Year: 2020

Nawanidhi Financial Services > Blogs > 2020

Nawanidhi Tax Planning Services

Posted on by Annapurna Shastri

India follows a progressive tax regime; which means that those who earn higher income are taxed more
than those earning lower income. Which means as your income and savings grow, the total income
which is the sum of your active income from salary and your passive income from your investments is
likely to be subject to a higher rate of taxation. At the highest tax bracket , mass effluents in India
earning more than Rs 15 lakh pa end up paying more than 30 % of their hard earned money in
taxes every year. Hence, tax planning becomes very crucial.
How do we fit in?
We are primarily financial planners and don’t claim to be tax experts. Our main role is to analyze your
finances and customize a financial plan from the tax perspective, so that your tax liability is minimized
and there is a greater contribution to your investment kitty.
We endeavor to
1. Suggest investment schemes which not only focus on long term capital growth, but also on
reducing the tax liability, and increase post tax returns on your savings.
2.Attempt to reduce your taxes on salary by advising on all the suitable income tax sections
available to claim rebates and exemptions.

Disclaimer: We are not tax returns preparers and we do not /are not authorized to file returns on behalf
of our clients.

Debt mutual fund investments in current economic situation

Posted on by Ram Hegde

Many investors have started asking questions to continue in debt funds after the recent trouble in several debt MFs lead by Franklin. In last 1 year about 22 companies held by mutual funds defaulted. IL & FS,DHFL, Reliance ADAG and yes bank contributed to bulk of these defaults. Credit Risk funds & Medium Duration funds were the major ones to take this hit. In select cases even Short term & liquid funds gave negative returns.

Does this mean you should stop investing / withdraw from  debt funds? 

No, there are plenty of opportunities in debt funds if the categories and schemes are chosen carefully.

Not All debt funds are bad. There are total of 16 debt fund categories and it requires careful consideration over which debt fund category suits you.

Let’s focus on select debt fund categories that have good potential to meet or beat the bank FD returns at relatively less risk.

1.Corporate Bond Funds: You may notice, of all debt fund categories, only Corporate Bond Funds have a mandate on high credit rating . In corporate bond funds, more than 80 per cent of the portfolio has to be invested in securities rated AA+ / AAA. All other debt fund categories need not necessarily maintain high % of AAA securities &  it is open to what is mentioned in the AMC scheme documents , namely Scheme Information Document (SID) and the AMC fund manager’s decision. Less than 1% of securities have negative outlook in this category. Also, majority of the funds in this category are currently giving returns well above bank FD’s.

2.Banking & PSU Funds: These funds have a minimum 80% investment in debt instruments of banks, Public Sector Undertakings, and Public Financial Institutions. These are relatively safer and returns are likely to be above bank FD’s as less than 2% of the securities held by them have negative outlook.

3.Liquid & Overnight Funds: Overnight securities have maturity of 1 day & liquid funds upto 91 days. Returns on these funds tend to fluctuate less when compared with other funds. These are the safest among all debt funds. However, the returns are likely to be in line with your savings bank account. If you don’t have an account in a bank that does not give a  return of about 5% then you may consider this category, for parking your money for a very time. You may also consider Liquid/Overnight MF’s that offer instant redemption to serve your emergency needs better and choose funds that have overall high Tbill percentage.

4.GILT Funds : Multiple rate cuts by RBI in last 6 months led to a steep fall in bond yields .This in turn gave a big boost to the NAVs of long-term debt funds, such as GILT funds. Hence, majority of GILT funds have given about 16% returns in last 1 year.

Those who assume they have invested in safe govt bonds would be shocked to see that returns on the GILT funds can swing plus or minus 5% within a span of 2 weeks.

However, long-term SIPs in gilt funds have been quite productive in the past and have given good returns. You should expect returns inline with current YTM of the GILT MF.

Also, returns through tactical allocation based on 6 & 12 months moving average, of bond PE has beaten the SIP approach.

Its very important to take help of a Financial advisor while making ANY investments in GILT funds as they are more difficult to understand.

Diversification is the essence of your debt portfolio management. It is advisable to diversify your debt portfolio across different categories of debt MF’s based on your risk profile, liquidity needs &  investment horizon. While choosing the debt MF our suggestion is to choose funds that have100% AAA rated papers &  Sovereign/ RBI Bonds from Govt of India, until overall economic situation improves further.


Its very important to understand the investment philosophy, read scheme related document carefully and periodically go over the holdings of the debt mutual funds.

OUR OFFERING/SERVICES IN THE EQUITY SPACE

Posted on by Annapurna Shastri

The global pandemic has resulted in a secular stock market downturn since February. In just over a month starting from the 3rd week of February, the Nifty corrected by over 35 %. Though it has recovered slightly from that low, it is at a 25 % discount to its price before the start of this meltdown.

As a result we have been getting many enquiries from clients, investors, friends, acquaintances wanting to take advantage of this. The most common queries being asked are:

  1. I want to invest in quality stocks now at these cheaper valuations. How do I ensure that I invest in companies with strong fundamentals and good credentials, which are likely to bounce back once we tide over this covid crisis?
  2. I am stuck with an existing portfolio of shares/equity funds which are at a significant loss now, and I do not have any spare funds to invest. Should I book at loss to prevent any further damage, or wait patiently for things to get back to normal?
  3. I have never invested in equity earlier. But from all the news reports and advice from my experienced friends, I feel it is the right time to start. What is the best way to go about it?

We are financial planners, and our main objective is to protect investor wealth over the long term and ensure that it generates superior risk adjusted returns so as to meet all the financial goals. We are neither fund managers, nor equity analysts or stock market experts.

However, equity investments form an integral part of our recommendations and we have listed below what services we offer in this space.

  • For those investors wanting to get into direct equity, we have researched, identified and shortlisted a couple of equity advisory companies which have a good track record and have been consistently beating the benchmark indices . Most of these start with an initial investment of 5-10 lakhs. These advisory outfits have portfolios with specific themes which the investor can take exposure to depending on their preference. They are given a login access to the equity portfolio which they can check anytime to see where the fund manager is investing or what is being bought and sold.
  • For the DIY investors who are savvy and have been managing their own share portfolios for a long time, and only want recommendations or names of select stocks to invest in with the rationale and reasoning behind it, there are organizations which we can suggest which do this for a fee.
  • For those who have an existing portfolio of shares which they haven’t been able to track properly or do not know what to do next, please send it to us, we can analyse those based on certain standard basic parameters which lie within our purview and area of knowledge and expertise, and give you our feedback.
  • For the new entrants, we suggest that they avoid getting into direct equities right away; and start with investing small amounts regularly into diversified equity funds with a proven track record of consistency in returns. We can help you construct a customized portfolio of equity funds, which we will help you invest, and manage and track it too.

If you are interested to know suitability of equity to your investment portfolio or require in depth review of your existing portfolio or require any services of a Financial Advisor to do feel free to contact us @

www.nawanidhi.com |  nawanidhif@gmail.com or info@nawanidhi.com

Demystifying Debt Mutual Funds

Posted on by Ram Hegde

Debt MF’s invest your money in Commercial papers, NCD’s, CD’s and other market securities. It is like someone investing in Fixed instruments/FD on behalf of you. By definition debt MF’s are designed to provide regular income generation in a relatively more stable manner as compared to equity-oriented funds when you choose correct MF’s fitting your Risk Profile

Debt MF’s are tax efficient as compared to bank FD’s. When held over 3 years or more they have indexation benefits. The overall tax that you would pay for the debt MF will be less than the bank FD’s.The returns in Debt Mf’s can be much higher than the bank FD when chosen correctly.

Unlike Equity MF’s debt MF’s are complex and there are about 16 categories of Debt MF’s of varying themes, maturity duration and risks The, returns offered by the debt MF’s vary mainly depending on type & duration of Mutual funds

You may notice out of the sixteen debt fund categories, only Corporate Bond & Credit Risk Funds have a mandate on credit rating [Quality of MF investments]. In corporate bond funds, more than 80 per cent of the portfolio has to be invested in securities rated AA+ / AAA & for credit risk funds, 65 per cent or more has to be in less quality papers i.e rated AA and below. All other debt fund categories, it is open to what is mentioned in the AMC scheme documents , namely Scheme Information Document (SID) and the AMC fund manager’s decision.

Debt Mutual funds are subjected to multiple risks such as Credit ,Interest & on few occasions Liquidity Risks.Any default or change in in the underlying investment rating affects the performance of the MF. Change in Repo rates by RBI [typically once in a quarter] impacts the MF returns.At times due to abnormal outflow in a MF leads to Liquidity crisis ( Recent Franklin issue) as the AMC will find it difficult to sell the underlying low rated papers.

Many of the ratings on popular sites tend to give more importance to the past performance & less value to the underlying quality of investments.These ratings are very generic & it is important to choose a mutual fund that fits your Goals, Risk profile & Investment duration.Choosing solely based on past Performance & Ratings may not be a wise decision in a long run

If you are interested to know suitability of a debt MF to your investment portfolio or require in depth review of your portfolio or require any services of a Financial Advisor to do feel free to contact us @

www.nawanidhi.com |  nawanidhif@gmail.com or info@nawanidhi.com

9820418134 | 9845818270