SIPs can be done in any kind of MF scheme. Also, as many SIPs as you want can be done (any number of them for any amount). Invest through SIPs in liquid/ ultra short or short term funds for your short term goals (between 0 to 2 years)
Invest through SIPs in bond funds for your medium term goals (between 2 to 7 years)
and invest across diversified equity MFs for your long term needs (goals after at least 7 years).
All these goals (short, medium and long) can have multiple SIPs for the purpose of diversification (within an asset class)
You can different SIPs in the same as well as different asset classes
Yes, you can have more than SIP. Also, you can diversify across asset classes like Equity, Debt, Gold etc.
Equity investments are suited for long term investing (at least in excess of 7 years) for the goals which would require money after at least 7 years. Also, equity investments are meant for people who understand the volatility involved with this asset class.
Given that you have just started investing, you should first build an emergency fund (equal to 6-8 months of your monthly expenses) by investing the procceds in an ultra short/liquid fund. In addition, if you have any credit card outstanding, it's advisable that you square it off before starting to invest. After these 2 are done (retiring credit card outstanding and building an emergency fund), you should create a medium term fund (for goals occuring in 2 to 7 years) by investing ib corporate bond funds
This is depending on your financial goal. If your goal falls within 2 years you should not be investing in Equity. Rather Debt is a preferable option. In Debt category you may look for a Liquid fund or Short-Term Fund.
If the goal fall between 3 years to 6 years then go for Hybrid category. In case it is beyond 7 years then only go for Equity fund.
You may start with saving in bank in form of Fixed Deposit (FD) and Recurring Deposit (RD). Whatever amount to decide to save in FD & RD, 10% of it you can start investing in Liquid Mutual Fund and Balanced Mutual Fund. Once you are comfortable with the market volatility, you may increase your investment gradually. For better clarity on your risk-taking appetite and financial goals, contact your Financial Advisor/Planner.
To begin with, categorise your goals/needs as per short (0 to 2 years), medium (between 2 to 7 years) and long term (in excess of 7 years). Then prioritize them
And then invest the current and future cashflows and current savings available as per the impending needs.
For your short term goals invest in short term MF products like ultra short and short term funds. For medium term goals you can invest in bond funds or banking and PSU debt funds and for your long term goals invest across diversified equity MFs. While investing in equity funds it is suggested that you invest in a staggered fashion. if you have monthly surplus, you can initiate a SIP (Systematic Investment Plan) across diversified equity MFs, if you have lumpsum money available, you can start investing in the equity funds by initially putting up the amount available in the respective liquid/ultra short fund and then start a STP (Systematic Transfer Plan) to the equity fund over 6 or 12 installments
DIY (Do IT Yourself): you will have to make a note of your own behaviour and sentiment when markets go up or down. And then do analysis come to the conclusion.
Professional: You should contact your Financial Advisor/Planner so that no blind spots are there.
Note: Risk profiling depends on number of factors like demographic, financial goals, what is your relationship with money when you were child, teenager & adult, your current nature income etc.
To me, risk (what you undertake on your money) is defined by the need, by your future goals. If majority of your goals are short (occuring between 0 to 2 years) and medium term (arising between 2 to 7 years) then for these goals you should invest in liquid/ ultra short term funds (for short term goals) and for long term goals (due after an excess of 7 years) invest in diversified equity mutual funds.
Based on your investments, if your majority investments (depending on your future needs/goals) are in the short and medium term category, you are a conservative investor. And, if your majority investments are in long term assets you are an aggressive investor.
In order to ascertain your risk appetite, you should consider various situations and your reponse to those situations. e.g. if you are considering an investment where there are chances of losing your principal amount partially and at the same time there is also a likelihood of gaining substantial returns , your comfort of taking this risk defines your risk appetite. Risk appetite is also associated with your income levels, occupation and several other behavioral factors. However, more important is that the investor should clearly know the risks associated before making investment decisions because most investment accidents happen due to limited knowledge of risk return profile of an instrument.
Without providing any basic details about you like your age, risk profile, retirement age, etc it will not be possible for me to answer your query
Investment is subject to market risk, please read the document carefully before investing
|Returns of monthly investment done||12%||12%||12%||12%|
The chart above details 4 scenarios
PV (Present Value) means the amount needed if you were retiring today
After refers to the number of years you are retiring after
FV (Future Value) means the amount (extrapolated for those years at an inflation rate of 7%)
Monthly investment required in computed at a compounded returns of 12% per annum. These long term investments should stay invested for at least 7 years
Alternatively, if you require Rs. 4 cr.after certain years ( as mentioned below), the mobthly investment required to be made for that is as under
|Returns of monthly investment done||12%||12%||12%||12%|
We would require more information from you before advising on the quantum of investment required to reach a retirement corpus of 4 crores. However, you will get a clue when I say that if you do an SIP of 25000/- for 27 years then assuming a return of 10%, you might reach this target. However, depending on your expenses, years to retirement and other family obligations you can decide on your SIP amount.
Active investing means there is a Fund Manager & a Fund Management Team that will research the companies and identify the stocks to buy / sell.
In case of passive investing, there is no role played by a fund manager or the team to identify the stocks to buy/sell. Eg. NIFTY Index Fund - where the stocks are bought in such proportion that the portfolio mirrors the NIFTY.
Passively managed funds have lower cost as compared to Actively managed funds. However, this does not necessarily mean that Passively managed funds yield a better return than Actively managed funds. Over a fairly long period - 5 years or more - many actively managed funds have outperformed the Passively managed funds.
Major difference in active and passive investing is in style of investment and cost of fund management. Active investing involves portfolio creation based on fund manager's style of investing which includes growth or value biases, fundmental analysis of various sectors and stock selection approach. In case of passive investing , stock selection and allocation weightage mirrors the underlying index or benchmark. Active investing involves lot more fund maanger involvement while passive investing involves limited role to be played by fund manager . Therefore, cost of active investing is almost always higher than passive investing.
In nutshell, Active Fund manager endeavours to beat the benchmark in order to create alpha and thereby justify higher expenses.
Active Investing means Fund Manager or Portfolio Manager actively takes decision with the portfolio on Regular Basis to generate the Returns Over and Above the Benchmark to Generate Alpha Returns.
Passive Investing means no active Roles in Portfolio like investing for long term in Index Fund or ETF Etc. Returns Matches with the Benchmark Returns.
Active investing requires adequate and in depth knowledge of markets, instruments and most importantly, the ability to withstand losses and setbacks.
Mutual fund schemes gives you the cheapest cost option of investing in the market as a passive investor as you get access to very highly qualified, experienced and well paid fund managers to do the active management of your funds while you remain passive. This option allows you not to take the risk of uncertainty off success, gives you time and piece of mind to focus on your core strength, your profession / trade. I would advise passive strategy through investment into MF schemes with proper asset allocation.
Active investing allows the fund manager to choose stocks and their proportion while building a portfolio in line with the objectives and directives of that scheme. Also, the changes happen keeping in mind the fundamental attributes of a stock and fund manager's views on the underlying businesses/industries
Passive management needs the fund manager to follow an index (based on the specific product in question)
Owing to the fact that the former (active management) requires research and due diligence on the securities at hand the expenses are higher than passive management
Active management strategy seems to work better in economies of developing nations where the market information is far from perfect. This leaves room for many opportunities and sweet spots in securities purchase increasing the possibility of superior returns (vs the benchmark/index)
Equity Mutual Funds invest in the shares of the universe mentioned in the offer document (in could be as per market caps- large, mid and/or small; as per investment style- growth, value or blend; as per sectors- diversified or specific sectors like, banking, infrastructure, pharma etc.
ULIPs (unit linked insurance plans) are primarily a two in one. They combine investments and insurance. They provide a risk cover to the extent of the current value of the investments made.
Mostly the expenses of ULIP are multiple times those of equity MFs. This often makes the Equity MFs superior in performance to ULIPs
Option 1: Supoose if the Present Cost of a house is Rs 30,00,000/- and inflation is @8% Future Cost of the house is @ Rs 44,07,984/- one should invest Rs 60,000/- per month with 8% Return on investment.
Option 2 : if the Present Cost of a house is Rs 30,00,000/- and inflation is @8% Future Cost of the house is @ Rs 44,07,984/-. Assuming to go for a bank loanf with Down Payment of Rs 4,07,984/- and taking Loan for Rs 40,00,000/- with Interest rate @8% for Next 20 Years EMI Would be Rs 33458/-.
Over a 15 year time horizon, Equity tends to yield a better return than non-equity instruments. However, equity also is highly volatile!!
Therefore, the ideal way to meet this goal is to start a monthly Systematic Plan in an Equity fund or an Equity Hybrid fund. More important is for you to be willing to tolerate high fluctuations and to accept long periods of low returns during the 15-year journey.
The goal is 15 years hence, therefore, one should look at investing in riskier asset classes viz, equity or aggessive baalanced funds. At the same time, one should have sufficient term insurance cover on the earning member to take care of college education and other family requirements in case of any eventuality in the intervening period.
15 years is a very good time in the current situation in India to invest for a particular goal. You can choose to do systematic investment (SIP) monthly into equity funds (one large cap fund and one mid cap fund). If you do not disturb the same for 15 years and continue the SIP for 180 months, you will have more than desired amount for her education. You can then withdraw the necessary amount for education as and when needed and continue the SIP and hold on t othe remaining amount in the investment.
Alternatively, if you want to invest a lumpsum amount then, please put the investment into a short term debt fund and put a 12 month Systematic Transfer Plan from this short term fund into 2 equity funds, one large cap and one mid cap. You will get average NAVs of coming 12 months for entry into equity funds and then hold it without disturbing for 14 years. The desired result will be achieved.
You are better off investing money for her her higher education across well managed diversified mutual funds. Be a long term investor (at least 7 years plus). Invest across large caps (around 75-80%), mid caps (10-15%) and the balance across mid cap Mutual Funds
Also, across each market caps diversify through 2-3 MF schemes.
The best way to invest this corpus is through monthly investing by doing a SIP (Systematic Investment Plan) . Even if you have a lumpsum amount you are better off investing it in a liquid fund and transferring a fixed amount every month in the respective equity Mutual fund across 12 months through a STP (systematic transfer plan)
Technically, Mutual Funds are non transferable and therefore, gifting of MF units is not possible. If one wishes to do so, one should sell his/her MF units, transfer funds as gift to sister and she may purchase same MF units in her name. However, if sister is a minor ,then only gurdian can purchase the MF units on behalf of minor.
Unlike shares, mutual fund units cannot be simply transferred from one person to another, except on demise of the unit-holder.
The ideal way to do it is to open a minor bank account in your sister's name. You can be the guardian for her.
Also, investments have to be done in your sister's name with you as a guardian.
When she turns into an adult, she will have to apply for a status change (from minor to major) for those investments and they will eventually be in her name.
Choose a MF based on it's past long-term data (for more than at least 7 to10 years). Go for a fund which has minimised risk and maximised returns among its peers. We want to identify optimum risk adjusted returns of a fund.
Check whether the investment universe of the fund is as stated in its' objectives, that the processes are in place (and being adhered to) for stock selection and buidling up of the portfolio, and that it is not individual driven.
Also, accord weightage to a fund house in terms of its operational ease and access to information needed.
1. Set Your Financial Goals Before Investment
2.Define your Risk and Reward Ratios
3.Check the Fund History and Track Record of the Funds and Fund Manager track record
4. Expense Ratio and Loads
5. Select a Fund which is appropriate for your Time Horizon
6. Take the help of an Advisor
Review the risk data and performance numbers (vs index and its peers) of the scheme for the last 7-10 years. If you find inconsistencies in the abovemnetioned data for at least 4-5 quarters, you may want to evaluate exiting the fund. While executing the exit be mindful of the tax implications and exit loads. Be clear that you are not judging in a hurry and remember that the preformance most often is in line with the equity markets benchmark.
However, it could also be a debt fund during an interest rate hardening cycle or a debt fund having poor credit quality securities which could be losing the money. If its the fomer you could hold it longer till the cycle starts turning or till the accrual returns make good the loss. If latter is the case, please consult your advisor for actionable.
All the data/information shared above are opinions/ views that solely belong to the Mutual Fund Distributors. UTI Mutual Fund (acting through UTI Trustee Company Pvt Limited) / UTI Asset Management Company) owes no responsibility/ liability whatsoever in this regards. The information contained should not be construed as forecast or promise, and the only objective of this initiative is to educate the consumers to take a more informed investment decision. Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.