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The average penetration and density of LIFE INSURANCE in India is a measly 2.76%. There have been improvements in this arena but overall the growth has been rather slow in India. Not many people are aware of the benefits of LIFE INSURANCE and the numbers for penetration are an indicator of the same.

Accidents and mishaps are strong indicators of how fragile human life can be and how we need to systemically insure our lives. It is an important tool for providing an individual's family with safety and security. It acts as a protective cover to safeguard the insured's dependents. In the event individuals do not insure their lives, their dependents end up facing the tragic loss of their loved one along with a whole host of liabilities such as rent, loans, EMI's and child services.

LIFE INSURANCE is crucial for families to feel security and a sense of confidence to continue their lives without losing their everyday stability. To help understand the key features and advantages of LIFE INSURANCE, here's a quick lowdown:

Death Benefits

LIFE INSURANCE enables individuals to protect themselves and their families, in case of any unfortunate happening in the life of the insurer. The insurer pays an amount equivalent to the sum assured as specified in the contract along with applicable bonuses. This is known as the death benefit.

Investment Components

Certain LIFE INSURANCE policies offer two-pronged benefits of both insurance and investment. While one half of your premium is paid toward insurance, the other half is invested in equity, debt or combinations of both. You get the best of both worlds with a protective covering as well as high returns on your investments. You can make the most of this component by investing in funds that align with your investment horizon and risk appetite.

Maturity Benefits

LIFE INSURANCE policies can also double as a savings instrument by offering maturity benefits. If the insured survives the policy term and no claims have been made, the total premiums paid are returned at the time of maturity of the policy. In this manner, LIFE INSURANCE plan can have a savings component, while also offering a protective cover.

Tax Benefits

Under the umbrella of Section 80C of the Income Tax Act 1961, individuals can reduce their tax liabilities by investing in specific instruments. LIFE INSURANCE policies are one of them. Under section 80C, the premium paid for your LIFE INSURANCE policy is eligible to attain a certain amount as tax deduction as declared time to time in the Union Budget. In addition to this, under Section 10(10D), any payouts you receive from your insurance policy are completely tax-free provided your premium does not exceed 10% of your Sum Assured, annually.

Coverage Against Liabilities

To fulfill your dreams and attain your goals, you may have required a certain amount of financial support - in the form of loans, mortgages and other types of debt. Be it student loans or credit card debt, dealing with such liabilities can be a source of great financial strain, without a steady stream of income. While you may have the funds to pay off a part of your loans now, your family may find it difficult to manage such liabilities in the event of your unfortunate demise, owing to the loss of income. Thus, taking a LIFE INSURANCE policy ensures that your family has the financial means to steadily meet your loan and mortgage repayments, even in your absence.


You can opt for riders to enhance your LIFE INSURANCE coverage. A number of riders, ranging from Term Rider to Critical Illness and Accidental Disability Rider are available and help protect you and your loved ones against instances where in your life cover may not come into play.

Optimum Cover for Health-related Issues

Needless to say, it has become very easy for any individual to fall ill. Be it a kid or an adult, all have become sensitive to illness, whether due to pollution or hectic lifestyle. Buying a policy online will help you tackle health-related issues and avail the best possible medical treatment without worrying about expenses.

What’s best is that based on your policy conditions, you will receive coverage for:Cashless treatment, Pre & post hospitalization cost coverage, Ambulance expenses, No Claim Bonus, Medical Checkup, Room rent, Alternative treatment, Organ donor expenses, Domiciliary treatment, Daily hospital cash allowance

Financial Safety Against Rising Medicinal Costs

With the passage of time, the cost of medical treatment is also increasing. More and more people are preferring health insurance in India to gain security against these sky-rocketing costs. In this scenario, health insurance is coming across as the best solution to safeguard oneself against massive, unavoidable expenses. You too can buy a policy online and avoid paying big amounts in the hospital or spending too much money on medicines. What’s best is that you won’t have to give away anything from your savings.

More Benefits for Young Buyers

You earn more benefits of health insurance when you buy it at a young age. Young health insurance buyers do not have to deal with the waiting period. Also, they don’t have to face high claim rejections.

Profitable Deals

In the health insurance sector, early planning can get you a great deal. If you start planning health insurance purchase early, you become eligible for better benefits than others, be it adults or senior citizens at a low premium. Since chances of getting ill at an early age are less, it becomes easy to get through waiting periods, pre-existing diseases and more. Moreover, it gets easy to claim all the benefits.

Additional Protection Over and Above Employer Cover

Most organizations provide their employees with group health insurance coverage. However, many people may find the group policy to be unfit for their needs. Yet another issue that most people have with their corporate insurance is that it ends with the loss of job or change in employment. In this case, having a basic health insurance policy helps one protect their health and financial stability when an emergency situation occurs.

Benefits in Income Tax

As per the Section 80D of the Income Tax Act, there are certain benefits in the Income Tax Act 1961 for those who buy HEALTH INSURANCE Policy. These benefits are revised time to time in the Union Budget So, buying health insurance policy now would make you eligible for some more benefits in Income Tax and help you gain more benefits.

Wondering what is the difference between HEALTH INSURANCE and LIFE INSURANCE? Here are the details. Health Insurance and Life Insurance both seem to be the same considering they both cover the insured person against an unforeseen and unfortunate event. However, they are completely different by definition and the type of coverage they offer. Following are the differences between life and health insurance.

Health Insurance Life Insurance

Health Insurance is a contract in which the Insurance Company agrees to pay for the medical and hospitalization expenses of the insured and the insured person agrees to pay a fixed premium.

Here, the coverage is against the risk of hospitalization and medical expenses.

It falls under under Section 80D of the Income Tax Act

Money invested is recovered in terms of reimbursement for medical expenses or if you do not claim it you get a reward in terms of bonus for your next insurance premiums.

Generally has a shorter term.

Life Insurance is a contract in which the Insurance Company agrees to pay the maturity amount to the insured person or a fixed amount to the nominee if the insured person dies.

Here, the coverage is against the risk of death. Hence, your nominee receives the payment.

It falls under under Section 80C, Section 10(10D) of the Income Tax Act

Money invested can be recovered on the maturity of the policy.

Generally has a longer term

Disclaimer - Many Insurance companies offer competitive rates for both Health Insurance and life Insurance along with enticing benefits. Hence, the person who is willing to buy the LIFE INSURANCE policy or the HEALTH INSURANCE policy is ALWAYS advised to take the guidance from the Insurance experts who have a wide knowledge in their respective field before taking a dive in to the insurance pool.

Mutual fund benefits to Know about before Investing

While you may be well aware of some of the common mutual fund benefits, there are a few lesser-known advantages that you mightn’t know about. It is pivotal to know all the benefits offered by mutual funds prior to investing in order to derive the maximum benefit from your investment. Here is the list of all the benefits that mutual funds offer to the investors:

Smart investment option

When you invest in an investment tool which invests in one specific sector there is a risk of losing money in one go. If the industry where you have invested fails, then you might lose all your money. However, this is not the case with mutual fund investments. When you invest in a mutual fund the associated risk is relatively low as most of the mutual fund schemes spread the investment in multiple assets and sectors for reducing the risk. Hence, if any one of the sectors faces a loss then the gains from the other sectors will compensate the amount that you have lost. This risk mitigation benefit makes mutual fund investments a smart investment option compared to other investments.

Low-cost investment

This is a very interesting feature of mutual funds. Since mutual funds get money from multiple investors, the asset management services provided by the company come at a comparatively low cost or charge since the amount is equally divided between all the investors.

Well-regulated funds

Mutual fund investments are regulated by the Securities and Exchange Board of India (SEBI). SEBI has laid down certain rules and regulations which all the mutual fund providers in the country have to follow. All the investments made in the funds have to be according to the SEBI guidelines. This ensures that the investment works in favour of both investors and providers without any unfair treatment. Being monitored and supervised by an authorised body like SEBI, the investments under mutual funds are safe and well-regulated.

Professionally managed

Investing in mutual funds is easy. These funds are professionally managed by expert and experienced fund managers who have extensive experience in managing funds. Hence, even beginners who don't have any knowledge about the market can invest in such funds with the help of expert managers. Since experienced professionals manage all activities related to these funds you can be assured that your money will be invested in safe places. Not only that, an entire team of experts will take care of your investment, design your portfolio, strategise on your behalf, and will guide you through every step of investment.

Multiple investment options

Investors get a variety of investment options while investing in a mutual fund. Not only can they choose funds as per their investment objective but they can also pick funds based on the amount of returns they want to derive. For instance, if you want to receive returns in a short period of time, you should ideally invest in short-term funds but when you have some future expenses to meet, investing in long-term funds will be ideal to serve your purpose. Mutual funds also offer the option of having a regular income flow throughout the tenure in the form of dividend payout facility. If your investment objective is to grow your capital throughout the investment tenure you can choose the growth option and for earning a regular income you have to go for the dividend facility.

Lump sum investment or in installments

Mutual fund investments offer investment options for people who don't have a large amount of money to invest at a go. Suppose you are very young or just don't have sufficient money to invest in mutual funds in one shot, in both the cases you can still invest in mutual funds by opting for the SIP investment option. A SIP is a Systematic Investment Plan which allows the investors to invest in mutual funds in installments (EMIs). When you invest in a SIP there will not be much pressure on your finances. Contrarily, if you have a large amount of money you can invest a lump sum amount.

Low investment requirement

Since mutual funds offer SIP investment facility, the investors can start investing in these funds with as little as Rs.500 every month. When you opt for the Systematic Investment Plan (SIP) under a scheme you don't have to invest thousands of rupees in the fund in one go. Instead, you can start your investment with a minimum of Rs.500 by opting for an SIP. Later, if you have a lump sum amount and feel the need to increase the invested amount you can invest more money in your fund.

Diversification of risk

Though mutual fund investments are subject to market risks, the advantage is that the associated risk can be diversified. It is completely up to the risk appetite of the investor to decide how much risk he/she is ready to take. While a high-risk fund tends to offer higher returns, the chances of loss in these are equally high. So, if you are not willing to take a huge risk you have the option to choose low or medium-risk funds. A medium-risk fund tends to balance the risk and give out a medium return and a low-risk fund has lower risks and gives the lowest returns. Thus, based on your risk-taking ability you can diversify the risk by choosing a suitable fund matching your requirement.

Growth-oriented investment

Since most of the mutual funds invest in the growth-oriented equity market, the investors get a chance to benefit from the growing Indian economy. Though investments in equity and equity-related securities of companies are prone to certain risks, the chances of generating returns from such funds are considerably higher.

Easy liquidity options

When making investments in mutual funds, an investor gets options for liquidity as well. Being an investor you will have the flexibility to choose between regular funds and tax-saving funds which are different from each other in terms of liquidity. While in a regular plan you can liquidate your income a few months after making the investment, in a tax-saver fund, the principal, as well as the dividend, can be withdrawn only after the completion of a 3-year lock-in period. As a result of the higher lock-in period in a tax-saver scheme, you can plan your future finances in a better way while generating high capital growth by the end of the investment tenure.

Flexibility of switching funds

Mutual funds come with an option of fund switching. This means the investors can switch between schemes or between funds to avail better terms and/or better returns from their investment.

Tax-saving advantages

A mutual fund investment also provides tax-saving benefits to investors. If you invest your money in mutual funds such as equity-linked savings schemes (ELSS) then you will be eligible to get tax-deduction benefits under Section 80C of the Income Tax Act, 1961. As per the Income Tax Act, a mutual fund investor is permitted to have tax deduction benefits up to the amount of Rs.1,50,000/-.

1) Bonds are for storing wealth and equities are for creation of wealth.

2) In my opinion, the biggest asset one can have is zero debt.

3) The greatest discipline in personal finance is living below your means.

4) As Ben Carlson says, emotions cannot be back tested. That’s why past bear market always looks like opportunities and future ones scary.

5) Early financial independence and early retirement are completely different. To me, the former is a blessing and the latter is a curse.

6) Don’t think how it would have been if you’ve started 10 years ago. Start today and visualize how you would feel 10 years from now.

7) The neighborhood we live determines our life style & spending. Need to be careful in choosing one which matches our goals and personality.

8) Paying minimum balance regularly on credit card is the maximum sign that you’re getting into debt trap.

9) Many are long term investors till next bear market.

10) Don’t take aggressive bets. Take measured risk. Remember one blunder can push you back by a decade or more in terms of wealth.

11) Big money can be made through high savings, wise investing and lots of patience.

12) One sign of progress in individual investor’s portfolio is no churn or very less churn.

13) Trying to get rich fast is a foolproof way to lose what we have.

14) Losing opportunities is far better than losing money. Don’t invest in fads.

15) “Making as much money as quickly as possible” is not an investment strategy. Unfortunately for most of us that is the strategy.

16) Aggressive strategy cannot be a substitute for high savings. Save high and take moderate risk than saving less and taking high risk.

17) The day we realize not losing is as important as winning; we would stop blindly chasing returns.

18) Good periods are more than bad periods. By not timing, though we go through bad periods, do not miss even a single good period.

19) We’ll stop looking for quick money the moment we consider stocks as businesses and realise that our wealth grows in line with business growth.

20) There are periods of high returns, low returns, no returns and negative returns. We need to go through all these to get long term returns.

21) Listening to market forecasts is not only useless but can be very harmful too; if you start acting on them.

22) The hard truth is only around 3% of our population are in a position to aspire for financial independence. Don’t waste this rare privilege.

What are some of the mistakes of Indian Investors that are destroying their financial lives?

Buying insurance policies for investment purpose:

Have you invested your money in insurance plan to get a return in future? Big mistake! Out of 100 people I have spoken, 95 have made this mistake.. Very few people understand the difference between term plan, endowment plan, etc.

Not able to crack the credit card mystery:

Are you paying the minimum amount due on your credit card payment? If yes, you are trapped in credit card mystery. On the other side, very few people really enjoy the benefits like free lounge access, buy one get one movie ticket, etc.

No idea about the power of compounding:

Everyone has come across the formula of compounding but very few people really understand its power. This is the reason people do not start saving early and hence lose out on the power of compounding. Albert Einstein said that power of compounding is the eighth wonder of the world.

Buying stocks based on tips without any knowledge:

You will find every Tom, Dick and Harry giving stock tips over Facebook, Whatsapp and TV. Unfortunately, a lot of people fall in a trap of these people and invest money without any knowledge. What is the end result? They lose everything!

Becoming a victim of lifestyle inflation:

Moving from 2bhk to 3bhk just because you have got a good hike, upgrading your car because you have got some bonus are some of the examples of lifestyle inflation destroying financial lives.

Buying things just because they are on discount:

From Amazon’s “Great Indian Sale” to Flipkart’s “The Big Billion Days”, everyone is encashing on the weakness of Indians buying things just because it is on discount. Funny thing is now you will find such sales every other month.

Getting tempted to go for an exotic vacation just because someone put a post on Facebook and Instagram:

Instagram and Facebook are introduced as Social Media Platform but they are actually destroying the entire social fabric. Friends are jealous of each other. Most of them are just social media friends. Facebook and Instagram are more of a marketing platform where people post stuff just to get some likes and companies promote their product and services.

Spending a bomb on weekend parties:

5 days work and 2 days party: This is the new culture in India. Pubs are jam-packed on weekends where people would spend a bomb on drinks. By the end of the month, they are left with no money.

No track of cash flow:

Very few people keep a track of their expenses. Most of them just don’t know where the money is gone.

No emergency budget:

Not having any extra money in the case of an emergency results in embarrassing situations of borrowing money from friends and relative. Some people even break their investments and make a big mistake.

No medical insurance:

I have seen people losing out the lifetime savings just because they did not take medical insurance. One accident can shatter all financial dreams. Better be insured. Healthcare cost is rising and it is impossible to manage it without insurance.

No financial plan:

People do not know why they need to save money because they don’t know their financial goals.

No diversification:

Some people would invest all their money in real estate, some would invest all the money in gold, some would just keep it in the locker, some would invest all the money in the stock market. Very few people understand the right way of diversifying the investments.

Spending all the hard earned money on children marriage:

Thanks to our hypo critic society! People save their entire life just to spend all the money on random relatives who only bother about the food and arrangements. What is the topic of discussion at weddings? “Sharma ji ne to unki beti ko car gift kari. (Mr Sharma has gifted a car to his daughter)”. “Mehta ji ne unki beti ko 50 tola sona diya” (Mr Mehta has gifted 500-gram gold to his daughter.)

Buying excessive gold only to keep it in the locker:

Gold worth Lakhs is kept in lockers only to be used once or twice a year. This is resulting in the money getting blocked and hence not getting any returns on it.

An extremely conservative approach with investment:

Traditionally, people have been risk-averse. They would just have an FD and live on 6–7% annual interest. Some would just keep the cash at home.

Lack of clarity between asset and liability:

Having a car is not an asset because it consumes fuel and has maintenance cost. Its price will only depreciate in the future. Car is a necessity but people spend a lot of money and even take the loan to buy a luxury car over and above their budget.

Considering frugal as cheap:

A lot of people confuse economic spending with being cheap. An economic spender does not compromise with quality but does his research well enough to buy the product or service at the lowest rate.

Procrastinating investment decisions:

“I will invest from tomorrow”. But the problem is that tomorrow never comes.

Spending a lot of money on fancy stuff:

A fancy car, a fancy house, a fancy watch, a fancy vacation. People want fancy stuff and willing to pay a premium irrespective of the value it generates.

Lack of patience:

“I can’t wait for my wealth to grow. I want to double my investments in 6 months. I need to invest in the stock market.” A lot of people lose their lifetime of savings because they don’t have the patience to understand the investment option and would blindly trust anyone with their investment.

Depending upon others for investment decisions:

“I don’t know anything about investment. Please manage my money.” Unfortunately, a lot of people are dependent upon others with their hard earned money. This is the reason we have a lot of self-proclaimed experts giving stock market tips.

Getting too greedy with investment:

People blindly invest their money in penny stocks, day trading, futures and options. They eventually lose all their hard earned money. What is the root cause? GREED

Lack of disciplined investment:

Instead of spending what is left after investing, people invest what is left after spending. This results in undisciplined investment.

Root Cause:

Lack of knowledge about personal financial management!!

Investing in mutual funds has an inherent risk assumed upon the ownership. However, performance of the mutual funds can be quantified with the mathematical calculation of the historical returns. The correlation of the potential risk and the potential returns constantly put forth the opportunities to invest in mutual funds and drive maximum potential returns with minimum underlying risk.

Risk adjusted returns

Risk adjusted returns are the calculative returns your funds make compared to the risk indicated over the period of time. If compared, a couple of mutual funds which drive the same percentage of returns over the same period of time, the lesser risk funds have a higher Risk Adjusted Returns.


Benchmarking is the measurement of quality of the funds against the standard measurements. It is a point of reference compared to the funds peer markets. Irrespective of the objectives of investment in mutual funds, benchmark helps you gauge the performance of your investment against the market competition. Considering historical returns against the market conditions will help you determine the relevance of the performance benchmark for your investments. However, historical return is not a reliable indicator of future results.

Relative Performance with peers

Relative performance with peers is a yardstick of the effectiveness of your mutual fund of the same category. Mutual Funds actively try to top the ranking of the fund universe. Intended towards a higher return for the determined period of value learning, the relative peer performance is recommended.

Quality of stocks in the portfolio

Quality of stocks in the portfolio is reflected in its ability to drive superior returns on capital invested for a specific period of time. It is wise to check the industry leadership position of the mutual fund. Quality of the stocks in the portfolio would reflect in returns hence in the performance. Qualitative statistics and historical performance of mutual funds would help evaluating the performance.

Track record and competence of the fund manager

Quality of stocks in the portfolio is reflected in its ability to drive superior returns on capital invested for a specific period of time. It is wise to check the industry leadership position of the mutual fund. Quality of the stocks in the portfolio would reflect in returns hence in the performance. Qualitative statistics and historical performance of mutual funds would help evaluating the performance.

Source: Motilal Oswal

It is essential to have a better idea about the Do’s and Don’ts of investing. It is seen that an average investor makes the following mistakes. Learning from these mistakes may help you make wiser choices while you choose your channel of investing.

Not understanding the Risk Profile

Taking risks without a thought makes one doom down. It is always beneficial to play safe understanding your risk profile. It is seen that the investors are aware and concerned about the risks in the mutual fund schemes. However, it is also important is to find your risk aversion. A simple step like personal audit would help finding your risk profile. Check whether your risk tolerance matches with the SEBI’s product labeling.

Not diversifying a portfolio

While making a choice of a scheme, make your portfolio diversified across the sectors. It is beneficial to invest with a good understanding of the entry and exit point. While making a portfolio, diversify it to various sectors for a safer side. However, a portfolio diversified in too many sectors is difficult to manage and may not be focused. Hence diversifying the portfolio is good but it should be easier to optimize and should be beneficial in returns. Choose the right funds.

Making sentimental investment decisions

When it’s about investments, never attach sentiments. Brands do have a sentimental value that makes you shape your choices about purchasing their product but in the stock market the value of stocks is more important than the sentimental values. The financial position of the stocks is important.

Holding on to consistently loss making investments

In case the company you have invested in is not holding a good position in the market and is consistently making a considerable loss, it does not make sense to stick on to it for long. To avoid loss in your expected returns, it is better to make a wiser decision and invest in the value driven funds which would reap benefits.

Making investments with insufficient knowledge

Knowledge brings the best! Investing your money without a sound knowledge of market and its functions may lead you to lose money. Learning the market rather would be profitable. Keep an eye on the ticker tape. Learn the trends in the market, part in the discussions with good investors, read about the stocks you invest in. An appropriate approach to knowledge would open a lot of possibilities.

Source: Motilal Oswal

An average investor uses his money and invests the rest; a good investor invests his money and uses the rest. Investing is a risk vs. returns game. While some have made millions, many have lost as well. Learn the key characteristics of a good investor to become one.

Goal setting

Failing to plan is planning to fail!
A good investor will always have clear goal. It is very important to have a plan to achieve the goals. Variations most likely tend to divert an investor from the agenda. Having a plan of action within a defined period of time for a particular return on investment is a sign of a good investor. They are prepared for the uncertainty of the market while the plans are usually made considering both the sides


When you know better, you do better!
Besides utilizing time to the best, a good investor possesses knowledge of the market. He/she understands the position of funds and has researched about the company investment strategy and philosophy. You need to know where your money is being utilized. A good investor analyses the growth pattern of the company over the years from genuine sources. On the accounts of the anticipations and knowledge a good investor will have a defined plan for exit point as well. An active learner who is open to make a right choice on the basic of genuinely of knowledge is a good investor.

Right Decision

Listen to the world but do what is right!
A good investor knows the time. They keep an eye on current scenario in the market. They update their knowledge about market activities and growth. Having a sound understanding of trends enables the investors to overlook their plans and decide the term of investment. Having an understanding of current trends and company market position makes one a good investor. They own their mistakes and learn not to make them again. It’s not necessary that the good investor jumps into the trends; he/she just does what is right.


Keep calm and carry on!
Over the period of time a good investor creates wealth due to his patience. It is probably the finest quality to have. A good investor has faith in his plans. They usually do not feel bad about the 10% downtick; they would rather sit tight to celebrate the 100% uptick. They are persistent about sticking to the plans. They usually do not get into the buy and sell trends.

Risk Aversion

Know thyself!
Good investors know the inherent risk in investing. They understand their plans and analyze their expected returns. Being risk averse is a quality shaped by experience, knowledge and confidence over the above mentioned key characteristics.

Source: Motilal Oswal

Quality of a company is reflected in its ability to deliver superior returns on capital invested while treating stakeholders in a consistently fair way. This ability should be deep rooted and hence sustainable. Quality of a company can be characterized in two specific dimensions – Quality of a business and quality of management. Followed are the 5 key elements of quality companies you need to analyze before opting to invest.

Profit Pool Industry

Profit Pool is the aggregate level of absolute profit earned by all players in a sector. It helps one understand the long term potential of the sector. Very high profit pool player are good quality companies for a long term investment. Over the years statistics show that profit pool of companies benefit long term investors.

Value migration

Value migrates from outmoded business designs to new ones that are better able to satisfy your key priorities. Value Migration results in a gradual yet major shift in how the current and future Profit Poolin an industry is shared.

Competitive landscape

Businesses with low competitive intensity are more favorable for investors in a long term investment philosophy. Competitive intensity is not solely a function of the number of rival players in a business. Thus, in the Cement sector, competitive intensity is relatively low despite a large number of players. On the other hand, competitive intensity is high in sectors like wireless telecom and tyre, despite a handful of players. If a company enjoys return on capital higher than industry average the company has an Economic Moat over the competition.

Managements with integrity, competence and growth mindset

Quality management is one which has competence and can be seen in the industry leading margins they command. Quality management is also characterized by a rational capital allocation policy. Management drives the potential in terms of quality of a company. The integrity of the management towards leading the growth of company makes a vital point.

Innovation and transparency

Quality companies not only think innovative but also implement innovation in terms of their products, processes and relative selling approach. They bring businesses to the new age. They are always transparent in their dealing and provide adequate disclosures. Such companies are usually trustworthy and honest.

Source: Motilal Oswal

Wealth creation is everyone’s dream but not everyone can successfully do it. While various investment gurus have various ideas for wealth creation, we have tried to mention a practical few. Let’s be clear, there is no formula for certainty of wealth creation in equity. One needs to develop strategies, implement ideas and perform a whole lot of research that goes without saying. Let us discuss 5 key ideas for wealth creation in equity.

Set practical financial goals

Depending on your risk appetite set your financial goals. Understand and draw difference between your needs and wants clearly. Where to invest your hard earned money? How long to invest for? What is the potential of growth? etc. Investing in equity has changed lives. Some have made fortunes while some have lost


You would not want to buy anything which is of sub-standard quality, would you? Research is the strongest support for your investments; or should we say “wiser investments”! People often say that investment in equities is nothing less than gambling. They say so because they often come across the term “Tip”. The golden rule about investing in equities is that there is no place for “Tips” because these tips are nothing more than word of mouth without any backing of data. On the other hand, research makes investing in equity less of a gambling game and more of knowledge based wealth creation medium. It is necessary to research about the quality stocks that have shown growth in the past and at the same time have potential to deliver with similar consistency for times to come. Invest not only your money but also your time in learning these companies.

Focused Portfolio

Once you have researched thoroughly and identified quality stocks, the next step is to invest

You would not want to buy anything which is of sub-standard quality, would you? Research in appropriate quantity. Avoid investing in too many stocks that may scatter your attention. You don’t need 100 stocks in your portfolio; only a few good names can do the trick. Managing big portfolios is quiet difficult as you practically can’t keep a tab on each stock in a bigger portfolio. There is a notion that the large number of stocks reduces the risk. However, there are studies which show that after about 20 - 25 stocks the risk tends to be constant. So invest in a few quality stocks that keep your portfolio simple to manage.

Long term

If you are investing in equity, it’s advisable to invest for a longer time. Buy the right stocks and hold them across market cycle. Investing in equities is not only about quality stock picks but also requires patience to see your money grow. Remember the quote by Charlie Munger; ‘Big money is not in buying or selling, it’s in waiting’.


It may happen that your risk appetite may change or you may face an unforeseen circumstance while you are still invested. At such times you may choose to effectively reconstruct your portfolio so as to benefit from the risk reward equation. Churning your portfolio time to time isn’t a good recommendation. However, you may opt to reconstruct your portfolio according to your changed risk appetite only if it is necessary.

Source: Motilal Oswal

Everyone wishes to have a financially secured future. Financial security can have various purposes from buying a house, world tour with family, child’s higher education, marriage or post retirement life. So what are you doing to secure yourself financially? Are you saving money or investing? Let’s learn 5 key differences between saving and investing and what suits you the best.


Savings are typically for small financial objectives to be met in short periods of time, say about 1-3 years! If you’re looking forward to buy mobile phone or to go on a small domestic vacation in near future, saving might be a good option to meet such objectives. On the other hand, investing is typically a long term plan for bigger financial goals. Say you’re planning for your child’s education or wedding or your comfortable retired life which is due in about 5 or more years ahead from now, investing from now can make these goals achievable by the time of need.

Access to money

At time of critical need of money savings serve as handy cash. You have all the access to your money in savings. You may withdraw a part of your savings or the whole amount as per your wish but at times, you end up spending money you have easy access to. In case of investing, access to your money depends on the kind of investments you make. Open ended equity mutual funds schemes allow you to redeem your investments any time. If the investment period in equity mutual funds scheme is more than one year the capital gain is exempted from tax liabilities. Government of India also provides tax rebate for equity linked saving schemes (ELSS) u/s 80C of Income Tax Act 1961.


If you have savings in reputed banks your money is safer in the bank accounts than at home. Hence risk of losing money in savings is very low compared to any investments. Besides this, your savings are also entitled to interest. Investing mediums may involve risk of possible potential returns pertaining to the term of investment or the market situations. Investing in equity market comes with an inherent risk. One might lose money if not invested in quality stocks with long term growth potential companies. Hence it is advisable to avail services of expert financial advisors. Risk in investing varies according to the channels of investments. If your money is invested in good quality companies with long term views, then short term ups and downs should not affect your outlook towards such investments. Mutual fund provides the scheme details thereby indicating the possible risk involved. Investing wisely may give returns much higher than savings in the long run.


In case you invest in bank fixed deposits, on an average, you may earn interest upto about 8-9%. Interest on savings accounts is often much lower. However, the investments in equity based mutual fund schemes carry much higher potential for long term value growth. Quality investments have higher potential returns than regular savings if compared for a long term of about 5-10 years.


The right thing is to first identify your purpose. Why do you want to save or invest your money? Check whether your goals are short term or long term. It’s always wise to save money for small term goals, emergencies and casual expenses as it provides quick access. This makes it easier to meet small goals. But in the long run, consider your changing needs, limited income sources and inflation; savings may fall short for bigger financial goals. Remember you are planning for future. It’s advisable to start investing at a young age but it’s never too late. Savings are for the present and investments are for the future. Investments are made typically for bigger financial goals which may seem impossible now but would be possible in the time to come if they are wisely planned today. Investing smartly is the key to meet such goals. To conclude, your dreams don’t follow inflation rates. It is recommended to save for small term goals but investing simultaneously may make it simpler achieve your long term dreams.

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Source: Motilal Oswal

Q) Who is NRI as per Income Tax Act?
A) Residential status of an individual or HUF or a company is of great importance in Indian Income Tax Act as the liability to pay tax in India does not depend on the nationality or domicile of the Tax payer but on his residential status. Residential Status is determined on the basis of physical presence i.e. the number of days of stay in India in any year.

An individual is resident if any of the following conditions are satisfied: (i) he stayed in India for 182 days or more during the previous year, or (ii) he stayed in India for 365 days or more during the four preceding years and stays in India for at least 60 days. 182 days in case of an Indian citizen or a person of Indian Origin coming on a visit to India or 182 days in case of an Indian citizen going abroad for an employment during the previous year. Otherwise he is Non Resident.

Hindu Undivided Family (HUF) or firm or other Association of persons is resident of India except in cases where the control and management of its affairs is wholly situated outside India in the previous year

A company is resident in India if-it is an Indian company, or during the previous year, the control and management is situated wholly in India.

Q) I am NRI; do I need to file my Income Tax Return for A Y 2015-16?
A) NRI need to file your return provided your taxable income in India during the Assessment Year 2015-2016 was above the basic exemption limit of Rs 2.5 lakh OR you have earned short-term or long-term capital gains from sale of certain investments and assets, even if the gains are less than the basic exemption limit. For NRIs, certain short term or long term capital gains from sale of investments or assets are taxed even if the total income is below the basic exemption limit. There is an exception: If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.

Q) Is Income Tax Return need to file compulsory Online for NRI for AY 2015-16?
A) Central Board of Direct Taxes (CBDT) in India issued a notification which has made it mandatory for individuals who have annual gross total income in excess of Rs 5 lakh to file their returns online from Assessment Year 2014-2015. This applies to all individuals including non resident Indians. So as an NRI with gross total income exceeding Rs 5 lakh in Assessment Year 2015-2016, you must file your returns electronically.

In case your taxable income exceeds Rs.5 lakh in the previous year, you would be required to file the return of income electronically either using the digital signature or through submission of the verification Form ITR-V after electronically filing the return of income. In case your income does not exceed the above limit, you would also have an option to file the return of income in paper form.

Q) Are NRI were liable to pay advance tax for Assessment Year 2015-2016?
A) As per the Income Tax Act, Individual must pay advance tax in three installments during the year in case the tax payable is likely to be Rs 10,000 or more after considering TDS deduction. In case of default interest is generally 1 percent per month for the default amount and extends till the date of payment. Therefore, NRIs should evaluate if they were liable to pay advance tax and whether the same was paid in time.

Q) What is last date to file your Income Tax Return? What if NRI do not have any tax payable?
A) The last date to file returns for the financial year Assessment Year 2015-2016 is July 31st 2015. However, If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March 2016 without any penalties.

Q) What if NRI do not file return till 31 March 2016?
A) If you do not file your tax returns even by the 31st of March 2016, you may be charged a penalty of Rs 5,000 for every year of delay or sometimes may not be able to file your returns at all after 2017.

Q) My NRO account TDS has been deducted at source @30%. My interest income is 1 Lakhs Rs? Do I Need to File Return?
A) As your total income is less than Rs. 2.5  Lakh, you are not liable to file return. However you can cliam refund of Rs 30,000/- of your TDS deducted for which you should file return. If you are expecting a refund, make sure that you put accurate bank details such as account number and IFIC code of the branch as refunds are processed electronically.

Q) Can NRI get Refund of TDS by Filing IT return for Last year 2014 March Ending.
A) Yes you can file your return for Financial Year ended 2014 and get refund.

Q) What all income is exempt for NRI?
A) Dividends from equity shares and equity mutual funds is tax free in India. Interest received on the NRE account and FCNR account is tax free. Long term capital gains on equity shares and equity mutual funds (provided you pay securities transaction tax at time of sale). Further, If you have given a property on rent, you can claim an ad hoc deduction of 30% of net annual value as repairs and maintenance expenses in addition to claiming a deduction on mortgage interest.

Health insurance premium in India for yourself or your dependents, you can claim a deduction under section 80D. If the health insurance is taken for your spouse and dependent children, you can claim a deduction of Rs 15,000 per annum. An additional Rs 15,000 is available as deduction on insurance premium paid on behalf of your parents. If either of your parents is over the age of 65, the additional deduction will be Rs 20,000 instead of Rs 15,000.

Contributions to an approved charity, you can claim a deduction under section 80G. Investments such as life insurance premiums, Mutual Fund ELSS, etc. can be claimed as deduction under section 80C up to a total of Rs 15. lakh.

Q) I am NRI has deposited Rs. 1 crore in a non-resident ordinary (NRO) account in the form of fixed deposit. I want to transfer the amount from NRO to a non-residential external (NRE) account. Is it compulsory to give Form 15CB and 15CA to banks? Who has to file these forms? The bank has deducted tax at source when it credited the interest amount. What is the ceiling for transfer from NRO to NRE during a year?
A) An NRI can transfer / remit out of the NRO account subject to production of documentary evidence in support of acquisition by the remitter and an undertaking by the remitter along with a certificate by a chartered accountant in Form 15CA and 15CB

As per regulations, NRI are permitted to transfer a maximum of $1 million per financial year to your NRE account. The transfer will be subject to payment of applicable taxes. So far the amount being transferred to the NRE account represents balances for which tax has already paid or exempt there shouldn’t be additional tax.

Q) I am a non-resident Indian (NRI) and have a piece of agricultural land and an apartment in India. I earn agriculture income and rental income from these two. Do I need to file income tax return? Also, can an NRI buy agricultural or farmland in India?
A) NRI would be subject to taxes in India on any income accruing or arising from an asset located in India. The agricultural income earned by you would be exempt, whereas the rental income from the house property would be subject to tax. You would be under an obligation to file an income tax return in India on or before 31 July 2015 for financial year 2014-15 if your taxable income exceeds Rs.2.5 lakh in the previous year. However, you may note that the income tax law prescribes a specific method of computing taxable income where the taxpayer has earned agricultural income. While this type of income is exempt from tax, it is nonetheless included in the total income for rate purposes.

Q) Is NRI allowed to buy Agriculture property or Farm house in India?
A) NRIs and Persons of Indian Origin are not allowed to buy agricultural property, plantation or a farm house.

Q) What are the tax implications for an NRI looking at selling his property in India?
A) If the property is more than 3 years old, long term capital gains tax will be incurred on the sale of the property. On long term capital gains, tax is payable @ 20%. However, tax can be minimised by making alternative investments in India.

Q) I am a NRI living in US. Can you please advise me if long term capital gains tax are payable on sales of shares purchased by paying STT, and if it is exempt is there a limit?
A) LTCG is fully exempted on sale of listed company shares, purchased by paying STT, provided the transaction is long-term. i.e that share are hold for period of more than 12 months

Q) I an NRI, bought a property in 2005 and sold it in 2014 at a difference of Rs 40 lakhs for Rs 80 lakhs. If I repatriate this amount to the US, am I liable for any tax? What is the procedure to repatriate money to the US?
A) You have earned a long term capital gain on your property. You have to pay taxes in India on this income and then obtain a certificate from a chartered accountant. After this certificate only, you would be able to repatriate the money abroad.

Q) During Year Ended 2014, I, NRI leased out my building to a bank which is paying rent monthly but is deducting TDS. Can you please let me know what kind of documentation is required from the bank to submit my taxes in India? Is form 16 sufficient?
A) Form 16 is enough to determine your income on rent and TDS deducted by the bank.

Q) Is the money received from sale of inherited property in India taxable for an NRI? Earlier it was mandatory to put it in an NRO account but now with the RBI go ahead can we transfer it to NRE account provided the tax is paid?
A) Yes, the money received from NRI is taxable in India. Sale proceeds will first be credited to NRO account. Then you have to obtain a certificate from the chartered accountant relating to payment of taxes after which the money would be transferred from NRO account to NRE account.

Q) I hold NRI status for this year 2014. I have FD and RD accounts in ICICI Bank and they are deducting taxes. Do I need to pay the tax for the interest I get from FD and RD?
A) If the FD and RD were opened under NRE status as (NRE-FD or NRE-RD) then the interest earned on the same will not be taxable. However, in case the FD/RD was opened when you were resident Indian then the said FD will be converted to NRO- FD (upon your status being changed to NRI) and the interest earned on the same will be subject to TDS. However, depending on your cumulative tax liability in India, you may claim refund while filing tax return in India.

Q) If I have 8 year NRE FRD and if in second year I become resident, how NRE FDR will be treated after third year and will interest thereon be taxable?
A) For returning Indians, funds held in fixed deposits in NRE accounts, interest will be payable at the rate originally fixed, provided the deposit is held for the full term even after conversion into resident account. However, the interest earned after the status was updated to resident will be taxable.

Q) If I buy a property out of NRE funds and later on sell the property and credit the proceeds to my NRO account, what are the tax implications?
A) Profits earned by selling property in India will be liable to Capital gain is the difference between the sale value of the property and its cost of purchase. Capital gains can be classified as short term (up to 36 months) or long term (more than 36 months), depending on the period for which the property is held. Short-term capital gain will be taxed at normal slab rates and long-term gain will be taxed at 20%.
If a residential property is sold after being held for more than three years and the proceeds are reinvested for purchase of a new residential property, then the capital gains will be exempt to the extent of the amount reinvested. The exemption is subject to the new property being purchased within a year before or two years from the date of sale, or if new property is being constructed within three years from the date of sale.

Q) Can NRIs can also claim exemption by investing the amount of capital gains in bonds issued by the National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC) in case of Profit from sale of property which is long term?
A) Yes Investment in the specified bonds is to be made within six months of such sale and there is a lock-in period of three years for such bonds.

Q) I am an Indian resident taking up employment abroad. I want to know whether I am eligible to claim exemption of income under NRI category. If the employment is in Dubai, where there is no tax on income, will it make any difference?
A) Your employment in Dubai will not make any difference. As per taxation laws in India, your overseas income getting credited to your NRE account in India will not be taxed. It is indifferent to overseas country tax regulations.

Q) I have an account in Qatar and want to send money to my resident (saving) account in SBI Bank, Will it be taxable? What is the ceiling for wire transfer? Can I open an NRO/NRE account before completing first six months out of India.
A) Yes, you can send money to your resident account and the said amount will not be taxable because it will be from your overseas earnings. There is no upper cap on the amount you can wire transfer to a bank account in India.  The income earned on this account is taxable. Yes, based on a valid work visa and company offer letter, you can convert your existing resident account into NRO and open a NRE account as well.  NRIs are not allowed to continue operating their resident SB account once their status changed to non-resident.

Q) Can an NRI returning back to India, continue to hold his foreign earnings overseas, and gradually bring the money back to India as and when required?

A) You can bring your earnings as you wish. You should take care of income tax of your earnings. After you are return to India, your income earned outside India will not be taxable in India provided it is received in India for two years. After the two years, your worldwide income would be taxable in India.