Skip to main content

Investments must suit your Life Goals

Top SIP Funds to Invest in India Online 

You have to ask a lot of questions before committing to an investment. But the due diligence is often limited to looking at the risks and returns. To check the suitability of an investment, one needs to do more. Here are some factors you must consider during your investment process. 

Go beyond returns 

A 10% expected return may seem a good reason to invest. But that alone is not enough. Look at how the returns are structured. If your goal needs periodic funding, then the investment too must provide periodic returns, such as fixed deposits, bonds or monthly income schemes. If your investment is in equity, where the return is more from appreciation in value, generating a regular income would be difficult. 

Similarly, if you are investing in a debt product—such as a bond that gives periodic interest income—with an aim of accumulating wealth for long-term goals, it is important that interest income is reinvested. Funds left idle or reinvested at lower rates will imply a lower corpus value than expected. An investment product that allows automatic reinvestment is more suitable here than a product with periodic payout. Some investments provide the flexibility to structure returns as income or capital gains. 

Know how the risks affect you 

Go beyond the categorization of an investment's risk as high or low. Look at how the risk will affect your goals. Selecting a money market fund, because you see it as a low-risk investment, may mean that you are exposing your goal to the inflation risk, if you use this product for a long-term goal. Or, avoiding an investment because it is categorized as high-risk in the short term, as is the case with equity investments, even when you have the advantage of a long-investment horizon, may result in being under-funded. Similarly, a safe investment can mean low returns. Align the risk to your investment plan. 

Ease of investing

There are some prerequisites to investing—for example: Know-Your-Customer norms, PAN card and routing the investments through your bank account. Then there are specific requirements. For example: to invest in securities, you need a demat account; to invest in government securities you need a special account with a primary dealer to deal in and hold the securities. Also consider the ease of obtaining and submitting applications and modes of payments. Being able to make and manage investments easily is an important parameter. 

Match the fund flow 

It may not always be possible to time the investible cash flows with investment opportunities. When that is a constraint, look for investments that are available through the year and allow investments in smaller instalments, if necessary. Some investments can be made only as a lump sum amount, such as an initial public offer (IPO). However, products that allow smaller investments may have minimum amount requirements, and the returns will depend upon the prevailing price or interest rate at the time of each purchase. Some investments need a minimum number of instalments upfront. Mutual funds require such a commitment on systematic investment plans (SIPs), though investors can cancel the SIP by giving due notice. Some investments need a minimum annual investment and there can be penalty for not adhering to it, for example, Public Provident Fund (PPF). 

Focus on costs and taxes 

The real returns from your investment will be lower to the extent of costs and taxes. Consider the costs associated with the investment, such as: brokerage on stock market investments or expense charges in the National Pension System (NPS). In some cases, the costs are billed and collected directly from the investor, such as the annual maintenance fee on a demat account; or it may be deducted from the value of the investment periodically, such as the expenses related to mutual funds, or it may be in the form of exit loads and other fees at the time of redemption.

Similarly, taxes also eat into the returns. Some investments, such as mutual funds, allow you to structure returns as income or capital gains depending on which is more tax-efficient for you. So, look at ways to maximise net returns. 

Liquid in investment

You may need to liquidate the investment earlier than planned, so investments with lock-ins, such as tax-saving instruments, may not be suitable. Others may have a penalty or load for premature withdrawal, like a bank fixed deposit. If the investment value is likely to fluctuate, then you may be withdrawing from the investment when the values are down. Some investments can be redeemed at any time, such as in the case of open-ended mutual fund. Some investments, such as mutual fund holdings, can be redeemed partially, and some cannot, like a post office saving. The facility of taking loans against the investment is also a way to generate liquidity without selling the investment. 

What is your recourse? 

The ease with which you can register complaints and receive resolution is an important investment feature to consider You are entitled to information about your investment and its performance. The extent of information that you get and its frequency help you monitor performance. Read the small print to understand the features of the investment before you decide to include it in your portfolio.

Not all features are equally important to all investors. Select the investment that best reflects your needs.




SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now