investing

Small savings rates – what REALly matters?

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Small savings rates table new 2016

So, small savings rates across the spectrum have been cut including that of the ever popular PPF, Senior Citizens Savings Scheme and the Sukanya Samriddhi Yojana.

In fact, the rates will now be reset every quarter.

Here is the new rate structure applicable on Small Savings Instruments from April 1, 2016:

Small savings rates table new 2016

People are shocked and dismayed at this drastic cut.

Unfortunately, if you too are, then you are missing the real picture. To see this real picture, you would have to add another column to the above table, that of inflation rate. 

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Why am I not investing in NPS?

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NPS - why i will not invest in national pension scheme

Well, as you would know, under section 80CCD, an additional Rs. 50,000 of investments in National Pension Scheme or NPS can be claimed for tax deduction. Basically, you do not have to pay tax on investment upto Rs. 50,000 in NPS.

So, my friends have been calling me asking “Should I invest in NPS? There is an additional tax saving on Rs. 50,000 of investment.”

My simple answer to them is “I would not invest in NPS“, to which I receive surprised uhhs, ahhs and a variety of other expressions. In some cases, they strongly put forth their arguments as to why I am wrong.

It is amazing that tax savings still continue to drive our investment decisions. In this case too, the die hard fans of NPS are actually not the fans of NPS, but merely hunters of more tax benefit. 

The ‘bhakts’ of this benefit leave no stone unturned to make you believe that this is the best reason that one should invest in a high lock-in product like NPS.

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Building MF Portfolio – Avoid these 5 mistakes!

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MF Portfolio - Mistakes to avoid in mutual fund portfolio

This is my MF portfolio – am I right?

I often receive reader queries on the blog stating their choices of schemes that should be a part of their winning MF portfolio. They then want to know if it is alright or any change is required.

I recently received another one. As I said this is not the only one. There have been several such in the past. So, this reader had been investing in the following funds and now wanted a ‘second opinion‘ if these funds continued to make sense.

Here is the list of fund scheme names with their options.

  1. ICICI Prudential Export & Other Services Fund  – Dividend
  2. SBI Pharma Fund – Dividend
  3. UTI MNC Fund – Dividend
  4. ICICI Prudential Value Discovery Fund – Dividend
  5. UTI Transportation & Logistics Sector Fund – Dividend
  6. Canara Robeco Emerging Equities Regular – Dividend
  7. Reliance Small Cap Fund – Growth
  8. MOST Focused Mid cap 30 Fund – Growth
  9. Reliance Pharma Fund – Growth

The reader was concerned that his portfolio had a loss, that is, the current value of the investments was less than the amount he had invested.

He also made it amply clear that he was looking for ‘maximum returns‘. He mentioned that it was his hard earned money, which to me means that he does not want to take a lot of risk.

And you know what – his retirement is only 5 years away!

This is a perfect textbook example of how one can make all the mistakes in one go.  I believe we all have lessons to learn here.

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How to track mutual funds portfolio all in one place?

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Track mutual funds portfolio - investment tracking - Unovest

How should one track mutual funds portfolio – all of it in one place? This has been a common problem expressed by many investors. Any why not?

There are 44 mutual fund companies in India along with 4 registrar and transfer agents who handle customer transactions.

If you happen to have investments in just 4 mutual funds, that is, HDFC, Quantum, Sundaram and Franklin Templeton, you are going to have an interesting time tracking all these investments with multiple folios in one single place.

Add to that investments in the name of family members and you have got a multiplication of your tracking troubles.

So, you are looking for a solution that enables you to:

  • Track mutual funds portfolio – all investment folios including of family – in one place
  • See a quick summary of your investments
  • An analysis of your investment holdings
  • Track your capital gain and loss for reporting in your income tax returns
  • Tag your investments to specific goals and monitor the progress

Is there a solution where you can do it all and more?

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Should you invest in an FMP or Fixed Maturity Plan?

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Should you invest in an FMP?

If you have been bombarded recently with emails from various fund houses announcing several fixed maturity plans or FMPs, as they are popularly known, then you are not alone.

FD returns have gone down recently and fund houses are doing their best to offer an alternative to the ‘safe return’  seeking population.

If you have come across an FMP sales pitch, it almost always is that “it is as safe as a Bank FD”, yet, “it will give higher returns than an FD.” An easy lure for most investors since ‘safe returns’ is a primary criteria.

Let’s build a perspective on FMPs and should they become a part of your portfolio?

What is an FMP or a Fixed Maturity Plan?

If you have invested in a Bank FD before, you know that it comes in for different tenures of 1 year, 3 year, 5 year, etc. 

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How to make sense of the mutual fund factsheet?

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mutual fund factsheet

If you have ever read or heard a mutual fund advertisement in print or radio or TV, the final cautionary words are – “Please read the scheme information document carefully before investing.” 

In reality, very few investors actually do it. That does not take away the fact that the best way to understand a fund is to read various documents associated with it.

Unfortunately, the fund industry has done its best to confuse the investor in every way possible. The information is strewn across so many documents including a Scheme Information Document (SID), a Key Information Memorandum (KIM) and a Factsheet.

And worse, there is no standard format for them. So, if you take scheme documents of two funds, you would feel that they have come from two different planets.

Just search documents for any two funds on the Internet and you will know what I mean.

As an investor, the most important information that you should be looking for is available in the fund factsheet.

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