One disadvantage with leveraging with Futures is profit from F&O is treated as business income and taxed at 33%. With long term capital gains at 0%, lot of profit in Futures is taken by tax man.
Another disadvantage is rollover costs. Also how much margin you keep aside for the future position decides the risk/reward. Or one day loss of 10+% can wipe you out.
I have not calculated the costs/tax etc. but feel that leveraging with loan and buying in cash/delivery is better option. If we manage to get personal loan or any other loan at 14% and invest in stocks like HDFC Bank to make 20%, it’ll add up in long term. Also we can hold position when stock falls drastically and pay off loan with salary/business income. In 2008 like fall, futures position will wipe out the portfolio if used excessively.
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