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?
If you are suffering from an itch on the skin, you can consult this dermatologist for a cure. But if you return with an itch of a different kind, don’t blame him please.
Have you ever visited a doctor to discuss your investment portfolio? Chances are very very rare. But tucked away near the country’s west coast in the city of Baroda, which gave India Vijay Hazare, Irfan Pathan, Yusuf Pathan and Hardik Pandya, lives 53-year-old dermatologist Hitesh Patel, who can detect multi-bagger stocks as deftly as he can spot an eczema from a distance.
In a state where investment is a signature of the people, Patel is widely known for his skills in picking multibagger stocks. Some of his cherry picks such as Atul Auto, Kaveri Seeds, Ajanta Pharma, Canfin homes, PI Industries, Avanti Feeds, Mayur Uniquoters and Laurus labs have helped him to achieve financial freedom.
Doctor to investor
Patel’s journey from a doctor to an investor began originated in his love for reading. He used to read up all kinds of books ranging from classics like Thomas Hardy, Jane Austen to the humourous books of PG Wodehouse, to the thriller and mystery writers like Robert Ludlum, Agatha Christie, Desmond Bagley, Dick Francis and a whole host of other genres and authors.
A surgeon friend introduced Patel to One Up on Wall Street by Peter Lynch and John Rothchild. Patel took to it as a duck takes to water. Lynch is a former fund manager at US firm Fidelity Investments who averaged a near 30% average annual return from 1977 to 1990.
“I devoured all three books of Peter Lynch. For anyone with no background in the field of investing and finance, it is an ideal preparation for the wide world of stock markets. Being a son of a mathematics professor and despite studying dermatology, it did not take me long to get addicted to investing,” Patel said. He admits that the real kicker came from reading Warren Buffett’s authorised autobiography, Snowball.
What impressed him was the fact that the legendary investor started off investing his money and savings which he had accumulated doing part time jobs and odd jobs and ultimately went on to become one of the richest persons in the world.
That opened his eyes to the possibility of amassing enough wealth to think about a comfortable retirement.
Dreams fulfilled
Patel accumulated his initial capital for investing from his first job. “Thanks to the success in equity investing, I was able to take voluntary retirement and devote myself to my favourite pursuits of full time investing, reading, farming, and other activities such as swimming, cycling, walking, trekking, travelling, watching movies in my more than enough spare time,” he said.
Patel also fulfilled his dream of having a decent farmhouse 15 km from his home. “At my farmhouse, I love to grow mangoes, guavas, mulberry, vegetables and spend quality time in nature with family and friends,” he added.
Road to financial freedom
The key factor that allowed him to achieve financial freedom was first learning the ropes of investing by reading books and then through interactions with some friends.
“Both opened my eyes to different styles of investing and having seen first-hand people with diverse investing styles succeed, I derived a lot of confidence and comfort in allocating a big part of my networth into equities. Most of my personal wealth remains invested in equities for past 10-12 years and very good compounding has taken care of the rest,” said Patel.
He further added that one of the most important attributes to creating decent wealth is to allocate enough amount of money to equities and then allocate enough part of the portfolio to high conviction stocks.
Approach to investing
Patel said that the key to achieving success in investing lies in knowing oneself as an investor and finding a style suitable to match the individual’s temperament. “I love the techno funda approach to investing and find it very exciting and rewarding. Combining the knowledge accumulated over the years in fundamental analysis with technical analysis has been the cornerstone of recent successes,” he said.