We provide Investment Advisory Services to clients who
- Want to invest a minimum of Rs 1 Lakh (100,000) per month for a period of 3 to 5 years. (Either transferred on a regular basis or as a corpus of funds that need to be invested over a period of time).
- Have an appetite for equity exposure, and understand the associated risks.
- Have long term investment horizon (over 5 years, preferably 10 years)
- Have the ability and willingness to sustain short term losses
- Have the understanding that investing in market is inherently risky and have the willingness to accept the investment losses without recourse.
Fee would be 20% of the returns generated over the agreed benchmark. Fees would be assessed on a yearly basis at the end of the financial year.
Benchmark: 70% of 1 Year FD rate offered by State Bank of India on 1st April of each year as the benchmark for that year.
Rationale for the benchmark:
- To ensure fee is for the returns generated over and above client’s opportunity cost.
- Assumption here is that if the clients were not taking our advice they would be investing funds in a bank fixed deposit
- Interest from bank fixed deposit is taxable at marginal rate (all our clients will be in the 30% bracket) hence 70% of post-tax returns on bank 1 year fixed deposit rate is the benchmark.
Returns = Market value of the securities at the end of the financial year + dividends received – investment made.
Taxes: Our advice is for long term investments. As per the Income Tax act, profits from long term gains (gains from stocks held over 12 months) exceeding Rs 1,00,000 are taxed at 10%. Dividend’s received are tax free. Returns generated based on our advice will take advantage of the LTCG act.
Applicable taxes for our services are also paid by the clients.
Examples illustrating the fee:
- Fee will not be assessed if the returns are below the benchmark.
- The returns are NOT guaranteed.
- Clients will be bearing the losses and enjoying the returns of their investments.
- There is no guarantee that past performance will be indicative of future results. No assurance can be given that the recommendations will be profitable or will not be subject to losses. All clients should understand that the results of a particular period will not necessarily be indicative of results in future periods.