FD vs Mutual Funds

In India FDs are one of the most popular choice for investing. But are they the ‘best’ investment option?
Below is a comparison of Fixed deposit vs debt mutual funds.

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Epic Investment lessons from Mahabharata!!!

The best childhood memory still fresh in my mind is the one where my grandfather told me the mythological story’s about Lord Krishna and his magic tales. I always imagined the scene in which Krishna advised Arjuna on the Chariot. This scene had left a huge impact on my teenage life. I decided my life goal after listening to it. It wasn’t an advisor; it was to become a chariot rider. Turns out, I am an adviser and not a chariot rider. Such a disaster!
Being an advisor let me walk you through some investment lessons from Mahabharata. Allow me to be your Krishna for once!

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India’s most trusted app for Direct Mutual Funds!

Dear Customer,

Tired of giving away money to the broker (commission) with Regular mutual funds? Welcome to MyWay – India’s Most Trusted App for Direct mutual funds that offer commission-free Direct mutual funds

Make the best lifetime investment decision with MyWay, and here is how?

  • Invest in MyWay Wealth’s recommended funds: These recommendations are from our experts and especially curated for you to ensure long-term wealth creation.
  • Do It Yourself: Make your own investment decisions by evaluating performance, risk, portfolio allocation across all Direct mutual funds.

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Don’t delay your investment because of these myths. Learn facts!

Many potential investors delay their investments and miss the opportunity of earning hefty returns because of the Mutual fund myths that they often hear. But here are the real facts about the Mutual funds.

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retirement

How to plan your Retirement

“Old age is like everything else. To make a success of it, you’ve got to start young.”

-Theodore Roosevelt

In India, the most common beverage consumed is a cup of hot tea. It is served in the house, every morning, evening and sometimes even at night. A cup of hot tea is comforting and each person has their own way of making tea depending on their tastes. Such is the case of saving money. Many people do it in a different way. Now one of the most mundane of all saving is that of retirement. When approached with the subject people wave it off saying they’ll probably never retire or they will be well taken care of by their dependents. But like they say, your parents are not your emergency fund and your children are not your retirement fund. That’s why planning for your savings is crucial for maintaining your lifestyle even after you retire at that time.

So how does a person begin to plan for retirement? Well, there are two important points to keep in mind:

Your Spending

Every person’s individual spending habits vary. Some spend on food while others spend on clothes, some spend on their trips to exotic places while others spend on furnishing their dream home. One of the most important things to remember is that what you spend now will only increase in the years to come thanks to the constant inflation. So, in order to plan for what you spend after you retire to take a hard look at how much you spend these days. Try and anticipate how it will grow over the years while taking into consideration the inflation in the market. An easy way to do this is using the Rule of 72 which states that if you want to know how long it will take to double your money at 6% interest(inflation), divide 72 by 6 and get 8 years. Knowing this will instantly give a clear picture on what you need to do rather than leaving it up to chance to figure it out.

Your Saving

Now it comes down to how much a person must save. Many already have savings like FDs and Provident Funds so it can vary in terms of that. But when it comes to stocking up for your retirement there is a formula that will work wonders for you. Based on the age you are you save up that percentage of your income (after taxes). If you are 25 you should put away 25% of your income, if you are 30 you must put away 30% of your earnings. This should begin as early as you start to earn right until you are 55 or 60 years old.

Say you are 65 when you finally give yourself a break and want to sit back and take the load off. You will have children who take care of you and dependants that are always with you. Would it be better to still be standing on your own and do whatever you want rather than be totally dependant on others? You can use the money to pay your bills, go on that trip you planned for, buy your dream house, even pay for your dependent’s emergency needs at times.

Retirement isn’t just another option, it’s a need. So don’t delay, choose a way to save up for your retirement. The money you save today is like a bag of tea that is stored up until the right time. When you finally retire you can have a hot cup of strong tea. However, if you don’t plan for it and save up, you will have only a weak tea that gives no energy or comfort whatsoever.

Gold Investments - Dipika Jaikishan

Is investing in Gold a good idea?

Safety, Liquidity and Returns are the three factors that most conventional investors look for before making any investment. While Gold meets the first two criteria significantly, but it doesn’t do too badly at the last one either. Here are two main reasons why you should invest in gold:

a. Gold investment is worthwhile because it is an inflation-beating investment.

b. Gold has an inverse relationship with equity investments.

However, every investment is unique and hence choose your investments in Gold wisely and based on your investment needs.

MyWay Wealth Weekly Update (Issue #15):Top tax-saving funds & more.

Tax season is as certain as sunrise.
You’ll be better off having a hat at all times!

“Request for submission of proof of investments”: This is the email subject I woke up to this morning. I realized that many, just like me, are just so engrossed in the frenzy of daily tasks that we sometimes forget our essentials – like saving tax through 80C deductible investments.

It would be too redundant to list out a comparative table enlisting tax-saving options with their pros/cons and prove how ELSS mutual fund is the best tax-saving avenue in terms of the lowest lock-in period and highest return expectation.

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tax-benefits

Tax benefits under Section 80C

The avoidance of taxes is the only intellectual pursuit that carries any reward.

— John Maynard Keynes

Quite often, we rush to make the least thought-through tax saving investment (the easiest like insurance plan & PPF being the most popular) with a short-term view to save on taxes.

Have you ever wondered if the same investment could also help you build wealth and take you closer to your financial goals? Probably not.

Here’s a cheat-sheet to help you choose the best tax-saving option to utilize your section 80C’s INR 1.5 Lakh tax-deductible limit.

Options available under the section 80C basket:

Tax Saving ProductsLock in periodExpected Returns
Equity Linked Saving Scheme (ELSS) Mutual Funds3 Years 12% - 15%
Public Provident Fund (PPF)15 Years 8.00%
National Savings Certificate5 Years 8.00%
5 Years Tax - Saving Fixed Deposit5 Years 7% - 7.5%
Insurance 10 - 15 Years 4.5 % - 5%

Trivia:

Sagar had started a SIP of INR 12,500/month (INR 1.5L annually) in an ELSS mutual fund – ICICI Prudential Long Term Equity Mutual Fund ten years back.

Over this period, he saved almost INR 4.5 lakhs in yearly taxes while his investment has grown to INR 32 Lakhs! A total gain of INR 21.5 Lakhs in ten years!

What happened there? It’s the power of equity, compounding and a wise tax-saving investment that made all the difference.

Equity as an asset class is by far the most dominant when it comes to building wealth. A classic display of the power of equity was the performance of TCS shares in the past week.

Shares of TCS gained the most this week. Since it got a clean-chit in the controversial racial-discrimination lawsuit filed in the U.S. Digital funds have been the biggest winners along with TCS.

TCS Share Price (22 Nov-30 Nov 2018)

Fund Name TCS (%)
Tata Digital India11.96%
Aditya Birla Sun Life Digital India fund11.70%
Axis Long Term Equity Fund8.44%
Axis Focused 25 Fund7.60%

 

Stock Market in last week

 

 

Mutual fund

Types of Mutual Funds

“Embrace those things that make you unique”

Absolutely! We are unique and so are our financial needs. Someone might want to build a house, while someone would want to save for their child’s education or marriage. Some might want to build a corpus for their retirement, and some might just want to invest to save and get better returns. When investment needs are so different, how can they all be served through a Bank FD or RD? We definitely need flexible plans that blend and suit our financial requirement. And this is possible with Mutual Funds. Mutual Funds have various categories of funds that serve different needs and this article will throw light on them.

The broad category of Mutual Funds includes:

  1. Equity Funds: Equity Funds invest in shares of companies that have different market-capitalization. They are meant for investors that have a long investment horizon i.e 5 years or more. Equity Funds generate high returns, which also indicate high risk, thus it’s important for investors with higher risk tolerance to opt for Equity Funds. Since investors under this category remain invested for a long period of time, there is sufficient time for the fund to overcome the market fluctuations.
  2. Debt Funds: Although Debt Funds have no guarantee of returns, they primarily invest in treasury bills and corporate bonds, therefore the returns earned by debt funds are most often predictable thus making them a less risky option than Equity Funds. Conservative investors who have a lesser risk appetite, looking for moderate returns and have a financial goal that is either short term ( 3 months – 1 year) or medium term (3 – 5 years), can opt for this option.
  3. Hybrid Funds: Hybrid Funds invest both in equity and debt instruments. They form a perfect combination, meaning they provide better returns than Debt Funds and at the same time are less riskier than Equity Funds, thus avoiding excessive risk and providing both income and capital appreciation. Investors who have a lesser risk appetite, but at the same time want their investments to have equity exposure, can opt for this option.

Mutual Funds can also be categorized based on Market Capitalization:

  1. Large Cap Funds: Large-cap funds are those that invest primarily in companies that have a large market capitalization, these are companies that fall into the top 100 ranks (as per SEBI). Investors who have a lesser risk appetite can opt for this option as these funds have fewer fluctuations when compared to Mid Cap and Small Cap funds. However, it is recommended that investors remain invested for a long period of time, say 5 – 7 years or more.
  2. Mid Cap Funds:  Mid-cap funds invest in companies that have mid-market capitalization i.e. companies that fall between the rank 101 – 250 (as per SEBI). In short, mid-cap funds lie between Large Cap and Small Cap funds. So investors who have higher risk tolerance and are willing to face higher market volatility than large-cap funds can go for mid-cap funds. However, first-time investors are not recommended to choose this option.
  3. Small Cap Funds: Small-cap funds are the riskiest and most prone to market fluctuations when compared to Large Cap and Mid Cap Funds. Investors who have high-risk tolerance and want aggressive returns can choose this option. However, it is highly recommended that investors only invest a portion of their portfolio in small-cap funds.

This is not all: Mutual Funds can further be classified on the basis of Risk levels, structure, asset classes, investment objectives, or even expense ratios. But the right way to choose a Mutual Fund must be based on the investor’s profile:

  • Investment horizon: duration of the investment
  • Risk Appetite: The level of risk an investor can tolerate
  • Returns: The percentage of returns an investor expects from an investment
  • Financial Goal: the objective of the investment

 

Invest Yourself on MyWay Wealth

Are you worrying about your Job Loss? Here is what you can do!

The thought of losing a job is very scary, isn’t it? With the evolving technologies around and automation happening in every industry, it is but natural to be worried. Any of us can lose our job at any time and the worst part is we can’t do anything about it.

What you usually do to get out of this fear is you start talking to your peers, your friends, spending more time with your loved ones or you may watch a motivational movie etc which can motivate you. Each of them will motivate you but you would end up getting the perfect answer for what if I lose my job?
So here are some best ways to prepare for and tackle the job-loss situation:

Create your emergency fund:

Build your emergency fund out of your income. Transfer around 30% of your saving income into Liquid funds or ultra-short-term funds where risk is minimal, and your money will start growing on a daily basis. An ideal emergency fund should be equal to six months’ future expenses or if you are having any EMI’s going on, it should at least equal future six months EMI.
Another option would be to reduce the EMI amount & increase the tenure of the loan temporarily till the time things get normal. This is not at all beneficial for you in the long term so better have an emergency fund in place.

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