Prajna Capital |
- Diversification is key in financial investments
- When financial needs are different strategy has to be tailor made
- SIP with Life Cover from Reliance Mutual Fund
| Diversification is key in financial investments Posted: 11 Mar 2013 03:46 AM PDT Invest In Tax Saving Mutual Funds Online EVER wonder why mom and pop stores sell wildly unrelated products side by side, like umbrellas and sunglasses, or Halloween candy and screwdrivers? Customers probably would never buy these items on the same shopping trip, right? That's exactly the point.
By diversifying their product offerings, vendors reduce the risk of losing sales on any given day, since people don't usually buy umbrellas on sunny days or sunglasses when it rains. The same diversification principle also applies in the investment world, where it's referred to as asset allocation. By spreading your assets across different investment classes (stock mutual funds, bonds, money market securities, real estate, cash), if one category tanks temporarily, you may be at least partially protected by others.
You must weigh several factors when determining how best to allocate your assets: Risk tolerance: This refers to your appetite for risking the loss of some or all of your original investment in exchange for greater potential rewards. Although higher-risk investments (like stocks) are potentially more profitable over the long haul, they're also at greater risk for short-term losses.
Ask yourself, would you lose sleep investing in funds that might lose money or fluctuate wildly in value for several years; or will you comfortably risk temporary losses in exchange for potentially greater returns? Time horizon: This is the expected length of time you'll be investing for a particular financial goal. If you are decades away from retirement, you may be comfortable with riskier, more volatile investments. But if your retirement looms, or you'll soon need to tap col lege savings, you might not want to risk sudden downturns that could gut your balance in the short term. Diversification within risk categories is also important. From a diversification standpoint it's not prudent to invest in only a few stocks. That's why mutual funds are so popular. They pool money from many investors and buy a broad spectrum of securities. Thus, if one company in the fund does poorly, the overall impact on your account is lessened. Typically, each portfolio is comprised of various investments that combined reach the appropriate risk level. Usually, the more aggressive the portfolio, the higher percentage of stocks it contains (that is, higher risk/higher reward). Another possibility is the so-called "targeted maturity" or lifecycle funds offered by many 401(k) plans and brokerages. 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 )
------------------ Best Performing Mutual Funds
            |
| When financial needs are different strategy has to be tailor made Posted: 11 Mar 2013 03:21 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Lata Desai, a school teacher in Pune, has recently started a monthly recurring deposit scheme with her jeweller. Her inspiration: A neighbour, who told her that a lot of people were doing this, because gold prices have gone through the roof. Desai hopes to buy jewellery by saving small amounts of money this way. The thought that this jewellery, accumulated over the years can become a good investment was also an attractive proposition for Desai. Similarly, Rajeev Gupta, a vice – president with an FMCG firm recently sold all the equity investments he had been holding for the last two years, as they had not performed as per his expectations. He invested the money in a real estate project along with his friends who convinced him that real estate was the best investment currently. They based their decision by the returns generated by real estate in the last couple of years. It is not uncommon to find such instances. Often we are influenced by the latest trends and, thereby, end up investing in assets which might be in vogue at that point of time. We believe that since a lot of people are doing the same thing, we won't be wrong. This behavior can be attributed to the lack of financial literacy. It is seen even among investors in countries which have highly sophisticated financial markets, like the USA, for instance. This is the same reason why even Ponzi schemes succeed, as people get comfort in the fact that they are in the company of several like minded people who have invested and, therefore, the element of risk is also perceived to be lower. Take the case of equity markets. When equity markets were going through a bad patch and most days the indexes are falling, the tendency of most retail investors was to sell and get out. Their fear was that it may fall further, thereby increasing losses. Similarly, when equity markets start rising, investors who had bought gold and real estate, failed to see the signs of the revival in the equity market and continued to ignore it. But now that the index has moved up to dangerously high levels, it is attracting the attention of investors once again. Now investors are talking about putting money in equities once again and hoping that they don't miss the bus. Once again, the topic of discussion in offices, during tea breaks, or at social gatherings is centred about how much the stock market has gained and how everybody is investing in equity. It is the same pattern being repeated all over again. What are the consequences? Even though you have a very good intention of saving and investing, following the trend in investing without doing the due diligence can make you invest in the wrong assets or products, which eventually can lead to losses or inadequate returns. Some of the schemes may not even provide liquidity and if you have committed a bigger amount, you may end up getting into debt in case you are not able to liquidate those investments during a major emergency. How do you avoid such situations? 1) Writing down your financial goals along with their time frame and value, can help you make the right start in your financial life. Based on the goals and time horizon, appropriate assets can be selected. For example, if you are planning for your child's post graduation and if it is nearly 10 years away, then one needs to invest a major amount in equity. Similarly if funds are required for your daughter's marriage after two years, then you should select safer assets such as fixed deposits or debt funds where there is surety of capital as well as fixed returns. 2) Getting information on the product or asset and its past performance is necessary as it can give an insight into how that asset performed over different periods. With so much information available online nowadays, it is not difficult to find such information. If you don't have the time then get it evaluated by a reliable advisor. 3) If the returns expected are more than those offered by fixed deposits, then there is an element of risk involved. Ask yourself if you are in a position to take that risk in the pursuit of higher returns. 4) Don't make haste as the world is not going to end tomorrow. Sometimes the product seller or distributor may convince us to invest in a particular product by saying that the period for investing is going to end soon, or the price of the asset will rise as there is high demand. Most of us fall in this trap and we then don't spend time to evaluate or verify whatever has been told to us else we might miss the opportunity. A little time spent on evaluating the advantages and disadvantages of the product can save you from future hassles.
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 )
------------------ Best Performing Mutual Funds
     |
| SIP with Life Cover from Reliance Mutual Fund Posted: 11 Mar 2013 01:55 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Reliance MF offers life insurance cover through SIP investment.
Reliance MF has introduced an add-on feature into their 10 schemes 'Reliance SIP Insure' to encourage investors to save and invest regularly through Systematic Investment Plan (SIP), to ensure that investors achieve their financial objective even in the unfortunate event of death before completing the SIP tenure as the balance amount towards the SIP installments remaining unpaid shall be made good from the life insurance cover and the nominee would be able to continue investing in the scheme without having to make any further contribution. The cost of life insurance premium will be borne by the AMC. The 'Reliance SIP Insure' feature will be available under the following schemes as: Reliance Growth fund, Reliance Vision Fund, Reliance Diversified Power Fund, Reliance Regular Saving Equity and Balance Option, Reliance Banking Fund, Reliance Pharma Fund, Reliance Media and Entertainment Fund, Reliance Equity Fund, Reliance Equity Opportunities Fund, Reliance Equity Advantage Fund.
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 )
------------------ Best Performing Mutual Funds
     |
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