Wednesday, March 26, 2025

How Inflation effect your savings

 🙏🙏

So the budget helped you save tax?

What about the *Inflation*??

Inflation is the hidden tax on your money. Whether you notice it or not, every Rupee you save in savings account or cash kept in home looses it's buying Power.

Don’t let inflation quietly rob you of what you’ve worked so hard for. Fight back inflation by making your money work for you.

1.) Cash kept in home no interest.

2.) Balance in savings account less than 3% interest.

3.) Balance in your current account. No interest 

4.) Balance in debt fund ( Low duration funds) 6 to 7% interest

No lock in.

Any time add or withdraw. Within 1 day it will be in your bank account.


So save wisely.


https://slfinancial.fundexpert.net/

Tuesday, March 25, 2025

Mutual fund verses Direct stocks

 *Forward post from vijai mantri*

Direct Stocks versus Mutual Funds!


First how do you get multi-baggers without the possibility of permanent loss of capital!  


Yes you can by investing in equity MFs. In Indian equity markets, money doubled every 4.5 years. For the purpose of simplicity let’s assume money doubled in every 5 years. At this rate of growth let’s say how many times your wealth could have grown.


Years Growth of wealth 


5 years 2 times 

10 years 4 times 

15 years 8 times 

20 years 16 times 

25 years 32 times 

30 years 64 times 

35 years 128 times 

40 years 256 times 

45 years 512 times 

50 years 1024 times 


Yes with intermittent volatility! 


Now look at the performance of direct stocks!


Performance from 2016-2021 (5 Years) 


Large Cap Stocks (100 stocks)


- 74 stocks delivered 12% CAGR

- 25 stocks delivered zero returns 

- 1 stock delivered negative returns 


Compare this with LC equity MFs.


- Worst Fund 11% CAGR

- Category Average 16% CAGR

- Best Fund 20% CAGR


MId cap stocks (150 stocks)


- 77 stocks delivered 16% CAGR

- 61 stocks delivered 10% CAGR

- 12 stocks delivered negative return


Now look at performance of mid cap funds 


- Worst Fund 13% CAGR

- Category Average 17% CAGR

- Best Fund 24% CAGR   


Small cap stocks (2680 stocks)


- 1 stock delivery 93% CAGR

- 20 stocks delivered 46% CAGR

- 2651 stocks delivered 2% CAGR


99% of all the small cap stocks delivered just 2% CAGR. So much so for multi- baggers in small caps!!


Performance of small cap funds 


- Worst Fund 14% CAGR

- Category Average 20% CAGR

- Best Fund 25% CAGR


Mint Report 

Mint looked at direct stock returns from Jan 2002 till Jan 2022. 


- Out of 600 stocks around 1/3rd stocks delivered 20% CAGR generating 87 times wealth. 


How much MFs have done in this period. 


- Worst Fund 12%CAGR 11 times

- Worst 3 Fund 13% CAGR 13 times

- Worst 5 Fund 14% CAGR 14 times 


- Nifty Fund 15.5%CAGR 18 times 


- Avg Fund 19% CAGR 36 times 


- Best Fund 26.8%CAGR 100 times 


25 years (1996-2021)


-Worst Fund 12% CAGR 17 times 

-Worst 3 Fund 13% CAGR 20 times 

-Worst 5 Fund 14% CAGR 26 times 


- Cat Avg 19% CAGR 74 times 


-Best Fund 25.8%CAGR 300 times

(HDFC TAX SAVER FUND)


https://slfinancial.fundexpert.net/

Saturday, March 22, 2025

Patience makes win situations.

 You think your plans didn’t work out?


Sunita Williams and Barry Wilmore thought they were going to space only for 8 days.

They ended up being there for 286 days.


They were LITERALLY stranded in space.


Imagine this:

👉🏾 You pack for a short trip, but instead, you’re gone for almost a year.

👉🏾 No fresh air. No real food. No way out, just waiting in the void of space.

👉🏾 No clear answer to when (or even if) you’ll make it back home.


And here we are, losing patience when:

- A 10-minute traffic jam ruins our day.

- A deal gets delayed by a few days/ months.

- A rejection email makes us want to quit.


Those astronauts had no control over their situation. They couldn’t just book a return flight. They had to accept, adapt, stay calm and trust the process for 286 days of uncertainty.


And they made it.


If THAT isn’t the ultimate lesson of Patience, Endurance, and Problem-solving, I don’t know what it is.


Hats-off to these legends for not just surviving but making history. 


Next time life throws unexpected delays at us, let’s remember:

At least we’re not stranded in space.


Life will throw curveballs. Your plans will go Haywire, things will take WAY longer than expected.

But if these astronauts can survive nine months in space instead of eight days, you and I can surely handle a few detours here & there in life.

https://slfinancial.fundexpert.net/

Friday, March 21, 2025

Tax Harvesting in India

 Tax Harvesting in India


 Save Part of Capital Gains Tax


Most investors overpay taxes without knowing this simple trick.


Tax harvesting is a 100% legal way to reduce your tax bill and optimize profits.


A must-know strategy for every Indian investor! 🧵👇


🔥 What is Tax Harvesting?


A tax-saving technique where you sell loss-making investments to offset capital gains tax.


It allows you to turn losses into tax savings and carry them forward for future gains.


💡 Smart investors do this every year to legally reduce taxes!

🧾 Capital Gains Tax in India:


📊 Short-Term Capital Gains (STCG):

• Applies to stocks/mutual funds held < 1 year

• Tax: 20% on profits


📈 Long-Term Capital Gains (LTCG):

• Applies to stocks/mutual funds held > 1 year

• Tax: 12.5% on gains above ₹1.25 lakh per FY (No indexation)


💡 If you don’t use tax harvesting, you’re leaving money on the table!

🚀 How Does Tax Harvesting Work?


Step 1️⃣: Identify Loss-Making Investments

Scan your portfolio for stocks or mutual funds trading below your purchase price.


Step 2️⃣: Sell & Book the Loss

Sell these assets before 31st March to realize the loss and reduce taxable gains.


Step 3️⃣: Offset Capital Gains

➤ Use these losses to offset your STCG first (higher 20% tax).

➤ Remaining losses offset LTCG above ₹1.25 lakh.


Step 4️⃣: Carry Forward Excess Losses

If losses exceed gains, carry them forward for up to 8 years to offset future profits.


Step 5️⃣: Reinvest Wisely

Buy a similar but not identical stock/fund to maintain your investment exposure while complying with tax laws.


🔹 Simple, effective, and 100% legal.

💰 Why Every Investor Should Use Tax Harvesting:


✅ Save Lakhs in Taxes


✅ Clean Up Your Portfolio – Remove underperformers & free up capital.


✅ Offset Gains for 8 Years – Losses don’t go to waste!


✅ Plan Around the ₹1.25 Lakh LTCG Exemption


✅ Boost Net Returns – Reduce tax drag on your investments.

📅 Pro Tips for Maximizing Tax Harvesting:


1. Do It Before 31st March – Only losses booked before the FY-end count.


2. Use LTCG Exemption Smartly – Sell stocks with gains up to ₹1.25 lakh yearly (Tax-free).


3. Avoid Wash Sale Mistakes – Don’t repurchase the same stock immediately. Use similar but different stocks.


4. File ITR Properly – If you don’t file your capital loss in ITR, you can’t claim carry-forward benefits.


5. Plan Smartly with Mutual Funds – You can switch funds within the same category for better performance while harvesting losses.

📊 Example: Tax Harvesting in Action


👨‍💼 Investor Scenario:


🔹 ₹15 lakh STCG from stock sales (Tax @20% = ₹3 lakh)

🔹 ₹5 lakh loss from underperforming stocks


Without Tax Harvesting:

Total tax = ₹3 lakh


With Tax Harvesting:

Taxable Gain: ₹15L - ₹5L = ₹10L

New Tax = ₹2 lakh


💰 Tax Saved: ₹1 lakh instantly!


And if the ₹5 lakh loss exceeds this year’s gains?


Carry it forward for up to 8 years and reduce future taxes!

🔥 Advanced Tax Harvesting Strategy (Pro-Level)


💎 Use the LTCG Exemption Hack


Since LTCG under ₹1.25 lakh is tax-free, here’s how experts use it:

✅ Sell stocks with gains up to ₹1.25 lakh every year (no tax).

✅ Reinvest immediately in the same stock to reset your purchase price (cost basis).


This reduces your future taxable gains—an optimized tax-saving compounding strategy! 🚀

🚫 Mistakes That Can Cost You Money:


⚠️ 1. Buying Back Too Soon (Wash Sale Mistake):

• If you buy the same stock too soon, you may lose the tax benefit.

• Instead, buy similar but different stocks/funds.


⚠️ 2. Forgetting to File Losses in ITR:

• If you don’t report the loss, you can’t carry it forward for future gains.


⚠️ 3. Ignoring LTCG Exemption:

• Many investors forget the ₹1.25 lakh LTCG tax-free limit—Use it every year!


⚠️ 4. Last-Minute Rush:

• Tax harvesting should be planned before 31st March, not at the last minute.

🚀 Take Action Today & Save on Taxes:


✅ Review Your Portfolio – Identify tax-loss harvesting opportunities.


✅ Sell Loss-Making Investments – Before FY-end to offset gains.


✅ Reinvest Wisely – Don’t break compliance rules.


✅ File ITR Properly – To carry forward unused losses.


https://slfinancial.fundexpert.net/

Sunday, March 16, 2025

Compounding Effect

🙏🙏 Good Morning 🌞🌞

From 3MB to 100TB: The Power of Exponential Growth!

In the 1950s, IBM introduced a *3.5 MB* hard drive. By the 1960s, storage capacities had grown to a few dozen megabytes. In the 1970s, they reached *70MB*. Even in the early 1990s, hard drives only ranged from *200MB to 500MB*. But then, things took off exponentially:

*1999*: Apple’s iMac featured a *6GB* hard drive  
*2003*: The iMac offered *120GB*  
*2006*: The new iMac came with *250GB*  
*2011*: The first *4TB* hard drive was launched  
*2017*: *60TB* hard drive  
*2019*: Storage reached a staggering *100TB*  

As *Morgan Housel* points out, from *1950 to 1990*, storage increased by just *300MB*. But from *1990 to today*, it has grown by over *100 million MB*! Even the most optimistic predictions in the 1950s might have guessed storage would grow *1,000 times*, or maybe *10,000 times*— *but 30 million times*? No one could have imagined it.

That’s the power of exponential growth!

Now, let’s apply the same concept to investing.

Suppose you invest *₹1,00,000* with an average annual return of *14%*, which is reflective of the Sensex's historical performance. Here's how your wealth grows over *45 years*:
Compounding
- **Year 0**: ₹1,00,000   
- **End of Year 5**: ₹1,93,484   
- **End of Year 10**: ₹3,86,743   
- **End of Year 15**: ₹7,50,255   
- **End Compounding of Year 20**: ₹14,59,024   
- **End of Year 25**: ₹28,28,117   
- **End of Year 30**: ₹55,46,180   
- **End of Year 35**: ₹1,08,47,427   
- **End of Year 40**: ₹2,12,61,030   
- **End of Year 45**: ₹4,18,49,088   

Now, observe the real magic of compounding:

In the *first 15 years*, your investment grows to approximately ₹7.5L.

In the *next 30 years*, it doesn’t just add another ₹7.5L—it adds around *₹4.11 crore*, reaching over *₹4.18 crore*!

This highlights the profound effect of time and compounding in wealth creation. 

Wealth creation may start slow, but patience leads to extraordinary results!

https://slfinancial.fundexpert.net/

Sunday, March 9, 2025

Staying invested during Market correction

*Good morning* 🌞🌞🙏🙏

Understanding market correction: How much of a drop can there be before FD returns match up?

A typical investor's view

You have been enjoying a 14% CAGR for several years, but then the market hits a big drop. Naturally, you think: “Would I have been better off in a bank FD earning 7%?”

Let's simplify this question with numbers.

Why growth is faster than you think

Investing at 14% CAGR means your money grows much faster than an FD at 7% CAGR. However, after adjusting for taxes, the more realistic return of an FD is 6%. Here is the evolution of a ₹100 investment:

• 3 years → ₹151.36 (market) vs ₹119.10 (FD @ 6%)

• 5 years → ₹192.54 (market) vs ₹133.82 (FD @ 6%)

• 7 years → ₹250.13 (market) vs ₹150.36 (FD @ 6%)

• 10 years → ₹370.49 (market) vs ₹179.08 (FD @ 6%)

• 15 years → ₹710.49 (market) vs ₹240.10 (FD @ 6%)

Even if the market falls, The percentage fall required to reach FD levels is huge.

How much fall can there be before it comes at par with FD?

If you have 14% CAGR growth for a few years, the market fall required to come at par with FD returns (6% adjusted) is as follows:

• After 3 years of 14% growth, a fall of 21.3% will bring you to FD levels.

• After 5 years, the corresponding fall is 30.5%.

• After 7 years, it is 39.9%.

• After 10 years, it is 51.7%.

• After 15 years, it is 66.2%.

What does this mean?

Even if the market falls 20% after five years, your investment is still ahead of the FD.

A 30.5% drop after five years or a 51.7% drop after ten years would be needed to bring your returns back to FD levels.

And in this context, the power of the rebound cannot be ignored.

The best part?

Market declines are often temporary, especially if they are emotion-driven and not fundamentally driven.

History shows that long-term investors benefit more than those who panic and exit.

At such times, those who exit are passing on the returns to those who stay invested. At such times, the game changes from a positive-sum format to a zero-sum format of patient investing.

Key Lesson

Market highs and lows are part of the game.

But before you worry about the decline, ask yourself:

“Am I still ahead of FDs, which are my only other option?”

Chances are, the answer will be yes.

Stay invested, go forward.