If I did not know how the government works (no even now I do not, but some readers may think I know), I would have believed that the brokers association has done a good lobbying job. That does not seem to be the case.
However the RGESS (Rajiv Gandhi Equity Saving Scheme) is likely to be available as a deduction ONLY for the DIRECT EQUITY INVESTMENT by a first time investor.
Whom does it help? Banks, banks, and of course banks.
A person who has NEVER invested will now have to go to a bank and open a 3-in-1 account. Savings, demat and brokerage account. Then the noble Relationship manager will advice him on where to invest. And this will be locked in for 3 years. So Rs. 50k gets invested in a ‘good quality’ Indian equity.
Annual dividend @ 2% = Rs. 1000. Annual demat charges, broking account charges, etc = Rs. 1000. Dividend yield NIL.
After 3 years if he share is say Rs. 60,000, well the investor is lucky. If it is Rs. 40,000, bad luck.
For a client to be able to pick this share his RM should understand equity markets..debt markets etc. – why preferably some market timing and portfolio management also 🙂
Should they be asked to invest through a mutual fund? I should jump up and down and say YES….provided 5-6 mutual funds are chosen and asked to launch INDEX FUNDS.
and these index funds should have the same management fee as the NPS. .0009, remember?
Not a fancy equity fund where they do what they want and charge a 2.5% amc…- if a business is driven by the statute, should not the statute decide on the money these fat cats should make?
If that cannot happen, it should be only direct equities. At least one intermediary less to handle for the retail investor.
Of course have you seen anything with the name Rajiv…do good…I have not.
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