Nifty 17457.1 (0.32%)
Sensex 58674.64 (0.36%)
Nifty Bank 36804.35 (0.81%)
Nifty IT 36442.9 (0.79%)
Nifty Financial Services 18061.5 (0.44%)
Adani Ports 738.25 (-0.12%)
Asian Paints 3166.10 (-0.46%)
Axis Bank 686.30 (1.51%)
B P C L 385.40 (1.73%)
Bajaj Auto 3323.60 (-0.14%)
Bajaj Finance 7229.00 (0.68%)
Bajaj Finserv 17880.00 (0.69%)
Bharti Airtel 726.00 (-0.89%)
Britannia Inds. 3586.70 (0.23%)
Cipla 915.05 (-0.67%)
Coal India 159.70 (0.25%)
Divis Lab. 4752.05 (-0.53%)
Dr Reddys Labs 4633.85 (-0.62%)
Eicher Motors 2482.90 (1.28%)
Grasim Inds 1730.95 (0.41%)
H D F C 2814.00 (0.22%)
HCL Technologies 1182.75 (-0.16%)
HDFC Bank 1535.35 (0.63%)
HDFC Life Insur. 703.55 (-0.25%)
Hero Motocorp 2484.95 (0.50%)
Hind. Unilever 2379.55 (-0.16%)
Hindalco Inds. 430.90 (-0.28%)
I O C L 121.80 (0.95%)
ICICI Bank 728.20 (0.80%)
IndusInd Bank 953.80 (0.87%)
Infosys 1773.60 (1.45%)
ITC 225.05 (-0.18%)
JSW Steel 647.15 (0.06%)
Kotak Mah. Bank 1980.00 (0.80%)
Larsen & Toubro 1835.50 (2.59%)
M & M 853.90 (0.51%)
Maruti Suzuki 7264.80 (-0.82%)
Nestle India 19317.35 (-0.95%)
NTPC 129.75 (0.82%)
O N G C 145.70 (1.18%)
Power Grid Corpn 216.10 (0.75%)
Reliance Industr 2468.40 (-0.58%)
SBI Life Insuran 1179.05 (-0.76%)
Shree Cement 26300.25 (0.04%)
St Bk of India 480.90 (0.82%)
Sun Pharma.Inds. 761.95 (-0.56%)
Tata Consumer 774.15 (0.12%)
Tata Motors 481.55 (0.51%)
Tata Steel 1111.00 (-0.13%)
TCS 3651.25 (0.23%)
Tech Mahindra 1632.95 (0.20%)
Titan Company 2393.00 (0.27%)
UltraTech Cem. 7363.40 (0.55%)
UPL 713.65 (2.21%)
Wipro 647.80 (0.15%)

Investment Instruments: Mutual Funds vs National Pension Scheme

Investment Instruments: Mutual Funds vs National Pension Scheme
by 5paisa Research Team 25/10/2021

NPS and Mutual funds are the most popular investment instruments for retirement planning which deliver decent returns to their investors.

There are various investment instruments available for an individual where he can park his funds to plan for his retirement. Every investment instrument has unique features and has different riskiness. One can make investments in instruments such as equity, debt, bank fixed deposit, post office savings scheme, mutual funds, National pension schemes, Public Provident Funds, etc to execute a better financial plan. An individual can fulfil his life goals by adequately planning their investments and creating a diversified portfolio. Retirement planning is an essential aspect of every individual’s life. This life goal of an individual is a long-term goal.

So, let’s look at two different avenues that investors may consider for their retirement planning. 

 

Particulars  

National Pension Scheme (NPS)  

Mutual Fund  

Overview  

National Pension Scheme is an investment instrument where an individual can invest in for their retirement. This scheme is regulated by Pension Fund Regulatory & Development Authority (PFRDA). NPS can be subscribed by any citizen of India.  

These funds are professionally managed funds which pool the corpus from investors and allocate the same across various asset classes. One can invest in these funds in order to fulfil short term as well as long term goals. Mutual funds are regulated by Securities Exchange Board of India (SEBI).  

Risk  

These schemes have lower risk as compared to mutual funds and direct equity  

Mutual fund schemes are risky than NPS but less risky than direct equity  

Types  

Tier I- This is a non-withdrawable account up to the age of 60 i.e., retirement age, in which, your deposits will be deposited.    

Tier II- This is a voluntary savings account, which you can deposit as well as withdraw at any point. You cannot open a tier-II account without a tier I account.    

Swavalamban account- This type of NPS is provided for encouraging poor workers. Under this scheme, the Govt of India pays Rs 1,000 per year for 4 years of contribution.    

  

Mutual fund has five main categories of scheme such as:  

Equity-oriented schemes: these schemes pre-dominantly invests in equity and equity-related instruments.  

Debt-oriented schemes: these schemes chiefly invest in debt and money-market instruments.  

Hybrid schemes: These schemes invest in combination of both debt and equity instruments.  

Solution-oriented scheme: These schemes enable an individual to create a corpus for their children education or marriage, etc. and retirement.  

Other Schemes: Other schemes are divided further into two subcategories such as Index Funds/ETFs and FoFs (Overseas or Domestic)  

Tax Benefits  

Amount of deduction u/s 80CCD (1) is 1,50,000, which is a part of section 80C.    

2. The maximum deduction that one can claim is:    

Salaried employees-     

• Employees contribution, or     

• 10% of salary, whichever is lower.    

Other individuals-    

• Assessee’s contribution,  or    

• 20% of gross total income, whichever is less.    

3. Deduction u/s 80CCD (2), which does not form part of sec 80C, cover employers’ contribution towards NPS. This cannot be claimed by self-employed individuals.    

The deduction will be as follows:     

• 10% of basic pay + dearness allowance    

• 14% where contribution by the central govt as an employer.    

  

Equity oriented schemes:  

Short term Capital Gains – The capital gains arising within 12 months are taxed at the rate of 15%.  

Long term Capital Gains – The capital gains arising after 12 months are exempt up to ₹1 lakh and are taxed if capital gains exceed ₹1 lakh, then they are taxed at the rate of 10% without indexation benefit.  

Debt oriented Schemes:  

Short Term Capital Gains: The capital gains arising within 36 months are taxed as per income tax slab rates of an assessee.  

Long Term Capital Gains:  

The capital gains arising after 36 months are taxed at the rate of 20% with indexation benefit.  

Hybrid Funds: The proportion of equity and the equity-related instrument is more than 65%, then it will be taxed same as equity schemes, otherwise like debt schemes.    

  

  

 

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Trending stocks: Keep a close eye on these small-cap stocks for 26 October 2021

Trending stocks: Keep a close eye on these small-cap stocks for 26 October 2021
by 5paisa Research Team 25/10/2021

The following small-cap stocks have made fresh 52-week high today – Pansari Developers, Sikko Industries, Digjam Limited, India Nippon Electricals, Best Agrolife, Best Agrolife and Rajnandini Metal.

Indian equity markets ended on a positive note on Monday, 25 October 2021. Benchmark indices Nifty 50 and Sensex gained 0.06% and 0.24% respectively. Bank Nifty index jumped 2.15% and closed at 41,192.4. BSE Small-cap index bucked the broader market trend, ending in the red territory down by 1.76%.

Keep a close eye on these trending small-cap stocks for Tuesday, 26 October 2021:

NRB Bearings – The Board of Directors of the company at its meeting held on October 25, 2021, inter-alia considered and approved the following:

Execution of a share purchase agreement with NRB Holdings Limited (NRB Holdings), a wholly-owned subsidiary of the company, incorporated in Dubai International Finance Centre, Dubai, United Arab Emirates for disinvestment of its 100% shareholding in its wholly-owned subsidiary, NRB Bearings Europe GmbH, to NRB Holdings at an aggregate consideration of not less than Rs 1.32 crore.

Execution of a share purchase agreement with NRB Holdings for disinvestment of its 100 per cent shareholding in its wholly-owned subsidiary, NRB Bearings USA Inc., to NRB Holdings at an aggregate consideration of not less than Rs 96.6 lakh.

Acrysil – The company has announced that its capacity expansion of an additional 1.4 lakh units at the Bhavnagar plant in Gujarat has been completed. The commercial production from an additional 140,000 units has commenced on 25 October 2021. The manufacturing capacity of quartz kitchen sinks of the company now increased from the earlier 7 lakh units to 8.4 lakh units per annum.

RattanIndia Enterprises – Revolt, India’s market leader in electric motorcycles backed by the company has announced the opening of its dealership in Bangalore. The dealership was inaugurated by Jenender Anand, CEO of Revolt Motors. Revolt has been witnessing robust demand for its electric bikes in the festive season particularly with rising petrol prices. Revolt electric bikes provide great savings for its customers with running costs as low as Rs 9 per 100 kilometres.

52-week High Stocks - The following small-cap stocks have made fresh 52-week high today – Pansari Developers, Sikko Industries, Digjam Limited, India Nippon Electricals, Best Agrolife, Best Agrolife and Rajnandini Metal. Keep a close eye on these counters on Tuesday, 26 October 2021.

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Closing Bell: Market snaps 4-day losing streak led by gains in Banking and Financial stocks

Closing Bell: Market snaps 4-day losing streak led by gains in Banking and Financial stocks
by 5paisa Research Team 25/10/2021

Indian markets broke the four-day losing streak and ended higher supported by the banking heavyweights. 

Domestic equity benchmarks snapped their four-day losing streak on Monday, October 25, 2021, led by gains in banking stocks of ICICI Bank, Axis Bank and State Bank of India. But the upside was capped owing to selling pressure in Infosys, HDFC Bank, Asian Paints, Reliance Industries and Bajaj Finserv. During today's trading session benchmark indices traded in a volatile manner with Sensex moving in a band of over 900 points and Nifty touching an intraday high of 18,241.

At the closing bell, the Sensex was up 145.43 points or 0.24% at 60967.05, and the Nifty was up 10.50 points or 0.06% at 18125.40. On advance-decline, around 971 shares have advanced, 2276 shares declined, and 174 shares remain unchanged.

Top gainers on the Bombay Stock Exchange were ICICI Bank, Axis Bank, SBI and Dr Reddy’s Laboratories. The top losers of the day were Bajaj Finserv, Bajaj Auto and HCL Technologies.

On the sectoral front, except the banking sectoral, all other sectoral indices ended in the red with auto, IT, FMCG and Realty indices were down 1-2%. In the broader markets, BSE Midcap and Smallcap indices fell over 1% each.

Among the buzzing stocks today was the Indian Railway Catering and Tourism Corporation (IRCTC) which came under intense selling pressure after the stock came out of the National Stock Exchange's futures and options ban list on Monday. Shares of IRCTC fell as much as 14.32%to hit an intraday low of ₹ 3,960.05.

ICICI Bank was the top gainer, as the stock jumped after the bank reported a 29.6% rise in net profit to Rs 5,511 crore on a standalone basis for the July-September quarter in the financial year 2021-22, compared to Rs 4,251.3 crore in the year-ago period.

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Tech Mahindra reports 26% rise in Q2 profit, revenue up 16%

by 5paisa Research Team 25/10/2021

IT services firm Tech Mahindra Ltd reported quarterly revenue that beat street expectations but posted a profit after tax that was marginally below consensus for the three months ended September 30.

Tech Mahindra reported a net profit of Rs 1,339 crore, down 1.2% from the first quarter on a sequential basis but 26% higher year on year. Analysts were expecting a profit of around Rs 1,400 crore.

The company’s revenue, however, grew 6.7% quarter on quarter and 16.1% over the second quarter last year to Rs 10,881 crore.

Tech Mahindra shares, which are trading close to their 52-week highs, were up 0.42% to close at Rs 1,524.4 apiece on Monday. The IT firm, which announced a couple of overseas acquisitions in the July-September period, declared its financial results after trading stopped for the day.

Tech Mahindra Q2: Other highlights

1) EBITDA at Rs 1,995 crore; up 6.3% QoQ and 17.2% YoY.

2) The board has proposed a special dividend of Rs 15 per share (300%).

3) No. of active clients increased from 1,058 to 1,123 during the quarter.

4) Attrition has shot up to 21% from 17% in the first quarter and 14% in same quarter last year.

Tech Mahindra management commentary

CP Gurnani, Managing Director and Chief Executive Officer at Tech Mahindra, said the company recorded its highest sequential growth in a decade.

“We have witnessed strong traction across all key markets as we invest in our digital capabilities through strategic partnerships. We continue to accelerate our clients’ digital journey by creating Human Centric Experiences, helping them gear up for tomorrow, today,” he said.

Milind Kulkarni, Chief Financial Officer at Tech Mahindra, said, “Our strong execution has ensured that we maintain our profitability margins while accelerating growth momentum. We remain committed on the operational excellence journey we have boarded, and continue to create value to shareholders through efficient capital return.”

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Meet the dean of valuation - Aswath Damodaran

Meet the dean of valuation - Aswath Damodaran
by 5paisa Research Team 25/10/2021

Owing to his deep knowledge and expertise on valuation, Aswath Damodaran has been christened as the "Dean of Valuation".

Aswath Damodaran is a professor of finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. He has written over 20 books to date that includes, Applied Corporate Finance, Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, Narrative and Numbers: The Value of Stories in Business to name a few. 

He has won the Richard L Rosenthal Award for Innovation in Investment Management and Corporate Finance and also the Herbert Simon Award. Damodaran regularly blogs about his views on the ongoing developments in the market on "Musings on Markets", which is a popular website on investing.

The secret to being a successful investor 

Aswath Damodaran strongly believes that humility is the single most important characteristic required to be a successful investor. In his latest webinar- The Illusion of Smart Money, he classified the investors into two groups- the humble and the arrogant. The humble investors are the ones who recognized success as a function of luck as well as skill and failure as a part of investing and an occasion for learning. On the other hand, he described the arrogant investors like the ones who viewed success as a function of their skill alone and took failure as a humiliation. Furthermore, if given a choice to pick someone to manage his money, he would select someone humble, since he believes that humble investors are less likely to overpromise and overcommit.

Talking about the rise of crypto assets, in an interview with CNBC TV18, he called cryptocurrency the millennial gold. He further revealed that he is not a market-timer and that he is still invested in stocks that he believes can deliver reasonable returns.

The Zomato IPO pricing debate

While talking about Zomato IPO, in an interview with CNBC TV18, Damodaran advises staying away from metrics that scale to current earnings, irrespective of the company because it will lead to absurd valuations. The reason is that investors buy for the future potential of the company, not the present and that future potential should seem reasonable. Speaking about Zomato, he said that while the company leads the online food delivery market, which holds great growth potential, two important factors need to be considered for tapping into this potential. Firstly, the growth of the Indian economy, as the rise in demand for online food delivery requires a rise in disposable income and secondly, the change in food habits of Indians.

Upcoming IPOs

Commenting on the upcoming IPOs of Paytm and Ola, Aswath Damodaran would prefer to invest in Paytm IPO over the Ola IPO. In an interview with Business Today, the professor believed that the former has potential as the financial services and payment processing business is huge. On the other hand, the ride-sharing business is a catastrophe globally and there is no stickiness in the market. Hence, if he has a choice, he would prefer to invest in Paytm IPO, provided that it is priced reasonably.

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These stocks are likely to be in focus on October 26

These stocks are likely to be in focus on October 26
by 5paisa Research Team 25/10/2021

The BSE Sensex with the help of banking majors managed to close in green on Monday. SBI, Axis Bank and ICICI Bank made afresh 52 weeks high on Monday even as the Nifty Bank index traded at all-time highs. Bank of Baroda gained by more than 2% in today's trade.

ICICI Banks, Axis Bank, ONGC, MRPL, Shopperstop, KEC, PVR, Torrent Pharma, Quess Corp, S H Kelkar & Company, City Union Bank, Blue Star, Minda Industries and Chennai Petro will be in focus on Tuesday, October 26.

Watch out for these stocks on Tuesday -

ICICI Bank: The shares of ICICI Bank gained by more than 10% on Monday. The stock of ICICI Bank displayed a gap up opening and managed to outperform with a huge spurt in volumes. The banking heavyweight managed to close at its all-time highs on Monday and will be in focus on Tuesday.

Axis Bank: The shares of Axis Bank managed to close at an all-time high on Monday. The shares gained by more than 3% on Monday with a spurt in volumes by 3 times. Axis Bank will be watched on Tuesday by the momentum traders and investors.

ONGC: The shares of ONGC after a gap up opening continued to build their gains on Monday. The share price of ONGC jumped higher by 3%. The shares of ONGC gained by 2.77% with a spurt in volume of 1.58 times. ONGC may trade with a bullish sentiment on Tuesday, October 26. Keep a watch on this stock.

Price Volume Breakout: MRPL, Shopperstop, KEC, PVR, Torrent Pharma, Quess Corp, S H Kelkar & Company, City Union Bank, Blue Star, Minda Industries and Chennai Petro are some of the BSE 500 index constituents that displayed a price volume breakout in the Monday trading session. These stocks will be on the radar of bulls on Tuesday.

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