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The Comptroller and Auditor General (<keyword id="19900713" type="General" weightage="20" keywordseo="CAG" source="keywords">CAG</keyword>) has asked the <keyword id="19900485" type="General" weightage="20" keywordseo="Finance-Ministry" source="keywords" meta.keywordsubtype="org" meta.entityname="Finance Ministry" meta.hostid="153" meta.entityid="Finance Ministry">Finance Ministry</keyword> to identify <keyword id="22837132" type="General" weightage="20" keywordseo="high-risk-taxpayers" source="keywords">high risk taxpayers</keyword> in the <keyword id="20981418" type="General" weightage="100" keywordseo="GST-composition-scheme" source="keywords">GST composition scheme</keyword> on a periodical basis and verify from other sources, including third parties, their declared <keyword id="22837745" type="General" weightage="20" keywordseo="value-of-sales" source="keywords">value of sales</keyword> to check <keyword id="20121097" type="General" weightage="20" keywordseo="tax-evasion" source="keywords">tax evasion</keyword>. Based on an analysis of 8.66 lakh composition taxpayers under the central jurisdiction between 2019-20 to 2021-22 fiscals, the Comptroller and Auditor General (CAG) found that a significant number of <keyword id="19951327" type="General" weightage="20" keywordseo="gst" source="keywords">GST</keyword> taxpayers have a high risk of crossing the <keyword id="22837744" type="General" weightage="20" keywordseo="turnover-threshold" source="keywords">turnover threshold</keyword> for composition levy scheme (CLS). These high risk taxpayers were identified by audit from the data contained in GST returns viz. GSTR-4A, GSTR-7 along with third party data sources such as IT returns, 'Vahan' database etc. The GST composition scheme is available to taxpayers whose aggregate turnover, in the preceding financial year, has not exceeded Rs 1.5 crore. For taxpayers in special category states, this limit is Rs 75 lakh. The CAG said two major risk areas in respect of CLS taxpayers are under-declaration of the 'value of outward supply' by the taxpayers to continue in the scheme; and non-fulfillment of eligibility conditions for availing CLS. The audit also observed that there were certain CLS taxpayers who were continuing in the Scheme despite not fulfilling the eligibility criteria prescribed in the Act and the Rules, and a substantial number of CLS taxpayers were not discharging their obligatory responsibilities of filing returns and payment of tax under reverse charge. "The Ministry should identify high risk taxpayers in the CLS on a periodical basis using a risk-based approach and verify their declared value of outward supply from other sources including third parties to minimize the possibility of misuse by ineligible persons," the CAG said in a report tabled in Parliament recently. The official auditor also suggested that the Finance Ministry may develop a system of identifying ineligible taxpayers and take action to exclude them from the CLS in order to prevent misuse of the intended benefits of the scheme.

Finance Ministry should identify high risk taxpayers in GST composition scheme: CAG

<ul class="summary-list"><li>My bank has lowered the APY on my high-yield savings account by almost half a percent recently.</li><li>I'm not happy that my cash is generating less returns now, and I don't know what to do.</li></ul>It's never pleasant to receive an email from your bank informing you that the interest rate on your <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/best-high-yield-savings-accounts-rates-right-now">high-yield savings account</a> is decreasing.Unfortunately, like many Americans happy to collect a robust yield on their savings, I've gotten three of these notifications in the last three months as the Federal Reserve has begun to lower interest rates. From August until the end of October, the annual percentage yield (APY) on my high-yield savings account has fallen from 4.6% to 4.2%.I opened this bank account almost two years ago, right after graduating from college. Back in 2023, with inflation still elevated, interest rates were at their highest levels since the Great Financial Crisis, and it seemed like most banks were offering near-5% yields on savings. After paying off my bills every month, I would put the remainder of my paycheck into my high-yield savings account and watch the number creep up.Now, it looks like the days of a 5% APY are in the past. In September, the Federal Reserve dished out a 50 basis-point rate cut, signifying the beginning of the end for high rates. Continuing this trend, the central bank's chair, Jerome Powell, announced a <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">25 basis-point cut</a> last week, and is expected to slash rates further in the months ahead.Is there anything I can do about the state of my savings account, or do I have to watch my yield erode away slowly? Curious, I asked three financial experts for their advice on this topic.As a famous politician once said, we didn't just fall out of a coconut tree. Context is important. Patti Black, a financial advisor at Savant Wealth Management, reminded me that the recent high interest rate environment is a marked departure from the last decade, where interest rates were near zero and there was no yield on cash to be found. So, while yields dropping from nearly 5% might seem like a tough pill to swallow for someone like me who just opened an account in the last couple of years, it's still a pretty good deal when you consider where rates have been in the past.I didn't have a bank account during the post-2008 zero-interest rate policy era, so this was helpful context to have. Perhaps my generation is indeed coddled — first by our parents and now by Jerome Powell's post-pandemic rate hikes.Black also suggested that I switch up my perspective. While a rate-cutting cycle means less return on my cash, it also means lower borrowing costs for a car loan or a mortgage, which is good news for the housing market.But there are other options for where I can have my money sit, Black said. Of course, one alternative is a <a target="_blank" href="https://www.businessinsider.com/cd-rates-certificate-deposit-high-interest-where-to-invest-now-2024-10">certificate of deposit</a> (CD), which is essentially a savings account that holds money at a fixed interest rate for a fixed period of time. CDs generally pay higher interest rates than savings and money market accounts in exchange for locking up your money for anywhere between three months to many years. However, my hands are a little tied. A well-known rule of thumb is to keep three to six months of living expenses available in your bank account as an emergency fund (read: liquid and highly accessible), so it's not a good idea to lock up money in my high-yield savings account for a prolonged period time. I could withdraw my money from the CD if needed, but I'd have to pay back some or all of the interest I'd generated up until that point as a penalty.With this in mind, Black said that sometimes it doesn't matter what the rate on the high-yield savings account is — it's the best place to park cash for easy access.Armed with this context, I still wanted to see if there were more ways to put my cash to work for me.Daniel Milan, financial advisor at Cornerstone Financial Services, had some more thoughts on CDs. A three-month CD could be a good option if I were comfortable locking up my money for that period of time, according to Milan.My bank didn't offer CDs, so I would need to open up a new bank account, which isn't necessarily a bad thing. Some financial experts recommend having <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/how-many-savings-accounts-can-you-have">multiple bank accounts</a> for different savings goals. Searching online, I saw <a target="_blank" href="https://www.businessinsider.com/personal-finance/banking/best-3-month-cd-rates">multiple options</a> yielding over 4.6%.However, Milan didn't recommend locking up my money for longer. Usually, the longer the term of the CD, the higher the rate. But that's not always the case in today's market."In this current environment, it makes no sense to go further out than three months on a CD because the three-month CD is paying you more than a one-year or two-year right now," Milan said.Looking at CD offerings from a variety of banks, I discovered that this was indeed true — generally, the longer the CD duration, the lower the rate, especially after a 1-year duration. Rates on 6-month and 9-month CDs were also attractive depending on the bank, but again, my liquidity needs take those off the table.Many of the banks I looked at didn't offer short-term CDs, either. For example, one option offered a 4.5% APY on an 11-month CD, 3.7% on a 2-year, and 3.5% on a 5-year.It wouldn't make sense to move my money out of my savings account without high enough compensation for the lower liquidity."You're not getting paid for that illiquidity," Milan told me.Short-term <a target="_blank" href="https://markets.businessinsider.com/bonds">Treasury bills</a> are another investment option for higher yield, and they offer more liquidity than CDs, according to Richard McHorter, a private wealth advisor at SRM Private Wealth. A three-month Treasury bill currently yields 4.43%.There's also the added benefit of tax savings, which is especially appealing for McHorter, who lives in California: "If you're a resident of a high-income tax state, I would be looking at Treasury bills."As a resident of New York City, the idea of lower taxes certainly appeals to me. If I were to buy Treasury bills, I would only need to pay federal taxes, bypassing state and local income taxes.McHorter also said that there's a lot of uncertainty about interest rates right now, and they could actually start going back up again. Trump's proposed <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariffs-hit-company-stock-profits-hardest-china-investing-manufacturing-2024-11">tariff policies</a> could increase inflation, in which case the Fed would probably increase rates to combat an overheating economy, he said.If I buy a three-month Treasury bill, I can reassess the inflation situation when I get my money back in three months and reinvest it accordingly, McHorter said.When it comes to interest rates and inflation, pay attention to the data and don't try to predict the market with your money, Milan advised. <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">Jerome Powell</a> himself has said that it's too soon to say how the election results could reshape markets and interest rates."My advice to anybody would be: just be diligent in reading and interpreting the data as it comes out," Milan said. Watch inflation data and Fed commentary, and base your investing decisions on the information you have at hand.It feels like the market is a bit in limbo as everyone waits for the effects of the election to ripple through, but as Black mentioned, not taking any action right now isn't the worst decision.What's next? For starters, I'm going to sit down and crunch some numbers for what three to six months of living expenses look like for me and keep that in my high-yield savings account. With the money I have left over, I have some good options.Are you a Gen-Zer who has recently been faced with an investing predicament? Feel free to reach out to Christine at <a target="_blank" href="mailto:cji@businessinsider.com">cji@businessinsider.com</a> to share your story.

The interest rate on my high-yield savings account keeps dropping. I asked 3 experts how to earn more on my cash.

<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?

George Wilson learned the hard way that there's no such thing as a free lunch — or, in his case, a free dinner that cost him a chunk of his retirement savings.As a retiree, he regularly received postcards in the mail, offering to teach him about finance and how to make money in retirement. They usually involved a presentation at a nice restaurant, and he would go without acting on any of the investment advice.But on one occasion, Wilson did take the bait after a brochure he received in 2010 inviting him to an evening at Ruth's Chris Steak House ended up costing him $158,000."It was a very good restaurant. And so, of course, it caught my attention," Wilson said in an interview.At that fateful dinner, he enjoyed his favorite top sirloin steak, asparagus tips, and a "fabulous" chocolate cake. He also met David Escarcega, one of the hosts and a broker who would eventually advise him to invest in so-called non-correlated, fixed-income alternative products from the <a target="_blank" class="" href="https://www.investmentnews.com/alternatives/gwg-holdings-files-for-bankruptcy/220355">now-bankrupt firm GWG</a>.Years later, Wilson is still fighting to regain what he lost from that investment. An arbitration decision recently awarded him $267,252 in compensation, including emotional distress damages from the last broker who facilitated the transaction. But the respondent only paid approximately $103,363.40 toward sanctions and the award. After costs, Mr. Wilson will end up with almost no payout, according to his attorney.Fancy restaurants with presentations are a common practice in the industry, says financial planner Michael Murray, adding that there are services that provide mailing lists of people with a certain net worth, and retirees are often on them because it's where wealth tends to be concentrated.But those meals aren't really free, Murray said. They're predominantly set up to sell high-commission products. In GWG's case, brokers earned up to 8% in commissions. What advisors can earn from one of these events pays for the meals and more. Picture a scenario where an advisor signs up $500,000 worth of investments with an 8% commission rate; that's a $40,000 payout. The math is very favorable for those who do this regularly, he added.Meanwhile, invitees feel like the hosts have done something nice for them and there's an implication that they should do something back, Murray noted. "So I think certain people will go to these dinner seminars and almost feel an obligation to work with someone."They're referred to as "free lunch seminars," said Adam Gana, a securities attorney who worked on Wilson's case. They're common in the industry. But Gana says that when brokerage firms offer them, he tells clients to run the other way."We see them all the time," Gana said. "I've represented 3,000 investors over the last 15 years, and in so many of those instances when we're dealing with a horrific product, a non-traded product, a product that's just terrible for investors, it usually starts with a free lunch."<h2 id="74285f86-a363-43ff-b132-9ec411f82f14">Risky business</h2>After the dinner, Wilson and his ex-wife Jean followed up with Escarcega at his office to discuss alternative investment options."We sat down with him, and he went through various opportunities that he could present to us, and we asked for several," Wilson said. "And the one that seemed the most attractive and that he extolled the virtues of the most was GWG. And so we thought about it for several weeks and went back and forth and then ultimately decided to do it."The products were non-publicly traded so-called LifeNotes, high-yield debt securities that paid a 9% monthly interest rate by GWG Holdings, according to documents viewed by Insider. They were based on life insurance policies purchased on the secondary market, with the expectation that death benefits would be paid to GWG's bondholders when the insured died. One brochure, viewed by Insider, advertised them as a "secured investment backed by a large portfolio of high-quality life insurance policies""Escarcega had pitched them as a safer alternative to the volatile stock market that could provide steady dividend payouts while preserving the principal investments, Wilson said."Of course, we want to leave our equity to our children but have some kind of income coming from it while we're still here," Wilson said. "And so that was very attractive to us, that we preserve our equity."Wilson initially purchased $180,000 worth of the notes using funds from his IRA, according to documents viewed by Insider. He later reduced his investment to $158,000 and flipped it to GWG preferred stock. For the next few years, things were looking good. Wilson received payouts monthly. In 2017, he decided to renew his investment, according to documents viewed by Insider.What he didn't know was that by then, Escarcega had been barred from selling securities after misrepresenting investment risks, according to FINRA. So Escarcega used his brother Adrian's license to submit the transactions through AGES Financial Services, according to arbitration documents from Wilson's attorneys. The Escarcegas could not be reached for comment.It was one of many details Wilson wasn't aware of. Thus far, the payouts had always been timely, he said. So, there was no reason to suspect there were problems. But there were. GWG's balance sheet wasn't adding up. FINRA had determined that it hadn't been profitable in over a decade. The firm had been selling new bonds to pay dividends to existing bondholders. The underlying collateral wasn't generating an income and multiple accounting firms refused to audit it, according to the amended statement of claim.The doom loop would eventually come to a screeching halt due to GWG's accounting issues, an SEC investigation, and failure to file its annual SEC report. By 2021, it could no longer sell bonds which led to its bankruptcy by 2022 and the halting of dividend payments, according to the amended statement of claim.Craig McCann, a consultant providing expert testimony in investment cases, including this one, said that GWG's insurance contracts were being overvalued on its balance sheet and the firm was assuming that people would die earlier. As a result, they estimated receiving the death benefits sooner. Simply put, there were not enough benefits being paid on the insurance contracts to cover the interest and principal due."There were lots of signals," McCann said. "There were lots of problems with their SEC filings and lots of reasons to believe that it was imminently going to happen, but most investors were very unsophisticated investors."In 2019, <a target="_blank" class="" href="https://www.investmentnews.com/alternatives/clients-win-another-gwg-bond-claim-this-time-against-b-d/245442">AGES had ended its relationship with GWG</a> due to a change in the company's business model, according to the firm. But Wilson says he was not informed by the firm, <a target="_blank" class="" href="https://www.investmentnews.com/fixed-income/investors-claiming-emotional-distress-damages-win-lawsuit-involving-gwg-bonds/257068">preventing him from selling his shares in time</a> (AGES disputes this). An arbitration panel found that the investment scheme was so egregious that they awarded him $267,252.00 in compensation that included emotional distress damages, according to the order. AGES paid $103,000 for all claimants.<h2 id="9e594bc3-8860-404f-8b63-aeb5d0906705">Risk reward</h2>Wilson's situation is a cautionary tale. He used his IRA to make the investment, so he's also faced with a required minimum distribution, which includes the amount invested in GWG even though it's nominal. He told Insider he must withdraw from other investments to meet the minimum.His case isn't an isolated one. There may have been thousands of brokers selling GWG bonds, based on data pulled from ADV filings as reported by McCann. Wilson says he lives with the guilt of advising his ex-wife and a friend who also invested in the bonds and lost their principal.Truth be told, it's difficult for the average retiree who is not financially savvy to understand the mechanics of many of these alternative investments, even when there are red flags, Murray said. Non-publicly traded investments take time to build capital before generating free cash flow. For those with lower cash reserves, they don't make much sense because they lack liquidity, he added.But Murray also emphasized that not all alternative investments are bad. He just thinks that if you're considering them, you must be financially savvy and have the ability to dig into offering statements, look at fee structures, and related party transactions. Even then, investors should resort to a second opinion from a fiduciary advisor, a CPA, or an attorney.Finally, understand that risk and reward are always tied together. Outsized promises of yields that are much higher than, say, the 10-Year Treasury is a red flag and means there's elevated risk, Murray said.

How a free meal cost an investor his retirement savings

Donald <keyword id="19906203" type="General" weightage="20" keywordseo="Trump" source="keywords">Trump</keyword> and <keyword id="19903807" type="General" weightage="100" keywordseo="Elon-Musk" source="keywords">Elon Musk</keyword> have apparently become great friends over recent months. Musk poured millions of dollars into Trump's successful election campaign and has been a vocal and visible supporter of the president-elect. In return, he's been given a new job, in joint charge of the new <keyword id="23593857" type="General" weightage="20" keywordseo="Department-of-Government-Efficiency" source="keywords">Department of Government Efficiency</keyword> (Doge), where he will be tasked with streamlining government operations and reducing bureaucracy. This "department"—actually an advisory group—will aim to cut unnecessary spending and make the general functioning of the US government more efficient. The idea is that within a federal budget of over US$6 trillion, there are opportunities to make some big savings. Musk's appointment—like many things he's involved with—has sparked controversy. The richest man in the world has already said he wants to cut spending by US$2 trillion (£1.6 trillion) and mentioned setting up a "leaderboard for most insanely dumb spending of your tax dollars.". Some are concerned about the impact he could have on public services. Others fear he will use his position to promote his own business interests. On the positive side, Musk has a very impressive CV when it comes to big organisations. He has created (or co-created) multi-billion-dollar businesses, including Paypal, <keyword id="19895433" type="General" weightage="20" keywordseo="Tesla" source="keywords" meta.keywordsubtype="org" meta.entityname="Tesla" meta.hostid="261" meta.entityid="Tesla">Tesla</keyword>, and <keyword id="19905255" type="General" weightage="20" keywordseo="SpaceX" source="keywords" meta.keywordsubtype="org" meta.entityname="SpaceX" meta.hostid="261" meta.entityid="SpaceX">SpaceX</keyword>. He has founded startups involved in AI (xAI), tunnelling (the Boring Company), and medicine (<keyword id="19985233" type="General" weightage="20" keywordseo="Neuralink" source="keywords" meta.keywordsubtype="org" meta.entityname="Neuralink" meta.hostid="261" meta.entityid="Neuralink">Neuralink</keyword>). And research suggests that much of Musk's success comes down to a relentless focus on efficiency. He has also been praised for the depth of his analytical thinking and innovative problem solving. Tesla's factory in California went from being the least productive car manufacturing plant in the US when it was owned by General Motors to the most productive under Musk's ownership. SpaceX has vastly reduced costs in the space cargo business. So he has form. And Musk is not the first American business leader to offer private sector expertise to the world of politics. Back in the 1960s, Robert McNamara, former president of the Ford Motor Company, served as secretary of defence under presidents John F. Kennedy and Lyndon B. Johnson. McNamara brought significant innovations to <keyword id="22668770" type="General" weightage="20" keywordseo="government-efficiency" source="keywords">government efficiency</keyword> that drew on his corporate experience. He championed cost-benefit analysis and a data-driven approach to decision-making and was keen on reducing bureaucracy and promoting accountability in complex governmental processes. To achieve this, McNamara recruited a team of experts from the worlds of academia and business. Known as the "Whizz Kids," they brought new perspectives to the White House. In the UK now, the Labour government's minister of state for investment is Poppy Gustafsson, a former venture capitalist and tech founder. Its minister for prisons is James Timpson, former CEO of the Timpson Group, a family firm renowned for hiring ex-offenders. These people—and there are many other examples around the world—were brought into the political sphere because of the knowledge and vision they have demonstrated in the private sector. The hope is their talent and leadership will improve policy and practice. <h2>Data-driven reform</h2>The same must be hoped for Musk: that with his co-leader, Vivek Ramaswamy—a biotech entrepreneur and former Republican leadership candidate—he will bring expertise in cost-cutting and innovative strategies. This will probably include comprehensive audits and data-driven approaches to reform. Critics refer to prior examples of Musk's approach, such as the mass layoffs and aggressive cost-cutting measures at Twitter (now X), with concerns that there could be similarly drastic reductions in the federal workforce and public services. But big job cuts were happening across the tech sector at that time. They came in the wake of reduced revenues and a need to reduce bloated workforces and ineffective functions—not unlike the challenges faced by the US government. Nevertheless, while proponents see Musk as an experienced leader capable of streamlining bureaucracy, sceptics fear the advent of harmful austerity measures that risk disruption to essential public programs. Concerns have also been raised about potential conflicts of interest, as Musk's business empire benefits from government contracts. However, since Doge will operate as an advisory body, concerns over him gaining advantage through any self-dealing seem overblown. Besides, two of Musk's companies (SpaceX and Tesla) have been awarded US$15.4 billion (£12.3bn) in federal contracts in the last decade. Perhaps then, success precedes influence rather than the reverse? Doge will also be governed by the Federal Advisory Committee Act, which maintains legal and ethical guardrails. And Congress will have the final say over any decisions. Fears of the worst possible outcome to Musk's appointment are a natural human response in the face of uncertainty. It is part of the reason that negative headlines get more clicks than positive ones. It is also true that Musk has aligned himself with a politician who divides opinion like few others. By leveraging his billions of dollars and 200 million followers on X to help Trump to victory, he made it clear which side he was on. And in a highly polarised US political landscape, the anguish about his governmental role may be little more than a knee-jerk reaction from the millions of people whose side he did not choose.

Love him or loathe him, Elon Musk is a champion of efficiency and could save the US government a fortune

<ul class="summary-list"><li>Business Insider spoke to over 40 baby boomers in recent months, many of whom are struggling to retire.</li><li>They're disappointed that Social Security isn't helping them stay out of poverty in their post-work years.</li></ul><a target="_blank" href="https://www.businessinsider.com/boomer-living-on-social-security-retirement-savings-401k-bus-driver-2024-7">Emma Echols</a> has worked since she was 12 as a babysitter, chef, and convenience store manager.The 68-year-old should be preparing for retirement, but she believes she'll have to <a target="_blank" class="" href="https://www.businessinsider.com/retirement-crisis-social-security-pensions-student-loan-debt-2024-3">work for the rest of her life</a>.Echols lives in Alabama. She said she never made much money and has always lived frugally, but her rent and transportation alone cost her $1,000 monthly. She started <a target="_blank" class="" href="https://www.businessinsider.com/social-security-no-savings-snap-benefits-debt-boomers-experiences-2024-6">taking Social Security early</a> and receives $1,056 monthly — 25% less than she would have gotten had she waited until the federal retirement age of 67.But she's still working part-time as a bus driver making $26 per hour to pay the rest of her bills."I don't see myself being able to retire, but I'm grateful and healthy," she said.<a target="_blank" class="" href="https://www.businessinsider.com/boomer-lives-social-security-struggles-afford-grocery-bills-rent-retirement-2024-8">She's not alone:</a> According to a <a target="_blank" class="" href="https://www.nerdwallet.com/article/insurance/medicare/2024-medicare-and-retirement-report">NerdWallet study</a> published last week of 2,100 adults, just 30% of respondents said they believe Social Security alone will allow them to live comfortably in retirement.Over the past few months, Business Insider has spoken with over 40 baby boomers and some Gen Xers, all of whom are struggling in retirement or <a target="_blank" href="https://www.businessinsider.com/boomer-social-security-cant-afford-groceries-feels-lonely-retirement-2024-7">fear they can't retire</a> because debt, low-paying jobs, and unexpected life circumstances have kept them from saving enough over the years. Though many say they are thankful to have Social Security payments at all, they aren't enough to fill the gap.Social Security is supposed to be American retirees' safety net, but as it continually <a target="_blank" href="https://www.businessinsider.com/when-will-social-security-benefits-run-out-retirement-crisis-boomers-2024-5">lands in political crosshairs,</a> it might seem like a less safe bet than ever before. Full benefits are set to <a target="_blank" href="https://www.businessinsider.com/when-will-social-security-benefits-run-out-retirement-crisis-boomers-2024-5">run out in 11 years</a> unless Congress steps in with an infusion of funding."There's just a lot of people who expect Social Security to be a really important piece to their post-work life," Tracey Gronniger, managing director of economic security for the advocacy organization Justice in Aging, said.Even with the current full benefits, some baby boomers are forced to continue working into their 70s and 80s, while retirees worry they may have to return to a part-time gig. Others said they're considering moving out of the country for a lower cost of living or moving in with their children."At this point in my life, my expectations are very low," said <a target="_blank" href="https://www.businessinsider.com/peak-boomer-retirement-affordable-housing-rent-california-alice-food-stamps-2024-5">Cheryl Simmons</a>, 62, who lives in her car in San Diego and makes $42,000 a year as a parking lot attendant — slightly too much to qualify for affordable housing. "I'll have to work until I drop."<h2 id="42ec9f61-b6ed-4191-abf8-5155a510a607">Social Security varies by age and income, but the average monthly check is $1,907</h2>Social Security, created in 1935, was implemented during the Great Depression to assist the <a target="_blank" class="" href="https://www.ssa.gov/history/briefhistory3.html">more than half</a> of Americans in poverty, including older workers looking to retire."There is no tragedy in growing old, but there is tragedy in growing old without means of support," President Franklin D. Roosevelt said in a <a target="_blank" class="" href="https://www.ssa.gov/history/locations.html#:~:text=Old%20age%20is%20at%20once,without%20means%20of%20support.%20.%20.">1934 address</a>.Social Security benefits are <a target="_blank" href="https://www.ssa.gov/OACT/COLA/Benefits.html">based on a worker's average monthly income</a> during their 35 highest-earning years, adjusted for inflation.For example, an American earning an average income of about $66,000 who retires at 65 will have 39% of that annual income replaced by Social Security, according to <a target="_blank" href="https://www.ssa.gov/OACT/NOTES/ran9/an2024-9.pdf">SSA estimates</a>. This compares to an average <a target="_blank" class="" href="https://www.oecd-ilibrary.org/docserver/5df7712d-en.pdf?expires=1724266845&amp;id=id&amp;accname=guest&amp;checksum=2527F54D46AE1A4C399BE99BBB46A640#:~:text=Full%2Dcareer%20male%20workers%20will,slightly%20lower%2C%20at%2050.1%25.">income replacement rate</a> of slightly over 50% in OECD countries — and nearly 80% in Spain and Greece.Americans can begin claiming Social Security at age 62 — but their monthly amount is often higher if they wait longer to collect benefits. In 2024, the <a target="_blank" href="https://www.businessinsider.com/personal-finance/investing/what-is-social-security">maximum monthly benefit</a> is $3,822 for those claiming the benefit before turning 70; for those claiming the benefit at age 70, the maximum benefit is $4,873. However, the average monthly check is much lower: $1,907.An annual income of just under $23,000 doesn't go far in the US today. While Social Security was never meant to promise a life of luxury — and is ideally combined with savings and other investments — the baby boomers BI spoke to have struggled to save much at all because life events and low wages got in the way.Some are part of the one in five older Americans who have <a target="_blank" class="" href="https://www.businessinsider.com/gen-x-baby-boomers-savings-cant-afford-retirement-2024-4">no retirement savings</a> at all. Experts say you can partially blame the US' <a target="_blank" class="" href="https://www.businessinsider.com/retirement-social-security-gen-z-millennials-uncertainty-fears-pensions-2024-4">switch to 401(k) accounts from pensions</a> in the 1980s, which largely replaced guaranteed retirement payouts funded by employers with investment plans that require employees to opt in and provide the bulk of their savings.While many employers do offer 401(k) matches to their employees, the amount can vary greatly between companies. And, because participation and employer matches are voluntary — and income-based — this opt-in system can cut down on employees' retirement savings and lead to even <a target="_blank" class="" href="https://mitsloan.mit.edu/ideas-made-to-matter/how-retirement-saving-incentives-amplify-wealth-gaps-u-s">greater income inequality</a>.To help pay the bills, nearly 80% of retirees receive some Social Security income, per BI's calculations, and the Social Security Administration estimates that 97% of older adults will ultimately receive benefits.Social Security indeed helps older Americans <a target="_blank" class="" href="https://www.cbpp.org/research/social-security/social-security-lifts-more-people-above-the-poverty-line-than-any-other">escape the technical definition of poverty</a>. However, the official poverty line is based on a formula from the 1960s, a measurement that <a target="_blank" href="https://www.businessinsider.com/poverty-line-leaves-behind-low-income-americans-snap-medicare-wic-2024-6">experts previously told BI</a> is outdated and leaves many to fall through the cracks between needing help and making too much to qualify for assistance.The baby boomers BI spoke with are not part of the group who have myriad investments, high-paying careers, or strong 401(k) employer matches. They are retired teachers, rideshare drivers, food service and retail workers; some live in a car or can't afford groceries — and they certainly feel like they are living in poverty.Others, however, have minimal expenses and <a target="_blank" href="https://www.businessinsider.com/boomer-lives-on-social-security-works-walmart-retirement-savings-2024-7">live in low-cost-of-living areas</a>, allowing them to live comfortably on Social Security alone.Those who are already living check to check said they've been forced to drain savings accounts because their income isn't enough to cover medical bills and unexpected expenses. And, with limited Social Security money, some boomers are forced to enroll in other government assistance <a target="_blank" href="https://www.businessinsider.com/buying-groceries-snap-food-stamps-cant-afford-essentials-credit-card-2024-6">programs like SNAP</a> to put food on the table or return to work after retirement.<a target="_blank" class="" href="https://www.businessinsider.com/boomer-couple-lives-social-security-snap-no-retirement-savings-2024-6">Mary Dacus</a>, 62, and her husband Stephen, 67, live in Robinson, Illinois, on their combined $2,140 monthly Social Security income and $23 a month in SNAP. They've racked up thousands of dollars in credit card debt to pay for groceries, utilities, and healthcare. They feel like it's their only way to survive."A lot of people think that, with Social Security, you get this big check, and you can move to Florida, and you could buy a boat and go fishing," she said. "That's not what it is."<a target="_blank" href="https://www.businessinsider.com/retirement-social-security-peak-boomer-alaska-medical-expenses-financial-insecurity-2024-8">Becky Davenport</a>, 61, works at a nonprofit outside Anchorage, a high-cost-of-living area. She told BI that her expected $2,000 monthly Social Security payments may not be enough. The single mom fears she may need to move in with her sons or find a roommate. Medical costs, housing expenses, and transportation have all chipped away at her savings."I usually had more money going out than coming in," Davenport said. "I was kind of a master at juggling bills. I had some credit cards that I used for emergencies and ended up defaulting on all of those. I just managed to scratch out a living and keep a roof over my kids' heads."<h2 id="65730406-dd92-418b-963e-a6e4f447db7f">Social Security solutions could include raising earnings caps and improving funding</h2>With a presidential election coming up, Social Security is likely to be in the hot seat once again.While Social Security is costly — <a target="_blank" href="https://www.cbpp.org/research/federal-budget/where-do-our-federal-tax-dollars-go#:~:text=Social%20Security:%20In%202023%2C%2021,to%2049.1%20million%20retired%20workers.">it amounted to 21% of the federal budget in 2023</a> — it's widely popular. Polling has consistently shown bipartisan support for the program; a <a target="_blank" href="https://www.pewresearch.org/politics/2024/06/24/americans-views-of-government-aid-to-poor-role-in-health-care-and-social-security/">Pew Research Center poll</a> of 8,709 adults in April 2024 found that almost every group thinks Social Security benefits should not be reduced. That includes 77% of Republicans and 83% of Democrats.Already, former president and current Republican nominee Donald Trump has proposed cutting taxes on benefits — a measure that an economist said could <a target="_blank" href="https://www.businessinsider.com/trumps-tax-plan-social-security-retirement-medicare-2024-8">actually drain the program's coffers faster</a>.Senators Bernie Sanders and Elizabeth Warren, along with fellow Democrats, have <a target="_blank" href="https://www.businessinsider.com/sanders-warren-bigger-social-security-checks-medicare-retirement-biden-2023-2">proposed raising the earnings cap for Social Security taxes</a> to offset hiking benefits by $2,400 a year. Currently, only <a target="_blank" class="" href="https://www.ssa.gov/benefits/retirement/planner/maxtax.html">income up to $168,600</a> is subject to Social Security tax, with income beyond that untaxed. On the other hand, some House Republicans <a target="_blank" href="https://www.businessinsider.com/social-security-benefits-republicans-raise-age-retirement-cuts-2024-3">have proposed</a> hiking the eligibility age for the program.Those proposals come against the backdrop of already-dwindling funding."We really want to see a more robust Social Security system," Gronniger said. Already, she said, the program is lifting millions of adults out of poverty — but, with a very low poverty line in the US, that's "not saying a ton.""We could do a lot more because I think what we want is for people to actually have real economic security and so feel as though they can afford the things not only that they need, but that people should have," Gronniger said. "You shouldn't be worrying about whether or not you can pay for all of your food and all of your medicine and all of your housing."But the dire straits older Americans have found themselves in, even with Social Security, point at a larger issue that might only get exacerbated: Retirement is becoming a luxury. As pensions dissipate and only higher-earning retirees have savings, Social Security might only become more pivotal for retirees. And that's already not working so well."I don't want to be rich, I just need to be comfortable," 62-year-old Angela Babin — who lives on her <a target="_blank" href="https://www.businessinsider.com/boomer-social-security-checks-snap-food-stamps-cant-afford-food-2024-6">$1,100 monthly Social Security check</a> — told BI. "I just want to know that I can have food when I need it and a nice roof over my head."Are you living check to check on Social Security? Have you experienced loneliness because of your finances? If so, reach out to these reporters at <a target="_blank" class="" href="mailto:allisonkelly@businessinsider.com">allisonkelly@businessinsider.com</a>, <a target="_blank" href="mailto:nsheidlower@insider.com">nsheidlower@businessinsider.com</a>, and <a target="_blank" href="mailto:jkaplan@insider.com">jkaplan@businessinsider.com</a>.

Social Security won't save you

Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords" meta.keywordsubtype="org" meta.entityname="Sebi" meta.hostid="153" meta.entityid="Sebi">SEBI</keyword> has asked the <keyword id="20677983" type="General" weightage="20" keywordseo="mutual-fund-industry" source="keywords">mutual fund industry</keyword> to proactively conduct stress tests, a key component of <keyword id="20383727" type="General" weightage="20" keywordseo="risk-management" source="keywords">risk management</keyword> for the financial sector, which will help strengthen the ecosystem, its whole-time member Ananth Narayan Gopalakrishnan said on Friday. The regulator's stress testing emphasizes the need to assess and manage liquidity risks, especially in small and midcap equity schemes. Speaking at a mutual fund event, Gopalakrishnan highlighted the importance of modelling stress scenarios not just for individual schemes or fund houses, but for the entire mutual fund ecosystem. "It is also important to model stress scenarios for the entire composite mutual fund ecosystem. I would strongly encourage the industry and <keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords" meta.keywordsubtype="org" meta.entityname="AMFI" meta.hostid="153" meta.entityid="AMFI">AMFI</keyword> to take the lead and proactively conduct objective and credible industry wide stress tests. themselves," Gopalakrishnan said. He also emphasized the need to find better ways to communicate the risks associated with different mutual fund schemes. The SEBI official mentioned that while the current risk measurement system is straightforward and has had a significant impact, it doesn't fully capture the differences in risks among various investment schemes. According to him, many schemes are just labelled as high risk, even though they have different kinds of risks. The goal is to improve this system to better reflect those differences, while keeping it simple and easy to understand. One possible approach is to consider the portfolio's volatility and liquidity from stress tests to give a clearer picture. "While ensuring simplicity and ease of understanding remains a key objective, perhaps the underlying volatility of the portfolio along with the liquidity of the portfolio from stress tests could be used to provide better colour all around," he added. This comes at a time when the holdings of mutual funds by <keyword id="20234284" type="General" weightage="20" keywordseo="domestic-institutional-investors" source="keywords">Domestic Institutional Investors</keyword> (DIIs) and individuals have risen from about 54.3% of free float of all mid cap and small cap companies, as of March 2020 to 60.6% as of March 2024. Several fund houses have proactively stopped lump sum investments in some small-cap schemes and also capped the amount that can be invested through <keyword id="20675888" type="General" weightage="20" keywordseo="systematic-investment-plan" source="keywords">Systematic Investment Plan</keyword> (SIP) into small-cap schemes. He also highlighted the potential mismatch between the demand for paper and the supply of fresh paper coming into the ecosystem. Gopalakrishnan said the industry can make more progress in streamlining operations and improving efficiency for investors. "At a time when instantaneous fund transfers have become ubiquitous in our country, perhaps we should look to improve our internal processes and the security settlement ecosystem, to ensure that funds are passed on to investors on the day of the settlement itself, rather than a day after or two days after," he added. Over the last few years, the mutual fund industry has made impressive strides, and is now playing a crucial role in channeling financial savings towards risk capital formation. This was driven by stable macros, increased formalization, robust corporate earnings, digitisation and user friendly access. Moreover, the number of mutual fund investors has grown significantly from about 2 crore as of March 2019 to nearly 4.7 crore as of June 2024, an impressive compounded annual growth rate of 18% during that period. Gopalakrishnan mentioned that several exciting initiatives are in the works, developed with input from all stakeholders. These include a proposed low-ticket SIP, further breaking down regular SIPs into smaller, more accessible units (sachetisation and tokenization), and the introduction of "mutual funds lite" regulations. These new regulations will simplify rules for passively managed funds, reducing the compliance burden and encouraging competition and innovation. Additionally, a new class of higher-risk schemes is proposed for investors with a greater capacity to handle risk.

SEBI asks mutual fund industry to proactively conduct stress test

<keyword id="19895437" type="General" weightage="20" keywordseo="investment" source="keywords">Investment</keyword> in <keyword id="20300870" type="General" weightage="100" keywordseo="equity-mutual-funds" source="keywords">equity mutual funds</keyword> surged over five-fold to Rs 94,151 crore in the June 2024 quarter against Rs 18,358 crore a year ago, driven by a strong <keyword id="21477327" type="General" weightage="20" keywordseo="economic-environment" source="keywords">economic environment</keyword>, supportive <keyword id="22575274" type="General" weightage="20" keywordseo="government-fiscal-policies" source="keywords">government fiscal policies</keyword>, <keyword id="19900618" type="General" weightage="20" keywordseo="investors" source="keywords">investors</keyword> confidence and robust <keyword id="21990858" type="General" weightage="20" keywordseo="stock-return" source="keywords">stock return</keyword>. This has also pushed the industry's assets under management (<keyword id="20019621" type="General" weightage="20" keywordseo="AUM" source="keywords">AUM</keyword>) by 59 per cent to Rs 27.68 lakh crore in June from Rs 17.43 lakh crore a year ago, data from the Association of Mutual Funds in India (<keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords">AMFI</keyword>) showed. The robust gain in the asset base was also replicated in the growth of investors in equity mutual funds, with the number of folios closing at 13.3 crore, adding an investor base of over 3 crore. The significant gain in equity folios indicates broader participation across investor segments, driven by improved <keyword id="19929245" type="General" weightage="20" keywordseo="financial-literacy" source="keywords">financial literacy</keyword> and accessible investment platforms, Trivesh D, COO of stock trading platform Tradejini, told PTI. According to the AMFI data, equity-oriented mutual fund schemes invested Rs 94,151 crore in the quarter ended June 2024. This comprises Rs 18,917 crore in April, Rs 34,697 crore in May and Rs 40,537 crore in June. The investment in equity-oriented mutual funds jumped five-fold to Rs 94,151 crore in the June quarter from Rs 18,358 crore in the quarter ended June 2023 and increased 32 per cent Rs 71,280 crore witnessed in the preceding March 2024 quarter. "The confluence of political stability, supportive government policies, and a favourable economic environment has significantly contributed to the impressive inflows into equity mutual funds, signalling a positive outlook for the sector," Trivesh said. Strong macroeconomic fundamentals, bolstered by supportive government fiscal policies like higher-than-budgeted tax collection growth, reduced revenue expenditures, and increased capital spending have helped in increasing the allocation to equity mutual funds, Feroze Azeez, Deputy CEO, Anand Rathi Wealth, told PTI. He further said that investors' confidence in the markets and historically strong returns given by Indian equities with relatively low risk also helped investors to move towards equity mutual funds. Additionally, the shift was further fuelled by a transition from traditional investments like deposits to mutual funds in pursuit of higher returns. "The long-term outlook remains positive, with expectations of 11-13 per cent annual returns for Indian equities, and equity mutual funds potentially delivering even higher returns," Azeez said. Within the equity segment, sectoral or thematic category attracted Rs 46,731 crore during the quarter under review, followed by Multi-cap (Rs 10,077 crore), Flexicap (Rs 8,387 crore), Large &amp; Midcaps (Rs 7,948 crore), Smallcap (Rs 7,197 crore) and Midcap (Rs 6,927 crore). Large-cap funds witnessed an infusion of Rs 1,991 crore during the April-June quarter of the current financial year (FY25). Moreover, inflows into the systematic investment plan (<keyword id="19956399" type="General" weightage="20" keywordseo="SIP" source="keywords">SIP</keyword>) have been rising continuously for the past several months. The monthly SIP contributions crossed the Rs 21,000 crore mark in June, with the total inflow reaching an all-time high of Rs 21,262 crore. This shows investors' commitment to disciplined and long-term investing. The fund infusion through the SIP route was Rs 62,537 crore in the April-June quarter of FY25, a remarkable surge from Rs 43,211 crore in the same quarter preceding the fiscal.

Investment in equity mutual funds surge 5-fold to Rs 94,151 cr in June qtr amid robust eco environment

The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

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