Whether liquid funds are a good option for building emergency corpus?

Liquid funds in India, due to their trait of being liquid, are suitable to be used to create an emergency corpus. They also generally carry less risk and are less volatile when compared to equity mutual funds. Read more to understand what you need to create an emergency corpus. Liquid funds in India, as the name suggests are liquid. This means they can be easily converted from invested money into useable money. They have minimum 7 day’s of exit load. . Before focusing on why to use liquid funds in India for emergency corpus, let’s focus on how to build an emergency fund. 

1)      Examine your Cash Flow:

First and foremost, check if can maintain the income which meets your monthly expenditure or basic needs. Due to pandemic-induced economic deceleration, salary cuts and business losses have affected the majority of the population throughout the world. If you have a surplus left after meeting your emergency corpus, you may then consider investing money.   

2)      Understand your risk-taking ability:

Before you invest your money, gauge your risk taking abilities. If you are an investor reaching your retirement, then you might want to take a conservative stand. This means holding a bigger emergency corpus, say 24-36 months equivalent of expenses into a liquid mutual fund. Liquid fund returns may be lesser compared to a longer-term debt fund or other funds such as equity mutual funds, however, they can serve the main purpose of an emergency fund; which is offering you safety and liquidity at the time of need.   

When selecting the liquid funds to invest in, note that the focus should not be on return but the safety and liquidity aspect, especially if you are building emergency funds. Liquid Funds may not vary a great deal in returns. Invest in liquid funds which invest completely in short-term government securities of not exceeding 91 days and have no private party risks. Due to the short maturity period, they are not subject to volatility in interest rate fluctuations. 

Liquid funds taxation is as per the holding period. For short term capital gains of lesser than three years, the gains are taxed as per the income tax slab of the investor. For long-term capital gains exceeding three years, liquid funds are taxed as per 20% with indexation benefit. 

Traits of Liquid Funds in India that makes them an excellent choice for the Emergency fund:

1)      Liquidity: Liquid funds can be easily converted to useable money. They can be easily redeemed and in just T +1 time the money gets credited to your account.  

 2)      Risk:Liquid funds are less risky as compared to equity mutual funds. This helps to minimize the downside risk of your investments due to from market volatility to a certain extent.  

Last but not the least, always choose mutual funds to create the emergency corpus you desire as the Mutual Fund industry is managed by professionals and regulated by SEBI.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

How to do tax-saving with mutual fund investments?

Mutual Funds are not just a good vehicle for investments but are also good for tax savings. At the time of investing, if you are looking for a tax benefit up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961, a tax saving mutual fund Equity Linked Savings Scheme (ELSS) is the answer. They even have the shortest lock in period among other tax saving instruments.  Read more to know how Mutual funds help in saving tax. It might be difficult watch your hard earned savings simply getting deducted in taxes. The simplest thing to do would be to invest in a tax saving mutual fund, which helps you build wealth and reduce your tax liability. Remember though tax planning is challenging, it can also be rewarding if done correctly. So, we are giving you a quick run through about how you can save your hard earned money by investing in a Tax Saving (ELSS) mutual fund scheme. 

An ELSS (Equity Linked Saving Scheme) could become you best choice if you are looking for:

1.       Tax benefit u/s section 80C of the Income Tax Act, 1961

2.       Opportunity to invest in the equity markets to grow your investment corpus

3.       Long term Capital appreciation

4.       Shortest lock-in period as compared to other tax saving instruments under Section 80C 

As per SEBI’s categorization norms for mutual funds, ELSS is an open-ended equity-oriented mutual fund scheme that invests a minimum 80% of its assets in equity & equity related instruments.

Generally investment objective of an ELSS tax saving mutual funds is to achieve long-term capital appreciation by investing primarily in equity and equity-related instruments. 

A distinctive feature about ELSS is that compared to the other open-ended diversified equity mutual funds, investment in ELSS is subject to a compulsory lock-in period of three years. During this period, you cannot redeem your investments before the completion of three years from the date of the investment. After the lock-in, if you decide to redeem the investment on the realized gain, as per the current tax rules, LTCG (Long-term capital gains) tax applies.

Remember, though tax saving may be a major purpose behind investment in tax saving mutual fund; it’s a general expectation that any investment should also deliver some return. Hence, while evaluating your options for the tax saving mutual funds of 2021 to invest in, you need to look at the return column too. Do not forget that as an investor, should know the risk- reward tradeoff specific to an investment before taking the plunge with your hard earning money. You need to look beyond to see a historical growth of ELSS tax saving mutual funds for a period of at least 3 years.

If you are looking to save tax, lower your capital gains tax and long term risk adjusted returns from your investments, maybe you should consider adding an ELSS tax saving mutual fund to your portfolio. 

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

What are the types of debt mutual funds and their risk classification?

Debt funds are a type of actively managed mutual fund that primarily invests in debt instruments such as Treasury bills (T-bills), Government securities (G-secs), commercial papers (CP), government and corporate bonds, certificates of deposit (CD), and money market instruments. What are the different types of debt funds in India? 

1)      Liquid Funds: This type of debt fund is considered relatively less risky among mutual funds. As the name suggests, they are liquid and allow investors to redeem and liquidate their investments depending on their needs. The portfolio of this fund comprises instruments that have a short maturity period of not exceeding 91 days.    

2)      Dynamic Bond Funds: Dynamic Bond Fund is where the fund manager dynamically changes the maturity of the portfolio depending upon the interest rate forecast. If the forecast indicates a rising interest rate, then the fund manager may opt for instruments with a longer maturity. If the forecast is indicating a falling interest rate, then the fund manager opt for investments in instruments with a shorter duration of maturity.  

3)      Short / Medium / Long Term Debt Funds: Short-term Funds are a type of debt fund that generally have a maturity period of 1 to 3 years. The portfolio of short-term funds is structured in a way such that their prices are not much impacted by the interest rate movements. Medium Term debt funds generally have a maturity period of up to 3 to 5 years, and long-term debt funds have a maturity exceeding 5 years. The longer the tenure, the more significant is the impact of the interest rate on the portfolio, which is also known as interest rate risk or duration risk.  

4)      Fixed Maturity Plans This type of debt mutual fund is a closed-ended scheme. However, they can be traded on the stock exchange where they are listed.  Investment in debt mutual funds are generally less volatile than equity mutual funds. However, there are different types of risks in debt funds.

AMFI has very well-articulated the risks present in Debt Securities. Let us take a brief look at the risks prevalent in the debt market instruments. 

Interest Rate Risk 

The NAV or Net Asset Value of Debt Mutual Funds is inversely related to interest rate movement. Generally, when the interest rates rise, the prices of existing fixed income securities in your debt mutual fund portfolio fall and when interest rates drop, such prices increase. Accordingly, the NAV of the debt mutual fund portfolio may fall if the market interest rate rises and may increase when the market interest rate comes down. The extent of fall or rise in the prices depends upon the duration or maturity of the underlying security. 

Credit Risk 

Credit risk refers to the risk associated with default on interest and /or principal amounts by issuers of fixed income securities. The credit rating agencies assign a credit rating to fixed income securities and accordingly, in case of a default, the debt mutual fund may not fully receive the amount due to them and the NAV of the scheme may fall to the extent of default. The price of a security may change with expected changes in the credit rating of the issuer, even when there is no default. It may be mentioned here corporate bonds may carry a relatively higher amount of credit risk than government securities. Within corporate bonds too there are different levels of safety.

Liquidity Risk 

Liquidity risk refers to the ease of selling debt instruments at or near their valuation yield-to-maturity (YTM) or true value. Liquidity condition in the market varies from time to time and accordingly, the liquidity of a bond may change, depending on market conditions Assess the illiquidity of the underlying securities of the debt mutual fund portfolio. At the time of selling the security, the security may become illiquid, thereby leading to a loss in the value of the portfolio. Debt funds are suitable for investors having a lower appetite for risk. Be cognizant of the underlying risk in the portfolio before you invest.

Source: AMFI

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Closed Ended Mutual Fund vs. Open Ended Mutual Funds vs ETF

Mutual Funds can be of different categories, which means their underlying assert and their style of investing can vary. If we choose to look at them from a structural classification, they are either open-ended or closed-ended mutual funds. Open-Ended Mutual Funds:

Open ended mutual funds are mutual funds where your investments are not subjected to any lock-in. They are liquid and can be redeemed any time. They may be subjected to an exit load depending on which category they belong to. These types of mutual funds may or may not be listed on the exchange. They are more popular among the investors as compared to closed ended mutual funds.

Closed-ended Mutual Fund:

As the name suggests, closed-ended mutual funds are funds that are subjected to a lock-in period or a fixed maturity period.. Closed-ended funds can be bought or sold real-time just like any additional stock on an exchange.  However, one key difference between closed-ended mutual fund vs. open-ended mutual fund is that in Closed-ended Fund once you invest, you cannot redeem your money back unless the lock-in period is over.. The lock-in negates the possibility of an impulsive decision during times of unstable market conditions. A steady AUM helps fund managers to take prudent investment decisions. Closed-ended mutual funds are mandatorily required to be listed on the exchange but you can invest without a DEMAT account too.  

Investors with a long-term investment horizon who do not need the invested money during that horizon can look at investing in closed-ended funds.

ETFs: 

Exchange-traded funds are investment vehicles that invest in a basket of securities. These funds are open-ended. You can buy and sell them on the markets just like stocks. They are not available over-the-counter which means you will need a DEMAT account to invest in them. ETFs mirror or replicate the performance of a particular index.

ETFs are managed passively & actively.  ETFs generally  have lower expense ratios than those charged by actively managed funds. 

Investing in more than one ETF could lead to duplication or over-diversification. An ETF tracking the NIFTY 50 and an ETF that tracks technology or IT companies may have many overlaps if the underlying stocks are common.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Can Liquid Funds Can Be Considered As Emergency Funds

Liquid funds in India are a category of debt funds that invest in short-term market instruments such as treasury bills, money market, government securities, commercial paper and so on, which are of a short duration with a maturity of up to 91 days.  

The liquid fund investments are subject to minimum 7 day’s exit load on a graded basis, and as the name suggests, some liquid funds with insta redemption facility allow redemption up to 50, 000/-  credited instantly to your bank account. This liquidity feature makes liquid funds as one of the options to consider along with parking your money in bank deposits.

Liquid funds are generally less volatile and have relatively lower risks as compared to equity mutual funds. Due to their short duration, liquid funds returns are subject to lower interest rate risk and thereby less prone to volatility.  Even though returns received from Liquid funds are not guaranteed as compared to fixed deposits, but they are less risky than equity funds.  

Investors look at the liquid funds to invest to create an emergency fund as they are liquid. Ideally, they are designed for investors with a 3-month investment horizon. Since the central bank RBI has maintained a low-interest rate environment to revive the economy from the pandemic-induced economic deceleration, returns from liquid funds are muted . Nevertheless, due to their liquidity and relative safety of underlying investments, they are a good option to consider among mutual funds to create an emergency corpus. Depending on their liabilities, investors can consider parking an emergency corpus equivalent to 1 to 12 months of monthly expenses.

Since liquid funds have a short duration of not exceeding 91 days, this prevents the fund’s NAV from getting impacted significantly as the interest rate fluctuations are minimal. The returns or gains made from liquid funds are subject to taxation. Due to their short-term holding period, the gains are subject to short-term capital gains (STCG) tax depending on the investor’s income tax bracket.

Liquid funds are an option to consider parking your idle money.

  Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

How you can start your SIP journey

SIP or Systematic Investment Plan - Many investors confuse SIP with a mutual fund product. On the contrary, it is a facility for investment in Mutual Fund schemes. It is not uncommon for an investor to ask this question- can I achieve my goal by investing in SIP. SIP helps you to invest regularly in mutual fund schemes starting with a minimum of Rs. 500. Keep your investments staggered in SIP mutual funds ��to achieve your goals over a period. A Systematic Investment Plan for beginners is a simple and easy investment solution provided by mutual fund companies.

How to start SIP?

Step 1 – Identify and assess your risk appetite

Before stepping into the world of SIP or investments in general, assess your risk appetite and  based on your age, income and other criteria. It is essential for an investor to estimate their risk profile. For example, as you become older, you are burdened with many financial liabilities, thus reducing your risk appetite. SIP is a simple way where you can start your investments if you are an amateur. The key is to start early, at the start of one’s working life, as you can take higher risk, and with the high risk you get chances of high returns. But it is most crucial to analyze this factor to develop effective risk mitigating strategies. 

Step 2 – Recognize your specific goals  

Once you have gauged your risk appetite, you need to evaluate your investment’s main purpose, which means what you are expecting from an SIP investment to fetch you over a period of time. In other words, you need to understand your investment objective and set your goals accordingly. SIP helps you plan just that.

For instance, individuals who intend to plan their retirement by routing their mutual fund investments through SIP may opt for an investment portfolio with diversification in various asset classes as per equity, debt, gold and others.

Step 3 – Choose a SIP mutual fund based on qualitative and quantitative factors

 There are multiple Mutual funds schemes available for SIP in the market today, but make sure you choose the right SIP as per step 1 and step 2 given above. Risk appetite, financial goal, the performance of the funds, the credibility of the fund house, fund manager track records and most importantly, perform due diligence on the investment portfolio or you may seek help from an investment advisor. Always remember past performance or a star performer may not always prove to be the best fund!

Step 4 – Set a convenient timeline and date

The SIP allows you to opt for an auto-payment option eliminating the need to make periodic investments. However, you need to choose a convenient date before commencing the process. Please keep in mind that you may select multiple dates to route your investments through SIP each month as per your convenience, then decide a time horizon for your SIP investment. Typically, the SIP investment horizon is pre-determined based on your financial goal and investment amount. You can choose to use an SIP calculator to make your investment decision easier. You may choose an offline or online process for opting in SIP investment.

The following steps will resolve the question of how to start SIP investment for beginners via an online facility

How to invest in SIP online

·         Complete the KYC process – Using the SIP procedure given below

·         All the necessary ID proofs need to be submitted,.

·         Commence the KYC process

·         You need to then complete in-person verification 

·         Register your SIP

·         Choose your SIP Mutual fund as per your suitability

·         Select the amount

·         Choose your SIP option like daily, weekly, monthly etc. set the date

·         SIP will start after a month of completing the process and verification.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

What Are Debt Funds & How do they Work?

Debt Funds or Debt Mutual Funds  primarily invest the money in fixed-income securities like government securities, debentures, corporate bonds and other money-market instruments. These funds lower their risk by investing in such avenues. They have relatively low volatility and generate risk adjusted returns over time. 

How do Debt Funds Work?

These funds invest in instruments such as Bonds and fixed income securities to generate returns for the investors. These funds buy these instruments and earn interest on the money. The yield that the investors receive is based on this. The portfolio of debt funds needs to have specific maturity ranges. For example, a liquid fund can buy only securities which have maturities of upto 91 days. They do not offer assured or fixed returns, unlike FDs. Their returns can fluctuate. A rise in interest rate positively impacts on the interest income but negative impact on the bond or instrument price. And it’s the other way round when the interest rates fall.   

What are different types of debt funds? 

1)      Liquid Funds: 

This category of funds are considered the least risky among the mutual funds. As the name suggests, they are highly liquid. The portfolio of this fund comprises instruments that have a maturity period of not more than 91 days.    

2)      Dynamic Bond Funds

In this fund, the fund manager changes the maturity of the portfolio depending upon the forecast of the interest rates. If the forecast indicates a rising interest rate, then the maturity will be longer. If the forecast is indicating a falling interest rate, then the maturity will be a shorter duration.

  3)      Short / Medium / Long Term funds 

Short term Funds come with a maturity period of 1 to 3 years. The portfolio in these funds are structured such that their prices are not much impacted by the change in interest rate movements.

Medium Term debt funds have a maturity period of upto 3 to 5 years, and long-term debt funds have maturity beyond 5 years. These are riskier than short-term as their tenure is longer; hence more significant is the impact of the interest rate on the portfolio, which is also known as interest rate risk or duration risk.  

4)      Fixed Maturity Plans

These schemes are closed-ended schemes. But can be traded on stock exchange where they are listed.  

Debt funds are ideal for investors seeking moderate risk as the risk of investing in debt mutual funds is generally lower than in equity mutual funds. Debt funds can be the right choice for anyone having a lower appetite for risk. You can invest in a debt fund if you have a surplus fund or want to diversify your investment portfolio, or think of making an emergency fund. Debt funds can also diversify the overall portfolio risk if your allocation towards the equities are on a higher side.  

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

5 Mistakes to Avoid in Retirement Planning

Saving & investing for your retirement is essential while you are in that nascent stage of your career. However, people end up making small mistakes that later amplify their losses or their realized gains.

Most of the time, people don’t realize the importance of saving & investing. They push it back and worry about their retirement kitty for later. However, the sorry news is that this is, quite honestly, not the right approach. Here are 5 mistakes one should avoid while saving up for their golden years.

Mistake 1: Improper Plan/Calculations for Your Retirement Dream You must start estimating your retirement corpus requirement with a Retirement Calculator. Start by sharing your future plans with your spouse by asking each other how much of the present income is required to maintain a comfortable life during retirement? Are there any plans to see the world? Figure out your costs. Calculate your current expenses and find out the future value of your expenses by the time you retire, assuming a realistic rate of inflation. Once you know your answer, use the Retirement Calculator  to serve a rough guide as to what this figure can be.

 Mistake 2: Not Increasing Your Investments through SIPs A Systematic Investment Plan (SIP) could be your first step to happy retirement life. SIP is one of the preferred ways of investing in a mutual fund. In an SIP, you can invest every month with a minimum amount of Rs. 500. An SIP makes you a disciplined investor. It also helps you achieve your goal of retirement planning. Let’s say you save 5% of your income, for instance, Rs. 2,083/- a month on a yearly income of Rs. 5,00,000 Gradually increase that amount to 10-12% every year. The additional increase will substantially add to the future value of your corpus.

 Mistake 3: Starting late & losing on Compounding

The tool that you need to grow your investment over time is the power of compounding. In simpler words, it is earning returns which gets reinvested - a snowball effect that could effectively increase your savings much more over time. Thus, the sooner you start saving, you get more time on your hands, thereby letting compounding work for you in the long run.

Thus achieve your financial goal of saving up for retirement by investing as soon as possible. consult your financial advisor before making any investment-related decisions.

Mistake 4: Improper Asset Allocation

Asset allocation is based on the premise that the different asset classes have varying performance cycles.,.

A good asset allocation plan develops an investment portfolio that will help you reach your financial objectives with minimal amount of risk. However, if you are young and not investing in equity, you are missing out on gains that equities have to offer. A portfolio heavily tilted towards debt at a young age might keep your principal at lesser risk, but it will fail to generate more significant returns. Similarly, if one ends up investing heavily into equities when they are reaching a senior age, they are risking their capital. - a move that could prove disastrous.

So a prudent asset allocation is always advised based on one’s risk-taking capacities.

Mistake 5: Not having a Plan at all

It may sound funny, but if we open our eyes, we will notice that saving habits among youngsters are at an all-time low. Many fancy that they will end up running some successful business that will generate enough cash flow to meet their needs. But pandemic has taught us that some of the most reliable ideas have miserably failed and have bought people to poverty. So it’s not just wise but equally important to have a retirement plan for ourselves no matter how we are faring in our lives.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

ETF VS Stocks: How do I select?

While Stocks and ETF both trade on an exchange, they are two different investment vehicles. They both have their pros and cons and possess a great degree of flexibility in terms of investment. Stocks & ETFs both trade on exchange, but they are two different investment vehicles. When you purchase a stock, you are buying equity of the company, which means you become a shareholder. When you are investing in ETFs you are investing in a fund which is mirroring an index. First let’s understand how each of them works in piecemeal. 

Stocks & their Benefits: Stocks represent ownership in companies. They trade on regulated markets & over-the-counter markets. Stocks give you more degrees of control over your investments and let you invest in and potentially have a say in the management of particular companies. In contrast, ETFs let you track a more extensive market index

When you invest in stocks, you have more control over where to invest. You have the liberty to invest in the business you understand. You can research the company, their business model, their earning history, and their quarterly forecast and then make a sound decision.  The same would be difficult in an ETF because they replicate the fractional shares of index with a lot of companies. Hence that is beyond your control. 

ETF & its Benefits: Exchange-traded funds are investment vehicles that invest in multiple securities. You can buy and trade them on the markets just like stocks. They are not available over-the-counter. ETF’s seek to replicate the stocks of a particular index.

ETFs are managed passively 

Salient Features of Stocks & ETFs: When you are buying individual stocks, you are owning a particular company but when you buy ETFs, ETFs let you track a broad area of the market because they are replica of respective index. ETF’s are more diversified than individual stock, but they carry expense fees, which a stock does not. When you are buying individual stocks, you have the flexibility to pick and choose the stocks that fit your financial objectives. You have the liberty to create a portfolio for yourself, including stocks of foreign companies.

Investing in more than one ETF could lead to duplication or over diversification. An ETF that tracks NIFTY 50 and an ETF that tracks technology or IT companies may have many overlaps as they will have several stocks in common.

Costs: To invest in a stock, you will pay a brokerage charge, for ETF you will be paying management fees in the form of expense ratio of the scheme. 

Risk: When you invest in stocks, you limit yourself to that company’s performance, subjecting your portfolio to a higher degree of risk. By investing in ETFs you allow yourself to keep your investment spread over equities of different companies, thus diluting your risk significantly.

You can't fully predict the difference between an ETF and a stock in terms of returns since nobody can fully predict the market, but you can choose which is suitable for your investment needs. 

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

The power of compounding

What is compounding? Compounding may sound like a complex concept, but it is a simple and also a very powerful concept. Power of compounding is nothing but when the value of an investment increases due to the interest earned on the Principal as well as accumulated interest. The power of compounding is an interesting concept and explained as you read further. The power of compounding is an effective tool to grow your investment size. Why is power of compounding powerful? Simply because this strategy allows the interest earned to also earn interest leading to a growth in the value of investment. Using this strategy, the investments works hard for you. Therefore, it is a powerful tool used in the world of investments, which helps achieve your future goals. 

Now it’s not uncommon to have questions in your mind regarding where should you invest? How do you start? How much should you invest? The answer is simple, start your investments in mutual funds.

With each succeeding year, the returns will get added to the principal. Power of compounding is nothing but exponential growth for your corpus. Example for the Power of compounding : if you had invested Rs 1 lakh  in 2010 investment growing at an assumed rate of 10% annually compounded, after 11 years in 2021, the investment corpus was Rs 19.28 lakhs( Returns are net of total expenses and are calculated on the basis of Compounded Annualized Growth Rate (CAGR).The above example is to explain the concept of power of compounding and is given for illustration and explanatory purposes only 

Make the best use of this tool – the power of compounding in three 3 easy ways

  Start early     - Longer the investment horizon, the better     as mentioned earlier, your investment and corpus size keeps growing with     the help of power of compounding. SIP mutual     funds     are a convenient way to use this power of compounding. The key is to start     investing early and stay invested for a longer tenure to leverage the     power of compounding. This will help you to gather a retirement corpus. 

  Choose     wisely - Seek optimum return on investment     Ensure to choose your mutual funds wisely     before making an investment. You can also use the power of compounding     calculator to understand your desired objectives. If you invest in any     Equity or debt mutual fund schemes, you can benefit from the power of     compounding. Mutual fund schemes and objectives have various categories     and goals. Accordingly corroborate the target and required corpus. 

  Invest     judiciously and regularly     It is evident that if you invest a higher amount, you potentially to have     a larger sum of investments at the end of your time horizon subject to     market risk. However, the sentiments are different because investments are     sometimes random and unplanned. So, the investment size does not grow. This     can be changed by investing timely and regularly. Therefore, the Power of     compounding can be utilized and optimized with the factor of regular and     disciplined investing. Thus, it is essential to invest in mutual funds     systematically. 

 In a nutshell, long-term investment strategy is best utilized with the power of compounding in SIP. The Power of compounding is a useful and powerful tool that is also subject to market risk and conditions. Investors may seek the help of an investment advisor and gather maximum knowledge before investing. 

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Why does Quantum Mutual Fund not have a Mid Cap Fund Ajit Dayal, Chairman, Quantum Asset Management Company Pvt Ltd answers an investor's query on why Quantum mutual fund does not launch a Mid Cap fund, at the recent Path to Profit event held in Mumbai. Given valuation parameters it is difficult to pick out a desired number of mid cap stocks without affecting their share prices.

Watch full video :https://www.youtube.com/watch?v=PUyWt3JUi9Y

How to select mutual funds beyond star ratings

Investors should not blindly follow star ratings as they could mislead.  Investors usually go about searching for the top-performing mutual funds and look for ratings to evaluate the best mutual fund. Investors need to take cognizance that not all best performing funds may always perform better than other one.  Why should you not only depend on ‘Mutual Fund Ratings’? 

 It is essential     to look beyond rating for various     types of mutual fund schemes. Investors need to consider the     following factors: 

1)      Evaluate the financial health: An investor must thoroughly perform due diligence on his investment’s financial health

2) Portfolio composition: Investors also need to check the portfolio components, sector allocation, the credibility of government papers in different types of mutual funds he is looking to invest. 

3) Cash level: Fund Managers adjust the cash level in their portfolio depending on the prevailing liquidity requirements and portfolio changes due to market cycles. If the equity markets are rising, they trim their respective allocations to keep a higher portion in cash and reduce the cash level during a falling market. 

Therefore, it is advisable not to blindly follow star ratings for various types of mutual fund schemes. 

 It is     not wise to judge several types of mutual     fund schemes based on star ratings, as they can also be subject to     market risks. . Always remember high returns and high risk goes hand in     hand. 

 In a     nutshell – Yes, one can consider ratings     for different types of mutual fund schemes to reduce the time     on research, but this should not be one of the most important factors to     consider while choosing a mutual fund. 

Here are six factors to consider when choosing different types of mutual funds schemes in India beyond the best star rating funds 

1.       Goals – While investing in a mutual fund or several other types of mutual fund schemes, one must choose its goals in terms of the time period, returns and primarily the specific goals. For example, planning your retirement, planning a vacation or buying your dream house. It is imperative to identify each goal depending on various factors such as age, income, gender, etc. You can take a call depending on the tenure, be it long or short term, and select the types of mutual fund schemes accordingly.

2.       Risk - Risk is an important factor to consider while choosing the types of mutual fund schemes offered by mutual fund Companies as risk is a phenomenon of uncertainty. Do consider your risk profile before opting for various types of mutual fund schemes like Equity, Debt or Hybrid Funds. Your type of mutual fund schemes will vary depending on their performance. Some examples of risk are:1. Sudden surge in Covid-19 cases in India could impact the future of equity Markets. 2. Equity has risks involving volatility of the markets, quality of stocks invested, etc.  3. Debt and hybrid funds also have other risks such as a) portfolio risk, b) change in Government policies affect portfolio component and quality of papers or c) rating agencies downgrading various money market papers. 

3.       Investment Strategy- Ensure that the investment strategy followed by a mutual fund company aligns with your goals and if it is conflicting, you should evaluate the reasons for it. It is suggested to go for a long-term approach instead of chasing returns that carry high risk. 

4.       Expense ratio – The expense ratio is the commission or the fee charged from the investors to manage their investments. As an investor, you must target mutual fund schemes that have a low expense ratio.

5.       Exit Load - Exit load refers to the fee charged by mutual fund companies from investors while exiting from a particular mutual fund scheme. 

6.       Fund Manager and Fund House – Check for the credibility of the fund house. Past performance may not sustain in the future is a reality. Do not blindly follow star performance. They could be futile in the future. 

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

What are Index funds and Exchange Traded Funds?

What are Index funds

Index Funds are nothing but passive mutual funds that work by replicating popular market indices.  The Fund manager invests in all the stocks that mimic the subsequent Index. How do Index funds work?

According to the portfolio aligned with the Index, the fund manager buys or sells units according to the portfolio during any changes in the stock's weight within the Index.  Although it is easier to follow passively managed funds, there is a limitation to this it may not always offer the same returns as that of the Index because of an error called tracking error and scheme expenses. Tracking error occurs due to disproportionate holdings of securities that align with the Index and transaction costs incurred.

Understanding Nifty Index Fund

Nifty Index funds are also a replica of Index funds. Nifty Index funds in India are those mutual funds that are a replica of the composition of nifty stock indices. So you may choose to invest in a set of handpicked instead of restricting yourself to a particular stock. The Nifty Index fund is a replica of the NSE Index, which is a benchmark

Hypothetically speaking, Nifty 50 has around 31% exposure to the Retail/FMCG Industry. Thus, Nifty Index funds that track Nifty 50 will also have 31% of its portfolio invested in the Retail/FMCG sector. The same stocks that are included in the benchmark Index are easier to track and analyze. Nifty Index funds gives you the best of both worlds with the benefit of Indexation and optimum use of marketization of stocks.

Benefits of Investing in Nifty Index funds in India

Ø  Risk-adjusted returns: Nifty Index fund gives you the benefit of reduced risk level for those who do not wish for an actively managed fund. Investors should remain invested in Nifty Index fund for at least 3-5 years to generate risk-adjusted returns.

Ø  Invest in a basket of shares: Allows you to own the shares in the Index for a fraction of their value in the Index.

Ø  Diversification: This allows you to diversify across the top companies in different sectors through a single investment.

Ø  Returns in tandem with broad market average: Nifty Index fund is an easy and feasible investment avenue to lock returns in line with the benchmark Index, which means that investors are in tune with the broad market at all times.

Ø  Flexibility: Gives you the flexibility to choose between nifty Index direct growth and indirect option.

What are Exchange-traded funds (ETFs)Exchange-traded fund (ETF) is a type of investment that can trade on an exchange like a stock, which means they can be bought and sold throughout the trading day. From traditional investments to tangible assets like commodities or currencies are offered by ETFs. 

Let’s understand the types of ETFs:

There are a few types of ETFs like –

1)      Market ETFs – includes Index S&P 500 

2)      Bond ETFs – This is designed to provide exposure to various types of bonds available; corporate, high-yield etc. 

3)      Sector/ industry & Commodity ETFs: Designed to provide exposure to a particular industry, such as oil, pharmaceuticals, or commodities. 

4)      Style ETFs – This is based on investing style or pattern such as growth stock or small cap equities. 

5)      Actively managed ETFs are curated to outperform an Index, unlike most ETFs, which track an Index.  

There are a few more ETFs in the market that can be classified based on strategy. 

 In     short, ETFs are easy to trade - you can buy and sell any time of the day

 Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Taxation Benefit with Mutual Funds

Harness the power of ELSS to save tax under section 80c. Don’t just save tax, but build wealth too by exposing your money to equities. Use ELSS funds for prudent portfolio management. Explore how taxation applies to redemption of mutual fund units in debt and equity investments.

There are various categories of mutual funds -equity-oriented, debt-oriented, hybrid, thematic etc. and each of these have a sub-category that address to a set of investment objectives or needs.

At the time of investing, if you are looking for investment up to Rs 1.5 lakh to save Tax under Section 80C of the Income Tax Act, 1961, Equity Linked Savings Scheme (ELSS) is the answer.

It's not easy to watch your hard earned savings simply getting deducted in taxes. So, with the beginning of the new financial year, we're giving you a quick run through about how you can save your hard earned money by investing in a Tax Saving (ELSS) scheme.

An ELSS (Equity Linked Saving Scheme) could become your best choice if you're looking for:

1.       Deductions under section 80C of the Income Tax Act, 1961

2.       Opportunity to invest in the equity markets

3.       Long term Capital appreciation

4.       Shortest lock-in period of all the tax saving instruments under Section 80C

 ELSS is an open-ended equity-oriented mutual fund scheme that invests a minimum 80% of its assets in equity & equity related instruments.

The investment objective of an ELSS, broadly, is to build on your investment corpus by investing primarily in equity and equity-related instruments. A unique feature about ELSS is that compared to the other open-ended diversified equity mutual funds, investment in ELSS is subject to a compulsory lock-in period of three years. During this period, you cannot redeem your investments before the completion of three years from the date of the investment

 Understand taxation in mutual fund

Income from sale of ELSS and other equity mutual funds are called as capital gains. This income is taxable in the hands of investors. The tax to be paid on the capital gains depends on the time period for which the investment was held. The minimum holding period for long term capital gains in equity funds is one year. Gains made on an investment in equity mutual fund sold before completion of 12 months from the date of purchase is termed as short term capital gains. Gains on any investment held over 12 months is long term capital gains.

Short term capital gains (if the units are sold before one year) in equity funds are taxed at the rate of 15% plus 4% cess.  Long term capital gains tax in equity funds is 10% + 4% cess provided the gain in a financial year is over Rs 1 Lakh. Long term capital gains upto Rs 1 Lakh is totally tax free. *

When it comes to ELSS after the lock-in period of three years, long term capital gains (LTCG) tax on mutual fund redemption applies, as per the current tax rules.

Whereas when it comes to debt mutual funds, short term capital gains tax is applicable as per the investor’s Income tax slab rates for a period less than three years whereas the rate of long-term capital gains tax for period exceeding three years is 20 percent with indexation benefit.

For those investors looking at an option to save tax, and earn risk adjusted returns from your investments, could consider adding ELSS mutual fund to your portfolio. The simplest thing to do would be to invest in an ELSS fund, which helps you build wealth and save tax. Remember, though saving tax liability is a major purpose behind investment in tax saving fund; any investment should also deliver some return. Hence, while evaluating your options for the best fund to invest in, you need to look at the return column too. Do not forget that as an investor, you should know the risk and reward attached to investment before taking the plunge with your hard earning money.

A famous American Wealth Manager, Barry Ritholtz once said "When it comes to investing, there is no such thing as a one-size-fits-all portfolio." Therefore, personalization is important when you construct a mutual fund portfolio. Save tax conveniently by investing in ELSS Mutual Fund.  

 *As per existing income tax guidelines for the FY  2021-22

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

What is the difference between direct & regular mutual funds?

As per the Securities and Exchange Board of India (SEBI), every mutual fund offered by a fund house comes in two variants: regular & direct. Both have their own set of advantages & disadvantages. When it comes to investing in Mutual Funds you generally have two options; Regular plan & Direct plan. If you invest via distributor you get a regular plan & if you invest via RIA’s or Directly in Mutual Fund Schemes  you get a direct plan. A regular plan differs from direct plan in terms of the cost structure. The cost associated with regular plan translates into a higher expense ratio which includes the income earned by the distributor in the form of distribution or transaction fees. This added cost which is passed on to the investors who invest via regular plan. Hence, as the expense ratio in a direct plan is lower, it has a higher NAV as compared to regular plans. 

Salient Features

1)      How to Switch: While the process depends on the respective AMC’s website, as a standard, switch option can be conducted online or in person by visiting the nearest branch If you are not comfortable with the online switching procedure, then you can also switch funds offline. To switch offline or in person you will need to visit the nearest branch of the fund house and fill and submit a switch form. Once they process it, they will send you an updated account statement. You can also get this done via your distributor. 

2)      Net Asset Value (NAV): The TER (Total Expense Ratio) of any mutual fund plan is adjusted from the NAV. The NAVs of direct plans are higher than the regular plans since TERs of regular plans are higher than those of direct plans. In other words, the investment value after you make an investment will generally be higher in a direct plan compared to a regular plan. 

3)      Returns: The difference of TER between regular & direct plans varies from one AMC to another and scheme to scheme, largely depending upon the commission structure of AMCs. The commissions or brokerage paid for equity funds are generally higher than debt funds. The difference in TERs between regular & direct plans can range from 0.5% to 1%. Although this sounds minuscule, it directly affects the returns of regular and direct plans. When you are investing for a long term and you compare returns of mutual fund direct vs regular plans, the direct plans can add up to big amount of difference in returns on your investment. 

Direct plans have lesser costs and give higher returns over regular plans. However, you need to have some investment experience and knowledge to pick and invest in the right direct mutual fund plans.

Whenever you are making a switch from a regular plan to a direct plan or vice versa, always remember that switching of funds means selling your current units and purchasing units under the new scheme. While switching, there may be certain exit loads applicable. You also need to consider the tax implications. Hence, be wise when making a switch decision. Consider and reflect on your overall financial goals before making any decision.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video. 

 Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Starting an SIP in the Best Mutual Fund

SIP is the most preferred way of investing in the markets by retail investors. One of the key advantages of SIP is that you can start it at any time with whatever amount you choose. Once you start with an SIP, you no longer need to worry about market levels (high, low). You should continue with your SIP in the best mutual fund of your choice till the time your financial goals are achieved. SIP stands for Systematic Investment Plan, a mode of investing in mutual funds that allows one to invest fixed amount in a specific mutual fund scheme at regular intervals (weekly, monthly, quarterly). It makes regular investment convenient:

·         Easy auto debit facility, 

·         Affordable with a low minimum investment requirement: SIP doesn’t incur any additional charges.

While investing is a personal decision based on everyone’s unique situation, every financial plan will have some allocation of the 3 major asset classes: 

1.       Equity or stocks, 

2.       Debt or fixed income instruments, 

3.       Precious metals like gold and silver. But investing in the stock markets can be a challenge, with the wild and unpredictable swings in share prices. To reduce the risk of investing “at the wrong time”, many investors can opt for a Systematic Investment Plan (SIP) in the Best Mutual Fund of their choice. 

An SIP, or a Systematic Investment Plan, is a mode of investment whereby you, the investor, invests a pre-determined amount on a monthly basis, on a pre-determined date, into the Best Mutual Fund Scheme of your choice. Today, it is among the most chosen method of investing by retail investors.

4 Benefits of SIP:

While there could be other benefits, here are 5 that we would like to share.

1.       Benefit of Rupee Cost Averaging:

Since you are buying units every month, you will be buying at market dips and rises, so you are averaging your cost of investments over the time period.

2.       Benefit of Power of Compounding:

If you start early, SIP helps you to start investing to meet the greater expenses of your life. Saving a small sum of money regularly makes your money work with power of compounding and increase impact on wealth accumulation.

3.       Helps you avoid market timing:

SIP investors can avoid market timing - as they get the chance to buy low, and later when they want, sell high.

4.       It's possible to start small:

The best part of starting an SIP is that it is suitable for any wallet. You can start with a ticket size of your choice, you can start small with as low as Rs. 500/- in the Best Mutual Fund of your choice and slowly build up your wealth.

5.       Helps you avoid market timing:

With an SIP you do not need to try to time the market and thereby inculcates automatic financial discipline into your investing method.

Making investments in stock markets via Systematic Investment Plan (SIP) has been proved as a strategy to many investors and also helps you to play safe given the volatile nature of stock markets.

From a practical point of view, an SIP is the preferred route of mutual fund investments as investing through SIPs inculcates the discipline of saving & investing. It is best to align the frequency of investments with that of your income schedule. If you are a salaried employee, you could go for monthly SIP to regularize your savings. Most of our bills follow a monthly cycle so it makes sense to view SIP as a monthly 'expense' that is actually an investment helping you to inculcate the investing habit.

The yardstick for SIP must be your financial goal – the fund that you select to start an SIP in should best match your Financial Goal. 

An SIP is the first step to your financial goals and should not be judged on the basis of market performance. Market uncertainty will prevail but your financial goals are fixed. Let your SIP achieve it. You need patience and confidence till the time your SIP helps to achieve your financial goal. Remember mutual funds sahi hai & SIP is one of the sahi tareeka for investing in mutual funds. 

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

ESG Investing: Explained & Simplified

If you’ve started to become environmental friendly and value certain ethics and principles, then you’d want your investments to follow the same values as well. That’s where ESG investing comes in.

What is ESG Investing?

 ESG investing means investing in companies that contribute to better people, planet & profits, without sacrificing investment returns. ESG factors may include non-financial parameters that does have a material impact on a company’s long-term financial health.

 ESG encourages companies to look beyond traditional parameters and measure sustainability. Companies are evaluated on quantitative and qualitative parameters. ESG factors cover a wide spectrum of aspects that may not be part of financial analysis, yet may have financial relevance. This might include how corporations respond to issues such as climate change, water management, health and safety policies, supply chain management, treatment of minority workers and whether they imbibe a culture of innovation & trust.

Let’s understand the full form of ESG funds

E - indicates a company’s exposure to environmental issues such as energy conservation, pollution control, climate change, carbon neutrality, treatment of animals, water management, etc.

S – Social, includes companies’ ability to attract and retain skilled manpower at a socially responsible manner incorporating an inclusive workforce irrespective of gender, race or color. Other socially responsible initiatives could include providing the locals with access to education and medical facilities and avoiding product liability issues.

G- indicates a well-run company with strong governance, how does it interact with shareholders, how does the management drive leadership and bring effective adherence to policies and procedures, while fostering integrity, honesty and transparency at all levels.

Why should you make an investment in ESG? Investors can grow their corpus by investing in companies that take care of environmental, social and governance factors:

a)      Companies who care about such values resonate with consumers and investors,

b)      have lower costs and improved operational performance,

c)       create sustainable value and

d)      Enjoy corporate longevity.

For companies that do not incorporate ESG parameters they:

a)      End up losing their customer base,

b)      Fail to attract/retain good talent,

c)       Run the risk of facing litigation and regulatory actions etc.

Therefore, ESG investing reduces your exposure to risk and contributes to growth over the long term.

ESG Investing is Responsible Investing You experience a sense of personal satisfaction when you choose to buy organic vegetables from the local vendor as compared to buying vegetables that look nearly half as fresh from a supermarket. Similarly, when you invest in companies that are sensitive to ESG parameters, you feel empowered to invest in companies that reflect the fundamentals that you believe in.

In coming times, corporate India will have to follow stipulated norms and regulations or provide extensive disclosures on adherence to responsible business practices.

ESG criteria broadens the ecosystem of how participants interact with each other. For instance, on the social side, it identifies companies that have built a sustainable relationship with employees, suppliers, communities and investors at large; and have built a strong reputation with the potential to generate more business. A significant proportion of a company’s valuation is tied to intangible environmental and social and governance parameters that material impact on its financial outcome.

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