Table of contentsStock savings fundsHow did it come about?Tax-advantaged investmentStock savings fundsBasically we can define stock savings funds as the sum of funds arbitrage, stocks and debt. It is a hybrid scheme that is suitable for investors who are looking for higher income generation, capital appreciation and returns compared to long-term fixed deposits and a moderate risk appetite. Investors also invest in equity-linked instruments, debt and money market instruments, and arbitrage opportunities. A minimum of 65% of the shares are placed in arbitrage opportunities and are classified as equity funds, with the remainder of the fund invested in fixed income securities. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayHow did they come about?Three years ago, the government developed a new program to increase the detention period of three-year loan fund in order to benefit from indexation benefits. Otherwise, investors were taxed at the applicable rate. In short, this meant that debt and debt-oriented funds, such as monthly income plans (MIPs), enjoyed the same tax treatment as fixed deposits (FDs) for holdings up to three years. To cater to this specific set of investors, Equity Savings Funds were introduced as a category to provide similar returns to MIP. Equity savings funds should be considered as an alternative to bank fixed deposits, as equity savings funds are tax efficient and offer higher post-financing. tax returns. These funds are ideal for investors seeking medium to long term investment objectives. These stock plans are less risky than balanced funds since only a third of the amount is invested in stocks. If the fund categories are represented graphically on a risk-return axis, equity savings funds fall between MIP funds and balanced funds. Equity savings fund positioned higher than MIP (debt oriented funds) and one notch lower than balanced funds in risk-return parameters. Let’s talk about the benefits of investing in stock savings funds. There are essentially three major benefits: equity growth potential, income opportunities, and tax efficiency. Equity Savings Funds are an excellent investment instrument for regular income as well as capital appreciation and maintaining average market volatility. Tax-efficient investment Equity savings funds offer risk-averse investors tax advantages. Equity savings funds offer tax-free returns compared to tax incurred on interest earned on bank deposits, when the holding period is more than one year. However, the investor must pay tax at the rate of 15% on short-term capital gains, if the shares are redeemed before one year. For debt funds, the investor has the advantage of making short and long term capital gains. Short-term capital gains are taxed based on its slab and added to the investor's total income, while long-term capital gains are taxed at 20% with indexation after three years. In other words, all debt-oriented schemes, such as monthly income plans, enjoy the same tax treatment as bank or post office fixed deposits. Less..