5 Ways To Increase Your Annual Income

Invest in Enriching Your Life and Increasing Your Income

Increasing your annual income has many benefits- mainly, ability to afford a quality
lifestyle for you and your family, and also the ability to manage unexpected money
requirements.
Here are five practical ways to increase your annual income.
#1: Invest in Yourself Add Value to Your Self Worth
Investing in yourself will give you disproportionately high return on investment- both for
the amount of money invested and the time you spent.
DIY Tips to Invest in Yourself

Leverage the power of learning. Add a new skill, learn a new language, or try
something thats been on your bucket list.

Set aside time on a daily or weekly basis to read informative blogs, articles or
books.

Attend a workshop, webinar or training to stay updated on the latest trends.

Explore your creative side to exercise untapped areas of your mind. This will
open up different doors of perception- personally and professionally.

Invest time in taking a sabbatical Retrospect, introspect and regain your focus
How Does This Increase My Annual Income?
Better skills, greater knowledge and wider perception, all lead to a higher level of
opportunities.

#2: Invest Smart Monetarily not Momentarily

Talking about increasing income is incomplete without considering the actual monetary
aspect of investing smart.
DIY Tips to Increase Your Future Annual Income

Start early-as early as you possibly can

Invest for the long term

Make the right investment choices- for long term goals (more than 5
years), invest in equities and short term (less than 5 years), invest in
debt instruments.

How Does This Increase My Annual Income?

Increase your profits by investing wisely. Instill a long term perspective to evade myopic
results from a short-sighted plan.
#3: Invest in a Long Term Career Path Map Your Progression Professionally
Mapping your professional interests can help you strategically build your career path.
DIY Tips to Chart Your Career Path

Do a SWOT analysis on your professional traits. Determine your strengths,

weaknesses, opportunities and threats. In this way you can identify the best
opportunities that can help you progress with purpose.

Inculcate a long term vision. Do not let short term challenges come in the way of
building your potential in the future.

How Does This Increase My Annual Income?

Being at the right place, at the right time with the right capabilities, tactically improves
your career prospects.

#4: Invest in Rewarding Risks Zone Out of Your Comfort Zone

Taking risks can snap you out of your comfort zone.
DIY Tips to Zone Out of Your Comfort Zone

Take a chance to challenge yourself. Push your limits beyond the monotony of
mediocre tasks. It is a bitter truth that machines will replace you eventually.

Focus on work that allows you to build your capabilities, even if it means making
a drastic change.

How Does This Increase My Annual Income?

Stepping out of your bubble automatically unlocks new possibilities
#5: Invest in Health Focus on Your Physical, Mental and Social Well Being
The real wealth is in the health and well-being of your body, mind and social interaction.
While the increase in disposable income may translate to a higher standard of living, it
could also lead to increasing health issues.
DIY Tips to Enrich Your Wealth in Health

Physical Health
o Exercise. If not for the physical benefits, it also helps in reducing your
healthcare bills.
o Eat healthy. A home cooked meal is not only healthier but also lighter on
the pocket.

Mental Health Many occupational lifestyle diseases are creeping into

urban population. Maintain a good work-life balance to avoid mental
problems such as depression, hypertension and neurological issues.

Social Well Being Whether you admit it or not, who you interact with
socially and your lifestyle have a big impact on your personality. The social
environment you choose to be influenced by will affect the way you think
and the decisions you make. Choose wisely.

How Does This Increase My Annual Income?

You become the environment you live in. Make it clean, green and lean on the body,
mind and wallet.

How Can I Replace My Salary Through

Investing?
Recently, we received this query by E-mail.
I am 22 and earn Rs 18,000 per month. At what rate should I invest and how should I
proceed further to earn income that could replace or be equal to my present salary.
Rajesh (Name changed)
We found this interesting on a number of levels. For starters, at 22, Rajesh is starting to
secure his financial future early in his career. Second, he understands the importance of
having a defined corpus that generates income to replace his own thats making
money work for you.
In this article, we will discuss how you can go about building a corpus that will generate
an income to replace your current salary.
How to create a corpus that replaces your income
In order to generate Rs 18,000 per month, lets start with the following assumptions

You invest 30% of your salary. In this case Rs 5,400.

You invest in equity mutual funds with an expected return of 14% annualized
over the long term

You re-invest the accumulated corpus in a bank FD with an expected return of

8% per annum

Taxes are not taken into consideration

Rajesh will need 14 years to accumulate the required corpus of Rs 28.18 lakhs
which when invested in a Bank FD will give you Rs 18,790 per month.
Monthly SIP
(Rs)

Investment Option

Expected Rate of
Return

Years
Required

5400

Equity Mutual Funds

14%

14

5400

Bank Recurring
Deposit/PPF

9%

18

This is great. Rajesh could achieve a corpus that replaces his current salary by the time
he is 36.
However, there is a problem with this approach. We have failed to take inflation into
account. What inflation does is reduce the value of money over time. With a given sum
of money, you will be able to buy significantly less 14 years from now. To put it in
numbers, Rajeshs current Salary of Rs 18,000 will be worth only Rs 6,128 in 14 years.
How to create a corpus that replaces your income adjusted for inflation
To get a corpus that is capable of generating this inflation adjusted (higher) income,
Rajesh will need to save for longer. Lets see what it will take to do this. We will go with
the same assumptions as before but also consider inflation.

You invest at least 30% of your salary- (INR 5,400 in this case)

Investments happen in equity mutual funds with an expected return of 14%

annualized over the long term

You re-invest the accumulate corpus in a bank FD with an expected return of 8%

per annum

Tax implications are not taken into account

Inflation rate is 8% per annum

Rajesh will need 28 years to accumulate the required corpus of INR 2.16 crores, which,
when reinvested, will give him Rs 1,44,209 per month an amount that is equivalent to
his current salary of Rs 18,000 adjusted for inflation over 28 years.
Is there a faster way to achieve this?
Yes. And that involves increasing your saving every year by, say, 10%. This is in-line
with the increase in your income.
If you do this, you will only need 18 years to accumulate the required corpus of INR 1.03
Crores which could then generate a monthly income of Rs 69,108 an amount equal to
your current salary adjusted for inflation over 18 years.
Monthly SIP (INR)

Investment Avenue

Rate of Return

Years Required

5400

Equity Mutual Funds

14%

18

5400

Bank Recurring Deposit/PPF

9%

28

Thats good advice for Rajesh, but what can I do?

We know every ones different so we created a comprehensive calculator. Find out how
you can get your savings to replace your income using our downloadable excel
worksheet.

Key Take Away

Start investing as early as possible

Invest in high-return long term asset classes like equity mutual funds to achieve
your goals faster

Always factor inflation into your calculations

Use our downloadable excel worksheet to find out how your money will grow

Its ideal to increase your saving/ SIP amount every year by at least 10% or morein-line with your increase in income

Take into account the tax implication of your investments. Not all investments are
tax-free during maturity (Weve written many articles on this topic)

The Easiest Way to Invest in Mutual Funds

Use Scripbox to automate your investment in mutual funds.
Scripbox takes care of all the heavy lifting- from which mutual funds to invest in, to easy
online investing and withdrawal, to annual review and rebalancing of your portfolio.

Everything You Need To Know About

Your Salary Slip
Every month, your finance department will send you a salary slip once the salary gets
paid out.
For most people, the importance of salary slip is only when they apply for a loan or a
new credit card. Otherwise, the confusing terms and figures seem like a puzzle you
dont want to solve.
But heres why you might want to understand your salary slip better.

o Choose smartly from competing offers when you are looking to switch jobs
o Optimize tax liability by making full use of the deductions available
o Understand what percentage of your salary is forced savings (EPF, ESI
etc.)

The income part of your salary slip

#1: Basic Salary
Its the most important component of your salary and generally comprises 35-50 % of
your total salary. Most of the other components are structured around it. Bigger the
basic salary, the more tax you need to pay.
Tax Implications: 100% taxable
Adds to in-hand? Yes

# 2. House Rent Allowance:

Its an allowance to pay your house rent. Normally, HRA is 40-50 % of the basic, based
on your location (metro or non-metro).
Tax Implications: You get tax exemption based on whichever of the following is lower

40% of your basic pay

Actual rent minus 10 % of basic

HRA component specified on your salary slip

Adds to in-hand? Generally Yes

# 3. Conveyance Allowance:
Its paid by the company to take care of your official commuting needs. The amount
varies depending on your job profile. For example, sales executives who have to travel
frequently get significantly higher conveyance allowance.
Tax Implications: Rs 1600 per month or the conveyance allowance component in your
salary slip, whichever is lower, is exempted from tax.
Adds to in-hand? Yes, depending on how much you actually spend.
# 4. Leave Travel Allowance:
Its given by employers to cover the cost of employee travel while on leave. It includes
travel expenses of your immediate family members as well.
Tax Implications: Proof of journey required to avail deduction subject to certain limits.
Any expenses incurred during the trip apart from travel does not count towards your LTA
tax exemption. The exemption is also applicable only for 2 journeys undertaken in a
block of 4 calendar years.
Adds to in-hand? No.

# 5. Medical Allowance:
It is given by employers to cover any medical expenses incurred during the period of
employment. It is also generally a reimbursed expense and thus subject to providing
proof of expense.
Tax Implications: The allowance is exempt up to 15,000 per annum subject to proof of
expenses such as medical bills.
Adds to in-hand? Yes. If you fail to provide the proof, you still receive the amount, but
will be fully taxed.
# 6. Performance Bonus and Special Allowance:
It is given to reward or encourage employee performance and varies with performance
or company guidelines.
Tax Implication: 100% Taxable
Adds to in-hand? Yes. It can be variable and therefore, difficult to assess as part of
your in-hand.
Other Allowances: There are quite a few other kinds of allowances based on the
industry or the company. Most such allowances are fully taxable. They might or might
not add to your in-hand salary based on the conditions they are subject to.
Make sure you talk to the HR and get a clear understanding of the in-hand and tax
implications of your salary components.
The deduction part of your salary slip
# 1. Provident Fund:
PF is typically 12% of your basic salary which is put into a government controlled body,
Employees Provident Fund Organization. Your contribution is typically matched by the

company subject to certain maximum amount, defined as per the company policy. You
can also choose to opt out from the PF scheme.
How to lower this deduction? You can choose to opt out of the PF scheme. In case
you opt out, make sure you invest it regularly in better investment options like equity
mutual funds that gives you a higher return. If you are unsure of investing the money, its
best to stay invested in PF.
# 2. Professional Tax:
This is payable only in the following states-Karnataka, West Bengal, Andhra Pradesh,
Telangana, Maharashtra, Tamilnadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya,
Orissa, Tripura, Jharkhand, Bihar, and Madhya Pradesh. It normally amounts to just a
few hundred rupees each month and is subject to your gross tax slab.
How to lower this deduction? This deduction cannot be lowered.
# 3. Tax deductible at source:
This amount, which is decided based on your overall tax slab, is deducted on behalf of
the income-tax department by your employer.
How to lower this deduction? You can reduce this burden by investing in tax savings
instruments under Section 80 C or other sections under the IT act.
Things to keep in mind when comparing salary slips in offers:
# 1. Your basic salary is critical as most of your allowances will be based on that figure.
This is your real salary or primary hiring cost.
# 2. Look for special allowances and check whether they are performance or event
based.
#3. Do not focus only on the in-hand salary. Look at the other benefits the company
provides (health insurance, accident insurance, free food, bus transport, better career
growth) which might outmatch a higher in-hand salary offer from some other company

A Quick One-Page Guide To Filing Your

Tax Returns Online
Heres the thing about income tax returns- its time consuming, you dont really want to
do it, but it needs to be done.
Even though July 31 is the last day to file your income tax returns, you can get started
much early since most of the data you need to file your returns will be available by end
of May.
Tax filing, when done incorrectly, can lead to complications. To make tax filing less
complex, heres a checklist you need to follow to ensure that your tax returns are filed
properly. Printable PDF checklist at the end of this article.
Step 1: Collect and organize all the required documents to file your tax returns
Before you file your returns, you need to ensure you have all the documents to help you
file your returns. Even though you need not submit these documents when you file,
youll need to keep records should there be any scrutiny and you are asked to submit
the proof. Its also useful for cross-checking.
#1: PAN Number- Youll need to quote your PAN number during the tax filing process.
#2: Form 16- This is the form provided by your employer. The TDS (Tax Deducted at
Source) for the income chargeable under head salaries is declared in this form. In
case you have not received the form 16, you can use third party excel based
calculators to figure out your TDS amount or use form 26AS (more on form 26AS in
Step 2).
#3: Form 16A- Similar to Form 16; However, a form 16A is issued for TDS on income
from sources other than salary. Form 16A will be issued to you in case of TDS on your
interest income from Bank FDs and so on.

#4: Demat account transaction statement- If you do trading in the stock market and
book profits/losses, your Demat account statement will come in handy to declare them
while filing your returns.
#5: Advance Tax/ Self-Assessment Tax payment challan- If your tax liability is more
than Rs 10,000 in the same financial year, you need to pay advance tax. If you have
only salary income, TDS by the employer should cover this. You can cross-verify this
using Form 26AS.
In case you have income from other sources, you need to pay advance tax on it.
Calculate your advance tax liability using the calculator here. If you have not paid
advance tax, it attracts penalty.
Before filing your returns, you need to calculate your final tax liability after deducting
TDS and advance tax paid during the course of the previous financial year. Final liability
as per your calculation is the self-assessment tax. You need to pay self-assessment tax
before filing your IT returns.
#6: Bank account statements- Youll need all the statements from the banks used in
the same financial year for which you are filing taxes.
#7: Capital gains/loss statements- You can offset loss against gain to reduce your tax
liability. Remember these points

Short term loss can be offset against short term and long term capital gains
during the same period

Long term loss can only be offset against long term gains during the same period

Online platforms like Scripbox provide you downloadable capital gains statement for
your mutual fund investments. If you dont have such a functionality, check with your
investment broker/platform for manual generation of the statement.

#8: Principal and interest payment certificate from loan provider- Youll need the
actual amount you paid towards your home loan principal and interest to claim tax
deductions under Section 80C and section 24 respectively.
#9: Income and investment actuals- You need to get the accurate amounts for your all
of your investments, income, and deductions.
Even if you have declared amounts with your employer and they have cut the TDS, you
need to enter the accurate amounts while entering data in your ITR form. This includes
your actual contribution to PPF, any donations made, and so on.
In case the employer deducted more tax than required as TDS, the data you enter will
help you get a tax refund. The reverse is also true. If the employer has deducted less tax
from you than required, youll need to pay the dues before filing your returns.
Please note that unclaimed HRA cannot be claimed via your IT returns. It can be
claimed only through your employer.
#10: Copy of last years return (if applicable)
Step 2: File your returns
Now that you have all the documents ready, its time to file the returns. Heres the stepby-step guide to filing your returns.
#1: Prepare for e-Filing
Register on the official website https://incometaxindiaefiling.gov.in/
You can also use various third party websites like cleartax, taxspanner etc for filing your
returns. These third party websites makes the process of filing easier and also provides
additional services like CA assisted filing for a small additional fee.
#2: Verify your tax credit statement

Form 26AS will tell you how much tax money was credited on your behalf via TDS. This
amount should match the TDS amount you have from form 16 and form 16A.
#3: Choose the correct ITR form
Choose the ITR form that applies to you from under the downloads tab.

Follow the prompts in the excel sheet that you downloaded and complete the form by
filling all the required details (remember to enable the macros).
Generate the XML file from the sheet at the end of the process.
#4: Upload to the e-filing website
Once the XML file is generated, you can go ahead and upload the newly generated file
to the official website. Use the upload return button on the homepage to upload the
file.
#5: Save the acknowledgement form
On successful upload of the XML file, youll be able to download the acknowledgment
form ITR-V (ITR-Verification).

#6: Physically send the ITR-V acknowledgement form

If you selected no for digital signature, then youll have to take a print of the
acknowledgement form, sign it with blue ink, and send it to the following address.
Income-Tax Department-CPC, Post Bag No-1, Electronic City Post Office, Bangalore
560100, Karnataka.
This has to be sent within 120 days of filing your return and only through speed post or
normal post. Couriers are not accepted.
Thats it. You are done with your IT returns filing.
Download the checklist
Add your email address below and press the [Download] button to receive the printable
checklist.
Dow nload

Want to pay less tax for your next financial year? Here are some pointers that might
help

Consider The Tax Bite When You Invest

4 Lesser Known Ways To Save Tax

11 Tax-Saving Options That Save Tax And Grow Your Wealth

Taxes Matter More Than You Think

7 Smart Ways To Use Your Tax Refund Money

You receive a cheque in the mail and its from the Income Tax Department. Its a tax
refund for the last financial year, and it is for a significant sum.
While you can easily blow up the money and spend it on luxuries such as a big screen
TV or the latest Apple watch, it would be wise to think about one aspect. The refund

money is neither a bonus, nor a gift. Its your own hard earned money that didnt have
to go to the IT department in the first place.
Here are seven smarter ways to spend that tax refund money.
#1: Pre-pay loans and lighten the EMI burden
If you are paying EMIs on a home loan, car loan, or any other loan, you probably know
how much it pinches to read the SMS alert stating the EMI has been deducted from your
account.
It makes sense to utilize the tax refund to make a part pre-payment on your loan and
reduce the EMI.
#2: Start/Top up your emergency Fund
The world over, its considered a healthy practice to maintain an emergency fund which
you can withdraw from only for emergencies (like losing a job, medical situations and so
on). If you dont already have an emergency fund, nows your chance to start one.
Experts suggest that the emergency fund should have a corpus of at least three to six
times the current monthly salary. You never know the amount you would require during
an actual emergency. So its OK if the amount goes a little higher.
#3: Spend on yourself or your family
When spending on yourself, nothing can be better than spending to upgrade your skill
sets. You could spend the tax refund to take up a part time course or workshop related
to your field of work.
This, indirectly, helps to increase your employability and thus your salary potential.
In case you have children, you could spend that refund to sign them up for a course and
help them learn a new skill.
#4: Home improvement

Home maintenance issues often crop up and are often kept on the back burner due to
lack of funds or urgency.
Use the new found funds to fix maintenance issues. A well-maintained house (e.g. with
good flooring or cabinets) not only makes for a pleasant place to live in, but it also hikes
up its market value.
#5: Invest in tax saving instruments
Investing in tax saving instrument is a wise move as it helps you start off early on your
tax planning for the following year, and the money gets put away for future use.
For 80C tax saving investments, ELSS mutual funds are the recommended option.
#6: Invest in mutual funds
Let your tax refund work hard for you. For a normal investor, it makes sense to invest in
mutual funds compared to stocks for wealth creation.
Dont get tempted by short term investment options. Think long term. For investments
with a horizon of more than 5 years, equity mutual funds are ideal. For less than 5
years, debt mutual funds serve as an excellent alternative for bank FDs.
Choose free online mutual fund platforms like Scripbox that makes it easy for you to
invest in mutual funds.
#7: Spend on what you love
Its OK to treat yourself and your family once in a while by going to a fine dining
restaurant, or by taking that long-due vacation.
A note of caution though; dont go overboard.
If your tax refund is Rs. 20,000, you definitely dont need a vacation worth Rs. 50,000 to
spend that Rs. 20,000.

The First-Time Investors Guide To A

Demat Account
Do you have a bank account? Mostly, youd say yes- maybe you even hold multiple bank
accounts.
A Demat account is something like a bank account. Only thing is, instead of money held
in your bank account, Demat holds your securities a form of shares, bonds, or
debentures.
If you wish to buy securities in the stock market, you first need a Demat account. Heres
everything you need to know about opening a Demat account.
What is a Demat account and when do you need it?
A Dematerialized or Demat account is an electronic account where your securities are
held, serving as an alternative to physical certificates.
In order to buy and sell securities in the Indian stock market, it is necessary for you, as
an investor, to open a Demat account with a Depository Participant (DP).
What are depositories and depository participants (DPs)?
Depositories are organizations that hold your securities electronically and also facilitate
transacting. The two depositories registered with SEBI are National Securities
Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
Depository Participants (DP) act as agents between depositories and investors. In order
to avail the services of a depository, you need to go through a DP. The account you
need to have with a DP is referred to as a Demat account.
What are the benefits of a Demat account?

Your shares and securities are securely held

The transaction cost is significantly lesser compared to the physical segment

since you dont have to pay stamp duty

Convenient and fast for electronic settlements

Reduced paperwork in case of transfer of securities

Risks associated with physical certificates, such as thefts, non-delivery, and fake
certificates, are eliminated

Sell any number of shares you want- even one

Invest online

What are the fees associated with opening a Demat account?

Most DPs do not charge a fee to open a Demat account. Some offer refundable account
opening charges while others have a fixed charge.
There are also other charges such as transaction fee, annual maintenance fee, and
charges for converting shares from physical to electronic format in case you need
physical shares to be converted to Demat form.
How do you open a Demat account?

You can open a Demat account with a depository participant (DP) registered with SEBI-

a list which you can download here.

Once you receive the copy of the terms of agreement, the rules and regulations, and the
charges that will apply, you need fill in the account opening form.
Make sure you add a nominee when opening a Demat account.
1. Submit all the required copies of documents. Mainly address proof, ID proof, and
your PAN card
2. The DP staff will then contact you to conduct in-person verification

3. Once the verification is satisfactory, you will receive your Demat account details
from your DP
It typically takes one to two weeks to open a Demat account. There is no mandatory
requirement to maintain a minimum balance of shares when opening a Demat account.
You can open multiple Demat accounts in the same name with different or the same DP.
What are the KYC norms to be fulfilled to open a Demat account?
In order to prevent fraudulent activity, a customer identification process known asKYC
(Know Your Customer), has been introduced. According to SEBI, you need to fulfill KYC
norms to open a Demat account. Heres what is required to fulfill the KYC norms:
1. Proof of identity You need to have a PAN card, passport, voter id card, or
Aadhar card.
2. Proof of address You need to have a passport, ration card, bank statement,
utility bills or driving license.
3. Bank account number held in your name
Once you open a share trading account and have a valid Demat account, you can start
buying securities online.
6 Reasons Why Investing In Equity Mutual Funds Is Better Than Buying Stocks

Heres an interesting fact about India.

Compared to other countries, individual investors in India hold more stocks in their
name, than they hold mutual funds.
Only about 3% of the total market cap in India is held through equity Mutual Funds,
whereas direct holding by individuals is nearly 22% of the market (7 times more);
contrary to the developed markets where individual investors tend to hold stocks
primarily through Mutual Funds.

The question for an individual is then, why buy equities through a Mutual Funds (and
land up paying an annual fees of ~ 1.8% of the total Assets), when they can buy directly
through a stockbroker (paying a one-time per trade charge).

Here are a few reasons to buy mutual fund instead of stocks

#1: You are not held back by your ability to pick and track stocks
One of the main benefit a Mutual Fund provides is that you dont have to pick stocks.
Picking stocks, tracking them, making sector and asset allocation, buying and selling
stocks when required, are all best done by a professional fund manager.
We have seen several individuals who bring up their old portfolios for review. The older
portfolios, say more than 15 years old, have more than 60% of stocks that are
completely defunct today. Such defunct companies drag overall portfolio returns even
though the other stocks may have done well. Recently, I saw a portfolio that is a 60 year
old portfolio and not even one company exists today.
In a Mutual Fund, you can avoid such situations completely. Its managed by a
professional fund manager wholl ensure your portfolio contains good stocks with
potential for long term returns.
#2: Zero capital gains tax for short-term profit booking by the fund manager
When an individual manages a portfolio of stocks, there will most likely be some selling
and buying. If the selling of stocks is done within one year of purchase, there is an
incidence of short term capital gains tax.
Whereas for a fund manager, there is no capital gains tax, even if it were to book short
term capital gains for the fund he manages. This will trickle down as benefits for you as
an investor in that fund.
That being said, if you invest Rs 10,000 in a particular equity mutual fund and after 3
months, the value becomes Rs 12,000 and you withdraw the entire amount, you are
liable to pay tax on the Rs 2,000 profit. Only after a year does withdrawal from equity
mutual fund not attract any tax.

#3: Lower cost associated with investing

The fund, being large, will be able to benefit from economies of scale. It can negotiate
better with intermediaries, and therefore lead to lower overall costs.
For e.g. if you were to open a share trading account, youll probably end up paying
0.5%-1% of the trade as commission to the brokerage. However, due to the scale
mutual funds have, theyll end up paying much less than that. This benefit will indirectly
be passed to you as a mutual fund investor.
SEBI, the market regulator, has made it compulsory for the management fees to include
all associated costs. Look out for the expense ratio of funds to understand the cost of
investing. This is a % value that tells you how much the mutual fund charges you as
fund management fee.
Expense ratio is typically around 1.8% for actively managed equity funds.
#4: Instant diversification of your portfolio with a few thousand rupees
Typically, in order to have a well balanced portfolio, you would need to have about 25-30
stocks in your portfolio. This can lead to a good mix of performance and stability.
Such a basket approach can be achieved if you have a large enough corpus. As an
individual, you may not have sufficient funds or mental bandwidth to create a sufficiently
diversified portfolio of stocks.
Mutual funds provide instant diversification. Since you are buying units of the mutual
funds that are spread across several stocks, you receive diversification benefit without
investing a huge corpus.
#5: More time to do what you love
You may be expert in your own field. For example, you may be a great programmer or a
sales person. Stick with your area of expertise, and what you love doing. You will
probably end up earning more, if you stick with what you love doing.

Leave investing to specialists, who know and love what they do.
More time at your disposal also means you get to do more of what you love to do the
most outside of work- like taking a vacation or spending time with your family.
#6: Mutual fund investing is simply more convenient
With stocks, you have to open a DEMAT and a share trading account, do complex
analysis on companies and sectors to understand which stock to buy, know when to sell
stocks, pay commission on each trade you make, and more.
When a Mutual Fund is managed, a custodian will handle all settlements and safety of
assets. It is the job of the custodian to ensure settlements happen safely and investor
assets are secured. Its also a tightly regulated industry.
Everything gets done for you for a very small management fee. Online platforms like
Scripbox make it even easier to invest in mutual funds by doing fund selection, annual
portfolio review, automated investments and more for you, completely online.
All these being said, we are not saying you should never directly invest in stocks. Direct
stock investing can be profitable and worthwhile if you

Are willing to spend time analysing and tracking companies and sectors regularly

Can handle volatility on a more frequent basis

Understand tax implications of your trade, especially if you do volume trading

Have enough money to invest in building a diversified portfolio of stocks

For someone who wants their money to grow safely, generating inflation-beating returns,
and not having to worry too much about where and when to invest, a mutual fund offers
a good alternative.
4 Lesser Known Ways To Save Tax

Gain from Permitted Tax Strategies not Evasive Loopholes

Every year, when the time comes to file taxes, its an itchy interlude, when most of us
are filled with anxiety about the deductions that are going to burn a hole in our pockets.
Here are five subtly obvious ways you can save tax.
#1: Gain from capital losses by balancing it off
Did you know you could balance short term losses against long term capital gains?
Short term capital losses such as that incurred from investing in stocks can be set
against long term capital gains like that gained from debt funds or sale property.
For instance, youve paid off the home loan and sold the property for a profit of Rs. 40
lakh. At 25%, the amount of tax payable is Rs 10 lakh. In the same year, however, if you
have sold stocks at a short term loss of Rs. 4 lakh, then your taxable amount will be Rs.
36 lakh.
Proof Required - Ensure you keep the statement of your trading account, including the
details of transactions for which you have incurred losses.
#2: Learn More to Save on Educational Expenses
Increasing cost of education is a major concern for parents. In the case of education,
the taxman is relatively favorable.
Under Section 80C and 80E, interest on educational loans for children as well as
spouses (excluding relatives and siblings) is deductible from taxable income for the first
eight years.
Proof Required For claims on interest paid on education loans, you need to present
your loan account statement as proof.
#3: Lighten the weight of medical expenses on illness of dependants

The taxman understands that in circumstances where a dependent is chronically ill,

medical expenses can weigh down taxpayers. Therefore, under Section 80DDB, an
annual deduction of INR 40,000 or INR 60,000 for senior citizen dependents can be
claimed.
Deductions can be claimed on only certain diseases, some of which include, advanced
stage of AIDS, hematological disorders such as hemophilia, neurological diseases such
as Parkinsons, dementia, chorea, and chronic kidney failure.
To be eligible for a claim, dependents (parents, children, spouses and siblings) should
not have claimed for deduction separately.
Proof Required For claims on medical expenses on illness of dependants, you need
a medical certificate and details of the illness from a certified medical professional in a
government hospital.
#4: Politicians are not the only ones to gain Benefit from deduction on political
contributions and charitable donations
Being socially responsible and politically inclined seems to be the current trend.
Whether you contribute to a recognized political party, volunteer to donate money to a
NGO or charitable organization, you are eligible for a tax deduction.
Under Section 80GGC (80GGB for corporates), donations to registered political parties
(excluding contributions to individual) or electoral trusts can be entitled for a deduction.
A fascinating point to note is that there is no upper limit on the amount that can be
claimed as a deduction.
Under Section 80G, 100% or 50% of your donation to a charitable organization and up
to 10% of your income is entitled for deduction.
Proof Required For claims on contributions to political parties, you need a stamped
receipt from the party or trust. For claims on donations made to charitable organizations,
a tax exemption certificate or receipt is required.

Remember: Its not about avoiding taxes. Its all about reducing your tax liability
5 Ways To Save More Money With Credit Cards

There are a world of benefits you can accrue with smart usage of credit cards. Heres 5
of them that help you save some money.
#1: Eat for less with dining offers
Most cards these days are associated with some of the other restaurant chains or coffee
shops. You just need to find out which ones are partnered with the card you use.
You could just ask the restaurant/shop if they offer discounts with any particular card.
You will be surprised to find out how many times the answer comes with the name of
one of the places you visit frequently. For example, Citibank has a tie-up with Cafe
Coffee Day.
Power user tip: If you dont have a credit card yet and is shopping around for one,
make sure you do a bottom-up approach. Identify the restaurants/coffee shops you
regularly visit and choose a card that is already offering a discount for that particular
restaurant/coffee shop.
#2: Take vacations for free
One of the advantages of co-branded credit cards are that they let you accumulate
rewards over a long term.
For example, a JetPrivilege co-branded card will give you up to 5 miles for every Rs 100
spent and the miles are valid for 5 years. This means that if you spend around 20,000 a
month, you will get 12,000 miles per year. Over a 5 year period, with just 10% increase
in spending per annum, you can accumulate enough miles to fly a family of 4 anywhere
in India.
Pro-tip: The typical reward system does not work the same way you think it might. For
example, in case of Jet, 1 JPMiles is not equal to 1 rupee. Also, the JPMiles required for

travel in a year between two destinations are pre-set. Its best to use these reward points
when you are booking your travel suddenly and the ticket rates are very high.
#3: Save on your daily commute
Credit card companies have tie-ups with fuel retailers. While some credit cards charge
an additional 2.5% surcharge on fuel purchase, considering it is one of the most
frequent expense on an average credit card, others waive if off completely. Some cards
offer the surcharge waiver as cash back for fuel purchases.
Power user tip: Not all credit cards are the same. Look for the co-branding and choose
a card that you can use in your frequently visited pumps. There are also cards like those
from standard chartered which dont have a co-branding, and yet, give discounts across
multiple fuel providers.
#4: Save even more money shopping online
Ever went to an ecommerce portal and saw extra 10% off on XYZ bank credit cards?
Credit card companies tie up with ecommerce players. If you happen to have the
particular bank credit card, you could get an extra discount (subject to the maximum
discount). Next time you visit an ecommerce website like Flipkart or Myntra, make sure
you check out the credit card offers they have for the day.
Pro tip: Credit card offers get rotated. Before you make the purchase or try and get the
credit card which has the offer running, wait for a week or two and see if an offer for the
credit card you already hold comes up.
#5: Ask for it
Sometimes you just have to make that call and ask your credit card company for the
benefit. Ask for your annual fees to be waived or for a lower interest rate on the unpaid
amount.
Pro tip: If you have a good standing with the credit card company, you can even ask for
a payment holiday in case you have a cash crunch for a particular month.

Some more tips to save money with credit cards

Go for credit cards without a co-branding- in case of frequent travelers, it might not
be ideal to stick to one airline only. Credit cards such as citibank premier miles lets you
accrue miles and redeem against a number of airlines as against one

Make use of insurance tied to your credit cards- Many credit cards offer lower
premium health and travel insurance policies for credit card holders. While you should
definitely have a separate insurance policy (even if your employer provides you one), you
can use your credit card insurance scheme as an extra cover

The other side of the coin

While credit cards offer great benefits, improper use could lead you into a debt trap.
Here are a few pointers to keep in mind while using plastic money.

Be careful about zero interest EMIs: Most banks hide the interest as processing fee.
So the zero interest EMI on a mobile that costs you INR 10,000 might actually be INR
11,000 when you factor in the processing fee

Always pay in full- every month: Check with the bank and enable auto debit for your
credit card. Carrying over your existing charges to the next month or beyond will attract
huge interests in the range of 20-40% per annum

Rewards points dont tell you the full story: Just like the example of JPMiles I shared
earlier, reward points might not be what it appears to be. For example, some bank credit
card reward points can be redeemed only against products offered by the banks online
store for their credit card customers. Most often, the redemption points required here are
much higher than what youd end up paying as cash otherwise. Thats if you find
something you are interested in getting in the first place.