Prajna Capital

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• Index Mutual Funds are for low Risk Equity Investors
• What are non-convertible debentures?
• Bank Savings account and reward points

Index Mutual Funds are for low Risk Equity Investors Posted: 06 Aug 2013 06:00 AM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Unlike actively managed funds, index funds eliminate fund manager risk   Taking a call in volatile stock market conditions isn't easy. But for long- term corpus building, equities need to form a part of your investment strategy call. Other asset classes such as real estate and gold are good as diversifiers, but should not form the core of the portfolio. And they come with their own set of issues. With the Consumer Price Index ( CPI) – the indicator of what consumers are paying for their basket of goods – in double digits, investing in fixed income instruments does not really make much sense because the post- tax returns are in the region of seven to eight per cent. Real estate requires a huge capital investment. Gold, the favourite of investors for almost half- a- decade, seems to be slipping especially after the government and the Reserve Bank of India have come out with stringent guidelines. It's not that equities are without their own problems. For instance, which sector does one choose? Or which stock in a particular sector is good? Even mutual fund investors have around 2,000 equity schemes to choose from. However, a safe and perhaps the simplest way of investing in equities is through an index fund. Index funds provide a low- cost and somewhat safer option. Also, the fund manager has to follow a template that is already existent, in terms of the index that the scheme is following. So what is an index fund? It is an equity fund that replicates a particular equity index by investing in the stocks that the fund tracks. For example: An index fund can mirror either S& P Sensex or Nifty or BSE- 100 and so on. Investing in index funds is a passive investment strategy as the investor attempts to mirror the returns of the overall market represented by the index stocks. But before investing in them, look at two important parameters to choose an index fund - expense ratio and tracking error. Tracking error is the standard deviation of the returns differential between the fund and its benchmark. The objective is to choose an index fund with the lowest tracking error. The optimal index fund then is one, which has low tracking error and expense ratio. The low tracking error is considered good as the returns of the fund mirror that of the index. If the tracking error is high, it means the returns of the fund is not in line with index contradicting the very purpose of investing in index fund. John Bogle, founder of The Vanguard Group and a major figure in the index investing community, was the first person to offer an index fund to retail customers. Bogle has long been a proponent of passive investing over active management, and for low fees and no sales charges. Considered the Father of Index investing, Bogle believe that the average investor cannot "beat the market" over time. Vanguard funds are renowned for their ultra- low expense ratios, and for having no loads. Vanguard 500 Fund carries atotal expense ratio of less than 0.5 per cent of assets annually, and has outperformed the majority of mutual funds over the past 25 years. Advantages of index investing: Convenience: Since investors don't have to bother about the performance of specific stocks, it provides huge convenience for investors to have hassle free investing. Low expense ratio: Since there is no active management of stocks, the expense on account of investing is lower. The expense ratio for index funds ranges from 0.5 per cent to 1.50 per cent whereas the expense ratio for active funds is 2 per cent to 3 per cent. Churning of underperformer outdated stocks: Most of the indices consist of actively traded stocks. In case any stock is an underperformer or has low liquidity, it is automatically weeded out whenever the reconstitution of stocks in the index happens. Thus, these indices enable the investor to own stocks that are in vogue and remove the underperformers. Investors, then, need to worry about being invested in laggards. Diversification of risk: Since you invest in a basket of securities, it allows you to have a diversified portfolio. Disadvantages of index investing: No outperformance: A small set of active fund managers will always outperform the indices. If you have invested in passive funds, don't pay too much attention to the active funds that have outperformed in a given year. Remember that the probability of correctly predicting next years winners year after year is very small. Most suited to efficient markets: Globally, it has been witnessed that as markets become more efficient, it becomes harder for fund managers to beat their benchmarks. Passive funds progressively become the preferred investment vehicle in such markets. Limited options: Today, there aren't enough passive funds for executing all types of investment strategies. The universe of passive funds available to Indian investors needs to grow. There is also lack of awareness among Indian investors about index funds. Returns (%)* Scheme Name 1 year 3- year 5- year Mirror the index stock in the same proportion as their constitution in the index The expense ratio is approximately 0.5 to 1.5% The returns will be similar to the index which it mirrors. Less volatile Best suited for those who don't wish to take fund manager' riskwhile investing in equities Structure Expense Returns Volatility Suitable to whom Take an active call on stocks based on the fund manager's investment outlook and constitution of the scheme. The expense ratio is approximately 2 to 3% The objective is always to outperform the benchmark index More volatile Suitable for those who wish to have returns higher than the index. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving) Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications These Application Forms can be used for buying regular mutual funds also Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

What are non-convertible debentures? Posted: 06 Aug 2013 05:04 AM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     NCDs are debt products, also called fixed income investment products, which are issued at a certain price called face value, have a maturity period of a few years and carry a fixed rate of interest. Usually NCDs are issued by corporates to raise money and are listed. Since they carry higher risks than government debt instruments, the rate of interest is also higher than what one can get in fixed income instruments from the government. To attract fixed income investors, NCDs issuers also offer rates higher than bank FDs. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving) Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications These Application Forms can be used for buying regular mutual funds also Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Bank Savings account and reward points Posted: 06 Aug 2013 03:59 AM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Find out about the eligibility and types of transactions you need to conduct before redeeming reward points The big spenders are expectedly pampered, with credit card issuers and merchant outlets showering them with discounts and freebies. In recent months, however, two private-sector majors—ICICI Bank and Axis Bank—have expanded their scope of offerings to cover the savers as well. While a plethora of freebies is being offered on a platter, on the flip side, there is the tedium of keeping tabs on the reward points and redeeming them. If you want to make the most of the loyalty programmes, you need to understand how they work and avoid the peril of over-spending. How does it work? The savings account holders in banks that offer reward point programmes do not have to make an effort to sign up for it since they are enrolled by default as soon as they open an account. The transactions include simple ones like activating Internet or mobile banking, opening a recurring deposit account, updating mobile number through an ATM, or registering for an e-statement. Then there are more complex activities like taking a loan, paying utility bills using the online payment platform, or even making an EMI payment on time. To be eligible for the reward points, the retail customer needs to fulfil certain conditions. For instance, in the case of ICICI Bank, account holders are required to maintain a minimum monthly average balance of 15,000, while NRI customers are not eligible at all. The public-sector banks, however, are not rewarding their savings account holders and have largely limited themselves to card spends for now. How to redeem reward points While you earn 1 point for every 100 you spend online through Net or mobile banking with ICICI Bank, you can get 100 points for just activating these services. In the case of Axis Bank, you can earn 25 points for ordering a new cheque book online or via an ATM, but get 500 points when you open a Wealth or Privee account. How do you keep track of your reward points? Since ICICI Bank's points are managed by PAYBACK, the multi-brand loyalty programme, you can either get in touch with its contact centre/website, through the bank's website, or even via your account statement. To redeem points, you have to choose from the list of products or services published on the bank's website and call up the bank to communicate your decision. For Axis Bank, you can pick from 500 rewards from a range of lifestyle and entertainment products and services, provided that you have accumulated a minimum of 300 points. Rewards on card spends A high-end credit card is bound to offer a better spend-to- reward-point conversion ratio compared with a no-frills card. However, such cards typically entail a huge membership fee. Plain-vanilla cards may not levy a big fee, but could require you to make substantial purchases to be eligible for worthwhile rewards. Availing of cash-back offers is relatively easy as you have to simply swipe your card at the merchant outlets or make an online purchase and the applicable amount will either be credited to your account or the discount factored into the bill. While both cash-back and reward point programmes seem attractive, it requires you to choose your bank or card, as well as rewards, carefully. So, if you watch movies or dine out often, pick a lifestyle card that offers additional points on such spending. On the other hand, cards or savings accounts that entitle you to, say, 5% cash-back on payment of utility bills will be useful for all segments as it is an unavoidable expense. Ensure that you exercise caution while choosing cards for the cash-back benefits as banks and card issuers routinely revise their offerings. Besides, your spending pattern should justify the membership fee. The last thing you should do is to sign up for a card only to avail of the reward points or cash-back offers. Many credit card users believe that hoarding a large number of points for years will help them buy an expensive product. However, the bank or card issuer usually specifies a validity period for redeeming the points. Check this or you may end up waiting for months only to find out that the offer period has expired. 5 questions to ask before you sign up for reward points l Is it a limited period offer? l Does your spending pattern justify the annual fee? l Is it restricted to transactions with select merchants? l Does it exclude any spending categories such as the one on fuel? l For what can you redeem your points? Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving) Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications These Application Forms can be used for buying regular mutual funds also Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

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