Investing becomes a daunting prospect without options that guarantee returns. In such a scenario, many of us would prefer to keep our surplus untouched at the end of the month. Fortunately, fixed deposits provide a reliable avenue for investment, ensuring:

1. Predetermined returns and the safety of the principal amount.
2. A secure way to park money without worrying about market volatility.
3. Flexible options to receive interest periodically or at maturity when banks offer fixed deposits.

For those seeking guaranteed returns and having a limited understanding of risk, fixed deposits emerge as a suitable and reassuring option.

Why do people choose Fixed Deposits?

1. Assured Returns: Fixed Deposits offer guaranteed returns on the invested amount. The interest rates are fixed at the time of deposit, providing investors with a clear idea of their earnings.
2. Safety of Principal: The invested principal amount in Fixed Deposits is not subject to market fluctuations. It remains secure, ensuring that investors get back their initial investment at the end of the maturity period.
3. Ease of Understanding: Fixed Deposits are simple and easy to understand. Individuals do not need advanced financial knowledge to invest in them, making them accessible to a wide range of investors.
4. Various Tenure Options: Fixed Deposits come with flexible tenure options, ranging from short-term to long-term. Investors can choose the duration that aligns with their financial goals and liquidity needs.
5. Regular Interest Payouts: Investors have the option to receive interest payouts at regular intervals, providing a steady income stream. This feature is particularly beneficial for retirees and those looking for a regular income.
6. Tax Benefits: Certain Fixed Deposits, such as Tax-Saving FDs, offer tax benefits under Section 80C of the Income Tax Act. This makes them an attractive choice for individuals looking to save on taxes.
7. Senior Citizen Benefits: Senior citizens often receive higher interest rates on Fixed Deposits, providing an additional incentive for this demographic to choose this investment option.
8. Liquidity: While Fixed Deposits are meant to be held until maturity for maximum returns, they still offer a degree of liquidity. Premature withdrawals are allowed, albeit with some penalty, in case of urgent financial requirements.
9. Low Risk: Fixed Deposits are considered low-risk investments compared to market-linked instruments like stocks. This makes them suitable for conservative investors who prioritize capital protection.
10. Bank Reputation: Many individuals prefer placing their money in Fixed Deposits with reputable banks, adding an element of trust and security to their investments.

The combination of guaranteed returns, safety of principal, simplicity, and flexibility makes Fixed Deposits a popular and enduring choice among Indian investors.

Congratulations! You have learned all about “Why Are Fixed Deposits a Popular Choice Among Indians?”

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post Why Are Fixed Deposits a Popular Choice Among Indians? first appeared on Nivesh Ka Pehla Kadam.

Why is Money Management Important?

Here are some of the reasons why money management is critical for everyone:

Develop Self Discipline.

Understanding how to manage your money isn’t just about numbers—it’s about cultivating self-discipline. By gaining insights into proper financial handling, you can steer clear of impulsive decisions that may harm your financial well-being.

Consider this: if you tend to use credit cards for unnecessary purchases, you might find yourself sinking into debt. On the flip side, if you embrace budgeting and prioritize spending on essentials, you’ll reduce the likelihood of encountering financial troubles.

Build Your Goals

Effective money management is all about establishing and accomplishing your financial goals. With the right financial skills, you can effortlessly allocate funds for short-term objectives and steadily invest in long-term aspirations.

Consider this scenario: if you dream of owning a new car or a house, you can initiate early savings for a substantial down payment. For those aiming at an early retirement, strategic investments in retirement accounts and passive income sources can be the key.

A practical financial goal breakdown may include:

1. Clearing outstanding debts
2. Building an emergency fund equivalent to three to six months of living expenses
3. Obtaining life insurance coverage
4. Initiating investments for future growth
5. Establishing retirement funds for a secure future

Empower Your Finances: Gain Control and Make Informed Decisions

An essential aspect of money management is empowering yourself with control over your finances. By mastering the art of financial management, you can seize command of your economic situation and make informed decisions that contribute to your overall financial well-being.

For instance, if you find yourself entangled in debt, you can craft a strategic debt repayment plan to expedite the process. If your goal is to save more money, creating a budget or exploring additional income sources, such as side hustles, can be transformative.

Many individuals are subject to the influence of spending habits and debt. Acquiring effective money management skills enables you to reverse the scenario, putting you in control of your finances rather than being controlled by them.

When you know how to manage your finances properly, you take calculated risks and minimize the chances of making financial mistakes.

Today we will know about JARS money management system which is describe in  Secrets of the Millionaire Mind book., its a popular money management method— designed specifically to get you to financial freedom.

Basically, using this system, you split your money up into six different accounts, and you have percentages of your money to put into each account. You can use bank accounts or actual jars.

So what are these jars and what percentage of your income goes into them?

Right now you may be thinking, “I’m not earning a lot of money” or “my expenses are too high.”

Am I saying you have to put Rs.1000 into your accounts every day? No, I didn’t say that.

How come I’m not suggesting a specific amount but certain percentages? It’s so that every single person, regardless if they’re earning Rs.10000 a month or 3000 rupees in a week, can follow this money management system.

Yes, if you are earning 3000 rupees in a week, you can do this system.

Jar 1: NECESSITIES A/c

55% of your income goes into the NECESSITIES jar.

Includes: Food, Mortgage, payments, bills, Gas, oil, Insurance premium etc.

Jar 2: Financial Freedom A/c

10% of your income goes into the Financial Freedom jar.

Includes: The money in this jar can only be used for investments (with returns or profits). This jar is used for building wealth for your future financial freedom. You must never spend this money.

Jar 3: Long Term Savings A/c

10% of your income goes into the Long Term Savings jar.

Includes: The objective of of this jar is to save money for future expenses (e.g. a new car, a vacation, a new couch, gifts, repaying debts….

Jar 4: Education A/c

10% of your income goes into the Education jar.

Includes: Use the money from this jar for personal or professional development (e.g. books, courses, seminars).

Rich people constantly learn and grow.  Poor people think they already know”. 
-T. Harv Eker

Jar 5: Play A/c

10% of your income goes into the Play jar.

Includes: indulge yourself with a nice massage, some new clothes, a fancy dinner… To avoid over-spending or under-spending, make sure you use up the money from this jar at least every few months. This allows you to spend without guilt, and to also gradually improve your standard of living as your income increases.

Jar 6: Give A/c

5% of your income goes into the Give jar.

Includes: Food, Mortgage, payments, bills, Gas, oil, Insurance premium etc.

The single biggest difference between financial success and financial failure is how well you manage your money.  It’s simple: to master money, you must manage money”. -T. Harv Eker

Do not fool yourself with statements like

” I would love to have this money management habit, but I cannot do it! “
” I don’t have enough money coming in to split it. “

or statements like
 
” My expenses are too high, there is no way I can afford to split my money into different accounts. “

Decide Right Now! Are you going to get 6 jars and start managing your money today? Or Not.

The post Effective Money Handling: A Guide to Efficient Money Management first appeared on Nivesh Ka Pehla Kadam.

When one’s income goes up, their expenditure rises with it. This is known as lifestyle inflation

Lifestyle inflation happens when we start splurging on non-essential things like dining out, travel, or luxury items because we believe we can afford it. This isn’t exclusive to the wealthy; it can affect anyone, irrespective of income levels. The problem with lifestyle inflation is that it often leads to overspending and accumulating debt. Once we get used to a certain lifestyle, it’s tough to cut back on expenses if our income drops or unexpected costs arise.

In your 30s and 40s, lifestyle inflation can sneak up on you. As your income grows, so do your expenses, creating a cycle where you feel the need for more money just to maintain your current way of life. The more you spend, the more accustomed you become to a higher standard of living. Consequently, you might find yourself continuously increasing spending, making it challenging to save and invest. This, in turn, can result in financial stress and anxiety over time.

Causes of Lifestyle Inflation

There are several factors that contribute to lifestyle inflation.

One common trigger is a raise or promotion, which often results in an increase in disposable income. This newfound financial freedom can lead to indulgences that may not have been afforded previously.

Simple Story to Understand What We Do.

He managed through college with a modest monthly allowance of Rs. 6,000, using a budget-friendly smartphone, owning just two pairs of shoes, and riding a used bike. Now earning Rs. 60,000 monthly, he moves into a two-bedroom apartment, purchases five pairs of premium shoes, a brand-new sports motorbike, and the latest iPhone. He significantly elevates his spending to sustain a more lavish lifestyle.

After a commendable performance, he receives a salary increment of Rs. 30,000 the following year. Taking advantage of the increase, he upgrades to a new iPhone, adopts a pet dog, acquires six more pairs of high-end shoes, purchases a pair of expensive sunglasses, and invests in a costly suit. Consequently, his living expenses rise once again.

A’s income consistently sees an upward trend over the years, maintaining this spending pattern. Gradually saving less, he struggles to achieve significant financial goals, eventually resorting to taking out loans.

Another cause of lifestyle inflation is peer pressure or social comparison. As friends and colleagues show off their material possessions and experiences, it’s easy to feel compelled to keep up with the Joneses and maintain a similar lifestyle.,  EMI is the biggest way enter into a big debt.

Impact of Lifestyle Inflation on Financial Goals

Lifestyle inflation can have a significant impact on an individual’s long-term financial goals. Like saving for retirement, paying off debt, or investing in other financial objectives.

It’s important to note that lifestyle inflation is not always a negative thing. In some cases, it can be a natural and healthy response to an increase in income. For example, an individual may choose to invest in their health and wellness by joining a gym or hiring a personal trainer.

Impact of Lifestyle Inflation Wealth?

Reduced Savings: One of the significant impacts is a decrease in savings. As individuals allocate more income to a higher lifestyle, they might save less, hindering their ability to build a robust financial foundation.

Financial Stress: Constantly chasing an elevated lifestyle can lead to financial stress. Increased expenses may result in a paycheck-to-paycheck situation, leaving little room for emergencies or future planning.

Ineffective Budgeting: Lifestyle inflation can make budgeting challenging. Without conscious financial planning, it’s easy to lose track of spending and end up with an inflated lifestyle that is unsustainable.

Lets Understand with Story

Situation:

Imagine you’re in your mid-30s, and a promotion at work brings a substantial boost in your salary. Excited about the increased income, you decide to make some changes like upgrading to a pricier car, moving into a larger house in an upscale area, and indulging more in dining at fancy restaurants. Additionally, you start acquiring expensive gadgets and take more frequent vacations.

Now, let’s look at the costs:

Luxury car: The monthly payment for an expensive car could be Rs. 50,000 or more, totaling Rs. 30 lakh over five years, depending on the model and financing terms.

Bigger house: Moving to a larger house in a posh locality can lead to higher rent or mortgage payments, increased maintenance costs, and utility bills. This might add an extra Rs. 50,000 or more per month, reaching Rs. 30 lakh over five years.

Dining out and gadgets: Regularly dining at upscale restaurants, buying costly gadgets, and taking more vacations could accumulate to several thousand rupees monthly, quickly amassing to tens of lakhs over five years.

When you sum up these expenses over time, you realize how lifestyle inflation can consume a significant part of your wealth. Instead of utilizing the extra income for savings and investments, it’s used to sustain a higher standard of living. This could leave you with minimal savings and limited financial security for the future, hindering the achievement of important financial goals like building an emergency fund, saving for retirement, or investing in assets such as real estate or stocks.

How to Avoid Lifestyle Inflation?

To steer clear of lifestyle inflation, it’s crucial to purposefully manage your spending and saving patterns.

Create a Realistic Budget: Develop a budget that aligns with your financial goals. Categorize your expenses, differentiating between needs and wants. This clarity can prevent unnecessary spending.

Set Clear Financial Goals: Establishing clear financial goals can help you stay focused on your priorities. Whether it’s saving for a house, education, or retirement, having defined objectives allows you to allocate your income more purposefully.

Automate Savings: Set up automatic transfers to your savings or investment accounts. This ensures that a portion of your income is saved before you have a chance to spend it.

Reassess Regularly: Periodically review your financial situation. Assess whether your spending aligns with your goals and make adjustments as necessary. This habit helps you stay on track and avoid unintentional lifestyle inflation.

Prioritize Investments: Rather than immediately upgrading your lifestyle with a salary increase, consider prioritizing investments. Allocating additional income toward investments can contribute to long-term financial growth.

To overcome lifestyle inflation, it’s critical to keep track of your expenditures.

Delay gratification: Instead of buying everything you want right away, try delaying your purchases. This can help you determine if the purchase is really necessary and avoid impulse buying. For example, if you see a new gadget that you want, try waiting a week or two to see if you still feel the same way about it.

Conclusion:

Lifestyle inflation is a common challenge, but with conscious effort and financial discipline, individuals can manage it effectively. By setting clear goals, budgeting wisely, and prioritizing savings and investments, one can avoid the pitfalls of lifestyle inflation and build a more secure financial future.

Congratulations! You have learned all about “Lifestyle Inflation: Understanding the Impact and Strategies to Avoid It.”

Conclusion:

Lifestyle inflation is a common challenge, but with conscious effort and financial discipline, individuals can manage it effectively. By setting clear goals, budgeting wisely, and prioritizing savings and investments, one can avoid the pitfalls of lifestyle inflation and build a more secure financial future.

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post Lifestyle Inflation: Understanding the Impact and Strategies to Avoid It. first appeared on Nivesh Ka Pehla Kadam.

Sujat

Congratulations on your first job! It’s a great time to kickstart your retirement savings journey.

Swarup

Why begin now? Retirement is still more than 30 years down the road

Swarup

Let me savor life for now. I’ll consider investing more when I’m older.

Sujat

Why not enjoy life and plan for retirement together?

Swarup

Why does it matter if I begin later?

Sujat

If you kick off investing when you’re young, your money has more time to grow. Thanks to compounding, the longer you invest, the faster your wealth multiplies.

Swarup

All right. I’ll begin investing now.

Sujat

Kickstart with a single SIP for retirement. It’s a smart way to handle market ups and downs effectively.”

Sujat

Planning for retirement now is the wise move. Last-minute plans rarely succeed, just like many things in life.

Swarup:

Appreciate the advice. I’m starting my SIPs without delay.

Sujat

Remember, consistency and discipline with your retirement SIP are key

Swarup

No worries. I’m committed to it

Sujat

Yes. SIP Sahi Hai

To maintain a comfortable lifestyle post-retirement, it’s crucial to plan for the future. If your current monthly expenses are Rs 1 lakh and you’re a decade away from retiring, projecting for a 5% inflation rate, your expenses could be around Rs 1.6 lakhs per month in ten years.

Assuming your post-retirement costs are 70% of pre-retirement expenses, you might need a monthly budget of Rs 1.1 lakhs. To generate this income at an 8% return on investment, you would require a corpus of Rs 1.7 Crores. This estimate doesn’t consider factors like inflation and taxes.

Considering a retired life spanning 25 to 30 years, with a 5% inflation rate, a more comprehensive retirement corpus would be in the range of Rs 2.5 – 2.7 Crores. This ensures financial independence throughout your retirement years.”

Systematic Investment Plans

Mutual fund systematic investment plan (SIP) is one of the best ways to invest for retirement planning. Through SIP, you can invest in a mutual fund scheme of your choice, based on your investment needs and risk appetite, from your regular monthly savings through auto-debit from your savings bank account. SIP can be a disciplined way of investing because it will make you control your spending habits and invest regularly. SIPs in equity mutual fund schemes also average the cost of your purchase (Rupee Cost Averaging) by taking advantage of stock market volatility.

If your age is 30, if you are planning to retire at the age of 60, if your desire Retirement corpus 3 crores, suppose your expected earning 12% per annum.

Monthly SIP investment required – Rs. 8,498

Some fund list Of Solutions Oriented fund

SBI Retirement Benefit Fund – Aggressive Plan – Regular Plan – Growth

Fund Size:

₹ 1891.64 Cr

Inception :10th Feb 2021

HDFC Retirement Savings Fund – Equity Plan – Regular Plan- Growth

Fund Size:

₹ 4036.24 Cr

Inception :26th December 2016

Tata Retirement Savings Fund – Regular Plan – Progressive Plan – Growth

Fund Size:

₹ 1631.19 Cr

Inception :1st November 2011

Nippon India Retirement Fund – Wealth Creation Scheme – Growth

Fund Size:

₹ 2713.6 Cr

Inception: 11th February 2015

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post Plan for a Bright Retirement with SIP. first appeared on Nivesh Ka Pehla Kadam.

The other day, I had a conversation with my employee, Swarup, who works as a 30-year-old digital marketer at Findola Capital in Raiganj. During our discussion, Swarup expressed feeling a bit overwhelmed when it comes to managing money. As our conversation unfolded, I discovered that Swarup’s uncle intended to gift a substantial amount from his retirement fund, and Swarup had been contemplating investing a portion of the monthly earnings.

Swarup is well aware of the benefits of mutual funds and understands the importance of starting a systematic investment plan (SIP) for regular salary-driven investments. However, there was a slight hesitation. “So what’s holding you back?” I inquired. Swarup responded, “I want to pick the ‘best fund’!” That was the stumbling block. The uncertainty of how to select the first mutual fund. So, here’s what I shared with Swarup.

I explained that there’s no one-size-fits-all approach to determining the ‘best’ mutual fund, and the process can be both intimidating and subjective. The key is to identify a few funds that align with individual needs and goals. I acknowledged that with numerous options and multiple factors to consider, the task might seem daunting, but with a systematic approach, Swarup can confidently embark on this investment journey.

Understanding your personal financial goals, risk tolerance, and investment timelines is crucial when selecting a mutual fund. To guide Swarup through this process, I introduced a simple framework that he could use to choose a fund that suits his needs.

1. Identifying Financial Goals:
   • Swarup, being 30, has both growth-oriented goals (like retirement and children’s education) and capital preservation goals (such as a house downpayment or emergency fund).
   • Recommended an equity-oriented mutual fund for growth-oriented goals due to their potential for better long-term returns.
   • Suggested a debt mutual fund for capital-preservation goals, offering lower risk and steady returns.
   • Calculated the appropriate allocation for each fund based on his financial goals.
2. Understanding Investment Comfort:
   • Acknowledged that Swarup is a first-time investor and somewhat risk-averse.
   • Advised starting with aggressive hybrid funds for long-term goals, which have a balanced mix of equity and debt.
   • For experienced investors with a higher risk appetite and a horizon of more than five years, recommended pure equity funds.
3. Determining Investment Horizon:
   • Emphasized the importance of the investment horizon, considering Swarup’s retirement goal in about 20 years.
   • Suggested equity mutual funds for long-term goals, as they allow for potential high returns and recovery from market fluctuations.
   • For short-term goals like a house downpayment within three years, advised safer, low-return funds.
4. The Decision:
   • Swarup opted for an ‘aggressive-hybrid’ fund for her long-term goals and a ‘short-duration’ fund for the short-term goal.
   • Recommended reviewing the portfolio after three years to make adjustments based on experience and market conditions.

Takeaway: This framework is applicable to new investors like Swarup, providing a structured approach to selecting the right mutual fund. By answering these three crucial questions and aligning them with the options, investors can confidently make informed decisions.

Mutual Fund Selection Framework:

To Conclude: Once you’ve shortlisted your initial investments, refer to our Analysts’ Choice feature, which helps in selecting top-performing funds in respective categories.

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post How Swarup selected his First Mutual Fund? first appeared on Nivesh Ka Pehla Kadam.

If investors want regular cash flow from their investments the automatic choice for many are bank fixed deposits or postal deposits. However, declining interest rates on these schemes have made investors worry about their future income needs.

Mutual funds have a solution for this, called SWP.

What is SWP in mutual funds?

Mutual funds have a solution for this, called SWP. What is SWP in mutual funds? SWP or systematic withdrawal plan is a mutual fund investment plan, through which investors can withdraw fixed amounts at regular intervals, for example – monthly/ quarterly/ yearly from the investment they have made in any mutual fund scheme.

The investors can choose a day of the month/quarter/year when withdrawal can be made and the amount credited to investors bank account by the AMC. To generate this cash flow, SWP Plan redeems units of the mutual fund scheme at the chosen interval. Investors can continue with SWP as long as there are balance units in the scheme.

Discover how SWP works

SWP generates income by selling units from the scheme regularly. The number of units sold depends on the SWP amount and the scheme NAV on the withdrawal date. For instance, if an investor puts Rs 10.00 lakhs in a mutual fund scheme with a purchase NAV of Rs 20, they get 50,000 units. If they start a monthly SWP of Rs 6,000 after a year, assuming the NAV is Rs 22, the AMC redeems 272.728 units in the 1st month. The remaining units are now 49,727.272. This process continues monthly. If the NAV appreciates more than the withdrawal rate, the investment value increases; otherwise, it decreases.

Advantages of SWP

1. Regular Income Streams: SWP provides a systematic way to generate regular income from your mutual fund investments, allowing you to plan your cash flow effectively.
2. Flexibility in Withdrawals: Investors have the flexibility to choose the frequency of withdrawals (monthly, quarterly, etc.) and the amount they wish to withdraw. This adaptability caters to individual financial needs.
3. Professional Management: SWP is an actively managed approach, and fund managers can make strategic decisions based on market conditions, potentially optimizing returns.
4. Potential for Capital Appreciation: If the scheme’s Net Asset Value (NAV) appreciates over time, the investor might experience capital appreciation, enhancing the overall investment value.
5. Tax Efficiency: In some cases, SWP may have tax advantages. Capital gains tax is applicable only on the redeemed amount, and if held for the long term, it can qualify for lower tax rates.
6. Diversification Benefits: Investors can enjoy the benefits of diversification by investing in various asset classes through a single SWP plan, reducing risks associated with a single investment type.
7. Disciplined Approach: SWP helps in maintaining a disciplined approach to withdrawals, preventing impulsive decisions during market fluctuations.
8. Liquidity Management: SWP provides a method for managing liquidity needs while keeping the remaining investment in the market to capture potential future gains.

Investors should carefully consider their financial goals and risk tolerance before opting for an SWP.

SWP (Systematic Withdrawal Plan) can be beneficial for various types of investors based on their financial goals, risk tolerance, and income needs. Here are the types of investors who can consider using SWP:

Who Benefits from SWP?

1. Retirees: SWP is commonly used by retirees who are looking to convert their accumulated savings into a regular income stream during retirement. It helps in managing expenses and maintaining financial independence.
2. Conservative Investors: Investors with a conservative risk profile who prefer regular income and capital preservation may find SWP suitable. It allows them to withdraw funds while keeping the remaining investment intact.
3. Goal-Based Investors: Individuals saving for specific financial goals, such as a child’s education or a home purchase, can use SWP to generate periodic payouts aligned with their goal timelines.
4. Income Generation: Investors seeking regular income from their investments can opt for SWP as a strategy to supplement their salary or other income sources.
5. Diversification Seekers: Investors who want to benefit from diversification across different asset classes can use SWP to withdraw profits from a well-diversified portfolio, helping to manage risks.
6. Market Timing Concerns: Investors who are concerned about market timing and want to lock in profits during favorable market conditions may use SWP to systematically withdraw funds.
7. Tax Planning: SWP can be used as a tax-efficient strategy. Long-term capital gains tax, which is usually lower than short-term gains tax, may apply for withdrawals made after holding the investment for a specified period.
8. Wealth Preservation: High-net-worth individuals looking to preserve their wealth while still enjoying some liquidity can use SWP for controlled and planned withdrawals.

Tax Benefits with SWP

When units are redeemed to draw the SWP amount, it attracts capital gain (in case the redemption NAV is higher than the purchase NAV) on the profits made from the sale of units. The capital gain can be defined as short term or long term as per following conditions

Taxation of Capital Gains of Equity Funds

Equity funds are those mutual funds where more than 65% of it total fund amount is invested in equity shares of companies. As mentioned above, you realise short-term capital gains if you redeeming your equity fund units within a one year. These gains are taxed at a flat rate of 15%, irrespective of your income tax bracket.

You make long-term capital gains on selling your equity fund units after holding them for over one year. These capital gains of up to Rs 1 lakh a year are tax-exempt. Any long-term capital gains exceeding this limit attracts LTCG tax at 10%, without indexation benefit.

Taxation of Capital Gains of Debt Funds

Debt funds are those mutual funds whose portfolio’s debt exposure is in excess of 65% and equity exposure is not more than 35%. Starting 1st April 2023, the debt funds will no longer receive indexation benefit and deemed to be short-term capital gain. Therefore, the gains from debt funds will now be added to your taxable income and taxed at the slab rate.

Earlier, the long-term capital gains from debt funds were taxed at 20% with indexation benefit. 

Taxation of Capital Gains of Hybrid Fund

The rate of taxation of capital gains on hybrid or balanced funds is dependent on the equity exposure of the portfolio. If the equity exposure exceeds 65%, then the fund scheme is taxed like an equity fund, if not then the rules of taxation of debt funds apply.

Therefore, it is essential to know the equity exposure of the hybrid scheme you are investing in, if not then you might be in for a nasty surprise on redemption of your fund units. The following table summarises the rate of taxation of capital gains on mutual funds

Top 5 SWP Mutual Funds

When it comes to choosing the right SWP in mutual funds, the options can seem endless. However, we have listed down the best SWP mutual fund plans that you can check out. 

ICICI Pru Equity & Debt Fund – Growth

19.17%(5 Years Annualised)

Quant Absolute Fund – Growth

21.99%(5 Years Annualised)

Kotak Equity Hybrid fund – Growth

16.25%(5 Years Annualised)

HDFC Balanced Advantage Fund – Growth

18.56%(5 Years Annualised)

SBI Equity Hybrid Fund – Growth

13.35%(5 Years Annualised)

*Return as on 15th December 2023

Congratulations! You have learned all about “Withdraw Smartly: A Guide to Systematic Withdrawal Plans (SWP)“

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post Withdraw Smartly: A Guide to Systematic Withdrawal Plans (SWP) first appeared on Nivesh Ka Pehla Kadam.

3 Asset 1 One Fund

If you Need Diversified Fund,One Fund and multiple asset class like Equity, Debt, Gold or Real Estate that is Multi Asset Allocation Fund

It enables the investors to invest across asset classes (Equity, Fixed Income, Gold/Silver, REIT/INvit, International Equity) to help build a diversified portfolio with the ability to generate capital appreciation over a long term horizon. Multi Asset Allocation Funds invest at least 10% of their portfolio in three distinct asset classes.

Why multi asset allocation fund?

Different asset classes offer different potential advantages and levels of risk depending on the economic cycle. While equity as an asset class may offer growth during bull markets, debt can be a more attractive option during interest rate hikes, while commodities like gold and silver can serve as a hedge against inflation.  Multi-asset allocation scheme is a type of hybrid scheme offered by mutual funds, which carries the advantage of offering investors a variety of asset classes in a single fund.

What is Multi Asset Allocation Mutual Fund?

Multi Asset Allocation Funds are hybrid funds that must invest a minimum of 10% in at least 3 asset classes. These funds typically have a combination of equity, debt, and one more asset class like gold, real estate, etc.

Advantages of Multi Asset Allocation Funds

Risk Associated With Multi Asset Allocation Funds

The risk levels associated with a multi-asset allocation fund are on the lower side. This is because the portfolio of these funds is constituted in such a way that the fund invests at least 10% in a minimum of three different asset classes. This mitigates the risk of concentration to a greater extent and gives you the benefit of exposure to a diversified portfolio.    

Who Should Invest in Multi Asset Allocation Funds?

Investing in multi-asset allocation mutual funds is suitable for those investors who are not willing to assume higher levels of risk and are looking to earn stable and consistent returns on their investments. 

How long should I stay invested in Multi Asset Allocation Mutual Funds?

These funds are ideal for an investment horizon of at least 5 years.

What kind of returns can I earn from Multi Asset Allocation ?

Multi Asset Allocation Funds have on an average delivered 14.0% p.a. returns in the last 5 years. Their 3 and 10 year annualized returns are 17.14% and 12.85% p.a.

Summary

If you are looking at options to diversify your portfolio, then investing in a multi-asset allocation fund is apt for you.

Congratulations! You have learned all about “Know all about Multi Asset Allocation fund category”

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post Know all about Multi Asset Allocation fund category. first appeared on Nivesh Ka Pehla Kadam.

1. This time is different!

The point is no one has been able to predict these events, not even an astrologer. So my dear friend, no time is different unless you make it different. Focus on investing in the right stocks.or right funds. If required, hire a credible expert to guide you.

Every Dip is an Opportunity.

2. Will invest tomorrow. What’s the rush!

Rs. 10,000 invested every month at the age of 30 for the next 20 years aggregates to Rs. 75,75,332 at 10% interest p.a. compounded on a quarterly basis.The same amount sums up to Rs. 20,55,685 if invested for 10 years.

Numbers never lie! The sooner you start, the better the rewards. And, “anytime is a good time to start when the rewards are lucrative!”

3. How much return will you get in a year?

Yes, annualized returns and impressive CAGR are always the ultimate objectives of any investor. However, when you are investing in stocks, you are actually investing in businesses. Businesses take time to grow and definitely, that is not a chapter which will last just a year. With returns, the correct question to ask your advisor would be the strength of the fundamentals to stand the test of time in the long run.

4. Let’s buy this fund, if someone said it would be good

There are only three golden rules of investing. 1. Research 2. Research 3. Research. If your friend / relative / broker is recommending a particular stock, check the investment rationale before you put your hard-earned money in the stock.

Congratulations! You have learned all about 4 Common Phrases You Need To Stop Saying To Create Wealth!

Disclaimers:
An investor education initiative By Findola Wealth Research Team.
This article is generated and published by Findola Wealth Research Team.
Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post 4 Common Phrases You Need To Stop Saying To Create Wealth! first appeared on Nivesh Ka Pehla Kadam.

 In my 15 years of experience of interacting with 8 to 10k investors, I find that if there is one thing missing among most investors, it is self-realization.

Self-realization is crucial for investors for several reasons:

• Understanding Personal Goals:
  • Self-realization helps investors identify and understand their financial goals. Knowing what you want to achieve with your investments is fundamental to developing an effective and personalized investment strategy.
• Risk Tolerance:
  • Investors have varying levels of comfort with risk. Self-realization allows individuals to assess their risk tolerance accurately. This, in turn, influences investment decisions, ensuring they align with the investor’s comfort level.
• Investment Time Horizon:
  • Knowing oneself helps in determining the investment time horizon. Different goals may have different timeframes, and understanding one’s own timeline allows for appropriate investment planning.
• Financial Situation:
  • Self-realization involves an honest evaluation of one’s current financial situation, including income, expenses, and debt. This awareness is essential for setting realistic investment goals and creating a budget for investment.
• Emotional Preparedness:
  • Investing can be emotional, especially during market fluctuations. Self-realization helps investors understand their emotional responses to financial decisions, enabling them to make more rational choices and avoid impulsive actions.
• Active vs. Passive Investing:
  • Some investors prefer a hands-on approach to managing their investments, while others may prefer a more passive strategy. Self-realization guides individuals toward the investment style that suits their preferences and lifestyle.
• Alignment with Values:
  • Understanding one’s values and principles is crucial for ethical or socially responsible investing. Investors who are self-aware can choose investments that align with their beliefs and values.
• Continuous Learning:
  • Self-realization encourages a mindset of continuous learning. Investors who are aware of their knowledge gaps are more likely to seek information, stay informed about market trends, and make informed investment decisions.
• Long-Term Discipline:
  • Awareness of one’s financial goals and risk tolerance contributes to long-term discipline. Investors who know themselves are more likely to stick to their investment plans even during market volatility, avoiding knee-jerk reactions.

According to a great Greek Philosopher Aristotle “Knowing yourself is the beginning of all wisdom”

In today’s story, let’s take a look at one of the most ignored aspects of investing; the need for knowing yourself before you start investing.

According to a great Greek Philosopher Aristotle “Knowing yourself is the beginning of all wisdom”

Well, investing is like marriage. Because both require a long term commitment.Now you must be wondering why this analogy between investing and marriage.

The reason is quite simple – when a person decides to get married, he/she looks for a person who matches their personality. So the entire quest for searching a life partner revolves around one’s one characteristic.

But sadly, the same approach is missing when it comes to investing. I see people asking more questions about the market, factors influencing the market and outlook of businesses. All questions are fine, no doubt. However, the starting point of investing should begin with knowing yourself.

So, which are the questions that you should ask yourself to understand yourself better?

 let’s break it down into simpler terms:

• What do I want to achieve with my money?
  • Think about what you want to do with your money, like buying a house, saving for your child’s education, or preparing for retirement.
• What is my risk tolerance?
  • Assess your comfort level with risk. Are you willing to take higher risks for potentially higher returns, or do you prefer more stable and conservative investments?The level of risk tolerance will also depend on factors like the number of earning members in the family. Along with this, your age, income, occupation, expenses expected in the future, etc. also should be considered. For example – if there is only one earning member in the family, the level of risk tolerance will be generally low, whereas if there are more earning members in the family, one can take more risks in their investment. Also, if you’re at the age of 30, earning modest and unmarried, you can take more risks as compared to an investor whose age is 60.
• What is my investment time horizon?
  • Determine the timeframe for achieving your financial goals. Different goals may have different time horizons, and this influences your investment strategy.
• What is my current financial situation?
  • Look at how much money you’re making, spending, and if you have any debts. This helps set the stage for your investment plan.
• What is my budget for investing?
  • Decide on a budget for investing. Think about how much you can invest without affecting your daily needs.
• Do I have some money saved up for emergencies?
  • Make sure you have some money saved for unexpected expenses before you start investing.
• How much do I want to be involved in managing my investments?
  • Consider if you want to actively manage your investments or if you’d rather have someone else do it for you.
• What is my knowledge about different investment options?
  • Gauge your understanding of various investment vehicles such as stocks, bonds, mutual funds, and real estate. Continuous learning is key to making informed decisions.
• Have I thought about how taxes might affect my investments?
  • Understand how taxes can impact your investments. It’s essential to know how much you’ll actually get back after taxes.
• How do I react when the stock market goes up or down?
  • Think about how you feel when the stock market goes through changes. This helps you understand your emotions and make better choices.
• Am I planning to invest for a short time or a long time?
  • Decide if you’re investing for something happening soon or for something in the future. Different goals need different plans.
• Do I care about investing in things that match my values?
  • Consider if it’s important for you to invest in things that align with what you believe in. This is called ethical or socially responsible investing.

Answering these questions in simpler terms can guide you toward making decisions that match your goals and how you feel about money.

Ultimately, self-realization contributes to financial success and satisfaction. When investors align their investment decisions with their values, goals, and risk tolerance, they are more likely to achieve the outcomes they desire.

In summary,

self-realization is the foundation for building a successful and personalized investment strategy. It ensures that investment decisions are aligned with individual preferences, goals, and values, leading to a more fulfilling and effective financial journey.

Disclaimers:
An investor education initiative By Findola Wealth Research Team.
This article is generated and published by Findola Wealth Research Team.
Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post The First Step In Investing – Know Yourself First(KYF) first appeared on Nivesh Ka Pehla Kadam.

ESG investing, which stands for Environmental, Social, and Governance, represents a growing trend in the financial world. It involves incorporating ethical and sustainable considerations into investment decisions. Sustainable mutual funds, also known as ESG funds, follow a strategy that goes beyond financial returns and considers environmental impact, social responsibility, and corporate governance practices.

Key Components of ESG Investing:

• Environmental Criteria:
  • Focus Areas: Assess a company’s impact on the environment, including its carbon footprint, energy efficiency, waste management, and resource conservation.
  • Investment Choices: Companies with environmentally friendly practices, renewable energy initiatives, and sustainable sourcing are favored.
• Social Criteria:
  • Focus Areas: Evaluate how a company treats its employees, engages with the community, and addresses social issues such as diversity and labor practices.
  • Investment Choices: Companies with fair labor practices, diverse and inclusive workplaces, and positive community engagement are preferred.
• Governance Criteria:
  • Focus Areas: Examine the leadership, structure, and transparency of a company, including board independence, executive compensation, and shareholder rights.
  • Investment Choices: Companies with strong governance practices, transparent financial reporting, and responsible leadership are prioritized.

Characteristics of Sustainable Mutual Funds:

• Ethical Screening:
  • Sustainable mutual funds often employ strict ethical screening processes to exclude companies involved in controversial industries such as tobacco, weapons, or fossil fuels.
• Positive Screening:
  • In addition to excluding undesirable investments, ESG funds actively seek companies with positive environmental, social, and governance practices.
• Engagement and Advocacy:
  • ESG fund managers may engage with companies to encourage positive change and advocate for sustainable practices in the corporate world.
• Performance Considerations:
  • Contrary to the misconception that ESG investing sacrifices returns, many sustainable mutual funds aim to deliver competitive financial performance while aligning with ethical values.
• Long-Term Focus:
  • ESG investing often involves a long-term perspective, recognizing that sustainable practices contribute to long-term business success and resilience.

Benefits of ESG Investing:

• Alignment with Values:
  • Investors can align their investment choices with personal values and principles.
• Risk Management:
  • Evaluating ESG factors can help identify and mitigate risks associated with poor environmental or social practices.
• Positive Impact:
  • Investing in sustainable companies contributes to positive environmental and social impacts.
• Long-Term Resilience:
  • Companies with strong ESG practices may be better positioned for long-term success and resilience.
• Increasing Demand:
  • The growing interest in ESG investing reflects changing investor preferences and an increased focus on sustainable business practices.

Considerations for Investors:

• Thorough Research:
  • Understand the specific ESG criteria and screening processes employed by each sustainable mutual fund.
• Performance Track Record:
  • Assess the historical financial performance of the fund to ensure it meets both ethical and financial expectations.
• Diversification:
  • As with any investment, consider diversifying your portfolio even within the realm of sustainable funds.
• Stay Informed:
  • Keep abreast of evolving ESG trends, regulations, and the fund’s ongoing engagement with portfolio companies.

ESG investing provides an avenue for investors to contribute to a more sustainable and responsible global economy while seeking financial returns. As the demand for ethical investments grows, sustainable mutual funds continue to play a crucial role in reshaping the landscape of the investment industry.

How to invest in ESG Funds?

It is quite easy to invest in ESG mutual funds on Findola. Here are the steps that you have to follow.

• Register online on Findola app 
• Click to Invest sections and choose the Thematic-ESG fund you want to invest in.
• Click on invest and choose the amount and mode of investment (SIP or Lumpsum)
• Provide your KYC details (Pan number, Bank details) and complete your investment.

List of ESG Fund

Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

The post ESG Investing: A Look into Sustainable Mutual Funds first appeared on Nivesh Ka Pehla Kadam.