Assuming that you got about 8% interest in bank deposits over the past 10 years, and that you paid 30% tax on that. This means you got about 5.6% post tax from your bank EACH YEAR….

How much did you REALLY GET..well you got nominal return (5.6%) and the resultant inflation is here…so your real return is calculated as follows:

NOMINAL RETURN minus INFLATION….and here are the inflation figures…

CPI India 2015 6.25 %  (so negative return of 0.65%)

CPI India 2005 4.25 %

CPI India 2014 6.37 %

CPI India 2004 3.77 %

CPI India 2013 10.92 %   CPI India 2003 3.81 %   CPI India 2012 9.30 %

CPI India 2002 4.31 %   CPI India 2011 8.87 %   CPI India 2001 3.77 %   CPI India 2010 12.11 %

CPI India 2000 4.02 %   CPI India 2009 10.83 %   CPI India 1999 4.84 %   CPI India 2008 8.32 %

CPI India 1998 13.17 %   CPI India 2007 6.39 %     CPI India 1997 7.25 %       CPI India 2006 5.79  –

Most debt instruments would have given you very small +ve return, or more likely you MUST have got a – ve return….

See more at: http://www.inflation.eu/inflation-rates/india/historic-inflation/cpi-inflation-india.aspx#sthash.nfFsPdHu.dpuf

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1. ##### Shyam

Sir,

can you please post an article to explain the scenario’s mentioned in the below article link. I could not understand especially the last 2 paragraphs

Tax avoidance: Dividend strippers put focus on mutual funds

2. ##### Selvan

Shyam: Dividend stripping make an Investor value as 8.6 lac if 12 lac is invested. He has to hold next 9 months in order set a a loss aginst a capital gain. For example if there is a capital gain of about 3.4 lac in another investment he/she can set the notional loss of 12 lac invested in dividend stripping. This will works as long as the fund value after nine months is 8.6 lac.

Who knows what it will be after 9 months?

If there is an expectaion that market will go down, he/she can do short of nifty future of 8.6 lac worth for next 9 months so he/she is offsetting the above scenario.

It is trading option to my opinion using a mutual fund with dividend stripping.

I haven’t done or never do as it is very short term that too benefit with tax % on short term capital gain.

Not a best way for a long term investor.