Colour code for Mutual Fund

We often see the mis-selling of the financial products. Mis selling is a common thing in the financial industry that happens to almost everybody's life. To control mis-selling in mutual fund, SEBI has issued guideline for colour coding of mutual funds. The new guidelines to be effective from July 1, 2013, for all existing and forthcoming mutual fund products. Now onwards, product labels with scheme detail would be disclosed on common application form and advertisements. The labels would also include detail about the nature of schemes such as to create wealth or provide regular income in an indicative time horizon (short/ medium / long term)

There is also colour code for displaying the product risk. A blue colour coded box would indicate low risk, yellow box would indicate a medium risk, while brown box would be represent schemes with high risk. As per the guidelines, mutual funds would also have to include a disclaimer that "investors should consult their financial advisers if they are not clear about the suitability of the product".

These new colour code would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them.

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

Twitter id : @trivedi_arvind

Basic rules for investing

New Year, New Hopes and revisit some basic investment rules

First of all Very Happy and prosperous year 2013 to all of you. New year has already begun with new hope and optimisim in equity market. Yesterday, Nifty and Sensex were closed at 2 year high and now the market sentiments appear quiet positive in near term. Today I will not write lengthy article. At the beginning  of year, it is important to make some financial resolution and don’t repeat past mistakes.

There are few basic investment rules of investing and I am sure many of those rules you already know. I am attempting here to those rule revisit in very compact manner.

1)   Before make any investment decision, first know your networth.

2)   Be clear about your financial goal and honestly asses your needsand income

3)   Don’t investment in hurry and never investment in those products which you don’t understand

4)   If you have not properly insured then calculate your actually needed insurance cover and purchase term insurance online if possible

5)   Purchase mediclaim policy and personal accident policy also as it is very important

6)   Understand your risk appetite. If you cannot see 25% value erosion of your portfolio then stock market is not right place for you.

7)   If you are near about retirement please keep away from ULIP and insurance like product and reduce your equity investment and increase debt portfolio.

8)   Track your portfolio time to time and change your asset allocation according to time frame of your goal and market condition.

9)   Always pay your credit card bill on time as it has very high interest charges.

10)                If you feel any problem to understand or you have not enough time to take care of your investment find one financial planner and discuss with him about your financial planning and doubt.

There are much more basic rules and we will discuss about them this entire year in detail. Once again I wish for all of you a very happy, Healthy and prosperous year.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

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.

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

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com