In the last few months a common complaint of Indian investors has been that SIPs, the most popular route for them to tap the market, has been underperforming. Returns have been low and the attractiveness of this once popular investment route is gradually and steadily diminishing.
In the last few months a common complaint of Indian investors has been that SIPs, the most popular route for them to tap the market, has been underperforming. Returns have been low and the attractiveness of this once popular investment route is gradually and steadily diminishing.
The recent volatility in the market coupled with global developments have had a significant impact on the yield of the popular small and mid caps. Against handsome yields of above 70 per cent late last year, returns are subdued. The market has been under pressure due to increase in crude prices and fall in the Indian rupee coupled with interest rate hike by the RBI. There were also fears of a US Fed rate hike and trade wars. This has hit small and mid caps. According to analysts, the Mid Cap Index has been down by 12 per cent while the Small Cap Index has been down by 14 per cent this year. They have been hit further by the SEBI reforms like reclassifying mutual funds. This has left the small investor worried.
So then where do they invest? Typically, advisors will tell you, small and mid caps are fast and high-return but high-risk investment. While some fund managers are still putting their bet on small and mid caps, the time may have come for low-risk and safe returns through large caps.
Large caps are well established, stable companies with strong market presence. They are also more protected during market volatility and adverse economic circumstances. With market volatility expected to continue for the next 12-18 months, a fresh look at large caps has merit. In this scenario, our cover story on the importance and advantages of large caps assumes special significance.
Tax planning has always been top priority of every investor. Every year, a significant part of salaried employees’ investment planning is essentially tax related while the rest is based on returns on investment. So what is the best way to plan investments so that one can get the maximum tax benefit? Anagh Pal attempts to break this conundrum by looking at how to plan taxes and get into a win-win situation of low-risk, low taxes and maximum returns.
Staying with investments, is everyone tax and investment savvy? Perhaps not. In most cases, those getting into the tax net for the first time and new retirees often make silly mistakes while investing. So how does one ensure that the investment is right? With the real estate market subdued, gold volatile and SIP returns under the curve for the last few months, not many are getting the correct guidance about where to put their hard-earned money. Aditi Jain looks at the common mistakes people make while investing and where they should be cautious.
Provident Fund has always been a staple savings mode for salaried employees. But for most, literacy about this essential mode of savings is rather limited. Despite investing in it for decades, many investors cannot decide between an EPF, PPF and VPF and often end up making the wrong choice. In this issue we try to demystify the three and bring out the best option for salaried employees so that they can make an informed choice and get the best returns on their investment.
Most couples plan their future together but how many of them care to plan investments together? Many do not even know that insurance companies offer joint term insurance for couples with long-term benefits. Nirmala Konjenbham looks at this attractive option for couples and offers ways to invest their money together for the long journey of life.
The signs are clear. The markets will remain volatile going forward, at least for the near future. In such times, it is pertinent to opt for low-risk options even if returns are moderate. It may make sense to look at large caps or stay invested in mid and small caps for a longer term till the market returns to stability.