CEO Speak

As we go through this festive season, many of us must be getting rid of some old clutter and sprucing up our homes. This is that time of the year when many in our country take stock of their business year and get ready to start a new business cycle. We say, this may be also a good time to review your portfolio and take stock of your financial goals and investments. Look at your asset allocation, start a new SIP, begin a new journey into the equity funds. Our belief has always been long term investments. Trying to time the market is not a good idea. SIP helps average out market highs and lows by buying more units of a fund when markets are low and fewer units when markets are high.

A lot of you may also be gearing up for your company investment declarations and tax planning. In a country where tax planning is such a crucial financial consideration for individuals, the Equity linked savings schemes (ELSS) has emerged as a vital tool for smart investors. ELSS aims to offer dual benefit of reducing tax liability while helping the investors towards long-term wealth creation. At HSBC Mutual fund, we feel that one must plan for their tax savings and start investing regularly in such tax saving schemes through the SIP route*.

How is ELSS beneficial?

Tax Benefit: ELSS is a type of mutual fund scheme that predominantly invests in equity and equity related instruments. What sets ELSS apart from other funds is its Section 80C benefit under the Income Tax Act, which allows investors to claim a tax deduction of up to INR 1.5 lakh^ in a financial year. (This is subject to the investor’s choice of the tax regime to follow.)

Short Lock-in: Compared to other tax saving instruments available, ELSS has a relatively shorter lock-in period of 3 years.

Markets have been volatile because of largely global incidents, however, we have always believed in “time spent in the markets “and the long term “growth story of India”. Most of our investors have now gone through several market cycles and don’t usually get swayed by the market ups and downs if they have a clear financial goal. If you are a relatively new investor into mutual funds and wondering what the action plan during market volatility can be, our recommendation is to remember your financial goal and stay invested if it was long term in nature.

You may also want to look at re-balancing your portfolio. The way to re-balance one’s portfolio is to check the current corpus which has been created, assess the financial goals and check dispassionately the asset classes and their performances. You may want to continue with some, you may want to shift some money from one asset class to another and you may want to also plan a new investment strategy for fresh investable surplus.

This festive season include financial portfolio review in your list of things to do.

On behalf of the entire team at HSBC Mutual Fund, we wish a very Happy, Healthy and Safe festive season!

*SIP in ELSS will lock your investment on each Investment installment (i.e. for 3 years).

^ The tax saving shown has been calculated for a person aged less than 60 years in the highest income tax slab having annual income less than Rs. 50 lakhs, as per Section 80C of the Income Tax Act, 1961 for the Financial Year 2022-23 and includes applicable cess. We have considered the current 4 per cent educational cess on tax. Including cess, the tax saving per annum would amount to 31.2 per cent of Rs. 1.5 Lakh or Rs. 46,800

An Investor Education and Awareness Initiative by HSBC Mutual Fund

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