LIC’s IPO will open on May 2 for anchor investors and from May 4 to May 9 for the general public, with the price band set at ₹ 902-949

Mumbai: The Life Insurance Corporation’s (LIC) initial public offering (IPO) will be  open on May 2 for anchor investors and from May 4 to May 9 for the general public.

Beginning of “LIC 3.0”, says LIC Chairman M R Kumar, referring to India’s biggest public issue, which will be in the price band of ₹ 902-949, with a ₹ 60 discount to policyholders and a ₹ 45 discount for retail investors and employees.

India’s largest insurer LIC is likely to list on the stock exchanges on May 17, a week after its mega IPO closes.

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said listing of LIC is part of the long-term strategic vision of the government and will highly enhance the value of the corporation in the long-run.

“This (LIC IPO) is right sized, considering the capital market environment and will not crowd out capital supply given the current market environment,” Mr Pandey said on Wednesday.

Even after the reduced size of about ₹ 20,557 crore, LIC IPO is going to be the biggest initial public offering ever in the country, he said.

The employee reservation portion will be 5 per cent of the post-offer equity share capital, and the policyholder reservation portion will be 10 per cent of the offer size.

The LIC board approved a cut in its IPO issue size to 3.5 per cent from 5 per cent, the company said.

The government will now sell 20,557 crores amounting to a 3.5 percent dilution of its stake in LIC for ₹ 21,000 crore, valuing the insurance behemoth at 6 lakh crore.

DIPAM secretary Tuhin Kanta Pandey said, the size for the LIC IPO is right, given the market constraints. We want to champion LIC as a long term value creator in the equity market.

The decision to list took into account market demand, stabilising market conditions. Indian markets have recovered from initial shocks, while global sentiments are weak, Indian markets

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It is generally said that investing in large-cap stocks or shares of large companies is safe. Therefore, financial advisers generally advise mutual fund investors to give large consideration to large-cap funds that prioritize large-cap stocks.

At the same time, high-risk investors need to adjust their portfolio in such a way as to maximize returns. Mutual fund investment ratio adjustments are also subject to change due to high risk willingness. Over the last three years, small- and medium-cap stocks or midcap-smallcap stocks have made significant gains. One factor that often influences investors is recent performance. Therefore, such investors are increasingly interested in funds that invest heavily in small and medium stocks.

At the same time, the risk of midcap-smallcap funds investing in small- and medium-sized stocks is high. Just as midcap-small cap funds offer high returns when such stocks perform well, the decline in such stocks is also strongly reflected in the NAV of these funds. Therefore, multicap funds, which are almost equally important for small-, medium- and large-cap stocks, are ideal for high-risk investors who want small- and medium-sized stocks to dominate their portfolio.

The feature of multicap funds is that they offer the potential to make higher-than-average returns through stocks that perform well in different climates. Small- and medium-sized stocks may not perform well in years when the shares of large companies are performing well. Similarly, small- and medium-sized stocks may have performed better in the years when the performance of large companies was sluggish. Examining the performance of the Large Cap Index and the Mid-Small Cap Index over the last ten years, the Large Cap Index has performed well for one year and the Mid-Small Cap Index for the next year. The advantage of multicap funds investing in both these categories of stocks is that they perform well on any of the large-cap and mid-small-cap indices.

Their performance history shows that midcap-smallcap funds perform better than largecap funds in years when they perform better than midcap-smallcap funds in years when largecap funds perform better.

High-risk investors can invest 50-60% in multicap funds. Remember that any category of funds should choose funds with excellent track record, high asset management and best fund managers.

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We invest in mutual funds with the goal of gaining more than the stock index. This is why portfolio management attracts investors with funds that offer returns based on excellence. While some funds perform better than the average of the funds in the category they belong to, the performance of some funds is the exact opposite. When evaluating performance, we can also see funds that have performed lower than the index (benchmark). Should investors switch from one fund to another on the basis of profit?

Long-term investment does not mean staying in one fund for too long. In order to ensure the best return on investment in the long run, it is necessary to evaluate the performance of the invested fund over a period of time and decide whether the fund should change based on it. But the next question is how to assess the performance of the funds.

The performance of a fund is often evaluated by comparing it with its category average and index. Experts say comparing it to the index is the right way to go. They say that it should not be a big deal if the fund continues to gain more than the index, even if it returns lower than the category average in a few quarters.

Earlier, rating agencies used different criteria to decide which category a fund should belong to. A fund can be seen by different rating agencies in different categories. This method has now changed. SEBI has clearly defined the categories and the fund houses have adjusted the schemes accordingly.

An assessment compared to a category average may not always be accurate. Indexes (benchmarks) of funds belonging to the same category are also found to be different.

When should the withdrawal from one fund and the investment be transferred to another fund? Experts point out that if the return of the fund is two to three per cent lower than the benchmark for three consecutive months in a year, switching to another fund may be considered. It is necessary to check whether the performance decline is due to the change of fund manager or the transfer of funds to another fund house.

The expense ratio of low return funds should also be considered. Increasing the expense ratio may adversely affect the return. It is advisable to opt for and invest in high asset flagship schemes of asset management companies.

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The classification of mutual funds has been changed as per the guidelines of SEBI (Securities and Exchange Board of India). According to this classification, the names of many funds have changed. For example, some funds, formerly known as multi-cap funds, have added value to their names and are now called value funds.

For example, HDFC Capital Builder Value Fund’s portfolio has 60 per cent large cap shares and 40 per cent mid- and small cap funds. Similarly, the portfolio of Aditya Birla Sun Life Pure Value Fund includes 60 per cent large cap and 40 per cent mid- and small cap shares.

Naturally, investors may wonder what the difference is between multi-cap funds and such funds. Value funds make choices beyond market-based classification. It is a coincidence that in such a selection, stocks of different tiers are represented on the basis of market value.

It is generally said that there are two types of investment methods — value investing and growth investing. Value investing is a method of selecting and investing in stocks that are available at a price lower than the base value. Value investing follows the investment principle of buying stocks that fall below the baseline value due to the unrecognised strength of a company’s business and holding them until the work realises their value.

At the same time, in the case of growth investing, the shares of the fastest growing companies are bought at market-specified premiums. If value stocks are low cost, growth stocks are high cost ones.

Value stocks can be found in largecap stocks, midcap stocks and smallcap stocks. Therefore, stocks in all these three categories are found in value funds. But that does not mean they are multi-cap funds. Typical multi-cap funds include Growth Stocks and Value Stocks.

Value investing is a process that requires a long wait to see results. Once an investor realises the value of a stock and invests in it, it is probably too late when the market realises it and the stock price will rise. The investor must have the patience to wait until then and maintain unwavering faith in the investment he has made. Reaping the benefits of investment in the short term is not possible in value investing.
The same is true of value funds. Investors must be prepared to wait a long time to get the best out of them. It is also necessary to invest in multi-cap funds for diversification.

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Investment guru Warren Buffett gave advice to investors at the annual general body meeting of his company, Berkshire Hathaway. The advice was to invest in index funds to get the best return. Warren Buffett gave the advice citing the returns of an index fund based on the S&P 500, an index of the US stock market. Can this advice be applied in the Indian context?

Index Funds and Exchange Traded Funds (ETFs) are ideal investment products for those who want to gain by sticking to the stock index. Index funds and exchange traded funds invest in stocks that are included in the indices. There is a difference between ETFs and Index funds. While Indian index funds may focus on investing in equities, the weightage of stocks in the fund’s portfolio may not be equivalent to that of the index. The position of the fund manager can also influence the weightage. At the same time, ETFs will give the indexes an equal gain.

There are other differences. Index Funds are mutual fund products. At the same time ETFs are listed on the stock exchange. Their NAV (Net Asset Value) fluctuates depending on the market position at the time of stock trading. Investors can trade during these times. At the same time, the NAV of index funds, like other mutual fund products, will be announced after the close. In addition to investing in index-based stocks, there are also index funds that invest a fixed percentage of funds in other stocks selected by the manager.

Let us now turn to the advice given by Warren Buffett. The market conditions in India and the US are different. In India, mutual funds, which are actively managed by fund managers, outperform ETFs and index funds. The return of mutual funds based on the excellence of the portfolio management of the fund manager can make a big difference in the value of the investment in the long run.

Stock indices in India are limited in reflecting the overall performance of companies in the market as in the US. Therefore, the return on ETFs and Index Funds in India will be limited. At the same time, mutual funds that are actively managed by fund managers can outperform the index. Therefore, instead of opting for index funds and ETFs, it is advisable to invest in such equity funds.

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Do you need to make a profit from mutual funds just like you make a profit from stocks? As mutual funds are a relatively safer way to invest than investing directly in stocks, it is natural for investors to wonder whether mutual funds should not be as profitable as those who invest in stocks.

The answer to this question can also be found by understanding the difference between equities and mutual funds. Investing in stocks requires research on your own and learning about companies. Only then can the best stocks be found and invested. And wait for the opportunity to receive the shares at a fair price. Investors tend to make a profit in stages when stocks bought at a fair price become expensive.

At the same time, those who do not have the ability or time to do their own research to invest directly in equities go in for mutual funds as a choice of investment. Mutual funds operate by building the best equity portfolio with the skills of a fund manager.

Unlike equity investing, mutual funds are best suited for investing through a systematic investment plan (SIP). Investors are able to grow their investment in the long run by constantly investing a fixed amount regardless of the market climate. At the same time, investors in mutual funds through SIPs do not have to worry about making a profit like investors in stocks. The reason is that the two are different investment methods. Mutual fund investors who follow the path of the manager who manages the fund by holding the best stocks and selling the weakest stocks should continue to invest according to their investment term.

In order to reduce risks investors reinvest in low cost stocks from high cost stocks. It is also common for low-cost stocks to be given high weightage in the portfolio, as long-term gains are more likely to be corrected by more expensive stocks. The fund manager does all this when it comes to investing in mutual funds. The fund manager decides which stocks to profit from and which stocks to buy more. In fact, mutual fund investors are entrusted with the job of investing and making profits.

Those who invest through SIPs may have certain goals. All they have to do is withdraw the investment when it is time to achieve these goals. Therefore, mutual fund investors do not have to think about making a profit as they do from time to time in stocks.

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What is the reason behind investors making significant investments in the stock market through Systematic Investment Plan (SIP)? The changed climate is the reason why even investors, who in the past turned their backs on the stock market and mutual funds and did not even try to understand what SIP is, are keen to start such investments.

The question now before investors is where to invest other than the stock market. No other investment option offers attractive returns. As the interest rates on bank fixed deposits have come down significantly, investors have come to realise that the return on investment through interest rates is negligible. The attitude of a section of those who had earlier invested in bank fixed deposits and small savings schemes for the sole reason of risk free has changed. Mutual funds bring SIPs to such investors looking for alternatives to risk-free but low-return investment avenues.

Retail investors are hopeful that the stock market’s remarkable progress made in recent years will be repeated in the coming years. Equity mutual funds have provided impressive gains over the years. Investors are therefore governed by the conviction that it is better to make regular investments on a monthly basis, without delay, in order to continue to reap these benefits.

The attractiveness of this investment method has been enhanced by the widespread awareness among investors that investors through SIPs need not fear even a correction in the stock market. The biggest feature is that those who invest through SIP do not have to wait for an opportunity like those who invest together.

Although SIP is a way for investors to follow in any market climate, in the past, investors have made adjustments in their SIP investments in line with market fluctuations. Investing in mutual funds has been predictable in the past. The trend in the past has been to increase investment in equity funds as the market rises and to reduce it as the market adjusts. This is because investors have made decisions based on the short-term performance of the market. If the return over the last one year or six months is good, the investment in equity funds will increase, otherwise the investment will decrease – this was the situation earlier.

But now the response of investors to market fluctuations is quite different. It is now seen that investors continue to invest through SIPs and make more investments every month, regardless of the market correction. This growing trend of investing in equity funds has also led to large stocks becoming more expensive.

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The recent trend is to increase investments in equity schemes of mutual funds through Systematic Investment Plans (SIPs). Investments through SIPs increase every month. At the same time, the average investment through SIP is only Rs.3,565 per month. Despite the increase in the number of SIP operators, this suggests that investing through SIPs is relatively small.

Equity mutual funds offer higher returns than any other investment option. But if only a very small amount is invested as SIP, the investment value will not increase significantly.

Let’s look at an example. Rajeev started SIP at the age of 40. With a salary of Rs.1 lakh, he set aside Rs.3,000 for SIP investment, just three per cent of the monthly salary. He continued to invest for 15 years. He earned 12 per cent per year. When he retired after 15 years, he got Rs.15.1 lakh. Of course, it is no small matter that a person who has invested only Rs.3,000 per month will get Rs.15 lakh in 15 years.

But for Rajiv, who is retiring at the age of 55, Rs.15 lakh a month is not enough to cover his monthly income after retirement. Moreover, Rajiv received only a small amount of money through 15 years of SIP as compared to the amount received by investing in other fixed income schemes like EPF for 30-35 years. This is because he invested only three per cent of his monthly income through SIP.

It is common for investors to invest the same amount over a long period of time through SIPs and not increase the SIP amount as the return on income increases. This will also prevent us from getting enough investment to achieve our goals.

If a person who has invested Rs.10,000 a month through SIP for 15 years gets 12 per cent return per annum, he/she will get Rs.50.5 lakh after 15 years. At the same time, if the SIP investment is increased by five per cent per annum in line with the salary increase, the result will be much greater. After 15 years, the return will be Rs.71 lakh. This additional benefit of looking to increase SIP investment in line with the increase in returns will be very beneficial in post-retirement planning.
We can only get enough money to achieve our goals if we pay attention to investing a sufficient amount instead of SIP considering only the rate of return on investment. It should be noted that the amount allocated to SIP investments.

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The NFO (New Fund Offer) of Dividend Yield Funds is now attracting investors. Dividend Yield Funds are mainly invested funds in companies that offer high returns through dividends. Such funds focus on stocks with high dividend yields (what percentage of the share price dividends means dividend yields) in the portfolio.

Investors who aim to earn higher dividends through investments in companies should mainly consider the dividend yield on shares. High dividend yielding stocks are the stocks that give investors the highest return through dividends.

Dividend yield refers to the percentage of the share price that investors receive as dividends. For example, a stock with a face value of Rs.10 trades at Rs.100. If the company declares a 50 per cent dividend, the shareholders will receive a dividend of 5 per cent of the share price. That is, the dividend yield on this stock is 5%.

Dividend Yield Funds are suitable for those who want to invest in equities that offer the best dividend yields, just as there are opportunities for those who want to invest in banking stocks to choose from the banking sector funds. Ordinary investors who are unable to conduct research to select and invest in the best dividend-yielding stocks can seek the help of fund managers through Dividend Yield Funds.

The first criterion that managers of Dividend Yield Funds look for when selecting stocks is the best dividend yield. Fund managers provide investors with the opportunity to invest in a portfolio of low volatility and relatively stable stocks by choosing stocks that are stable in cash flow and pay dividends regularly.
One of the main problems faced by investors is that companies do not necessary pay dividends. This means that companies are still not guaranteed to pay dividends. This is why it is important to choose companies with a consistently high dividend payback history.

It is reasonable to assume that companies that have already paid dividends even when performance is poor will continue to pay dividends. Dividend Yield Funds select and invest in such top companies.

Dividend-yield funds are less likely to invest in high-growth stocks during periods of market downturn. Dividend-yield funds can perform better as dividends increase the attractiveness of such stocks as they are a positive gain in the face of market downturns.

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Equity schemes of mutual funds are the best way to make equity investments in the long run to achieve life’s goals. Evaluating the performance of invested funds is just as important as choosing the best funds to invest in.

It is the nature of many investors not to think about it once they have invested. However, since the performance of mutual funds is related to fund management, their performance needs to be monitored during the investment period. The performance of mutual fund schemes does not need to be checked on a daily basis but should be evaluated at least once in six months. This can be done on your own or with the help of an expert.

The Fact Sheets, which are issued by mutual funds every month, contain the information required to evaluate the performance of funds. The fact sheet is available from the fund houses’ websites. The fact sheet contains information about the portfolio of each scheme and the number of shares held recently. There will also be information on the various ratios that are important in evaluating the performance of the schemes.

The performance of a mutual fund scheme cannot be assessed on its own. To evaluate the performance of a fund, one needs to compare that fund with other funds in the category involved. It needs the help of experts. You can also rely on independent websites that provide comprehensive information on mutual fund schemes for comparison. Comparisons can be made over different periods of time, such as six months, one year and three years.

The investor needs to evaluate the changes in the fund management. If the fund manager changes, the investment pattern is likely to change. Check the performance history of the new fund manager and changes in the portfolio under the new fund manager.

Changes in the investment method will be reflected in the performance of the fund. From the point of view of fund managers, the investment ratio in large and medium stocks may change. Following a change in the manager of a scheme fund investing heavily in large stocks, the nature of the fund itself may change if the investment in medium-sized stocks increases.

Investors should not make decisions based on the performance of the short-term scheme. If the performance of one fund goes down by one month or three months, do not think of selling and switching to another fund. Investors should be prepared to wait between six months or a year after the change of fund manager. Only if the performance has not improved by then should the investor think about changing the scheme.

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The stock market will be on the upswing for a few years and the next few years it might fall. But in the long run, the market has outperformed for investors on an annualised basis.

In the long run, one should try to make a profit by investing with goals in mind. An equity fund investment should be for long-term goals. Investing in the stock market for short-term goals is a very risky approach. For short-term goals, the fixed return should be invested in almost certain debt funds. Continue to invest until long-term goals are achieved and allay fears and greed about the stock market alike.

Investors need not fear fluctuations. Stock market trading is the process of going through price fluctuations every minute. If the investor loses focus on the ups and downs, it will be difficult for him to continue investing. Therefore, it is important to be prepared to approach fluctuations in a balanced way. Investors need to make the most of the value fluctuations created by fluctuations through a long-term approach.

For the general public, mutual funds are the best way to invest in the stock market. It is best to do the same with a Systematic Investment Plan (SIP). But good results can only be achieved if SIPs remain in a long-term position and do not invest in SIPs during fluctuations. Investors need to be more patient if they want to reap high returns. If we have the patience to continue investing in stocks for a long time, we can reap the benefits.

Just as stopping SIP investments when the stock market crashes can cause a rift in long-term goals, so SIP investing or stopping investing and making profits can adversely affect long-term goals when the market is high. A person who has invested for a long period of ten years, such as making a profit after three years, may be hindered from properly fulfilling the investment objectives set after ten years.

Investors should pay special attention to ensure diversification in investment. Do not limit your investment to equity funds. Fixed income plans, including debt funds, should also be represented in the portfolio to adjust risk.

Diversification is also needed in equity funds. The most suitable for this are multi-cap funds. Multi-cap funds are systematic investments in large cap stocks, mid cap stocks and small cap stocks across different tiers based on market value. Multi-cap funds are able to give investors the benefit of these different categories of stocks in different market climates where they perform well. Instead of focusing on any particular category of stocks in all market climates, investors can diversify their investments through multi-cap funds investing in stocks that are at different levels of market value.

Excessive diversification can adversely affect investment. It is better to limit the investment to two to five funds. Excessive investment in midcap and small-cap funds should be avoided. Many investors are seen investing only in midcap and small-cap funds. Funds that invest heavily in midcap and small-cap stocks are the biggest losers when the market is down.

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Investing in mutual funds can be done by more than one person jointly. Certain conditions apply to investing in a joint account.

Two or a maximum of three people can be joint account holders. All joint account holders must comply with KYC (Know Your Customer) requirements. Those who have not submitted the information and required documents as per KYC rules cannot be included in the joint account.

It is now common for couples to take out joint loans and make bank deposits together. You can also invest in mutual funds. However, there are some things to keep in mind when investing in joint mutual funds through joint accounts to facilitate investment and withdrawal. It is important to understand this and decide which option to choose in the joint account.

There are two types of joint accounts. All joint account holders have an equal right to choose the joint option. Selecting this option will require the signatures of all joint account holders to buy and sell mutual fund units.

The second is the ‘Either or Survivor’ option. Under this option any of the joint account holders will have the opportunity to buy and sell units on their own. This does not require the signature of the other account holder or owners.

It is better to opt for the ‘Either or Survivor’ option to avoid any interruption in the transaction during the buying and selling of units.

Under this option, paperwork can be avoided and one of the investors can transact without interruption when required. At the same time, it is advisable to choose the joint option if the other investor or investor wants the investment partner to avoid making decisions on their own.

Only the first (first-holder) of the investors in the joint accounts will get the tax benefits. According to 80C, the tax benefit is available only to the first holder when investing through joint accounts in equity linked savings schemes and others. Therefore, when investing for tax benefits, it is advisable for all investors to opt out of the joint account and invest through special accounts if they want a tax benefit.

In case of death of the joint account holder or owners, the entire deposit will be in the name of the living account holder.

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Parents are more interested in investing exclusively in the name of their children than ever before. It is common to open savings accounts in the name of children and to invest in schemes such as PPF and Sukanya Samridhi Yojana.

It has become common practice for parents and close relatives to deposit their gift money into savings accounts instead of piggy banks during birthdays, festivals and high marks.

Mutual funds are an ideal way to invest such savings in savings accounts effectively and with good returns. While interest rates on schemes such as PPF and Sukanya Samridhi Yojana are likely to fall in the future, adopting equity-linked investment options such as mutual funds will help in achieving better returns in the long run.

Mutual funds’ equity schemes are one of the best ways to invest for children, as they are the least suitable for risk-averse equity investing.

The minimum amount that can be deposited in the name of a child in a mutual fund is Rs.500. Underage children can invest in any fund house scheme. The child will be the sole account holder of such deposits. Inclusion of joint account holder is not allowed in such deposits.

The date of birth and age of the child should be recorded at the time of starting the investment. Proof of date of birth of the child and information about the parent should be provided along with it. Birth certificate and passport can be submitted as proof of date of birth.

It is also possible to start investing in the name of a minor through a Systematic Investment Plan (SIP). SIP can only continue until the child reaches adulthood. SIP can only be continued till the age of 18, even if the original application has been submitted with the provision of continuing after attaining the age of 18 years.

Investments can be made in the name of minors through SIP as well as Systematic Transfer Plan (STP). STP is a method of transferring money from a liquid fund to an equity fund every month.

SIP and STP will be discontinued when the child reaches 18 years of age. The fund house notice will be sent to the unit owner shortly before the minor attains the age of majority. To change the status of the folio from Minor to Major, you need to apply with sufficient documents. The house of Funds will send notices in this regard. KYC Acknowledgment Letter should be submitted

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The practise of investing in liquid funds instead of savings bank accounts has become widespread in recent times. However, due to the inclusion of substandard bonds in the portfolio, there has been a recent decline in the NAV (Net Asset Value) of some liquid funds.

Liquid funds are a category of mutual funds (debt funds) that invest in bonds. Liquid funds invest in very short-term bonds. Liquid funds are better suited for savings bank accounts than for short term investments. Liquid funds paid annual returns equivalent to bank fixed deposits over the past year.

No charges of any kind are levied for withdrawal of investment from liquid funds. Exit load is applicable if the investment is withdrawn from debt funds within a year but it is not applicable to liquid funds. The use of this medium by investors has increased as leading fund houses have introduced the facility of withdrawing deposits to bank accounts at any time.

However, this trend has been adversely affected by the recent decline in the returns of some liquid funds. This is because of the failure of some companies to repay their debentures. This has prompted investors to turn to overnight funds as these are less risky than liquid funds.

For those who are investing for a very short period of time, overnight funds may seem reasonable as there is no significant risk. The best feature is that the investment can be withdrawn in a short period of time without any loss in capital.

Overnight funds, as the name implies, invest in one-day bonds. When the investment in one bond is returned, it is deposited in the bond for the next day. It is very unlikely that the price will fall within a day or the return on investment will fall.

Investment firms are the ones who generally invest mainly in overnight funds. Such funds are used to ‘park’ the investment for a very short period of time. Some schemes in liquid funds have seen a decline in NAVs, which has led ordinary investors to turn their attention to overnight funds.

At the same time, liquid funds are a better investment option for ordinary investors than overnight funds. Liquid funds offer better returns than overnight funds. Investment firms invest only in quality bonds to ensure investment security and avoid a fall in NAVs. Highly rated bonds are selected and invested in. Such funds have not caused any loss to investors or reduced their profits.

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In the event of death of the mutual fund unit owner, the fund units have to be transferred to another person. The process of converting mutual fund units can be easily completed if the required documents are submitted properly. If the investment is in various fund houses, you will have to submit to submit a separate application to each fund house for conversion of mutual fund units.

In the event of death of the first owner of the fund units, the units will be transferred to the name of the second owner. This is the case with joint accounts. If the account is a single owner-only account, the units will be transferred to the nominee’s account. The second account holder or nominee must notify the fund house about the death of the first account holder. Death Certificate, KYC details and Bank Account Number should be enclosed.

Some fund houses require the bank to certify the bank account details of the second unit owner and nominee. If the units are transferred to the name of the owner of the second unit, only the above documents are required by the fund houses. If the nominee makes a claim regarding the deposit, he/she will have to produce some additional documents. In addition to the above documents, an Indemnity Certificate is required. Fund houses follow different models in terms of this certificate. Mutual fund units change process is completed within five to 10 days after receipt of required documents.

Many investors buy mutual fund units in demat form through stock exchanges. In case of death of one of the mutual fund unit owners, the living account will be transferred to the owner’s name. For this, the living account holder has to submit the death certificate and the completed application form for closing the account.

If the mutual fund units are in demat form, the second account owner can transfer it to the name of the holder or nominee only in the same format. There must be a demat account be in the name of the person to whom the units are to be transferred. If not, you will need to open a new depository account. For this, the required procedures have to be completed and documents have to be produced.

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Many investors who choose to invest in new fund offerings (NFOs) of mutual funds are subject to some misconceptions. One of them is that new fund offers are less expensive or cheap.

The unit price (face value) of the New Fund Offers is Rs. 10. Investors misunderstand that new fund offers are cheaper than funds priced at Rs 50 and Rs 100 per unit.

The base price of all New Fund Offer unit is Rs.10. All funds enter the market with a face value of Rs. 10 / with New Fund Offers. But this pricing has nothing to do with the quality of the fund.

It is not possible to evaluate a New Fund Offer as one would when a stock is marketed with an initial public offering (IPO) on the basis of the issue price. There is a core difference between an IPO and an NFO. The stock price is evaluated and the issue price is determined based on the previous history and financial position of a company that come up with the initial public offer,. But new funds cannot be valued or evaluated in this way. They are brand new in every sense of the word. The performance history of the fund starts from the day it is listed.

Investors need to consider a few things when choosing new funds for investment. When choosing to invest in a fund, the performance stability and performance of the fund should be taken into consideration. No such assessment is possible in the case of new funds. What can be done is to look at the asset management company’s asset status and the fund manager’s operating history of the new fund. But just because not all funds managed by a fund manager are successful does not mean that the future performance of a fund can be assessed solely on the basis of the fund manager’s track record. Similarly, an asset management company that handles funds with a high rating and good performance history is not guaranteed to maintain that level in new funds.

Instead of opting for new fund offers just because the unit has a face value of only Rs.10 per unit, it is advisable to invest in existing high quality funds that excel in performance stability and performance. At the same time, those who want to invest in different themes and choose schemes that are not currently available in the market can invest in such NFOs.

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There is a growing awareness among investors that Systematic Investment Plan (SIP) is the best way to invest in mutual funds. The recent trend is for investors to pay more attention to investing through SIPs. Half of the fund houses’ SIP accounts have been in operation for more than five years. However, there is limited knowledge among investors that there are different types of SIPs besides the monthly investment plan.
Most investors opt for a SIP that invests a certain amount on a specific date each month. This plan is the most popular. At the same time, there are different types of SIPs currently in the market. These plans can be selected according to the nature of the investor.

Monthly SIP is generally suitable for monthly income earners. Since the salary is paid on a fixed date every month, a certain amount of it goes to the deposit on the due date, which makes the investment planning convenient for the monthly earners. At the same time, if investors adopt the practice of investing on their own every month, it may not be able to move forward smoothly due to unforeseen costs and so on. Current trends and fluctuations in the market may also influence the investor.

This is where SIP comes into play. SIPs are able to streamline the investment process every month, regardless of market conditions. SIP enables investors to practice financial discipline, reduce the average return on investment and achieve higher returns.
Let us see what are the various types of SIPs.

Daily SIP: There is a SIP that invests every day. But it is better to avoid daily SIP as many entries will complicate your investment. There are SIPs that invest on a quarterly and half yearly basis. But these are not enough to achieve the goal of reducing the average investment cost from market volatility.

‘Endless’ SIP: There are some other plans that are worth investing in. One of them is a SIP in which the investor invests regularly without setting an expiration date. The plan is such that the investor can terminate the SIP once he has achieved his goal. The Fund House must be notified in writing to terminate the SIP. This plan can be chosen by those who are investing to achieve long term goals.
SIP Top-up / Step-up: A plan that increases the monthly amount invested under SIP every six months or one year is also suitable for monthly earners. This plan will help you to increase the SIP amount as your salary increases every year. Some fund houses refer to this method as a top-up plan, while others refer to it as a SIP booster or SIP step-up plan.
Most major fund houses offer this facility to investors. The minimum amount for top-up should be Rs.500. The top-up amount can only be determined in multiples of Rs.500. The SIP amount can be increased by a certain amount or a certain percentage after the period prescribed by the investor. Investors need to constantly increase their investment in mutual funds every year to overcome inflation. The advantage of SIP Top-up is that this is implemented it automatically.

Flexi SIP: Flexi SIP is a plan that allows investors to reduce or increase the SIP amount as and when required. This plan helps in determining the investment amount according to the amount of money coming into the hands of the investor.

Alert SIP: Alert SIP is an investment plan that is subject to market fluctuations. For example, when the Sensex falls by 500-1,000 points or two to five per cent, investors will be notified and will be able to invest accordingly. This plan is suitable for market observers.

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Credit risk funds are a group of debt funds that invest in bonds. These are called credit risk funds because they are invested in high risk bonds.

About 65% of such funds invest in bonds below AA rating. According to SEBI’s classification, the rating of superior loan schemes should be AA + or above. Bonds below the AA rating are at higher risk. The higher the risk, the higher the return! As their ratings rise, so does their capital gains. Therefore, credit risk funds are more likely to give higher returns than liquid funds.

Credit risk funds are only suitable for high risk investors. Lower rating is a risk factor. Bonds are rated by agencies based on their credit rating.

There are two types of returns on such funds. The interest earned on the bonds in which they are deposited is a kind of gain. Demand for this specialty has grown significantly as a result of recent corporate scandals.

The increase in the price of bonds will also be reflected in the NAV of the funds as demand increases. There is also the potential for capital gains. In the long run, credit risk funds are likely to offer two per cent more annual returns than liquid funds.

Short-term capital gains tax is applicable on gains made from credit risk funds within three years. The investor’s income tax is taxable according to the slab rate. That is, the tax should be calculated along with the investor’s annual income. Long-term capital gains tax is applicable on gains made after three years.

If the investment is withdrawn after three years, 20 per cent of the amount received is taxable in excess of the current value calculated under the Cost Inflation Index of the previous investment. Dividends are not taxable. But the schemes pay 28.84 per cent dividend distribution tax.

Such funds are not suitable for ordinary investors because the risk is high. Failure to repay any debentures may adversely affect the NAV.

Liquid funds are ideal for ordinary investors. Liquid funds can expect a return equal to the repo rate on an annual basis, but many funds are able to provide better annual returns than the repo rate due to the excellence of fund management.

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Many experts share the view that this is a good time to buy shares of small and medium enterprises. A section of companies with high weightage in the stock indices Nifty and Sensex have become very expensive. At the same time, small- and medium-sized companies still have a large number of low-cost stocks.

Large-cap stocks were the main gainers when the indices rose. SMEs did not play a significant role in this move. At the same time, there is a strong expectation that the next five years will pave the way for more investment in the best SMEs.

It is likely that investment firms will change the way they currently invest significantly only in large companies and focus on better midcap stocks. Many small- and medium-sized stocks are now at a very low level in terms of their all-time value.

Companies in the 101st to 250th position by market value are classified as ‘midcap’ and those in the 251st to 500th position in the ‘smallcap’ category.

Small- and medium-sized stocks are likely to perform well at a time when the economy is booming. Shares with relatively low market value tend to jump in such situations. At the same time, these declines are likely to intensify as the business cycle moves towards recession.

Neither the Sensex nor the Nifty are able to include many high-growth companies in their basket due to technical limitations. At the same time, experts point out that it is normal for small stocks to trade at a higher value than large stocks when there is a boom in the economy. This is because the stock market value dictates the future growth potential of a company. When the economy is on the path to good growth, it will be more beneficial for medium and small companies.

Stock indices Nifty and Sensex are likely to move further by 5 per cent to 10 per cent. At the same time, high weightage stocks included in the index are expensive and no major improvement can be expected in the index. At the same time, as the index stabilises, demand for shares of small and medium-sized companies is likely to increase. All investors need to do is try to seize the opportunity well in advance.

At the same time, do not expect all stocks in this category to perform well. Shares that are low cost or reasonably priced should only be purchased if their growth potential is clear.

It is better to rely on mutual funds when you are confused about stock selection. This is especially true for small- and medium-sized companies. It is difficult for ordinary investors to choose and invest in the best midcap and smallcap funds.

SEBI classifies funds that invest more than 65 per cent of their assets in midcap stocks as midcap funds. Similarly, small cap funds are funds that invest more than 65 per cent of their assets in small cap stocks.

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Investing in commodities is not as common among investors in India as investing in stocks, gold, real estate and fixed income sources. This is due to the limited availability of means to invest in commodities. However, investors have recently had the opportunity to invest in commodities through mutual funds.

Earlier, there was no suitable investment method for those who wanted to invest in commodities. Although there is a way of futures market, the commodity futures market is not familiar to the average investor. A small margin is enough to trade in the futures market. But if the price fluctuation is negative, a higher margin amount needs to be considered to move the contract forward. Failure to roll-over at the end of the contract period during a negative price move can result in huge losses.

Another way is to buy commodity directly. But storage facilities are required to store commodities such as steel or aluminum. If you need to sell for some reason, a buyer should also be available. This may not be always possible. For the average investor, this type of trading is not easy at all.

Another way is to buy shares of commodity companies. Shares of companies that produce commodities can be bought from the market. If the commodity price rises, the share price of these companies will rise naturally. But this method will only be effective if you identify the commodity sector that has the potential to advance and find the best companies in that sector and invest. Selection of stocks is not an easy task for the average investor. This requires research and study of market trends.

One of the benefits of investing in commodities is that they can help bring sustainability to the portfolio. Therefore, with the approval of mutual funds to invest in exchange traded commodity derivatives, a new opportunity has opened up for ordinary investors.

Mutual funds are allowed to invest only in Multi Asset Allocation Schemes and Hybrid Schemes in the Exchange Traded Commodity Derivatives. Up to 30 per cent for multi-asset allocation schemes and up to 10 per cent for hybrid schemes can be invested in commodity derivatives. This will help in further diversifying the portfolio of mutual funds. Such mutual fund schemes can be considered by investors who want to sustain their portfolio by investing in commodities.

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Low investment in the stock market is one way to maximise profits. But it is very difficult to invest in high and low levels. Therefore, investing in Employees’ Provident Fund or Recurring Deposit is a way to plan your investment every month regardless of the ups and downs of the stock market. Mutual Funds Systematic Investment Plan (SIP) is designed for such monthly investments. This investment method also helps in maintaining financial discipline.

Those who buy mutual fund units through SIP on a fixed date every month do not have to worry about where the stock market is heading. Investors who buy units at high prices when the market is high have the opportunity to buy at a lower cost and lower the average investment cost when the market is down.

At the same time, Systematic Transfer Plan (STP) is a more effective investment option than SIP. In a systematic investment plan, a certain amount is transferred from a bank savings account to an equity fund on fixed dates. At the same time, in a systematic transfer plan, the money is deposited in any debt fund and, as in SIP, the debt is transferred from the deposit to the equity fund on a fixed period of time. In doing so, the investor also benefits from the investment made in the debt fund.

Debt funds are mutual funds that invest in bonds. Liquid funds in debt funds or ultra short term funds can be used for a systematic transfer plan. Liquid funds and ultra short term funds invest in short-term debt securities. The average annual return on ultra short-term funds over the past one year is 6%. There are also funds that have returned more than 7%. Liquid and Ultra Short Term Funds can be expected to have a return equal to the Repo rate on an annual basis, but many funds are able to provide better annual returns than the Repo rate due to the excellence of fund management.

At the same time, interest rates on savings bank accounts have dropped significantly. SBI has linked interest rates on savings bank accounts above Rs.1 lakh to repo rates. The interest rate on savings bank accounts above Rs.1 lakh in SBI is currently 3 per cent.

After investing Rs.1 lakh in an ultra short term fund if you invest it under STP for one year, the return can be as high as Rs. 1,200 extra over SIP.

Withdrawals from Liquid Funds and Ultra Shot Term Funds are free of charge. Exit load is applicable if the investment is withdrawn from debt funds within a year but it is not applicable to liquid funds.

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