Knowledge Base

Goal Based Planning is critical to reach one’s Investment goals. There is nothing like 'one solution' that works for all. The right solution is the one that works for you and it is our job to discover such an investment strategy for you. Goal Based Planning will help you reduce your dependency on luck and market timing.

Getting married, buying a house, going overseas, retiring – whatever stage of your life you are at, we can help you achieve your Investment goals. It doesn't matter whether you have a small amount to start investing or you already have a large portfolio, having a Goal Based Plan in place will help you get the most out of your existing situation. We can help you carve out your Investment goals and design a strategy to achieve those goals, taking into account your investment options and other factors such as inflation, etc.

We focus on your goals and work on areas of your investments to draw a Goal Based Plan that suits your profile. Instead of merely telling you what to do, we work together with you step-by-step, providing easy-to-understand recommendations and helping you implement the same in a timely manner.

A mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

One of the main advantages of mutual funds is they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities. Each shareholder, therefore, participates proportionally in the gain or loss of the fund. Mutual funds invest in a wide amount of securities, and performance is usually tracked as the change in the total market cap of the fund, derived by aggregating performance of the underlying investments.

Mutual fund units, or shares, can typically be purchased or redeemed as needed at the fund's current net asset value (NAV). A fund's NAV is derived by dividing the total value of the securities in the portfolio by the total amount of units outstanding.

An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds. Equity mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography. Normally, equity funds are ideal investment vehicles for investors that are not as well-versed in financial investing or do not possess a large amount of capital with which to invest. Equity funds are practical investments for most people.

Equity Funds are further categorised into :

  • Large Cap Funds
  • Mid Cap Funds
  • Small Cap Funds
  • Multicap Funds
  • Thematic Funds
  • ELSS Funds ( Investment in these funds are eligible for deduction under Section 80C of Income Tax Act, 1961)
  • Hybrid Funds

Debt Mutual Funds mainly invest in a mix of debt or fixed income securities such as Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities of different time horizons. Generally, debt securities have a fixed maturity date & pay a fixed rate of interest.

The returns of a debt mutual fund comprises of :

  • Interest income
  • Capital appreciation / depreciation in the value of the security due to changes in market dynamics

Debt Funds are categorised into :

  • Liquid and Liquid Plus Funds
  • Income Funds
  • Gilt Funds
  • Monthly Income Plans
  • Credit Opportunities Fund
  1. Lumpsum or One time Investment
  2. Systematic Investment Plan (SIP)
  3. Systematic Transfer Plan (STP)

A Systematic Investment Plan or SIP is a smart and hassle free mode for investing money in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future. 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.

Many investors are sitting on money, looking to invest it in an equity or balanced mutual fund. But they are scared to put all of it in one go because the markets are at an all-time high. To arrest the risks involved in investing, one may stagger their investments into equity mutual funds over the next 6-12 months, using a systematic transfer plan, or STPs. In an STP, the money remains invested in a liquid ultra short-term fund till it is transferred to an equity fund. This money earns a return, which is generally higher than that of a savings bank account. STP helps in averaging out the cost of investors.

If investors want regular cash flow from their investments the automatic choice for many are bank fixed deposits or postal deposits. However, declining interest rates on these schemes have made investors worry about their future income needs. Mutual funds have a solution for this, called SWP. What is SWP in mutual fund? SWP or systematic withdrawal plan is a mutual fund investment plan, through which investors can withdraw fixed amounts at regular intervals, for example – monthly/ quarterly/ yearly from the investment they have made in any mutual fund scheme.

The investors can choose a day of the month/quarter/year when withdrawal can be made and the amount credited to investors bank account by the AMC. To generate this cash flow, SWP Plan redeems units of mutual fund scheme at the chosen interval. Investors can continue with SWP as long as there are balance units in the scheme.

Benefits of SWP

  • Flexibility: In a SWP plan, investor has the flexibility to choose the amount, frequency and the date according to his/her needs. Also, the investor can stop the SWP at any point in time / or can add further investments or even withdraw amount over and above the fixed SWP withdrawals.
  • Regular Income: SWP in mutual funds facilitates investors by providing a regular income from their investments. Therefore, this becomes highly convenient and useful for those who need regular cash flow for meeting regular expenses.
  • Capital appreciation: As we can see in the example above, if the SWP withdrawal rate is lower than the fund return, the investor gets some capital appreciation too in the long term.
  • No TDS: For resident individual investors, there is no TDS on the SWP amount.

Who can use SWP?

  • For those looking for regular source of secondary income – The investor who knows what is SWP plan, they know very well that it can be a source of creating an additional income stream from their long term investments. It can help tide over the rising living cost. Therefore, investing for the long term in mutual funds and withdrawing regularly through SWP may be an easy way to create a regular source of secondary income.
  • Those looking for capital protection – Investors who are risk averse, can invest in moderate or low risk profile mutual fund schemes and receive only the capital gains as SWP. For example – Suppose, the initial investment is made in an Arbitrage fund and the capital appreciation is received regularly by way of SWP; the initial investment will remain at almost zero risk.
  • Those wanting to create their own pension – Investors who do not have any pension earnings can create their own pension by investing the retirement corpus in schemes suiting their risk profile and earn a regular income at a frequency chosen by them. Therefore, on retirement, the investor can start an SWP and create their own pension.
  • Those who are in high tax bracket – Investors in high tax bracket find SWP useful as there is no TDS on the capital gains. Also, the capital gains from equity/equity oriented funds are taxed moderately. Gain from debt oriented funds is also moderate as indexation is allowed on the long term capital gains.
Other Offerings
CORPORATE FIXED DEPOSITS

Fixed Deposit is the most popular investment choice in India. Like Banks, RBI permits selective corporates & NBFCs to accept deposits for a fixed interest rate and tenure. Such deposits are called Company or Corporate Fixed Deposit.

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