Skip to main content

Keeping goals as the focal point of any investment

 

A RECENT development in the mutual fund space has been the concentration by mutual funds on providing solutions for investors. Here, the fund tries to ensure that there is an achievement of the goals of individual or the family by providing various funds that can be used for this purpose. This is a different approach that is being adopted by the mutual funds for the purpose of connecting with the investor.

While considering this situation there are a few things that the investor needs to know to evaluate the options in front of them.


Financial planning approach: One of the first points to understand for the investor is that the goal-oriented approach is exactly what is undertaken when the process of financial planning is adopted. Under the financial planning approach the starting point is to consider the financial position of the investor and then setting the different goals.

The goals have to be achieved over a period of time and there are various ways and routes in which planning is undertaken. The important thing for investors is that they concentrate on the goals and formulate a plan that will help in attaining these goals over a period of time.

Asset classes: Just as an individual will look towards different asset classes like equity, debt and gold for achieving their goals, these mutual fund offerings also follow the same approach. Usually the goals would require the usage of multiple asset classes and hence they will form the possible investment route for various funds that are launched under this.

The main thing to consider here is the allocation that will be given to different asset classes.

Different risk:

The other feature of the goal-oriented approach of mutual funds that are launched is that they will provide various investment options for the investor.

These options will meet the differing risk criteria that are faced by the investor and hence they can adopt the route that matches with their risk taking needs.

In some cases the choice can be simple like conservative, moderate and aggressive while some funds might offer an additional choice in the form of ultra conservative or ultra aggressive. The presence of a higher choice is not necessarily a good thing because this can make the decision making process difficult.


Own approach:

The main question that the investor should ask is whether they should adopt one of these funds for the purpose of their requirements or should they follow their own approach. If the investor is already using the financial planning route where they are setting their own goals and then making use of various investment alternatives to achieve these goals then they need not go in for specific funds that try and achieve the same objective.

This is important because of the fact that it would lead to a situation where there is a duplication of the effort that is taking place. If an approach is suited to requirement and this is working fine then they should stick to it and ensure that they continue with it.
Even when they have adopted financial planning on their own it is likely that they will be using different mutual funds as part of the process.

 

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

Mutual Fund Review: L&T MIP

        This fund won't deliver chart-topping returns. However, over the long run it will not disappoint and end up beating the category average The fund has seen numerous changes at the helm. When Katare took over in October 2007, he made dramatic alterations to the portfolio. On the equity side, he increased the number of stocks to 11 (November) from 2 (September). On the debt side, he added Certificates of Deposit (CDs), while earlier Treasury Bills (T-Bills) and cash accounted for 88 per cent (September 2007) of the portfolio. In November 2007 he exited T-Bills for good. The results impressed. In the last quarter of 2007, it delivered 12.83 per cent (category average: 6.12%). In 2008, the first quarter performance was nothing short of impressive, a return of 9.93 per cent (category average: -3.97%). While other players increased their portfolio maturity, Katare maintained a low maturity profile. While the average maturity of the category was 2.81 years that quarter, th...

PF e-Passbook

  Provident Fund e-Passbook   The Employees Provident Fund Organisation now runs an e-passbook service that enables members to log in and access their provident fund accounts . This facility enables tracking of the money and ensuring that the employer's contribution has been deposited into the account. This facility is available to those whose accounts are with the central provident fund commissioner for maintenance and can be availed at members.epfoservices.in . Registration A member can register at the portal easily by using PAN , Aadhar or passport number as the log in and the mobile numbers as the PIN . This combination enables easy retrieval of information. Accounts After logging in, the member has to choose the state where the employer is located, and enter the code number of the employer, account number and name. These details can be obtained from any existing PF document . PIN To download the passbook, the member will request...

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...

Reconfigure investments to reap benefits in DTC

    Investing for tax benefits under the new Direct Taxes Code ( DTC ) will be different in several ways from what taxpayers are familiar with right now. This will require some reconfiguration in the nature of investments for the investor and they need to be ready to tackle the changes that will come about once the new DTC is implemented from financial year 2012-13.One area of interest for most taxpayers is the manner in which they can extract the maximum tax benefit. Here is a look at the situation and also how it changes from the existing position. Basic deduction: At present, there is a deduction of Rs 1 lakh that is available for an individual when they make investments under specified areas such as provident fund, public provident fund, national savings certificates, equity linked savings scheme and insurance premium, among others. This benefit is available under Section 80C of the Income Tax Act. This has been replaced by a new Section 68 under the DTC where there is a deduct...
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