Saving-Ideas.com

Icon

Personal Finance Blog India –

How Many Mutual Funds Are There In Your Portfolio:

One of my friend is investing in Mutual Funds since a decade and he has around 60-65 mutual fund schemes in his portfolio.There are more than 40 mutual fund companies operating in India, its not surprising to see the long list of mutual fund schemes if any investor is investing since long term.

Number of mutual fund schemes

 

Here we will list the reasons why mutual fund list goes on:

  1. Investment through multiple brokers:Suggestions and investments made from different brokers leads to investment across multiple schemes.
  2. Cumbersome process to modify monthly investment amount: Most of the investors invests through SIP. Its cumbersome to change/modify monthly investing amount so Investor prefers to invest in new funds rather making changes in existing schemes.
  3. Exit Load / Lock in: Most of the schemes carry exit load for periods ranging from 01 year to 03 yrs.Investors generally not prefer to switch out in new schemes with in exit load period.
  4. Capital gain period: Short term capital gains applicable for Equity funds if units are redeemed / switched out within first year.So if any investor is investing through systematic investment plan then there will be at least few units which have not completed one year and so units are not switched out completely.
  5. Time lag between switches: Its cumbersome to redeem from one scheme and reinvest in scheme of another mutual fund.It also involves time lag of 4-5 days to switch in other mutual fund.
  6. Deviating mutual funds from their objectives:Now a days, most of schemes deviates from their objectives and  schemes having same objective have extreme returns.So investor looks to manage risk & diversify in schemes having same objectives.

What investors can do:

  • Its not a good idea to have huge number of schemes in portfolio.
  • Investor can consolidate schemes based on fund objectives like – Bluechips,Value funds,Mid caps,Debt funds etc and keep max up to two schemes having same objective.Investors can consolidate schemes based on their age,risk profile and goals.
  • Having large number of schemes may not diversify the Risk but leads to unnecessary maintenance.
  • Investor can take help of independent financial advisor if they are at state of indecision.

So, how many mutual fund schemes are there in your portfolio,How do you manage the risk?,Do you think only  2-3 balanced funds can help you to achieve the goals?

CII – Cost Inflation Index From 1981-1982 To 2016-2017:

Cost Inflation Index : Indexation is a process by which Cost of acquisition is adjusted against inflationary rise.  Every year Govt notifies Cost Inflation Index which is used for calculating Long term capital gains.

When investor sells its property then CII index is used to determine current indexed value.

Govt have recently notified CII for year 2016-1017.Historical values of CII are as follows:

 

Financial Year

 

Cost Inflation Index
1981-1982 100
1982-1983 109
1983-1984 116
1984-1985 125
1985-1986 133
1986-1987 140
1987-1988 150
1988-1989 161
1989-1990 172
1990-1991 182
1991-1992 199
1992-1993 223
1993-1994 244
1994-1995 259
1995-1996 281
1996-1997 305
1997-1998 331
1998-1999 351
1999-2000 389
2000-2001 406
2001-2002 426
2002-2003 447
2003-2004 463
2004-2005 480
2005-2006 497
2006-2007 519
2007-2008 551
2008-2009 582
2009-2010 632
2010-2011 711
2011-2012 785
2012-2013 852
2013-2014 939
2014-2015 1024
2015-2016 1081
2016-2017 1125

Significance of Cost Inflation Index:

Suppose

  • Ramesh purchased residential property in June 2006 :@ Rs.16 Lakh
  • He sold this property in June 2015: @ Rs.60 Lakh

Then for calculating indexed value of property, CII of corresponding years will be used:

 

Capital Gain Tax CII

Ramesh will calculate Capital gains based on this indexed cost.

 

Long term Capital Gain will be calculated as:

Sale value under consideration after Expenses paid towards brokerage, advt & indexed cost of improvement

(Less)

Indexed Cost of acquisition 

 

After Calculating capital gains, Ramesh has options as below to claim exemption from LTCG tax:

  1. Buy Residential property of value equivalent to capital gains.This property must be purchased either 01 yr Before OR 02 Yrs After sale of property.
  2. Property need to be bought on sellers name only to claim exemption.
  3. If investor invests in under construction property then Construction of property must be completed within 03 Yrs after sale of property.As per one of court verdict,if builder of new construction fails to hand over property within 03 yrs,exemption is still allowed.
  4. Invest capital equivalent to capital gains in 54EC capital bonds @6% (interest paid annually) issued by NHAI or REC, with in 06 months of sale of property.
  5. If entire capital gains is not invested then proportionate exemption will be allowed.
  6. If he decides to pay tax then he will need to pay long term capital gain tax at rate of 20% + surcharge + Cess on capital gains.

Mahindra & Mahindra Financial Services Subordinated NCD Issue May 2016:

Noted Non-banking finance company – Mahindra Finance which is promoted by Mahindra & Mahindra will soon come up with an issue of subordinated , unsecured NCDs.

Issue Size: Mahindra Finance will raise Rs.250 crore through this issue with an option to retain over subscription up to Rs.1000 crore.Company may issue one or more tranche of issues.

Company will utilize the issue proceedings for lending,financing,refinancing existing indebtedness,long term working capital & general corporate purpose.

About MMFSL :

Mahindra finance provides finance mostly in rural areas for Agricultural / allied activities & auto sector.

MMFSL is listed company at BSE and NSE promoted by Mahindra & Mahindra.

Profit After Tax history & other financials of MMFSL is as below:

MMFSL PROFIT

Above table shows snapshot of Sales,Operating profit,Gross profit and net profit of company for last 05 years.

Performance of company mostly depends on rural economy and in turn factors like monsoon,performance of agricultural sector etc.  Agricultural  /allied , Auto  comprises of more than 90% of companies loan portfolio.

 

  • MMFSL NCD Issue Imp dates:
  1. Issue open date:May 25, 2016
  2. Issue close date:June 10, 2016.

 

  • Interest rates for individual investors :Investors have different investment options like – Quarterly , annual interest & Cumulative.

Quarterly Interest payout:

Interest will be paid quarterly accumulated from date of allotment.

Mahindra & Mahindra Financial Services NCD May 2016 Quarterly interest payout

Annual Interest Payout:

Interest will be paid out annually.

Mahindra & Mahindra Financial Servives NCD May 2016 Annual Interest Payment

Cumulative:

Interest and principal amount will be paid at maturity.

Mahindra & Mahindra Financial Servives NCD May 2016 Cumulative Option

Other details:

  1. Credit Rating:CARE AAA & IND AAA which indicates highest safety.
  2. Mode of holding:NCDs can be held in physical or demat mode.
  3. Face value: Rs.1000.
  4. Min application amount : Rs.10,000/-
  5. High Networth Individual : Investor applying for more than Rs.5 lakh will be treated as HNI investor.
  6. Listing : @ BSE only.
  7. No call or put option : Investor will able to sell NCDs only in secondary market.
  8. TDS : Provision of Tax Deduction at Source will be applicable for physical mode of holding if interest paid / accrued is crossed the threshold limit of Rs.5000.One can submit appropriate form like 15G / 15H to avoid TDS. No tax will be deducted at source if NCDs are held in demat form.

Though NCDs are subordinated,unsecured,Tier-II, one can invest small part of fixed income portfolio in this issue.

Mahindra Finance also accepts public deposits .Click Here for details and interest rates offered by Mahindra & Mahindra Financial services.

 

Page 1 of 183
1 2 3 183

Advertisement


Categories

Blog Archives

Advertisement

Blog Author

Blog Author

Who's Online

11 visitors online now
7 guests, 4 bots

See How Much Interest Your Saving Have Generated!!!

11 visitors online now
7 guests, 4 bots, 0 members
Max visitors today: 24 at 12:06 pm UTC
This month: 30 at 06-13-2016 11:33 am UTC
This year: 152 at 03-01-2016 12:09 pm UTC
All time: 152 at 03-01-2016 12:09 pm UTC
Thank You For Visiting This Blog!!!