The benefits of investing in mutual funds

We think about it all the time, we hear about it all the time, yet we fail to react to it all the time. There are tonnes of benefits that come with investing in monetary instruments on a regular basis. It is the best and simplest way to get a strong portfolio done and to make the best savings on the long run. If you have thought about starting your portfolio, the timing could not have been better. There are tonnes of products that are available and each of them would give you huge benefits and returns.

The simplest and best instrument to invest in is mutual funds. It would give you good returns, help you ease your profit margins and also be able to help you reduce your tax liabilities. There are many reasons why you should invest in the mutual fund market as compared to anything else available today. The first and obvious reason that comes about today is the amount of liability you have or the risk that such an investment carries. There is no doubt that you can get healthier profits from any investment in the stock market, but the level of risk is extremely high too. You would want to reduce the risk you take by trying to divide your investment across different verticals.

Instead of putting all your money in the stock market, look at investing across different mutual fund India products. This would be so much better than putting your money in one specific company. With this, you would also be able to grow out different investment patterns and profit rates. It is bound to give you a huge boost in both the short and long span of time. When you are looking to invest in these funds, study the bunch of companies that have been put together and realise the industry growth that is expected. It would give you a clear idea on how well you can do and how the growth just might be.

The tax benefits are another reason that most people want to buy these funds. Because you are able to reduce the amount of tax you are liable for thanks to these investments, they are hot property. You would be in an instant win situation right from the word go. The benefits are surely present when you are investing in mutual funds, apart from being a great source of money, it would be a great learning curve too.

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Not investing online? You’re losing out massive benefits!

If you have not started investing and saving for a rainy day, it must be the first thing you figure out to do. Of course, there is the huge advantage of saving for a future date and for higher responsibilities like owning a home or a car – but is it enough to just save money year on year? Would it beat inflation in the first place by just keeping your money in the bank? Not really. You have to think about smart investment points that would grow your money instead of keeping your money growing at the bare minimum percentages.

Investing in an online mutual fund would be the smartest and best way to make your money grow for you quickly. You can now invest in these funds at any time from any place. You have access to your investment online and with a secure payment process; the entire plan is almost paperless. There are quite a few funds you can look at buying provided they are from branded firms and you can decide which plan would suit your need. Look and invest into plans that give out timely dividends as well as strong investment values. The net asset value of the fund is the most important metric when you are investing in a fund. It would give you a clear idea on the growth of the stock and how well it has grown over the time you have invested.

Many of us do not understand it, but the benefits are more towards the downside of the market than the upward trend. When you enter an online mutual fund, it may not be the lowest point of the price cycle or the net asset value that is running then, but since you are investing in this continuously over a period of time, you would buy it during the lower points to over a year or even more. So, when the price of the mutual fund comes back to its original value, it has already led you into a sizeable profit. It is this reason that most mutual fund investments are on the long run and not on the shorter period.

Not only would an investment like this protect you in a situation of financial instability, but also gives you profit on the long run with minimum monitoring of the stock market. If you have been thinking of investing in mutual funds, the time could not be better.

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How pension funds could plan your retirement.

Planning for your future the right way is one of the toughest things to do. There are a host of activities you need to plan out when you are working through your career – none more important than how you will spend your life post retirement. The burning question that comes to mind for us all is the way we are going to secure our lives with the right investment plans. One of the best ways to ensure you have a perfect retirement is to invest in a pension fund.

The entire objective of this fund is to provide periodical income to you after you complete 58 years of age. In most cases, these funds are invested in fixed securities and also debentures you cannot convert or bonds that are similar in nature. All the investments in this kind of program are in the low to medium risk options.

Such pension funds are mostly hybrid debt oriented and are invested with the idea to build on to a safe investment and regular income source after your retirement. The best part of such funds is that it secures your life post your working career and safe guards your future. There is no upper limit to the investment you can make and hence you are allowed to increase the investment based on your income plan during retirement. There biggest challenge with such investments in to know the amount you would have to plan to retire with. The key points you have to think about are the kind of expenses you would have when you retire. Your daily expenses, the rate of inflation you would have to deal with and how much money you would have to put aside for an emergency. A pension fund is the single most reliable way for you to ensure a safe and secure future.

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What are the Different Types of Mutual Funds?

Investing in mutual funds is without doubt the best idea if you have been thinking about your future and financial security. The biggest benefit is that you are able to plan it out perfectly based on your financial capabilities, plus you are able to control your investments completely when you have calculated your returns. Apart from understanding the benefits of mutual funds, you have to also understand the different kinds of funds that are present in the market today.

Open ended

One of the biggest kinds of mutual funds is open-ended which would allow you to buy or sell units of the fund at any point of time. In other words, there is no fixed maturity date on the fund. In these kinds of funds, there are a few kinds too

1.       Debt/Income funds: In this kind of fund, most of the invested money is put into debentures or other debt investment plans. This could include government security instruments too. Now, even though the capital appreciation is lower as compared to others, it is perfect for investors who want to a constant income coming through.

2.       Liquid funds:  These kinds of investments are to make the excess funds into short term investments so that you decide a better long term investment afterwards. These kinds of investments are perfect when you have saved an amount and planning a short term investment.

3.       Growth funds: These are very popular in retail investments and it could be a high risk element in both the short or long term. These kinds of schemes are a perfect example of the capital appreciation you can receive in the long run. This is probably the reason that most people look at investing in growth funds early so that the risk involved is lesser and the returns on the long run are very good.

4.       Tax saving growth funds: This probably the most recommended mutual funds, as they provide big tax benefits to its investors. Your money is invested in equities that offer long term growth opportunities called equity linked saving schemes or ELSS. These kinds of funds normally come with a 3 year lock in period.

Balanced funds

These kinds of funds are good for investors that are looking to enjoy good growth and income at the same time. These funds are invested in different kinds of securities – mostly equities and fixed income. Of course, the proportion of investment is pre-decided and is revealed in the offer documents. These are great ways to get good returns and is cut out for the investor that knows his kind of investment returns and plans. It does bring out a great deal of profits if you plan it right. This makes it one of the most popular types of mutual funds.

Close ended funds

These funds do not allow you to buy or sell units at any point of time. These kinds of funds can be invested at only during the launch of the fund. These are rolled out during the new fund offer period and can be purchased only then. These funds do come with the goal to protect the principal amount and deliver good returns at the same time.

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Ways to Invest in Mutual Funds

If you have been working for a few years in India, chances are quite high that you have heard of investing in mutual funds many times. In that past, most of these kinds of investments were driven through agents. It’s a lot different now as you would get to know every bit of information about these investments online and that surely makes your decision easier.  If you have been thinking about making an investment, here are a few simple methods:

1.       Invest via an AMC: You can invest into a mutual fund by approaching the mutual fund companies directly. Each of the companies provide online facilities to invest from the second investment onwards and thus are able to complete your transaction easily. Sounds good? Well almost. In this process, you have to fill the first form at the office of the AMC, so apart from the first investment; the rest can be done on the internet. The tough end of this deal is if you want to participate in 3-4 different funds, that means you have go to each of the offices and have the first form filled and submitted. So, this investment makes sense only when you are going to invest a big amount of money and over a long period of time too. Plus, you do not really need a demat account for this.

2.       Use your Demat account: The most common and recommended methods would be to use your demat account. You can look through all the different mutual funds and easily make your investments. All it would take is a few clicks on your mouse, to choose to invest in the fund of your choice. The only catch would be the charges you have to pay the demat medium you use. The biggest advantage though is that you can have access to all your transactions and details from one place alone. How easy is that?

3.       Use the fund directly: Certain funds allow you to purchase mutual funds online, that means not having to go through a broker or source at all. You would have all the possible information you need about the mutual fund along with the performance of the fund over the years. It is a very easy solution no doubt and is a sure option on the long term. You would have lesser commissions to pay and thus is a great idea if you are planning to invest on the long term. 

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Calculating Your Mutual Fund Returns is as Simple as 1, 2 & 3!

Understanding how mutual funds work is very important if you are planning to invest in them. Unlike the stock market which fluctuates through the day, a pricing for a fund is decided only one a day and that is typically done at the end of business hours. Calculating your return on investment is very important and is quite simple to do too. The ROI should be calculated for a specific time period and would be the total increase in capital divided by the total investment made. This percentage would give you the best idea of how well your investment is doing. 

There are different methods of calculating the profit that you have made on your investment also. Different formats are taken by different investors but the simplest two ways are to break it down by an absolute return method or by a total return in fund. 

In the absolute return method, you most important dates are the date of investing and the date of exiting the fund. You can calculate the absolute return by dividing the total chance in the NAV during period of investment and the NAV that was present at the start of your investment. With this you are easily able to figure out the return and you can use this on any kind of mutual fund. So, this is how the absolute return is calculated using - (NAV(end) - NAV(start))/NAV(start).

The other way to use a mutual fund calculator is by calculating the total return that is obtained from the fund. In this method, you include the dividends that you have received too. So add the dividends in the holding period and then remove the total change in the NAV. Finally divide this with the initial NAV when you purchased the fund. This can be calculated with - {Dividends +[NAV(end) - NAV(start)]}/NAV(start).

With these calculators, you would be able to plan your investment and know how close to your target you’ve reached.

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Why You Should Invest in ULIP: Unit Linked Insurance Plan

Investment plans should always have a firm plan and that is precisely what you get when you invest in Unit Linked Insurance Plans – it is a combination of insurance and investment. While many have reasons to think of the reasons to invest here, the honest idea is quite simple. Because it has elements of insurance as an aspect of it, you are in it for the long term. Just like you would with an insurance policy for your child or an investment for your child's wedding perhaps. It is long term and has plenty of benefits. What are they? Let's find out.

1.       You are protected: With a volatile market and not much to guarantee on economic conditions, there is a severe need to be sure of the goal you have in mind. Irrespective of the policyholder, your investment is safe. The final target which you had with the investment is cleared out in the event of death or at the period of maturity. You are safe from fluctuations and that keeps you protected.

2.       Tax exemptions: We are all struggling to reach our exemption limits with respect to tax. If your total investment is to a level of Rs 1 Lakh, this would be deductible and also the amount you get on maturity is tax free. Do note that this is applicable if the total premium paid is not over 20% of the insured amount.

3.       Flexibility: Not all investments give you this opportunity and with ULIP, you have just that. You can switch without any thought and that means a seamless and tax friendly method. You can do this at any time and change your portfolio in many ways.

4.       Long term thinking: Anyone who is planning to invest here should be thinking of exiting only after 12-14 years. That is a long time and the dividends come out only in such periods. When you enter this investment, you are protecting your long term goals and that gives you so much more than any short term investment.

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How to Calculate Mutual Fund Performance and Returns?

As we progress through our career and financial goals, there would come a time when you are required to take informed decisions on financial planning. Each time, you would have to take a call on the evaluation of the investment and how well you are planning it out. Yes, there has to be a diversified approach to your investment, but having a constant watch over the growth is a must.

Mutual funds are a common choice by many to plan out their investment for a long period. Equity based funds almost always beats other investment forms in the market today. To evaluate the performance of your fund, it is important to keep a benchmark. This benchmark will and must always give you an idea of exiting or progressing ahead.   

So, how would you go about this? Here are a few simple methods –

1.       Absolute return: The two most important dates with respect to an investment are – the beginning date and the end of the holding. This is calculated by the dividing the absolute change in the NAV from the investing period and the NAV during the start of the investment. The simplest advantage is that we can use this calculation on any kind of fund to track out the return. (NAV(end) - NAV(start))/NAV(start) would give you the percentage increase.

2.        Total return in fund: Another method to calculate the total return that has come from the fund is to include the dividends that are in place too. This can be calculated by adding the dividends which are spread across the holding period and with the total change to the NAV, divided by the NAV at the initial day. {Dividends +[NAV(end) - NAV(start)]}/NAV(start)

With these calculations, the mutual fund performance can be tracked and you would be able to know when the fund is performing well as per your ‘benchmark’.

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Know the NAV of your Mutual Funds Before you Invest

All of us know that investing in a mutual fund today is a must. There are great investment benefits and you would get certain tax benefits too. One of the key points you must follow when you are investing in them the ‘net asset value’. This number represents the per share market value of the fund you have chosen. In simpler words, it is the price with which investors are bidding to fund shares from the company and also to sell them too.

So, how do you derive this value for a mutual fund? It is quite simple – you have to add the complete total of cash and securities in the fund portfolio (the assets) and remove the liabilities that are present. For example, let’s say a fund has the assets of 3 million and the liabilities of 2 million; then the NAV of the fund would be 1 million.

The computation of mutual fund NAV is calculated at the end of every day and is of great importance to investors. You can also figure out the real time NAV performance based on the traded fund series. In other words, you can easily find out the price per unit of the fund, by dividing the NAV by the number of outstanding units. This would be different from that of a common stock that is in the stock market. While this is based on supply and demand forces, that of the stock market is purely on market sentiment.

Using the NAV of a fund, you can easily understand the present condition of the fund. You can also chart out a series to figure out how the demand for the fund would be. You would not be able gauge the performance of the fund though as it would be independent of the NAV.

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Keeping a Transaction Simple is Easy Now – Using IDFC!

Giving your customer the chance to transact seamlessly should be one of the top most priorities of every company. The customer should have total control on how he is buying and should always have every access to transact through it seamlessly. This is absolutely critical when you are buying mutual funds too – you need to have complete clarity and be able to know how you can transact with it at all times.

One of the simplest advantages with IDFC mutual funds is just that. Here are the many ways you can transact once you have made an investment.

1. Online transactions: With the internet boom, one of the biggest advantages that have come by has been the way we behave online. We want all our information on the internet and that is exactly what you get with IDFC mutual fund investment once you verify PAN number, mobile, bank account number and email address.

2. Mobile: We are all addicted to our mobile phones and it gives us perfect reason to be able to transact through a mobile friendly website. Track and view your statements within a matter of a few taps on your phone. You can also get all information you need via SMS too, it is that simple. These transactions are done with a pre-registration to ensure security at all times.

3. Phone: The good old phone is a great way to have your transactions verified too. Individual investors can track their investments too this way.

The key to having complete control on your investment is by ensuring you are aware of all the transactional insights and that is possible when you use a reliable mutual fund like IDFC. Investing your money into mutual funds is the best investment to make in every stage of your career.

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The Simple Benefits of Investing in Mutual Funds in India

Aren’t we all bogged down about the different investment options that are available for us? One of the first things that come to our mind when we are thinking about making investments is mutual funds. There are many benefits and most of them are way better than investing in any other form.  Well, here are simple financial gains you can get out of investing in them –

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1.       Beat Inflation: Without having to think too much, you can beat inflation and hence get good returns. Instead of having to put your money into the standard saving accounts in your bank, you can make your money grow via mutual funds. While you invest in the savings account of your bank, you get just about 6% interest – that does not beat inflation which is close to 10% on an average. So, mutual funds would always be a smarter investment as compared to a basic bank investment.

2.       The Convenience Factor: As compared to investing in the stock market or even real estate, investing in mutual funds is a lot easier. There is a lot of documentation when you are going to invest in real estate or the stock market – on the other hand, investing in mutual funds in India is really easy. Not too much documentation or details to be shared.

3.       Tax Saving Benefits: the biggest advantage you get by investing in mutual funds is that you get tax exemptions from the government too. That means you are able to save money apart from the growth that comes your way. Completing the limit of your tax exemption is a must of a goal and you can do that easily by investing smartly.

4.       Cost Factor: With all the investment points that are present in the market today, you need to be very choosy about where you put your money. It does require a lot of research, but especially if you are putting larger sums of money. This is the case with real estate especially – the cost of investment is really high. When it comes to mutual funds though, your costs are lower and thus, it is affordable.

5.       It’s a Mixed Basket: It is never advisable to put all your money into a single point of investment. You need to keep your investments as diversified as possible and thus you have a wide array of assets. There are plenty of short, medium and long term options that are virtually tailor made for you.

6.       Accessible Investments: Unlike how you get stuck with many investments – stock market, real estate or even gold, mutual funds can be liquidated any time. There are many schemes that can be used based on the net asset value at any time.

7.       Crystal Clear: One of the best advantages you get with mutual funds is that you always aware of the investment value and growth. Plus, each mutual fund is regulated by SEBI and that guarantees that your money is kept in the right place.

There is no doubt that there are plenty of benefits when you make smart investments. The entire idea is to plan the money you have saved towards mutual funds. Not only would you be saving money, you would be making money.

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Why your credit card could be your biggest saviour!

Life does provide us with quite a few complications and a few of them can be sorted out with the help of money. We have constant challenges in life – a medical emergency, or an unexpected expense and most of the time, we are left wondering how we can make ends meet. Well, if you have been in a situation like this in the past and have been left wondering how you can get the better of it – you need a credit card.

With the power of a credit card, you would be able to get a health credit period of at least 40 days. This leaves you with the strength of spending today and paying tomorrow. It would solve the immediate need for a cash payment and give you the benefit of paying at an extended date.

The cycle of credit is something that you need to look at very carefully when you are choosing a credit card and also the credit payment facilities – most good banks like Indus Ind bank allows you to clear the payment in multiple methods like online transfers and even from ATMs. With a credit cards facility, you would be able to manage your savings in a much better fashion.


You also stand to have joining bonuses and cash back offers among the many offers when you sign up for a credit card. Get discounts at restaurants, cash back when you book movies or flights and even have fuel surcharge waived off. No two ways about it, a credit card can give you some amazing benefits.

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Are you aware of the yield curve in your mutual fund

If you have invested in mutual funds, it is vital to know what the yield curve is and which is applicable for you. The curve is a combination of charts that gives you yield of bonds that are of the same quality but there would be different maturities that are linked up. It would give you the interest rates of the future and it is compared with a simple time vs yields. The curve would give you the rate with which the market are to transact the capital for all time terms. There are different kinds of yield curves.

- Normal yield curve: This condition is matched when there are long term interest rates instead of short terms. The curve in this case would be sloping upwards.

- Flat yield curve: When there is no change in the money market due to interest rates, a flat yield is achieved.

- Steep yield curve: This is quite common during the start of an economic expansion or when a period of recession is complete. The slope of the curve is the difference between the short and the long term yield. This has inputs from inflation and high long term interest rates.

- Inverted yield curve: There would be a downward sloping yield curve when the short term interest rates are higher than the long term interest rates. This is seen when there is high volatility in the market.

It is very important to match your mutual funds yield to the investment you have made and what you can expect from it. 

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How do you redeem a mutual fund scheme & what is a transaction slip?

Most of us invest in mutual funds today and the odd question pertaining redemption of these mutual funds does crop up frequently. The procedure to claim these mutual funds is always not clear and does need a bit of research. If you have purchased the fund from an offline source or an AMC, you would have to go the company office and get the redemption form filled out. This would be available at branches of the insurance company and has to be done offline only.

It is possible to get multiple mutual fund redemptions at once too, so a good idea would be to save multiple trips and make it at one go. It is convenient and easy to fill. Here are the list of information points you need

• -          Name
• -          Folio number (this is to extremely important to get right)
• -          Volume of units
• -          Unites to be redeemed

Once this is submitted to the executive at the office, it would be sent for processing. You would have to submit the bank details for transfer of funds too. You can use the same account that was used at the time of buying for a quicker transaction. The transfer of mutual fund dividend is quite quick to say the least; you can get the amount transferred into your bank within 2-3 working days.

The redemption transaction slip is used to make a redemption claim and is available online too; so make a quick print and fill out your details before you go to claim your dividends.

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What is the difference between Debt fund & hybrid fund?

There are different types of mutual funds that exist in the market today and each of them have different priorities or growth plans and two of the different kinds of funds are debt funds and hybrid funds.

Debt fund

A debt fund is a mutual find that is invested mostly in the safer market like fixed income securities. Examples of these may be bonds and treasury bills, monthly income plans, short term plans, liquid funds and even fixed maturity plans. These are varied across short term, medium term and even long term investment plans and can be scalable across your requirements. These are in most cases planned by individuals who do not want to invest in risky or volatile market. This is a slow but steady return as compared to an investment in the stock market for example.

Hybrid fund

It is a mutual fund investment that is determined by the portfolio that is created with a mixture of stocks. In most cases, this also includes different kinds of bonds too that can varied in a fixed proportion or floating structure. There are mainly domestic or international hybrid categories. These funds respond to market conditions and are passively managed with a fixed life cycle to get into a more aggressive structure.

The biggest difference in both of these equity funds is the location of investment in both cases. A hybrid fund is more balanced as you are investing in both stocks as well as bonds where as in a debt fund, you are restricting your investments to only a fixed income security. It is widely different when it comes to goals and outcomes even though you can see that it is for a different target category when it comes to buyers of both. Based on your requirement, you should settle on either one.

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Planning of making your first investment?

One of the first excitements after you start earning is to make your first investment. You are curious as to the ways you can make the investment and if you have to just start small and choose amongst the many options to take the plunge. Just like any other first time investor, you are bound to come across many ideas from friends, colleagues and well wishers and probably, one of them would be mutual fund investments.

What is mutual fund?

A mutual fund is an investment programme that is promoted or created by shareholders amongst diversified holdings and trading. This is professionally managed and you would have experts looking after your investment, giving you a massive benefit. The mutual fund definition itself means creating a portfolio among different companies so as to get a balanced return.

How to make an investment?

One of the first tips for investment in a mutual fund is to understand the kind of companies that are going to be a part of the portfolio and the period of investment. You can gauge an approximate of the growth thinking about the industry as well as the exit time horizon. You would know how long you would be participating in the mutual fund as a whole too. It is key to understand what the estimates are from the mutual fund investments and how you can get the best results from it.

The main idea would be to keep a close watch on the growth of the fund and since it is one of the first investments to make, you can choose similar funds in the future. It is important to notice that these predictions being made are by experts and that they would consider the past and present market conditions to determine the future growth of the mutual fund.

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How to invest in mutual funds

Rarely does one make a profit out of an investment without research. Before you look at investing your money, you must look at the market conditions and if the investment matches your requirement. There are several factors that contribute to the success of a fund investment and timing and fund selection are the most important of them. Yes, there are different requirement for so different investors, so let’s take a look at what you should know before you invest in mutual funds. 

What is mutual fund in the first place? It is a diversified investment in a set of companies or equities that will give you a return over a period of time, based on the performance of the overall set of companies. You can choose sector specific mutual funds which can be targeted to pharmaceuticals, energy, petro companies and so on. You can also invest based on the market cap of the company. Large cap, medium cap and small cap are the three major kinds. It is based on your take to a volatile investment that you can choose which of the three to choose. These are the mutual fund basics that you have to know before you go ahead making an investment. These are tax saving funds too and would give you a healthy benefit in income tax. To understand which kind of mutual fund definition of market cap would suit you best – speak to your financial advisor or an industry expert. The performance of your investment depends on the market condition and hence you require expert guidance.

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