Analysts have argued that as this trend continues it could have a negative effect on the quality of certain housing metrics that rely on multiple-listing services for data collection, because iBuyer sales bypass those platforms entirely. Real estate investors who are looking for a healthy increase in property values over the long term focus on real estate markets with good appreciation. With so much capital deployed to get that extra tax break, it wouldn’t be surprising if investor appetite for OZ investments is significantly lower in the coming months.
Top investments for 2020
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Rent control will spread more widely, eating into investor interest in higher-cost markets
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Roofstock makes it easy to get started in real estate investing.
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MF News. Learn Ask the expert Fund Basics. Page Industries. Market Watch. Pinterest Reddit. Getty Images. The outlook next year for these investors is a mixed bag, depending on the tax bracket and risk profile of the investor. The middle-class investor Investors in lower tax brackets are spoilt for choice.
Post Office deposits offer 7. Risk-free investments, like overnight schemes of mutual funds, offer returns of about 4. Banking and PSU debt funds yield around 6. Though such debt mutual fund investments are tax-efficient, they are not tax-free.
Public-sector tax-free bonds have poor liquidity for both purchase and sale. The yields, depending on daily vagaries of the market, can vary between 5. Brokerage can further dilute the return.
To juice up returns, investors need to take either duration risk or credit risk. Duration risk Higher the duration of a bond, the more susceptible it is to interest rate movements. Markets are notoriously difficult to predict. Credit risk The time to buy is when there is blood in the streets or in other words, when the prices are beaten down is an old saying attributed to Baron Rothschild. Credit Risk funds are an offering in the debt mutual fund category that invest in lower-rated securities.
This would be akin to contrarian investing in the equity segment. The NBFC crisis has left many credit risk funds bleeding. There are yet others who do not have any securities in the default category, but there is no assurance these will not default in future.
Clearly credit risk funds are not for the faint-hearted; many of the names in their portfolio will make conservative investors shudder. What can investors do? Fixed income investors in the higher tax brackets can spread their portfolio across the credit spectrum, from the least risky overnight funds yielding about 4.
Investors need to be cognizant of the prospect of losses in credit risk funds, as the name of the schemes imply. Arbitrage funds, potential tax-free play up to Rs 1 lakh Arbitrage funds offer relative safety while being highly tax efficient. They carry the same tax treatment as equity-oriented funds.
Long term capital gains in equity investments up to Rs 1 lakh is tax free. This provides an interesting play. An investor who either does not invest in stocks, or does not intend to book capital gains, can invest a maximum of about Rs 15 lakh before 31st March, in arbitrage funds, and redeem the investment before 31st March, after holding for one year, booking tax-free returns of about Rs 1 lakh.
This strategy can be repeated year after year, unless the tax laws change! What is the risk in arbitrage funds? Until now they have turned out to be safe, with fixed income like returns.
But mutual fund investments are, in general, subject to market risk. The caveat holds true here as. The author is an expert in corporate banking and fixed income investing. Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.
Planning to invest in mutual are townhouses a good investment 2020 to build a retirement corpus? Here is what you should know. Read more on Best Mutual Funds for Debt Mutual Funds. Mutual Fund News. Arbitrage funds. Long Duration Funds. Follow us on.
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Investment trends to watch in 2020
We are already seeing a growing number of private companies outside of OZ investment areas focus their efforts on constructing new housing projects, converting existing housing into affordable housing, or creative new adaptive reuse projects, where they convert old, vacant buildings like factories, schools, and office space into residential housing. There are two financial metrics used to identify property with strong cash flow:. The increasing adoption of iBuyers in the residential space may also lead to the development of faster and more automated leasing and buying platforms on the commercial. Virtual and self-guided tours will become more of a part of both the leasing and buying experience, and start-ups that develop these technologies will receive additional attention. Subscribe Here! Click to enlarge. Can social responsibility prevail? The gains made on the OZ are townhouses a good investment 2020 are tax-free if held for over 10 years.
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