Finance

Mutual funds are one of the most sought-after investment vehicles in the 21st century because they have the potential to offer better capital appreciation than any other conventional investment avenue. Mutual funds source financial capital from investors sharing a common investment objective and invest the sum accumulated across various money market instruments and asset classes. Mutual funds have designated fund managers, who along with a team of market researchers and analysts, study market movements and build an investment portfolio with securities and stocks that have growth potential. But not all mutual funds invest in stocks or equity related instruments.

Some mutual funds like debt funds are best suited for investors with a moderate to low risk appetite. For those who do not know, debt mutual funds are those mutual fund schemes that aim at generating stable income by investing in fixed income securities and debt related money market instruments. These funds are also considered by investors who have moved away from conventional investment avenues and are looking for other investment schemes. Investors who wish to invest in mutual funds but refrain from exposing their finances to volatile market conditions may also consider investing in debt mutual funds.

What are liquid funds?

While equity funds try to generate long term capital appreciation by predominantly investing in stocks of publicly listed companies, mutual funds like liquid funds build their portfolio with fixed income securities such that the average portfolio maturity is 91 days. A liquid fund invests in government securities, repo rates, commercial papers, certificates of deposit, etc. that have a short maturity date.

Who should consider investing in liquid funds?

If you are someone who has surplus capital that you recently received through a policy in which you earlier invested and if you do not need that money for a few more months, you can invest this money that is sitting idle in a liquid fund and earn interest without worrying about any losses. A liquid fund’s main objective is to offer capital protection and immense liquidity so that the investor can easily redeem the invested sum in case of a financial emergency. Hence, you can even consider investing in this liquid fund for building an emergency fund that can come in handy during an unforeseen financial crisis.

Should you invest in debt funds or liquid funds?

Those who are new to mutual fund investing often find it confusing as there are thousands of investment products to choose from. This is when the investor usually ends up making a mistake and makes the wrong investment decision. However, market regulator SEBI has further categorized mutual funds based on the different natures of the schemes, their asset allocation, and investment objective, etc. so that investors are able to make an informed investment decision.

So, for those who do not know, liquid funds are a product category under debt funds. So you can either choose to invest in liquid funds which is a debt fund itself or choose from a wide range of other debt schemes available for investment. Investors must always keep their financial goals in mind and then target them with schemes that are best suited for achieving those goals. Also, one’s investment horizon and risk appetite play a crucial role in deciding which funds are suitable for their portfolio.

Also, investors must do not just depend on one asset class for all their financial goals as it is less likely for that single asset class to deliver consistently through one’s investment journey. For those who need further assistance, please talk to your financial advisor who might help you make an informed investment decision.

Nifty is a combination of two terms, the National Stock Exchange (NSE) and fifty. Nifty comprises the top performing 50 equity stocks actively trading on NSE. Introduced by the NSE in 1996, Nifty is one of the popular benchmark indices of the Indian stock market to invest. Since 50 stocks are included in the Nifty index, it is also known as Nifty 50. 

Nifty: A brief history

There are two major stock exchanges in India – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Sensex is an index that is an indicator of the performance of the BSE, while Nifty 50 indicates the performance of the NSE.

NSE, established in 1992, was the first electronic exchange in India that offered a fully automated screen-based electronic trading system. NSE Indices Limited (formerly known as India Index Services & Products Limited) manages and owns Nifty 50. NSE Indices is a specialised subsidiary of the NSE, focused upon the index as a core product.

Some key aspects related to Nifty 50 are:

• While the Sensex comprises 30 stocks, Nifty has 50 stocks under its umbrella.
• 1995 is the base year for Nifty and the base value is 1,000.
• Nifty 50 companies are from 13 different sectors of the Indian economy; they are the top stocks in the market.

Why is Nifty important?

A market index reflects the performance of stocks and helps you make decisions about your investments in the stock market. Given below are a few aspects that highlight the importance of Nifty.

• Nifty 50 stocks include companies from various sectors, such as financial services, information technology, telecommunications, energy, etc., which makes it a comprehensive and diversified index.
• It is used for various purposes such as benchmarking index funds, fund portfolios, and index-based derivatives.
• It represents about 66.8% of the free-float market capitalisation (the company value is calculated by excluding shares held by the promoters) of the stocks listed on NSE as of March 29, 2019.
• The total traded value of Nifty 50 constitutes 53.4% of the traded value of all stocks on the NSE, for six months ending March 2019.
• Nifty is very useful for derivatives trading.

How can the Nifty 50 index help you?

• Nifty can help you understand the performance of the stock market today and plan your investments accordingly. It indicates whether the stocks are doing well and if they will provide good returns in the future.
• Nifty helps pick which stocks to buy, as it includes only those companies that perform outstandingly well in the market.
• It can help you earn good returns in the long run. The base year for Nifty 50 is 1996. If you had Rs. 1,000 in 1996 it would be worth Rs. 17,945.95 on 11th October 2021, which was the Nifty share price for that day.

Conclusion

The Nifty 50 can help you in choosing which stocks to invest in and manage your portfolio. However, if you want some expert advice on which stocks to invest in and design your portfolio, you can consult a financial advisor to help you in your investment journey.

Know Your Customer (KYC) for mutual funds works the same way as that for other financial services. It’s a customer identification process carried out by all financial institutions including banks and asset management companies.

KYC Registration Agencies (KRAs), entities registered with the Securities and Exchange Board of India (SEBI), maintain KYC records. The Reserve Bank of India set up the KYC guidelines in 2002. Along with these guidelines, the SEBI master circular on Anti Money Laundering Standards emphasises the requirement for the customer identification procedure.

Why is KYC Mandatory for Mutual Funds?

The Prevention of Money Laundering Act, 2002 requires you to complete the process of KYC before investing in mutual funds. It helps establish your authenticity as an investor by making sure you provide your real name and other necessary details. The process also ensures that you have constructive investment purposes and don’t come with a history of defaults. This helps prevent risks of fraud and money laundering in future.

Who Needs KYC Compliance for Mutual Funds?

Whether you want to invest in a mutual fund through SIP (systematic investment plan) or with a lump sum, you must complete the KYC procedure. You only need to go through a one-time verification for transactions across all funds. KYC compliance for mutual funds applies for:

• Non-individual(s) or individual(s)
• One who has legally become an investor, for instance, after the death of the original investor
• Constituted PoA (Power of Attorney) holder(s)
• A guardian who wants to invest on behalf of a minor

How to Get KYC Compliance?

You can check whether you have already gone through the KYC compliance process by entering your PAN details on the particular mutual fund website or the KRA website. Then you can also see the last modification date and whether you need to provide any missing details.

If you have completed the KYC procedure at an AMC or KRA branch or via a SEBI-registered intermediary like a mutual fund, DP or broker, you need not go through the process again.

If you are not KYC compliant, you can go through the process online or offline. For the online (video) method, you need to upload scanned images of your signature and proofs of address and identity with an original photograph. To carry out the process physically, you (including all joint holders if any) can download the KYC form online from the mutual fund website. Then each applicant must fill it up and submit it with proper identity and address proofs. When you submit the documents, you need to appear in person for their physical verification.

After the procedure, use the SIP compounding calculator to check the estimated returns of your chosen investment scheme.

Now that you see it’s so easy to carry out KYC for mutual funds, complete the procedure soon so you can start making investments right away. Besides, always make sure that the information in your KYC records is updated. To modify any information, you need to submit a KYC details change form with the required documents like a current address proof if your residential address has changed.

To adapt to modern time requirements, businesses of all kinds, including e-commerce businesses, must stay up to date with the demands and needs of their clients. This includes providing them with the services and products they are looking for.

But it’s not only about the quality of products and services you sell; it’s also about how easy and convenient the whole purchase process is, starting from the shopping journey and payment to the delivery and after-sales services.

Customers who shop online look for convenient payment options that appeal to their preferences. Considering that, businesses must offer several payment options to cater to and target as many customers as they can.

For now, cash is here to stay. Some may still go for cash to make payments. There are many reasons for that; old people find it easier to handle cash and think it is safer than other options. Other people use cash to control their expenditures since they tend to turn into spendthrifts when using credit cards and other digital payment methods.

Still, those don’t represent the majority; most people don’t like to carry cash anymore. For that reason, businesses must be prepared to serve people no matter what their preferences are.

In this article, we will list the most popular payment methods every business must encompass not only to be at the top of clients’ list but also to facilitate the relationship between them and their different suppliers.

Credit and Debit Cards

Credit and debit cards are some of the most popular payment methods around the world. They can be used for both in-store and online purchases.

 Many prefer paying using their card to benefit from their banks’ reward programs. With every payment they make they’ll earn points that can be redeemed for things like traveling miles, VIP lounge access, and other tempting stuff.

They are popular for their convenience. It is rare to find a business that doesn’t allow paying with a debit or credit card and the few that don’t lose a lot of profit. It takes few clicks, and everything is done.

Direct Deposits

With direct deposits, individuals can transfer money directly to the business’ account. Through direct debit mandates, the customer would be able to send a request to the bank to authorize the payment.

Direct deposits are actually one of the safest paying methods, eliminating the risk of theft. This method is more commonly used with recurring expenses, e.g., monthly service subscriptions fees.

It may be a traditional way compared to the newly invented methods, but it wouldn’t lose its value any time soon. In fact, it is very essential for B2B kind of payments.

Cryptocurrencies

It may seem a bit insane for some at the moment, but cryptocurrencies are growing in popularity and are expected to be one of the mainstream payment options in the future. Governments around the world are heading towards establishing laws that will regulate the use of cryptocurrencies.

Though they are surrounded with uncertainty due to the constant change in value and government unstable views towards them, cryptocurrencies are a worthy online payment option to consider.

 Electronic Wallets

Electronic wallets or e-wallets are the new go-to payment option for businesses and customers. The concept is simple, the customer would download an app, where he will store all the financial information he needs to make a payment. It can be used to pay online or in-store.

Not only customers can benefit from e-wallets these days. This convenient option can function as a payment method in B2B transactions. It would help business owners to enhance their relationships with suppliers, track expenses, and settle payments easily.

Now that there are lenders that have lowered their home loan interest rates to as low as 6.5%, homebuyers are eagerly looking to apply for home loan plans. This comes as no surprise as these rates have reached their lowest level in almost 15 years, which is why buying a house now seems like the right decision to make.

But should borrowers buy houses simply based on the interest rates of their home loans? Of course, there are other factors that are equally important that need to be considered before going for a home loan. Sure, the falling interest rates are a great incentive to apply for home loan.

However, it is also necessary to maintain the following factors:

• Decent credit score

No matter what type of loan you go for or which lender is offering the loan, your credit score is always going to be reviewed before the loan approval. If the credit score is low, there are high chances of either the loan application getting rejected or getting stuck with a high interest rate, which defeats the purpose since you were looking to take advantage of the current low home loan rate.

• Stable flow of income

Even though the home loan interest rate might have reached the lowest level it has in years, it is very important to consider job stability before taking a home loan. Many people have lost their jobs and got their incomes affected due to the pandemic, and you need to make sure that your employment is secure with a stable flow of income before applying for such a loan.

• Ability to cover down payment

If the loan amount is between the ranges of Rs 30-75 lakh, most lenders will cover 90% of the property cost. If the loan amount is more than Rs 75 lakh, lenders will only cover 80% of the property cost. The remaining expenses will have to be covered from your own pocket. It is very important to have sufficient savings so that you can cover the down payment for the house you are planning on buying.

• Awareness of existing debt obligation

One common mistake that many borrowers make is only considering the home loan EMIs as expenses from their monthly income. However, you also need to calculate the rest of the debt obligations too while counting deductions from the monthly income. Once you calculate all the expenses, it will give you a clear idea of whether the home loan is affordable. It is always advisable to use a home loan calculator to understand the exact amount of the monthly instalments. Also, make sure to have enough savings to take care of any medical emergencies to pay for immediate hospitalisation.

Once you have considered the above-mentioned points, feel free to go ahead and take advantage of the low housing loan interest rate of the current market. Apply for a home loan, today.

When moving to a new country, understanding the tax payments and filing is crucial beforehand. For instance, if moving to France, a country with one of the most complicated tax systems, you will need to get some French tax advice to help you on the way forward. You may hire an advisor before you embark on your journey. This will be more beneficial to you as they will prepare you for what to expect regarding your finances. A French-registered financial adviser can guarantee that you are financially prepared for your move, including any investments, savings, and taxes that may be owed on both income and payouts you expect after your transfer.

A tax advisor in France is very beneficial and, as a foreigner, will help you understand the French fiscal system. Listed below are some of the reasons you need French tax advice for expats.

1. Help you understand tax in France

Most people who relocate to France fear they will pay more taxes than in the United Kingdom or any other state; of course, this is dependent on your specific circumstances. Still, a qualified financial planner should be able to offer you a simulation of the taxes you’ll be paying, as well as an explanation of each one, so you’re clear on your responsibilities.

2. They take you through the inheritance planning in France

France’s legal system differs from that of many other states, particularly in terms of inheritance rules. Because of the French succession laws, you may be in for a nasty surprise if you don’t get competent guidance for all of your possessions. Remember that while most of us seek limited assistance from a Notaire while purchasing a home, consider the remaining assets.

3. They guide you through the investments in France

If you are unsure about the French possibilities when you relocate to France, you can leave your investments and money in your home country. Your ISAs and Premium Bonds will be taxed after you become a French resident.  Similarly,  in France, specialized investment vehicles allow you to defer paying taxes on your investments. Moreover, a French-registered financial consultant can compare your expected return on investment to the returns available from tax-efficient financial products. As a result, if you intend to use your property as your primary source of income, the way you purchase it can have various tax implications in France. A regulated adviser has no financial stake in the property you buy, but they frequently have a lot of experience with the path you’re following.

4. They give more information on the pensions in France

Moving abroad will impact your pension, whether you have already retired or are still working. If you live in France, you should carefully consider your options to get the most out of your money once you reach retirement age. This is particularly important since pension rules are different in every country.

 In conclusion, taking financial advice is highly recommended, especially in a foreign country. The guidance required is highly specialized and specific to each individual because it is based on their personal and financial circumstances.

Be it any parent, each one of them want to secure that their child’s future. The only way to ensure that your child is able to excel in their life is by providing them with the right type of education. The only way to ensure that parents have a decent amount of money saved is through proper financial planning for their child’s higher education. The reason financial planning is important is that the education prices are soaring, thanks to inflation. Whatever you have saved right now will lose its value by the time your child is ready for higher studies. This is the reason why parents may have to start investing what they have saved so that in the long run, their investments compound and turn into a commendable corpus to take care of their child’s education expenses.

The current cost of an MBA is around Rs. 20 lakhs and if you want to get into medical, the costs are somewhat similar. If your child is 10 years old right now, by the time he is ready for higher education the cost of such courses is expected to soar and go as high as Rs. 45 lakhs. To accumulate such a hefty amount, one may need an investment horizon of at least 10 years which is why parents must start planning for their child’s future when they are toddlers.

Not everyone has a clear idea of how much money they must save and invest so that they can achieve their long term financial goals like children’s education. Hence, parents depending on their risk appetite can consider investing in a solution oriented mutual fund scheme like Children’s Gift Fund. And to calculate the future value of their mutual fund investments, parents can make use of a mutual fund calculator.

Also referred to as SIP calculator, investors who wish to invest in mutual funds via SIP for their children’s education can make the most out of this free online tool. For those who aren’t aware, a Systematic Investment Plan or SIP is a simple and convenient way to save and invest a fixed sum regularly in mutual funds. Investors can decide how much money they want to invest and then invest the predetermined SIP sum every month on a fixed date regularly till their investment objective is accomplished. SIP can be an ideal way for parents to build a solid education corpus for their children as long term investments in the mutual fund via SIP can allow compounding and rupee cost averaging. This will allow parents to generate more returns while reducing their average cost of purchase.

An online SIP calculator can help you figure out whether your monthly mutual fund SIP investments are enough for your child’s higher education.

 Here’s an example to help you understand better how the SIP calculator works:

Suppose you want to build a corpus of Rs. 35 lakhs for your child’s higher studies. You plan to build this corpus in 10 years and have started a monthly SIP of Rs. 15000 in a mutual fund with an expected 10 percent rate of return. If you put these details in the SIP calculator it will compute and tell you that your current SIP investments will only help you accumulate a total sum of Rs. 30.98 lakhs at the end of your 10 year investment journey. This means that you will be 5 lakhs short of your education corpus. However, by investing Rs. 17000 you will be able to achieve your financial goal. A SIP calculator can help parents with such calculations to ensure that they are investing enough for their child’s future.

There is a lot of fuzz surrounding SIP investments and a lot of people are confused because they do not know exactly what to do with all the information that is circulating through various modes of communication. The truth is that SIP is a great way to save and invest a fixed sum regularly in a mutual fund scheme. Mutual funds are a great investment vehicle to create long term wealth and one can start their investment journey in mutual funds via SIP. Why SIP? Because in the long haul, SIP has the power to convert one’s small investments into a commendable corpus.

And one way to ensure that your SIP investments are in sync with your financial goals is by using the SIP calculator.

How is the SIP calculator useful?

Online SIP calculator is an easy-to-use tool that lets investor determine their future returns which their SIP investments might be able to fetch over a certain duration. There is also a lump sum calculator for those who want to calculate their future mutual fund returns made through lumpsum investing but SIP investing is much better as one does not need to have a large sum as principal capital for starting their investment journey. To get a rough estimate on the returns which individuals can earn through SIP, mutual fund investors can use the SIP calculator.

However, the SIP calculator does not take several factors like exit load and expense ratio into consideration while computing results.

The SIP calculator is grounded on the following formula –

M = P × ({[1 + i]n – 1} / i) × (1 + i)

In the above stated formula –

‘M’ stands for the amount you receive upon maturity

‘P’ stands for the amount you invest at regular intervals

‘n’ is the number of payments you have made

‘i’ represents the periodic rate of interest

Calculating returns with SIP calculator

There are two different ways in which a SIP calculator can work. This may vary depending on which SIP calculator you use. Of course, all SIP calculators serve the same purpose but might be designed by AMCs in a slightly different way from one other.

If you know what your ultimate financial goal is, all you have to do is –

• Enter the corpus that you want to achieve e.g. Rs. 50 lakhs, Rs. 1 crore, etc
• Enter the expected rate of return i.e. the CAGR of the scheme, e.g. 8%, 10%, etc.
• Enter the investment horizon i.e. by when you need the above mentioned corpus. Depending on the calculator you may have to enter this in either years or months

The SIP calculator will compute and display –

• Total amount invested
• Targeted amount (total investment sum + interest earned)
• Monthly SIP sum that one needs to invest to achieve the desired financial goal

This is one way to use the SIP calculator. Another way to use the calculator is to find out how much your current monthly SIP investments can fetch in the long run.

To use the SIP calculator this way –

• How much you are investing in mutual funds via SIP every month or how much you want to invest every month
• Then enter the number of years / months you wish to continue investing this sum
• Enter the expected rate of return

The calculator will display –

• Total amount invested
• Total wealth created

Investors are free to change the monthly SIP investment sum, expected rate of return, and investment horizon so that the calculator can compute and display various results. This might allow the investor to plan his / her mutual fund investments in a better way.

We all know how useful SIP can be for mutual fund investors with a long term investment horizon. For those who do not know, a Systematic Investment Plan or SIP is an investment tool that allows investors to save and invest a fixed sum at periodic intervals in a mutual fund scheme of their choice. The frequency at which the SIP investments are made is predetermined and so is the investment sum. Just like a recurring deposit, a SIP auto debits the predetermined sum from the investor’s savings account and lets them buy units irrespective of the existing market conditions. When you continue to invest, you are automatically saving regularly, and this investment approach might be necessary to create long term wealth or for someone to achieve their financial goal.

And to understand how much your monthly investments in mutual funds via SIP should be, investors can make use of an online SIP calculator.

How to achieve goals with an SIP calculator?

To achieve life’s short term or long term financial goals, investors need to first prioritize their goals depending on their urgency. A short term goal can be anything like renovation of your house, planning a short vacation, buying a new car, etc. Such goals can be achieved through SIP investing for a duration of 1 to 3 years and be achieved by investing a fixed sum regularly. Investors usually invest a bigger amount when they have to achieve a goal in a short duration.

For example, if you want to buy a new car that costs Rs. 15 lakhs in the next three years, as per the calculations computed by the SIP calculator a monthly SIP amount of Rs. 35000 might be sufficient for you to achieve this goal. Here, we have assumed a 12% rate of return from the mutual fund scheme.

Long term goals are usually monetary goals that require thorough financial planning. Because one might need a large corpus spanning over Rs. 1 crore or even more depending on their goals. One must also remember that they need to have a long investment horizon to achieve such a hefty corpus.

Let’s say that you want to build a retirement corpus worth Rs. 2 crores so that you can enjoy financial freedom and do not have to depend on anyone. You have 25 years in hand before you retire. After putting in the necessary details in the SIP calculator it will tell you that a monthly SIP of Rs. 15000 can help you achieve the desired retirement corpus. Here, the rate of return assumed is 10%.

Multiple simulations in a few seconds

Investors can use the online SIP calculator to derive multiple results in just a few seconds, thus saving a lot of time. If an average human had to manually compute all the results, it would be a time consuming process. Since it is such a fast and easy to use tool investors can easily change the expected rate of return, change the SIP sums and investment horizons to get different results. This way they might help you to understand whether your current SIPs are aligned with your targeted goals or whether they need to invest more.

A mutual fund SIP calculator is an ideal tool that any existing or aspiring mutual fund investor can make the most of. However, investors must understand that mutual funds do not guarantee returns, and hence, it is better to diversify their investment portfolio across asset classes.