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High net worth individuals (HNIs) have unique financial needs and goals that require specialized attention. Managing significant wealth, mitigating risks, and ensuring that wealth is passed down to future generations are complex tasks that require expertise and experience. This is where private wealth management services come in, providing tailored solutions to meet the specific needs of HNIs.

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NPS with its tax benefits can help you reduce your taxable income by quite a bit. However, it is appropriate for you to invest in NPS as a tax saving option. It is a great product to build a corpus for your retirement thanks to its low cost and flexibility. So invest for the right reason.

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India’s National Pension System is synonymous with retirement planning and investing. Earlier, NPS was open to only central government employees, but in 2009, it was opened to all citizens of India including private sector employees.

Run by the Pension Fund Regulatory and Development Authority (PFRDA), under the jurisdiction of the Ministry of Finance, NPS enables Indian citizens to contribute towards their pension fund, to be withdrawn when their account matures or under other specific circumstances.

Accounts in NPS

To learn more about how NPS works, read this blog.

The National Pension Scheme provides its subscribers with two types of accounts primarily referred to as Tier I account and Tier II account. It is mandatory for subscribers to join NPS through a Tier I account, whereas opening a Tier II account is optional and can be done at any time, whether it be at the time of opening the Tier I account or later.

The Tier-I/Pension Account is a permanent retirement account that requires subscribers to invest for the long term, and in return, they receive a pension at the time of retirement. Meanwhile, the Tier-II or Investment Account is a voluntary short-term investment account.

Tier I vs Tier II

Below are some key differences between Tier I and Tier II NPS accounts:

Tier ITier II StatusMandatoryVoluntary WithdrawalsRestrictedPermitted Min Initial Contribution₹ 500₹ 1000 Min Subsequent Contribution₹ 500₹ 250 Max NPS ContributionNo LimitNo Limit

Registering for NPS and opening an account will enable you to open a Tier I, since that is the default choice for new investors. Why? Because you need to have a Tier I account in order to open a Tier II account.

How to open a Tier II account?

Once you have registered for a Tier I account, here is how you can go about opening a Tier II account:

You should have a ‘Permanent Account Number’ (PAN).​

You can then enter details like PRAN, Date of Birth and PAN.​

OTP for the purpose of authentication will be sent to the mobile number registered with the CRA.​

You then need to fill up all the mandatory details (Bank, Nomination, Scheme Preference etc.) online.​

Upload copy of PAN Card and cancelled cheque.​

You need to enter the initial amount for investment (minimum ₹ 1000).​

You will then be routed to a payment gateway for making the payment towards your NPS account from Debit/ Credit card or Internet Banking.

You will need to take a printout of the form after activation of Tier II account.​

The form along with copy of PAN card and cancelled cheque should be sent within 30 days from the date of activation of Tier II account to KFintech branch office or else the PRAN (Tier II) will be ‘frozen’ temporarily.​​

Conclusion

To learn more about you can plan your retirement with NPS and open an account, visit our dedicated NPS platform.

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You can also take the help of a tool that lets you manage your investments, without you having to do (a lot) of leg work. KFintech’s KFinkart Investor Portal can enable you to track your investments more easily, and take informed decisions to achieve your financial goals in the long run.

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Many people tend to overlook retirement planning in the overall financial plan that they make for themselves, until it’s too late. The truth is that the earlier you start planning for retirement, the better off you’ll be in the long run. One of the most popular investment vehicles for retirement planning is, of course, the government-run National Pension System.

The NPS pension scheme that allows individuals to invest and save for their retirement years. It’s open to all citizens of India between the ages of 18 and 60. Contributions can be made on a regular basis (such as monthly or annually) up until the age of 60.

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New Rules for NPS Fund Managers and their Impact on Your Returns

The National Pension Scheme (NPS) has undergone various changes since its inception. They are sometimes linked to NPS withdrawal rules, while at other times, they are related to NPS exit rules. This time, however, against everyone’s expectations, the Pension Fund Regulatory and Development Authority (PFRDA) proposed changes that apply to fund managers, but have an impact on subscribers. Before discussing them in detail, let’s first understand what NPS is.

What is the National Pension Scheme?

The National Pension Scheme is a voluntary investment plan launched to secure your retirement. This retirement scheme is under the purview of the central government and the Pension Fund Regulatory and Development Authority (PFRDA). The NPS was initially accessible to government employees, but in 2009, it was made available to all Indian citizens aged 18 to 60 years.

You can make an investment in the NPS until the age of 60 years. After that, you can withdraw 60% of the corpus and use the remaining 40% to buy an annuity plan.

NPS New Rules 2021

Since the launch of NPS, the scheme has seen several alterations. The new ones are listed below.

Investment in mid-cap stocks

Previously, NPS fund managers were limited to investing in companies that were traded on the Futures and Options market. In addition, the funds must be invested in companies with a minimum market cap of ₹5,000 crores. As a result, the fund managers’ only alternative is to invest in the top 100 large-cap funds. Fund managers can now invest funds in the top 200 companies (100 large-cap and 100 mid-cap).

Investment in Initial Public Offerings (IPOs)

The new NPS rule permits fund managers to invest in firms that are set to go public, though there is one prerequisite to investing in an IPO. They cannot invest in them if their market capitalisation is less than that of the 200th company from the top.

It means that any large IPO with a market capitalisation of more than ₹21,200 crores can be added to your NPS portfolio.

Investment in more group companies

Earlier, fund managers could only invest 5% of the equity spread of funds in group companies; the new NPS rule states that the 5% cap applies to the total portfolio rather than just equity.

How Will the New Rules Affect the NPS Subscribers?

The ability to invest in mid-cap companies has opened up a slew of new possibilities. Between large-cap and mid-cap companies, you will notice that mid-cap companies have more growth potential.

Companies that are newly listed can give substantially better returns than those that are already listed. However, there are certain challenges in front of NPS fund managers in this case. Even a look into a company’s financials, cannot determine how stocks would be welcomed by investors.

The permit to allocate more funds towards group companies provides fund managers with more flexibility. As an NPS member, your returns will be multiplied if you have exposure to a group firm with strong growth prospects.

To Conclude:

The new NPS rules are mainly related to equities. The broader investment options may improve returns over time. Yet, you must not forget that higher returns come with higher risks, especially in the context of equity. Therefore, as an NPS subscriber, keep track of your investment’s performance. Change your NPS fund manager if you believe your portfolio is underperforming.

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The National Pension Scheme (NPS) has undergone various changes since its inception. They are sometimes linked to NPS withdrawal rules, while at other times, they are related to NPS exit rules. This time, however, against everyone’s expectations, the Pension Fund Regulatory and Development Authority (PFRDA) proposed changes that apply to fund managers, but have an impact on subscribers. Before discussing them in detail, let’s first understand what NPS is.

What is the National Pension Scheme?

The National Pension Scheme is a voluntary investment plan launched to secure your retirement. This retirement scheme is under the purview of the central government and the Pension Fund Regulatory and Development Authority (PFRDA). The NPS was initially accessible to government employees, but in 2009, it was made available to all Indian citizens aged 18 to 60 years.

You can make an investment in the NPS until the age of 60 years. After that, you can withdraw 60% of the corpus and use the remaining 40% to buy an annuity plan.

NPS New Rules 2021

Since the launch of NPS, the scheme has seen several alterations. The new ones are listed below.

Investment in mid-cap stocks

Previously, NPS fund managers were limited to investing in companies that were traded on the Futures and Options market. In addition, the funds must be invested in companies with a minimum market cap of ₹5,000 crores. As a result, the fund managers’ only alternative is to invest in the top 100 large-cap funds. Fund managers can now invest funds in the top 200 companies (100 large-cap and 100 mid-cap).

Investment in Initial Public Offerings (IPOs)

The new NPS rule permits fund managers to invest in firms that are set to go public, though there is one prerequisite to investing in an IPO. They cannot invest in them if their market capitalisation is less than that of the 200th company from the top.

It means that any large IPO with a market capitalisation of more than ₹21,200 crores can be added to your NPS portfolio.

Investment in more group companies

Earlier, fund managers could only invest 5% of the equity spread of funds in group companies; the new NPS rule states that the 5% cap applies to the total portfolio rather than just equity.

How Will the New Rules Affect the NPS Subscribers?

The ability to invest in mid-cap companies has opened up a slew of new possibilities. Between large-cap and mid-cap companies, you will notice that mid-cap companies have more growth potential.

Companies that are newly listed can give substantially better returns than those that are already listed. However, there are certain challenges in front of NPS fund managers in this case. Even a look into a company’s financials, cannot determine how stocks would be welcomed by investors.

The permit to allocate more funds towards group companies provides fund managers with more flexibility. As an NPS member, your returns will be multiplied if you have exposure to a group firm with strong growth prospects.

To Conclude:

The new NPS rules are mainly related to equities. The broader investment options may improve returns over time. Yet, you must not forget that higher returns come with higher risks, especially in the context of equity. Therefore, as an NPS subscriber, keep track of your investment’s performance. Change your NPS fund manager if you believe your portfolio is underperforming.

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The Future of Wealth Management: Predictions and Trends

Hey there! Are you curious about where the world of wealth management is headed? You’re not alone. As the financial industry evolves, so too do the strategies and approaches to wealth management. In this blog, we’ll explore some of the predictions and trends that experts are forecasting for the future of wealth management.

Personalised Services

One trend that is already starting to emerge is the shift towards more personalized and customized wealth management services. Gone are the days of one-size-fits-all investment portfolios. Today’s investors want and expect tailored solutions that take into account their unique financial goals, risk tolerance, and personal preferences. As such, wealth management firms will need to be more agile and adaptable in order to meet the needs of their clients.

Technology

Another trend to watch is the increasing use of technology in wealth management. From robo-advisors to machine learning algorithms, the use of technology is expected to play a larger role in the industry. While this may sound intimidating to some, the reality is that technology can actually make the wealth management process more efficient and effective. By automating certain tasks and using data to make more informed decisions, wealth management firms can better serve their clients and stay ahead of the curve.

Sustainability Awareness

Sustainability and impact investing are also gaining traction in the world of wealth management. As more and more people become aware of the environmental, social, and governance (ESG) issues facing the world, they are looking for ways to align their investments with their values. Wealth management firms that offer ESG investment options and can help clients make informed decisions about socially responsible investments are likely to see an increase in demand.

Digital Assets

Finally, the rise of cryptocurrencies and other digital assets is starting to shake up the wealth management industry. As more people invest in these assets, wealth management firms will need to figure out how to incorporate them into their investment portfolios and advise their clients on their potential risks and rewards.

Conclusion

Overall, the future of wealth management looks to be exciting and full of change. With personalized solutions, technology, sustainability, and digital assets all on the horizon, it’s an exciting time to be in the industry. As always, it’s important to do your due diligence and carefully consider your financial goals and risk tolerance before making any investment decisions.

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India’s Mutual Fund Solutions Universe

The mutual fund universe in India can seem like a maze, with hundreds of schemes to choose from. But don’t let that deter you – with a little bit of research and planning, you can find the right mutual fund(s) to meet your investment goals. Below are the types of mutual funds available for investing in India.

Equity Funds

Equity funds, also known as stock or growth funds, invest in a diversified portfolio of stocks. These funds aim to provide capital appreciation over the long term by investing in companies with strong growth potential. Equity funds are suitable for investors with a high-risk appetite and a long-term investment horizon.

Debt Funds

Debt funds, also known as fixed income or income funds, invest in a diversified portfolio of fixed income securities such as corporate bonds, government bonds, and money market instruments. These funds aim to provide a regular stream of income through interest payments and capital appreciation. Debt funds are suitable for investors with a moderate-risk appetite and a medium-term to long-term investment horizon.

Balanced Funds

Balanced funds, also known as hybrid funds, invest in both equity and debt securities in a predetermined proportion. These funds aim to provide a balance of capital appreciation and income generation. Balanced funds are suitable for investors with a moderate-risk appetite and a medium-term investment horizon.

Money Market Funds

Money market funds invest in short-term debt securities such as commercial papers, certificates of deposit, and treasury bills. These funds aim to provide liquidity and stability of capital, and are suitable for investors with a low-risk appetite and a short-term investment horizon.

Index Funds

Index funds track the performance of a particular index such as the S&P BSE Sensex or the Nifty 50. These funds aim to replicate the returns of the underlying index and are suitable for investors looking for a passive investment option.

Sectoral Funds

Sectoral funds invest in a particular sector or industry such as technology, healthcare, or infrastructure. These funds offer higher potential returns, but also carry higher risks due to the sector-specific nature of the investments. Sectoral funds are suitable for investors with a high-risk appetite and a long-term investment horizon.

Tax-Saving Funds

Tax-saving funds, also known as Equity Linked Savings Schemes (ELSS), invest in a diversified portfolio of stocks and offer tax benefits under Section 80C of the Income Tax Act. These funds have a lock-in period of 3 years and are suitable for investors looking to save on taxes while also seeking capital appreciation.

Well, that’s it for our deep dive into the world of Indian mutual funds. We hope that you now have a good understanding of how mutual funds work in India and are feeling more confident about making informed investment decisions. Remember, mutual funds can be a great way to grow your wealth over the long term, but it’s important to do your due diligence and choose a fund that aligns with your investment goals. Don’t be afraid to ask for help – whether it’s from a financial advisor or a knowledgeable friend – and always be sure to read the fund’s prospectus before investing. With the right strategy and a bit of patience, you’ll be on your way to building a strong portfolio of mutual funds in India.

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If you invest in wealth management services, you may be able to use financial planning software to help you create a financial plan. Similarly, wealth management software can help you track the performance of your investments. Regardless of which type of software you choose, it’s important to find software that is compatible with your financial advisor.