Mutual fund investment in the name of minors

How can you invest in Mutual Funds in the name of a Minor?

Mutual fund investments are fast becoming popular in India. As an increasing number of people learn about mutual funds and understand their benefits, there is also a growing inquisitiveness about investing in the name of a minor (that is, a child under 18 years of age). This is because many parents wish to invest for their child’s future in avenues that can generate stable returns. The idea is that the investment grows as the child grows. Mutual funds are one such avenue that is being increasingly preferred as a tool for meeting long-term goals such as children’s future education.

Here, we will explain the possibility, merits, demerits, and also the process of investing in mutual funds on behalf of minors. (more…)

Weekly SIPs in mutual - should you opt for them

Weekly SIPs in mutual funds – Should you opt for them?

Systematic Investment Plan (SIP) in mutual fund investments are preferred by investors due to its many benefits ranging from cultivating the discipline of regular investments to averaging the cost per unit. They are considered the most effective form of mutual fund investment. SIPs are automatically deducted as per the predetermined limit since these are linked to the investor’s bank account. SIP investments are mostly set to a default of one month, which means the amount of investment is deducted every month.

Most investors prefer monthly SIPs for their investment portfolio.

Did you know, SIPs need not be restricted to a month and these can also be weekly or fortnightly?  This means, instead of a monthly investment, an investor can invest every 7 or 15 days. This brings us to the question, should an investor choose a weekly or monthly SIP investment? To answer this, let’s deep dive into the concept of Weekly SIPs and understand how they work.  (more…)

mutual fund myths

Top 7 myths around mutual fund investing debunked

In today’s complex financial markets, Mutual funds remain one of the most trusted investment options for those looking to create wealth. However, like any area of investment, mutual funds have their share of misunderstandings or myths among investors. These tend to build an unrealistic image of mutual funds in the eyes of investors. As more investors in India are considering mutual funds as a good investment alternative, it is important for experts to debunk some of these myths to help create a positive investment environment.

Here, we present some common myths around mutual funds that investors should not believe in and why. (more…)

Sip with insurance

Insurance cover with mutual fund investments. Should you opt for it?

Only a person living under the rock may not have heard about mutual funds today. We have grown up hearing about mutual funds especially that they are ‘subject to market risk’. Mutual funds have been a popular investment product for a very long time. It is an easy investment product that allows the investors to gain potentially higher returns at relatively lower costs. There are many types of mutual funds in the market for the investor to choose from like equity mutual funds, debt mutual funds or hybrid mutual funds. 

Apart from this, the investors now are getting the option of adding an insurance cover to their investment.

We discuss the details of such insurance cover that comes with a  mutual fund investment. The pros and cons of the same as well as its need.  (more…)

Looking to invest in International companies? Learn all about it

A smart investment strategy requires choosing a good mix of various asset classes, which can match up to individual financial goals. Equally important are an investor’s risk profile and the time horizon for which he/she wants to stay invested. Any financial advisor would recommend investors ensure diversification through asset allocation. This is because investment in a wide range of asset classes ensures portfolio diversification and also offers a healthy risk-reward balance.

Every Indian investor must design his/her portfolio by considering these factors and also look at international investment to broaden the investment horizon. So why does international investment matter? 

Let’s find out! Here is everything that an investor needs to know about international investing. (more…)

Taxes on Mutual fund investments- How do they work?

The current generation has grown up listening about mutual funds. The most common thing anyone knows about then is that they are subject to market risks. Mutual funds are an easy and effective way of investment for all age groups. But when it comes to taxes on mutual funds not many are aware of how they are taxed and that’s when the investor has to bear the tax brunt. 

We bring you all the details that you need to know about how your mutual fund investments are taxed. We advise you to bookmark 🔖this page for your reference. 

(more…)

Demystifying the New Mutual Fund Riskometer

In recent times, mutual funds have undergone many regulatory changes. The primary motive behind most of these changes is to make mutual fund investments more transparent and safe for investors. One of the noteworthy changes that are being implemented by SEBI is the introduction of risk levels attached to all mutual fund schemes.

SEBI announced the introduction of a new riskometer back on October 5, 2020. This has come into effect on January 1 2021. Accordingly, all mutual fund houses have been instructed to notify investors about the risk level of their schemes. The risk levels must have a six-stage scale ranging from “Low” to “Very High”.

 Are you curious about what this means for you as an investor and how it could help you invest better? Let’s have a look at some important aspects to note about the new mutual fund riskometer.  (more…)

What factors should you consider while investing in mutual funds?

Mutual funds have become the preferred choice of investment for many new investors in India. In recent times, many top-performing mutual funds have been offering attractive returns to investors. This investment option is ideal for those who have extra funds available and want to park them in a safe avenue for the long-term. 

While mutual funds attract millions of investors, they have some amount of risks and disadvantages. Before investing in mutual funds, investors must make themselves fully aware of all these factors and make an informed investment decision. In this blog, we will discuss some important factors that investors should try to remember before investing in mutual funds. 

To begin, let’s first understand the basics of mutual funds.

(more…)

Why choose mutual funds as your go-to investment option?

“An investment in knowledge pays the best interest.”
–Benjamin Franklin

Mutual funds are one of the most lucrative personal investment options available in India and it is has been booming in recent years with the advent of increasing accessibility, powered by the Internet. But, before we give you the reasons to consider investing in mutual funds it is essential that you decide on it with at least the basic understanding and knowledge of mutual funds.

(more…)

Is it a good time to invest in midcap and small cap funds?

The equity market is never meant to take a straight-line trajectory. It has its shares of ups and downs based on a number of other factors like the general economic and political conditions within and outside the country, the interplay of global capital markets, movement of the local currency, and many other factors.

There are 5000 odd stocks listed on the Bombay Stock Exchange, there is a classification put in place to differentiate between the stocks based on market capitalization. For the uninitiated, market capitalization is the market value of all outstanding shares of a company.

According to changed norms for fund categorization, large-cap funds can only invest in Top 100 stocks by market capitalization, mid-cap funds can choose between the 100-250th stocks and small-cap funds from the 251st stock by market cap.

What Is So Interesting About The Mid Cap And Small-Cap Space?

The Upside of Mid & Small Cap Space

Is it only the market capitalization that makes mid-cap and small-cap space unique and interesting? Of course not!!

Mid-caps and small-cap space represent that universe of the stocks which are budding or has the highest potential for growth. These companies are in their expansion phases and often prove to be value buys. These companies are not very popular so there are a limited number of value seekers investing in this space.

In a phase when the market is growing, the mid-cap and small-cap stocks often perform better than the large-cap stocks due to their potential for growth. Similarly, the mid-cap and the small-cap funds that majorly invest in these companies do well than the large-cap peers.

No wonder there is a lot of interest in this space.

The Downside of Mid & Small Cap Space

The Mid& Small Cap universe has a number of green-horn companies.

While the management of large-cap stocks is seasoned and can better weather a crisis, midcaps and small caps stocks might still be reaching there. Also, these stocks can quickly go down when there is an economic crisis/bear phase in the market.

Therefore investment in this space is not free from risks as these stocks show higher highs and lower lows (volatility).

Although, Mid-caps and small-cap mutual funds are handled by experienced fund managers yet they cannot guarantee you lesser volatility.

Performance of Mid-Caps/Small Caps vis-a-vis large caps

All said and done each one of us looks to maximize our investments. So performance is a key factor.

We looked into the performance of BSE Large Cap 100, BSE Mid Cap, and BSE Small-Cap indices over a 5 year period. This is considered as a proxy for Large Cap and Mid& Small Cap funds.

5 year performance of indices

We see that all 3 indices had a common base figure (almost) in 2013. While the index figure for Large Cap is just nearing the double-figure, the Mid-cap and Small Cap indices have moved way past that figure indicating growth in these stocks.

On the other hand, the volatility (ups and downs) for the Mid and Smallcap indices is also much higher when compared to volatility for the Large Cap index. For Ex: Consider a one-year horizon from Dec 2017 to Dec 2018, the fall in mid & small-cap indices has been much more than the fall in large-cap, thereby validating our view of higher highs and lower lows.

Takeaways

There is no right or wrong time to invest in any fund. Every fund stands to satisfy a certain need like large caps allow lesser returns with lesser risk and it is the vice-versa for mid and small caps.

The time horizon for holding also matters. Investments in mutual funds generally pay well over longer time horizons.

One cannot totally shun or embrace the mid-cap and small-cap funds. The investments in these funds should be guided by your risk appetite, holding horizon, and financial goals rather than timing the market.