Tag Archives: mutual funds

Let us start from the very basics and understand what mutual funds are. After that, we'll discuss how to invest in them and discuss the advantages and disadvantages of investing in mutual funds.   What is a Mutual Fund?  A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments.   Fund managers manage mutual funds – they make investment decisions on behalf of the people who have trusted them with their money.   Mutual Funds are of different types, like equity mutual funds, debt mutual funds, and hybrid mutual funds depending upon the investment proportion in debt and equity.   These different types of mutual funds vary in their risk and return potential. Mutual Funds are one of the most popular investment options today.   Invest in Mutual Funds Advantages of Investing in Mutual Funds 1. Advanced portfolio management When you purchase a mutual fund, you must pay a small fee as a part of your expense ratio. That fee is used to engage professional portfolio managers to buy and sell stocks, bonds, and other securities on your behalf – it is a tiny fee for professional assistance in managing your investment portfolio, which goes a long way in creating market-beating turns.   2. Liquidity An advantage of investing in mutual funds is the ability to redeem the units when you require them. Mutual funds, unlike fixed deposits, allow for flexible withdrawals.   However, issues such as pre-exit penalty and exit load must be taken into account before deciding to exit your position in a mutual fund.   3. Convenience and fair pricing Mutual funds are simple to purchase and comprehend. They usually have modest minimum investment values and are only traded once a day at the closing net asset value thus removing day-to-day price fluctuations and different arbitrage opportunities used by day traders.   4. Diversification An investment's Maybe. The value may or may not decrease or increase in tandem. When one investment's value rises, another's value may fall. As a result, the risk that the portfolio's overall performance would be erratic is low.  Diversification lowers the risk of putting together a portfolio, lowering the risks for investors. As mutual funds consist of a variety of assets, the interests of investors are protected even if there is a downfall in the value of other securities so purchased.   How to track the performance of mutual funds? Read More 5. Accessibility A big reason for the popularity of mutual funds is the easy accessibility from anywhere in the world.   An Asset Management Company (AMC) offers the funds and distributes them through different channels like brokerage firms, registrars, the AMCs themselves, online mutual fund investment platforms, and agents and banks.   This factor allows mutual funds to be available and easily accessible universally. Also, mutual funds are easy to buy and track performance and one-click investments.   6. Low lock-in period Tax-saving mutual funds have the most down-locking periods of only three years, which is lower when compared to the maximum of five years for other tax-saving options like FDs, ULIPs, and PPFs. Also, you will have the opportunity to stay invested even after completing the lock-in period.   Fits every financial goal: The best aspect of a mutual fund is that you can invest with as little as ₹500, and there is no upper limit for an investor.  Before investing in mutual funds, examining their income, expenses, risk-taking abilities, and specific investment goals is essential.   As a result, anyone from any walk of life is free to invest in mutual funds regardless of income.   7. Good tax-saving options Mutual funds are one of the best ways to save on taxes. Under section 80C of the Income Tax Act, equity-linked saving scheme (ELSS) mutual funds are eligible for a tax exemption of up to 1.5 lacs per year.   In India, all other mutual funds are taxable according to the type of investment and the fund's duration. For example, equity mutual funds and debt mutual funds are taxable at different rates.   Tax-saving mutual funds have the potential to out for performing other tax-saving products such as PPF, NPS, and tax-saving FDs in terms of returns.  Disadvantages of investing in mutual fund Mutual funds do not promise set returns, so you should always be prepared for the unexpected such as a drop in the value of your mutual fund. In other words, mutual funds are subject to a wide range of price changes.   Fund managers oversee all forms of mutual funds. A team of analysts may assist the fund's management in various circumstances. As a result, you have no influence over your money as an investor.   Your fund manager makes all significant decisions regarding your fund on your behalf. However, you can look into certain vital factors, including disclosure requirements, corpus, and overall investment strategy.   Diversification is a significant advantage of mutual funds. However, the problem arises when there is over-diversification.   Over-diversification can raise funds' running costs necessitate increased due diligence, and dilute the relative benefits of diversification.   A mutual fund's value may fluctuate as market conditions change. In addition, there are fees associated with professional mutual fund management which are not present when purchasing stocks or securities directly from the market.   When buying a mutual fund, investors must pay an entry load. When investors wish to exit from a mutual fund, providers charge an exit fee.  The performance of a mutual fund does not give investors enough information about the degree of risk that the fund faces.  As a result, it is just one of the metrics used to assess the company's performance, but it is far from being comprehensive.  How to invest in a Mutual Fund via the Edufund App?  Step 1: Log in to the Edufund website or the Edufund app.   Step 2: Complete your KYC and move ahead to create your investment account.   Step 3: Choose the option of mutual fund investments.   Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions.  Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take.   The Edufund website or the Edufund app will suggest some mutual funds you might want to invest in, with a recommended SIP value.  Step 6: Choose the fund and start investing. FAQs What is a Mutual Fund? A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments. How to invest in a Mutual Fund via the Edufund App? Step 1: Log in to the Edufund website or the Edufund app.   Step 2: Complete your KYC and move ahead to create your investment account.   Step 3: Choose the option of mutual fund investments.   Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions.  Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take.   The Edufund website or the Edufund app will suggest some mutual funds you might want to invest in, with a recommended SIP value.  Step 6: Choose the fund and start investing. What are the different types of mutual funds? The different types of mutual funds are Debt, Equity, and Hybrid Funds. There are many more divisions within mutual funds that investors should check before investing their money. TALK TO AN EXPERT

Investors frequently struggle with deciding whether to invest directly in stocks or through mutual funds for equity investments. Equity Mutual Funds are institutions that combine investors' money to invest it in publicly listed stocks. On the other hand, buying these equities through the stock market is also possible. Direct equity investments have historically been unpredictable; they have resulted in significant returns as well as massive losses for some investors.   This article will learn the distinction between direct equity investment vs investment in mutual funds.   What is Direct Equity Investment?  Direct stock investments have a significant risk of loss but also have the potential to be very lucrative. Before investing in equities, one must thoroughly understand the underlying business and the sector in which it works.   As a result, as an investor, you will need to research the company's track record, financial performance, managerial expertise, and even external issues like governmental regulations, currency exchange rates, and changes in local and global politics.   You can gain more if you strike the correct balance between risk and return.   What are Mutual Funds?   Companies that offer mutual funds pool money from a variety of investors and save through their offered mutual fund plans. The money gathered is subsequently invested by the fund firms in a variety of financial products to provide significant returns.   Experts administer mutual funds. In essence, you own the units representing the share of the fund you own as an investor. A unit holder is another term for the investment.   The distribution of the investment's increased value and other revenue is proportional to the number of units owned by the unitholders - provided after any necessary deductions.   What are mutual funds? Read More Source: Pixabay Direct Equity Investment vs. Investment in Mutual Funds While direct equity investment offers substantial returns, it is only practical for individuals who consistently understand how the equity markets operate.   Therefore, the mutual fund option is better for people who lack the time or expertise to track and understand equities markets. With regard to your investment in mutual funds, there are some advantages that you get.   From professional management of your money by mutual fund experts to low ticket sizes where you can start to invest with as low as Rs 500, there are many perks of investment via mutual funds.   Subject to exit loads, open-ended funds permit investors to withdraw their money at the current net asset value (NAV). This also aids in financial planning. When a person invests in shares, he is uncertain as to whether he will be able to sell the shares on the market for a reasonable price or not.   In risk management, an individual may go overboard on a particular share; however, a fund manager will have the risk management guidelines in place there are limits on how much a fund manager can invest in each stock and sector.   When you buy and sell shares before holding them for one year, you end up paying short-term capital gains of 15%. However, the fund manager may keep transacting shares at varying intervals if the investor remains invested for more than one year in an equity fund, his gains are tax-free since STT is already deducted.  Your final decision on whether to invest either in mutual funds or direct equity will depend upon how much you understand the markets and whether you have the time to trade in direct equity or not. If you lack the discipline to operate in the stock market, you should channel your money via the mutual fund route. FAQs What is the difference between investing in equity shares and mutual funds? While direct equity investment offers substantial returns, it is only practical for individuals who consistently understand how the equity markets operate.    Therefore, the mutual fund option is better for people who lack the time or expertise to track and understand equities markets.   Are mutual funds 100% safe? Mutual funds are generally looked at as safe investments, considering the diversity they offer to minimize the risk. However, any investment involves risk. Investors should consult experts and do their research before investing. Are mutual funds safer than equity? Direct stock investments have a significant risk of loss but also have the potential to be very lucrative. Before investing in equities, one must thoroughly understand the underlying business and the sector in which it works.    The mutual fund option is better for people who lack the time or expertise to track and understand equities markets. With regard to your investment in mutual funds, there are some advantages that you get. From professional management of your money by mutual fund experts to low ticket sizes where you can start to invest with as low as Rs 500, there are many perks of investment via mutual funds.   Is mutual fund and equity fund the same? An equity fund is a mutual fund that invests majorly in stocks. It can be actively or passively managed. Equity funds are also called stock mutual funds.  Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

In the previous article, we discussed the dos and don'ts of saving for your child's education in 2022. This article will discuss how to beat inflation by investing in mutual funds.  You might be the type of person who prefers to delegate some of the tasks of growth to your finances. You can lose money if your investments aren't making enough to outpace inflation.   Your savings may be deflated in value as the gradual increase in the cost of goods and services is inevitable.    For most people, the most excellent method to beat inflation is to generate returns that, on average, are higher than the average inflation rate while still leaving some tax space.  Source: pixabay The most typical way to achieve that is to invest in a mutual fund that combines stock and bond holdings.   Beat inflation with a good portfolio: A good portfolio consists of a mutual fund and an exchange-traded fund. It is diversified in nature with numerous options to maintain a healthy balance.   Everybody has their preferred building materials, tools, designs, and tactics. Ultimately, all structures tend to function similarly and share some fundamental characteristics.   It would be beneficial if you went beyond the good advice to build a mutual fund portfolio in order to increase the value of your assets. A clever design and a solid foundation are necessary for a structure to endure the test of time and inflation.   Diversify: Putting your eggs in different baskets is just one aspect of diversification with mutual funds and ETFs.   Many investors make errors in believing that diversifying their portfolio by distributing funds among many mutual funds is equivalent to doing so. Diverse does not equate to different, though. Make sure you have exposure to several mutual funds and ETFs kinds.   Choose growth or foreign stocks and ETFs: Growth stock mutual funds and ETFs often perform at their peak during the mature stages of a market cycle when the economy is expanding at a steady clip.   The growth strategy depicts what businesses, consumers, and investors are doing at once during a prosperous period. They spend extra money to ensure that future growth is higher than anticipated.   Increased inflation may result in a decline in the value of the currency. As money invested in overseas assets can eventually transform into more money at home, international stock funds and ETFs can serve as a hedge (an asset that seeks to limit total losses).   Use inflation-beating bond funds: Bond prices move in the opposite direction of interest rate movements; bonds can lose value when inflation increases.   With inflation, interest rates typically increase. When inflation rises, there are ways to invest in bonds, bond funds, and ETFs.   Find funds that pay dividends: Over time, dividends can significantly boost the total return that investors experience and they typically work in tandem with capital gains to outperform inflation.   The expansion of mutual funds that invest in dividend-paying stocks is well known. These funds are good purchases for investors looking to generate income from their portfolios.   The best-performing mutual funds have outperformed inflation over the long run, even though they cannot guarantee the return of your principal.   In conclusion, taking the time to think about some of the numerous investments may help you eventually avoid the harmful effects of inflation. FAQ What is the best investment to beat inflation? For most people, the most excellent method to beat inflation is to generate returns that, on average, are higher than the average inflation rate while still leaving some tax space.   The most typical way to achieve that is to invest in a mutual fund that combines stock and bond holdings.   Can SIP beat inflation?   A systematic investment plan is a vehicle to invest in mutual funds. Your investment’s potential to beat inflation depends on the type of mutual fund you choose to put your money into.   What is the easiest way to beat inflation?   Beat inflation with a good portfolio: A good portfolio consists of a mutual fund and an exchange-traded fund. It is diversified in nature, with numerous options to maintain a healthy balance.    Everybody has their preferred building materials, tools, designs, and tactics. Ultimately, all structures tend to function similarly and share some fundamental characteristics.    It would be beneficial if you went beyond the good advice to build a mutual fund portfolio in order to increase the value of your assets. A clever design and a solid foundation are necessary for a structure to endure the test of time and inflation.  How do you escape money from inflation?   Diversify: Putting your eggs in different baskets is just one aspect of diversification with mutual funds and ETFs.    Many investors make errors in believing that diversifying their portfolio by distributing funds among many mutual funds is equivalent to doing so. Diverse does not equate to different, though. Make sure you have exposure to several mutual funds and ETFs kinds.    TALK TO AN EXPERT

Incorporated on December 10, 1999, HDFC Asset Management Company Ltd. is among India's most popular fund houses. HDFC Mutual Fund launched its first scheme in July 2000, and ever since it has been ambitious about offering a stable performance of funds across all the variants of schemes it offers.   The HDFC Mutual Fund is managed by HDFC Asset Management Company (HDFC AMC) Limited. HDFC Trustee Company Limited is the trustee of the mutual fund. The HDFC Mutual Fund is sponsored by the Housing Development Finance Corporation Limited (HDFC Ltd.) and Standard Life Investments Limited.  https://www.youtube.com/watch?v=U1nfBwXH15M HDFC Small Cap Fund  Investment Objective: The primary objective is to provide long-term capital appreciation /income by investing predominantly in Small-Cap companies.   Investment Process:   The stock selection entirely focuses on quality companies with good financial strength and reasonable return on equity.  Investment is made at sensible valuations in companies trading at reasonable multiples (P/E, P/B, EV/EBITDA, etc.)  The scheme aims to maintain a reasonably diversified portfolio at all times. The scheme may also invest some of its corpus in debt and money market securities. Credit quality, liquidity, interest rates, and their outlook will guide investment in debt securities.  Portfolio Composition  The portfolio holds significant exposure in equity & equity-related stocks at 92.01%, and significant sectoral exposure is to Banks, which account for roughly 9.75% of the portfolio.  Note: Data as of March 31, 2023. Source: HDFC MF Top 5 Holdings for HDFC Small Cap Fund  Name Weightage % Sonata Software Ltd 5.25 Bank of Baroda 4.16 Bajaj Electricals Ltd 3.89 Firstsource Solutions 3.34 Green Eastern Shipping Co Ltd  2.87 Note: Data as of March 31 2023. Source: HDFC MF  Performance  Note: Data as of March 31, 2023.  Source: Value Research Fund manager  Mr. Chirag Setalvad (Since June 28, 2014) has over 25 years of experience, of which 18 years in Fund Management and Equity Research and three years in Investment Banking. Before HDFC, he worked at New Vernon Advisory Services and started his career at ING Barings in India.   Mr. Priya Ranjan (Since May 01, 2022) does have a Collectively over 15 years of experience. Senior Equity Analyst and Fund Manager for Overseas Investments. He also holds eight years of experience in Credit Cards and Consumer Finance Collections, Client Relationship Management & Team Management.  Who should invest in HDFC Small Cap Fund?  Investors looking to generate higher returns by taking exposure to small-cap equities can consider this fund. However, investors need to understand the aggressive risk exposure of this fund.  Why invest in this Fund?  This high-risk, high-return strategy offers the potential to 'earn big' returns.  It can help you beat the impact of rising prices over the long term.  The fund allows investors to earn good returns as they confer more growth  Time Horizon  One should look at investing for at least 3-4 years or even more.  The fund is an open-ended fund. One can invest any time in this fund.  Conclusion  The HDFC Small Cap Fund has a proven track record of over 15 years, with an Asset Under Management of ₹14,962.63 Cr. The fund holding a significant portfolio in equity provides a much higher rate of return in the long run.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 

Parag Parikh Financial Advisory Services is a unique fund house that draws its inspiration from the Hammurabi Code. King Hammurabi (18th Century BC) is recognized as the world's first coder of social laws. Hammurabi's law stated that if a house collapses, causing the occupant's death, it is the builder's liability, and he must be executed. To demonstrate this conviction in their asset management methodology, the management motivated company insiders to buy units in the Parag Parikh Flexi Cap Fund. Presently, company insiders hold 4.653 crore units, and the total amount they have invested is INR 156.41 crores. The management believes that when their own stake is involved in the fund, they will take informed decisions and never indulge in reckless behavior. The promoter of PPFAS Asset Management Company (PPFAS AMC) is Parag Parikh Financial Advisory Services Pvt. Ltd. (PPFAS Ltd.). PPFAS Ltd. is a 1992-incorporated boutique investment advisory firm. It is also one of the oldest SEBI Registered Portfolio Management Service (PMS) providers in India. The PPFAS mutual fund's investment methodology is much different from other mutual fund houses operating in India. While most other companies run after algorithms, momentum, and technical analysis, PPFAS mutual fund relies on conventional metrics like cash flow, debt, price earnings, etc., to pick stocks with tremendous growth potential. Another unique thing about PPFAS mutual fund is that it stops accepting lump sum deposits from the public when equity valuations are extremely high. Generally, when the market is at its peak, retail investors get carried away and pour in money. While eventually, the market consolidates, investors grapple with monumental losses. PPFAS mutual fund's innovative fund management style intends to reduce losses and generate profits consistently. PPFAS AMC is headed by Mr. Neil Parag Parikh, who is the Chairman and Chief Executive Officer of the company. He holds 15,61,216 units in the Parag Parikh Flexi Cap Fund. The Investment Manager of PPFAS Mutual Fund is PPFAS Asset Management Private Limited. The company was registered on 08/08/2011. Parag Parikh Financial Advisory Services Private Limited holds 100% shares in the company. PPFAS mutual fund's Asset Under Management (AUM) grew to INR 2,871.87 Crore in the financial year 2019-20 from INR 1,961.51 Crore in the previous financial year. In the financial year 2018-19, the AMC had 80,289 investors investing in its various mutual fund schemes. The figure increased to 1,84,789 in the financial year 2019-20. PPFAS Asset Management Private Limited's operating income increased to INR 1,832.12 lakhs in the financial year 2019-20 from INR 1,538.31 lakhs in the previous year. The AMC's Profit before Depreciation, Tax, and Exceptional & Extraordinary items grew to INR 638.29 lakhs from INR 618.53 lakhs. And the Reserves & Surplus increased to INR 3,061.16 lakhs from 2,715.15 lakhs. Important information about PPFAS Mutual Fund Mutual Fund NamePPFAS Mutual FundInvestment ManagerPPFAS Asset Management Private LimitedEstablished10th October 2012Date of Incorporation8th August 2011Sponsor Parag Parikh Financial Advisory Services Limited 81/82, 8th Floor, SakharBhavan, Ramnath GoenkaMarg, 230 Nariman Point,Mumbai-400021TrusteePPFAS Trustee Company Private LimitedChairman and Director, PPFAS Asset Management Private LimitedNeil Parag ParikhChief Executive OfficerNeil Parag ParikhDirectorRajeev Thakkar Shashi KatariaIndependent DirectorsKamlesh Somani Rajesh Bhojani Arindam GhoshChief Financial OfficerShashi KatariaCompliance OfficerPriya HarianiInvestor Service OfficerAalok MehtaStatutory AuditorsCVK & Associates, Chartered Accountants 2, Samarth Apartments, D S Babrekar Road,Off Gokhale Road (North), Dadar (West),Mumbai 400 028Tel. No: +91-22-24468717,+ 91-22-24451488Fax. No: +91-22-24466139BankersHDFC Bank Limited 81/82, 8th Floor, Sakhar Bhavan, Ramnath Goenka Marg, 230 Nariman Point - 400021Registered Address, PPFAS Asset Management Pvt.Ltd.81/82, 8th Floor, Sakhar Bhavan, Ramnath Goenka Marg, 230 Nariman Point Mumbai - 400021Phone 22-61406555 / 1800-266-7790Fax022-61406590Emailmf@ppfas.comWebsitehttps://www.amc.ppfas.comRegistrar & Transfer AgentComputer Age Management Services Ltd. Address: 7th Floor, Tower II, Rayala Towers, 158, Anna Salai, Chennai - 600002 Phone: 1800-3010-6767 / 1800-419-7676 Fax: 044-30407101 Email: enq_h@camsonline.com Website: www.camsonline.com Three top-performing Parag Parikh mutual fund schemes  1. Parag Parikh Flexi Cap Fund (formerly known as Parag Parikh Long Term Equity Fund) The Parag Parikh Flexi Cap Fund, with a NAV of 38.8948 (Regular Growth) (as of 13th April 2021), is the top-performing fund in the 'Equity: Flexi Cap' category. This open-ended fund was launched on 28th May 2013 and has given trailing returns of 70.41% in one year (as of 13th April 2021). The fund considers the NIFTY 500 TRI as its benchmark.  Key information Minimum InvestmentINR 1,000Minimum Additional InvestmentINR 1,000Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 1,000Exit Load2% for redemption before 365 days; 1% for withdrawals between 366 and 730 days; Nil for redemption after 731 daysReturn Since Inception (28th May 2013):18.81% (as of 13th April 2021)AssetsINR 8,182 Crore (as of 31st March 2021)Expense Ratio1.86% (as of 28th February 2021) 2. Parag Parikh Liquid Fund The Parag Parikh Liquid Fund, with a NAV of 1,150.8854 (Regular Growth) (as of 14th April 2021), is the top-performing fund in the 'Debt: Liquid' category. This open-ended fund was launched on 11th May 2018 and has given trailing returns of 3.10% in one year (as of 12th April 2021). The fund considers the CRISIL Liquid TRI as its benchmark.  Key information Minimum InvestmentINR 5,000Minimum Additional InvestmentINR 1,000Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 1,000Exit LoadNil for redemption after 6 daysReturn Since Inception (11th May 2018):4.92% (as of 14th April 2021)AssetsINR 1,243 Crore (as of 31st March 2021)Expense Ratio0.26% (as of 28th February 2021) 3. Parag Parikh Tax Saver Fund The Parag Parikh Tax Saver Fund, with a NAV of 14.5112 (Regular Growth) (as of 14th April 2021), is the top-performing fund in the 'Equity: ELSS' category. This open-ended fund was launched on 24th July 2019 and has given trailing returns of 59.68% in one year (as of 12th April 2021). The fund considers the NIFTY 500 TRI as its benchmark.  Key Information Minimum InvestmentINR 500Minimum Additional InvestmentINR 500Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 500Exit LoadNil (Lock-in period - 3 years)Return Since Inception (24th July 2019):24.12% (as of 13th April 2021)AssetsINR 179 Crore (as of 31st March, 2021)Expense RatioINR 179 Crore (as of 31st March 2021) How can you invest in PPFAS Mutual Fund via EduFund? EduFund is a one-stop app for investing in the top-rated schemes of the PPFAS mutual funds. All transactions on EduFund are secured with international-standard authentication and encryption. Hence, hackers or malware can never infringe upon your financial privacy. Investing in PPFAS mutual fund is a straightforward six-step process Step 1: Open Google Play Store or Apple App Store, type 'EduFund,' and download the app. Step 2: Create an account by entering details such as name, email, and mobile phone number. Step 3: Browse the various PPFAS mutual fund schemes, view the Net Asset Value (NAV), and check the returns, expense ratio, nature (open-ended/ close-ended), date of launch, returns since inception, and other details. Choose the scheme that best suits your financial goals. Step 4: Choose an amount to invest. You can start with a lump sum of INR 5,000 or a SIP (Systematic Investment Plan) of INR 500. EduFund provides you with two options - Growth and Dividend. The dividend option will suit you more if you want to get a regular income. In contrast, the growth option is better if you are investing for getting a lump sum amount after a few years.  Step 5: When you invest in a scheme, the units get credited to your EduFund account within four (4) days. You can check the current value, NAV, balance, and other details in the app. You can also invest more, withdraw money, or switch to another fund. In case you need further help, EduFund's expert advisors are available to help you with the selection process.  Step 6: You are all set to witness the growth of your capital.  Three best-performing fund managers at PPFAS Mutual Fund 1. Mr. Rajeev Thakkar Mr. Rajeev Thakkar, Chief Investment Officer and Equity Fund Manager, at PPFAS mutual fund, joined the company in 2001. His professional journey started in 1994. He has extensive experience in asset management and capital markets. His specialties include investment banking, fixed income, Portfolio Management Services, and broking operations. Before joining PPFAS AMC, he worked as Manager of Fixed Income Securities at DIL Vikas Finance Limited for two years. He also worked with Prime Securities as Manager of Investment Banking for five years. Mr. Thakkar did his schooling at St. Xavier's High School and a Bachelor of Commerce from Narsee Monjee College of Commerce and Economics. He is also a Chartered Accountant (The Institute of Chartered Accountants of India) and CFA Charter (CFA Institute, USA). Mr. Thakkar manages the Parag Parikh Flexi Cap Fund. 2. Mr. Raunak Onkar Mr. Raunak Onkar, Research Head of, PPFAS mutual fund, joined the company in January 2012. Before joining PPFAS AMC, he worked with Parag Parikh Financial Advisory Services Limited as an Analyst and Intern (Research Trainee) between May 2008 and January 2012. He has more than ten years of experience in Equity Research, Portfolio Management, Research, Capital Markets, Valuation, Business Analysis, Investments, Finance, Hedging, Asset Management, and Mutual Funds. His educational qualifications include a Bachelor of Science in Information Technology and a Master in Management Studies Finance (University of Mumbai).  3. Mr. Raj Mehta Mr. Raj Mehta, Fund Manager, of PPFAS mutual fund, joined the company in August 2012 as a Research Trainee. Before joining PPFAS AMC, he worked with K.P. Mehta & Co. as an Article Assistant. His specialties include Equity Research Analysis, Financial Analysis, Financial Modelling, Auditing, Accounting, and taxation. Mr. Mehta did B.Com and M.Com from Narsee Monjee College of Commerce and Economics. He is also a CFA Charterholder and Chartered Accountant. He participates in various TV channels and writes for several financial publications.  Why should you invest in PPFAS mutual fund? PPFAS is a unique mutual fund house that offers only three schemes. They identify value-oriented stocks with solid fundamentals and invest. The best thing about PPFAS mutual fund's flagship scheme Flexi Cap Fund is that it invests in high-quality Indian and international companies that have delivered steady returns irrespective of market conditions. The fund managers at PPFAS AMC have a consistent track record of generating gravity-defying returns. Another exciting thing about PPFAS mutual fund is that it stops accepting lump sum public deposits when they find that the valuations are too stretched. Hence, you should consider investing in a PPFAS mutual fund scheme if you want to make decent profits over the long term. EduFund brings PPFAS mutual fund schemes to your fingertips. You can start investing with as little as INR 5,000 and benefit from the market upswings.  EduFund offers you the following distinct features: Customized Financial Plans - EduFund tracks all mutual fund schemes offered by mutual fund houses in India. It uses over 1 lakh data points and 400 financial situations to display the best mutual fund schemes for you. For every financial goal, you can get a personalized investment plan exclusively for you. Talk to a Financial Counsellor - EduFund's financial counselor employs time-tested methods to help you find the best scheme that suits your financial profile and goals. You can get free counseling about all your fund-related queries. Explore International Instruments - Besides Indian mutual funds, EduFund also provides you access to US Dollar ETFs and International mutual funds. You do not need any special account to invest in international financial instruments. EduFund's app is a one-stop destination for everything related to investments. Get Free Calculators - Your goals are unique. EduFund simplifies the more challenging task of calculation. You may use various free tools like the SIP calculator, College Savings Calculator, etc., to easily figure out the amount you will need to fulfill your goals and select the right mutual fund. EduFund uses bank-like security protocols to ensure 100% safe transactions. FAQs How can I invest in PPFAS mutual fund? Step 1: Open Google Play Store or Apple App Store, type 'EduFund,' and download the app. Step 2: Create an account by entering details such as name, email, and mobile phone number. Step 3: Browse the various PPFAS mutual fund schemes, view the Net Asset Value (NAV), and check the returns, expense ratio, nature (open-ended/ close-ended), date of launch, returns since inception, and other details. Choose the scheme that best suits your financial goals. Step 4: Choose an amount to invest. You can start with a lump sum of INR 5,000 or a SIP (Systematic Investment Plan) of INR 500. EduFund provides you with two options - Growth and Dividend. Why should you invest in PPFAS mutual fund? The fund managers at PPFAS AMC have a consistent track record of generating gravity-defying returns. Another exciting thing about PPFAS mutual fund is that it stops accepting lump sum public deposits when they find that the valuations are too stretched. What are some popular funds by PPFAS mutual fund? Parag Parikh Liquid FundParag Parikh Flexi Cap FundParag Parikh Tax Saver Fund Consult an expert advisor to get the right plan TALK TO AN EXPERT

In the early article, we discussed financial planning. In this article, we will try to under the taxation in the mutual fund system that applies to mutual fund investments.  Factors determining the taxation of Mutual funds  To know the taxation structure, first, you need to identify which type of mutual funds you have invested in and whether the fund you hold is an equity mutual fund or a debt-oriented mutual fund.   Along with this, the type of income that you are generating from the fund, whether a capital gain or dividend income - both these types of income are taxable in different ways.  Finally, your holding period is crucial in knowing the taxes applicable to your mutual funds' portfolio.  Earnings in mutual funds There are usually two ways in which money is earned in mutual funds: one through the selling of the mutual fund (capital gain) and the other through dividend income.   For example, if you are holding units of a mutual that you purchased at a NAV (Net Asset Value) of Rs. 100, and you sell it when its NAV of Rs. 150, you make a capital gain of Rs. 50; it is worth noting that capital gains tax accrues on the mutual funds' units only after redemption.   The tax will be payable when you file your income tax returns for the coming fiscal year.  The second way to earn from mutual funds is dividend income – the fund declares dividends for the holders based on the surplus that it has for distribution Dividends are taxable as soon as the dividend amount hits the bank accounts of the investors.   Source: Pexels Tax on capital gains  Here, there are again two parts to the story – whether the realized capital gains have come from equity mutual funds or debt mutual funds.   An equity mutual fund has an equity exposure of greater than 65%. For equity mutual funds, if the gains have been realized within 12 months of holding, then the applicable tax rate is flat at 15% on the gains (irrespective of your income tax bracket).   When the holding period exceeds 12 months, the capital gains of Rs. 1,00,000 are exempt from taxes. Any amount upwards of Rs. 1,00,000 is taxable at 10%, along with the provision of indexation benefits.  For debt mutual funds (funds with greater than 65% exposure to debt instruments) - the holding period is considered short-term if it is less than 36 months; anything more than that is long-term.  For the short term, the tax rate is in accordance with your income tax slab. On the other hand, for debt funds held for more than 36 months, the gains are taxable at a flat rate of 20% post-indexation (plus, some cess and surcharge are added).  A possible third case is hybrid funds (funds with a mix of debt and equity) it is simple, their tax treatment is supposed to be on the basis of the fund's exposure to debt and equity.  If the hybrid fund is equity-focused: LTCG is charged at 10% on capital gains exceeding Rs. 1 lakh (without indexation), and STCG is charged at 10%. If the hybrid fund is debt-focused: LTCG is charged at 20% with indexation benefits, and STCG is charged per income tax slab.  Tax on dividends  Now, when it comes to taxation of dividends paid out on mutual funds, it is done by adding the dividend to the investor's taxable income, and then the individual income tax slab rate is applicable; this is in accordance with the amendments made by the union budget of 2020.  Earlier, dividends were tax-free in the hands of investors since the companies paid the Dividend distribution tax (DDT) before sharing the profits with the investors.   Dividends (received from domestic companies) of up to Rs. 10,00,000 per year were tax-free in the hands of the investors during this period. Dividends above Rs. 10 lakhs were subject to a dividend distribution tax of 10%.  STT Aside from the dividends and capital gains taxes, there is also a securities transaction tax (STT).   When you acquire or sell mutual fund units of an equity or a hybrid mutual fund, the government charges an STT of 0.001%. It is important to note that selling units of debt funds are exempt from the STT.  Important points to note  There are tax-saving equity funds as well. Investments made under the ELSS (Equity-linked savings schemes) qualify for tax exemption under section 80C of the Income-tax Act (exemption up to Rs. 1,50,000).   Please note that ELSS schemes come with a lock-in period of 3 years – that is, investors cannot redeem the units before three years. LTCG (long-term capital gains tax) is not applicable for gains up to Rs. 1,00,000.   For LTCG more than Rs 1 lakhs, the applicable tax rate is 10% without indexation.  Taxation in the case of SIP (Systematic Investment plans)  Let us understand this with the help of an example  An investor invests Rs. 10,000 every month from April 2021, and another investor invests Rs. 60,000 lump sum at the same time.   When both of them redeem their funds simultaneously, Rs. 10,000 will qualify for tax exemption for the SIP investor because the investment made in 2021 would exceed one year as of May 2021. In contrast, the entire capital gain isn’t taxable for the lump sum. Investing in the long term can be more tax-efficient than holding the units for a short duration. FAQs How much amount is taxed in mutual funds? If the investor claims redemption in less than 1 year of investment, it would fall under the Short-term Capital Gains (STCG) category. The tax rate would be 15% on the gains earned by the investor. If the investor holds the investment for more than a year, (say April 2020 – May 2021), the gains would be taxed at long-term capital gains (LTCG) tax of 10% Is SIP in mutual funds taxable? Yes, SIP in the mutual fund is taxable. The tax amount differs based on the duration and returns generated Which mutual funds are tax-free? Profits from the sale of ELSS fund units are considered long-term capital gains and have tax exemption. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In the previous article, we talked about what is dollar-cost averaging. In this article, we will try to understand what is NAV and some important points related to NAV   What is NAV? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.   Mutual funds are broken down into units that are when you purchase a mutual fund, you receive units of it. NAV represents the assets held by the mutual fund.   According to the SEC (Securities and exchange commission), mutual funds and unit investment trusts (UITs) should calculate the respective NAV once a day.  How is NAV calculated?  Net Asset Value = Value of assets – Value of liabilities, where 'value of assets' represents the value of securities in the mutual funds' portfolio, and 'value of liabilities is the value of all the expenses and liabilities incurred by the fund.  On a per-unit basis, the formula is   NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units.  Is NAV important?   The answer is No! NAV is fairly irrelevant in cases of mutual funds – new mutual funds have a lower NAV than old ones.   Before buying mutual funds, you should consider the size of the AUM (Assets under management), the past performance of the fund, the managers' experience, and the alpha, and the beta. Source: Pexels Invest in funds with lower NAV: A common myth about NAV  Let's take an example. Suppose you invest INR 10,000 in two schemes (A & B). The Nav of scheme A is INR 50. while the Nav of scheme B is INR 100. For your investment in scheme A, you will get 200 units(10000/50). And, for your investment in scheme B, you'll get 100 units. Now, after 1 year, both the schemes generate a return of 20%. This implies that the NAV of schemes has also appreciated by 20%. So now the NAV of scheme A will be INR 60 (20% * 50 + 50). Similarly, the NAA of scheme B will spur to INR 120(20% * 100 + 100). The final investment value in scheme A is INR 12000(200 units * 60) and in scheme B also it stands at INR 12000(100 *120). Thus, a fund with a lower NAV doesn’t signify that it’s a good investment or an underpriced one. Same for investors who think that funds with higher NAV are good investments.    What matters is the performance of the scheme and not the NAV.  When is NAV updated?   Unlike stock prices, NAV is not updated on a real-time basis – the reason for this is that a mutual fund has many assets in its kitty, and tracking all of them is a complicated task. Hence, SEBI mandates the mutual funds to update the NAV every day by 9 p.m. (different mutual funds update their NAV at different times before 9 p.m.).  Which NAV value is taken while buying and selling a mutual fund?   If a mutual fund unit’s purchase happens before 3 p.m., the investor will receive the units at the NAV of the same day at 9 p.m., whereas purchases made after 3 p.m. are calculable at the next day's NAV.   The ruling remains intact even when the mutual fund units’ selling happens. Transactions before 3 p.m. are settled on the same-day NAV, and transactions post 3 p.m. are carried out on the next day's NAV.   In case of purchase/sale done on holiday, the order is carried out at the NAV of the next working day.   How do stock markets affect the NAV of a mutual fund?   Different mutual funds hold different types of assets; they have different levels of exposure to equity and debt markets. The relevance of the exposure to the stock markets will determine how much the SENSEX and NIFTY will affect the NAV of a mutual fund.  If a mutual fund has invested in companies that are part of SENSEX, NIFTY, or both, it is more likely to imitate their movements. Also, multi-cap mutual funds invest in companies of various sizes, so they may or may not be affected by SENSEX or NIFTY depending upon the number of large-cap investments they have.   NAV vs. Stock price Are they the same?  The answer is NO! As we saw above, NAV is not affected by demand, but stock price movements do depend on demand and supply.   Instead of calling NAV and stock price the same, we can say they're similar - the reason being that NAV reflects the book value of the mutual fund, and stock prices, do the same for companies; the book value for companies would include assets of the company and the profits it made.   However, another vital metric behind stock price is demand – if many people want the stock, its price may shoot up (the stock becomes over-valued), and the reverse may happen (the stock becomes under-valued).  How do AUM and NAV differ?  NAV and AUM are two different things. Unlike NAV, AUM is of prime importance, and it should be factored into consideration before purchasing a mutual fund.   AUM (Assets under management) is the total value of assets that the mutual fund manages; it includes both the assets held and the cash possessed by the fund.   How does NAV fluctuate?  NAV can fluctuate with the change in the value of assets held by the mutual fund. Since mutual funds have varied investment instruments, the value of the holding will change depending upon the change in prices of the instruments.  So, if the value of the assets held by a mutual fund is lower than the previous day, the NAV will also be lower and vice versa.  Some key takeaways   The Net Asset Value is a fund's assets minus liabilities and expenses.   It represents (on a per-share basis) the price the investors can transact in the mutual fund units.   The NAV moves in the same direction as the value of securities the mutual fund holds.   The NAV itself offers no justification for a fund being "good" or "bad" to invest in.   A fund's mutual fund units may trade at levels different from the NAV.  FAQs What is NAV? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.   How is NAV calculated? Net Asset Value = Value of assets – Value of liabilities, where 'value of assets' represents the value of securities in the mutual funds' portfolio, and 'value of liabilities is the value of all the expenses and liabilities incurred by the fund.  On a per-unit basis, the formula is   NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units. Is NAV important?   The answer is No! NAV is fairly irrelevant in cases of mutual funds – new mutual funds have a lower NAV than old ones.   Before buying mutual funds, you should consider the size of the AUM (Assets under management), the past performance of the fund, the managers' experience, and the alpha, and the beta. Does NAV change daily? Unlike stock prices, NAV is not updated on a real-time basis – the reason for this is that a mutual fund has many assets in its kitty, and tracking all of them is a complicated task.   Hence, SEBI mandates the mutual funds to update the NAV every day by 9 p.m. (different mutual funds update their NAV at different times before 9 p.m.).    What is NAV, and how does it work? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.    According to the SEC (Securities and Exchange Commission), mutual funds and unit investment trusts (UITs) should calculate the respective NAV once a day. Net Asset Value = Value of assets – Value of liabilities, where ‘value of assets’ represents the value of securities in the mutual funds’ portfolio, and ‘value of liabilities is the value of all the expenses and liabilities incurred by the fund.    On a per-unit basis, the formula is    NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units.   Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In this article, we will discuss direct mutual funds vs growth mutual funds. We'll try to understand what they offer in terms of risk and return and their composition.  Growth mutual funds As the name suggests, growth mutual funds invest in stocks of companies that have the potential to grow rapidly, thereby outpacing the market.   The main aim for investment in a growth mutual fund is capital appreciation, for which investors do not receive any dividends because the earnings are used as reinvestments in the company.   With high returns, growth mutual funds also bring about asymmetric risks. So, growth mutual funds are more suited for investors with a high-risk appetite.   Investors with a conservative approach and those with less knowledge of the market should keep away from these investments.   Growth mutual funds are highly volatile. The value of the investment might fluctuate widely, especially during market corrections.  In terms of taxation, these funds are subject to a long-term capital gains tax of 10% on profits over 1 lakh rupees (for investments held for more than one year).   Investment in growth funds allows you the diversification of companies that can multiply your money in a shorter amount of time.  Direct mutual funds On the other hand, direct mutual funds were introduced by SEBI (Securities and Exchange Board of India) in January 2013.  The direct mutual fund plans aim to eliminate mediator involvement by channeling your money into the fund. The absence of a mediator will add to your responsibilities as a buyer to do good research about your buying fund.   Because the transactions are done directly, the commission is absent, and as a result, the expense ratio for direct mutual funds is lower than the regular plans.   The lower expense ratio acts as a bonus for the investor, saving them the cost. However, people usually avoid direct mutual funds owing to a lack of research & awareness and end up paying a higher expense ratio (usually higher by 1 percent) and hurting their returns in the long run.  Source: Personalfn In the figure above, we assume that a fund generates 12% CAGR, then Rs. 1,00,000 lakh invested in a direct fund would amount to Rs. 3,47,855 after ten years and Rs. 3,23,073 in a regular fund we see a big difference of +7.7%. In the long term, the difference is non-ignorable.  Now, to say which one is better than the other is difficult. It depends on your willingness to spend time on what you do and your risk appetite. Use your due diligence to make your investment. FAQs What are growth mutual funds? Growth mutual funds invest in stocks of companies that have the potential to grow rapidly, thereby outpacing the market.   The main aim for investment in a growth mutual fund is capital appreciation, for which investors do not receive any dividends because the earnings are used as reinvestments in the company. What are direct mutual funds? Direct mutual funds were introduced by SEBI (Securities and Exchange Board of India) in January 2013.  The direct mutual fund plans aim to eliminate mediator involvement by channeling your money into the fund. The absence of a mediator will add to your responsibilities as a buyer to do good research about your buying fund. Is the expense ratio for direct mutual funds less than regular? Yes, because the transactions are done directly and the commission is absent, the expense ratio for direct mutual funds is lower than the regular plans.  

As an investor, you may have heard about three broad types of funds equity funds  hybrid funds  debt funds  In this article, we will be trying to put out a comparison between debt funds and hybrid funds. We will try to differentiate them based on risks-returns and tax assessment. Difference between Debt funds and Hybrid funds 1. Debt fund A debt fund is a mutual fund, an exchange-traded fund (ETF), or any other pooled investment instrument that invests primarily in fixed-income assets. Debt funds have lower fees than equity funds due to lower management costs. Investors in debt funds can choose between passive and aggressive solutions. Credit funds and fixed-income funds are common names for debt funds. These funds are popular among investors looking to preserve their capital, along with the generation of low-risk income. Debt funds invest in a wide range of securities, each with its own set of risks. Companies with a steady outlook and high credit quality issue investment-grade debt. High-yield debt is usually issued by low-credit-quality businesses with good growth potential and a larger risk-return profile.  Debt funds are appropriate for people with short to medium-term investment horizons, where “short-term” refers to 3 months to one year, and “medium-term” refers to a period of 3 to 5 years.  2. Hybrid funds A hybrid fund is a mutual fund scheme that invests in a mix of equity and debt instruments to create a balance between the risk and returns of the instruments mentioned above.   The risk of investing in a hybrid fund is dependent on the allocation of funds between equity and debt.   Hybrid funds obtain their returns effectively in two parts:   From the risk-free debt instrument   The risky and high-delivering equity segment is volatile as well.  A comparative analysis of Debt and hybrid funds  1. Comparison of the risk-return scale Without a second thought, hybrid funds are riskier than debt funds because of equity components.   The riskiest ones within hybrid funds are those with more than 65% of equity exposure; among debt funds, the fund with low credit quality and high growth prospects carry a riskier profile.  Returns are dependent on the risk you take so returns will vary depending upon your separate exposure to equity and debt, though debt funds are categorically safer than a hybrid.  2. Comparison of the funds on the taxation scale These funds are subject to taxation on capital gains and dividend distribution tax. Funds are categorized into equity (if equity exposure is >65%) and non-equity.  Equity funds are subject to STCG of 15% if held for less than one year and LTCG of 10% if held for more than a year. On the other hand, non-equity funds (debt funds and hybrid funds with <65% equity) are taxable according to your income-tax slab.   If held for less than three years, LTCG is payable at 15% with an indexation benefit. Equity and non-equity funds attract Dividend distribution tax (DDT) of 10% and 25%, respectively.  So, while choosing the fund you wish to invest in, you have to account for your risk-return equation before deciding. FAQs What are debt funds? A debt fund is a mutual fund, an exchange-traded fund (ETF), or any other pooled investment instrument that invests primarily in fixed-income assets. Debt funds have lower fees than equity funds due to lower management costs. Investors in debt funds can choose between passive and aggressive solutions. What are hybrid funds? A hybrid fund is a mutual fund scheme that invests in a mix of equity and debt instruments to create a balance between the risk and returns of the instruments mentioned above.   What is the difference between debt funds and hybrid funds? Hybrid funds predominantly invest in equity whereas debt funds invest in debt and debt-related instruments. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Investment tips can be a life savior. Especially when life today is expensive and getting costlier. Education, housing and other costs of living are certainly not getting any cheaper. Your savings will only take you so far and thus, financial planning and investment have become a necessity today. Education planning in India is getting popular, especially for parents looking to send their kids to study abroad without taking out education loans. If you are a beginner investor, and thinking about child investment plans or other strategies, here are some things you should know. 1. Invest with a plan You should always invest with a plan. It is very important to be clear from the get-go about what your financial goals are. Investments in a house, investments for buying a car, investments for retirement, and investments for child education are all very different financial goals. Some financial goals require short-term planning while others require planning long-term.  For example, buying a car is a short-term goal, while creating a proper education plan for your child or planning for retirement are long-term goals. A diversified short-term investment plan is much more suitable for the former and a long-term investment scheme will be more useful for your long-term goals. If you are a beginner, it can be a good idea to invest with a financial service that manages your investments for you. A personalized and customized financial plan created by experts is useful when you are short on time or expertise yourself. If you want to create a solid education plan for your children, you can invest your money in mutual funds and ETFs through EduFund.  2. Educate yourself about the stock market While it may be tempting to leave everything to the experts and rest stress-free, that is not a very good attitude to have. You should educate yourself about what you are investing in and why. A lot of beginner investors follow trends and invest in whatever is being talked about the most. There is a chance of this being profitable in the short term but this definitely not a good long-term strategy. For that, you will need to educate yourself on the stock market. You need to understand how the stock market works and what it means when a stock rises or falls. What is a stock and what does it mean when you buy a stock? You should also educate yourself on the jargon. What is BSE, NSE, Sensex, Nifty, etc.? What is the difference between investing and trading? First-time investors also need to specifically look at what they are investing in and learn as much as possible about it. If you are investing in ETFs, it is important to first understand what an ETF is and why they are so popular with beginner investors.  Sometimes, the experience can also be a teacher. When you enter the market as a rookie, you may make mistakes and suffer losses. Take these losses as a learning experience to understand what to do and what not to do. Knowledge is your friend when you are an investor and not all of this knowledge needs to be bookish. 3. Understand market risk When you invest your money into the market, you can either make a profit or suffer a loss. The more money you have invested, the more your exposure and consequent risk.  Volatile or trendy stocks and options can be risky. Balanced mutual funds, real estate, and high-income bonds are relatively low risk. Bank savings deposits, fixed deposits, and government bonds are the lowest-risk investments. As an investor, what you need to do is determine how much risk you are willing to take. It is always a good idea to start slow. Do not speculate too much too quickly. Rather, plan things out and invest according to your goals. Your risk tolerance will also differ depending on your financial goals. If you are investing to fund your child’s education plan, which is an expensive, long-term investment, you should not take unnecessary risks.  Diversification is a great idea to lower risk as this ensures that your invested principal is not tied up in only one thing. This balances out your risk. Investing in ETFs and mutual funds is a great way to do this. These funds are already diversified and their investment portfolio is structured and balanced to ensure relatively lower risk. 4. Invest in what you know We have recently seen big booms and falls in the prices of certain stocks like GameStop. A lot of people invested in these stocks due to the hype and media attention. While many of them made huge profits, when the stocks eventually fell, many investors ended up losing a lot of money as well.  This is a great example of what happens when you invest out of herd mentality, without fully understanding what you are investing in and why. While these types of investments can be good for a quick and sudden cash fall, they are completely inappropriate as a long-term investment strategy.  When you invest in a stock, you purchase yourself a stake in the company. As a stakeholder, you should do your due diligence about the company and its stocks. Understand how the company makes its money and stays profitable. If you don’t do this, you will not be able to predict or understand when a company’s stock may fall and put you in a financial crisis. If you don’t understand how or why a particular stock shot up, it's not a good investment. 5. Stay calm This is perhaps the most important aspect of investing. The stock market with its highs and lows can lure you into making impulsive, emotion-driven decisions. It is important to have self-control in these matters and stick to proven investment strategies rather than variable market trends. It is also equally important to understand that short-term market fluctuations, by and large, don’t affect your long-term investments in the long run. With financial goals like education plans and home ownership, any rise and fall in stock prices can make you nervous. However, it is important to have faith in your long-term investments. If you have done your due diligence and research in picking the right plans and strategies for yourself, the only thing you need to do is relax and keep faith in your investments. Conclusion Investment is a strategy for creating wealth in the long term and requires patience, faith, knowledge, and planning. It is important to educate yourself as much as possible about all relevant issues and keep in touch with experienced advisors and analysts. FAQs What is the best strategy for a beginner investor? You should always invest with a plan. It is very important to be clear from the get-go about what your financial goals are. Investments in a house, investments for buying a car, investments for retirement, and investments for child education are all very different financial goals. Some financial goals require short-term planning, while others require long-term planning.    How can I invest smartly? Stay calm. This is perhaps the most important aspect of investing. The stock market, with its highs and lows, can lure you into making impulsive, emotion-driven decisions.   It is important to have self-control in these matters and stick to proven investment strategies rather than variable market trends.   It is also equally important to understand that short-term market fluctuations, by and large, don’t affect your long-term investments in the long run. What should beginning investors invest in? Invest in what you know. When you invest in a stock, you purchase a stake in the company. As a stakeholder, you should do due diligence on the company and its stocks.    Understand how the company makes its money and stays profitable. If you don’t do this, you will not be able to predict or understand when a company’s stock may fall and put you in a financial crisis.    If you don’t understand how or why a particular stock shot up, it’s not a good investment.   What are 5 tips for beginner investors? Invest with a plan   Educate yourself about the stock market   Understand market risk   Invest in what you know   Stay calm  

The question of how much salary to invest in mutual funds is a burning question for many salaried professionals.   There are many thumb rules; for example, the 50:30:20 rule is a great example that shows how, typically, on average, a person should invest 20% of a month’s salary.   Before investing in any instrument, the first thing that needs to be taken care of is your fixed obligation-to-income ratio. Fixed obligations are those expenses that are necessary to sustain your life.   So, whatever remains after paying your fixed obligation should go towards investing.   How much in mutual funds?   The question is how much of that 20% of investments should go into mutual funds. Mutual funds are a very popular form of investment giving better returns than your savings account and are also a hassle-free investment strategy.   There are various types of mutual funds depending on your risk appetite. Some of them are index funds, debt funds, multi-cap funds, hybrid funds, and equity funds.   Equity funds are the riskiest because they have the highest exposure to equity markets.   The amount that you will invest in mutual funds will depend upon your salary range and the expenses you will cover. But the percentage, as shown above, is usually 20%.   At least half of it is 10% of the total salary and should be in mutual funds in the form of SIP investments because mutual funds have the power to generate high returns in the long run. Far more than FDs and savings accounts.  Example:   Suppose person A earns ₹40,000 per month.   50% of 40,000 = 20,000   So, ₹20,000 should go towards the necessities like rent, bills, etc.   30% of 40,000 = 12,000   Then, ₹12,000 should be spent on movies, gyms, restaurants, etc.   20% of 40,000 = 8,000   The remaining ₹8000 should be saved or invested.  In that ₹8,000, at least ₹4,000 should be invested in mutual funds, which is 10 percent of the total salary. The remaining 10 percent can be saved or invested depending on your financial goals.  Source: Pexels Long term goals   Your investment in mutual fund SIPs should align with your future goals as an individual or even for your family. It completely depends on how much wealth you would like to have in the long run (given your desired time horizon).   Your long-term financial goals will also decide how much you want to invest and which type of mutual funds you should invest in to get the desired type of returns.   You can arrive at any amount depending upon the type of expenses you will undertake in the future. You must carefully analyze the total amount of your SIP investment in mutual funds.  Investing some portion of your monthly income will go a long way in your dream of wealth creation in the future. You need to remain consistent with your investments.   Also, keep on increasing the size of your investment in your desired instrument with every hike in your salary.  FAQs What % of your salary should you invest in mutual funds? The thumb rule that most investors follow is the 50:30:20 where 20% of your income should be invested. However, the percentage differs based on the individual's salary, financial goals, and assets/debts. How much in mutual funds?   The amount that you will invest in mutual funds will depend upon your salary range and the expenses you will cover. But the percentage, as shown above, is usually 20%.  To figure out how much to invest, you can always consult an expert. Can a salaried person invest in mutual funds? Yes, salaried persons can invest in mutual funds/stocks and ETFs. There are many investment options available to salaried persons in India and even abroad such as investing in US stocks and ETFs. How much to invest in mutual funds and how to choose a mutual fund is best answered with the help of an advisor! Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Investing in equity has never been an easy task. It demands a lot of time and effort from your side to understand the company’s business, analyze the financials, develop the investment philosophy, and whatnot. So, you invest in mutual funds, giving your money to a professional fund manager who will manage and invest it in equity markets. But he is going to charge fees for his professional services, and there is no assurance that he will be able to generate a good return. Then you might ask if there is any way by which you can invest in equities where you will not be required to put the effort like a professional fund manager or pay hefty professional fees, and yet you can earn a decent return. The answer to this question is index funds. In this article, we will see an index fund, its benefits and limitations, how to invest in index funds in India, how to buy index funds in India, and some points about ETFs. What is an Index Fund? Index Fund is a mutual fund where the fund manager invests in stocks that are part of a particular index called the underlying index. Here, the fund manager does not use his professional skills but replicates the index with the objective of earning a return (before fees and expenses) that is commensurate with the return of the underlying index. Since the fund manager does not apply his professional skills and the fund is managed passively by just copying the index, the expense ratios of index funds are also very low. Hence, index funds are the best passive funds. https://www.youtube.com/shorts/78mX8bcNPcM Benefits of Index Funds Lower Fees: Since the fund manager is not required to manage the funds actively and invest by replicating the underlying index, index funds have lower expense ratios than actively managed funds. Zero Risk of Fund Management: The risk of the fund manager's decisions going wrong is eliminated because the fund manager mimics the underlying index. Easy to Invest: Index funds are easiest to invest in because it requires very little application of financial knowledge than actively managed funds. Diversification: Generally, indices are well diversified, and since index funds invest in stocks that form part of that index, you get the benefit of diversification automatically. Due to the benefits mentioned above, index funds are the best passive funds to invest in. Limitations of Index Funds The only considerable limitation of index funds is that you don’t make returns higher than the index; you can make the maximum that index has made but not more than that. How to invest in Index Funds in India? Once you have decided to invest in index funds, you can follow the following approach for investing in index funds. Selection of the appropriate underlying index: Based on the time horizon and your risk appetite, you must select an appropriate underlying index for your investments. Selection of appropriate index fund: Once you have chosen the underlying index appropriate for you, you have to select the index fund with the index that you have chosen as its underlying. With the help of the following factors, you can decide the best index fund to invest in. AUM: Consider the funds with the highest AUM because the higher the AUM, the more the chances of being better managed. Expense Ratio: Since there is no active management of funds, you should consider the funds that have the lowest expense ratio, so you incur lesser costs. Tracking Error: Tracking error measures the difference between the returns generated by the index fund and the underlying index. The lower the tracking error, the better it is, as you get returns like the underlying index as much as possible. How to buy Index Funds in India? After deciding to invest in index funds, you might have a question about how to buy index funds in India. Don't worry. The procedure to buy an index fund is simple and the same as the procedure for buying any other mutual fund. You can visit the official website of the mutual fund, complete the standard KYC procedure, and fill up the required information for buying the index funds. You can also invest in index funds in India using our EduFund App without paying any commission in a simple and hassle-free manner. What is an ETF? ETF is also an index fund. The only difference is ETFs are traded on stock exchanges like normal stocks. There are also ETFs based on commodities like gold, silver, etc. You can consider the parameters of liquidity and volume in addition to the approach given above to decide the best ETF to invest in India. You can also invest in the best ETFs in India through our EduFund App. https://www.youtube.com/shorts/ufTDh0aPOG8 Conclusion Index funds and ETFs are the best way to start investing, considering the benefits and limitations. However, time spent in the market is much more essential to create wealth. Hence, it would help if you focused more on staying invested for a longer duration than deciding which is the best index fund or the best ETF to invest in.  TALK TO AN EXPERT

In the previous article, we discussed taxation in mutual funds. In this article, we will discuss the types of risks associated with mutual funds. Mutual funds are excellent investment options for both novice and seasoned investors; they are currently a very popular investment option due to their capacity to provide inflation-beating returns.   Mutual funds combine money from a range of individuals and institutions and invest in various asset classes such as shares, debt, and other money market instruments after conducting thorough research to maximize capital appreciation or income generation.  The investors are subject to risks like volatility risk, management risk, liquidity risk, interest rate risk, and inflation risk. We shall now discuss all such risks that come up with an investment in mutual fund schemes; a sound knowledge of these is helpful to an investor in making the investments.  There are two types of mutual funds: equity mutual funds and debt mutual funds. Risks associated with mutual funds There are major two types of risks associated with mutual funds that the article will discuss such as risks associated with equity mutual funds and risks associated with debt funds. 1. Management risk A company's management refers to the group steering the organization on the right path.   Changes in the management team and their activities, such as pledging shares, decreasing or increasing promoter stakes, and so on, can impact the price of a company's stock.   While principles such as solid corporate governance and high transparency benefit a company's stock, mismanagement, team conflicts, and other factors depress the stock price and thereby affect your mutual fund investments as well if that particular stock is a part of your investment.  2. Liquidity risk When it comes to equity investments, long-term investing has the best possibility of securing investment profitability.   Thus, it is difficult for equity mutual funds to quickly buy or sell stock investments to profit or minimize a loss leading to a situation where the scheme's liquidity is insufficient to meet investors' redemption requests.   A liquidity crisis like this is most prevalent when investors make a high number of redemption requests due to prolonged bad market inequities.   Many equity funds invest a small amount of their capital in debt and money market instruments to mitigate this risk and ensure more substantial returns.  3. Volatility risk An equity mutual fund invests mainly in the stocks of publicly traded corporations.   As a result, an equity fund's value is in line with the performance of the companies in whose stocks it has invested. Current macroeconomic conditions have an impact on the company's performance.   Government, Sebi, and RBI policies, consumer preferences, the economic cycle, and other macroeconomic changes are all examples of factors that directly impact the price of company stock, either positively or negatively.   The value of an equity fund is affected by this movement. Large-cap corporations, on average, are less prone to such volatility than mid-cap and small-cap market enterprises.   Similarly, when compared to thematic or sectoral equity, funds are diversified. Equity funds are less likely to be influenced by such volatility. Risks associated with debt funds 1. Inflation risk Bonds and money market instruments are fixed-rate instruments because their coupon rates are fixed. As a result, rising inflation erodes the coupon rate-based revenues that the debt fund aims to receive.   As a result, rising inflation causes bonds to trade at a lower price on the bond markets, lowering their potential returns for the debt funds investors. On the other hand, lower inflation tends to push bond prices and debt fund investment values higher.  2. Credit risk Government securities, corporate bonds, certificates of deposits, commercial papers and other debt and money market instruments are among the items that debt funds invest in.   Credit ratings such as AAA, AA+, AA, AA- and so on are offered by credit rating agencies such as CRISIL, ICRA, and Fitch they evaluate the credit quality of these investments, which vary depending upon the issuer.   A specific risk is that the borrower fails; they do not pay the principal and/or interest on the loan.  3. Interest rate risk A risk linked with debt funds is interest rate risk. Bonds are exchanged in the same way as stocks, and their prices fluctuate.   The economies' interest rates mainly influence the movement in bond prices; the link between interest rates and bond prices is the opposite. As a result, as the economies' interest rate rises, the values of current bonds fall since they continue to offer the same interest rate.   Interest rate risk refers to price variation in bonds caused by changes in interest rates it is a market-wide element that influences bond prices and, as a result, the value of all debt mutual funds.   The degree of interest rate sensitivity varies by debt fund type and is shown by the adjusted duration of the debt fund.   In general, debt funds that invest in shorter-term assets are less vulnerable to interest rate risk than those that invest in longer-term products.  With regard to the above-mentioned risks, it is vital to note that while mutual fund performance is always subject to numerous risks, every fund house employs a variety of tactics to reduce, if not eliminate, these well-known dangers.   As a result, even if your investment gains are not guaranteed, your chances of developing your wealth are good if you invest with a well-known fund house, choose a fund with an established track record, and make the investment with a long-term horizon. FAQs What are the three main risks associated with mutual funds? The three main risks associated with mutual funds are: Management risk Liquidity risk Volatility risk Do mutual funds have high risk? All mutual funds are risky. Its terms and conditions specify that mutual funds are volatile in nature and are subject to market ups and downs. There are different levels of risk involved in mutual funds. What is the biggest risk for mutual funds? The biggest risk for mutual funds is inflation. Inflation affects different types of funds differently. Rising inflation causes bonds to trade at a lower price on the bond markets, lowering their potential returns for debt fund investors. On the other hand, lower inflation tends to push bond prices and debt fund investment values higher. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT