Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online

An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.

After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund’s rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large out performance over its benchmark and peers in the last couple of years. The fund’s investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfolio in large caps, with 35-40 per cent in mid caps and the rest in small-cap stocks. This allocation does not swing wildly over time.

The fund has had its share of challenging years, with the periods between 2000-01 and 2008-10 seeing it under perform the benchmarks. But it has delivered good three-, five-, ten- and 15-year CAGRs. The returns since inception, at 21 per cent, are not to be scoffed at. The fund’s returns in the last two years have been helped by the significant out performance by the quality pack that it favours. The fund’s overweight positions in engineering and capital-goods majors paid off big in the first part of 2015. So did its underweight positions in financial services and energy.

If you like a fund which has proved itself across not one but multiple market cycles, this one fits the bill.

Invest in ELSS with a long term perspective

Buy Best ELSS Funds Online

Equity linked savings schemes, or ELSS, are actively managed diversified equity funds. As with any equity fund, it is recommended that you have a long-term perspective in mind, preferably five years at the minimum.

Equity, as an asset class, always carries with it the risk of loss of capital. But this risk is pronounced when you invest with a very short-term perspective in mind. For instance, if we look at the 1-year return, the category average is -11%, with the worst performer (Reliance Tax Saver Div) delivering a gut-wrenching -19.22%. However, it all changes when you stay in for the long haul. The very same fund delivered annualized returns of 21% over 3 years, 15% over 5 years and 12% over 10 years.

The figures below shows the average category annualized returns over various years.

  • 15 years: 19%
  • 10 years: 9.69%
  • 5 years: 11.50%
  • 3 years: 16%
  • 1 year: -11%

So even when the 3-year lock-in period expires, you need not exit your investment. If the market dynamic favours you and you need the money, then do so. But otherwise, hold on till the market picks up. Remember, there is no pressing need for redemption once you complete the mandatory lock-in period.

Franklin India Prima Plus

Invest Franklin India Prima Plus Online

In times of high volatility in markets, investing in schemes which have clear focus on quality companies that generate superior return ratios and have wealth-creating strategies in place is a must. Among multi-cap schemes, Franklin India Prima Plus is one such scheme which has not only all the aforementioned attributes, but also delivered consistently superior returns for the past five years.

Like most Franklin schemes, Prima Plus also, to a large extent, follows the process of identifying companies which largely excel on three parameters -impeccable and encouraging past performance (return ratios), future plans in place, and ability to generate sustained wealth in a competitive market. These three parameters form the bedrock of investments for the fund managers.

Fund managers Anand Radhakrishnan and R Janakiraman hardly deviate from these three core investment parameters and pick stocks by employing bottom-up approach. These strategies have paid off and its success can be measured in the long admirable performance of the scheme with respect to its benchmark Nifty 500. A large part of the scheme’s portfolio is dedicated to large-sized companies (70%), while the remaining portfolio of the scheme is spread across mid-sized and small-sized companies.

In the past six months, the scheme’s fund managers have invested in companies which are essentially value themes, such as Apollo Tyres, Aditya Birla Fashion and Retail, Exide Industries and Cadila Healthcare.


MF SIPs give Higher Return

Mutual funds provide solutions to almost all kinds of investment needs.

Mutual funds do not offer any guaranteed returns. Depending on the time horizon of your needs, you can choose liquid funds or debt funds or equity-oriented funds.

If you need this money back within a year, invest the same in liquid funds. For any time horizon of less than three years, you can choose debt funds. You can expect more or less the same returns as of your fixed deposits from fixed income funds.

If your time horizon is more than three years, you can look at balanced funds or equity funds depending on your risk profile. Many think SIP is to generate higher return. SIP helps reduce the average cost over a longer period of time and thus moderates risk. You can choose to invest in diversified equity-oriented mutual funds through SIP for a longer term, say 30 years, to funding your financial goals. You can target to save 20-30% of your income.

All your investments are in mid cap-oriented schemes. Generally, people pick funds based on the past performance and go overweight on a particular theme. In times of volatility, these people fade away from the market. This is not the right approach.

If you don’t have the appetite for higher volatility, do not opt for mid-cap schemes.There is no point in dividing money among four mid-cap funds as well. If you want to diversify, you need to have one or two large cap, one or two mid -cap and one or two multi-cap funds. Restrict your MF schemes to a number where you can track easily. Else, map schemes to your life goals so that you will have more clarity during the testing times.

PPF vs Debt Funds

If you seek tax efficiency with assured returns, Public Provident Fund (PPF) scores over debt mutual funds. Both investment and returns in PPF are tax free, however PPF has a lock in period of 15 years and the returns may just about match government security rates.

Debt funds, should be your choice if you seek higher returns with anytime liquidity. But if held for less than three years they will attract short term capital gains tax as per your income tax slab. Debt funds held for more than three years will qualify for long term capital gain tax of 20 percent, with indexation benefits on your costs.

You need to be aware that just like in equity markets, in the debt market, the prices of different bonds can rise or fall. Therefore returns from debt funds, even short term ones can vary from year to year. But then, PPF interest rates will now change every quarter too

If you are completely averse to taking any risk with your money, then opt for the Public Provident Fund (PPF). It is safe because it is backed by the government.

Best Tax Saving Options in India for 2017

Investing in ELSS Funds to Save Tax is the Best Tax Saving Options in India for 2017.

Top 4 Tax Saver Mutual Funds for 2017 – 2018

Best 4 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. BNP Paribas Long Term Equity Fund

Use Tax Saving Investments to achieve Financial Goals and Get Rich

Saving taxes shouldn’t be the only purpose behind investing in tax-saving investments. By their very nature, tax-saving investments make for excellent long-term investment avenues because they come with lock-in periods. The lock-in periods, which are as long that as 15 years in some cases, force the investor to stay invested and it is this compulsion to stay invested translates into high returns over long periods of time.

It is for this reason that tax-saving investments can help you achieve your financial goals like a child’s education or wedding, a house you want to buy or a trip you want to take to a foreign country or even your own retirement. Staying invested for long periods of times means you keep adding to the kitty gradually and the kitty grows into a sizeable corpus, especially when the power of compounding starts to kick in.

But the catch is that not all tax-saving investments are the same and one size doesn’t fit all when it comes to investing for goals. Different kinds of goals require investments in different types of tax-saving investments. Ideally, different goals should have different tax-saving portfolios for them.

Long-term goals should have higher exposure to investments that have an equity exposure. Here is where ELSS funds can come in handy. Equity is the only asset class that has the potential to generate inflation-beating returns. But at the same time, equity can also be volatile. The stock markets tend to be turbulent and a bear phase can result in the value of investments going down suddenly. This is why equity is best suited for long-term goals. When the investment goal is 10 year away or more, then you can comfortably ride out the volatility that comes with equity. This is what makes ELSS funds the best tax-saving investment that can be used to achieve goals like a child’s education or wedding or one’s own retirement.

On the other hand, for short-term goals, the best investments would be fixed income investments like tax-saving fixed deposits. These FDs have a lock-in period of 5 years and also earn the investor a tax break under Section 80C. ELSS funds have a shorter lock-in, of 3 years, but for a period of 3-5 years equity can lead to anxiety because of its volatile nature. More so when the short-term goal is a non-negotiable goal like buying a house or paying education fees. For such goals, it is best to invest in FDs to save taxes and fulfill the goal.

For long-term goals, an investor can even have a portfolio mix of equity as well as debt tax-saving investments. While ELSS funds can take care of the equity component, PPF can be a suitable debt component to provide stability to the portfolio. PPF is a fixed income investment that comes with a lock-in period of 15 years. A partial exposure to PPF can be used to mitigate the volatile effects of ELSS funds.

The kind of exposure you decide to have in your portfolio would also depend on your income, age and risk profile. But on a macro level, the best way to get more than just tax saving out of your Section 80C investments is by planning them in a way that also helps you achieve financial goals.

Difference Between ULIP And Mutual Funds

Unit linked investment plan (ULIP) and mutual fund are two different forms of investments which confuses most of investors. In broader terms, ULIPs are insurance cum investment product which provides a mix of both insurance & investment in one single policy whereas mutual funds are pure investment product. Both these investments are market linked i.e subject to market risk which means if the performance of the financial market will improve the value of the funds of the investor will also go up and vice versa.

Investor can invest in either of the investment according to his risk appetite. As both ULIP and mutual fund offers variety of funds like equity fund, debt funds, income fund, balanced fund etc. investor can choose to invest in one or multiple types of funds in both these investment according to his risk appetite. Higher the risk higher the returns on investment. Investor can choose to invest either monthly or lump-sum.

We have already described ULIP (Unit Linked Insurance Policy) and MF (Mutual Funds) in detail in our earlier posts. Lets have a brief comparison of ULIP vs MF specific to Indian market.

Point Of Difference


Mutual Funds

Regulators IRDA SEBI
Primary Objective Insurance + Investment Pure Investment
Type Of Investment Good for long term investors Good for short to medium term investors
Flexibility Limited Flexibility – can switch to funds offered by your policy company Very Flexible – can switch to any fund available in the market
Entry Load Huge entry load, from 5 to 40% No or small entry load
Liquidity Limited Liquidity, minimum 5 years of investment required Very Liquid, Sell your MF anytime except ELSS
Tax Benefit All ULIP investments are qualified for tax benefit under section 80C Only ELSS investors are qualified for tax benefit under section 80C
Investment amount Determined by the investor and can be modified later Minimum investment amounts are determined by the fund house
Switching of Funds in portfolio Investor can switch funds by paying switching fees. Like from liquid fund to equity fund etc. Investors are not allowed to switch funds as your investment portfolio is managed by professional fund managers.
Charges Higher charges Low management fee
Expenses High Expenses – As there is no upper limit determined by the insurance companies Low Expenses – Upper limits for expenses is pre – set by the regulators
Portfolio disclosure No legal requirement Quarterly disclosures are mandatory
Transparency Lesser transparency Greater Transparency
Maturity Period Normal maturity period is 5 to 20 years No maturity or lock in period except for ELSS
Lock-In Period 5 Years Lock-In Period No Lock-In period except for ELSS i.e 3 years.
Life Cover Yes No Life cover
Premature Redemption You can premature your policy by paying penalty . But if you redeem your investment in ULIP within 3 years of start of paying of premium, you would be at a loss. The administrative charges are quite high during the initial policy years. If investor redeems his units before the lock in period (normally a year in case of non tax saving mutual funds) exit load has to be borne by the investor. Also you are not allowed to redeem your investments in tax saving mutual funds before 3 years.
Post Maturity In ULIP you do not have the option of staying invested post-maturity. You have the option of staying invested in the scheme even after maturity.
Nominee Receivables higher of sum assured or fund value in case of death of insured. (In some policies both). 125% of the single premium paid in case single premium policy. Nominee will receive the fund value.
Track Record Limited track record as ULIPs are comparatively newer in market Longer history or record of performance helps investors choose the right fund.
Risk Exposure Relatively Less Risky Relatively Risky
Return On Investment Potential return on ULIP is low as risk exposure is low and there is a guaranteed sum assured value which will be paid in case of death of the insured irrespective of funds making money or not. Potential return on Mutual funds is higher in hybrid mutual funds where risk exposure is higher.


We should never forget the basic rules which says never mix insurance with investment as both these serves different purposes. The purpose of investment is give protection to the members of the family in case of death of the insured whereas investment helps you build your wealth. So there is no point investing in ULIPs as this product don’t either give the desired insurance cover or higher returns on investment part. But if you are already invested in ULIP then it will be better to take a term insurance plan to have sufficient life cover.

The decision to invest in mutual fund or a ULIP plan should depend on certain factors like the time period of investment, financial goals of the investor and his risk appetite.

Loan on Investments in MFs

How to get Loan Against MF Investments

In case you need funds for an emergency or for a small period of time, instead of stopping your Systematic investment plan (SIP) or redeeming your MFs, you could consider taking a loan against your units.

From where can you get a loan against your mutual fund units?

You can take a loan from a financier which could be a bank or a non banking finance company (NBFC) by pledging your mutual fund units.

You can pay back the loan at the interest rate agreed with the financier. During the tenure when the units are under lien, you cannot redeem or switch the units.

What is the process?

As a first step you need to execute a loan agreement with your financier. The financier will write to the mutual fund registrar like CAMS or Karvy and ask them to mark a lien on a certain number of units that are being pledged. Financiers typically lend about 60-70% of the value of the pledged units. The registrar in turn will mark the lien and a letter is sent to the financier with a copy to the investor confirming the marking of a lien on the units.

3. How is the lien removed?

Once the loan is repaid, the financier can ask for the removal of the lien and send a request letter to the fund. This request should state the name of the investor, fund, folio number, scheme and the number of units for which the lien should be removed. A financier can also request for a partial removal of lien in which case, lien on some of the units will be removed and these units are `Free’ units. This can happen when financiers receive part payments.

What happens if the investor defaults in making a payment to the financier?

If the borrower defaults in making payment, the financier can enforce the lien i.e. send a signed request to the mutual fund to redeem the units and send the proceeds cheque to the financier.

What is the advantage of a loan against mutual fund (LAMF)?

Loan against mutual funds gives you the option of receiving immediate liquidity against the mutual fund units that you own. It is like an overdraft facility for short term monetary requirements, with a relatively shorter tenure than other loans. It is a beneficial monetary tool for those looking to leverage their otherwise idle mutual fund investments, and also raise capital quickly for short term financing needs. You need not sell your mutual fund units, nor is your ownership of the fund units divested after pledging them for a loan.

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities.

Basic information on Mutual Funds

People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal.

Functioning of Mutual Funds

You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any time for profits. Then you could reinvest your profits.

Types of Mutual Funds

You may choose to invest in several Mutual Funds to spread out your investment. These could range from Equity-linked Funds to Debt Funds. There are different categories of Mutual Funds. These are based on asset class, risk profile, and investment purpose.

Equity/Index Funds: These Funds invest in shares or stocks of companies. Each company has a certain value on the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). The value of Funds invested in these companies is proportionate to the company’s value on the specific stock index. For example, your fund could invest in the stocks of a company listed on the BSE index. Large-cap funds hold shares and stocks of well-established companies. Mid-cap Funds invest in smaller companies that may still be growing.

Sector funds: These Funds invest in equities in a particular sector of the economy. For example, you may invest in a Mutual Fund holding shares or stocks in an automobile or infrastructure company (like Birla SL). Here, the funds are concentrated in the same industry. So they could be very unstable. But suppose you add Mutual Funds from other assets (like debt or gold). You may be able to spread out both your investment and your risk.

Debt Funds: These Mutual Funds invest in fixed-income securities like treasury bills, government securities, and corporate bonds. Debt securities pay a fixed rate of interest. They also have a fixed maturity date. There are different options of investing in Debt Funds. These include monthly income plans, short-term plans, and fixed-maturity plans. You could also invest in short-term, medium-term, and long-term bonds through Debt Mutual Funds. Debt Mutual Funds could be more stable than Equity-linked Mutual Funds.

Hybrid Funds: These funds could allow you to invest a bit in both stocks and bonds (Equity and Debt). Equity Hybrid Funds invest more in Equity and less in Debt. For example, 65% could be in Equity and the rest in Debt. Debt Hybrid Funds invest more in debt and less in equity. For example, about 75% could be in debt and the rest in Equity. Debt Hybrid Funds may protect you when the market is rough due to their debt factor. They include monthly income plans and capital investment plans.

Mutual Funds could be open-ended or close-ended. Most Mutual Funds are open-ended. They let you convert your share into cash at any time. But some funds may not let you convert until the end of the scheme.