Monthly Archives: October 2014

Think Magma for your Tractor Loans

There is a surge in small business set ups. The list isn’t restricted to urban areas alone, but also extends into the rural area. Farmers are ready to venture into modern tools and equipment’s for their agriculture purpose.

One such need is of a good tractor. Well now you do not have to worry about it anymore, as there are many non- banking financial institutions that are ready to finance your tractor owning dream. Let us try to understand the product in detail.


What is Magma’s Tractor Loans all about?

Magma readily finances your tractor owning dream. This financing house provides with all the necessary finance for all the brands of Tractors. Also, they provide you with loans for buying used tractors. You can avail loan up to 95% of the tractor price. The best part is they do not take your land as mortgage.

How to apply for Magma’s Tractor loan?

Applying for a Magma tractor loan is a very easy task. The entire procedure not only comes with minimal paper work but also is completely hassle free. They have their dealers spread across 6000 branches all over pan India. There are village blocks where you can avail help for your tractor financing related issues. So visit your nearest Magma branch anytime and avail the services.

What are the different types of products available under the tractor finance segment?

Magma has divided the tractor financing segment in three different parts. Agricultural, commercial and tatkal scheme are the three categories under which you can apply for a tractor loan. Under the agricultural scheme you can avail loan up to 95%, you are expected to own lands up to 2 acres. With the commercial scheme you can avail up to 70- 80% of loan; however a guarantor and property ownership is required. Lastly, comes the Tatkal scheme, wherein, one can avail loan up to 50- 60% with a guarantor provided.

So visit your nearest Magma branch and avail of the many finance related products they have to offer.


Which Mutual fund to go with: Equity fund or Debt fund

There are many investment avenues available for one to park their money. However, many investors refrain from venturing into these territories. The major reason being a lot of investors really do not understand the entire working of many investment options available.

Funds Type

Today, we shall try and understand the difference between Debt Funds and Liquid Funds. Also, try to decipher the tax treatment both the entities are liable to. However, before we proceed with the different kinds of funds. Let us try to understand the term “Dividend Distribution Tax”.

Dividend Distribution Tax (DDT)

Dividend received from a mutual fund is tax free, but only at receiver’s hand. However, mutual funds have to pay a tax on that dividend to government before giving it to us. So actually the tax is paid by mutual fund on behalf of us. This tax is called DDT.

Let us try to understand Equity, Debt and Liquid Funds.

Equity Funds

Equity Funds are the type of funds where about 65% of the corpus is invested in equity shares of different companies. The dividend acquired from these funds is exempted of DDT. Therefore, the unit holders receive 100% of the dividend declared to them. However, it isn’t any form of extra income. It is very much your invested money that you receive after the dividend.

Debt Funds

These funds invest in medium-to-long term debt securities like government bonds and corporate bonds/debentures. These funds are subject to DDT at the rate of 12.5%. A surcharge and cess of 10% and 3% respectively is applicable as well. These funds come with an effective tax rate of 14.16%.

Liquid Funds

Liquid funds are usually short-term debt securities. They invest in commercial papers, certificates of deposit and call money, where the duration is less than a year. The income incurred from such funds is subject to DDT of 25%. Like the debt funds, these funds too are liable to pay a surcharge and cess of 10% and 3% respectively on the tax.

Well, there are different types of funds available in the market. Each comes with its own benefit and purpose. One needs to invest in a fund that best suits their needs.

How to Calculate Returns from Systematic Investment Plan

There are various modes of investments in mutual funds available. However, investing in mutual funds through systematic investment plans (SIPs) is the most considered avenue of all.

One major reason being, SIP helps to tackle the market volatility better. Investors can buy more units when there is volume gain and fewer when the value rises. Amidst, all this there is one question that every investor ponders upon: How are SIP returns calculated?


It is an easy task to calculate returns when lump sum investments are made. As the entry and exit of the investment is defined, along with the expected returns. However, when it comes to SIP, where the exit date is confirmed, but there are multiple investments made at different intervals.

In such case, internal rate of return or IRR method is of great help. IRR is useful not only for SIP returns but also for estimating returns from money back insurance policies and bond yields. This calculation method equates the discounted value of the stream of investments (also known as cash outflows) to the discounted exit value of the investment (cash inflows). The discount rate that equates the present value of cash out flows and the present value of cash inflows is the rate of return earned by an SIP.

What is IRR?

IRR or internal rate of return


Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.

Internal rate of return is used to evaluate the attractiveness of a project or investment. If the IRR of a new project exceeds a company’s required rate of return, that project is desirable. If IRR falls below the required rate of return, the project should be rejected.