Which SIP Gives Highest Returns?

If you are new to investments and mutual funds is what tops your list, starting with SIP helps you make investment a habit. In a Systematic Investment Plan (SIP), you invest a small amount of money in a mutual fund of your choice on a routine basis. A specific sum of money is deducted from your bank account at predetermined intervals and gets invested in a selected mutual fund scheme. You can choose the frequency of SIP investment that you are convenient with—weekly, monthly or quarterly.  This flexibility associated with SIP makes it quite a sought after mode of mutual fund investment amongst the rookies.

Who is more likely to invest in SIP mutual funds?

  • If you are a first-time investor
  • If you have thought about investing in an equity-linked investment only recently
  • If you have just started your career and do not have a huge sum at your disposal

Why is it better to invest in SIP mutual funds?

SIP investment is in demand, mostly amongst the first-time investors for a number of reasons:

  • Rupee Cost Averaging:
    Mutual funds are subject to market risks. You buy less units when there is a bullish trend and buy more units in the bear market. This way you reduce the cost per unit and, in turn, the overall cost of investment. There is no need to time the market.
  • Low Invest:
    For beginners, you can start by investing in SIP a monthly standard amount of Rs.500. Some funds even let you invest as low as Rs.100 per month.
  • Flexibility:
    You are completely at liberty to start or stop SIP at any point in time. The fund houses have no say whatsoever. You can run more than one SIPs simultaneously. You can choose the frequency of SIP at your convenience.
  • Makes investment a habit:
    SIP creates a habit of regular investment. Under the automated payment option, a fixed amount is deducted from your bank account at predetermined intervals and gets invested in a selected mutual fund scheme.
  • Power of compounding: You get better returns in SIP by means of the power of compounding.
  • Higher returns:
    You get higher returns in SIP as compared to bank FDs, PPF or other conventional investments.

Types of SIP mutual funds:

  • Top-up SIP:
    Here, the investment amount can escalate on a regular interval depending on how well that particular mutual fund scheme is faring. This way, you get an edge by increasing your SIP amount on schemes that are performing well.
  • Flexible SIP:
    You can increase or decrease the investment amount here. Under the shoestring budget, you either cut back on a few instalments or skip it entirely for a few months. Inversely, you can increase the investment amount when you have a considerable amount at your disposal.
  • Perpetual SIP:
    When there is no end-date associated with your SIP investment, you are free to close your SIP as deemed fit. This type of SIP is known as Perpetual SIP.
  • Trigger SIP:
    It is considered to be the best mutual funds for SIP for seasoned investors. They choose their own index level, NAV or a start-date for SIP.

Criteria for choosing the best SIP plans:

  • Fund house reputation:
    Reputation of the fund house is crucial while selecting the best mutual funds for SIP. Choose a fund house that has tactfully handled the lows and highs of the market. A good fund house will not let the see-sawing market scenario exert influence on their investors.
  • Value of assets under management:
    The asset size of Rs.500 crore acts as a standard criterion for choosing a fund.
  • SIP duration:
    The more the duration of your SIP the more are the chances that your investment grows to a considerable amount.
  • Stability of the fund:
    Evaluate the performance (in terms of the return) of the fund you want to choose over the last three to five years. This would give you an idea of the stability of the fund.
  • Know your risk-appetite:
    If you have a high-risk appetite, go for equity funds. For a low-risk appetite, debt funds are a better option.

What are the best SIP plans in 2021?

If you consider SIP investment in 2021, you would want to do a bit of market research. As far as equity funds are concerned, for a 5-year performance, ICICI Prudential Technology Fund offered a 27.95% return and SBI Small Cap Fund offered a 12.83% return. In debt funds, Aditya Birla Sun Life Digital India Fund offered 27.01% and ICICI Prudential Multicap Fund offered a 9.17% return as per the 5-year performance. Choose the best mutual funds for SIP after thorough research.

Conclusion:Returns on SIP depend on how different funds are performing and how a fund manager is balancing the market fluctuation. Choose the best SIP plans based on these factors.

Can I buy mutual funds today and sell tomorrow

Starting from instant noodles to instant money transfer, instant is the new normal—the need of the hour. Why should the money market hang behind? If you want to redeem their money from the market almost instantly, the Securities and Exchange Board of India (SEBI) has introduced a new type of debt funds called overnight funds in 2018.

Ever since there has been a rising demand for overnight mutual funds among those who have a very short investment horizon. These funds are also widely known for being investor-friendly, where you buy mutual funds today and sell them tomorrow.

What are overnight mutual funds?

Overnight mutual funds are a type of open-ended debt funds where you invest your money primarily in overnight assets and securities. You, as an investor, can simply enter and exit an overnight mutual fund within the trading session (9.15hrs-15.30hrs). When a business day begins, the funds are held in cash.  Your fund manager invests in bonds that mature the very next day, that is, matures overnight. This may go on in a circle.

How do overnight funds function?

The two most important aspects as far as overnight fund operation is concerned are as follows:

  • Where to invest

According to SEBI, you can only invest in funds and assets that mature in one day, like collateralized borrowing and lending obligations (CBLOs), overnight reverse repos and other debt/ money market securities. An overnight fund portfolio undergoes changes every single day, incorporating new overnight securities. Here, you cannot invest in deposits or risky debt instruments. The overall asset holding of such a fund is categorised as “Cash and Cash Equivalents”.

  • How to earn

The securities that the fund holds mature overnight. Hence, you cannot earn capital gains by investing in overnight mutual funds. Here, you only receive the interest paid on your debt holdings. Returns on overnight funds show the lending and borrowing rates generated in one day. The rates and conditions in the overnight market for funds determine the returns of overnight funds. 

Features of overnight funds:

The main objective of an overnight fund is to help investors put the excess cash to better use without risking too much. The following features of this fund help achieve this goal:

  • Very short investment horizon
  • The significantly low exposure to risk
  • Buy and sell funds in no time leads to high liquidity

Why trade in overnight funds?

Is it a good time to invest in mutual funds when the market is more volatile than ever? The answer could be yes if it is an overnight fund, because: 

  • When you invest in securities that mature overnight, you do not make any capital gain or loss. Also, these securities hardly renege on interest payments. Hence, their credit risk is almost nil. If you have a low-risk appetite, overnight funds are the best mutual funds to buy now. 
  • A majority of the overnight funds incur an expense ratio below 1%. They are, therefore, considered low-cost.
  • With overnight funds, you are free to enter and exit the investment at your convenience. It, thus, offers flexibility.

So, if you have a query, is it a good time to invest in mutual funds you need to do your research properly.

Who trades in overnight funds?

You may want to buy mutual funds that mature overnight if you:

  • have a very short investment horizon
  • want a risk-free breathing space before you shift investments to equity funds

What are the best mutual funds to buy now?

In case you aren’t sure what are the best mutual funds to buy now, the following criteria may help you choose:

  • A week’s or a month’s return performance of the fund
  • The less the expense ratio the more the return

Overnight funds and taxation:

Tax levied on overnight funds is similar to that of debt funds. If the fund is given up before the completion of three years, the units of that fund are subjected to short-term capital gain tax. In case the fund is held for more than three years, the units are subjected to a long-term capital gain tax at 20%. Dividends are taxed based on income bracket.

Conclusion: Overnight funds allow investors to utilise the excess cash that they have at their disposal in a better and more cost-effective way. However, the only factor to invest should not be your consideration if is it a good time to invest in mutual funds. You can invest in overnight funds if you wish to park it for a short period, even if that means for a day or the weekend only.

How is Sukanya Samriddhi Yojana Interest calculated?

How about an account that financially fortifies your girl child’s future?  That’s Sukanya Samridhhi Yojana (SSY) for you. The Yojana was launched on 22nd January 2015 by the Government of India under the “Beti Bachao Beti Padhao” campaign. Sukanya Samridhhi Yojana is a girl child prosperity scheme—a savings account that helps you pay for your daughter’s higher education or marriage. Deposit a minimum of Rs.250 and you can earn up to 7.60%.

More on Sukanya Samridhhi Yojana

  1. Age-wise important year-marks:
  • 0-10 years: year-mark for opening the Sukanya Samriddhi Account. The age of the girl child should not be more than 10 years.
  • 5 years: Year-mark that allows the first premature closure of the account.
  • 10 years: Your girl child is now eligible to operate the account on her own.
  • 15 years: In order to keep the account going, it is compulsory to deposit money for the initial 15 years.
  • 18 years: Year-marks the second withdrawal, which is up to 50% of the corpus.
  • 21 years: Year-marks the total tenure of the account.
  1. Maximum deposit: Rs.1,50,000
  2. Lock-in period: 8 years (entry age is excluded)
  3. Tenure: 21 years
  4. Who is allowed to open the account: Parents of the girl child on behalf of her
  5. Account opening procedure: Download the RBI authorised Sukanya Samridhhi application opening form or get it from a prescribed bank or post office.
  6. Payment mode: Cheque or demand draft
  7. Documents required: 
  • KYC documents 
  • Daughter’s birth certificate
  •  Photo ID proof of the daughter and the parent/ legal guardian
  •  Two photographs of your daughter
  1. Tax benefits: Non-taxable under Section 80C
  2. Financers to approach: 28 banks and post office

Sukanya Samriddhi Yojana Calculator

You can calculate Sukanya Samridhhi Yojana interest using the Sukanya Samridhi Yojana calculator. The calculator also calculates the corpus your daughter is entitled to at the end of the tenure. This utility tool is basically a formula box where you punch in details like amount deposited, age of the beneficiary, etc. Based on the data provided by you, the calculator displays both the interest and the maturity amount.

Step-by-step guidance to use the online calculator

Here’s how to use the calculator:

  • Type in the deposit amount (not exceeding Rs.1,50,000)
  • Enter your daughter’s age in years (not exceeding 10 years)
  • Choose the investment starting year
  • Choose the duration of the investment

Once you provide these data, the calculator will show you:

  • The age of your daughter at the time of the maturity of the account
  • The year your investment will get matured
  • The maturity amount
  • The interest generated

The mathematical formula

The online calculator displays the interest and the corpus generated on the maturity of your SSY account just by entering the required data. But how does the mathematical formula work? Read through to get an idea:

 A = P(1+r/n)^nt 

Where A = compound interest 

P = Initial Deposit 

r = Rate of interest 

n = Number of time the interest is compounded 

t = Number of years 

Click to know more about SSY Interest Rate

Conclusion

The Sukanya Samridhhi Yojana account is an investment that offers multiple benefits. It secures your daughter’s future in terms of her higher education and marriage, offers one of the highest interest rates and guarantees tax exemption.  The interest generated from the investment is tax-free as well. Sukanya Samriddhi Yojana calculator shows a consolidated account of your investments and returns. With the help of the SSY scheme, the “Beti Bachao Beti Padhao” campaign has gathered speed.

What Mutual Funds Should You Invest in 2021?

Newspapers, TV commercials, social media posts – all communication mediums seem to be majorly abuzz with an offering nowadays: Mutual funds. It has already proved to be one of the most attractive investment options for people with lucrative returns. Mutual funds investments are constituted when an Asset Management Company, in order to buy securities, collates investments from investors – both individual and corporate.

However, the market is flooded with a variety of mutual fund options, all promising the moon for you. The question arises: Which mutual funds should one invest in? In this blog, we give you a lowdown of the top mutual funds in 2021.  

Mutual fund for beginners

Types of Mutual Funds

Mutual funds investments are categorised on the basis of the types of securities they have in their portfolios and the type of return they expect. Some of the types of mutual funds are as follows:

  • Equity funds:
    This is the largest category of mutual funds investing in stocks. This is sub-categorised as small-cap, mid-cap and large-cap, decided by the size of the company invested in.
  • Fixed-income funds:
    These are investments that guarantee fixed return-rate, such as government bonds or debt instruments.
  • Index funds:
    This deals with stocks that correspond with a major market index. Target investors are those who are cost-sensitive.
  • Balanced funds:
    Invests in an amalgamation of different asset classes such as stocks, bonds, money market, etc. Aims at reducing the market risk via diversification.
  • Money market funds:
    These are low-risk, short-term debt instruments, namely government T-bills.
  • Income funds:
    Invests in government debt and other high-quality corporate debts. Aims at creating a steady flow of income for the investors.
  • Global funds:
    Invests only in international assets. It is beneficial when the economy of a foreign country outperforms that of your own country.
  • Speciality funds:
    These are all-encompassing well-known categories of funds.
  • Exchange-traded funds:
    Exchange-traded fund deals with stock exchanges. If you are looking for a cost-effective investment, this is tailor-made for you.

Invest your money like Warren Buffet

What should you consider while picking the mutual fund that works best for you?

  1. Investment objective:
    Different mutual funds have different objectives. A thorough assessment of your long-term financial goal and your appetite for risk is necessary before you make your choice. If your objectives are long-term, then a short-term scheme will not serve the purpose. Also, if your appetite for risk is low, you would like to give high-risk funds a miss.
  2. Fund history: A proper fund history research of the mutual fund is necessary. This gives you a fair idea of how a particular mutual fund has fared during the bear run. You may opt for a fund with a good history of at least 5 years. 
  3. Financial ratios:
    Asses a fund’s risk-return potential. A financial ratio (Sharpe ratio and alpha ratio) does that for you. A fund with a higher Sharpe ratio is better than a fund with a lower Sharpe Ratio.
  4. Expense ratio: Fund houses charge an annual fee, in terms of percentage, from the investors for managing their money. This is called the expense ratio. A higher expense ratio means lower return as it eventually affects the fund’s return.
  5. Performances of the fund managers:
    As fund managers handle your mutual funds investments performance of the fund manager is crucial.

Conclusion:Being aware of the various types of mutual funds options is a vital first step in investing in one. Solid research can help you shortlist the ones tailor-made to your requirements.

Investing in large-cap funds versus midcap equity mutual funds

Equity mutual funds are differentiated into different types based on the market capitalisation of the stock into which the funds invest. The different categories are as follows –

  • Large cap funds which invest in stocks of large cap companies
  • Mid cap funds which invest in stocks of mid-cap companies
  • Small cap funds which invest in stocks of small cap companies
  • Multi cap funds which invest in a combination of large, mid and small cap stocks

Among the different types, large cap and mid-cap funds are quite popular because of their returns. But is investing in both the funds same?

No, it is not. 

Large-cap mutual fund in India is a fund that invests in the stocks of the most established companies of the market, companies which are in the top 100. Mid-cap funds, on the other hand, invest in companies which are in their growth and development stages and are not yet completely established in the market. Thus, the portfolio of both these funds differs greatly and so does the risk-return profile.

Here are some of the similarities and differences of investing in mid-cap and large-cap mutual fund in India –

Similarities 

  • Both funds are equity-oriented funds which are exposed to volatility risks
  • Under both the funds you can get attractive returns through equity exposure
  • Both the funds are exposed to equity taxation

Differences 

Besides these similarities, large-cap and mid-cap funds are quite different from one another. Here are the differences –

Differences 

Understand your investment preference and then select the top-performing large-cap fund or mid-cap fund to invest. Large-cap mutual fund in India is usually considered better as it invests in large and stable companies and hence offers stable returns. On that other hand, returns in a mid-cap fund are volatile. So, you need to choose accordingly. 

To find the top-performing large-cap funds you can visit etmoney.com. Etmoney.com is an online platform which allows easy mutual funds investment online in simple steps. You can visit etmoney.com and find every type of mutual fund scheme to build a diversified financial portfolio. So, understand the difference between large cap and mid cap funds and choose one or both for your portfolio. 

How Aggressive Hybrid Funds Works? Top-performing Aggressive Hybrid Funds in India

Choosing between equity and a debt mutual fund scheme can be a challenge when you want exposure to equity but fear market volatility. Equity schemes invest only in equity and debt schemes only in debt. What if you wanted a combination of both?

Hybrid mutual fund schemes fill in this description. They invest in both equity and debt giving you a perfect balance between risk and returns. Hybrid mutual funds come in two variants –

  • Aggressive hybrid funds
  • Balanced hybrid funds

If you are looking at a higher equity exposure with a little investment in debt, you can invest in aggressive hybrid funds online. Aggressive hybrid funds are those which invest at least 65% of the portfolio in equity and equity oriented securities. Thus, when you invest in aggressive hybrid funds online, you are investing in an equity oriented mutual fund scheme which also has a debt allocation. Aggressive hybrid funds, being equity oriented in nature, give you the benefit of equity taxation. 

How do aggressive hybrid funds work?

Under aggressive hybrid funds, the portfolio is allocated between equity and debt. The fund manager invests 65% to 80% of the pooled portfolio to equity oriented securities. The remaining 35% to 20% of the portfolio is invested in debt and related instruments.

When selecting equity instruments, the fund manager has the autonomy to choose between equity stocks and arbitrage opportunities in the equity market. While equity stocks offer good returns but are volatile, arbitrage opportunities allow fund managers to buy a security at a lower price and then sell it at a higher price and make a profit on such sale. Thus, arbitrage opportunities help fund managers to hedge against inflation and volatility risks.

In case of debt, the fund manager can select any type of fixed income instrument depending on its sensitivity to interest rate movements. 

Thereafter, as the underlying assets of the aggressive hybrid fund perform, the fund offers returns and capital appreciation to investors.

Taxation on aggressive hybrid funds

Before investing in aggressive hybrid funds online, you should know about the tax implication on your investments. 

As mentioned earlier, aggressive hybrid funds attract equity taxation. Thus, they are taxed as follows –

  • Investment into an aggressive hybrid fund does not earn you any tax benefit. The invested amount forms part of your taxable income
  • If you redeem your investment within 12 months, the returns earned would be called short term capital gains. Such gains would be taxed @15%
  • If you redeem your investment after 12 months, you would be eligible for long term capital gains tax. Returns up to Rs.1 lakh would be tax-free in such cases. Thereafter, excess returns would be taxed @10%

Benefits of aggressive hybrid funds

By investing in both equity and debt securities, aggressive hybrid funds give you the following benefits –

  • Good returns

A high equity exposure yields good returns, especially over a long term period allowing you to maximize your investments.

  • Stability

The debt component of the portfolio brings stability, especially in volatile markets when the equity might be underperforming. 

  • Hedging opportunity

By investing in arbitrage opportunities, aggressive hybrid funds allow you to hedge against inflationary trends and volatility in the market.

Best aggressive hybrid funds in India

If you are looking to invest in aggressive funds, choose the best aggressive hybrid funds of India. Such funds would give you the best returns as well as stability. Here are the top five aggressive hybrid funds which you might consider –

Name of the fund1-year return*3-year returns*5-year returns*
Mirae Asset Hybrid Equity Fund20.74%6.85%11.1%
Canara Robeco Equity Hybrid Fund11.4%8.58%10.34%
Tata Retirement Savings Moderate Fund9.28%5.46%11.06%
Quant Absolute Fund16.93%8.47%10.06%
Principal Hybrid Equity Fund6.17%3.08%9.86%

(*CAGR returns as on 16th October 2020)

(Source: https://www.etmoney.com/mutual-funds/hybrid/aggressive-hybrid/68

Investing in aggressive hybrid funds

To invest in the best aggressive hybrid funds in India, you can visit the best personal finance website –  www.etmoney.com. ETMONEY is one of the best personal finance websites because it allows you to invest in aggressive hybrid funds online with minimal effort. The whole purchase process is online and the KYC verification is also done online. Moreover, there are no charges or commissions payable for investing in mutual funds through ETMONEY’s best personal finance website. So, invest in aggressive hybrid funds for a diversified portfolio and choose ETMONEY for investing hassle-free.

How Money Market Funds Works?

Debt mutual funds are suitable for those investors who do not like taking risks and want to protect their capital against the volatility of the equity market. Debt mutual funds are sub-divided into different types of funds based on the asset allocation of the fund and the average maturity of the underlying assets. You can opt for short term or long term debt funds depending on your investment needs.

One type of debt mutual fund is the money market fund. As the name suggests, money market funds invest in securities of the money market. These securities are highly liquid as they are frequently traded by investors. Moreover, money market securities have the maximum maturity period of one year which increases their liquidity. Money market mutual funds are those which invest in such short-term money market instruments. These funds are, therefore, marked by two distinctive features – liquidity and short term maturity.

Features of money market funds

Money market funds have the following features –

  • They invest in money market instruments like commercial paper, treasury bills, certificates of deposits, corporate bonds, etc. 
  • They are liquid and suitable for investors who are looking for a short term investment avenue
  • Money market funds have low risk and provide stable returns

How do money market funds work?

The money that you invest in money market funds is pooled into a corpus and then invested in money market securities. According to SEBI’s norms, money market funds invest in securities which have maximum investment duration of one year. Since money market securities are debt instruments, they pay a guaranteed rate of interest which is the source of earnings for investors. The interest earned on the underlying assets helps in providing capital returns to investors. Moreover, top money market funds also aim at capital appreciation by banking on the interest rate movement in the market. When there is a fall in the interest rates, money market funds reallocate their investments to securities with a high tenure. This increases the fund value. On the other hand, if the interest rates rise, the fund tries to invest in short term instruments to minimise capital losses. Thus, by changing the fund allocation in accordance with interest rate movements, money market funds try to provide capital appreciation to their investors.

Money market fund benefits

There are different money market fund benefits which you can avail if you choose to invest in these funds. These benefits are as follows –

  • Liquidity 

Money market instruments are highly liquid and since money market funds invest in these instruments, they also become highly liquid. So, if you are looking to park your surplus cash for a limited time, you can invest in money market funds and redeem the fund instantly whenever needed.

  • Limited interest rate risks

The risk with debt mutual funds is primarily interest rate risks. This risk increases with higher maturity funds. Since money market funds invest in instruments with a low maturity period, they have minimal interest rate risk and can offer good returns even if the interest rate is fluctuating in the market.

  • No volatility risk

Being a type of debt fund, money market funds do not invest in equity. They invest only in debt instruments which provide a guaranteed rate of return on investments. As such, money market funds have no volatility risks and are suitable for investors who are risk-averse and want capital protection.

  • Ease of choosing STP

STP (Systematic Transfer Plan) is a process by which you can invest in equity in a systematic manner rather than at once. You can invest in the top money market funds and choose the STP feature to allocate your investments to equity at regular intervals. 

Investing in money market funds

To avail money market fund benefits and to invest in the best funds, you can choose ETMONEY.com. ETMONEY.com is an online personal finance platform which allows you to invest in the top money market funds of India with some simple clicks of the button. No commission or fee is involved in buying through ETMONEY.com and you can buy online in a paperless way too. So, if you are looking for a short term investment avenue which is also liquid, choose money market funds and invest in the best funds through ETMONEY.com for ease and convenience. 

SIP is power investments, check out why

Mutual funds give you different investment choices. You can choose from a range of mutual fund schemes each of which has a different asset allocation and risk profile. Similarly, when it comes to the modes of investing in mutual funds, there are two options – 

The lump-sum mode of investment is when you invest a lump sum amount one time into a mutual fund scheme at a given NAV.

SIP (Systematic Investment Plan) mode of investment, on the other hand, is when you invest small amounts at regular intervals (usually monthly) into a mutual fund at different NAVs.

The SIP mode of investment is the best mode of investing in mutual funds. Do you know why? Let’s find out –

What makes SIPs powerful?

When you invest in SIP online, here are the benefits which you can avail –

  1. Affordable and easy investments

SIPs are an affordable way to invest in mutual funds. You can invest as low as Rs.500 per month by choosing to invest through SIPs. This amount is low and easily affordable for small investors too. Thus, investors who have a limited capital to invest can choose the best SIP plans for investing in mutual funds with their limited incomes. Since investment is done monthly, it is affordable and does not pinch your pockets.

Moreover, investing in SIPs has become easy as you can do so online. You can choose to invest in SIP online through the mutual fund house itself. Alternatively, you can choose to invest through ETMONEY, the best investment website, which gives you the benefit of choosing the best SIP plans through comparing. You can simply complete your KYC formality online and start investing in SIP online within minutes through ETMONEY’s best investment website. Thus, besides being affordable, SIPs are easy to invest into too.

  1. A disciplined approach to saving

When you choose to invest through SIPs, you create a disciplined investment habit. SIP investments are usually done in monthly instalments through direct debit from your bank account. Thus, once you start a SIP, you can invest every month in a disciplined manner. These disciplined investments help you create wealth with small investments. Moreover, when you invest regularly, you can build up a sizeable corpus even with the little amount you save.

  1. Compounding of returns

Mutual funds give compounded returns wherein the earned returns get added to your investments to earn future returns. As you keep on investing through SIPs, your investments attract compounded returns and through long term investment, you can generate exponential returns through the power of compounding. For instance, if you invest Rs.5000 every month for 20 years at an average interest rate of 12%, you can accumulate a corpus of Rs.49.46 lakhs through the power of compounding. Amazing, isn’t it?

  1. Rupee cost averaging

When you invest in a lump sum, you should time the market to invest at the right time when the markets are expected to increase. If you invest and the markets fall, you would make losses. In the case of SIP investments, however, timing the market is not needed. Your investments are done at a pre-determined date every month. As such, the NAV on the date of investment is considered to buy the units. Even if the market fluctuates during the year, the effective NAV for your investment would be averaged out over different months. This rupee cost averaging factor helps beginners to invest in mutual funds through SIPs as they don’t have to monitor, track and time the market for the right time to invest.

These features and benefits make SIPs a powerful investment tool. You can, therefore, start your mutual fund journey through SIPs. Alternatively, if you are an existing investor you can start a new SIP or top-up an existing one to save more. Always compare and choose the best SIP plans for maximum wealth creation. The best SIP plans would give you the best and consistent returns and help build up your investment portfolio. To compare between SIPs, choose ETMONEY’s best investment website and invest in SIPs without any additional cost.

Tips to safely buy insurance policies through App

Technology has advanced to such a degree that it has made the world a smaller place. Any information that you need is now available on your computer wherever you are. Even mobile phones have evolved and have become Smart. They are not only used for making calls or sending messages. Nowadays, mobile phones have become an all-purpose tool to help you do multiple things.

Special applications have been developed for mobile phones for every use that you can put your phone too. Buying insurance has also become simpler as there are financial apps especially for your phone. These apps help you buy insurance easily in simple steps.

The ETMONEY app is one such mobile application which allows you to insure yourself. Here are the various uses of the app – 

  • You can buy life insurance through ETMONEY app 
  • You can buy health insurance through ETMONEY app
  • You can even invest in mutual funds and NPS scheme online using ETMONEY

ETMONEY is, therefore, a one-stop solution for your investment and insurance needs and can be easily downloaded on your Smartphone. However, online transactions are prone to cyber-attacks and when you do a transaction through the ETMONEY app, the whole process is online. You should, therefore, follow some safety tips when using the app online. Here are some safety tips which should be practised –

  1. Secured connection

Ensure that you use secured connections when using the ETMONEY app. Use your mobile internet or a trusted Wi-Fi to connect to the application. Your home Wi-Fi or office Wi-Fi would be ideal connection points as they would be secured against possible hacking. Do not use unsecured Wi-Fi connections or connections in public places as they are unsecure and pose a threat to your financial transactions.

  1. Use of firewall or anti-virus 

The importance of anti-virus software and firewalls cannot be stressed enough. These measures protect your devices against cyberattacks. So, if you use a computer, make sure you have installed an anti-malware or anti-virus software on your device. Nowadays even mobile phones carry anti-virus software as mobiles have become multi-functional. Check your mobile device for the inbuilt firewalls. If there are none, buy and install an anti-virus on your Smartphone so that it can smartly thwart possible cyberattacks and allow you to do secured financial transactions.

  1. Use of reputed applications

Ever since Smartphones became popular, the market has been flooded with apps for them. You should, however, download and use reputed apps as they are secured, safe and guard your privacy. ETMONEY is one such reputed application which respects your privacy and guards your data through encryption. You can, therefore buy insurance through ETMONEY app without fear.

  1. Locking the app with a password

Make your app secured with a passkey which would be needed to unlock and use the application. If the app is password protected you can prevent misuse of the app of the leakage of sensitive information. So, opt for passwords when using the app and also change your passwords regularly for enhanced safety.

  1. Create a registered account

When you download the app and open it, it asks you to register yourself using your mobile number. This registration ensures that you become a registered user and can lock the app with a password. So, always create a registered account on the app and use the account to buy insurance policies online.

These safety measures ensure that you can buy insurance using apps without any worry about cyber thefts, frauds or phishing. The ETMONEY is a renowned and secured app which you can use freely for buying insurance. However, the knowledge and practice of the above-mentioned tips would go that extra mile to ensure your safety when conducting financial transactions. So, better safe than sorry, right?

How to select the best liquid funds to invest in India?

Where do you park surplus funds for a short period of time?

The probable answer to this question would be a bank account wherein you can easily save your money on a short term basis before you allocate your savings to other fruitful avenues.  However, bank accounts might not always be a smart choice because of the returns that they give. If you have a current account, the interest rate is zero and your money does not earn any return for the time it is saved in the account. Saving accounts, however, do yield interest which usually ranges from 3% to 6%. But what if you can get higher returns?

Liquid mutual funds are an ideal solution for parking your money for a short time. Liquid fund investments are debt mutual funds which have a low-risk profile and a short-term investment horizon. Liquid mutual funds invest in securities which have a maturity period of up to 91 days thereby giving you an avenue for short-term investments. They have high liquidity, very low volatility, low credit risk and no exit load. You can redeem your investments any time from the online liquid fund and get access to funds whenever you want.

Liquid fund investments are ideal for investing your emergency funds and when choosing an online liquid fund, you should be careful. The following factors should be taken into consideration when picking the best liquid mutual fund for your personal finance needs –

  1. The AUM of the fund

The AUM (Assets under Management) of the fund plays a very crucial role in determining which liquid fund investment you should choose. The larger the AUM of the fund the better diversification the fund would offer. This would diversify the risks and offer better returns. Moreover, if the AUM is large, the returns would not be impacted considerably if a large number of investors redeem their investments at the same time. It is because if there is a redemption pressure, the scheme would have to liquidate its holdings prematurely and suffer a penalty. This penalty would impact the returns generated. When the AUM is large, the impact of the penalty would be spread over a larger fund and the returns would not be impacted greatly. So, choose a scheme with a large AUM.

  1. The expense ratio

Another important consideration is the expense ratio. The lower the expense ratio of the fund the better would be the returns. So, compare the available online liquid funds and choose one which has a lower expense ratio for better returns.

  1. Check the asset allocation

Even though liquid funds invest in debt instruments, the asset allocation of the fund should be checked. You should opt for a fund which has a diversified portfolio. The portfolio holding of the scheme should not be concentrated in a few securities. It should be diversified across a range of securities whether they are treasury bills, commercial papers or certificates of deposits. Moreover, the portfolio should invest majorly in high-rated credit securities. Look for ratings of AAA or A1+ as they denote credit quality of underlying assets.

  1. The fund house

When selecting liquid fund investments, always choose reputed and large fund houses. This is because such fund houses have their reputation to take care of and they take on the responsibility of offering the best returns from their liquid funds. Large fund houses are also expected to have a larger AUM which is important when selecting online liquid funds.

All in all, the AUM, the fund house, the expense ratio and the asset allocation of the fund should be given careful consideration when choosing liquid funds for personal finance. Returns, though a factor, are not the only qualifying criterion. There is not much of a difference in returns among different liquid funds. So, returns should be checked but other factors should also be given priority. 

To make things easier, here are some of the best liquid funds which you can choose for your personal finance needs –

Name of the fundAUM as on 30th June 2020Expense Ratio as on 30th June 2020Portfolio Allocation (credit quality) as on 30th June 20203-year returns as on 5th August 20205-year returns as on 5th August 2020
HDFC Liquid FundRs.99,867 crores0.2%A1+ – 46.09%SOV – 35.94%AAA – 4.7%6.49%6.88%
SBI Liquid FundRs.50,762 crores0.18%SOV – 65.55%A1+ – 48%6.52%6.88%
Aditya Birla Sun Life Liquid FundRs.36,679 crores0.21%A1+ – 58.48%SOV – 28.59%AAA – 13.07%6.68%7.02%
Kotak Liquid FundRs.36,040 crores0.2%A1+ – 47.65%SOV – 31.09%AAA – 12.58%6.49%6.87%
Nippon India Liquid FundRs.30,604 crores0.19%A1+ – 55.81%SOV – 45.17%AAA – 1.72%6.68%7.01%

(Source: https://www.etmoney.com/mutual-funds/debt/liquid/57)

Choose any of these funds and invest your money in the best avenue for a short term period.

Create your website with WordPress.com
Get started