Are you first time MF investor?

Are you first time MF investor?

I dedicate today’s blog to my new mutual fund investors. India has less invested in mutual funds if compare with other asset class like fix deposit, real estate, post office saving etc. Although the mutual fund has been the great wealth creator in long run and outperformed to all asset class but still it is not very famous among investors.

Since last 2 years the scenario has been changed, many new investors have started to invest in mutual fund. The problem is many investor do not know the basic of mutual fund schemes and often choose wrong schemes, so now it is more important to educate the investors about mutual fund which is new to these investors. There are many types of mutual funds are available in the market but what is your requirement you should know first.

First of all if you are planning to invest for 1-5 years, never go with pure equity plan. You should go with debt mutual fund or balance plan depend on your time horizon and risk appetite. In debt plan, there are many types of plan which are good for different time horizon investor. So investment time plays vital role to decide the mutual fund scheme.

After deciding the investment time frame, you should also know the expected return, fund’s track record, fund manager and where the fund investing your money. All the information is also available with your adviser and online also. You should know the real rate of return after adjusting taxes and inflation. After all, your investment must beat the inflation at all.

Never go after scheme’s NAV. It does not mean that the lower NAV scheme is better than high NAV scheme. Old schemes often have higher NAV and new investor think it is very costly. It is wrong assumption after all rate of return is important not the current NAV figure. Always choose growth option if you are going for long term investment.

When you plan to invest in mutual fund, please follow the old golden rule that never put all eggs in one basket. It means never invest all money in one particular scheme. You should diversify your portfolio and review it time to time.

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

ABKI BAAR INVEST KAR YAAR...!!!

ABKI BAAR INVEST KAR YAAR….!!!

In the last few months stock market have delivered handsome return. Some of equity mutual funds scheme like Birla Sun Life Pure Value Fund, ICICI Prudential Midcap have given more than 40% return in last six months. Retail investors have missed this early part of market rally but now it seems they have started entering in this bull rally. According to available data, in the last six months foreign investor has invested huge money but the retail equity funds has witnessed the outflow.

Although many of retail investor has already missed the rally of the market, they need not to repent. Even if you have not invested in market till date, my advice for those start investing in the market with immediate effect. In simple language my advice to all investors that ABKI BAAR INVEST KAR YAAR (Don’t miss this bull market rally, participate in it and be part of this long bull run.) There are few points to understand why I am so bullish about this bull market:

The benchmark Sensex has rallied over 20% in the last 6 months and now at around 15 PE. There are still midcap and small cap stocks whose valuations are very reasonable or below from the fair value. So there are good room for growth of mid and small cap rally.

Market may be consolidate for few months or even may be decline from current level but in the long run it will outperform to all asset class. After the announcement of election result the no. of investor has risen significantly. It indicate that more people are willing to participate in this bull run.

During 2008-13 our corporate has restructured itself and have become more competitive. The newly elected government has boosted the sentiment of business community and investor which has already reflecting in the no. of market indicies.

Nifty and Sensex are at the all time high in these days.The Indian rupee is now stable against US currency which is good sign for the economy. The corporate profits as a percentage of GDP have reduced to 4.2% in 2013-14 which was 7.8% in 2007-08. If corporate earnings become long term average 5.6% of GDP by 2018 then there would a 22% CAGR growth for in the next 4 years.

FII have shown big faith in Indian market but our domestic retail investor has not shown any faith in last six months. There are many more reasons which are indicating the big bull run in our market within next 5 year and I would like to say to every investor that be the part of this bull run. ABKI BAAR INVEST KAR YAAR…!!!!!

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

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Why lose money in Stock Market..?

Main reasons behind lose money in share market

I often meet the people who often complain about losing money in shares. Majority of the people do not know even the difference between trader and investor. It is very clear and surprising that both buyer and seller at the same think they have taken prudent decision. First we analyze that why people lose money in share market. The some reasons behind the lose money in stock market given below:

Little knowledge: The biggest reason for lose money in the market that people trade without any research and knowledge. Most of time, they rely on broker, friends or so called tips.

Greed and fear factor: Although as a human being, we cannot control our emotions in 100% manner but we can control and mange it better. Many times people make buy/sell decision in very hurried manner after rumours or TV/ newspaper headlines. After viewing headlines, ticker on TV or reading headlines in daily newspaper people were forced to take hast move without any analysis. They sudden jump into conclusion and often make worst decision.

Lack of discipline in trading: The thumb rule for trading is that you should determine your profit/ loss before any trade execution. Know the difference between trader and investors but the funny thing is that if the trader’s expected rate do not come then the forcibly become investor. Always put the stoploss for any intraday trade.

Too much averaging in one stock: People often average a particular stock and block their amount for long term and lose the bright opportunity to make the money in another stock. You do not know whether a particular stock price come to above your buying average in your life time.

Trade in leverage product without knowledge: People often trade in high leverage product and do not understand the margin requirement from the broker side. If they do not fulfil sudden requirement of the margin money, broker square the position and trader suffer very heavy loss special in derivative product or high intraday leverage product.

Too much trade: You will lose more money as your trading frequency increase. There are many charges like broker’s commission, govt charges for each trade.

Key point to remember to enter in stock market:

• Spend time in your own research about companies business, management, quarterly result, sector trend rather than tips from broker, operators, manipulators, friends or totally rely on TV anchors.
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• Decide your category first whether you want to be trader or investor. In my personal view, the chance of losing money is much lower when you enter in the market as investor.

• If you are short term trader keep strict stoploss in each trade and never chase any particular stock for averaging in each time of falling the stock’s price. You cannot always win in each trade.

• If you have deeper knowledge, conviction and understanding of your stock’s business, sector and management, you can better control the greed and fear factor in decent manner.

• Please understand about margin requirement from your broker well before doing trade in future, options or commodity futures.

Once again my best wish to all of you for good financial health and physical health on the eve one year 2014. For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

One more Single Premium Insurance cum Investment Plan

One more Insurance cum Investment Plan

I have came across one article in business standard which I want share with all of you.

Life Insurance Corporation's (LIC's) 'Jeevan Sugam' is a single-premium endowment product. Since the product gives death benefit (sum assured) that is equal to 10 times the premium paid, it will qualify for tax exemptions under Sections 80C and 10(10D) at entry and exit.

Along with LIC, Star Union Dai-Ichi has a similar product to offer, which is giving a higher guarantee and a better rate of interest than LIC on Rs 1 lakh single premium paid by a policyholder. Both are single premium endowment products. The insurers have launched this products under the endowment umbrella to give guaranteed returns to customers. Additionally, there are enough single premium products available in the market which fall under the ULIP category.

The products are available to people between the age group of eight and 45 years. According to experts, individuals will have to undergo a medical test before buying this product.

Both the products are close-ended and will be available for purchase only till the end of this month. While both the products are giving a death benefit equal to 10 times the premium paid, their maturity benefits will differ. Ten years is the policy tenure.

According to the data available, if a person buys Star Union's 'Dhan Suraksha Platinum II', he or she will get a maturity benefit of Rs 1.81 lakh after 10 years (policy tenure) against Rs 1.77 lakh in LIC's 'Jeevan Sugam'. Reason: The difference in their returns is due to the different mortality tables used by both insurers. Experts say since LIC is deeply rooted into rural areas where risk to life is higher, there are chances their premium rates are higher due to that.

Pankaj Maalde, head-financial planning at Apnapaisa.com says, in the long run, Star's product will return better than LIC's because after 10 years Star Union's product will give an IRR (internal rate of return) of 5.8 per cent, compared to 5.6% returned by LIC.

Hence, one shouldn't buy these products for investment sake because their returns from the guaranteed portion are not attractive. If one is looking at good returns, they can consider investing in a Public Provident Fund (PPF) and bank fixed deposits which guarantee better returns.

While insurance is not for investment, it's still better to weigh your options in case you plan on buying one. Hence, it's better to compare insurance products, their premiums and benefits offered before buying them. Financial planners say it's an investment product and people left with no other tax-saving avenue only should make use of such products. LIC and Star Union are offering an additional benefit of 4.5 and two per cent if your maturity sum assured exceeds Rs 5 lakh. In other words, Star's benefits here is less compared to LIC.

Star Union has clearly mentioned in the product details that the product will give a tax break on the plan benefits received, under Section 10 (10D). Whereas, LIC has not mentioned this on their website.

While R R Dash, zonal manager, LIC confirms the maturity amount from this product is tax-free under Section 10(10D), we have still refrained from mentioning it, in case tax laws were to be changed anytime this year.

In the case of Star Union, the maximum amount of loan that can be availed is 75 per cent as against 60 per cent in the case of LIC. That quantum will be available as the surrender value at the time of taking the loan.

If the policy is surrendered on or before the second year is completed, the insurers will return 90 per cent of the single premium paid. Whereas, in case the LIC policy is surrendered in the first year itself, then the company is returning 70 per cent, compared to 85 per cent in case of Star Union.

While single premium products are expensive compared to pure protection plans, it makes sense not to mix insurance products with investment products. While one has to make regular annual payments in protection plans, it makes sense, as the death benefit offered by life insurers is much more than such investment-based products. If one is looking at such products purely for tax-saving purpose, then he or she can also consider tax-free bonds giving returns in the range of 7 and 7.5 per cent. Additionally, people ready to take some equity exposure can invest in an equity-linked saving scheme.

For more detail about any other query related investment, you can contact me through my email.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Beware from MLM and fraud comanies with greed of high return

Beware Investor from MLM and fraud companies

I have said many times in past that keep away from MLM ( Multilevel Marketing Companies) or Ponzi Schemes and those companies agent who promise huge return in short period. Today, I have read Indian express newspaper and sharing some fact and figure with you about these companies.

 The government yesterday said it has found 87 companies across the country to have disappeared after raising funds totalling Rs 342 crore through public issues. In these companies most of established in Gujrat state. Besides, 87 other companies are also being probed by the government agencies for duping the general public through illegal Multi-Level Marketing (MLM) or Ponzi schemes and West Bengal tops this list with as many as 73 such entities.

The market regulator Sebi has also detected as many as 669 companies to have duped the investors of Rs 7,435 crore through illegal collective investment schemes, Corporate Affairs Minister Mr Sachin Pilot informed the Lok Sabha.

The entities are classified as 'vanishing companies' if they cease to file their balance sheets and other documents after raising capital and the whereabouts of their offices or directors become untraceable.

In the Ponzi or MLM investments, the companies generally raise the money from general public and ask each investor to lure others into these schemes with a promise of huge returns. However, the operators disappear after some time, leaving the gullible investors in lurch.

In reply to another query on vanishing companies, the Corporate Minister said that the government had initially identified 238 such entities that have raised money through public issues. Out of these, 119 companies were put under a 'watch list', as they began filing their balance sheets and other documents with the Registrar of Companies or stock exchanges. Out of the remaining 119 companies, 32 companies are presently under liquidation, while 87 others have been classified as 'vanishing companies', Pilot said.

As per the state-wise list, 26 companies out of the total 87 such untraceable firms were registered in Gujarat. Gujarat is followed by Andhra Pradesh (13), Tamil Nadu (10), Maharashtra (9), Delhi (5), West Bengal (5), Madhya Pradesh (5), and Uttar Pradesh (4) for such companies. Regions such as Chandigarh, Karnataka have two such firms each, while one company each are from Orissa and Punjab. FIR has been filed against all the 87 companies and prosecutions has been filed against 85 of them.

The state-wise list of the companies indulging illegal Ponzi schemes is topped by West Bengal (73), followed by Delhi and Tamil Nadu with five each such companies. Besides, two such companies were found in Rajasthan and one each in Karnataka and Uttar Pradesh.

"Out of these companies, 75 have been wound up and the money refunded to the investors. 552 companies were prosecuted (and) convictions have been secured in 124 cases," Pilot said.

The Minister further said that various regulatory agencies are also taking steps to sensitise the public against such schemes, while newspaper editors are also sensitised to exercise caution in accepting advertisements pertaining to acceptance of deposits of un-incorporated bodies.

While Sebi is also conducting various investor awareness programs in this regard, the RBI is in process of undertaking a comprehensive campaign aimed at alerting the public against falling prey to Ponzi schemes and other monetary malpractices.

If you have some queries about investment and financial plan please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Some Important Points for Investors

Since last 4-5 year the retail investor has been losing money in equity market as market is not performing well. But not only in equity the so called advisor are fooling the investor from last so many years. I have earlier written so many times in my blog that if you have not much time and knowledge about market or investment please find a well knowledge filled financial planner. Set your financial goal and save before spending. Here I am sharing some basic tips which is very important for every investor before taking investment decision.

The most important thing is to protect your capital first. Take moderate risk for getting decent return. It is said that high risk give high return but before taking high risk assess your age, need and goal.

Never expect unrealistic return. Always try to get the return above average of the particular investment category. You cannot compare a single script return with any type of equity mutual fund. If anyone tell you about extra ordinary return please beware and alert before investing. I want to say only that keep reasonable expectation from any investment avenue.

Try to well diversify your investment portfolio according to your investment horizon and risk appetite. A well diversified portfolio reduces loss in other word say never put all eggs in one basket. Diversify your portfolio among different asset classes.

Keep away from any market rumors or news hype. Give proper time to your investment to grow. The process of investment is like sowing seeds. It need proper time to grow according to investment avenue. There is no rocket science to get multi-times return in short period.

There are other important things regarding investment which you will know in coming blogs. If you have some query about investment or financial planning please contact feel free to me

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Some basic rule for investment - II

How to be Successful Investor – Part II

In my previous blog we have discussed about some principle of smart investing. Today we will share some other rules about smart investing.

  1)Diversification of portfolio: It would be good if you diversify your portfolio      between equity and debt according to your age, financial goal and time horizon. No one can predict about future of the market, specific sector. It would be wise move if you have invested in a well diversified manner.

  2) Proper homework and research: Do proper research and homework before any investment. If you do not have time then take help from the experts. Remember, you are buying company business or assets. You are not buying the just number. If you expect a company to grow and prosper, you are buying future earning of the company.

  3) Stay calm and don’t panic: Don’t panic if you have not sold your stock portfolio before market crash. Don’t rush to sell the next day after huge market crash. If you can’t find more attractive stocks, hold on to what you have.

  4)Review portfolio in some interval: Review your investments time to time as no market is permanent either bull or bear. Keep get update yourself about those sectors and companies which have invested. Latest information and knowledge is the key to be successful investor.

  5) Avoid short gain or any market tip: There is no free lunch. Never invest on sentiment or on any tip. Avoid market rumor and IPO. Most of the IPOs decline after market listing . The recent example is Facebook IPO and many more. This does not mean you should never buy an IPO.

Outperforming the market is a difficult task. It would be better if you make a financial plan and accordingly fulfill the future goal. It is very difficult to implement all these discussed rules here. Everything is in a constant state of change including economic and political environment. So be careful adopting any rule of investing as the time changing investing rules also change. It would be better contact a good financial planner and expert before any investment decision.

If you have any query about investment or financial planning feel free to ask through mail.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com