Mutual Funds Archives - VSRK Capital

November 12, 2021August 18, 2023

Become a Crorepati with 151515 Rule

The title seems to be a calculating mistake or some kind of an exaggeration. But when we talk about the Indian stock markets and its returns, these quants seem to be digestible. One can easily amass a gigantic corpus of Rs 1 crore if you invest only Rs 15K per month. Lets’ discuss the rule of 15x15x15 and the compound interest mantra behind the success of investment king “Warren Buffet”.

The magic of compounding and the statement title can be easily explained with the help of an example further. Assume an investor is investing Rs 15000 per month for 15 years and generating 15% rate of returns. This will result in the accumulated wealth of Rs 1.00 crore (Rs 1,00,27,601). SIP Calculator. Not only this, as per compounding principle, if we apply the same returns and same contribution for 15 more years

i.e. 30 years in totality, the amount which an investor will accumulate increases further exponentially. The rule 15*15*30, as they call, helps you accumulate Rs 10.38 Crore (Rs 103849194). SIP Calculator. Double the time period with doubling the investment amount but the return is tenfold.

This is the power of compounding. As per the rule, if one invests Rs 15000 per month via SIP in equity mutual fund that generates an average 15% returns, the investor is likely to become a Crorepati. The total investments for 180 months of Rs. 15k each turns out to be Rs 27 lakhs. The periodic investments generate the profit of Rs 73 lacs.

Similarly, if the young investor increases the period by another 15 years, the wealth increases 10 times. Thus, amount invested in 30 years is Rs 54 lakhs i.e. Rs 15000 for 360 months and the Profit earned above investments is Rs 9.84 Crore.

This effect clearly says the earlier the better. The sooner one starts investing; the more wealth one can accumulate with time. Love begets love, similarly, money begets money, and its progeny can generate more. Compounding gives a multiplier effect to the invested amount whereby the initial capital gets interest for the first year, and in subsequent years, even the interest becomes the principal for the upcoming years which generates more interest in addition which makes it more powerful and lucrative.

To conclude, we can say that, compounding is a long-term strategy. VSRK suggests mutual funds because of the features such as flexibility of switching from category to other, redemption at any time if required, a high degree of transparency, and most importantly, the simplest means to play in the equity market. To take advantage of compounding, all you can do is to start investing in the early years of life.

October 7, 2021August 18, 2023

Why do you Need Blue-chip Funds in a Portfolio?

Every coin has two sides, risk and returns are those which comes with investing in any financial product. The decisions can be personal or suggested by an expert which can be based on age, risk appetite, investment horizon, financial goals, and other vital factors.

Mutual funds are trending, because of sorted risks by fund managers with higher returns than bank savings and term deposits. Fund houses offer different types of schemes, carrying a different investment strategy which are suitable for various needs of individual investors. Blue Chip funds have become “hot pancakes of the Industry”.

Blue-chip mutual funds invest in a few selected large-cap companies with a proven track record and established businesses with some lucrative characteristics attached. The companies in conversation are managed by professionals with sturdy leadership based on business insights. Established business models with market kingpin or one of the top ranked within the industry having verifiable track records. They show profits year on year with uninterrupted dividend payouts. Tend to deliver good returns over the long period, help growing capital to build a huge corpus

The major reasons to support blue-chip funds as an excellent way to achieve long term financial goals such as retirement planning. The dynamism & volatility of stock markets and of course economy needs stable investment returns which are provided by such companies to withstand the market hush without difficulties.

Reasons to include blue-chip funds in investment portfolio

The blue-chip companies pay regular dividends, which is an excellent way to earn an additional income.
Being a part of the market leaders, Blue-chip investments are financially strong maintaining a balanced debt-equity ratio further reducing volatility.
Investments done in diversified businesses enables to earn income through different streams serving a wide demographic which diversifies risks.
These companies are part of Fortune 500 list, which gives an additional security while investing in a diversified portfolio.
Investing in the Equities among different sectors reduces risks and enhances the returns from the growing markets.

September 22, 2021August 18, 2023

Should I stop SIP at Market High?

The stock markets are making all-time highs. Many think – too fast, too soon! We could sense that all those questions are back such as should I stop my SIPs? Or should I pull out money invested in my funds? Is the time right to add more funds to stocks? Or should invest in gold/real estate? Now the problem arises is that what should be done to find the correct answers for above stated what shall be done. Investing success is about 99% temperament and only 1% about where you invest.

We have huge ocean of investment avenues and various hot ideas that keep floating around, the question is how to react in such times. It is very well said, “Your biggest enemy is yourself.” That’s where thought process of investors comes into picture. Think of a state of mind as a predefined thinking guide but not as a shortcut to meet goals. It is something that makes you behave in a certain manner.

As far as investing and wealth is concerned, the model that works is Asset Allocation. It acts as a FOMO antidote. For your information, FOMO is Feeling of Missing out. At any time, it is difficult to know which investment is best. Asset Allocation allows us to take a chunk of several avenues that is worth investing in and market cycles does wonders.

Any investor rebalances with time, to check that did the portfolio was a thumb-up or a thumb-down. Don’t stress on the positioning of the market, or if product is expensive to get into or get out of. The idea of allocating in various types of investments wherein few can be highly volatile, & others less. Some active, some passive. It helps you diversify which encourages prudence, risk management and good investment practices.

We live in a world of Volatility, Uncertainty, Complexity and Ambiguity. A diversified portfolio, it acts as a cushion from the impact of unknowns. Investor is aware that there is a chance of finding comfort as the other ones are working towards long term accumulation.

It gets you to act. The portfolio is to be rebalanced periodically based on the rules set before, without getting mixed up in present emotions. It helps in getting Behavioral Alpha. Investments when managed well, the alpha is assured. One never pulls out of markets when it’s all-time high. One never stops SIPs. Invest when there is blood around. One should patiently move from one asset to another, without a fuss.

VSRK suggests that even when markets are at all-time highs, our experts tells us to continue investments as per allocations. Be active in SIPs. Rebalancing of asset allocation is better but one can sell the chunk of the money that is needed urgently. For lumpsum investing, consider the kind of a stomach you have in terms of funds and risk appetite.

September 14, 2021August 18, 2023

Never Under-Estimate the Power of SMALL CAP

Over the last two years, in the unfolding Bull Run, small caps have monopolize the limelight. Since April 2021, S&P BSE 250 Small Cap TRI has delivered 106% as of July 2021, thus doubling an investment made in the index. Looking at the long-term figures, the picture is pale. The 7 and 10-year returns of the BSE 250 Small Cap TRI stand at a modest 13.4 and 11.3% p. a. respectively. This tells that the short-term smart performance of small caps may not reflect in the long-term, because of amid market corrections. The investors who are hypnotized by short-term returns from small caps need to put things in perspective with time.

The small-cap segment provides ample opportunities, as seen by the long-term returns of the top funds. Deciding to invest in this cap, must go with a fund that has proved its ability to navigate the funds and returns.

After the crash in March last year due to the pandemic, the segment witnessed an investor evacuation as the markets recover. From July 2020 till February 2021, small-cap funds experienced an outflow of Rs 4,300 crore. Noting, during the same frame, the AUM of the category grew at an annualized rate of 87%, thanks to the mega relay in small caps.

Time and again, whenever investors are fearful, and then miss out on the big Bull Run that follows the crash. Presently, it’s relevant to small-cap funds, where the return-generating periods come in cycles and those who are not invested during the times tend to have a dismal return experience.

The small-cap category has outperformed all the major equity categories in 2020-21. At the end of July 2021, the one-year return of the small-cap category stand at an average of 108%, which is about 30% more than the returns from the mid-cap category, the next best performer. Thus, if you look at the returns over any of the shorter time-frames, the small-cap segment triumphs over all other major categories by a small margin. However, if we look at the other end of the spectrum, one sees that the quantum of outperformance over other categories significantly reduces as we increase the investment horizon.

Despite this, the small-cap segment does provide ample opportunities, as seen by the long-term returns of some of the top funds. Hence, if you decide to invest in this space, you must go with a fund that has proved its ability to navigate this tricky segment.

The investors in this high-volatility segment pay not just in terms of costs but also in terms of high emotional strain from time to time. If planning of investing in same, one must have the ability to digest high volatility. Also, given the recent high returns, moderate your return expectations. Like other equity funds, invest in small-cap funds only through SIPs.

Understand that small-cap funds should play supplementary role in any portfolio with allocation of 10-15%. For most investors, investing in three-four flexi-cap funds would satisfy to provide the necessity to the small-cap segment. Happy Investing.

September 6, 2021August 18, 2023

Difference Between Stocks and Mutual Funds

As the red blood cells contain hemoglobin and transport oxygen. Similarly, the stocks supplies funds to the market for their capitalization. White Blood cells protect the body from infections. Similarly, Mutual Funds protects the market from downfall. Both Mutual funds and stocks are very distinct concepts and prospective the new investor clan often confound these to be similar. If anyone is prospective about the financial market entrance, he/ she has these options to put their funds in. One can choose to park their in equities straightforwardly through the stock market or one can choose the other way out of investing in equities through the mode of mutual funds.

“All the Financial Market’s a body,

The Finance’s a blood,

And all the mutual funds and stocks merely white and red blood cells.”

Shares or stocks are floated by the corporates through Initial Public Offer to raise money for expansion and other operations. The stocks are bought or sold through a trading account. Depending on future goals, any investor invests in ventures by buying their stocks for some period. The investor gets the benefit in the form of enhancement of value of the stock.

Mutual funds are an investment vehicle that pools money from different investors and invest in various assets such as equities, bonds, money market, currencies, derivatives etc. These investment are managed professionally. One can invest in the mutual funds either in the lump sum mode or the SIP mode. The returns generated on mutual funds are distributed in proportion of the units held by the investor.

Difference between Shares and Mutual Funds

In mutual funds, the funds are pooled by the team of professionals and invested in the securities of different companies. It leads to diversification of investment. This type of assortment is not possible with the investment in stocks directly.

Investing directly in shares is a tedious responsibility as a lot of analysis of a venture is to be done, say finding the price worth or future prospects etc. The professional research is done in Mutual funds before investing.

Investing in shares of a firm, investor becomes a part of their growth story and will get dividends as the company performs well. Investing in Mutual funds, purchasing the units, investor is connected to the average growth or progress of all the ventures involved.

Investing in shares exposes to the risk of the particular company, hence it’s more risky. Whereas in mutual funds, the risk is mitigated with the help of bouquet of diverse stocks.

Investing in shares requires good research of the companies which is time consuming. Contrarily, mutual fund has easiness and simplicity attached to it. Because they are maintained by the fund managers.

The basic requirement to invest in shares is Demat Account for the purchase or sale of securities in the Indian financial market. One can invest in Mutual funds directly.

Mutual funds gives higher returns if invested for a longer period of time. With the right strategy of buying, selling or holding any stock, one can earn high in short period as well.

Trading in shares involves brokerage whereas mutual fund investment includes management fees, entry load, exit load, etc.

What to choose?

A common dilemma which all the prospective investors have, is to choose which one is the better. The fact remains that both these avenues are distinctive from each other. One must choose which suits risk appetite and financial goals. Check your risk appetite at VSRK and our executives will help you take the right investment decision.
Therefore, selecting any justified investment will be based on individual’s preference, financial goal and style of investment.

Conclusion

Every investment avenue is favorable in its own way. If selection is puzzling, one is free to contact VSRK. Our professionals help you in selecting the best mutual funds for investment. In addition, you can open a Demat account with us and invest in shares on the basis of our regular research reports.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing

September 3, 2021August 18, 2023

Withdraw Tax-efficient Happiness Post Retirement

Everyone has to retire one day. Some people retire at an early age or some retire at their death bed. Let’s directly switch on a product which will give not only income after retirement but also will help tax planning.

Systematic Withdrawal Plan is a facility for regular cash flow with the help of mutual funds. It gives the investor, the freedom to enjoy life one has always dreamt of post retirement. One can withdraw funds from existing mutual fund outlays at pre-set interludes, be it fortnightly, monthly, quarterly or even annually, which will create a regular cash flow for both certain and uncertain needs. One can plan investments and withdrawals with tax advantage. It gives an investor more potential to gain rewards over a span of time, as one withdraws happiness bit by bit.

A Systematic Withdrawal Plan is a divesture strategy that empowers one to redeem fund units in a planned mannerism, instead of a lump sum sale. Constructively, one can withdraw investments in parts, thereby spawning a rhythmic stream of inflows.

An SWP is the antipodal of a Systematic Investment Plan, wherein one invests in mutual funds in parts. Moving funds from savings to a better performing mutual fund scheme is a SIP, while in an SWP, the movement of funds is back into savings account from already made investments. Alike, investing in mutual funds is easy on the VSRK app, withdrawals are also simple and straightforward on the app.

To execute an SWP, one need to withdraw some part of your investment at periodic intervals. Withdrawal money from investment means selling off or redeeming a chunk of the units one holds. The number of units to be sold depends on the NAV on the date one makes the withdrawal.

The period to start SWPs from one’s own funds need to be conceived well in advance to get the complete benefits. It is advisable not to go for SWP in two conditions, first is when one has cash at hand or when markets begins its downtrend. During such times, one should put money to work to achieve preset goals of wealth creation.

Retirement, the phase of life when incoming paychecks halts, is considered as a favorable time to start an SWP.

SWP acts as a rewards of the systematic investments made during working years. People generally ask a very complicated question that for how long the SWP will last? Ultimately the length of SWP is determined by two main factors. The first is the size of the corpus and the withdrawal amount is the second one. Principally, the progressive the frequency and amount pulled out, the swifter will be the rate of abatement of the corpus.

The uptrend performance of the markets are directly proportionate to milking higher amounts through SWP. Contrarily, if markets are showing downtrend, the radius of SWP may dwindle. Making systematic withdrawals using an SWP allows you to take advantage of rupee cost averaging.

Tax implications of SWP

When any investor makes withdrawals via SWP, it allures taxes based on type of scheme. The tax incidence on SWP depends on FIFO method and the holding period.

SWP initiated from an equity fund in the 1st year of investment, it is coined as STCG. The amount will be taxed at the rate of 15%. Whereas, if initiated after 1 year of investment, it falls under LTCG. Long term capital gains are completely tax-free. We at VSRK always suggests to do an SWP from your equity fund investments upon completion of one year.

Risk averse investors investing in Debt funds shall note that the holding period for debt funds taxation is 3 years. Any SWP initiated from the debt fund within 3 years of investment, it is considered as STCG and when initiated after 3 years of investment, it falls under LTCG which are taxed at 20%. Additionally, you can get the benefit of inflation indexation.

Concluding the words, SWPs can heavily aid in unifying income needs post retirement. In order to achieve the most of blessings, VSRK helps to plan SWP according to your requirements and tax incidence.

August 27, 2021August 18, 2023

SIP vs Lumpsum: Difference Between SIP and Lumpsum?

Investing is putting away savings or surpluses for the future, with a motive to achieve a higher return in exchange for taking on some risk. Investing comes with choices. Apart from selecting different schemes to invest in, one also enjoys the right to choose the method to invest in mutual funds.

An investor comes with an option to either make a one shot investment in mutual funds also termed as lumpsum investment or can design to spread it out over a period of time through a systematic investment plan.

SIPs helps to inject money into any scheme periodically ranging from weekly to monthly or quarterly even half-yearly. Contrarily, lump-sum investments are a single season bulk investment in any scheme. The minimum investment amount also varies. One can start investing in SIPs with as low as Rs.500 per month while generally lump-sum investments need at least Rs.10, 000.

The methodology of investment can make a difference in one’s investment portfolio as well as the returns in the future. Twain SIP & lump sum investments empower investors to securely flair and create wealth through mutual funds. Basically, frequency of investment is the mainly how we can differentiate between SIP and lumpsum methods.

SIPs are more suitable option if an investor is available with small but regular amount of money. On the other hand investors with a relatively good investment amount and risk tolerance, lump-sum investments will be healthier.

Most investors emphasize on SIPs over lump-sum investments for the reason discussed ahead. Busy investors don’t have to monitor the market closely. With SIPs, one gets a chance to enter during different market cycles. One can begin investing in SIPs with as little as Rs. 500 per month, although most mutual funds in India have set the lower limit at Rs. 5,000. VSRK provides SIP calculator to calculate and estimate the returns on their SIP investment. Per unit cost is averaged out over the investment horizon. Which helps wind over market ups and downs with cost levelling. The interest earned on SIPs are reinvested and the compounding effect do wonders. SIPs motivates into the habit of saving frequently.

The market experts do tell that those investors who are capable to invest a huge lump sum amount should recognize market cycles and invest at a market low which will garner high returns after a stipulated time period. Simple funda of buying low and selling high. Resulting in increase in investment value, at market high. Lump sum investment is ideal for Long-term tenure say for 10 years or more. Individuals can also choose to invest for a medium-term with a Debt fund. Lump sum amount should ideally be invested when the markets are already in a slump and is showing growth potentials.

Synopsis:

VSRK says choosing a SIP or a lump-sum investment primarily depends upon investors’ financial condition and requirements. Elements such as income, economic stability, financial goals, and risk appetite are studied for following the route of investment. Smartly, some form of investment is better than none.

July 30, 2021August 21, 2023

How to Beat Inflation with Investment?

Inflation, in simple terms, refers to the increase in the prices of commodities and services. It has a direct impact on the time value of your money. It means that your wealth might not have the same value after a few years. For example, if you are paying INR 20000 as rent for a 3BHK house might increase to INR 30000 in the next five years for the same flat.

There is one thumb rule to understand the effects of inflation. It is known as the ‘Rule of 70’. It says divide 70 by the rate of inflation and it will give you the number of years by when the value of your wealth by 50% of its today’s value. For example, if the current rate of inflation is 5% and you have INR 40 lakhs. After 14 years (i.e., 70/5), the value will be INR 20 lakhs.

Beat Inflation with a Portfolio of Mutual Funds

Mutual funds are a class of assets that has become one of the most popular investment options. The most looked after feature of mutual funds is the benefit of diversification. Mutual funds allow investors the advantage to invest in multiple companies across different industries. It provides a safeguard against the risk of uncertainties. Diversification helps to minimize the risks while at the same time also average outs the returns. So, any losses in any particular sectors are adjusted through high performing stock in the same portfolio.

There are also a large variety of investment options that are available in the market. Growth funds are said to be one of the best performing mutual funds in inflationary periods. Apart from this, other categories help you to reap good returns on your investments. In the past years, equity mutual funds have shown the potential to deliver an annual return of 11% to 14% in the long term. Mutual funds give you 2 investment options. The first is to make a one-time lump sum payment, the other is in the form of SIP. You can make regular investments into best performing, starting with just INR 500 per month.

Conclusion: Making regular investments in mutual fund schemes could be considered one of the best ways to overcome the effect of inflation on your investment. It provides returns higher than the rate of inflation and minimizes associated risk by diversifications.

July 13, 2021August 21, 2023

11 Things You Should Know About SIP Mutual Funds

Investing in markets is one of the most concerning decisions. As a traditional customer, you will think twice before making any large investment. But with the introduction of SIP, now the situations have changed. It is easy and convenient to make investments. Every year, the number of customers is increasing who look forward to bring their investment in SIP mutual funds. In this blog, we will give you a quick some features of SIP mutual funds.

To the customers who are just beginners in the market, SIP is a new word. SIP stands for a systematic investment plan. It is the most flexible way to invest in the market. The best thing about this plan is that you can invest per month rather than one lump sum amount.

Eleven things you should know about SIP mutual funds:-

1. Amount of investment
SIP gives you the right to invest according to your requirements and convenience. You can start your investment with a minimum amount of Rs 100 or Rs 500 per month. A Small Amount of investment will not develop a financial burden on your head can easily maintain your financial balance.

2.Savings
SIP mutual funds can formulate monthly, annually, quarterly, and semi-annually. It develops a sense of saving habits among investors. Your saving habits play a vital role in the circulation of your money. Tax saving schemes also comes under SIP mutual funds.

3.Types
SIP mutual funds are of various types. The most common type is a hybrid mutual fund. A Hybrid mutual fund is the one under which the investment portfolio is equally divided between equity and debt financial instruments. Other types of SIP funds are Flexi SIP, Step-up SIP, Perpetual SIP, etc.

4.Timing of the market
The timing indicates the ideal time frame, where the investors can gain a maximum of the benefit in the stock markets by purchasing more units of mutual funds when the prices are comparatively low. With SIP mutual funds, you can invest throughout the year and get better returns.

5.Investments of recurring nature
You have to make regular deposits, like recurring deposits. However, in RD the returns are linked with the bank FD rates, but in the case of mutual funds, you can invest in different financial instruments that link to market-related returns.

6.Regular investment
Investing in small amounts per month will make you a burden-free and disciplined market investor. You will become smarter about your expenses and start thinking to invest maximum. The regular investment feature of SIP will help you today and in the future.

7.Objective
The main objective of SIP mutual funds is to achieve long-term accumulation of wealth. When you invest through SIP, you invest in a disciplined manner without feeling the stress of market conditions. SIP mutual funds from time to time remind you of your investments and motivate you to move ahead.

8.Safe and sure
Mostly SIP is marked as a safe and sure way of investment and an efficient way to create wealth for the long-term. SIP is generally secure regarding mutual funds. SIP gets stuck to continuous money to earn a fixed percentage of commissions or returns. It makes you worthy of a safe and secure investment nature.

9.Best for the beginners
SIP mutual funds are the best choice for beginners who don’t have experience regarding the market as it averages out the price over some time. The funds in a mutual fund are sub-invested in various sectors. Through this, the investors get the benefit of diversification. You can consult your financial adviser for SIPs which offers several plans for the beginners.

10.Management
Financial experts regulate the SIP mutual funds. These professionals work on improving the returns of the funds. The SIP mutual fund is well managed and provides you with the best service in all possible ways.

11.Investment goal
Most people fail in investment activities due to a lack of market knowledge. SIP provides a wide range of investment options. With these various options, you develop yourself as a diversified and disciplined investor. The most common reason why people start investing is they need to save taxes. If you want to invest in SIP, you must target a specific goal. Determining the aim is an essential factor. It is necessary to know the reason behind your investment in SIP. Attach a money value to your goals. A Mutual fund (SIP) will provide you with the best returns than other investment option.

All the SIP features are present online. Online facilities provide complete services from starting till the end with ease of the internet all these services are working 24*7. Things like child education, marriage funds, home loans, retirement plans are necessary for one’s life. These require proper planning with adherence to the amount of wealth and period time. Each year the value of SIP changes. You have to understand the past, estimate the current values, and come up with future possibilities.

June 16, 2021

Difference Between Growth, Dividend and Reinvestment Option?

The most looked out feature of a mutual fund is the number of options and flexibility it gives to the investors. Your mutual fund (whether equity or a debt fund) provides you with three types of plans: growth plan, dividend plan, and dividend reinvestment. In terms of liquidity management and tax treatment, there are several variations between these proposals. If you are planning to invest in mutual funds, there is one question that will strike you. How does one choose the best option? In this article, we will talk about how one can select a plan that suits him. First, let’s understand the growth plan, dividend plan, and dividend reinvestment plans.

a. Growth Plan

The most basic type of plan is a growth plan, in which the unitholder receives no payment. Whatever dividends or capital gains you earn stay in your portfolio, ensuring that the growth plan, NAV rises with the market.

b. Dividend Plan

In a dividend plan, the dividend is distributed to unitholders in cash. It is a suitable plan when someone is looking for a steady stream of income from mutual funds. Your fund’s NAV would drop to the point that the dividend is paid.

c. Dividend Reinvestment Plan

A dividend reinvestment plan is a hybrid plan that combines the benefits of both growth and dividend investing. The declared dividend is not paid out in cash in the dividend reinvestment but is reinvested in the same fund’s units.

Do you know various investment strategies that can be employed in different investment scenarios? Let us discuss them one by one:

1. If you have a long-term financial plan that includes the Equity Fund

Equity funds carry a higher risk, but they also have higher returns and the power of compounding results in massive wealth accumulation over time. If you opt for dividend pay-outs, it can cause money to be taken out of your account regularly. Any dividend pay-out lowers the NAV, and unless reinvested at a high rate of return, the goal of financial planning is lost. A dividend reinvestment plan is identical to a growth plan. So, it will have the same issue. As a result, a growth equity fund would be more straightforward and ideally tailored to your long-term financial goals.

2. What about a tax-advantaged ELSS plan?

An ELSS is similar to an equity fund. However, it has a 3-year lock-in duration and provides additional tax benefits under Section 80C of the Income Tax Act. Most investors can be unhappy without liquidity because ELSS funds have a 3-year lock-in duration. As a result, a dividend strategy could be a reasonable choice for investors who want to monetize their annual returns. If liquidity is not a concern, consider a dividend reinvestment or growth strategy. A growth strategy, on the other hand, should be favoured. Since dividends are reinvested, the date of reinvestment is the same as the date of investment, and the 3-year lock-in duration is determined from that point forward. As a result, growth strategies would be more successful.

3. When it comes to debt funds, how about deciding on a strategy?

In the case of debt funds and liquid funds, there is a slight difference in the calculation of capital gains tax liability. In debt and liquid funds, the long term is for three years; short-term gains are taxed at a higher rate, whereas long-term gains are not. You can choose the dividend plan and arrange it as a gradual withdrawal plan if you want daily income flows from your debt fund (SWP). It would also save you money on taxes because selling the fund in less than three years would result in you paying the highest tax rate.

Conclusion: Mutual fund strategies shall be developed on the specific liquidity requirements and tax situation of an investor. In most cases, the growth strategy is the better option for long-term holdings. However, if the customer wants a stable income or growth with a stable income, he can opt for the other two schemes.

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Category: Mutual Funds

Become a Crorepati with 151515 Rule

Why do you Need Blue-chip Funds in a Portfolio?

Never Under-Estimate the Power of SMALL CAP

Withdraw Tax-efficient Happiness Post Retirement

SIP vs Lumpsum: Difference Between SIP and Lumpsum?

How to Beat Inflation with Investment?

11 Things You Should Know About SIP Mutual Funds

Difference Between Growth, Dividend and Reinvestment Option?

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