Step-up SIP - What is it and how does SIP Top-up Work?

Posted by Rushabh H. Mehta | Published on 28 Feb 2020
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Step-up SIP - What is it and how does SIP Top-up Work?

Step up SIPs

Systematic Investment Plans, or SIPs, are very popular as they allow you a disciplined approach to investing in mutual fund schemes. You can start a SIP in any mutual fund scheme that you prefer and invest periodically affordable amounts to build up a substantial corpus over a long term period. SIPs offer you the benefits of –

  • Affordable investments
  • Disciplined investments and
  • Rupee cost averaging

When you invest through SIP, you choose a fixed amount of money that would be invested at periodic intervals. But what if you want to increase the SIP amount? Can you do so in the existing ongoing SIP investment?

For doing that you may have to start a fresh SIP for the additional amount. The current SIP amount would not be allowed to increase unless you have opted for “Step up” feature at the time of starting your SIP investment. Let’s understand what this feature is all about.

What is a step-up SIP?

A step-up SIP, also called a top-up SIP, is a type of SIP investment wherein you can increase your monthly SIP investment amount periodically at a fixed rate. A step-up SIP, therefore, allows you to increase your mutual fund investments as your income grows.

How does a step-up SIP work?

A step-up SIP increases your monthly SIP investments in any of the following two modes –

  • By a fixed amount
  • By a fixed percentage

When you invest in a step-up SIP scheme, you have to specify which increment mode you prefer, the amount or rate of increase, the frequency of increase (annually or monthly) and the time up to which the increase should be done. When all the details are provided, your SIP commences and then increases at the defined rate and at the defined interval.

Let’s understand the working of a step-up SIP by an example –

Suppose you choose a step-up SIP of INR 5000 due every month. You choose to increase the SIP by 10% every year for up to 10 years. In this case, when you start the SIP, the first year, your investments would be done @ INR 5000 every month. Thereafter, in the next year, the SIP amount would increase to INR 5500. In the third year, the SIP amount would again increase to INR 6050, and so on.

Alternatively, you could choose to increase the SIP by a fixed amount of INR 1000 every year rather than a fixed percentage. In that case, your SIP in the first year would be INR 5000 per month. In the second year, it would increase to INR 6000, then INR 7000, and so on.

Thus, under the step-up SIP scheme, your SIP amount would increase by a specified amount every year, allowing you to step-up your investments over time. You can also specify a maximum SIP amount, which would serve as the maximum limit to which the SIP would increase over time. When the increased SIP reaches the maximum specified amount, no more increase would be affected, and your investments would continue at the maximum amount.

Benefits of step-up SIPs

Step-up SIPs prove beneficial than conventional SIPs because of the advantages that these schemes provide. Such advantages are as follows –

  • You can sync your investments with increasing income

During your active working life, your income does not remain stagnant at one level. It increases with the increase in your experience and your appraisals. When your income increases over time, why shouldn’t your SIP increase too? Step-up SIPs allow you to effortlessly increase your investments so that your increasing income is saved to yield an increased corpus.

  • You can accumulate a higher corpus

As you increase your SIP investments, your corpus grows. Step-up SIPs allow you to increase your savings even when you are a passive investor. Your marginal propensity to save increases as your income increases through step-up SIPs. A slight increase in your SIP investment can help you meet your financial goals faster.

  • It helps you face inflated costs

The higher corpus which you can avail through step-up SIPs also allows you to meet the increased cost of living due to inflation. As inflation raises the cost of goods and services, the corpus that you accumulate through step-up SIPs allow you to meet such inflated costs without any difficulty.

  • It results in disciplined savings

Ideally, as your income grows, so should your investments. However, this is seldom the case. As incomes increase, many individuals squander their money in unnecessary indulgences rather than in savings. Step-up SIPs ensure that a part of the increased income is directed to disciplined investments so that you are not tempted to spend your earnings mindlessly.

  • It is convenient

Rather than looking for different fund options for a new SIP to boost up your investments, a step-up SIP allows you to increase your investments through the existing fund itself. Step-up SIPs, therefore, provide you with the convenience of managing a handful of funds as you don't have to manage and monitor multiple mutual fund schemes for enhanced investments.

Step-up SIPs, therefore, are the ideal solution for increasing your investments over time as your income increases. It is a smart saving solution if you want to create a higher corpus for your life’s goals. Beginners can choose step-up SIPs to start investing small, affordable amounts as they start their mutual fund portfolio and then gradually increase their investments as their income and knowledge grows. So, make your SIP investments dynamic through step-up SIPs. Find out some of the best performing step-up SIPs at IndiaNivesh, and we promise you expert assistance with your mutual fund investments.

 

 

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Loan Against Mutual Funds – Get Loan on Mutual Funds in India

Posted by Rushabh H. Mehta | Published on 28 Feb 2020

Financial crisis can hit you anytime and therefore you must always be prepared to face them. But sometimes, there may be a situation when you have the funds but you have invested them in different investment avenues and you do not have the extra funds to deal with the monetary needs in your life. In such situations, mutual funds can act as a saviour. You can use them as security to avail a loan from financial institutions or banks. In this article, you will learn all the details about loan against mutual funds. Let us begin by learning how you can avail loan against mutual funds. How to Avail Loan on Mutual Fund? By pledging the mutual fund units, you can avail loan against mutual funds. You can take the loan on mutual fund of any type including equity, debt, or balanced fund. However, it is always advisable to take the loan against equity-based mutual funds and not against debt-based mutual funds. The loan against mutual funds interest rate depends upon the period of the loan. When you opt for taking a loan against the mutual funds, you cannot sell or switch the mutual fund unit that is under lien. Let us now understand the term lien on mutual funds. Lien on Mutual Funds Lien is an important term to understand while availing loans against mf. Lien is a document that gives the NBFC or banks the right to sell or hold your mutual fund's units. When a lien is provided in the favour of bank or NBFC, it means that you have given the ownership right of your mutual fund units to the lender. To transfer the ownership you must visit the fund house and request them to transfer the ownership of your mutual fund units in the name of the lender. The letter for lien transfer must be signed by all the unit holders. Let us now learn about the process of applying for a loan against mutual funds How To Apply For Loan Against Mutual Funds You can avail loan against mutual fund online if your mutual fund units are in demat account and you have prior approval. However, if the mutual fund units are in physical form you can avail loan on mutual fund by executing a loan agreement with the financing company or bank. The bank or NBFC shall ask the registrar of the mutual fund like Karvy or CAMS to mark a lien on the fund units being pledged. The registrar on marking the lien sends a letter to the lender along with a copy to the borrower regarding the same. One important aspect that you must know here is that you cannot redeem the units until full repayment of the loan. The money you get for the loan will depend on the type of mutual funds you own. Banks and other financial institutions often set the maximum and minimum cap on the amount of loan that you can apply for. For example, if you own equity-oriented mutual funds, you can get a loan of up to 50% of the Net Asset Value of the mutual fund. Let us now learn about interest rates on loans against mutual funds. Interest Rates on Loan Against Mutual Fund The loan against mutual funds interest rate will depend on the tenure of your loan. Similar to the terms and conditions, the interest rates vary from one financer to another. In general, the interest on the loan of mutual funds is 10% to 11%. Since this is a secured loan, the interest on this loan is lower than the interest on an unsecured loan. They may even lower the interest rate if you have a good credit score and a long standing relationship with the bank. Let us now learn how to remove lien on the mutual funds How to Remove Lien on Mutual Funds After repaying the loan amount, the financer will send a request regarding the lifting of lien to the fund house. You can even apply for partial removal of lien on making part payment to the financier. However, some units shall still be under the claim of the lender. Since you know the process of removal of lien, you must also know the consequences if you default the loan. Consequences of Defaulting Loan Against Mutual Fund If you default the loan on mf, the financier can enforce a lien for defaulting in making the payment. The financing company holds the right to send a request to the mutual fund company to redeem the units. Let us now learn about the benefits of borrowing against mutual funds. Benefits of Borrowing Against Mutual Funds You can create instant liquidity by taking the loan against mutual funds. Since mutual fund investment remains idle most of the time, you can raise capital for meeting the short term requirements. Since the mutual fund is a secured asset, the interest rate of the mutual funds is lower than the interest rate on a personal loan. For taking a loan on mutual funds, there is no need for selling the mutual fund units. The above mentioned are a few of the benefits of availing loans on mutual funds. Raising loans against mutual funds is a rare practice and not many are aware of it. It is also a far better option than other traditional methods of availing a loan. If you are new to the market or need any financial advice, you may contact IndiaNivesh.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Mutual Funds Taxation – Know about Tax on Mutual Funds

Posted by Rushabh H. Mehta | Published on 28 Feb 2020

We all make investments with an aim to enjoy capital appreciation and build a huge corpus in the long run. Mutual funds are one such investment channel that has the potential to offer capital appreciation in the long term horizon. Therefore, you must have always heard financial advisors suggesting the importance of investing in mutual funds. In fact, mutual fund investment is a great way to begin your investment journey. While we carefully plan our investments, one aspect which is often ignored is mutual fund taxation. Mutual fund taxation rules can get slightly confusing for a layman. However, if you have a mutual fund portfolio, it is imperative that you have a good understanding of how your returns will be taxed. Tax on mutual funds majorly depends on factors such as the type of fund you have invested in, your investment duration, your income tax slab and so on. This article helps you understand the taxation rules for mutual funds and how mutual fund taxation impacts your overall returns. Mutual Fund Taxation When you invest in mutual funds, you make profits in the capital investment in two ways – through capital appreciation and dividend receipts. The mutual fund house or Asset Management Company declares dividends on the equity funds appreciation and dividend receipts. The fund house declares dividends in the event of equity funds as and when the fund makes earnings. Likewise, on debt funds, you receive regular interest at a set rate. With these earnings, the value of your mutual fund investment continues to grow. At the same time, it attracts capital gains that tend to be taxable to investors. Understanding Capital Gain on Mutual Fund Capital gain is nothing but the profit that you make on your mutual fund investment when you redeem or sell your mutual fund units. In simple words, it is the difference between the value at which you purchased the mutual fund units and the value at which you are going to sell or redeem them. For example, let us say, Mr. Rohan invested Rs. 2 lakh in a mutual fund scheme on 1st January 2017 and the value of his investment on 1st January 2020 is Rs. 2.5 lakh. In this case, Mr. Rohan has earned a capital gain of Rs. 50,000. Taxation of Capital Gain on Mutual Fund The capital gains tax on mutual funds depends on the type of mutual fund scheme and the investment duration. The duration over which an investor stays invested in a mutual fund scheme is called the holding period. It plays a crucial role in determining the tax implication on the mutual fund investment. Depending upon the holding period, capital gains tax can be classified into two types – Short term capital gains tax (STCG) and long term capital gains tax (LTCG). Short-Term Holding Period Equity funds and equity-oriented hybrid funds are taxable for the short term if the holding period is less than 12 months. On the other hand, debt-oriented hybrid funds and debt funds are taxable as short term if the holding period is less than 36 months.   Long-Term Holding Period Holding equity funds or equity-oriented funds for more than 12 months is termed as long term. But in the case of debt funds, the investment is termed as long term only if the holding period is 36 months or more. If the mutual fund is a hybrid equity oriented fund where the exposure of equity is more than 65%, it will be considered as an equity fund for mutual fund taxation. However, when the exposure of the hybrid fund is less than 65% towards equity or it is 50% debt and 50% equity, in such case, the fund shall be considered as debt fund for taxation purpose. Let us now learn about mutual fund taxation rates. Mutual Fund Taxation Rates Equity Oriented Mutual Fund Schemes The mutual fund taxation rates for equity-oriented schemes with a holding period of up to 12 months are taxable for short term capital gains at the rate of 15%. If the holding period is more than 12 months, the long term taxation rate is 10%. The long term capital gains are exempt up to Rs. 1 lakh per annum for investing in equity-oriented mutual funds.   Non-Equity Oriented Schemes The mutual fund taxation rates for non-equity oriented schemes with a holding period of up to 36 months are taxable for short term capital gains at the rate of investor’s tax slab. If the holding period is more than 36 months, the long term taxation rate is 20% after indexation. Apart from the above-mentioned capital gains rates, the investor now has to pay tax on the dividend income as per his personal income tax slab rate. Prior to the budget 2020, the fund house (Asset Management Company) was supposed to to pay Dividend Distribution Tax (DDT) on the dividends on mutual funds on behalf of the investors. Another type of tax known as Securities Transaction Tax (STT) is applicable on the sale of mutual fund units in balanced and equity funds. It is applicable to both close-ended and open-ended schemes. Conclusion Since taxes take away a major portion of your corpus that you need to meet your financial goals, it is important that you include the tax on mutual funds in your calculation while doing financial planning. Investing in mutual funds is an art and you will master it with time. While deciding to invest, you must consider a few factors such as your investment goals, risk appetite, investment horizon and returns expectation before making any decision. Acquiring knowledge about mutual funds can help you go a long way. You can read from the vast information available on the internet or you can seek expert advice. If you need any assistance regarding mutual fund investment or taxation on mutual funds, you can contact IndiaNivesh.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • What is Side Pocketing and How it affects Mutual Funds
    Posted by Rushabh H. Mehta | Published on 06 Mar 2020

    What is Side Pocketing, and How it affects Mutual Funds? The mutual fund industry in India is growing at an exponential pace, and as an industry, it is continuously widening its investor base and also increasing its geographical spread. The market regulator SEBI plays an important role in the regulation of the mutual fund industry, protecting the interest of investors at all times and taking adequate measures as and when needed to boost investor confidence in both equity and debt mutual fund schemes. Side pocketing in mutual funds is one such measure taken by SEBI to protect the interest of investors in debt mutual fund schemes in case of troublesome debt in the portfolio of the scheme. What is side pocketing in mutual funds? Side pocketing in mutual funds is the creation of a separate portfolio within the fund’s portfolio for assets that are illiquid, risky or distressed at the moment and have been downgraded by rating agencies below investment grade. Such assets are ring-fenced from the other high quality, liquid assets in the portfolio to protect and treated differently for investment and redemption to safeguard the interest of old as well as new investors in the scheme. Side pocketing was introduced by SEBI in December 2018 after the IL&FS fiasco, where it failed to meet its debt obligations and repay its lenders and creditors. This, in turn, put significant pressure on various mutual fund schemes that had IL&FS papers as a part of its holdings. The complete mayhem resulted in substantial volatility in the debt and money market instruments resulting in redemption pressure in mutual fund schemes. High-quality, liquid assets in the schemes were sold by the funds to meet redemption requests resulting in increasing the exposure of remaining investors in the illiquid assets.  Side pocketing mechanism is allowed only in debt mutual fund schemes. How does it side pocketing work? Whenever a debt instrument is downgraded by credit rating agency from an investment grade to a non- investment grade, the mutual funds have an option for creating a side pocket and segregating illiquid assets from the high-quality liquid assets. The existing investors are allotted units in the leading portfolio and segregated portfolio on a pro-rata basis. No redemption and subscription are allowed in the segregated portfolio. Moreover, SEBI makes it mandatory for the fund to list the segregated portfolio on the stock exchange within 10 days to provide an exit window to the existing unitholders. Depending upon their outlook, investors can either continue to hold their investment in the segregated portfolio or choose to exit at the prevailing rate. Any future recovery from the illiquid assets is credited in the side pocket portfolio and paid to the unit holder in proportion to his holdings. Side pocketing impact on mutual funds and AMCs Side pocketing aids mutual fund schemes from selling quality assets in its portfolio to meet sudden redemption pressure in a panic situation. Creation of side pockets help insulate the remaining portfolio from troublesome debt To ensure that mutual funds do not misuse side pocketing, SEBI also suggests a list of safeguards that AMCs may implement.   Benefits of side pocketing in mutual funds Over the last few months, many debt mutual fund schemes have side pocketing a portion of its portfolio if the ratings of the investment paper in its holdings have been downgraded by the credit rating agency. Side pocketing is important to protect the interest of retail investors in case of illiquid assets because credit defaults accompanied by information asymmetry, results in institutional investors taking advantage of the situation. The benefits of side pocketing in mutual funds include- It is an important mechanism to ensure stability and reduce volatility in the debt market by addressing the issue of redemption pressure in case of troubled assets It prevents distressed assets from hampering the returns generated by high quality, liquid assets At the time of selling the segregated assets, only those investors who have units in segregated assets on the record date are entitled to the proceeds, thus ensuring a fair treatment To avoid unfair advantage of lower valuation, fresh inflows are allowed only in the non-side pocketed portfolio As side-pocketing helps curb redemptions, it helps in stabilizing the net asset value (NAV) of the scheme In case of a situation arising due to sudden illiquidity, it provides cushioning to the portfolio. The most significant benefit of side pocketing is that all investors, retail or institutional are treated at par CONCLUSION Globally, side pocketing is one of the best mechanisms to protect the interest of investors, and SEBI as a regulator ensures that it takes timely measures and imposes adequate regulations for the AMCs to safeguard the interest of investors at large. If you have any specific query or doubt about side pocketing in mutual funds schemes, contact our experts at IndiaNivesh for guidance.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • Money Market Mutual Funds
    Posted by Rushabh H. Mehta | Published on 02 Mar 2020

    Mutual fund investments are one of the most preferred choices of investments for investors as it is the easiest and most comprehensive way to create a diversified portfolio. There are different categories of mutual funds to meet the specific requirement as per the time horizon, risk appetite, and investment purpose. Broadly, mutual fund either in invest in equities, debt, or both debt and equity. Additionally, they can either be open-ended or closed-ended schemes. What are Money Market Mutual Funds? Money Market Mutual Funds are open-ended mutual fund schemes that invest in short-term debt instruments. As the name suggests, Money Market Mutual Funds invest in high- quality money market instruments/securities such as commercial papers, treasury bills, certificates of deposit, etc. with short-term maturity usually less than a year.  Money Market Funds aim to serve a cash-like position for investors with very low volatility to ensure capital protection. These mutual funds are a stable investment vehicle for investors for short-term income generation with an investment horizon ranging from three months to one year. What are Money Markets and different types of money market instruments? Money Market is an important segment of the Indian Financial Market for borrowing and lending of short-term funds. The maturity of money market instruments ranges from one day to one year. Transactions in money markets are high, and the market is predominantly for large players.  After understanding the money market mutual funds meaning, one needs to know the different types of money market mutual funds. As retail players have limited scope for direct participation in money markets, the different types of money market instruments are the best way to invest in such investments. 1. Treasury Bills: Treasury bills, also known as zero-coupon bonds, are issued by the RBI on behalf of the central government to fulfill short-term fund requirements. T-bills are issued at a discount and paid at par on maturity. These are the safest as they are backed by the government. 2. Commercial Papers: Commercial Papers are unsecured promissory notes issued by companies and other financial institutions with a maturity period of 15 days to a year. As they are unsecured papers, these are issued by companies with high credit ratings. These papers are issued at a discount and redeemed at face value.  3. Certificate of Deposits: Certificate of deposits are short-term instruments which are issued by commercial banks and other financial institutions to individuals and companies, when the demand of credit is high, but the growth in deposits is slow, thus resulting in tight liquidity of the financial institutions 4. Repurchase Agreements (Repos): Repurchase Agreements is an agreement to facilitate short-term loans under which RBI lends money to other banks. The agreement can also exist between two banks. Simultaneous sales and purchase of agreement are involved in the case of the repurchase agreement.  These are the four types of money market mutual funds available in India. Key features of Money Market Mutual Funds 1. Short-term debt instrument: These funds invest in very high-quality, short-term money market instruments, and cash equivalents. 2. Low-Risk Investment: As these funds carry very low risk, so the rate of return is near the risk-free rate of returnBetter returns than Bank Accounts: The returns offered are better than those offered by bank FDs or savings account 3. Allow retail investors to participate in Money Markets: They provide retail investors an opportunity to invest in money market instruments which are other inaccessible to them due to high ticket size4. Liquidity: Money market mutual funds are highly liquid and ideal to park short-term emergency money Factors to consider before investing in the different types of Money Market instruments 1. Investment Horizon: For any investment time horizon of investment is very important. Money market mutual funds are specifically designed to meet the short-term investment needs of investors. So, you should invest in these funds only if your investment horizon is of three months to a year. 2. Risks: Money market mutual funds are safe investment options, but these funds are subject to interest rate risk affecting the price of the underlying instrument due to an increase or decrease in the interest rate. Money market instruments such as CD are unsecured loans, and hence creditworthiness of the issuer is essential. 3. Returns: Money market mutual funds have the potential to offer higher returns than a regular savings account, especially when the interest rates are falling. The NAV of the fund depends on the prevailing interest rate. A fall in the interest rates means that the price of the underlying assets will increase resulting in higher returns from the funds. 4. Expense Ratio: Cost plays an important role as it affects the overall returns generated by these funds. The expense ratio is the fees that the fund charges to manage the portfolio. The maximum limit for expense ratio as prescribed by market regulator SEBI is 2.25%.  CONCLUSION If you are looking at investing your surplus in a safe investment for better returns than traditional bank deposits and also highly liquid instruments, then money market mutual funds are the best option for you. A good investment broker like IndiaNivesh provides a complete list of top-performing money market funds. Here is the list of top-performing money market funds: Aditya Birla Sunlife Money Manager FundKotak Money Market SchemeL&T Money Market Fund IndiaNivesh provides the ideal platform to meet your investment needs. Open your Demat account with us by completing the simple documentation and KYC form and get started now.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. 

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  • NFO – All about New Fund Offer (NFO) in Mutual Funds
    Posted by Rushabh H. Mehta | Published on 28 Feb 2020

    Fund raising is an important aspect of financial planning for any company. There are many ways through which a company can raise capital from the market. However, in the case of an Asset Management Company, they can raise the capital through New Fund Offer (NFO). In this article, you will learn all the important details about NFO and its related concept. Let us begin by learning NFO meaning. What is NFO? When an Asset Management Company launches a fund, a New Fund Offer is launched to raise capital in order to purchase securities. The securities include equity and bond. During an NFO, mostly new mutual fund schemes are launched. NFO is similar to IPO expect for the fact that it is launched by an Asset Management Company. The NFO remains open for a specific period of time and the investors can apply for it during the stipulated price. On conclusion of the NFO period, the investors get the funds at the prevailing Net Asset Value (NAV) of the fund. Many times investors get confused between an NFO and IPO. In this section of the article, we will clear all your doubts regarding the same. Difference Between NFO and IPO Since IPO and NFO both aim to raise money, the investors often get confused between the two. A company brings IPO to raise capital for improving its operational efficiency. On the other hand, an Asset Management Company brings NFO for purchasing the stocks of the company, commodities, bonds, etc. The price of the IPO is much higher than its face value. But in the case of NFO, the fund's price is Rs.10 per unit in general. Let us now learn about the types of NFO. Types of NFO A New Fund Offer is of two types; Open-Ended Funds As the name suggests, the investor can enter or exit the open-ended fund at any point in time after its launch. These funds are launched when the NFO ends. When there is a New Fund Offer, the open-ended funds announces the purchase of new units on a specific date. You can purchase any number of units of these funds. The NAV of the open-ended mutual funds is reported regularly after the closure of the stock market.   Close-Ended Funds A close-ended fund is one that does not allow you to make an entry or exit after the NFO period is over. They have a fixed maturity period that ranges from 3 to 4 years from the launch date. Theoretically, you can buy or sell these funds in the market, but it is not possible to do so because of lower liquidity. Let us now learn about the advantages of investing in NFO. Advantages Of Investing In NFO Close-ended funds provide you with the opportunity to invest in new and innovative products that are not available in the case of other funds. The close-ended funds come up with hedging strategies that protect you from the downside in the market by using the put options. However, being a close-ended fund, you can invest only when the NFO period is open. The close-ended NFO mutual funds often outperform other investment avenues. This is because when an NFO is launched during the peak of the market and you invest in it, the fund manager has the authority to hold the funds and invest when the markets are favourable or more attractive. Since close-ended NFO mutual funds have a lock-in period, the fund managers are not required to sell their stocks out of panic leading to losses to the unitholders. The fund managers in close-ended funds have the time to carry out research for stock selection and accordingly invest in securities. The lock-in period of NFO immunes the investors from market panic. With a lock-in period in place, the investors would not fall for bad investment decisions. Therefore, as an investor, you would make higher returns in these funds as you remain in the market for the long term. Since there are many advantages of investing in the NFO, you must select it carefully. To help you with the NFO selection, we list down certain points that you may follow. Things to Consider Before Investing in NFO You must make a background check of the fund house. You must ensure that the NFO has a positive history of mutual fund investments and has the potential to offer good returns in the long run. Before selecting any fund for investing, you must read about the risk, returns, allocation of the asset, etc. of the NFO. Always make sure that you read the offer document carefully and understand the fund manager’s investment process. The minimum amount for NFO subscription ranges from Rs. 500 to Rs. 5,000. So choose your funds accordingly. Some of the NFOs have a lock-in period. So invest in them after considering that factor. The above mentioned are a few things to consider before investing in New Fund Offer. Investing is all about selecting the right avenues and making good returns in the long run. If you are a beginner in the market or seek any assistance in investing, you can contact IndiaNivesh. We understand your financial needs & goals and accordingly suggest the right investment option for you.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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