Invest in Equity Funds even after Retirement

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The other day, I received a WhatsApp message from a senior citizen whose returns from a fixed deposit have gone down by 25%. This difference has come about between a five-year deposit that he made in 2012, and when he renewed it upon maturity in August 2017.

To those who are just reading the headline numbers on interest rates, this may not make sense. Depending on when you are measuring, interest rates have gone down by 2 or 3%. However, here’s the exact message: "I was being paid Rs 35,352 every month (subject to income tax) enabling me to lead a worry-free life. Now on maturity I have reinvested the amount in the same bank and I will be paid Rs 26,489

The interest rate on his FD may have gone done by just about 2.5%, but his income is down by 25%. In fact, this is an obfuscation in the way reduction of interest rates is announced and carried in the media. A reduction in the interest rate on a particular kind of deposit from, say, 10 to 8% is a reduction of 20%. If you were earning Rs 20,000 a month, you will now earn Rs 16,000 a month. The 2% reduction is an illusion.

Retired from the economy
The move towards a lower interest rate economy, while great news for the economy, is of little relevance to older, retired people. Lower inflation and interest rates, better fiscal management and higher economic growth carry no benefit for them because they are no longer in the earning and accumulative phase of their lives. An older person is not going to get a better job or a higher salary because the economy is growing. That phase of his or That phase of his or her life is over.

However, wishing for higher interest rates is no solution. This yearning is there because we have been conditioned to ignore high inflation, the evil twin of high interest rates. I’m sorry to say this, but the person in the above example is financially doomed. For the last five years, when he was getting Rs 35,352 as interest income and spending it, he was actually eating away his capital. Out of that income, no more than Rs 7,000 to 10,000 was real income. The rest was just the inflated value of the currency.

Here’s the fact that he and crores others ignore: his real income has probably not gone down. If he was spending only his real, inflation-adjusted income, he would probably find that it has actually increased. And how would he have spent only his real income? The answer is, by spending only about 1.5 % of the deposit per year, and letting the rest compound. This is based on the assumption that FD rates are about 1.5% higher than the inflation rate.

Obviously, he would need far more money to do that. Instead of Rs 40 lakh as deposit, he would need more than Rs 2 crore as deposit, which he does not have. There is no complete solution to this particular case. However, even a partial solution can only come from the returns that equity can generate. Real (inflation adjusted) equity returns are actually double or triple that of fixed income. Where a FD may generate 1.5% above inflation, equity will do 3 to 5%.

There is no way out except to take some exposure to equity in a measured, de-risked and tax-efficient way. First, keep roughly three years’ expenses aside and gradually invest the remaining amount into a set of two or three conservative hybrid funds (balanced funds). After three years, you can start withdrawing every year from these balanced funds an amount that is roughly 3 to 4%of the remaining sum.

"If one is to avoid old-age poverty, then this phobia of equity investment in retirement must be gotten rid of. There is no other way."

This will give you an amount that is equal to, or more, than what you are earning from a fixed income deposit today. The best part is that the value of the remaining investment will also grow at roughly the inflation rate. If you can implement this, then there is a virtual certainty that you will not be faced with old age poverty. The icing on the cake is that unlike your deposit interest, this income will be tax free.

SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

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Credit Risk Funds

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Credit-risk funds that invest in securities with lower ratings are gaining popularity among investors as there is a potential for investors to earn double-digit returns.

What are credit-risk funds?

Credit-risk funds are debt funds which have at least 65% of their investments in less than AA rated paper. They generate high returns by taking higher credit risk and by investing in lower-rated papers. Such companies offer higher interest rates and as and when their ratings move up, they offer a benefit of capital gains. The interest risk in these funds is low as most of them have a lower duration. These funds typically have the potential to give 2-3% higher returns compared to risk-free papers.

How do the funds work?

Credit-risk funds make returns in two ways: one, they earn interest income on the securities they hold. Secondly, since they invest in lower-rated securities, if the rating of a security is upgraded, they have the potential to make capital gains.

What is the tax treatment of these funds?

Dividends are exempt from tax, but the scheme has to pay a dividend-distribution tax of 28.84%. Returns you earn within three years of investment are subject to short-term capital gains tax. This will be as per your income-tax slab. After three years, you are eligible for long term capital gains tax at 20% with the benefit of indexation.

How should investors choose a credit-risk fund?

Credit-risk funds have a higher liquidity risk. If a bond with a lower rating in the portfolio defaults or faces a further downgrade, it may be difficult for the fund manager to exit this holding.

Financial planners advise investors to choose large-sized funds in this category. Higher assets give the fund manager better scope to diversify and spread risks. Investors should also look at a fund with a lower expense ratio and make sure the portfolio is not concentrated or has high holdings in any single business group. They should choose a fund manager and a fund house with good experience in managing debt portfolios. Finally, investors should not hold more than 20% of their debt portfolios in such funds, which typically carry higher risk compared to other debt funds.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

UTI Mastershare Fund

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UTI Mastershare Fund
HOW HAS THE FUND PERFORMED?
With a 10-year return of 12.78%, the fund has outperformed both the benchmark index (10.80%) and the category average (11.52%).

Growth of Rs 10,000 vis-a-vis category and benchmark

Growth-of-Rs-10,000
UTI Mastershare Fund has outperformed both the index and peers over the past decade

WHERE DOES THE UTI Mastershare Fund INVEST?
Fund's-portfolio

HOW RISKY IS IT?
riskiness-of-fund

Should You Buy UTI Mastershare Fund?
This is the country’s oldest equity fund and has a decent long-term track record. It is among the more conservative large-cap funds that follow a benchmark-conscious approach to portfolio construction.

While its portfolio is reasonably diversified, it takes large positions in its top picks—mostly index heavyweights. The fund manager, however, is comfortable stepping out of the benchmark index to play in the mid-cap space. She stays away from smaller names though and emphasises on quality. Currently, the fund has overweight positions in technology and auto sectors, and is tilted in favour of financials. Given its conservative style, the fund has remained a mid-rung performer in recent years.

But investors can take comfort in its above-par performance over longer time periods.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Principal Emerging Bluechip

Best SIP Funds to Invest Online

In its near ten year history, this fund has managed to consistently beat its benchmark by huge margins

  • Betting on the future: Principal Emerging Bluechip

The primary aim of Principal Emerging Bluechip fund is to achieve long term capital appreciation by investing in equity and related instruments of mid and small-cap companies. In its near ten year history, this fund has managed to consistently beat its benchmark by huge margins. This fund defined the mid-cap universe as stocks with the market capitalisation that falls within the range of the Nifty Midcap Index. But, it can pick stocks from outside this index and also into IPOs where the market capitalisation falls into this range.

Principal Emerging Bluechip fund’s portfolio is well diversified in up to 70 stocks, which has aided in its performance over different market cycles. On analysing its portfolio, the investments are in quality companies that meet its investment criteria with a growth-style approach. Not a very big-sized fund, it has all the necessary traits to invest with short phases of indifferent performance. However, it will pay off to stay invested in this fund for the long haul.

Launch Date: October 20, 2008
Fund Manager: Dhimant Shah
Benchmark: Nifty Free Float Midcap 100 Index

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

INVESCO INDIA GROWTH OPPORTUNITIES FUND

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Fund Manager: Amit Ganatra and Taher Badshah

Assets Under Management:484 crore

Top Holdings: HDFC bank, Reliance and Indusind Bank

RETURN: 21.31%

A mix of large and mid-cap stocks, style neutral, with 75% of its portfolio allocation to growth, and 25% to value, helped the fund emerge a winner post demonetisation. Buying growth at a reasonable price and rarely buying a high price stock have helped the fund come up with stellar returns. Buying IT as a contra play with stocks like HCL Tech, Cyient and Infosys ahead of others along with participation in IPOs such as Mishra Dhatu, Shankara Building and Apex Frozen helped deliver higher returns.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Mirae Asset India Equity Fund

Best SIP Funds to Invest Online

A common thing in recent post-earnings conference calls of leading companies is the expectation of double-digit volume growth for the next two to three years. Therefore, it will be profitable for investors to spot such companies at the right time and stay invested with them. One mutual fund scheme, which favours such companies after careful examination of return ratios, is Mirae Asset India Equity Fund

Mirae Asset India Equity Fund has performed consistently well by sticking to its investment mandate. In the past three- and fiveyear periods, the scheme has given 13% and 20% returns, respectively, while its benchmark, BSE 200, gave 9% and 13% returns.

Mirae Asset India Equity Fund scheme follows two key principles: one, buying companies with high return on capital employed, and have generated consistent and incremental cash flows; and two, attractive valuations. These factors have played a crucial role in the scheme’s outperformance. It has been largely observed that the scheme has 5-10% higher exposure to large-sized companies than its peers. In buying large-sized companies, the scheme’s fund manager, Neelesh Surana, always associates a lot of importance to the companies’ valuations. In the past six months, the scheme, co-managed by Harshad Borawake, has invested in companies which are value picks, such as Bharat Electronics, Cipla, Marico, and United Phosphorous.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

L&T Emerging Businesses Fund

Best SIP Funds to Invest Online

The Scheme will primarily be a diversified equity fund which will invest predominantly in small cap stocks to generate long term capital appreciation.

L&T Emerging Businesses Fund may have completed just three years since launch, but it has proven itself capable of beating both its benchmark and peers by convincing margins in this period. Its one and three-year returns are 7 and 6 percentage points ahead of the category returns. This is despite the benchmarking to the BSE SmallCap Total Returns Index. Making its debut at a three-star rating, it has climbed to four stars in the last six months. The fund does not pigeon-hole itself into either the growth or value styles of investing but looks to buy good-quality, growth businesses at a reasonable valuation. It has retained a laser focus on mid- and small-cap stocks through market cycles, without leaning on any large-cap exposures to handle deployment or liquidity issues. This makes its performance vis-a-vis peers stand out. The fund remains open to both lump sums and SIPs.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

MNC Funds

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An investor is typically suggested a combination of large-, mid and multi-cap equity funds, in varying proportions, to create a well-rounded equity portfolio.

It is usually recommended that investors stay away from the more exotic offerings such as thematic funds. However, the consistent strong performance of MNC themed funds may be a compelling reason for investors to make space in their portfolio for these funds.

MNC funds invest in multinational companies—businesses that derive a sizeable chunk of their revenue from overseas operations or via exports to foreign countries. Among the MNC-themed funds, only UTI MNC and Aditya Birla Sun Life MNC have been around for a long time. SBI Magnum Global only recently aligned 100% to this theme, moving away from its earlier mid-cap focus with an MNC bias. These funds have shown a high degree of consistency in their returns.

For instance, during the past one year of high volatility in the equity markets, the category delivered a healthy 14.4% return, just behind tech- and consumption-themed funds. Over the past five years, only mid and small-cap funds and energy-themed funds have fared better than MNC-themed funds. Over the past 10 years, this category has topped the charts, outperforming all fund categories including mid- and small-cap funds.

MNC funds have topped the charts
Barring 5-year mid-cap returns, MNC funds have outperformed all categories
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*Includes all thematic funds except MNC funds

These funds have been consistent outperformers because of the quality of the companies in their portfolio. Several of these companies have a technological edge over their peers and are strong global brands that gives them strong pricing power. Most of them perform across market cycles and have superior return ratios.

For these reasons MNC stocks tend to command a premium in the market. It’s all about scale, vision and management bandwidth to expand operations in the right geographies that has helped MNC companies remain relevant in a complex global environment and eventually get rewarded by investors in stock markets

Given the stable fundamentals of their underlying businesses, these funds work best in volatile markets. In general, because MNC stocks tend to be cash-rich companies, they are less volatile when the market’s risk perception is high, helping them generate optimal returns over the long term. For example, in 2008, MNC-themed funds fell by about 44% compared to the S&P BSE 500 TRI’s fall of 57%.

Similarly in 2011, these funds contained the decline far better than the index. The composition of MNC funds also makes them less risky than most other thematic funds. MNC funds are not restricted to specific sectors. They are more diversified and less risky than regular sector or thematic funds. They do not need the extent of active management that other theme-based funds require

Good performance across time periods
Untitled-5
Data as on 3 Aug 2018. 5- and 10-year returns are annualised. Source: Value Research.

Given their dependable longer term performance, should investors consider including an MNC fund in their fund portfolio? MNC funds follow a multi-cap approach, investing across the spectrum of companies

It can be argued that multi-cap funds also invest in some MNCs, thereby providing the necessary exposure to investors.

We would prefer a diversified fund over an MNC fund considering that majority of the stocks in the portfolios of MNC funds find a place in our recommended large-cap or multi-cap funds

In fact, the return profile of MNC funds is not much different from that of quality multi-cap funds, when compared on a rolling-return basis over the long term. The average five-year rolling returns for MNC funds over the past 15 years is comparable to some of the top performing multi-cap funds.

MNC fund can perform the role of a large-cap fund in the portfolio, considering the deterioration in return profile in this category. “In a volatile market, an MNC fund can provide stability to a portfolio. They can be better substitutes to large-cap funds (whose margin of outperformance is shrinking) since large-caps are also meant to contain volatility

The hunt for superior return, it is much more important to focus on the quality aspect of the return, and this is where an MNC fund fits in the investor’s portfolio. Growth and quality are like the accelerator and brakes for a stock. Growth without quality causes severe accidents and quality without growth won’t start the car. It’s all about risk-adjusted returns and that’s where the MNC fund compliments existing large-, mid- and multi-cap funds

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Tata Equity P/E Fund

Best SIP Funds to Invest Online

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Refer annexure for performance of other schemes managed by Fund Manager – Sonam Udasi
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Mutual Fund investments are subject to market risk, read all scheme related documents carefully.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Invesco India Tax Plan

Best SIP Funds to Invest Online

HOW HAS THE Invesco India Tax Plan PERFORMED?
With a 10-year return of 14.58%, the fund has massively outperformed the benchmark index (8.03%) and the category average (10.67%).
Invesco India Tax Plan Annualised-performance

FUND MANAGER
Amit Ganatra
Tenure: 1 month
Education: B.COM(H), CA, CFA

WHERE DOES THE FUND INVEST?

HOW RISKY IS Invesco India Tax Plan?

Wherever not specified, Data as on 31 April 2018.

Should You Invest in Invesco India Tax Plan?
This tax-saving fund has a healthy track record and has consistently ranked in the first or the second quartile in its category. It follows a multi-cap approach with an emphasis on growth businesses. While in the past it had a mid-cap tilt, the fund has maintained a heavy large-cap bias for the some years now. This has resulted in a slight dip in its return profile relative to peers.

The fund prefers to maintain a compact portfolio of around 40-45 stocks, allowing it to take large positions in its high conviction bets with the aim of delivering outperformance. Since the fund’s stewardship has changed only recently, investors may wait for the fund to build a track record under the new fund manager.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich – Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com