investfinance - Tumblr blog

[investfinance]

Arbitrage Funds- What, Why and How?

Wondering what are arbitrage funds India? These funds work on the concept of equity share mispricing in the market for spot and futures. They majorly tap into price differences prevailing between future and present market securities for generating the highest possible returns. Arbitrage mutual funds have fund managers buying shares in cash markets and selling the same in derivatives or futures markets simultaneously. The differences in the selling price and cost price will work out to the final return that you get. Since there are positive arbitrage funds returns for the taking, if proper strategies are implemented, many investors prefer deploying their money in these plans.

Arbitrage funds in India are best handled by professional fund managers. They will look to tackle volatility and other risks arising from sustained equity exposure. They will also allocate the remaining portion of the corpus (after allotment towards equity) for instruments that generate fixed income. The fund managers make sure that investments are solely deployed in debt securities with high credit quality including debentures, zero-coupon bonds and even term deposits. This will help in keeping arbitrage funds returns in sync with overall customer expectations even at the time of lower opportunities for arbitrage in the market.

These funds usually derive profits from low-risk purchase and sale opportunities in cash and futures markets. The levels of risk are similar to pure debt funds in the market. Several arbitrage mutual funds follow a specific benchmark, i.e. the CRISIL BSE 0.23% Liquid Fund Index. The funds are suitable for people who are desirous of obtaining exposure to equity but remain anxious about associated risks from the same as well. These funds are safer choices for those people who are averse towards risks and wish to park surplus funds in the right place as well. This should be applicable whenever markets witness consistent fluctuations.

Some aspects worth noting

Market Risks- Since trades take place on the stock exchange, there will be zero counterparty risks for these funds. However, there will be limited opportunities available for arbitrage down the line. The spread between futures and cash market prices may erode in future, leaving limited room for those investors focusing on arbitrage. You may have to consider other debt fund types in your portfolio for garnering superior returns.

Returns- Arbitrage mutual funds help investors earn profits reasonably without having sky-high expectations. The returns may hover between 7-8% historically over a period of 5-10 years on average. Moderate returns can be expected with a perfect fusion of equity and debt in a market which remains volatile, from these funds.

Investment Costs- The funds will charge an annual expense ratio, i.e. a percentage of overall assets for management by a skilled manager and other charges. Transaction costs will be high owing to frequent trades. Exit loads may be imposed for 30-60 days to discourage any early exits.

These funds may be suitable for investors with a short or medium term investment horizon, ranging between 3 and 5 years approximately. Do your homework carefully before choosing these funds.

[investfinance]

ELSS-Tax benefits to investment rewards-What you should know

Equity Linked Savings Scheme in India is a tax saving mutual fund that invests largely in equities and equity-oriented securities. Investors who want to earn regular returns, get a capital appreciation, and at the same time save taxes, can invest in the ELSS Scheme in India.

At a minimum of 80% investment corpus is allocated to equity and equity-oriented securities in a diversified manner. The fund is invested across different market capitalisation, industries, and sectors. The lock-in period is three years which is the shortest among all the tax-saving funds in India. Moreover, there is no maximum tenure of investment and it depends on the investor's capacity.

Before investing in an Equity Linked Savings Scheme in India you must consider the fund performance for the previous few years. If you want to achieve your long term financial goal along with saving tax, then only invest in tax saving SIP in India. As there are more options for tax savings and you can look for them if you are not into achieving a financial goal. Finally decide if you want to invest a lump sum amount of money at a time of investment, or a systematic payment with a small amount. ELSS SIP in India allows investors to pay a minimum of Rs 500 every month. That is every month you need to pay a fixed amount of money.

Benefits of ELSS

As the primary investment of these funds is equity, they offer capital appreciation in the medium to long term investment goals. As investment in equities offers a potentially high return rate though is associated with several market risks. Another reason for its wealth creation is investment diversification.

Equity Linked Savings Scheme in India allows you to invest through a Systematic Investment Plan or SIP. Here you can start investing with a minimum of Rs 500 every month. The benefits from SIP investment is rupee-cost averaging and compounding. These factors protect you from market volatility in the long term investment goal.

ELSS Tax Benefit in India allows investors to save tax for investments up to Rs 1.5 lakh. If the Long Term Capital Gains or LTCG is up to Rs 1 lakh, then no taxes are charged. But if it exceeds Rs 1 lakh, then a 10% LTCG tax is chargeable on the return.

There are certain things that you should remember while investing in an Equity Linked Savings Scheme in India. It has a three years lock-in period, during which an investor cannot redeem or withdraw his investments. During this period the investment grows. After the lock-in period, if you keep on investing then you get a chance of capital appreciation. Moreover, long term investments can beat inflation in the market. There is no upper limit of investment and no fixed maximum tenure. So if you are planning to raise your retirement corpus then keep on investing. The investors are provided with growth and dividend options while investing. In the growth scheme, the investor is provided with a lump sum amount after completion of the lock-in period. But in the dividend scheme, a dividend is paid to the investor regularly during the 3 years lock-in period. The ELSS mutual funds are managed by professional fund managers.

[investfinance]

The Features And Long-Term Benefits Of Investing In Unit Linked Insurance Plan

About unit-linked insurance plan

These are the vehicles of savings and protection which have been proved to be all-rounders in every respect. The unit linked insurance plans ensure guaranteed returns each year based on the premiums paid towards the policy while some generate a guaranteed maturity benefit which can help in obtaining long term financial goals.

These are fixed-term unit linked insurance plans curated for the high-risk takers and who expect a high return on investment. The money invested in these plans is further bifurcated into two parts- one which is invested as insurance to cover for the death or any contingency towards the insured, and the other as an investment fund which is directly invested into a market-linked fund. The second option gives returns based on the performance of the market and the entity in which the funds are invested. Since the risk constituent is high in these investments so even the return on investment, which is directly proportionate to the risk, is high.

How does a unit linked insurance plan work?

Below mentioned are the various steps which are followed for the efficient working of unit linked insurance plan:

Step 1- The insured buys a unit linked insurance plan with selective coverage based on basic sum assured, premium paying term, and coverage term. The premium is calculated on the parameters mentioned.

Step 2 – If investments are made in a participating plan, then bonuses earned will be calculated and declared by the company. There could be other benefits too like interest, return on investment, and other bonuses that can be earned and calculated.

Step 3 – In case of the death of the insured, a lumpsum amount, which could be the basic sum assured plus any bonuses he may have earned during the entire tenure of the policy, is paid out to the nominee or the immediate family of the insured.

Step 4 – In case of maturity pay-out, a basic sum assured plus any bonuses he may have earned during the entire tenure of the policy is paid out as maturity benefit to the surviving insured.

Key Features of a unit linked insurance plan:

To achieve life goals and to make sound investments in life that pay out a guaranteed amount of savings either to the policyholder or to his family, one must invest in a unit linked insurance plan.

Let us look at the salient features offered by unit linked insurance plans:

These plans offer a comprehensive death benefit and a maturity benefit which is guaranteed based on the basic sum assured. The benefit can increase if the bonuses eared (if any) are cumulated with the final amount to be paid out.

The returns guaranteed by a unit linked insurance plan are much higher as compared to a pure lie insurance policy. These could be risk-taking plans or simple plans, but every policy ensures a guaranteed and a high rate of return.

The premium payment tendency is customized as per the preference of the insured and can be paid out on a monthly, quarterly, half-yearly, or annual basis as it suits the policyholder. Online and offline payments towards premium payment can also be made. The policyholder also has the option to opt for the regular premium, limited premium, or single premium policies.

Flexibility while purchasing unit linked insurance plan is ensured as various riders can be additionally purchased and combined with the original policy cover like critical illness, personal accident, and disability, or a minimum premium payment plan which can be taken up. 

Tax deductions and exemptions under section 80C and 10(10)D can be availed by investing in unit linked insurance plans. “Tax benefit is subject to changes in tax laws”

These are much safer investment plans than directly investing in market-linked investments like mutual funds, shares, and stocks and it guarantees a fixed amount of payment at maturity or death even if the market is not performing. So, it has a low risk as compared to other investment options.

These are long-term policies that can go as long as 30 years and can be sufficiently used retirement benefits or meeting long-term financial goals like the higher education of children or their marriage. There are many plans which provide exclusive coverage till the policyholder reaches the age of 99 or 100 years so a safe retirement option can be seen in these plans.

[investfinance]

जीवन-बीमा एक जरूरत या छलावा

हमें हमारे जीवन की योजना बनाने के लिए हमेशा सिखाया जाता हैं। हम ग्रेजुएशन किस विषय से करेंगे। आगे की पढ़ाई कहाँ से और क्या करेंगे। जॉब कब करेंगे। शादी कब करेंगे। रिटायर कब होंगे। निवेश कहाँ करेंगे, कब करेंगे, कितना करेंगे।  हम जीवन की हर योजना को पहले से ही सोचकर रखते हैं। हम सोचते हैं कि ऐसा करके हमने अपने जीवन को सुरक्षित कर लिया। पर क्या आपको लगता है कि आपने अपनी तैयारी पुरी कर ली हैं। क्या वास्तव मैं इससे आपका जीवन पूरी तरह सुरक्षित हो गया। सोचिए अगर कभी आपको कुछ हो जाएँ तो आपके अपनों का क्या होगा। क्या इस बारे में आप कोई तैयारी नहीं करेंगे। वो भी तब जब बेहद कम और किफायती प्रीमियम पर ही आपको जीवन बीमा मिल रहा हो। जीवन बीमा आपके जाने के बाद भी आपके अपनो पर आपकी सुरक्षा बनाएँ रखता हैं।

लाइफ इंश्योरेंस कैम्पैन

सबसे पहले लाइफ इंश्योरेंस कैम्पैन लोगों में जीवन बीमा को लेकर जागरुकता लाने की एक सशक्त पहल हैं। भारत में लोग जीवन बीमा को खरीदने को महत्व नहीं देते हैं। वो इस बात को नहीं समझ पाते की एक जीवन बीमा उनकी लाइफ में कितनी महत्वपूर्ण भूमिका निभा सकता हैं।

जीवन बीमा है क्या?

जीवन बीमा बीमा कंपनी और बीमाधारक के बीच एक कॉन्ट्रैक्ट है, जिसमें कुछ प्रीमियम के बदले बीमा कंपनी बीमाधारक को असामयिक मृत्यु की स्थिति में उसके परिवार को एक निश्चित राशि अदा करने के वादा करता हैं। ताकि परिवार अपनी सभी वित्तीय जरूरतों को उस राशि से पूरा कर सकें। यदि आपने टर्म बीमा लिया है तो आपको परिपक्वतता के लाभ भी मिलेंगे।

जीवन बीमा लेने के लाभ-

1. आज के युग में हर कोई अपने सपनों की उड़ान पूरा करने के लिए कुछ न कुछ लोन लेकर रखता ही है ऐसे में यदि उसे कुछ हो जाएँ तो उसके परिवार को वो लोन चुकाना पड़ेगा। इससे उस परिवार पर गंभीर आर्थिक संकट उपस्थित हो जाएँगा। पर यदि जीवन बीमा की सुरक्षा है तो एकमुश्त राशि से परिवार अपनी सारी जरूरतों को पूरा कर सकता है।

2. यदि आप समय पर प्रीमियम अदा न कर सकें तो आपको एक महीने का ग्रेस मिलता हैं। उसके बाद पॉलिसी लैप्स कर जाएँगी। यदि आप दुबारा पॉलिसी शुरू करना चाहते हैं तो आप अगले दो वर्ष तक में पॉलिसी को दोबारा शुरू करा सकते हैं।

3. यदि आपने टर्म बीमा लिया हैं तो परिपक्वता के समय आपको परिपक्वतता के सारे लाभ प्राप्त होते हैं जो भी कंपनी ने आपसे वादे किये हैं।

4. आजकल ऑनलाइन पर ही सारी जानकारी उपलब्ध हैं। आप आसानी से ही जीवन बीमा के बारे में सारी जानकारी प्राप्त कर सकते हैं और मनचाहा बीमा खरीद भी सकते हैं।

5. जब आप कोई पॉलिसी लेते हैं तो जो प्रीमियम आपके लिये तय हुआ है जब तक उस पॉलिसी की अवधी है तब तक के लिए आपको समान ही प्रीमियम देना होगा।

6. जब आप युवा होते है तो आपको कम प्रीमियम अदा करने की जरूरत होती हैं। ऐसे में कम उम्र में बीमा लेना फायदेमंद होता हैं।

 इर प्रकार जीवन बीमा आज के साथ भविष्य की जरूरतों को पूरा करता हैं। जीवन बीमा आप के समय की जरूरत है। इसे नकारकर आप सिर्फ अपने आप को एक संरक्षण से ही खत्म करेंगे। जबकि इसे अपनाकर आप जिंदगी के साथ और जिंदगी के बाद भी अपने और अपनों को सुरक्षित कर सकेंगे।

हमारे पास कौन-कौन से विकल्प होते हैं?

·         जीवन बीमा योजना

·         टर्म जीवन बीमा योजना

·         स्वास्थ्य बीमा योजना

·         पेंशन योजना

·         बच्चों का बीमा

 एक से अधिक पॉलिसी लेने का कितना सही रहता है?

आप अपनी जरूरत के हिसाब से एक से अधिक बीमा पॉलिसी ले सकते हैं। वैसे एक टर्म पॉलिसी के साथ एक लाइफ पॉलिसी भी आप रखते हैं तो यह आपके लिए एक अच्छा सौदा साबित हो सकता हैं। टर्म योजना से आपको परिपक्वता के लाभ मिलते हैं वही बेहद कम प्रीमियम पर आपको असामयिक मृत्यु की स्थिति में बड़ी एकमुश्त राशि प्राप्त होती हैं।

[investfinance]

8 Benefits Of Availing An Instant Personal Loan To Meet Emergencies

Not comfortable borrowing cash from family and friends during personal emergencies? There is a paucity of reliable loan providers in times of need. Banks usually do not hand out short term instant personal loan.

The online loan app is bursting with activity in the financial markets. This instant loan concept is getting immensely popular among young professionals due to the various advantages it offers.

1. Round the clock availability

The instant loan is available for download on the Google play store. Email or social signup is asked and the customer rep will get back to you at a convenient time to discuss the next steps.

2. User Convenience

Filing documentation can be quite excruciating for loan applicants. Companies that provide instant personal loans emphasize customer satisfaction. You can go through the online brochure, which is easy to understand. When the decision is made, the loan amount is just a mouse click away.

3. No Physical Submission

Modern society is time-constrained. Gone are the days of waiting in the brick and mortar offices wasting precious professional time. The required documents can be scanned and uploaded in the online loan app. Loan applicants can have a hassle-free instant personal loan approved on their smartphones.

4. Small Cash Loans

Instant loans come in all convenient amounts. Small business owners have sudden financial commitments to ensure the movement of goods. To maintain business continuity, instant personal loans are an amazing avenue to fulfil short term cash shortages. Instant loans start from as low as INR 10,000 and can go up as per your eligibility and requirement.

5. Decreased interest rates

Instant loans come under the category of unsecured short-term loans. The base interest rates on instant personal loans are comparatively low to the bank loans. The interest rates on instant loan online app start from as low as 3 %.

6. Quick Disbursal

Loan applicants appreciate urgency and transparency in all their loan processes. The instant loan app is streamlined so that there is no ambiguity in the minds of customers. Once the personal loan application is approved, the monetary amount is immediately transferred to your personal savings account.

7. Swift Procedures

Unlike conventional loans, instant personal loans are processed faster through mobile apps. Starting from the application and culminating in approval, the whole loan affair will take just 15 to 20 minutes. You can get immediate access to the loaned cash on the same day of the loan application

8. Flexible loan-seeking reasons are acceptable

Online instant loan apps do not ask for uncomfortable and irrelevant questions while analysing your loan application. You need not specify any details on the loan application. The entire matter is protected as confidential between the customer and the loan disbursing company.

Bottom Line

Online loan apps function as lifesavers during emergencies. Borrowers can meet urgent cash requirements by skillfully using the benefits of instant personal loans. The documentation process is non-adversarial, and instant loans can be approved within a few hours. You need not visit office premises or deal with company bureaucracy and complete the whole process in a time-efficient way.

You can now download Lazypay App from Google Play Store and Apple Store.

[investfinance]

What are diversified equity funds and are they right for you?

Wondering what are diversified equity funds in India? These are mutual funds which make investments in a sizable number of companies across multiple industries and sectors and differing market capitalization categories while lowering overall investor risks greatly. The advantages of investing in diversified equity funds in India is that they require lower capital for diversification of unsystematic risks in comparison to making direct investments in stocks.

Capital is considerably required in most cases for ensuring ample diversification in a portfolio of stocks since a large number of stocks have to be purchased. Retail investors may look at tax saving mutual funds or simply attain ownership of diversified equity fund units through investments as low as Rs. 500 initially.

Diversified funds in India- Key aspects worth knowing

While embarking on financial planning for investing in diversified equity funds, you should know that they also diversify throughout multiple market capitalization categories, i.e. large cap companies with market cap between Rs. 15-20,000 crore, mid cap companies with market cap between Rs. 5-20,000 crore and small cap entities with market cap lower than Rs. 5,000 crore. Each of these segments has their own attributes pertaining to risks and returns. Large cap entities are usually seen as having lower volatility in comparison to mid and small cap counterparts. Small cap companies are seen as possessing the highest risks but also the potential to offer lucrative returns on investments.

The downside of investing in large cap entities is somewhat neutralized in bearish markets in comparison to midcap and small cap companies and hence they should be present in your investment portfolio. However, returns will be a little restricted with solely large cap funds in the investment basket. This is where fund managers aim at choosing small and mid cap companies that can ensure good capital appreciation for all investors over a sustained time period. Diversified funds may have roughly 45-75% of the portfolio deployed in large cap funds while the remainder may be allocated in mid cap and small cap funds. Various segments of the market will naturally perform differently in varying markets. While bear markets have large cap entities doing better than mid cap entities, the latter may do better towards the mid/end phases of any bullish cycle in the market.

As a result, choosing diversified equity funds in India means that your portfolio will generate better returns by cashing on performance of different market segments during varying market cycles. Bull markets will see a rally of mid cap and small cap stocks which will give you high returns while bear markets will have large cap funds pulling your portfolio through. The other benefit of these investments is that liquidity levels are on the higher side since large cap stocks comprise of a major chunk of the investment portfolio.

[investfinance]

Top Reasons To Choose Term Plans Over Other Insurance Plans

Term insurance plans are simple coverage schemes providing life insurance coverage for the self and dependents. It is also an affordable insurance plan with guaranteed benefits payout if the insured dies in the middle of the policy. Upon maturity of the plan, the insured receives no benefit. Therefore, it is a plan that offers protection only.

Term plans are not a type of insurance plans, but a subset of them. There are some similarities between term insurance plans and life insurance plans.

Similarities between life insurance plans and term insurance policies

Term insurance and life insurance policies provide tax benefits under Section 80 C of the Income Tax Act on the paid premiums.

Death benefit received under both plans is exempt under Section 10 D for a tax deduction.

There are term plans that provide maturity benefit. These plans are called return of premium plans. They are similar in nature to life insurance products, but may not have any investment portion.

Differences between term policies and life insurance plans

The nature of term plans makes them a low-cost life insurance product. Premiums are generally quite low compared to life insurance products such as unit-linked insurance product, money back or an endowment policy.

Term plans may have higher coverage for life insurance plans. The latter can also have higher coverage, but this generally comes with higher premiums. But because a term insurance policy is a pure protection plan and does not offer maturity benefits, the coverage amount is usually high.

Term plans offer enhanced financial security courtesy the high death benefit. Insurance products such as money back policies have periodic payouts. But when compared to term insurance plans, the cost to benefits ratio is not high. Term insurance plans offer higher coverage and death benefit payout. This aspect of term insurance plans ensures that policyholders can have complete peace of mind about their future.

Term insurance products have no savings component. Life insurance products such as ULIP invest in the markets to make a profit and benefit the insurance holder with a profitable return on investment. Life insurance plans also have maturity payout that may include reversionary bonus, terminal bonus, survival benefit and several other accrued benefits. Term insurance plans have none of these but have a very high payout on death of the insured.

The following is a list of benefits that may be unique to term insurance plans.

Benefits of term insurance plans

Whole life cover

Term insurance plans provide coverage for life. It provides complete peace of mind for the insurance policyholder. It is essential for those with a large number of dependents.

Easy to understand – life insurance policies have lots of terms and conditions. Term plans have terms and conditions, but they are fairly easy to understand and comprehend.

Critical illness coverage

If a term insurance policy has critical illness cover, then the insured can claim for coverage amount if affected by any critical illness.

Complete death benefits payout

If the breadwinner of the family dies, the liabilities and debts of the insured is covered by the term insurance cover, thereby putting no additional burden on the immediate dependents or nominees.

[investfinance]

How should you approach Large Cap Funds for investments?

If you are thinking of investing in large cap funds, then you should first endeavor to learn more about these products. Large cap mutual funds are those funds which majorly deploy investments in organizations that have larger/bigger market capitalization.

These funds are regarded as great options for first-time investors since they have mostly helped in sizable wealth accumulation over the long run. The term cap here indicates the market capitalization. These funds are regarded as sustainable, solid and steady investments with regard to their returns, making them immensely popular with investors nowadays.

Should you invest in large cap funds?

Large cap funds usually invest up to 80% of the overall corpus in 100 of the largest organizations with stock market listings by way of their market cap. In usual cases, large capitalizations are perceived to exceed at least Rs. 10,000 crore. The top-50 stocks listed on the National Stock Exchange (NSE) have similar sizes. The remaining amount for large cap funds can be invested in small and mid cap stocks for getting added returns.

Remember that large cap mutual funds are equity based funds and hence their investment goals will be formulated on the basis of the investment region, assets and strategies. These funds make investments solely in stocks and hence they are perceived as high-risk propositions although the returns are also on the higher side. These mutual funds usually focus on the size of a particular company since it naturally affects the size of the investment. Large-cap investment propositions come with specific benefits.

Major advantages of investing in these funds

Here’s looking at why mutual funds prefer investing in large-cap organizations or entities:

Large-cap entities are deemed as more reliable and trustworthy and have stronger balance sheets and reputations alike.

These companies have operated for a long period of time in the market and already have a steady track record.

These companies usually adhere to stringent procedures of corporate governance owing to their sheer size and organizational breadth.

Large-cap mutual funds have traditionally offered higher short-term returns.

They help in wealth creation over the long haul while regularly paying out dividends.

These investments are suitable for those with lower risk appetites and they can withstand situations like a bearish market.

The key take-aways for investors

As can be seen, large cap funds are absolutely suitable for those investing in mutual funds for the very first time. Since approximately 80% of the total corpus is deployed in companies with large sizes, investors remain comparatively safer. Yet, if performance is considerably influenced by the portfolio-building strategies of fund managers, then the remainder or 20% can do wonders, provided the strategies and handling are on track.

These funds offer advantages of enhanced capital appreciation along with adding more stability to an investor’s portfolio. Wealth is built for the long term and you can easily withstand market fluctuations and bearish tendencies with these funds and their relative stability.

[investfinance]

Pension Plan in India-Top Six to Consider

What is a Pension Plan

Pension plan or retirement plan, as we know, is an option of investment that lets you allot a fixed part of your income to gather over a long period, to provide you with a steady flow of income upon retirement.

Purpose of Pension Plans

An individual’s savings tend to get exhausted pretty quickly as it may even be used for emergencies. Thus, a pension plan is beneficial to ensure a secure financial future using a steady income to deal with the uncertainties and eventualities of life post-retirement.

By way of regular investments in a pension plan, the amount accumulates through the advantage of compounding, which benefits your final savings compilation.

Best Pension Plans in India  

By choosing a suitable pension plan, it is possible to plan your retirement in a phased manner, which will ensure you can enjoy the golden years of your life to the fullest.

Let us explore six of the best Pension Plans in India:

1. LIC Jeevan Akshay 6 Plan: this is an immediate annuity plan that can be bought by paying a single premium, post which your pension starts immediately.

Features  

The pension can be received monthly, quarterly, half-yearly or annually

No medical examinations needed

Minimum purchase price of Rs 1 lakh – Rs 1.50 lakh

No maximum limit on the purchase price

Entry age – 30 years – 85 years

Premium paid is non-taxable

2. LIC Jeevan Nidhi Plan: Is a profit pension plan, wherein the gathered amount is utilized to generate pension depending on the policyholder’s survival post the policy term.     

Features:

Premium paid is non-taxable under Section 80C of Income Tax Act

The policyholder receives a guaranteed Rs 50 addition per Rs 1000 assured for each year for the first five years

The policy term is between 5 to 35 years

Minimum purchase price of Rs 1 lakh – Rs1.50 lakh

No maximum limit for sum assured

Entry age – 55 years – 65 years

3. SBI Life Saral Pension plan is a traditional participating, non-linked, individual pension plan in India that will protect the policyholder from future market volatility and fluctuations.

Features:

For the first five years, the plan promises a guaranteed bonus of 2.5% of the sum assured for the first three years and 2.75% for the next two years.

Minimum policy term – 10 years and Maximum term – 40 years

Minimum premium Rs 7500 per annum

Entry age – 18 years to 65 years

Minimum maturity age 40 years

Maximum maturity age 70 years

Minimum sum assured Rs 1 lakh, no maximum limit

Assured vesting bonuses on the maturity of the plan

4. HDFC Life - Click2Retire: this pension plan in India is an online Unit Linked Plan that promises market-linked returns at minimum charges for post-retirement needs.

Features:

Promises vesting benefits along with additional gains from the market

Entry age - 18 years to 65 years

Minimum maturity age of 45 years and a maximum of 75 years

Death benefits to the nominee – higher than the policy fund value or 105% of premiums paid.

Tax benefits under Section 80 C and 10 (10A) of the Income Tax Act

5. HDFC Life - Assured Pension Plan: It is a unit-linked pension plan that promises market-linked returns along with loyalty additions.

Features

Vesting benefits along with additional gains from the market

From 11th year, loyalty additions every alternate year

Entry age – a minimum of 18 years. Maturity age – 45 years

Single pay options

Death benefits to the nominee – higher than the policy fund value or 105% of premiums paid

Tax benefits under Section 80 C and 10 (10A) of the Income Tax Act

6. ICICI Pru - Easy Retirement: This plan helps the holder receive a regular inflow of money once regular salary stops after retirement by way of equity investment. It offers protection against market volatility and also generates good long-term returns.

Features:

Minimum premium – Rs 48000, no maximum limit

Monthly, half-yearly and yearly payment options

Entry age – 35 years – 70 years

Minimum vesting age – 45 years, maximum – 80 years

Tax benefits on premiums paid

7. Edelweiss Tokio Life – Wealth Gain+: A ULIP that offers life cover and lets you accumulate wealth with 100% refund of mortality charges.

Features:

Life cover

0% Allocation Charges

Equity Blue Chip & Gilt Fund Offerings

100% Return of Mortality Charge

Loyalty & Booster additions for longer investments

So go online to https://www.edelweisstokio.in/online-life-insurance-plans/wealth-gain-plus check out the pension plan Edelweiss Tokio has to offer. And once you do, kick back, relax because everything is okay!

After considering all of the above, it can be safely concluded that a good pension plan is a sensible investment for your long-term gains and financial security.

[investfinance]

What are long term equity funds? Should you invest in the same?

Wondering what is a long term equity fund? These funds are primarily meant to ensure capital appreciation in the long term. They usually invest in equity and equity based market instruments, thereby enabling income tax deductions for investors. These funds undertake management of diversified portfolios of companies with strong performance records and better business models. These funds majorly deploy investments by choosing stocks across the entire spectrum of market capitalization levels and take into account factors like margins, growth, cash flow, asset returns, price to sales ratios, price to book ratios and price to earnings ratios.

Before deploying the investments in the long term equity fund, the managers will also determine stock selection via analyzing companies on the basis of several other parameters. These include prospects for unlocking value or creating value, growing earnings, present financial conditions of the organization, capital structure, management strength, business potential, policy structures, responsiveness in the face of business fluctuations, brand equity, competitive edge, market share, technological expertise, research and transparency in terms of overall governance.

Delving deeper into long term equity fund investments

ELSS (Equity Linked Saving Scheme) is a long term equity investment that benefits investors in terms of generating additional income while ensuring several benefits at the same time. There are clear tax savings with lock-in periods standing at 3 years in most cases. The money invested likewise in equity instruments will have ample growth potential via compounding when you hold onto the investment for a longer period of time. Thus, you should have a long term perspective in mind when making these investments.

These investments are ideal for meeting long-term financial objectives which include your own retirement, the wedding of your children and their higher education among others. The lock-in period and holding onto the investment for a longer duration enables better wealth creation as well. Investments made in ELSS instruments, for example, are eligible for deductions up to Rs. 1.5 lakh under Section 80C. Thus, these investments offer tangible tax benefits which you should certainly consider carefully. The 3-year lock-in period means that you cannot redeem or withdraw the investment before the expiration of this specific period. Hence, you should invest in the suitable funds if you wish to save taxes and grow wealth for the long term.

Yet, you should always have financial goals clearly lined up prior to making your investments. Identification of specific objectives will help you work out the amount to be invested and the corpus that you wish to achieve in a particular time period. Diversification of your financial portfolio through ELSS investments is highly recommended. Investing in long term equity funds could thus be a good addition to your financial blueprint for the long haul. However, remember that all investments in mutual funds are always subject to market risks. Do your homework and invest carefully.

[investfinance]

Child Plans in India- Safeguard Your Ward’s Future

A Child Plan is a mix of a backup security plan and investment funds plan. The reserve funds viewpoint ensures that you fabricate a corpus over the long haul and get great returns. You can pre-characterize the phases when you would require these profits, for example, when your kid gets into secondary school or school or when they get hitched. The Life Insurance perspective guarantees that your youngster's funds are dealt with by the existence spread if there should arise an occurrence of your sad destruction. Child plans in India are a rigid financial tool to protect the future of your child from any unprecedented situation. 

Benefits of a Child Plan  

The child plans provide numerous benefits listed below: 

Waiver of premium: In case of demise of the policyholder, the future premiums of the policy are waived off by the insurer

Life Cover: It provides life coverage to the policyholder safeguarding the future of the child

Tax Benefits: The premium paid for the policy gets the rebate in the unique tax benefits as decided by the tax authority of India

Loan Facilities: In case the policyholder needs a loan for emergency purposes then it can be done against the policy

Schedule the withdrawals: The insured can schedule the withdrawals at the start of the policy itself

Edelweiss Tokio Life Child Plans 

The child plan offers by Edelweiss are listed below:

Importance of Child Plan for Education 

Education is a must for every child, and as seen from the rising cost of secondary and higher education, the parents must plan savings and investments for the child’s future from the very start. You can set aside a certain percentage of your income every year to invest in financial instruments that will help the child at the time of getting a higher education. Start with a Child Education Plan, which gives assured returns on your investment funds as well as offers you an actual existence spread. You can decide to get returns at significant phases of your child's life. Furthermore, you can ensure that your kid gets the advantages of the Child Plan in any event of the demise of the guardians. 

Type of Child Investment Plans 

Child Endowment Plans: The funds are invested in the debt products which are secured from the risks and will assure your assistance at the time of need. 

Market Linked Plans: Also known as ULIP plans, the money is invested in both insurance products and the market-related instruments to get the financial gains in the future. 

Child plans have great importance for your child’s future and will help at the time of his higher education and unseen situations. You can plan well in time to get the full range of benefits of the policy.

[investfinance]

What are low duration funds and how are they useful for an investor

Low duration funds are debt funds that are invested in short term debt instruments. The duration of the fund portfolio varies between 6 and 12 months. In this fund, the assets are held for a considerable period which is in fact longer than overnight funds. Due to this reason, there are greater credit and interest rate risks in these funds.

You should know how the low duration funds work. You should also understand the meaning of duration because ‘duration’ does affect these funds. By duration, we mean the range of fluctuation of the value of the fund in reaction to the changes in market interest rates. Another name of duration is ‘interest rate risk’. Hence, the longer the duration, the more volatile the value of the fund will be. So, funds holding long-term maturity have higher durations. If the duration of the fund increases, its interest rate risk also increases likewise.

According to SEBI, low duration funds have to maintain their duration between 6 and 12 months. It goes to mean that low duration funds are invested in short-term debt securities. If the duration of the fund is low, then the risk also is low.

These funds invest in a wide spectrum of securities including government securities, corporate bonds, or other mutual fund units. There is a certain amount of flexibility involved here. If you invest in these funds, you earn through interest and capital gains from debt securities. These funds are on purpose invested in low-rated bonds such as AA to earn a higher interest rate. Yet there is a risk involved here, namely that of risking the investment through the risk of defaults. Anyway, it is one of the ways of earning through a low duration fund.

Low duration funds have to go in for some credit risk because they need to deliver higher returns. These funds are capable of generating capital gains as well. When interest rates fall, the fund managers increase the exposure of this fund to bonds with longer maturity period. As long as the interest is falling, this fund will enjoy gains likewise. There is a push-up in the value of these funds in a scenario where interest rates are going down. Low duration funds make use of strategies that are based on credit risk and interest rate risk. Overall, if the strategies are sound and in place, you gain immensely from investing in these funds.

One of the advantages of low duration funds is it involves moderate and bearable risk since securities are not held for more than 18 months. This low-duration holding period makes these funds relatively safer than investments with higher risk potential, i.e. ones where securities are held for longer durations. Hence, low duration funds are hugely advantageous for investors. This is a win-win situation for you since fund managers cut the time horizon whenever rates of interest start rising.

[investfinance]

How ULIPs can grow your money: Find Out

The first thing that strikes you after you’ve seen leaflets and literature associated with ULIPs is that “time” or “duration” is the number one priority in ULIP investments, just like investments in the equity market. You might have the orthodox notion that waiting is not good for making money. It is like sowing the seed today and reaping a ripe harvest tomorrow. One has to master the skill of waiting if one wishes to build a wealthy portfolio.

Now, with the aid of latest technologies, it has become a lot easier to access investment options through unit linked insurance plan, to explore and compare various types of plans and to get the transparent details of cost-structures. All these have made ULIPs a lucrative investment option for realizing both short- and long-term goals. There is another positive aspect of ULIP that has made it more lucrative. It is insulated against the volatility of the stock market. You don’t need a higher risk appetite for investments in ULIPs because you know for sure that your investment is safe. 

Following are the reasons why ULIPs are a sensible option for growing your money:

Unit Link Insurance Plan is suitable for retail investors. Other investment instruments are an amalgamation of funds from various institutional investment companies in which the retail investors are susceptible to risks associated with turmoil in the market. In other investment instruments, you are required to stay focused on the short-term or very short-term performance of your investment and there the key is the allocation to liquid assets. These factors are not suitable for longer-term investors whose returns might be dented by the swings in the market. ULIP is not vulnerable to such flaws because here the money is locked in for a fixed period. During this period, your money is allowed to grow to its full potential and you get the advantage of compounding of income.

The tax structure of the country favors an investor whose money is locked-in for a long period. The investor gets taxation benefits as well. The same is not true of an investment in which the investor is eager to switch funds. For them, there is a tax implication. In ULIP there are diverse investment options amongst equity, debt, balanced funds, etc. You have the freedom to switch between these safer funds without bearing any additional costs. There are some ULIP classes where your asset allocation is auto-rebalanced as you grow in age over time. The nearer you are to retirement, the money invested in ULIPs is automatically shifted to more conservative instruments or more balanced funds. And there are no tax implications to boot.

There is protection for you throughout your life. There are some ULIP plans which have provisions for including your family members into the existing policy. The whole life ULIP is suitable for you if you are looking at your retirement years as well.

[investfinance]

A guide to the new tax regime in India and how you should plan for the same

The new tax regime in India has introduced a totally new way of paying one’s taxes through the introduction of a radical change in the way taxes were collected and concessions were given. The current year has introduced two ways for you to pay your taxes and you can’t say that any one of them is inferior or less beneficial. Both have their own set of advantages but the choice is yours to go for any one of them, depending on some factors.

The old tax regime, if you follow, will continue to be the same as far as the tax amount is concerned. There is no change in the rate of taxes. But in the new regime of taxes, the taxes have been lowered. These are the basic differences or changes. If you go according to the new regime and gain the benefits of paying lower taxes, then you will have to do away with so many concessions that you had in the old system.

New tax planning in India has brought some conflicting ideas in the minds of salaried individuals due to the introduction of dual tax regimes running parallel to each other. Employees are in two minds as to which regime to follow. To dispel doubts, one has to understand the differences between these two regimes. The following is the difference.

Deductions: If you take up the new regime you have to opt-out of Standard deduction of Rs 50, 000. This holds true if you are a salaried employee. There are other benefits you’ll have to forego such as HR allowance on your staying as a tenant, interest on housing loan, Leave travel allowance, life insurance premium, ELSS and so on. These cannot be claimed under the new regime. Many exemptions have been dispensed with.

You should know what’s best for you. You should see what your taxable income is and if it is less than Rs. 5 Lakh or above Rs. 15 Lakh, the tax rate remains the same. In this case, you should continue with the old regime.

You should explore what the exemptions were and how many you will lose if you opt for the new regime. You’ve got to examine what amount of money you could save if you were to follow the old regime as before. Now you should go and check the table of tax rates and find out the total income tax that you have to pay under both regimes.

Now you’ve got to look beyond taxable income. You should take into account the stage of life you’re in, your priorities in life, and your financial objectives. With inflation going up and growth of the market-driven economy, you should be advised to start saving early for your rainy days. You should find yourself in a position to equip yourself with the power of compounding your income. You can change your regime every year. For first-time taxpayers, it will be simple and easy to follow the new tax regime.

[investfinance]

Why are Hybrid Funds a Smart Strategy?

Hybrid funds are a solution to the drawbacks of Equity and Debt mutual funds. Unlike other mutual funds, these funds also aim in increasing the amount of money invested by capital appreciation or establishing respectable return levels. They are also called exchange-traded funds or ETFs as well as Balanced Funds, which includes investing in more than a single type of investment security like stocks and bonds. They are less risky in comparison to equity funds and yield higher returns. They are generally classified as conservative, moderate and aggressive.

Based on asset allocation, hybrid funds are classified as – Equity-oriented hybrid funds where the fund manager is investing 65% of the fund's assets in equity, debt-oriented balanced funds where the fund manager invests 65% on debt instruments, monthly income plans with 15-20% exposure to equities and Arbitrage Funds. Monthly Income Plans help in increasing the fund's total amount and generate a higher return in comparison to regular debt funds. The arbitrage funds are maintained by a set of managers who buy the stock at a lower price in one market and sell it in a different market at a higher price point, thus maximizing the returns.

While investing in hybrid funds, you must consider certain points. Though it is said to be risk-free yet there might be some minimum risks, so you need to exercise caution and undertake portfolio rebalancing regularly. No guaranteed return is possible; there may be fluctuations due to market movements. These funds require a managing portfolio fee known as expense ratio. Look for the minimum one possible.

Check for the investment horizon, financial goals and tax benefits. It is better to select a medium-term investment horizon and if you desire to have a risk-free return rate, then go for arbitrage funds. The tax rate over long term capital gains crossing Rs. 1 lakh on equity components is 10% and for short term capital gains, it is 15%.

It is considered that hybrid funds are way too safe than equity funds. They are providing higher returns due to the presence of equity components in comparison to genuine debt funds. Investors who are willing to get exposure to equity markets can invest in hybrid funds. This fund comes with a debt instrument that protects investors against extreme market fluctuations.

The dynamic asset allocation feature is the best way for a less conservative category of investors looking to shy away from market fluctuations. Therefore the main reasons why investing in hybrid funds is smarter are active risk management, portfolio diversification and asset allocation. Hybrid funds efficiently allocate the funds between industries and asset classes proportionately depending on the investment mandate and fund type. These funds are best for mid-term goals like accumulating money to make a down payment for buying a house or for a child's education. The allocations are taken care of by professionals, employed as fund managers.  

[investfinance]

Key Features of ELSS Investments You Should Know About

Equity linked savings schemes or ELSS investments represent investments in diversified equity mutual funds. These are funds where a significant portion is invested across equities and the returns is naturally influenced by equity market trends. There are several major features of these mutual funds that you should know more about before investing.

Firstly, equity linked savings scheme have lock-in periods of 3 years. This will be applicable from the date on which you have made your investment. Every SIP (systematic investment plan) in ELSS that you make will be locked in for a period of 3 years from their respective dates of investment as a result. After the period of 3 years passes, you can exit your ELSS investment by selling it off.

Secondly, ELSS investments are subject to tax deductions as well. You can get deductions under Section 80C up to Rs. 1,00,000. Of course, this category includes deductions across several other basic investment categories like PPF, life insurance, home loan principal repayment and so on. The returns from ELSS investments are tax-free as well.

Thirdly, there are growth and dividend choices for investors. Investors will naturally get a lump sum corpus upon the conclusion of 3 years from the date of investment. In the dividend system, the investor will be getting a dividend income regularly whenever any dividend is declared by the fund in question. This happens even in the lock-in period.

Fourthly, remember that lock-in periods are much lower at 3 years for ELSS investments as compared to other tax-saving channels under Section 80C like PPF which has a lock-in period of 15 years, NSC which has a lock-in period of 6 years and tax-saver FDs which have lock-in periods of 5 years.

You should always invest in any equity linked savings scheme only after looking at some key factors including the fund’s performance over the years, the credentials of the manager of the fund, the portfolio, the expense ratio and past volatility of the fund in question.

Keep in mind that ELSS investments are not suitable for those who do not have a higher appetite for risks or do not wish to take any risks at all. These investments are like investments made in the stock market. There are risks linked to these investments depending on market fluctuations although they can earn you handsome returns over a prolonged time period.

 Experts feel that adopting a long-term approach towards reaping the rewards of ELSS investments is always a good option. This will ensure better returns which can beat inflation while giving you decent tax benefits as well. Always consult a financial expert prior to investing in an equity linked savings scheme and make sure that it is a part of your financial portfolio. Do not keep all your eggs in one basket; diversify your investments into ELSS and other channels.

[investfinance]

Can you invest in mutual funds overseas?

You can go for investments in mutual funds that operate overseas. These funds are recognised as International Mutual Funds. Investing in mutual funds overseas is the same as investing in stocks or securities to build a strong portfolio in your own country. If the currency value overseas is higher then there are possibilities that you could gain by a good margin. This is because of the economies in different countries that function in a visibly different way.

Here are some important pointers for investors who are interested in the overseas market:

Currency exchange rate: The exchange rates of currencies fluctuate regularly. If the Indian rupee falls against the dollar, then you are bound to get a greater amount per dollar by the mutual funds investing overseas strategy.

Performance factor: The mutual funds investing overseas market not only fluctuates, depending on economic conditions but also depending on social and political factors. Therefore, you should maintain regular vigilance on market movements.

Returns policy: It is for sure that the international market could bring a good surplus as against the Indian economy, especially if you trade in dollars. Greater returns imply greater profits and appreciation. It also boosts your potential with regards to mutual funds investing overseas and also helps in enhancing your portfolio.

Risks involved: Do not get too excited with the fact of investing overseas because many times you do not understand how the market can divert. You cannot always keep up with the present economic conditions in the international fund market and thus, it becomes a risky proposition overall.

Tax benefits: Since these funds invest in securities that are mostly equity shares, therefore it becomes a long-term investment plan. Previously, only short-term plans were charged with taxes and these long-term investments were kept tax free to attract investors into this money-making market. However, ever since the Budget 2018 was introduced, investors earning more than 1 lakh rupees are subjected to a 10% tax.

Remember that even though you get good returns, there are greater risks in the overseas market and therefore you have to be mentally prepared in taking up risks and challenges throughout changing market conditions.

However, the market gives you wide exposure to diversification and also helps in building more experience on your part. But remember that before you decide to invest in a mutual fund, clarify your intentions for which you are going to invest. In simple terms, fix a goal. Carefully inspect the terms and clauses of the mutual fund you are going to invest in and analyse the risks which you have to be prepared for.