June 9, 2017

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India First Free Online Financial Advisory, India First Free On-call Financial Advisory, Best Free Financial Advisory

Choosing the right fund to invest in via a SIP is very critical to earning high returns. Keep in mind the following factors when deciding which SIP to invest in.

 ➡ Investment Objective:

Before you even start investing in a fund, it is important to know what you are investing for. You need to ask yourself two questions.

1) Are you investing for the short term or the long term? And,

2) what is your risk appetite?

Your investment horizon and risk profile will help determine which type of fund will suit you. For instance if you are a risk-averse investor and want consistent returns, without a tear-jerk reaction, debt funds might be more your thing. However, if you are in for the long haul and are comfortable with market volatility, equity funds should be your investment avenue.

 ➡ Fund type:

As mutual funds are of various types, it’s important to know which type is suitable for your risk appetite. Let’s take a quick look at the types of mutual funds:

Asset-based mutual funds

  • Equity Funds: These funds are further categorised into various types: large cap, diversified, mid & small cap, sector and index funds.
  • Debt Funds: These funds can be further classified based on investment tenure: money market, income and fixed maturity funds.
  • Balanced Funds: These funds are a blend of equity and debt funds and present the best of both worlds to an investor. They counter equity fund’s risky profile by simultaneously investing in debt instruments to ensure steady returns to the investor.

Structure-based mutual funds

  • Open-ended: An investor can enter or exit these funds at any time, without restriction.
  • Close-ended:  These funds are open for investment for a specific time during the scheme’s launch. Once the new fund offer (NFO) closes, no further investments can be made.

 ➡ Historical Performance & Returns:

Carefully study funds before investing in them. Compare funds on the basis of performance over a 3 to 5 year term. A comparison of historical performance will tell you how strong or weak a fund is and whether it can withstand market volatility. Avoid funds that perform strongly when the market is high but collapses as soon as the market also falls. When studying these trends, avoid a myopic view and look at fund’s performance over the long term, say 5 years and 10 years.

 ➡ Expense ratio:

If your research has boiled down to funds that are similar in nature, you can choose among them on the basis of expense ratio. This ratio comprises management fee and administrative costs, and is essentially a fund’s annual fee. Schemes that have higher assets under management usually have lower expense ratios, making them a go-to option.

A difference of 0.5% in expense ratios of two funds may seem negligible but should not be taken lightly. Consider Fund A with an expense ratio of 1.5% and Fund B with 1%. Now, for these two funds to give same returns, Fund A will have to outperform Fund B every single year. While this may seem doable, in the long term, maintaining this performance will be difficult. Simply put, a high expense ratio will pull down a fund’s performance.

 ➡ Entry or exit load:

Earlier, investing in funds invite a small fee in the form of entry load. However, Securities and Exchange Board of India (SEBI) has stopped funds from levying an entry load. So, now, the only time you pay is when you are leaving a fund (also known as redeeming a fund) which is called an exit load, before the exit load period. The fee varies with scheme, investment tenure and amount. For example, if you redeem your fund whose value has grown to Rs 100 at an exit load of 2%, you will only get Rs 98. Exit loads too are regulated by SEBI and all the fund houses have to follow the directives.

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The most joyful life event for every couple is childbirth. While enjoying the moments, most expectant dads feel the stress in the air about putting the family finances in order. It is perhaps the game-changer of the family’s financial planning!

However, it can be dealt with ease with a thorough financial plan. Secure your family with expert financial advice from certified financial planners at online advisory, like Moneymindz. A thorough plan helps you enjoy your parenthood without financial drawbacks. Here are the best money tips straight from experts for expecting dads.

Identify And Evaluate Your Financial Goals

To reach your life goals like buying a home, offering the best education for your kids, buying a car, etc., you should firstly identify and evaluate all of them. Understand how achievable these goals are, given your current financial status.

Estimate expected expenses and assess different ways to reach your goals, after beating inflation. After evaluation, create a thorough financial plan and begin implementing, accordingly. The expert advice helps get your calculations right.

Automate Savings And Payments

Once you have a plan, begin with dedicated savings and move ahead with right investment choices. Automate all the payments so that you do not neglect or miss any. The key lies in sticking to the budget and parking the savings at the right platforms.

Be Prepared For An Emergency

Now that your dependent’s list is increasing, you have to make every possible preparation to deal with any kind of emergency in life. Get a right insurance portfolio with life insurance, health insurance, disability insurance etc, to deal with financial distress that occurs during an uncertainty.

Build an emergency fund and park it at a secured place. If you park your emergency fund in debt funds or liquid mutual funds, your capital would be safe and at the same time, the money grows. If you do not get into any emergency for a period of time, your money has the scope to expand all through the period.

Make Estate Planning

Do your estate planning if you wish to transfer your property and assets to your loved ones, after your death. Yes, you may be young now and feel like you are left with a lot of time in life. But, life can get uncertain at any point and your dependents would suffer if you are not prepared with a Will. In several cases, instead of dependents, the government got benefited because of the lack of a Will.

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As a parent, you must deal with the immediate needs of your kids and should be equally focused on their distant needs, so that you can have a proper plan for their future. Child Future planning is all about perceiving a future for your child and doing the best as a parent. While doing this, you should communicate with your kids to get a glimpse about their future aspirations.

Shaping the future of your child will require a lot of investment on your part- investment in terms of time, money, love, and efforts. However, no parents need to be told how to love their kids or how to understand them, so this blog will only talk about how to best put your money into work to financially secure your child’s future.

1. Start Investing Early For Your Child

She has just started to walk or he is just in pre-school, if you think these moments are too early to start investing for your child’s future, then think again. In fact, when it comes to investing there is nothing like too early but yes there is definitely something like too late. Investing early always give you the biggest edge or benefit of investment, i.e power of compounding. Precisely, early start gives your money time to grow. 

2. Set The Right Goal Amount

You know that your child’s higher education and marriage are definitely on cards and these are big financial goals for you. So how would you decide your goal amount? Just designating any random amount as your monthly saving for your child is not a right approach.

Tip: However, just knowing this not sufficient to set your goal amount. For a proper analysis of your need and goal setting, you can take help from professional financial service providers. They will also help you with right investment products as well. 

3. Give Your Child the Protection Shield

Your child’s future is definitely bright as you will leave no stone unturned but you always need to be ensured about their future’s security Here, insurance is a very sensible step that every parent should take. It gives you the sense of security that whatever financial support you have planned for your child will always be there. Apart from making the regular investments for wealth creation to support your child’s future, you should integrate insurance as well in your children future planning.

4. Always Support Your Child But Somewhere You Have to Stop

Children will always have you at their back, but after a particular age or time, they should become independent as an individual. Don’t over do your financial support. Let your child learn how to acquire financial independence. The only point here is, avoid pushing yourself too much to fulfil each and every financial wish of your child, and most importantly don’t compromise your retirement planning while saving for your child’s future.

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