Balance your funds by investing in balanced funds

Balanced funds or hybrid funds are a mix of equity and debt mutual funds. They keep their investment in the ratio of 60-40 where 60% of the amount is invested in stocks, and the balance 40% is invested debt instruments. Balanced funds maintain their formula of income generation and capital appreciation

Balance funds have their advantage and disadvantages:

The pros: The investor gets diversification in a single docket of mutual funds without the hassle of analysing and selecting each and every equity and debt fund.

Balanced funds are suitable for persons who are willing to invest a smaller portion of their income monthly.

A balanced fund allows the investor to make systematic withdrawals while maintaining suitable asset allocation.

The cons: They are not entirely risk-free, many investors are of the view that less volatility means risk-free. That is not the case; balanced funds also have their share of risks..

While holding only a specific class of funds, the investor can relocate some of the funds into other mutual funds as diversification for tax planning or wealth creation. However, in balanced funds, it is not possible as the same mutual fund owns both types of the asset class.

Choosing a balanced fund that suits the investor’s long-term goals is very important. When assessing the equity part, the investor should look for factors like the fund house, fund manager, asset value, constancy of portfolio, diversification, risk taken by the fund, asset size, and the historical returns. When assessing the debt funds, they should pay attention to the asset quality, fund manager’s qualification and sensitivity of the fund to rate changes.

Balanced funds are custom-made for new investors and those looking for relative stability for their savings. Hence balanced fund provides a good investment option wherein investing in one particular fund you can have exposure to equity as well debt market.

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Now that I am earning I can finally spend! Why should I care about investing at this point

 So, you finally have a job. You no longer need to ask your family for pocket money.Now, you have a job. You have discretionary income.  It’s liberating, exhilarating. Finally, you’ve arrived! It’s that beautiful phase, where you are wondering how to spend your earnings. An EMI plan on a car might be nice, that new smart phone or those beautiful shoes…

But hold on before you get too far…let’s give your new found financial freedom some thought. Let’s account for:

1. These carefree days may not last more than a few years
2. You get older – your earnings increase as do your expenses. A house, a car, school fees…
3. Your parents’ get older – you may need to help them financially.
4. You will retire – how will you maintain your life style?

And now, let’s rewind back to today. Where were we? Yes, you were a carefree and young individual. But after reading this article, you will be carefree, young and wise individual.

There’s no rule that says you can’t spend when you have the disposable income. But the wise one squirrels away a small percentage of salary without fail every single month.  That leads us to the next important question – should you just kept that money aside, as in “save” or should you “invest” that money?

Just as drops of water make an ocean, small but regular investments can go a long way in building wealth over a period of time.You may have to choose from various investment options available if liquidity concerns you

SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP allows an investor to buy units regularly on a specific date of the month. This will help in building wealth in the long term. Due to the principle of cost averaging, more number of units are bought in a falling market and fewer units in a rising  market. SIPs allow you to take part in the stock market, without trying to time it, also bringing discipline to your investments.

It’s the key to investing success. Regular investment makes you disciplined in your savings and also leads to wealth accumulation. Systematic investing is a time-tested discipline that makes it easy to invest automatically. Investing regularly in small amounts can often lead to better results than investing in a lump sum.INVEST NOW 

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WHY YOU SHOULD START INVESTING EARLY?

One of the most important factors to consider while drawing a financial plan is fixing the time period, especially if you are a beginner. The thumb rule is, the earlier you start, the greater the chance of achieving your financial goals. Having the advantage to grow your investments over time, and putting your investments to work for you, will help you live the life you ultimately want to.

It is time tested that if one starts investing early, the percentage of building the corpus for one’s desired future financial goals is higher as compared to those who start very late in their life.

Investing according to financial goals.

Identify and prioritise goals:

The first step in goal based investing is identifying and prioritising goals by segregating them into needs and wants – needs are essentials and hence get precedence over wants, which are desires and aspirations. Once decided, align your needs/wants to the time horizon.​

Explore the systematic method of investing in mutual funds​

​​Investors can also benefit from the systematic plans offered by the mutual funds. For instance, a systematic-investment plan (SIP) is used for wealth accumulation. A systematic-transfer plan (STP) helps in transferring wealth from one asset to another, in safeguarding the portfolio against volatility, and in adapting to the changing risk appetite with age and increase in responsibilities. Lastly, a systematic-withdrawal plan (SWP) is useful in deriving a regular income from the created wealth created.​​​​

Power of Compounding

Young investors have an advantage in investing since the longer you stay in the market, the less risky your investment becomes and the more corpus you can generate over a period of time. This happens because of the compounding effect and the rupee cost averaging benefit you get over a long term.

Once you are done with prioritizing your financial goals of life, quantify them, that how much amount you may need to achieve those goals and based on that choose mutual fund schemes. So give wings to your dreams and start investing in something each month to achieve your goals without any burden of heavy debt on your shoulder.

Investing at any age isn’t easy, but waiting to invest for when it’s convenient isn’t the best approach (because it’s never going to be easy). Don’t fall into the I-need-a-lump-sum-of-cash-to-start-investing trap start small, with whatever you can afford to invest today because it’s most likely going to be worth more tomorrow.

Keep in mind, the market goes up and down, much like our emotions, and that means sometimes your investments will fail. Still, in the long term, investing early and giving your investments time to mature will help you come out ahead.

Finally, you don’t have to be an expert to invest. Find yourself a traditional advisor like us who will do the legwork and guide you in the right direction. 

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ELSS: Invest to save tax and wait for the Returns

Birla Sun Life Tax Relief 96 – Growth Weekly Chart

 

Birla Sun Life Tax Relief 96 is an open ended Equity Linked Saving Scheme (ELSS) with 99.09% exposure to equity.

 

Portfolio Analysis: The fund aims to generate returns by investing in complete equity with maximum exposure to Automotive and Banking/Finance sector.

Top Stock Holdings

 

Sector Allocation

 

Returns as on 8^th May, 2018

Risk Profile: This fund is considered as “Risky Fund” due to complete exposure to equity instruments, it’s suitable for investors who are looking for Tax benefits.

Taxation Perspective: Birla Sun Life Tax Relief 96 is ELSS fund is where investor is eligible for tax exemptions up to 150,000 INR under section (u/s) 80C of the Indian Income Tax Act, 1961 if they stay invested for three years or more. ELSS Funds are also eligible for Long Term Capital Gains which will be treated tax free as the holding will be more than one year. The Dividend earned from ELSS funds is also treated as tax free.

Technical Perspective: Post the completion of wave 1 at the highs of 24 levels and prices formed running complex correction pattern in wave 2 which completed at the lows of 22 levels. Now wave 3 is ongoing which the strongest segment of an impulsive move. Now the outlook for this fund will continue to be positive, any pullback towards the blue support line should be utilized as buying opportunity for the targets of 35 levels.

Investment Rationale: Birla Sun Life Tax Relief 96 fund has shown some outperformance in sync with the Indian Equity Markets. Currently it is in the beat of its trend so one should dive in this fund through SIP or lump sum investments.

Invest NOW in Birla Sun Life Tax Relief 96 Fund online – Click here

How to create Investment portfolio using Mutual Funds?

I believe innovation is the key to success even in Financial and Investment domain. I thoroughly believe in application of Elliott wave that can be extended to NAV of Mutual funds as well. It provides vital information on maturity of the trend and one can accordingly make investment decision.

Following is UTI equity fund research shown on 7^th December 2016 in our Mutual fund research report by Waves Strategy Advisors

UTI Equity Fund Growth Weekly Chart (shown on 7^th December 2016)

 

UTI Equity Fund: Happened

 

Technical Perspective – Anticipated on 7^th December 2016

The Weekly Chart for UTI Equity Fund Growth shows that post retracing 38.2% of the previous up move prices bounced sharply and now it has managed to take out the previous peak high which suggests that probably a complex correction pattern is in formation and currently wave y of the same is ongoing. Once wave y completes its course the corrective leg in the form of wave 2 will end and then the bull trend should resume in this fund. Move above 114 will suggest about the completion of the same.

Happened: The NAV of the fund increased drastically and moved exactly as expected. This simply shows how one can use Elliott wave to predict the path ahead even on Mutual Funds!

Invest NOW in UTI Equity Fund Equities Fund online – Click here

We can help you in creating your portfolio of Mutual Funds. I think it is best to diversify and not only park money in stocks alone. By diversifying it across different Mutual Funds one can create a sustainable financial model with prudent mixture of both stocks portfolio and MFs. Invest in Mutual funds through us and we can assist in providing multibagger research from our research associate – Waves Strategy Advisors to create a holistic portfolio. Invest here

Compounding: Eighth Wonder of the World!!!

Saving money regularly and investing them into relatively safer financial instruments yielding moderate returns can work wonders over long period of time. Also Napoleon Hill the author of Think and Grow Rich says, “Make your money work so hard for you that you do not have to work for it.”

The power of compounding is such that it helps you to reach your financial goals. Compound growth refers to earning returns on your returns or similarly, earning interest on interest.

The power of compounding is very beneficial to long term investors.

Mutual Funds were made to make investing easy, so investors do not have to be burdened with picking the individual Stocks. When it comes to Compounding, do not trust your intuition, you have no idea how powerful it is.

Wealth cannot be created overnight it needs to be nurtured with care. Compounding teaches that we do not have to invest huge but regular savings can increase your wealth. As it is rightly said, “Little Drops of Water Make the Mighty Ocean.”

One can make regular savings by investing in SIP as it is very convenient mode of investment and it supports the power of compounding very well.

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How Investor lose out to EMOTION!!!

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Growth v/s Value equity mutual funds.

Equity Mutual funds are normally classified into different types of category. However it can be simply divided in 2 types i.e. Growth and Value. The characteristic of both Growth and value equity fund differs from each other. So it is important to understand their characteristic in order to build an investment strategy which will suit the investment objective of an individual.

Below is the detailed description of Growth and Value equity mutual fund which may help an investor to build a strong portfolio.

Growth Fund – It includes stocks of the companies which are expected to grow at a faster rate as compared to the overall market. Growth funds offer higher potential capital appreciation but usually at above-average risk. High risk-reward makes this fund an ideal investment tool for those not retiring any time soon. It is advisable that an individual should have a high risk appetite and should hold their investment for 5-7 years in order to gain good return from their investment.  Growth fund invests their corpus in both large and mid-cap fund.

Value Fund – It includes stocks of those companies which are fundamentally undervalued. Those who have a low risk appetite may invest their corpus in value fund as the risk exposure is quite less when compared to growth equity funds. Also it provides higher dividends and capital appreciation to its investor.

It appears that growth investors enjoy higher returns compared to value investors in form of dividend and appreciation of stock. The risk associated with value fund is less compared to growth fund during market volatility. So depending on one’s risk appetite and their goals and objectives one should accordingly decide whether they should go for growth fund or value fund.

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Impact of GST on Mutual Fund Investment

 











Goods and Service Tax (GST), India’s biggest tax reform is going to soon turn into reality from July 1. Goods & Services Tax (GST) is an indirect tax throughout India to replace taxes levied by the central and state governments.

Under the GST regime, Asset Management Companies (AMCs) will have to pay service tax of 18 per cent on the investment management fees they earn. Until now, the rate was 15 per cent. Management fees are part of the total expense ratio charged annually by AMCs. These include marketing and selling expenses, fees paid towards registrar and transfer agents, trustees, auditors, etc. Typically, equity funds charge management fees of 1-1.5 per cent of the assets under management, while debt funds charge between 0.05 per cent and 0.5 per cent.

The impact will not be that big, but it surely will change something for the mutual fund investors. The increase in service tax from 15 per cent to 18 per cent would make mutual funds a bit expensive. The higher expense ratio will lead to lower returns in mutual fund schemes. There will always be some or the other change in the markets and policies, investors do not need to keep changing their portfolio. Equity mutual funds are a long-term investment. Policy changes will happen but investors should stick to their schemes. However, most of your funds will be able to capture these changes in the market.

WAYS TO PICK GOOD MUTUAL FUND

When finally you have decided to invest in Mutual Fund the next question arises which mutual fund to choose from and will the chosen fund provide you the required return satisfying your goals.

Here are some ways to pick good mutual fund which will help to make correct decision.

1. Buying No-Load Mutual Funds.

Mutual funds make their money by charging fees to the investor. It is important to gain an understanding of the different types of fees that you may face when purchasing an investment. Some funds charge a sales fee known as a load fee, which will either be charged upon the initial investment or upon the sale of the investment. There are some fund houses which do not have load charges and it increases the profit as one would not have to pay load charges.

2. Being Careful to Expense Ratio.

Expense ratio is very important parameter to be looked at while selecting any mutual fund scheme. All fund management and distribution related expenses are borne by the scheme. This means high expense ratio will affect the fund’s returns.

3. Evaluating Past Performance and Experience of Fund Managers.

Fund manager plays a very important role in the fund’s performance. Fund manager is the ultimate decision maker and his experience and view point matters a lot. Before investing one should evaluate fund manager’s past performance and track record. If you find that due to change in the fund manager there is considerable effect on the fund’s performance which does not suit your risk appetite then you may make a decision to exit.

4. Size of Fund.

This parameter is different for debt and equity schemes. In equity the comfortable asset size is hundreds of crores, in debt it should be in thousands of crores as the investment value per investor is higher in debt funds. 90 % of total Assets Under Management (AUM) of the mutual fund industry are invested in debt funds, so your selected scheme assets should also have a considerable AUM. Less AUM in any scheme is very risky as you don’t know who the investors are and what quantum of investments they have in this particular scheme.

5. Identifying Goals and Risk Tolerance.

Before investing an investor must first identify his or her goals and desires for the money being invested. Depending on his/her goals investor must the mutual fund which meets his particular goals be it short term or long term. In addition, investors must also consider the issue of risk tolerance- Is the investor risk adverse or risk tolerant. Depending on this he /she should opt for particular Mutual fund.

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Equity Funds v/s Debt Funds

The first thing to understand is that mutual funds are investment vehicles, and that simply means that investors pool their money together and then the mutual fund invests that money on their behalf. The easiest way to understand this is to think that as an individual investor you would’ve gone to the stock market and bought a share, but now as a mutual fund investor you buy a mutual fund unit, and then the mutual fund pools together your money with money from other investors and then goes and buys shares on your behalf.

There are four main type of mutual funds based on what they invest in.

1. Equity Mutual Funds: These are mutual funds that invest in shares of other companies.

2. Debt Mutual Funds: Debt mutual funds are mutual funds that invest in debt instruments so they may buy debentures of a company or government and other such things.

3. Commodity Mutual Funds: These are mutual funds that own commodities like gold, and in reality, India only has gold based mutual funds.

4. Hybrid Mutual Funds: Hybrid mutual funds invest in a mix of the above three classes at the same time. So for example, they may invest 65% of their money in shares and 35% in debt.

The answer to which mutual fund you want to invest in depends on what you actually want to buy and your appetite for risk.

If you want to invest in shares and understand that investing in shares can sometimes mean that you even lose your capital then equity funds are for you.

If you want to be safe and protect your capital then you should only invest in debt mutual funds.

If you were interested in getting returns from gold then you should invest in a gold mutual fund. A hybrid fund is for someone who needs a balance.

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