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Mutual Fund

Money Market Funds: Features, Benefits, & More

Money market funds are a type of open-ended debt funds with high liquidity and short-term investment horizon. These funds invest in debt securities with high credit ratings, bringing stability and diversification to your portfolio.

In this article, we will highlight the features and advantages of money market mutual funds.

Money markets are the financial markets that deal with short-term lending and borrowing with up to one year of maturity period.

Treasury Bills (T-Bills): The RBI issues T-bills to raise money for a duration of up to 365 days.
Certificate of Deposits (CDs): Scheduled commercial banks offer CDs for a specific tenure in a dematerialized form. CDs are similar to FDs with a lock-in, i.e. you cannot withdraw CD before the maturity.
Commercial Papers (CPs): Companies and financial institutions release commercial papers to raise money for a short duration. CPs have high credit ratings and are usually available at discounted prices.
Repurchase Agreements (Repos): RBI lends money to commercial banks in the form of repos.

Money market funds invest in low-risk short-term debt instruments such as treasury bills, commercial papers, repos, etc. The maturity period of the underlying assets ranges from one day to one year. These funds are suitable to introduce stability to your portfolio while generating a source of income through interest.

Money market funds are highly liquid with underlying assets maturing within a year. These funds are better suited for 6 months to 1 year of investment horizon.

Debt funds are prone to interest rate risk as when the interest rate goes up, bond prices go down. Therefore, the longer the maturity of a debt fund, the higher the interest rate risk. As money market funds have a short maturity period of up to one year, the interest rate risk is low.

Short-duration debt instruments are known for low volatility. That is, the value of these funds does not fluctuate drastically. These funds are stable and ideal for investors seeking principal protection.

These funds tend to deliver superior returns than bank FD or savings accounts for a similar duration. However, the returns are lower than long-term debt funds.

Though money market funds carry relatively lower risk, these funds are prone to interest rate risk and market fluctuations. These funds may also carry reinvestment risk. As the funds invest in new securities as and when the old ones mature, the reinvestment may happen at a lower interest rate.

Money market funds are only suitable for 3 months to a year of investment. If you are planning for a longer investment horizon, you can explore other debt fund categories such as dynamic bond funds, medium to large-duration debt funds, etc.

Always ensure the exit load and the expense ratio associated with any mutual fund. Read the fund-related documents carefully before investing.

Capital gains earned from these funds attract tax. The payable tax depends upon the investment duration. Short-term capital gains tax will be applicable for investments redeemed before 36 months. Otherwise, you’ll have to pay long-term capital gains for investments held for more than 36 months.

In the case of debt funds, both STCG and LTCG are taxed at your tax slab.

Money market funds are ideal for investors seeking liquidity and short-term investment avenues. These funds are ideal to park your surplus funds instead of keeping them in a bank account. You can leverage these funds to build an emergency fund of up to one year. Investors with low to moderate risk appetite can consider these funds to mitigate equity investments.

Take a quiz to understand your risk profile.

Money market funds are a perfect fit for investors seeking liquidity, low risk, and stable returns. These funds can be a part of your emergency funds or a short-term financial goal. Rather than keeping your funds in a savings account, you can utilize these funds to earn superior returns.

It is important to note that, while these funds are safe, they’re not entirely risk-free. Make sure you evaluate your financial goals and risk appetite while investing. If you’re unsure whether to invest in debt funds or not, get in touch with us. Our experts will review your portfolio and help you realign it with your financial goals.

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Mutual Funds

ELSS vs ULIP: Choosing the Right Tax-Saving Investment for You

When it comes to tax-efficient investment instruments, ELSS and ULIP are two of the popular options. Both Equity-Linked Saving Schemes and Unit-Linked Insurance Plans offer dual benefits of investment and tax deductions.

However, both products cater to different financial goals. Let’s break down the key features of ELSS and ULIP to help you choose the right tax-saving instrument.

Equity-Linked Saving Scheme (ELSS) is a type of mutual fund that invests at least 80% of the total assets in equity or equity-related instruments. With 3 years of lock-in period. These funds offer tax deductions of up to INR. 1,50,000 under section 80C of the IT Act.

Unit-Linked Insurance Plan (ULIP) is a combination of investment and insurance. Part of your premium goes towards investment and the other part towards insurance. ULIP investments can be either equity-oriented, debt-oriented, or both (balanced funds). You can choose the ULIP investment type based on your financial preferences and risk appetite. With a 5-year lock-in period, the ULIP premium also offers a tax deduction of up to INR. 1,50,000 under section 80C of the Income Tax Act.

ULIP offers life insurance along with an opportunity to grow your money in the market. ELSS, on the other hand, does not offer insurance benefits. ELSS funds and the investment portion of ULIPs are market-linked. Therefore, you get to invest and grow your money in a fund of your choice for the long term.

ELSS mutual funds only have a 3-year lock-in period. It is the shortest among all the tax-saving instruments eligible under section 80C of the IT Act. Please note that if you’re investing in ELSS via SIP, each installment will carry its own lock-in period. You can withdraw the installments that have completed the lock-in.

ULIP, on the other hand, has a 5-year lock-in period, making it less liquid than ELSS.

ULIP allows you to change your investment strategy by switching between ULIP funds. That way, you can realign your investment strategy with your current financial goals.

Since ELSS is a mutual fund, switching strategy is not an option. However, you can redeem the funds after 3 years and invest in a different ELSS fund as per your preferences.

Being equity-oriented, returns on ELSS funds often outperform returns on other tax-saving instruments. These funds are subject to market fluctuations, however, you can expect decent growth in three years of the lock-in period.

In the case of ULIP, part of your investment goes towards life insurance. Therefore, you only get returns on the remaining amount invested in the market. The associated risk depends upon the scheme strategy that you choose.

The overall returns on ELSS and ULIP depend upon the performance of the underlying assets.

ELSS, like any other fund, has charges such as exit load, and expense ratio. Charges on ELSS funds are lower compared to ULIP.

ULIP schemes involve charges such as premium allocation charges, policy administration charges, mortality charges, fund management charges, and surrender charges.

While ELSS charges are always written in the factsheet, ULIP charges may not be as transparent. It is always advised to review the charges behind any investment instrument to understand the cost of investment and how it’ll affect overall returns.

Both schemes offer tax deductions of up to INR. 1,50,000 under section 80C of the IT Act. ULIP additionally offers tax exemption on the return under section 10(10D) of the IT Act.

Redeeming ELSS mutual funds after 3 years of lock-in period attracts Long-term capital gain tax of 10% above INR 1 lakhs.

FeaturesELSSULIP
Investment ObjectiveEquity orientedInsurance + Investment (Equity, or debt, or both)
Lock-In Period3 years5 Years
Flexibility to Switch StrategyNot AvailableAvailable
Return on InvestmentDepends on the performance of the underlying assets, usually more than ULIP as the entire money goes towards equity investments. Depends on the performance of the underlying assets, usually less than ELSS as the portion of the investment goes towards life cover.
ChargesExit load and expense ratio are applicable. Transparent Charges. Premium allocation charges, policy administration charges, mortality charges, fund management charges, and surrender charges are applicable. Lack of transparency in charges.
Tax BenefitsTax deduction of INR. 1,50,000 under section 80C of the IT Act. Tax deduction of INR. 1,50,000 under section 80C of the IT Act. Tax-free return upon maturity under section 10(10D) of the IT Act.

ELSS mutual funds are ideal for investors seeking tax deductions and have moderate to high-risk appetite. These funds invest predominantly in equity instruments. Therefore, the risk could be comparatively higher, but the returns would be superior.

ULIP is ideal for investors who, apart from tax deductions and wealth creation, also want life cover. ULIP scheme divides your investment into life insurance and market investments. You need to factor in the various costs associated with the ULIP before investing

Ultimately, the choice is yours based on your financial goals.

You can always reach out to experts at VNN Wealth for more information. Book your appointment today!

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Mutual Fund

ELSS Mutual Funds: Features, Benefits, Taxation and More

What if you could save tax and earn reasonable returns on your investment?

Say hello to the Equity Linked Saving Scheme (ELSS). ELSS mutual funds offer tax exemption of up to INR. 1,50,000 under the section 80C of the IT Act. So while equity instruments encourage your wealth creation, you can also lower your overall tax liability.

Let’s get to know these funds better…

ELSS mutual funds are open-ended equity funds with 3 years of lock-in period. The scheme invests at least 80% of the assets in equity or equity-related instruments. 

The underlying stocks in these funds range across market capitalization (Small-cap, Mid-cap, large-cap) and different sectors. These funds aim to maximize your return on investment while providing tax exemption.

Among all the instruments eligible under section 80C of the IT Act, ELSS funds have the shortest lock-in period.

Investment Instruments Eligible for Tax deduction under 80C of the IT ActLock-in PeriodRisk LevelExpected Returns
ELSS3 yearsHighDepends upon market performance
Tax Saver Fixed Deposit5 yearsLowBetween 6%-8% p.a
National Savings Certificate (NSC)5 yearsLow7.7% p.a. (may change every financial year)
Public Provident Fund (PPF)15 yearsLow7.1% p.a. (may change every financial year)
National Pension System (NPS)Till retirementModerately highDepends upon market performance

ELSS mutual funds are ideal for you if you don’t want to lock your money for a longer horizon. 

Equity-linked savings schemes invest the majority of their assets in equity or equity-related instruments. Therefore, these funds have the potential to deliver superior returns compared to other 80C instruments. Over the long term, these funds can help you build significant wealth. 

By investing at least INR. 1,50,000 in ELSS mutual funds in a financial year, you can claim tax deduction under section 80C of the IT Act. 

ELSS mutual fund managers distribute the fund assets across market capitalization, sectors, and themes. This diverse investment strategy lowers the concentration risks. 

Before you choose the ELSS fund, you must compare its performance against the peers and the benchmark. While a fund’s past performance can give you an idea of how it performed during various economic conditions, it’s not the only measure to judge any fund. Therefore, it is crucial to analyze the rolling returns for accurate performance analysis.

Explore the types of returns on mutual funds

Ensuring the mutual fund aligns with your risk profile and fits in with your financial goals is important. Being an equity-heavy scheme, ELSS funds hold higher risk. 

The fund performance may fluctuate with market movements. Staying invested for a longer horizon, even after the lock-in period is over, can mitigate the risk.

Determine your Risk Profile by taking our risk profiling quiz

The mutual fund factsheet holds all the financial parameters such as the fund’s standard deviation, alpha, beta, Sharpe ratio, etc. These parameters may sound complex, but they make comparing two funds quite easy. 

You can learn how to read a fund factsheet here.

Apart from the fund parameters, the factsheet also contains the investment cost of a fund such as expense ratio, exit load, etc.

You can invest in ELSS mutual funds either via lump sum or SIP. The lump sum amount will be eligible for redemption after 3 years of the lock-in period. However, SIP redemption is different. 

If you start an SIP of ELSS fund, the three-year lock-in period applies to each installment. Let’s take an example of investing INR. 1,50,000 in a financial year in an ELSS fund via monthly SIP of INR. 12,500. 

Each SIP installment will have its own lock-in period of 3 years. 

-The first installment on 1st Jan 2024 will mature on 1st Jan 2027. 

-The second installment on 1st Feb 2024 will mature on 1st Feb 2027. 

-The third installment on 1st Mar 2024 will mature on 1st Mar 2027. 

-And so on…

Therefore, your entire investment will not be eligible for redemption at once. You can redeem eligible installments by raising a request to the mutual fund house. 

Equity-linked Savings Schemes attract equity tax implications after redeeming funds. As the fund has a 3-year lock-in period (more than 12 months), there won’t be any short-term capital gain taxation. 

You will have to pay a 10% long-term capital gain tax on profit exceeding 1 lakhs in a financial year of withdrawal. You don’t have to pay any tax if your profit on ELSS funds is less than 1 lakhs.

ELSS mutual funds are ideal for professionals seeking tax deduction options. By investing INR. 1,50,000 in ELSS funds, you can claim tax deductions under section 80C of the Income Tax Act. 

While PPF, EPF, NPS, and tax-saver FD offer similar tax benefits, the returns could be lower and the lock-in period is higher. ELSS demands only 3 years of commitment in exchange for superior returns and tax exemption. 

Not only will the ELSS fund provide tax benefits but also offers instant diversification across equity markets. You can easily invest a lump sum amount or start a SIP with VNN Wealth. Be sure to evaluate your risk profile by taking our risk profiling quiz.

Equity-Linked Saving Scheme is a popular tax saving instrument. ELSS promotes wealth creation by delivering superior returns compared to other tax-saving schemes and lowering tax liability.

Investors can invest INR. 1,50,000 in an ELSS scheme via lumpsum or via SIP, as per convenience.

Explore various categories of mutual fund schemes here and effortlessly start investing

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Mutual Fund

54EC Capital Gain Bonds: Features and Benefits

Get an exemption on long-term capital gain tax through 54EC Capital Gain Bonds. Here’s everything you need to know! Selling immovable property such as land or a house brings generous profit; especially after a long duration. However, that profit soon attracts capital gain tax.

Thankfully, there’s an easy way to avoid or lower capital gain tax by investing in 54EC bonds. Let’s find out how.

Section 54EC of the IT Act allows taxpayers to avail exemption on the long-term capital gain tax (asset sold after 24 months of purchase). This benefit is only applicable to the capital gains earned through the sale of an immovable property such as land/house/shop. Upon selling the property, taxpayers can reinvest the profit in bonds that fall under section 54EC.

1. Rural Electrification Corporation Limited or REC bonds,
2. National Highway Authority of India or NHAI bonds,
3. Power Finance Corporation Limited or PFC bonds,
4. Indian Railway Finance Corporation Limited or IRFC bonds.

1. Capital Gain bonds are backed by the government under the Income Tax Act 1961. These bonds are AAA-rated and, hence, are safe to invest in.
2. 54EC bonds come with INR, 10,000 face value. Investors can invest a minimum of INR. 20,000 (2 bonds) and a maximum of INR. 50,00,000 (500 bonds) in a financial year.
3. With a 5-year lock-in period, these bonds offer a 5.25% interest rate.
4. There is no TDS on the interest earned on capital gain bonds. However, the interest is taxable as per your tax slab.

Let’s take an example to understand how to avail exemption on LTCG after selling an immovable property. You are selling your house at 1 crore after 4 years of purchase. You will have to pay long-term capital gain tax on the profit, unless, you buy a 54EC bond within 6 months.

The sale price of the property: 1,00,00,000
Indexed Cost of Acquisition: 70,00,000
Indexed Cost of Improvement: 2,00,000
Capital Gains: 28,00,000

Since the max limit is 50 lakhs, you can invest the entire 28 lakhs of capital gains in 54EC bonds. That will remove your LTCG tax liability. However, if you invest only, say 20 lakhs, you will have to pay LTCG tax on the remaining 8 lakhs.

54EC bonds are available to invest for any individuals, Hindu Undivided Families (HUFs), Companies, LLPs, Firms, etc.
How to Invest in 54EC Bonds?
Capital gain bonds are not available on the stock exchange. If you’re interested in purchasing 54EC bonds, please contact us. You can choose to buy these bonds in either demat or physical certificate format, depending on your preference. However, the demat format is easier to track. Simply fill out a form, and experts from our team will reach out to assist you with the process.

The 54EC bonds offer a great opportunity to lower your capital gain tax liability. After selling your immovable asset, you can re-invest the capital gains in the 54EC bond within 6 months to benefit from the tax exemption. These bonds are safe and offer a decent 5.25% interest rate.

If you wish to buy bonds, contact VNN Wealth to simplify the purchase procedure.

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Personal Finance

Filing ITR for NRIs: Step-by-Step Guide

Navigating through the ITR process might seem overwhelming, especially for NRIs earning income both in and outside India. As per SBNRI’s survey, 73% of NRIs from the USA, UK, and Canada are trying to file ITR. Filing ITR for NRIs includes managing your tax liabilities in your current country of residence and India. Don’t worry, this step-by-step guide will simplify the process for you. Sit back and go through each point carefully to fulfill your tax obligations.

Let’s get started…

NRIs/PIOs/OCIs must file an ITR in India if their total annual income is more than 2.5 lakhs as per the old tax regime or 3 lakhs as per the new tax regime. Here’s everything you need to know before filing an ITR.

The primary step is to confirm your residential status. As per the Income Tax Act 1961 guidelines, you are an NRI if:

1. You have stayed in India for less than 182 days during the financial year.
2. Or, You have stayed in India for less than 365 days during the preceding four years and less than 60 days in the relevant financial year.
If you visit India during the year, the 60-day rule mentioned in point 2 will be replaced by 182 days. The same is applicable if you leave India as a crew member or for employment.
Finance Act 2020 Updates:
The 60-day rule mentioned in point 2 changes to 120 days for Indian citizens or people of Indian origin with an income of 15 lakh excluding foreign income. It also states that if an Indian citizen earns more than ₹15 lakh (excluding foreign income) and is not taxed in any other country, they will be considered a Resident in India.

Form 26AS is an annual tax credit statement that holds information such as tax deducted at the source, tax collected at the source, etc. You can easily view/download Form 26AS on the income tax portal to analyze your financial activities.

In this step, you have to determine your tax liability on your income earned in India. The income includes salary, interest from FDs and bank accounts, rental income.

NRIs will have to pay tax in India for capital gains earned from stocks, mutual funds, etc. The tax rate depends on the type of instrument and the duration of the investment.

While filing your taxable income, you can also opt for various deductions with your tax-saving instruments. For example, you can claim a deduction of up to 1.5 lakhs under section 80C of the IT act against ELSS mutual funds, Tax Saver FD, Public Provident Fund account, etc. You can invest in various tax-saving instruments to reduce your taxable income in a current financial year.

This is a very crucial step while filing ITR for NRIs. Depending on your residential status, you are obliged to pay tax in India on global income. Fortunately, India has signed a treaty with more than 85 countries to help NRIs avoid paying double taxation.

The Double Taxation Avoidance Agreement (DTAA) offers three methods:

1. Get tax credit against the tax paid in the resident country and claim it in India while filing ITR.
2. Certain types of income are eligible for exemptions. You can obtain a Tax Residence Certificate to qualify for the exemption.
3. You can also opt for the deduction method which allows you to deduct taxes paid in the foreign country.

Individuals with NRI status must fill out either an ITR-2 or ITR-3 form.

ITR-2 is applicable for residents or NRIs not having income under the head Profits and Gains of Business or Profession.

ITR-3 is applicable for residents or NRIs who have income under the headings of profits and gains of business or profession.

Make sure you fill out accurate details of your income and exemptions. Refer to the in-detail manual of filing ITR provided by the income tax portal.

You must provide a bank account to receive a tax refund (if any). You can either provide an Indian bank account or a foreign bank account as per your situation.

You are required to declare all your assets (movable and immovable) and liabilities if your total earnings exceed INR. 50 lakhs. In this step of ITR filing for NRIs, you must report all your assets and liabilities.

After a roller coaster of filing ITR, you can upload your NRI income tax return. Cross-check all the information before submitting the form. Make sure to verify the form within 120 days. Please note that your ITR will be marked as invalid if you fail to verify it within 120 days.

1. Passport to prove the duration of your stay in and outside India.
2. Overseas employment contract (if any).
3. All your financial statements, including your investments.
4. Form 26AS for annual tax statements.
5. TDS certificates.

Filing ITR for NRIs isn’t as confusing as it appears. By following the above-mentioned steps, you can easily fill out the ITR form. Keeping your documents in handy will ease the process. Make sure you fill in accurate details. With the help of the Double Taxation Avoidance Agreement, it has become easier for NRIs to invest in Indian markets.

Explore the top 5 investment avenues in India for NRIs.

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Personal Finance

Double Taxation Avoidance Agreement: A Guide for NRIs

Paying tax in one country is daunting in itself, let alone in two. This is one of the primary concerns for NRIs every year while navigating finances in their country of residence and India. Thankfully, India has a Double Taxation Avoidance Agreement with 85+ countries. Non-resident Indians residing in these countries can avoid paying double taxes on their income.

In this article, we will delve into the Double Taxation Avoidance Agreement and how NRIs can benefit from it.

Double taxation occurs when an individual has to pay tax on their income in two countries- the country of residence and the home country. For example, a person working abroad also earns income in India via rent, interest on FDs, etc. In that case, he/she has to pay tax on that income twice, in both countries.

To offer double tax relief for Indians living abroad, India has signed a tax treaty with 85+ countries called the ‘Double Taxation Avoidance Agreement.’ With the help of DTAA NRIs, PIOs, and OCIs can seek exemption for tax they already paid in India while filing an ITR in their resident country.

DTAA helps NRIs lower their tax liability using three methods:

Non-resident Indians are eligible to utilize tax credits in their country of residence if they’ve paid tax on their income in India. Or, they can claim foreign tax credits to lower their tax liability in India. Let’s say you’re living in the US and have earned $100,000 in salary. You’ll have to pay 22% i.e. $22,000 tax in the US. You’ve also earned INR 5,00,000 as rental income in India. As per the tax slabs in India, let’s assume you owe INR. 1,50,000 in tax. Assuming the currency exchange rate of INR. 85 per dollar, your combined global income will be: INR. 85,00,000 (US income) + INR. 5,00,000 (Rental income in India)= INR. 90,00,000. Your tax liability in India will be approximately INR. 27,00,000. However, you’ve already paid a tax worth INR. 18,70,000 in the US. Therefore, while paying tax in India, you can use foreign tax credits worth INR. 18,70,000 to avoid double taxation on foreign income.

In the exemption method, you only have to pay tax in the country where you are working on certain types of income. You can obtain a Tax Residence Certificate which allows you to get tax exemption in India on incomes eligible under this method.

This method allows you to claim taxes paid to the foreign government as a deduction.

1. Tax Residency Certificate (TRC): TRC is a crucial document issued by the tax authorities of your country of residence. This document verifies your residential status in the foreign country while filing ITR as NRI in India.

2. Form 10F: TRC may not offer all the information required to claim DTAA. In that case, you can fill the Form 10F online. It’s a self-declaration form to provide the additional information that the TRC lacks.

3. Form 67: NRIs can claim foreign tax credits by filling out Form 67. While paying the tax in India, NRIs can pay tax on global income using foreign tax credits. For example, you’ve received dividend income in the US and already paid tax on it. You can use those tax credits to pay tax on the same income in India.

4. You may also need additional documents such as a PAN card, Passport copy, and Visa copy to claim DTAA.

Note: The process to get relief on double taxation may vary based on your current country of residence. The tax rates and the exemption methods may also vary accordingly.

As per the double taxation avoidance agreement, NRIs do not have to pay double tax on the following type of income:

1. Services provided in India.
2. Salary received in India.
3. House property located in India.
4. Capital gains on transfer of assets in India.
5. Fixed deposits in India.
6. Savings bank account in India.

India has DTAA with 85+ countries. The TDS rates for the few are mentioned below.

CountryTDS Rate
USA15%
UK15%
Canada15%
Dubai12.5%
Oman10%
Singapore15%
Malaysia10%
Spain10%
Australia15%
Germany10%

The aim behind signing the Double Taxation Avoidance Agreement (DTAA) was to provide double tax relief to NRIs/PIOs/OCIs. India has signed the DTAA with more than 85 countries, allowing NRIs to pay a fair tax on their income in two different countries. Non-resident Indians can claim tax exemptions using the combination of methods mentioned above. That way, they do not have to pay taxes twice on the same income.

DTAA has also made it easy for NRIs to invest in Indian markets without having to worry about taxes. NRIs can invest in mutual funds and various other avenues to build wealth in India.

If you’re an NRI seeking investment opportunities in India, contact VNN Wealth. Our experts will provide detailed insights into your investment portfolio. You may like to read a step-by-step guide to filing an ITR as an NRI.

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Personal Finance

Should You Invest in Solar Energy Stocks in India? 

The sun is shining bright on solar energy stocks in India.

The green energy sector is booming as India aims to achieve 500GW capacity of renewable energy by 2030. Investing in this sector is a promising opportunity for both seasoned investors and beginners. There are plenty of solar energy stocks to bring into your portfolio.

On 7th April 2021, The Union Cabinet approved the Production Linked Incentive (PLI) Scheme to boost the manufacturing of solar PV modules. The total of INR. 24,000 cr dedicated towards the sector aims to produce 39,600 MW capacity. India is set to create solar cities across the nation. The 1st solar city, ‘Sachi’, has already been launched in Madhya Pradesh in 2023. As the country marches ahead in this sector, many big solar panel manufacturers are raising INR. 5,800 cr this year. These funds will be used to establish 500 GW capacity by 2030. Along with Solar Panels, the manufacturers will also produce cells, wafers, and ingots under the PLI scheme.

The top three solar module manufacturers are:

1. Waree Energies
2. Vikram Solar
3. Premier Energies

All three of these companies are coming up with their IPO, out of which, Waree Energies and Vikram Solar are available for purchase in the unlisted market for allocation confirmation. To inquire about the Waree Energies share price and Vikram Solar share price, get in touch with VNN Wealth.

waree energies share price

Waree Energies is playing a crucial role in expanding India’s renewable energy sector. The largest manufacturer of solar modules in India, Waree has rapidly boosted its capacity to 12GW in recent years. The company occupies about 50% of the market share in solar PV module export, surpassing Adani and Vikram Solar. In December 2023, Waree Energies filed a draft with SEBI to raise INR. 3,000 crore through an initial public offering. The funds will be used to further expand the capacity from 12 GW to 38 GW over the next five years. While the IPO dates are yet to be released, Waree Energies IPO is most likely to get oversubscribed. Buying unlisted shares of Waree Energies can guarantee allocation and significant growth over the years. (Please note that the unlisted shares are subject to availability.)

Read more about Waree Energies and other unlisted shares here.

vikram solar share price

Vikram Solar is another big player in the green energy sector. With 3.5GW capacity, it is among the largest exporters of solar PV modules. Additionally, the company provides engineering, procurement, and construction (EPC) services, as well as operations and maintenance. Vikram Solar’s 70% of the revenue comes from PV modules and about 20% revenue comes from EPC. In the previous year, the company also received approval from the government to set up 2.4GW of additional capacity under the PLI scheme. Currently, Vikram Solar is available to purchase in the unlisted market. The company has filed a draft with SEBI for an initial public offering (IPO). Vikram Solar IPO will offer a fresh issue of up to INR. 1,500 crores and an offer for sale of up to 5,000,000 equity shares.

premier energies share price

Premier Energies is one of the largest integrated solar cells and solar module manufacturers in India. With 29 years spent in the solar sector, the company now has an installed capacity of 2GW for integrated solar cells and 3.36 GW for solar module manufacturing. Premier Energies has filed the draft with SEBI to raise INR. 1,500 crore via initial public offering (IPO). The company will utilize INR. 1,168.74 to establish a 4 GW solar PV TOPCon cell and 4 GW solar PV TOPCon module manufacturing facility in Hyderabad. The remaining funds will go towards general corporate purposes. The company is also aiming to execute EPC projects, independent power production, and O&M services.

India’s solar energy sector is rapidly expanding with the PLI scheme in place. The government is taking the initiative to encourage growth in the capacity of renewable energy production. This is the right time to enter the sector by investing in solar energy stocks. It has the potential to deliver a significant return on your investment. Buying unlisted shares of Waree Energies or Vikram Solar will ensure allocation before the IPO. However, it is subject to availability. Get in touch with experts at VNN Wealth for the unlisted shares you wish to buy. Explore all unlisted shares here.

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Investing Basics

Top 5 Investment Options in India for NRIs

India is the world’s 5th largest economy with a GDP of $3.9 trillion and will reach $5.1 trillion in 2027. (Source). By 2030, India is likely to surpass Japan and Germany to become the world’s 3rd largest economy. Evidently, the Indian economy is rapidly growing and so are the investment opportunities. While Indians are benefiting from these opportunities, NRIs (non-resident Indians) are not left behind. There’s a wide spectrum of investment options in India for NRIs. NRIs can comfortably invest in Indian markets and diversify their portfolio. Here’s everything you need to know.

Non-resident Indians (NRIs) can invest in Indian markets by creating a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) bank account. Having either of these accounts is mandatory to be able to transact in Indian currency.

Experts at VNN Wealth will guide you through the entire procedure, including KYC, after which you can start investing in the following options.

top investment options for NRIs in India

Read in detail below👇

Mutual funds offer instant diversification to your investment portfolio. NRIs can invest in mutual funds via SIP or lumpsum, based on their financial goals and risk appetite. You can choose from equity mutual funds, debt funds, or hybrid mutual funds to balance risk-reward.

Equity funds are ideal for long-term investments. Debt funds offer a range of categories from short to long-term investments. Hybrid funds offer the best of both worlds. The rate of return on mutual funds depends upon the fund type and market movement.

Get in touch with experts at VNN Wealth for further guidance.

Note: Some Asset Management Companies (AMCs) may restrict NRIs from USA and Canada.

Alternative Investment Funds offer non-conventional investment options. NRIs can expand their portfolio beyond mutual funds by investing in AIF. AIFs have three categories: CAT I, CAT II, and CAT III. Each category provides diverse investment avenues such as private equity, venture capital, hedge funds, angel funds, etc. AIF CAT III is more popular among investors. You can contact VNN Wealth and our experts will walk you through the procedure.

Read more about AIFs.

Unlisted shares are gaining popularity among investors. NRIs can also buy shares of a company that hasn’t been listed yet. Unlisted stocks are traded off the market (Over-the-counter market). Therefore, it can be tricky to identify promising stocks.

VNN Wealth has handpicked unlisted shares with a good track record. These stocks are less volatile compared to the listed stocks as they’re not frequently traded.

Investing in unlisted shares unlocks the following benefits:
1. Guaranteed allocation if the company goes live on the stock exchange via IPO.
2. Pre-listing gains right before the company goes live.

NRIs can consider parking some of their funds in these shares to further diversify their portfolio.

The good old FD is always worth looking into. While the return may not be as superior as the avenues listed above, it’s safe and can accumulate wealth over a period of time. NRIs prioritizing safer investments along with steady interest income can consider fixed deposits.

Here are three ways NRIs can create an FD:

1. Non-Resident Ordinary (NRO) Fixed Deposit allows you to invest your Indian income such as rental income, dividends, pension, etc.

2. Non-Resident External (NRE) Fixed Deposit converts your foreign currency into Indian currency to invest.

3. Foreign Currency Non-Resident (Banks) Fixed Deposit is a term deposit account. You can maintain and invest funds by transferring from your NRE account.

Portfolio Management Service (PMS) provides tailor-made investments for HNIs. NRIs seeking personalized investments can also opt for PMS. A dedicated portfolio manager makes decisions on your behalf to optimize your investments & maximize returns. The minimum investment requirement for PMS is INR. 50,00,000. You will have to transfer the entire amount to the PMS house. Or, you can transfer your existing portfolio to the PMS house. If your portfolio is worth less than INR. 50 lakhs, you can invest the remaining funds by transferring the amount.

PMS helps you keep track of your stock, ESOP, and other asset holdings. The portfolio manager leverages market opportunities to deliver superior returns on your investments. You can directly communicate with the portfolio manager to gain insights. Read more about when is the right time to opt for PMS.

Taxation is an important factor to consider while investing. Tax rules for NRIs are similar to the Indian residents with slight exceptions.

The tax implications will depend upon the investment avenue and the investment horizon. The most important thing is to avoid double taxation. Make sure your country of residence has a Double Taxation Avoidance Treaty (DTAA) with India. You must also file The Foreign Account Tax Compliance Act (FATCA) self-declaration.

Also read- Mutual fund taxation for NRIs in India.

1. NRIs with funds lying idle in India can invest without moving funds out of India. This will generate steady income for themselves or dependant parents in India.

2. NRIs returning with foreign assets can explore investment opportunities in Indian markets to amplify wealth.

3. NRIs planning to return to India after retirement can build a solid retirement plan by investing funds in various assets

India is likely to overtake Japan and Germany to become the 3rd-largest economy in the world. Sectors like Auto, Cement, Telecom, Financials, etc will significantly contribute to the growth. NRIs can explore plenty of investment options in India across various sectors and expand their portfolio.

A wide range of investment instruments, such as mutual funds, AIFs, unlisted shares, and FDs, are easily accessible. Savvy Non-resident Indian investors can also opt for Unlisted Shares/Pre-IPO to help generate that extra alpha on their portfolio. Make sure you evaluate your risk appetite and align your investments with your financial goals.

For more insights and guidance, contact VNN Wealth, and our experts will streamline your investments.

Categories
Personal Finance

Our Top 7 picks of Unlisted shares in India

Unlisted shares in India have become popular over the past few years. Investors are buying unlisted shares of emerging companies showing potential growth as the awareness around them has increased. 

By investing in these shares Pre-IPO, you gain returns in two ways. 

1. Prices of these shares may go up in the long run via over-the-counter trading.

2. You may bag pre-listing/ listing gains. 

We’re receiving more inquiries about unlisted shares than ever before, especially after the Tata Tech IPO’s massive success. Tata Technologies was our second success story after Nazara Technologies in terms of entry and exit for our investors. And now, more unlisted companies have entered our top picks. 

Interested to know which unlisted share to buy?

Our team of experts has curated a list of the top 7 unlisted shares in India. 

But before we dive into it, read everything about unlisted shares here

waree energies share price

The leading renewable energy company in India, Waaree Energies Ltd manufactures solar PV modules and offers solar energy solutions. Waaree’s manufacturing facility of 12GW is among the largest in India. It started with 2GW in 2021, upgraded to 9GW in March 2023, and rapidly expanded to 12 GW in June 2023. Waaree’s four manufacturing units are located in Surat, Tumb, Nandigram, and Chikhli- collectively across 136.30 acres. The company manufactures a wide range of products such as solar panels, solar water pumps, solar street lights, and solar inverters, to name a few. The company also offers Solar EPC services along with project development, financing, operations, maintenance, and asset management.

Waaree witnessed an incredible revenue boost from 1997cr in 2021, 2950cr in 2022, to 6840cr in 2023. The operating profit margins have also increased from 4.35 in 2021 to 12.37 in 2023. Waaree is aiming to keep contributing towards a green future with its affordable and easily accessible solar energy.

vikram solar share price

Founded in 2006, Vikram Solar is one of the leading solar PV module manufacturers in India. Currently, with 3.5 GW capacity, the company also provides integrated solar energy solutions, Engineering, Procurement, and Construction (EPC) services, and operations & maintenance. Vikram Solar has 3 manufacturing units in Tamilnadu and West Bengal. The company has 42+ distributors across 600 districts in India. Vikram’s 70% of revenue comes from PV modules and about 20% from EPC services.

It is the first company to contribute to fully solarizing Kochi(Kerala) airport, installing a floating solar plant in Kolkata, and commissioning large-scale rooftop solar plants across India. The company also has sales offices in the USA and has supplied solar PV modules in 32+ countries. The company’s revenue has increased to INR. 2015 crores in fy23, an 18% boost from the fy22 revenue. Vikram Solar has filed a draft with SEBI to raise INR. 1,500 crore via initial public offering (IPO) and an offer for sale of up to 5,000,000 equity shares. 

tata capital share price

A subsidiary of TATA Sons, TATA Capital Limited is registered with RBI as a non-deposit-accepting NBFC. Along with its subsidiaries, TATA Capital offers financial services to corporate, retail, and institutional customers. The company’s product portfolio includes various types of loans, investment advisory, cleantech finance, private equity, wealth products, commercial and SME finance, leasing solutions, and TATA cards, to name a few. 

In the financial year 2022, TATA Capital reported the highest profit. The company’s PAT increased from INR 1,245 crore to INR 1,801 in FY22 crore and to INR 2,975 crore in FY23. Tata Capital’s loan book grew by 28% in FY22-23 and the book value increased to 48.36 from 33.82. The RoE also increased from 15.6% to 17.3%.

sbimutualfund

SBI Funds Management Limited is one of the most popular, largest asset management firms in India. Founded in 1987, it’s a joint venture between the State Bank of India and AMUNDI (A global fund management company.) SBI currently holds a 63% stake and the remaining 37% belongs to AMUNDI. SBI mutual funds offer a wide range of mutual fund schemes such as equity mutual funds, debt funds, hybrid mutual funds, solution-oriented schemes, and Exchange-traded funds, to name a few. The company also launched an Alternative Investment Fund (AIF) in 2015 and may launch more funds in the future. 

With over 53+ mutual funds schemes, SBI mutual funds have INR 1.65 trillion assets under management (AUM) and over 12 million investors. SBI fund management has been offering international investor solutions since 1988. The company guides and manages India’s dedicated offshore funds. The company also offers Portfolio Management services catering to HNIs, large provident funds, institutions, and selective trusts. 

SBIFM’s AAUM is 44% more than the next largest peer (ICICI prudential mutual fund). And has hit a 27% CAGR when the rest of the market delivered 10% over a five-year horizon. As per the recent financial reports (March 2023), SBI fund management has made a net revenue of INR 2297.27 crores.

NSE India limited share price

Founded in 1992, the National Stock Exchange (NSE) is India’s leading stock exchange with ~1968 companies listed on it. In 1994, NSE launched electronic screen-based trading, and internet trading in 2000.  NSE’s flagship index, Nifty 50, serves as a global benchmark for Indian capital markets. NSE is the world’s largest derivative exchange with 21% of the global derivative contract trading. It’s also the second-largest derivatives exchange in the world for currency futures trading. The capital market business model of NSE primarily offers trading services, exchange listing, market data feeds, indices, and technology solutions.

Its cash market offers a platform to trade equity shares, mutual funds, ETFs, REITs, Sovereign Gold bonds, government securities, T-bills, etc. The debt market offers government, corporate bonds, commercial papers, and other debt instruments. NSE also provides index management services for equity indices, hybrid indices, and customized indices for asset management companies, insurance companies, investment banks, PMS, and stock exchanges. The company has performed at a CAGR of 35% over the last three years. NSE’s FY23 revenue has reached INR 12650 Cr. with a 63.27 net profit margin. 

csk share price

The four times IPL winner, CSK is the only sports team in India available for the general public to invest in. CSK is one of the most popular IPL franchises with a strong brand value. The brand was founded in 2008 as an IPL cricket team representing Chennai, Tamil Nadu. It is a wholly-owned subsidiary of India Cements. Being a popular IPL franchise, CSK became the country’s first sports unicorn. The brand’s market cap was raised to 7600 crores (more than 1 billion) with the share prices in the unlisted market trading between Rs. 210-225. 

Chennai Super Kings generates revenues from various sources such as- Gate ticket collection, In-Stadium Advertisements, and Merchandise sales. The team earns 60% of the total revenue from Media Rights, which is the highest revenue stream. The revenue from sponsorship makes up around 15-20% of total revenue followed by 10% from ticket sales. While the Pandemic had an impact on many brands, CSK managed to maintain a balance via indirect revenue streams. One of the most loved IPL teams, CSK, will continue to generate solid revenue via merchandise sales, sponsorships, portions of prize money, and digital viewership. 

studds share price

Being a global leader in two-wheeler helmet manufacturing, Studds accounts for almost one-third share of the organized two-wheeler helmet market. Studds had an opportunity to manufacture face shields and protection wear in high demand during Covid-19. Studds’s sales received another boost when The Ministry of Road Transport and Highways declared that India would only manufacture and sell BIS-certified two-wheeler helmets. Demand for two-wheeler helmets is growing rapidly post-COVID-19 as transportation has resumed. Besides, people often replace their helmets within two to three years, enabling more business for the company. 

Studds is also expanding its accessories manufacturing with riding gear gloves, goggles, jackets, and safety and storage gear. Additionally, Studds also has an opportunity to dominate bicycle helmet sales. The company is operating in more than 40 countries including Europe and US. Recently, the company has doubled its manufacturing capacity in Faridabad, Haryana. 

Nazara Technologies: Was listed on the stock exchange on March 30, 2021, at INR 1,981, an 81% boost from the issue price of INR 1,101.

TATA Technologies: Was listed on the stock exchange on 30th November, 2023 at INR 1,200, a whopping 140% higher than the issue price of INR 500.

Kurl On: In July 2023, Kurl On’s biggest rival Sheela Foam acquired a 95% stake in the company and offered a buyback option to shareholders. 

Unlisted shares are not available to invest via the established stock exchanges as they’re traded over the counter or via private platforms. If you want to buy unlisted shares of the above companies, get in touch with us anytime and our team will take care of the rest.

Invest in unlisted shares.

Buying unlisted shares is a great strategy to diversify your investment portfolio. These shares are fairly safer than listed shares due to less volatility. And the major benefit of investing pre-IPO is the allocation confirmation. With Unlisted shares, investors have the opportunity to gain either pre-listing gains or listing gains.

Share prices of unlisted companies often boost right before the IPO. With a huge demand in the unlisted market, you can sell your shares and earn pre-listing gains. Or, you can wait until the IPO is live and get profit from listing gains. Please note that the pre-listing and listing gains are subject to market risk. To avoid any risks, we have chosen known brands with high brand value and promising futures. Get in touch with us if you are interested in buying the above shares. Experts at VNN Wealth will guide you through the process.

Categories
Personal Finance

Top 5 Dos and Don’ts of Mutual Funds

Investing in mutual funds is as easy as ordering your favorite shoes online. 

The financial awareness has increased and so are the number of mutual fund investors. Anyone can start investing with as little as INR 100/month via SIP. Mutual funds can accompany you throughout your wealth-creation journey. And if you want that journey to be smooth, you must incorporate certain practices. 

In this blog, we will cover some of the common dos and don’ts of mutual funds. Let the learning begin…

What You Should and Shouldn’t Do with Mutual Fund Investments

Below are some factors to keep in mind as an informed mutual fund investor. 

Mutual funds have various categories primarily divided into equity funds, debt funds, or hybrid funds.

Equity funds invest in company stocks across the market cap. Debt funds are a collection of government bonds, corporate bonds, T-bills, etc. Hybrid funds are a combination of both.

Each fund has a different composition, category, and associated risk. You can read the mutual fund factsheet to understand the fund objective before investing in it.

Investing in a fund that doesn’t fit your risk appetite is like buying the wrong size of shoes. 

The easiest way to understand your risk appetite is by evaluating your income and expenses. Whatever money you are left with after expenses can be invested. 

Here, you may want to consider your ability to take risk instead of willingness
You may like to read-> Invest as per your risk appetite.

Once you understand your risk appetite- define short, medium, and long-term financial goals. For example, buying a car, moving to a bigger home, etc. 

Your risk appetite and financial goals collectively help you plan your investment across mutual funds. 

Consistent investments can help you achieve your financial goals faster. Systematic Investment Plan (SIP) is a popular strategy for consistent investment.

You can start an SIP of 100/month, 500/month, 5000/month or whatever amount you are comfortable with. 

Benefits of Investing via SIP.

Investors have to pay tax on capital gains earned from mutual funds. Equity mutual funds, debt mutual funds, and hybrid mutual funds have different tax implications.

Short-term capital gains will be applicable on investments withdrawn before 12 months for equity funds and before 36 months for debt funds. Whereas, equity investments redeemed after 12 months and debt investments redeemed after 36 months will fall under long-term capital gain taxation. 

Here’s a quick overview of mutual fund taxation rules for Indians and NRIs

Your income, financial goals and risk appetite will change with time. Update your investments accordingly. 

You can consider increasing the SIP amount, changing asset allocation, and redefining your financial goals. 

Regular portfolio monitoring also helps you restructure mutual fund categories that you’ve invested in. 

Your financial expectations, goals, and horizon will always be different than someone else’s. Just because a friend invested in a certain fund doesn’t mean you should too.

Investing based on other’s opinions might do more harm than good to your portfolio. Instead, consider hiring a wealth manager/financial advisor who can sketch a portfolio of funds for you. 

A lot of investors make the mistake of choosing funds based on past performance. The fund’s history has very little to do with its future performance.

Mutual fund past performance guarantees nothing. It only showcases the consistency of the fund during changing economic cycles.

The better way to judge a fund is by checking the underlying assets, the fund manager’s track record, and the rolling returns of the fund with respect to the benchmark.

Diversification plays a crucial role in bringing superior returns with downside protection. To achieve true diversification, you must distribute your money among various asset classes such as stocks, bonds, gold/silver ETF, etc.

The right asset allocation encourages balance and diversification. When one asset class declines in performance, the other can keep your portfolio moving. 

Therefore, avoid investing the majority of your money in a single asset class. 

Seeing your portfolio performance drop during a volatile market may cause emotional turmoil. 

At times like this, panic selling is the last thing you want to do. In fact, correction in the market should be used to invest more. 

The market bounces back as the economy recovers or as soon as the event passes (for example COVID-19). All you have to do is stay patient and let your wealth grow at a steady pace. 

Many investors focus more on timing the market than consistently investing. Let’s assume for the sake of example- Sensex drops by 1000 points from the current 73150 points (as of 15th Jan 2024), i.e. 1.36% drop.

If you plan to stay invested for a longer horizon, that 1.36% drop is not significant enough to time the market. Rather start an SIP and let your investment consistently grow at a steady pace.

Mutual fund investments are meant to achieve financial goals in a given time frame. Therefore, focus on spending more time invested in the market.  

Invest in Mutual Funds

Mutual funds are powerful tools for building wealth. However, investing in them requires patience and awareness.

By following the above dos and don’ts, you can certainly navigate through the changing economic situations. Follow your financial goals and stay informed.

If you are looking for financial advisors in Pune, experts at VNN Wealth can meet you in person. Reach out to us via Email. If you’re not based in Pune, you can also book a consultation call at your preferred time. Get a complimentary portfolio review and plan your investments accordingly. 
Read more personal finance insights.

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