Investment ideas to grow your money
1:33 PM Posted by ukmad
If we look at the kinds of investment, options available to investors in today’s times, we find that mutual funds are one such instrument which can provide the facility to participate in all available financial instruments.
The following points bring out the importance on mutual funds in financial planning process.
Mutual funds offer a variety of products suitable for :
i. different return requirements.
ii. Different risk appetite
iii . Different tenures
These instruments also provide for the same or better tax treatment than other instruments viable, therefore various kinds of mutual funds schemes like equity, debt and money market can be used in various proportions to make a portfolio having the risk and return attribute tailor made to an investors need.
Use of Mutual Funds help financial planners to make own tasks easier. This means that the role of financial planner will be make strategic asset allocation in response to the needs of client and then leave the fund managers of mutual fund schemes to select securities within those asset class.
Since Mutual Fund portfolios are driven by pre-stated investment objectives, it is easier to match investor objectives with the mutual fund product.
Mutual funds enable flexible options to invest and withdraw funds, and alter the investment portfolio by changing the mix of funds held by the investor.
On an average less than 5 % of the investors in India have invested in Mutual Funds and rest in other instruments like Bank Deposits, Post Office Savings schemes, Gold etc.
All mutual funds are registered with SEBI and function within the provisions and regulations that protect the interests of investors. A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. All such investors buy units of a fund that best suits their needs be it capital growth, regular returns or safety of capital. The Fund Manager then invests this pool of money in securities, ranging from shares to debentures to money market instruments, depending on the objective of the scheme.
Benefits of a Mutual Fund: 1. Increases the purchasing power of investments.
2. Enables them to have a well-diversified portfolio even with a very small amount of investment.
3. Reduction of risk.
4. Money would be managed by a professional at low costs.
5. Reduction of transactions costs due to economies of operation at a large scale.
6. Liquidity
7. Convenience of investing the money and tracking the performance of money ( hassle free investment, consider this : an investor can have exposure in equity shares without having a D-mat account. )
8. Flexibility to change investment objectives.
Mutual Funds offer a wide variety of schemes.
DEBT FUNDS: These funds invest only in only in Debt instruments like company debentures, government securities and money market instruments completely avoiding any investments in the stock markets. Hence, they are much safer than equity funds. At the same time the expected returns from debt funds would be lower.
BALANCED FUNDS : These funds invest in mix of equity and debt instruments. Hence, they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but are looking of higher returns than those provided by debt funds.
EQUITY FUNDS : These funds invest entirely in the share markets and attempt to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However, they are also exposed to the volatility and attendant risks of stock market investments and hence should be chosen by investors who have risk taking capabilities.
Choosing your investment mix depends on factors such as your risk appetite, time horizon of your investment, your investment objective, your age etc.
Advantages of investing in Mutual funds are:
PROFESSIONAL EXPERTISE: Fund Managers in mutual funds are professionals who track the markets on a minute to minute basis. With their mix of professional qualification and market knowledge, they are better placed than the average investor to understand the markets.
DIVERSIFICATION: Since a mutual fund scheme invests in a number of shares or debentures, the attendant risks are greatly reduced. Even if the stock price of one of the companies goes down or a company defaults on payment of interest, it does not result in a substantial loss to the investor, as the other holdings of the fund can compensate for this fall.
RELATIVELY LESS INEXPENSIVE: When compared to direct investments in the capital market, mutual funds cost less. This is due to savings in brokerage costs, demat costs, depository costs etc.
LIQUIDITY : Investments in mutual funds are completely liquid and can be redeemed at NAV related prices on any working day. Since, these are bought back by the mutual fund itself; there is no risk of not finding a buyer. Besides, redemption money can be received by the investor within a week.
TAX BENEFIT : This summery of tax implications is based on the current provisions of the applicable tax laws. Income received by the unit holders in respect of the units of the Mutual Fund is exempt from tax under Section 10 ( 35 ) of the Act.
Tax deduction at Source : In view of the exemption of income in the hands of the Unit Holders, no income tax is deductible at source on income distribution by the Mutual Fund, under the provisions of Section 194 K and 196 A of the Act.
Investment in mutual funds are subject to market risks.
For queries contact:
Bankim bhagwat
bhagwatbankim@gmail.com
098452 73406
Make your money grow- personal finance
11:45 AM Posted by ukmad
If anyone has some specific questions he could ask Bankim about it at bhagwatbankim@gmail.com.
I believe that the present economic scenario caused by a worldwide slow down and upheavals in the Indian Money Market are only of temporary nature. Based on the economic forecasts released by Central Statistical Organization the Indian economy is expected to grow at 7.00 per cent in the current fiscal despite the global economic crisis. Thus, the future prospects appear to be positive and present you with an investment opportunity now.
Keeping the above scenario in mind one can create an investment portfolio to one’s risk appetite and return expectations. It may be advisable to allocate some portion of your investments to equities as an asset class and thereby partake and participate, to benefit from our growing economy.
I will highlight some of the Investment Options available with UTI which has enabled many investors structure a financial plan for their financial goals and could therefore be a part of your investment portfolio.
As you are aware, UTI has transformed itself into one of the best Asset Managers of the country. UTI Mutual Fund has a highly qualified and professional fund management team to take care of the investor’s investments. UTI Asset Management Company Ltd. has been awarded the “Best Equity Fund House of the Year” by ICRA* and as the “Best Debt Fund House” by Outlook Money and NDTV Profit* recently for its best Fund Performance. This is a reflection of the commitment to provide investors with the best possible wealth creation solutions. These awards from independent and renowned agencies in the Indian Financial scenario also recognizes UTI as being one of the most competent Fund Managers of the country on various parameters by these experts. However, past performance is no guarantee of future results
1. UTI DIVIDEND YIELD FUND
UTI DIVIDENT YIELD FUND is positioned as a conservatively managed equity fund. The fund portfolio will primarily comprise of stocks which are high dividend yielding (on historical basis) or potential high dividend yielding stocks. The fund will have a good mix of companies across various sectors. The fund is well suited for investors with medium to low risk profile and with a long term investment horizon. The fund aims to distribute regular dividends to its investors. Investors have an advantage of lower expense ratio as UTI Dividend Yield Fund is the largest fund in the dividend yield funds category in the industry. The Fund has a fair amount of retail participation. This helps in mitigating the volatility risks that may arise out of movement into and out of the Fund by large investors.
2. UTI OPPORTUNITIES FUND
UTI OPPORTUNITIES FUND is an open ended equity oriented scheme. This scheme seeks to generate capital appreciation and / or income distribution by investing the funds of the scheme in equity shares and equity related instruments. The main focus of this scheme is to capitalize on opportunities arising in the market by responding to the dynamically changing Indian economy by moving its investments amongst different sectors as prevailing trends change, for investors looking to supplement their core equity portfolio with a dynamically managed portfolio.
3. UTI WEALTH BUILDER FUND SERIES II
First of its kind to offer an asset allocation combining financial asset allocation combining financial assets as well as physical asset. By providing exposure to alternative asset class the fund offers common investor a strategy traditionally reserved for HNI’s / Institutional clients. Alternative assets aid to portfolio diversification even in down markets due to their less / low correlation to traditional asset class like equity. Convenience of investing through SIP / STRIP in a fund that will have exposure to
Gold ETF’s, leading to a portfolio built over various market phases and economic conditions. Alternative market levels provide opportunities to clock higher growth over the market starts moving upward.
4. UTI MASTERSHARE FUND
UTI MASTERSHARE is an open ended equity fund aiming to provide benefit of capital appreciation by investing the funds of the scheme in equity shares, equity related instruments and fully convertible bonds / debentures of the company. Investment may also be made in issued of partly convertible debentures / bonds including those issued on rights basis subject to the condition that as far as possible the non convertible portion of the debentures / bonds so acquired or subscribed shall be disinvested within a period of twelve months from the date of acquisition.
5. UTI BOND FUND.
The Bond fund is positioned as an aggressively managed pure debt fund with a high quality portfolio mix of G-Sec and PSU Bonds to capture both the duration movements as well as the spread compression & gets the best of both the worlds without compromising
on credit quality . Ideal for an investor who invests with a long term horizon & wants a higher return at a moderate right level.
6. UTI EQUITY TAX SAVINGS FUND
EQUITY LINKED SAVINGS SCHEME is similar to the normal equity diversified schemes but what differentiates it from an open-ended equity diversified scheme is tax saving benefit and a lock-in period of three years. Flexibility to fund manager to focus on long term opportunities. E L S S has potential to counter inflation and notch up healthy inflation adjusted returns.
Author: Bhagwat Bankim
E Mail: bhagwatbankim@gmail.com
098452 73406
