I have the following income sources:

1. House rent
2. LTCG
3. STCG
4. Bank interest
5. Small share jobbing income (less than Rs 2,000)
6. Small income from private tuitions (approximately Rs 50,000)

Which ITR should be used for filing return for AY 2021-22?

Note: I was employed till March 2020 and hence was filing regular returns using an ITR-2.

Ans: For any rental income, it has to be considered under rent and not professional income

Ans: Hello, that can be a good idea on paper, provided you know that you will get a job after 2 years of studying and you can start with your EMI immediately. Just to put it in numbers :
Loan amount after 2 yrs at 9% - Rs.2376200
EMI will start after 2 yrs , lets assume you select 5 yrs, so the total interest cost will be - Rs.583360
Total Interest = 959560
Value of 12L after 7yrs at 13% cagr = Rs.2823126

VS the second option of taking a loan of 8L and having the same scenario , the interest cost will be = 150480 + 233409 = 383889

Hence by taking a loan of 20L and investing 12L in equity MF for 7 yrs total is a much more beneficial option

Do let me know your views on this on my LinkedIn profile, attaching my profile :
https://www.linkedin.com/in/ca-vivek-lala-21a2038b?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=android_app

Ans: Hi Sakshi

You are pursuing ETC. The purposes of GATE and UPSE exams are different. There are no similarities between the GATE and UPSE examinations. GATE is for pursuing PG in engineering and UPSE is conducted for civil services.

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Radheshyam

Ans: Hello
Even though your daughter scored an average %tage, she can join to B.Pharma course. This is one of the best choices for female candidates. Your decision is correct. Right now, it is not possible to earn based on any course in the running time. She can join any office as a part-time assistant for a few months till she completes any additional certificate course from an earning point of view. There are many certificate courses available in the market. Based on her interest, pl choose one of them of short duration and with minimum fees. Once it is completed, she can get a part-time job to start earning. But it is advisable that, instead of looking for short-term gain, tell her to focus more on her studies and excel in the subjects. Otherwise, if a candidate starts earning at an early age, lose concentration and focus on their studies.

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Radheshyam

Ans: Hello

You are in 12th and have taken PCM. One of the aims is to go for NDA but you are in a dilemma whether you will get it or not.
It would be suggestible for you that, please focus on the engineering entrance tests (either state or national level). Try to crack it. If not successful, then you try other options. To think of other options, you have ample time. Many career options can be easily explored after the 12th board + CET + JEE examinations. Please contact me after the exam is over. Based on the score (either good or bad) better options can be suggested to you. Best of luck with your upcoming examinations.

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Radheshyam

Ans: Dear Friend,
Thank you for your query. 1.5 Years is a very short time for getting high returns. Investing Rs 10 lakhs in mutual funds for a short-term horizon of 1.5 years requires a cautious approach. For such small period, you should look for low to moderate-risk funds that offer stability with reasonable returns, as investing in high-risk equity funds might be too volatile for a short time frame. Since your investment horizon is just 1.5 years, avoid high-risk equity mutual funds as they can be volatile in the short term. Check for exit loads and tax implications before investing. Most short-term capital gains (if you withdraw before 3 years) from debt funds are taxed according to your income tax slab.
You have to evaluate your risk Appetite , Short-Term Debt Funds are invested in government securities, corporate bonds, and other debt instruments with short maturities, offering stability and moderate returns. For a 1.5-year investment, these are ideal as they are less volatile. you can expect 5-7% per annum Returns. You can think of
• ICICI Prudential Short Term Fund
• HDFC Short Term Debt Fund
• Axis Short Term Fund
• ICICI Prudential Corporate Bond Fund
• HDFC Corporate Bond Fund
• Aditya Birla Sun Life Corporate Bond Fund.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar

Ans: Hello

If possible, prefer G.L. Bajaj Noida

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Radheshyam

Ans: You cannot add a second holder to an existing demat account. Regulatory guidelines do not allow converting a single-holder demat account into a joint account.

However, you can open a new joint demat account with your son as a co-holder. A joint demat account allows multiple holders and can be an ideal option for family members wanting to invest together.

Options for Joint Investment
Opening a New Joint Demat Account:
You can open a new demat account where both you and your son will be joint holders.

Both holders can access and manage the account.
This is useful if you want to manage investments together.
Existing Account:
Since your current demat account is in your name only, you can:

Keep using it for your investments.
Add your son as a nominee to this account.
Alternatively, you can give your son Power of Attorney (POA) to manage the account on your behalf.

Joint demat accounts can be opened with two or more holders, but you cannot convert an existing single-holder account.
Opening a new joint account with your son is the best solution for combined investments.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: Naveen, thank you for reaching out. Investing in ELSS funds is a good choice, especially considering tax-saving benefits. Stopping your SIPs due to monthly expenses is understandable, but restarting is crucial to achieving your financial goals.

Let’s address your two concerns one by one.

Question 1: Achieving Rs. 5 Crores in 10 Years
You aim to accumulate Rs. 5 crores in the next 10 years, with an expected 20% annual growth. While this is a high target, it’s not impossible. But I must highlight that 20% returns over 10 years are aggressive, and the market may not guarantee such consistent growth. Equity mutual funds, however, can potentially give you strong returns if you stay disciplined.

Steps to Achieve Rs. 5 Crores in 10 Years
Daily SIP Approach:
Daily SIP is a good way to spread out your investments. It allows for better averaging as the market fluctuates daily.

Focus on Equity Mutual Funds:
For such high returns, equity mutual funds are ideal. These funds have a strong track record of delivering long-term growth. However, keep in mind that they come with market risk.

Avoid Setting Unrealistic Return Expectations:
A 20% return every year is optimistic. A more realistic return from equity funds would be around 12% to 15%. Anything beyond that would require consistent high-performing market conditions.

Recommended Strategy
Diversified Equity Funds:
Instead of chasing returns with a single fund, diversify your investments across various equity funds. This reduces risk and ensures balanced growth.

Mid and Small Cap Funds:
These funds offer higher returns but come with more volatility. You can allocate a portion of your investments to these funds for higher growth potential.

Large Cap Funds:
They offer stability. Having some exposure to large-cap funds can help you maintain balance in your portfolio.

Avoid Index Funds:
Index funds might not meet your target as they only track the market. Actively managed funds can provide better returns through stock selection.

Calculating SIP Contribution
Achieving 5 Crores in 10 Years:
If you want to achieve Rs. 5 crores in 10 years, based on a more realistic 12% to 15% annual return, you would need to invest a significant amount every month. A Certified Financial Planner can help you calculate the exact monthly SIP amount based on your goal and risk tolerance.
Question 2: Should You Continue ELSS SIP or Shift to Hybrid Funds?
Your current ELSS investment in Axis Long Term Equity Fund is a tax-saving fund with a 3-year lock-in period. Since you’ve already completed the minimum holding period, you may wonder if it’s wise to continue or switch to a different type of fund.

Assessing ELSS Funds
Tax Benefit:
ELSS funds provide tax benefits under Section 80C. This is a significant advantage if you still need to save tax. Continuing with your ELSS investment can help you keep your tax-saving advantage.

Equity Exposure:
ELSS funds are equity-oriented, which means they have good long-term growth potential. If your goal is to build wealth over time, equity exposure is necessary.

Disadvantages of Switching to Hybrid Funds
Lower Returns:
Hybrid funds invest in a mix of equity and debt, which may offer lower returns compared to pure equity funds. While they are less volatile, their growth potential may not meet your goal of Rs. 5 crores in 10 years.

Not Ideal for High Growth:
If you want aggressive wealth creation, hybrid funds may not be the best fit. Their balanced approach is better suited for those with low to moderate risk tolerance.

What You Should Do
Continue with ELSS:
Since you’ve already started with Axis Long Term Equity Fund, consider continuing for a longer period. ELSS funds provide both tax benefits and growth. You’ve already endured the initial market volatility, and over time, equity funds tend to deliver better returns.

Avoid Hybrid Funds for Now:
If your goal is aggressive wealth creation, hybrid funds might not align with this. Instead, stick to equity funds with a high growth potential.

Final Insights
Set Realistic Expectations:
While you aim for 20% annual returns, the market is unpredictable. A more realistic expectation of 12% to 15% will help you stay grounded and focused.

Daily SIPs Can Be Helpful:
A daily SIP strategy can help you achieve better averaging. However, for high returns, focus on equity funds with a long-term horizon.

Continue Your ELSS Investments:
Since you’ve already invested in Axis Long Term Equity Fund, consider continuing with it. It offers both tax benefits and long-term growth.

Consult with a Certified Financial Planner:
To determine the exact amount you should invest monthly, it’s essential to work with a professional. They can help you build a diversified portfolio aligned with your goals.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in