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Mutual funds have become an increasingly popular investment option for Indians. They offer a diversified investment portfolio, professional management, and the potential for higher returns than traditional investment options. However, investing in mutual funds can be overwhelming for beginners. In this blog, we will discuss the best way to invest in mutual funds in India. Understand your investment goals and risk tolerance: The first step towards investing in mutual funds is to identify your investment goals. Are you investing for short-term or long-term goals? What is your risk tolerance? Understanding your investment goals and risk tolerance will help you choose the right mutual funds for your portfolio. Choose the right mutual fund: There are different types of mutual funds available in India, including equity funds, debt funds, hybrid funds, and more. Each type of mutual fund has its own risk and return characteristics. Equity funds are generally considered riskier than debt funds but offer higher returns in the long run. Debt funds, on the other hand, are less risky but offer lower returns. It's important to choose a mutual fund that aligns with your investment goals and risk tolerance. Research and analyze the performance of mutual funds: Once you have identified your investment goals and chosen the right type of mutual fund, it's time to research and analyze the performance of mutual funds. Look for the past performance of the mutual fund and compare it with its benchmark index. Check the expense ratio and other fees associated with the mutual fund. You can use online mutual fund research tools to analyze the performance of mutual funds. Invest through a Systematic Investment Plan (SIP): A Systematic Investment Plan (SIP) is a method of investing in mutual funds where you invest a fixed amount of money at regular intervals. SIPs offer several benefits such as rupee cost averaging, disciplined investing, and flexibility. Investing through an SIP can help you achieve your investment goals in a systematic manner. Invest through a reputable mutual fund company: It's important to invest through a reputable mutual fund company that has a proven track record of performance and management. Look for a mutual fund company that has a good reputation, offers transparency, and has a history of delivering consistent returns. Monitor your investments regularly: Finally, it's important to monitor your investments regularly. Keep track of the performance of your mutual funds and make necessary changes to your portfolio if required. Regular monitoring can help you stay on track towards achieving your investment goals. Certainly, thank you for the clarification. It's great to know you that through "Mera Nivesh Dot Com By Rupaye Baba", one can have access to a digital platform that helps them choose the right investment manager based on their objectives, goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their financial goals. In conclusion, investing in mutual funds is a great way to achieve your investment goals. By understanding your investment goals, choosing the right mutual fund, researching and analyzing the performance of mutual funds, investing through an SIP, investing through a reputable mutual fund company, and monitoring your investments regularly, you can create a successful mutual fund investment portfolio in India.

Estate Planning is an important aspect of financial planning that involves arranging for the transfer of an individual's assets to their loved ones after their demise. It ensures that the assets are distributed as per the individual's wishes and also minimizes any potential legal disputes between family members. In India, estate planning has gained importance in recent years due to the rise in disposable income and the increasing complexity of financial assets. The following are the essential elements of estate planning in India: Will: A will is a legal document that outlines how an individual's assets will be distributed after their demise. It must be drafted in accordance with the Indian Succession Act, 1925, and should clearly specify the beneficiaries and their share of assets. It is advisable to review and update the will periodically, especially in case of any significant life events such as marriage, birth, or death. Nomination: Nomination is the process of appointing a person who will receive the proceeds of an asset in case of the owner's death. It is essential to ensure that all financial assets such as bank accounts, insurance policies, and mutual funds have a valid nomination. In the absence of a nomination, the asset may be subjected to legal complications, resulting in delays in transfer and potential disputes. Trusts: A trust is a legal arrangement where a person transfers their assets to a trustee who manages them on behalf of the beneficiaries. Trusts can be an effective way of managing assets, especially for minor children or incapacitated family members. It also provides flexibility and control over the distribution of assets after the grantor's demise. Power of Attorney: A power of attorney is a legal document that grants a person the authority to act on behalf of the grantor. It is essential to appoint a power of attorney, especially in case of incapacitation, as it ensures that the assets are managed efficiently without any interruption. Tax Planning: Estate planning also involves tax planning, which aims to minimize the tax liability on the transfer of assets. It is advisable to seek professional help from a tax consultant to understand the tax implications of various estate planning strategies. It's great to inform you that through "Mera Nivesh By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager for your retirement based on their goals and financial roadmap. This added convenience and personalized approach to Estate Management can be a valuable resource for individuals looking to ease transformation of Estate. We have hired CA and Lawyer for your facility. In conclusion, estate planning in India is crucial to ensure that an individual's assets are distributed as per their wishes and to avoid any potential legal disputes. It is advisable to start estate planning early in life and review it periodically to ensure that it is aligned with the changing circumstances. Seeking professional help from a financial planner or lawyer can be beneficial in developing an effective estate plan.

Tax Planning. Tax planning is the process of utilizing legal and legitimate ways to minimize your tax liability. It involves analyzing your financial situation, understanding the tax laws, and making strategic decisions to optimize your tax outcomes. In India, tax planning is an essential aspect of financial planning for individuals and businesses alike. Income Tax in India. In India, income tax is levied on the income earned by individuals, firms, companies, and other entities. The Income Tax Act, 1961, is the governing legislation for income tax in India. Income tax is calculated based on the income tax slabs prescribed by the government. The tax rates and slabs are revised from time to time, and it is essential to stay updated with the latest changes. Tax Planning Strategies for Individuals Here are some tax planning strategies that individuals can use to minimize their tax liability: Invest in Tax-Saving Instruments: The government offers several tax-saving instruments under Section 80C of the Income Tax Act, such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS), and others. Investing in these instruments can help individuals reduce their taxable income and save on taxes. Claim Deductions for Health Insurance: Individuals can claim a deduction of up to Rs.25,000 for health insurance premiums paid for themselves, spouse, and dependent children. Additionally, a deduction of up to Rs. 50,000 can be claimed for health insurance premiums paid for parents above 60 years of age. Make Use of Home Loan Interest Deduction: Individuals can claim a deduction of up to Rs. 2,00,000 on the interest paid on a home loan for a self-occupied property under Section 24 of the Income Tax Act. This can significantly reduce the taxable income. Plan Your Capital Gains: Individuals can save taxes on long-term capital gains by investing the proceeds in specified tax-saving bonds or in a residential property. Similarly, short-term capital gains can be offset against short-term capital losses. File Your Taxes on Time: Filing your taxes on time can help you avoid penalties and interest charges. Additionally, timely filing can help you plan your taxes better for the next financial year. Tax Planning Strategies for Businesses. Here is some tax planning strategies that businesses can use to minimize their tax liability: Claim Deductions for Business Expenses: Businesses can claim deductions for various business expenses, such as rent, salaries, travel expenses, office expenses, and others. Keeping track of these expenses can help businesses reduce their taxable income and save on taxes. Opt for Depreciation Benefits: Businesses can claim depreciation on their assets, which can help reduce their taxable income. It is essential to understand the depreciation rates and methods prescribed by the Income Tax Act to make the most of this benefit. Make Use of Tax Credits: Businesses can claim tax credits for various taxes paid, such as TDS, GST, and others. These credits can be used to offset their tax liability. Plan Your Investments: Businesses can plan their investments to maximize their tax benefits. For example, investing in a start-up or a specified industry can help businesses claim deductions under Section 80-IAC and Section 35AD, respectively. Choose the Right Business Structure: Choosing the right business structure can have a significant impact on the tax liability. For example, a sole proprietorship is taxed differently from a limited liability partnership (LLP) or a private limited company. It's great to inform you that through "Mera Nivesh By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager for your retirement based on their goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their taxation goal and long term wealth creation goal. Conclusion: Tax planning is an essential aspect of financial planning for individuals and businesses in India which may erode after new tax regime implementation. By making strategic decisions and utilizing legal and legitimate tax-saving instruments, one can minimize their tax liability and save on taxes. It is essential to stay updated with the latest tax laws and regulations to make the most of these benefits.

As the end of the financial year approaches, most of us scramble to find ways to reduce our tax liability. One of the most popular ways to do this is by investing in tax-saving instruments such as Equity-Linked Savings Schemes (ELSS). In this blog, we will take a closer look at what ELSS is and why you should consider investing in it. ELSS is a type of mutual fund that primarily invests in equities and is designed to help investors save tax. ELSS has a lock-in period of three years, which means that the investor cannot redeem their investment for three years from the date of investment. However, the lock-in period of ELSS is the shortest among all tax-saving instruments. Other tax-saving instruments such as Public Provident Fund (PPF) and National Savings Certificate (NSC) have a lock-in period of 15 years and 5 years, respectively. Investing in ELSS has several benefits. Firstly, it provides tax benefits under Section 80C of the Income Tax Act, 1961. An individual can claim a deduction of up to Rs. 1.5 lakh from their taxable income by investing in ELSS. Secondly, it offers the potential for higher returns compared to other tax-saving instruments such as PPF and NSC. Since ELSS invests primarily in equities, it has the potential to generate higher returns over the long term. Another advantage of investing in ELSS is the flexibility it offers. Investors can choose to invest a lump sum or through systematic investment plans (SIPs) as per their convenience. Additionally, investors can also choose the frequency of their SIPs - monthly, quarterly or annually. Certainly, thank you for the clarification. It's great to know that through "Mera Nivesh By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager for your retirement based on their goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their tax savings objective. Click here and get logged in and start investing in ELSS Mutual Funds. In conclusion, investing in ELSS is a smart way to save tax and grow your wealth. It offers several benefits such as tax benefits, potential for higher returns, and flexibility. However, it is important to remember that ELSS is subject to market risks, and investors should carefully evaluate their risk appetite before investing. As with any investment, it is also advisable to consult a financial advisor before making any investment decisions.

Education is one of the most important investments you can make in yourself, but it can also be one of the most expensive. Between tuition, books, and living expenses, the cost of higher education can quickly add up. That's why it's important to plan and budget for these expenses in advance, so you can focus on your education without worrying about financial stress. This guide will help you get started with education financial planning. Step 1: Determine Your Education Goals: Before you can begin planning for your education expenses, you need to know what you're planning for. What kind of degree or certification do you want to earn? How long will you be in school? Knowing these details will help you determine the estimated cost of your education, so you can start saving and budgeting accordingly. Step 2: Research Financial Aid Options: Once you know what you're planning for, it's time to research your financial aid options. There are several types of financial aid available, including scholarships, grants, loans, and work-study programs. Research each option to determine which is best for you. Some scholarships and grants don't have to be repaid, while loans will have to be repaid with interest. Work-study programs allow you to earn money while you attend school. Step 3: Set a Budget: Once you have a better idea of the cost of your education, you can start setting a budget. A budget will help you determine how much money you need to save each month and what expenses you can cut back on. Consider creating a budget for your everyday expenses, as well as a separate budget for your education expenses. Step 4: Start Saving: The next step is to start saving. There are several ways to save for your education expenses, including a savings account, a high-yield savings account, or an investment account. Choose the option that works best for you and start setting aside money each month. If you can, try to save more than your budget calls for, so you can prepare for unexpected expenses. Step 5: Track Your Progress: Finally, track your progress and make adjustments as needed. If you find that you're not saving as much as you'd like, consider cutting back on expenses or finding ways to earn extra income. If you're ahead of schedule, consider increasing your savings or investing more in your education. Certainly, thank you for the clarification. It's great to know that through "Mera Nivesh By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager for your retirement based on their goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their retirement goal. Conclusion Education financial planning can help you achieve your educational goals and minimize financial stress. By setting a budget, researching financial aid options, and saving regularly, you can invest in your future and secure a better future for yourself.

Retirement Planning in India: A Guide to a Secure Financial Future. Retirement is a time in life when you can finally relax and enjoy the fruits of your labor after a lifetime of hard work. But, have you considered how you will support yourself during this time when you no longer have a steady income? This is where retirement planning comes in. In this article, we’ll take a look at the basics of retirement planning in India and what steps you can take to ensure a comfortable and secure retirement. Why is Retirement Planning Important in India? Retirement planning is important for several reasons. Firstly, the average life expectancy in India has increased, which means that people are living longer and need to plan for a longer retirement. Secondly, the cost of living in India is rising, and it is essential to have sufficient financial resources to maintain your standard of living in retirement. Finally, the Indian government provides limited support to citizens in retirement, which means that it is up to individuals to plan for their future. How to Plan for Retirement in India? 1. Assess Your Retirement Needs: Before you start planning, it is essential to assess your retirement needs. This includes estimating your monthly expenses, considering inflation, and accounting for any health-related costs. 2. Start Early: The earlier you start saving for retirement, the better. Starting early gives you more time to save, and the power of compounding can help your savings grow faster. 3. Make the Most of Tax Benefits: Retirement planning in India comes with tax benefits, and it is crucial to take advantage of them. For example, you can invest in a Public Provident Fund (PPF) account or a National Pension System (NPS) to claim deductions under section 80C of the Income Tax Act. 4. Diversify Your Investments: Diversification is the key to a successful investment portfolio. You can consider a mix of fixed income and equity-based investments to balance the risk and returns. Some of the popular investment options include Equity-Linked Saving Schemes (ELSS), Unit Linked Insurance Plans (ULIPs), and Annuity Plans from Life Insurance Companies. 5. Consider Life Insurance: Life insurance is an important aspect of retirement planning as it provides financial protection to your loved ones in case of your untimely death. You can opt for a term life insurance plan or a pension plan, which doubles as an investment option. 6. Keep an Eye on Expenses: As you approach retirement, it is crucial to monitor your expenses and make changes to reduce them if necessary. This can help you save more money and reduce the strain on your retirement corpus. 7. Stay Informed: Retirement planning is a dynamic process, and it is important to stay informed about the latest developments and changes in the market. Keep a track of the latest trends and investment options, and seek professional advice if required. Retirement Planning in India: A Guide to a Secure Financial Future. Are you preparing for your retirement? It's never too early (or late) to start planning for your future. In India, the average life expectancy has increased, and the cost of living is rising, which makes retirement planning even more critical. Certainly, thank you for the clarification. It's great to know that through "Mera Nivesh By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager for your retirement based on their goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their retirement goal. In conclusion, retirement planning is crucial for a comfortable and secure financial future. Start planning early, assess your financial needs, invest in retirement-specific schemes, diversify your portfolio, consider health insurance, and review your plan regularly to ensure that you have the financial resources you need in retirement. With the right planning, you can enjoy your golden years without financial worries. #RetirementPlanning #FinancialPlanning

Investment management is a crucial aspect of personal finance that helps individuals and businesses make informed decisions about their financial resources. It involves the selection, monitoring, and adjustment of investments to meet specific financial goals. Whether you're saving for retirement, purchasing a home, or building wealth, investment management can help you achieve your financial objectives. Why is Investment Management Important? Investment management is important because it provides a structured approach to managing your money and making informed decisions about your finances. The process of investment management involves creating a comprehensive financial plan, setting clear goals, and making well-informed investment decisions. It helps you to minimize risks and maximize returns, leading to long-term financial stability and security. Types of Investments There are several types of investments that you can choose from, including stocks, bonds, mutual funds, real estate, and commodities. Each type of investment carries different risks and offers different returns, so it is essential to choose the right mix of investments to match your financial goals and risk tolerance. Creating a Diversified Portfolio. One of the key principles of investment management is diversification, which means spreading your investments across a range of assets to minimize the risks of any single investment. A well-diversified portfolio helps to ensure that you are not over-invested in one particular asset, which can help to mitigate the impact of market fluctuations and reduce the risk of large losses. Risk and Return. Investment management involves balancing the trade-off between risk and return. While higher-risk investments generally offer higher returns, they also carry a higher level of risk. Conversely, lower-risk investments offer lower returns but are less likely to experience large losses. The key to successful investment management is to find the right balance between risk and return that aligns with your financial goals and risk tolerance. Working with an Investment Manager. Investment management can be a complex and time-consuming process, and many people choose to work with a professional investment manager. An investment manager can provide expert advice and help you to make informed investment decisions that are tailored to your specific financial goals. They can also help you to create a comprehensive financial plan and monitor your investments over time, ensuring that your portfolio is aligned with your financial goals. Certainly, thank you for the clarification. It's great to know that through "Mera Nivesh Dot Com By Rupaye Baba", individuals can have access to a digital platform that helps them choose the right investment manager based on their objectives, goals and financial roadmap. This added convenience and personalized approach to investment management can be a valuable resource for individuals looking to achieve their financial goals. Conclusion. Investment management is an important aspect of personal finance that can help you achieve your financial goals. Whether you choose to manage your investments on your own or work with a professional investment manager, the key to success is to have a clear understanding of your financial goals, to make well-informed investment decisions, and to diversify your portfolio to minimize risk. With a solid investment management strategy, you can build wealth and achieve financial stability over the long term.

Starting to invest your money can seem overwhelming, especially with so many different options available. But don’t worry! Mutual funds are a great choice for young people who are just starting to build their investment portfolios. What are Mutual Funds? A mutual fund is essentially a basket of investments that holds a variety of securities, such as stocks, bonds, and other assets. When you invest in a mutual fund, you own a portion of all the securities in the basket, giving you a diverse range of investments to help spread out your risk. The beauty of mutual funds is that you don’t have to pick and choose individual investments. Instead, a professional fund manager makes the investment decisions for you, based on the mutual fund’s investment objectives and goals. This makes mutual funds a great option for people who don’t have a lot of time or expertise to dedicate to picking individual investments. Why are Mutual Funds a Good Option for Youngsters? Diversification: One of the biggest advantages of mutual funds is that they offer diversification, which is the practice of spreading your investments across a variety of different assets to reduce your risk. With a mutual fund, you get exposure to a diverse range of investments, which can help protect your portfolio from market ups and downs. Professional Management: As mentioned, a professional fund manager oversees the investments in the mutual fund and makes decisions about what to buy or sell. This takes the pressure off you and can provide peace of mind that your investments are in good hands. Low Minimum Investments: Most mutual funds have low minimum investment requirements, making it easy for young people to start investing with just a small amount of money. Convenient Investment Options: Mutual funds can be purchased through a brokerage or a financial advisor, making it easy for you to invest in the stock market without having to do all the research and analysis yourself. Long-Term Investment: Mutual funds are typically long-term investments, which can be a good option for young people who have a long time horizon to invest and watch their money grow. In conclusion, mutual funds can be a smart investment option for young people who are just starting to build their investment portfolios. With the advantages of diversification, professional management, low minimum investments, convenient investment options, and long-term investment, mutual funds can help young people grow their wealth over time and reach their financial goals.

Buying health insurance when you are comparatively younger and healthier will supplement your employer-provided cover for any higher hospitalisation bills and there will be no hassles in terms of renewability. If you want to buy insurance at an advanced age and have some new health issues, insurers may not even be willing to cover you. Once you retire from work, your corporate health insurance will cease to exist. So, it’s a no-brainer that in retirement, you need personal health insurance to cover the risk of hospitalization expenses. But should you wait till retirement to purchase health insurance? I recently met a relative who is 55 and will retire in the next 4-5 years. He does not have health insurance of his own but is currently covered under his employer’s group health insurance. He asked whether he should wait more and purchase a policy closer to retirement, or should do it now. My answer was clear. Get it as soon as possible. Do not wait anymore or till retirement. Many employees think that employer-provided medical coverage is sufficient as long as they are working. But that is not fully correct. Employer health insurance alone is not enough. It is good to have and if you have to make a claim, you should first do it via your employer’s coverage. But still, it makes sense to have one of your own as well. Coming back to the question about not waiting till retirement to purchase one. Having health insurance is crucial at all times. But it becomes increasingly more important as your retirement approaches. And the reason is that the chances of developing medical issues increase with age and hence, you need large enough insurance coverage so that your savings are not exhausted in meeting hospitalisation bills. One big reason for those nearing retirement to purchase health insurance soon is that you never know whether in a few years' time, when you decide to purchase one, and you have some new health issues, then the insurer may not even be willing to cover you. Or you may have a pre-existing condition, which will come under the waiting period clause. So if you purchase a policy a few years before retirement, then you can easily see through the waiting period as the corporate cover is still there till you are working. Once you retire, your personal health insurance will be free of any waiting periods for pre-existing conditions and can be used (if need be) to cover such conditions at a later stage of your life. So better to buy Health Insurance earlier when you are comparatively younger and more importantly, healthier. There will then also be no hassles in terms of renewability. It also allows you to build your claim-free track record with the insurance company. That also helps if you have a years-old relationship with the insurance company when it comes to claim settlements. There is another reason to purchase a cover as soon as you can if you are in your late 40s or your 50s. Quite often the employer-provided coverages are small at just Rs 3-5 lakh. Sums like these are definitely not enough when you look at the rising cost of medical expenses. So, while everybody’s right coverage amount will be different, it still makes sense to have a coverage of around at least Rs 15-20 lakh. If your corporate cover is less, then get yourself one on your own, irrespective of whether you are nearing retirement or not. What more should those nearing retirement do? If possible, they should have a separate medical contingency fund as well. With an increase in age, it’s never just about hospitalisation expenses. Hospitalisation is a low probability event. Instead, more probable are the regular, on-going healthcare expenses that old people need to spend money on. The cost of medicines, diagnostics and regular consultations for lifestyle and chronic diseases (like diabetes, thyroid, etc) in itself can be a lot. And the problem is health insurance does not cover these out-of-hospital expenses. For such scenarios having a medical contingency fund is recommended. It also acts as a buffer to dip into in case the hospitalisation bills exceed your health insurance coverage. So all said and done, don’t be penny-wise and pound-foolish. At least when you are nearing retirement. Get yourself personal health insurance (or a family floater) as soon as you can.

Delayed settlement will be subject to a penalty of 15% per annum on a pro-rata basis. In a circular, SEBI has directed fund houses to transfer the redemption/repurchase proceeds to the unitholders within three working days from the date of redemption or repurchase. However, the timeline in the case of permissible overseas investments is five working days. The circular said, “For schemes investing atleast 80% of total assets in such permissible overseas investments, the transfer of redemption or repurchase proceeds to the unitholders shall be made within five working days from the date of redemption or repurchase.” The regulator also directed fund houses to make dividend payments within seven working days from the record date. Fund houses failing to meet the above timelines will have to pay a penalty of 15% per annum on a pro rata basis. So far, there was no penalty on settlement of redemption proceeds within 10 days and dividend payment within 30 days. Have a query or a doubt? Need a clarification or more information on an issue? Mera Nivesh By RUPAYE BABA welcomes all mutual fund and insurance related questions. So write in to us at support@meranivesh.com

Investing is a very tough exercise. So, how does one get started and keep following it year after year? Through Systematic Investment Planning, is known as SIP. What is Systematic Investment Planning? Well, Systematic Investment Planning is a way to ‘automate’ the habit of investing. It is a method of investing in Mutual Funds in a planned manner, wherein you can invest an amount of your choice in a mutual fund scheme at fixed intervals. This approach allows you to take savings and grow them in a way that leads you to generate wealth. Thus, making you a disciplined saver and investor as well as creating a healthy investment habit. You can start investing in SIPs with a small amount and gradually increase it over a period of time. In fact, you can take a call on how regularly you want to invest – it can be weekly, monthly, quarterly or even annually. Through the SIP investment option offered by Mutual Funds, you can achieve your goal of creating wealth over a long period of time – one of the powers of investing through SIP. Having learnt what SIP is, let us now delve into the Powers of SIP. 1. Power of Pocket Friendliness. Investing via SIP in mutual funds means that you don’t require a huge chunk of money to invest. You can start investing with as low as Rs.500. It allows you to invest in small chunks, thereby being pocket friendly. 2. Power of Balancing the Market Ups and Downs. Taking the SIP route to mutual fund investments opens up a window for the investor to invest in a time-bound manner without worrying about the market dynamics. Investing through SIP ensures that you don’t time the market. You keep on investing systematically, irrespective of the market’s ups and downs. 3. Power of Rupee Cost Averaging. It’s a fact that SIP works better than other investment methods available in the market, which allows lump sum investment, and this is because of rupee cost averaging. Under the rupee-cost averaging, one can typically buy more of a mutual fund unit when the prices are low, and similarly, one can buy fewer mutual fund units when the prices are high. It contributes to a good discipline. Also, it forces one to commit cash at market lows, when many other investors in the market are wary and exiting the market. On the other hand, it enables one to lower the average cost of their investment. So, from the above table, you can see that based on the market movements, the NAVs fluctuate and so do the units purchased and allocated to you. Essentially, you buy more when the markets are low and buy less when the markets are high. This ensures that you get maximum value for your investments even if the market is volatile. 4. Power of Compounding. It is often referred to as the eighth wonder of the world. Under the power of compounding, you not only get returns on the money which has been invested but also on the gains. One of the most significant benefits that investors can appreciate about the power of compounding is the value of time. With time, you could gain returns, and the yields on these returns could further generate returns, thus, helping to increase your investments quickly. And this way, an investor can create a significant amount of wealth over a period of time, subject to market conditions. Imagine you invest `5,000 every month. The interest on this amount is 10% per annum. Let us understand how your investment returns would look like over time: The above is only for illustrative purposes The above table clearly demonstrates the benefit of compounding. 5th years onwards, the wealth gains rise exponentially to generate Rs. 96 lakhs. Another thing that the table indicates is the importance of investing early or giving enough time for your investment to generate returns you would love to see, as well as having the patience to withstand the market ups and downs. 5. Power of Flexibility. Under SIP, the amount you invest periodically can be changed at any time according to your wish. The benefit it allows is that you can increase the investment amount as and when your incomes grow. In this way, you can increase the value of your returns too. Over the years, SIP has become the favorite mode of investing in mutual funds. It helps you to achieve your financial goals without putting much stress on your monthly budget. The only thing you need to do is select the appropriate mutual fund scheme as per your investment goal and follow a disciplined investing approach. Disclaimer: The section Knowledge Centre on this website is a platform for MeraNivesh By Rupaye Baba to spread awareness and educate investors about various Mutual Fund products. It should not be construed as an offer to sell nor is a solicitation of an offer to buy units of any of the schemes of any mutual fund. Figures indicated here are for illustrative purpose only and does not correspond to any live or historical data. The information herein above is meant only for general reading purposes and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall 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. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Investment Specialist Larissa Fernand on getting the right picks for your Emergency Fund. A reader wrote in saying that he would like to keep the money allocated for his Emergency Fund in equities, or at least a hybrid fund because he may not need it for a long time. I completely disagree with him because he is working under the assumption that the emergency is many years away. The fact is that we do not know when an emergency creeps up; it could be later today, it could be 5 years down the line. Secondly, should he need the money when the stock market is in the doldrums, then he will lose out considerably. Thirdly, he is looking at wealth creation, when an Emergency Fund is simply a personal insurance of sorts. All assets cannot be part of an Emergency Fund. All assets cannot be part of an Emergency Fund. Only those which rank high on capital preservation (safety) and liquidity (quick accessibility). Real estate and art are illiquid assets. Fixed-return investments such as Public Provident Fund (PPF) and Employee Provident Fund (EPF) are extremely secure, but they are not very liquid. You will not get the money in 24 hours. The Emergency Fund is not a wealth creation avenue. So returns must take a backseat and volatile investments must be avoided. Stay away from stocks and equity mutual funds. You may need the money during the depths of a bear market and would be forced to sell investments at a huge loss. Consider debt funds. Liquid and Overnight funds meet the prime requirements of safety and liquidity. Both are open-ended debt fund categories that invest in high credit quality instruments entailing minimal credit and duration risk. Both types of funds have portfolios diversified across high credit quality instruments with minimal duration risk. They are typically accessible within T+1 days (T being date of redemption). Your Emergency Fund can have the above debt funds and a bank deposit too. It need not be one to the exclusion of the other. It can be a combination of investments, but all should rank high on the safety and accessibility scale. I personally know someone who has a significant amount in his Emergency Fund as he has a wife and children as dependents, and also helps his parents. He has distributed the money between a bank fixed deposit, a liquid fund, an overnight fund and even an ultra-short term bond fund. Some inputs from Dhaval Kapadia, Director, Managed Portfolios, at Morningstar India, on the debt funds. Safety and Liquidity are the key focus when it comes to Liquid and Overnight funds. Returns take a back seat. Liquid funds invest in short-term instruments, certificates of deposits (CD), commercial papers (CP), treasury bills (T-bills), repo, and so on. The average maturity of such funds is typically around 1-2 months. Given the short tenor of the underlying instruments, the yields (YTMs) offered by such funds closely track interest rates in the money markets as the maturity proceeds of underlying instruments are rolled over and invested at the prevailing market rates. Evaluate the credit quality of the holdings and always check the expense ratio of the fund. A lower expense ratio results in higher returns assuming other fund attributes are similar. There is no exit load but do look at taxation. Capital gains in case of holding periods up to three years are termed as short-term capital gains (STCG) and taxed at the marginal rate of income. Capital gains in the case of holding periods of more than three years are termed long-term capital gains (LTCG) and taxed at 20% with indexation. This is important. Ensure that nominees and joint accounts are in place. The money must be easily accessible to you and your immediately family. It will be a shame if the family members who need to access the money are not authorised to do so. The amount could vary from 6 to 12 months of expenses. It all depends on how many dependents you have, if your spouse is earning too, and if you are servicing any loans. Evidently, the amount could vary over different phases of your life. If you are newly married with both spouses earning, the Emergency Fund could even be just three months of expenses. But over the years, if a parent moves in and you have a child, the Emergency Fund must balloon accordingly to take care of additional dependents. Start Creating your Emergency Fund Now.