Why you should invest in MFs

After demonetisation in November 2016, many investors are using mutual funds as a preferred vehicle to route their savings into the financial markets. ET tells you why mutual funds are good investment options and what their advantages are. 

Is there a mutual fund product that will match my requirements? 

Mutual funds have various product categories -from liquid funds, in which investors can invest from as little as a day, to equity mutual funds where one  .. 

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http://economictimes.indiatimes.com/articleshow/58728050.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Are direct plans of mutual funds destroying your wealth?

Everyone loves direct plans of mutual fund schemes these days. In their quest to save commissions paid to mutual fund advisors, many mutual fund investors, especially novices to mutual funds, have been lapping up direct plans in a big way. However, their mutual fund portfolios along with their approach to investing, present a scary picture. Many of them are just adding one top-star scheme after the other to the portfolio, without bothering to educate themselves about investing in mutual funds. W .. 

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http://economictimes.indiatimes.com/articleshow/59139854.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

CHILD FINANCIAL FUTURE PLAN

Every parent aspires to offer a secure and quality life to his child. But when it comes to finances, many miss out on making the right investment choices at the right time. Here we listed the best investments that can secure the child’s future and help meet all the financial needs.

1. Systematic Investment Planning (SIP): The SIP is the best option for 2 main reasons i.e. the longer time-frame (10 to 15 years) and the simple mode of investment. A monthly investment of INR 5,000 in mutual funds for 18 years can fetch approximately 19.5 lakhs, assuming 12% annual returns. Due to the compounding power, returns clearly beat the inflation rate of 6% every year. So, the key lies in the time-frame of the investment rather than the invested amount.

SIPs or mutual fund investments into a well-diversified portfolio for long-term are best to meet the future big money needs like the kid’s higher education or marriage.

2. PPF: The Public Provident Fund (PPF) scheme has become the popular investment option for its impeccable EEE (exempt, exempt, exempt) feature. The first exempt is that the investment is allowed for tax-deduction. No tax is levied on the returns earned through accumulation. And the total amount withdrawn at the end would also be tax-free. Funds are deposited in PPF accounts for a fixed time period to earn interest on savings. As per the Union Budget 2016, the interest rate on PPF for the financial year 2016-2017 is 8.1%.

The PPF scheme’s long tenure is apt for the money needs life child’ marriage or higher education.

3. Sukanya Samriddhi Scheme: This initiative from Government of India is designed to encourage saving for the girl child. It can be opened any time between the birth and the age of 10 years. Minimum INR 1,000 and maximum INR 1.5 lakh annual investments can be made for 14 years. Maturity period for the account would be 21 years from the day of account opening. The attractive interest rate that is however subject to change, is the main feature. It is another EEE product eligible for tax exemptions under Section 80C.

The scheme is ideal for a girl child to meet higher education and marriage needs. Also, the scheme allows partial withdrawals after the child attains 18 years of age.

4. Debt Funds: Debt funds are a type of mutual funds generating returns from the investments into various deposits or bonds. These funds simply earn interest by lending the money deposited by the investors and this interest is the source of returns. The short-term debt funds can deliver up to 7% to 8% annual returns. They are more flexible and allow withdrawal or investments whenever required. If the income from mutual funds is invested for at least 3 years, it can be taxed at a lower rate.

Debt mutual funds are ideal for child’s recurring expenses like school fees, extra activities, clothing, transport and medical expenses, due to the liquidity and safety of the deposited amount.

5. Term Insurance Cover: Secure your child against any unforeseen event by taking a proper term insurance cover. Have a proper risk cover to reduce the financial impact on the lives of your dependents in your absence.

Avail a term insurance that covers all the major expenses of child-like marriage, education as well as livelihood he or she turns adults.

Approach experts to make a thorough financial planning and meet all your money goals of life. Online fiduciary, is established to make personal finance planning services available to every individual. Value your earnings and make right investments.

                                                                                                                                           By Artha Yantra

FINANCIAL PLANNING

People work hard and earn their livelihood. But many do not focus on the regular mistakes they commit, which burn out their pockets. Identify such common mistakes, made by almost everyone, and avoid them to add more value to your hard-earned money. We attempted to list out some of them below.

No Track Of Spending: The most common money mistake people make is not tracking their spending. They live paycheck to paycheck, which means making the payments and spending the remaining amount. It is unhealthy to ignore finances. Put efforts to sit down, track all your spending and prepare a budget. Give no scope for unnecessary spendings and save as much possible towards dedicated goals.

Using Cards More Than Cash: Studies indicate that people who make purchases using credit card   tend to spend 12% more than those who use cash. Moreover, many opt to make minimum monthly payments towards the credit card bills, rather than paying off the total balance. These common money mistakes turn costly, leading to unwanted debts. In contrary, using cash helps avoid impulse spending besides limiting the purchases to the budget.

Overspending On Gifts: Spending on gifts is not always realized due to the emotional bonding with the dear ones. However, it does not make sense to spend heavily just to surprise people. Rather, show your affection through other deeds like helping them with their work, giving your time, assisting them in reaching higher career goals, etc. 

Bad Tax Planning: Tax-planning is one area where many go clueless, losing a huge amount every year. Most people invest to save-tax, but they ignore the fact that the right investments actually save tax besides allowing the money grow. Taking an expert advice to plan taxes along with the best investment choices help save a lot and let the money grow.

Short-Term Budgeting: With short-term budgeting, one does not focus on the long-term insights and thus, are more prone to unwanted expenses. Experts suggest that an annual budget is effective than a monthly budget, when it comes to saving money. An annual budget does not give cushioning for non-committed expenses. A complete financial plan with all the financial goals of life gives a thorough picture of the priorities in life. Savings and investments could then be dedicated to those life goals.   

                                                                                                                                         By Artha Yantra             
         

NPS#RETIREMENT

The old-age is the phase of life when most people do not have a stable income-source. But a regular income can be generated all through the golden years with a good pension or retirement scheme.

National Pension System (NPS) is one such retirement scheme established by the Indian Government on 1 January 2004, to offer retirement income to all the citizens. Indian citizens aged between 18 and 60 are eligible to open an NPS account. Here are must to know details of NPS.

Key Features Of NPS:

NPS generates income during old-age by offering reasonable market-based returns over the long term. The scheme extends old age security coverage to its subscribers. Its crucial features include:

• Allotment of a unique Permanent Retirement Account Number (PRAN) for every NPS subscriber.
• The PRAN can be used from anywhere to make NPS transactions.
• With PRAN, you can access two personal accounts, which include Tier-I pension account and Tier-II savings account.
• Tier-I pension account is a non-withdrawable account, into which retirement savings can be deposited.
• Tier-II savings account allows voluntary savings facility, from where saving can be withdrawn anytime.

Benefits Of NPS:

Cost-effective: The scheme requires you to make your first contribution while applying for registration. One has to make contributions subject to the following:

• INR 6,000 minimum contribution each year.
• Minimum amount per contribution is INR 500.
• Minimum number of contributions every years is one.

Simplicity: Account can be opened  through the nodal office or online, after which the PRAN number is generated. This single PRAN number can be used to make all the transactions.

Transparency: Through the cost-effective and transparent system, the pension contributions are invested into pension funds. Subscribers will be allowed to know the value of their investments on day-to-day basis.

Regulated: The Pension Fund Regulatory and Development Authority regulates the NPS. Besides transparent investment norms, the regulator monitors and reviews the performance of the fund managers.

Portable: Every employee holds a unique identification number and separate PRAN numbers that are portable. These numbers remain same for the entire life and can be carried even if an employee gets transferred to another office.

Self Allocation: Investments under NPS can be made, based on the investor’s choice or as per the “Auto Choice” option.

Tax-Savings: NPS investments allows tax benefits based on the below criteria

• INR1,50,000 as per section 80CCD(1) – deduction has to be minimum of 10% of gross income or salary.

• Rs.50,000 as per section 80CCD(1b). Thus, investors can avail maximum tax benefit of INR 2 lakhs.

• 10% of basic salary + dearness allowance as per section 80CCD(2).

In conclusion, elevated cost of living, life expectancy and inflation all make retirement planning an essential part of today’s life. Avail any of the pension plans but ensure to analyze if the retirement corpus is enough to lead a retired dignified life. If not, substantiate it with other investments like mutual funds, after seeking an expert advice. Approach Money Farmers for  financial planning and personal finance advice.

                                                                                                                                              By Artha Yantra

HOW MUTUAL FUND WORKS

Investing for your dreams through SIP

Don't diversify beyond point