solid fundamentals, good cash flows, and impressive return metrics while maintaining a long-term view.

Diversify Your Investment Portfolio

Just as Lord Ganesha’s four hands symbolize various aspects, including desire retrenchment, enlightenment, ambition pursuit, and blessings, your investment strategy should focus on achieving balance. Building a diversified investment portfolio with a balanced exposure between high-risk and low-risk asset classes would be best. It will help you navigate diverse market conditions and cycles effectively. 

Stay Informed About Market Conditions

Lord Ganesha is also called Chinteshwara because of his small yet sharp eyes. It helps him focus on tasks without distractions. Similarly, you must keep a hawk-eye on market developments and stay informed about market news. It is crucial to make well-informed decisions, particularly during market uncertainty. It not only helps to minimize losses but also increases the chances of making profits on investments.

So, as we prepare to celebrate the auspicious day of Ganesh Chaturthi 2023, let us embrace the qualities of humility, adaptability, flexibility, and limiting ourselves to specific ideas. Research asset classes and align your investments with your financial objectives and aspirations.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

Have you ever wondered what investment strategy to secure your family’s future?  Which strategy can make your pockets fuller – short-term investing or long-term investing? If you look for solutions online, you may get stuck in the confusing mesh of options and end up frustrated. 

So, don’t worry about ways to protect your family’s future, as we have made your job simple with this article. This article will cover everything about long-term investing.

Also, how does it work, and what makes long-term investing the best way to secure your family’s future and achieve your financial goals? But before we move to the benefits of long-term investing, let’s explore what long-term investing is all about.

Understanding Long-Term Investing Strategy

Long-term investing is buying and holding assets like mutual funds, stocks, and real estate for a long period, usually more than a year, and letting them grow in value over time. Long-term investing has many benefits, including compounding interest, tax efficiency, reduced stress, and improved quality of life.

Long-term investing is not a gamble or a matter of luck but a game plan. The market rewards patience, not speed. It’s not about finding the right moment to invest but about staying invested for a long time.

Real-Life Example of Long-term Investing

Let us use an example to dive deeper into long-term investing concepts. Let’s say Investor C and Investor D invest ₹10,000 in XYZ company. This growing and profitable company pays a dividend of ₹2 per share annually and increases its earnings by 15% annually.

Investor C believes in long-term investing and holds his investment for 10 years until December 31, 2029. He reinvests his dividends every year, buying more shares of ABC at the prevailing market price. He also benefits from the compound growth of ABC’s earnings and share price.

Assuming that ABC maintains its dividend payout ratio and earnings growth rate, Investor C’s investment will be worth ₹52,378.64 by the end of 2029. His total return is ₹42,378.64 (423.79% of ₹10,000), as well as his taxable income as a long-term capital gain.

Investor D is a short-term investor who sold his investment after one year on December 31, 2020. He receives ₹11.50 per share, which includes the dividend and the capital gain of ₹1.50 (15% of ₹10). His total return is ₹150 (1.5% of ₹10,000), which is also his taxable income as a short-term capital gain.

To calculate their investment values and returns, we can use the following formulas:

where g is the annual growth rate of earnings and share price, D is the annual dividend per share, and P is the share price.

The annual rate of return is: r=0.15+2/100​ i.e. R = 0.35

  • For Investor C, the future value of his investment after 10 years: FV = PV(1+r)n

where FV is the future value, PV is the present value, r is the annual rate of return, and n is the number of years.

The future value of his investment after 10 years is:

FV=10000× (1+0.35)^10

FV=52378.64

His total return: TR = FV−PV i.e., TR = 52378.64−10000

Total Return (TR) =42378.64

His percentage return(PR) is: PR=TR/PV ​× 100

PR = (42378.64/10000) ​× 100 i.e. PR = 423.79%

  • For Investor D, the future value of his investment after one year: FV = PV +G + D

where G is the capital gain per share.

  • The annual rate of return for Investor D: R = PG + D​

For Investor D:

The annual rate of return is:

R = (1.5+2)/10 i.e. R = 0.035

The future value of his investment after one year is:

FV=10000+(1.5×1000)+(2×1000)

FV=10150

His total return (TR): TR = FV−PV

TR=10150−10000 i.e. TR=150

His percentage return (PR) is:

PR= TR/PV ​× 100

PR= (150/10000)​×100 i.e. PR =1.5%

As you can see, Investor C has earned much more than Investor D by long-term investing. He has also paid less taxes since long-term capital gains are taxed lower than short-term. Moreover, he has enjoyed the benefits of compounding interest, dividend reinvestment, and earnings growth.

Benefits of Long-term Investing

Power of Compounding Interest:

Compounding Interest is a magical process of growing your money. Simply put, earning interest on interest can help you grow your wealth exponentially over time. Compound interest gives you a higher future value because you earn interest on your initial investment and reinvested payments.

Say you invest Rs. 100/- annually in an investment offering 10% interest. You will be surprised to know the long-term investing returns. With the magic of compound interest, you will have ₹1753.11 after 10 years.

Also Read: What is Compounding?

Tax efficiency:

Long-term investing can help you save on taxes and fees, as long-term capital gains are taxed lower than short-term ones. Also, long-term investing can reduce the impact of commissions and transaction costs on your returns as you trade less frequently

Reduced stress:

Long-term investing can help you avoid the stress and emotions involved in making investment decisions, as you do not have to worry about market fluctuations, volatility, and noise. You can keep your long-term goals in mind and follow your investment strategy.

Improved quality of life:

Long-term investing can help you achieve your financial goals and secure your family’s future. You can enjoy peace of mind and satisfaction when you have no behavioral or emotional biases or fear of short-term market fluctuations holding you back. You can also spend more time on other aspects of your life, such as your health, hobbies, and relationships.

Portfolio Diversification:

You can diversify your portfolio and reduce your risk in long-term investing by allocating your funds to different asset classes, such as stocks, bonds, real estate, etc., with different characteristics and performance.

You must also invest in different sectors, industries, markets, countries, etc., with different growth potential and risk factors. By diversifying your portfolio, you can reduce the impact of any single asset or market on your overall returns and lower your exposure to volatility and uncertainty.

Key Takeaways

Long-term investing effectively supports your personal and professional growth, your family and social relationships, your health and well-being, your hobbies and passions, and your contribution to society. You can create a meaningful and satisfying investment journey by aligning your investment strategy with your life purpose.

Long-term investing is a smart, sustainable, and disciplined way to grow wealth and secure your family’s future. You gain financial and emotional well-being and improve your quality of life by adopting this time-tested long-term investing strategy.

So, if you haven’t already, take your first baby step towards starting your long-term investing journey today and reap the benefits tomorrow.

NOW READ:

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FAQs

How to avoid common mistakes and pitfalls in long-term investing?

To avoid common mistakes and pitfalls in long-term investing, you need to remember a few basic guidelines-
1. Avoid selling winners too soon or holding onto losers too long,
2. Stop chasing hot tips or trends without doing your research
3. Do an in-depth fundamental and technical analysis of any stock. In the case of mutual funds or other assets, assess the risks first
4. Do not change your investing strategy too often or too randomly
5. Avoid letting emotions or biases influence your decisions
6. Do not ignore the fees or taxes that can erode your returns
7. Always review or rebalance your portfolio periodically.

 What are some of the best long-term investment options for your needs?

Some of the best long-term investment options, depending on your risk preferences and time horizon, are stocks, bonds, real estate, mutual funds, exchange-traded funds (ETFs), Public Provident Fund (PPF), National Savings Certificate (NSC), and many more.

How to start or continue your long-term investment journey?

To start or continue your long-term investing journey, you need to get your finances in order, know your time horizon, pick a strategy, and stick with it. If possible, learn to diversify your portfolio across different sectors, industries, themes, and geographies.

Monitor your performance and progress timely. You also need to adjust your strategy according to changing market conditions and personal circumstances, balance your long-term goals with your short-term and medium-term needs, and deal with the psychological and emotional challenges of long-term investing.

Have you ever felt the need for safer assets to park your funds to seek relief from market upheavals? If your answer is yes, don’t shy off. Every investor must invest in bonds at some point in their investing roadmap. The intent is to reduce their risk through diversification or capital preservation.

However, the bond market has both risks and rewards. If you understand the right way to invest in bonds, you can achieve your financial goals in the long run, from building your dream home to adding to your retirement corpus.

And, if you don’t adopt the right techniques, you can incur losses even if bonds are considered safer than equity investing. So, let us understand how you can invest in bonds for the long term.

In this article, we have covered the basics of bonds in detail, from what bonds are and their types to the proper techniques to invest in bonds that you should know.

What are Bonds?

In simple terms, Bonds are written acknowledgments of debt that the bond issuer promises to pay the bond buyer.  When you invest in bonds, you lend money to someone who promises to pay you back with a pre-determined interest rate. When you sell a bond, you get your money back, plus or minus some profit or loss.

But who are these people that you are lending money to?

You can invest in bonds issued by governments or corporations that need capital for various reasons. For example, the government may need money to build roads, schools, or hospitals. A corporation may need money to expand its business, buy new equipment, or research new products.

You can invest in bonds for various purposes with varying maturity dates. The maturity date tells you when you will get your money back. The face value of a bond means how much money you will get back. The coupon rate tells the interest you will be paid yearly as a return on your investment.

Is it risky to invest in bonds?

Let’s answer this common question in every investor’s mind. Bonds also have different levels of risk and return depending on the credibility of the issuer of bonds. Some bonds are safer than others because they are more likely to pay you back.

When you invest in bonds that pay you lower interest rates, it is because they are less risky. Or the risk of default is low, like government or municipal bonds.

When you invest in bonds that pay you higher interest or look more rewarding, it is because they are riskier than others. Their probability of default or the likeliness of not paying you back could be higher.

Types of Bonds

Bonds are often called fixed-income securities because when you invest in bonds, you get a fixed amount of interest every year until its maturity. The maturity of these bonds ranges from one day to 30 years.

Upon maturity of bonds, you get back the principal amount you invested. The bond market has various investment options. Some of the common types of bonds are:

Features Treasury BondsMunicipal Bonds Corporate Bonds
IssuerIssued by governmentStates, cities, or other local governmentsIssued by Companies or Corporations
PurposeTo finance its budget deficit or public debt.To finance their public projects or servicesTo raise funds for their business activities
InterestUsually, they have moderate interest rates, depending on the credit rating and financial condition of the issuer.Usually have higher interest rates, because they involve higher risk Municipal bonds are generally less risky than corporate bonds but more risky than treasury bonds.
Default Risk Municipal bonds are generally less risky than corporate bonds but more risky than treasury bonds. Municipal bonds are generally less risky than corporate bonds, but more risky than treasury bonds.More risky than treasury and Municipal bonds as they depend on the financial performance and creditworthiness of the issuer

Some other types that you may find in the financial bonds market are-

Zero-Coupon Bonds

Zero-coupon bonds are also known as discount or deep discount bonds and do not pay you interest during your lifetime. In the Bonds market, these are sold at a lower price than their face value and redeemed at their face value at maturity.

If you want to invest in bonds with a lump sum amount to meet a long-term and do not need regular income from your investment, these bonds are a good choice. Zero-coupon bonds usually have long maturity periods, ranging from 10 to 40 years.

Floating Rate Bonds

Floating rate bonds are also known as floaters or adjustable rate bonds. Floating bonds can be a sound option if you decide to invest in bonds to drive benefits from the changing market conditions. You can also avoid the risk of falling bond prices when interest rates rise. Floating-rate bonds usually have short maturity periods, ranging from a few months to 5 years.

Benefits of Investing in Bonds

  1. Fixed Return on Investment- When you invest in bonds, you are very clear about what returns you will get (i.e., Coupon Rate) and when you will get the principal back (Maturity date).
  1. Better Risk Management– It is well-established that bonds are less vulnerable to market volatility and less likely to default than stocks. When you invest in bonds, you can better manage your risk by choosing the kind of bonds you wish to invest in. If your risk appetite is low, pick bonds backed by reliable issuers or have high credit ratings.
  1. Tax Benefits– When you invest in bonds issued by local or state governments, you can benefit from tax advantages or special exemptions. Municipal bonds are also tax-exempt bonds because the interest income from these bonds is usually exempt from state and local taxes.
  1. Portfolio Diversification- When you invest in bonds, you can effortlessly diversify your portfolio because it allows you to distribute risk across multiple assets. Maintaining a healthy balance between bonds and equity can cushion investors against interest rate changes and market swings.  

Drawbacks of  Investing in Bonds

Lack of High Return Potential – When you invest in bonds, you miss out on higher returns as they generally have lower yields than stocks or other assets. Bonds also have limited upside potential because their prices are constrained by their face value.

Poor liquidity- Investing in bonds may face liquidity issues, as some may be harder to sell or buy than others.

How to Use Bonds in Long-Term Investing?

Capital Conservation

Bonds work best for investors who are averse to making losses and those who value their capital preservation above all. So, if your priority is to make a low-risk bet, invest in bonds, especially treasury or municipal bonds that pay on maturity.

To multiply your returns with low risk and compounding benefits, you can reinvest the interest income in alternative fixed-income investments like recurring deposits (RD), Fixed Deposits (FD), or PPF.

Retirement Planning

When you invest in bonds, you get a predictable cash flow that you can use to fund your future expenses or build your retirement corpus. Bonds can help you add to your wealth building safely.

Children’s Education

When you invest in bonds, one thing is very clear in your mind. That is, you will hold this investment till maturity. These fixed-income instruments can exponentially grow your savings to meet your long-term responsibilities, like funding your child’s education.

You can inflation-proof your portfolio by investing in inflation-indexed bonds, which boost their payments when inflation occurs and decrease their payments when deflation happens.

Key Takeaways

Every investor is unique in terms of its needs and goals. Whether you should invest in bonds that offer fixed interest or take wilder routes like equity depends on a few factors- like how early you are starting, your financial ambitions, how much risk you can afford to take, and how long you can stay invested.

If you are planning wealth building over the long term going through a safe and secured way, including bonds in your portfolio can be a good choice. Investing in bonds helps you diversify your portfolio, build future savings, earn a steady income, and cope with interest rate fluctuations. If needed, you can also seek professional or expert assistance.

Read More:

5 Advantages of Investing in Bonds You Must Know

India’s First Sovereign Green Bonds: What Are The Potential Outcomes

FAQs

  1. What are the risks when you invest in bonds for the long term?

    You may have to face a few risks when you invest in bonds, like chances of lower returns, higher costs, lower liquidity, and higher sensitivity to interest rate changes. Therefore, always go for portfolio diversification and monitor the market conditions to reduce risks.

  2. What types of bonds I should invest in for long-term investing?

    The answer to this question entirely depends on your goals, risk tolerance, and time horizon. Generally, long-term bonds have higher yields but also higher risks. You can choose from different types of bonds, such as treasury, corporate, municipal, floating rate, or zero-coupon bonds.

  3. How do I measure the performance of my bond investments?

    When you invest in bonds, you can track the performance of your investments by using various metrics, such as yield-to-maturity, yield-to-call, current yield, total return, duration, convexity, and credit spread.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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