Steps to Bring Financial Wellness at Workplace

Steps to Bring Financial Wellness at Workplace

Financial wellness is nothing but productively taking charge of your own finances. The more successfully you do it, the better you are deemed. If you manage your economic life properly, you effectively succeed in bringing financial wellness into your life. If you fail to manage it properly, you will face many challenges in your economic path.

Everyone struggles with financial wellness at some point or the other, but with proper training and guidance, one can overcome the hurdles. Financial wellness is important because it brings forth mental peace and rids a person of undue stress and anxiety. When a person is at peace, he or she functions very well and the productivity at work increases as well. So if you are a business owner, you need to take charge of the financial wellness plan of your employees.

Doing this will help your employees to a great extent and will also drive in more profits your way. Read on to know more.

Why is financial wellness important?

Financial wellness at workplace is very important. This is because the financial journey of an employee essentially begins from his or her workplace. The salary earned is the largest and for many, the only source of money. Sadly, many employees live on a paycheck-to-paycheck basis. They are unable to manage their expenses and end up with practically no savings. This is why it is crucial for an employer to step in and ensure employee financial wellness takes place on multiple levels.

 

Here are the most common reasons why many people struggle to achieve Financial Wellness on a day-to-day basis:

1) Faulty debt management –

Many employees may be struggling because they have too many loans and no idea how to repay them. Proper debt management is an integral component of financial wellness plan. If an individual has a student loan, a home loan, a car loan and a personal loan that he is repaying, it will become difficult for him to clear all the EMIs.

Myth: At times, people also end up taking additional loans to manage their existing loan liabilities. This causes havoc to their financial wellness and brings forth excessive stress and anxiety.
Truth: This is the biggest reason for a lot of people to fall into the debt trap!

2) Unwillingness to make a budget –

Although simple it may sound, most people are either unwilling or unable to follow certain basic financial rules such as making a budget for themselves. No matter what the earning and the spending is, a proper budget definitely needs to be in place. Without a budget, aimless spending can happen and that can lead to further financial hardship for a person who is already struggling with his money!

Myth: People feel that since they don’t have too much of a disposable income and they almost live from salary-to-salary, creating a budget and sticking to it is of no use.
Truth: This is a misconception, as a budget helps you to spend smartly and save, even when your earnings and low.

3) Tax inhibitions –

Taxation is an integral part of everyone’s financial lives. Whether they pay a huge amount of money as income tax each year or not, understanding the tax structure is crucial. This is especially true since there are two income tax regimes that can be chosen.

Myth: Faulty knowledge of the taxation norms leads to many challenges that range from tax returns not being filed on time to avoidance or high interest on overdue taxes! These factors pile up the financial problems for your employees and keep them away from achieving financial wellness.
Truth: A proper understanding of the taxation norms might enhance the financial wellness of your employees.

4) Faulty investments –

There are many investment opportunities available in India. From the basic post-office saving schemes to the more complex investment options, your employees can invest their money in various ways.

Myth: Proper information about investments is only required if the investment corpus is high.
Truth: A lot of people may not have proper financial knowledge about investing properly, as per their financial capabilities and risk-taking abilities. This leads to faulty investments that subsequently lead to financial disasters.

5) Poor financial literacy –

And finally, it is common to find a deficit of correct financial understanding among employees in general.

Myth: Everyone seems to know about the basics of economics such as savings, investments, taxation and so on.
Truth: However, if you dig deeper, you will find that the knowledge is very limited and often the financial literacy is very poor. This is one of the main reasons why they fail to achieve financial wellness plan.

As an employer, it is your duty to make sure no employee working in your organisation faces financial hardships due to the reasons mentioned above. You need to take charge and implement financial wellness at work. Thankfully, there are some very effective ways in which you can achieve this.

Read about the importance of financial literacy at workplace

 

Top #3 Ways to achieve financial wellness at work:

You can help your employees achieve financial wellness in the following ways:

1) Helping them make better financial decisions –

As stated above, making poor financial decisions that range from not filing the taxes properly to investing incorrectly, your employees end up losing a lot of money that makes their financial life a mess.

Pro Tip: Help them to make better financial decisions by counselling them on how to make the best financial decisions.

2) Training programs to inculcate good financial skills –

An employee needs to be financially skilled to take care of his own financial wellness. This requires training over a period of time.

Pro Tip: Once your employees understand the basics, they will be more skilled to make the correct financial moves independently, and this will be a major step towards a comprehensive financial wellness plan.

3) Helping them to reduce financial stress –

And finally, your employees can only achieve financial wellness when they have a calm and worry-free mind. If they are constantly worried about money matters and how to manage their monetary duties, they cannot focus on anything else. As a step to bring financial wellness at workplace, you need to help your employees to let go of this stress.

Pro Tip: Offer therapeutic facilities such as access to a counsellor, mental relaxation games, access to better healthcare, etc. Becoming stress-free is the first step towards achieving financial wellness at work and in life.

Rather than organising one-off workshops or training modules, it is always better to integrate the employee financial wellness programs holistically into the work ethics of your company. This is an important step towards bringing financial wellness at workplace. Train and counsel your employees continue to make sure financial wellness at workplace happens on a regular basis and your employees get their economic live son track.

Are your employee feeling financially stressed? Here’s How to Help! Read our blog to know more

 

Financial wellness and income – the correlation

Financial wellness does not solely and wholly depend on the salary of an employee. A person who earns a few thousand rupees a month might be financially well and sound because he lives within his means saves and manages his financial duties with proper care. On the other hand, a person who draws a salary of Rs 5 lacs a month might be in a financial mess due to his extravagant lifestyle, a habit of overspending and poor financial literacy.

This analogy proves that it is not always the volume of the salary that ensures employee financial wellness. The individual’s financial literacy and money management skills are of extreme importance. Every employee has a different degree of financial knowledge and, as is evident from the points mentioned above, his or her financial wellbeing belongs greatly upon it.

It is, therefore, a very good idea for you, the employer, to ensure financial wellness at work by organising holistic financial literacy programs that benefit all the employees of your organisation.

Download a complete guide on Financial Wellness for FREE!

 

Designing programs to increase financial wellness at workplace

A compassionate employer who genuinely cares about the wellness of his employees will not fall short of ensuring that the employees receive the correct type of training, as per their requirements. To design the best programs to help your employees, you first need to evaluate the following:

1) Evaluate and assess the pay-structure of the organisation –

Before looking towards the employees to assess their financial statuses, you need to take a good and hard look at some of the facilities you offer to them. A major area is the pay structure of your organisation. Are the salaries you pay at par with the industry standards? Are you paying your employees too less? You need to evaluate this aspect and ensure your workforce is getting what they deserve. If the wages are too low, it is normal for people to worry and struggle financially.

2) Evaluate the financial literacy levels among the employees –

As mentioned above, all your employees may not be at the level of economic literacy. So before a financial wellness program is designed, ensure you understand the financial literacy levels of the employees and design or employ pieces of training that can help them to the greatest extent.

3) Evaluation of dependency on other financial aids –

Many people depend on additional financial aids like payday loans or personal loans. The dependency on such tools can prove to be very harmful in the long run and pull your employees into deeper financial distress. Make a truthful assessment on the overall dependency on such aids and see how you can help them get out of the trap.

Once you conduct these assessments, you will know where your employees stand. You can segregate them in groups and offer effective financial wellness programs that would help your employees to overcome their monetary hardships and also free them of stress and anxiety.

 

What does financial training comprise of?

There are many different forms of financial training available. However, an effective program would surely educate your employees on the following topics:

Step #1: Saving money –

Saving money on a regular basis is of utmost importance and is perhaps the most effective step towards achieving financial wellness. You need to train your employees on how to save money. The financial training material must comprise of this area as without proper savings, an employee cannot achieve his long-term financial goals.

Step #2: Budgeting –

As stated, making and maintaining a budget is of great value. But many people do not know how to make a budget. Making a budget does not simply mean noting down the incomes and expenditures. A budget is a plan and needs proper designing. A good financial wellness training program can tell your employees all about budgeting.

Step #3: Planning for their retirement –

It is crucial for all individuals to plan for their retirement. You are not going to pay for the expenses of your employees once they retire, so you need to make sure they set up a retirement fund early on in life. A retirement corpus needs to be created and maintained diligently and a good financial training program would tell your employees how to go about this.

Step #4: Investing –

Investing money in the first product you come across can be tremendously dangerous! Investing without proper knowledge and understanding is much more dangerous than not investing at all. Train your employees about the correct ways in which they can invest their money as this would be a great step towards bringing financial wellness in their lives.

Step #5: Maintaining a proper credit score –

Do your employees know about the concept of credit score? It may seem like a simple concept, but a large number of people do not even know it exists! Yes, that is correct. You need to inform your employees about the significance of having good credit and what a high credit score can do to their financial capability.

Once your employees understand these fundamental financial concepts, they will begin to improve their financial wellness, which would be of help to them and to you as well.

 

Importance of employee financial wellness

An organisation that has a happy workforce is an organisation that records better profits. This is an actual, hard fact because your employees are ultimately the backbone of your firm that keeps it upright.

The reasons that make employee financial wellness important are:

1) Better performance –

An employee who is constantly bogged down with stress and anxiety will find it very difficult to concentrate on anything else. His mind will remain clouded and he will have little enthusiasm left. This will greatly affect his work productivity as he will not be able to focus on the assignments he needs to complete. If however, he is stress-free and relaxed, he will be more enthusiastic and focused and will deliver very well at work.

2) Increased loyalty –

If you help your employees to achieve financial wellness, they will surely be grateful to you. The gratitude would make them better and more loyal and this would help you to have a strong and reliable workforce. After all, the efforts of your employees would ultimately bring in the profits, so you need their support in every possible way.

3) Good reputation for the firm –

And finally, your efforts to bring forth financial wellness at the workplace would surely fetch some good amounts of reputation. You will be known as an employer who takes care of his employees and worries about their financial wellness. This would not only win you accolades, but it would also make the most talented candidates eager to work in your organisation.

Keeping these points in mind, it can indeed be said that regular employee wellness programs must be deeply integrated with the work culture of the organisation.

Here is a more detailed guide on financial wellness. Download the guide for FREE

 

Ensuring proper implementation of financial wellness

As an employer, you need to ensure your employees are financially well. Do not treat this merely as a duty that you need to fulfil. Rather, be empathetic and treat this as a necessity for the overall wellness of your company. Hire a proper institute who can train your employees and help them achieve financial wellness in a proper and apt manner. There are some highly competent academies such as Koppr Academy that offer excellent financial courses for employees.

You can collaborate with Koppr Academy and enrol your employees for some of the best financial literacy courses. They can learn about several economic areas such as investments, taxation, budgeting, etc when they attend these courses. The courses are available online so your employees can access them at their own convenience. The course material is designed by some of the leading economists, which prove to be highly effective.

In a nutshell

To put it in a nutshell, financial wellness at work has no alternative. As the employer, it is your responsibility to ensure your employees achieve financial wellness at every level. Keep all the tips and guidelines mentioned above and you’ll surely be able to provide the help your employees need. Remember, an employer is highly regarded and trusted by his employees. You must make the most of this and offer all the help you can to your invaluable workforce.

The Importance Of Financial Literacy at Workplace

The Importance Of Financial Literacy at Workplace

To ensure the productivity of an organisation is at its peak, as an entrepreneur you must have the best employees. However, an organization is a mixed-bag of employees. It is the employees’ hard work and dedication that ultimately drives in the profits and improves the wellbeing of a company.

However, if your employees are healthy, happy and eager to work, as a business owner, you will see a positive change in the fortunes of your firm. On the other hand, if they are stressed and anxious, you will see the figures drop.

One of the most important reasons for stress among employees is financial worry. A majority of the people suffer from money-related problems as their financial management skills are not the best. It is, therefore, your duty and responsibility to introduce a financial literacy program in the workplace to ensure your staff understand the basics of financial literacy and manage their money better.

Once your employees are financially literate, they would be able to manage their own money much better and hence their stress levels over financial issues would eventually reduce! This would surely lead to healthier and happier individuals who would contribute immensely to the growth of the organisation.

The importance of financial literacy

As stated, it is very important to introduce the concept of financial literacy among your employees.

Here are a 5 reasons to highlight the importance of financial literacy:

1) Understanding investments –

Very few people can solely rely on their salary to take care of all their financial goals. Wealth creation is extremely important and that mainly happens with the help of investments. Unless you invest a part of your money, you will seldom see it grow and you will struggle to meet your long-term financial goals.

Pro Tip: A good financial literacy program teaches your employees about investments and guides them on how to multiply their wealth with the resources at hand.

2) Managing debt –

Borrowing money has become tremendously commonplace in the modern era. There are very few individuals who do not opt for bank loans. From home loans to personal loans, from education loans to car loans, an average person has many loans against his name. However, managing this debt can become a challenge if a proper debt management system is not implemented.

Pro Tip: A good financial literacy training talks about debt management and ensures people don’t struggle to pay off the loans they have.

3) Effectively clearing bills –

Apart from loans and EMIs, most of us struggle to pay a fat bunch of bills each month. From credit card bills to utility bills, the total bill payment amount is large enough to cause stress and anxiety among many!

Pro Tip: This is why you must insist that your employees undertake a financial literacy program and understand the ways in which the bills can be effectively cleared each month.

4) Planning for retirement –

As a responsible employer, you will pay your employees their monthly salaries. This would help them to take care of their livelihoods. But what happens after they retire? You would not be paying them their monthly salaries any longer so how would they sustain?

Pro Tip: To make sure they have a financially secure retirement, you need to train them about retirement planning. Do this with the help of a financial literacy program at the workplace.

5) Budgeting –

And last but not least, the importance of financial literacy at the workplace lies in teaching the employees budgeting.

Pro Tip: They need to know all about making a budget and sticking to it as that is the only way in which they can cater to their monetary needs and still save money for their future.

A good financial literacy program touches upon all these areas and provides wholesome training to the employees of the company.

What do financial literacy programs look like?

A financial literacy program, as the name suggests, is a comprehensive education program that focuses on teaching the participants the basics of monetary management. Here are some common components of a standard financial literacy program:

1) Step #1: Budgeting and saving –

Unless a part of the money earned is saved, a person will struggle financially. A financial program aggressively trains the participants on how they can budget and save. Making a budget may seem like a simple task, but in reality, it is actually quite complicated.

One needs to know their spending patterns, financial responsibilities, debt system, etc and then make a proper budget. Once a good budget is in place, the payments and savings both can happen. Budgeting and savings thus form an important part of any financial literacy program.

2) Investments –

As mentioned above, investments are the key to financial independence. However, the investments should be proper and effective, sadly, a poor investment can lead to heavy losses and the investor may even end up losing all his hard-earned money.

This is why a person requires extensive training and guidance before he begins investing his money. A financial training program tells the participants about the different investment channels, the risks associated, etc and helps them to choose the correct platform.

3) Taxation –

Taxation is a very important part of any financial plan. Most people who earn incomes pay taxes in some form or the other. Though commonplace, taxation is still a topic that baffles many.

If your employees are a bit confused about their taxes, enrol them in a financial literacy program and help them to understand all about the taxation system.

4) Maintaining good credit –

A financial literacy program teachers employees about maintaining good credit. There really is no alternative to having a good credit score as that allows a person to enjoy sound financial wellbeing.

Your financial journey becomes a lot smoother if you maintain good credit and this is why it is so important to learn about it.

Want to know more about financial wellness and it’s importance, read our blog to know more.

5) Staying away from frauds –

Sadly, frauds and cheats are rampant in the financial world. Many a time, unsuspecting people fall prey to these fraudsters and end up losing all their money. From disguising as bank employees to investment gurus, these fraudsters are there at every corner.

When your employees undergo a financial literacy program, they learn about the ways in which they can identify and subsequently, stay away from these cheats.

As you can see, these are very important financial topics that everyone needs to understand. When you arrange for a financial training program, your employees get wider knowledge about these economic matters and that benefits them to a large extent.

The cost factor – Financial education doesn’t have to be expensive

As a small business owner, you may be apprehensive about the costs involved in arranging a financial training program for your employees. The good news, however, is that such programs are often affordable and never too expensive to worry about. There are some very good and successful financial academies that offer customised training programs to company employees at very economical costs.

Options in financial literacy for employees

These days, employers around the world opt for new and interesting ways to impart financial training to their employees. From financial advisors coming in, to online courses being set up, there are indeed many options for imparting financial education among the employees. Some of the most popular options include:

1) In house financial advisor –

You can start off by employing a financial expert who can offer his or her advice to the other employees whenever needed. Many a time, employees feel tremendous stress and anxiety and fail to cope up with their financial troubles.

Having help at hand at such times can be of immense help. Also, when the advisor is a co-worker, the employees feel more comfortable discussing their issues, in comparison to discussing them with a complete stranger.

2) Option for teleconferencing –

Your next option is to set up a teleconferencing facility. You can tie up with a financial education firm and offer a phone number to your employees.

They can call the number and speak to the financial advisors and get the financial training they need.

3) Arranging physical workshops in the office –

Another option is to arrange for a financial literacy workshop in the office premises during office hours. There are many trainers who would come down to your office and conduct a fixed-duration workshop.

It can be a monthly affair or a bi-yearly one, depending on what your requirements are. The employees can join the workshops and get the training they need to ease out their financial struggles.

4) Signing up for online courses –

Many offices worldwide opt for the very popular option of online financial courses. There are many academies that offer excellent financial literacy for employees through these online courses.

In fact, there are multiple courses on Financial Literacy for your employees on Koppr Academy that can benefit your employees. You can opt for the same. All you need to do is to provide the login details and inform the time and ask all the employees to log in. they can receive the training remotely and stay one step ahead in the economic game.

Opting for Online Financial Literacy Courses on Koppr would not only be cost-efficient but make the most sense in the post-COVID era where everyone can access the same at their ease without having any physical interaction. This would keep their productivity ongoing.

You can opt for any of these options to ensure your employees receive the financial education and training they require. You need to ensure that the training they receive is of superior quality. Unless this is ensured, your employees may not gain completely from the training you arrange.

Benefits for the organization on training the employees on Financial Literacy

If you financially sound employees, your organisation will benefit immensely. Here are some ways in which that can happen:

1) Increase in productivity –

There can never be enough emphasis on how important and beneficial it is for the employees to be mentally fit. If they are constantly bogged down by stress and anxiety, they will remain preoccupied and that will prevent them from delivering their best. Even the most talented employees won’t be productive enough for your business to flourish.

And as we all know, financial stress is one of the main reasons why people lose their mental stability and get into tremendous bouts of anxiety. This causes them to lose their focus. If their finances are sorted, they are more relaxed and can focus more on the job at hand. This would increase the levels of productivity and in case benefit your organisation to a large extent.

Read a blog on How can you improve the mental health of employees in your workplace?

2) Easy to retain employees –

An employee who is financially stressed would be very tempted to change his job and opt for a new position where the salary is just marginally higher. He or she may not even give a lot of thought to the process of changing jobs at such a time. This can be quite damaging to your firm, as losing a capable employee who you trained over the years can be detrimental to the company.

If the employee is financially secured, he or she will be happy to earn the current salary and definitely will not quit the job just for the lure of a few extra bucks.

Here are top 9 employee retention strategies that will help your to retain the best talent in your organization.

3) Good reputation for the company –

When stressing the importance of financial literacy for employees and arranging various training programs for the same, you end up taking good care of your workers. This works in your favour and also increases the reputation of the organisation. People identify you as a good employer who thinks about the employees.

This increases your reputation in the industry and the best candidates want to work for your company. So financial literacy for employees has this added benefit that you can easily amass.

4) Financial gains –

Last but not the least, you get some economic gains of your own when you ensure your employees have proper financial knowledge. To begin with, the employee sick days reduce quite dramatically once the employees know how to cope with the financial stress around them.

Then, there is also a lowered healthcare-related expenditure as the employees stay physically fit and healthy when they are mentally relaxed and stress-free. And finally, employees who aren’t distracted by their personal money matters will definitely perform better and add to the revenue generation of the organisation. All these factors would prove to be financially fruitful for you, the business owner, in the long run.

Any organisation would benefit from having financially competent employees who are happy and perform their best. This is one of the biggest reasons why you should stress on arranging programs that aim to increase the financial literacy for employees.

Collaborating with a good academy

As you can clearly see from the points mentioned above, providing financial training to your employees is of utmost importance and as a business owner, you simply cannot skip doing this. However, you must also remember that providing proper and insightful training is vital. Many employers make the mistake of appointing sub-par financial trainers. This causes a lot of harm and the employees receive poor quality financial education. This leads to more problems and the training proves to be a disaster! You need to steer clear of all such matters. You can start off by hiring or collaborating with a highly competitive and able financial academy such as Koppr Academy.

Koppr Academy is an online financial training platform that offers financial literacy programs with the help of video tutorials prepared by financial experts. The course material is carefully curated and designed in a way to promote financial literacy for employees.

The courses can be accessed online by your employees 24×7. They can learn about various financial aspects such as retirement planning, investments, debt management, budgeting and so on. The courses are very affordable and this makes it easy for you to enrol your employees into these programs.

To sum it up

When it comes to money, most people are still quite conservative and prefer to be discreet. The reluctance to discuss their financial matters and the urge to manage it all by themselves lead to financial stress in many people. This is why you must integrate some methods into the regular work to inculcate the basics of financial literacy among your employees. A good way to do this is to introduce a financial literacy program for your employees.

After going through all the points mentioned above, the importance of financial literacy can not be ignored any longer. So get associated with a good academy like Koppr Academy and provide your employees with all the aid they require and soon you will have a group of financially sound employees who would deliver their best performance at work.

To a step toward spreading financial literacy we have a FREE course on Financial Planning. Enroll Today!

 

The Concept of Taxation in Mutual Funds

The Concept of Taxation in Mutual Funds

When you are investing, it is always important to consider the tax implications of the particular investment to understand how tax efficient the returns could be. Mutual funds are considered to be tax efficient investment options. Tax treatment and tax implication varies depending on the category of mutual funds you are investing into. You can take a detailed look at the taxation aspect of mutual funds below –

Taxation of mutual fund based on the type of fund

1) Tax implications for Equity mutual funds

Equity mutual funds are the funds that invest primarily in equities of companies. Any fund that invests more than 65% into equities is considered as an equity mutual fund for taxation purposes. Tax treatment for equity oriented hybrid funds that invests more than 65% into equities would be similar to that of equity funds.

If you make profit by redeeming your equity mutual fund investments, it is referred to as capital gains which are subjected to income tax. Following is the tax treatment for capital gains from equity mutual funds –

  • Short-term capital gains

Gains from equity mutual funds are classified as short-term if the units sold are held for less than one year. Short term capital gains are taxed at 15% plus cess.

  • Long-term capital gains

Gains from equity mutual funds are classified as long-term if the units sold are held for one year or more. Long-term capital gains have been reintroduced (which were tax free till April 2018) in the unit budget 2018. Presently, long-term capital gains on equity funds are taxed at 10% without indexation, only if the annual gain from equity exceeds INR 1 lakh.

 

Start Tracking your Mutual Funds Investment for FREE!

2) Tax implications for ELSS (Equity Linked Savings Schemes)

Equity linked savings schemes (ELSS) are the type of equity mutual funds that come with taxation benefits. ELSS funds are designed to provide tax benefits as it comes with a three years lock-in period. Which means, you cannot exit from the fund within three years of investment. But, you can avail tax deduction of up to INR 1.5 lakhs under Section 80C of the Income Tax, 1961. However, tax treatment of capital gains from ELSS schemes is similar to that of equity mutual funds.

Want to know more benefits investing in Mutual funds. Click here

3) Tax implications for debt mutual funds

Debt mutual funds are funds that invest predominantly into debt securities. Debt-oriented hybrid funds that allocate significant proportion into debt securities are also treated similar to that of debt funds for the taxation purpose.
If you make profit by redeeming your debt mutual fund investments, it is referred to as capital gains which are subjected to income tax. Following is the tax treatment for capital gains from debt mutual funds –

  • Short-term capital gains

Gains from debt mutual funds are classified as short-term if the units sold are held for less than 36 months or three years. Short-term capital gains from debt funds are taxed as per tax slab applicable to you based on your total taxable income.

  • Long-term capital gains

Gains from debt mutual funds are classified as long-term if the units sold are held for three years or more. Long-term capital gains on debt mutual funds are taxed at 10% without indexation and at 20% with indexation benefit.

Fund of funds, exchange traded funds and international mutual funds are also treated similar to debt mutual funds for the purpose of taxation. Tax implications are similar to that of debt funds for all of these funds.

Mutual Funds Sahi Hai but Are Your Financial Planning Sahi Too?

Mutual Funds Sahi Hai but Are Your Financial Planning Sahi Too

4) Tax implications on mutual fund dividends

Dividends received on mutual fund investments are taxed differently depending on the type of fund. Dividends paid by the mutual funds are subjected to dividend distribution tax (DDT) which is paid by the mutual fund companies. Mutual fund companies pay DDT of 11.648% on equity funds and 29.12% on debt mutual funds. Dividends were tax free in the hands of investors.

However, there is a major change in dividend distribution tax rule as introduced in the Union Budget 2020. In the new tax regime, dividend on mutual funds will be taxed as per the tax slab applicable to you depending on your total taxable income. Dividend on mutual funds needs to be now added to taxable income under the header ‘Income from other sources’.

Here is a step-by-step process to invest mutual funds in India.

Taxation is an important aspect of your financial planning. Understanding the tax implication on mutual fund schemes that are planning to invest can help you make effective investment decisions. Understanding the mutual funds, its working, types, routes and process to invest in along with the tax implications on each type of mutual funds can give you a general idea about the product as a whole.

When you are making an investment decision, understanding the product helps you make an informed and rational choice that would lead you towards your financial goal.

Here is a FREE course on  Mutual Fund, Enroll Today!

 

The Bulls, The Bears and The Farm – Know The Stock Markets

The Bulls, The Bears and The Farm – Know The Stock Markets

The stock markets have their own version of animal farms. And just like the real jungle, each animal (read investor) has a unique and distinct approach to investing. Let us look at what the stock market farm looks like.
The lead actors of the stock markets

The two most predominant characters are – The Bulls and The Bears.

1) The Bulls

The bulls are investors who have a positive outlook about the market’s future. They believe that the stock prices will go up in the future and so will their wealth! Bulls are often responsible for driving the stock prices higher. They can be easily recognized from the crowd with their optimistic and their “bullish (go-getter) attitude.

2) The Bears

The bears have a 180-degree opposite approach to investing as compared to the bulls. They are sure that the markets are going to head south in the coming future. Bears are pessimistic and can be often found cribbing about the jungle (read market) conditions to anyone willing to listen to them.

Know the 7 Golden rules of stock market investment

The not-so famous character actors

While the bulls and the bears hog the maximum limelight in the stock market farm, there are some other (not so often spoken about) characters as well which deserve your attention.

1) Wolves

Remember the dashing Leonardo DiCaprio in the movie The Wolf of Wall Street? As much as you like him, no one should be a wolf in the stock farm. This is because these type of investors use unethical or criminal ways to make profits. Wolves are the one who are usually responsible for market scams and frauds. We have had some wolves in the Indian stock market as well. Such as Harshad Mehta – the scamster of Dalal Street.

2) Chicken

These investors literally “chicken out” in times of volatility. They are usually fearful of stock price fluctuations and do not prefer to assume risk. Their fear outweighs their desire to earn higher profits. Hence, they stick with conservative investment instruments such as Fixed Deposits, government securities, bonds or such other low-risk, fixed-income generating instruments.

3) Pigs

There is a famous quote by Jim Cramer, a famous investment guru – Bulls and bears make money. But pigs get slaughtered!
Pigs are investors who feel that even a 100% return (over a one-year time period) is not lucrative enough. Such investors are always on the lookout for that “perfect” investment opportunity which will make them a millionaire in a short time period. Their investment decisions are based on market grapevine news or hot tips. They get drawn towards high-risk stocks and invest without putting in adequate time or effort in understanding the company or doing a thorough background research. As a result, they are the ones who land up bleeding most often.

4) Stags

Stags invest only through the IPO (Initial Public Offer) stage. Their objective is to not to remain invested for long. They want to make a quick buck by selling the stocks once they get listed in the exchange market.

5) Sheep

Sheep investors follow the herd and invest in the “most popular” stocks. They do not have their own investment strategy. They follow a leader and do not alter their investment style with changes in market conditions.

6) Ostrich

Whenever faced with a problem, this bird instinctively buries its head in the sand, with the hope that the trouble will go away. This type of investor does the same when there is negative news about their investments. While it may be very tempting to ignore things that are unpleasant to deal with, it is not a great coping (or investment) strategy. This is because you cannot make things better when you refuse to confront them. So, this is one type of investor you should definitely not aim to be.

7) Rabbits

Just like rabbits who keep on hopping from one place to another, these investors are always on the lookout for opportunities to earn quick money. They hold their investments for an extremely short time period (usually in minutes).

8) Turtle

These investors believe in the saying – slow and steady wins the race. They do not make any impulsive investments and trade keeping in mind the long-term. They try to minimize their number of trades and invest significant time and effort in each trade decision. As a result, they are not rattled or worried with short-term fluctuations as they are in it for the long run.

9) Whale

Whales are big investors who have the power to fluctuate the stock price when they trade (buy or sell) in the market. Generally, there are very few such investors. You can benefit a lot by swimming (read trading) along the whales.

Final Words

There is no king in this animal farm. Simply because, markets are cyclical. For instance, although the bears and bulls are endlessly at odds, both of them get their chance to shine and make money as the cycles change. So, you can choose any investment strategy which is in sync with your risk profile (except wolves and ostrich) and you are bound to be a happy animal in the long run.

Here a complete guide on how to invest in stock market for a longer run

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How to Read a Stock Table/Quote? Understanding Stock Quote

How to Read a Stock Table/Quote? Understanding Stock Quote

Recollect the table printed in the business section of newspapers with a lot of numbers that seemed like greek to you? Or those tickers flashing on new channels which seemed to buzz past the screen before you could even blink? They were nothing else but stock quotes and tables. (Thanks to technology, they are available online as well these days)

Stock quotes may seem intimidating at first, but once you understand the data points, you will be surprised with how simple yet effective they are.

Why you should be able to read a stock quote

You need to know the past, to understand the present. When you invest in a stock, you should have information about how its price has behaved (gone up and down) historically. After making sure that the stock qualifies on the checklist (Refer Finding Stocks for Investment), you need to decide on your investment timing as well.

Though we don’t believe that there is one “perfect” time to enter the market, investing at a time when the stock prices are reasonable and have not hit their saturation point is important. One of the most talked about financial strategies is to buy low and then sell high. Stock quotes support you to make these decisions. Even after investing in a stock, you should keep on monitoring their performance and growth on a periodic basis. Again stock quotes will come handy in such reviews.

Bottom Line: Stock quotes give you important insights about the stock’s performance. Without understanding them, you would not have complete information required to make a good buying or selling decision.

Let’s start planning your finances!

Let's start planning your finances!

How to read stock quotes and tables?

In order to read stock quotes, you need to understand its various elements and their implications.

1) Company symbol

Stock tables have limited space that they can dedicate to each stock. Hence, in order to display maximum possible stocks, they display a symbol instead of the company’s name. For instance, Infosys limited is denoted as INFY on the stock table. Usually the stock table lists all stocks in alphabetical order (of symbols).

2) Highs and lows

Share prices keep on fluctuating throughout the course of the market working hours. The stock table mentions the two extreme points – the maximum price and minimum price that the stock traded in a particular day. The price range (difference between these two points) helps you to understand the volatility faced by the stock on a given day.

You can try to co-relate the volatility with the major events that have taken place so as to understand the impact of specific activities on that stock’s market value.

Learn more about How and Why Does a Share Price Rise and Fall?

3) 52-Week High and Low

This column helps you understand the stock’s growth or trading range for a longer time period. It shows the maximum price and the minimum price at which the stock has traded in the last 52 weeks (one year).

4) Close

This column mentions the last price at which the stock was traded that day. For next day trading, you can refer to this close price as a ballpark figure of what you can pay for the stock.

5) Net Change

Net change indicates the growth or degrowth in the stock’s price as compared to the previous day. It is mentioned in absolute terms as well as a percentage of change.

Net change is calculated as:

(Today’s close price less Previous day’s close price) divided by previous day’s close price
When the net change is a positive value, the stock is highlighted in green colour. On the other hand, for a negative change, it is shown in red.

6) Dividend

Dividends play a significant role in stock selection, especially for long term investors. Hence, stock tables provide information regarding the dividend per share or dividend yield so that you can compare it against the stock price. (If the dividend field is blank, it indicates that the company is currently not making any payouts)

Dividend Yield is calculated as Dividend per share divided by Stock price. Higher is the value of dividend yield, higher is the return on your investment.

Read How to invest in stocks in India for trading or long term investment.

7) PE Ratio

You would have come across this financial ratio in the earlier articles as well. It is one of the most commonly used data-point while assessing a stock’s true potential especially in relation to its financial performance. It indicates how much you (as an investor) are paying for every rupee earned by the company.

PE Ratio is calculated as:
Stock price divided by the EPS (Earning per share)
A high PE ratio indicates that the stock is overvalued(costly). Conversely, a low PE ratio indicates that it is undervalued.

8) Trading Volume

This shows the number of shares that were traded in a day. It is expressed in hundred. So, in order to get the actual number, you need to append “00” at the end of the mentioned number. A heavy trading volume is generally followed by a major change (up or down) in the stock price.

Stock quotes are a powerhouse of critical information, which can help transform a newbie investor into a savvy one! Read, understand, draw insights and take smart investment decisions!

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