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What is Financial Planning

All of us have some dreams in life – be it buying a dream home, a car, children’s education, their marriage, travelling abroad for leisure, retirement, amongst host of others. In parlance to personal finance, all these are financial goals; because after all, along with emotions they carry a monetary value.

You see, for your dreams to convert into reality there’s no other alternative to effective planning.

Our experience narrates that many people often have infinite financial goals with limited income. They don’t know where to start from for achieving these goals and which path to follow. While being ambitious is good, it is vital that you know the path you’re travelling to, for you to reach the desired destination.

What is Mutual Fund and how do they work in India?

Most of us have a large chunk of our savings as deposits in a bank. Besides bank savings accounts, we usually invest in jewelry and real estate (home), the latter being the biggest investment that one makes during his/her lifetime. Most people do not get involved in other kinds of investments as they do not have knowledge about it or they do not have the time to choose the right kind of investments.

This is where mutual funds come in as one of the best and really popular options of investment for all.

The Dilemma Of Choice

Traditional equity funds tend to remain fully invested across market cycles and have delivered great returns over the long term. However, equity markets are cyclical in nature and exhibit intermittent episodes of market fluctuations/sell-offs including occasional large falls. Consequently, many investors tend to not remain invested in equity funds across cycles and instead redeem or stop investing during challenging market periods and miss out on the long term benefits. As a result, investor returns in equity funds have significantly lagged as compared to fund returns. In fact as per our internal study over the period 2003-16, investors lost 6.3% of returns per annum compared to what equity funds on an average have delivered over this period!

Data period : 2003 - 2016, Source: Internal Analysis. Past performance may or may not be sustained in the future Analysis used regular growth plan returns for all actively managed diversified funds for which data was available during the period. All analysis was done using monthly AuM and return data. Equity Funds : All open-ended, actively managed diversified funds for which data was available during the period. Debt Funds : All open ended debt schemes excluding liquid, ultra-short term and gilt schemes for which data was available during the period. Fund Returns: Asset weighted returns for all funds. Investor Returns: Consolidated returns that were realized by all investors adjusting for their inflows/outflows into individual schemes. Returns are compounded annualized for >1yr period

What is a Systematic investment Plan?

A SIP is a flexible and easy investment plan. Your money is auto-debited from your bank account and invested into a specific mutual fund scheme.You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day.

Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.

Mutual Fund SWP An underestimated investment strategy

Systematic Withdrawal Plan (SWP) is a service offered by mutual funds which provides investors with a specific amount of payout at a pre-determined time intervals, like monthly, quarterly, half-yearly or annually.

Why opt for Mutual Fund SWP?

Investors in India, opt for Mutual Fund SWP for either of the two reasons:

I. To meet living requirements; usually after their retirement.

II. For the purpose of tax planning.

Contact Us

For any Tax or Investment related query, contact now. We would be happy to assist you.