September 30, 2022

Steve Campbell

Section 80TTA of Income Tax Act- Claim Deductions Under 80TTA

Jan 28, 2022

Taxpayers in India can claim deductions on their income, investments, and various payments. For instance, do you know that the interest you earn from your savings account is eligible for tax deductions under Section 80TTA?

As every taxpayer in the country may have a savings bank account, Section 80TTA deserves your attention as it can help reduce your tax liabilities. Here’s everything you should know about Section 80TTA.

What is Section 80TTA of the IT Act?

Section 80TTA of the IT Act allows a deduction of up to ₹10,000 on the interest generated from savings account in a financial year. Individuals and HUFs (Hindu Undivided Families) can claim this deduction on the interest generated from a savings account in a bank, cooperative society that offers banking services, or post office.

However, the interest generated from Fixed Deposits (FDs), Recurring Deposits (RDs), or any other time-based deposits are not eligible for 80TTA deductions.

Can You Claim Interest Deductions from Multiple Savings Accounts?

It is not uncommon for people to have multiple savings accounts. Section 80TTA allows a tax deduction on the interest income irrespective of whether the interest is generated from a single or multiple savings account. So, you can claim deductions even if you earn interest from more than one savings account.

However, you can claim the deduction only up to ₹10,000 in a financial year.

If the interest generated from more than one savings account is under ₹10,000, you can claim full deduction on the interest amount. But if the interest income is higher than ₹10,000, the deduction can still be claimed only up to ₹10,000. The remaining interest will be taxable.

How to Claim Deduction Under Section 80TTA?

Any income tax exemption or deduction can be claimed while filing tax returns. For claiming a deduction on the interest income from savings bank account/s, taxpayers should disclose their interest earnings under the head ‘Income from Other Sources’ while filing tax returns.

For instance, Mr Shankar earns a salary of ₹6 lakhs in a financial year. He also earns an interest income of ₹12,500 from a savings account. Let us assume that he does not claim any other tax deductions or exemptions. So, the gross income for the financial year will be as follows:

Particulars Total Amount (in ₹)
Salary Income ₹6,00,000
Income from Other Sources

–          Interest from the savings account

 

₹12,500

Gross Total Income ₹6,12,500
Chapter VI-A Deduction

–          80TTA

 

₹10,000

Taxable Salary ₹6,02,500

Important Points to Know About Section 80TTA

Here are some additional things you should know about Section 80TTA:

  • Only taxpayers whose total income in a financial year is higher than the NIL tax slab can claim deductions under Section 80TTA
  • Seniors or taxpayers above 60 years cannot claim 80TTA deductions; however, they can claim deductions under Section 80TTB
  • NRIs with NRO savings account can also claim 80TTA deductions

Reducing Your Tax Liabilities with 80TTA Deductions

Interest income from a savings account is the most common income earned by almost all taxpayer. Under Section 80TTA, you can claim deductions on the interest income up to the prescribed limit to reduce your tax liabilities.

Taxpayers should take advantage of all the applicable tax provisions to legally save as much tax as possible. You can also consult with a professional tax advisor to boost your tax savings and invest confidently.

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Find Out How SIP Returns are Calculated

Jan 21, 2022

With a gamut of options for different risk appetites, multiple investing modes like SIP (Systematic Investment Plan) and lump sum investments, as well as inflation-beating returns, mutual funds are rightly one of the most popular investment instruments in India.

One can invest in a mutual fund scheme for varied goals and needs, both long-term and short-term. Different income groups can also use mutual funds as they allow investments as little as Rs 500. However, before you choose a mutual fund, you must know how its returns are calculated. Not only will this help you pick the right product, it will also help you track your investments along the way.

SIP calculators offer you simplified solutions in a matter of minutes. They are easy to use and can come up with precise estimates of your SIP returns. Here are five things to know about how your SIP returns are calculated:

  1. Compound Annual Growth Rate (CAGR)

There are three ways to calculate the returns from a mutual fund. The first is known as the compound annual growth rate (CAGR) method. As the name suggests, CAGR is the compounded growth rate of your investment over a period of time. It can be used to calculate the historical returns of different mutual funds.

CAGR is calculated based on three things:

  • The beginning value of your investment
  • The ending value of your investment
  • The tenure of your investment

Formula to calculate CAGR: [(Ending value/ Beginning value) x (1/Tenure)] – 1

  1. Extended Internal Rate of Return (XIRR)

XIRR is a more accurate method to calculate the returns from a SIP. When you invest through SIPs, you can have multiple investments of different values for different durations. XIRR calculates the CAGR of each installment and adds them up to give you the overall compounded growth rate of the investment.

You can calculate XIRR in Excel by using the function = XIRR (value, dates, guess)

  1. Absolute Returns

The third method to calculate the returns from mutual funds is the absolute returns method. This method shows you the point-to-point growth of your investment. You can use this to check the total profit or loss from a mutual fund scheme.

Formula to calculate absolute returns: (Final value – Initial value) / Initial value x 100.

Choosing the Ideal Method for Calculation

All of these methods have their pros and cons. Absolute returns are very easy to calculate. However, since the formula does not use the investment tenure, you cannot ascertain the exact growth of your investment over time.

XIRR may be the most accurate when calculating the returns from a SIP. It is also easy to use in Excel. CAGR is ideal for calculating the annual average returns of a mutual fund. However, it may be better suited for lump sum investments and is inaccurate when calculating SIP returns.

Conclusion

Understanding these different methods to calculate the SIP returns can help you plan your mutual fund investments better. Now that you are familiar with the basics, why not install the Tata Capital Moneyfy App and consolidate your investment journey?

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How To Save Money on Your Home Phone and Broadband

Jan 7, 2022

Saving money is something that we all want to do. It does not matter how much money you make, or how much you have. We would all prefer to save money on our home phone service and broadband needs. There are several steps that you can do to ensure that you get the best price for the amount of broadband that you need.

  1. Compare-This cannot be stressed enough. Compare every company that offers service in your area. It may seem like a daunting task that you would prefer to skip over, and you would be partially correct. It would be a chore to check with every service provider. There is an easier way. Use an online platform that will do the leg work for you. One that will compare them for you. All you must do then is read over the contract details and pick the one that fits your needs.
  2. Plans-You do not need to pay for a premium plan if you have low needs. Go through each plan that the providers can offer to you, and find the one that fits your needs, and wants. You will see that some providers do not offer all the choices that are available. This is another reason why it is so important for you to compare plans. Do not ever let yourself get stuck in a basic offer that will not meet your needs, but you need to ensure that you are not talked into a plan that offers more than you need. Keep your service plan at the level that you need. Yes, it is nice to have a ton of speed with little chances of lagging, but is it worth the extra cost?
  3. Hidden Fees-Check the plan for any hidden fees. You will probably have to pay some taxes on the service, which is a small amount that every customer is charged. If it is an excessive amount, find a new provider. Read through the entire contract before agreeing to anything. Make sure there are not fees put on as riders, or exclusions. For instance, if the contract charges you extra for calls made during certain times, or if the broadband delivered to you could fluctuate due to demand around you. Check everything in your broadband plans. If it sounds fishing, then it probably is.
  4. Add-Ons-When reading through the contract you need to also check for any add-ons that may be present. If there is, have the carrier remove the ones that you will not need. Especially check the details on your home phone because they may very well try and charge you for calling details that you do not need. An example would be long distance calling if you do not need it. No point in paying for anything that you will never need.
  5. Time To Switch-Even if you are happy with your service provider it may be possible for you to get a better deal for the same service elsewhere. Not all plans are created the same, and not all companies try to offer great service at an affordable cost. You need to follow the steps above and compare all the providers in your area.

Saving money is not a complicated task, but it will take some effort on your part. Using an online platform that compares the providers in your area will save you a ton of time and will reduce the amounts of stress that you would normally gain.

Never fall for the trick that companies use to get your business. A discount that is good for your first couple of months may seem good, but once the true price kicks in you may find that you are paying more than expected.

To save money on your home phone and broadband lines all you really need to do is check through all the contracts and read every part of them, including the small print. Get the plan that you want, not the plan that the provider wants you to have.

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EQUITY MUTUAL FUND INFLOWS DIP TO RS 28,671 CR IN OCTOBER

Dec 20, 2021

Certain factors such as positive sentiments and rally in the equity markets have attracted several investors towards equity mutual funds like a moth to a flame. However, the quantum of cash flows into the equity markets dipped from Rs 36,656 crores in September 2021 to Rs 28,671 crores in October 2021. This could be because several investors ended up booking profits as the markets started to trade at all-time highs. What’s more, several investors chose to stay in the sidelines as the stock markets were overvalued.

 

However, the good news is that the pickup in the vaccination drive across the country and resumption of business activities have drastically improved the growth viewpoints. This has helped the markets in touching their all-time highs on the prospects of economic retrieval, which has helped sideline the possible financial risk of a probable third wave of the Covid-19 pandemic. The potential to earn significant returns and this secular bull run in the markets further motivated the investors to boost the cash inflows in the equity markets. Equity mutual funds were further popular due to the lower returns offered by traditional forms of investment options. This has resulted in a robust inflow of cash in the equity-oriented mutual funds since March 2021. The equity segments have received a massive net inflow of Rs 73,766 crores since March this year. Evidently the market trends have upturned. Except for ELSS tax-saving mutual funds or equity-linked savings scheme and dividend yield categories, all the other types of equities have witnessed net cash inflows in the market in October. NFO or new fund offer have been constant to gather strong interest among retail investors. Additionally, owing to the sharp rally in the prices of equity indices, several investors are fascinated by passively managed mutual fund schemes. During the same duration, 3 new ETFs (exchange-traded funds) and 4 index funds were launched that co-jointly collected a new inflow of Rs 1,119 crores in the month of October. Sequentially, other ETFs category and index mutual funds acknowledged a total cash inflow of Rs 5,427 crores and Rs 3,514 crores respectively.

 

In the other equity funds categories, thematic funds or sector funds continue to appeal retail investors with a majority of these investors exploiting the situation of recent market ally experienced all around. However, one must be careful of the fact that all investors should be careful while investing in equity mutual funds as sector funds and thematic funds belonging to the equities categories are believed to be cynical in nature. Additionally, these mutual fund schemes tend to carry a higher level of risk as compared to a diversified investment portfolio of regular equity mutual funds. This is why mutual fund experts and financial advisors often advise their investors to invest in these high risk-return investment options only if one has the essential resources and understanding of the equity markets or are endowed with the needed support and guidance to make informed investment decisions. Happy investing!

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Is it safe to buy gold bonds online?

Dec 20, 2021

Is the price of gold going to spike again? Are you looking for a trusted platform to buy gold online? If you’re searching for these answers but don’t know where to start, here is a simple guide to help you invest in gold.

Gold is considered to be a highly secure investment option, as it has the ability to hold its value even after decades and centuries. Furthermore, as per recorded history, the stock market and gold have an inverse relation. This is seen when there are rumours of the market standing on thin ice because of the global debt crisis and the overbought sentiment of the Indian market. The beloved gold is again in the spotlight.

Some options to buy gold include:

  • Gold sovereign bond: Sovereign Gold Bonds (SGBs) are a government initiative to substitute holding physical gold, and they are denominated in grams of gold. The Reserve Bank of India (RBI) issues these bonds, and you will be issued a certificate of holding on the date of issuance of the bond. The tenure of the scheme is eight years, with an exit option after five years. In addition to the potential appreciation of this asset, it also provides an assured interest of 2.5% per annum. Moreover, the issue price of gold bonds will be Rs. 50 per gram less than the market value for online investors. Invest in SGBs if you’re looking for long-term investments.
  • Gold ETF: Gold Exchange Traded Funds (ETFs) invest in the precious metal and aim to replicate its current market price. These ETFs are traded like stocks on the stock exchange, and you need a demat account to invest in them. Brokerage for these traders may vary from broker to broker. Thus, selecting the right broker is essential.
  • Gold mutual funds: Gold funds are open-ended mutual funds with the objective of acquiring high returns by investing in gold ETFs. The returns on these funds could reasonably match that of gold ETFs. One of the advantages of this investment is the automated Systematic Investment Plan (SIP) option, which can be started with a reasonably low amount.

Conclusion 

Gold is a great asset class to consider adding to your portfolio and has the potential to provide an excellent return on investment. Hence, in a nutshell, gold is one of the oldest and safest investments. Though the medium of buying gold has changed, a good platform provides users with the ability to undertake a seamless journey to purchase these assets online. If you are stuck with creating a robust portfolio and are trying to figure out how much gold allocation to opt for, it is always prudent to reach out to a financial expert before making any investment.

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Who should invest in mutual fund fixed maturity plans?

Dec 17, 2021

The best part about mutual fund investments is that you can create a portfolio aligned with your risk tolerance. If you dread market volatility and want to create a conservative portfolio that gives you a fixed return, you can consider investing in mutual funds with a fixed maturity plan. Fixed maturity plans, popularly known as FMPs, are close-ended debt mutual fund schemes with a pre-defined maturity ranging from a few months to a few years. FMPs are a sound investment for people who want a risk-free return and can stay invested for a pre-defined tenure.

Here is everything that can help you decide if you should invest in mutual funds fixed maturity plans:

What are mutual funds fixed maturity plans?

Mutual funds fixed maturity plans (FMPs) are close-ended debt schemes, which primarily invest in fixed income securities, including certificate of deposits (CD), commercial papers (CP), non-convertible debentures, money market instruments, corporate bonds, treasury bills, etc. These mutual fund schemes have a pre-defined lock-in period and a restricted investment window. FMPs lock in the rate of interest and offer a fixed return at maturity. Generally, the maturity tenure varies from 30 days to 5 years.

If you invest in an FMP for three years or more, you also get the benefit of long-term capital gains. The tax benefits and the lock-in of the interest rate are two of the most beneficial reasons for investing in mutual funds fixed maturity plans.

What are the features and benefits of mutual funds fixed maturity plans?

  1. Fixed tenure: FMPs come with a pre-defined fixed maturity period ranging between 30 days and five years. You can choose a mutual fund FMP that suits your investment horizon. Investments in FMPs are fixed and cannot be withdrawn.
  2. Close-ended funds: FMPs only have a limited investment window, implying you can buy this mutual fund only during the initial offer period and redeem the scheme at maturity. In some cases, you can exit the mutual fund scheme before its tenure expiry.
  3. Low-risk:FMPs invest in debt securities, such as CD, CP, treasury bills, corporate bonds, money market instruments, etc. These securities offer a fixed rate of return and predominantly consist of high-rated credit securities, ensuring a low risk of default. As an investor, you know your interest return in advance.
  4. Tax benefits: FMPs are also beneficial for high-income tax bracket investors. Investing in these mutual fund schemes for more than a year allows you to benefit from indexation in long-term capital gains. You can make higher returns than a fixed deposit (FD) at a much lower tax rate than FDs.
  5. Stability of income:FMPs lock in the interest rate, safeguarding you from any interest rate fluctuations. Hence, you know the precise returns from the mutual fund scheme.

Who should invest in mutual fund fixed maturity plans?

As an investor, you can invest in an FMP if you do not want to take a high risk and desire fixed but better returns than a fixed deposit. However, these investments are not 100% safe. The net asset value (NAV) of these mutual fund schemes varies with interest rate fluctuations and other macroeconomic factors. Moreover, FMPs have a fixed lock-in period and no provision for early withdrawal. Hence, if you can stay invested for a fixed term, FMPs are a good investment option for you.

You can invest in FMPs via lump sum mode or SIP (Systematic Investment plan). Invest and monitor your FMPs conveniently through the advanced Tata Capital Moneyfy app.

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How do you Get a Higher Loan Amount Against Your Property in India – Explained!

Dec 17, 2021

A mortgage loan can be applied for by both salaried as well as self-employed professionals. This loan can be used for various purposes such as expanding a business, paying for your child’s education, paying for medical expenses, and so on. Now, lenders take into consideration numerous aspects while evaluating an individual’s application. If you are looking to get a higher loan amount against your property, it is essential to be aware of these factors.

So, take a look at factors that can help in getting a higher amount when you apply for loan against property:

  • Apply for the loan with a co-applicant

As a lender, would you prefer giving a loan to an individual borrower or two actively earning co-borrowers? The latter option reduces the lender’s risk of giving a mortgage loan. This is the reason why applying for a mortgage loan with a co-applicant will improve your loan against property eligibility for a higher loan amount.

  • Make sure to improve your credit score

One of the most effective ways of getting a higher mortgage loan amount is to improve your credit score. Any financial institution is going to review your CIBIL record before approving the loan. This is because this gives the lender an idea of your defaults, creditworthiness, spending patterns, and so on. A good credit record implies that the applicant is likely to repay the loan without any default, which is why lenders are more likely to approve higher loan amounts to those with good credit scores.

  • State any additional sources of income

If you have more than a single source of income, your repayment capacity increases. This is a positive sign for a lender as they can then trust you with a higher mortgage loan amount. This is why it is very important to state any additional sources of income you may have.

  • Maintain a low DTI (debt-to-income) ratio

The debt-to-income ratio is a very important aspect that lenders take into consideration while evaluating a loan application. If most of an applicant’s income is getting used up to clear bills of existing debt, it leaves little room to accommodate another loan. This is why you should always make sure to clear any outstanding loans before applying for a loan against property. A low DTI ratio can make lenders trust you with a higher loan amount.

  • Avoid multiple loan application rejections

If a lender finds too many loan applications, you can be perceived as someone who is always in need of credit. If your applications have previously been rejected, this is counted as a negative mark for a lender deciding whether to sanction a high loan amount. This is why you should avoid submitting too many applications to lenders.

These factors can help improve your mortgage loan eligibility for a higher loan amount. Also, before getting the loan, it is advisable to make use of a loan against property EMI calculator to make sure the loan plan can be repaid comfortably.

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Experts Recommend That You Should Definitely Be Aware of These Factors That Affect Your Personal Loan Rate of Interest!

Nov 26, 2021

A personal loan is an amount of money that you can avail from banks and financial institutions at a certain rate of interest. This fund can be used for any purpose as you wish. In addition, lenders give you the option to repay the loan in flexible instalments. In a nutshell, a personal loan can help you arrange funds in a short time without the need to furnish any collateral. However, the EMI amount you pay for the personal loan depends significantly on the interest rate. Therefore, to ensure that you get competitive interest rates on your loan, you must know the factors that affect it.

Here are the factors that affect the personal loan interest rates.

  • Credit score

One of the significant factors affecting your interest rates is your credit score. Your credit score is an indicator of your past repayment history. Having a high credit score indicates that you are a reliable borrower and have repaid the loan timely in the past. If your credit score is high, you can get lower interest rates and even a high loan amount. However, if you have a poor credit score, the lender can charge you a high-interest rate. You must have a credit score of at least 700 to avail a personal loan.

  • Income

Your income is a significant determinant of your eligibility and so, it also affects your interest rates. If you have a high income, it means that you have enough money to repay the loan timely. It also means that you are unlikely to default on the loan repayment. This assurance lowers the risk for the lender, so they can offer you a lower rate of interest. With a poor income, they can doubt your repayment capacity and charge you a high-interest rate.

  • Job profile

Lenders consider your income stability to ensure that you will be able to repay the loan. Your job profile is an important determinant to find if your income is stable. If you have hopped jobs, it could mean that you do not have a steady source of income. Some lenders could consider you as an unreliable borrower charging a high-interest rate. If you are employed with a reputed organisation, you are more likely to get lower interest rates as it means you can make timely payments and are financially secure.

  • Debt to income ratio

Debt to income ratio is the ratio of your total debt divided by total income. If you have a high debt to income ratio, it would mean that you are spending a significant part of your income on EMI payments. Lenders can charge you a high-interest rate in this case. You must keep your debt to income ratio below 50% to avail a personal loan at a lower interest rate.

Considering these factors can help you get a loan at low-interest rates. However, you must always know that you can negotiate your personal loan interest rates by leveraging your financial profile and credit score. Apply for personal loan, today.

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WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF A PRIVATE MORTGAGE

Nov 24, 2021

Short term loans are also known as private mortgages. The mortgage usually lasts for about six months to three years. They are usually more expensive than a conventional loan and it is most opted for by those who don’t qualify for it. It is also a great option when you need money quickly and doesn’t have the time to wait for bank approvals. However, when you plan to take a private mortgage, you must approach a Certified Mortgage Broker. Before you take a private mortgage, you must know the advantages and the disadvantages.

Advantages

  1. Less Interested in your past: Private mortgage is considered to be the best option for those who don’t have a great credit history as the private lenders show lesser interest in it. The loan is given based on the value of the property which is kept as a security against the loan. It is also a great option for those who are self-employed.
  2. Less Turnaround Time: When you are applying to a financial institution for a loan, it might take days before you hear back from them. With a private mortgage, this turnaround time is short. When you are looking for quick funding, it becomes the ideal option as you would be hearing back in a matter of days and not weeks.
  3. Can Use unconventional properties: Whenever you are taking a loan, you need to provide security against it. With conventional banks, there are certain guidelines that you need to abide by. In the case of private lenders, you can make use of conventional properties and get your loan against them.
  4. Specialisation in Particular Field: Most of the time the private lenders have specialization in the field for which they provide a private mortgage. When they are lending you money they have a better understanding of the circumstances and the kind of financial requirements that you might have.
  5. Helps in improving Credit Score: When you have a lot of unsecured debt like unpaid credit card bills and personal loans, you can consolidate all of it by taking a private mortgage. Clearing off all your consolidated debt will help to improve your credit score and reduce your interest rate.

Disadvantages

  1. High-Interest Rate: Private lenders tend to charge higher interest rates against the private mortgage in comparison to the conventional mortgage rates.
  2. Short term: When you are taking a private mortgage, you can pay it off anytime between a year to three months. Before taking a private mortgage, you need to have a plan in mind about how you will be paying back all the money within the estimated time. With a conventional mortgage, you can pay it back slowly.
  3. Higher Closing Rates: In the bigger picture, the private mortgage does turn out to be a more expensive option as the closing cost is also higher. This is because you are required to pay the commission and the appraisal costs. All of this put together only increases the cost.

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How does qualitative analysis in stocks help investors?

Nov 24, 2021

When you are analysing a stock, besides looking at the numerical aspects of a company’s statements, there’s a whole set of other factors that you should be considering and that’s the qualitative factors. These primarily include the people and technology involved in the company., which is essential when deciding stocks to invest in.

Qualitative analysis in stocks deals with the management philosophy and technological factors of the company. Not all the factors that determine a company’s actual value can be quantified. Suppose a pharma company that has weak financials develops a cure for COVID-19 and gets the approval for the same, this factor, in itself, can help the stock prices to soar.

Qualitative analysis in stocks deals with factors mostly based on soft variables rather than justifiable hard numbers. Like in a job interview, besides looking at the record of your accomplishments in various examinations, an interviewer also tends to analyse your soft skills on the required parameters to make a final decision.

How to perform a qualitative analysis of stocks?

Management factor: The management philosophy of the company constitutes a major factor in the qualitative analysis of a stock. It helps in understanding:

  • The return on capital employed by the management
  • The key officials of the company and the expertise they bring with themselves
  • Key stakeholders’ vision for the company

The same can be extracted from different management filings and interviews, an exercise that is prudent to undertake when making stock market investments.

Employee factor: Employees represent the way a stakeholder is managing the company. These are relatively easy to calculate and comprehend. The same can be calculated using the retention and employee turnover ratios. Employee satisfaction has gained a lot of prominence with time.

Vendor factor: Vendors of the company also play a vital role in qualitative analysis. While vendors should be chosen for quality and competitive pricing, a competitive vendor’s view of the company, with a reputation in the market, should be given ample weightage.

Technological factor: When you are screening stocks to buy today, you should also look at the technological factors that the company has employed; a premier technology not available otherwise can lead to commendable success in operations and thus can help the share price to rise.

Institutional investment factor: Another important factor that helps in the qualitative analysis of a stock is the quotient of investment by institutional participants. Institutional investors do a comparatively robust analysis, considering diverse variables, which is generally not possible for a retail investor to carry out.

Related party factor: When a company has a major stake holding by a handful of parties, an eye should be kept on how transactions with related parties are shaping up. Related party factor helps in understanding if there are any charges for fraud or unlawful transactions.

Conclusion

Qualitative analysis of stock requires the gathering of data from sources like business journals, annual reports, annual general meetings, the official company website, and other filing reports. These factors do not have clear-cut definitions, so this kind of analysis is more of an art than science to know how much weightage is to be given to what factor. It’s important to remember that qualitative and quantitative analysis should go hand in hand. So, while deciding upon your stock market investment, make sure to give due importance to each.

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