Remember these while investing in Mutual Funds

aspire_logo4Mutual Funds are the most efficient way for long term wealth creation.  Mutual funds investments can be availed for amounts as small as Rs. 500 and for as long or as short an investment period as the investor desires. Even then, investing in mutual funds can be daunting for individuals because of lack of awareness.

Here are a few things to remember while investing:

Understanding the Risks Involved: It is crucial to analyse the risks based on your investment opportunities. Every mutual fund carries some amount of risk arising from factors such as the fund’s underlying securities and investment methodology. Rule of thumb – equity funds especially mid and small cap funds have the highest risk with the highest potential for offering rewards. In comparison, debt funds are relatively low risk and potentially offer lower returns hence preferred by investors with low risk tolerance. Hybrid funds invest in both debt/money market instruments as well as equity markets hence they offer a unique balance of risk and return. Understanding these risk-return relationships which are unique to each fund are vital when selecting the type of mutual fund that best meets your expected returns and risk tolerance requirements.

Keep your Investment Objectives Clear: After risk, the two most basic questions that you need to answer are – how much can you invest and how long can you stay invested? Mutual funds are relatively flexible financial products as you can start investing with an amount as low as Rs. 500. Furthermore, apart from some schemes such as ELSS and closed ended funds, you can invest in or redeem your mutual fund investment at any time of your choice. This provides you with the ability to choose a specific type of mutual fund keeping in mind your investment objective as well as time horizon. For example in case you want to save on income tax and stay invested for the long term, then ELSS is the ideal investment for you. On the other hand, if you want to invest for the short term, want to maintain a high level of liquidity and receive higher returns than your savings account with minimum risk, a liquid fund or an ultra short term debt fund might just be a better option.

The NAV Does Not Matter: The mutual fund NAV actually has no bearing on how a fund has performed or will perform in the future. That’s the key reason why mutual fund returns are represented by percentage growth figures. So whether you have bought a fund with high NAV or low NAV, the growth of your investments as a percentage will be impacted only by the performance of the fund. For example, let’s assume you buy 200 units of a fund with NAV Rs. 10 vs. 20 units of a fund with NAV Rs. 100. In both cases, you are investing the same amount i.e. Rs. 2000 and if returns generated are 10% in both cases, your investments will grow by the same amount i.e. Rs. 200.       

Diversify Your Investments Over Time: Mutual funds offer you with unmatched opportunities to diversify your investment due to the varying types on offer based mainly on the types of investments they make. For example in case you feel the market is bullish and want your money to grow fast, you could invest in a mid cap or small cap fund which can potentially offer a high rate of return. On the other hand if you want a lower risk investment option you could consider either liquid or ultra short term debt funds, which offer potentially lower returns but often feature a higher level of consistency. That said, you could also consider diversifying your portfolio with a mix of equity as well as debt fund investments, which can balance the overall risk and return of your portfolio.

Consider a strategy focused on long-term growth: Mutual funds are not by any means
“Get rich quick Schemes” and you need to have a long term investment horizon to get the highest rewards. Equity-oriented mutual funds are ideal for investors with an investment horizon of 5 years or more. This is because, in the short term, equity markets are often volatile but historically, in the long term, equity markets have always headed in the upward direction. However, the ideal strategy would be to maintain some short term investment holdings along with equity investments in order to maintain liquidity of your portfolio. Thus investing in debt funds to some extent would help ensure that you could meet emergency cash requirements without sacrificing long term opportunities for capital appreciation.
Periodic Monitoring is Essential to Success: A crucial aspect of investments which most investors tend to ignore is monitoring their investments periodically to examine their performance. This allows the investor to figure out what type of investment is working well vs. what hasn’t performed according to expectations. Once this information is available, the investor can make an informed decision and consider reallocation of current poorly performing investments into more lucrative avenues suitable for ensuring long term growth of the investor’s portfolio as a whole.

#MutualFunds #AspirePFS# Investments #SIP

Advertisements

How to Get the Most Out of a Date With Your Money

money date

A great way to start the week!  Happy Dating Girls!

 

 

By John Schneider

When you a that big date, you want everything to go right.

If everything goes just right, you’ll get lucky. Maybe enjoy more than dinner and drinks.

To have the kind of fun you really want to have, you must first prepare. You need everything in its place, everything looking good. And feeling good.

To get the results you want, you must plan, plan, plan.

This is the same when making a date with your money.

If you want your money date to be bigger, better, and more exciting, this six-step plan will satisfy you.

Prepare.

Sure, you could dive right into it and hope for the best. With a little pre-date prep, though, you can make your money date pleasurable and certain.

Get online access to all your accounts and account statements. Include investment and savings accounts with bank and investment firms, retirement (company sponsored retirement plans and individual retirement accounts, such as your Traditional or Roth IRA), and credit card accounts.

Don’t forget about your Health Savings Account (HSA) and Flexible Spending Account (FSA). Get access to your mortgage account and any personal and home equity lines of credit (HELOC).

Get access to any account you have anywhere. Have all this information accessible so you can peek at it as needed.

Gain an understanding of what kind of accounts you have and how they work. If you have a company-sponsored retirement plan, what kind of plan do you have and how does your employer manage it? If you have a HELOC, know your terms, such as withdrawal limit, interest rate, and payoff requirements.

Lay the groundwork for a successful date with your money so you aren’t stuck.

Get intimate.

It’s hard to get what you want when you don’t know what you want. You can’t be fulfilled if you don’t know what you crave.

To get the most from the date with your money, know your goals and dreams. If you don’t know your goals and dreams, do some self-reflection, meditate, journal, read, and talk with friends and family.

Find out what it is you most want in life and then structure your financial plan to achieve those goals.

While you’re self-reflecting, figure out what scares and concerns you. If you’re afraid to lose money, for example, you want more conservative investments.

If you’re concerned by what would happen if you lose your job, you want to devise a plan to save six-months’ worth of living expenses in an emergency savings account.

Be honest about your limitations and weaknesses. If you’re prone to misuse credit cards, then all those credit card hacking articles you’ve read don’t apply.

If your dream is to be a social worker, then a top-tier college that costs six figures doesn’t make sense.

Understanding what you desire and what you can handle will take you a long way in creating a financial plan that works for you. Most people create a financial plan to simply look like they’re doing better than their neighbor.

That’s a plan for failure.

Shoot to score.

If a date with your money includes someone else, good on you. The more the merrier.

If your money date includes someone else because that someone else is included in your family plan, know all the above about them as well as you do about yourself. When you have that level of understanding, you can seek mutually happy endings.

Money is one of the top three leading causes of stress in relationships. Understanding your partner’s financial personality and having them understand your financial personality will help you both feel satisfied.

It’s important to keep in mind that you don’t need to have the exact same financial goals as your partner. You can support your partner in reaching for their individual financial goals.

Protect yourself.

Because you’re getting so intimate, it’s wise to use protection.

Get life insurance, even if you don’t have a spouse or children. Today’s life insurance isn’t our parent’s life insurance.

Policies today often allow you to leave an inheritance to heirs that include partners, children, nieces, nephews, grandchildren, or anyone unrelated to you by blood but related to you by love.

Many policies permit leaving charitable donations. You may leave a donation to one or more organizations in your name. If you choose the latter, it’s wise to assign a trustee to your estate to oversee that the donations are distributed appropriately and not a la Eva Peron.

Get life insurance as soon as possible because the earlier you do the cheaper it is.

Whether you have health insurance through an employer or through the Affordable Care Act, make sure you have enough coverage to meet your needs. Risking that you won’t get sick or hurt is taking the risk of losing your health and your wealth.

Bank or credit union savings accounts or money market accounts with no bells or whistles are ideal to use as emergency savings accounts. You don’t want this money too easily accessible, so decline debit cards and check writing.

In a real emergency, you won’t mind driving to the bank or requesting a wire for this money. If you have an urge to buy a new television, the effort it takes to access your emergency savings funds may motivate you to find the money elsewhere.

Clip, pare, prune, and trim.

Less is more. As designers, writers, and editors often say, “Edit. Edit. Edit.”

That’s often the case that our lifestyles grow proportional to our incomes. We spend all we earn – and sometimes more.

In any case, cut excess spending and waste. When you trim, your prize becomes clearer and appears bigger. You will achieve any and all financial goals sooner rather than later.

Concentrate.

If you’re reading this article, it’s likely that balancing your accounts and paying bills is low on your list of enjoyable activities.

To make this date with your money a quickie, take a deep breath, relax, and release. The more you focus on the task at hand and the goal in mind, the sooner you’ll be finished. We don’t always want dates to end quickly, but sometimes it’s all we can do.

With these steps, you can have the money date you need and achieve the money goals you want. It’s only as hard as you make it or want it to be.

Now make that date!

#AspirePFS #dating #Investments #MutualFunds

Read More

As a woman, are these 5 things stopping you from investing?

Would you call yourself a financially independent woman?

Think about it. Do you handle your own finances? Do you depend on someone to make your financial decisions? Or are you really doing everything you can to grow your wealth? Are you wondering what other way is there to grow your wealth apart from working for it?It’s to make your money work for it. I’m talking about investing.

If you have never made a financial investment in your life, are these 5 things stopping you?

1. Other responsibilities: Call it conditioning or a choice, but women generally put familial responsibilities before everything else. Thinking that you won’t be left with enough money to invest is a common thought. Well, that stops now. Through Systematic Investment Plan (SIP) you can invest an amount as little as Rs 1000 every month.

2. Lack of knowledge: This is a thought that most non-investors have – that they don’t know how to invest. Mutual Funds come to your rescue here. An experienced fund manager handles your money and invests it on your behalf so you are not required to be an expert yourself.

3. No time: I understand you have work, household chores, and some of you might also have kids to take care of. Thinking this would not leave you with enough time to invest is understandable, but that’s the good thing about automated deductions. If you invest through SIP, the fixed amount will be deducted from your account automatically at regular intervals when standing instructions are given to auto debit your account.

4. It’s a man’s world: “Investment is not for women” or “the man of the family should do it.” Have you been told this at some point in your life? Well, it’s incorrect! Making an investment has nothing to do with your gender.Women are just as capable of making investments and need it equally to plan for their futures. You just need to choose an option that is in line with your risk capacity and financial goals.

5. No women-centric investment options: If you’ve been looking for investment avenues for women and a lack of the same is keeping you from investing, then it should not. As mentioned earlier, investment in stocks and mutual funds is gender agnostic. Along with these, you also have other investment options such as FDs, PFs, real estate, Gold ETFs etc.

So, don’t let anything stop you and aim to get a step closer to being financially independent with mutual fund investments.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Read More

This Diwali be Smart!

SGBThis Diwali be smart and buy Sovereign Gold Bonds instead of Physical Gold. SGB is the most hassle-free way of buying Gold.

3rd Tranche of Sovereign Gold Bond for 2017-18 is open for subscription from 16- 18th October 2017. While the Nominal value of the bond works out to ₹ 2987/- per gram. GOI, in consultation with the RBI, has decided to offer a discount of  50 per gram on the nominal value to those investors applying online and the payment against the application is made through a digital mode of the Sovereign Gold Bond. Hence, the issue price of Gold Bond for this tranche has been fixed at ₹ 2937 /- (Rupees Two thousand nine hundred and thirty seven only) per gram of gold.

Sovereign Gold Bond 2017-18 Series-IV

Subscription Period Issue Price per gram (₹) Investment limit for Individuals Interest per annum Date of Issuance
October 16 – 18, 2017 ₹ 2987/-
₹ 2937/-( For Online applications)
Minimum:1 gram
Maximum:4 Kg*
2.50% October 23, 2017

Why it makes sense to buy SGB instead of Physical Gold

  1. Attractive Interest with asset appreciation opportunity
  2. Redemption is linked to Gold Price
  3. Elimination of risk and cost of storage
  4. Exempt from Capital gains tax, if held till maturity
  5. Helps you save money (5-15%) upfront, which otherwise, would go to the jeweler as making charges(coins/ bar/ lose gold chips do carry making charges (profit margin))
  6. This is a more efficient way to accumulate gold
  7. Carries no markdown on prevailing price of gold at the time of early redemption (post 5 years) or at maturity.
  8. Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

Sovereign Gold Bond Features

Eligibility: The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions.

Denomination: The bonds will be denominated in units of one gram of gold and multiples thereof.

Minimum size: Minimum permissible investment will be 1 gram of gold.

Maximum limit: Maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time

Interest rate: The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually.

Tenor: The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates.

Redemption: Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.

 

How to Buy

You can buy this easily from an authorized dealer. It can be bought online through Aspire Personal Financial Solutions. Contact us on 9999 321 868 or leave a message below.

 

#Diwali #Dhanteras #Gold #SoverignGoldBonds  # AspirePersonalFinancialSolutions

Adhere to these investment basics while investing in mutual funds

Adhere to these investment basics while investing in mutual fundsThe first step towards successful investing in mutual funds is to have a clear understanding of your financial goals and one’s risk appetite including the time horizon required to achieve those goals and then accordingly choose their fund.

A basic issue bothering mutual fund investors would be on the ways to approach mutual fund investing. “Once you have identified the category and type of mutual funds, it’s time to select best fund within that category on the basis of its investment objective, past performance (vis-a-vis peer funds), benchmark indices, as well as the reputation of fund house and fund management team,” Allow your funds to grow and get the benefit of compounding, which adds significant power to your investments

Allow your funds to grow and get the benefit of compounding, which adds significant power to your investments

Time, Time and only Time

Enough has been said, “Spend time in the market” rather than “Timing the market”. Mutual funds are fantastic avenues to invest and hold a basket of great investment ideas (stocks). Your mutual fund investments will deliver better yields over a longer time horizon.

Some diversified equity funds have delivered over 10% CAGR during a time period of past 10 years, and over 20% during past 20 years

Your investment will not only gain from the power of compounding over the years but also give you the necessary tax savings. In addition, you also profit from completely tax-free earnings for staying invested in mutual funds for a period greater than a year.

 Go for Growth! Choosing growth option vs dividends

Though some schemes do pay handsome dividends with some level of predictability, they are not assured in quantum or frequency. Allow your funds to grow and get the benefit of compounding returns, which adds significant power to your investments.

Portfolio vs Performance

The previous year’s returns make an attractive case for investing in equity mutual funds. However, the trend should not steer you from realizing the risks involved in investing in these funds. Maintaining the appropriate balance in investing is important for optimal experience in investing. Don’t just chase past performance always choose a great portfolio rather than just great returns.

 Know the Risk

It is quite natural to direct your money into funds that have proven their mettle. However, it is important to realise that asset allocation should be done keeping in mind your risk appetite and goals; the best way to fulfill this is diversification.

Diversification in asset classes, schemes and to some extent across a few mutual fund companies is the best way to make the most out of this wonderful investment option.

This information may help investors to take good decision while investing in mutual funds. However, taking proper guidance from a financial adviser is must who can help you in reviewing your funds’ performance linked with your financial goals.

#mutualfunds #financialplanning #investments

Article Courtesy: Money Control

Mutual funds have multiple advantages over bank fixed deposits

tax-thiIn three years, falling interest rates have knocked off around 40% from the annual income that a FD would yield. That’s a shocking decline. People generally don’t do the math of returns correctly. Each step in the decline of FD rates appears small. They’re generally around 0.25% to 0.5%, which sounds trivial.

However, the actual reduction in income is much more significant. For instance, a decline in the interest rate from 7.5% to 7% is a reduction of 7% in the income that the deposit generates. This adds up fairly quickly. Over the past three years, you would have seen a 2.5% decline in the rate of interest that you earn from your FDs, from 8.75% to 6.25% . However, in terms of actual income, that’s a reduction of 40%.

The logical way to deal with this issue is to shift your money from FDs to mutual funds. Mutual funds that have a low risk profile would appeal to FD holders. These have rates of return that appear to be only marginally higher than those of fixed income. However, the math works the same way as in the above example. Over the past year, an FD would have yielded 7% interest, which was the rate in late 2016. Over the same period, an average liquid fund, which has negligible risk and variability, would have yielded 7.5%. That’s 10% higher in terms of earnings. 
However, in addition to this, there’s the cherry on the cake: taxation. For investments of less than three years, the taxation is the same for the two options. If you sell off the entire mutual fund investment, the earnings will indeed be taxed in the same way as the FD, that is, by being added to your income. However, if your goal is to withdraw the gains, the tax paid in the case of mutual funds is much less. The reason is simple. Interest is income, while mutual fund returns are capital gains When you receive interest from a deposit, the entire thing is considered income. However, when you withdraw money from your mutual fund investment, a part of it is the original principal you invested, which is obviously tax-free.

Here’s a concrete example. Let’s say you invest Rs 10 lakh in a mutual fund. A year later, the value of the investment has increased to Rs 10.8 lakh. Now, you want to withdraw the Rs 80,000 you have gained. Note that out of the investment you hold, 7.4% is the gain and the remaining 92.6% is the principal that you had invested. Here’s the key idea: when you withdraw any money, the withdrawal shall be deemed to consist of the gains and the principal in this same proportion, for tax purposes. Therefore, of that Rs 80,000, only Rs 5,926 will be considered gains and will therefore be added to your taxable income. This makes an enormous difference. In an equivalent FD, you would pay Rs 24,720 as tax in the highest slab. In the mutual fund, you would pay Rs 1,831 as tax.

There are other benefits which fund investors understand but bank depositors seem to be unaware of. There’s TDS and annual taxation, for instance. For cumulative FDs, you have to pay tax every year. That’s money that won’t be earning returns in the future. In the equivalent mutual fund investment, there’s no annual tax liability because the gains are not considered income. So the money is available for compounding for as long as the investment is held. After three years, the accumulated amount in the mutual fund will be almost one and a half times that in the deposit, assuming you are in the top tax bracket. For an initial investment of Rs 1 lakh, at the end of three years, the FD will effectively be worth Rs 1.26 lakh while the fund investment will be worth Rs 1.4 lakh. Since the FD tax outgo is split between 10% TDS and the rest paid out directly, the exact rate of return depends on how you account for this tax.

Whichever way you look at it, in these times of falling interest rates, the tax advantages make the mutual fund alternative twice as attractive.

#mutualfunds #investments #fixeddeposits #interestrates #tax

Article By Dhirendra Kumar

Read More