Time the Entry & Exit in Gilt Funds

Sayan Ghosh, Toronto

I opened up a National Pension System (NPS) account with NSDL as an NRI in 2017 and used to contribute by mode of Standing Instruction (SI) monthly, from the SBI website. The SI has expired and bank websites do not allow any more SI to NPS. D-Remit facility is not available for NRI subscribers. Even though I cannot update the overseas address, NPS wants to upload the e-KYC XML file offline, which is not accessible from here. Since I have opened the account online, my home branch, although a POP registered on the NPS website, does not provide any such service if I provide paper documents. Kindly guide me through a procedure through which I can set up regular contributions and update my visa, address, fatca details?

With reference to your query, I can suggest a few solutions.

1. You can set up your UPI through the BHIM app by downloading it from any app store or via net banking app and start contributing with UPI. You can also pay through debit and credit card.

2. If you have your mobile number registered then you can ask your relative in India to go to the Aadhar website and download XML with OTP sent to you and then you can upload it yourself once you receive the file. Alternatively, you can also download MAdhaar app if you have a registered mobile number active with you and create a virtual id and through that ask the person in India to download the XML file.

3. You can go to https://www.npscra.nsdl.co.in  and various options are available for changing fatca details. In case you need to send the documents you can visit their registered address, or can also download NPS from the Google play store (NPS by NSDL e-Gov).

Hina Shah, Certified Financial PlannerCM & Financial Coach, LUHEM

Subhash Banerjee, Kolkata

My friend, who has 20 years of experience in the market, has advised me to invest in Gilt Funds and ignore Fixed Deposits (FD) altogether. I have an FD account, and over the years, I have renewed most of my deposits without taking maturity values. Should I put an old practice like this on hold? Will Gilt Funds generate decent value for me? I am 43 years old now.

FD rates have been declining for the past few years and have gone below the inflation rate thereby reducing investor’s purchasing power. You must chalk out your financial goal where you would like to invest your Gilt Funds. These funds primarily invest in government securities which are more secure but they also carry interest rate risk. Investors with high awareness about the money market or bond market should invest in these schemes. It is important to time the entry and exit in these schemes because they are sensitive to interest rate movements. Many investors get lured into investing in these funds by looking at their past performance. However, it is not the correct step to take without understanding the high volatility associated with them due to above-mentioned facts.

Kindly note that Gilt Funds and Debt Funds are more tax efficient than FD if you stay invested for a minimum of 3 years, as it provides indexation benefit. If your investment horizon is anywhere between seven years and 10 years, you may consider investing a small part of your surplus in Gilt Funds. However, simply investing in Gilt Funds and FD may not help in accumulating adequate retirement corpus amounts.

Since you are 43 and if you are planning to retire by 58 or 60, you have at least 15-17 years for your money to grow. You can also consider investing in the Equity Hybrid Mutual Funds category or other categories of equity funds if you can take moderate risk. Primarily, it will be better to consult a certified financial planner.

Suhel Chander, Certified Financial PlannerCM, Co-Founder, Handholding Financials