[Naetik30]

Originally Posted by thirugata

My 2 cents on this:

Have a minimum cut off point in mind below which you dont want to loose the profit you have made. Keep increasing this value if the market moves up. Lets say you are making 100% profit, lets say you choose a cut off point of 85%. If market goes up and your gain goes to 110%, then you increase your cut off to 95%. ( Just an example).

Thanks. This is an interesting thought. In your case, how would you set the target cut-off - just as an absolute % or a % value against number of years? Say for example - 100% in 5 years?

And will this not affect our time in market for the units held? Say, if we keep selling when the going is good, do you buy back the same MF units? Or redeploy in some other MFs? If the MF we have is doing well enough, should we not hold on so that it averages out the days when the returns go down.

[thirugata]

Originally Posted by Naetik30

Thanks. This is an interesting thought. In your case, how would you set the target cut-off - just as an absolute % or a % value against number of years? Say for example - 100% in 5 years?

And will this not affect our time in market for the units held? Say, if we keep selling when the going is good, do you buy back the same MF units? Or redeploy in some other MFs? If the MF we have is doing well enough, should we not hold on so that it averages out the days when the returns go down.

First of all, there is no one right way of making money in stock market and can never say which method is superior. My point was tax should not be the determining factor when you want to decide sell or not to sell.
The method i mentioned needs more active participation in the market and that does not suit everyone.
But being in the market for last 15 years I have understood one thing, buying and just holding without knowing when you should sell is not a good strategy. Hold is what you do until the price that you want to sell is not hit. Yes you need patience and long term gives money, but its when you sell you make money. So its equally important to know when to sell.

If I give an example: Nifty hit 6500 levels 3 times in between 2007 - 2014. Once it came down to 2200, second time to 4500. So people who just held made 0 return from 2008 Jan to mar 2014, though market moved significantly.
Do not sell when the going is good, you just trail the cut off percentage.

But as i said this method does not suit everyone as this needs regular monitoring. But in my opinion you may need an hour of time per week to check whats happening to your portfolio and nothing more than that.

Once i sell any fund, its not necessary i buy back the same. It purely depends on what kind of fund composition it has and how it is fitting into my portfolio to balance the allocation of Largecap, Midcap and Smallcap.

[sameerg]

Originally Posted by Naetik30

2. Difference in NAV between Regular and Direct for the 3 funds -
a. ICICI Prudential Bluechip Fund (66.23 vs 71.34)
b. UTI Flexi Cap Fund (246 vs 258)
c. Franklin India Focused Equity Fund (65 vs 72)

Sorry for a noob question, but how come NAV for same fund be different on two portals (ICICIdirect vs ETmoney in this case??

[Fx14]

Originally Posted by Naetik30

Need advice on whether this is a worthwhile thing to do or not. So here is the data -

1. If I sell all my regular plans today, my LTCG liability would be INR 122,000.
2. Difference in NAV between Regular and Direct for the 3 funds -
a. ICICI Prudential Bluechip Fund (66.23 vs 71.34)
b. UTI Flexi Cap Fund (246 vs 258)
c. Franklin India Focused Equity Fund (65 vs 72)

With this new data, does it make sense for me to make the switch?

If these are going to be your only transactions attracting LTCG during the FY, then you can look at it this way :
1. LTCG tax @ 10% on 22,000 would be your immediate impact.
2. The long term gain would be the savings on the differentials between the expense ratios of the respective direct and regular schemes listed by you.
3. The NAVs would keep changing proportionately and hence not really affect the decision per se.

If gains in point 2 are more than the impact of point 1, you may want to go ahead.

[graaja]

Originally Posted by sameerg

Sorry for a noob question, but how come NAV for same fund be different on two portals (ICICIdirect vs ETmoney in this case??

Most mutual funds have two categories - regular and direct. Both the categories are actually the same fund.

But with regular funds, the fund house will pay commission to brokers - ICICI Direct is one such broker. So ICICI will get commission from all mutual fund houses for all the investments made from their platform.

On the other hand, direct funds are funds where investors can invest directly without any brokers in between. As there is no broker commission involved, that amount reflects as additional returns to the investor.

That is why direct funds usually have about 1% more returns compared to regular funds.

Hope this clears your doubt.

Originally Posted by Naetik30

Wow. Excited to get a response from one of my inspirations @graaja sir. Also from the same city (Coimbatore)…

1. If I sell all my regular plans today, my LTCG liability would be INR 122,000.
2. Difference in NAV between Regular and Direct for the 3 funds -
a. ICICI Prudential Bluechip Fund (66.23 vs 71.34)
b. UTI Flexi Cap Fund (246 vs 258)
c. Franklin India Focused Equity Fund (65 vs 72)

With this new data, does it make sense for me to make the switch?

Thank you for your kind words

If you do not plan to make any other redemptions this year, then of the 1.22L LTCG, 1 lakh will be exempted and you would pay 10% on 22k which would be 2.2k. I think this will be quite low a proportion on the overall investment comparing with the approximately 1% more returns you would gain for the direct funds. In your situation, I would move these funds from regular to direct.

[Naetik30]

Originally Posted by Fx14

If these are going to be your only transactions attracting LTCG during the FY, then you can look at it this way :
1. LTCG tax @ 10% on 22,000.

Originally Posted by graaja

Thank you for your kind words

If you do not plan to make any other redemptions this year, then of the 1.22L LTCG, 1 lakh will be exempted and you would pay 10% on 22k which would be 2.2k. I think this will be quite low a proportion on the overall investment comparing with the approximately 1% more returns you would gain for the direct funds. In your situation, I would move these funds from regular to direct.

Sorry, I think I wasn't clear. My tax on LTCG would be INR 1,22,000 (not the LTCG itself). But I get the drift of the messages. Will plan to utilize the INR 1 lakh exempt profit to switch to direct plan over the next few years.

If only I had thought about it a few days back, may have utilized last financial year's benefit as well.

[sameerg]

Originally Posted by graaja

That is why direct funds usually have about 1% more returns compared to regular funds.

Hope this clears your doubt.

Thanks a lot for clearing this. This means I need to stop investing more through ICICI direct. Any recommendations on how to set up SIPs for investing directly?

[graaja]

Originally Posted by sameerg

Thanks a lot for clearing this. This means I need to stop investing more through ICICI direct. Any recommendations on how to set up SIPs for investing directly?

I use a platform called MFUtility that allows investment in direct funds. There are other platforms like Zerodha that allow direct funds. People who use these platforms can provide more i information.

[pratyaksh]

Originally Posted by sameerg

Any recommendations on how to set up SIPs for investing directly?

Zerodha is easy to use and can be set up in minutes.
Other option is to do it directly on the AMC's website individually.

[SR-71]

I am using my Kotak Trading account to invest in the direct funds. I also have some investment in regular funds which have been around for a few years now and I don't want to take them out just yet. Question - Is it possible to shift these funds to a new platform without having to whit draw the fund. Withdrawing and reinvesting in another platform would mean incurring tax and obviously I do not want to do that. Kotak has one of the worst portal of late and even worse MF platform.

[pratyaksh]

Originally Posted by SR-71

Withdrawing and reinvesting in another platform would mean incurring tax and obviously I do not want to do that. Kotak has one of the worst portal of late and even worse MF platform.

You could Switch these funds from one to another without incurring any losses. Can also use SWP route for averaging if needed.

[Naetik30]

Originally Posted by pratyaksh

You could Switch these funds from one to another without incurring any losses. Can also use SWP route for averaging if needed.

Not true. Switching basically means redeeming or selling the units and repurchasing. So you will have to account for captial gains tax.

[Fx14]

Originally Posted by SR-71

I am using my Kotak Trading account to invest in the direct funds. I also have some investment in regular funds which have been around for a few years now and I don't want to take them out just yet. Question - Is it possible to shift these funds to a new platform without having to whit draw the fund. Withdrawing and reinvesting in another platform would mean incurring tax and obviously I do not want to do that. Kotak has one of the worst portal of late and even worse MF platform.

If you are investing via a trading platform, check if the MF units are held in demat form.

If yes, check if you have an option to transfer the holdings off-market to another demat account held by you in the same right and holding pattern - in which case no redemption would be involved through the AMC.

[graaja]

Originally Posted by SR-71

I am using my Kotak Trading account to invest in the direct funds. I also have some investment in regular funds which have been around for a few years now and I don't want to take them out just yet. Question - Is it possible to shift these funds to a new platform without having to whit draw the fund. Withdrawing and reinvesting in another platform would mean incurring tax and obviously I do not want to do that. Kotak has one of the worst portal of late and even worse MF platform.

If you create an account in MFUtility, all your current holdings will be visible under this account. Only requirement is that the KYC details match. You can then do all transactions from MFUtility itself. So there is no need to sell, buy or transfer etc.

For many years, I was purchasing funds directly from each fund house. When I created the MFUtility account, all these funds were visible in this account and now I don't visit the individual sites.

[vijaykr]

Originally Posted by graaja

I use a platform called MFUtility that allows investment in direct funds.

I have been using MFUtility for several years and have found it easy to setup and use. Provides access to funds across almost all AMCs. And this is an initiative backed by AMFI itself.