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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
MUTUAL-FUNDS
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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
INVESTMENTS MUTUAL-FUNDS
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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
INVESTMENTS MUTUAL-FUNDS
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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
INVESTMENTS MUTUAL-FUNDS
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what are sip investments?


Systematic Investment Plan (SIP) is where you invest a fixed amount of money every month into Mutual Funds thus contributing towards financial goals. You can start with small amount on monthly, quarterly or annual basis which will be helpful in the long run. It is ideal for the first time investors.

  1. First thing is to get the Know Your Customer (KYC) completed.
  2. Select a Mutual Fund scheme.
  3. Provide basic investor details.
  4. Complete new purchase application form.
  5. Confirm purchase.
  6. Payment gateway.
FEATURES
  • You can select the date of your choice for deducting the SIP amount depending on the Asset Management Company.
  • The investor can do SIP through Electronic Clearing System (ECS) in which he sends instruction to the bank to auto allow debit of SIP amount on a certain date of every month.
  • When the Mutual Fund NAV is high you get lesser units but when the NAV is low you get more units.
BENEFITS
  • SIP can be done as low as Rs.500 or Rs.1000, it can be increased or decreased at any point of time.
  • The cost of starting a SIP is nil.
  • Long term financial goals can be achieved with SIP
  • SIP reduces average cost of purchasing financial asset over time.
  • There is no fixed tenure for running SIP, but minimum of 6 months before redeeming.
  • SIP is less risky when compared  to one time Investments.

“To be successful you need to start investing early which helps in earning much higher returns.”
SIP is a flexible means of making mutual fund investments online which is available on our website www.instaemi.com  to make the transactions smooth and easy for the investors.
INVESTMENTS MUTUAL-FUNDS
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Can mutual funds be used as collateral?

mutual funds

Yes,  your Mutual Funds can be used as collateral against loans. These loans are called loan against securities/ LoanAgainst Mutual Funds units (LAMF). You can borrow money for short period instead of stopping Mutual Funds SIP or redeeming your Mutual Funds. You can avail a loan against mutual funds from Public sector banks, Private Banks and NBFC’s.

The interest would be around 10% - 13% depending on the bank and type of fund pledged.
You can avail loan only against the eligible Mutual Funds listed in the bank from which you are Borrowing. Banks don’t lend for subscribing another scheme of Mutual Funds. 

You should send a letter to the Mutual Fund/ Registrar requesting to mark a lien on units in favour of the financer. Lien is a document that gives bank right of ownership to hold or sell funds. If you default the loan, lender can evoke the lien and recover the dues.

Mutual fund units pledged with the bank can’t be redeemed or switched, during the tenure of the loan, but the dividends earned would be credited to your account.


The amount of loan is linked to the Mutual Fund net asset value(NAV) and not to the face value. The extent of funding against Mutual Funds is around 40%-50% of  NAV.

Plan to tackle your day—and financial goals—with confidence. Invest in Mutual Funds at  www.InstaEMI.com
FINANCIAL-PLANNING INVESTMENTS MUTUAL-FUNDS
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The SIP way to Financial Freedom

life stage financial planning

Most individuals are confused as to how to plan their finances. Especially when it comes to investment, one is torn between investing in real estate, Gold, Stocks, Mutual Funds or go traditional by opting for fixed deposits. We normally go by the advice of our friends, relatives or any acquaintance. Now predicting your returns on these investments are purely speculative and your success in each of these depends on how well you understand the industry, market and potential.
For the sake of argument, let us look at Mutual Fund investments in the long term, assuming that the return on investment is going to be 15%..  Ideally you should start investing from your first job itself to take advantage of the power of compounding. A small investment of Rs.1000/month over 10 years can get you 2.75 Lakhs, over 15 – 6.7 Lakhs, over 20 – 15 Lakhs and so on and so forth. So you can see that the longer you stay invested, the better your returns are. This is possible due to the power of compounding.
Let’s say a certain Mr. Singh lands his first job at 20 years and starts a SIP of Rs. 2,000 for 5 years. This would potentially earn him 1.75 Lakhs at maturity, which can easily fund the down payment for his first car. Similarly if he continues to invest a systematically throughout his professional life, he will be able to retire into a financially independent life.
Looking at the chart below listing the investment plan and expected return, you can see how much a small investment of Rs, 5,000/month can get you over a 25 year period. A whopping Rs. 1.6 Crore.   
Life Stage
Age
Purpose
SIP Amount
Period (Yrs)
Expected ROI
Total Investment
Maturity Amount
Job
20
Car
2,000
5
15
120,000
175,000
Settled
25
House
5,000
10
15
600,000
1,375,000
Family
30
Graduation
3,000
15
15
540,000
2,000,000
30
Higher Education
3,000
20
15
720,000
4,500,000
30
Child's Marriage
2,000
25
15
600,000
6,500,000
35
Pension Corpus
5,000
25
15
1,500,000
16,000,000

Total

4,080,000
30,550,000

You can see that by calibrating your investments at each of your life stage can go a long way in meeting your financial goals. Let’s take a look at his returns and what life event it was used for.
@ 25 Years – Rs. 1.75 Lakhs as down payment for Car
@ 35 Years – Rs. 13.75 Lakhs as down payment for House
@ 45 Years – Rs. 20 Lakhs for child’s Graduation
@ 50 Years – Rs. 45 Lakhs for child’s higher studies
@55 Years – Rs. 65 Lakhs for child’s Marriage
@ 60 Years – Rs. 1.6 Crore Retirement Corpus
And how much did he invest in all – little more than Rs. 40 Lakhs over a 40 year period.
So contact your financial advisor today and sign up for a SIP. A small investment today can set you on the path towards a fulfilling and financially free retired life.
Disclaimer: Mutual Fund Investments are subject to market risks. Read the offer document carefully before investing.
FINANCIAL-PLANNING MUTUAL-FUNDS
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5 Tips on Mutual Funds

MUTUAL FUNDS

Mutual funds are a vehicle to mobilize money from investors, to invest in different markets and securities, in line with the investment objectives agreed upon, between the mutual fund and the investors.
Mutual fund investments are considered safe due to professional management, diversification, variety, liquidity, affordability, convenience, and ease of recordkeeping—as well as strict RBI regulation and full disclosure.
Popular Types of Mutual Funds in the Market are;
Diversified Funds: It is a category of funds that invest in a diverse mix of stocks/securities across sectors.
Equity Linked Savings Schemes (ELSS): Lock period of 3 years, tax benefits applicable.
Index Funds: To replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.
Small, Mid & Large Cap Funds: Funds invested in different sized companies. Steady growth, capital appreciation is the key.
Sector Funds: Invested in sector-wise, less broad-based compared to diversification.
Balanced Funds: Invest & provide exposure in both equity and debt with the allocation based on the market views.

Here are 5 tips to help you invest in MFs smartly;

Why are you Investing?  - How much risk you can afford and stand? How much you need to invest initially and subsequently on a periodic basis (SIP) to meet your goals assuming a target rate of return that is consistent with your level of risk tolerance and a specific investment horizon?
Investment Scope & Evaluation - Decide on the set of assets that you will allocate your money to; consider all of the investing styles within each of the asset classes. Do a comparative analysis for the select MF list methodically. You can use some statistical evaluations, like risk-to-return, mean-variance, coefficient of variation based on the market cap and investing style.
Plan your budget - Investing whole-sum/part or incremental. Decide with the help of your financial advisor.
Buying Mutual Funds  - An investor can subscribe to the New Fund Offer (NFO) through ASBA facility. You have the options of buying from issuer, broker or online. The Fund may introduce other newer methods of application which will be notified as and when introduced.
Rebalancing and Portfolio Maintenance - Monitor Mutual funds are a vehicle to mobilize money from investors, to invest in different markets and securities, in line with the investment objectives agreed upon, between the mutual fund and the investors.

Mutual fund investments are considered safe due to professional management, diversification, variety, liquidity, affordability, convenience, and ease of recordkeeping—as well as strict RBI regulation and full disclosure.

Popular Types of Mutual Funds in the Market are;

Diversified Funds: It is a category of funds that invest in a diverse mix of stocks/securities across sectors.
Equity Linked Savings Schemes (ELSS): Lock period of 3 years, tax benefits applicable.
Index Funds: To replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.
Small, Mid & Large Cap Funds: Funds invested in different sized companies. Steady growth, capital appreciation is the key.
Sector Funds: Invested in sector-wise, less broad-based compared to diversification.
Balanced Funds: Invest & provide exposure in both equity and debt with the allocation based on the the market views.

Here are 5 tips to help you invest in MFs smartly;

Why are you Investing?  - How much risk you can afford and stand? How much you need to invest initially and subsequently on a periodic basis (SIP) to meet your goals assuming a target rate of return that is consistent with your level of risk tolerance and a specific investment horizon?
Investment Scope & Evaluation - Decide on the set of assets that you will allocate your money to; consider all of the investing styles within each of the asset classes. Do a comparative analysis for the select MF list methodically. You can use some statistical evaluations, like risk-to-return, mean-variance, coefficient of variation based on the market cap and investing style.
Plan your budget - Investing whole-sum/part or incremental. Decide with the help of your financial advisor.
Buying Mutual Funds  - An investor can subscribe to the New Fund Offer (NFO) through ASBA facility. You have the options of buying from issuer, broker or online. The Fund may introduce other newer methods of application which will be notified as and when introduced.
Rebalancing and Portfolio Maintenance - Monitor performance using NAV, ensure they aren't off course and rebalance unfailingly. using NAV, ensure they aren't off course and rebalance unfailingly.
INVESTMENTS MUTUAL-FUNDS
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