The Indian stock market has touched new heights despite an investment slowdown post demonetisation. This rise in the stock market has resulted in a steady increase in the number of domestic investors. More and more people are choosing to invest their wealth in financial instruments as opposed to saving in cash.

Equity mutual funds are emerging to be a popular method of investment as the money from the equities flows into large stocks that carry more weight on the stock market indices. By investing in equity mutual funds, you can acquire gains and build your savings for your respective financial goals.

Here are 5 useful tips that can help you manage your investments in equity mutual funds in the current equity market.

Invest In Long Term

Equity mutual funds prove to be more profitable when invested in over a long-term period of 3 years or more. This is because the performance of equity mutual funds, when assessed over a longer period, shows better results and returns. If you invest for a short-term period, say less than a year, the equity market’s daily ups and downs will not give you beneficial returns on your investment.

Invest Through SIPs

Due to the high valuation of the equity market, corrections are expected but when these would occur cannot usually be predicted. Opting to invest in mutual funds through regular SIPs means you do not have to time or actively track your investments according to the corrections. SIPs ensure regular investments on pre-determined dates decided by you and allow for cost averaging by buying you more units during market corrections.

Invest In Instalments

In case of steep corrections, avoid stopping your SIPs if you have made lump sum investments. Market corrections in an over-valued equity market can be seen as opportunities for creating long-term wealth. By staggering your lump sum investments into instalments, you can reduce your investment cost and arrive at your financial goal that much sooner.

Reduce Portfolio Risk

Investing in equity mutual funds does not mean that you have to stick to your fixed set of stocks, especially when the equity market is over-valued. If your existing portfolio consists majorly of stocks from the over-valued segment, then you can reduce your portfolio risk by investing in under-valued stocks instead. As mid-cap and small cap stocks face a higher valuation at the moment, a large cap stock and a selection of multi-cap stocks can reduce the risk to your portfolio. Scan through your portfolio and remove any stocks that have a high valuation or are over-priced in the current market.

Avoid Changing Asset Allocation

Equity mutual funds remain relatively attractive as compared to other assets such as bonds, property and gold. While it might seem tempting to change your asset allocation in an over-valued equity market, sticking to equities will afford you better returns over a long term.

With these useful tips in mind, you will be able to navigate your way through the current equity market and make the most of the situation.

Do you wish to save money, yet find yourself falling short of your wishes? Whether you want to purchase your dream car, go on an extravagant holiday, set up your ideal home, or simply secure a comfortable retirement, saving should begin as early as possible. You don’t have to wait until you earn big bucks to begin saving for your dreams. An average salaried person is just as capable of saving as any other as long as you set a careful budget plan. Without having a budget plan in place, you run the risk of overspending on things you might not need. Here are certain steps you can follow to stay committed to your savings goals and set up your finances for the future.

Set Well-Defined, Realistic Goals

First, start by setting up a realistic, end-term goal – what is it that you wish to save the money for? Once you have an answer to this question, you will be able to set a course that leads up to your financial requirements. It might seem daunting if you set too high a goal that might not be achievable as you begin to earn. Instead, divide your long-term goal into multiple small-term goals. Create a budget plan where you save first and spend later after getting your salary. As the legendary investor Warren Buffett has said, “Do not save what is left after spending, but spend what is left after saving”. So, set aside a 30:70 ratio where 30% of your income can be put to savings while the rest can be kept for your monthly expenses. You can also set up automated payments by giving standing instructions to your bank to redirect the necessary amount towards your investments.

Invest In The Right Instruments

Choose your investments based on your goals. For long term goals, such as retirement or building a house, invest your money in a PPF or in equity mutual funds. If you are currently focused on short term goals, such as purchasing a car then investing in liquid funds or a recurring deposit is a better idea.

Maximize Your Tax Benefits

When you start out in your career, saving tax might not be a priority as your earnings may not be too high, or you may not have a thorough knowledge of taxability. However, it is best to start learning about taxations on various instruments as early as possible. You can begin by investing in avenues that offer tax deduction under Section 80(C), such as PPF, EPF, tax-saving 5-year FDs, ELSS, etc. From here you can select your tax-saving investments on the basis of your long term or short term goals.

Buy Life Insurance

Opting for life insurance may not seem like an urgent requirement when you are young. However, a life insurance can take care of unforeseen situations and help you save some money as well depending on the type of insurance you take. While a term life insurance provides high covers for a low premium, it offers you no returns. Instead, try opting for long-term, traditional life insurance plans that include endowments and money-back policies. ULIPs are also a good option as they are market-linked insurance plans that come with a lock-in period of 5 years and offer market-linked returns.

Be Careful With Debt

As you start earning, it might be tempting to avail a credit card and use it for all your payments. However, keep in mind that using a credit card comes with its own set of debt-related pitfalls. If you must use a credit card, make sure you only spend as much as you can repay. Be sure to repay the credit in full rather than repaying the minimum amount due as that can lead you to pay the hefty, remaining sum after a year. Additionally, taking on too many loans at the beginning of your earning career can careen you into a repayment cycle that can often last for years.

Therefore, by keeping track of your monthly expenses on a regular basis is necessary to be able to stick to your savings goals for the year. With proper discipline and careful budgeting, you will soon be able to achieve the financial goals you set yourself.

The Indian stock market has touched new heights despite of short-term blips on account of demonetisation and introduction of Goods and Services Tax(GST) This rise in the stock market has resulted in a steady increase in the number of domestic investors. More and more people are choosing to invest their wealth in financial instruments as opposed to saving in traditional instruments. Recent study suggests that more than 50% of money flowing in equity funds is through systematic investment plans. Also, the shift towards equity funds is largely on account of them being more tax efficient and better returns, as the study suggests.

Equity mutual funds are emerging to be a popular method of investment as it is considered ideal for long term capital growth. As one invests in equity mutual funds, the same gets spread into different sectors, thereby, reducing the risk of loss in the future. Benefits of investing through equity mutual funds include:-

1. Portfolio Diversification
2. Professional Management
3. Liquidity
4. Systematic investment option
5. Capital appreciation
6. Tax benefits
7. Financial goal oriented

Here are 5 useful tips that can help you manage your investments in equity mutual funds in the current market scenario.

Invest In Long Term

Equity Mutual funds are suitable for investors who are seeking long term capital growth. This is because the longer you invest, the volatility and the probability of loss decreases. For instance, HDFC Taxsaver Fund gave a return of 26% over the last 20 years. Let’s say if an investor invested 1 Lakh with them for 20 years, the return would be INR .57 crore. At the same time, if one were to invest the same amount for 10 years, the return would be INR 3.14 Lakhs. Thus, it shows that the longer you invest, the probability of loss reduces as well as the volatility in returns.

Invest Through SIPs,

Systematic Investment Plan(SIP) is investing a fix sum periodically in a fund. Opting to invest in mutual funds through regular SIPs means you do not have to time or actively track your investments according to the corrections. SIPs ensure regular investments on pre-determined dates decided by you and allow for cost averaging by buying you more units during market corrections.

Invest In Instalments

In case of steep corrections, avoid stopping your SIPs if you have made lump sum investments. Market corrections can be seen as opportunities for creating long-term wealth. By staggering your lump sum investments into instalments, you can reduce your investment cost and arrive at your financial goal that much sooner.

Diversify your investments

Investing in equity mutual funds does not mean that you have to stick to your fixed set of stocks, especially when the equity market is over-valued. If your existing portfolio consists majorly of stocks from the over-valued segment, then you can reduce your portfolio risk by investing in under-valued stocks instead. As mid-cap and small cap stocks face a higher valuation at the moment, a large cap stock and a selection of multi-cap stocks can reduce the risk to your portfolio. Scan through your portfolio and remove any stocks that have a high valuation or are over-priced in the current market.

With these useful tips in mind, you will be able to navigate your way through the current equity market and make the most of the situation.

Term insurance is the most basic life insurance policy which helps provide your loved ones with financial security at a low cost. Purchasing term insurance is not only a sound financial decision in terms of a saving plan, but it is also a necessity in order to secure your family’s future and provide for their needs in the unfortunate event of something happening to you. By paying a premium amount at certain intervals, according to your insurance plan, you protect your loved ones from the potential loss of income they may face due to uncertain future events.
When it comes to actually purchasing an insurance plan, you may face several questions regarding the amount of coverage, your need for insurance and the kind of insurer to trust. Keeping these dilemmas in mind, following are 5 factors you must consider before purchasing a term insurance plan –

Market Reputation

Purchasing term insurance is an important financial decision. It is, therefore, essential that you choose your insurer wisely. The reputation of an insurance company should be a big factor in your decision-making process. While conducting your research, you must consider the standing that the company has within the market and whether existing customers are satisfied with their services or not. It takes time to build one’s reputation, and a company with a good reputation would have carved a niche for itself by offering a quality product which is backed by great customer service. A brand that values its customers would be able to build its equity through positive customer interactions in the long run. A company that is customer-centric would understand that the nature of their product is to offer support to families in difficult times by providing a hassle-free process of claim settlement. A reputable company would also have a strong financial record which would afford a sense of security to your investment. This would reflect in their claim settlement ratio, turn around time to oblige a claim and their solvency ratio.

Coverage & Premium

The purpose of term insurance is to provide sufficient cover for all possible expenses which may be incurred by your family in case something were to happen to you. It is a common rule to purchase a cover of approximately 10 times your annual income. Though this is a ballpark figure, it would be prudent to consider various aspects such as ongoing liabilities,non negotiable financial goal, prevailing interest rates on fixed income instruments in the economy, annual income, expenditure and the age factor before settling on an insurance amount. However, it is a common mistake to under-insure oneself which defeats the basic purpose of insurance. The coverage you choose should not be driven by the amount of premium that is required to be paid. It is a wrong approach to buy an insurance based on the amount of premium that you are willing to set aside. Instead, you must look to provide financial security for your family while buying insurance. An unnecessarily high cover is also not advisable as it shoots up your premium outgo.

Tenure & Returns

Ideally, you would buy term insurance for your lifetime or at least until the time of your retirement. It is not advisable to have a cover for a shorter span of time just to save on the payment of premiums. If you have dependents, you could take a term insurance for the duration of which you are not independent of your prime financial responsibilities or until the time your liabilities towards your dependents is over. The coverage should be dependent on the time horizon one intends/expect to run existing liabilities, additionally one must also consider the gap on non negotiable financial responsibilities.

Income factor & Liabilities

The number of members and sources that contribute to a family’s income has a great bearing on the kind of term insurance they should opt for. So the amount of term insurance purchased should depend on the collective income of your family. Individuals in a family tend to have various financial obligations, which could lead to a number of liabilities that they incur. The greater these liabilities are, the larger should be the amount of insurance cover you purchase. This way, the income and corresponding expenses of the family should be analysed while choosing an appropriate insurance amount.

Your needs and requirements

You must assess whether the amount assured to you would be sufficient to meet the requirements of your family in the future. You must opt for an amount which is capable of beating inflation and providing a steady income to the family while allowing them to maintain their lifestyle without making any compromises. The financial condition of your family and their ability to handle finances must also be considered.