Archive for: ‘August 2014’

The Basics of Investing in Mutual Funds

August 9, 2014 Posted by admin

No doubt you’ve got some plans for your future. Even if you don’t, you’re likely aware that you’ll need some money for the future to meet your growing needs. But your needs aren’t going to be met with the interest you get on savings accounts or your fixed deposits. So what do you do? You could try investing in mutual funds instead. There are various kinds that you could look up and pick the ones which are most likely to serve your own needs. The one thing you need to keep in mind is that you’ll have to understand your mutual fund investments – and you can’t do this if you don’t know anything about what the company does. If you don’t know squat about a company’s product, then you don’t want to invest in it. This is because you don’t know whether the company’s product is strong, is likely to survive competition and so on. For starters, it’s best to stick to things you know best.

Once you’ve narrowed down the companies and the products you can identify and know enough about, you can move to the next step: comparing the pricing. You want to look at how the company has performed, yes. But you should also look at how friendly the company is to share-holders and how well priced the shares are so that you can buy them. Even when you’re looking at a company’s past performance – don’t invest because you see the profit is good. You’re not looking at the profit but checking the volatility of the fund when you do this research. If you’ve noticed very high fluctuations, you might want to not invest, or at least invest very little in it – it is certainly a risky venture. Look at the fund ranking when you’re researching, but take the ranking with a handful of salt – if the person managing the fund has changed then it is likely the results will as well.

You want to opt for diversified funds as much as possible. Don’t invest in multiple companies in the same sector – that isn’t what qualifies as �diversified’. The whole idea is to invest in entirely different sectors. This is because if a single sector goes into troubled waters, another sector which performs well is likely to make sure you don’t drown. At the end of the day, you just need to do your research well and look for a competent fund manager to handle your investments. But make sure that you also keep an eye on them and that you ask questions when you don’t understand something.

How to Find the Best Performing Mutual Funds in India

August 6, 2014 Posted by admin

Identifying a mutual fund is just like finding out the best stocks to invest in – you must be very careful with the choice instead of going with the �hot’ fund of the day or week, or ones that have nothing else but a short term past performance to show for.

There are some simple rules you must follow to identify the best performing mutual funds in India. Here are three of them:

1. Look for long term players: Typically in a bull market, there are a lot of new schemes launched by mutual fund companies. Most of these schemes are nothing but an offshoot of existing schemes, and thus have nothing new to offer to investors.

These are however launched with a view to get more assets under management for the mutual fund companies.

For you, as an investor, it pays to look only at schemes that have been operation for a long time, say around 10 years. This will leave you with only those schemes that have seen through a few market cycles, and thus have proven their ability to earn returns for investors.

Simply avoid the schemes that have done well in the short-term, because their returns are exactly that – short-term.

2. Look for low cost funds: Mutual funds don’t come for free. Fund houses charge investors what is known as fund management fee, which is mandated to be a maximum of 2.5% for equity funds (2.25% for debt schemes).

Look for funds that charge a low management fee, because each rupee saved can add a lot to your returns over the long term. Of course, cheapness alone doesn’t guarantee success – but low cost is one of the necessary conditions for long-term success.

3. Look for best-performing managers: Your money is not managed by mutual fund companies, but by the fund managers employed by these companies. And fund managers are people like us, who have their own investment rules and discipline to follow.

It is thus important that you choose fund where the fund manager had delivered good returns over the past 8-10 years. This will help you ensure that the manager has been on the job in both bull markets and bear markets.

Also look whether a fund manager has been with a specific fund for long (10 years) or not. While there’s no data to back the claim for a �long-serving’ fund manager in India, research done by Standard & Poor’s in the US has proved that a fund manager’s tenure with a specific fund is one of the most important reasons for its success. But this factor is often overlooked by investors rushing to buy funds with the highest short-term returns.


Like your must do a careful research to find out the best stocks for your portfolio, you must also do a due diligence when it comes to finding out the best mutual funds for long term investment.

While it is difficult to know how your chosen fund will perform in the future, you will at lese be able to sleep peacefully at night knowing that you have done the hard work to pick the safest and the best fund.

Pros and Cons of Mutual Funds

August 5, 2014 Posted by admin

As a structure, mutual funds(MF) have inherent advantages: Expert research team and fund managers ?�EUR” Unless you devote full time to research, you cannot expect to do justice to your portfolio. In mutual funds, you just leave the research to the specialists and relax while they do their job and deliver returns for you Diversification ?�EUR” A single stock or a single bond inherently has risks. Think of the Satyam or the Enron debacle. But as a market, the risks are far lower. This simple concept, wherein you use the fact that not all stocks go bad at the same time, though individual stocks sometimes could, is called diversification. MFs use this to your advantage, through holding several stocks or bonds at any given time Risk control ?�EUR” Experts in the regulatory bodies, and in the fund houses themselves, have laid down strict rules that funds must follow. This is a scientific way to keep risk low and manageable. You would struggle to do this yourself. There are some special advantages of MFs in the Indian context:
1. Customer friendly regulatory environment: MFs in India are regulated by the Securities and Exchange Board of India (SEBI). Over the years, SEBI has introduced several features to make mutual funds customer friendly ?�EUR” such as safety, low transaction costs, transparency on fund portfolio and strict disclosure norms for the funds. Indeed, in several ways, investing in MFs in India is cheaper and easier than in the West. 2. Tax treatment: MFs enjoy a favourable tax treatment in India, far better than even the US and several Western markets. In India, they are treated as a pure pass-through, i.e. there is no separate taxation of funds. In case of equity and gold, the only tax that happens is at the product level. In case of debt, it is even better. While interest from debt if you invest in a fixed deposit is taxed as income, mutual fund debt is taxed as capital gains, a far more lenient system.
3. Low cost: As a result of the above points, the annual cost of holding MFs in India is very low (hardly 2% in case of equity and less than 1% in case of debt). This is a very small price to pay compared to the returns you can generate, and the other benefits mentioned above.
There are very few cons of a MF. In fact, we struggle to think of any serious contender! But yes, for certain expert and involved investors who are regularly updated on the market, mutual funds may be unnecessary. They may prefer to deal in the equity or debt markets directly.For more knowledge and wisdom on Personal Finance, visit the website of fintotal

0% Financing Credit Card Offers

August 1, 2014 Posted by admin

0% financing credit card offers are a subject that gets a lot of attention, especially online. If you go online, you should have no trouble finding blog posts and websites all about 0% financing credit card offers [] and what you can do with them. The concept of a 0% down payment is a buzzword that gets a lot of attention. Unfortunately, these teaser financing techniques can actually be a really negative thing if you enter into them for the wrong reasons. People can easily find themselves in financial trouble because they took advantage of 0% financing credit card offers without really understanding what they were getting into. Taking advantage of 0% financing credit card offers without a money management plan can easily put you into some seriously massive credit card debt.

The truth of the matter when it comes to 0% financing credit card offers is that they are best taken advantage of in situations where you do not actually need them. You can wisely take advantage of 0% financing credit card offers and end up better off in the long run, but only in situations where you are not desperate for credit. If you take advantage of these teaser deals and 0% financing credit card offers because you desperately need credit help, then you are in it for the wrong reason and it is going to come back to bite you if you do not protect yourself.

0% financing credit card offers are teaser offers, meaning they are short term offers that are meant to draw consumers in and to drive new customers. After a set period of time, which is not always easy to figure out, the APR will suddenly shoot up, and you will find yourself with an insane interest rate to accompany the large balance that you have already accumulated. If you want to avoid this, you need to be wise about taking on 0% financing credit card offers, because they are not all as wonderful as they seem when you first find out about them. 0% financing credit card offers can be useful in certain circumstances, but usually only when you don’t actually need them.