The decision to buy or rent a home is a significant financial choice that has a profound impact on one’s life. Each option comes with its own set of advantages and disadvantages, and the right choice depends on individual financial circumstances and long-term goals.
The Case for Buying: Building Your Castle
Owning a home carries a sense of stability and control. Homeowners build equity with every mortgage payment, and the feeling of fully owning one’s space is empowering. Homeownership allows personalization, from painting walls to remodeling kitchens, and offers the potential for property appreciation, although it’s not guaranteed.
Additionally, homeowners enjoy tax benefits, such as deductions for mortgage interest and property taxes, leading to potential savings during tax season.
The Case Against Buying: The Heavy Burden of Ownership
However, homeownership is not without its challenges. The upfront costs, including a down payment, closing costs, property taxes, and insurance, can be substantial. Maintenance and repair expenses are the homeowner’s responsibility, and selling a property can be complicated and costly if the need to move arises.
Early mortgage payments primarily cover interest, emphasizing the long path to full ownership.
The Argument for Renting: Liberating Flexibility
Renting offers financial accessibility with lower upfront costs. Maintenance and repairs are the landlord’s responsibility, providing peace of mind. Renting offers unparalleled flexibility, allowing easy transitions without property ties. Renters are also shielded from property market volatility.
The Renting Reality: No Equity, Rising Costs
However, renters do not build equity, and rising rent prices can strain finances over time. Tax benefits of homeownership are not available to renters.
In conclusion, the choice between buying and renting should be based on personal financial stability, long-term plans, budget, and lifestyle. It’s a deeply personal decision, and there’s no one-size-fits-all answer. Ultimately, the goal is to find a place where one feels comfortable, secure, and financially stable, whether owning or renting. The key is to envision the life you want and choose the path that aligns with your happiness.
When you sell mutual fund units, you are liable to pay capital gains tax on the profit earned. Capital gains tax depends on factors like the holding period and the type of fund. Indexation is a provision that comes into play while calculating the net tax liability on capital gains. It helps in reducing the profit gap between the purchase price and the sale price due to inflation.
To be eligible for indexation benefits, investors need to choose the growth option of the fund and remain invested for a minimum of 3 years. Indexation involves inflating the purchase price using the Cost Inflation Index (CII), a government-notified inflation factor. This inflation-adjusted purchase price reduces the total profit and, consequently, the capital gains tax liability.
For example, if an investor purchased mutual fund units in 2018 and redeemed them in 2023, the purchase cost can be indexed up with reference to the CII of 2023-24 divided by the CII of 2018-19. The tax liability is then calculated on the difference between the indexed-up purchase price and the sale price.
However, recent changes in the Finance Act of 2023 have impacted indexation benefits. Indexation benefits on debt mutual funds are no longer available. Gains from the growth option of a debt mutual fund with less than 35% equity allocation are taxed as Short Term Capital Gain (STGC) at the marginal tax slab rate, irrespective of the holding period.
Equity mutual funds, on the other hand, continue to enjoy favorable tax treatment. Pure equity funds with over 65% equity allocation do not qualify for indexation benefits. If an investor holds the growth option of an equity mutual fund for more than 12 months, they become eligible for Long Term Capital Gain (LTCG) tax, calculated at 10% plus cess and surcharge.
Some hybrid and multi-asset funds that allocate 35-65% to equity may be eligible for the indexation benefit, as per the Finance Act. However, investors should confirm with the fund house or a financial advisor whether a particular fund is eligible for indexation.
Please note that mutual fund investments carry market risks, and it is advisable to consult a SEBI-registered financial advisor before investing
The Reserve Bank of India (RBI) has opted to maintain the Repo Rate at 6.5%, a decision that is viewed positively by experts as beneficial for home loan borrowers and the real estate sector during the festive season. Additionally, this unchanged repo rate offers an extended window of opportunity for fixed deposit (FD) investors to capitalize on the current higher interest rates.
Locking in Higher Interest Rates
Many banks are presently offering FDs with annual interest rates of up to 9% or more for various tenors. Anshul Gupta, Co-Founder and Chief Investment Officer at Wint Wealth, suggests that retail investors should consider securing long-term FDs at these elevated interest rates in the coming 3-6 months. Gupta notes that this period is likely near the peak of the interest rate hike cycle.
Diversifying Investments
To optimize returns and manage risk, investors are advised to diversify their FD investments across different banks. This approach can align with specific financial goals and investment timeframes. Gupta recommends spreading investments across various commercial and small finance banks, as well as non-banking financial companies (NBFCs).
Floating Interest Rates for Home Loans
While FD investors are encouraged to lock in higher rates, home loan borrowers are advised to stick with their floating interest rate loans for now. Despite the availability of fixed-rate loans at discounts, experts suggest maintaining floating rates, as bond markets have already factored in rate cuts, leading to a decrease in 10-year G-Sec yields. The future may hold potential for rate cuts, making floating rates a more flexible option for borrowers.
This decision by the RBI provides an opportunity for both investors and borrowers to make informed financial choices based on the prevailing interest rate environment.
Gold prices have experienced an over 11% decline since their May peak above $2,000 per ounce due to the Federal Reserve’s hawkish stance, which has driven long-term bond yields to a 16-year high. After breaking below the psychological support of $1,900 last week, gold found support around $1,820 and currently resides in oversold territory. Silver also follows a similar pattern.
Non-Farm Payroll Data Impact
The upcoming Non-Farm Payroll (NFP) data is expected to play a crucial role in shaping the precious metals market. A stronger-than-expected NFP report could lead to further correction in gold and silver prices. The consensus estimate for NFP is a gain of 170,000 jobs compared to September’s 187,000 rise. The recent disappointing ADP jobs report has raised concerns of another downside surprise in the NFP data.
Fed’s Influence
Gold’s recent weakness can be attributed to the strengthening US dollar and rising Treasury yields. Despite a recent retracement in the US dollar and yields, gold has struggled to rebound. The Federal Reserve’s hawkish stance continues to limit gold’s upside potential.
Outlook for Gold
While a strong rally in gold is not anticipated in the short term due to potential Fed actions, there is optimism for 2024. Some Fed members favor another rate hike, but the outlook suggests that the Fed may consider rate cuts before August 2024. This prospect could have a positive impact on gold and silver prices.
Technical Analysis and Opportunity
Technically, MCX Gold is in an oversold condition with the Relative Strength Index (RSI_14) at 25, historically indicating potential reversals. The outcome of today’s employment data will be crucial. If it favors gold, it may present a favorable long opportunity. For those with short positions, booking profits is suggested. Going long around 56,000-55,500 with a target of 57,500 and a stop loss at 55,200 could be considered as a potential trade strategy. However, market participants should remain cautious and monitor the Fed’s actions closely for further cues.
A study commissioned by the Financial Planning Standards Board (FPSB) highlights the positive impact of working with certified financial planners (CFPs) on individuals’ financial well-being and overall quality of life. The study compares the experiences of those who navigate their financial journey independently, those who work with a financial planner, and those who seek advice from a CFP.
Improved Financial Well-being and Quality of Life
The study reveals that individuals who work with professional financial planners, especially CFPs, report feeling better off financially and experiencing an improved quality of life. They have greater financial confidence, resilience, and satisfaction with their financial situation.
Key Findings
80% of Indian consumers feel that professional financial planning services have enhanced their quality of life.
75% of consumers feel more financially confident with the guidance of a financial planner.
91% of retirees advised by a CFP professional believe they have enough money for a happy retirement.
76% of clients of financial planners are highly satisfied with their overall wealth.
94% of clients of CFP professionals feel financially secure, and 95% feel better off.
97% of clients of CFP professionals believe that the value of financial planning outweighs the cost.
Beyond Wealth
The study highlights that financial planning benefits extend beyond wealth. Clients of CFP professionals report improved family life, social life, mental health, and work satisfaction. Financial advice positively impacts mental health and overall well-being, with 60% of those working with a CFP professional reporting a positive impact on their mental health.
High Trust and Quality of Life
Clients of CFP professionals exhibit a high level of trust in their financial planners. They score the highest in terms of quality of life, with a score of 82 out of 100, compared to other financial planning professionals and the unadvised. Trust in CFP professionals is also exceptionally high, with 100% of clients trusting their financial planners to act in their best interests.
Conclusion
The study underscores the importance of professional financial planning, especially with CFP professionals, in helping individuals achieve their financial goals, enjoy a better quality of life, and cope with financial uncertainties. It reinforces CFP certification as a symbol of excellence in financial planning.
In a significant decision, the Calcutta High Court has issued a stay order against the Union Home Ministry’s decision to deactivate the Aadhaar cards of a woman and her family members who were accused of being Bangladeshi nationals. The court emphasized that the authorities did not adhere to the required procedures mandated under the Citizenship Act, 1955, and the regulations governing Aadhaar cards when revoking an individual’s Indian citizenship.
Procedural Lapses
Justice Sabyasachi Bhattacharyya, a single-judge, pointed out that before any formal inquiry or adjudication takes place, the respondent authorities cannot strip the petitioner woman and her family of their basic rights as Indian citizens. The court noted that, despite allegations made by the woman’s husband in criminal proceedings, the woman had provided numerous documents during her Aadhaar enrollment, indicating her Indian citizenship.
Burden of Proof
The court underlined that it was the petitioner’s husband’s responsibility to prove, beyond a reasonable doubt, that she and her family were Bangladeshi citizens at the time when the documents, including Aadhaar cards, were issued.
Stay Order
The court ruled that the deactivation of Aadhaar cards and all consequential actions taken by the authorities would remain stayed during the pendency of the writ petition. However, it clarified that authorities were not prevented from proceeding based on the communication challenged in the writ petition, provided they followed due legal procedures.
Next Hearing
The matter is scheduled for further hearing on December 5.
Legal Representatives
Advocates representing the petitioners included Kallol Basu, Shibaji Kumar Das, Ahshan Ahmed, Samik Sarkar, Rupsa Sreemani, Atreya Chakrabarti, and Swapnamoy Sarkar. Additional Solicitor General Ashok Kumar Chakrabarti, along with Advocate Susmita Saha Dutta, represented the Union Government, while Advocate Anuran Samanta represented the Election Commission of India.
WhiteOak Capital Mutual Fund has introduced the ‘WhiteOak Capital Balanced Hybrid Fund,’ an open-ended balanced scheme designed to invest in both equity and debt instruments. The New Fund Offer (NFO) commenced on October 5, 2023, and will remain open for subscription until October 19, 2023.
Investment Objective
The fund aims to achieve long-term capital appreciation and generate income by maintaining a balanced portfolio of equity, equity-related instruments, debt, and money market securities. It is benchmarked against the CRISIL Hybrid 50+50 Moderate Index.
Balancing Equity and Debt
WhiteOak Capital Balanced Hybrid Fund offers investors a straightforward way to participate in both equity and debt asset classes. While equity provides long-term wealth creation opportunities, debt provides stability to the portfolio. This approach intends to provide reasonable returns while minimizing the intermittent volatility associated with pure equity investments.
Tax Benefits
Investments in this scheme are eligible for Long Term Capital Gain Tax with Indexation Benefit, provided the holding period exceeds three years.
Expert Insights
Aashish Somaiyaa, CEO of WhiteOak Capital Asset Management Limited, emphasized the importance of maintaining a balanced approach in investment. He noted that taxation considerations should not be the primary driver for taking on risk, and the fund’s rebalancing strategy aims to provide a better risk-adjusted balance compared to aggressive hybrid funds.
Asset Allocation
The fund’s asset allocation strategy involves investing 40-60% in equity and equity-related instruments, including foreign securities, and 40-60% in debt securities, including securitized debt, money market instruments, cash, and cash equivalents, and/or units of domestic liquid mutual fund schemes across various sectors. The portfolio will rebalance back to a strategic asset allocation of 50% whenever external asset allocation limits are breached due to market movements.
Disclaimer
Investors are advised that mutual fund investments carry market risks, and they should consult their financial advisor before making any investment decisions. The information provided is based on a press release from WhiteOak Capital Asset Management Ltd.
Shares of Larsen & Toubro (L&T) experienced a surge of over 2% after the company secured several ‘large’ projects across various business units. The engineering and construction conglomerate’s stock reached its 52-week high during intra-day trading.
L&T’s Buildings & Factories business won significant projects, including the construction of a residential township in Bengaluru and commercial towers in Hyderabad for a renowned developer. Additionally, the company secured a contract from the Indian Institute of Technology, Kanpur, for constructing a super specialty hospital and an academic block.
While the company did not disclose the exact values of these contracts, they fall under the “significant” category, which typically ranges between Rs 1,000 crore and Rs 2,500 crore according to L&T’s classification of contracts. L&T’s power business arm also secured an order worth up to Rs 2,500 crore from the West Bengal Power Development Corporation Limited.
The positive news boosted L&T’s stock price, making it the biggest gainer among the 30-share BSE Sensex firms. The stock’s performance reflects the company’s ongoing success in securing substantial contracts across various sectors of its business.
The Reserve Bank of India (RBI) is anticipated to keep key interest rates unchanged during its Monetary Policy Committee meeting. Although the RBI faces rising global and domestic risks, including surging crude oil prices and a depreciating Indian Rupee, its focus is likely to remain on inflation.
Experts suggest that the RBI will maintain a policy rate of 6.5% while aiming to keep liquidity tight. While inflation has been driven by food price volatility, there are initial signs of a slowdown in food inflation. Core inflation has remained stable, with some easing observed in August. Liquidity conditions have tightened, leading to elevated borrowing costs.
Stimulating Economic Growth During the Festive Season
Despite these challenges, the RBI is expected to prioritize economic growth, particularly during the festive season. The stable interest rate environment is likely to encourage borrowing, especially for home loans and car loans. The positive economic momentum and lending conditions may lead to increased loan applications in the near future.
While inflation remains a concern, experts do not anticipate further rate hikes by the RBI in this fiscal year. Rate cuts may be considered after the first quarter of the upcoming fiscal year. Overall, the RBI’s decision is expected to support borrowers and stimulate economic activity during the festive season.
Recent changes in visa rules for international students have significantly impacted the decision-making process of Indian students aspiring to study abroad. These changes, aimed at attracting more international students, have made it easier for them to obtain study permits and extend their stay post-graduation.
For example, the United States has introduced student-friendly visa policies, allowing international STEM graduates to apply for post-graduation work permits for 24 months. This has incentivized Indian students to pursue STEM courses and provided them with more time to secure employment and manage their education loan repayments.
Similarly, the UK’s Graduate Visa permits students to stay for 2-3 years after completing their higher studies, while Canada offers a post-graduation work permit for up to 3 years. These favorable policies, including part-time work options, have become crucial factors in students’ destination choices and financial planning.
Growing Demand for Education Loans
The rising cost of overseas education, combined with the desire for world-class education, has driven Indian students to explore opportunities abroad. Education loans have become a viable solution to bridge the financial gap. Institutions like Avanse Financial Services have witnessed a surge in education loan demand, particularly from tier 2 and 3 cities.
Additionally, there has been a significant increase in female students pursuing higher education, especially in STEM fields. The desire for global exposure and qualifications to enhance job prospects in a competitive market has further fueled the demand for education loans.
Overall, these developments highlight the growing importance of education loans in fulfilling Indian students’ aspirations to study abroad. While the United States remains a top choice, there is also a growing interest in countries like the UK, Canada, Germany, and several Nordic nations for higher education.
