Personal Finance Blog- India

Tough times do not last.

These volatile times in the stock market may look turbulent for traders and short term investors, but for long term investors this should not be much of a botheration. With a favourable demographic profile and being a developing economy, India has great prospects of growth . Even if you consider all the negatives, a return of 12-15% per annum over next 10 years seems very much possible.

We should understand that time in the market is more important than timing the market. A regular and systematic investment will definitely help good returns over the long term.

Investing regularly for long run and not tracking the markets on a day to day basis would help your investments generate good returns and a good night's sleep too.

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Good large cap funds to start SIP

Of late, we have been receiving a lot of queries about some good large cap funds in which SIP can be started. We recommend a few based on our experience.(investors are advised to do their own due diligence before they start investing)

1. Reliance Vision

2. HDFC Equity/ Top 200

3. Birla Sun Life Equity

4. DSP BR Equity/ Top 100

5. Kotak 30

6. Sundaram Select Focus

7. ICICI prudential Dynamic

These are some of the funds in which an investor can start his/her SIP. A longer time horizon ( say 5 years ) increases the probability of a higher return. please mail us in case you have any questions. You can also drop a comment with your choice of large cap funds.

EPF rate still @ 8.5% (2009-10)

EPFO has maintained the interest rate for 2009-10 on EPF funds at 8.5%. ( EPF- Employee Provident Fund - normal 12% deducted from basic + 12% employers contribution)

If you are a person who looks at stocks as very volatile and are looking for good fixed income returns, increase your EPF contribution ( Voluntary contribution which most of the employers allow). This would ensure that your money earns a tax free return of 8.5%. With the declining Fixed deposit rates , this seems to be a good option. Fixed deposit returns have almost come down below 8% (with a slightly downward potential). Again , your Fixed deposit interest is not tax free. PPF with 8% tax free return would be the next best option to consider for , if you are not keen /able to increase your EPF contribution. Both of these investments (EPF/PPF) can get you deductions under 80C ( upto 1 lakh) and generate a handsome tax free return.

No entry load on Mutual fund investments

Now MFs cannot charge entry load even if you make investment through a distributor.( Directive of SEBI -- news ). This is definitely a good news for investor. But there would be lesser motivation for the distributors to promote mutual fund investments.

If the investments are made through distributors or through online trading sites ( that have this facility), no entry load would be payable. But the continuation of such services by distributors or service portals without any commission needs to be seen.

This is definitely a good news for the retail investors.

Momentum is back

May has been a month of momentum for stock markets. It all seems exciting now. But as usual market may be over-reacting now and making the stocks go above their value. The indices are definitely going to move up in the long run because of the advantages that India seems to have but the short term euphoria need to be watched for carefully.
Its definitely time to heave a sign of relief but caution should also be the buzz word. For regular investors through SIP route , it's going to be business as usual!