Creating a financial checklist before the end of 2019

Creating a financial checklist before the end of 2019

As another calendar year comes to an end, you must be getting ready with your New Year resolutions. This time lets make it more real. At least with respect to your finances, let’s not take chances. Here is a 6 point financial checklist for you before we enter the Year 2020. But, remember to be fully prepared with your checklist before the new year sets in.

  1. If you have not already done it, set your financial goals and create a financial plan. This may sound like a routine affair but you need to make it happen. Unless you sit down and jot down your goals on a piece of paper; like your retirement, your daughter’s education, your nest egg etc, it will never happen. Financial goals are the starting point because they give direction to your finances. Make a comprehensive list of all possible medium term and long term goals. For now, don’t worry about whether these goals are practical or not. Just ensure that you are able to assign a monetary value to each goal.

  2. If you have goals, you need money and the probability of your becoming a millionaire by a stroke of luck is extremely small. So you need to work towards it and more importantly, you need to make money work harder. The starting point is savings. How much are you saving per month and can you squeeze extra out of your monthly income. Remember even a small additional sum of Rs.2000 per month invested in a SIP mutual fund can make a big difference at the end of 20 years. That is why savings matter!

  3. Review your credit score and it does not cost a dime. CIBIL and Experian will give your credit score by email free of cost. Review your credit profile and analyse why your score is low. It could be because your debt is too high as a percentage of your income. It could also be because you have multiple credit cards and you are close to your limit on all of them. It is time put thing in order. Use intermediate inflows to reduce your high cost loans and put limits on card usage. Your score will automatically improve in a few months. Credit score review should be a necessary part of your checklist.

  4. Review  your insurance and your emergency fund. Firstly, don’t mix insurance and investments. That means; endowment policies and ULIPs are clearly out. Risks must be covered by term policies and a mix of mutual funds can help you with investment and wealth creation. Review your emergency fund. Ideally, it should be around 4-5 months of your monthly income and must be invested in something like liquid funds that can be easily accessed. Don’t let your emergency funds run too low.

  5. Consolidate your mutual fund and equity investments. Remember, a combination of equity funds and debt funds are best suited to meeting your long term goals. Ideally, adopt the SIP mutual fund route to meet these goals and ensure that each SIP is clearly tagged to a goal. Don’t spread your money too thin across too many funds. Stick to a handful of funds that have given good performance in risk-adjusted terms. That can make a big difference to ease of handling your mutual funds portfolio.

  6. Finally, get your tax process in order. Irrespective of whether you are an employee or a businessperson, maintenance of tax records and timely remittance of tax is a must. Don’t fall for the age old PPF and NSC story to save tax. Tax saving mutual funds or ELSS funds are a potent combination of tax saving, lower lock-in and equity participation. It can work for you in multiple ways.

The New Year should be a time to get your finances and investments more organised and this checklist can be a good starting point. Don’t forget that tax saving mutual funds can be like hitting two birds with one stone.

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What is ELSS Funds and How they are Helpful for Tax Savings?

What is ELSS Funds and How they are Helpful for Tax Savings?

ELSS fund or Equity Linked Savings Scheme fund is a tax-saving scheme that derives their returns from the equity market. The ELSS funds come with a lock-in period of three years. The investor cannot withdraw from the ELSS scheme during this duration. The ELSS fund gives twin advantage of capital appreciation and tax benefits.

The ELSS funds are mostly open-ended mutual funds. They help the investor to save tax under the Section 80C, and the taxable deduction available for this investment is upto Rs.1,50,000. The ELSS funds are suitable to inculcate the habit of saving among investors as the lock-in period prohibits the withdrawal of the investment for three years.

The ELSS comes with a low investment threshold of Rs.500 and the investor need not make a one-time investment for ELSS.  They can opt for the Systematic Investment Plan(SIP) method where they will invest a pre-set amount on a specified date of every month or six months. Through the SIP method, the investor has the option to spread their investments over the year, and this saves the last minute rush for searching for investments that help in tax savings.

However, when the investors opt the method of SIP payment, they should be aware of the fact that every SIP payment is considered as a fresh investment and it has an individual locking period of three years. The ELSS funds are the only investment with a low lock-in period of three years when compared to other tax saving investments.

When calculating SIP for the ELSS investment, the investor has to make sure that their investments are spread over the year. The investor has to use this simple formula to arrive at their SIP calculation

The ELSS funds come with two options for Growth and Dividend. The investor can choose the option that aligns with financial goals.

Growth option:

In this option, the investment along with its profit is accumulated, and the total amount is paid to the investor at the end of the lock-in period with an option of reinvestment.

Dividend Option:

The dividend option comes with two choices of dividend payout and dividend reinvestment. In dividend payout, the investor will receive the payment of a dividend from time to time. In dividend reinvestment, the payout is reinvested, and it will be treated as a fresh investment with the benefit of a tax deduction

The tax saving feature of ELSS funds:

Under Section 80C of the Income Tax Act,1961 a tax payer can claim up to Rs.1,50,000 as relief against their investments. Under the new budget rules, the long-term capital gains (for investments held more than one year) exceeding more than Rs.1,00,000 are subject to 10% tax without benefit of indexation.

The ELSS funds are the best option as tax saving investments as they have the power to give benefits of high returns with the flexibility of investment and the lowest lock-in period when compared to other investments.

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How to Prepare for Next Bear Phase in Stock Market?

How to Prepare for Next Bear Phase in Stock Market?

What exactly do we understand by a bear phase in the stock market? While there is no hard and fast definition of a bear market, the accepted standard definition is a correction of 20% from the peak of stock market. It is normal for stock broker and investors to panic in the face of a bear market and act instinctively. The result is that you end up losing opportunities which the bear market offers. Bear markets are not about jumping in and buying every stock that has corrected. Here is how you can prepare for a bear market.

Remember, bear markets are always more severe on some sectors

If you look back at the bull markets of the last 25 years, then the bear markets subsequent to such rallies have followed a similar pattern. The maximum damage has happened in stocks that triggered the rally in the first place. Post 1992, it was the cement pack that corrected the sharpest. Post the technology rally in 1999 even frontline stocks like Wipro and Infosys corrected more than 75%. Much worse was the damage to realty and infrastructure stocks post 2008. Most of the stocks lost over 95% of their peak value. As a strategy, prepare to exit the drivers of the bull rally first in any bear market. Such stocks are not meant to be bought on dips. This is the basic rule that should guide stock broker strategy in the bear phase of stock market.

Stay low on leveraged positions in the market

The problem with bear markets is that they are also accompanied by a rise in volatility and a fall in buying demand. This widens the spreads on stocks. In the markets, you can be leveraged in two ways. You can either borrow to invest or you can trade on margin. In both cases, bear markets are the time to cut down on your leveraged positions. Even if your view is right, the spurt in volatility may trigger stop losses. Minimize your leveraged positions in a bear market as it can draw you into a vicious cycle of trading losses.

Look for asset classes beyond equity

More often than not, we end up believing that equities are the only place to invest and end up making wrong decisions. There are asset classes beyond equity that can protect value in bad times. For example, gold has typically done very well when equity markets have fallen. Similarly, liquid funds and debt funds can also give much more stability to your portfolio. Even within your equity portfolio, look to diversify across themes. If you spread your portfolio across themes and sectors, you stand a very good chance of doing well compared to putting all your eggs in one basket.

Bear market is the time to restructure and rebalance your portfolio

If you were waiting for the right time to change your portfolio mix, then for stock broker the bear stock market is the right time to rebalance and restructure your portfolio . As we said earlier, first get out of the stocks and themes that triggered the bull market in the first place. Shift your stocks from high beta names to low beta names. They will hold value much better. In any bear market, the mid caps and small caps face the maximum damage. You can prepare yourself by shifting out of such stocks well in advance. Focus more on companies that follow relatively higher standards of corporate governance and disclosure practices. They are likely to give fewer negative surprises in a bear market.

If we can just focus on these defences, bear markets can be easily and methodically handled!

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How to Secure your Portfolio Against Fall in Nifty?

How to Secure your Portfolio Against Fall in Nifty?

The Nifty chart over the last 18 years shows a secular up move in the index. However, within the overall trend, there have been bouts of severe volatility and sharp corrections. We have seen big corrections in the market in 2000, 2008 and 2013. The corrections have ranged from 20% in 2013 to as high as 62% in 2008. As an investor, it is not always possible to enter at the bottom and exit at the top because markets tend to be counter-intuitive. How do you adopt a systematic approach to securing your portfolio against a fall in the Nifty? There are some proactive solutions and some reactive ones.

Chart Source: Google Finance

It would be very simple to say that over the long run the Nifty has made profits. The bigger question is how to shield against short term volatility.

1. Time to reallocate – Buy into strength and sell into weakness

This is a cardinal approach to handling a correction. Even when the NBFC crisis broke out in late 2018, Dewan Housing corrected more than LIC Housing or Bajaj Finance. That is why, it is always essential to buy into strength and sell into weakness in a falling market because weak stocks become vulnerable. When you reallocate your portfolio, it has a cost but it would be smarter than just watching your portfolio depreciate. Quite often, investors use discrete options like averaging or exiting altogether. There is a mid-way approach.

Why are we talking about buying into strength? When the Nifty corrects, it separates the men from the boys. In 2000, technology stocks caused the crash. Over the last 18 years stocks like Satyam, Pentamedia, DSQ and many more vanished. But stocks like Infosys, TCS and Wipro have only emerged stronger. The rule is to exit frothy stocks immediately.

2. Seriously consider farming your losses for tax purposes

In India, tax farming is quite popular among HNI investors. If you are holding on to stocks and it is down in the last 6 months, you can book a loss and write it off against other gains. This reduces your capital gains tax liability. Now that LTCG is also taxed on equity, this can be applied to LTCG and to STCG. By farming losses, you don’t lose anything but the notional loss is converted into a real loss and reduces your overall tax liability. Even if you don’t have gains in this year, you can still farm these losses and carry forward for a period of 8 years.

3. Make the best use of hedging tools

The stock market offers you a variety of hedging tools. You can sell futures against your stock to lock in profits and keep rolling over. Alternatively, you can buy lower put options to limit you risk in a falling market; either in the stock or the index. You can even sell higher call options to reduce your cost of holding. In short, F&O offers you a plethora of opportunities to protect and also benefit from a falling Nifty.

4. A phased approach will be a good shield against a falling Nifty

The best of traders are not able to call tops and bottoms of the market consistently. When the market is falling, you normally believe that you have a choice between staying out and catching a falling knife. But there is a third option. You can adopt a phased and systematic approach to investing, at least till the time the volatility normalizes. Focus on managing your risk. One of the basic rules you must follow is to be true to your long term goals. They don’t need to be impacted by Nifty volatility and SIPs tagged to these goals must go on.

5. Keep liquidity handy to buy stocks at lower levels

A sharp correction in the Nifty can also offer bargains. But the trick is to ensure that you have liquidity in your hand when it matters. So, it is time to selectively roll your shopping trolleys out. You were happy to purchase HUVR at 1900 then why not at Rs.1500? A lot of quality stocks also correct in sympathy. Look for bargains and buy quality at cheap prices.

A falling Nifty calls for a mix of proactive and reactive actions to protect the value of your portfolio and make the best of opportunities. It is not too complicated!

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Everything you need to know about Burger King IPO

Everything you need to know about Burger King IPO
by Mrinmai Shinde 12/01/2020
Quick service restaurant chain, Burger King India is launching its three-days long IPO from 2nd December to 4th December. The company has set the price band at ?59-?60 per share for its IPO.

Through the IPO the company aims at raising ?810 crore. Of the total amount the promoter entity QSR Asia Pte Ltd will sell up to 60 million shares, which would amount to ?360 crore while a fresh issue of shares will aggregate to ?450 crore. The company has also raised a pre-IPO funding of ?92 crore from public markets investor Amansa Investments Ltd at ?58.5 per share.

Burger King IPO details at a glance

IPO Date

Dec 2, 2020 - Dec 4, 2020

Finalisation of Basis of Allotment

Dec 9, 2020

Initiation of refunds

Dec 10, 2020

Transfer of shares to demat accounts

Dec 11, 2020

Listing Date

Dec 14, 2020

Issue Size

?810.00 Cr

Fresh Issue

?450.00 Cr

Offer for Sale

?360.00 Cr

Face Value

?10 per equity share

IPO Price

?59 to ?60 per equity share

Min Order Quantity (each lot)

250 Equity Shares

Min Amount Cut off


Maximum Lots allowed

3250 Shares (13 lots)

Want to know our suggestion? Read here - Burger King IPO Note.

Things you need to know:

Burger King India Limited is one of the fastest growing international QSR chains in India during the first five years of operations based on the number of restaurants. Talking about the global presence, when measured by the number of restaurants, with a network of 18,675 restaurants in over 100 countries, Burger King is the second-largest fast food burger brand globally. In India, the company owns 261 restaurants which include eight Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India.

Burger King India has exclusive franchise rights in India and a strong customer value preposition. Apart from the customer loyalty and brand value, strong management and a vertically scalable supply chain are the company’s key strengths. The company will use the funds raised through the IPO to finance the roll-out of new company-owned Burger King Restaurants, repayment or prepayment of outstanding borrowings and to meet the general corporate purposes.

If you are looking for the short-term gains through the IPO, you need to bear in mind that if there is a spike in the Covid cases and there is another round of lockdown, then the business might take a hit. The termination of the Master Franchise and Development Agreement could also pose a threat to the business. Lack of identification of the locations when expanding in new regions, and deteriorating relations with third party delivery aggregators apart from perceived and real health concerns along with shifting food preferences and habits are a few things to look for. Having said that, the investment would turn out to be promising in long term.

This year has seen a lot of good IPOs, which has encouraged a lot of new investors to enter the markets. Apart from Burger King, the other companies that issued IPOs this year include SBI Card, Rossari Biotech, Mindspace Business Parks REIT, Route Mobile, Happiest Minds Technologies, Angel Broking, Chemcon Speciality Chemicals, Computer Age Management Services, Mazagon Dock Shipbuilders, UTI AMC, Likhitha Infrastructure, Equitas Small Finance Bank and Gland Pharma.

How to apply for Burger King IPO?
  • In 5paisa Trading App, go to IPO Section reflected on the home screen
  • Click on Apply IPO
  • Enter Quantity and Price to bid for
  • Enter UPI id to block funds on
  • Later in the day you will receive funds block confirmation in your UPI app, which needs to be approved

If you are not a 5pasia customer, you can apply for the IPO using any supported UPI apps. Click here to find the list of UPI apps and banks supporting the IPO application.

Watch the video below to know more about the Burger King IPO

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Union Budget 2020 – What’s It All About?

Union Budget 2020

Budget 2020 was rich on expectations but the exemptions in the budget were much lower than what the market desired. The impact was visible in the performance of the stock market indices which cracked in response. While a detailed analysis is still due, the immediate reaction of the market appears to be that there was no big bang announcement in the Union Budget despite the tough macro conditions. Here are some of the major announcements in the Union Budget 2020.

Response to macro pressures

  • Nominal growth for fiscal year 2020-21 has been pegged at 10%. The real rate of GDP growth could be in the range of 5.5% to 6% depending on the nominal growth actually achieved as even 10% does look quite steep at this point in time.

  • The budget 2020 has fully utilised the 50 bps leeway on fiscal deficit offered by the N K Singh Committee. For 2019-20, the fiscal deficit has been pegged at 3.8% instead of 3.3% while for the fiscal year 2020-21 it is pegged at 3.5% instead of 3%.

  • There is some positive impact on post-harvest infrastructure. To improve post harvest infrastructure, including cold storage, the budget has announced viability funding based on public-private-partnership. Indian Railways will run dedicated trains to support the cold chain plan.

Some cheer for Corporates and MSMEs

  • Despite the lack of any cost advantage, the Budget 2020 has outlined big plans for manufacture of mobile phones and electronic equipment and semiconductor packaging. In addition, the 15% concessional tax will be extended to the power sector too.

  • Finally, MSMEs have something to be really pleased about. Invoice financing via the factoring method will be extended to MSME as will be the issue of subordinated debt to MSMEs and handholding in the early stages.

No cheer for markets and that was evident

  • LTCG on equity stocks and equity funds was not scrapped, despite the STT being introduced in 2004 in lieu of LTCG tax. This is resulting in the cascading effect of STT plus LTCG tax and that is adding to the costs of traders and investors.

  • While DDT has been scrapped on equity and on equity funds, it comes back in another form. At the same time, the dividend distribution tax on debt funds will continue as before. There will be a single point of taxing dividends as other income at the applicable peak rates of tax for individuals.

  • Efforts are being made to reduce tax burden on middle class. People earning in the range of Rs.5 lakh to Rs.15 lakhs will see reduction in taxes.

Direct tax; more complicated than effective

  • Direct tax regime has suddenly become a lot more complicated. There will be two regimes; first regime will focus on status quo with all exemptions and rebates. The new regime with lower rates applicable will be devoid of exemptions and rebates. Loss of exemptions could be a big cost as many exemptions are virtually mandatory or inevitable like life premiums, provident fund, tuition fees, home principal etc.

  • Under the new tax regime, direct taxes will be as under:

Income bracket

Below 5l

5l to 7.5l

7.5l to 10l

10l to 12.5l

12.5l to 15l

Above 15l

Tax Rate (%)







Above table represents the new regime. If you opt for the second option, then your IT form will be auto-filled. That simplicity appears to be the only visible advantage.