Invest In Tax Saving Mutual Funds Online
Financial products can be offered to investors in two distinct frameworks. The first is 'disclosure of information', wherein the assumption is that investors will be able choose a product based on the information provided to them. The second is 'suitability' framework, in which the product's key attributes are framed in terms of their suitability to investors to enable them to choose correctly. Regulators across the world, keen to correct misselling of financial products and advice, recognise that full disclosure is necessary, but not sufficient, to ensure investor protection. The code of conduct created for investment advisers places on them the onus of ensuring that the product being advised is suitable.
The adviser's primary job is to find out if a product is suitable to the investor. However, he operates in the realm of regulation and producer incentives. Mis-selling happens when unsuitable products are sold to gullible investors to earn a commission. If a 15-year Ulip is sold as a 5-year product with gains to an NRI investor looking for investment rather than insurance, the suitability criterion is not met. It is easy to assume that investors will read the offer documents. They don't.
There are two ways to ensure that investors are not sold products that do not suit their needs or risk preferences. The first is an investor-side framework, which asks for information about the investor to assess what is good for them. The second is the product-side framework, which provides reliable information to enable assessing the type of investor for whom the product may be suitable. It is the responsibility of the regulator to ensure that both these are in place.
The investor-side approach requires KYC. Beyond the paper verification of address and identity, the adviser should know the financial situation of the investor. Does he have a specific purpose in mind while investing? How sensitive is the investor to loss of capital? Does he depend on the income generated by the investment? These are the questions that need clear answers before an adviser can determine the suitable product. The adviser should also know how to help the investor manage his personal finances and make suitable choices in financial decisions.
A young investor may want to invest in equity, lured by high returns, but he may not have built adequate wealth to suffer a loss. A salaried investor may have too many loans and he should repay them before investing. A retired investor may worry about inadequate income without considering options to generate income from unused assets like property. It is the adviser's job to know the investor's needs and preferences and offer products in that context. Unless the regulators insist that no financial product can be sold without assessing the suitability, mis-selling may not end. The Sebi (Investment Adviser) Regulation does not plug this gap.
The product-side framework requires that information disclosed to investors enables an actual assessment of its features for suitability. The failures here are stark because producers comply in word with information disclosures and regulatory disclaimers and focus on selling the product. They use incentives and commissions, and marketing push to gather assets. Producers offer a wide range so that investors can be found for each variation, differentiation or segmentation.
The primary responsibility to protect the investor is that of the regulator. The disclosure of information alone will not serve the purpose of suitability. Increasing the number of disclaimers will also not do. Key questions pertaining to suitability should be answered by producers in simple language that can be understood by investors. Product features that distort this understanding should be disallowed. Ulips should be required to state that they are 15-year products with costs that make short-term investing unprofitable. Instead of saying that mutual fund investments are subject to market risk, they should say that the value the investors will realise on selling units depends on the market price at that time. We need product labels that enable
choice based on suitability, like the green dot on vegetarian food packets.
The problem is that sales targets define product features and marketing literature. Regulators let poor products pass without gatekeeping. The RGESS, which has been designed to fund the disinvestment program of the government, is an example. A 3-year investment in equity is risky. Investing in PSU stocks is a risk that not all investors can take. A diversified RGESS fund is more costly than an index fund. Closed-end short term funds in equity are risky. The product fails most criteria for suitability. Still, it's defined by the government, encouraged by regulators, incentivised by producers, and mis-sold by advisers in the tax-saving season.
Suitability is a responsibility. Even a bus journey needs defining where one goes, how many tickets one needs, etc. What stops us from naming, describing and labelling financial products with the same responsibility?
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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online
Tax Saving Mutual Funds Online
These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs
Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
- ICICI Prudential Tax PlanInvest Online
- HDFC TaxSaverInvest Online
- DSP BlackRock Tax Saver FundInvest Online
- Reliance Tax Saver (ELSS) FundInvest Online
- Birla Sun Life Tax Relief '96 Invest Online
- IDFC Tax Advantage (ELSS) FundInvest Online
- SBI Magnum Tax Gain Scheme 1993Invest Online
- Sundaram Tax SaverInvest Online
- Edelweiss ELSS Invest Online
Best Performing Mutual Funds
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- Reliance Banking Fund
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- DSP BlackRock Tax Saver Fund
- Reliance Tax Saver (ELSS) Fund
- Gold Mutual Funds Invest Online
- Relaince Gold Savings Fund
- ICICI Prudential Regular Gold Savings Fund
- HDFC Gold Fund
