What are diversified funds in India? Why should you cash in on them?

 

Diversified funds in India are often regarded as quality investment additions to financial portfolios. Should you invest in diversified equity funds in India and other similar types such as multi cap funds? These funds owe their importance to the time tested golden investment principle that states do not put all your eggs in one basket. This equates to the need for not putting your entire investment corpus into a single type of investment. Risks should be spread out and diversified with investments made in several assets and throughout diverse business sectors/industries. Mutual funds enable diversification very naturally through ensuring access to several business sectors and companies alike though these entities may be from one sector. Hence, these funds come with diversified options that spread throughout market capitalizations and business sectors as well. You can consider diversified equity funds in India for investing in accomplishing financial goals for the long term.

Diversified funds in India are those which are often called multi cap funds, i.e. those which invest in various business sectors and market capitalizations. Diversification takes place with several mutual funds being present within the portfolio. This enables reduction of overall risks while helping in cushioning negative impact of performance of some mutual funds/securities within the portfolio as well. The main objective behind diversification is safeguarding returns from the portfolio in the context of extreme market fluctuations and other volatile circumstances. Several mutual fund houses offer diversified funds which may fall in any category. By deploying an investment in a single fund, investors get the advantage of investing in multiple securities which are spread throughout diverse market capitalization levels and business sectors/industries alike. These funds are still impacted by market volatility levels although the impact is lower as compared to funds concentrating on one market capitalization or pure sector funds.

Learning more about diversified mutual funds

These funds will help you mitigate risks better than many other categories such as small cap or mid cap funds. Fund managers of these funds will periodically make the switch between small, mid and large cap stocks on the basis of market conditions. This will make sure that you can cash in on better opportunities present in the market. Returns are suitably amplified from these funds since they deploy investments in companies across varied market capitalizations. Hence, investors can expect sizable growth prospects for the future in spite of the diversified funds not being totally safeguarded from market uncertainty.

Investors also get relatively broader exposure to the market with these funds. Multi cap funds are diversified funds since they invest throughout market capitalizations while saving time for investors greatly. The risks are more balanced when it comes to these kinds of funds. This happens since small cap funds do well in a bullish market while large cap funds work as support in case of a falling market. Those who relatively understand equity markets and their risks and those who have moderate appetite for taking risks, may consider investments in these diversified funds accordingly.

How Does Buying Online Term Insurance Help?

When looking for a life insurance policy with a low premium, you can opt for a term insurance plan. Term insurance plans are the most affordable form of insurance policy with the lowest premium. It provides the highest life cover to a policyholder for a particular time period. 

In India, term insurance plans are offered by almost all insurance companies. 

What does it mean by term insurance plan?

Term insurance plan means a kind of insurance policy applies only for a specific time period or for a fixed term(years). The plan provides financial security to dependant family members in the policyholder's death/critical illness or disability. The term insurance plan offers high returns(amount) at a significantly low premium. 

Why is it essential to invest in term insurance?

In today's environment, the frequency of road accidents and diseases are increasing at a rapid pace. Although we all plan our lives for long, but can never rule out the unfortunate incidents that can play havoc in any person's life. It is, therefore, necessary to financially safeguard the interest of your family. Hence, it is advisable to take a term insurance plan. 

It is an excellent option to subscribe to a term insurance plan at a young age as the premium paid is less. The term insurance plan comes in handy to let your family lead a stress-free life and meet all future financial needs in case of a policy holder's death. 

What does it mean by online term insurance?

Term insurance plans are available on both online and offline platforms. The only difference is that online term plans can be purchased from the comforts of home after analyzing, comparing, and then selecting from various products offered by different insurance companies. Buying online term insurance allows an applicant to:

ü  Review features and other benefits of various term insurance plans

ü  Calculate and then select the premium required to opt for a particular plan

ü  Read the reviews and understand the riders attached to different plans

ü  Online buying cuts down the purchase time and is hassle-free

ü  Most importantly, online buying term insurance helps you make an informed decision 

What are the benefits of buying a term insurance plan online?

Buying a term insurance plan online is convenient and easy; some of the other benefits are:

²  Low premium

The online term insurance plans are available at a lower premium than the offline products. One reason being the absence of a middle man (insurance adviser). The other cost escalation factors, including logistics, paperwork, fixed expenses, are also negligent, and the companies pass on the benefits to the policyholder bringing down the cost. 

²  Easy comparison among different companies plans

Before buying a term insurance plan, an aspirant can do research and compare various companies' insurance plans. Compare the features, benefits, read customer reviews, do premium calculations, etc. Thus buying a term insurance plan is based on the information you gather online. 

²  Quick and secure process

Buying a term insurance plan online is easy and completely secure. You can use net banking, credit, or debit cards to buy the policy hassle-free and instantly receive a receipt. 

Conclusion

Our lives are unpredictable, and no one can rule out any negative untoward incident in life. Hence it is advisable to be prepared to meet such an eventuality and protect your family. Loss of bread bearer is not only a physical loss for the family but can also push them financially backward. With a term insurance plan, an insurer can be assured that the family members will lead a dignified life even in his absence.

5 advantages of investing in long-term equity funds

 

Should you invest in a long-term equity fund in India? Investing in mutual funds for the long term usually means more than 3-5 years at least. In an ideal scenario, investing for more than 3, 5, 7 or 10 years will qualify as a long-term investment bet in order to enable long term wealth creation as well. You may be wondering why an investment should be long term in order to garner wealth. The basic philosophy behind the premise is that any deployment of capital for the long haul will naturally enable greater appreciation in terms of its overall value and this will ensure a handsome return on your investment as well.

Also, the short-term nature of the stock market is fluctuating and volatile, making it more difficult to reap the best rewards on your investment in a shorter period. Staying invested for a longer duration automatically ensures that you ride out the volatility in the market in the short term and get the benefits of better compounding on your investments at the same time.

Biggest advantages of investing in long-term equity funds

As you may already know, there are aspects to be factored in while investing in equity funds including market volatility, higher risk components and long term capital gains taxes among others. However, equity is a vital part of financial planning and you can also consider investing in long-term tax saving mutual funds with pre-defined lock-in periods (ELSS) for getting the highest rewards on your investment.

Here are the 5 biggest advantages of investing in a long-term equity fund in India.

• Duration- The time period for which you invest is really important to say the least. The longer you stay invested, the higher your chances of getting the best returns from your investment. From achieving any specific goal in life or accomplishing major financial objectives, you will have to clearly choose an investment tenure that is proportional towards the goals that you have. It takes time for any fund or stock to hit its peak levels and this is approximately 5-7 years at a minimum. You should give proper time for the mutual fund to grow in value as a long term investment.
• Compounding- This aspect cannot be emphasized upon less! The power of compounding is what actually makes long-term equity investments so lucrative. For equity mutual funds, compounding of the returns makes your corpus swell to a sizable amount at the time of maturity. Most people are often pleasantly surprised to see the overall returns on investment owing to compounding over several years.
• Portfolio Diversification- Diversifying your investment basket will naturally fetch you the highest profits. Investing in a long-term equity fund in India will ensure that you diversify your portfolio and get a chance to beat inflation with good returns.
• Lower Risk- By investing for the longer haul, you automatically spread out your risks and combat short-term market volatility. As a result, your investments go down in terms of the overall risk quotient.
• Proper Regulation- SEBI (Securities and Exchange Board of India) and AMFI (Association of Mutual Funds in India) hold responsibility for regulation of all mutual fund products. Both these government authorities ensure fully transparent investment practices and procedures. They regulate funds that are required to reveal their month-end figures and portfolios online for customers along with their daily net asset value (NAV) and expense ratios as well. Long-term equity funds are well regulated and hence you can be free from worries pertaining to your investment in the long run.

These are some of the biggest advantages of long-term equity fund investments that you should definitely check out.

Why investing in a global equity opportunities fund is a good idea

 

Indian investors are waking up to the sheer potential of international mutual funds in recent times. Several investment advisors and managers of funds are gung-ho about these global funds while private wealth consultants/managers are also recommending various products to their wide spectrum of clients. Geographical diversification is becoming really essential for portfolios of investors in India. Are these funds suitable for Indian investors who individually invest smaller amounts on a regular basis through SIPs? The answer is yes, provided financial goals and risk appetite are in sync.

The best international mutual funds give investors in India a chance to diversify their portfolio and give it exposure to stocks abroad. These are international equity funds spanning countries like the USA, China, Europe, Brazil and other emerging worldwide markets while there are schemes focusing on specific sectors including mining, agriculture, information technology and so on. Some of these fund plans have passive strategies for investments similar to index investments. There are several reasons behind the soaring popularity of global mutual funds including the considerable stimulus package declared by the USA Government which has got people in India eyeing opportunities for diversifying their portfolio in the American market. Additionally, several investment advisors believe that leading USA companies including Amazon, Facebook, Alphabet (Google parent) and Netflix, among others, may uniquely lead global disruptions in a post-COVID-19 scenario. There are similar factors prompting investments in other nations as well.

Global equity opportunities fund India- Should you invest?

Amongst the international equity funds India which are popular with investors, the global equity opportunities fund in India is an emerging favorite. Schemes like these have performed exceedingly well over the last 3 years or so, if such a duration is taken into account and those who had invested approximately Rs. 1 lakh three years earlier in these funds would have seen their corpus swell to a whopping Rs. 2.15 lakh today! This is a specific fund which majorly deploys investments in buying foreign company shares. If you invest for at least 5 years or higher, you can expect handsome returns that will comfortably surpass returns from fixed income instruments and inflation alike.

However, market fluctuations may lead to fluctuations in investment value down the line as well. Global equity opportunities funds are suitable for investing a portion of your capital for diversifying your portfolio. This means that if there is a correction in the Indian market, you can at least safeguard a part of your portfolio from the same. However, you should invest in a fund which invests in companies of varying sectors, sizes and nations. Have an investment horizon of at least 5 years without wanting to redeem your money before this duration.

Taxation on global equity opportunities fund India

When it comes to a global equity opportunities fund, you should remember that capital gains will incur 20% taxation if you sell mutual funds post 3 years from the investment date. If sold before 3 years, they will be taxed at the prevailing slab after adding your income to the amount. Taxes do not have to be paid if you are holding onto these units. Dividends will be added to your income and undergo taxation based on your tax slab.

If your income from dividends crosses Rs. 5,000 in a particular financial year, then TDS will be deducted by the mutual fund house at the rate of 10%. A global equity opportunities fund could be a great way to diversify your portfolio and spread out your risks while enhancing the overall quality of your portfolio. 

ELSS investments- A brief guide

ELSS stands for equity linked savings scheme and it is one of the foremost investment options under which you can save taxes under Section 80C of the Income Tax Act. If you are wondering how to invest in ELSS, you should know that these schemes are quite similar to other open-ended funds in the equity space although they have lock-in periods of 3 years. However, the minimum amount for investment can be as low as Rs. 500 every month without any upper threshold or limit for investing. You can either invest via a lump sum amount or choose SIPs (systematic investment plans).

Keep in mind that each and every installment you make accordingly will have a lock-in period of 3 years. Along with long-term wealth generation, you can garner attractive returns that may surpass inflation as well. Investing through SIPs will help you benefit from rupee cost averaging along with compounding, enabling better protection against market volatility and long-term capital appreciation. Choose ELSS funds on the basis of several parameters like consistent performance in the long term, rate of returns (adjusted for risks), reputation of the mutual fund house/firm and the terms and conditions.

Why ELSS funds are beneficial for your portfolio

Now that you know what is ELSS and know more about investing in these schemes, there are various benefits in store.

·        Lower Lock-In Period- ELSS investments come with 3-year lock-in periods which are considerably lower in comparison to other tax-saving investments like tax-saver FDs which have 5-year lock-in periods, PPF which has a 15-year lock-in period and NSC which has a lock-in period of 6 years.

·        Tax Savings- ELSS tax saving mutual funds will help you save considerably on your tax outgo. Investments are eligible for deductions up to Rs. 1,50,000 under Section 80C. Tax efficiency makes these schemes great options for investments.

·        Building Wealth- ELSS schemes will help you get inflation-beating returns over the long haul, helping you amass wealth considerably over a span of 3-5 years or more.

·        Professional Management- Unlike many other investment options, ELSS schemes will be managed professionally by market experts. They will naturally aim at ensuring the highest possible gains/returns for their clients.

·        Flexible SIPs- For paying smaller amounts every month instead of a lump sum amount and benefiting from cost averaging and compounding alike, you can choose SIPs (systematic investment plans) for amounts as low as Rs. 500 a month.

Of course, you should take a closer look at the market performance of the ELSS scheme that you have chosen along with its returns (adjusted for risk) over a sustained time period. Make sure that you shortlist a reputed mutual fund house as well. These schemes will help you earn good returns while helping you save on taxes as well.

You can flexibly continue with the investment after 3 years or withdraw your money as per your convenience or needs. These are some of the reasons why you should choose to invest in ELSS plans.

 

Do hybrid mutual funds actually balance out your portfolio?

Thinking of investing in hybrid mutual funds? Making a choice between debt and equity is always tough and advisors usually advocate investment planning on the basis of the conditions in the market and age among other factors. If you are an investor who does not want to undergo the sheer hassles of making investments in a multifarious product basket which has to go through rebalancing periodically, hybrid funds are your best option.

Deploying investments in hybrid mutual funds India will help you tap into the potential of both debt and equity as per experts. Equity based hybrid funds will have exposure exceeding 65% for equity and the remainder will be allocated for debt. Similarly, debt based hybrid funds will have around 70-75% allocated for debt instruments and the remainder will be deployed across equity. Owing to their unique nature, hybrid funds are also referred to as balanced funds at times.

Vital things worth noting about hybrid mutual funds

Hybrid mutual funds usually come in the form of asset allocation based funds, funds for capital protection and also MIPs or monthly income plans. They offer the best of both debt and equity investments while lowering risks automatically through diversification. Returns have been steady from such funds over the last few years as per reports. They have ensured close to 18% in returns over the last 3-4 years in comparison to 23% of returns enabled by the BSE (Bombay Stock Exchange) Sensex.

There are some hybrid funds which have generated returns to the tune of even 25% or more annually. Over the last 5 years, these funds have performed substantially better than the Sensex by offering 10% or more returns in comparison to a rise of 5% for the benchmark index. These funds usually perform better whenever markets are witnessing difficulties since debt works like a cushion. This makes them better suited towards withstanding any sudden drops/falls in markets. At the same time, when markets rise rapidly, they may not perform as strongly as peers which have 100% equity components.

Rebalancing on the basis of circumstances in these markets also work magnificently for such funds. Balanced funds which function on a 70-30 ratio basis for exposure for equity and debt respectively, work well in this case. Suppose there is a fall in the stock market. The exposure to equity will fall and fund managers will have to purchase more shares for keeping the 70% threshold intact. Debt in this case, offers the safety net. When the market rises and allocation to equity goes up to 80%, managers will be selling 10% of their portfolio in equities and purchasing debt for making higher profits. The debt aspect is managed in a manner that offers less volatility for the investment while lowering overall risks at the same time.

Remember that the chief objective of investing in hybrid funds is diversification which is possible if both asset classes have negative/low correlation. Choose on the basis of your strategy for allocating assets. Equity based funds will be taxed similarly as regular equity funds. i.e. STCG (short term capital gains) taxes will be taxable at 15% and LTCG (long term capital gains) taxes will be nil.

Choosing the best ULIP in India

In this generation of unpredictability and uncertainty, life insurance policies guarantee an agreed-upon sum in case an untowardly proceeding takes place. However, it was soon realized that a small majority of people were more interested in savings and returns during their lifetimes rather than pay a premium towards a plan that only guarantees a sum assured in the event of uncertain death.

This loophole led to the advent of ULIPs that combined the best of both worlds and optimizing profits without having to invest in two different policies. 

What is a ULIP, and how do they work

A ULIP, short for Unit Linked Insurance Plan, is a hybrid between insurance and investment, hence offering you benefits from both segments with flexible options, in effect providing you with a life cover and diversifying your investment for better returns.

What a ULIP does is create a base insurance plan tailored to the needs of the potential policyholder, and provide an additional feature of investing your premiums, just like a mutual fund, in the market to plan your future financial goals strategically.

Unlike standard insurance policies, ULIPs are open-market based investment plans, and based on market performance; the policyholder reaps its benefits. However, contrary to popular belief, ULIPs are not full-fledged stock market investments, and, in a way, grow steadily and minimize risks subject to stock market volatility wherein a small portion of your premiums are set aside towards life insurance. The rest is invested.  The best part about this is that the policyholder does not have to involve himself/herself in the “where to invest” part. 

What are the risk factors involved

Although the risk factors are not as high as stock market investments, the “Where to invest” segment is customizable depending on the policy holder’s risk appetite. If the policyholder wishes to minimize risk and does not expect sudden bursts of profits and would instead go for steady growth, he/she may choose to invest in low-risk debt funds. Equity investments are better suited for investors who are aggressive with their investments. 

Do ULIPS qualify for tax saving benefits

ULIPS are exempted from tax under section 80C of the Income Tax Act, 1961. Similarly, the pay-off amount upon maturity is exempted under section 10(10D) of the Income Tax Act. 

What establishment should I opt to invest in a ULIP

There are a plethora of choices available for an investor in the markets today. Touted as one of the best investment-linked insurance providers in the country, Edelweiss Tokio offers you a range of ULIP options to choose from based on your requirements to suit your needs.

With low premiums and strategically designed flexible payment schedules, Edelweiss Tokio makes sure you are protected at all times.

The company also gives you the flexibility of switching between funds based on circumstantial dynamic changes so that you do not miss out on optimal conditions and better performing funds at any given point of your tenure.

Happy investing!

 

 

International Mutual Funds can provide good returns if strategically chosen

International mutual funds can pay off in terms of good returns in the long run, provided the investment strategy is right. Overseas mutual funds are the ones which make investments in foreign entities or companies. They are also called foreign investment mutual funds in some cases. These may come with higher exposure to risks although the chances of obtaining attractive returns may also be higher. Mostly, these are preferred as good long-term investment alternatives. 

Diversifying the portfolio is a must for hedging returns against market risks and taping into new opportunities for earning good returns. Investing in international mutual funds will not only enable greater portfolio diversification, but will also help in lowering losses and gaining higher returns since economic market cycles vary from one country to another. Hence, investments made simultaneously in different markets can pay off in the long run. 

What should you keep in mind while investing? 

Mutual funds investing overseas require you to be a careful and involved investor. They are not suitable for those who are mostly passive investors since there is an element of consistent and continual tracking of markets across the world. Those investing in international mutual funds should be absolutely certain about their investment objectives across both short and long durations beforehand. The track record of various global funds should also be carefully ascertained prior to investing.

Mutual fund foreign investments usually come with specific risks linked to fluctuations in rates of currency exchange. For example, if the fund is majorly investing in the USA market, then if there is a fall in the rupee value, then you will have higher rupees for every dollar you have invested in. Similarly, if the rupee value goes up, then there will be fewer rupees available for every dollar that you have invested in. In the latter scenario, the net asset value (NAV) will come down while in the earlier scenario, it will naturally go up. At the same time, you should also keep in mind that economic and socio-political changes and decisions in several global economies may impact performance of mutual fund investments. Hence, keeping a tab on market trends is a must for investors in international mutual funds.

Should you invest?

By tapping into multiple global economies, you may garner higher returns for the long haul while diversification of the portfolio also spreads out the risks considerably. However, you should make sure that you conduct thorough research on the funds you are interested in, their performance and the returns they are providing, before signing on the dotted line. Keep in mind taxation issues as well since hybrid funds majorly invest in companies in the domestic market and the remaining portions in global markets. As a result, returns garnered from the same are mostly subject to LTCG (long term capital gains) taxes.

However, international mutual funds have historically performed well over the years as per several reports. You should select plans across markets where the stock markets are properly developed and zero in on those markets which have suitable corporate governance. Invest in countries which have solid legal systems and solid, long-term businesses.

Why Buy Life Insurance for Your Family?

The global health crisis is looming large. The necessity of life insurance is imperative in these unsettling times. It is a financial cushion for many during post-retirement.

Why buy life insurance at an early age?

This is a common thought amongst the younger working group. Investing early can help you build a sizable corpus. It is the right age to explore your finances. You have the benefits of compounding your investment by starting early. You have better access to lower premiums and higher coverage.
Why buy life insurance is a question that often ponders your mind.

It justifies the following reasons:

• Early unexpected death
• The longevity of your life with more liabilities

A financial Instrument

A life insurance plan covers long-term expenditures, such as:

• Financial support for the family at the time of your death
• Meet expenses for your children's education
• Savings for your post retirements
• Financial stability at times of illness or accident
• Support other contingencies and requirements

Who is in need?

Anyone who is a breadwinner requires life insurance. The amount depends on family size and lifestyle. Choose the right plan, depending on your affordability and your needs.

The plan enables you to fill your different needs. It is the right tool to help you settle down in life in your 30s.

There are options to choose if you start to invest early in life. The term plan and permanent plan are two main features. The term plan covers anywhere from five to 30 years. It is meant for a set term. It allows death benefits to beneficiaries in case of untimely death during the term. A term plan is known for its lower premium.

In a permanent plan, the premium is paid throughout your life. Thus, the plan covers you as long as you pay the premium. The plan does not expire. It has both death benefits and savings benefits.
Some term plans can be converted to a permanent plan. The permanent plan is favorable to tax treatment.

In the Right Direction

The majority of the consumers agree that they enjoy life more by financially protecting their loved ones. There has been an increase in awareness of insurance products.

A survey conducted recently showed an awareness of term products up to 50% among the millennial parents.

Life Stage Goals

Parents achieve a few milestones in their various stages of life. A sound financial plan gives protection to:

• Support for higher education for their children
• Other expenses, such as children's marriage

Children are the center of a family's financial planning. A recent survey reveals that childbirth is the most significant factor in buying an insurance plan.

A total protection plan can:

• Replace income that is lost through an untimely death. This applies to dependent adults like parents and adult children
• Able to cover funeral and burial costs
• Beneficiaries can inherit the policy benefits

Run Your Company from Distress

Besides protecting the family, life insurance caters to businesses. The untimely death of a key employer can cause businesses to close down. A company-owned protection plan helps to keep business afloat after the death of the owner. The insurer pays the death benefits to the company. The benefits can be utilized to pay debts or cover other losses.

Story of Peter's Company

Let us see how Peter's company survived. Peter owned a company in his 20s that was at its cutting edge. He had many employees under him, but he was an integral member of the team. He was the brain behind the breakthroughs of the company. Soon the company realized that it would suffer financial loss in his absence. Peter decided to invest in a plan to protect his company. As things began to take shape, Peter had cancer. He died within a few years of his policy into effect. The company's sales plummeted soon after his death. The death benefits of the company owner helped the business to run for the next 12 months. A new replacement for Peter could be done, and business was back on track.

This story should strike a chord in considering buying a policy.

A brief tax guide to debt mutual funds

Investing in debt mutual funds equates to varying risk levels, depending on the type of fund chosen and maturity among other aspects. Debt funds naturally have risks related to interest rates and credit risks, making them slightly riskier in comparison to bank fixed deposits and the like. Liquid funds are often chosen by people with investment horizons ranging between 3-4 months to a year or so while 2-3 years is usually chosen for short-term bond funds. Dynamic bond funds may be suitable for investment periods of 3-5 years.

Debt mutual funds can be smartly used to enhance your income and supplement what you earn from your salary/business. You may also invest a portion in debt funds for liquidity purposes. They may also be good avenues for those investing for retirement. Debt mutual funds are usually considered safer bets in comparison to equity investment funds.

Some key aspects worth remembering

You can expect comparatively lower returns from debt mutual funds in comparison to the riskier equity fund investments. Here are the returns that you will be getting:

• Income that you get in the form of interest.
• Appreciation of capital on the basis of market changes.

Debt funds usually have various types which are sub-divided on the basis of the instrument in which the investment is made. Some of the commonly preferred types include liquid, floating rate, ultra short term and corporate bond funds among others.

Taxation in case of debt mutual funds

Taxation upon debt mutual funds depends on several factors including the various types of funds in the market. There are two kinds of taxes imposed on these funds, namely Long-Term and Short-Term Capital Gains tax.

• Short-term- The debt fund that you hold for a period which is lower than 3 years will be classified as a short-term investment. This will be worked out on the basis of your specific income tax slab. Suppose someone earns approximately Rs. 12 lakh annually and based on the prevailing tax slab, the rate of taxation will be 30%. Now, consider that Rs. 1 lakh was invested by this person in debt funds for a tenor of 2 years. Since the period is lower than 3 years, the returns (interest) earned from this particular investment will be treated as short term capital gains. They will be taxed as per the person’s income tax slab, i.e. 30%.
• Long-Term- If you hold a debt fund for a period exceeding 3 years, it will be worked out as a long term investment. The taxation will be under long term capital gains and the rate will be 20% with indexation. There will be an additional 3% cess levied, taking the overall rate to 20.90%.

As can be seen, taxation varies from one person to another, depending on the type of debt fund invested in and other factors. Make sure that you read up on taxes, associated costs and other vital aspects of debt mutual funds before investing.

Large Cap Funds - Key Features & Investment Tips

Out of all the other funds that operate in the mutual fund market, large cap funds can be termed as funds with the excessive potential to capitalize your investments. This is because these funds invest in equity funds that are associated with the big companies in the trade market. Here are some of the key features which you must bear in mind before investing in Large Cap Funds:

1. Stability: Large cap funds offer better stability in returns and gains as these usually deal with large companies who are hardly affected by the changing market dynamics at all times of the year. 

2. Payments: Investors of large cap funds enjoy the benefit of receiving dividends even if the rate of growth of the company does not stand out on its expectations. Moreover, these dividends are often paid by the company to investors as compensation value for underperformance of their funds. Thus, people who are seeking regular cash flows can invest in these funds to earn from a new source of income. 

3. Safety and security: Since large cap funds invest in big companies that are quite popular in the media, the information and queries related to it can all be found easily through the internet. You can easily keep an eye on the market dynamics and the fund performance by following up on the updates online. Thus, you can be assured that your investments are in safe hands. 

4. Lower Risks: When investments are made in big companies with a well-renowned name, it does not matter how long you have been investing or its tenure. This is because gains will automatically start flowing in, thus, imposing fewer risks on your investment horizon. Moreover, the Net Asset Value controlling the risks shows steadiness which you will hardly find in low and mid-cap funds.

After having discussed the key features of large cap funds, let us now look at some of the investment tips that will prove to be beneficial in the long run.

1. Before investing in large cap funds, do check out its costs and expense ratio. The percentage of the asset under management must also be kept in mind.
2. Since these funds are long term investment plans, you should only consider investing in such funds, if you have enough time to reach your financial goals.
3. Holding onto long term investments will make your investments subject to long-term capital gains and thus, you can benefit from getting 5% off on the payment of taxes.
4. Do not keep your expectations too high when you are going for large cap funds. Even though these funds take time to yield valuable returns, they never let you down from giving you a dividend.

Well-established companies that have secured a firm position in the market will hardly suffer during the fluctuating market rates since their foundations or the base to connect to a large audience is very strong. As a result, even during inflation or deflation, you can expect a reasonable return if you invest in large cap mutual funds. Thus, these funds can be one of the most preferred investment horizons that you can opt for.

This is the reason why an online term plan draws more attention from customers

A term insurance policy is a type of life insurance policy which offers death coverage to the beneficiary/nominee of the policyholder if the insured dies. A term insurance plan only offers life coverage for the insured for a period of time which is called the term period. If you buy a term insurance policy then you will not get any maturity benefits if you survive till the end of the term period. As you will not get any maturity benefits, the premiums for this type of policy are cheaper than other life insurance plans.

It will be better if you buy a term plan online because no fraud agents will be able to cheat you. There are many other reasons for which buying a term insurance plan is better. Buying a term insurance policy online is very easy; it's like buying something from an online store.

If you buy term insurance plans online then you will be able to explore various websites of insurance companies and it will help you to compare the features, premiums and other things. The most important thing is that the prices of the online term insurance plans are much lower than the offline versions.

The insurer calculates the premiums for a term plan not only considering the term, gender, age or sum assured but they also look for whether the plan is bought online or through an agent. If you buy a term plan online from the website of the insurer then no agent will be involved and neither you nor the company will have to pay any other commission to anyone.

Most of the companies provide online tools for customers. The customers can calculate their premiums, coverage and other things using the online tool. If you choose to buy an online term insurance policy then you will be able to get different features and riders which are not available for many offline versions of policies. The different features and riders include accidental death, terminal illness and premium waivers.

You will have to be careful about some things before buying a term plan online.

When you are going to buy a term insurance policy online, then check if the company is offering policies online in your city. Before filling the application form, make an effort to contact the insurer through their helpline services. They will let you know about the procedures and other important information.

There can be some disadvantages to online policies because there will be terms and conditions. Read all the terms and conditions carefully before buying the term plan online. This is because if you buy a term insurance policy which is not going to provide the benefits and coverage you need, then it will be a very big disadvantage.

Buying a term plan online is a very good option but before buying it, check the claim settlement ratio of the company, additional riders, service quality and add-on covers.

ELSS vs. other investments for saving tax under Section 80C

The full form of ELSS is Equity Linked Saving Schemes and these schemes are a more efficient way to save taxes than many other investment instruments available under the Income Tax Act, 1961 and Section 80C. This article will help you to understand ELSS investments and the advantages in comparison to other investment options.

If you want to invest while saving taxes then the ELSS Tax Saving option is one of the best choices for you. These funds are managed by fund managers who are highly qualified and experienced professionals. You will be able to save taxes up to 1.5 lakh rupees but if the amount of investment exceeds 1.5 lakh then you will not be able to save any taxes according to the Income Tax Act, 1961 (Section 80C).

The two types of ELSS Tax Saving options are Growth Fund and Dividend Payout. If you are searching for a long term investment then Growth Fund is for you where you will be able to realize the value of the fund at the time of redemption. On the other hand, the Dividend Payout has two types of categories, one is Dividend Payout and the other one is Dividend Reinvestment. If you choose the Dividend Payout option then you will get tax free dividends and if you choose Dividend Reinvestment then your tax free dividends will be reinvested for higher returns.

If you want an investment which will offer you higher returns and also will save tax, then ELSS is one of the best options indeed. There are many tax saving options available in the market, such as ULIPs, PPF, etc. However, ELSS is a better choice according to several experts because if you invest through ELSS you will get higher returns on the investment. Experts say that ELSS generates a return of 12% over ten years and more while a PPF generates 8% returns at best.

If you invest through ELSS then the minimum time duration of investment is for three years but if you invest through other investments like PPF, EPF and NSC then the tenure will be longer in comparison.

The ELSS Tax Saving option is so flexible that you can move to any other fund as well. ULIP schemes also offer this flexibility but you will be able to move to other funds that are offered by that ULIP. If you are not satisfied with the performance of your current ELSS fund, you can shift to another one at any time.

You can combine your PPF with ELSS and this combination is a very good strategy to get higher and more secure returns. If you combine these two investment options, then you will get the option to get a higher return through equities and you will also get the safety of government-backed securities.

Know about all the aspects of ELSS investments before you sign on the dotted line. You can also consult an expert who will tell you about all the advantages of this investment and you can tailor the same according to your financial goals.

Key Factors To Note While Investing In A Dynamic Bond Fund

Before addressing the topic, let me narrow down the context of the subject for you. In this article, we will highlight some important aspects of Dynamic Bond Fund to keep in mind in order to get the most out of your investments in the fund market.

Let us first start with the definition of a Dynamic Bond Fund and how it works. A Dynamic Bond Fund invests in debt mutual funds over a specific period of time to yield optimum results irrespective of the prevailing market conditions. It requires you to invest in the fund market and put your trust solely on the fund manager as she will be playing a lead role in the proceedings.

Some major aspects to consider

Being an open-ended debt scheme, Dynamic Bond Funds have higher chances of yielding greater returns than other investment plans. However, they may be highly risky investments at times owing to fluctuating interest rates in the bond market. The role of the fund manager in this scenario is a very important one. The fund manager needs to bid for a specific duration, predicting the interest rates in the market and if everything goes according to plans, then the investments will be worth it.

However, the call taken by the fund manager is not always in sync with market trends and as a result, investors may have to encounter temporary setbacks. You can choose short- or long-term investment plans as well. Long-term investments, while being risky, can help you get better returns as compared to short-term plans. Hence, choose your Dynamic Bond Fund scheme wisely.

A few points to keep in mind

• The first thing before investing in a fund is to check records of past years with regard to fund performance.
• Check how the fund performed at junctures when market values and interest rates changed.
• Do not solely depend on the returns which you are expecting from the investment made in a Dynamic Bond Fund. Take it as your additional source of income.
• Only opt for investing in this scheme if you are planning to invest for a period more than 36 months.
• There are many new funds and offers in the market which may promise higher returns on paper. However, choose funds which are popular or have been doing well over a long period of time.

Investing in Dynamic Bond Funds can be useful in various ways. Keeping aside the risks of the market and the vital role played by the asset manager, a Dynamic Bond Fund could actually help you in meeting your financial objectives faster. However, you need to stay invested for a longer period of time in order to reap good returns on your investment.

Remember that these bonds are inversely proportional to the interest rates prevailing in the fund market. The higher the interest rate, the lower is the value of the bonds and vice versa.

Choosing The Best Term Insurance Plans – Tips That Will Help

Your term insurance plan, as many financial experts would say, is what you make of it. Sounds confusing? While the definition of the best term insurance plan for you and your family may vary, a lot of it depends on you and how you choose the policy in question.

A term insurance plan is the most basic and popular life insurance offering since it offers a lump sum benefit or sum assured to the policy holder’s family in case of his/her untimely or unfortunate demise. The reason behind the popularity of these plans is also because of their comparatively lower premiums for the coverage that you receive throughout your lifetime.

However, while looking for the best term insurance plan, people often end up  making some common mistakes due to lack of awareness more than anything else. Here are some tips that might help you choose the best term insurance plan that meets your needs.

Tips to choose the best term insurance plans:

• Do not skimp on the sum assured for paying a cheaper premium

Many people choose term plans with a lower sum assured for saving on premium payments. However, saving smaller amounts in premium payments every year while sacrificing a lump sum coverage amount, is a mistake that you should avoid by all means. The sum assured should be chosen on the basis of your future requirements and should be enough for covering all your financial obligations in case of your untimely demise.

• Do not opt for a lower tenor

Choosing a lower tenor for the term plan means that you will enjoy coverage only for a shorter period of time. Term insurance plans pay out the sum assured in case of the policy holder’s death during the tenor of the policy. In case the policy holder survives this period, no maturity payment is made. If you wish to get maximum coverage, you should choose the highest possible tenor of the policy for keeping you secure till a higher age.

• Make sure you fill up the proposal form correctly

Many people make the mistake of getting their brokers/agents to fill out proposal forms for term plans. You should endeavor to fill up the form yourself while verifying all the details that you provide in the same. The form is the basis of the final insurance contract on which the policy is issued by the insurer. Incorrect details or misrepresentation of important facts may negatively impact future claims.

• Compare insurance plans before buying

Do not just go for the first available term plan that you see. Make sure that you compare multiple insurance plans and providers before signing on the dotted line. A thorough comparison will help you compare premiums, sum assured/coverage, additional benefits and claim settlement ratio/track record of the insurance company.

These are key tips that will help you choose the best term insurance plan for yourself. Additionally, make sure that you get a term plan at the earliest since you stand to get higher coverage at a lower premium if you purchase the same at a young age.