My equity portfolio is like this: I have about Rs.23 lakh in equity mutual funds (MFs), Rs.22 lakh in equity and Rs.24 lakh in unit-linked insurance plans (Ulips). My MFs include systematic investment plan (SIP) of Rs.12,500, and this has been running for almost 33 months. My overall portfolio return is 15%. I recently read about direct plans in MFs. Should I opt for a direct plan? I have a background in finance.
While deciding on an investment strategy for the long term, we should realise that there is no one-size-fits-all recommendation that applies to everybody.
As a person in finance, the way you can manage your investments would differ from a person who is in a different profession. However, every person has to determine as to how actively and diligently he will be able to manage his investments on his own over several years and how much advice would he need.
Even people in the finance field might think that they need an external perspective on their investments and seek an outside adviser’s help to manage their investments (just as doctors would need another professional to guide them on their health).
So, to answer your question, these two factors (how much you can manage your investments on your own and how much help you need) will determine the method you adopt to investing.
If you are not up to frequent monitoring and management of your investment portfolio, you will be better off with MF investments rather than direct equity investment.
Similarly, if you feel you need advice and hand-holding, you can either go with a registered investment adviser (RIA) and direct plans, or simply regular plans through an independent financial adviser (IFA) or an investment platform.
There are diverse solutions available to ensure that something is available for every type of investor out there and their particular circumstances.
Can one offset capital gains from an exchange-traded fund (ETF) or another MF traded in a foreign stock market against capital losses made in the foreign stock market?
Foreign securities such as ETFs and MFs traded in foreign stock markets are not treated like Indian shares or MFs for the purpose of capital gains taxation in India.
Gains from such securities, if held for less than 3 years, are treated as short-term capital gains and taxed at your income tax slab rate. If held for over 3 years, the gains are taxed at 20% after indexation of the cost.
You can offset short-term capital losses arising from such transactions against short-term or long-term capital gains of any assets other than Indian listed equity shares or equity MFs. If it is a long-term capital loss, you can offset it against long-term capital gains from any asset other than Indian listed equity shares or equity MFs.
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