mirae. axis fees are excessive
Sure placing a lien on MF in demat shouldn’t be doable for a 3rd celebration. blindly deciding to place all cash with ZD was a silly mistake – a realization retains getting stronger every time
Hello @QuickoIf mortgage towards securities/ mutual fund is taken and utilizing this quantity if Gilt funds are purchased that are additional pledged for collateral. Fno buying and selling is carried out utilizing this collateral. So the question is can this cost of curiosity on mortgage be handled as enterprise bills for reducing the revenue and calculation of tax accordingly.
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Why you need to put money into Gilt fund by taking mortgage? Return on Gilt fund is lower than mortgage curiosity, instantly you possibly can pledge orginal mutual funds proper?
I’ll strive elaborating it this manner:
Say I already personal Gilt funds + another mutual funds price Rs. 5 lakhs
I get mortgage towards the above for say 3 lakhs with curiosity on mortgage say at 11%
New Gilt funds price Rs. 3 lakhs are purchased from this mortgage quantity
These new funds are pledged for collateral from intention of doing fno buying and selling… serving as margin cash for choice promoting
Now say authentic set of Gilt funds present returns of 7-8%, in order that approach I’ll get round 14% notional returns by doubling the amount
If fno buying and selling is finished methodically and it seems to be worthwhile, this revenue coupled with returns as in #5 can be larger than the curiosity to be paid as in #2
It’s a identified undeniable fact that rates of interest are at peak and fed / rbi will start the speed minimize cycle which can improve the Gilt fund returns considerably
Now the query is:
Is it allowed to deduct the curiosity payable from the revenue generated @Quicko
Has such difficult association labored in previous… noobs on this discussion board might kindly opine @Jason_Castelino
By no means commerce with borrowed cash.
Your complete factor is resting on the logic of constructing earnings.
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So, you’re going to get the return of 14% by doubling the amount however it is advisable to pay 12% curiosity on mortgage. Internet return can be 2%. For those who don’t take mortgage, your return can be 7% proper.
You’ll get margin on 3L for F&O when you take mortgage, in any other case you get on 5L, right here additionally you might be loosing.
VIPULK:
It’s a identified undeniable fact that rates of interest are at peak and fed / rbi will start the speed minimize cycle which can improve the Gilt fund returns considerably
See mainly goal is to utilise this chance of peak rates of interest anticipated to be minimize in close to future. So in case of even 0.5% price minimize, returns from Gilt funds (contemplating their modified period of 7-8 years) can be 3.5-4% along with their regular 7% I e. round 10%+ as noticed throughout earlier price minimize cycle.
So successfully doubling it to twenty%+Mortgage is procured at 10.5% because it’s a secured one towards the mutual fund
So right here web curiosity acquire of 8-9%
Concerning buying and selling technique…properly that’s merely very very conservative threat averse say promoting a weekly nifty strangle with 90%+ pop with ROI of round 0.5% every week
I do know sounds extraordinarily difficult and infeasible… However possibly workable with rule primarily based buying and selling with self-discipline … iota of luck
VIPULK:
utilise this chance of peak rates of interest anticipated to be minimize in close to future
…and what does the maths appear like within the state of affairs in whichinterest charges aren’t minimize as per the timeline you take into account?(or say they go even larger because of another unexpected occasion within the close to future)
VIPULK:
… iota of luck
You imply like playing?
cvs:
and what does the maths appear like within the state of affairs in whichinterest charges aren’t minimize as per the timeline you take into account?
Solely when rates of interest improve, this setup will fail. Even delayed price minimize could also be sustained because of marginal out efficiency from doubling impact.
Not a spot for Playing, however luck issue is sort of a chocolate… at all times welcome
VIPULK:
returns from Gilt funds (contemplating their modified period of 7-8 years) can be 3.5-4% along with their regular 7% I e. round 10%+ as noticed throughout earlier price minimize cycle.
I consider you may gain advantage from this value improve of gilt fund throughout a price minimize, provided that you redeem throughout this quick time period when there’s a spike in demand.
IMO, For those who keep invested in such gilt funds, it will ultimately common out the returns bringing it near regular anticipated return, is it not?
My thesis is predicated on previous returns from the interval of 2014 from when rate of interest minimize cycle started until I believe upto 2017-18, momentarily paused after which once more upto 2020 when rate of interest minimize cycle bottomed out.This was the perfect interval to money in on practically double digit rolling returns in an round 10%+
So anticipating related phenomenon to repeat.
Supply: Mutual Fund Rolling Return | RupeeVest
Inflation is staying in consolation zone goal of RBI and really chance of price minimize cycle to start both by October or December
I used to be simply referring to the fluctuations within the return.
Figuring out when to exit is essential to reap the advantages of value improve because of price cuts.
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Sure that’s true, however it’s typically noticed that from price minimize cycle to bottoming out takes round 3-4 years… then the trough interval of round 1-2 years… relying on inflation trajectory… so we’ve got a great time cushion.
As soon as we get the indication of reversal as they’re now…we take the motion anticipated pursuant to that state of affairs.
So basically I’m dealing with 3 issues right here
Harness Leveraging energy
Logical entry / exit in long run debt fund
Most dangerous a part of excessive chance fno buying and selling with very minimal RoR ~ 2% a month
Main question nonetheless stays that whether or not curiosity on cost of mortgage might be proven as enterprise bills and if deducted from the revenue from fno (if I keep worthwhile).
VIPULK:
whether or not curiosity on cost of mortgage might be proven as enterprise bills
Why not?
Any expense incurred solely for the aim of the enterprise is eligible to be claimed.
Assuming in your case, such borrowed funds are used for investing in debt, which in flip will get pledged for margin, curiosity on such borrowings would qualify as a enterprise expense.
@Quicko can verify this.