You may have heard that SEBI implemented a new methodology of categorizing mutual funds [MFs].  However, there are still some pockets of confusion even after the new norms have come into place and ushered in an era of uniformity. A large deal of confusion still prevails between a balanced fund and a balanced advantage fund. It is important for investors to know how to clearly demarcate between these funds and understand the risk aspects surrounding them.

Differences between balanced funds and balanced advantage funds

After SEBI-mandated re-categorization took place, there have been changes in both fund categories and also some changes within the categories. Here are the main differences between balanced and balanced advantage funds:

Balanced Funds – A balanced fund, also called hybrid fund, invests in both equities and debt. Under SEBI’s new norms, aggressive/equity-oriented hybrid funds invest 65~80% of their portfolio in equities. As per tax laws, funds that maintain 65% or above in equity investments are classed as equity funds and are eligible for Capital Gains tax benefits. However, there are also hybrid funds that invest a greater portion of their portfolio in debt [less than 65%]. These debt-oriented hybrid funds are treated as debt funds as per tax laws and don’t enjoy the capital gains tax advantages available for investments in equity funds.

Both kinds of balanced funds – equity-oriented and debt-oriented hybrid funds maintain their asset allocation irrespective of where the stock markets move. For instance, if equity markets move downwards thereby providing investment opportunities, a balanced fund will not change its asset allocation to take advantage of this opportunity and will retain its asset allocation at a near-static level.

Balanced Advantage Funds – A Balanced Advantage Fund [BAF] also known as a dynamic asset allocation fund invests in both equity and debt and the allocation between the two is managed dynamically. The term ‘dynamically’ allows mutual fund houses to have flexibility in maintaining levels of debt and equity within these funds.

Balanced Advantage Funds and their advantage

BAFs are known to adjust their equity exposure to prevailing market valuations i.e. whether valuations are cheap or expensive. So, when stock market valuations are high, BAFs will lower their equity exposure and when they are low, they will increase equity exposure. These schemes work best for investors who have a good grasp over asset allocation strategies. Investors, who understand the wealth generation capability of equity investment may also benefit from investing in BAFs. Here is why you should consider BAFs

• Good in volatile conditions – Equity markets are going through increased periods of volatility in the present scenario. Since BAFs have the flexibility of changing equity exposure to take advantage of market conditions, they can offer more protection against volatility.
• Good for capital growth – In undervalued markets or where fundamentally strong companies’ stocks have been browbeaten, BAFs can increase exposure to equities to as high as 80% and have the ability to generate considerable growth.
• Eliminate need to time markets – There is no need to time the markets if you invest in a BAF. These funds have the expertise to take advantage of market movements.

Given the broad macroeconomic factors and the resultant volatility in the markets, Balanced Advantage Funds [BAFs] have advantages that investors should definitely consider.

Non-Resident Indians [NRI’s] enjoy many of the similar financial benefits enjoyed by regular Indian investors. They can purchase property, set up their businesses in India, invest in the stock market, buy tax-saving products such as ULIP, apply for tax-benefits etc. However, the steps and formalities they have to follow differ vastly from regular Indian investors.

Some NRIs have retirement plans that involve moving to India and living here for the rest of their lives. However, they must complete some formalities to transfer their overseas income in an Indian bank. When NRIs visit India to perform banking and transactions, they must open an NRE or NRO savings or current account. There is a separate protocol and a set of documents that an NRI needs to produce for opening these accounts.  They can exchange their foreign currency to Indian INR for usage.

NRIs also need to fulfill additional formalities for making investments such as trading stocks, buying life insurance, purchasing real estate etc. The Government of India offers some exceptions for taxes on payment of insurance. Section 80D of the Indian Income Act, 1961 states that any payment made towards insurance and medical expenses is eligible for deduction. This benefit is also available for NRI’s.

ULIPs are hybrid insurance policies as they provide dual benefits of insurance and investment under one plan. Premiums paid are divided into two parts. One goes toward providing you and your loved ones with life insurance cover, and the other goes towards multiple ULIP fund options selected by you under your plan. In ULIPs, the amount that goes towards life cover and fund options depends on the policyholder. The ULIP investment plans provide additional benefits to all the policyholders such as the switching benefit to yield better returns.

ULIP tax-benefits for NRI investors

1. Under Section 80C of the Income Tax Act 1961, premiums paid towards keep a ULIP policy alive are deductible from your taxable income [up to INR 1,50,000]
2. You don’t attract taxes on the ULIP returns accumulated during the policy term.
3. Under Section 10(10D) of the Income Tax Act 1961, the maturity benefits received by the policyholder is exempt from taxation, provided that the annual premium is ten times the promised Sum Assured.

Given below are some of additional tax benefits that are applicable to NRI investors:

1. According to Section 80D, the Government of India made certain exceptions for taxes on payments for health insurance. According to Section 80D of the Indian Income Tax Act, 1961, any payment that is made towards health insurance is said to be eligible for deduction. NRIs as well can enjoy the benefit of this Act.
2. You can choose to receive your maturity benefit in installments [monthly, yearly, half-yearly] or one-time. The TDS is applicable in case your pay exceeds INR 10,000. However, you can claim these later when you file your returns.
3. There are some NRIs who pay tax for both the countries, which might reduce their overall income. The taxes of NRIs are, however, comparatively higher than that of a permanent citizen of India. If you don’t wish to pay double taxes, there is an option where you can apply for a Double Taxation Avoidance Agreement. India has signed DTAA with more than 80 countries. So before you apply, it is important to check if there is a DTAA available with India in the country you reside.

ULIPs allows you to switch between different portfolios as per your risk appetite.  In addition, it uses your money to boost your wealth. ULIP covers the two most important aspects of wealth management, i.e. savings and investment. The best ULIP plan in India will provide you with an option where you can invest in equity markets and protect your family with a financial cover that will help you get your life goals done.

After the introduction of the new categorization of mutual funds [MFs] by the Securities and Exchange Board of India [SEBI], Multicap Funds are defined as equity funds that can invest across market capitalization. These funds should invest at least 65% in equity and equity related instruments. The portfolio of such funds can comprise of large-cap, mid-cap as well as small-cap stocks. Multicap funds have been gaining in popularity of late due to their performance.

Multicap funds for investors

When you think of investing in an equity fund, you should consider multi-cap funds. Here are some reasons why multicap funds are recommended to investors:

1. No need to understand valuations: Some investors find it difficult to grasp valuations of various capitalizations like mid, small or large and it is problematic for them to decide on which will do better in the future. Investing in multicap funds eliminates the need to choose the right capitalization.
2. Professional expertise: In a multicap fund, a dedicated fund manager can shift holdings from one capitalization to another depending on market outlook. As an example, if valuations of mid and small cap companies turn expensive, the fund manager can shift the holdings to large caps, and vice versa.
3. Fewer constraints: Multicap fund managers have greater freedom in managing the fund’s portfolio. For example, in a pure large cap fund, it is a requirement that 80% of the portfolio be allocated to top 100 stocks by market capitalization; mid-cap funds need to have 65% of the corpus in stocks listed between 101-250 in terms of market capitalization. In a multicap fund, a fund manager is free to pursue the best pickings and create a mixed portfolio without any market cap bias.

Risks attached to multicap funds

All investments carry some risks and so do multicap funds. Since mid-cap and small cap funds carry more risk than large cap funds, the risks of mid cap and small cap funds are in part inherited by multicap funds. However, in a good economic environment, the fund manager can invest in small and mid-cap segments while shifting to large caps during periods of downturn.

Who are multicap funds good for?

Multicap funds are good for long-term investors who have an investment horizon of above 10 years. These funds can help in wealth building, planning for retirement and achieving long-term financial goals like purchase of a house or education funding. This type of equity fund uses a dynamic investment strategy to accumulate gains over different market cycles. Here is a snapshot of their performance

A Systematic Investment Plan [SIP] in a multicap fund can help you build a comfortable corpus through consistent investments over the long term. Investors who do not want to get into the nitty-gritty of stock selection or sifting through market capitalization may find these funds ideal.

Delhi, a city of fascinating history, charm, and chaos, blends the rich Indian culture and modernity at once. Though for some reason, people love to hate this city, it doesn’t change the fact that it is one of the best places to buy a house in.

Are you planning to invest in a residential property? Read on to know why the heart of India makes for one of the lucrative options.

1. Value appreciating venture

Over the past few years, there has been a downfall in the real estate business. However, according to multiple surveys, this sector is going to have an economy of $1 trillion by 2030. The value of residential properties in all likelihood will be increased in Delhi. Therefore, buying a house here makes sense for it is a value appreciating investment. If you are looking for funding, a home loan can be the right approach for you.

2. Favourable government schemes

To assist Delhiites financially, the Delhi Development Authority offers a plethora of beneficial schemes. For example, the Mukhyamantri Awas Yojana caters to the people from the lower-income group and middle-income group, on the provision of valid documents. Moreover, the Ministry of Housing and Urban Affairs offers the House Building Advance [HBA] scheme to government employees based on certain criteria. If you do not qualify for both, you can opt for a housing loan and fund your dream house in Delhi.

3. Ease-of-Connectivity

Being the heart of India, Delhi is well-connected to every other part of the country and also globally. Moreover, the development of intercity communication via metro routes, buses, and autos are mention-worthy. All you need to do is to find the right location in Delhi to enjoy such benefits.

4. Quality education

Home to multiple educational institutes of great repute, Delhi is the ultimate educational hub. You have a strong reason to buy a home here if you want to see your kids graduating from the best educational institutions.

5. Multiple Job Opportunities

Despite the slowdown in the economy, the capital never fails to disappoint its people. Delhi, including the NCR, over a period, has created a plethora of job opportunities for people from every walk of life. Be it creative or technical, the place offers jobs to have a steady life. Hence, buying a home for the foreseeable future is a smart choice.

Opting for a home loan

A home loan offers several benefits, an important one being the tax benefit. With such a loan, you can get a tax deduction under Section 24 of the Income Tax Act and thus, reduce your taxable income.

A Housing loan offered by financial institutions like Tata Capital Loan seems to be a feasible option. With an easy application and post-verification of documents, the money will be disbursed to you within a reasonable period of time. Moreover, with flexible EMI schedules, you can repay the money at your own convenience.

An amortization table is a chart that lists the periodic loan payments and is inclusive of the principal amount as well as the interest amount, which forms the basis of each monthly installment till the end of the loan term. Amortization tables are standard for installment loans, which have the payoff dates known at the time of the sanction of the loan. Both borrowers and lenders use them for assessing home loan repayments.

Amortization table reveals the true cost of buying a home with regular home loan repayment installments over a period of time. The earlier home loan installments mostly go in repaying the interest on the loan. As a result, the percentage that covers the loan’s interest decreases with every installment. By the end of the tenor, most of the payment is directed to cover the principal. Borrowers can avail discounted interest rates if they choose to reduce the amortization period of their home loan. However, as doing so considerably increases the monthly payment amount, only individuals who can maintain a higher level of monthly payment should consider it.

A home loan amortization table can be obtained by using a home loan EMI calculator. The key components of the table are:

1. An installment number, which is a unique serial number with the payment details mentioned in the corresponding rows.
2. The due date for each loan payment.
3. The opening principal, which indicates the standing principal amount at the beginning of the month on which the interest is subject to be charged.
4. The installment amount, which is the EMI repayment amount that changes with the fluctuations in interest rate over several years.
5. The principal component of the installment, which is the component of the EMI that goes into paying the principal amount of the home loan.
6. The interest component of the installment, which is the component of the EMI that goes into paying the interest on the opening principal of the home loan. The interest component is more initially; however, it keeps decreasing over time.
7. The closing principle amount, which indicates the principal amount remaining post the payment of the monthly EMI. The opening principle of the following month is the same as the closing principle of the last month.
8. The interest rate per annum, which is also known as the home loan interest rate that varies based on the lender.

The home loan authorization table is important to take into account when applying for a home loan. It presents a clear picture of the home loan payment schedule and as well as assists in understanding the home loan repayment process. With a better idea of the final cost of buying a particular home, it becomes easier to make an informed decision.

Travel includes a lot of excitement and enjoyable memories. However, it can be disturbed by any unexpected problems. Therefore, an individual should be prepared, if in case any problems arise. It can be sudden illness or accident, which might turn down the excitement of the trip. In addition, the medical cost in foreign countries is expensive. You can come across events like baggage loss, thefts, passport loss or monetary loss.

It can be any natural calamities or man-made riots which can affect your travel plan and your finances. Therefore, it is always safe to buy family travel insurance while planning for a family vacation.

Travel insurance provides medical and financial assistance in case of emergency to you and your family while traveling abroad. The aim behind buying travel insurance is to fly safe, worry free, and make the entire trip memorable. With the range of travel insurance plans covering leisure and business travel, you will find adequate coverage for a premium that suits every budget.

Buying travel insurance online offers you a wide range of travel insurance plans covering leisure and business travel. You can choose the insurance plan with the adequate coverage for the premium as per your budget.

Today, insurance companies offer specialized product portfolio with customized travel insurance plans:

• Individual Only Insurance
• Family Floater Plan
• Senior Citizens
• Students
• Multi/Annual Trip for business travelers

It is very important to understand the coverage offered under the family travel insurance or other plan you opt for. The most common travel eventualities covered under travel policies are:

• Emergency Medical expenses and emergency evacuation/repatriation expenses
• Accidental Death or Permanent Disablement
• Flight delay
• Loss/delay of checked baggage, Loss of personal documents
• Personal Liability

Following are the few benefits of travel insurance

Medical costs

In case of any unexpected illness, disease or accidental injuries, travel insurance covers the cost of medical expenses. The policy pays for the cost of the room and boarding expenses, fees of physicians and ambulance service, etc.

Repatriation

If you are unable to continue the trip due to any reason after hospital stay or medical treatment then the insurance company pays the cost of return to your country along with the medical bills.

Loss of baggage/personal documents

Under travel insurance, even your belongings are covered during travel. In case you lose your belongings or personal documents like identity card, passport, etc., you can claim the costs with your insurance provider.

Flight delay – If the flight is delayed from scheduled departure time then the insured will be reimbursed for any essential purchases.

Personal Liability – This cover provides third-party liability coverage if one involuntarily causes damage to third-party person or any property.

Hotel Accommodation – If the insured is hospitalized as an inpatient then the insurance provider will pay for the costs of hotel accommodation for the insured’s family member.

If the insured one is hospitalized as an inpatient, the insurance company pays the costs of the accommodation for the insured one’s family member.

All the above benefits vary depending upon the policy you choose. Therefore, always make sure to read the terms and conditions of the policy carefully.

Other things that one needs to consider while evaluating travel insurance policies are:

Look for policies that offer highest reimbursement towards

• Personal Accident
• Medical Expenses
• Loss of passport
• Personal Liability
• Trip Delay
• Checked baggage delay
• Financial emergency assistance
• Offers Accidental Death & dismemberment
• Dental care expenses

While booking flights, hotels and places also make sure to buy travel insurance online as well to stay protected. It will help you with the assurance of support being available in a foreign land in case of unforeseen eventualities. In addition, domestic travel insurance can help you to enjoy your domestic trip peacefully with your family members or loved ones.