Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
Retirement planning is an extremely crucial financial planning that one has to undertake. Ideally, it should be done from the first day of one’s professional life. Planning for early retirement enjoins careful planning and strict financial discipline. If you start saving from your early twenties for your retirement, you’ll be able to do it better since one has comparatively less financial responsibilities than those in their thirties.
If you want to retire at 50 or 52 with a corpus of almost Rs 15 crore here is a way out. “For those who plan to retire early, starting early will give them a longer tenure to generate a larger corpus along with the benefits of compounding,” said Nilotpal Banerjee, a professional financial planner from Kolkata.
Mutual fund
Goals like retirement corpus can be achieved with investments in mutual funds that offer inflation-beating returns in the long-term.
For that end you need to choose a diversified portfolio. For instance, you can plan your investments in mutual funds through SIP. Experts advise that one should begin a SIP while in their early twenties with a small sum. The amount can be increased as incomes go up. The point of saving from early years is to get benefits of compounding.
If a 25-year-old, who plans to retire at the age of 52, starts a monthly SIP of Rs 25,000 from the very first month of his/her career, then by 52 he/she would have invested Rs 81,00,000. Assuming a modest 14% return from a diversified portfolio, he/she would get around Rs 9.1 crore at the age of 52.
If the person is able to take more risk and invest in purely equity based direct growth fund then the return would be around 16%. That would give the person a comfortable corpus of around Rs 13.75 crore.
National Pension System
Besides mutual fund, National Pension System (NPS) is one of the best retirement options till date as it gives investor a good option to choose the fund by himself or herself. Being a young investor, you can invest 70%-75% of your monthly corpus to equity and the rest in corporate and government bonds.
This investment pattern might get you a return of 12%. If the person invests Rs 20,000 per month for a period of 27 years till 52 years of his/her age, it will yield about Rs 4.84 crore. Out of this corpus, almost Rs 3 crore will be paid at the age of 60 years.
The rest Rs 1.84 crore would be used to provide annuity. At 7% annuity rate, the person would get a monthly pension of Rs 52,200 for the rest of his life after the age of 60 years.
Public Provident Fund
Along with MF and NPS, the Public Provident Fund (PPF) is another safe option. Even though PPF comes with an initial lock-in period of 15 years, it is fully guaranteed by the Central government. It now long-term returns at a 7.1% interest rate, compounded annually.
Depositors can also extend their investments indefinitely in a block of 5 years, after the expiry of the initial 15-year lock-in period.
For example, if you deposited Rs 1.5 lakh every year in the PPF account for 27 years at a 7.1% interest rate, after the lock-in period is over, the maturity amount will be around Rs 1.22 crore. Of this amount, the nominal value of investment is Rs 40.5 lakh and the rest is interest income. The entire amount is free from income tax.
Experts say investment in PPF can also help meet an individual’s long-term financial goals. If one invests in equity-based investment option like MF or NPS, the person should invest in PPF, as it is fully government guaranteed.
Experts take
One may create a retirement corpus of more than Rs 15 crore at the age of 52 years, if the individual plans accordingly. If he/she retires at 60, the amount would be far higher.
Investment advisors pointed out that to create a corpus of Rs 15 crore by that age, one has to invest at least Rs 57,000 a month.
“This is just an idea. To get this corpus at the age of 52-53, the person has to invest at least Rs 57,000 per month. That means the salary of the person should be at least Rs 80,000/pm from the very beginning, otherwise it is really tough to achieve the corpus. If the person reschedules his/her retirement age at 60, it would, however, be easier to achieve the figure of Rs 15 crore,” said Nilotpal Banerjee.
“But if he/she is saddled with any home loan or personal loan or car loan, then the monthly salary of the person has to be consistently more than Rs 1 lakh. This is quite uncommon for a fresher, except for some special cases. So Rs 15 crore at the age of 52 is something not easy to achieve,” added Banerjee further.