Finance Facts

The topic I’m writing about today has nothing to do with the current state of the markets, but everything to do with making money in them.

The reality is that there are certain core competencies you must implement if you want to trade profitably.

Unfortunately, most investors either don’t get it, or worse, simply choose to ignore these fundamentals. Still others understand these rules. And yet, when push comes to shove, they let their emotions get the better of them, which often leads to disastrous results.

Everybody is running to make money fast. The world of stockmarket fascinates us all with small investment with huge returns .

I call the following concepts as "Fifty golden rules of profitable trading.” Follow these time-tested precepts each and every time you trade and invest, and I think you’ll have the essential framework to make money in any market.

  What is Bitcoin?

Bitcoin is what's known as a cryptocurrency, a digital asset that exists only as data. You probably have money in the bank that is digital, but those digits equal physical currency. Not so with Bitcoin. Bitcoin also has no centralized regulation nor innate legal framework. As such, the value of Bitcoin is dictated entirely by the market, and the market is hot right now.

Bitcoin is stored in a digital wallet, which you can save locally on a hard drive or phone, or online with any number of Bitcoin exchanges. Saving your Bitcoins locally is like keeping all your money under the mattress. If something happens to the digital wallet, all your money is toast. Sending and receiving money is handled by pointing your Bitcoin client or web exchange toward a Bitcoin address, which every wallet has. A few minutes later, the Bitcoin will leave your wallet and show up in another. Websites that accept Bitcoin are rare, but they are out there. Spending it in real life is considerably more tricky, but again, there are a few system in place to manage it.

Who created Bitcoin?

The first Bitcoin specification and proof of concept was published in 2009 by an unknown individual under the pseudonym Satoshi Nakamoto who revealed little about himself and left the project in late 2010. The Bitcoin community has since grown exponentially.

Satoshi's anonymity often raises unjustified concerns because of a misunderstanding of Bitcoin's open-source nature. Everyone has access to all of the source code all of the time and any developer can review or modify the software code. As such, the identity of Bitcoin's inventor is probably as relevant today as the identity of the person who invented paper.

Who is involved in Bitcoin?

Over $1B of investment into Bitcoin and blockchain companies has taken place resulting in thousands of companies and hundreds of thousands of individuals involved from around the world.

Is Bitcoin really anonymous?

Transactions are at the heart of Bitcoin -- it's powered by what's known as a blockchain. You can view blockchain information for any wallet address, too. You don't necessarily know whose wallet is whose, but you know what's in them because it's a public ledger. Perhaps you've heard about "mining" Bitcoin? That's when you use a computer to crunch numbers for the blockchain. This is how transactions are verified, and in return you get some Bitcoin. It used to be easy to mine Bitcoins, but the difficulty increases substantially over time. Now, you need a server farm to earn much this way.

How does Bitcoin work?

From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and enables a user to send and receive bitcoins.

Behind the scenes, the Bitcoin network is sharing a massive public ledger called the "block chain". This ledger contains every transaction ever processed which enables a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses therefore allowing all users to have full control over sending bitcoins.

Thus, there is no fraud, no chargebacks and no identifying information that could be compromised resulting in identity theft

Bitcoin Mining

Just like anyone can join the Internet, anyone can help to verify and record payments into the block chain. This process is called mining.

In mining, users offer their computing power.

Miners are rewarded with newly created bitcoins and transaction fees.

Currently, miners receive 12.5 bitcoins every 10 minutes. This halves every 4 years. The next halving will happen in mid-2020.

How is Bitcoin involved with Ransomware?

So, Bitcoin could do a lot of good things, but you often hear about it in negative contexts. The anonymous aspect of Bitcoin has drawn cybercriminals to the digital currency. Ransomware attacks started occurring a few years ago as the price of Bitcoin shot upward, and the WannaCry ransomware made news just a few weeks ago. When your computer is infected with ransomware, it encrypts your important files and demands a Bitcoin payment to a specific address in exchange for the key. It's not like criminals can ask you to wire some easily traceable money to their bank account, so Bitcoin is the perfect solution. After a few hops in the public blockchain, the money is essentially clean.

Bitcoin is very much the wild west of international finance. Security firms have reported that some cryptocurrency from ransomware attacks ends up in the hands of North Korea, which is barred from many traditional financial markets by international sanctions. The same has been said about terrorist groups and organized crime, which risk having assets seized in traditional banks. All those ransomware payments are just the tip of the criminal iceberg, too. Numerous Bitcoin exchanges have also been the victim of hacking and fraud, which has led to Bitcoins being stolen from users. That money is just gone—there's no FDIC to refund people when Bitcoin is stolen.

What does Bitcoin mean for the economy?

Despite all these issues, Bitcoin is surging in part because more people are using it. Bitcoin fans believe steadfastly that it's the future. Regular people are becoming interested in cryptocurrencies, but it's still too complicated for mainstream adoption. If that ever happens, we could see a lot more highs and lows in the global economy as Bitcoin's value swings. And it does… a lot.

If you'd bought $1,000 of Bitcoin in 2010, you'd be worth $35 million right now. However, if you bought $1,000 worth of Bitcoin in early 2014, you'd have only had a quarter as much buying power a year later. Imagine being paid in Bitcoin, and then finding your money was only worth half as much a few days later. Economies with that kind of inflation are not stable, but Bitcoin has the advantage of operating alongside regular government-backed money. Almost no one has all their assets in Bitcoin.

Is Bitcoin going to last?

As a backdrop to all this, programmers are arguing over how best to manage Bitcoin going forward. There are calls to "hard fork" the currency, which could lead to two competing standards. That would cause even wilder swings in price. Whatever the long term ramifications of these decisions, Bitcoin (or whatever cryptocurrency it becomes) isn't going anywhere.

Don't Let Your hard earned money Slip Away!!

You and me, everyone want to save tax. You must be knowing some ways of tax saving. But still there is scope. Rather, you can always find some extra methods to reduce the tax outgo. Do you want to know the 10 most effective ways to save tax? You must read on this post to save thousands of rupees. This articles is specially written for salaried people.

1. Save Tax On Rent Payment

We get a job in a different city or place. We go there to do our job. If the company does not give us accommodation we have to rent out. We live in rented house because of our job. Therefore, expense of rent should be deducted from the taxable income.

Employers do give some part of your remuneration as House Rent Allowance (HRA). You subtract this HRA from your gross income. However, you cannot take full benefit of HRA for tax saving. There is a formula for the HRA tax benefit.You can deduct the lowest of these from gross income.Employers do give some part of your remuneration as House Rent Allowance (HRA). You subtract this HRA from your gross income. However, you cannot take full benefit of HRA for tax saving. There is a formula for the HRA tax benefit.You can deduct the lowest of these from gross income.

• Actual HRA given by the employer

• 50% of the basic salary plus DA if the employee is situated in Delhi, Mumbai, Kolkata and Chennai. Else, 40% of the basic salary plus DA.

• Actual house rent paid by you, minus 10% of basic salary+DA.

You can also use a HRA calculator to find out the HRA tax benefit.HRA gives you big tax saving. Ask your employer to keep the provision of HRA in your salary structure.Also, Don’t forget to take rent receipts from your house owner. If your total rent of a financial year exceeds 1 lakh then you need to give copies of registered lease agreement and copy of the homeowner’s PAN card.(Note: Claiming bogus rent payment and rent payment to your family member may lead you to serious litigations)

One important thing to consider before you jump invest in tax saving investment options for reducing your tax dues is to review your pay structure and your household expenses first. Your salary may comprise of several allowances and perquisites like Leave Travel Allowance (LTA), House Rent Allowance (HRA), Medical Reimbursement, Uniform Allowance, Car Reimbursement, Telephone Reimbursement, Books and Periodicals, etc which may be claimed as tax exempt subject to submission of related proofs. But most of the employers stop accepting the related proofs towards the end of January. So now you may not be able to claim all these exemptions, but you can still claim few of them while filing your tax return to reduce the tax burden, e.g., HRA.

3. Leave Travel Allowances and Medical Expense

Some personal expenses are also eligible for exemptions. These Expenses are deducted from your gross salary. Your employer may give you part of your salary as medical allowance. Check with the HR department.
If you produce an actual bill of medical expenses, this allowance becomes tax-free. So, Start collecting medical bills. However, it is limited to Rs 15,000 in a financial year. You can give receipts of medical expense of your dependents as well.
Your employer can give you leave travel allowance as well. You are entitled to tax-free leave travel allowance.

• It is also limited to two times in a block of 4 years.

• The travel should occur while you are on the leave.

• It should be within India.

• Travel should be from the shortest route.

• You can claim the maximum for AC-I of the train journey and economy class of air travel.

4. Invest And Reduce Taxable Income

Certain investments give you tax rebate. These investments come under section 80C deductions. The amount invested is deducted from your taxable income.
Many of such investments come under EEE category. It means you need not to give tax at the time of  investment, earning and redemption. However, There is a maximum limit for 80C deductions 1.5 lakhs .

5. Expenses Eligible For Tax Saving

There are some expenses which also give a deduction for tax saving. These expenses are also counted under the limit of 80C.

• Tuition fees for self and children

• Insurance scheme premium

• Home loan principal payment- Home loan EMI has two-part, principal and interest. Principal part gives tax saving benefit under section 80C. Know more about the tax benefit of home loan

These expenses and above mentioned investment in aggregate should not exceed 1.5 lakh limit.

6.Medical Insurance Deduction

Medical Insurance expense gives you the deduction, over and above the 1.5 lakh limit. You can save tax for the health insurance premium of your family and dependent parents. Also, health checkup can also give you tax saving. You can deduce these expenses from your total taxable income.

• Up to Rs 25,000 for the health insurance of self and family. You can also include health checkups of up to Rs 5,000 within this limit.

• Up to Rs 25,000 for the health insurance of parents. If they are above 60 years, This limit goes up to 30,000.

7. Enjoy Tax Benefit On  Home Loan Interest Payment

Home loan interest payment enjoys separate tax saving. The limit of deduction for home loan  interest payment is ₹2.0 lacs. This deduction can give you a very big tax saving. However, the loan amount should be big to get the full benefit. You can also double your tax saving through the joint home loan.

8. Set Off Capital Gain, Save Tax

Salaried people need to give capital gains tax on their investments. Shares attract only short-term capital gains tax while property and gold attract both short and long term capital gains taxes. However, you can set off your capital gains  from an investment with the capital loss of another investment. Note, you can set off short-term capital gain only with short-term capital loss and long term capital gain with long term capital loss only.
You can also carry forward your capital loss up to 8 years. This will give a fairly good chance of tax saving on account of capital loss. Suppose you incur trading loss in shares. This loss can be carried forward up to seven years. In subsequent years your trading profit can be set off with this big loss.

9. Giving Away Money For Charity? Why Pay Taxes

10. On Time Tax Declarations And Investments

Practically, this is the most important tip of tax Saving.  Employers need to pay advance tax every quarter. Therefore, they deduct TDS every month from your salary. The TDS is deducted according to your projected tax liability for that financial year.
If you don’t declare your planned tax saving, investment and expenses of the year, the projected tax will be higher. Accordingly, the employer would start deducting TDS every month from the first quarter of the financial year. It may happen that when you declare all of your tax saving instruments, It would have become very late. The company may have cut more TDS than required. Of course you can claim tax refund while filing income tax return, but for the time being you pay extra taxes. So, give a tax declaration at the beginning of the year.

If You like this post please share it with your friends on Facebook or Twitter 

IF You Fail To Plan.. You Plan To Fail..!!

Few days back on a lazy weekend I was hanging out with my friends with non commerce background (engineers). Being the only person with tax and finance background in group, i was asked about various side income opportunities. This triggered a conversation about how to start investing in share market. We discussed how the professional stock brokers and advisers pursue a layman to start investment by giving them vague and illusive figure with enough percentages to impress you. But with a proper PLAN & STRATEGY one ends up with losses and paying huge brokerage charges to the professional. So I decided to write an article and share some pro tips for the newbie and amateurs with no practical knowledge about finance or stock market . If you are the one I'm talking about congratulations mate you are in a right direction and right place.

#1 Source of your Regular Income

 Before any investment sort your income. What is your regular and stable source of income? What are your recurring expenditures and liabilities? What is the extent of loss you can absorb? (It is no secret about chances of losses in share market)

Always keep a percentage of your income as savings in cash. I personally prefer 10% of income should be kept in bank safe to face any contingency and unplanned expenditures smoothly

Investing in Shares of a company is not the only way of investing in Share market but it is one of the many ways. Being a new entry or person with no technical knowledge of stock market you can invest in a portfolio build by professional. These portfolios are known as MUTUAL FUNDS. You can track past performance of these mutual funds to be double sure about your returns on investments. 

• Types of Mutual fund :-

On Basis of Portfolio 

• Debt MF : portfolio in majority debt funds and give consistent and secure return but less than equity MF 

• Equity MF: Portfolio of investment in equity of listed companies. Highly volatile returns .

On Basis of Investment

• Monthly SIP: An Investor invests a fixed amount every month which get invested in SIP mutual funds

• LumSum : Investor invests in a MF by paying a one time lum sum money in MF of his choice

Ask yourself a Question If you are a Investor or trader. Trader: A person who invest- disinvest and rotates and circulates his money frequently (Very short term investment sometime for just few minutes or seconds ) Investor: Person who puts his money for longer period for medium or long term and is not influenced by short term fluctuation
Your Strategy: If you have sufficient time and knowledge you can become a trader as you would need to keep a constant watch over fluctuations in price to book profits and to mature an opportunity but if you are a busy person investing as a side income and cannot dedicate whole time to market then you should decide your investments as a trader 

It means in what ratio you should invest your money in various financial Instruments
My personal recommended percentage for beginners which may vary with situation and personal believes 

 10% Cash: I always believe every beginner and pro must keep 10 % as cash for contingencies 

 60 % Fixed returns Investments: 60 % of your investments in investments yielding fix returns. Debt oriented MF , Fixed deposits with banks or post offices or Saving Certificates like KVP or NSC which may give fixed return of about 7-9% p.a.

30% Equity: It means Investing directly into shares of a company of your choice. You directly purchases-sale share of a company directly. It is risky portion of your portfolio

Again Bifurcate this 30 % of equity in 70% in equity for trading and 30 % for investment (difference between trading and investments discussed  in #4)

For e.g. you decide to start with 1000 Rs. in your portfolio, then you

1.      100 Rs. in your bank as cash
2.      600 Rs. in Debt Instruments/FixedDeposit/Saving Certificates (secure)
3.     210 Rs. as investment in equity for long and medium period
4.     90 Rs. in equity for short term and experimental learning and incomes
By this strategy you can invest your money yield return and learn also in a safe manner

Whenever you buy a share always apply a Stop loss to it . It is a price below you purchase price and your share automatically gets sold to prevent and restrict the extent of loss. 

Everyday a time comes when share price dips to its lowest point i.e. share’s price falls for a while. Don’t miss that opportunity to buy share at that dip.

If you are a slow thinker or a lazy person with a confuse personality, sorry my friend equity is not a right place for you. In equity you should be very fast and clear about your approach to take quick decisions’ to secure your funds within fractions of seconds without any second thoughts or waiting for dust to settle.

Problem in stock market is that everyone wants to make huge profits within short period But the key is Trading involves emotions and investment require patienceNever panic. Be assure of your investment and never be afraid of losses and risks. Remembers even if you lose you learn something and best part is that with above suggested strategy you would be staking only a small portion of your money

Never follow any Tips, suggestions, recommendations, news trend by any professional, broker, news channel or any other source. It is a bitter fact that some people at high places plant these tips for their benefits and could put your fund at huge risks.So its better to take some time to do your own research, study books and learn basics of stock market. So Friends its never too late to start investment. Start Investing and learning today grow your small savings into huge profits. And if you like this post don’t forget to subscribe to #FinanceFactBlog . Share this post. Like and follow us on Facebook and twitter. Good Luck.