One of the important terms that you will come across when picking mutual funds is NAV. NAV stands for Net Asset Value and refers to the fund’s per unit market value. It is the cost at which an investor purchases fund shares from a fund company and redeems the same by selling it to a fund company. NAV essentially denotes the price of per share of the fund. As with stocks that have a share price, mutual funds have Net Asset Value.

How does NAV work?

Unlike share prices that fluctuate or change throughout the day, NAV does not. The Net Asset Value is updated at the end of the trading day. It is calculated by dividing the total value of all the assets, minus the total number of liabilities. The reason it is calculated at the end of the day is because it takes into consideration the closing market prices of the securities that are held by the funds. It is usually in the later hours of the evening or any time before 9 pm.

Importance of NAV

NAV is a factor of great importance when tracing share price movements. Albeit, it does not aid in clearly gauging and acquiring an overall view of the fund’s performance. The reason behind this is that at least 90% of the realized capital gains and income is divided among investors each year. This distribution leads to a reduction in the NAV. Thus, NAV should be considered as one factor but not the only concern. While it may reflect a drop, in actuality the net value of the investment remains unchanged.

When investing in mutual funds, you must be certain about the different aspects related to mutual funds. It is important that you effectively define your objectives and investing goals. If you are looking to derive returns to be used over a latter period, then a long-term goal is best suited for you. It is advisable to choose a financial advisor who can guide you through the path of investment. Remember, mutual funds are subject to market risk. You must ensure that you make informed choices when investing in the same.

So you want to open a demat account. Banks and brokers have made demat account opening quite simple. But it would not hurt to gain some familiarity with the steps involved. Knowing how it all works could smooth out the demat account opening process for you.

The word ‘demat’ is short for ‘dematerialised’. If you invest in shares or other financial securities, you can hold these in your demat account in dematerialised form. This means the security certificates are maintained in electronic form in your account. No need to bother about physical certificates anymore.

In any case, the Securities and Exchange Board of India [SEBI] has mandated that only dematerialised securities can be bought and sold on stock exchanges. There is no scope for buying or selling shares in the physical form. That means for those wishing to trade or invest in the stock market, having a demat account is essential. If you don’t have a demat account yet, here’s what you need to know about the demat account opening process.

Steps to follow to open a Demat Account

1. Contact a registered Depository Participant [DP]

A depository helps investors and traders to buy and sell securities like shares, bonds, debentures, and mutual fund units by holding them digitally. Supporting the depository in carrying out its functions are registered DPs. These could be banks, brokers, or other financial institutions. You can get a list of DPs from the websites of India’s two depositories – National Securities Depository Limited [NSDL] and Central Depository Services Limited [CDSL].

2. Complete the paperwork

Once you select a DP, it is time to fill in the demat account opening form. You can download the form from the DP’s website. At this stage, you will also have to furnish the Know Your Customer [KYC] documentation.

Demat account charges

Some DPs levy a demat account opening charge, but the amounts tend to vary and the amount charged may be refundable in some cases. You could also shop around for a DP that will open an account for you free of charge.

Among the other charges are an annual maintenance fee and a custodian fee for holding your digital certificates securely. You would also incur transaction charges, though this too would vary from one DP to another. The transaction charge could take the form of a flat rate. Or it could be a variable charge based on the number of transactions you make.

Common demat account opening questions

Q. Is it possible to open multiple demat accounts under one name?

Yes. You can open and operate more than one demat account with the same DP or with different DPs. However, the KYC process has to be carried out each time you open a new account.

Q. What is the minimum balance requirement?

You are not obliged to maintain a minimum number of securities in your demat account.

Q. Can a minor hold a demat account?

The parent or court-appointed guardian of a minor can open a demat account in the child’s name. Here, two KYC forms will have to be filled – one for the minor and one for the parent or guardian. The parent or guardian has to operate the account until the minor turns 18. At that time, the old account will be discontinued and a fresh one will have to be opened.

Q. Why KYC is important for demat account opening

SEBI has made the KYC process mandatory for opening a demat account. When you provide the complete KYC documentation, the authorities are able to track the flow of funds to and from your account. The KYC norms help curb illegal practices like money laundering, fraud, and funding of terrorist activities.

Once you complete your KYC, the data is stored in a centralized database. The authorities can access this by entering your PAN. It also simplifies the filing of tax returns, since your stock market transactions are easily linked with your bank account and tax returns.

KYC norms for opening a demat account

To complete the customer identification process, you will need to provide the following KYC documents:

• Proof of identity [e.g. PAN card with photograph, passport, voter’s identity card]
• Proof of address [e.g. PAN card with photograph, passport, voter’s identity card, ration card, utility bills, bank account statement]
• Bank account number
• PAN card

Summing up

A demat account can add an extra layer to your financial planning. Now that you have the option of investing in the stock markets, take your wealth creation plans up a notch. Besides, holding securities in electronic form certainly beats having to maintain physical certificates. Dematerialised securities are safe, as well as easy to buy, sell, or transfer.

To open a new demat account, simply approach a DP like Kotak Securities, fill out the account opening form, provide the KYC documentation, and you’re done. You should get your account details within a week or two. To ensure a smooth account opening process, simply ensure that your KYC documents are in order.

Investors seeking long term capital appreciation with moderately high risk appetite can consider investing in mutual funds. Mutual funds are a modern investment tool which collects money from investors sharing a common investment objective and invests this pool of funds in various asset classes including equity, debt, government securities, corporate bonds and other money market instruments.

There are two ways in which investors can invest in mutual funds, either through lump sum or SIP. Lump sum payment is ideal for those who have a surplus amount parked in their bank account and wish to invest this amount for better gains. In lump sum payment, the investor pays the premium at the beginning of the investment cycle.

Systematic Investment Plan or SIP is a systematic approach where an individual can give their investments a disciplinary touch through systematic and regular investing. SIP is an electronic payment process where all an investor needs to do is instruct his/her bank and every month, on a predetermined date a fixed amount is debited from their account and transferred to the mutual fund account.

SIP investments are the best way for anyone who wants to inculcate the discipline to save regularly. If you wish, you can also buy SIP online. The best part about SIP is that you can start investing with an amount as small as Rs. 500 per month.

However, there are certain things for investors to keep in mind while investing in SIP. Building your mutual fund portfolio is one thing, but avoiding mistakes and managing risk is an entirely different aspect. Here are a few steps to avoid risk in SIP investments.

• SIPs do help in averaging out costs, but this doesn’t necessarily mean that SIP investments will all give investors positive returns. If the market performs well, SIPs will give good results, but if there is a downfall in the performance of stocks, there is no way for SIPs to overcome losses. To avoid losses, it is advisable that investors keep periodic checkups and compare their fund’s performance with other funds in a similar category.
• Technically, there is no such thing as SIP giving good returns or bad returns. Either the fund you invested in through SIP is underperforming or outperforming. If your fund has been underperforming for a long time, it is better to redeem your units and invest them in another fund. If you wait for too long, there are chances of you losing out on your initial investment also.
• SIP investments in mutual funds are exposed to market volatility, making them a high risk investment. Hence it is better that you identify your risk appetite and also understand what type of investor are you before investing in mutual funds through SIP. If you are more of conservative types who do not wish to exposes their finances to the vagaries of the market, it is better than you reconsider investing.
• No investment is risk-free, and investors should be ready to bear losses, especially when the market becomes extremely volatile. The sensible thing to do here for investors is to invest within their boundaries and avoid over investing. That last thing you want is to become bankrupt and hence, always have a diversified portfolio and avoid investing beyond your risk appetite.

If you are investing in mutual funds through SIP, make sure that you have a long term investment horizon. That’s because equity investments tend to outperform only when held for the long term. If you have a short term investment objective, SIP investments might not be ideal for you. It is better that you look for other investment options rather than banking on SIP to get you closer to your ultimate financial goal.

These were some of the things every investor should keep in mind if they have to avoid risk in SIP investments. Make sure you stick to an investment strategy and do not drift away from it. It is only then that you stand a chance to make some profits from your SIP investments.

Investors seeking long term capital appreciation through equity investment can consider investing in equity mutual funds. These are a mutual fund category which predominantly invests in equity and equity related instruments along with investment in other money market instruments like government securities, debt bonds, etc.

Investors should, however, remember that mutual fund investments are subject to market risk and returns are never guaranteed.

But this doesn’t mean that you are bound to lose your money through mutual fund investments. If you know your financial goal, your risk appetite, your investment horizon, and if you manage to invest in a scheme which shares the same investment objective as you do, there are chances of you making some decent profits.

So if you are someone with a moderately high risk appetite who wishes to invest in an equity fund which has a diversified portfolio, you can consider investing in multi cap funds. To find out more about multi cap funds, read on:

What are multi cap funds?

In SEBI’s own words, A multi cap fund is ‘An open ended equity scheme investing across large cap, mid cap, small cap stocks. Of the total assets, a minimum of 65 per cent investment is made in equity and equity related instruments‘.

Multi cap funds let you take advantage of all the three caps by diversifying your investments is small, mid and large cap company stocks. Diversification means less risk, which also means that your investments stand a chance to reap some benefits too.

Here are few things about multi cap funds which an investor must know, especially if they are planning to invest in these funds:

1. Investment objective – Multi caps fund usually aim to generate long term capital appreciation by investing in a diversified portfolio of equity and equity related instruments across market capitalization. So if you are an investor who shares a similar investment objective, you can consider investing in multi cap funds. Multi cap mutual funds aim to offer investors an ideal mix of equities in an attempt to provide long term returns while minimizing risks associated with market volatility.

2. They offer great flexibility – Multi cap funds usually offer a great amount of flexibility, especially for the fund manager who can switch the portfolio composition depending on the market conditions to maximize profits. For example, if mid cap stocks are underperforming, a fund manager has the liberty to change the asset composition and invest in large and small cap stocks to give the fund some stability.

3. There are some risks involved too – Remember that multi cap funds are equity oriented funds. And, investments made in the equity market are subject to market volatility. Hence, returns are never guaranteed. So investors should first identify their risk appetite, and only if they have some risk appetite, they should consider investing in multi cap funds.

4. Investment horizon – Equity investments tend to outperform and beat their benchmarks if stayed invested for the long run. The same applies to multi cap funds, and hence, if you are someone with a long term investment horizon, chances of you benefiting from your multi cap investments are higher. Bear in mind that wealth creation or building of a corpus takes times, it cannot happen overnight. It is hence advisable to have a long term investment horizon when considering investing in multi cap funds.

5. They are ideal to invest through SIP – There are two ways to invest in multi cap funds- either through lump sum payment or payment through SIP. If you have surplus money parked and wish to invest all at once, you can opt for lump sum payment. On the other hand, if you wish to give your multi cap funds a systematic approach, you can consider opting for SIP. Systematic Investment Plan or SIP is a payment method, where an investor can instruct their bank, and a fixed amount is debited every month on a predetermined date, and then the money is transferred to his / her multi cap fund. If you too wish to reap benefits of SIP, we recommend you begin investing soon.

We hope that the above pointers about multi cap funds help come in handy while making an investment decision.

Who doesn’t want to save tax? Ok, let us rephrase the question. Who wants to give their hard earned money to the government? No one, right? That’s true because keeping inflation in mind a lot of us are anyways finding it challenging to make ends meet from the income that we receive every month.

And if you too are someone who has been taxed on their annual income for the first time, welcome to the club, my dear friend!

Women have a natural tendency to save money. But when it comes to paying taxes, even they are left confused. If you too are confused about how and where to invest in order to save yourself from taxes, we have seven tips for working women which might come in handy while planning your taxes.

1. Section 80C of the Indian Income Tax Act, 1961 has certain tax saving instruments under it where investors can invest up to Rs. 1.5 lakh annually and claim tax deductions. Instruments like ULIPs, health insurance, life insurance, Public Provident Fund, Employee Provident Fund, ELSS, etc.

If you are someone who doesn’t wish to expose their finances to volatile market conditions, you can consider investing in traditional investment tools like Public Provident Funds, National Pension Scheme [NPS], etc.

2. Your employer must have already opened an EPF account on your behalf, but if you want to invest further to build a commendable corpus for your sunset years, you can consider investing in Public Provident Fund [PPF].

PPF is a scheme launched under the purview of Government of India which comes with a minimum lock of 15 years. The rate of interest in low but you are guaranteed returns.

3. Another way you can choose to save tax is Unit Linked Investment Plan or ULIP. ULIP is a blend of investment and insurance where women can invest and claim tax deduction. Since ULIP partially invests in equity markets, returns from ULIP investments are never guaranteed.

4. As per Section 80D an investor can invest in a health insurance and claim tax benefits of up to Rs. 25,000 per fiscal year. But make sure that you buy a health insurance that covers the major illness and diseases.The last thing you want to do is pay from your pocket because the health insurance doesn’t cover a particular ailment or illness.

5. Equity Linked Saving Scheme or ELSS is the only tax saving equity scheme which comes under Section 80C that allows investors to seek long term capital appreciation with a tax benefit.

6. Here’s an example to help you understand how ELSS works. If your gross taxable income is Rs. 12 lakhs, you can invest Rs. 1.5 lakhs in this tax saving mutual scheme and bring down your taxable to Rs. 10.5 lakhs. ELSS comes with a mandatory lock-in of three years. Which means you cannot redeem your ELSS units for at least three years. Investors can actually benefit from this as holding your ELSS investments for the long term might help them beat market vagaries and seek some decent returns. There is no upper limit in ELSS and hence, if you wish you can invest more that Rs. 1.5 lakh in your ELSS scheme. However, you cannot claim tax benefits for more than Rs. 1.5 lakh per fiscal year.

Young working women with moderately high risk appetite who wish to save tax and seek capital appreciation through equity investment can consider investing in ELSS. Women can invest in Equity Linked Saving Scheme through SIP. Systematic Investment Plan or SIP is a systematic approach where women can invest in an easy and hassle free manner. All they need to do is instruct their bank and a fixed is debited from their bank account of a predetermined date every month and transferred to their ELSS fund.

7. ELSS is an equity oriented scheme. Investments made in the equity market are prone to market volatility, and returns are never guaranteed. So it is advisable that investors first identify their risk appetite and invest only within their boundaries. Working women with zero risk appetite must reconsider investing in this tax saving scheme. In case you want to refrain investing in this tax saving equity scheme, you can consider investing in other investment options that come under Section 80C.

Financial independence is something which every working and non-working women seeks. And a tax saving scheme like ELSS holds the potential to them with this freedom.

Tax saver mutual funds like ELSS have the potential to beat market fluctuation. But they need to remember that these investments are risky and impose a risk to their finances. Hence it is better that women first identify their financial goal, investment horizon and risk appetite before making an investment decision.

According to a 2017 survey, only around 44% of the Indian population possesses proper health insurance coverage. The statistics suggest that more than half the people in the country are still living without any medical coverage.

Are you amongst the 56% of Indians who do not have valid medical insurance protection?

Medical inflation in India is at an all-time high, with hospitalization and other associated costs increasing with every passing day. Staying without Individual health insurance policy at such a time makes no sense. Still, if you want to know about the advantages of availing a health insurance plan, read on.

No Need to Pay for the Hospitalization

With proper medical cover, you do not need to pay for hospitalization when seeking treatment at nursing homes, hospitals and other medical facilities in India. Instead, the insurance provider will settle your bills incurred during the hospital stay.

Considering the substantial expense of a bed and room at some of the reputed private institutions, such reimbursement is vital.

Critical Illness Care

Some illnesses are more severe than others are. Thus, their treatment is considerably more expensive as well. Further, you cannot afford to delay treatment for these diseases, as doing so could drastically hamper your chances of survival.

To ensure immediate and proper medical aid, you must opt for a health insurance policy that includes critical illness add-on as well.

Tax Benefits

If you are paying premiums for a medical cover, you are eligible for attractive income tax rebates in compliance with Section 80D of the Income Tax Act. For instance, people below 60 years of age are liable for a maximum tax discount of Rs. 25,000 per annum due to medical insurance premium payments.

Alternatively, those aged over 60 years can file for a yearly tax discount of up to Rs. 50,000 if they pay regular premiums for a medical insurance policy.

Thus, if you want to reduce your tax burden, opting for a medical insurance policy is a wise move.

Pre and Post Hospitalization Coverage

You do not incur medical expenses only during hospitalization. Costs, such as doctor’s fees and medication, are prevalent even before and after the actual hospital admission period. Pre-hospitalization refers to the medical expenses that you incur before hospitalization occurs.

Similarly, the follow-up visits to the doctor, along with any additional therapy required after discharge falls under post-hospitalization care. If you want to avoid such financial liabilities, make sure you pick a reputed health insurance plan that offers these facilities.

Free Yearly Check-Ups

Most insurance companies in India cover medical check-up charges incurred every year. Some insurers may provide coverage for dental check-ups, while others encourage policyholders to undergo a full-body check-up every year. These medical testing can help detect underlying conditions, allowing you to seek treatment for such conditions at their initial stages.

For instance, cancer can remain undetected in the body for several years before symptoms appear. However, each day you live with cancerous cells in the body pushes you closer toward death. The sooner you seek treatment, the better it is for you in the long-term.

Support for Alternative Forms of Treatment

Today, treatment is no longer restricted to conventional medicine alone. Many patients opt for alternative remedies and therapies when looking to cure certain conditions. For instance, Ayurveda and homeopathy are just two of the most popular branches of medicine that have found many takers recently.

Reputed health insurance policies support these remedies under the AYUSH cover, allowing you to file for reimbursement even when you opt for such unorthodox forms of treatment.

AYUSH cover is very important for Senior citizens, so make sure you check and compare health insurance plans and add-ons provided with it before making a decision.

Daily Cash Payment

When you are admitted to the hospital, family members need to travel to the treatment centre every day to visit you. Further, they need to purchase food from the outside, as carrying home-cooked food may not be feasible.

Daily cash payments from your insurer can help curtail these additional costs. Plans offering such support reduce financial obligation further for you and your family.

Domiciliary Treatment Cover

In some cases, doctors may recommend taking the patient home to continue treatment, if the practitioner feels that this the best course for the long-term recovery of the patient. Although the patient is back home, he/she remains under strict medical supervision at their residence.

Health insurance policies covering domiciliary treatment reimburse the cost of medical supervision at home under such circumstances, ensuring continued support and treatment.

Now that you know why medical insurance is essential, what are you waiting for? Contact your insurance provider immediately.

However, before availing one, do not forget to look at all available options in the market. Compare the products online and pick the insurance plan that best suits your individual needs.

The wedding day is one of the most important moments of your life. And if you are planning to commemorate the ‘day of your love’ through a big celebration, then you do need to plan ahead of time.

From finding a reputable wedding photographer, the most scenic venue, perfect attires and designing the invites, there is so much that makes a wedding glitzy.

It is essential to begin your planning well in advance. This will leave you with enough time to manage the smaller things that may crop up during the times leading up to the wedding. Here is a checklist that you should essentially follow before the day of tying the knot!

• Create a budget – You sure have a vision of what you want your big day to look like and you must have a budget in place to support it. Before the chaos runs high, it is best to construct a wedding budget by including all the expenses that you will and expect to pay.
• A wedding planner – While a lot of couples choose to plan the wedding themselves, a wedding planner can ease the burden.  Hire a planner that understands the type of wedding you want to create. Research well and carefully look at portfolios before hiring one.
• Wedding entertainment – Your guest must be well-entertained at your wedding and you can use a variety of forms. This could include an artist, DJ or band. When roping in either or all of the preferences, make sure that you book them in advance. Start your search and block the dates.
• Design and send out invitations – Understand how you would like your wedding invites to look and feel. The process of finalizing on one can be daunting. Pick the most favorable design and you can send out the invites by mail or online. Wedding invites should be sent out well in advance so that your guest can block their dates.

Planning well with the aid of the above mentioned check list will help you stay well prepared for when the day arrives. Sort your finances well as you do not want to be trapped by the lack of funds. A wedding or marriage loan is a personal loan that you can avail of either to fulfil the big marriage expenses or as an emergency fund. Getting all the little and mighty things organized will let you thoroughly enjoy your special day with your loved ones.