Investing for the First Time? Here are Some Tips for Beginners

According to an article in The Hindustan Times in early 2015, there has finally been a predominant trend of household savings in India being funneled towards financial assets instead of physical ones, like gold and property. Experts believe that this is indeed smart money management, since physical assets are no longer providing handsome returns. If you are starting off with investing, the focus should be on mutual fund investments perhaps. We look at some guidelines to follow for first time investors.

Starting off with Investments: Here are Some Options to Consider

Some top investment choices for beginners include:

1. Stocks: When choosing stocks for investment purposes, beginners should consider seasoned one that have been stable for a period of time. Primarily, these stocks would be the ones belonging to the more established companies, dealing in goods of everyday needs, the demand for which would be sustained despite the economic scenario. For instance, stocks of companies dealing in food items, cleaning agents or personal care items must be considered. These stocks have the ability to rise fast. Therefore, you need to buy when their prices drop and consider selling when prices seem to have peaked. This can help you make profits and provide a boost to your investment plans.
   
2. Certificates of Deposit: Financial planning in India is incomplete without these risk free investment instruments. Certificates of Deposit entail no risks; however, the returns are fairly low. Besides, there are no quick gains here. You will need to keep your money with the bank for a period of 6 months or more. The bank pays you back with interest, which is not generally very high. If you want to be a seasoned investor with CDs, you can choose three certificates with 1, 2 and 3 year maturity periods, respectively. This way, you can periodically cash out on your investments.
   
3. Mutual Funds: These funds are ideal for beginners because they are managed by seasoned investment specialists. An experienced fund manager often succeeds in generating handsome returns for all investors who might have pumped in cash into a fund. Also, mutual fund investments can be started with a very nominal amount and hence easy to manage for beginners.

Above all, you will need an expert investment advisor for help and support. Choose an investment company that understands your needs as a beginner and provides suitable suggestions for building on your investments. The idea is to move from strength to strength and gain confidence as you gain grip on the investments. Your personal interests as well as your comfort levels should be given foremost importance when providing suggestions.

Above all, investments should begin with smart money management. You should start saving early and give yourself more time to build a corpus. Only then can investments reap the best rewards. 

How to Choose the Correct Mutual Fund for My Needs?

The asset base of equity mutual funds (MFs) surged 13 percent to Rs 3.45 lakh crore at the end of March 2016, compared to Rs 3.05 lakh crore in March 2015, says an article published in The Economic Times in April 2016. Mutual fund investment is considered to be an effective tool for building a significant corpus, whether for the purpose of wealth creation, retirement planning or savings. Being professionally managed, it is ideal for individuals who do not have the time and knowledge to assess the market day-in and day-out. When you invest in an MF, most of your investment decisions are taken by experienced portfolio managers.

Steps to Choosing the Right MF

There are various types of mutual funds in India, including equity, debt and hybrid. Each scheme invests in different types of security. They have a specific objective and carry different levels of risk. You should familiarize yourself with the different types and the risks each one carries before parking your money in any one of them. Here are a few steps to choosing the right money management tool:

 Identify Your Goal – You must identify the objective with which you are investing your money. You can consult a financial advisor, who will assess your expected rate of return, your current financial condition, and risk appetite and investment time horizon to determine the amount of money you must invest and the type of scheme you should opt for.

Choose a Scheme – While choosing a scheme, you need to assess its past performance for the short, medium and long term of 6 months, 3 years and 5 to 10 years, respectively. You must also calculate the risk-adjusted returns of the scheme, comparing the returns offered by the scheme with that offered by securities carrying zero risk, such as government treasury bills. Also, choose a scheme that has consistently surpassed benchmark indices. You can also refer to the ranking provided by various research portals.

Know the Fees – Annual charges and fees for mutual funds in India might include advisory fees, transaction costs and annual management charges. Make sure that you are not exorbitantly charged.

Assess the Fund Manager – Go through the fund manager’s qualification, his past performance and investment style. He should be consistent in his investment style and adhere to the objective of the scheme.

To know more about money management though mutual fund investment, you can consult your financial advisor.

5 Things to know if you are looking to Invest in Property

The Indian real estate market is expected to touch US$180 billion by 2020. The housing sector alone contributes 5-6% to the country's GDP, says a report published by the Indian Brand Equity Foundation in January 2016. The real estate sector is considered to be one of the most lucrative options when it comes to building a corpus. Ideally, you should buy property when the markets are down and sell when the markets are at their peak. However, to make the most of your investments, you must stay invested for about 7 to 10 years, if you plan to buy and hold. Other than directly investing in property, you can park your surplus money in this sector through REITs and real estate funds in India. The former is a fund that is traded in the stock market, while the latter is a mutual fund that only invests in the real estate sector.

Things You Must Do

Whether you are buying your first property or are a veteran, the rules of investing remain the same. Given below are some property investment tips that could prove useful when you consider investing in this sector.

1. Get Rid of Your Credit Card and Personal Loan Debts: Both these types of debt come with higher interest rates than mortgage loans. They can significantly decrease your borrowing capacity. Decrease your credit card limit or if you don’t use your credit card, you might as well get them closed.
    
2. Choose an Established Developer: You might be lured into buying a house by a new developer in town because of its low price. Don’t be fooled by low prices, go for an established developer, who has an impressive track record of successful projects in the city. Also, look at whether the previous projects were completed on time or not.
   
   
3. Check All Documents: Go through all important documents yourself, such as the title deed, clearance given by government authorities, approval of the building plan, environmental clearances and commencement certificate. If you are buying property that is being resold, make sure that it is not mortgaged via a bank loan and does not have any property tax due.
   
   
4. Shop Around for a Loan: You might be a loyal customer and go to one bank for all your financial needs. However, it is a good idea to shop around for a bank loan while buying property.
   
   
5. Calculate Extra Cost: Apart from the cost of the house, insurance, maintenance, registration and stamp duty, additional costs may arise at any time. Make sure to calculate these extra costs and keep sufficient cash flow at least for one year from the time of possession.

To invest in real estate funds in India, you can consult your financial advisor. They will be able to advise you on the amount of money you should invest, taking various factors into consideration.

ABFSG – A Premier Financial Services Company

Aditya Birla Financial Services Group, or ABFSG, is one of India’s premier financial services companies. ABFSG is a part of Aditya Birla Nuvo Limited (ABNL), a USD 4.4 billion conglomerate with multiple manufacturing and services businesses. It offers an umbrella of banking, financial advisory services and asset management services. ABFSG ranks in the top five fund managers of India (excluding Life Insurance Corporation, or LIC), with assets under management of INR 1.8 trillion as on 30^th September, 2015. ABFSG stands out in customer experience, as it is a one-stop shop for the entire range of banking, financial and insurance solutions. ABFSG has twelve lines of business spread across seven entities.

Aditya Birla (AB) Finance Ltd (ABFL)

ABFL is a leading Indian non-banking financial company (NBFC). The company offers loans against securities, loans against property, lease rental discounting and loans for purchasing commercial properties. The company also offers corporate finance solutions for large caps, mid-caps and SME, or small and medium enterprises. They also offer Debt Capital Markets and Syndication Services to help investment grade companies raise debt and equity capital.

AB Housing Finance Ltd (ABHFL)

ABHFL provides loans for buying a home, making home improvements, or for home construction. It also offers the service of balance transfer of a loan from another bank, with an option of topping it up if required by the client.

AB Insurance Brokers Ltd (ABIBL)

ABIBL is a leading composite general insurance intermediary. It specializes in insurance broking and risk management solutions for individuals and corporates. It also offers reinsurance solutions to insurance companies across the globe.

AB Money

AB Money is a single brand offering the services of AB Money Mart Ltd (ABMML), AB Money Ltd (ABML) and AB Customer Services Pvt Ltd (ABCSPL). ABMML sells a range of third-party financial products such as company deposits, mutual funds, alternate investments and wealth management services to high net worth individuals (HNIs). ABML provides equity and derivatives trading through the national stock exchanges. ABCSPL offers a unique platform known as MyUniverse, AC Nielson’s “Product of the Year”, which helps customers to aggregate their bank accounts, investments including gold and real estate, credit cards, loans, incomes, and expenses in a highly secure environment.

AB Capital Advisors Pvt Ltd (ABCAPL)

ABCAPL provides investment management and financial advisory services to domestic and global investors. It currently manages INR 11.79 billion under two funds, the Aditya Birla Private Equity - Fund I and Aditya Birla Private Equity – Sunrise Fund.

Birla Sun Life Insurance (BSLI)

BSLI is a joint venture between the Aditya Birla Group and Sun Life Financial Inc., one of the leading international financial service companies from Canada. BLSI offers a complete range of offerings including term insurance, insurance cum protection plans, wealth plans, plans for children’s education, and health insurance plans.

Birla Sun Life Asset Management Company Ltd (BSLAMCL)

BSLAMCL is a leading asset management company with a wide range of product offerings across equity, debt and balanced as well as structured asset classes. BSLAMCL also offers portfolio management services to HNIs, and real estate investment advisory.