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They will help reduce investment risk and ensure consistent review of your portfolio   Anita and Amit were a happily married couple. Both of them were in the software industry and based on their current income levels, they borrowed heavily to buy a lavish flat in Mumbai. But within a few years, Amit had to take a pay cut due to the downturn in Information Technology sector. The couple had a tough time repaying their loan. They had to drastically cut down their expenses, and also stop paying mutual fund payments and insurance premiums. Since they had been paying premiums for less than three years, they lost a lot of money they had paid towards premiums until then. By stopping their mutual fund Systematic Investment Plans they lost the opportunity to build up savings. Although Anita and Amit continued to service their home loan, they were left with zero savings. Although, they managed to save their home from being taken over by the bank, they would have been able to continue with their loan as well as their savings if they had consulted a financial advisor. For instance, an advisor would have told them that they can negotiate with their bank to restructure their home loan by reducing the monthly outgo and increasing the tenure. Or they could have shifted their loan to a bank where the interest rates are lower. This would have also helped reduce the monthly EMI. Since home loan pre- payment does not attract any penalty now, they would not have lost any money. Despite higher incomes, today, people also borrow more. A household with multiple loans ( such as home, car, consumer durable, education) is very common. But despite the high income levels and borrowings, most of the households do not have a proper financial planning process. This can be for two reasons – lack of time to do so or lack of awareness. Also, people do not realise that financial planning is not a one time process, but a continuous one that requires timely review. If you do not have a financial plan in place, there can be a major impact on your wealth creation process. So for people who do not have the time or do not understand financial nuances, seeking help of a financial advisor makes a lot of sense. Investment products are becoming more complex and to understand risk and return trade off, needs expertise. A financial advisor can provide the same. While choosing a financial advisor need to look at the services that he or she offers and the fees charged. Ideally, a financial advisor should offer the following services: Expertise in determining the best asset allocation Professional help to sort out investment hassles and estate planning Professional advice to help maximise returns from your investments Advise on retirement planning Before making specific recommendations, agood advisor will ask you questions to gain a whole picture of your past experience, lifestyle and goals, as well as your other investments and current financial situation. You can consult an advisor even if you are just starting a career. For instance, Ajay a bachelor always felt that there was no need to save and used to spend recklessly. After all he had just started his career and had no dependents. Although his father was retired, the money from his savings took care of the household expenses. But suddenly Ajays father fell ill and the family incurred huge medical expenses. His father did not have health insurance and the treatment ate up a huge chunk of his savings. It was then that Ajay realised the importance of saving and planning fore retirement, especially for eventualities like illnesses in old age. On basis of the advise of his friend, he met Jagan a neighbourhood financial planner who made him understand the nuances of financial savings. Due to the savings, Ajay was able to meet his fathers medical expenses and also started building his own corpus for future. How does a financial advisor help : Develops realistic expectations by providing proper perspective on the risks and rewards of each investment Helps you match your financials goals with right investment avenues Monitors your portfolio and provides information on the returns being generated Regularly reviews the portfolio to ensure optimal results for you Gives opinion on investments Provides professional advice Mitigates your investment risk These are some normal services that investors should expect from their financial advisors. Other services could include advice on retirement plan, developing tax- efficient strategies, estate planning, home loan advice, etc. Services and charges : The fees charged by the financial advisor depends on the type of service availed. Investors should opt for financial advisors with good credentials. Don't hesitate to ask what are the advisors qualifications. Preferably, look for an advisor who is certified by the Financial Planning Standards Board India. Make sure he recommend products only based on your needs. If your financial goals change, inform your advisor and take his help to change your savings accordingly. There is no need to stick to the same plan that has been made when you started taking advice. Have regular meetings with your advisor and review your investment portfolio in his presence on a regular basis. One should be careful while choosing a financial advisor. Don't forget to check his track record and avoid those who assure high and unrealistic returns without explaining the product. Also, beware of fly by night operators Financial advisors have an important role to play in terms of financial planning and implementation. There are plenty of financial advisors available. However, before selection of financial advisor, please check the credentials in order to ensure safety of your capital.

Good time to invest in equity

 

RETAIL investors have largely taken a cautious approach ever since the 200708 global financial crisis, notwithstanding the recovery of FY10 and FY11.

Their behaviour reminds you of the famous adage ­ "once bitten, twice shy".

Even last year, when the domestic stock market was pretty buoyant and foreign institutional investors (FIIs) pumped in a lot of money ($24 billion), retail investors used the rebound to cut their equity exposure by redeeming mutual funds (MFs). They continue to shun equities this year with the NSE Nifty being more or less flat. Equity MFs have seen outflows worth Rs 6,000 crore year-to-date (YTD).

Given the challenging macro-economic backdrop, what strategy should retail investors adopt? We believe retail investors, who have been patiently waiting for some decent returns from equities for the past five years, should not lose heart. With expectations of subdued returns from gold and real estate, this is the right time to look at equities for long-term growth of one's investment portfolio.

Under-ownership among retail investors, coupled with expectations of a gradual economic recovery and undemanding valuations (12.0x FY15 earnings) make equity a fairly attractive investment option.

Our view on the domestic markets is positive over the next couple of years, as India's economic growth will start to look up slowly but surely on the back of better agriculture sector growth and increased government spending in the run up to general elections. Barring food prices, inflation has been brought under control and is not expected to rise anytime soon. Fiscal consolidation remains well on track. In fact, the FY13 fiscal deficit came in at 4.90 per cent of GDP opposed to the budget estimate of 5.20 per cent. The finance minister has expressed confidence in meeting the FY14 fiscal deficit target of 4.80 per cent of GDP .

Good southwest monsoon is likely to boost agriculture output, while large current account deficit (CAD) is also expected to moderate in FY14 on lower gold imports. The upcoming Lok Sabha polls will lead to some pick-up in fixed investments as tends to happen in a pre-election year.

The domestic stock market's valuation remains supportive at 12.0x FY15 earnings, which is below the long-term average of 15.0x to 16.0x one-year forward earnings. Retail investors can thus expect good returns from domestic equities over the next two years and recommend increasing allocation towards the same.

Retail investors can take exposure to equities via MFs. A variety of equity MF schemes are available in the market. One can opt for systematic investment plans (SIP) in one or more MF schemes -large-cap funds, large-cap cum mid-cap funds and balanced funds. If one is not shy of a direct equity exposure then one can buy large-caps and quality midcaps. Stagger your investments rather than putting a lump sum and stick to a disciplined approach by regularly reviewing your strategy.

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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 )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief '96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund