Wednesday, August 7, 2013

Prajna Capital

Prajna Capital


What to do when your investments do not work out as expected

Posted: 07 Aug 2013 07:21 AM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 



It's not easy being a long- term investor. For long periods, things may not be in your favour. For instance, in the past five years, the Bombay Stock Exchange Sensitive Index, or S& P Sensex, has returned barely five per cent annually. Obviously, there will be a lot of anguish.

While analysts or investment advisors give ample advice on where to invest, but there is limited advice on what to do when your investment does not perform up to mark. The best advice that is given is -- hold on. But as an investor, if your investment is not performing too well, there are two things you need to do. One, analyse why is it so? Then, take remedial measures, if required.

Failure of instruments to give adequate returns is a common phenomenon these days. This may happen mainly in stock market- linked products like equity and mutual funds. But it can also happen in case of some traditional fixed income instruments such as company fixed deposits or gold. It is important for investors to note that they cannot win always. Secondly, there are many who can outsmart you in the market. Also markets are not perfect and are not always Non- performance may be for the following reasons:

Selection of wrong investment product:

This can result into poor performance of the investment. For instance, insurance products generally provide very nominal return which cannot even beat inflation so it can result in destruction of wealth. Similarly putting money in a fixed deposit with say 8 or 8.50 per cent annual return may not yield any value for money due to the inflation of more than 9 per cent.

Market conditions:

The investment avenue selected may have had a high- return potential but failed to perform.

For example, you may invest in equity or equity- oriented mutual fund scheme but due to adverse market conditions, they failed to generate desired return.

If an investor comes to realise that his investment has failed to produce desired result, he should take corrective action. There are some points which an investor may keep in mind while tackling such investments:

Avoid averaging of cost:

Averaging cost is the most popular method. The belief is that averaging reduces the cost of purchase and helps in generating wealth in the long term. This may work, if the investment product selected has failed to perform for some temporary reason. However, in case the fortune of that industry has changed permanently or structurally, averaging may result in more losses. However, investors can look at going for a systematic investment plan, in some cases to avoid timing issue of investing.

Hold or sell decision:

If an investment fails to perform in the short term, investors believe that in the long run it will definitely perform and hence, continue to remain invested. It is important to note that long- term investing is not remedy for all investment errors. It is important to analyse whether to hold for or should you come out of some of the incorrect investment decision is very much important.

Booking a loss may be less costly than carrying a loss: It is important to have a stop loss strategy. One should have the heart to book losses. Don't be disillusioned by the fact that your investment choice will always work and hence, you must stay invested.

Please remember carrying a loss will eat away your investments badly in the long run, hence it may be important to have a stop loss strategy.

Retaining failed investment can lead to deterioration of financial wealth.

Constant review:

Investor must know that monitoring the performance of investment on an on- going basis is a key ingredient to ensure success.

You must take the responsibility of tracking the performance of your portfolio at periodic intervals.

Avoid too much churning of portfolio:

Investors who invest without a well- defined time horizon get tempted to make abrupt changes in their portfolio. Lack of clarity in the expectations force them to take impulsive decisions and can lead to further losses. It is important for investors to understand that poor or negative returns could just be a result of the way the market behaves during certain time periods and may not require any action on their part.

The common grouse of equity investors has been their portfolio has not performed up to the mark. In the analysis below, an attempt is made to find out the performance in case a person had invested at various time intervals in say equity index Nifty.

For the benefit of investors we have tracked the performance on a relative basis for various time periods. As can be seen from the above table, if you had invested in the index five years back, your simple annual return would have been just 6.02 per cent for the five year period. In case you had invested three years back i. e. on 20th June 2010, your simple return would have been only 1.88 per cent. However if you had invested last year, the return would have been 10.45 per cent for one year.

Most of the equity investors can take solace from the above table that the stock market has not performed as per expectation. So in case you have seen your portfolio is not performing or is in negative, there should not be much cause for worry.

The process of measuring the performance and monitoring the progress of the portfolio as well as the subsequent actions to fine tune the portfolio if needed requires an investor to follow a well thought out strategy. There is no ready to use solution to remedy any non- performance of investments. However it is important to always have an alternate plan in case your original investment does not provide desired results.

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 )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Benefits from periodic debt mutual funds

Posted: 07 Aug 2013 06:11 AM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 


There are multiple options available to corporates with regard to investments. To maximize returns therefrom, it is wise to factor in the liquidity aspect, risks associated with such investments, business needs and also the incidence of taxation on returns from these investments.


For investments over a short period of time, liquid and liquid-plus funds are the best available options. Generally, these funds can give returns which are around 200-250 basis points higher than fixed deposits, and they combine this with immediate liquidity.
The most important consideration for corporates is to have surplus funds, and surplus cash needs to be kept in diversified funds. To enjoy better returns, corporates need to invest in periodic debt funds (last year debt funds generated very good returns). Also, a portion of the funds needs to be assigned with professionals with a conservative mandate, like debt portfolio management services.


Small and medium sized corporates, which cannot afford a separate treasury department, need to decide on their mandates according to the business requirements with tax consideration and optimize returns by getting professional help.

 

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 )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

How long is long-term in mutual fund investing

Posted: 07 Aug 2013 04:38 AM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

MUTUAL fund investors are finding out that the term long-term has undergone a change of meaning.

 

The usual advice to investors is: invest for the long term so you may derive better returns from equity-oriented instruments.

However, this often does not turn out that way as far as the total time period is concerned. This is why an individual must make sure that he has a fair idea of the situation before acting.

Normal expectation:

Usually, when you refer to a long-term investment you mean three years or so.

That is how people, including advisers as well as distributors, refer to the context of mutual funds. This is longer than the normal time period of several months or a year or two that one might expect for an investment. There is a certain expectation that comes with looking at this time period and this is that there would be good returns that one would normally expect with an equity investment would be witnessed in the portfolio. The normal thing is that in the short time period of a few months or even a couple of years, there could be tough conditions in the equity whereby the returns might not be visible but by the time the period has expanded to more than three years the real benefit of investing in equities would start being seen.

Poor conditions:

 The situation for many investors is extremely critical at this juncture because their entire plans have been turned upside down. On one side they started investing during tough times through a systematic investment plan and this has gone on for quite some time which for many people is around four to five years. The problem is on the returns side where many are under water, which means that they are actually losing money while those in the positive territory are just in the 2-3 per cent annual range. The feeling is that of disappointment wherein even after waiting for a long time period and continuing to invest there is no result that is actually being witnessed and at the same time there is also no surety as to when the situation could also change.

Time Revision:

Considering the actual position individual investors will have to ensure that they are making the right decision. The way to go about this process is to start at the basic level and look at the expectations that have been built in. The time period of three years that most people consider as long term is the one that needs to be revised and hence there has to be work on this particular front. The real long term that many investors look towards is not just a few years but it can be a decade or more because equity cycles can also last this long. The real wealth that is built up in equities comes over this longer time period and hence this has to be the end goal of the individual.

Most people do not venture this far or they actually do so only when they realise that their existing plans are not working that they decide to remain invested for a longer time period. However, one has to understand that in the field of equity and equity mutual funds there is nothing that is certain and there could be long time periods when the position is not working out. The real work lies in understanding that the period could extent for far longer than what one can have expected.

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 )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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