A student loan requires an earning co-applicant as well as collateral

-v. Swaminathan

If a company’s shares are a large part of your portfolio, you should definitely consider disinvesting it partially, if not completely. It is better to diversify portfolio than to hold one stock; Even if it is a reputable company, as you say, you are subject to the risk that the company may hold. Exceeding capital gains on listed equity shares ₹1 lakh in a financial year in excess of 10% may apply as surcharge and cess. If you had invested before 31st January 2018 then you would be eligible for Grandfathering Clause and any gain would be exempt from tax.

The sale proceeds can be reinvested according to your risk appetite, as you need regular income; That’s why you should consider a debt portfolio.

I want to take education loan. I have two options. The first is to use my fixed deposit and use overdraft on it. The other is the more traditional education loan which will charge me close to a slashing interest rate of 9.5 percent. I’m leaning towards the first option, but I want to make sure there are no caveats and tax implications.

—Name withheld on request

When you compare both the options i.e. Overdraft facility vs Education loan then the main factor for you to take is the cost and convenience of borrowing. The cost of overdraft facility comes to 6.5% (5.5% + 1%). And in case of study loan, the cost is around 9.5%. As deduction of interest is allowed under Section 80E of the Income Tax Act, the tax benefit will reduce the cost of borrowing. Assuming the tax rate of 30%, the net cost of borrowing comes to 6.65%. If both are more or less the same, then you have to look at convenience. An education loan requires a co-applicant as well as collateral versus overdraft facility, which is easy to process and does not require any co-applicant.

Surya Bhatia is the Managing Partner of Asset Managers.