Indholdsfortegnelse for July 2023 i Outlook Money

Even when you are consulting a professional advisor, you need to do some amount of due diligence on your own to make sure you are on the right track A friend of mine recently asked me for help with his financial portfolio— he already invests in some mutual funds and wanted to add some more “SIPs with growth potential”. The popularity of SIPs has perhaps outpaced that of even mutual funds, which came up with the idea in the first place. That, of course, leads to the complication of mis-selling, where any product that can be paid for using regular instalments is sold as an SIP. But that’s a story for another time. One of the biggest reasons that makes SIPs so popular is the fact that it enables even…

SIP or systematic investment plan may seem like any other simple three-letter word. But this word, which is easy to remember, spell and pronounce, has now become an intrinsic part of any conversation related to investments. And when we talk of SIPs, a discussion on the best mutual funds (MFs) is obvious. In fact, the pace of acceptance of MFs has gone up drastically in India in recent years. The ₹43.20 lakh crore industry has witnessed a remarkable rise in the number of investor accounts. From December 2014 to March 2023, the number of investor accounts has increased from 40.3 million to 145.7 million. Though the numbers have grown consistently, a spurt was seen in the last two years as the industry added a little more than 50 million accounts…

Outlook Planet National Productivity Council, DPIIT, Ministry of Commerce and Industry, Government of India and Asian Productivity Organization, Tokyo held an international conference on “Productivity and Green Growth: New Interlocking Paradigms” from 14 to 16 June 2023 in Chennai, Tamil Nadu. It brought together more than 100 experts, policymakers, industry leaders, and stakeholders to discuss and explore strategies for institutional strengthening for green growth, financing mechanisms, leveraging ESG ratings to boost green finance and realizing net zero emission targets for achieving higher productivity and green growth. About 26 international participants from 16 countries such as Republic of Korea, Taiwan, Malaysia, Philippines, Indonesia, Singapore, Fiji, Bangladesh, Cambodia, Lao PDR, Sri Lanka, Mongolia, Turkiye, Nepal, Vietnam, Thailand etc joined the conference representing the AsiaPacific region. The conference was timely for India in…

An article about credit score? What interesting stories can we have on this? In fact, why should anyone even care? It’s not like it’s a measure of something critical, like your blood pressure or net worth. Well, credit scores do impact our daily lives, and we’ve got some answers. In June 2023, during the Credit Score Awareness Week, many people shared their credit score stories with us, some of which have interesting learnings for consumers. Here are a few of those. Don't Be Late How bad can one late credit card payment get? It happens to most people, and it turns out that one missed payment can be very bad. Syed, a digital marketer, rarely took his credit card out of his wallet. He preferred his debit card. One day,…

What if we tell there was a sure-shot formula to create wealth? You must be thinking that it is a joke. You might say that if it existed, we would all be rich. The approach we are talking about is Systematic Investment Plan (SIP). This is an investment route wherein investors can make a predetermined investment at regular intervals in a mutual fund. When you continue investing in mutual funds in a disciplined manner, it can lead to wealth creation in the long run. Here, we will look at the various benefits of investing in a mutual fund through SIP and how wealth is created over the long term. Flexibility to Start Small Do you have only Rs.100 to invest every month? Don’t worry. You can start investing in mutual…

Investors in India are increasingly choosing mutual funds. Given the variety of options, it might be difficult for investors to select the best mutual fund scheme suitable to them. While return is a crucial factor, investors should pay more attention to the risk taken by the fund manager than merely its absolute returns and they should focus more on the amount of risk they are willing to accept for possible returns. A mutual fund scheme’s investment objective and its approach to the portfolio should be an important criterion. Some investment plans may invest in stocks, while others may invest in bonds or both (hybrid). Debtoriented funds provide lower returns but are less volatile than equity-oriented funds, which typically offer higher returns, but it also carries higher risk and volatility too.…

Debt Strategies The article, Sky-High Interest Rates: Strategies for Borrowers (June 2023 issue), provides a comprehensive view of how to deal with various loans. I used to think people have stopped taking loans due to high interest rates, but the reality is different. The credit market has been growing despite rate hikes. The strategies described in the article with examples like increasing the EMIs, prepaying them, or refinancing the loan at lower rates reminded me of my loan and helped me get more clarity on how to handle it better. My takeaway is that timely debt repayment is vital to avoid penalties in a high-interest-rate environment. Amit Rai, email Money Relations Why We Spend The Way We Do by Larissa Fernand (May 2023 issue) is a refreshing read, highlighting people’s…

Outlook Money’s rating partner Morningstar India helped us rate mutual fund schemes with an investment track record of more than three years. The cut-off date for this exercise was March 31, 2023. The ratings are based on the funds’ risk-adjusted returns. Morningstar uses three steps to calculate Morningstar Risk-Adjusted Return (MRAR). The calculations are done on a monthly basis first and then the results are annualised. Here’s the three-step process. Total Return: This is the first step in which the monthly total returns for the funds are calculated. Morningstar Return: At the second step, it calculates or collects monthly total returns for the appropriate risk-free rate. It then adjusts returns for the riskfree rate to get the Morningstar Return. MRAR: The third step in the selection process is about adjusting…

Investment can be a lot like test cricket. It surely is. Which can be explained from Cricketer’s lens and this belief firmed up after watching again the highlights of Laxman and Dravid’s innings of 2001 against formidable Aussies. Most of the times our investment journey can be dull, stagnant, boring and not leading anywhere (at that particular moment) but that is so untrue because like a game of test cricket it only takes one moment, one move to grab the momentum and get moving again. Some lessons learnt from the game of test cricket – a corollary drawn. • Unitize - add and add together Worthwhile to note that while watching a test match you don’t necessarily notice each run scored or impact of every maiden overs bowled. It takes…

In today’s rapidly changing economic landscape, it is becoming increasingly important to equip our children with the knowledge and tools to navigate the financial challenges they will face as adults. F.I.R.E (Financial Independence Retire Early) aims to attain financial freedom through smart money management and investing. It’s almost like a cult these days in western countries, specifically in the United States. Over the past few years, this concept is gaining traction among the Indians as well. With time, this is likely to be the next mandatory goal for the next generation. In this article, we explore how parents can adapt the principles of F.I.R.E. to set their children on a path towards financial independence and a secure future. Given below are some of the wealth creation formulas which one needs…

When it comes to investing, there are four major asset classes: Equity, Debt, Commodity and Real Estate. The often followed approach is to allocate equal proportions in each asset class. However, each asset class has its own pros and cons. To get a better understanding on how to go about allocation, it is important that we understand the pros and cons of each asset class well. Asset Classes: Pros & Cons Debt: This refers to investments which offer guaranteed returns. Here, an investor will receive the interest decided at the time of investment. People often are charmed by the prospect of “guaranteed returns”. What they overlook is the opportunity cost of such an investment over the long term. A practical approach here is to have enough debt investment to cover…

EQUITY Large Cap ■ ICICI Pru Bluechip ■ HDFC Top 100 ■ SBI BlueChip Large-And-Mid-Cap ■ HDFC Large And Mid Cap ■ ICICI Pru Large & Mid Cap ■ SBI Large & Mid Cap Mid Cap ■ PGIM India Midcap Opp ■ Quant Mid Cap ■ SBI Magnum Midcap Small Cap ■ Quant Small Cap Flexi Cap ■ HDFC Flexi Cap ■ Parag Parikh Flexi Cap ■ Quant Flexi Cap Multi Cap Quant Active ELSS ■ Bandhan Tax Advantage ■ Parag Parikh Tax Saver ■ Quant Tax Plan Focused ■ HDFC Focused 30 ■ Nippon India Focused Equity Value ■ Bandhan Sterling Value ■ ICICI Pru Value Discovery ■ Templeton India Value HYBRID Balanced Advantage ■ HDFC Balanced Advantage ■ ICICI Pru Balanced Advantage Debt-Oriented Hybrid ■ BOI Conservative Hybrid Equity-Oriented…

Yoga, an ancient discipline from India, is globally recognized and celebrated on June 21st for its significant contributions to physical and mental well-being. Interestingly, these fundamental yoga principles— balance, nutrition, patience, discipline, and mindfulness—are also relevant for achieving financial wellness. Just as consistent yoga practice fosters health and vitality, applying these principles to finance can enable financial growth and security. Thus, Yoga and financial stability are interlinked, reinforcing the idea that the path to prosperity requires a balanced and mindful approach. Let’s delve deeper into these five principles and how they translate into successful investment strategies: Balance - The Art of Asset Allocation Balance is at the heart of yoga practice, and so it is in investing. Much like a well-rounded yoga routine incorporates a variety of asanas, or poses,…

Mr. Vijay Gupta, 68, is a private sector professional. His wife Geeta Gupta (61) and his 30 years old son Rajat are part of the family. Despite being a late investor in mutual funds who started investing post he attained 60 years of age, Mr. Gupta is a happy investor given the better than expected returns. He has developed a liking for mutual funds as one of the best vehicles to generate long-term wealth. However, this was not the case until he met Mr. Abhishek Mittal, his mutual fund distributor. Investment Preference before Mutual Funds Mr. Gupta has been a highly conservative investor. He never wanted to take risks and thus preferred investing only in residential real estate properties and banks’ fixed deposits. It could possibly be because of his…

The last date of filing income tax return (ITR) is round the corner. It’s important to file your ITR within the due date to avoid penalties and make the most of the tax benefits available to you. Filing ITR is a crucial financial responsibility that every taxpayer must fulfil. It not only ensures compliance with the law but also provides an opportunity to assess your financial health and claim eligible tax benefits. Here’s a step-by-step guide to help you streamline the process and ensure accuracy in your tax filing if you want to do it yourself. Remember to seek professional help if you have multiple income sources or other complexities that you may not be able to handle on your own. Which ITR Form Is Meant For You? Determine the…

Systematic Investment Plan (SIPs) offer a methodical and disciplined approach to investing in mutual funds. By making regular contributions at fixed intervals, investors can harness the power of compounding and potentially achieve long-term financial growth. SIPs provide convenience, flexibility, and the opportunity to build wealth steadily over time. Taking this one step forward, ICICI Prudential presents an innovative solution, Freedom SIP. This combines the advantages of SIP and Systematic Withdrawal Plan (SWP). It promotes a goal-oriented investment approach, enabling individuals to accumulate wealth and systematically withdraw profits. The Concept Freedom SIP seeks to offer investors a comprehensive solution, covering both investment and withdrawal stages. It underscores the value of systematic investments and withdrawals versus lump sum actions, facilitating goal-aligned, disciplined, and focused investing. Three Phases Freedom SIP involves three distinct…

Retirement The minimum assured return scheme (MARS), the pension regulator’s version of a scheme aimed at delivering minimum assured returns, is expected to be based on floating rates pegged to 10-year government security. The scheme, spurred by the need to provide an alternative to entirely market-driven performance in the organised retirement sector, will take pension reforms to the next level. Assured returns will attract a new set of subscribers to the National Pension System (NPS), which stand at the very centre of reforms initiated by the Pension Fund Regulatory and Development Authority (PFRDA) in recent days. The MARS variant, likely to draw serious long-term allocations to the system, will encourage a relatively more conservative section to save for retirement. In this context, an insight into the concept of floating rates…