Budgeting arbitrage into investor choices4 min read . Updated: 09 Feb 2018, 01:31 AM IST
How long is long term? You have to hold equity for 1 year, real estate for 2 years and debt for 3 years for the profit made to become 'long term'. This classification of assets is against Finance 101
Every time people who have defined benefit retirement plans make rules for the market, their lack of understanding comes across clearly. Take people in the Ministry of Finance for instance, and then look at what subsequent Budgets have put in place. Not only is there arbitrage between asset classes on the definition of long term, there is arbitrage within an asset class too on the basis of which product you choose to buy. If tax policy is used to nudge behaviour, there is some serious malfunction in the Indian policy that is nudging in all the wrong directions and all the wrong products.