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Good Investment HabitsIf you are looking to diversify investments across market capitalisations, Flexi-cap mutual funds can be a boon! Mutual fund investors often find it difficult to decide how much and to what extent to diversify across market capitalisation and then to keep track as per your goals. Flexi-cap mutual funds do it for you! Let’s understand them in detail.
What are Flexi-cap mutual funds?
As per the SEBI mandate, Flexi-cap mutual funds can invest 65-100% of their assets in equity and equity-related investments. This allocation can be across large-cap, mid-cap and small-cap companies in a proportion that the fund manager deems fit basis the market conditions and relative attractiveness of each market cap segment while matching the fund’s objective. Hence, as an investor, diversification in multiple market capitalisations segments can be achieved through a single fund.
A Flexi-cap fund identifies the stocks across market capitalisations (Large /mid/small cap) space thereby reducing the risk of your investment. Flexi-cap funds are also referred to as diversified equity funds.
Benefits of investing in a Flexi-cap fund
Dynamic allocation of funds
Because there is no restriction on how much to invest and in which capitalisation, Flexi-cap funds are free to change their allocations as per the fund manager’s expertise and scheme’s investment objective. Investments can change across market capitalisations depending on the market attractiveness. So, if you are worried about how much allocation should be made in large, mid or small-cap stocks or not sure about which market segment is attractive due to lack of expertise and time then Flexi Cap Fund may be the right option.
Diversification
As mentioned above, Flexi-cap funds allow you to diversify your investment across market-caps with no restrictions on the segments they invest in. This directly helps with investment diversification for the investors, as they can benefit due to various cycles in the multiple market capitalisation categories.
Mitigation of risk
Often a by-product of diversification is the reduction in the volatility of your portfolio overall. Thus, when you diversify, you must try to ensure that all your eggs are not in one basket. Hypothetically, if a chunk of your investments were made in a particular market capitalisation category & if that category loses value due to some market happenings, then your investments can be deeply affected. But if you had the same corpus distributed across all the capitalisations, you would not be as affected by the drop. Hence, risk mitigation is one of the prime benefits of a Flexi-cap fund.
Who should invest in Flexi-cap funds?
nvestors with a high-risk appetite and at the same time in need of diversification can invest in these funds. Risk appetite is relevant because the fund predominantly invests in equity and equity-related instruments. Investors with largely debt funds in their portfolios and wanting to take their first steps in the equity markets can also consider these funds. These funds provide stability to the investors while taking appropriate risks.
Disclaimer:
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit www.scores.gov.in . For more info on KYC, change in various details & redressal of complaints, visit www.nipponindiamf.com/InvestorEducation/what-to-know-when-investing.htm This is an investor education and awareness initiative by Nippon India Mutual Fund.
The information/ illustration herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, affiliates or representatives (“entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme related documents carefully.
All of us work very hard to earn money, but most of us fail to invest it well. This causes us to lose out on a lot of opportunities to create wealth and may lead to reduction in our quality of life – either in the short term or
post-retirement when our income stops!
Thanks to our sponsor's 130 years of global wealth creation experience, we understand this happens due to lack of awareness, information and above all, wrong investing habits.
But we have some good news!
Having studied habits of successful investors across the world, we have been able to compile the habits of successful investors, that somehow remains the same across the globe!
We believe that everyone can and
must inculcate these habits and invest well.
We have therefore collated these habits and want everyone to master them with an aim to claim their #RightToWealth
| • | Achieve most of financial goals quite comfortably through regular and right investments |
| • | Balance investment responsibilities with quality of life so that one does not have to compromise on today for a brighter tomorrow. |
| • | Enjoy peace of mind on financial front |
| • | Be prepared for financial emergencies |
Inflation reduces the 'purchasing power of money'. What Rs. 100 was able to purchase last year will generally be higher than what the same amount can fetch this year. Look at it as a leaky tap that is depleting your money that is lying idle. The solution is to 'invest' it well so that it can earn returns that are more than the drain due to inflation (typically 4-5% post-tax). This is called 'beating the inflation'.
Worldwide, equity investments have been the choice of successful investors ; for beating which has helped them beat inflation and growing grow their wealth. However, equity investments, by their very nature, are subject to market volatility. Hence one needs to give them time and be patient through the 'market cycles'. Typically a 3-5 years of time needs to be given to equity investments for us to begin to realize their inflation-beating potential.
It is critical to 'accept' that equity investment comes with both growth potential coupled with the uncertainty of market volatility. Beating inflationinvestment and accumulatingve wealth, therefore, generally is a chance that enhances with the time given to the investment. The first and most primary requirement for you to be a successful equity investorment is to 'understand risk'
Mutual Funds typically employ researchers, analysts and fund managers to keep a close eye on the performance of the markets. They are as watchful as possible to reduce the impact of these uncertainties. And their expertise is available to investors at a very reasonable cost.
IAttaching a goal to your investment is so good an idea, good financial planners will always insist that you invest for a specific goal. This helps us stay the course through market ups and downs. Conversely, investing without a goal in mind often increases the chances of investors getting impacted unfavorably by market fluctuations.
While one should not be fearful of the market volatility, one should not also attempt to time the market and gain from short terms swings. No one has been able to convincingly predict the market movement and conversely, many investors have tend to faced losses due to fear and greed.
A financial plan is constructed on the simple principle of 'investment for every financial need/ goal and a goal for every investment'. It lists down all financial responsibilities and the investment plan against those. The time horizon for the goal (when the money is needed) and the risk-profile of the investors determine the funds selected. It also typically includesd Life (term plan) and Health insurance needs.
Once the investment goals are identified, right funds selected for each goal and investments start into those funds, the best course of action to follow is to keep investing till the respective goals are achieved; without worrying about the market volatility. This has been proven time and time again across the world.
For many years, gold has been used as an investment opportunity by investors to hedge against inflation. Historically, it has been seen that the performance of gold, as an asset class is inversely proportional to that of equity; i.e. generally when the equity markets fall, the demand for gold picks up and vice versa . Gold assets introduce the required diversification in your portfolio. Let’s say; it is a teamwork between the two classes that makes your portfolio more stable.
Consider the below graph that shows the actual performance of the S&P BSE Sensex TRI(Total Return Index) and Domestic Gold prices in the Indian market over the period of August’19 to July’20, wherein the Y-axis shows the rebased prices of both the asset classes. As you can see, the inverse relationship between the two asset classes is clearly visible in their performance record.
As an investor, you will appreciate the fact that every asset class has its own performance path over various time periods. Additionally, the various market forces at play make it difficult to be able to predict the performances of these asset classes. You may not have the skill, time, and the expertise to be able to foresee these changes and align your portfolio accordingly. Hence, the need to diversify into gold as an asset class.
There are two ways in which you can invest- gold ETF and gold savings funds are one of the ways of investing in Gold as an asset class .
Gold ETF:A gold ETF buys physical gold of 99.5% purity. The objective here is to replicate the price performance of physical gold.
Gold Funds: A gold savings fund is a Fund of Fund (FoF) that invests in the Gold ETFs that invest in bullion gold of 99.5%.
Below are some of the benefits of investing in gold via the above methods-
Ease of Investing
One can easily invest in gold via Gold ETFs or indirectly through Gold funds (Fund of Fund). By investing in units of Gold ETF, one can have an exposure to physical gold with 99.5% purity , whereas an investor in units of Gold Fund has an indirect exposure to physical gold via investment through Gold ETF.
To invest in Gold ETFs, you need a Demat account whereas, for Gold Funds, you do not. Gold Funds may have a higher expense ratio when compared to Gold ETFs because the investors will be bearing the recurring expenses of the scheme, in addition to the expenses on the underlying scheme. In Gold Funds, the option of an SIP mode of investment is readily available, whereas in Gold ETF it is possible only if the broker offers a stock SIP option
However, you will have to go through the one-time mandatory KYC process before investing in any of the gold schemes of an AMC.
99.5% Purity of Gold
If you invest via Gold ETFs, you invest in physical gold of 99.5% purity. However, in case of a Gold Fund, the underlying scheme i.e. Gold ETF invests in physical gold of 99.5% purity, andtracksthe performance of the domestic price of gold. So, you do not have to worry about the quality of gold you are investing in.
No Storage Hassle
A precious commodity like gold when taken in physical form needs to be kept safely & securely as the chances of it getting misplaced or lost are higher. However, when you invest in gold via mutual funds, there is no storage hassle.
Relevant diversification
The gold asset class can help you with asset diversification in your portfolio has the potential toas well ascanmitigate the risk because different asset classes have different levels of risks associated with them. This diversification has the potential of affecting your returns positively over a long-term investment horizon.
Your portfolio is better off being a good mix of asset classes like equity, debt and gold and more, as the need be. Investment in gold helps you in allocating your assets such that your risks are not completely invested in an asset class.
Disclaimer:
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be
verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit www.scores.gov.in . For more info on KYC, change in various details
& redressal of complaints, visit mf.nipponindiaim.com/InvestorEducation/what-to-know-when-investing.htm This is an investor education and awareness initiative by Nippon India Mutual Fund.
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, affiliates or representatives (“entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme relate documents carefully.
Diwali is around the corner, and we are all busy cleansing our homes, all set to welcome the auspicious energy of growth into our lives! It is also the time of the year when buying goldis a part of the tradition , more as a symbol of wealth-index and a good omen than anything else. How about we do something different this Diwali? Let’s buy gold because it adds value to your financial portfolio, not just because it is a token of good luck or festivity.
Let’s delve into some details. As an investor, you will appreciate that every asset class has its own performance path over various periods. Additionally, the various market forces at play make it difficult to predict the performances of these asset classes. You may not have the skill, time, and expertise to foresee these changes and align your portfolio accordingly. Hence, the need to diversify into gold as an asset class.
Gold ETFs and Gold Funds are two ways of investing in gold as an asset class.
Gold ETF: A gold ETF buys physical gold of 99.5% purity. The objective here is to replicate the domesticprice performance of physical gold. If you invest in Gold ETFs, you can buy and sell units of Gold ETF on the stock exchange by having a Demat account. 1 Gold ETF unit can be as low as 0.01 gram of physical gold.
Gold Funds: A gold fund is a Fund of Fund (FoF) that invests in the Gold ETFs that indirectlyinvest in bullion gold of 99.5%. Unlike the gold ETFs, you do not need a Demat account for investing in Gold funds.
Let’s look at some benefits of investing in gold as an asset class-
Hedge against inflation
For many years, gold has been used as an investment opportunity by investors to hedge against inflation. Historically, it has been seen that the performance of gold, as an asset class is inversely proportional to that of equity; i.e. generally,when the equity markets fall, the demand for gold picks up and vice versa. Gold assets introduce the required diversification in your portfolio. Let’s say; it is teamwork between the two classes that make your portfolio comparativelymore stable.
Ease of Investing
One can easily invest in gold via Gold ETFs or indirectly through Gold Funds (Fund of Fund). By investing in units of Gold ETF, one can have exposure to physical gold with 99.5% purity, whereas an investor in units of Gold Fund has an indirect exposure to physical gold via investment through Gold ETF. The expense ratios in both cases may vary, and you may choose an investment instrument more suitable for you.
However, you will have to go through the one-time mandatory KYC process before investing in any of the gold schemes of an AMC.
Relevant diversification
The gold asset class can help you with asset diversification in your portfolio has the potential to mitigate the risk because different asset classes have different levels of risks associated with them. One such risk that comes with equity investments is market risk, i.e. the risk of market surprises affected by various macroeconomic conditions. When you invest in gold, you safeguard yourself against such market surprises because, as seen above, gold and the equity market do not really work in tandem. This diversification has the potential of affecting your returns positively over a long-term investment horizon.
99.5% Purity of Gold
If you invest via Gold ETFs, you invest in physical gold of 99.5% purity. However, in the case of a Gold Fund, the underlying scheme,i.e. Gold ETF, invests in physical gold of 99.5% purity andtracksthe performance of the domestic price of gold. So, you do not have to worry about the quality of gold you are investing in.
No Storage Hassle
When taken in physical form, a precious commodity needs to be kept safely & securely as the chances of it getting misplaced or lost are higher. However, when you invest in gold via mutual funds, there is no storage hassle.
So, what are you waiting for? With so many benefits, gold-buying can be at the top of your list this Diwali. Let’s just be clear on our investment objectives: why we invest in gold and invest in an instrument that can get us the maximum profit.
Happy Diwali!
Disclaimer:
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be
verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit www.scores.gov.in . For more info on KYC, change in various details
& redressal of complaints, visit mf.nipponindiaim.com/InvestorEducation/what-to-know-when-investing.htm This is an investor education and awareness initiative by Nippon India Mutual Fund.
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme relate documents carefully.
By now, you would have done your goal planning and started SIPs for most of your goals. Now let us look at that part of your money that is not invested. Or received in your account but not yet invested. We call it idle money. You can invest in liquid funds and/or overnight funds for a period of even one day! These are essentially debt funds which invest in debt securities with very short durations such as certificates of deposit, commercial papers, fixed deposits, bills discounted, etc.
Taking this thought forward, review the rest of your traditional investments. Check if the returns you are earning would beat inflation over a long term. This also includes the investments you make for saving tax. Also the schemes that combine insurance with investment. Seek professional help if required. Here are some reasons you should invest in Mutual Funds: Professional Management: Every individual might not be aware about investment management. Mutual Funds are handled by professional fund managers, who understand the markets. They will pick stocks for you. This is after conducting a proper research on future prospects for profits of the company, add few more factors. Small Amounts: You can invest an amount which is as low as 100 Rs. Diversification: MFs invest in an array of assets - equities, debt or money market instruments. So, investing in mutual funds will allow you to divide your risk & portfolio. Moreover, a mutual fund can give you access to more assets than your corpus can buy on its own. Transparent & Well Regulated: Mutual funds are well regulated and are closely supervised by the market regulator, SEBI. These investments are very transparent as NAVs (Net Asset Values) are declared on a daily basis and portfolio disclosed every month. The performance is benchmarked against relevant indices too.
An emergency fund can help us look forward to the future without worrying about being unprepared for unexpected expenses. Having an emergency fund is critical to the financial security of your family. It also allows you to invest the remaining part of your wealth as you know that you already have a sum kept aside for emergencies.
ELSS stands for Equity Linked Savings Scheme. ELSS funds are equity funds that offer you a tax deduction (Section 80C of the Income-Tax 1961) on the specified amount you invest in the fund. This tax deduction is available for an investment amount of up to 1.5 lakhs per financial year. ELSS funds carry the same level of risk and potential returns as equity funds. Investment in an ELSS fund is subject to a lock-in period of 3 years from the date of allotment of units. This lock-in period can be beneficial to help you reap the rewards of long term investment. The tax benefits are as per the current Income Tax laws & rules and any other law for the time being in force. Investors are advised to consult their tax advisor in view of individual nature of tax benefits.
Cost of living doubles roughly every 10 years! And many people start planning for their retired life after they actually retire – often leading to considerable financial stress even to meet the regular lifestyle expenses. Not to mention the untoward circumstances, like health wise issues as we grow older. Most of us actively look towards retirement to fulfil our interests like travelling the world – a retirement fund can be a great way to do this. More than anything else, you will not have to depend on anyone financially if your retirement planning is spot on.
When we start our investment planning, most of us quickly realize that our current sources of income fall short of the requirement if we start investing for each of our goals. Investing for a new bike or own home? Choose what is more important and tackle that first.
Common sense but we see many people forget to do this. A goal could be achieved much faster if you increase the SIP amount as the income increases. IE Pledge (Right to Wealth) I understand that in order to preserve my wealth and indeed to enhance it, I must strive to beat inflation. I understand that Mutual Funds are a good option for common people like me to invest well with an aim to beat inflation. I pledge to claim my #RightToWealth by gaining proper knowledge from the right sources about Mutual Funds and how to invest in them. I also promise to conduct proper research and stay invested for the long term.
The ability to set and follow through on goals can make a profound difference in your personal performance and long-term business success. Research has shown that teams who set goals obtain 20–25% improved work performance! ... Goals are the expected results of specific actions.
Here are 5 simple steps which can help you set clear goals and objectives in life:
1. Make Them Visible
Once you have your goals articulated, take some time to turn them into a creative and artistic visual. Though it might sound juvenile, sit with color markers, crayons or paint and write them
out in a way you might if you were back in school. This activates a different part of your brain, and as it will be wildly different to your working style, will help cement your goals in your mind.
2. Feel Them
Rather than just write out your goals in a topline way, write at least a paragraph on how it feels to achieve your goal. Acting like you have already achieved your goal will start to connect the dots
between where you are now and the steps you need to take to achieve your goals.
3. Understand Them
To set goals that truly motivate you, you must understand why you want to achieve your goal. Without a clear understanding of your motivation, it’s hard to find the tenacity or drive needed to
succeed. Take some time to interrogate your goal; why you want to achieve it, how it would make you feel, what doors it would open up, why it must happen now and why this is essential to your happiness.
4. Take Action
Finally, once you have your goals written, take immediate action – even if it is a small step. Momentum begets momentum, and by kick starting your goal writing process with a tangible action, you
will immediately create a sense of progress. Change happens as a result of lots of little steps, so don’t feel the need to start with a huge, intimidating step.
5. Share Them
Many people have fear about sharing their goals in case they don't achieve them. But sharing them will keep you accountable. Additionally, once you say something to someone else, out loud, you have
made an unknowing commitment to make it happen.
Upon following these simple steps, you can witness major benefits of clear goal setting
• Provides direction.
• Clearer focus on what is important, which save time and energy.
• Clarity in decision making, resulting in better concentration.
• Gives you control of your future.
Setting clear goals is one of the key practices that go a long way in helping you become a successful person. And setting clear goals is also one of the key virtues of a smart investor. Even successful investors across the world say so.
#RightToWealth
