How to get maximum benefit out of Budget of 2014?

How to get maximum benefit from Budget of 2014

How to get maximum benefit out of Budget of 2014?


Budget of 2014 is released now. There are several positive and negative factors for employees, businessmen and investors. In this article I would help you to analyze some of these budget 2014 highlights and how you can benefit maximum out of it. I would also highlight which sectors you can look for investment.

How to get maximum benefit out of Budget of 2014?


1) PPF increased from Rs 1 lakh to Rs 1.5 lakhs:


In budget 2014 investment in PPF has been increased from Rs 1 lakh to Rs 1.5 Lakhs from this financial year. Investment in PPF is a good way to plan for child education plan, daughter marriage, retirement etc. apart from earning tax free income. If you can plan well by investing Rs 1.5 Lakhs by the 5th of April, you can earn higher tax free income in a year.

Read: How to earn highest interest from Public Provident Fund (PPF)?

2) 80C limit increased from  Rs 1 lakh to Rs 1.5 lakhs


In this budget, income tax 80C exemption increased from Rs 1 lakh to Rs 1.5 lakhs. Under 80C any amount invested in insurance, PPF, NSC, ELSS, ULIPS etc. are eligible for deductions. While all the options are good, you can bet for better returns from PPF and ELSS. PPF is a good option to earn 8.75%  tax free interest, which has a lock-in period of 15 years. This is good for low risk investors. Coming to ELSS mutual funds, these are a medium risk investment option which can help you to earn 12% to 15% returns per year. This has 3 year lock-in period.

3) Housing loan interest exemption increased from Rs 1.5 Lakhs to Rs 2 Lakhs


This is a good news for everyone who are planning for or taken home loan. Interest from the home loan exemption has now increased to Rs 2 Lakhs per annum, i.e. Rs 16,667 interest would be exempted per month. If you can plan well by taking 30 years home loan tenure from the cheapest home loan provider, you can take maximum benefit from this.

4) Invest in infrastructure and banking Sector stocks / mutual funds


It was not surprising that the new Government have provided preference to infrastructure sector in the Budget. It has allocated Rs 2 lakhs Crores to spend in infrastructure sector. This is 25% higher compared to previous years. We should invest in  infrastructure and banking sector stocks and mutual funds to get good returns in next 3 to 5 years. Apart from this you can directly purchase stocks like ACC, L&T, Ultra Tech and JP Associates which would benefit. Housing loan exemption limit increase could benefit to LICHFL, HDFC etc. where you can look to purchase such stocks.

5) Invest in specific stocks of consumptions


Budget helped in reducing the prices of consumptions like television, telephone, refrigerators, footwear etc. This way consumptions will boost. Invest in stocks that deal with such business.  Excise cut on footwear could benefit Bata India, etc. which could be a good bet.

6) Invest in specific stocks  of insurance and defense sector


In budget, there is an increase in FDI in insurance and defense sector and opens doors wider to foreign investors in the Indian debt market. Financial markets are expected to boost. You should invest in insurance and defense stocks.

7) Incentives for introduction of REIT's


In this budget, the government has given the necessary incentives for the introduction of REITS (Real Estate Investment Trusts). This is going to increase valuations in the real estate industry. Companies like Prestige Estates etc. are going to benefit. You can look for undervalued stocks in this sector.

Also Read: What are Real Estate Investment Trusts and how they can benefit you?

Conclusion: Markets have reached new peaks and expected to take some correction before moving ahead. Look for opportunities during these market corrections and start investing. Some of the above are promising sectors and you could benefit more.

If you enjoyed this article, share this with your friends and colleagues through Facebook and Twitter.

Suresh
How to get maximum benefit out of Budget of 2014

Note: I am not well. My Son Akhil and Daughter Apoorva helped me by typing this article. Thanks Akhil and Apoorva 🙂

Suresh KP

32 comments

  • ars

    sir, kudos to your articles. The share market is going up and down and is reflecting on mutual funds.  Pl suggest is it prudent to withdraw amount from mf and deposit in FD or continue in MF.

    tks

    ars

    • Hi Ars, wait for some time before market takes correction. If you are short term investor or want money in next couple of years, exit during correction. Otherwise, do not worry about correction.

  • rasheed

    Get well soon suresh

     

     

  • mamata

    Dear Sir,
    I have invested in the following mutual funds through sip. Can u guide me whether the funds r good or I should switch to different funds

    1. BSL frontline equity fund direct growth 2000 rs
    2. BSL top 100 growth direct 2000 rs
    3. BSL infrastructure fund direct growth 3000 rs
    4. Reliance ewuity opportunity fund direct 1000
    5. Reliance banking fund growth 1000

    What are other funds I can plan to invest ? How much time I shoud wait for good returns in these funds
    Regards

    • Good funds Mamata, Point no.3 and 5, keep an eye regularly once in a quarter. Any downward movement, you should exit. Others you can keep for 10/15/20 years. They are good

  • Ramesh

    Good Work suresh and thanks for detailed summary.

    Regards
    Ramesh

  • Rajesh

    Dear Mr Suresh,

    Get well soon. You have the good wishes of all your readers.

    Rajesh

     

Leave a Reply

Your email address will not be published. Required fields are marked *