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Market watchdog SEBI has come out with a consultation paper in a bid to ease the functioning of <keyword id="22476006" type="General" weightage="100" keywordseo="ESG-Rating-Providers" source="keywords">ESG Rating Providers</keyword> (ERPs), pushing for the development of a <keyword id="23760035" type="General" weightage="20" keywordseo="subscriber-pays-model" source="keywords">subscriber-pays model</keyword>. As of July 2024, nine ERPs are registered with SEBI to operate in the country. These include <keyword id="23760037" type="General" weightage="20" keywordseo="CRISIL-ESG-Ratings" source="keywords">CRISIL ESG Ratings</keyword> &amp; Analytics, ESG Risk Assessments and Ratings, GlobeTrend Climate Impact Institutional Investor Advisory Services, <keyword id="23760038" type="General" weightage="20" keywordseo="NSE-Sustainability-Ratings" source="keywords">NSE Sustainability Ratings</keyword> and Analytics, PGS Impact, Pragati Development Consulting, CARE ESG Ratings, and SES ESG Research. Per the paper's proposal, ERPs won't be required to disclose ESG (environmental, social, and governance) ratings to the bourses, provided they confirm that there is no non-public information that could potentially affect the rating. Another proposal was the simultaneous sharing of the ESG rating reports both to the rated companies and to the subscribers who pay to access these reports. ERPs should ensure that rated entities, their group companies, or associates cannot subscribe to their own ESG ratings, SEBI said in its consultation paper. Some of the other suggestions put forth by SEBI include: 1. Companies will have a specific timeframe to respond to the ESG report, and any such comments should be included in the report as an addendum. 2. In case the ERP does not agree with the remarks issued by the rated company, they can add their comments to the report as well. 3. ERPs can rate unlisted issuers or other products, provided they meet specific guidelines from relevant regulators. SEBI is receiving public comment on these proposals until November 15, 2024. <h2>Steady returns </h2>Of the 11 ESG mutual fund schemes available to Indian mutual fund investors, the Quant ESG Equity fund has generated the highest returns of about 45.44% over one year, data from ValueResearch showed. Simply put, had you invested Rs 10,000 every month in this fund for three years, you would have accumulated a corpus of Rs 5,47,525. Over three years, the returns on this fund come to around 26%. This was followed by the ICICI Pru ESG Exclusionary Strategy fund, which yielded 44.73% returns over the same period. However, over ultra-short terms, i.e., 1-3 months, ESG funds have largely delivered negative returns, underscoring their suitability only as a long-term investment avenue. Only the SBI ESG Exclusionary Strategy Direct Fund and Quantum ESG Best In Class Strategy Direct Fund have been around for 5 years, during which they have generated returns of about 16.67% and 18.7%, respectively. <keyword id="23760036" type="General" weightage="20" keywordseo="ESG-mutual-funds" source="keywords">ESG mutual funds</keyword> typically select and invest in companies that are ESG-compliant, i.e., who weave in environmental conversation, social welfare, and robust <keyword id="20392393" type="General" weightage="20" keywordseo="corporate-governance" source="keywords">corporate governance</keyword> practices into their working philosophy and work ethos, while simultaneously generating decent financial returns for stakeholders as well.

SEBI mulls measures to facilitate ease of doing business for ESG Rating Providers (ERPs)

<ul class="summary-list"><li><keyword id="20241342" type="General" weightage="20" keywordseo="buck" source="keywords">Buck</keyword> and <keyword id="23582845" type="General" weightage="20" keywordseo="gracie-close" source="keywords">Gracie Close</keyword> are funding a basic income program for victims of unjust policing.</li><li>They view the program as a form of reparations for their family's history as slave owners.</li></ul>Buck and <keyword id="23582843" type="General" weightage="20" keywordseo="gracie" source="keywords">Gracie</keyword> <keyword id="20071130" type="General" weightage="20" keywordseo="close" source="keywords">Close</keyword> aren't shy about their family history. The siblings, both in their 70s, are the descendants of slave owners who operated lucrative cotton mills in South Carolina. "We were raised with the myth of the Old South and how wonderful everybody was, and kind, and family-like with the slaves that they did hold," Gracie Close, a 72-year-old based in Washington state, told Business Insider. "The role of slavery in creating generational wealth was not something that we discussed or thought about growing up," said Buck Close, who is 74 and now resides in Louisiana. "We were always immersed in the valor of the Old South. At that time we were, anyways." The two siblings are now privately funding a yearlong basic income program in Louisiana focused on transferring wealth to people who were victims of racist policing, an act they view as a form of reparations. The Truth and Reconciliation Project was brought to life by the American Civil Liberties Union of Louisiana, which selected 12 people who were "survivors of police misconduct who did not receive restitution in the courts," the ACLU of Louisiana website says. Program recipients told the ACLU they had spent thousands of dollars on court and legal fees while trying to fight charges and clear their names. Since November 2023, each recipient has received $1,000 a month in no-strings-attached payments. They also get access to free financial coaching, mental health counseling, and legal expungement services. The monthly checks will conclude this month, but the services will continue being offered for at least another year. "Those services were very important," Gracie said. "I think it puts a foundation under them that they've never had access to before." In a progress report after the program's sixth month, recipients of the guaranteed monthly income said they had better access to healthier food and basic necessities (such as transportation, housing, and healthcare). They were also significantly more comfortable withstanding surprise expenses. "I am proud of the GMI program we funded at the ACLU and look forward to the culmination of it in December. We will get to spend a day with the recipients and hear how they feel it has worked for them," Gracie said. <h2>Unraveling generations of hard truths</h2>In 2019, Buck, a donor to the ACLU of Louisiana, met for coffee with <keyword id="23582844" type="General" weightage="20" keywordseo="maggy-baccinelli" source="keywords">Maggy Baccinelli</keyword>, a senior director. They stayed in touch and continued their conversations in the following years. "She started talking about the roots of your generational wealth. She brought the subject up, and that was the spark, really, for me," Buck said. "I was very acquainted with racism and the evils of that. But I never focused on the history of my own family." Buck and Gracie grew up on the property of the White Homestead in Fort Mill, which is the site of the last full meeting of the Confederate Cabinet in 1865, according to the family's archives and The Rock Hill Herald, a local newspaper. While it wasn't a secret to Buck and Gracie that their generational wealth had been earned using slave labor centuries prior, it also wasn't something that they felt they had taken accountability for as a family. "I don't think my mother and father hid anything from us. I think this was just the milieu of the South at that time. Nobody was questioning the methods by which ancestors had become prosperous," Buck said. At the ACLU of Louisiana, Baccinelli and her colleagues started "discussing what it would be like to go deeper into the family history and to study the arc of slavery to mass incarceration and overlay the family history onto that arc," Baccinelli told BI. "We presented to Buck our idea about it, and he agreed, and he said that he wanted to invite his sister, Gracie, to participate," she said. With funding from Buck, the ACLU hired a genealogist to research the Close family history, including records of people their ancestors had purchased and enslaved. "It is time to spread the wealth and admit responsibility for our ancestors' participation in slavery," said Gracie, who noted she acts out of responsibility rather than guilt. "To work for justice today, we have to consider our past." In November, the two siblings <a target="_blank" class="" href="https://www.newsweek.com/learning-truth-reconciling-past-deep-south-opinion-1847646">published an op-ed</a> urging other descendants of slave owners to take similar action to investigate their pasts. <h2>Basic income as a form of reparations</h2>When considering how to address past wrongs, Buck and Gracie "latched on" to the idea of a <a target="_blank" class="" href="https://www.businessinsider.com/basic-income-opposition-discriminatory-universal-basic-income-argument-2024-4">guaranteed basic income</a>. Small-scale <a target="_blank" class="" href="https://www.businessinsider.com/los-angeles-guaranteed-basic-income-pilot-ubi-partner-violence-employment-2024-7">guaranteed basic income programs</a> have sprouted around the country in recent years, inspired in part by the success of pandemic-era cash handouts. These basic income programs offer unrestricted cash payments to specific groups of vulnerable low-income residents for a limited time period. The programs differ from a universal basic income, which would offer regular cash payments to all residents regardless of their financial status. "Our goal is to try to transfer wealth gained by us through the enslavement of others to descendants of the enslaved," Buck said. "So it fit that marker pretty well." American police systems can trace their <a target="_blank" class="" href="https://www.businessinsider.com/history-of-police-in-the-us-photos-2020-6">roots back to slave patrols</a>, Baccinelli said. "The reason why it's reparations is because policing started in the 1600s as slave patrols," Baccinelli said. "That's the beginning of the arc to where we are now, and so we see racist and unconstitutional policing as a vestige of slavery. I would venture to bet that every person in the program is a descendant of somebody who was enslaved, but I don't have confirmation on that." To that end, Buck and Gracie hope to establish a similar reparations-based program in South Carolina, the site of their ancestral home, that "transfers wealth from us as descendants of enslavers to other people who were descendants of the enslaved." "We're optimistic," Buck said. October 13, 2024 — A previous version of this story misstated where Buck and Gracie Close are from and what their future plans are. They are from Fort Mill, South Carolina, not North Carolina. In the future, they hope to implement a reparations-based program in South Carolina, not a basic income program.

A basic income program funded by descendants of slave owners provides $1,000 a month as a form of reparations

<keyword id="19955368" type="General" weightage="100" keywordseo="budget-2024" source="keywords">Budget 2024</keyword>, which is set to be presented on July 22nd, is set to accelerate the growth of <keyword id="20459350" type="General" weightage="20" keywordseo="Indian-stock-markets" source="keywords">Indian stock markets</keyword> by as much as 20%, a recent survey by <keyword id="19897999" type="General" weightage="20" keywordseo="Bloomberg" source="keywords" meta.keywordsubtype="org" meta.entityname="Bloomberg" meta.hostid="261" meta.entityid="Bloomberg">Bloomberg</keyword> noted. While some respondents hope that the <keyword id="20983733" type="General" weightage="20" keywordseo="NSE-Nifty50" source="keywords">NSE Nifty50</keyword>, which is currently trading at 24,273.35 points, might reach 26,000 points by the end of this year, others estimate the index to inch up even higher. The budget is likely to boost consumer spending, accelerate consumption, and support infrastructure development, noted half of the 24 experts Bloomberg surveyed. Data by Bloomberg Intelligence predicted that the estimated earnings per share (EPS) of companies on the MSCI India Index is set to rise by 15.6% on year basis, for the calendar year 2024. In contrast, Chinese firms are expected to grow at about 10%. One-fourth of surveyed analysts noted that pushing capital expenditure would be the government's top priority, while the other half thought the focus would be on boosting consumer demand. Naturally, analysts see potential growth in consumer discretionary stocks in the months to come, followed by financial services. <h2>Focus on Women, Capex</h2>Many are expecting the government to raise the standard deduction threshold from the current Rs 50,000 to Rs 1,00,000. The government is also thinking of raising the limits of the <keyword id="19930663" type="General" weightage="20" keywordseo="Public-Provident-Fund" source="keywords">Public Provident Fund</keyword> (PPF) from Rs 15,000 to Rs 25,000. As per Ashwajit Singh, Founder and Managing Director of IPE Global, "the budget is expected to be tilted towards adopting a strategy for the underprivileged, youth, farmers, and women. The budget is expected to reflect the government’s tried and tested formula of ‘guarantees’ by opting for income transfer policies and spending more on welfare schemes in government campaigns in India. Allocations for existing schemes such as 'Housing for All’, MGNREGA, and health insurance for these sections of society are likely to increase while new schemes may be introduced". According to Badal Yagnik, CEO of Colliers India, the real estate segment is optimistic regarding this budget: "Housing, infrastructure development, sustainability, and digitization will remain at the core of the budget, which will go a long way in supporting real estate growth across segments in the long term. EV infrastructure, renewable energy, and green financing will continue to remain in focus, creating a strong base for a sustainable future. Incentivization of green buildings through minimum alternate tax or tax breaks similar to the infrastructure sector will be particularly beneficial. Meanwhile, retail investors are calling for additional rationalizing of the capital gains tax structure. The Union Budget 2024–25 should explore initiatives to boost greater retail engagement in REITs and InvITs". Anooshka Soham Bathwal, founder of Dhanvesttor, a financial management platform, expects that the government's focus is likely to keep driving the increased participation of women in the workforce in the upcoming full budget, where it can attain the same by incentivising higher education for women. "To promote entrepreneurship, the government can introduce special benefits for the businesses started by women. Further steps towards a stable policy environment and ease of doing business are also desirable. Incentives on tax, funding, and growth for women-centric organizations can help to further attain the inclusive growth objective of government". Bathwal also emphasized that the budget should promote entrepreneurs and the country's startup system. "Entrepreneurs are advocating for additional tax breaks for investors and promoters to attract more domestic capital. As India progresses towards becoming a global hub for entrepreneurship and innovation, fostering both technological and process innovations is crucial. Significant improvements in ongoing training and skill upgrades are vital, particularly given the rapid growth in Tier 2 and Tier 3 markets. Additionally, the government needs to address the credit challenges faced by SMEs", she continued Also read <a href="https://www.businessinsider.in/budget/budget-2024-heres-what-indias-elderlies-want/articleshow/111486023.cms" data-type="tilCustomLink">Budget 2024: FM might delight India's senior citizens this time around</a> <a href="https://www.businessinsider.in/finance/union-budget-2024-25-when-will-it-be-presented-what-to-expect-and-more/articleshow/111014203.cms" data-type="tilCustomLink">Union budget 2024-25 : When will it be presented, what to expect and more</a>

Budget 2024 to fuel stock markets: Bloomberg Survey

Best post office schemes that offer over 7% interest

Capital markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords" meta.keywordsubtype="org" meta.entityname="Sebi" meta.hostid="261" meta.entityid="Sebi">Sebi</keyword> on Monday launched <keyword id="19925751" type="General" weightage="20" keywordseo="mobile-app" source="keywords">mobile app</keyword> '<keyword id="21922624" type="General" weightage="20" keywordseo="Saathi" source="keywords">Saa₹thi</keyword> 2.0' on <keyword id="20127396" type="General" weightage="20" keywordseo="personal-finance" source="keywords">personal finance</keyword> for <keyword id="19900618" type="General" weightage="20" keywordseo="investors" source="keywords">investors</keyword> with comprehensive tools aimed at simplifying complex <keyword id="21922626" type="General" weightage="20" keywordseo="financial-concepts" source="keywords">financial concepts</keyword>. "The updated 'Saa₹thi' app introduces a user-friendly interface with comprehensive tools aimed at simplifying complex financial concepts," Sebi said in a statement. The app includes <keyword id="21922625" type="General" weightage="20" keywordseo="financial-calculators" source="keywords">financial calculators</keyword> and has modules that introduce and explain KYC procedures, <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword>, <keyword id="20003842" type="General" weightage="20" keywordseo="ETFs" source="keywords">ETFs</keyword>, buying and selling shares on <keyword id="19905454" type="General" weightage="20" keywordseo="stock-exchanges" source="keywords">stock exchanges</keyword>, investor grievances redressal mechanism, and the Online Dispute Resolution (ODR) platform. Additionally, the app features a range of videos designed to assist investors in their personal finance planning. "In today's era, where social media sometimes provides biased or misleading information, there is a significant need for an unbiased, objective, and trusted source of investment information," Ananth Narayan G, Whole Time Member, said during the launch. "The Saa₹thi app serves this purpose by empowering investors with reliable and essential insights into the securities market. This tool can be especially useful for young investors who are at the beginning of their financial journey. "The content within the app is dynamic, allowing us to keep pace with the rapidly evolving market conditions. We actively seek public suggestions to further refine and enhance the Saa₹thi app, ensuring it continues to serve our investors," he said. The 'Saa₹thi' app is available for download on Google Play Store and the iOS AppStore.

Sebi launches Saa₹thi 2.0 mobile app on personal finance for investors

In a bid to support meritorious and deserving Indian students to pursue their higher education without having to worry about funds, the government today announced the <keyword id="23831216" type="General" weightage="100" keywordseo="PM-Vidyalaxmi-scheme" source="keywords">PM-Vidyalaxmi scheme</keyword>. Here's all you need to know about it: The scheme will cover students who secure admission to one of the top 860 higher educational institutions in the country. In effect, this is set to benefit over 22 lakh students annually. You can apply for this loan via a soon-to-be launched consolidated PM-Vidyalaxmi portal. The loan application will be entirely digital and will not require collateral or assets to be pledged in place of a loan or even a guarantor. For loans up to Rs 7.5 lakh, the government will provide a 75% credit guarantee. If your family's annual income is up to Rs 8 lakh, you are eligible for receiving loans up to Rs 10 lakh at an interest rate of up to 3% lower rates. This support will be offered to around 1 lakh students every year, and those who opt for technical or professional courses from government-run institutions will be given preference for the same. The government has already set aside Rs 3,600 crore for the same, to be utilized between 2024 and 2031, benefiting 7 lakh students in this period. All eligible students whose family's annual income falls below the Rs 4.5 lakh threshold will receive a full subsidy on interest payable. As for which higher education institutions (HEIs) will qualify, it will depend on recent NIRF (National Institutional Ranking Framework) rankings. This will include: <ul><li>All centrally governed institutions</li><li>Public and private institutions that have made it to NIRF's top 100 rankings in the overall, category, and domain-specific categories</li><li>All state government HEIs that are ranked between 101 and 200 in <keyword id="22759868" type="General" weightage="20" keywordseo="NIRF-rankings" source="keywords">NIRF rankings</keyword> will also be eligible.</li></ul> <h2>Rising cost of education</h2> Data from NSSO (National Sample Survey Office) highlights that the average expenditure on education in India has doubled in the last decade. Per the All India Survey on Higher Education 2020-21, the tuition fees for engineering courses in most private institutions have already risen by 50% over the past 10 years. Education inflation currently stands high, at about 11–12%. The demand for educational loans is also inching up steadily. Per RBI data, as of September 20, 2024, the total quantum of outstanding education loans stood at Rs 62,389 crore, up 2.8% from Rs 60,715 crore in September 2023. India's largest lender, the State Bank of India, leads the education loan bandwagon, with disbursals worth Rs 10,860 crore in FY24.

Lack of funds stopping you from pursuing higher education? The government can come to rescue

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Good morning! CEOs love talking about their wins, but what about their losses? The head of a failed supersonic plane startup detailed what went wrong, <a target="_blank" href="https://www.businessinsider.com/exosonic-ceo-explains-why-his-strategy-supersonic-airliner-failed-2024-11">and how other companies might find success</a>.In today's big story, President-elect Donald Trump is nominating the people <a target="_blank" href="https://www.businessinsider.com/donald-trump-white-house-staff-cabinet-picks-list-2024-11">who will play a key role in his administration</a> and impact the business world.What's on deck:<ul><li>Markets: Elon Musk wants to gamify "dumb" government spending, and <a target="_blank" rel="noopener" href="https://www.businessinsider.com/elon-musk-leaderboard-government-spending-marketing-genius-doge-donald-trump-2024-11">experts say it's a savvy marketing strategy</a>.</li><li>Tech: A healthcare startup raised $100 million on a bet it could build an AI doc-in-a-box. <a target="_blank" href="https://www.businessinsider.com/healthcare-startup-forward-shutdown-carepod-adrian-aoun-2024-11">Now it's shutting down</a>.</li><li>Business: Internal documents viewed by BI show plans for Amazon's AI chatbot <a target="_blank" rel="noopener" href="https://www.businessinsider.com/amazon-ai-chatbot-q-coming-to-microsoft-office-365-2024-11">launching in an unlikely spot</a>.</li></ul>But first, the nominations are rolling in.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h3 id="7fa5f018-5b05-4a37-a8dc-d3f89138bcb3">The big story</h3><h2 id="5fd547b9-ec52-41fc-8e08-4f4b27dd8097">Trump's new team</h2><div type="image" title="Trump pointing" height="667" width="1000" msid="115302524" hostid="261" sizebytes="47760"></div>President-elect Donald Trump is quickly fleshing out his cabinet, giving a sense of what his second administration will look like.Trump's slew of picks announced in recent days share a common theme: <a target="_blank" href="https://www.businessinsider.com/trump-cabinet-picks-so-far-loyalty-resumes-11">loyalty</a>. (You can find the running list of Trump administration staffers <a target="_blank" href="https://www.businessinsider.com/donald-trump-white-house-staff-cabinet-picks-list-2024-11">here</a>)With <a target="_blank" href="https://www.businessinsider.com/republicans-house-representatives-election-win-majority-2024-11">Republicans maintaining control of the House</a> and winning the Senate, the president-elect will enter the White House this January with incredible power to shape the country to his vision.Let's break down some of Trump's recent appointments and the impact they could have on the business world:<a target="_blank" href="https://www.businessinsider.com/trump-nominates-matt-gaetz-attorney-general-2024-11">US Attorney General — Matt Gaetz</a>: A surprising pick, to say the least, the representative from Florida caused havoc within his own party when he led the push to oust Kevin McCarthy from the speakership last year.Gaetz was also the subject of sex-trafficking allegations that led to an investigation by the very agency he's being nominated to lead. (The Department of Justice declined to pursue charges, but he'd been facing a probe from the House Ethics Committee.) House Speaker Mike Johnson told reporters on Wednesday that Gaetz had resigned from Congress.He's also <a target="_blank" rel="noopener" href="https://www.businessinsider.com/matt-gaetz-criticism-big-tech-trump-attorney-general-antitrust-2024-11">clashed with the tech industry</a>, suggesting Americans have an "obligation to use" their Second Amendment right when it comes to <a target="_blank" href="https://www.businessinsider.com/matt-gaetz-says-american-obligation-take-up-arms-big-tech-2021-5">Silicon Valley companies censoring conservatives</a>. Gaetz's appointment requires confirmation from the Senate, which is far from a shoo-in.<a target="_blank" href="https://www.businessinsider.com/what-trumps-secretary-state-pick-marco-rubio-means-for-china-2024-11">Secretary of State — Marco Rubio:</a> The Florida senator is an outspoken critic of China and a supporter of Taiwan. In fact, China sanctioned him twice, and his ability to travel to the country is somewhat in question.The appointment adds another wrinkle to the heightening tension between the US and China. Trump has said he wants aggressive tariffs against Chinese imports, and Rubio has raised the alarm on what he views as China's plan to harm the US economy.<div type="image" title="Fox News host Pete Hegseth at a network event in 2019" height="2555" width="3600" msid="115302517" hostid="261" sizebytes="483180"></div><a target="_blank" href="https://www.businessinsider.com/trump-pentagon-chief-pete-hegseth-world-views-ukraine-china-2024-11">Secretary of Defense — Pete Hegseth:</a> The Army veteran and Fox News host has been outspoken about the US involvement in geopolitical conflicts. Hegseth is among the growing number of Republicans questioning the US support of Ukraine. He also said he <a target="_blank" href="https://www.businessinsider.com/trump-pentagon-pick-pete-hegseth-criticized-us-involvement-ukraine-aid-2024-11">doubted Russia would invade Poland</a> if it successfully took over Ukraine.When it comes to Israel, Hegseth has been a staunch supporter. He's also pushed back against calls for a cease-fire and criticized pro-Palestinian protesters.Hegseth's takes aren't limited to international affairs. He's been critical of women serving in combat roles and diversity and equity policies in the US military.Treasury secretary — TBD: Trump's pick for his top economic advisor is being closely watched considering the key role the economy played in the election. The two front runners appear to be Scott Bessent, a hedge fund executive, and Howard Lutnick, <a target="_blank" href="https://www.businessinsider.com/wall-street-advisor-trump-lutnick-schwarzman-warsh-federal-reserve-2024-11">the co-chair of Trump's transition</a> team and the CEO of Cantor Fitzgerald.Bessent was initially viewed as the favorite, but Lutnick is <a target="_blank" href="https://www.wsj.com/politics/policy/trump-transition-co-chair-makes-late-play-for-treasury-secretary-f1b50c60">reportedly making a last-ditch effort</a> to be considered for the job.<h3 id="77f31a4c-8462-4e3d-a71f-838cb79493fb">News brief</h3><h2 id="1fcd294b-3f53-425f-9f20-4093e8623b59">Top headlines</h2><ul><li>Silicon Valley investors Marc Andreessen and Ben Horowitz <a target="_blank" rel="noopener" href="https://www.businessinsider.com/marc-andreessen-ben-horowitz-react-trump-win-crypto-founders-2024-11">celebrate Trump's win as 'a boot off the throat</a>.'</li><li>Why SoftBank bet $500 million on OpenAI. SoftBank's Vision Funds CFO <a target="_blank" href="https://www.businessinsider.com/softbank-openai-investment-explained-vision-fund-cfo-2024-11">told BI why it went all-in on the startup</a>.</li><li>Amazon is shuttering Freevee and some insiders fear <a target="_blank" href="https://www.businessinsider.com/amazon-shuttering-freevee-some-insiders-speculate-potential-entertainment-layoffs-2024-11">layoffs could be coming in the tech giant's entertainment arm</a>.</li><li>Mark Zuckerberg just released his own NSFW version of <a target="_blank" href="https://www.businessinsider.com/mark-zuckerberg-t-pain-get-low-rap-song-2024-11">'Get Low' in a tribute to his wife</a>.</li></ul><h2 id="8120060b-ae66-48dc-b149-f0489a30ffa2">3 things in markets</h2><div type="image" title="A photo illustration comprising a black-and-white photo of Elon Musk's profile over a leaderboard with dollar signs that decrease down the board." height="1500" width="2000" msid="115302527" hostid="261" sizebytes="121084"></div><ol><li>Loving the leaderboard: Elon Musk wants to gamify "dumb" government spending. Donald Trump tapped Musk and Vivek Ramaswamy to co-lead the Department of Government Efficiency, a commission aimed at slimming government waste. Musk has <a target="_blank" rel="noopener" href="https://www.businessinsider.com/elon-musk-leaderboard-government-spending-marketing-genius-doge-donald-trump-2024-11">teased a public leaderboard to track government spending</a>, which, if implemented, could keep the public engaged. <a target="_blank" href="https://www.businessinsider.com/elon-musk-vivek-ramaswamy-doge-government-efficiency-what-us-spends-2024-11">BI took a look at what the US actually spends money on</a>.</li><li>Inflation stays in line with expectations. October's consumer price index <a target="_blank" href="https://www.businessinsider.com/inflation-october-cpi-consumer-price-index-federal-reserve-interest-rates-2024-11">rose 2.6% compared to the same time last year</a>, representing a slight uptick from September's 2.4% report. Despite inflation heating up, the probability of the Fed making a 25-basis-point cut next month increased to about 80% after the report's release.</li><li>Polymarket's CEO was the subject of an FBI raid. Shayne Coplan, the 26-year-old boss of the betting market platform that successfully predicted Trump's win, reportedly had his phone and electronic devices <a target="_blank" href="https://www.businessinsider.com/fbi-raid-polymarket-ceo-shayne-coplan-nyc-2024-election-2024-11">confiscated by federal agents Wednesday morning</a>. Bloomberg reported the raid was tied to an investigation into the company accepting trades from users in the US, which is not permitted. A Polymarket spokesperson said it was an act of "political retribution" by the Biden administration.</li></ol><h2 id="f4b54806-7f81-450c-ba32-92560d4fae9b">3 things in tech</h2><div type="image" title="Forwards CEO Adrian Aoun with the Carepod" height="1500" width="2000" msid="115302521" hostid="261" sizebytes="394842"></div><ol><li>Inside Forward's failed attempt to revolutionize the doctor's office. The healthcare startup Forward went all-in on its AI doc-in-a-box: "If Elon has the self-driving car, well, this is the autonomous doctor's office," its CEO said in 2023. <a target="_blank" href="https://www.businessinsider.com/healthcare-startup-forward-shutdown-carepod-adrian-aoun-2024-11">But after raising $650 million in funding, it's going dark</a>.</li><li>What some Tesla employees think about Musk's new government job. Some are celebrating stock gains, with the company's share price soaring nearly 33% year to date, <a target="_blank" rel="noopener" href="https://www.businessinsider.com/tesla-trump-stock-gains-internal-reaction-2024-11">while others worry Musk will lose focus</a>. "There's this feeling that no one fully knows where anyone else stands," one manager told BI.</li><li>A new stage in the US-China tech cold war. The focus of the AI race is moving from chip dominance to rare earths, the raw materials they're made of. Right now, China has the upper hand; <a target="_blank" href="https://www.businessinsider.com/rare-earths-tech-war-explainer-chips-ai-china-us-2024-11">here's how it's tried to outmaneuver the US</a>.</li></ol><h2 id="9260fa45-d397-4b3c-b4f8-4bb193976216">3 things in business</h2><div type="image" title="The O's of the Hollywood sign walking away with film equipment" height="1457" width="1943" msid="115302520" hostid="261" sizebytes="350770"></div><ol><li>Hollywood's leaving. The film industry is ditching Los Angeles for up-and-coming entertainment hubs like Atlanta and smaller cities alike. Some have been preparing for an LA exodus for years, but the pandemic ushering in remote work <a target="_blank" href="https://www.businessinsider.com/hollywood-leaving-los-angeles-remote-work-tv-movies-money-streaming-2024-11">helped provide the final push</a>.</li><li>Too many videos, not enough mentors. Nobody knows how to do their jobs anymore because their companies aren't teaching them. Training is an easy place for companies to cut costs, but it comes back to hurt them in the long run. <a target="_blank" href="https://www.businessinsider.com/job-training-broken-gen-z-mentorship-companies-employees-managers-2024-11">Those who do invest often put their money toward the wrong fixes</a>.</li><li>Exclusive: Amazon's chatbot Q enters enemy territory. Internal documents obtained by BI show the cloud giant is looking to launch a Q add-in for a rival suite: Microsoft Office 365. Amazon hopes the integration could expand Q's user base by <a target="_blank" href="https://www.businessinsider.com/amazon-ai-chatbot-q-coming-to-microsoft-office-365-2024-11">piggybacking on Office's popularity</a>.</li></ol><h2 id="9f5d80ac-3466-429f-a50a-2ffbb70c65ff">What's happening today</h2><ul><li>Disney, Brookfield and other companies report earnings.</li><li>EU reveals Q3 GDP growth figures.</li></ul>The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.

Some of Trump's key cabinet picks provide clues to how his administration will approach the business world

ChatGPT competitor <keyword id="20068808" type="General" weightage="100" keywordseo="Perplexity-AI" source="keywords" meta.keywordsubtype="org" meta.entityname="Perplexity AI" meta.hostid="261" meta.entityid="Perplexity AI">Perplexity AI</keyword>, backed by <keyword id="20054707" type="General" weightage="20" keywordseo="Jeff-Bezos" source="keywords" meta.keywordsubtype="org" meta.entityname="Jeff Bezos" meta.hostid="261" meta.entityid="Jeff Bezos">Jeff Bezos</keyword>, is reportedly in the process of raising significant funds to boost its valuation. According to a report by the Wall Street Journal, the AI firm is seeking to more than double its valuation to over $8 billion through a new fundraising round. Perplexity is reportedly aiming to secure around $500 million in this funding effort, as noted by sources familiar with the matter. The report also added that the company, which has also received backing from <keyword id="19912297" type="General" weightage="20" keywordseo="Nvidia" source="keywords" meta.keywordsubtype="org" meta.entityname="Nvidia" meta.hostid="261" meta.entityid="Nvidia">Nvidia</keyword>, is growing rapidly and is estimated to have an annualised revenue of around $50 million based on recent sales figures. Perplexity AI is known for its powerful search tools, which allow users to ask questions and receive instant, detailed answers backed by sources and citations. The company utilises a variety of large language models (LLMs) to deliver these results, including OpenAI’s models and Meta’s open-source Llama model. This versatility enables Perplexity to sum up information efficiently and provide users with quick and reliable answers to their queries. Perplexity AI has alsobeen at the centre of some controversy in recent months. In October, the startup received a “cease and desist” notice from the New York Times, which accused the company of using its content to train its <keyword id="19896272" type="General" weightage="20" keywordseo="generative-AI" source="keywords">generative AI</keyword> tools without permission. This incident highlights the growing tension between AI companies and media outlets over the use of their content for artificial intelligence purposes. This wasn't the first time Perplexity AI had faced such accusations. Other media organisations had previously claimed that the company plagiarised their content. However, in response to these concerns, Perplexity had introduced a revenue-sharing program aimed at compensating publishers whose material is used by its AI systems. This move was seen as an attempt to improve relations with content creators and address some of the ethical concerns surrounding AI’s use of proprietary information.

ChatGPT competitor Perplexity AI seeking to raise $500 million, eyes valuation of over $8 billion

<div type="image" title="Are Indians depositing less money in banks, or more in mutual funds? Turns out, it&amp;#39;s neither of those." msid="113663806" hostid="261" sizebytes="1121785"></div> Over the past few months, there’s been a lot of brouhaha about the lagging pace of <keyword id="20202062" type="General" weightage="20" keywordseo="bank-deposits" source="keywords">bank deposits</keyword> in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialisation of <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> in the country or the rising preference of Indians towards <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian <keyword id="19949641" type="General" weightage="20" keywordseo="equity-markets" source="keywords">equity markets</keyword> through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by Franklin Templeton, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are household deposits really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. <div type="image" title="Yes, household deposits (as % of total deposits) have dipped, but the drop is far from significant" msid="113663882" hostid="261" sizebytes="306706"></div> Also, we can’t forego the fact that the share of Indian households in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and <keyword id="114757" type="General" weightage="20" keywordseo="savings-account" source="Orion">savings account</keyword> deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (Central Board of Direct Taxes) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of Securities Transaction Tax (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell <keyword id="6361918" type="General" weightage="20" keywordseo="equity-mutual-funds" source="Orion">equity mutual funds</keyword>, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by <keyword id="45369" type="General" weightage="20" keywordseo="equities" source="Orion">equities</keyword> can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in <keyword id="19998084" type="General" weightage="100" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the Fed recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next MPC (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day. Do you have insights or personal experience to share on your personal finances or money? Contact us at <a target="_blank" class="c-link" href="mailto:businessinsider@timesinternet.in">businessinsider@timesinternet.in</a>.

Simply Put: A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

In anticipation of the upcoming <keyword id="19894908" type="General" weightage="20" keywordseo="festive-season" source="keywords">festive season</keyword>, the central government has released over Rs 1.78 lakh crore to various states as part of its <keyword id="23500643" type="General" weightage="100" keywordseo="tax-revenue-devolution" source="keywords">tax revenue devolution</keyword>. This substantial disbursement, announced by the <keyword id="19900485" type="General" weightage="20" keywordseo="Finance-Ministry" source="keywords" meta.keywordsubtype="org" meta.entityname="Finance Ministry" meta.hostid="261" meta.entityid="Finance Ministry">Finance Ministry</keyword> on Thursday, includes an advance instalment in addition to the standard monthly release, effectively doubling the usual allocation of Rs 89,086.50 crore for October 2024. The largest share of the funds went to Uttar Pradesh, which received Rs 31,962 crore. Bihar followed with Rs 17,921 crore, while Madhya Pradesh and West Bengal received Rs 13,987 crore and Rs 13,404 crore, respectively. This allocation underscores the central government's commitment to ensuring that states have the financial resources needed to stimulate development, especially during a period of increased economic activity ahead of the festive season. Among the other states, Andhra Pradesh received Rs 7,211 crore, Tamil Nadu received Rs 7,268 crore, and Gujarat received Rs 6,197 crore. In the Northeast, Meghalaya was allocated Rs 1,367 crore, Tripura Rs 1,261 crore, and Manipur Rs 1,276 crore. The Finance Ministry noted that the decision to release these funds was aimed at empowering states to ramp up <keyword id="20148453" type="General" weightage="20" keywordseo="capital-spending" source="keywords">capital spending</keyword> and support essential welfare and developmental projects. This accelerated funding is intended to boost critical <keyword id="19936648" type="General" weightage="20" keywordseo="infrastructure-projects" source="keywords">infrastructure projects</keyword> such as road construction, public facilities, and other state-led development initiatives. This announcement follows a high-level meeting involving the Finance Secretary and the Secretary of the Department of Economic Affairs, emphasising the government’s commitment to sustaining <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> through state-level investments. By providing the funds ahead of schedule, the Centre aims to ensure that states are equipped to meet the demands of the festive season, while also fostering sustained growth and long-term development. The Ministry emphasised that this tax devolution aligns with the recommendations of the Finance Commission, which plays a crucial role in determining the distribution of tax revenue between the Union and states. This year’s devolution reflects the central government’s ongoing focus on supporting states as they undertake vital infrastructure projects and social welfare initiatives. (With inputs from ANI)

Centre releases Rs 1.78 lakh crore to states for festive season, with largest shares to Uttar Pradesh, Bihar, and Madhya Pradesh

Tensions in Middle-East are rapidly inching closer to their zenith, with Iran firing about 200 ballistic missiles at Israel late yesterday night. In response today, the Indian markets witnessed their worst decline in two months, with Sensex dipping around 1,769 points, or 2.1% to close at 82,497.10. <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords">Nifty</keyword> followed suit and was also down by 2.1% to close the day at 25,250.10. As a result, about Rs 11 lakh crore were wiped off the market today. The decline was broad-based, with sectors like realty (dipped by over 4%) auto, and energy suffering the most. Broader indices also fell, losing nearly 2% each. The Hang Seng index, which had rallied over 14% during the last week, largely on the back of various stimulus measures announced by the central bank to stir consumption in the Chinese economy, also slumped around 1.47%. With the possibility of an all-out war between Iran and Israel looming on the horizon, threatening to happen sooner than later, markets are expected to remain volatile in near future. Even the India VIX, seen as a gauge of uncertainty and investor fear in the market, jumped over 9% during the day. The war could throw a huge spanner on India's crude oil import plans. As of August 2024, about 44.6% of India's crude oil imports came from <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>. Israel has already promised significant retaliation, in response to Iran's attack in the days to come. And the strong possibility of a full-blown Israeli attack in Middle East, particularly major oil fields in Iran has sent the crude oil prices surging. Closer home, ONGC (Oil and Natural Gas Corporation) was amongst the biggest gainers on NSE today. <h2>Should Indian investors worry? </h2>But is the impending action in Middle-East the only reason behind today's drastic fall? Vishnu Kant Upadhyay, AVP, Research &amp; Advisory at Master Capital Services notes that while it plays a significant role, other factors are also at play. "Recent regulatory changes in the F&amp;O segment by SEBI is expected to impact trading volumes, as retail participation may decline due to the increased contract size and limits on weekly expiries. Meanwhile, strength in the Chinese market, following the People’s Bank of China (PBoC) stimulus package, has also diverted foreign investment to China, where valuations remain more attractive compared to India", he noted. But Upadhyay believes that the extension of losses in Indian markets wont last long. "From a technical perspective, as long as prices hold above the 25,250–25,100 zone, any decline could present an opportunity to build fresh long positions. A stock-specific approach is advisable, with sectors such as Oil, IT, PSU Banks, Metals, and Chemicals likely to outperform in the coming days", he adds. Shrikant Chouhan, Head Equity Research, Kotak Securities observes that as long as market is trading below 25,365/82,800, the weak sentiment is likely to continue. On the down side, it could slip till 25,150-25,025/82,200-82,000 as well. On the other side, one quick technical pullback is likely if the market succeeds to trade above 25,365/82,800. Above the same, it could bounce back till 25,475-25,500/83,100-83,300. The current market texture is volatile hence; level based trading would be the ideal strategy for the day traders. <h2><keyword id="20760178" type="General" weightage="20" keywordseo="mutual-fund-investors" source="keywords">Mutual fund investors</keyword>, stay put</h2>In the aftermath of a <keyword id="19968045" type="General" weightage="20" keywordseo="market-correction" source="keywords">market correction</keyword>, most mutual fund investors often face a critical decision- should they stop their SIPs (<keyword id="21047553" type="General" weightage="20" keywordseo="Systematic-Investment-Plans" source="keywords">Systematic Investment Plans</keyword>) or to view the downturn as a valuable opportunity to acquire more mutual fund units? By continuing SIPs during such downturns, investors can take advantage of 'rupee-cost averaging,' i.e. accumulating more units when prices are down. This approach not only lowers the average cost per unit, but also positions the portfolio for greater returns when the market eventually recovers, and softens the impact of short-term volatility. Swapnil Aggarwal, Director, VSRK Capital explains that alongside maintaining regular investments, revisiting your asset allocation is also essential in these turbulent times. A well-diversified portfolio, that balances equities with safer assets like bonds can withstand market fluctuations more effectively. You can consider shifting some investments into bond funds or other stable instruments, which can provide a cushion against further declines. <h2>What happens next? </h2>While the immediate impact of a market correction may lead to declines in the NAV (Net Asset Value) of mutual funds, disciplined investors can view this as a moment to reassess their strategies. Focusing on your <keyword id="20908416" type="General" weightage="20" keywordseo="long-term-financial-goals" source="keywords">long-term financial goals</keyword> will let you turn market volatility into opportunity! The market will remain keenly focused on the evolving situation in the Middle East. What will also be equally important are the US monthly jobs data due tomorrow, which could determine the size of Fed's next interest rate move in November.

Nifty, Sensex in freefall today as Iran mounts attack on Israel. Here's what experts think you should do

<ul class="summary-list"><li>Using a 401(k) can boost investment portfolios by 23%, per Charles Schwab study.</li><li>The study compared 401(k) and taxable accounts over 20 years with an 8% annual return.</li></ul>Nothing is less exciting than thinking about <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/taxes">taxes</a>, especially when the bill is coming due.And once you cross into the first quarter of the year, little can be done to reduce your tax liability, especially if you're a W2 employee.That's why thinking about deferral strategies is a great way to reduce how much you pay in taxes and increase your net worth in the long term. But to maximize your outcome, you have to start with a <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-401k">401(k)</a> or a <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-ira">Traditional IRA</a>, according to a recent simulated study by Charles Schwab. The study showed how a 401(k) could increase an investment portfolio's value by 23%.The study, which was backtested over 20 years, compared two investors, one who used a taxable brokerage account versus one who used a 401(k). At an 8% annual return, it found that the latter finished with a value of $177,116 compared to the taxable account at $144,547. Based on this scenario, it assumed that someone allocating funds after tax in a 24% bracket would have a principal investment of $38,000 compared to $50,000. It also assumed taxable events on a turnover rate every five years and on 2% qualified income dividends and 6% long-term capital gains.<div type="image" title="Chart showing increased portfolio value with tax-deferred account." height="1064" width="1846" msid="114955475" hostid="261" sizebytes="34694"></div>In a scenario where an investor uses a taxable account but doesn't turnover or realize gains every five years, meaning taxable events are only placed on the 2% dividends, the outcome would lead to an ending value of $152,392.One caveat is that <a target="_blank" class="" href="https://www.businessinsider.com/tax-loopholes-to-reduce-or-avoid-capital-gains-taxes-2024-10">tax-deferred accounts</a> don't take into account every phase of where taxation can occur along the investment process, says Rob Williams, managing director of financial planning at Charles Schwab. The first point is when money is earned and before it's invested. The second is when income and dividend payments are earned along the way. The third point is once gains are realized. The first two taxation points are covered. The last phase isn't. For this process, other accounts, such as Roth IRAs for after-tax contributions allow gains to grow tax-free.Roth IRAs could come in handy in retirement during years when you have a higher withdrawal rate and, in turn, fund yourself in a higher tax bracket.<h2 id="bd273b03-5ffe-4b6d-8acc-d2373d85fc37">Other tax tips</h2>Another option people don't think about as much is a <a target="_blank" class="" href="https://www.businessinsider.com/how-to-use-health-savings-account-retirement-tool-investing-wealth-2024-10">health savings account</a>, which is unique, Williams noted. You have to qualify for those with an employer that provides it through a health insurance policy with a high deductible plan. But they are a nice additional tool that investors can use to contribute from their paycheck, he added.It's contributed pre-tax. And if the money isn't used for healthcare costs, it can be saved and invested in that health savings account and grow tax-free. It's tax deferral and tax avoidance, he noted."For a health savings account, that's powerful," Williams said. "We call that a triple tax exemption. You get no taxes when you put the money in and no taxes on any growth or capital gains in the fund. And then when you take it out, you don't have any taxes as well."Taxable brokerage or investment accounts are still useful because they allow you to withdraw money before retirement. This is especially great in the event you need to make a big purchase. But when using these accounts, investors should consider the assets they're buying. For example, exchange-traded funds have less tax drag than mutual funds that have higher turnover and, in turn, more taxable events, Williams noted."Any investment or mutual fund that generates a fair amount of investment income, whether it's interest or dividends, do not tend to be very tax efficient," Williams said.This also means considering how funds distribute gains, such as whether they are qualified or ordinary dividends. The latter is taxed at an investor's tax rate and depending on what margin that's in, it may not be as advantageous as a qualified dividend.

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