Decoding InvITs, REITs and AIFs

Attracting long-term capital to facilitate investments in Infrastructure and Real Estate sector is the key driver for economic growth. Initiatives like Infrastructure Investment trust (InvITs) and Real Estate Investment trust (REITs) will attract public private partnerships (PPP) and foreign capital at large.

Terms like InvITs and REITs have been in the news lately with the IPO from IRB Infrastructure(InvIT) and SEBIs approval to Reliance Infrastructure to launch InvIT.  

We have decoded InvITs, REITs and AIFs for your ready reference
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How to do retirement planning yourself?

instaemi retirement planning

Retirement doesn’t mean you retire from life. This is an opportunity to try something new, travel to new places, etc. For all the needs you need to build a retirement corpus, which should be started early to accumulate sufficient money.

Retirement planning is an important aspect of financial planning. For deductions done towards payment of premium of retirement plans, benefits are available under Section 80C and 80D of the Income Tax Act. 

Steps in retirement planning
1.   Set your retirement goals.
2.   Assess your current financial position.
3.   Identify retirement income sources.
4.   Evaluate retirement risks.
5.   Understand health care issues.
6.   Invest your retirement assets.
7.   Manage your retirement income.
8.   Monitor your retirement assets.

Points to be considered for retirement planning
1.      Developretirement budget :
Look at what you are spending currently in major categories like groceries, medical, eating out, etc. They may change but you will have an idea of the normal expenses. You need to factor inflation at around 3-5% per year.

2.      Reduce Debt :
As the retirement period approaches, reduces your debt as much as possible including mortgage debt. The less number of obligations you have, the more you will have for personal expenses.

3.      Unforeseenmedical expenses :
Old age typically brings medical problems and increased healthcare expenses. To prevent any unforeseen illness consume your entire retirement corpus, you need to buy a medical insurance.

4.      It’s nevertoo late :
If you are starting late, make sure that you cover up for the lost time. It will be easier to sacrifice now compared to later.

5.      Invest forthe future :
Employee’s ProvidentFund is the most popular retirement saving instrument in India. National Pension Scheme has an annualized return around 10% for 4 years, it also provides tax benefit under sec 80C.
 Equity is the best instrument for long term investments, the returns are high when invested for long time horizon.


If you feel the calculation is time consuming, you can login to https://www.instaemi.com/ and find the corpus needed at the time of retirement.
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Good & Bad financial habits


Acquire these
You need to keep track of current investments. Get rid of those investments which are giving negative returns. Your returns should match with the financial goals. Reviewing portfolio helps in assessing any additional investment requirements.
As the Finance Minister prepares budget for the whole nation, you need to maintain a monthly budget to know the expenditure and income. You need to monitor monthly spending to avoid unnecessary expenses.
50-20-30 rule should be followed, which is fixed costs - investments- flexible spending.
Emergency fund is designed to cover a financial shortfall when an unexpected expense crops up. It might be job loss, illness or accident which creates a situation where your regular source of earning comes to halt.
You need to maintain minimum 6 months worth income as emergency fund.
You invest to reach your financial goals. You need to have an exit strategy for every investment as too long investments will lead to disappointment.
In case of equity investment stop- loss should be around 20%.
It is advisable to pay your bills well in advance to avoid huge payments at a later date. Delay in payments would have negative impact on your credit score.
Opt for automatic transfer of funds. You need to direct around 30% of your income towards investments.
Discard these
When you miss a credit card payment, the creditor adds late fee which causes to lose extra money. Late credit card payments damages credit score. Always pay off the entire outstanding as quickly as possible.
Allocate a specific amount in monthly budget for refreshments, eating out, movies, trips, etc. You shouldn’t use more than 30% of the monthly budget for luxuries.
Product maintenance can save you a lot of money on repair and replacement cost. Maintenance work on your car, AC, house reduces the cost of replacement.
Avoid unnecessary credit card purchases for earning reward point. You need to avoid credit card purchases that will create monthly payments for many years. Differentiate the products which can be purchased through credit card and which cannot be.
You will end up paying more than actual cost of the product which includes interest for EMI scheme and processing charges. Too many EMI schemes impacts the credit score.
Every financial transaction of an individual is recorded and is reflected in the credit score. Credit score is critical for availing loans. A person with good credit score has chances of getting loan at good rate of interest.
A credit score of 750 and above is considered good credit score.
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Why Mutual Funds better than Fixed Deposits?


mf vs fd

A fixed Deposit (FD) is a financial instrument provided by banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date.
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. 

               Fixed Deposits Vs Mutual Funds
Return earned varies with the market conditions.They earn pre-specified rates and do not change for entire tenure.
In case of redemption within a year, they would be charged exit load maximum of 1%.In case of premature withdrawals, they have to pay penalty and miss on actual returns.
High inflation-adjusted returnsLow inflation-adjusted returns.
High liquid.Low liquid till the tenure of deposit ends.
Tax benefit under 80C if invested in ELSS mutual funds.Tax benefit under 80C for investment in 5 year tax saving FDs.
LTCG
  1. Equity MF – Nil
  2. Debt MF – 20% indexation.
STCG
  1. Equity MF – 15%
  2. Debt MF – Tax Slab
Tax depends on your current slab rate, irrespective of the tenure of Fixed Deposit.
Debt Mutual funds have more risk. Equity Mutual funds have higher than Debt MF.FDs have minimal risk.
Mutual Funds have the option of monthly investments known as SIP.In FD it is only has one time investment option.



            Comparing mutual fund returns with fixed deposit returns



Fixed Deposits
Debt Mutual Fund
Equity Mutual Fund
Investment Amount
100,000
100,000
100,000
Return (% p.a.)
9.0%
9.0%
9.0%
Holding Period
1 Year
1 Year
1 Year
Fund Value
109,000
109,000
109,000
Inflation
7.5%
7.5%
7.5%
Indexed Investment Amount
-
107,500
-
Taxable Income
9,000
1,500
-
Tax Paid (as applicable)
2,700
300
-
Post Tax Returns
6,300
8,700
9,000
Post Tax Returns (%)
6.3%
8.7%
9.0%
(Source: PersonalFN Research)
(The rate of return and rate of inflation is an assumption, for illustration purpose only)

As you can see the post tax returns for Equity Mutual Funds & Debt Mutual Funds is higher when compared to Fixed Deposits, it is profitable to invest in MUTUAL FUNDS at  WWW.InstaEMI.com
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How mutual funds save tax?

instaemi mutual funds

Equity linked savings scheme (ELSS) are the open-ended equity mutual funds with dual benefit of growth and tax saving. ELSS can be classified into two types as dividend scheme and growth scheme.

Features:
  1. The minimum amount of investment depends on AMC but in general it can be around Rs.500
  2. These plans allow SIP.
  3. You can withdraw only after the lock-in period of 3 years is completed.
  4. The return is not fixed and varies with the market situation.
  5. Everyone having a taxable income can invest in ELSS to save tax.
Benefits:
  1. Investments are eligible for tax benefit under Sec 80C of Indian Income Tax up to Rs. 1,50,000.
  2. Long term capital gains from ELSS are exempt from tax.
  3. You can withdraw dividends even during the lock-in period which is not subject to tax.
  5. When compared to other tax savings options such as ULIPs, NSC & NPS, ELSS give higher returns & lock-in period is shorter.

Before investing you must look at the long term performance, fund manager, portfolio of the fund, expense ratio of the fund and volatility of the fund in the past. Consult a financial advisor to know the best ELSS mutual funds.
Instead of large investments at the end of financial year, you can start a SIP in ELSS mutual funds.

Crunch your tax numbers.otherwise the tax monster might munch on them. Start Invest with www.InstaEMI.com
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Why to invest in Equity Mutual Funds?

instaemi mutual funds

Equity mutual funds are those funds which mainly invest in stocks and have higher returns & risk involved when compared to other mutual fund categories. They can be sub categorized as diversified equity, large cap, sector funds, ELSS, small & mid cap, etc.

  1. More diversified fund has less negative effect of individual stock on NAV.
  2. Equity mutual funds might have notional losses in short-medium term but, in long term they will be profitable.
  3. They charge exit load maximum of 2.5% of NAV if redeemed/switched-out within a year of allotment.
  4. As the NAV keeps fluctuating, SIP would be better investment option when compared to one-time investment in case of  Equity mutual funds.
  5. A nominee can be appointed by the investor for mutual fund units.

  1. The tax implication on long term capital gains of equity funds is nil, in case of short term gains they would be taxed @ 15% STCG.
  2. Equity mutual funds such as ELSS are eligible for tax benefit under sec 80C of Indian Income tax up to Rs.1,50,000.
  3. The entry load for mutual funds is nil.
  4. Equity mutual funds also have the dividend option which is tax free.
  5. Mutual fund units are not subject to Gift Tax.

Equity mutual funds are for those who are looking for long term investment which is more than 5 years as the returns would be high.
You can compare and buy mutual fund units online at www.instaemi.com
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Why financial planning is necessary?

instaemi.com

 "Someone’s is sitting in the shade today because someone planted a tree longtime ago.” – Warren Buffet
Financial planning is the process of achieving life goals using different investment options. Financial planning is necessary as it helps you to meet the long, medium and short-term life goals. It is not only monetary, but also helps in fulfilling your dreams. It makes you feel secure and ready for the future.


  1. Determining your current financial situation.
  2. Developing financial goals
  3. Identifying alternative course of action.
  4. Evaluating alternatives.
  5. Creating and implementing a financial action plan.
  6. Re evaluating and revising the plan.



  1. You need to first set aside money as saving and then start investing.
  2. You need to maintain emergency fund in case you fall ill or loose job.
  3. You need to buy just enough insurance.
  4. You need to do goal based planning wherein you invest for specific financial goals which are to be met in the future.
  5. You should continuously review and revise your financial plan to remain consistent with your goals.

If you’re not sure with managing your own money, you can consult a financial planner/advisor to do the same. A financial advisor is an expert who will help you in avoiding financial blunder.
When should you meet a financial advisor? It’s now, at www.instaemi.com
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