mid and small cap

There’s more to your mid/small-cap portfolio than you can see

We all know a kid who remained at the bottom of the class long enough for people to lose all faith in his progress only to be surprised when he lands a great opportunity and is perhaps more successful in life than most peers.

Even in Indian equities, many in the small/mid-cap space are assumed to be underdogs till one fine day when an opportunity comes knocking and it hits one out of the park. True, one cannot simply generalise all small/mid-cap stocks to be underrated, but the ones that offer a massive wealth-creation opportunity along with business turnaround.

While Indian capital markets, along with other emerging nations, witnessed a difficult phase last year, bellwether index Nifty still managed to climb to an all-time high last month but the small-caps at the bottom of the market-cap was unable to keep pace. At the time of writing this NIFTY50 has delivered a one-year return of ~3% but the NIFTY Smallcap 100 recorded a steep -16% decline and NIFTY midcap 50 slumped by almost 7% for the same period. The valuation polarization is too sharp. We look at mid and small-caps creating new bottoms and the basket dragging quite a few high-quality stocks along – this pushes them into the undervalued zone.

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rebalancing

Rebalancing your portfolio

Before understanding this topic, let’s know what to do with a money box. In simple terms, fill it, shut it, forget it’ once in a year. Your situation may change, or the products may get worse or better, but one should clean their money box once in a year.

What is portfolio rebalancing?

Rebalancing is the process by which an investor restores their portfolio to its target allocation. The rebalancing process is reinvesting the profits taken from some of the outperforming investments and putting them in underperforming assets. Rebalancing brings your portfolio back to the desired asset mix.

Why is rebalancing important for an individual person who has invested?

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Invest

Key pitfalls of investment that every investor must avoid.

“The stock market is a device for transferring money from the impatient to the patient.”
-Warren Buffett

Your investment portfolio should consist of those products that match your needs and works towards your financial goals. Investment is a must these days. Because investments allow an individual to create a corpus, but they also enable us to earn a good return on the savings and can even generate regular income if done right. If you are a first-time investor or have been in the investment game for a while, you should consider these points and that will surely help you in your investment tactics and will also maximize your long term returns.

Mentioned below are the few factors that can help you find the right type of investment:

1. Understanding your financial product

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save-tax

Save Tax

What is ELSS?

ELSS (Equity-linked Savings Scheme) is a special kind of mutual fund that helps you to save taxes under sec 80C of income tax. In this scheme, the funds are invested in equity, and because of which the investor has the potential to earn high returns compared to Fixed Deposit and Public Provident Fund. And returns on these are tax-free. However, the returns are only taxable if the earnings are above 1 lakh.

How much tax can I save?

It depends on the tax bracket an individual belongs to:

  1. If you are in the 5% tax bracket, you can save up to Rs 15,000 per year in taxes.
  2. If you belong to the 20% tax bracket, then you can save up to Rs 30,000 per year in taxes.
  3. If you are in the highest tax bracket of 30%, you could save up to Rs 45,000 per year in tax.

Lock-in Period

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SIP vs SWP vs STP

Choose between NAV, SIP, STP, and SWP

STP (Systematic Transfer Plan)

In simple words, STP means transferring money from one mutual fund to another. STP is a smart strategy of investment over a specific term to reduced risks and balanced returns. Here, an AMC (Asset Management Company) permits you to put a lump sum in one fund, and transfer a fixed amount to another scheme regularly.
STP is a useful tool in mutual funds to average your investment over a specific period, which depends on three factors:

  1. Market view
  2. The risk profile of the investor
  3. An investor’s current allocations to equities.

Things to remember while investing via STP:

  • STP is the method that requires discipline; it’s not you who gets to cook your money overnight; it will take time to cover your returns.
  • It would help if you kept an eye on the underlying assets and their phases.
  • STP is one of the most reliable risk-reducing investments in which you can invest.
  • Go with STP only if you have a lump sum amount to invest.
  • You need to make at least 6 STPSs as per the SEBI guidelines.

In short, STP is a useful strategy to manage risks without affecting your returns significantly.

SIP – The recommended option

A SIP (Systematic Investment Plan) is an ideal way of investing in mutual funds. It allows you to invest in regular intervals. It is also called the “planned way of investing.” It helps investors to cultivate a habit of saving and accomplish the goal of wealth creation.
Through SIP, you can invest in a quarterly, monthly, or weekly basis as per your convenience. A fixed amount is debited from the policyholder’s account and invested in mutual funds. As you start investing a pre-decided number of units get allocated as per the current market price. Besides, mutual funds plans are flexible in nature, and you also have the option to discontinue it whenever you wish. However, you make the most out of Mutual Funds investments, remember to stay invested for a long period.

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Investment Rules

Follow these rules to improve your investments

“As we look ahead into the next century, leaders will be those who empower others.”
-Bill Gates

Investments are essential in today’s world because earning is not enough. You would be working hard for the money, but that may not be adequate for you to lead a comfortable lifestyle or fulfill your dreams and goals. And due to this reason you need your money work hard for you as well. And this is the reason you should invest. If your money is lying in a bank account, then you are losing the opportunity of earning returns on it. You should spend your money smartly by investing so that you can get profits from it.

Here are the rules of investment one must follow:

  • Have a plan

Before you invest your money, you must be aware of what you are investment purpose. You should set parameters like target return, time horizon, and risk appetite for the asset class, which suits your aims. You are unique, and so are your financial needs, so choose an investment plan based on your specific financial plan.

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cricket and investments

Khelo App ki Cricket Investments Pe

Cricket is the most popular game in the world undoubtedly, and it’s the world’s greatest sport. It’s a gentleman’s sport, full of sportsmanship. An epic journey where players and fans get to know each other over days of play, where respect is the golden rule, and integrity is very much alive. And on the contrary, Investing in the Mutual Fund is helps you to create wealth in the long/short term and helps in achieving your financial goals.
Besides entertainment, Investing is like a game of cricket.

“Your Team→ Your Portfolio
Your Players→ Your Securities.”

In this article, let us use the analogy of a cricket game in investing. When it comes to cricket, We ‘Fans’ always feel like the cricket team could have done a better job, when it comes to us, we fail to create our investment portfolio and financial success.

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health insurance

Importance of Health Insurance

“Good Health and Good Sense are two of life’s greatest blessings.”

There are plenty of reasons why health insurance is not just a good idea, but it is a necessity. The benefits will depend on the plans you buy and exclusions of the policy.
Many will face a financial crisis when it comes to medical emergencies and to meet the medical cost, people will switch into their savings, and they drain it entirely. So, in situations like this, a health insurance plan could be a real “life-saver” because it covers your hospitalization expenses.

Health insurance increases your accessibility to quality health treatments, including private healthcare, where the cost is still a barrier for many. Health insurance ensures you to get appropriate treatment promptly irrespective of their financial capability.
Especially in a country like India, people have a reduced capability to afford proper medical treatment. Medical insurance provides the much-needed financial stability to an individual.

Why is Health Insurance important?

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health-insurance

All about Health Insurance

Health is Wealth

At some point in life, everyone faces various types of health risks and uncertainties. And it’s important to understand these risks. Knowing the risks, you and your family may face can help you find ways to avoid health issues.

What are Health Risks?

A health risk is not something that will harm you or affect your health. Risk doesn’t mean that something terrible will happen; it’s just the possibilities. Health risks include your age, family health, and lifestyle.
There are some risks which can’t be changed. Such risks are “genes” (inherited diseases from your parents) while some risks are in your control like diet, physical exercises, etc.,
Your absence can devastate your family or your dependents. Thus, understanding the health risks can help you make smart and informed decisions.

How can you reduce the risk?

You can reduce the risk by transferring it to the insurance companies. Insurance acts as a “Financial tool” against your health risk. Let’s learn about “Health Insurance.”

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health insurance

Check out these points before you buy a Health Insurance

“In the end, it’s not the years in your life that count. It’s the life in your years.” 
—Abraham Lincoln

Buying health insurance is like a back-up plan for your life. Health insurance covers the whole or a part of the medical expenses incurred by you. Various insurance companies are offering numerous policies. The need for health cover is increasingly becoming more critical, and hence choosing the right health plan is essential.

Here are a few points that you need to check before you pick up a Health Insurance:

  • Lifetime renewability:

The regulating authority of health insurance companies is IRDA (Insurance Regulatory Development Authority of India). As per IRDA regulations, health insurance companies are mandatorily required to offer health insurance for up to 65 years. Most of the private companies do not have any such age limits in their plans. Once the policy is issued, individuals will be solely responsible for renewing the policy timely. If the individual fails to renew the policy, at the time of claiming, they will lose the real benefits of such a lapsed policy.

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