Can Govt Employee Invest In Share Market for Retirement Funds since Pension is stopped for Government Employees?
Well, it’s a pretty straight question every government employee should ask and will look for an answer to.
Many government employees are under an impression that their salary is treated just like any other private firm’s salary.
Though that’s not true, being in an authoritative position and buying the stocks with internal news, is in any way considered a fraud.
So now let’s delve to understand and answer if, can govt employee invest in share market?
Are their rules governing can a government employee invest in share market?
Yes, absolutely. You as a government employee will be governed by rules of investment as per the law.
Though SEBI calls Insider trading a fraud, you as a government employee should abide by some rules.
What are the Rules For Government Employee Investment?
- Rule no 35(1)
- Rule no 40(2) part 1
- Rule no 40(2) part 2
- Also, govt employees are required to disclose transactions in stock market value exceeding 6 months’ basic pay.
Can A Government Employee Invest In Stock Market within the perimeter of rules?
Yes. It’s possible. But Terms and Conditions Apply!
See before showing the light at the end of the tunnel, let me give the bitter truth who can’t invest!
Prohibition As per Rule 35 (1):
- No government employee shall be involved in speculating any stock, shares or any kindda investments.
- Basically, had a question can government employee do intraday trading or can government employees trade in share market, YOU CAN’T as rule prohibits YOU. Because rule 35 (1) defines buying, selling or both frequently is considered as speculating.
Prohibition as per rules for government employee investment, Central Civil Service (Conduct) Rules 40(2) Part i:
As per Central civil conduct rule #40(2) Part i states,
No investments in any stock market influence should be such that it embarrasses or influence the discharge of duties.
Investments that can embarrass or influence the government employee are:
- You are prohibited to buy any shares that are specifically restricted to Directors of Companies.
- Or to the friends of the directors or their family.
- Or any shares bought to discharge the duties in favor of a company or the people of the company.
Prohibition As per Rule 40(2) Part ii:
You as a government employee, your family nor any third party acting on behalf of news or info provided by you cannot invest in any of the below methods of stock market investing!
- If you are in a position to decide the IPO prices or in the position that may have access to the price, you are prohibited to invest in the stock market.
- Also restricted to buying any FPO (Follow On Public Offering) where you have the governing capability of the price of the offering.
Now given so much bitter news, shall we delve into the good part can government employees invest in stocks?
Can Government Employees Invest In Stocks within Rules n HOW?
As a government employee, you can invest in the stock market provided you are not trading (frequently buy and sell).
What investments in the stock market should you invest in?
- Any stock or an IPO where you are not influenced or being influenced to discharge your duties can be invested for the long term.
Long-term investments are any shares or multi-bagger stocks purchased that make money and are not redeemed or sold before 1 year.
- Remember stock markets have compounded around 10 – 12% Year on Year over a period of 5 years+ investments. Check out stock market returns by year.
- Being excited, you wanna invest and wanna know if stock market investments are right to invest now? I have your back. Read the above-linked article.
- Please invest in Mutual Funds SIP (Systematic Investment Plan) or Stocks directly through discount brokers for a long-term goal. Remember, as a government employee any investment below a year is against the rules.
- PPF (Public Provident Fund) lock-in is 15 years and can be invested for the long term which periodically has given 8% annual returns.
- FDs (Fixed Deposits) provide a very low return which I don’t recommend to anyone, but that’s an option for the sake of option.
- National Pension Scheme is also an option to invest up to 50K per annum.
Before we let you go, isn’t it important to know the disclosures governing the question can govt employee invest in share market?
Disclosures of Government Employees when invested in stock market:
- Any investment higher than 50% of your basic pay in a financial year, is supposed to be flagged to the authorities with transaction details.
For Ex.) If your basic pay is 30K/month, you have to disclose any investments in excess of 1,80,000 or more within the financial year.
Simple, if you are within this perimeter of 50% or less which is a superb investment of Rs.15K/month you have nothing to worry about or have to disclose!
1) Can Govt Employee Invest In Share Market?
A) YES, as per the rules governed in CENTRAL CIVIL SERVICES (CONDUCT) RULES of rules 35(1),40(2) parts i and ii. Government Employee Can Invest In Share Market within the perimeter or rules.
2) Can Government Employee Do Intraday Trading? / Can A Government Employee Do Trading?
A) NO. It’s not possible or against the rules as per rule 35(1)
3) Can A Govt Employee Do Business?
A) Rule #25 of Central Civil Services rules state no employee shall engage directly or indirectly in any business.
4) Can Psu Employee Do Intraday Trading?
A) As a PSU employee, you are capable of gulping insider information about companies or stocks.
So you are totally banned from day trading and SEBI will charge you with an insider trading clause which may lead to jail if proven guilty.
Can Govt Employee Invest In Share Market Conclusion:
Though government employees intraday trading is illegal, government employee can invest in share market.
You, Yes You are So Important!
Start stock market investing and pick your Next Multibagger Now.
Happy Trading and Happy Money Making!