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Grow Your Money Smartly with SIP

Plant your money today and watch it grow steadily with a Systematic Investment Plan (SIP). start building your wealth now with mNivesh.

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Mutual Fund Wealth Creation Marathon

Building wealth in Mutual Funds is a long-term marathon, not a sprint. Stay consistent and achieve financial freedom over time.

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Meaning and Benefits of Sip (Systematic Investment Plan)

It’s everyone’s desire to have the good things in life, buying an exotic car, a beautiful home, and an exclusive vacation to someplace around the world. Achieving these desires will require doing something extra. Investing through a Systematic Investment Plan (SIP) in mutual funds is a viable option to go forward with. So, let's have a look at what SIP means, how it functions, and be of help to you in achieving goals.

What exactly is SIP?

A systematic investment plan is a system of investment that can be used in order to save money while also reducing the risk of investing. The system is often used by investors in order to reduce the chance of making bad investment decisions. These mutual funds can be used to invest in shares, bonds, and a variety of other financial instruments.

How does SIP function?

A systematic Investment Plan or SIP is a way of investing in stocks. The investor makes it a habit to invest a fixed amount of money at regular intervals and in the same proportion to various stocks. This helps the investor diversify among various stocks with less risk as compared to putting all their money into one stock. The maths behind the Systematic Investment Plan is simple. The investor gets to decide how much he wants to put in his investment every month and how long he wants to save. The systematic investment plan does not just depend on market timing but works with all time frames to reduce risks of volatility and maximize returns. It can be beneficial for those who are passively invested in their investments.

Investing in a SIP has a number of advantages:

1. Compounding power: Compounding is an investment concept in which money earned on the investment is reinvested and thus also earns interest. Compound interest can be thought of as having multiple rates. Compound interest is the root of wealth for most people, because it enables investors to earn interest on their money over time, rather than only when they take it out of the account. To understand why compounding makes such a big difference, consider how much an investor would need to earn just by saving some amount per day in order to become a millionaire at age sixty-five.

2. Low Initial Investment: With just Rs. 500 per month, you can start investing in mutual funds using the systematic investment plan (SIP). This can be an affordable way to invest each month without hurting your monthly expenses. Over time as your income increases your investment can also be increased through the step up feature. Mutual fund houses allow investors to top up their SIPs regularly. So, even if you start with Rs. 500 or Rs. 1,000 each month, you can increase your investment as time goes on.

3. The average Cost of a Rupee: Rupee cost averaging is when you purchase more units of a mutual fund when the Net Asset Value (NAV) is low and fewer units when the NAV is high. This takes your purchase costs and averages them out over the course of the investment period. You don’t need to worry about market timing when you invest through a SIP.

4. Convenience: SIP can be a convenient mode of investing. You may not have the time for extensive market research and analysis to adjust or balance your portfolio. So, once you have decided a good fund, you can give standing instructions to the bank and let the SIP take care of your monthly investments for you.

How to Start SIP Investment-

1. Complete your KYC Make sure you complete your KYC documentation with your fund house before you start investing. Identity proof, address proof and photograph are the usual documents required. These days, e-KYC is being accepted by most AMC's. The process can be completed online without having to visit the AMC office.

2. Set your investment goals Before investing in SIPs, you should first figure out what you want to achieve with your money. Every mutual fund is designed to help you reach a specific goal, so it's important to identify yours. Once you know your goals, you can look for funds that will help you achieve them.

3. Choose the SIP Select a fund and fill in the parameters for a Systematic Investment Plan (SIP). This includes information such as:

The length of your investment

Frequency of investments (monthly, quarterly, semi-annually, etc.)

The amount you want to invest

Fill in your details as regards to your goals and financial posture.

Where to Invest: SIP or Lump Sum

There are two ways mutual funds can be acquired: it’s either as a SIP or as a lump amount. A lump sum investment entails putting aside a specific amount of money at once for a mutual.

Which is better? Here are some points to consider:

1. Amount of money SIPs are a good investment option if you have a limited amount of money to invest. You can commence your investment with as low as Rs. 500 each month. It doesn’t matter whether you have Rs. 500 or Rs. 1,000 to invest each month – you can get started right away!

2. Experience Lump sum investments are when you invest all of your money at once. You have to be careful when you do this, because you could make a lot of money if the market goes up, but you could also lose a lot if it takes a downturn. This is a good strategy for experienced investors who have a lot of money to spare, but if you're new to investing, it's best to stick with instalments over time instead. That way, you minimise your risk and still get to grow your money.

3. Investment disciple Investment discipline is key to success in the long run. When you decide to invest a fixed amount of money each month, you can make sure that your investment progresses steadily and fulfils your investment goals. It may seem like a slow process, but when you look back after a while, you'll be glad you invested steadily over time. SIP investing can help you build a large corpus slowly and steadily.

4. Customize SIP Salary earners prefer their SIP investment to be conducted. In this case, salary earners can fulfill their commitment as they receive their paychecks monthly.

5. Frequency of SIP You can start your SIP at any time and at any interval (weekly, fortnightly, quarterly, or semi- annual) which implies. You can also embark on a futuristic investment without setting out a specific time of completion.

Perpetual SIP: You can simply move a fixed amount into the mutual fund on a regular basis for as long as you desire using this option. Instruct your bank to disburse your fund on a specific day towards your investment and it will be done seamlessly.

Step-up SIP: If you started your SIP investment with Rs.1000 monthly and you desire an increase of the same amount each year, you’ll first invest monthly, Rs.1000 and the second year Rs.2000.

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Small Steps, Big Returns

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Everything you need to know about Fixed Deposit in India

If you're looking to invest some of your money in a Fixed Deposit in India but aren't sure how this works or what all the details are, don't worry. You're not alone. This article is a complete guide to Fixed Deposits in India for those who are curious about them or want to learn more about them. The intention of this article is only to educate you about how FDs work and give you a starting point so that you can do more research based on your own needs.

What exactly are Fixed Deposits?

A Fixed Deposit is a way of saving money where the investor agrees to keep his/her funds invested in the bank for a fixed period of time. During this period, the interest rate that the bank offers is generally higher than that of a regular savings account.

What are the types of Fixed Deposits?

There are two types of Fixed Deposits available in the Indian market:

1. Cumulative Fixed Deposit Schemes Investors of a Cumulative FD scheme benefit from compounding. On maturity, you will receive both the collected interest as well as the principal amount. The lender reinvests the interest money instead of delivering it to you on a regular basis. Thus, you will be earning interest on interest using it. For people who do not require regular dividends from their fixed deposit investments, a cumulative FD scheme is a viable option.

2. Non-Cumulative Fixed Deposit Schemes Non-cumulative Fixed Deposit schemes are recurring income plans that allow the investor to choose the time range for interest payments. Rather than reinvesting the accumulated interest amount, the lender delivers it to you in this case. The overall interest earned is much lower than Cumulative Fixed Deposits. This non-cumulative FD is a viable alternative for older persons and others who want to earn regular cash returns on their FD investment.

Pros and Cons of Fixed Deposit-

Pros:

Fixed Deposit is a secured way of investing with minimum risk.

A Fixed Deposit comes you a guaranteed income that is not affected by market fluctuations.

A Fixed Deposit has a set duration and allows for rollover.

You can utilize it as security in need and receive up to a limit of 90% of your investment as a cash advance.

You can also select the frequency of interest payments.

Cons:

Fixed Deposit is a type of debt instrument.Thus, less expected returns.

Earned Interest is taxable income.

Premature withdrawal incurs a fee from the lenders.

Taxable Income from Fixed Deposit in India-

While there is a lot of excitement and joy in investing, it is also important to keep track of the tax implications before making any investment. The interest received from Fixed Deposit in India is taxable.

Here is a breakdown of the Fixed Deposit income tax bracket.

FDs for Indian Residents: 10% Tax

FDs for NROs: 30% Tax + applicable surcharges & cess

However as an Indian Resident FD holder, TDS of 20% will be levied if you do not give PAN information. If your entire income from interest falls below the 10% tax bracket, you can claim back the deducted TDS. You can also provide Form 15G or 15H to your lender to declare that you do not fall into the tax bracket and no TDS needs to be deducted.

Conclusion

I hope this guide has helped in providing you with some of the basic information and tools required to invest your hard-earned money wisely. With foresight, planning, and a little bit of help along the way, you should be able to make informed decisions about how you store your money and what kind of interest rates you can expect to receive on your FD investments. To help you make further educated decisions, you can check FD Interest Rate Calculator Online and Fixed Deposit Interest Rates 2022 for free.

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Grow Wealth in the Stock Market

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Get Reliable Accident Insurance Today

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Protect Your Family's Future Dreams

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Smart Financial Choices for Tomorrow

Your today's choices shape your tomorrow. Take your first step towards absolute financial freedom. Start investing in Mutual Funds & SIP today with mNivesh!

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How to calculate Capital Gains for your Equity and Debt Mutual Funds?

Mutual funds are the most popular investment vehicles today. As you can invest in different asset classes through mutual fund schemes, there is a fund for every type of investor. Mutual funds are easily accessible through online platforms, financial product distributors, and mutual fund distributor services. However, it is important to understand how a mutual fund works and what are the complexities involved to make an effective investment decision.

These are broadly categorized into three types based on the asset classes they invest in – equity mutual funds, debt mutual funds, and hybrid mutual funds. When it comes to income tax perspective, hybrid funds are taxed as either debt-oriented funds or as equity-oriented funds depending on the percentage of allocation into the asset classes. Each mutual fund scheme that you invest in can generate two types of income –dividends and capital gains at the time of sale.

What is Dividend Income?

Dividend income is paid by schemes that invest in stocks of dividend-paying companies (that distribute the profit in the form of dividends). Dividends received were tax-free in the hands of the investor prior to 31st March 2020. However, with the amendments in The Finance Act, 2020 there is a TDS (tax deducted at source) of 10% applicable on the dividend income that exceeds INR 5,000.

What is Capital Gain? How it is calculated?

Capital gain is the profit generated from the sale of mutual funds. The method of calculation of capital gains is the same for all mutual fund schemes i.e., for both equity and debt mutual funds. However, the tax implication is different. Let’s understand more about capital gains.

Capital gains are categorized as two types based on the holding period of the investment: short-term capital gains and long-term capital gains.

Short-term Capital Gains: In an equity mutual fund, capital gains generated by an investment that is held for less than 12 months are referred to as short-term capital gains. In the case of debt mutual funds, short-term capital gains are gains generated by investments held for less than 36 months.

Long-term Capital Gains: In an equity mutual fund capital gains generated by an investment that is held for more than 12 months are referred to as long-term capital gains. In the case of debt mutual funds, long-term capital gains are gains generated by investments held for more than 36 months.

Capital gains on mutual funds can be calculated as below:

Capital gains = Fund value at the time of sale total cost of sale – total cost of acquisition of the fund

How Capital Gains are taxed?

Tax implications are different for capital gains from equity mutual funds and debt mutual funds. Let’s take a look at the tax treatment of capital gains of equity and mutual funds.

1. Short-term Capital Gains

Equity Mutual Funds: Taxed at 15% + cess + surcharge. Debt Mutual Funds: Taxed as per individual investor’s income tax slab rate.

2. Long-term Capital Gains

Equity Mutual Funds: Gains above INR 1 lakh a year are taxed at 10% without indexation benefit + cess + surcharge. Tax exemption is provided if the gain is within INR 1 lakh a year. Debt Mutual Funds: Taxed at 20% post indexation + cess + surcharge.

The amount of capital gain that a scheme can generate can also be impacted by the mutual fund plans that you choose. Every mutual fund scheme is offered in two plans – Direct and Regular. Direct mutual fund schemes can be directly bought through fund houses or even through direct mutual fund investment apps conveniently as these schemes do not involve any commission. On the other hand, regular mutual fund schemes are available for investment through financial products distributors and mutual fund distributor services. For these services, mutual fund distributor services and financial products distributors are paid a commission. Hence, you can see the difference in the total expense ratio and net asset value of both direct and regular plans. These changes in expenses and net asset value can definitely have an impact on the capital gains and the returns that you earn from mutual fund schemes, specifically for the long term.

Choose the right type of funds and the plans suitable for your investment goals to maximize your wealth.

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How to Process a Claim for Health Insurance?

If you're looking to buy health insurance, want to claim something, or learn more about the process, you should read this article. It's a complete guide to the health insurance claim settlement process for anyone curious about them or wanting to learn more about them.

Cashless Health Insurance Claim

A cashless facility is an emergency insurance plan that will help you avail of cashless treatment in a network of hospitals across India. Not having the option to pay out-of-pocket for emergency treatment in an empanelled hospital will give you peace of mind.

A. Planned Treatment

Here's how to file a cashless claim for planned treatment:

At least a week before the scheduled treatment date, the policyholder must submit the claim application form to their insurer via the appropriate option - online or offline.

The insurer will notify the hospital where you will be receiving treatment about your cashless claim procedure.

After the hospital accepts the cashless claim procedure, the policyholder will receive a confirmation mail or SMS. This email or text message has a specific expiration date, and the policyholder must complete his or her treatment within that time frame.

At the time of admission, the policyholder must submit or display the confirmation mail or text to the hospital.

Following therapy, the insurer will cover the treatment costs.

B. Emergency Treatment

Here's how to file a cashless claim for emergency treatment:

The policyholder must notify the insurer as soon as possible after being admitted to the hospital. Most insurance companies provide a 24-hour window for you to contact them.

The policyholder will be sent a cashless claim application form, which must be filled out completely and submitted.

The claim will be approved by the insurance, and the hospital will be notified.

Following therapy, the insurer will cover the treatment costs.

If the claim is denied, the insured will be notified within 24 hours of the company's notification.

Health Insurance Reimbursement Claim

If the policyholder chooses to visit a non-empanelled treatment facility, a health insurance reimbursement claim might be filed. In this instance, the cashless health insurance claim option is unavailable. As a result, the insured must first pay all hospital bills as well as other expenses involved with hospitalisation and treatment before claiming compensation. Here's how to file a reimbursement claim:

The policyholder must check the bill information after treatment.

Within 24 hours of discharge, the bill and associated treatment records must be sent to the insurance company.

The bill and documentation will be reviewed and authorised by the insurance company.

If the company has a question or the claim is denied, the policyholder will be contacted.

Once the insurance company approves the claim, the bill amount will be refunded.

Required Documentation

Whether you are going for Health Insurance Reimbursement Claim or Cashless Health Insurance Claim, your insurance provider will need some documented proof of the treatment. Here’s what you need to provide them to facilitate your health insurance claim settlement process.

Health Card

Filled Claim Application Form

Medical Form or Certificate signed by the doctor

Pharmacy Cash Memos

Hospital Prescriptions

Bills and Receipts

Discharge Summary

Report of Investigation

FIR or MLC (in case of an accident injury)

Conclusion

Finally, the health insurance claim settlement process is going to be different for everyone. It depends on your insurer and the type of claim you are making. There are no set rules that every company is going to follow. However, every company will have a general procedure that they follow that you can use as a guideline when filing a claim, or if you want to track the progress of your claim.

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