The importance of a term insurance plan cannot be stressed enough. The plan covers the risk of premature death and provides your family financial security even in your absence. If you invest in a term insurance plan, you can leave behind a source of income for your family even when you, the breadwinner, are not around anymore. The plan has very low premiums and the coverage that it provides ensures peace of mind. That is why having a term insurance plan in your kitty is always recommended but after understanding the different types of term insurance plans.
Many of you know that you can buy life insurance policies online. But did you know that you can also buy term insurance online through your Smartphones?
The Internet has brought about a revolution in modern society and nowadays almost everyone owns a Smartphone. To make the Smartphone a solution for every need, many mobile applications are available which bring the whole world literally to your fingertips. There are mobile applications for buying term insurance plans as well and the best application among all is the ETMONEY application. Do you know why?
The ETMONEY app – an edge in buying term insurance online
The ETMONEY application has been designed by the Times of India Group which is also the creator of leading brands like Economic Times, Times of India, MagicBricks, Indiatimes, etc. As such, the application is promoted by a reputed brand name which gives it credibility and trust. The ETMONEY application gives you a one-stop platform for investments, loans and insurance. It is a multi-faceted personal finance application through which you can buy term insurance online.
Why buy term insurance online through ETMONEY?
There are various advantages which you can get when you choose to buy term insurance online through the ETMONEY mobile application. These advantages include the following –
- Choice of the best brands
ETMONEY has tied-up with leading insurance companies of the segment to give you a choice of some of the best term insurance plans available in the market. You can find the range of term insurance plans offered by HDFC Life Insurance Company, ICICI Prudential Life Insurance Company, Max Life Insurance Company, etc. when you buy through the ETMONEY application. These companies offer some of the best term plans which ensure that you get the best coverage. You also get the choice of different types of term insurance plans and you can choose the plan which suits your needs.
- Simple online process
Did you know that buying term insurance online took only a few minutes? The ETMONEY application has simplified the way that you buy term insurance online. You just have to enter in your personal details to find the most suitable term plans. You can then compare between the available plans and choose the plan which offers the most inclusive coverage at the lowest premium. Buying the plan is simple as you fill up an online application form and pay the premium online. Once the premium is credited, your policy is issued instantly and you get covered within minutes.
- Personalized assistance
Insurance is a technical concept and you might have questions when buying the policy online. ETMONEY understands this and offers you personalised assistance when you buy the policy through its platform. You can connect with ETMONEY’s expert and get answers to all your queries. Moreover, even at the time of claim, you are promised help from ETMONEY’s team of experts so that you know how to get your claim settled at the earliest.
The ETMONEY app is available both on Google Play Store and Apple App Store. You can easily download the application on your Smartphone and buy term insurance online. The process is simple and you can also choose the best policy from the different types of term insurance plans available on the application. So what are you waiting for? Download the ETMONEY app today and insure yourself under a term insurance plan.
2017 witnessed a major event in the Indian mutual funds space. SEBI launched a re-categorization and rationalization exercise to ensure that mutual funds remain “true” to their label and schemes within the same category share uniform characteristics. For investors, this re-classification of debt funds, equity funds and hybrid funds would translate into simplicity and standardization. This in turn would enable them to pick the correct funds for themselves.
This re-classification exercise had three major type of changes – a mere change in the name of funds, funds which have now moved into another category (resulting in a change in investment style) and funds which have merged with some other fund.
As per the revised classification of debt funds, there are 16 types of schemes in this category. Broadly, there are two ways to look at this classification of debt funds – basis their duration or strategy. Duration wise they can be classified into overnight, liquid, low duration, short duration, ultra-short duration, medium, medium to long and long duration. In this article, we will talk about low duration funds and why they are essential for your portfolio.
Low Duration Fund Meaning
Low duration funds invest in debt and money market securities in such a way that the fund’s Macaulay duration is between six months to a year. The maturity period of these funds lies somewhere in between the new classification of debt funds. They have a higher maturity duration than overnight, liquid and ultra-short duration funds but shorter than short, medium, medium to long and long duration funds.
As per a report published by BloombergQuint, the AUM of low duration funds grew by 8% in the year 2019.
Why it is a good idea to invest in low duration funds?
Debt funds are known as the relatively less risky investment route. However, within debt funds too, the level of risk varies basis the maturity period. Risk and maturity period are directly related. Longer is the maturity period, higher is the risk (due to higher probability of interest rate fluctuations).
As a result, low duration funds are considered as a safer option amongst debt funds. Investors with a lower risk tolerance can easily invest in these funds.
Low duration funds score not only on the risk parameter, but also returns. Compared to other (relatively less risky) investment options such as savings account, etc. these funds have the potential to generate higher returns.
- Supplementary income
These funds can be used as a way to generate a steady stream of income (mix of interest and capital gains). A SWP (Systematic Withdrawal Plan) can help you to fund your financial goals in the 6 to 12 months’ time frame.
Things to keep in mind while investing in low duration funds
- Investment Tenure
Low duration funds can give you the optimum results provided your investment tenure does not exceed one year. It is important to align your investment horizon with the maturity period of the chosen debt fund
- Expense Ratio
Considering that your investment is for a relatively short time frame, the expense ratio can play a crucial role in your net gains. A lower expense ratio will help in maximizing your returns. However, this should not be the only selection criterion. It needs to be assessed along with other quantitative (performance track-record, consistency, etc.) and qualitative (fund house reputation, track record of fund manager, etc.) factors.
Always remember that no investment avenue (even FDs) are devoid of risk. A low-duration fund definitely carries lesser risk. However, the word to be noted is “lesser”. Even these investments have three risk components – credit risk, liquidity risk and interest rate risk. You should be mindful of this fact.
- Portfolio composition
It can happen that these funds lend their corpus to risky borrowers in order to enhance their returns. Hence, you need to examine the quality of funds comprising the portfolio. A high amount of low-quality debt is a red flag as a large default will plummet the fund’s value sharply, leaving no or minimal scope for recovery.
Low duration funds can be a great addition to your portfolio. Now that you know everything about low duration fund meaning, suitability and benefits, why are you wasting your idle cash in bank accounts? Remember every penny counts!
Mid-cap Mutual Funds invest in stocks which rank between 101 to 250 in terms of market capitalization. SEBI guidelines mandate these funds to invest a minimum of 65% of their total assets in stocks of mid-cap companies. Generally, the market cap of these companies ranges between 5000 to 20,000 crores.
Mid-Cap Equity Fund Features
Companies in this category are in their “growth” stage. Unlike large-cap stocks (which have already reached their peak and are often market leaders), these companies are yet to reach their maximum potential. Hence, they have the potential to grow at a rapid pace and offer higher returns to investors. It is often said that the mid-cap today can be the large-cap of tomorrow!
Mid-cap stocks are extremely sensitive to market volatility. In their attempt to grow faster, they might invest in riskier instruments. However, compared to small-cap funds they are relatively less risky.
- Investment Horizon
One of the most prominent equity fund features is the volatility faced by them in the short run. Hence, from an investment horizon perspective, holding them for a longer time makes more economic sense. Mid-cap funds require at least 7-10 years to generate their optimal result.
Mid-cap mutual funds do not score very high on this parameter. Owing to a smaller capital base, these funds sometimes suffer from liquidity constraints. The liquidity score (a measurement of the time taken by a mutual fund scheme to liquidate their holdings) of mid-cap funds tends to be on the higher side.
Mid-cap companies tend to be relatively under-researched and hence undervalued. Value investors believe that they can be a great means of long-term wealth creation when the markets correct itself and realize their intrinsic worth.
Are mid-cap mutual funds good for your portfolio
Now that you know the key mid-cap equity fund features, the question arises if they are a good decision for your portfolio. Mid-cap funds are suitable for investors who meet the following parameters:
- Risk Appetite
Investors who are looking for options to grow their wealth faster and have a high-risk tolerance can invest in these funds.
- Investment Horizon
Investors who have long-term financial goals or can remain invested for a long time period (minimum 7-8 years) will be able to make the most out of mid-caps.
As these funds take time to materialize into superior returns, sooner you start these investments, better it is. Hence, younger investors will get more time to remain invested and make higher earnings out of these investments.
However, do not make the below-mentioned errors while picking mid-cap funds.
- Mid-cap funds are a long-term commitment. The long-term outlook is a critical equity fund feature. Hence, while selecting the right mid-cap fund for your portfolio, do not take any decisions basis short-term market outlook.
- Your own asset allocation should dictate your mid-cap choice. Even the best fund will not be able to yield the desired results if it is not in sync with your personalized asset allocation.
- Past track-record of a fund, its star ratings, etc. are important selection parameters. However, you should not depend solely on any one of these factors. All of them needs to be analyzed simultaneously to arrive at the right decision.
- While we all look at numbers, trends and other data points while making our fund-related decisions, we often ignore the qualitative aspects. These factors (fund manager’s experience, portfolio characteristics, AMC’s investment philosophy, etc.) play an important role in a fund’s performance in the long run.
How to buy mid-cap funds online?
If you want to buy mid-cap funds online, you need to complete the KYC process and provide the necessary documentary proof (Photograph, Identity Proof and Address Proof). The KYC process can be done with any intermediary (SEBI authorized) such as the fund house, KRAs or online platforms.
Upon successful completion, you can choose the fund and start investing. It is an extremely simple and hassle-free process.
If you have a strong risk appetite and can bear some short-term pains for long term gains, mid-cap funds are perfect for you. Especially when you can buy the mid-cap funds online from the comfort of your home, the gains on your investment seems even sweeter!