Question

explain Indexation

Answer 1

Indexation plays an significant role in measuring your investment gain or loss. Indexation will minimize the overall tax liability by changing the purchasing price of the underlying asset or investment. Indexing is an important way to avoid the accumulation of your investment returns in the form of taxes. Indexation is applicable to long-term portfolios, including the bond fund and other types of properties. Indexing lets you change your investment purchase price. You would be able to lower the tax burden in this way.

The purpose of Indexation is to help one control the purchasing price of the investment, which relates to long-term investments, including debt funds and other assets. It offers you an option to increasing the purchasing price of the commodity, which also helps to reduce the negative cost effect of inflation. Indexation makes investing a lucrative scheme, as it offers an investor a greater chance of making a decent profit even after tax returns.

Indexing is one of the most organized and effective policies that are considered a benefit for investors in saving tax on their long-term investment. Indexation offers investors the ability to raise the purchasing price of the commodity, which in effect tends to reduce the negative effects on inflation-related costs.