Prajna Capital - An Investment Guide

From a tax point of view, taking a dividend reinvestment option is no different from receiving the dividend in you bank account and then making a fresh investment of the same amount. The dividend received will be taxed like any other dividend ( Dividend Distribution Tax or DDT ) and resulting purchase of fresh units will be treated like any other fresh capital investment. Any capital gains that you realise when you sell will be treated as long-term or short-term depending on the period of investment. Therefore, what you refer to as principal amount is not a single principal amount but a separate principal amount for each individual dividend reinvestment. Each one of these individual investments will therefore become long-term on a separate date 365 days after it was invested. This is a basic principle that is applicable to all types of funds. In the liquid fund case, there will definitely be a tax liability on the capital appreciation on the principal amount at the time of redemption...

Looking for an investment avenue when the stock markets are choppy? A fixed maturity plan not only guards against the unforeseen but also gives good returns. STOCK market opportunities may look like a mirage in a desert. In fact, what may look like a lifetime opportunity can turn into a black hole, and swallow your hard-earned money. But it shouldn’t deter you to make a foray on Dalal Street. A smart investor is one who holds his fort secure while keeping an open eye for better avenues. Fixed maturity plan ( FMP ) is one such investment that guards your portfolio against unforeseen risks and gives the good returns on your investments. Here’s a low down on what you need to know before taking an exposure in FMPs. MATURE OUTLOOK Financial planners say that FMPs, which have been offering high yields during the last couple of years, have become an important investment avenue. Though all segments of investors can benefit from them, this investment option is especially advantageous to those w...