Small businesses require funding at various stages – while getting off the ground, managing operations, maintaining inventory, upgrading equipment, and even recovering from losses. When running a Small and Medium-sized Enterprise (SME), it is imperative to optimise available resources in the best possible way. Sometimes, however, this still may not be enough to keep things running smoothly.

In such a scenario, some extra cash flow can go a long way. While there are several ways to fund your business, a small business loan or SME loan, can be the ideal solution to help steer things in a new direction.

There are many tangible benefits to taking such a loan. Here below, we list some of the most important ones.

Easy & Quick

With the world going digital, business loans have become much easier to access. In fact, today, many banks and lending institutions offer such loans without collateral. This makes it easier for small businesses to sustain their ventures. Further, the online application process for availing this facility is simple – with minimal steps and documentation.

Flexible Repayments

Nowadays, SME loans come with flexible repayment options. Banks and lending institutions usually understand the complexities attached to running a small business. As such, they offer flexible terms and conditions. They may allow an increase or decrease in EMI based on the financial condition of the company, and also allow bullet payments for periodic payment.

Low Rates & Charges

The interest rates for SME loans tend to be lower, especially in the case of government-backed schemes. Such loans are typically designed for public welfare. Overall, several factors are taken into account before disbursing the loan. These aspects include credentials of the borrower, tenure of the loan, business model and balance sheet of the company. Once approved, there are nominal one-time costs attached to the loan, such as processing fees.

Business Development

The required cash flow can help grow and expand your business. With stronger finance, manpower, technology and equipment, you have all the tools necessary to take your vessel to the next level.

Tax Benefits

Lastly, and quite importantly, you receive tax benefits under the Income Tax Act, wherein a part of the profit used for repaying the loan amount is exempt from tax.

Nowadays, especially for small establishments, business loans have become the order of the day. Along with all the unique benefits and features offered, they are also increasingly easy to take and repay.

If you are a growing Micro, Small & Medium Enterprise (MSME), it would be handy to know that you can always count on an MSME loan for your business needs. And, for the best loan rates, you should check out the Mahindra Finance SME loan plan.

Small business lending is more complicated when compared to individual loans. Such lending allows Small and Medium Enterprises (SMEs) to carry out their business operations smoothly. Often, these loans provide incentives that help the SMEs to reduce their costs.

Various financial institutions offer such loans for up to three years for meeting different fund requirements and may be customized to meet the specific needs of your business. Different lenders have different eligibility criteria.

Here are some basic eligibility criteria you have to meet to apply for small business loans:

• You must be in a specified business such as agriculture and food processing, automobiles, and auto ancillaries
• To apply for an SME loan, your business must be in operations for at least three years
• Your business should have earned a profit during the preceding financial year
• Lenders may sanction your application for a business loan for a Greenfield project if you are an established player in that sector
• If you are a reputed and well-known automobile Original Equipment Manufacturer (OEM), the financial institutions may consider your application for funding inventories.

Required documentation

The documents required to apply for business loans are simple. Here is an indicative list of documentation:

• Audited balance sheets for three previous financial years
• Collateral offered
• Business profile detailing your existing products
• The purpose for which the loan will be used
• Owners’ profiles along with Know-Your-Client (KYC) documents

Before you apply for Mahindra Finance SME loan, it is recommended you do the following:

1. Business plan

It is important you have a detailed and robust business plan before submitting your application. This is crucial to convince the lenders that your proposal is financially viable. The business plan must include details such as capital expenditure, employee and marketing costs, and debt repayment capabilities.

2. Credit history

You must check that your credit report is updated and accurate. Having a good credit history is favorable when you apply for an MSME loan (micro medium and small enterprises). Lenders review your credit report before approving your application.

3. Financial feasibility

Your business plan must include financial projections for the next three to five years. It is recommended you adhere to industry standards while doing the projections. You may also have to follow certain formats that help the lenders determine the financial feasibility of your business.

Such loans are available at competitive rates of interest and may be structured as per the specific needs of every borrower. Lenders also offer various repayment options to ensure you are easily able to service the loan.

Whether you are an entrepreneur or an existing business owner, it is possible that you require external finance. You need funds to buy equipment, meet working capital requirements, or expand your business.

In case you require funds, you may choose from multiple loans offered by the many financial institutions in India. With several available options, making the right choice may seem confusing. If you are not cautious, you may work with the wrong lender and face severe consequences.

Here are some basic questions that you must answer before you apply for a business loan.

• Quantum of funds needed
• Loan duration
• Purpose of loan
• Other outstanding loans
• The time required for repayment
• Credit score
• Number of years in business
• Type and quantum of collateral
• The current financial situation of your business

After answering these questions, you may apply for a loan offered by the lenders. Here are three tips to help you choose the right loan:

1. Review the purpose and loan amount

Lenders offer different types of business loans to meet the various needs of borrowers. You need to review the purpose for which you need funds, such as meeting working capital, a line of credit, vendor financing, or others. Moreover, you need to understand how much of the fund requirements may be self-financed. This will help you narrow down potential lenders.

2. Check the eligibility

Whether you are a Micro Small Medium Enterprise (MSME), Small Medium Enterprise (SME), or a large, venture you need to meet certain eligibility criteria. It is recommended you check these criteria to understand if you qualify for a Mahindra Finance SME loan or not. Moreover, you must also check terms and conditions, interest rates, loan tenure, processing fees, and other charges before you avail of a loan. Knowing the repayment schedule prior to disbursal will help you plan your finances properly to ensure that you are able to make timely repayments on the borrowed amount.

3. Processing time

Lenders may take a few weeks to several months to process your SME loan application. It is recommended you check the processing time with the prospective lender to ensure you receive the funds when required.

Use online financial platforms to compare various lenders and to procure an affordable interest rate. Adhering to the aforementioned tips ensures the procedure to apply for an MSME loan is quick and hassle-free. It is crucial to work with a reliable lender to avoid any issues in the future.

The most important factor to start a business is the capital. The basic fact is that the more capital you have for your business, the more your business will succeed and prosper. The best way to get capital for your business is through a business loan. There are different ways you can grow your business through a loan. SME loans are available for different types of businesses and for various purposes in the business. Here is how you can use the funds to grow your business.

1. Expand the business

You will need to do a lot of planning and funding to expand the business. Hence, if you have a well-defined plan but are lacking with money, an SME loan can help you grow your business. With this amount, you can increase the staff, inventory, and purchase new machinery.

2. Develop infrastructure

The backbone of any business is its infrastructure. It varies from business to business. You can use the funds from the loan to get an additional space to store inventory or to move to a bigger office. As your business grows, infrastructure will be a primary need and a small business loan will help you fulfill the same.

3. Purchase inventory

Having adequate inventory is important if you are running a small business. You will be able to meet the demands of a consumer only if you have sufficient inventory. Loans for small business can help you meet your needs related to inventory. In addition, you can increase the production, which will eventually lead to an increase in the business.

4. Hire staff

With a small business loan , you can suitable human resources for your business. The productivity of the business will increase if you hire qualified specialists and pay them a higher salary.

5. Look into the operational expenses

Every business requires working capital to maintain the operations. Sometimes, you come across a down phase in the business due to many reasons and this is when an SME loan will help you. You can use the loan to cover the operational expenses and ensure that you do not have to pay for the same from your pocket.

6. Develop marketing

With an SME loan, you can manage to grow your business by building a website and allocating more funds to the marketing activities. You need to do online, as well as, offline marketing to get more leads and acquire more clients in order to take your business to the next level.

It is important to carefully decide where you want to utilize the money and examine the choices that you have. When you know the purpose of borrowing, you can borrow the right amount and use it in the most appropriate manner. Once you know the amount of money you need in the business, you can approach the right lenders and take your business to greater heights.

Every size and type of business requires funds to operate. Whether the founders pool money or they raise funds from financial institutions, no business can sustain without adequate capital. The capital requirements also vary according to the size of the business. There are many types of business loans available for business owners. Business loans can be categorized into short-term, long-term, secured, and unsecured. Long-term loans, as the name suggests is a loan with a longer tenure and a short-term loan has a short duration. A secured loan is a loan, which has a collateral requirement and an unsecured loan has no such requirement.

However, when it comes to a loan for business, there are two main types—professional loan and trade loan.

1. Professional loans

Designed for self-employed individuals like lawyers, chartered accounts, and doctors, professional loans allow individuals to start or run their business. Such loans have a certain limit on the amount of funds that can be extended to the borrower. They are usually long-term in duration with a payback tenure ranging between five to seven years. The documentation required for this loan will vary depending on the lender.

2. Trade loans

A trade loan is designed to meet the needs of every size and type of business. The loan can be divided into three types—overdraft, term loan, and working capital loan.

• Overdraft

An overdraft loan is based on some securities in bank fixed deposits. Depending on your credit history, repayment history, cash flow, and relationship with the bank, the lender will take an approval for a specific overdraft limit. After approval, the overdraft amount can be used and the interest is supposed to be paid to the bank only on the amount you used. You can use the funds as per your requirements. However, you need to pay the interest and principal amount on time.

• Working capital loan

This loan is provided to your business as working capital and is issued against collateral. It has a lower interest rate as compared to overdrafts and the interest will be charged on the amount utilized by you. In this type of borrowing, you can utilize the money only to manage the daily operational requirements of the business and not for any other reason. This form of business finance will give control to the lender to monitor your cash flow, debtors, inventory, and receivables, among other aspects involved in business operations.

• Term loan

This is a standard and very popular option when it comes to loans for small business. It can be availed for personal, as well as, business purposes, and the total amount will have to be repaid over the tenure in Equated Monthly Installments (EMIs). Term loans can also be taken in a foreign currency and hence they are known as foreign currency loans.

Consider the purpose of borrowing and then decide on the type of loan you require. You will have to submit the requisite documents and ensure timely repayment of the loan in order to maintain a positive credit history. Business loans allow entrepreneurs like you to take their business towards progress without worrying about the lack of funds.

When planning for your financial goals, it is important to align them with a strong financial plan. To help meet these goals, you can invest your savings in reliable and rewarding avenues such as Fixed Deposits (FDs).

FDs, or term deposits, are a crucial component of any well-balanced portfolio. They are secure investment instruments that offer guaranteed returns.

In this scheme, you deposit a certain sum of money for a fixed time period at a pre-determined rate of interest. The timeline for this could range from a few weeks to a few years.

If you are looking to find the best FD scheme, and get the maximum returns out of your investment, here are a few things you need to keep in mind.

Interest rate:

Different lenders offer different fixed deposit interest rates Before investing in a fixed deposit, it would be wise to scout for the best interest rate available in the market.

Tenure:

The tenure on an FD ranges from 7 days to 10 years. Generally, the interest rate you are offered will depend on the term you choose. As such, longer deposits are likely to earn a higher rate of interest.

Lender’s credibility:

Before finalising your FD details, it is important to verify the lender’s credibility and standing. Agencies such as India Ratings & Research (Ind-Ra), Credit Rating Information Services of India Limited (CRISIL), Credit Rating Agency of India Limited (ICRA) and Credit Analysis and Research and Investment (CARE) provide a reliable reading of the lender’s credit rating.

Payouts:

Depending on whether you want periodic returns or interest at maturity, you can opt between cumulative and non-cumulative FDs. In non-cumulative FDs, payouts can be made on a monthly, quarterly, semi-annual or even annual basis. In cumulative FDs, the interest is compounded and a payout is made at maturity, on completion of the tenure. As such, these FDs offer you higher interest payouts.

Early exit charges:

Fixed deposits come with a lock-in period, which means you cannot withdraw the money prematurely, before the term ends. However, if you do so, there could be a penalty to pay. While choosing an FD, find out the price you may have to pay for its early liquidation.

Senior citizen benefit:

Senior citizens usually receive better rates of interest for FDs. Usually, the interest rate offered to them is 1% more than usual. If you’re a senior citizen, you should find an FD that offers you the best rate.

Simple process:

Lastly, when selecting a lender, ensure their application process matches your preferences. Nowadays, people generally prefer a simple online process, with minimal steps and documentation.

With assured returns and zero volatility,  FDs have become attractive investment avenues for investors. When looking for the best fixed deposit schemesin the market, it is important that you keep the aforementioned points in mind.

By making the most out of your investments, you can plan a worry-free future for the family.

Depositing additional funds are always welcomed by any bank, but, you as a customer are always muddled whether to store it in a Savings Account or a Fixed Deposit (FD) account. A head-on comparison between the two will reveal that the interest rates are higher on the FD side, which successfully culminates into a good return on investment (ROI).

You may also opt for mutual funds or shares; however, these are risky. A safer option that provides decent returns includes fixed deposits (FDs).

Here are six reasons to open FDs.

1. Safer financial products

Compared to shares or mutual fund schemes, FDs are safer. Furthermore, such deposits are rated by credit rating agencies like India Ratings & Research (Ind-Ra), Such ratings ensure your funds are safe and there is no risk of losing your capital.

2. Higher interest rate

Compared to a bank savings account, the fixed deposit interest rates are higher. In addition, financial institutions offer a greater rate for senior citizens when they open an FD. Therefore, you will be able to earn more on your capital.

3. Lower  amount

You may invest as low as INR 5,000 while opening an FD. In addition, you may choose a cumulative or non-cumulative option. When you choose cumulative FD, the interest is paid on maturity. On the contrary, non-cumulative FDs provide regular interest payments and are beneficial to earn periodic income.

4. Flexible investment

When you open an FD, you must choose the duration of the deposit. At the end of this period, you will receive your capital along with the interest. Moreover, most financial institutions allow you to withdraw your funds prior to the end of the deposit period. However, according to the Reserve Bank of India (RBI) rules, you are not allowed to withdraw your money within three months of opening the FD. In the case of premature withdrawal, the effective fixed deposit rates may reduce because you do not hold the FD until maturity.

5. Option to avail of loan

You may avail of a loan facility against your FDs. Financial institutions offer up to 75% of the deposit amount as a loan after three months of opening the FD. The interest rate on such loans is affordable, thereby ensuring you do not face any difficulties in repaying the borrowed amount.

6. Tax savings

Some FDs provide tax benefits. Usually, when you opt for a tax saving deposit, you will have to hold the FD for at least five years. You are unable to withdraw the money before the end of this period. Furthermore, loans are also not available on tax saving deposits. When you opt for these deposits, the capital invested up to INR 1.5 lakh is exempt from income tax under Section 80C of the Income Tax (IT) Act, 1961.

Several banks and non-banking financial companies (NBFCs) offer such time deposits. It is advisable you check the interest rates offered by different financial institutions to maximize your returns. FDs have been popular among Indians who want to invest their money in a safe financial instrument. Such deposits are regulated by strict laws and offer assurance to investors like you. Investing in FDs is advisable if you want to increase your income through another source.

One of safest and most sought-after investment instruments in the market today, Fixed Deposits (FDs) offer guaranteed returns, while also helping you meet your financial goals.

FDs can be categorised as cumulative and non-cumulative. In each form, the interest is payable at specified frequencies.

Cumulative

In a cumulative fixed deposit scheme, the interest amount is compounded over the term of the deposit and paid at maturity. Longer deposits generally earn higher FD rates.

For instance, if you invest Rs. 1,00,000 in an FD with a bank at a 10% rate of interest for 1 year, you would receive Rs. 1,10,000, which is the principal amount plus the interest earned, at the end of the year.

Non-Cumulative

On the other hand, in a non-cumulative scheme, the interest amount is payable on a monthly, quarterly, semi-annual or annual basis.

Let’s say you place another FD with the bank. Only this time, you choose the non-cumulative interest option. Here, you get to choose the frequency of your periodic payments – be it monthly, quarterly or annually.

This means that if you’ve made a deposit of Rs. 1,00,000 at a rate of interest of 10% for 1 year, coupled with quarterly payouts, you will receive Rs. 2,500 each quarter.

Different lenders offer different fixed deposit interest rates. Depending on your requirements and future financial goals, you can opt between a cumulative and non-cumulative FD of your choice. The only point of differentiation between the two is the periodicity of interest payments. While cumulative schemes offer a single outgo of interest, non-cumulative schemes offer periodic interest payments.

How to Choose Between the Two

Salaried individuals, or small business owners, who don’t necessarily need any added income to meet their monthly expenses can easily opt for a cumulative FD. By saving a larger amount, the corpus built using a cumulative scheme can also help meet long-term financial goals.

For retired individuals and pensioners, who don’t have a steady source of income, non-cumulative FDs are a better bet. They provide periodic payments on a regular basis, allowing such individuals to better plan their day-to-day and monthly expenses.

Irrespective of which section of society you belong to, an FD, can help you build a better corpus for the future. In fact, they are the most preferred form of investment to help individuals meet their long-term financial goals.

Learn more about fixed deposit .

The best way to build your wealth is to invest wisely. As a part of this financial exercise, you can keep some portion of your savings in Fixed Deposits (FDs). These secure investment instruments offer assured returns at an attractive rate of interest.

Moreover, they offer multiple benefits such as flexible tenure, easy online application and a high safety rating. Depending on your risk appetite and goals, you can also leverage a fixed deposit by taking a loan against it.

Here below are five sturdy reasons as to why you should invest in an FD:

Safe and Secure

Most market-linked instruments are volatile, and are easily affected by the current economic scenario. However, such is not the case with FDs. When you invest in an FD, your principal amount and accumulated interest, are both secure despite fluctuating market conditions.

Guaranteed Returns

When you put money in an FD, you know exactly how much you are going to earn through the term, or at maturity. With the assured principal and accumulated interest on hand, you can better plan for your longer-term financial goals.

Easy Liquidity

In case of an emergency, you can easily withdraw the money from your FD before maturity. In such cases, a penalty may be levied for breaking the deposit, but all in all, the process is quite simple. Most importantly, this facility helps dispense funds during a financial crisis or time of difficulty.

Flexible Tenure & Payouts

FDs offer full flexibility with regard to the term of investment. It could range from 7 days to 10 years. An investor can select any time-period that suits his needs. Further, FDs let you choose between cumulative and non-cumulative interest rates.

While non-cumulative FDs offer periodic payments on a monthly, quarterly, semi-annual or annual basis, cumulative FDs give you compounded interest at maturity.

Loan Against FD

If you hold an FD, you can also use it to leverage a loan when you need one. Usually, you can avail a loan up to 70% of the FD amount, that too at a competitive rate of interest.

In this day and age, a fixed deposit scheme is a safe and secure avenue to invest your savings. With assured returns and zero volatility, you can continue to build your wealth and create a sizeable corpus for your family.

If you’re searching for the best FD rates in the market, be sure to check out the Mahindra Finance fixed deposit. It offers the most competitive rates along with a bucket of future benefits.

In India, fixed or time deposits have been popular for many years. One reason is that these products are a safe investment option. In addition, these deposits offer a higher rate of interest when compared to a savings bank account.

Before you decide to invest in such deposits, it is important to debunk some myths. Here are five common myths related to these deposits that you must stop believing.

1. Only banks offer fixed deposits

This is one of the most widespread myths about fixed deposits (FDs). However, the fact is that even non-banking financial companies (NBFCs) offer such deposits. Generally, NBFCs offer a higher rate of interest on FDs. You may also enjoy different tenure options and flexible repayment schedules. FDs offered by NBFCs are secured as these are rated by credit rating agencies like Credit Rating Information Services of India Limited (CRISIL).

2. Tax Deducted at Source cannot be avoided

Interest earned on FDs is taxable at your income tax slab rate. The returns you earn is added to your total annual income under the heading ‘Income from Other Sources’. However, if the interest earned through FDs is not more than INR 10,000 during the entire financial year, there is no Tax Deducted at Source (TDS) implication.

3. FDs provide income tax benefits

 There are certain types of tax saving FDs that offer income tax benefits. You need to remember that when you opt for such tax saving deposits, you will need to lock your money for at least five years. The tax benefits are available under Section 80C of the Income Tax (IT) Act, 1961.

4. Regular interest payouts offer higher returns

The fixed deposit interest rates are pre-determined. You may choose to receive the income at periodic intervals or opt for the cumulative option. With regular payouts of the interest income, you earn less because there is no compounding. Compounding means that you are able to earn an additional income on the interest that is reinvested in the FD. It is recommended you opt for the cumulative FDs and receive the interest income at the time of maturity.

5. Cash difficulties could be met through premature withdrawals

You may consider taking out your money from the FD before its maturity date to meet emergency cash requirements. However, this reduces the FD interest rates and delivers a lower return on your investment. Often, the financial institutions levy a penalty on premature withdrawal. It is advisable to opt for either a loan against the FD or an overdraft to meet immediate cash requirements. Most financial companies offer such facilities.

Opening an FD is quick and simple. You may invest as low as INR 5,000 in these financial products. Moreover, minimal documents are needed for opening an FD, such as photo identity and residential proof. You need to issue a cheque or a demand draft for the FD amount at the time of opening a deposit. You may also include two joint holders while opening the FD.

FDs have been popular for several years and the above-mentioned myths often prevent individuals from investing in these products. Get your facts right and invest in FDs, the safest investment product today.

Fixed or time deposits are a common and popular investment option in India. These deposits provide interest higher than a regular savings account and are less risky than other investment options like shares.

You may open a time deposit account without any inconvenience with minimal documentation. However, premature withdrawal before the due date results in the payment of a penalty. If you want to invest in high-interest deposits, here are seven tips to keep in mind:

1. Check various options

Different institutions offer varied interest rates on fixed deposits (FDs). It is recommended you check with various institutions to know the best rate available for your required tenure.

2. Split the capital

Based on the capital you want to invest, it is recommended you split the same among multiple FD schemes. Therefore, in case you require emergency funds, you may withdraw from one deposit while the balance deposits continue to earn returns.

3. Choose multiple tenures

The financial institutions link the interest rates to the repo rate. This means the FD rates may fluctuate during the tenure. This fluctuation may be countered by including multiple FDs with different tenures.

4. Determine the tax liability

The returns earned on your FD investments are liable to the tax based on your income slab. It is important that you determine the tax liability before you invest in high-interest fixed deposit schemes.

5. Tax-saving FDs

Several tax-saving FDs are available, which have a lock-in period of five years. However, you are not allowed to make any withdrawal before its maturity date. Therefore, if you want the flexibility to break your fixed deposit prior to the end of its tenure, it is recommended you do not invest in tax-saving FDs.

6. Premature withdrawal penalty

In most cases, if you withdraw the money from an FD before its due date, you may have to pay a penalty. Financial institutions may allow you partial or premature withdrawal to meet emergency fund requirements before maturity by levying a penalty. The total interest may also be affected in such cases.

7. Interest reinvestment

When you opt for this option, the interest is reinvested to your FD account. This allows you to earn higher returns through reinvestment. It is recommended you opt for this choice if you want to benefit from capital appreciation over the long-term.

FDs have been a popular investment option for decades. The low-risk and convenience of opening an account with the opportunity to earn good returns make these a popular financial choice.

Time deposits are risk-free investments that also offer the opportunity to earn good returns. Therefore, such deposits have been widely used by Indians since decades to earn a regular income and build wealth over the long-term.

It is important that you have the accurate information related to such investments to ensure you have a positive experience. Here are four common myths associated with time deposits that are busted:

1. Company deposits are not safe

When compared to banks, company fixed deposits (FDs) offer a higher rate of interest. You may consider these riskier; however, this is a common myth. You may compare the ratings for the company FDs issued by leading credit agencies. Mahindra Finance fixed deposits enjoy good ratings ensuring their reliability and stability.

Company FDs interest rates are guaranteed and remain unaffected by market rates. Moreover, senior investors may enjoy a higher rate of interest, which makes these a good investment option.

2. Tax payment is mandatory

This is true only if the income in the financial year exceeds INR 5,000. This limit increases to INR 50,000 if you are a senior investor. Moreover, if you do not have other income sources or your total income is less than the minimum tax bracket, you do not have to pay taxes on FD income. To ensure that tax deducted at source (TDS) is not applicable, you must submit Form 15G or 15H.

3. Higher frequency results in more income

Non-cumulative fixed deposit schemes allow you to choose the frequency of the interest payments. If you choose a monthly payment, it does not mean that your income will be higher. The financial institutions calculate the annual FD rates and these are then divided in equal installments based on your chosen payment frequency.

The interest rates on cumulative FDs are often lower when compared to non-cumulative deposits. The interest earned on your initial investment is reinvested when you opt for a non-cumulative FD. Therefore, such interest reinvestment provides the opportunity to build a good corpus in the long-term.

4. Breaking FDs is tough

If you need to break the fixed deposit before maturity, the procedure is simple and quick. However, the institution may levy a premature withdrawal penalty and it is recommended you check this before breaking the FD.

When you invest in an FD, you will receive the principal investment along with the interest on the maturity date. However, the premature withdrawal amount will be deducted from the maturity proceeds. You may also avail of a loan against your FDs. All these features and benefits make FDs a popular investment option.

Fixed or time deposits are one of the most popular and oldest investment options. Compared to a regular savings or current bank account, the rate of interest on such deposits is higher.

Time deposits are recommended to mitigate the overall investment risk of your portfolio and counter the high-risk investment options like equities and mutual funds. Additionally, such deposits may be used to increase your income through regular interest payouts, which ensures you do not have any financial difficulties.

Here are five reasons why you must choose to invest in fixed deposits (FDs):

1. Assured and better returns

When you invest in stocks or equity-related mutual funds, the returns are linked to the overall performance of the markets. On the other hand, time deposits provide assured returns because the fixed deposit interest rates are pre-determined. FDs are risk-free investments. When you invest in FDs, you do not have to worry about market fluctuations. You need not focus on timing the markets. This allows you to concentrate on your job or business while earning good returns on your investments.

Compared to other fixed-income securities such as government bonds or treasury bills, the rate of interest offered by institutions on the FDs is higher. Additionally, the fixed deposit rates are higher compared to other types of bank accounts. Therefore, you have the opportunity to earn better returns with no risk.

2. Versatility

Financial institutions offer different investment tenures when you choose to invest in FDs. You may choose as less as seven days to as long as ten years based on your preferred investment horizon. The FD rates vary for different durations, which make these very versatile.

3. Loan availability

Most lenders allow you to borrow funds against your FD holdings. Additionally, you may procure an overdraft facility against these investments.

4. Liquidity

Generally, a fixed deposit comes with a pre-determined maturity date. However, financial institutions allow you to liquidate your holdings before the due date albeit at a penalty. Therefore, contrary to common perception, FDs are liquid investments.

5. Tax savings

When you invest in five-year time deposits, your investment is eligible for tax benefits under section 80C of the Income Tax Act. Therefore, you can reduce your tax liability through such investments.

Often, some people argue that you are able to earn higher returns in products like mutual funds, derivatives, or shares. However, these are high-risk investments with the possibility of losing your entire capital. It is recommended that if you do not have a high-risk tolerance, investing surplus funds in FDs is a better option.

An ideal way to kickstart your investment portfolio is through a fixed deposit (FD). It is not only risk-free and easy to comprehend, but also helps you in growing your wealth. In an FD, your money is held for a specific tenure and you earn interest on it until the date of maturity. FD interest rates are higher than the rates that are offered in savings accounts, which is also a reason why FDs are very popular. The pros and cons of investing in an FD are discussed below.

Pros of investing in FDs

FDs are considered as an ideal way to start saving money for the future. Its benefits are discussed below.

1. Low risk

FDs are not associated with market movement; hence, there is low risk. FDs provide guaranteed returns and are a preferred choice for individuals who have a low-risk appetite.

2. Fixed tenure

An FD scheme has a minimum tenure of six months and a maximum duration of five years. This means your money will be safeguarded and you will earn returns on it.

3. Loan against an FD

If you are in an emergency and need funds, you can simply take a loan against the FD without breaking your FD prematurely.

4. Flexible interest rate payout options

In an FD, you can select the desired term. Moreover, you can decide when the interest amount is credited to your FD account. You can choose between monthly, yearly, and at-maturity interest rate payout options. The fixed deposit interest rates offered are higher for senior citizens.

Cons of investing in FDs

FDs do have certain disadvantages, which also need to be considered. The cons of investing in an FD are discussed below.

1. Low rate of return

The returns in an FD are guaranteed but the FD rates are low as compared to other market-linked investments.

2. Penalty on pre-mature withdrawal

If you withdraw the FD before its maturity date, you will have to pay a penalty charge. You could also get a low interest on your FD if you break it before the date of maturity.

3. No complete tax exemption

The interest you earn on an FD will be a part of your taxable income. As per the Budget 2019, your interest earnings on FDs up to an amount of INR 40,000 will be exempted from tax. However, if you earn an interest income that is greater than INR 40,000 your income will be deducted by 10% Tax Deducted at Source (TDS). Hence, if you are looking for an investment option that provides complete tax exemption, then FDs are not the ideal alternative.

Many choose to invest in FDs over any other form of investment for the low risk and consistent return it generates. This is why it remains a favorite investment avenue for retired investors. The pros outweigh the cons when it comes to fixed deposits and if you are looking for a low-risk investment option, you must invest in an FD at the earliest.

The cost of living in the country is constantly increasing and Budget 2019 has offered positive signs for investors. The most important fixed deposit (FD) update is the removal of the traditional (Tax Deducted at Source) TDS deduction limit on FDs. This was a proposal by the Ministry of Finance, which has appealed to all the citizens of the country. In case of FDs, the interest earned up to an amount of INR 40,000 will be exempt from any TDS deduction starting this financial year. This is a major reform when it comes to FDs, as earlier the exempted amount was up to INR 10,000. It is this reason why you should consider FD as an investment this year.

Why is FD an attractive investment avenue?

The repo and reverse repo rate increased twice in 2018 and this meant stressful news for borrowers who had to go through an interest hike on their loan. However, it also meant good news for investors because banks, as well as, companies had to revise their fixed deposit interest rates. This hike was carried out to balance a rise in the cost of the loan. The rate hike has increased the faith of investors in FDs and has increased their investment significantly. This movement, which began in 2018, has turned highly significant with the TDS deduction nod in 2019.

The implementation of new tax slabs

As per the Interim Union Budget for 2019-20, there was a revision in the tax slabs for individuals and this meant that individuals earning an income up to INR 5 lakh in a year will remain exempted from tax. Further, those earning an income up to INR 6.5 lakh or more can claim deduction under certain sections and get a complete exemption from their taxable income. This means you can now allocate more funds towards FD investments to make the most of the new slabs.

You can now make the most of the FD interest rates and the tax slabs by making an investment in FDs right away. As per the external benchmark system, the FD interest rates will not see any more hikes and with the tax exemption for you, it is very likely that you will prefer high-interest FDs. You can make the most of FD rates in 2019 by opting for a reliable financial institution as compared to a bank. They offer lucrative interest rates and are an ideal place to put your money. If you are a current loan customer, you can also get an additional interest on the investment.

You can begin your investment with an amount as low as INR 5,000. You can choose from the different payout frequency options. There is a higher interest rate for senior citizens.

The above-mentioned factors ensure that FDs remain a preferred investment option for individuals across the country. Consider the income and align your goals to investments in FDs. In order to earn maximum returns, remain invested for a long period of time and ensure that you do not withdraw the FD before maturity.

In order to generate maximum returns out of an investment, it is essential to find the ideal fixed deposit (FD) scheme. There are a number of factors, which need to be considered before applying for an FD. Non-Banking Financial Companies (NBFCs)pay high FD rates as compared to banks. It is important to do some research before you put your money in an FD in India.

Factors to consider while choosing an FD

You need to keep the below-mentioned factors in mind when applying for an FD.

1. Interest rate

The most important factor to take into consideration is the FD interest rate. Choose a good deal by comparing the interest rates because it will make a huge difference to the returns generated on your investment.

2. Tenure

Another factor to consider is the tenure. If you want to earn maximum return from your investment, you need to remain invested until the maturity period. Hence, choose the tenure wisely.

2. Interest payout option

After comparing the FD rates in India, you will have to decide on the payout option. Consider the period when you would like to receive the interest. It could be monthly, quarterly, annually or half yearly.

2. Penalty rates

Before you put your money in an FD, you need to check the penalty rate in case you want to break the deposit prematurely.

How to choose a good FD scheme

In order to select the most suitable company FD scheme, you need to follow certain below-mentioned steps to ensure that you make the correct choice.

• Check the repayment history and verify the NBFC’s background. Many times, a company with a low credit rating offers high-interest rates in order to attract investors.
• Do not simply make a decision by looking at the fixed deposit interest rates. Conduct research about the financial institution before you put your money. Avoid companies, which offer more than 15% rate of interest.
• Stay away from unrated deposit schemes by companies. Instead, only look for AA or AAA-rated companies as they have a credible reputation.
• Start with a shorter period of one-three years. Investing for a longer period will provide you with a higher interest rate. However, while investing in an FD for the first time, you must be cautious by monitoring the NBFC’s services during the tenure.
• Diversify your portfolio and invest in a few good schemes rather than a single scheme.
• Review the profiles of the financial institutions along with their ratings. The ratings are given by agencies like CRISIL and ICRA.
• Understand the lock-in period of an FD scheme. Majority schemes have an initial lock-in period of three to six months.

FDs are considered as a traditional and secure investment option. They are low risk and generate consistent returns in the form of interest. Before you invest your money in an FD, understand the terms and conditions of the same. Make a wise choice and do not be simply driven by the rate of interest.

You do not need a complex solution to achieve success in business. Success comes from mastering the fundamentals of the business and understanding the point of view of the consumers. In order to run a successful business, you only need to address the need of the customers in a manner, which is better than the competitors. An analysis of the drivers of progress for small businesses signifies that there is a basic success formula for every type of business. If you can get the basics right, you will be able to take your business to greater heights of success and prosperity.

How to make your small business successful

Listed below are a few success formulas that you should follow in order to make your business flourish.

1. Build an understanding of customer value

If you look at the customer perspective in terms of value equation, it comes down to benefit minus the cost. Many businesses are not aware of what could make their customer happy and they try to fit their customer to a product instead of identifying which product would fit the customer. To run a successful small business, you need to keep the customer at the forefront and then fit your product as per their needs.

2. Build a better product for the customers

Every customer is different and every customer is important for the business. Hence, you need to identify the customer you are targeting and then create a product or a solution for the target audience. If you try to be an ‘all things to all people’ business organization, it will benefit neither the customers nor your business.

3. Learn to scale the product from one customer to many customers

After you have learned the value equation for your customers, you need to focus on finding many more customers who have similar product requirements. Many businesses try to scale the business before they have created a product. Loans for small business can help you achieve your marketing objectives in order to reach out to a wider consumer base. An SME loan is specially designed for small businesses and it serves multiple purposes.

4. Build a business model, which allows you to scale

The business model is crucial for achieving success. You need to build a business model, which grows the business and generates a high return on investment. However, you will not accomplish your business goals just by creating a business model. You also need to focus on the execution aspect. Build a team that believes in the business and will help you with the execution of the business model. When you build a business model, do not miss the basic steps and keep your audience at the forefront. If funds are a problem, you can apply for a business loan from a Non-Banking Financial Company (NBFC) and expand the business.

Nobody said running a business was easy but it is not complex either. With financial institutions offering small business loans at lucrative interest rates, it has become easier to establish and manage a small business. If you take the right steps and understand the perspective of the customers, you will be able to make your business successful in a short span of time.

No matter what stage of life you are in, investing is a financially-prudent habit to cultivate. Financial investment entails making decisions like when to buy stocks, when to invest in FDs, the best time to invest in mutual funds and the best mutual funds to invest in. These decisions will vary depending on where you are in life. For young investors, it is the best time to buy shares and equity mutual funds. For older investors with more financial responsibilities, a balance between debt and equity funds can help meet their financial needs. In this blog, we will outline the best mutual funds to invest in depending upon your life stage.

What is Life-Stage Financial Planning?

Life-stage financial planning refers to planning your financial investments depending upon the stage of life you are in. Some of the major factors that impact your financial decision while life-stage planning are:

• Age
• Amount of disposable income
• Amount of financial responsibilities
• Saving capacity
• Market trends

When done right, life-stage financial planning can help you with wealth accumulation and wealth creation.

Best Mutual Funds to Invest in Depending Upon Your Life Stage

Broadly, an individual’s investment journey can be categorized into four life stages:

1.Start of Your CareerIdeally, you should start investing with your first salary. Getting a head-start on your investment journey can help you meet your financial goals with ease. At the start of you career, you have fewer responsibilities and can save more. Goals are usually short-to-medium term like taking a vacation, saving for higher studies or buying a car. Since you have age on your side and flexibility to save and invest, this is the best time to buy stocks. It is also the best time to invest in mutual funds that are equity-based because you have time stomach volatility.

2.Partnership or Marriage The next stage of life is when you get into a committed partnership. This will involve more financial responsibilities and shared financial goals. It could involve medium-to-long term goals like saving for a house and for parenthood. The ability to take risks will reduce a little. This is the best time to invest in mutual funds that provide a balance between stable returns as well as wealth generation. Hybrid mutual funds, dynamic asset allocation funds and even large-cap equity funds can be a good investment at this life stage.

3.ParenthoodWhen you become a parent, your financial responsibilities and commitments will take a complete turn. Apart from meeting the present needs of your child, you will also need to plan their education, marriage and other long-term goals. The best mutual funds to invest in at this life-stage are ones that will give you stable, long-term returns. Consider diversifying your investment among large-cap funds, multi-cap funds and some debt funds for stability.

4.RetirementThe final financial life cycle is the time of retirement. This is when you need regular income and need to minimize your risks. This is the best time to invest in mutual funds that provide regular income like dividend funds. Low-risk mutual funds like overnight funds, liquid funds and other debt funds should be your other go-to options. Now may not be the best time to take a bet on shares.

TakeawayPlanning your financial investments according to your life stage can give you more clarity about the best mutual funds to invest in. The best time to invest in mutual funds is as soon as you can. This will ensure that you meet all your goals comfortably, without much hassle. If you are looking for a portal that gives you clarity and details about the best mutual funds to invest in, choose Mahindra Finance Investment Solutions Portal, a safe and online platform for your investment needs.

SIPs are a tool that can help you invest a specific amount regularly in mutual funds over a period of time. Here are top 5 reasons to start an SIP now!

An SIP is one of the most popular forms of mutual fund investments today. SIPs promise very good returns on your investment, and help you accumulate wealth in the long run. Since an SIP is subject to market conditions, investing in the right stocks can do wonders for your financial growth.

Five Reasons to Start an SIP Right Now

Investment doesn’t have to be tricky. You may have heard of equities and bonds and exchange-traded funds. However, one of the best instruments to begin your investment journey with is a Systematic Investment Plan or an SIP.

SIPs are a tool that can help you invest a specific amount regularly in mutual funds over a period of time. With more than 2,500 mutual funds to choose from, to start an SIP can be a great way to inculcate an investment habit and amass wealth over the long term. It can help you meet long-term goals as well as fund short-term plans like a vacation. Before you start an SIP, know more about why SIPs are so great!

Here are the top advantages of an SIP you should know:

1.Best way to inculcate a savings habit

If you want to start an investing habit, opening an SIP account is one of the best routes to take. You can start an SIP online with as little as Rs. 500 in a scheme. It is easy to set an auto-debit option from your bank account, wherein a fixed sum is invested in a mutual fund of your choice on a regular basis. Putting your investment on auto mode with your bank will make sure that you save without any lapses.

2.The power of compounding returns

One of the biggest reasons why you should start an SIP is the power it has to multiply your money over time. Your money is invested in the market through mutual funds, thereby making it possible to generate higher returns. The returns on mutual funds are usually higher than the returns you get from a fixed deposit or the interest you earn on savings bank accounts. This is one of the greatest advantages of an SIP.

3.No need to time the market

For first-time investors, investing in the stock market can be tricky. You may not have the expertise to follow company performance and invest in high-performing stocks. By investing in mutual funds through SIPs, you eliminate the need to time the market. Also, since you invest over a period of time, rather than a lump sum mutual fund purchase, the overall cost of purchase is also averaged out. This is called rupee-cost averaging. If an SIP is purchased when markets are performing well in one month, you may get fewer units. But on the flip side, when markets fall, you get more units. Hence, when you start an SIP, the costs are evened out.

4.Naturally-diversified investment

A thumb rule of smart investing is to never put all your eggs in one basket. Another is to invest at different points in time for different goals. When you start an SIP online, you can do all of this. When you open an SIP account, you can put your money in different stocks, bonds, gold, indices or even commodities. One of the biggest advantages of an SIP is that SIP investments are naturally-diversified, thereby providing you good returns over the long term.

5.Helps with goal-based investing

SIPs are an excellent tool when you have an end goal in mind. Let’s suppose you want to buy your dream home 10 years from now. You have an estimated budget in mind. Many fund houses and online portals will help you calculate how much money you need to invest periodically to reach that goal amount. When you start an SIP online, you can save for a down payment or even complete payment to purchase your home.

Takeaway

SIPs are one of the most investor-friendly financial instruments in the market. Their benefits are numerous, from low and convenient investments to goal-based and disciplined investing. Through SIPs, you can amass good wealth over the long term. It’s definitely an instrument worth having in your financial portfolio.

With Mahindra Finance, you have the opportunity to start an SIP online from the comfort of your home, with the help of our top asset managers! Open an SIP account and reap the long term benefits of an SIP investment!

Why invest in mutual funds? A brief overview of what are Mutual Funds and Their Benefits

Why invest in mutual funds? Here’s a brief overview of what they are, different types of good mutual funds and benefits of investing in good mutual funds.

Mutual funds are one of the most popular forms of investments today. Millions of people across the globe depend on good mutual funds to grow and diversify their wealth. If you’re new to investing, but want to grow your portfolio, simply contact an asset manager at a leading Investment Solutions company such as Mahindra Finance who can invest in mutual funds on your behalf, thus increasing your chances of making more money. Know more about mutual funds, what they are, what are the different types of mutual funds, and why invest in mutual funds for the future.

What are mutual funds?

To understand why invest in mutual funds, you should know, what are mutual funds? A mutual fund is like a shared or common pool of wealth, in which many investors put in their money, which is then invested in assets that the investment deems as its primary objective. Mutual funds can be invested in securities, gold, real estate assets, stock markets, bond markets or other money market instruments present in the country. Fund managers manage these investments with an objective to grow this wealth, thereby benefiting all the people who pooled their money in the first place.

Some examples of the top mutual funds include HDFC mutual fund, SBI mutual fund, ICICI, Motilal Oswal, Axis, IDBI and Tata Mutual Funds among others.

If you’re wondering which are some good mutual funds to invest in, simply contact an asset manager at a leading Investment solutions company such as Mahindra Finance to begin with!

How do investors make money through mutual funds?

• -Mutual funds give investors an option to claim all earnings or reinvest their earnings in more investments! Typically you earn returns in the form of dividends on stocks or as interest on bonds, every year.
• If a mutual fund happens to sell securities that have been very profitable, the mutual fund generates something called a capital gain. This capital gain is also distributed to investors as a reward.
• If the fund’s price increases with time, but your fund manager decides not to sell them, you can sell them outside in the market for a profit and make money out of it.

These are some ways through which you can make money through mutual funds.

What are the benefits of mutual funds?

• If you’re wondering why invest in mutual funds, know that they offer a lot of flexibility to investors, especially open ended ones, where if you feel like the market isn't being favourable, you can simply withdraw anytime you like.
• -Mutual funds allow you to diversify your investment portfolio and invest in several types of assets. Thus even if one fails, the others remain profitable.
• Mutual funds are handled by experts who are deeply involved in the stock market and who understand the nuances of trading. Therefore, it's not something you need to worry about at all.
• -Anyone can invest in mutual funds, as it accepts even a small amount of money. If you’re a novice investor, mutual funds are a great place to start.
• You can buy mutual funds from several leading financial services companies that exist today that handle several good mutual funds in the millions, without any issues. Thats a very convincing reason for, ‘why invest in mutual funds?’ isnt it?
• -Finally, mutual funds are safe and are endorsed by the most trustworthy financial institutions in the world. Your money is in safe hands!

As you can see, there are so many wonderful reasons why invest in good mutual funds. At Mahindra Finance, we offer a wide range of investment options that are fully supported by our end to end digital capabilities. You can invest in several good mutual funds right from the comfort of your home, and leave the rest to our expert asset managers. So, the next time you’re wondering why invest in mutual funds, just get mutual with Mahindra Finance Investment Solutions!

What are systematic investment plans or SIP schemes? Here’s a brief overview of what they are, different types of SIP funds and benefits of investing in SIPs

SIP schemes are one of the most popular forms of investments today. SIPs have many benefits that help you invest your money in a time bound and disciplined way to help maximize your wealth in the long run. If you’re new to SIPs, don’t worry. There are several top financial services companies such as Mahindra Finance who’s expert asset managers invest on your behalf and thereby manage and diversify your portfolio. Know more about what a SIP plan is and the benefits of investing in SIPs.

What are SIPs?

What is an SIP plan or Systematic Investment Plan? It is an investment opportunity that is offered by mutual funds, to help investors invest money in a time bound and disciplined manner. An SIP allows an investor to invest money in predefined intervals in any particular mutual fund scheme. There is flexibility in how much you can invest and the time intervals as well. You can invest as low as Rs.500 on a weekly, monthly, quarterly or yearly basis. The choice is yours. SIP schemes are popular mutual funds because they are less susceptible to market risks. Since the investment is time bound, SIP performance is less affected by market fluctuations, and through the power of compounding and average costing, you get the best SIP returns in the long run.

How does an SIP work?

Now that you know what is an SIP plan, let's find out how an SIP scheme works. Before we answer this question, it's important to understand the difference between a regular fixed deposit investment and an SIP. A fixed deposit account will help generate good returns on investment, but won't help you generate wealth in the long term. An FD is not subject to market forces whereas SIP schemes are. Which means that if you invest in the right mutual funds and top SIP plans, your SIP performance will improve and you can see your wealth grow significantly in the long run.

Some of the best SIP mutual funds in the market include Axis bluechip fund, DSP equity fund, Franklin India focused equity fund, ICICI Prudential blue chip fund, Nippon India large cap fund etc.

Why invest in SIPs?

• SIP schemes help in inculcating financial discipline and are extremely convenient. Since money is deducted at a specific date in a timely manner, it's an excellent investment option for people who need something systematic.
• SIP schemes are great for individuals who don't have much money to begin with either. Whether it be for millennials fresh in the workforce or experienced professionals, an SIP works for both. You can start an SIP with as low as Rs. 500 per month. It's important to know where to invest to get the best SIP returns.
• -SIP schemes follow the compounding effect, wherein the money invested will grow with time. If the market is doing very well, you can accumulate a lot of wealth through SIPs. Invest early to reap the power of compounding and high SIP performance!
• SIPs provide 2X higher returns than a recurring deposit, fixed deposit and other traditional investment schemes.

Hope you have completely understood what is an SIP plan! These are just some of the reasons why you should invest in top SIP schemes. If you’re wondering why ‘mutual funds sahi hai’, look no further than an SIP fund!

At Mahindra Finance, we offer expertise to help you choose the top SIP schemes, where we invest your money in high performing assets, to help increase your wealth! You can contact an asset manager at Mahindra Finance, who will take the time to find the perfect investment opportunity for you. Now, with our digitally enabled SIP solutions, you can start investing right from your home with the tap of the finger!

Want to know more about the different types of equity funds and stocks you should invest in? Here’s a detailed guide to get you started on your journey!

If you lack the market knowledge to go about investing in stocks and expanding your portfolio, investing in equity mutual funds is a great place to start. Top investment solution provider companies such as Mahindra Finance Investment Solutions can help you invest on your behalf, and ensure that your wealth increases in the future. You can invest in several different types of equity funds based on different parameters that will provide you with rich gains in the long run.

Know Your Stocks: The Types Equity Funds Invest In

Investing in equity mutual funds is a great go-to investment strategy for those who want to multiply their money but don’t have enough market knowledge to invest in stocks themselves. However, have you ever wondered what type of equity funds invest in?

Company stocks can be classified into different categories based on market capitalization, risk, dividend payment and price trends. Fund managers choose which types of equity funds to invest in depending upon the investment strategy they follow.

Here’s what you need to know about the different types of stocks:

1.Stocks categorized based on market capitalization

Market capitalization is the total shareholding of a company outstanding in the market. It is the current market price of the share multiplied by the total number of outstanding shares. Based on this, equity stocks can be classified into:

• Large-Cap Stocks

  The Securities and Exchange Board of India (SEBI), the regulatory body for the stock market, defines large cap companies as the top 100 stocks according to market capitalization. Usually, their market cap runs into trillions of rupees. Shares of Infosys Ltd., Reliance Industries, TCS, etc. are some examples of the best large-cap stocks. Large-Cap Equity Mutual Funds invest predominantly in large-cap stocks.

• Mid-Cap Stocks

  According to SEBI, all companies that rank from 101 to 250 in terms of market cap are mid-cap companies. Some examples of this type of equity fund are Relaxo Footwears, Trent, Sundaram Fasteners, etc. Mid-Cap equity funds invest predominantly in mid-sized companies with profitable stocks.

• Small-Cap Stocks

  All companies that rank 251 and below based on market cap are small-cap companies. These companies have growth potential and can give investors high returns, but risks are also high. Some examples of small cap equity funds include Bajaj Consumer Care, Delta Corp Ltd., NESCO Ltd., etc.

You can find a list of small cap equity funds on the Association of Mutual Funds in India (AMFI) website.

2.Based on Risk

• Blue-Chip stocks

  SIP schemes help in inculcating financial discipline and are extremely convenient. Since money is deducted at a specific date in a timely manner, it's an excellent investment option for people who need something systematic.

• High Beta stocks

  SIP schemes are great for individuals who don't have much money to begin with either. Whether it be for millennials fresh in the workforce or experienced professionals, an SIP works for both. You can start an SIP with as low as Rs. 500 per month. It's important to know where to invest to get the best SIP returns.

3.Based on payouts

Depending on how a company uses its earnings, stocks can be classified into:

• Income stocks

  Some companies pay regular dividends to shareholders. These stocks are called dividend-paying or income-yielding stocks. Equity funds that are geared towards providing regular income to their investors invest in these types of equity funds. Examples of income stocks include TCS, ITC Ltd., Wipro, etc.

• Growth stocks

  Contrary to income stocks, growth stocks do not pay dividends. Instead, they reinvest earnings in the company for further growth. Funds that are looking to create wealth appreciation for investors invest in the best growth stocks. Examples of such profitable stocks include Bajaj Finance, Britannia Industries, Minda Industries, etc.

4.Based on price trends

Stock prices are dependent on the market and economic conditions. Some respond directly to the economic environment while others may not. Based on this, stocks can be classified into:

• Cyclical stocks

  Some companies’ share prices fluctuate depending upon the economic environment of the country and the world. An economic boom tends to increase their prices and a drop deflates prices. Such company stocks are called cyclical stocks. Airline companies and automobile companies are the most common cyclical stocks. Funds looking for diversification benefits invest in these cyclical stocks.

• Defensive stocks

  Economic conditions do not affect defensive stocks. Instead, defensive stocks provide stability, especially in times of a crash. Funds invest in these defensive stocks for stability of a portfolio. FMCG stocks, pharmaceuticals or insurance stocks are often considered defensive stocks.

Economic conditions do not affect defensive stocks. Instead, defensive stocks provide stability, especially in times of a crash. Funds invest in these defensive stocks for stability of a portfolio. FMCG stocks, pharmaceuticals or insurance stocks are often considered defensive stocks.

The Final Word

Once you know the different types of equity funds invest in, you can understand a fund’s investment strategy better. Knowing the different kinds of stocks to invest in can help you make a more informed investment decision. As an investor, your aim should be to diversify your investments and make the highest returns possible. At Mahindra Finance Investment Solutions, we help you make the right investment by investing in a variety of profitable stocks!

Invest smartly, only with Mahindra Finance Investment Solutions!

Mutual Funds may sound complicated but are easy to understand. It's a lucrative platform where you can safely invest your money. Let us dive into its basics and discuss numerous Mutual Fund Instruments to help you invest in mutual funds.

What is a Mutual Fund?

Doing away with the technical jargon, let us consider this simple example: You have surplus money, but you have no idea where or how to use it. So, you appoint an expert who knows about money matters. This expert takes your money and invests them proportionately in various shares, bonds and fixed deposits. The expert accumulates the income (interest or income) earned from these various investments, and after deducting some charges, the expert gives the income to you.

Here, you are the investor. The expert, who pools and manages your money, is a Mutual Fund. And since your money gets invested in numerous 'baskets', the risk is relatively less than investing in only one form.

Mutual Fund acts as an intermediary. It is a financial company that collects money from persons desirous of investing. The money is then invested as a diversified portfolio in the form of equity shares, debentures and other kinds of financial securities. The money invested is represented by units. So you hold your investment in terms of units. The income or returns accrued by such Mutual Fund companies is distributed evenly amongst the investors after deducting certain charges by calculating an instrument's 'Net Asset Value' or NAV.

You can invest in mutual funds like Canara Robeco Mutual Fund, DSP Mutual Fund, Aditya Birla Sun Life Mutual Fund, SBI Bluechip Mutual Fund, Axis Mutual Fund, etc.

Mutual Fund Instruments:

Following are the Instruments in a Mutual Fund:

• A.Equity-based Instruments - These are instruments that invest only in equity shares and other equity-related instruments.
• B.Debt-based Instruments - Those instruments that carry fixed rates of interest income.
• C.Hybrid Instruments - These instruments are a mixture of the above two (Equity and Debt)
• D.Money-based Instruments - They have a short term maturity and are easily redeemable in the market.

Based on the Maturity Period, these instruments can be:

i. Open-Ended:

Blue-Chip stocks

This scheme allows you to buy or sell Mutual Fund units at any point in time. Funds under this scheme have no fixed maturity date. You can sell or buy units based on the net asset value of the fund. The NAV fluctuates daily based on the prices of the shares and bonds in the market.

No limitation is there on the number of units that can be issued under an open-ended scheme. One can invest in these funds through systematic investment plans (SIPs).

In SIPs , you can choose a fixed amount, say Rs 2000, and invest it monthly or quarterly. This amount is deducted from your chosen bank account at the start of every month or quarter. It is a less risky investment plan. Since you invest a small amount periodically, you don't feel the burden to invest huge money at one go to start your Mutual Fund Investment. You can use the SIP calculator, which is a simple tool available free online that helps estimate returns you may earn through SIP.

ii. Close Ended:

If you have enough surplus money and planning for a long-term investment, close-ended is the way. You can invest your money through a New Fund Offer in the market. This New Offer remains in the market for a period of thirty days. They have a fixed lock-in period. For example, when you invest in a three-year closed-ended scheme, you have a fixed number of units. You can redeem/sell them at the expiry of three years.

Since you are bound by the lock-in period, you do not fall prey to risky investments. By staying committed to the long term mutual fund, the returns/profits are comparatively maximum as compared to Open-ended ones.

So, if you are interested in markets, stocks, and all things financial, you can plan to invest in Mutual Funds. As it provides a diversified portfolio, it is less risky than other forms of investments and, if planned correctly, can provide profitable yearly returns.

What are Debt Funds?

Holding on to a day job and also managing one’s investments can be challenging for the best of us. Deciding on where, when and how much to invest can mean hours of research that many people cannot afford.

To invest in mutual funds is to put money into an asset class of one’s choice--equity, debt, money markets or a pre-specified mix of these, with the assurance that professionals will be managing these funds and deciding ultimate allocations of the pooled assets in line with the fund’s stated objectives.

Investors can base their choice of mutual funds on various criteria, including their end financial goal and overall risk appetite. Among the numerous mutual funds available to investors, fixed-income or debt mutual funds are ideal for conservative investors with minimal risk appetite.

What are debt funds and their benefits?

In debt mutual funds, investments are made across short and long-term government bonds, corporate bonds and money market instruments such as treasury bills or certificates of deposit, though this list is not exhaustive.

As the name suggests, debt instruments are essentially financial products of varying durations and risk profile, which enable the purchase and sale of debt or loans in return for an interest income.

Simply put, with debt mutual funds, investments are made in financial instruments that come with a pre-specified date of maturity and interest rate, allowing investors to earn interest income on maturity. Unlike equities, the returns on these debt instruments are not affected by any volatility in the financial markets. This is largely why debt funds are recommended to investors whose main goal is the preservation of wealth and a steady income.

Debt funds can vary in duration from as little as a few days or months to at least a couple of years, based on the instruments that make up the investment portfolio.

Fixed-income or debt mutual funds rank higher in safety and guarantee of returns (to an extent), compared to equity mutual funds. However, debt funds also differ in risk parameters based on which instruments comprise the portfolio; this is because debt instruments or products also come with a credit rating based on the likelihood of a default on the principal and interest payment by whoever has issued the instrument or taken the loan. The higher the rating, the lower is the risk of default.

Risks Involved

This also means that the highest-rated instruments may provide lower returns. This is because of the risk-reward principle. Lower the risk, lower the returns and vice versa

Talking about risk, debt funds may be less risky than equities, however, investors still take some form of risk when investing in debt instruments:

• One risk investors take when buying debt is that the issuer may be unable to repay the principal or interest.
• There is also the risk that the fund house one invests with may not have enough liquidity to be able to meet redemption requests, i.e. pay what is owed to investors who wish to withdraw units from the scheme and get back their investment, which is valued at the net asset value on the day of the withdrawal.
• Another risk is that fluctuation in interest rates may also affect the value of one’s debt holdings.
• Another aspect an investor should take note of when investing in mutual funds is the expense ratio, which is lower for debt funds compared to equity funds. The expense ratio is a percentage of the mutual fund scheme’s total assets that is set aside as fees for the management of the fund.

Among other things, the expense ratio sets apart the variety of debt funds available to investors through various fund houses.

One important factor to note when investing in debt funds is that capital gains earned on units of a scheme held by investors for up to three years is referred to as short-term capital gains and is part of your taxable income and taxed as per the investor’s income slab.

Meanwhile, capital gains earned on units held for over three years is referred to as long-term capital gains and taxed at 20% with indexation benefits.

Conclusion

Debt funds differ in duration from overnight to several years and the best debt fund is one that matches with the investor’s level of comfort for risk. While debt mutual funds offer the comfort that one’s money is managed by a professional, one must still take the time to go through the fine print and choose a fund with a competent money manager at the helm.

What are equity funds?

Contrary to popular thinking, mutual funds can have a mix of equity and debt securities. But, equity funds are those where the investor money largely goes into shares of various enterprises. Based on the weightage of different companies in the fund, the returns can range from 5%-18%. Equity funds tend to be a little riskier than mixed funds and debt funds.

Types of equity funds

There are many ways to categorize equity funds, and we will illustrate them all below.

In Based on market capitalization

Market capitalization means the monetary worth of a firm in the capital market, aka the total market value of all outstanding shares.

Large Cap funds:these equity mutual funds invest 80% or more in companies with large market capitalization or large-cap companies. The market cap is Rs 20k crore or more, being the largest 100 companies.

Mid-Cap Funds: They invest 65% of the money or more in mid-cap companies having a market cap of Rs 5000-20k crore. These companies generally occupy the 101-250th positions in an index.

Small-cap Funds: these equity funds invest 65% or more of the money in companies with less than Rs 5000 crore market capitalization. They come after rank 251 and are the majority of the Indian companies.

Multi-cap Funds: Here, the fund managers choose a mix of large-cap, mid-cap, and small-cap funds and park 65% of the funds at least.

One cannot objectively declare any fund as better than the others just based on size. Those looking for safe and stable returns may prefer large-cap funds, while those with a good risk appetite can consider small-cap funds, which may offer higher returns though with more volatility.

Based on Investment Type

Thematic Equity Funds:in these funds, all the companies in the mix follow one theme like agriculture, or rural development or sustainability, etc. For instance, the sustainability theme may include green energy companies, electric vehicle manufacturers, etc.

Sectoral Equity Fund:All the companies in a sectoral fund belong to the same sector of the economy like the pharmaceutical sector, or FMCG, or power corporations, etc.

Contra Equity Funds:These funds run contrary to market trends, identifying underperforming stocks to invest in, hoping that the companies have good business models and will recover in the long run.

Focused Equity Funds: These funds are allowed to invest only in 30 companies as per SEBI norms but with any market capitalization.

Based on Investment Manager Activity

Passive Funds: These equity mutual funds are not actively intervened by managers and may track an index from which the stocks are picked, ex: ETFs.

Active Funds:In this type, a fund manager monitors the stocks’ performance and changes the weightage if needed.

Should You Invest In An Equity Fund?

You can invest in mutual funds of equity-type to get high returns. However, when you choose an equity fund, you must check its performance over the last 5 years at least. If the fund does not outperform the stock market, then it's not very well-managed. Especially as a new investor choosing a safe, large-cap fund is a good idea till you become seasoned at the game.

If you have a very high-risk appetite, you can look at some private equity funds managed by top professionals and promise very high rewards.

Be warned, though, that they are very risky.

What are mutual funds?

Mutual funds are professionally managed funds that invest into multiple assets financial instruments such as stocks and bonds. Mutual funds usually charge a fee for holding and managing the assets within their portfolio, making changes as and when necessary to meet the fund objectives.

Why mutual funds?

Investors usually invest in mutual funds for the following reasons:

• 1.The funds have specific objectives, which are easy to align with financial goals. E.g., monthly income, or high returns, etc
• 2.The risk is reduced as compared to direct stock picking since it consists of a portfolio of stocks, bonds, and other instruments
• 3.They allow investments through the Systematic Investment Plan (SIP) mode with as low as INR 500 per month
• 4.Wide variety of funds to pick from, backed by strong fund houses in the market

What are hybrid funds?

Now that we understand what mutual funds are and why investors invest in them let’s look at what hybrid mutual funds are. The word hybrid suggests that the fund consists of more than one component. Hybrid funds invest in multiple asset classes: equity, debt instruments, gold, real estate, etc.

For example, if an investor is looking to take risks for a higher return yet also wants an assured regular income, a combination of equity and debt works the best, and this is what a hybrid fund offers.

Advantages of hybrid funds

• Risk is actively managed by portfolio management and diversification
• Fund managers automatically keep rebalancing the portfolio to fulfill the investment objectives of the fund
• Holding multiple asset classes by investing in one fund
• Choice of funds based on risk appetite, objective, and duration

What are the types of hybrid funds?

• Equity hybrid funds or aggressive funds where there is a minimum 65%, maximum 80% allocation towards equity, with the remaining 20 to 35% into debt. Most equity-oriented schemes are eligible for the tax deduction, making them more attractive.
• Balanced funds where a minimum of 40% to 60% is invested in debt or equity, and the balance in the other. Their goal is usually a combination of regular income and capital appreciation.
• Conservative funds where there is a minimum 10%, maximum 25% allocation towards equity, with most of the amount, between 75% to 90% invested in debt. Their goal is usually a regular income with a small amount that has the potential for good returns.
• Dynamic funds are funds where the allocation % can be changed during the tenure of the fund and thus can address the dynamic nature of one’s investment goals even within the duration for which the investment has been made.
• Multi-asset allocation funds where the allocation is in a minimum of 3 asset classes, with a minimum of 10% in each asset class. These funds have investment goals that the fund manager decides.
• Arbitrage funds where a minimum 65% is allocated to equity; however, the fund follows an arbitrage strategy: to buy low and sell high in different markets.
• Equity savings funds where minimum 65% assets are invested in equity and equity-related instruments, and the rest is invested in debt and derivatives classes.

Top hybrid funds in the market

Some of the best hybrid funds based on performance are: table pending

What Are Mutual Funds?

Mutual Funds can seem very complex, and therefore, we are here to break that myth and help you understand this simple yet powerful investment option better so you can speed up your wealth creation.

When the money invested by a lot of investors is pooled together to buy securities in the markets, it is known as Mutual Funds (Investment). Mutual Funds are managed by a Fund/Investment Manager, and the value of these Mutual Funds is reflected in the form of a Net Asset Value, also commonly referred to as NAV. The investors in the mutual fund are paid upon income/gains in the scheme proportionately with the number of units they hold. Mutual Funds offer a great way for one to invest in a diverse range of securities that are risk-managed by the fund manager and offer good returns based on the scheme chosen.

Types of Mutual Funds:

There are various types of mutual funds available to investors today depending on the purpose of the investment, types of securities invested in, the risk involved, duration, etc

• 1.Growth Funds
• 2.Income Funds
• 3.Liquid Funds
• 4.ELSS or Tax Saving Funds
• 5.Capital Protection Funds
• 6.Fixed Maturity Funds
• 7.Pension Funds

Let’s have a look at one of the most commonly used fund types, i.e. Equity Linked Saving Schemes(ELSS), which are more commonly referred to as Tax Saving Mutual Funds and some of their salient features.

What are Tax Saving Mutual Funds?

Tax Saving Mutual Funds are the most popular investment schemes available to the common man that is recognized and approved by the Government of India.

• Investments made in Government-approved Tax Saving Mutual Funds are exempt from the taxable income of the investor up to a limit of Rs 1.5 lakh, under section 80C of the Income Tax Act, 1961, subject to certain provisions.

Equity Linked Saving Schemes(ELSS) are diversified equity mutual funds that allow investors to get tax deductions under 80C and thus making sure they create wealth for themselves. ELSS invests in a diverse range of equity options across large, mid, and small-cap options.

With a lock-in period of 3 years, ELSS investments are subject to 10.4% tax on the gains upon exiting the investment after 1 year. Investments in ELSS can be made using either Lump Sum amounts or Systematic Investment Plan.

Most fund managers recommend ELSS as a long-term wealth creation opportunity, so if you are looking for an investment option that ticks both boxes of tax savings and long-term wealth creation then ELSS is the best out there.

Benefits of Investing in Tax Saving Mutual Funds(ELSS):

• 2X Higher Returns Than FD or PPF

  ELSS or Tax Saving Mutual Funds offer a fantastic option when considering long-term wealth-creation opportunities. ELSS has continued to deliver consistent results in terms of performance with an average of 15% returns in the past 3 years, whereas PPF & Fixed Deposits offer returns of 6-8% each

  That’s almost 2X returns as compared to other tax-saving instruments such as PPF & Fixed Deposits

• 2.Lowest Lock-In Period

  Compared to other tax-saving options, ELSS offers the lowest lock-in period of 36 months or 3 years whereas the Public Provident Fund (PPF) has a lock-in period of 15 Years & a National Savings Certificate of 5 Years.

• Option to Invest Monthly

  Tax Saving Mutual Funds is as popular among the common man not just because of the ease of investment, the good returns but ELSS also offers the options to make investments monthly using the SIP model with initial investments starting at INR 1000 or make lump sum investments with no upper limit.

• 4.Best Tax Saving Investment under 80(C)

  While enabling tax-saving under 80(C) for investors, the model turns out to be the best tax-saving instrument following the EEE format i.e. Tax Exemption, Wealth Accumulation & Zero Exit Load. The great returns over a longer duration make it every investor’s best bet to maximize gains over time.

Bottom Line

Invest in ELSS not because they have a short lock-in period or they offer great tax savings, invest in ELSS because they have the highest potential of wealth creation when looked at as a long-term opportunity of 15-20 years. With minimized risks owing to professional fund management, tax savings, and immense wealth creation opportunities, ELSS offers a solid bet for investors with a financial goal.

Shraddha is a 25-year-old IT professional drawing a good salary every month. She’s heard that getting a head start on investing can be useful. When she’s considering different options, a friend of hers tells her about the various benefits of investing in mutual funds.

If you are in the same boat right now and are wondering why mutual funds over instruments like fixed deposits or even equity, this article is for you!

What is a mutual fund?

Before looking at why mutual funds and what mutual funds to invest in, let’s begin by breaking down what a mutual fund is.

Before looking at why mutual funds and what mutual funds to invest in, let’s begin by breaking down what a mutual fund is.

A mutual fund is a pooled investment option wherein a fund house collects money from different investors and invests that in market securities. These could be stocks, debt instruments like corporate or government bonds or even assets like gold.

Mutual funds are a great investment option for individuals looking to grow their money over a period of time.

Advantages of Mutual Funds

Mutual funds are becoming popular investment avenues for people today, especially youngsters. This is because of the numerous benefits of investing in mutual funds. Here are the top 5 reasons why mutual funds are a great investment choice:

• 1.Naturally-diversified investment tool

  One of the thumb rules of smart investing is to diversify investments. Putting all your eggs in one basket can spell disaster if there is a sharp correction in the market. Mutual funds are naturally-diversified investment avenues. A fund invests across asset classes and industries so as to make the best of investors’ money. You don’t have to worry about doing this on your own.

• 2.Professional management

  Would you trust anyone to prescribe medications or self-medicate when you are sick? It’s always advisable to go visit a doctor for the same. Similarly, why entrust your money to anybody? Mutual funds are managed by professionals. They study the market and invest in such a way that your money works for you. It’s also a great option for those who lack sound financial knowledge since you don’t have to do much market research. You simply need to find what mutual funds to invest in that meet your financial goals.

• 3.Higher returns than FDs and lower risks than equities

  Another advantage of mutual funds is that they provide market returns. Fixed deposit instruments provide a lower rate of return when compared to mutual funds. Even debt mutual funds can give you higher returns than FDs. At the same time, because they are diversified instruments, they are less risky than investing in stocks. That’s the kind of balance that works when it comes to investments!

• 4.Extreme ease

  You can invest in mutual funds with as little as Rs. 500 if you choose the systematic investment plan route. You can also invest in mutual funds online through your bank. Liquidating mutual funds is as simple as clicking one button on your screen. This ease is one of the biggest advantages of investing in mutual funds.

• 5.Tax benefits

  Special mutual funds called equity-linked savings schemes also come with tax benefits. You can claim deductions under Section 80C of the Income Tax Act if you invest in these. They provide all the other benefits of mutual funds, but come with a lock-in period of 3 years. Small price to pay for a good investment decision, right?

  When considering what mutual funds to invest in, make sure you base the decision on the following factors:

  • 1.Your individual financial goal
  • 2.Your risk appetite
  • 3.Your investment time horizon
  • 4.The fund performance and history

With so many benefits, investing in a mutual fund is certainly the best way to grow your money. If you are looking to invest in mutual funds online, look no further than Mahindra Finance invest solution ,an investment portal that you can trust.

Have you heard terms like small cap equity funds, mid-cap equity funds and large-cap equity funds? Are you wondering what all of this is about? Don’t worry, we’ll help you understand this.

What are caps in mutual funds?

Companies are divided into different categories depending upon their market size. The total value of a company, i.e. the total outstanding shares multiplied by the market price, refers to the market capitalization of a company.

The Securities and Exchange Board of India, which is a regulatory body for mutual funds in India, categories equity mutual funds depending upon the different types of stocks they invest in, or on market capitalization of companies.

Based on market cap, equity mutual funds are categorized into:

• Large-cap equity funds
• Mid-cap equity funds
• Small-cap equity funds

• 1.Large-cap equity funds

  Large-cap equity funds are mutual funds that invest a majority of investor money in the best large cap stocks. According to SEBI, large-cap funds must invest at least 80% of the total fund’s assets or investors’ money in companies that are categorized as large cap companies.

  SEBI defines large-cap companies as those that are the 100 largest companies listed on stock exchanges in terms of their market capitalization. Large-cap funds are less risky when compared to mid-cap equity funds or small-cap equity funds. This is because they invest in the best large cap stocks that have a good performance history. For investors with relatively low risk appetite looking to invest in mutual funds, large-cap equity funds can be a great option.

• 2.Mid-cap equity funds

  Mid-cap equity funds are mutual funds that invest a majority of investor money in mid-cap companies. Just like large-cap company categorization. SEBI defines what a mid-cap company is. According to SEBI, mid-cap companies rank between 101-250 on stock exchanges in terms of their market capitalization. Mid-cap equity funds need to invest at least 65% of the total fund assets in the shares of mid-cap companies.

  Mid-cap companies are those that show potential to grow into large-cap companies. However, unlike large-cap stocks, they don’t have an established track record. Mid-cap equity funds carry higher risk than large cap companies since their growth is uncertain. However, they have great growth potential. Investors with a moderate risk appetite looking to grow wealth over the long term can invest in these funds.

• 3.Small-cap equity funds

  Small-cap equity funds are mutual funds that invest a majority of the fund pool in companies with small market capitalizations, or small-cap companies. SEBI defines any company that ranks below 250 on stock exchanges in terms of market cap as small-cap companies.

  Small-cap equity mutual funds have to invest at least 65% of their total assets in small-cap companies. The remaining can be invested in other companies or securities. Small cap companies are the riskiest among the three categories of equity mutual funds. However, they also have the potential for most returns. Investors looking to generate wealth and have the ability to stomach risk can invest in small-cap equity mutual funds.

  Now that you know the different caps, go ahead and choose what is right for you. Whatever be the cap you invest in, having the right platform to make an informed decision is key as well. Using Mahindra Finance Investment Solutions Portal , you can Invest in a portfolio of mutual fund schemes that is made for you.

Are you looking for an investment to generate higher returns? Is it tough for you to decide? Well, for this, you have the best option of investing in “Equity Funds”. But what are these equity funds? These are basically a type of mutual funds that allows you to make an investment in stocks. You can think about investing via sources like SIP or lumpsum, which then further helps you to invest in stocks.

Equity funds, as compared to the type of mutual funds, are riskier. But as they say, with more risk comes more returns too. Equity mutual funds allow you to invest in stocks of various companies. The investment is based upon the market conditions. You can choose to invest in various types of capitalisation such as “small-cap”, “large-cap”, and “mid-cap” companies.>

Your investment must align with your risk profile and other objectives. If you are looking for a long term goal, then investing in Equity funds is your best choice.

However, there are various kinds of equity mutual funds available. This makes it quite tough for the investors to choose the best one for them. Below are the types of equity funds that will help you to achieve your long term goal-

• Large-Cap Funds:

  If you are looking to invest in companies with large capitalisation, this is a good option. These companies are popular for their large caps with a strong and reputable image. These are listed in the top 100 companies. Amazing right? Well, yes, it is. This is the most suitable option for those investors who are ready to invest in lumpsum.

  But unfortunately, the returns from these equity funds are much lower than mid and small caps. Don’t worry! This is the one that provides a longer consistency and stability in returns.

• Mid-cap funds:

  After Large-cap funds come to the Mid-cap funds, which are referred to all those 100-250 companies with medium capitalisation. Investment in this means getting higher returns. Although, these are more risk to large-cap funds but is still considered as the most popular ones amongst the investors.

• Small-cap funds:

  This type of equity funds involves those companies with a small capitalisation of less than 500 crores. It has higher growth potential and is the best choice for investors who are expecting higher returns. Only the investors who have a great knowledge of stocks can choose to invest in this type of funds.

• Balanced Funds:

  If you are looking for equity funds that are a combination of both equity and bonds, then balanced funds is the one for you. Many investors may be looking for better income, financial safety and modest capitalisation. As the name itself says, balanced funds help them strike a balance between all their needs effectively.

You can aim for better capitalisation and income with the help of these equity funds. These are popular amongst retired investors who are seeking growth to overcome inflation.
• Sector Mutual Funds :

  If you look at a particular growing rapidly, you can call such industries with sector mutual funds. For instance, many areas of the economy and banking are growing. So, these equity funds allow you to invest in all those companies which are associated with such growing areas.

  These can be further classified into the following-

  • 1.Real Estate Funds
  • 2.Utility Funds
  • 3.Natural Resources funds
  • 4.Technology Funds
  • 5.Communication Funds
  • 6.Financial Funds
  • 7.Healthcare Funds

You can see that these funds are giving you many sectors to invest in. You just need to decide about it.

Conclusion:

Therefore, with a growing economy, investors are looking for various ways to have long term financial security. Above mentioned are a few of the private mutual funds which can be helpful to every investor for meeting their long term needs. You may face a crisis at any time, so secure your future with a suitable investment at the right time!

Marcel wants to save up for a vacation. Suhani wants to buy a home. Both of them want to meet their financial goals by investing in mutual funds. Is it the right choice? Of course! Mutual funds can be used to meet different investment goals with different investment horizons. The right question is, when to invest in mutual funds, what funds to invest in and how to invest depending upon your goals.

What is the time or investment horizon?

The time period over which an investor stays invested in a mutual fund is called the time or investment horizon. Determining the investment horizon depends upon the financial goal, the risk appetite as well as the income needs of the investor.

• Short-term investment horizon

  Short-term investments in mutual funds can range from 1 to 3 years. For instance, Marcel’s goal to save for a vacation is a short-term goal. He may want to go on vacation in a year or two. Since the duration is short, it is best to invest in funds that give relatively stable returns. He can invest in a mutual fund like a liquid fund, short-duration debt fund, or any other debt fund to meet his goal. The best time to invest in mutual funds for the short duration is as soon as one identifies their goal. This will give them more time to grow their money and meet their financial goal comfortably.

• 2.Medium-term investment horizon

  Investments for a duration of 3 to 7 years are called medium-term investment horizons. These can be to meet goals like buying a car, saving for a house down payment or to meet educational needs. Typically, since investors have some time to save for such a goal, they can afford to take on some risk. This may be a good time horizon to buy stocks of large-cap companies with assured returns or invest in equity mutual funds. For slightly more risk-averse investors, hybrid funds can be a good choice. Medium-term investors can also take time to decide when to invest in mutual funds. The best time to invest in mutual funds like equity or hybrid funds for medium-term investors is when there is a market downturn. This helps getting more mutual fund units that have the potential to grow over 3-7 years.

• Small-cap funds:

  This type of equity funds involves those companies with a small capitalisation of less than 500 crores. It has higher growth potential and is the best choice for investors who are expecting higher returns. Only the investors who have a great knowledge of stocks can choose to invest in this type of funds.

• Balanced Funds:

  If you are looking for equity funds that are a combination of both equity and bonds, then balanced funds is the one for you. Many investors may be looking for better income, financial safety and modest capitalisation. As the name itself says, balanced funds help them strike a balance between all their needs effectively.

• 3.Long-term investment horizon

  When an investor wants to invest for 8-10 years or longer in mutual funds, it is called a long-term investment horizon. Typically, people who aim for retirement funds invest for the long term. This is the perfect situation to buy stocks. If one doesn’t want to take the risk to buy stocks directly, then investing in riskier mutual funds like small-cap or mid-cap equity funds can be a good option. The question of when to invest in mutual funds for the long term is irrelevant because the sooner you start, the more time you have for your money to compound. Since the time horizon is long, any fluctuations in the market will be evened out. You have enough time to make up for any losses.

  What is the right time to invest in mutual funds?

  The generic question of when to invest in mutual funds can be answered with: right away! Early investment, be it for short-term goals or long-term goals, gives you more time to compound your money. However, it is best to time the market when it comes to investing in equity funds. The best time to invest in mutual funds that are debt or hybrid is anytime!

  So what are you waiting for? Go ahead and choose the best fund from Mahindra Finance Investment Solutions Portal.

Most investors choose to invest in a single type of fund. It could be mutual funds, SIP, debt, equity, or something else. However, portfolio investment allows you to choose various options to invest in. It diversifies your options. Thus, you can invest in mutual funds, SIP, debt, equity, and everything else without any restriction. That’s the primary objective of portfolio Investment.

Often, it is interchanged with terms like asset or wealth management. Even portfolio management gets tossed around a lot. The objective of portfolio management is to understand the investor’s risk appetite. Accordingly, you receive options to invest in the market to help you meet the financial goals by assessing your risk tolerance.

Portfolio investment can be in a single segment of the market or the entire industry.

Example Of Stocks And Bonds - Returns & Risk Management

Let’s take two primary examples. Bonds are the safest investments, while Stocks can be unpredictable or risky. A person with portfolio investment can decide to split the funds according to their risk appetite (or tolerance).

In other words, you can split it 50% in stocks and the remaining in bonds. Alternatively, if you want lower risk, you can increase the investment in bonds. Vice-versa if you’re going to increase the risk and returns.

This is how portfolio management primarily works. It attempts to understand the investor, mitigate the risk as much as possible and increase income.

Reasons To Opt For Portfolio Method Of Investing

Now that you understand what the portfolio method is, it’s time to determine its relevance to you. First of all, portfolio investment is a choice. It is not something you ‘have to do in the investment market. However, given below are the reasons or criteria for you to consider this option:

• 1.To Diversify Your Investment

  The entire gimmick of portfolio investment is to ensure that you can diversify your profile as an investor. You can invest in various assets, bonds, stocks, and even cryptocurrency. The objective is to enrich your profile, safeguard your funds and mitigate the risks.

• 2.Generate A Steady Income

  It could depend on the options you choose, but portfolio investment majorly provides a constant income flow. Regardless of the options you choose, there will be some percentage of income you can gain. It happens with the diversity of the investment. If you’re someone who likes to play moderate to high-risk and seeks regular income generation, portfolio investment might be excellent for you.

• 3.Significantly Mitigate Your Risk

  As mentioned earlier, you can change the assets you seek to invest in by understanding your risk appetite. However, even if you have a higher risk tolerance, you can drastically reduce the risk factor or disaster as there will be multiple investments. Thus, even one of the tanks, others can mature for lucrative returns or gains. So, whether you’re a high-risk investor or on the opposite end, you will always manage risk better.

• Cost-Efficient Option To Invest

  Portfolio management requires minimal asset management and would correlatively reduce transaction costs. Additionally, if you choose to invest in securities, it will reduce the social cost of investment. According to the investment profile, there are many other additional costs that you can reduce if you choose a portfolio method.

Bottom Line

Of course, there are some downsides to the method. For instance, it requires more diligent research and understanding of the financial market.

Overall, the portfolio investing method is excellent for everyone, from a beginner (novice) investor to a veteran. If you want to invest in mutual funds, SIP, and other assets, it is among the best diversifying options.

Fixed Deposit(FD) and Recurring Deposit (RD) are the two most common investment options in India. They both provide the benefit of steady returns with negligible risk and can hence be a fixed source of income for you.

However, the two are often confused. It is vital to understand the difference between FD and RD to align your financial goals and get the best returns. Read on to learn about the main differences between FD and RD. 

What are FD and RD?

In the case of a Fixed Deposit, the customer picks a fixed tenure that ranges from one week to 10 years. They will need to invest a lump sum, and interest is received on a monthly or quarterly basis. In a Recurring Deposit, customers get to deposit an amount every month that earns interest at the time of maturity.

Key differences between FD and RD

Conclusion

Why not open an FD and RD with Mahindra Finance today and enjoy hassle-free investments and payouts? To learn more about the difference between Fixed Deposit and Recurring Deposit or the varying FD and RD interest rates, visit our website.

Two widely trusted investment options are Fixed Deposit (FD) and National Savings Certificate (NSC). Both are time-tested, come with low risk, and ensure steady returns for you in the long run. However, picking between the two can often be difficult.

Learn about the differences between these two financial products so that you can make the right choice while investing your money:

What are FD and NSC?

• Fixed Deposit (FD) is a low-risk financial instrument offered by banks, NBFCs, and post offices. Customers make a one-time payment for the chosen tenure, and this earns them interest at a fixed rate throughout the tenure of the scheme.
• National Savings Certificate (NSC) is offered by the Government of India as part of the Indian Postal Service’s savings scheme. It is a savings bond with a maturity of five years and is a good scheme to reduce tax liability.

NSC vs FD: Key differences

NSC vs FD:

Which is the better choice?

Both FD and NSC are low-risk and secure investment options. They share several common features, including tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

Interest rates on FD and NSC are fixed throughout the tenure, and neither has a cap on the maximum amount that can be invested. So, the selection is a personal choice that can vary from individual to individual.

To know which one is better for you, use the FD vs NSC calculator. 

Open a Fixed Deposit with Mahindra Finance today and enjoy lucrative interest and several other benefits. Visit our website to learn more.

When it comes to safe investment options in India, PPF and FD are among the most preferred. They both offer a plethora of benefits and are attractive choices, regardless of one’s income. These financial instruments come with some unique features and are ideal options for risk-averse investors.

The following comparison between PPF and FD will help you get a better understanding of which one you should go for:

PPF vs FD:What are they?

• Fixed Deposit: FDs are offered by banks, post offices, and NBFCs. Customers are required to make a lump sum investment for the chosen tenure, and the interest rate is fixed throughout the tenure of the scheme.
• Public Provident Fund: PPF was launched by the Indian government in 1968. It is offered by nationalised banks, post offices, and certain private banks. It has a fixed tenure of 15 years and offers interest as per the rate set by the government.

PPF vs FD: The main differences

PPF vs FD: Which one should you choose?

In the case of PPF, customers can make premature withdrawals and also avail of a loan against the invested amount (after completion of the first three years). However, it offers low liquidity. On the other hand, FD offers better liquidity and allows flexibility of tenure. The choice between PPF and FD is, therefore, largely dependent on your desired tenure and the need for liquidity.

PPF vs FD: What are the interest rates?

While PPF interest rates are fixed by the government, interest rates on FD are determined by the bank in question. Generally, PPF offers a better interest rate as compared to an FD. The PPF vs FD interest rate can be calculated using the PPF vs FD calculator.

Conclusion

Visit our website to know more about PPF account and FD and avail of the product that best suit your needs and goals.

Introduction:

India has seen a massive boom in mutual funds over the past decade. Investors are now receptive to modern investment routes such as SIPs to reap the benefits of equity. Even then, traditional financial options, including FDs, remain a popular choice. Read on to find out what type of investment you should opt for.

SIP vs FD: Know the difference 

Before making a choice, it is advisable to know all about the differences between SIP and FD.

SIP or Systematic Investment Plan is a method of investing in mutual funds through smaller amounts at regular intervals. SIPs can be a good starting point for those looking to invest in equity and debt instruments. It ensures steady returns and inculcates the habit of regular investment.

FD or Fixed Deposit is a traditional and low-risk financial instrument that is mainly offered by banks, NBFCs, and post offices. When an investor opts for an FD, they make a one-time payment for the chosen period and earn interest at a fixed rate. It is ideal for those with a low risk appetite.

SIP vs FD: Detailed comparison

Let’s understand the benefits and drawbacks of SIP investment vs FD through the following table:

SIP vs FD: Final verdict 

Whether you should invest in a SIP or FD depends on your investment goals, risk appetite, the amount you wish to invest, etc. It is recommended that you spread your funds across conservative and aggressive investment options to ensure balanced returns and security.

Use the SIP vs FD calculator to make the right choice!

Conclusion

Open a Fixed Deposit with Mahindra Finance and benefit from competitive interest rates and steady returns. Visit our website to learn more.

One of the advantages of starting a fixed deposit (FD) is that it’s a safe way to invest. It also ensures the steady growth of your savings. What’s more, it is very easy to get started - just fill out the application form, either online or offline, and embark on your investing journey!  

But before you begin your investment journey, it is good to review the many features of fixed deposits and determine if this is the right scheme for you. 

Here are some key benefits:

• Additional interest rate for senior citizens:

  With Mahindra Finance fixed deposit, senior citizens are eligible to get an additional interest rate of 0.25% per annum. 

• Safe investment:

  Unlike (say) mutual funds, FDs are not driven by changes in the market. This is a standout advantage. At the time of maturity, you are assured of getting a certain sum based on your investment. This makes FDs an attractive proposition for risk-averse investors. 

• Easy liquidity:

  FDs benefit investors who are in it for the long haul as well as those who may need money at short notice. Yes, you can liquidate your FD if you need funds urgently. So, an FD can be a blessing in a financial emergency. 

• Loan against FD:

  Another benefit of FD is that you can take a loan against it - that too at a lower rate of interest. You get to enjoy the benefits of your FD, and you can avail of a loan to meet your current financial needs. 

• Simple investment tool:

  An FD benefits anyone who wishes to invest but doesn’t have in-depth financial knowledge. All you need to do is invest your money for a specific tenure and watch it grow. Unlike with equity funds, there’s no need to constantly monitor your investments since FDs are not affected by market fluctuations. 

A Fixed Deposit (FD) is a type of savings instrument offered by banks and Non-Banking Financial Companies (NBFCs). It allows you to save a certain amount of money for a predetermined term. This money earns a fixed amount of interest over that period. On maturity, the entire amount - the principal along with interest - is given to you as a lump sum. 

There are several advantages of fixed deposit account. But before we look at this aspect in detail, we must familiarise ourselves with the many features of a fixed deposit account. 

Features of a fixed deposit account

• Guaranteed returns:One of the key FD features that makes the instrument stand apart is the ability to earn assured returns. A fixed deposit is not linked to the market. The rate of interest is fixed, and you earn accordingly. There are no fluctuations or changes in your returns.
• Choice of tenure:A fixed deposit offers plenty of options when it comes to the length of the term. You can open a fixed deposit for as little as seven days or up to a maximum of ten years. The choice is yours.
• Online and offline methods:A fixed deposit account can be opened online from the comfort of your home or offline by visiting the branch of a bank or an NBFC.
• Predictable interest rates:An FD has a fixed interest rate. These interest rates are usually higher for senior citizens.

Benefits of a fixed deposit account

• Low risk:One of the greatest benefits of an FD account is that it is a low-risk financial instrument. Your money is not affected by market highs and lows; it grows at a systematic pace and delivers as per expectations. This allows you to plan for your future needs without any stress.
• Loan facility:If you ever have an unplanned financial need, such as a medical emergency, a home repair, or a child’s education expense, you can take a loan against your deposit. This is much quicker and simpler than taking a loan from a bank. You are basically borrowing from your own money and can pay it back slowly.
• Tax savings:Tax savings are another of the many benefits of a fixed deposit account. A five-year fixed deposit is among the tax-saving instruments covered under Section 80C of the Income Tax Act 1961. This lets you claim a tax deduction of up to Rs 1.5 lakh a year on your fixed deposit account, which lowers your taxable income and saves you some money.
• Simplicity:A fixed deposit is a simple product that has been helping people for years. It is easy to open. There are no difficult rules. It also does not require you to have a detailed knowledge of the market. Anybody can open an FD, irrespective of age and income. This makes it a good savings choice for most people.

Conclusion

Given the many useful fixed deposit features and benefits, it makes sense to check out this instrument for financial planning. You can use it to plan for various needs like a home purchase, a child’s wedding expenses, education, and more. Mahindra Finance offers you the option to open a fixed deposit online, making it easier to take a step towards financial security.

If you are looking to save some money for your future use, you could create an FD account. An FD or fixed deposit is a type of savings instrument that allows you to save a fixed amount of money for a pre-decided term. Your savings earn a fixed rate of interest annually, which can help you secure your future and pay for various financial needs.

You can create an FD online or offline. However, opening an online FD account is much more convenient. Read on to understand the steps to open a fixed deposit account online.

How to open an FD account online

An FD account can be opened at a bank or a Non-Banking Financial Company (NBFC). The process can vary slightly depending on the FD provider. However, the basic steps remain the same. Here’s what you generally need to do:

1. Visit the website of the bank or NBFC you wish to create an FD account with.
2. Fill up the application to open an FD account online.
3. Enter basic details such as your name, address, age, bank account number, PAN, and other required information.
4. Enter the deposit amount and select a term. An FD can have a minimum tenure of seven days and a maximum of ten years.
5. Enter the nominee information. The nominee is the person who gets the deposit money in the event of your death.
6. Enter your mobile number and email address.
7. Transfer the money into the FD account.

The bank or NBFC will verify your information and activate your FD account in a couple of days. Once your account is active, you will receive a notification on your registered mobile number or email address.

Documents required

While understanding how to open an FD account, it is also vital to know the documents required for starting the process. Here’s what you need:

• A copy of your PAN card
• A copy of your latest bank statement
• Identity and address proofs
• Latest coloured passport-size photographs

How to choose the right fixed deposit

It is vital to compare the interest rates and tenure options offered by different providers before you choose an FD. To ensure that you enjoy a smooth experience, check how easy the online application process is and the customer care service of the provider. Further, since you are saving your hard-earned money, make sure to choose a reliable name from the finance industry to avoid any issues of fraud later.

Conclusion

Now that you know how to open a fixed deposit account online, go ahead and open one right away. A fixed deposit can help you keep up with rising prices. It is also safe and contains no market-linked risk. Your earnings are assured, and you can sit back and relax while your money gains interest. Moreover, NBFCs like Mahindra Finance offer attractive interest rates on Fixed Deposits for all ages, including an additional 0.25% for senior citizens.