Avoid taking dividend payments if you have a regular income!

By | April 12, 2011

Avoid taking dividends if you do not want a regular income. Converting them from dividend to growth will be considered as redemption and hence capital gains will be applicable. Therefore, from the tax planning point of view, make sure you have completed one year from the date of purchase to classify your investments as long-term capital gains.

Moreover, having cumulative gains over a period of investment in a particular company helps you to increase your returns considerably, since it has a psychological impact. Having loose cash in your hand, increases the chances for you to spend the money thereby not providing any returns. However re- investing them will help in increasing your returns for a better future.

As a prudent advisor, it is always advised for you to read the policy documents of your investments so that you can very well know the actual features of your financial products. It is not advisable to consider taking a personal loan or any loan to finance your requirements in future just because you got lured to the attractive rate of returns promised and did not receive them because of the change in the policies.

Make a list of all your present and future financial requirements, and ask yourself, what s the maximum amount you can save from your take home salary. Cut down on unnecessary expenses and follow a systematic investments’ route. With this you will be able to a good financial corpus which can support you for all your financial and post-retirement needs.

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