Queries

Philip Allen, email

I try to save some part of my pocket money. I used to put this in my savings account but I have realised that the money tends to get spent. I want to opt for an instrument with a lock-in feature.

There are a few options, such as fixed deposits/recurring deposits in banks or post offices and small savings schemes of post offices. However, if you are able to save some money regularly, you could invest your money in mutual funds through a systematic investment plan (SIP).

While most mutual funds do not have a lock-in, you are allowed to withdraw partially or the entire amount. But, to discourage such practice, some mutual fund schemes charge an exit load if you withdraw before a certain period. Exit load is, typically, charged up to 1 per cent.

However, if you want a lock-in, you may opt for equity-linked savings scheme (ELSS), which does not allow withdrawal for three years from the date of investments. If you are a conservative investor, you can also opt for fixed maturity plans offered by asset management companies.

Shivik Gupta, email

I have a part-time job in an export company. I get paid Rs 20,000 a month. I also do some other paid gigs. Do I need to pay tax on this income? Usually, 10 per cent tax deducted at source (TDS) is already deducted.

You should file income tax returns, even if, at the current level of income, you do not fall in the income tax bracket. You cannot claim TDS refund without filing income tax return (ITR). In fact, if you are not filing ITRs, you are indirectly paying taxes to the government which you are not supposed to pay. So you file ITR and claim TDS. If the refund amount or TDS deducted is significant, you may even take the help of a qualified tax expert or a chartered accountant to help you through the process.

Ketaki Pilo, email

All my friends are putting money in cryptocurrencies. I also want to invest, but want to choose only one among cryptos, stocks and mutual funds because I have limited funds. What should I choose?

First, you need to understand that every individual is different when it comes to investments. Your risk appetite, investment horizon, liquidity requirements and other factors may not be the same as your friend’s. So, it is not necessary that if your friend is investing in a particular asset, you should also invest in it. Before you start investing, determine your objective of investment, set your financial goals, and assess your risk-taking ability, expected returns and other things. Once you have a fair idea of all these aspects, look at the assets that fit into your criteria and allocate the funds accordingly. It is always better to stick to regulated products such as mutual funds where it is easier to grasp the risks. They are managed by professionals and there is a lot of transparency. Cryptocurrencies are as such unregulated and, therefore, come with many hidden risks.

Rishad Manekia, Sebi-Registered Investment Advisor, and Founder and MD, Kairos Capital