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.

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.

 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.

Enter into the World of Mutual Fund Investing armed with confidence and knowledge. Learn about mutual funds and their types and how you can use them to attain your goals!

All About SIP

What are the benefits of SIP?

The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment &a; amount, long term wealth creation as a resultant of compounding effect.

How to start an SIP?

Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.

How much return can I expect on an SIP investment?

Unlike traditional fixed income products, Mutual Fund investments do not provide a guaranteed return. But, historically, over a long-term, investments in Equity Funds have generated better returns than traditional fixed-income products. Having said that, Mutual Fund investments are subject to market risks. You are advised to read all scheme related documents carefully before investing.

What are some of the best SIP plans?

There is no such thing as a “Best Mutual Fund.” It is a myth. Every fund has a unique investment objective that caters to the needs of different investors. You need to select the right fund basis your risk appetite and time-frame for achieving your life goals. You may decide to invest either via SIP or Lumpsum.

What is meant by “SIP frequency?”

SIP frequency refers to the pre-defined interval at which a fixed amount, mandated by you, is deducted from your bank account. You can go with a monthly, quarterly, semi-annual, or annual frequency.

Is there a minimum amount to start an SIP?

The minimum amount to start an SIP varies from fund-to-fund. Having said that, many funds in India now let you start an SIP at 100 rupees. Investing via SIP is not limited to small amounts. You can invest any amount you want. There is no upper limit on SIP. Minimum tenure of SIP is 6 months, whereas there is no maximum tenure.

What is the maximum amount I can invest through SIP?

Investing via SIP is not limited for any mutual fund scheme. You can start an SIP with any amount that you wish. There is no upper limit on SIP.

Can I have multiple SIPs?

Yes, you can start more than one SIP. There is no restriction on the number of SIPs you can have at a given point in time.

Does SIP offer the options of Growth and Dividend?

Yes, when you start an SIP, you can choose the option of either Growth or Dividend.

Can I switch between the options of Growth and Dividend at any point in time?

Yes, you can any time switch your SIP from Growth to Dividend and vice-versa, in an open-ended fund, without a lock-in period.

Is SIP available for all types of mutual funds?

Yes, you can start an SIP for any open-ended mutual fund.

What is meant by “Rupee Cost Averaging?”

One of the main benefits of SIP is Rupee Cost Averaging. It simply means that you get more units when the market goes down and less when the market goes up. Thus, you average out the cost of total units bought. This helps you to optimize returns over the long term.

Can I change the SIP amount at any time?

Yes, you can increase your SIP amount at any point. There are two ways to do that. You can either start a new SIP with the additional amount or you can opt for a facility, commonly known as SIP Booster or SIP Top-up, that lets you increase your SIP instalment amount at a pre-defined interval.

Can I stop my SIP at any time?

Yes, you can stop your SIP instalment at any point in time. There are no charges levied for stopping an SIP. Moreover, you can withdraw the corpus accumulated through previous instalments.

Can I switch my SIP investment from one fund to another?

No, you can switch your SIP from one fund to another. You will need to stop the current one and start a new one in your desired fund. But, the corpus accumulated through past instalments, in an open-ended fund without a lock-in period, can be switched to another fund.

Will I incur a penalty if my SIP installment fails to get through due to an insufficient account balance?

There is no penalty levied by Mutual Funds if your account balance is insufficient when the SIP instalment is due. It just that your instalment for that particular month will not be processed, but your SIP will continue normally next month onwards, provided the balance is sufficient.

Can I invest in ELSS using SIP?

Yes, it is possible to invest in an ELSS fund through SIP.

What is the ideal investment horizon for an SIP?

SIP is a good habit of saving & investing a fixed amount regularly with the objective of creating wealth over the long term. Hence, an SIP should be done for perpetuity, unless you are starting an SIP for a specific goal that is due on a particular date.

Which SIP frequency is better – weekly or monthly?

Assuming the same rate of return, a weekly frequency will turn out to be a better choice as you get the benefit of compounding. Unfortunately, the market returns are not predictable. Hence, there is no correct answer as to which frequency is better. That being said, it is advisable to select the frequency based on your cash flow. Hence, salaried individuals prefer a monthly frequency for their SIP.

Should I invest in SIP directly or through an advisor?

There more than 1000 open-ended mutual funds in India. Selecting the right fund is always an uphill task. It requires in-depth knowledge of markets and mutual funds. If you have the time and the required skills to analyse the funds for finding the one that suits your needs and risk appetite, you can go for Direct funds. Otherwise, it is advisable to go with the professional financial advisors who will recommend you the right fund that is best suited to your needs and life-goals.To start Investing journey Download Findola App

Is there any extra or hidden cost that I will incur for starting an SIP?

No, there is no extra charge or hidden cost for starting an SIP.

If the returns on my investment are negative, what should I do?

When facing negative returns, the most common mistake investors tend to do is to stop their SIP and withdraw the accumulated corpus. Ideally, if you have a long-term investment horizon, a market downturn should be treated as an opportunity to buy more to average out the cost of total units. This will help you to generate favorable returns when the market becomes positive.

What is meant by “SIP Booster” or “SIP Top-up?”

SIP Booster or SIP Top-up lets you increase the amount of your SIP installments at pre-defined intervals. This way, you don’t need to start a new SIP from time-to-time. The increase in the instalment amount can be a fixed sum of money or it can be a percentage of your current instalment value.

Which is better – Lumpsum or SIP?

The answer to this question depends on the stock market conditions. During upward trends, the lumpsum mode of mutual fund investment tends to give relatively higher returns whereas during falling markets, investments made via an SIP generally provides better returns than a lumpsum investment. Having said that, SIP promotes a habit of regular savings and investing, regardless of market conditions.

What are the types of SIPs available?

Below are the types of SIP available on findola App: 1. Perpetual SIP: Investors can choose a perpetual SIP with any Mutual Fund, which continues indefinitely until the investor decides to stop or modify it. 2. Top-up SIP: all Mutual Fund provides the option of a top-up SIP, allowing investors to increase their investment amount periodically by a fixed percentage or a fixed amount. 3. Smart SIP: In a Smart SIP, the SIP installment varies based on market valuations.

What is the Power of Compounding?

In compounding, interest is generated not only on the initial investment amount but also on the previously accumulated interest. In case of SIP, the regular re-investment of returns to generate compounding effects over time. Hence, it is advisable to start investing as early as possible to reap the maximum benefits of compounding.

What is the lock-in period for mutual funds?

Lock-in period in Mutual Funds refers to the period during which the investor is prohibited from redeeming the units of the fund, either partially or wholly. Usually, the lock-in period in case of the close-ended fund is 3 years. In India, most of the mutual funds do not have a lock-in period.

All About Tax Implication

Are mutual fund taxes payable every year?

If you opt for a mutual fund scheme, you need to pay the applicable taxes only when you redeem the units or sell the scheme. It does not count on every year. However, your total income for the financial year in question includes your dividend income from mutual fund schemes. So, you need to pay tax for this dividend income if your income is liable to income tax.

Can mutual fund investments help me get a rebate on income tax?

Under Section 80C of the Income Tax Act, tax benefits are applicable in the case of ELSS or Equity Linked Saving Schemes. You can get up to Rs.1.5 lakh in tax deduction and save around Rs.46,800 each year on taxes. One should remember that ELSS has a minimum lock-in period of three years. 

Are wealth taxes applicable to MF investments?

According to the Wealth Tax Act, mutual funds and other financial assets are exempted from any wealth taxes. So, you need not to pay wealth tax upon investing in a mutual fund.

How are you taxed on mutual funds?

Mutual fund taxes typically include taxes on dividends and earnings while the investor owns the mutual fund shares, as well as capital gains taxes when the investor sells the mutual fund shares.

Is tax automatically deducted from mutual funds?

No. You are liable to pay taxes on mutual fund returns/ gains only when you sell your holdings. However, the dividend income is added to your total taxable income. Thus, you will have to pay tax on the dividend income every year as per your income tax slab.

How much equity mutual fund income is taxable?

Mutual Funds classified as equity funds have an equity exposure of at least 65%. As previously stated, when you redeem your equity fund units within a holding period of one year, you realize short-term capital gains.

Regardless of your income tax bracket, these gains are taxed at a flat rate of 15%. When you sell your equity fund units after holding them for at least a year, you realize long-term capital gains. These capital gains are tax-free, up to Rs 1 lakh per year.

Any long-term capital gains over this threshold are subject to a 10% LTCG tax, with no benefit of indexation.

What is the STT rate for equity mutual funds?

0.001%

Securities Transaction Tax (STT)

An STT of 0.001% is levied by the government (Ministry of Finance) when you decide to buy or sell mutual fund units of an equity fund or a hybrid equity-oriented fund. There is no STT on the sale of debt fund units.

How do I avoid tax on MF?

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.

How do I show SIP in income tax?

You can initiate an SIP into an ELSS, the most popular tax-saving investment under Section 80C of the Income Tax Act, 1961. Every SIP instalment into an SIP counts towards tax deductions under Section 80C. You can claim a tax rebate of up to Rs 1,50,000 and save up to Rs 46,800 a year in taxes.

How do I know if my mutual fund is under 80C?

An ELSS is a mutual fund class that offers tax deductions under Section 80C of the Income Tax Act, 1961. To check if a fund is an ELSS or not, you need to check for its details on the fund house’s website. If you are investing via a third party, the same information will also be available on their website.

What is the exit load in a mutual fund?

Exit load in mutual funds. Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment, as specified in the Scheme Information Document.

Do all equity mutual funds come under 80C?

ELSS mutual funds are the only class of mutual funds that are covered under Section 80C of the Income Tax Act, 1961. By investing in an ELSS, you are entitled to claim a tax rebate of up to Rs 1,50,000 a year. 

General Queries

Investment Related

SIP Related

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 All about mutual funds, Discover Your Queries. first appeared on Nivesh Ka Pehla Kadam.

Right since its inception, Mutual Funds have evolved into a preferred investment tool for many investors. However, choosing the right Mutual Fund scheme can be a difficult task due to the wide array of options available. Investment requires a careful and well-thought-out approach to avoid potential losses. Hence, it is imperative to understand the basics of the different types of schemes available to you. Here, we will explore Equity Mutual Funds and talk about the different types of equity funds along with their benefits and a lot more.

Equity scheme

Equity Funds are a kind of Mutual Funds that invest in the stock markets. The stocks are selected by a team of professionals who try to deliver maximum returns from your investments while keeping risk in control.

Basics

Equity Funds give you a diversified portfolio. Most funds have 40-50 stocks in their portfolio. This reduces the risk you take.

1. Objective: To generate high returns by investing predominantly in stocks.
2. Risk Level: High, as it is subject to market fluctuations.Equity Funds can see some ups and downs in the short-term, so you will need to be patient.
3. Investor Profile: Suitable for investors with a higher risk appetite and a long-term investment horizon.Invest in Equity Funds only if you can stay invested for at least 5 years
4. Returns: These mutual funds invest at least 65% of the capital in equities and equity securities, while the remaining 35% is invested in money-market instruments or debt instruments. The returns of the investments in equity mutual funds range from 10% to 12%, which can sometimes also beat market growth and inflation.

Types of Equity Funds:

Large Cap Funds:

• Objective: Invest in stocks of large, well-established companies with a proven track record.
• Investment Approach: Prioritize stability and liquidity, typically holding blue-chip stocks.
• Suitability: Suited for conservative investors seeking stability and steady returns.
• Risk Level: Lower compared to mid and small-cap funds due to the stability of large-cap stocks.

Mid Cap Funds:

• Objective: Invest in stocks of mid-sized companies with potential for growth.
• Investment Approach: Seek a balance between stability (like large caps) and growth (like small caps).
• Suitability: Suited for investors with a moderate risk appetite looking for growth opportunities.
• Risk Level: Moderate, as mid-cap stocks can be more volatile than large caps.

Small Cap Funds:

• Objective: Invest in stocks of small-sized companies with high growth potential.
• Investment Approach: Focus on emerging companies with the potential for significant expansion.
• Suitability: Suited for aggressive investors comfortable with higher risk for potentially higher returns.
• Risk Level: Higher, as small-cap stocks can be more volatile and less liquid.

Multi Cap Funds:

• Objective: Offer a diversified portfolio by investing across large, mid, and small-cap stocks.
• Investment Approach: Flexibility to adjust allocation based on market conditions and opportunities.
• Suitability: Suited for investors seeking diversification across market caps within a single fund.
• Risk Level: Moderate to high, depending on the fund’s allocation among different market caps.

Dividend Yield Funds:

• Objective: Focus on stocks with high dividend yields.
• Investment Approach: Prioritize companies with a history of paying dividends.
• Suitability: Ideal for investors seeking regular income along with potential capital appreciation.
• Risk Level: Generally lower risk compared to growth-oriented funds.

Value Funds:

• Objective: Follow a value investing strategy, aiming to invest in undervalued stocks.
• Investment Approach: Identify stocks believed to be trading below their intrinsic value.
• Suitability: Suitable for long-term investors looking for potentially overlooked opportunities.
• Risk Level: Moderate, with an emphasis on fundamental analysis.

Contra Funds:

• Objective: Contrarian funds that invest against prevailing market trends.
• Investment Approach: Capitalize on potential reversals in market sentiment.
• Suitability: Geared towards investors with a contrarian investment approach.
• Risk Level: Moderate to high, given the contrarian nature of the strategy.

Focused Funds:

• Objective: Concentrate the portfolio in a limited number of stocks (typically 30-50).
• Investment Approach: Focus on the best-performing stocks for higher returns.
• Suitability: Geared towards investors seeking potentially higher returns and accepting concentrated risk.
• Risk Level: Relatively high due to the concentrated nature of the portfolio.

Sectoral/Thematic Funds:

• Objective: Concentrate on specific sectors or themes (e.g., technology, healthcare).
• Investment Approach: Offer targeted exposure to a particular industry or trend.
• Suitability: Suitable for investors looking to capitalize on specific sectors or emerging trends.
• Risk Level: Higher, as these funds are more susceptible to sector-specific risks.

ELSS (Equity Linked Savings Scheme):

• Objective: Equity-oriented mutual funds with a lock-in period of three years.
• Investment Approach: Invest in a diversified portfolio of equities with a tax-saving focus.
• Suitability: Ideal for investors seeking tax benefits under Section 80C of the Income Tax Act.
• Risk Level: Similar to other diversified equity funds, with a lock-in period providing stability.

Investment Style-based Categorization

• Active Funds – These schemes are actively managed by the fund managers who handpick the stocks that they want to invest in.
• Passive Funds – These schemes usually track a market index or segment which determines the list of stock that the scheme will invest in. In these schemes, the fund manager has no active role in the selection of the stocks.

Invest in Equity Mutual funds on Findola.

If you are sure about getting started and ready to invest in equity mutual funds, you can also invest in them through Findola by simply following the steps below:

Step 1: Download the Findola app from Play Store/App Store.
Step 2: Open an account and complete the KYC process.
Step 3: Click on the Invest tab, browse and choose the fund you want to invest in.
Step 4: Invest in the selected fund either in a lump sum or through an SIP.

Why Should You Invest in an Equity Mutual Fund?

Equity mutual funds pool money from investors to invest primarily in stocks or equities. They offer several advantages:

1. Growth Potential:
   • Equity funds aim for capital appreciation, providing an opportunity for significant returns over the long term.
2. Professional Management:
   • Skilled fund managers make investment decisions, leveraging expertise for optimal stock selection.
3. Diversification:
   • Investments span various stocks, sectors, and market caps, reducing risk through diversification.
4. Accessibility and Liquidity:
   • Investors can start with modest amounts, and funds offer daily liquidity for buying or selling units.
5. Expert Stock Selection:
   • Fund managers conduct in-depth research to choose fundamentally strong stocks.
6. Systematic Investment Plans (SIPs):
   • SIPs allow regular, disciplined investments, fostering financial discipline.
7. Long-Term Wealth Creation:
   • Suited for achieving long-term financial goals like retirement planning or children’s education.
8. Tax Benefits:
   • ELSS funds offer potential tax benefits under Section 80C of the Income Tax Act.

Investors should consider their financial goals, risk tolerance, and investment horizon before choosing equity funds, ensuring alignment with their overall financial plan.

FAQs

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 Understanding Equity Mutual Funds: A Fundamental Overview first appeared on Nivesh Ka Pehla Kadam.

Mutual funds are a popular investment instrument in India for wealth creation due to various benefits.

Diversification: Mutual funds allow investors to diversify their investments across a broad range of securities, reducing the risk associated with individual stocks or bonds.

Professional Management: Mutual funds are managed by experienced fund managers who make investment decisions on behalf of the investors. This professional management is attractive to those who may not have the time or expertise to manage their investments actively.

Affordability and Accessibility: Mutual funds offer an affordable way for retail investors to access a diversified portfolio of securities. Investors can start with a relatively small amount of money.

Liquidity: Mutual fund units are bought and sold at the Net Asset Value (NAV), providing liquidity to investors. This makes it easy for investors to buy or sell their mutual fund holdings.

Regulatory Oversight: Mutual funds are regulated by the Securities and Exchange Board of India (SEBI), providing a level of transparency and investor protection.

Variety of Options: There are various types of mutual funds catering to different risk profiles and investment objectives. This includes equity funds, debt funds, hybrid funds, and more.

Systematic Investment Plans (SIP): SIPs allow investors to contribute a fixed amount regularly, promoting disciplined and regular investing. This feature appeals to those looking to invest in a systematic and consistent manner.

Tax Benefits: Some mutual fund investments, such as Equity-Linked Savings Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act.

Dividends and Capital Appreciation: Depending on the type of fund, investors may receive dividends or benefit from capital appreciation, providing potential returns.

Overall, the combination of diversification, professional management, accessibility, and regulatory oversight makes mutual funds an attractive investment option for many Indian investors.

Choosing mutual funds involves considering key factors aligned with your financial goals, risk appetite, and asset allocation. Here’s a simple guide:

• Define Financial Goals:
  • Identify and outline your financial goals at various life stages, accounting for inflation.
  • Establish a clear plan on how much, where, and for how long you plan to invest.
• Assess Risk Appetite:
  • Evaluate your capacity to handle financial risks based on your age, life stage, and personal and financial situation.
• Determine Asset Allocation:
  • Different asset classes carry varying risk profiles, e.g., equity funds have higher risk than debt funds.
  • Balancing risk and return through asset allocation is crucial for achieving financial goals.
• Factors to Consider:
  • Investment Horizon: Align fund types (equity or debt) with your investment horizon.
  • Investment Objective: Decide between capital appreciation (equity) or regular income (debt).
  • Risk Profile: Match risk appetite with suitable fund categories (equity for higher risk, debt for lower risk).
  • Taxation: Understand tax implications based on holding periods and fund types.
  • Lump sum or SIP: Choose between lump sum and systematic investment plan (SIP) based on availability of funds and preference.
  • Fund Manager and Track Record: Examine the long-term performance of the scheme, fund manager, and the fund house.
  • Expense Ratio: Consider expenses, especially in index funds or ETFs where expense ratio plays a significant role.
• Mutual Fund Selection:
  • Assess the fund’s investment horizon, objective, and risk profile.
  • Examine the track record of the fund manager and the overall fund house.
  • Consider the expense ratio, especially in index funds or ETFs.
  • Choose between lump sum and SIP based on your optimal asset allocation.
• Seek Professional Advice:
  • If needed, consult a financial advisor for assistance in understanding mutual fund investment characteristics.

By evaluating these factors, you can make informed decisions and select the best mutual funds aligned with your financial objectives.

Congratulations! You have learned all about “Picking the Best Mutual Funds for Your Investment”

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 Picking the Best Mutual Funds for Your Investment first appeared on Nivesh Ka Pehla Kadam.

Investors are increasingly preferring mutual funds to begin their wealth creation journey as they offer ease of investment, liquidity, and transparency.

Investing your hard-earned money is a crucial step towards securing your financial future and achieving your financial goals. But, simply investing in mutual funds without following a effective investment strategy can be risky and limiting. This is where mutual fund portfolio diversification comes into play, and it’s not as complicated as it may sound!

‘Don’t put all your eggs in one basket’, that timeless adage tidily sums up the concepts of asset allocation and diversification in a mutual fund portfolio.

Mutual fund portfolio diversification is a strategy that involves spreading your investments across different assets and asset classes within a mutual fund portfolio. The goal is to reduce risk and enhance the potential for returns by avoiding concentration in a single investment or asset type.

Essential Elements of Diversifying Your Mutual Fund Portfolio:

1. Asset Classes: A diversified mutual fund portfolio typically includes a mix of different asset classes, such as equities (stocks), fixed-income securities (bonds), and cash or cash equivalents. Each asset class has its own risk and return characteristics, and diversifying across them can help balance the overall portfolio.
2. Geographical Diversification: Investing in funds that cover various regions and countries is essential. Different economies may perform differently at any given time, and geographical diversification helps mitigate risks associated with regional economic downturns.
3. Sector Diversification: Diversifying across different sectors of the economy is crucial. Economic conditions impact sectors differently, and spreading investments across sectors can reduce the impact of poor performance in a particular industry.
4. Cap Size Diversification: Portfolios often include a mix of large-cap, mid-cap, and small-cap stocks. These represent companies of different sizes, each with its own risk and return profile. Diversifying across market capitalizations can provide exposure to diverse investment opportunities.
5. Risk Tolerance Alignment: Diversification should align with the investor’s risk tolerance. Some investors prefer higher-risk, higher-reward strategies, while others prioritize stability and lower risk. A diversified portfolio should reflect the investor’s comfort level with risk.

The primary aim of mutual fund portfolio diversification is to create a well-rounded and resilient investment strategy. While it doesn’t eliminate risk entirely, it seeks to manage risk effectively by avoiding over-concentration in a single investment or asset class. Regularly reviewing and rebalancing the portfolio is crucial to maintaining the desired level of diversification as market conditions change.

Congratulations! You have learned all about Diversification is the key to managing wealth, but, where should you begin?

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 Diversification is the key to managing wealth, but, where should you begin? first appeared on Nivesh Ka Pehla Kadam.