Chit Funds vs. SIP - risks and advantages - Start SIP 9886568000

Chit Funds vs. SIP

Understanding the Dynamics and Advantages

In the realm of financial planning and investment, two popular options that often come under scrutiny and comparison are Chit Funds and Systematic Investment Plans (SIPs). Both offer distinct advantages and disadvantages, catering to different investor profiles and objectives. In this comprehensive analysis, we will delve into the intricacies of each, exploring their merits and demerits, and discerning why SIPs, particularly within Mutual Funds, have gained widespread favor over the years.

Chit Funds:

Advantages:

1. Community Savings: Chit Funds operate on the principle of collective savings. Participants pool in a predetermined amount regularly, forming a chit fund corpus. Each member gets a chance to bid for the entire corpus periodically, enabling access to a lump sum amount which can be used for various purposes such as education, business, or emergencies.

2. Accessibility: Chit Funds are relatively easy to join, requiring minimal documentation and formalities. This makes them accessible to individuals who may not have access to formal banking channels or who prefer a more informal savings mechanism.

3. No Interest: Unlike traditional loans or credit facilities, chit funds do not entail interest payments. This can be advantageous for individuals who wish to avoid interest-related financial burdens.

1. CHIT FUND FRAUD

Disadvantages:

1. Lack of Regulatory Oversight: One of the primary drawbacks of chit funds is the lack of stringent regulatory oversight. This opens up avenues for fraudulent practices and exposes participants to the risk of losing their savings.

2. Limited Returns: While chit funds offer the possibility of accessing a lump sum amount through bidding, the returns generated may not be as substantial compared to other investment avenues. This is primarily because the returns are dependent on the bidding process and may not always be favorable.

3. Liquidity Concerns: Participants in chit funds are committed to making regular contributions for the entire duration of the scheme. Exiting mid-way may result in financial penalties or loss of accrued benefits, posing liquidity concerns for investors.

Systematic Investment Plans (SIPs) in Mutual Funds:

Advantages:

1. Disciplined Investing: SIPs promote a disciplined approach to investing by encouraging regular contributions over a period of time. This systematic approach helps inculcate a savings habit and mitigates the impact of market volatility through rupee cost averaging.

2. Professional Management: Mutual Funds, where SIPs are commonly deployed, are managed by experienced fund managers who make informed investment decisions on behalf of investors. This professional expertise helps in diversifying risk and optimizing returns.

3. Flexibility and Liquidity: SIPs offer investors the flexibility to choose their investment amount and duration based on their financial goals and risk appetite. Additionally, mutual funds provide liquidity, allowing investors to redeem their investments partially or fully as per their requirements.

Disadvantages:

1. Market Risk: Like all market-linked investments, SIPs are subject to market risk. Fluctuations in the market can impact the value of investments, leading to potential losses, especially in the short term.

2. Fees and Charges: Mutual Funds often levy various fees and charges, including expense ratios, entry/exit loads, and management fees. While these charges are intended to cover the costs of managing the fund, they can erode returns over time.

3. No Guaranteed Returns: Unlike traditional savings instruments such as fixed deposits, SIPs do not offer guaranteed returns. The performance of the underlying assets determines the returns generated, and there is always a possibility of loss, especially in volatile market conditions.

Advantages of Mutual Funds SIP over the Years:

1. Compounding Benefits: The power of compounding is accentuated in SIPs, where regular investments accumulate over time, generating returns not just on the principal amount but also on the accumulated returns. This compounding effect can significantly enhance wealth accumulation over the long term.

2. Diversification: Mutual Funds offer investors access to a diversified portfolio of securities across various asset classes and sectors. This diversification helps spread risk and reduce the impact of adverse market movements on the overall investment.

3. Inflation Hedge: Investing in Mutual Fund SIPs provides an effective hedge against inflation over the long term. Equities, which form a significant portion of many Mutual Fund portfolios, have historically outpaced inflation, thereby preserving the purchasing power of investments.

In conclusion, while both Chit Funds and SIPs cater to different investor preferences and objectives, SIPs, particularly within Mutual Funds, offer a more transparent, regulated, and potentially rewarding investment avenue. With the twin benefits of professional management and flexibility, Mutual Fund SIPs have emerged as a preferred choice for investors seeking wealth creation and financial stability over the years. However, it is essential for investors to conduct thorough research, assess their risk tolerance, and align their investment strategies with their long-term financial goals before committing to any investment vehicle.

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Insurance and Investments for Age 40 and Above

A Comprehensive Guide to Life Cover, Guaranteed Pension, Lifetime Insurance Cover, and Mutual Funds

What is not possible? 

As individuals reach the age of 40 and beyond, planning for the future becomes increasingly crucial. Among the key considerations is securing financial stability and protection for oneself and loved ones. In this article, we delve into the realm of life insurance, exploring its various facets tailored for those in their 40s and beyond. From life cover to guaranteed pension, lifetime insurance cover, and mutual funds, we unravel the complexities and provide a comprehensive guide to help you make informed decisions.

Understanding Life Cover:

Life insurance serves as a financial safety net, offering protection to beneficiaries in the event of the policyholder's demise. For individuals in their 40s and beyond, obtaining adequate life cover becomes imperative, especially if they have dependents or outstanding financial obligations such as mortgages or educational expenses. When choosing a life cover policy, factors such as coverage amount, premium affordability, and term length should be carefully assessed to align with specific needs and goals.

Exploring Guaranteed Pension:

For many individuals entering their 40s, retirement planning takes center stage. Guaranteed pension plans offer a reliable source of income during retirement, providing financial security and peace of mind. These plans typically involve regular contributions throughout one's working years, with the promise of a fixed pension amount upon retirement. By starting contributions early and leveraging the power of compounding, individuals can maximize the benefits of guaranteed pension schemes, ensuring a comfortable retirement lifestyle.

Securing Lifetime Insurance Cover:

While term life insurance provides coverage for a specified period, lifetime insurance cover offers protection throughout the policyholder's lifetime. This type of insurance is particularly advantageous for individuals in their 40s and beyond, providing reassurance that their loved ones will be financially safeguarded regardless of when death occurs. With lifetime insurance cover, policyholders can enjoy the flexibility of accessing cash value accumulations, which can serve as a valuable asset for various financial needs, such as funding education or supplementing retirement income.

Harnessing the Power of Mutual Funds:

Mutual funds present a compelling investment option for individuals seeking to build wealth and diversify their portfolios. With a wide range of fund choices catering to different risk appetites and financial objectives, mutual funds offer flexibility and potential for attractive returns. For individuals in their 40s and beyond, mutual funds can play a pivotal role in long-term wealth accumulation, serving as a vehicle for retirement savings, education funds, or estate planning purposes. By conducting thorough research and consulting with financial advisors, individuals can identify mutual funds that align with their investment goals and risk tolerance.

As individuals enter their 40s and beyond, prioritizing financial security and planning for the future becomes paramount. Life insurance products such as life cover, guaranteed pension, and lifetime insurance cover offer invaluable protection and peace of mind, ensuring that loved ones are cared for and financial goals are met. Additionally, mutual funds provide opportunities for wealth accumulation and portfolio diversification, further enhancing financial well-being. By understanding the nuances of these financial instruments and seeking professional guidance when needed, individuals can navigate the complexities of life insurance and investment with confidence, paving the way for a secure and prosperous future.

Beat inflation with Mutual funds SIP and ULIP for lifetime

Beat inflation with Mutual funds SIP and ULIP

In today's dynamic economic landscape, the specter of inflation looms large, threatening the purchasing power of our hard-earned money. Inflation erodes the value of currency over time, diminishing the real worth of savings and investments. To combat this financial adversary and secure a prosperous future, individuals must adopt a proactive approach towards wealth management. This entails not only understanding the nuances of inflation but also harnessing the potential of investment avenues like Unit Linked Insurance Plans (ULIPs) and Mutual Fund Systematic Investment Plans (SIPs).

Understanding Inflation's Impact:

Inflation, often referred to as the silent thief, stealthily erodes the value of money. With prices of goods and services escalating over time, the purchasing power of currency diminishes. What cost a dollar yesterday may cost a dollar and fifty cents tomorrow due to inflation. Consequently, the money we save today might not suffice to meet future expenses, especially long-term financial goals like retirement, children's education, or buying a home.

The Case for ULIPs:

Unit Linked Insurance Plans (ULIPs) stand out as a versatile financial instrument that combines insurance coverage with investment opportunities. Unlike traditional insurance policies, ULIPs offer policyholders the flexibility to allocate funds into various investment avenues such as equity, debt, or balanced funds. This dynamic asset allocation feature empowers investors to adapt to changing market conditions and optimize returns.

Moreover, ULIPs provide a hedge against inflation by offering potential returns that outpace the rate of inflation over the long term. By investing in equity-oriented ULIP funds, which historically have delivered superior returns compared to inflation, investors can safeguard their wealth against erosion and strive for wealth appreciation.

Additionally, ULIPs offer tax benefits under Section 80C of the Income Tax Act, making them a tax-efficient investment option. The combination of insurance protection, investment flexibility, and tax advantages positions ULIPs as a compelling choice for individuals seeking to beat inflation and achieve their financial goals. 

Embracing Mutual Fund SIPs:

Mutual Fund Systematic Investment Plans (SIPs) present another effective strategy for combating inflation and building wealth systematically. SIPs enable investors to invest fixed amounts at regular intervals, thereby harnessing the power of rupee cost averaging and compounding over time.

By investing in mutual fund SIPs, individuals can diversify their portfolio across a wide range of asset classes, including equities, debt, and hybrid funds. Equities, in particular, have historically delivered inflation-beating returns over the long term, making them an essential component of a well-rounded investment strategy.

Furthermore, SIPs instill discipline and consistency in investment habits, helping investors navigate market volatility and capitalize on opportunities presented by fluctuating prices. Through regular investments, investors can accumulate a sizeable corpus over time, effectively counteracting the erosive effects of inflation.

Crafting Your Financial Blueprint:

To harness the full potential of ULIPs and mutual fund SIPs in beating inflation and achieving future financial goals, individuals must adopt a strategic approach to wealth management:

Set Clear Objectives: Define your financial goals, whether it's retirement planning, wealth accumulation, or wealth preservation, and tailor your investment strategy accordingly.

Assess Risk Tolerance: Understand your risk appetite and align your investment choices with your risk profile. While equities offer the potential for high returns, they also entail higher volatility.

Diversify Wisely: Spread your investments across different asset classes, sectors, and geographies to mitigate risk and optimize returns. A well-diversified portfolio can withstand market fluctuations and deliver consistent performance over time.

Monitor and Review: Regularly review your investment portfolio to ensure it remains aligned with your financial objectives and risk tolerance. Rebalance your portfolio as needed to capitalize on emerging opportunities and manage risk effectively.

The biggest threat of modern world is inflation. Beware of Inflation because it poses a formidable challenge to the financial well-being of individuals, necessitating proactive measures to safeguard wealth and achieve long-term prosperity. By embracing investment avenues like ULIPs and mutual fund SIPs, individuals can not only beat inflation but also unlock the potential for wealth creation and financial freedom. With careful planning, disciplined investing, and a long-term perspective, individuals can navigate the complexities of inflation and pave the way for a secure and prosperous future.

Your investment should best inflation, what is best, let us discuss. Call 988568000

Indian Mutual Funds inflows and outflows - May 2021 - Indian Mutual Funds - SIP performance

Mutual Funds – MAY-2021

(All Amount in Rs.)

• Net Outflows: -38602 Crores
• Total AUM: 33,05,660 Crores, New High (by Mth end)
• Total Folios: Crossed 10 Crores milestone, at 10.04 Crores, New High

Monthly Fund flow highlights:

• Equity attracted inflows of 9235 Crores, 3rd most in 26 Mths.

Major Net Inflows (O.E schemes): 

• Multicap 1954 Crores, helped by an NFO ; 
• Midcap 1368 Crores, up 74% from 3M avg ; 
• Focused fund 1169Crores, up 142% from 3M avg helped by an NFO ; 
• Sector/Thematic 1137 Crores.

Mutual Funds returns are subject to market conditions.

Major Net Outflows:

• ELSS -290 Crores. Close-ended equity -848 Crores, an increase of  6 M.
•  Gross redemptions of Open-ended Equity reduced to 15551 Crores, an 11M low.
•  SIP Inflows in May’21: 8818 Crore, 2nd most historically; 
• SIP A/cs: above 3.79 Crs, a new high

Debt suffered net inflows at -63454 Crores Debt (Ex-liquid and O/n) remained net outflows at -38602 Crores

  

Major Net Inflows: 

Low duration  7823 Crores, 6th most in 26M ; 

Money Market 4334 Crores, down -43% from 3M avg ; 

Ultra-short duration  2924 Crores ; 

Medium to long-duration  847 Crores, highest in 26M.

Major Net Outflows: 

• Liquid -45447 Crores ;
•  Overnight -11573 Crores, 3rd worst in 26M – both a surprise in the middle of the quarter ; 
• Corp. bond -1468 Crores; 
• Banking & PSU -1340 Crores – both at 4th low in 26 M. 
• Close-ended Debt -18942 Crores, near multi-year high outflows, mostly due to redemptions across nearly 69 schemes, highest in recent months.

Net Inflows: 

• Arbitrage 4521 Crores, down -11.7% from 3M avg ; 
• Hybrid received net inflows of 6217 Crores, 4th best in 26M.
• Dyn AA / Bal Adv 1363 Crores, 4th best in 26M. 
• Equity savings saw it’s first inflow in 26 mths at 382 Crores(without NFO). 
• Cons. Hybrid 395 Crores, most in 26M, in part helped by an NFO.

Net Outflows: 

Aggressive Hybrid -435 Crores, 3rd best in 26 M; Multi-Asset Alloc -8 Crores.

Solution saw net inflows of 68 Crores.

Others pulled net inflows of 9332 crs, up 63% from 3M avg inflows.

Net Inflows: 

• Other ETFs 5380 Crores, up 99% from 3M avg ; 
• Overseas FoF 2424 Crores, an all-time high monthly inflow, helped by 2 NFOs ; 
• Index fund 1241 Crores, 3rd most in 26M ; 
• Gold ETF 288 Crores, down -53% from 3M avg.

Net Outflows:  

• Nil.

NFO sales in May’21: 

• 5910 crs across 12 schemes (53% from Equity ; 
• 28.8% Overseas FoF ;
•  7.5% Other ETFs).

Between May’20 to May’21: 

• Number of open-ended schemes went up by 60 with more NFOs coming in (Equity 27 ; 
• Other ETFs 21 ; 
• Index 12 ; 
• Overseas FoF 8 ; 
• Hybrid 6 ;
• Soln 2. Debt schemes were down -16) ; 
• Close-ended scheme count decreased by -289 (Debt 250 ; 
• Equity 39) primarily owing to maturities and dryness in fresh offerings.
•  Total schemes stood at 1597 (OE: 1027; CE: 570).

April/May usually witnesses higher maturity of close-ended debt schemes, that were launched at the end of previous FYs, with the timeline advantage of an additional year of indexation.

Monthly Folio change highlights:

• The industry witnessed the highest ever monthly folio addition of 1867436 in May’21. 
• The previous high was in Jan’18 at 18.45 lakh folios.
• Equity added 1078091 folios, most likely a multi-year high.
• Major Folio Additions: 
• Sector / Theme 218854, 3rd most in 25M ; 
• Smallcap 167498, 25M best ; 
• Flexicap 140234 ; 
• Midcap 127751, 2nd best in 25M.

Major Folio Reductions: 

• Value/Contra -182, 2nd best in 25M (lowest reduction).

Debt lost :

• 3035 folios. Debt (ex-liq/on) ended up adding a meager 178 folios, reversing from 2 mths of reductions.

Major Folio Additions: 

• Corp. bond 11254, despite outflows, up 159% from 3M avg ; 
• Short duration 7536 ; 
• Medium duration 3632 ; 
• Ultra short duration 3224.

Major Folio Reductions: 

• Liquid -3819; Low duration -2317, 3rd mth in a row ; 
• Gilt -2091, 4th mth in a row.

Hybrid added 62739 folios, 4th most in 25M.

Folio Additions: 

• DAA / Bal Adv 29816, down -45% from 3M avg ; Cons. Hybrid 17006, most in 25M.

 Folio Reductions: 

• NIL.

Solution funds  :

• added 2376 folios

Other Funds:- 

• Added 727265 folios, a 25M best.

Folio Additions: 

• Other ETFs 368072, an all-time high (in part support from 4 NFOs) ; 
• Gold ETF 154503, 3rd most historically; 
• Overseas FoF 115666, an all-time high, in part lifted by 2 NFOs ; 
• Index 89024, 2nd most in 25M, also helped by an NFO.

Folio Reductions: 

NIL.

Source: AMFI

Will you buy Life Insurance and Mutual Funds online?

Will you buy Life Insurance and Mutual Funds online?

I would never buy any financial product from anyone online. Financial products like Insurance, Mutual Funds, Fixed Deposits and other investments require after-sale service. It is not that one time invested and left for a lifetime. 

Many think that online investment is easy and cheap but it is not like that. For every order or transaction, there is a cost that is being paid by the company. Most of the investors think the online investment is happening directly with the company but that is partially correct.

Mutual Funds - NFO - Open now - ongoing and upcoming Mutual Funds NFO's - Indian NFO in Mutual funds

 

Sr. No	Fund	Launch Date	Closing Date	Asset Class	Category
Ongoing NFOs
1	White Oak Capital Tax Saver Fund	16-Aug-22	23-Sep-22	Equity	ELSS
2	ICICI Pru PSU Equity Fund	16-Aug-22	06-Sep-22	Equity	Sectoral / Thematic
3	Edelweiss Gold and Silver ETF Fund of Fund	24-Aug-22	07-Sep-22	Other	FoFs Domestic
4	Union Retirement Fund	01-Sep-22	15-Sep-22	Solution Oriented	Retirement Fund
5	AXIS Silver ETF	02-Sep-22	15-Sep-22	Other	ETFs Fund
6	AXIS Silver Fund of Fund	02-Sep-22	15-Sep-22	Other	FoFs Domestic