Prajna Capital |
- SIPs are better when you invest over Stock Market Cycles
- Transferring Money through Mobile Banking or Iinternet Banking
- ULIP vs ELSS
| SIPs are better when you invest over Stock Market Cycles Posted: 01 Aug 2016 04:45 AM PDT Invest SIPs Online
Stock Market returns do not have linear movement
During bull markets, almost all stocks - the good, the not-so-good and the downright rubbish - tend to move up. Everyone seems to be elated because the value of their portfolios are moving up with leaps and bounds. So, you really won't know how resilient your portfolio is until there is a strong down turn. When selling becomes relentless - like it was 2 months back almost all stocks tend to lose ground. And so the cycle repeats. A bull market is followed by a bear market, which is followed by another bull market and then again a bear market. Many a times the retail investor goes out with a loss since he / she may have entered at a previous high and then blames the market. Is there no respite from this cycle? The answer is: No, because it is the inherent nature of markets. So what should investors do?
Markets have been choppy over last 2 years – A live example:
Indian stock markets started its bull run when the NDA Government won the general elections in May 2014. There was a sense of euphoria around the new government's reformist agenda, as investors started pumping money in the markets with a hope of turnaround. Valuations were at an all time high for major mid and small cap companies. However soon in midst of 2015, global and local factors played a spoil sport and Indian stock markets – Nifty corrected. In fact Nifty 50 touched 21 month low in Feb 2016. Again over last 2 months since the Budget was announced, markets have bounced back more than 12%.
This volatility has cause yet again many investors to enter markets at high points due to euphoria around the markets and sell stocks at losses due to fear around falling markets. Meanwhile people who have preferred the SIP route for investing tend to avoid the market volatility due to the concept of rupee cost of averaging. They follow a disciplined approach towards investing a fixed some periodically into mutual fund units in order to fulfill a financial goal.
(S)ystematic (I)nvestment (P)lan
Systematic Investment Plan or SIP, offer a simple and disciplined way to accumulate wealth over long term. Mutual Fund SIPs work pretty much like bank recurring deposits, except they generate superior risk adjusted returns compared to recurring deposits. It brings in a disciplined approach to invest regularly and can be started with a minimum of Rs.1000 per month. SIPs are perfect for people who wish to generate long term wealth without investing too much time, money and efforts into it.
Advantages of SIP Route: - Need to time the market become irrelevant, since frequent investments ensure entry in the market at both high and low levels. Thus making it favourable in volatile markets - Averages the cost of investment – which means when the markets are down one gets more mutual fund units and when markets are up one gets better returns - Professional management of funds and diversification at a very low amount, thus eliminating the need for monitoring the funds on a daily basis Below a snapshot of the performance of some of our key schemes as on 30th April 2016
Mutual Funds have been instrumental in protecting downside and improving upside by selecting the good from the not so good and the downright rubbish. On top of this, SIPs in mutual fund have delivered better than Market performance over various periods. It is a safer way of investing for conservative equity investors through up and down market cycles. So, dear investor, you really have two choices. You either learn by being disciplined and well planned or you will learn by losing money.
The ball is in your court. ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transferring Money through Mobile Banking or Iinternet Banking Posted: 01 Aug 2016 03:48 AM PDT 1. What is RTGS? Real Time Gross Settlement system is an instant settlement system usu ally used for high value payments. It is `Gross' because payments are not bundled together and are settled on orderon-order basis. The fund settlement system takes place in the RBI's books, hence they are irrevocable and final. The benefi ciary bank receives the amount on real time from the remitting bank and the beneficiary account should be credited within 30 minutes by the bank. The minimum amount for RTGS is `2 lakh. Charges: `2 lakh to `5 lakh not ex ceeding `30 per transac tion and beyond `5 lakh it would not exceed `55. 2. What is IMPS? Immediate Payment Service, initiated by National Payments Corporation of India of fers an instant 24x7 in terbank electronic fund transfer through mobile phones, internet and ATMs which is not only safe but also economical. It was started as a pi lot project in August 2010 but had its public launch in November 22, 2010. Though it had started with State Bank of India, ICICI Bank, Bank of India later pri vate banks like Axis Bank and HDFC Bank also joined. Now the whole list of banks is available with the NPCI website. 3. How does NEFT work? National Electronic Fund Transfer is a nationwide payment system that allows bank account holder to transfer funds to another individual or corporate account. NEFT is not a real-time fund transfer, as settlements are done in batches hourly . There are twelve settlement windows (between 8 am to 7 pm) daily and six settlements on Saturdays (between 8 am and 1 pm). There is no limit or minimum amount for a NEFT, however, for an individual the limit for domestic cash remittances is `50,000.NEFT transaction can happen at the bank branch or through internet transactions or even through ATM with a minor service charge. 4. Wallet Transfer -An Alternative Mechanism Users can transfer money using a smartphone through e-wallet transfers as long as the transaction takes place with the same e-wallet service provider. Wallet transfers are restricted to an upper limit of `10,000 per transaction. To transfer the funds the user needs to open the app, add the beneficiary's email id or mobile number and put in the amount to be transferred. Once the transaction is authenticated by the remitter the money gets added to the wallet of the beneficiary in real time. ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 01 Aug 2016 12:45 AM PDT The two products are often confused because both are taxsaving instruments. Here's what you should know before putting your money in either. 1 Ulip vs ELSS Ulip (unit-linked insurance plan) is an insurance-cum-investment product sold by insurance companies. Ulip investors have the option to invest in equity, debt, hybrid and money market funds. The minimum sum assured is 10 times the annual premium (seven times if age of entry is above 45 years). On the other hand, ELSS, or equity-linked saving schemes, are diversified equity funds that invest in stocks. These are pure investment instruments and don't offer any insurance. The confusion between the two is probably because both make investments in equity markets and are tax-saving instruments. However, one should be clear about one's objective and not mix insurance with investment. 2 Charges & transparency ELSS funds have only one charge, which is the fund management fee or expense ratio. This is a maximum of 2.5% and the cost is adjusted in the NAV of the scheme, not charged separately . This means that you know exactly how much amount was invested and can calculate your return, leading to high transparency in transaction.
In Ulips, almost 60% of the charges are incurred in the first few years, including the premium allocation charge (percentage of premium for charges before allocating units, initial and renewal expenses and agent commissions); mortality charge (insurance cost); fund management fee; policy administration charge; fund switching charge and service tax deduction. The remaining money is invested in the market. As the charges start reducing only after 3-4 years, the investment and, hence, returns will be very low. To get good returns, you need to stay invested for at least 10-15 years. The transparency is low since you do not know the exact amount being invested. Also, some charges are levied by reducing the units, not deducting from NAV , further reducing transparency .
3 Tax treatment Both instruments are eligible for deduction of up to Rs 1.5 lakh under Section 80C. ELSS funds follow the EEE mode, wherein investment, capital gains and maturity amount are tax-free. This is because you are locked in for three years, resulting in long-term capital gains, which invite zero taxation for equity investment.
As for Ulips, if you surrender before the lock-in period, any deduction claimed earlier is reversed and you have to pay tax. The maturity amount is tax-free only on death of the policyholder. If the premium is more than 10% of sum assured, the maturity proceeds are added to the insured's income and taxed at applicable rate. If the premium is more than 10% of sum assured and the proceeds for a year exceed Rs 1 lakh, tax of 2% is deducted at source.
4 Lock-in period Ulips have a lock-in period of five years, whereas in ELSS, your investment remains locked for three years. This means that if you exit before this period, you will have to pay surrender charges in case of a Ulip. This is usually calculated as a percentage of fund or annualised premiums. It is higher if you quit early and keeps getting lower with time. In ELSS funds, since you cannot withdraw before three years, no exit load is applicable. However, it is not advisable to quit a Ulip or an ELSS fund even after the lock-in period because equity investment gives the best returns in the long term of 7-10 years. In case of Ulips, this period is ideally 10-15 years.
5 Switching option Ulips offer a switch option, which means that you can alter the ratio of invested amount in different funds (equity , debt, hybrid etc). This allows you to shift your funds as per the risk exposure at different life stages. So while you are young, you can have a higher amount in equity, but with age you can shift to debt. You can also switch out of equity if you expect the markets to fall. Remember, however, that there may be a limited number of free switches. In the case of ELSS, there is no such option and you can't touch the investment before the lockin period. However, you can opt for the dividend option to ensure periodic booking of profits. ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- |
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