The benchmark is basically a performance index of the particular market segment which evaluate the performance of a security, mutual fund. Setting benchmark is important to define the investor goal, it also reflects the risk appetite of an investor on particular index.
Under section 80C of Income Tax, a deduction of Rs 1,50,000 can be claimed from your total income. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C. The deduction is allowed to an Individual or an HUF (Hindu Undivided Family)
It is the fees or charges that all Mutual Fund charge from the investor for managing his/her money invested. Its includes fund management charges, and distribution or marketing expanses of the fund houses. Sometimes distribution expanse or marketing expanses make impact fund performance.
Full form of NAV is Net Asset Value. It is the price per Unit of a fund. So, for example if NAV of “xyz” mutual fund is 90 and if you want to buy 1000 units of that fund, that will cost Rs. 90,000. The NAV is updated at the end of each trading day. So, when you purchase a mutual fund at a mentioned NAV price, that unit price is actually the price as of yesterday’s close.
Yes, can invest in ELSS, if the 60-year-old person income come above tax slab. Other than that the first priority should be to ensure steady income to take care of living expenses. You can opt for government-sponsored schemes like Senior Citizen Savings Scheme or Post Office Monthly Income Scheme to secure a guaranteed income. The amount invested in ELSS qualifies for tax exemption under section 80C of the income tax, 1961.
Many factors lead to the best mutual fund, but the first thing to keep in mind is to identify one’s own financial goals and requirements. On the basis of this one can further move towards starting the investment journey. It mainly depends on the risk profiling of an investor.
Any one invest in Mutual Fund need to be KYC verified, to comply fill KYC form and ask a mutual fund distributor to verify and submit it.
The application is the most basic need while making investment. In case of SIP you need to fill two forms. One form to open the account and the other one for choosing SIP way of investment.
Know-Your-Client (KYC) norms have been made mandatory for everyone who wishes to invest in an MF. All you need to do is to submit your KYC acknowledgement along with your MF investment form.
Unique Identification Number (UID) (Aadhaar)/Passport/Voter-ID Card/Driving license.
Make sure to keep your PAN card handy while opening the account.
if you wish to start an SIP straightaway without investing the minimal amount, it’s best that you give a cancelled blank cheque to facilitate an electronic clearing system (ECS) mandate. This is to ensure that your cheque details like the magnetic ink character recognition (MICR) code, Indian Financial System Code (IFSC), apart from your account number and others are appropriately captured. This is required for opening a SIP.
(However, The document requirements differ from asset management company to company, make sure to check before filling the form).
In Simple term SWP is similar to Monthly Income Scheme, only deference is in MIS customer only able to get interest part in monthly equated manner, but in SWP it could be included return as well as principle amount in equated manner. It is opposite to Systematic Investment Plan. Several equities & debt scheme has SWP facility.
Fund manager is the one in whose guidance a fund performs. He is responsible for managing the fund’s investments and ensuring that the fund strategy is aligned properly with the investor’s expectations. He is also responsible for the overall operation of the fund from customer service to risk management.
Yes, surely there are tax benefits. One can opt for ELSS as it is the best tax saver investment tool available with mutual fund.
Individuals who have ELSS funds can avail deductions up to Rs 1.5 lakh on the amount invested by them in the ELSS fund.
Sector funds – it is a mutual fund that invests in a particular sector of the economy.
For example: Banking Funds, Pharma Funds, Technology Funds, Real estate funds etc. These types of funds are good for aggressive investors who can take high risk and also want maximum exposure in the market space. So the option of choosing fund totally depends on the investor.
While choosing a mutual fund it is highly important to check a fund’s performance for over 5 years. This is a major myth amongst investors that the investment should depend on AUM base. Of course, this is one deciding factor. There’s no inherent reason that a larger fund is better than a smaller one. It totally depend on the market fluctuations. If a smaller fund has a better track record for risk-adjusted returns than a larger fund of the same type, then by all means investors should choose the smaller one.
*(Additional information : As per data by AMFI, the Assets Under Management (AUM) of the Indian mutual fund (MF) industry reached Rs. 19.4 lakh crore in February 2017)
Before selecting any scheme or option for mutual fund investment we need to understand no single mutual fund is perfect for every customer. So growth option is for the customer who wants to enjoy the market appreciation and dividend option is for the customer who wants get regular income with tax efficiency by enjoying the company profit in the form of dividend.
A portfolio can be constructed of different types of schemes. These schemes will be from varied funds available according to the investor’s risk profile & invested capital.
Diversification doesn’t mean to have 10-15 schemes but on an average of 4-5 schemes in the portfolio to manage or alter the risk of investing in just one scheme.
Load in mutual fund are the charges related to a particular scheme to compensate distribution cost. It comes directly from the invested money.
Loads can be of two types –
Entry load – added to the NAV at the time of purchase of units of a scheme.
Exit load – deducted at the time of redemption, if the investment redeem in between exit period.
It is a pool of money or a privately pooled investment structure. These type of funds are not so popular amongst India. Hedge Funds are engaged in private equity.
Hedge funds are known as Alternative Investment Funds (AIF) in India. AIF are defined in Regulation 2(1) (b) of Securities & Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Whenever a customer enters or register themselves for investing, He/she is given a unique ID & Password via which they can easily manage their funds & keep an eye on the performance of the same at day to day basis.
Debt funds mainly invests in fixed income securities such as Treasury Bills, Government securities, corporate bonds, money market instruments & other debt securities. The risk involved is decreased when compared to equity funds. Although the risk is always there when it comes to mutual fund market, irrespective of the fund invested but it is always advisable to invest in debt funds for the investors with low risk taking appetite.
SIP is Systematic Investment Plan whereas SWP is Systematic Withdrawal plan. Both the term are totally parallel to each other. SIP refers to the fixed amount of money that an investor invest every month whereas in SWP one can systematically withdraw the money every month.
Redemption as the name suggests refers to redeem or withdraw your mutual fund anytime you wish to exit from a scheme. Redemption process can be processed by both online & offline mode. One needs to submit the redemption form in case of offline mode with folio number & every detail regarding the fund.
In online mode, one can login the platform and submit a digital request.
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.
Mutual funds do provide with tax saving schemes. ELSS is one of them which is under section 80C and provides tax benefit. One can claim deduction for a maximum of 1.5 lac in a financial year under this specific scheme.
Hybrid funds invests in a mix of stocks & bonds. These types of funds are considered safe to some extend for the investors who have medium risk appetite. Investing in hybrid funds means placing about 60% of assets in stocks & 40% in bonds. So the funds are not purely equity or purely debt oriented.
The amount of cash that a company pays to its shareholders is known as dividend and the total amount of dividend paid to the shareholder relative to the net income of the company is known as Dividend Payout Ratio.
Whenever an investor wishes to change a lump sum paid scheme into SIP mode or simply wants to start investing via SIP then he/she needs to fill the SIP transaction slip.
TDS is the Tax Deducted at Source introduced by Income Tax Department. Deduction of a certain percentage of tax before making full payments is known as TDS.
Folio number is just like a bank account number which is unique to every individual. Only an existing investor can have a folio number. So first step is to invest in mutual funds. Every fund house differ in terms of folio number i.e Every other fund house have a different folio number. All the activities of the investment can be tracked through one unique number.
If you are a student then you can surely invest in equity oriented funds. The early you start the best it is for you to gain good returns on investment. As the risk taking capacity is more and there is no time boundations. It is not necessary to have a huge amount but you can also invest through SIP (Systematic Investment Plan) with a minimal amount of Rs. 500.
CD (Certificate of Deposit), Treasury bills, Treasury Deposit Receipt (TDR) & Commercial bills are the famous Indian money market instruments in which the investments made are short term (Even a day upto a year).
Indian Resident, Individual(s), NRI, Partnership firms, HUF, Trustees, Religious & Charitable trust, Societies, Associations, Minors can apply for mutual funds only through a guardian.
Fund selection depends on various things. It varies from one individual to another. The most important of all is the determine one’s own risk appetite, Investment tenure period, Future requirements & Investment capital.
Mutual fund, Cut – off timings are different. It simply determines what NAV you are going to get to buy or sell units in mutual funds. If you invest before the cut off time, then you will get the units at the NAV of the previous day and after the cut off time investor becomes eligible to get the units at the NAV of same day. For example, The cut off timings of liquid funds is 2 pm, for equity & debt fund the cut – off time is 3 pm on a working day.
Normally there is no changes on switching between funds, only charges applicable if the exiting fund investment tenure is below exit period.
Select funds and fill application or visit online sites to transact by filling up a common transaction form along with a SIP mandate form and submit to RTA or execute online.
Yes. There is a facility of renewing the fixed deposit. The facility can be availed anytime before the deposit matures. One can opt for the auto renewal option also, offered by various banks.
FATCA is Foreign Account Tax Complaince Act. According to FATCA, Every Indian investor needs to provide an additional KYC and complaince form at the time of investment. This brings the transparency to the process of investment further avoiding any type of confusion.
Cumulative FD – Interest is payable at maturity with the principal amount.
Non – Cumulative FD – Interest is paid annually, quarterly or every month depending upon individual preferences.
Tax saving FD – One can save tax as well as earn interest by enrolling for tax saving fixed deposit. The scheme is provided by every bank. The tax savings can be done under Section 80C of the Income Tax Act.
Flexi fixed deposits – These type of FD are linked with the savings account. One can just open the account with initial amount and then in multiples the deposit can be made. These minimum amount differ from bank to bank.
Fixed deposit these days provide with the facility of redemption with a penalty charges or according to the time period for which the deposit was held with the bank. The principal amount will be given with the calculated interest applicable.
An additional interest rate of 0.50% is provided to senior citizens.
Credit ratings are the deciding factor of the a particular product. It gives an analysis of the credit risk related. The ratings differ from agencies to agencies. AA+ ratings mean a little to no risk of default is involved with a company or a product source.
Recurring deposit is another option for the people who wants to have a deposit but does not have a lumpsum or required amount to invest. In recurring deposit, Also the interest rates of RD are similar to that of fixed deposits.
DISCLAIMER: Mutual Fund Investments are subject to market risks. Please read all the scheme related documents carefully before investing.