Are you feeling "Panic" ?

Are you feeling "Panic" ?

Yesterday, Indian market witnessed a shocking wave in share market. The Asia’s oldest market benchmark was down by 1624 point down. The investor’s Rs 7 lakh crore wealth wiped out in single day fall. Many investors feel panic and many see this is a good opportunity for investment. It is always good idea to buy in panic. At least you can find good company in fair value or below fair value.

Is the yesterday’s market fall just the beginning of a global recession or it is temporary blip with great pick opportunity? In my view, it is opportunities for those who have not plunged in the market till now. For those who have already invested in the market, need not to be panic. The India growing story is still intact and stay focused on. Savvy investors are investing millions of dollars into Indian companies. Indian Market is going to be huge, growing and world leading market. For traders, market always risky if their bet goes wrong so for them that does not matter whether market up or down. They totally play a gamble.

China have an economic problem so some impact is obvious on Indian market. Our CAD (Current Account Deficit) remains around 1.5% of GDP in comfort zone. We can convert worldwide crisis into an opportunity. Global development cannot impact India after beyond a point. Except for currency and stock market all other parameters are in right direction.

For investors who is looking good opportunity for investing in direct companies or in mutual fund can send mail for help. Please feel free to ask if you have any query.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

ULIP or Equity MF- Which one better?

ULIP or Equity MF – Which one better?

I have often seen very confused investor for which one is good for investment either ULIP or Equity MF. Both are long term investment product. Investors often lure with the ULIP for very catching word insurance. Whereas equity mutual fund do not offer any insurance but great return as the efficient wealth creator in long term.

Although, Unit-linked insurance plans (ULIP) offers many types of funds from equity to debt segment. If you compare its return over the five year period, it has performed very bad when we compare it with equity fund return.

Recently a very informative financial magazine has done a study about the return of ULIP and equity mutual fund schemes. The Top 10 ULIP funds has given an average anuualised return of 16.61% while mutual fund schemes has delivered an average return of 22.20%. If we compare top 25 ULIP funds and top 25 equity mutual funds, ULIP delivered an average return of 15.28% and MF schemes return has been 20.71% in the same period.

ULIPs published their NAV before adjusting fund management cost and other cost while equity mutual funds published NAV after adjusting all cost. It is the reason investors are not getting right comparison between ULIP and equity MF funds. Returns from ULIP would be more worst after deducting charges like premium allocation charge, mortality charge and other charges. These charges are different for ULIPs managed by various financial entities. Only fund management charge is adjusted in unit price of ULIPs funds. MF schemes unit prices are calculated after deducting all expenses. This makes equity mutual fund return more superior than ULIP funds.

The fund management charge, of around 1.35% may attract investor towards ULIP as it appears lower than expense ratio of equity mutual funds. But when we consider other costs of ULIP- in most cases- it goes up to above 3% in the initial years of investing in ULIP. In an analysis of 237 ULIP funds, more than 50% of ULIP funds underperformed the Sensex over a period of 5 year ended in Feb 2015.

IRDA has put some cap on various charges after 2010. But still the costs of ULIP are much higher than equity MF. If you are looking for good long term investment option with low cost, equity mutual funds are still good choice.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Gold Trading in MCX

Gold Trading in MCX

Trading in gold and silver are getting higher in day by day. We Indian are much obsessed for gold. In India, MCX facilitates for gold trading. Short term trader do trade with very low margin and get the gain from momentum in the respective prices.

In the open gold market, gold trading happens in per 10 gram rate. It means if gold rate says Rs 25,000 then it means 10 gram gold’s price Rs 25,000. In MCX the gold trading rule of trading is different. First you have to open account with MCX through any registered broker. After opening the account, you have to kept some margin with exchange for trade in gold. Commodity exchange fixes the margin amount on the basis of the momentum of the commodity rate.

In India, commodity exchange MCX provides 3 types of gold lot – 1 Kg (Gold Bada), 100 gm (Gold Mini) and 8 gm (Gold Gunia). For example if gold is trading at Rs 25,000 per 10 gm then the total value of 1 kg gold would be Rs 25 lakh. If you want to buy 1 Kg gold in commodity exchange then you will have need only Rs 1.25 lakh and if you buy it physical market then you will have to pay Rs 25 lakh full payment.

So you can purchase 1 kg gold worth Rs 25 lakh only paying Rs 1.25 lakh margin amount approx at present. The margin amount may be change it subject to MCX guideline. If you purchase Gold Bada (1 kg lot) then for Rs1 movement in gold price incurred you Rs 100 profit or loss. If the rate increase by Rs 1 then you will get Rs 100 and if it the rate goes down then you will have to loss Rs 100.

For gold mini (100 gm lot) the margin requirement is Rs 12,500 and for Gold Gunia (8 gm lot) the margin requirement is only Rs 1,000. By Rs 1 movement in gold prices, the mini gold gives you Rs 10 profit or loss and gold gunia gives you Rs 1 profit or loss.

Many traders are very active in gold trading through the MCX. However, it would be good if you have some extra margin kept with your broker in case of price goes against your trade. As I always say that trading have more risk than investment. You can also take delivery of physical gold. For this you will have to inform exchange before 5 days of gold contract expiry date.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com