I have invested around 15 L in Indian stocks, some are loss making and some are in profit but overall it’s a profit of 2 lacs. I had bought these shares over a period of 3 years. I am now planning to buy a flat in the city within 6 months and am thinking of selling all these stocks and investing them in a bond ETF like bharat bond for the 6 months until I finalize the property.
I would like some advise from you guys if this is a good idea or not especially from a tax perspective. Also, what are the risks involved and f there is a better way to manage this rather than invest in a bond ETF.
If your initial objective to invest in shares was to buy the property, then it is a good idea to systematically withdraw from shares over the next six months so that you can meet the requirement of buying the flat. I do hope the house finance is final and you will need this money to meet the commitment. I do not think it really matters where you park the funds as the duration is only six months. If I were you, I would keep the sale proceeds of shares into a SB account of a bank which gives 6 to 7 % per cent interest. No point paying commission to buy bonds etc… With regard to taxation, you need to worry about LTCG and STCG based on the duration of your holdings.
Heard they use CGAS type A savings account to move capital gains there and use that to buy house or invest in real estate. This way you don’t have to pay capital gains tax.
This is what I think of real estate.
Due note:- first 3 years of flat is loss. Because building deprecates year by year. Here it’s 20% a year according to govt rules(seller minus only 10%) . So the way your property value increases is by UDS only and that takes time.
6 months is a very short term, so your priority should not be returns, but on the safety of the capital, and liquidity. So choose an appropriate product, even a bank FD would do the job, or a liquid fund if your withdrawal will be in phases.