Expose your money to Equity!

Equity investment earns you the best returns when compared with the other investment options. Now, let’s understand the true nature of all the investment options.

Investment options Initial investment Finally earned

(principle+returns)

Fixed deposit 1 lakh 19.35 lakhs
Gold 1 lakh 16.10 lakhs
Public Provident Fund 1 lakh 32.78 lakhs
Equity 1 lakh 2.3 crores

 *A period of investment is considered as 30 years for all the investment options.

Then what are these Equities?

Equities are the stocks/ shares that are listed in the stock exchanges which are traded at the market price. You can invest in Equities in two ways:

  1. Direct investing in Equities-You will directly purchase stocks of listed companies through a demat account.
  2. Investing in Equities through mutual funds.

Why one should not buy Equities directly?

Think, how do you know which companies equities to buy?

Because, if you are new to investing, then opting for the wrong equities will cost your money and peace of mind. When you decide to buy equities through mutual funds, you outsource your decision to the Stock Experts. As an investor, one only needs to invest the desired amount and become a part of the fund holdings, and the professional managers will do this job.

Key advantages of investing in Equities through mutual funds:

  • They are professionally managed by expert professionals spend quality time in researching about the future performance of companies.
  • You get an exposure to various stocks when you are invested in an equity mutual fund scheme
  • They offer you an opportunity to redeem your investments at any time (Except for Equity Linked Saving Schemes-‘ELSS’ which has a lock-in period of 3 years).
  • Equity mutual fund schemes avail you a facility to invest small sums at regular intervals through systematic investment plans (SIP).

How to invest in equity mutual funds through?

You can start investing in Equities Mutual funds through MyWay Wealth. MyWay Wealth provides you smart recommendations to build your wealth scientifically and financially.

MyWay Screen shot

Thus, be smart in choosing your investment option. Always opt for investment that matches your financial goals and risk appetite, choose the scheme that matches your profile. Equities will end dependency on gold, real estate, and FDs.

It is not market timing but time in the market that matters!

Equity Mutual Funds

Equity funds

Equity is the best asset class among the Mutual funds which offer higher returns of different market caps (large, medium and small caps). Equity funds buy the stock of companies listed in the stock market and offer a variety of equities with greater flexibility.

Why not buy Stocks Directly?

This is the next question that hit a mind when you speak on “Equity funds”. Firstly, think about how you would know which stock to buy? Because, if you are new to investing, then opting for the wrong stock will cost your money and peace of mind. When you decide to buy a mutual fund, you outsource your decision to the Stock Experts.

There is “Fund House” where a team of specialists and analysts track the companies, markets, politics and interest rates to predict the future of stocks. Based on their reports, AMC (Asset Management Company) will help you to build your portfolio on stocks.
You can invest in equity mutual funds through a direct plan. Every mutual fund investment you make will have two variant- direct plan and regular plan. While Regular Plan bears a commission and direct plans are absolutely commission free. Hence, you get more returns on your investment with a direct plan.
You can invest in MyWay Wealth- Direct Plan Mutual Funds where it provides you an advantage of Zero Commission and Zero Fees.

Who needs to invest in Equity funds?

Your decision on investing Equities will depend on the factors like risk-bearing capacity, investment horizons, return expectation.
Suppose you want to make an investment for a period of 5 years or more, then you can buy Large-cap equity funds because your returns do not fluctuate more and it best suits for the investors who are risk-averse.
If you are willing to take a greater risk than as compared to large cap, you may invest in mid/small caps.

Things you need to consider as an investor before investing in Equities:

  • Objective: Be sure about your objective, decide whether your objective is income generation or wealth creation. Income generation is required for a near-term goal and you will stay invested in fixed-rate products.
    For wealth creation, you have to hold assets for a long period and wealth creation depends on the quality of asset and price others willing to pay.
    Fund type: There are a variety of classes in Equity (small-cap, mid-cap, and large-cap). Each class has a different level of risk and returns associated.
  • Cost: Your Equity fund charges an expense ratio to manage your funds. SEBI has set up an upper limit of expense ratio as 1.05%.
    Financial goal: You’re establishing these funds because to meet your future goals. Your goals can earn higher returns, early retirement planning. Children marriage, etc.

How do you Evaluate Equity funds?

Based on certain parameters, you will evaluate the Equity funds:

  • Fund performance based on return on investment which is considered as an important parameter for the selection of funds.
  • The fund you select should have a clean and long history of 5 years because to ensure that the fund has seen all the market cycles and,
  • The risk-return ratio becomes an important factor to select the fund and “Sharpe Ratio”, the higher the ratio, the better the risk-adjusted returns for that funds.
    (Sharpe Ratio: how much excess returns you can receive for bearing extra risk)

MyWay Wealth

You can invest in hand-picked funds through MyWay Wealth which is India’s most trusted Mutual fund app. However, remember to choose the right investment option that is based on your risk appetite and investment goal.

It’s never too late to make the right choice!

Budget Matters

(Don’t Stash That Cash)

Budget matter

“Always stay rational.”

—Warren Buffett

We Indians start thinking about what to invest in – should I buy a plot of land, or should I buy shares, or should I invest in a pension plan to solve our money problem? Everybody has money to save- from the poor woman who sells veggies on the roadside to those who just don’t know how to look for it.

Manage your expenditure by dividing them into different accounts such as:

Money drops in each month and the living cost kick in immediately: rent or EMI gets debited; domestic help salaries get paid; utility bills are done; groceries are bought; fees paid; travel costs are ongoing daily expenditure and so does shopping gadgets, eating out, movies. The rest goes to the credit card bill. A lot of money conversation begins with effective budgeting. We are told to write down every rupee we spend. And this process is monotonous and boring. So here is a classification that will help you to deal with your finances better.

Type of account

percentage

Inflow/Outflow

Income 10%-15% can be maintained as a cash reserve for daily expenses. Salary revived, rent received, dividends earned.
Spending Not more than 45%-50%. EMI, credit card bills, Utilities
Saving At least 15%-20% Set aside for investments

Let’s look at the above table in detail:

Once your salary hits your income account, within thirty minutes (OK take a day, but do it) move your monthly expenditure to your spending account.

Spendings should not be more than 45%-50% of your income. The salary (Income account) account is always a zero balance account so sweeping money is all possible.

So, at last, you would be able to manage savings of at least 15% to 20% excluding all your spending. Where you can utilize this money for your further investments.

Is it okay to have a joint account?

Type of account

Individual Joint

Description

Income Yes No It’s good to have a separate Income Account in case your partner is not helping and not supportive
Spending No Yes Spending can be a joint account where both of your credits can equal your monthly spendings
Saving Yes No Each will have different savings account it can be joint, where the primary holder should be the same on whose name investment will happen.

You have a three account system that separates your income, spending, and savings. Where you can analyze your income accordingly you would be able to figure out how much to spend. And by that, you would be able to wisely invest the amount and yield your profits from the invested rupees.

What do I do with my savings?

At a point when individuals retire they will either receive no salary or encounter a decrease in it. As a solution, opting a pension scheme would help you to save a good corpus for your old age, thus providing financial security and freedom. One should invest in NPS (NATIONAL PENSION SYSTEM). The national pension scheme is initiated by the central government. This scheme is where a person needs to invest in a pension account at regular intervals when the employee is working. This program is open employees from private, public, and even for those who are working in the unorganized sector. After being retired the person can withdraw a certain amount of percentage of their funds. Wherein the person gets benefit under section 80C and section 80CCD. This scheme is portable across all the locations.

MyWay app

MyWay Wealth is the best destination where one can think of investing their savings in a systematic manner. MyWay Wealth gives the option to invest your funds into NPS scheme and various other options such as Mutual Funds, Term Insurance or Digital Gold that suit your investment horizon and risk appetite.

Think investment! Think MyWay Wealth

Growth vs Dividend

growth vs dividend

“Rule No. 1: Never lose money. Rule No 2: Never forget rule No.1”-

What is a dividend option?

In the case of a dividend plan, the profits made by your funds are not reinvested back into the fund by the fund manager of the Asset Management company (AMC). Gains will be distributed on a quarterly, half-yearly or annual basis. Dividends are only declared by AMC when the scheme realizes a profit in real life. The amount of dividend you get is not predetermined. In dividend option, the dividend is paid to you from the NAV of the units you hold, so paying dividend reduces the overall NAV.

What is a Growth option?

In growth option, the profits are in the form of capital appreciation and dividend, made by your scheme are reinvested into the same fund. This will lead to the rise in the Net Asset Value(NAV) of the scheme with time. When the underlying portfolio of the fund makes profits, the NAV of its units rises. Similarly, your fund runs at a national loss, due to a market correction, the NAV of the same fund goes down.

Purpose of having different options:

When it comes to choosing a mutual fund, an investor needs to make a range of choices. And most of them find it difficult to choose between growth or dividend option. Both options have advantages and disadvantages. The investor needs to make a choice based on their personal financial goals and needs. The NAV of dividend option mutual fund scheme can be different from the growth option. The fact is NAV of growth option is found to be higher than the dividend option.
The scheme is the same but there is a difference in NAVs due to the compounding effect. In both the options, investment is done identical but the manner of distribution of profits varies.

Which option is better to invest in?

Whether to go for a dividend option or growth option that depends on the investor. Where dividend option works best when the market is high. As the NAV of funds rises consistently, the possibility of declaring dividends is higher. If you are an investor who focuses on a regular income, a dividend option might work for you. But one will lose compounding returns, as well as wealth accumulation may slow down as compared to growth option.
Where growth options can be suited for investors with long term investment deals. It will help the corpus for retirement. In case you don’t require a regular income go for growth option.

Different tax options:

In growth option, long term capital gains over 1 lakh on equity funds will be taxed at the rate of 10%.
And in the dividend option, the rate of 10% has been proposed on equity oriented mutual funds.

Summary – Mutual fund Growth vs mutual fund dividend plans:

Mutual fund Growth Plans are better than Mutual Fund Dividend Plans for the following reasons.

  1. Mutual fund dividends attract higher tax capital gains in mutual fund growth plans in several scenarios.
  2. Mutual fund dividends are not an indicator of profitability.
  3. One cannot control the timing of when mutual fund dividends are declared.
  4. Mutual fund dividends do not create value, they only distribute value.

MyWay Wealth app

Being a smart investor one should choose the best investment option. One should always opt for investment which matches their financial goals and risk appetite. Where MyWay Wealth gives you the best option to invest your funds safely. Mutual Fund Dividends are not an indicator of profitability, whereas Mutual Fund Growth is meant to be for the long-term and they can yield your money.

Happy investing!!!

My Retirement Goals

retirement

“It’s better to live rich than to die rich”.

How do we know that when we hit sixty-five or seventy or eighty, there will be a skill that can throw off an income? We need to create a retirement corpus so that by age sixty we are financially free. A person is financially free when you don’t need to work to pay your bills. You should have enough assets that generate enough income today and for the rest of your life. We all know inflation is relentless, and even when the rate of inflation falls it does not mean that prices go down. They just rise more slowly. Getting the right amount of retirement is not tough to crack.

At the age of twenty-five save 25 percent of your post-tax income, at age thirty save 30 percent of your post-tax income, At forty save 40 percent. This formula works if you don’t have a single rupee saved towards your retirement, till you are forty.

Here are the retirement plans one should invest for better returns.

1. NPS(National Pension Scheme)

The national pension scheme is initiated by the central government. This scheme is where a person needs to invest in a pension account at regular intervals when the employee is working. This program is open for employees from private, public, and even for those who are working in the unorganized sector. After being retired the person can withdraw a certain amount of percentage of their funds. Wherein the person gets benefit under section 80C and section 80CCD. This scheme is portable across all the locations.

Types of NPS account

There are basically two types of NPS and they have the tire I and Tier II.

Basic information for a Tire I

  • There is no limit of the Maximum NPS contribution.
  • The maximum NPS contribution should be Rs. 250 or Rs. 500 or Rs 1000.
  • One can get tax exemption up to Rs 2 lakh (Under 80C and 80CCD)
  • There is no permit for withdrawals.
  • The status of the tire I account is Default.

NPS Tier II account

  • There is no maximum limit for NPS contribution.
  • The minimum contribution should be Rs. 250
  • There is tax exemption up to 1.5 lakh for government employees other employees.
  • For withdrawals, you are permitted here.

NOTE: The tire-I account is mandatory for everyone who opts to invest in the NPS scheme. The central government has to contribute 10% of their basic salary. For the rest of everyone else, investing in NPS is their call.

How to open an NPS account:

NPS account is been regulated by PFRDA, one can go for online as well as offline to open this account.

Offline process

The person needs to pay a fee of Rs. 125 for this.
One needs to make an investment not less than Rs. 250 or Rs. 500 or Rs. 1000 annually.
To open the NPS account manually, one should find PoP- point of presence.
Remember one should update their KYC papers in a bank.

Online process

One can invest in NPS through MyWay Wealth.
All that you need to do is download MyWay Wealth app, which is India’s most trusted app, update your KYC and start investing your funds in NPS.

MyWay Wealth app

2. Senior citizen savings Scheme (SCSS).

The senior citizens saving scheme is a scheme protected and backed by the government of India to provide regular income for senior citizens of India. Since it is provided by the government of India, this scheme is tax-free, which is been preferred amongst the retired audience.

Who can invest in these?

  • Senior citizen of India is eligible for SCSS.
  • Senior citizens of India aged 60 years or above.
  • Retirees who have opted for voluntary retirement scheme (VRS). Or superannuation in the aged bracket 55-60.
  • Retired defense personnel with a minimum age of 50 years.

Note: HUFs and NRIs are not allowed to invest in this scheme.

What should my investment amount be?

1. The minimum amount required for investment is SCSS is Rs 1000.
2. The maximum amount should be lower of the two:

  • An individual can invest up to 15 lakhs.
  • An individual can invest the amount received as a retirement benefit.

If its joint account with a spouse, then the maximum amount is 30 lakhs.

The interest rate on the SCSS account.

Interest rate

How to open an account in SCSS?

  • SCSS account can be opened in any authorized bank or post office.
  • First, the person has to fill a document for opening an SCSS account.
  • Proof-like PAN card, a passport to be presented
  • Two passport size photos.

Note: have original identity proof for verification.
Hence it’s clear that NPS provides all the features that SCSS can provide. Also, NPS allows you to earn returns anywhere between 9-15% whereas SCSS helps you earn between 8-9%. Why miss out on the opportunity to earn those extra returns? Additionally, NPS provides tax benefits where one can secure the future after retirement. You can invest your funds through MyWay Wealth after all one should spend their retirement peacefully.
Invest in NPS on MyWay Wealth and enjoy a tension free retirement.

Exit of Mr. Gautam Sinha Roy & its impact on Motilal Oswal Multicap 35

Mr. Gautam Sinha Roy & Mr. Snigdha Sharma has resigned from his service with the Motilal AMC, with effect from 17th May 2019.Mr. Akash Singhania & Mr. Siddharth Bothra will continue as a fund manager.

Mr. Gautam Sinha Roy was a key person for Motilal Oswal and was acting as a co-fund manager for Motilal Oswal Multicap 35, Motilal Oswal Long Term Equity, Motilal Oswal Dynamic Equity Fund & Motilal Oswal Focused 25 Fund. He was there with these funds since inception.

Performance Scorecard – Mr. Gautam Sinha Roy

Oswal funds

During his time, except Motilal Oswal Midcap 30, every other fund has generated more than ~12% returns. Among those Motilal Oswal Multicap, 35 was a big hit. At present, the fund is going through its rough times if we compared to its peers & at the same time resignation of Mr. Roy will create a huge impact.

We are still skeptical about the new fund manager who is Mr. Akash Singhania as he is managing Motilal Oswal Midcap 30 fund which has not performed to the expectations and lagging the race within its peers.

We understand, Motilal as an AMC has a good track record and will do well, but still, we are keeping our stance neutral as of now and suggest investors hold for now. We are not recommending anyone to start a fresh SIP in this fund till the time we are not forming a conviction on the new fund manager.

If you have any concern, please write to us at ask@mywaywealth.com or call at +918048039999, we would be happy to answer your query.

 

Modi 2.0: Your Money & The Promised Land

Almost 72 years since independence and 16 Lok Sabha elections later, India seems to have identified the chosen one who will lead the country to glory (read as economic progress & social development)! This is perhaps the only time since independence that a governing party has been re-elected and rewarded with a clean sweep majority.

Major economies around the world are grappling with a variety of issues right from trade wars to Brexit ramifications, crude prices while the biggest impediment for India was uncertainty stemming from political instability. With this uncertainty out of the way, the road ahead offers more clarity.

I’m taking this opportunity to substantiate the euphoria & highlight India’s growth story potential that will help you decide and build your financial future here.

 

— Piggybacking the robust economic growth —

“We will sustain a growth of 7.5 to 8 percent per year” Modi was quoted saying while delivering a keynote speech at the Shangri La dialogue last year.
India is, in fact, poised for an economic turnaround on the back of improved capital flow, pick up in manufacturing, depth of global engagements and improving control on domestic macro-economic factors.

GDP

The key takeaway from the above graph is that independent India took over 60 years to enter the trillion-dollar economy club but only 7 years to double-up! The future beholds a $4 trillion economy and every Rupee invested in this economy is expected to grow in a similar trajectory.

Let’s make this more about you and less about the economy

I’ve been interacting with quite a variety of investors since years and can now confidently say, I DON’T understand investors! This election season only validated my situation where the more I know, the less I understand.Here’s the paradox I observed this election season –

Pre-election:

Nobody wanted to invest since they believed that markets were too volatile & in a “correcting” phase. There were also concerns that the impending election results would erode their wealth.

Post-election:

Nobody wants to invest because everything went well, and markets touched all-time highs before they got a chance to enter – will wait till volatility resurfaces and markets correct.

Here’s what you can do as an investor to make the most of this new-found political stability & imminent economic spurt – don’t think, start doing. As long as you have long-term financial goals and have the right portfolio construct, the market level at which you enter does not really matter. While entering at current levels may entail a probability of minor loss in the short term but hopping onto the fence entails a definite loss of time & opportunity.

As an investor, it is recommended you design a portfolio with apt asset-allocation & high-quality funds and deploy it in the right way. While the mobile app takes care of all these parameters, you must reach out to our team in case there’s any concern or query that’s stopping you from participating in the Indian growth story.