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MUTUAL FUNDS (Wealth Management)

Are there funds that need me to stay invested for a stipulated time?

One of the biggest advantages in a Mutual Fund scheme is Liquidity, i.e. ease of converting investment into cash.

Equity Linked Savings Schemes (ELSS), which offer tax benefits under Sec 80C, are required by regulation to ‘lock-in’ units for a period of 3 years, after which, they are free to be redeemed.

There is another category of schemes popularly called as “Fixed Maturity Plans” (FMP’s) where investors need to stay invested for a stipulated period which is pre-defined in the offer document of the scheme. These schemes have an investment duration of anywhere between three months to a few years.

A few open end schemes may however, specify an exit load period. For instance, a scheme may specify that units redeemed with 6 months would attract an exit load of 0.50% at applicable NAV.

One should bear in mind that while there be may some rules and regulations on minimum time horizon, it is best to take the advice of an investment advisor to know the appropriate or ideal time horizons for every type of schemes.


Source : MutualFundsSahiHai


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MUTUAL FUNDS (Wealth Management)

What are the benefits of investing in Mutual Funds?

Many of us dread the thought of managing our own investments. With a professional fund management company, people are put in charge of various functions based on their education, experience and skills.

As an investor, you can either manage your finances yourself, or hire a professional firm. You opt for the latter when:

  1. You do not know how to do the job best – many of us hire someone to file our income tax returns, or almost all of us get an architect to do our house.
  2. You do not have enough time or inclination. It’s like hiring drivers even though we know how to drive.
  3. When you are likely to save money by outsourcing the job instead of doing it yourself. Like going on a journey driving your own vehicle is far costlier than taking a train.
  4. You can spend your time for other activities of your choice / liking

Professional fund management is one of the best benefits of Mutual Funds. The infographic on the left highlights all the others. Given these benefits, there is no reason why one should look at any other investment avenue.

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SOURCE : Mutual Funds Sahi Hai 

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MUTUAL FUNDS (Wealth Management)

What are the kinds of financial goals I can fulfill with Mutual Funds?

The best part about Mutual Funds is that no matter what your financial goal is, you can find an appropriate scheme for it.

So if you have a long term financial goal like planning for your retirement or your child’s future education than equity funds could be a choice to consider

If your endeavour is to potentially generate regular income, a fixed income fund could be considered.

You may have suddenly received a windfall of money and are yet to decide where you wish to invest, you can consider a liquid fund. A liquid fund is a good substitute to consider for a savings account or even a current account to park your working capital.

Mutual funds also offer investment options for saving tax. Equity Linked saving Schemes (ELSS) are specifically designed to do the same

Mutual Funds are a one-stop shop for practically all investment needs.



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MUTUAL FUNDS (Wealth Management)

How do choose a Mutual Fund?

Imagine asking a travel agent, “How should I choose my mode of transport?” The first thing he/she will say is, “Depends on where you want to go.” If I were to travel to a distance of 5 kms, an auto rickshaw might be the best option, while for a journey from New Delhi to Kochi, a flight might be the best. A flight would not be available for a short distance and an auto rickshaw would be highly uncomfortable and slow for a long-distance journey.

In Mutual Funds too, the starting point must be- What are your requirements?

It begins with your financial goals and risk appetite.

You’ve got to identify your financial goals, first. Some Mutual Fund schemes are suitable for short term requirements or goals, whereas some might be better for long term goals.

Next comes your risk appetite. Different people would have different risk appetite. Even husband and wife may have joint finances but different risk profiles. Some are comfortable with high risk products, whereas some are just not.

You can get help from financial planners or investment advisers or Mutual Fund distributors to assess your risk appetite




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MUTUAL FUNDS (Wealth Management)

How do I withdraw my money from Mutual Funds?

One of the biggest advantages of Mutual Funds is liquidity – the ease of converting an investor’s units into cash.

Mutual Funds, being regulated by Securities and Exchange Board of India (SEBI), have well laid out norms to ensure liquidity. Open end schemes, which comprise of a large majority of schemes, offer liquidity as a major feature. Liquidity is ease of access or conversion of an asset into cash.

Once the redemption is complete, funds are transferred to the designated bank account of the investor, within 3 business days after the redemption was lodged.

However two issues need to be kept in mind. One, there may be an exit load period in certain schemes. In such cases, redemptions before a certain specified period, say 3 months, may attract a nominal load like 0.5% of Asset Value. Fund Managers impose such loads to deter short term investors. Secondly, AMCs may indicate what the minimum amount for redemption is. Investors are advised to read all scheme related documents carefully before investing.


Source – MutualFundSahiHai

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MUTUAL FUNDS (Wealth Management)

Why should one invest in Mutual Funds?

One should never invest in Mutual Funds, but should invest through them.

To elaborate, we invest in various investment avenues based on our requirements, e.g. for capital growth – we invest in equity shares, for safety of capital and regular income – we buy fixed income products.

The concern for most investors is: how to know which instruments are best for them? One may not have enough abilities, time or interest to conduct the research.

To manage investments, one can outsource certain tasks one is unable to do. Anyone can outsource ‘managing one’s investments’ to a professional firm – the Mutual Fund company. Mutual Funds offer various avenues to fulfill different objectives, which investors can choose from based on one’s unique situation and objective.

Mutual Fund companies manage all administrative activities including paperwork. They also facilitate accounting and reporting the progress of the investment portfolios through a combination of Net Asset Values (NAVs) and the account statements.

Mutual Fund is a great convenience for those who need to invest their money for future requirements. A team of professionals manages the money and the investors can enjoy the fruits of this expertise without getting involved in the mundane tasks.

SOURCE : MutualFundSahiHai

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MUTUAL FUNDS (Wealth Management)

What is the benefit of staying invested in the long term?

Invest for long term – an advice routinely given by many Mutual Fund distributors and investment advisors. This is especially true in case of certain Mutual Funds – such as equity and balanced funds.

Let us understand why the professionals give such advice. What really happens in the long term? Is there a benefit of staying invested for long term?

Consider your Mutual Fund investment as a good quality batsman. Every good quality batsman has a certain style of batting. However, each good quality batsman would be able to accumulate lots of runs, if he continues to play for years.

We are talking about the record of a “good quality” batsman. Every good batsman would go through some good and poor performances. On average the record would be impressive.

Similarly, a good Mutual Fund would also go through some ups and downs – often due to factors beyond the control of the fund manager. An investor would benefit if one stays invested through these funds for long periods of time.

So, as long as you can afford, stay invested for long periods of time – especially in equity and balanced funds.



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MUTUAL FUNDS (Wealth Management)

Financial Learning and Some Rules

This is surely just a ramble. I did not even know whether to call it learning, rules, diktats, …or just a ramble by an old investor, but hey here it is….

  • Make mistakes – write down what went wrong, make quick small mistakes, laugh at them, make it when you are young, and most importantly learn from them.
  • Write down the learning – from investing, losing, friends, reading,….and keep a nice notebook for the same.
  • Understand conflict of interest – broker, blogger, adviser, …their agenda and your agenda may not match
  • Choose your area of work, and enjoy the same – the pleasure gives you the energy required to succeed
  • Be Intellectually competitive by choosing an amazing array of friends
  • Choose complete idiots, very sharp people, chess players, equity analysts, salesmen, lawyers, entrepreneurs (failed or successful) as friends and see your thinking improve
  • Get friendly with people who criticize you
  • A person who claims to be my friend bad mouths me, and now I am enjoying it !!
  • Make brave decision based on 80% information and 20% gut
  • Review decisions based on information
  • Never argue with the truth, it does not work
  • Teach your kids investment reviews and use their services – so that they learn and you improve
  • Your kids are great at killing your ego, encourage them to do so, nobody else does it so well
  • When an idiot is criticizing you, concentrate on the criticism, you KNOW he is an idiot, don’t judge him every day
  • Trust your intuition. Verify performance.
  • Make tentative investments, but on confirmation buy real big
  • Don’t waste time investing 1% of your liquid net worth, does not help, it should be at least 5%

When you trade size of the trade should be worth your time..



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MUTUAL FUNDS (Wealth Management)

Equity for Retirement?


Even when stocks are doing well—and they’ve been on an incredible run the past five years with fantastic annualized gains. There is always a fear that the market could come down in a hurry – like a pack of cards – and that is scary is it not? Did that not happen in 2007 or should I say 2008 and 2009? What if the market falls 50% – or even worse your portfolio falls 60%.

Are we ever really for such a fall in our portfolios? Are we really ready for death? We always feel ‘he could have lived more’ do we not?

So it’s understandable, especially now, that all of us have doubts abound about the longevity of this bull market.

Do you have the famous question: Should I just skip shares altogether when investing for retirement?

Fair enough.

But if  you’re inclined to give shares a miss or even that you are considering such an option, you should be aware of the risk of NOT investing in shares. Yes, there are huge huge disadvantages. 

Despite their gut-wrenching volatility—or, more perhaps because of it—shares tend to generate higher returns than other financial assets like bank fixed deposits, rbi bonds, real estate, gold, by a wide margin over the long term. That superior performance isn’t surely NOT guaranteed, but it’s been pretty persistent over the last 100 years or longer. So we will have to go by past performance, and accept that the next 20-30-40 years.

Those higher long-term gains give you a huge advantage when it comes to saving rather investing for retirement. For a given amount of savings, you are likely to end up with a  larger nest egg by investing in good quality shares than you had avoided them. Another way to look at it is that by investing in shares you can build a much larger nest egg – even when you contribute lesser than the amount that you were willing to contribute to the investment!



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Composition scheme biz need not file purchase details while filing GST quarterly returns


Businesses opting for composition scheme under GST need not file details of purchases made from their vendors at the time of filing quarterly return GSTR-4, the Finance Ministry said Wednesday.

In a clarification, the ministry said there have been doubts regarding the manner of filing the quarterly return by composition dealers in Form GSTR-4 in the absence of auto-population of the details of inward supplies received from registered suppliers.

“In this regard, it is to clarify that the taxpayers who have opted to pay tax under the composition levy shall not furnish the data in serial number 4A of Table 4 of Form GSTR-4,” the ministry said in a statement.

Serial number 4A of Table 4 of Form GSTR-4 gives details of purchases made from GST registered vendors.

Over 18 lakh businesses opted for composition scheme, which allows them to pay taxes at a concessional rate and makes compliance easy under the Goods and Services.Tax (GST) regime which was rolled out on July 1, 2017. Businesses with annual turnover of up to Rs 1 crore can opt for the scheme.

The last date for filing GST returns for the July-September quarter for such dealers is October 18.

SOURCE- Economic Times.

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