Financial Advisor: Balance Mutual Fund

Friday, November 23, 2012

Prepation for after retirement

How to prepare Retirement Plan

In previous blog, we have discussed about the importance of retirement planning as the changing social and economic scenario. Today we will discuss how we should prepare retirement plan and what is the crucial factor should consider during the preparation of retirement plan. The most important thing it should start as early as possible at the beginning of the career.

First, we should make a list of current monthly expenses and annual expenses. After making list one should analyze how much these expenses are likely to increase or decrease after the retirement. After this consider inflation rate to these expenses to arrive approximate figure at the time of retirement. Estimate your and your partner’s life expectancy and calculate how much corpus needed for you after retirement till death to support your expenses.

Once we arrive to the corpus figure, now the question where we have to invest and how much amount have to invest for achieving this corpus figure. Evaluate the amount you need monthly or yearly to achieve target corpus. The most suitable invest avenue is mutual fund. Use the power of compounding by investment systematically in mutual fund through SIP plan. With the right mix of debt and equity one can successfully achieve the required retirement corpus. As your age reach near about to retirement age, reduce your equity exposure and shift it to debt systematically.

After making investment don’t divert from the plan, be disciplined and make investment regularly. In some time interval like annual you should revisit the plan and make sure your investment is on track. The most important thing is not to use your retirement corpus for your other requirement or before your retirement. Planning for retirement is not a rocket science. It is very simple step by step plan but this required only discipline and regular investing.

If you find difficulties to make your retirement plan then involve your Independent Financial Planner/advisor. Be in touch with your financial advisor during the entire investment period and clear your doubt investment and financial planning.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Tuesday, October 23, 2012

Balance Mutual Fund

Balance Mutual Fund: Better investment avenue for beginner

Often first time investors are very much confused for investment in mutual fund. A lot of query came across to me that which mutual fund is good for investment. In this year union budget a new scheme also introduced by government called Rajiv Gandhi Equity Saving Scheme. Now it has also included ETF fund also. While the details of the proposed scheme are still sketchy, it has caught the attention of non-equity investors. In my opinion there is also a good investment option available for new investor. For beginner, balanced mutual funds are safe option compared with pure equity fund. It is much safer and offer decent return in bad market condition also.

Balance mutual funds that invest both in fixed income instruments and equity to strike a balance between risk and return. In our country usually, such funds invest at least 65 per cent of the corpus in equity, while the rest of corpus is in debt. The allocation to equity and debt may vary across funds depending on the prevailing market condition. For instance, if the fund manager believes that the outlook for the equity markets is bright, he may allocate more resources to it. The onus is on the fund manager, not the investor, to decide on the optimum mix of assets. Balanced fund can provide you with the perfect portfolio diversification without having to invest in multiple funds.

As it do not invest all the money in equity, they are less risky and volatile than pure equity funds. This conservative approach helps balanced funds deliver steady returns to investors across each market scenario. If you do not have much high risk appetite but still some risk want t o take then you should consider a balanced fund.

If your investment horizon is short to medium term or 3 to 5 year it is ideal investment vehicle to help you meet your critical financial goals and also offer the stable return without worrying about market risk. Investment through Systematic Investment Plan (SIP) in these schemes will help you to safely build a sizeable corpus over 3-5 years and meet your financial targets in very smooth way. Investing in these funds also give you hassle free portfolio rebalancing automatically.

In the point of view of taxation, the balanced funds that invest at least 65 per cent in equity are treated at par with equity investments and attract no tax liability on capital gains if held for more than a year. The debt-oriented funds come under the debt fund category, where capital gains are taxable. Therefore it makes sense for you to invest in balanced funds for 3-5 years towards a particular goal, if you are new to the equity market and still want to the benefit of market.