Nine things you need to know before investing in Index Mutual Funds, ETFs

Nine things you need to know before investing in Index Mutual Funds, ETFs
While investing in passive funds, investors' decisions should not be driven by just expense ratio of the fund.

Key Highlights :

• Passive funds are not always safer
• Passive funds also underperform the index
• Tracking error & tracking difference in passive funds are not the same

Of late, more & more retail investors are getting attracted towards passive mutual fund schemes as actively managed funds have failed to outperform their benchmark over the last couple of years.
Looking at the investors' interest fund houses are lining up new ultra-low-cost index fund offerings. A few weeks back, Navi Mutual Fund created a buzz with its first offering—a Nifty50 index fund, which has an expense ratio of only 0.06%.
Index funds simply try to mirror the performance of their underlying index by holding the same stocks in the same proportion in which the index holds.
Despite this, index most funds fail to match the performance of the index they track.
Passive funds also have some drawbacks & advantages as well which investors should know before investing. 

Here are nine things investors should know about Index Funds & ETFs.
1. Passive funds are not always safer
Many investors are of the opinion that index funds or ETFs are safer than actively managed funds. Worth mentioning here is that both active funds and passive funds invest in equities, which by nature are volatile. So if the market falls index funds will also fall in line with the index. However, as index funds track a particular index, the quantum of fall may be lesser than active funds in general. But both active and passive funds carry market risk and can fall if overall markets fall. But the only difference in case of index funds is that their risk profile is consistent with the underlying index.

2. Passive funds also underperform the index
Although index funds try to mirror the performance of an underlying index, in most cases they underperform their benchmark. Returns of a passive fund are usually slightly lesser than the index it tracks, for multiple reasons. “The index itself is a theoretical concept and replicating it comes at a cost.” Worth mentioning here is that a fund's NAV is arrived at after deducting expenses. So more the expense ratio of a passive fund, the more will be underperformance. The cash position held by the fund also contributes to the gap in performance. Also, inflows & outflows in the fund lead to divergences in performance. This apart, tracking difference may also arise during rebalancing.

3. A passive fund can also outperform its Index
Sometimes, passive funds outperform their underlying index due to several reasons. Index funds having higher cash positions tend to outperform their index in case of market corrections. But if your fund is consistently outperforming its index—showing positive tracking difference then it is a matter of concern as it implies the fund manager is either struggling to mirror the changes in index or may even be taking unwarranted risk on the index portfolio. Experts say in a normal scenario, index funds are expected to show a nominal negative tracking error.

4. Tracking error & tracking difference are not the same
Most investors believe that tracking error & tracking difference of an index fund are the same. Typically investors use these two words interchangeably but these two are not the same. While tracking difference indicates the difference in return between an index fund & its benchmark index, tracking error signifies the volatility in the performance of the index fund relative to its index. tracking error is calculated by annualising the standard deviation of the tracking difference of an index fund. Tracking error captures the consistency in the fund’s tracking difference over a period of time. A high tracking error shows that the fund returns relative to its index keep varying widely & it is not a good sign.

5. Lowest expense ratio does not guarantee better returns
Typically investors tend to invest in the index fund that has the lowest expense ratio. But that does not guarantee better performance or lower tracking error. “Many other factors can still create a divergence between the fund & its index.” Funds with high expense ratios can also track the index better & funds with low expense ratio may clock high tracking differences. Obsessing over lowest cost index funds will be no different than yearning for highest return active funds. It traps you in the same endless pursuit. Just pick a fund with a reasonably low cost & stick with it for your investing time horizon, the publication mentioned.

6. There are additional costs in ETF other than expense ratio
Expense ratios of ETFs are even lower than index funds. But that does not mean that investors are better of buying ETFs. Unlike index funds, ETFs can be bought & sold on exchanges from other unitholders. So investors have to pay brokerage along with taxes & depository charges hide buying & selling ETF units from the market. These expenses increase the overall cost of holding ETFs.
Also, barring a few, trading volumes of most ETFs are very poor. This lack of liquidity often creates wide divergences between the fund NAV & the price at which it can be bought or sold. What you save in expense ratio is more than nullified by this impact cost. This gap is over & above the tracking difference common to both index funds & ETF's.

7. Watch out for creeping expenses
At present, expense ratio of passive funds are low as they aim to attract more investors. But there could be a surprise later when asset management companies achieve their target AUM. Passive funds are currently in their infancy & are inviting more assets by keeping costs very low. Recently, several index funds hiked their expense ratios. Tata Sensex Index Fund’s expense ratio increased 16 times from 0.05% to 0.8% in early April. HDFC Nifty & HDFC Sensex index funds now cost twice as much – from 0.1% to 0.2%. Similarly, UTI Nifty Index fund will charge a TER of 0.18% compared to 0.1% earlier. All these hikes were on direct plan variant, the regular plans already charge higher.

8. Bigger index doesn’t lead to greater diversification
Typically investors invest in passive funds that track a broader index such as Nifty 500 index to get the benefit of diversification. However, in real sense, this does not lead to greater diversification. Studies have shown that there is no incremental gain—in the form of lower risk—from diversifying beyond a point. In the same way, buying a broader index is not much different than buying a frontline index like Nifty50.
If you buy Nifty 100 index, theoretically, you do get 50 additional stocks but here the top 50 stocks enjoy a disproportionate allocation (84%) & the rest 50 stocks get lower allocation. So you don't get the desired benefit of diversification. The equal-weighted index will allow for more diversification in the true sense.
Similarly, if you are investing in a passive fund that tracks Nifty 500 index, large-cap stocks, account for a whopping 77% of the index, mid-cap stocks constitute 16%, while small-cap stocks make up the remaining 7%. Index funds based on broad market indices like Nifty 500 may not actually offer the diversification that investors are looking for as these indices are top-heavy.

9. Funds tracking beyond frontline indices don’t track well
Of late many fund houses have launched passive funds tracking small cap & multi cap indices. But tapping the broader market with an index fund or ETF can come at a steep cost, the publication mentioned. It may be noted that the tracking difference get bigger for broader index-based funds.
Over the past year, the gap remains up to 1% for bulk of the Nifty 50-based funds. It rises to 1.5% & beyond for the Next 50 index variants. The return differential increases to 2% for the Nifty 500 index & widens further for funds that are based on mid-cap & small-cap indices.
The main reason for this is the poor liquidity in the broader market. The low liquidity increases the impact cost, or the cost of executing a transaction.

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NPS Update ! Know 5 BIG changes in National Pension System : All benefits, Relaxations details

The National Pension System (NPS) is a government offered retirement cum pension scheme.
→ The National Pension System (NPS) is a Government offered retirement cum pension scheme. By investing in NPS, the investors get the dual benefit of tax-saving & retirement planning.
→ Contribution towards an NPS account provides a benefit to individuals by way of a deduction under Section 80C. Not just it secures your retirement planning, but it also saves taxes of up to ₹ 1,50,000 a year.
→ The best part is both Private & Government employees can invest in this retirement planning scheme. In recent months there have been few changes by the Pension Fund Regulatory & Development Authority (PFRDA) in NPS. Let’s see what are these major changes.

1. Transaction in NPS via NACH Mandate :
PFRDA has enabled the National Automated Clearing House (NACH) mandate in NPS transaction in order to curb the existing challenges in fund transfer process. With the help of the NACH mandate, the complete transaction process will become digital for Point of Presence (PoP) & other NPS distributors. PFRDA introduced NACH mandate jointly by Trustee Bank & Central Record Keeping through National Automated Clearing House operated by National Payments Corporation of India.

2. Withdraw Entire Accumulated Pension Wealth :
Now on maturity, the PFRDA has allowed NPS subscribers to withdraw the entire accumulated pension wealth without purchasing annuity if the pension amount is less than ₹ 5 lakh. Currently, the person can withdraw up to 60% of the amount accumulated in the account, while the rest 40% is used to purchase an annuity plan

3. Relaxation in Timelines :
PFRDA has relaxed timelines for activities under NPS & NPS Lite- Swavalamban scheme amid the second wave of the COVID pandemic. Point of Presence (POPs) are advised to undertake NPS related activities within prescribed Turn Around Time (TAT) under the Pension Fund Regulatory & Development Authority (Point of Presence) Regulations, 2018 & guidelines issued there-under, in order to ensure timely & efficient service to subscribers, this the pension regulator mentioned.

4. Partial Withdrawal via self-declaration :
In order to ease the process of partial withdrawal & make it simple, online & paperless in the of the NPS subscribers, it was decided to allow them the partial withdrawal based on self-declaration & thereby doing away with the submission of supporting documents to substantiate the reason for partial withdrawal.

5. Deposit contributions under D Remit :
National Pension System (NPS) subscribers can deposit contributions into their accounts under D Remit (or direct remittance) using IMPS. The pension regulatory said, "PFRDA is pleased to announce the enablement of contribution by subscribers into D Remit by using Immediate Payment System (IMPS), the instant fund transfer facility provided by National Payment Corporation of India (NPCI).

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Health Insurance Porting -Benefits & How to Port your Cover without losing Benefits.

Not happy with your health insurance policy? Here’s how you can port your cover without losing benefits.

→ If you are not satisfied with your existing health insurance policy or you believe that the benefits you get from your health plan are not worth the premium you pay, then you have an option to port it to a different insurer for a better plan. In this case, the no claim bonus on existing policy also gets ported.

→ Health insurance policies can be ported to a different insurer while continuing the accrued benefits of the existing policy. For example, if in your present health plan some treatments are not covered for the first two years & already one year has passed, then in the new policy offered by a different insurer the waiting period for the same treatment will be reduced by one year. Worth mentioning here that the same benefit will not be applicable to a senior citizen mediclaim policy.

→ It is easier to port the health insurance plan of a young person than a senior citizen. Companies often show reluctance to port senior citizen plans as the waiting period is either reduced or entirely waived off & the new insurance company's liability comes into effect earlier.

→ It may be noted that individuals having a chronic illness or who have already undergone a hospitalization may get limited options when it comes to health insurance portability.

Will the benefits continue?
→ Yes. Portability is allowed under all individual indemnity health insurance policies issued by general insurers and health insurers including family floater policies. Wherein, the continuity benefits are offered on time-bound exclusion to the extent of the previous sum insured.

What are the advantages of porting instead of purchasing a New Policy?
1. New Sum Insured : When it comes to portability, the sum insured & accrued bonus will be added, to determine the new sum insured. Furthermore, the existing no claim bonus will also be added to the new sum insured.
2. Continued Previous Benefits : All the benefits provided by the old policy will remain in force in the new policy.
3 Lower Policy Premiums : Due to the myriad of policies offered by many insurance players, if you are porting your policy, your new insurance provider would probably offer you existing benefits enjoyed in your old policy for even lower premiums. This will bring down the cost of insurance & help save more money.
4. Transparency : As the policyholder has the option of moving to a new service provider, they would have the option of porting their policy to an insurer that follows transparent practices, with no hidden conditions and clauses.
5. Customised Policy : Policyholders have the privilege of modifying their existing policy to suit their health requirements, such as opting for additional cover as per their current lifestyles & health stats, or changing their nominees.
6. Time-bound Exclusions Absent : Policyholders needn't worry about time-bound exclusions, when porting their policy.
7. Better Claim Settlements : If policyholders find the claim settlement process very slow & cumbersome with their previous insurer, they might enjoy better services with their new insurer, depending on the insurer's claim settlement ratio.

Will the Premium Change?
→ The premium on the new policy may vary depending on the underwriting process of the new insurance company for the particular product.

→ "The premium is calculated based on the age, geography, health conditions & gender in some of the products. However, the premium may differ from insurer to insurer based on coverage, terms conditions, sub-limits / no sub limits, room capping & waiting periods.

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10 Golden Investment Rules for First Time Earners

10 Golden Investment Rules for First Time Earners

Introduction : Congratulations on landing your first job. As the stepping stone to a long career — one that could see you rise to new heights & success — you also have dreams you wish to accomplish. A comfortable car, a new home, higher education, happy retirement & others. And while your investment goals may be as unique as the journey you take to reach them, here are ten golden investment rules to help you get where you want to be.

1. Create a Financial Plan : Build a financial strategy that includes your goals, investment timeframe & risk appetite. Knowing your risk profile is important when creating your financial strategy. Get to know your comfort level with risk & how much risk you need to take.to achieve your financial goals.

2. Start investing at the Earliest : When it comes to investments, the earlier you begin, the more benefits you stand to gain. Start investing now to allow the power of compounding to reap returns at a later stage. Investing in Equity & Equity-oriented mutual funds coupled with the power of compounding can help grow your investments into a substantial sum of money over time.

3. Diversify : You may have heard the saying, "don't put all your eggs in one basket." This principle also applies to your investments. Diversification is essential when investing as it ensures that any underperformance by one asset class could be offset by a good performance from other assets in your investment portfolio. By investing across asset classes, such as equity, fixed income, gold & alternate investments, you can achieve good returns with a balanced approach to risk.

4. Stick to Asset Allocation : Starting from your first job, you may have goals to achieve. Every goal may have a specific timeline. Your short-term goals could be achieved within the next year, medium-term goals in the next five years and long-term goals beyond five. Hence, choose suitable asset classes depending on your financial goals. Consider your risk appetite, time horizon & financial objectives in deciding the right asset allocation mix for your portfolio.

5. Know your Taxes : Your salary may be subject to tax & hence, knowing where & how much of your income is taxed is important. Learn more about investments & products that offer you tax benefits & tax exemptions offered under various sections of The Income Tax Act, such as those for Equity-Linked Saving Scheme - ELSS funds, Life insurance premiums, etc.

6. Be Informed : Do not invest in any instrument or asset class you don't understand. It can be a good time to learn more about different kinds of investments, potential rewards & the potential risks when investing. Knowing how your investments make money or how losses could happen is essential. Being informed can help you make smart investment choices.

7. Explore Mutual Funds : A mutual fund is a financial tool that pools money from many investors to invest in different assets such as equity, debt or gold. Mutual funds are simple to understand, affordable & offer professional management all combined in one. But more importantly, it also gives you instant diversification & liquidity. You can also choose to invest regularly through a Systematic Investment Plan (SIP's) or a lump sum amount as per your convenience. SIP is a good option for investors looking to instill discipline into their investing habits. Getting the freedom to choose schemes of your choice depending on your financial needs & risk-bearing capacity is the most significant benefit that mutual funds can offer.

8. Think Long-Term : When investing, consider doing so for the long run. It can ensure you are not hassled about daily or weekly stock market volatility. Stick to your financial strategy despite market movement that can help you focus on your long-term goals & time horizon.

9. Invest Regularly : A good way to discipline your investment habits is to ensure you make regular investments. It can help you beat market volatility, especially if you use Mutual Fund SIP's or choose to invest in stocks systematically. As you contribute small portions of your money to your investment portfolio regularly, you will be able to create a corpus over time without taking the pain of investing a large sum at one go.

10. Review your Strategy Periodically : Since no one can control market fluctuations, political environments or the economy, change is a constant that you can expect. You can consult with a financial advisor to help you review your strategy regularly. Consider your financial advisor as your expert navigator on your investment journey. Through their expertise & financial knowledge, you will know where you stand financially & what you need to do to reach your goals successfully. Many brokers or financial distributors also offer their recommendations on investments, diversification, asset allocation, etc. online for both first time & experienced investors. They also generally track & review their recommended investments to take them to closure. Investors can also take benefit of this facility.

In Conclusion : Following the above ten fundamental investment rules can increase your chances of building wealth & meeting your goals successfully. Above all, motivate yourself to keep your eyes on the larger picture to make smart investment choices despite market ups & downs.

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Investment into Mutual Funds Simplified

Is One of the Following Questions on your mind regarding Mutual Funds?

1. How much to invest in MutualFund?
2. Is my Existing Fund Performing?
3. SIP or Lumpsum?
4. Best Fund Suited to My needs? (Hint : Not always the top performing Fund in a prior period)
5. How can I add an extra 2-3% Return annually?

Benefits of Consulting & Investing For Tax Saving as well as in General for SIP, Lumpsum & Other Mutual Funds Investments with us.

1. Proper Guidance With Respect to Life Cycle Risk appetite Goals.
2. Proper Fund Selection based on above.
3. Follow up periodically. 

Apart From this You will get a ton of supports & markets research from IIFL Research team with products into Govt & Corporate Bonds, Corporate Fixed Deposits etc to achieve an extra 2-3% Return annually.

Practically a no Brainer Right? What are you waiting for? 

Drop a message on Whatsapp 7506265365 or mail at rajeshnair72@gmail.com for more details or help to invest.

Happy to Help.

Five sources of income beyond EPF, PPF that are exempt from Income Tax

Five sources of income beyond EPF, PPF that are exempt from Income Tax : 
→ As per income tax rules any individual having an annual income of more than ₹ 2.50 lakh is required to file income tax return.

→ It is necessary irrespective of the source of income. While salary income and business income are taxed as per the applicable individual tax slabs, there are certain sources of income that are exempt from income tax irrespective of the amount.
→ Maturity proceeds of Public Provident Fund (PPF), Employees Provident Fund (EPF), insurance policy are exempt from income tax.
→ Similarly, there are certain other sources of income that are not taxable : Tax experts say income from gift including marriage gift, share of profit in a partnership firm, educational scholarships, gratuity & ancestral property is also exempt from income tax.

Five sources of income that are exempt from Income Tax :
1. Share of profit in Partnership Firm : The share of profit, received by a partner, in the total income of the firm is exempt from income tax in the hands of the partners. As share of partners is arrived after providing for all expenses & income tax, partnership is not taxable. However, remuneration received by a partner & interest on capital received by the partner is taxable.

2. Marriage Gift : Gifts received by a newly-wed couple during their wedding are exempt from tax. If the gifts are given by immediate family members, such as their parents, siblings or any of their siblings’ spouses, or the siblings of their parents, they are exempt regardless of the value of the gift. Whether it is cash, stocks, jewellery, automobiles, electronics, artefacts, etc., or even immovable presents such as house or land, shall not attract tax & are exempt under Section 56 of the Income Tax Act, 1961.
However, if gifts are not marriage gifts, then they will be taxable if the combined value of the gifts exceeds ₹ 50,000.

3. Educational Scholarship : Any scholarship granted to meet the cost of education is exempt from income tax as per Section 10(16) of Income Tax Act 1961. However, to claim the expenses the scholarship income should have been used to meet the education expenses only.

4. Ancestral Property : The tax applicable while inheriting an asset is called Inheritance Tax or Estate Tax. In India, Inheritance Tax is not levied & (also referred to as Estate Tax) is a tax which is levied at the time of inheriting any asset. Inheritance Tax is not levied in India. So any amount received under a Will or by way of inheritance or in contemplation of death of the payer is exempted from income tax under Section 56 (ii).

5. Agricultural Income : In India, agricultural income is exempted from taxation & not included under total income. Agricultural income refers to income earned from sources that include farming land, buildings on or identified with agricultural land & commercial produce from horticultural land.

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How a Comprehensive Health Insurance Policy differs from a Basic Health Insurance Plan

How a comprehensive health insurance policy differs from a basic plan?

Discussing the concept of a Comprehensive Health Insurance Plan & how it differs from a regular or basic health insurance policy.
→ Health Insurance is essential to safeguard savings in the event of a medical emergency. While there are several options available, customers should research the features & options before deciding on a policy.

→ It's vital to understand that different health insurance plans fulfill different purposes. Some may cover only a specific group of people, whereas some may cover a specific disease.

→ Here, we are discussing the concept of a comprehensive health insurance plan & how it differs from a regular or basic health insurance policy.

Let's understand it under different sub-heads :
1. Coverage : Comprehensive medical insurance covers the cost of hospitalisation, daycare procedures, medical care at home, ambulance charges, among others. It offers extensive coverage & acts as a financial cushion in case of medical emergencies.
On the other hand, a basic health insurance policy covers medical expenses for illnesses or injuries. At the same time, it protects policyholders from sudden medical expenses & reimburses the bills or pays the medical care provider directly on the policyholder’s behalf.
In short, a basic health insurance plan helps policyholders in staying covered against various diseases. While, a comprehensive policy covers outpatient as well as inpatient treatments, including consultations, medical tests as well as hospital stays.

2. Inclusions & Cost : Comprehensive health insurance is generally designed without any capping for room rent/ICU charges & doctor’s fees. It also does not have any sub-limits for any coverage such as domiciliary hospitalisation. It offers the maximum benefit to the insured as compared to the basic health insurance cover & hence the cost is also higher.

3. Value-Added Services : Unlike basic health insurance, comprehensive health plans come with valued added services such as pharmacy & diagnostic centre tie-ups, doctor consultation, gym membership discount & many such features which add to the health cover.

Conclusion : So, which is better?
→ As per market experts, a comprehensive plan is much better than the regular health cover in terms of the sum insured, benefits offered, diseases covered, flexibility, etc. A basic plan has limited benefits.
→ However, it's always on the customers to pick the policy as per their needs & fund availability.

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Why term insurance policies that promise to pay back premiums are avoidable?

Why term insurance policies that promise to pay back premiums are avoidable?
Term Insurance policies also come with an option to return your premiums, but they are costly. If you invest the premium difference in a mutual fund SIP, you can earn more.

→ A pure term life cover is an insurance policy that promises to pay your nominee an amount (sum assured of the policy), if you die. But it doesn’t come bundled with investment, unlike traditional life insurance policies.
→ But insurance companies have another way of selling it to you. What looks like a term cover, but comes with an investment wrapper around it. Though you get some return from this policy even if you do not die, the premium is higher.

Rather Investing via mutual fund SIP earns better returns :
→ The right way to look at a life insurance policy is that you pay a cost for protecting your family’s financial future. That is not an investment. That’s why a pure term life cover comes cheap. Whatever extra you save, on account of a low premium, you are free to invest elsewhere & earn returns.

→ Let’s look at policies from HDFC Life Insurance & ICICI Prudential Life Insurance :
→ HDFC Life has a term policy for a 30-year-old woman, with an annual salary of around ₹ 15 lakh, which she can buy for the next 30 years at an annual premium of ₹ 10,690. In this case, the premiums paid will not be returned, it is a pure term policy. In the same policy, you have the option to get your premium back. Here is where the extra cost starts to stack up. Now, the premium itself increases to ₹ 23,230 a year. Hence, for the next 30 years, you pay an annual excess charge of ₹ 12,540. Over a period of 30 years, that is a difference of ₹ 3,76,230.
→ Let’s not stop here. You can take the difference in the amounts of the two types of policies and break it up into equal monthly investment amounts of ₹ 1045 to invest in equity-oriented mutual funds. At an assumed rate of 10% annually, continued for 30 years, this will grow to roughly ₹ 24 lakh. By opting for the regular term policy instead of the return of premium cover, not only are you saving money but also earning a lot more by investing it correctly.
→ ICICI Prudential iProtect Smart has a return of premium product version & a regular one. The difference in annual premium of the two versions, assuming a maturity age of 60 years & a policy term of 30 years, is ₹ 13,000 annually. That is a difference of ₹ 3,91,000 over a period of 30 years.
→ Monthly investments worth ₹ 1,086 for the next 30 years at an assumed return of 10% a year will get you approximately ₹ 25 lakh. This is a lot more than any return of premium or survival benefit amount that the policy will pay out.

What should one do then?
→ When something sounds too good to be true, it probably is. A term life insurance policy that gives you your premium back is just that. You are losing the opportunity to earn better returns elsewhere by paying a high premium.
→ If we can figure out the most effective & efficient way to invest money for long periods or decades, it’s hard to imagine that insurance companies don’t already know this.
→ Mixing insurance & investment is always costly. It’s always a better idea to separate investment from insurance. Don’t fall for the bogus charm of ‘return of premium’ on your term policy. Maximise your life cover & buy pure term life policies & invest your savings elsewhere, say a quality mutual fund, for better returns. Keep it simple.

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Why HNIs should consider Investing in AIF's

Why HNIs should consider Investing in AIF's

→ Driven by a high-performing market & low interest rates globally, India has increasingly become the preferred investment destination for global investors seeking double-digit returns. India attracted the highest ever FDI inflow of close to $70 billion during the first 9 months of FY 2020-21. It is, therefore, no surprise that millions of Indians are taking to more sophisticated investment vehicles & financial instruments as India continues to multiply wealth. This marks a paradigm shift from traditional physical assets, such as real estate, gold & bank deposits.

→ In addition to mutual funds & equities, Alternative Investment Funds (AIFs) have witnessed significant interest from domestic investors.

What are Alternative Investment Funds (AIFs)?
→ Alternative Investment Funds differ from regular conventional investments like public equities or debt securities. These funds are privately pooled funds which invest in venture capital, private equity, hedge funds, infrastructure, etc.
→ Currently, there are nearly 700 AIF's with over ₹ 4 trillion in investments, an impressive 15x growth since 2015.

What's driving AIFs in India
→ India is one of the fastest growing economies with a vibrant business ecosystem & the third largest startup ecosystem globally. Furthermore, Covid has resulted in major changes such as digitalization across industries, the rapid rise of health tech, widespread adoption of remote work, etc. The startup ecosystem, hence, is well poised to drive digital adoption in India and will be the real delta driving the economy in this decade. This is corroborated by the significant fundraising by India-focused funds in 2020, that raised $3 billion despite the pandemic.
→ In order to continue its fast-paced growth, however, infrastructure conforming to global standards is imperative for our country. AIF's have provided a viable route to make investments in public & private infrastructure much more accessible to investors who wish to capitalize on the opportunity presented by the development needs of India. This serves as a lucrative investment alternative for investors while contributing significantly to the overall economic growth.
→ To put things into perspective, India has already seen a record number of 12 Companies attain unicorn status to date in 2021. Additionally, more startups are getting public-market ready & set to launch their IPO's. These are strong indicators of the Indian market moving towards maturity. AIF's stand to benefit from the developments taking place in the venture ecosystem in addition to the overall infrastructure development drive by public & private players alike.

Growth of AIFs in India
→ The key growth enabler for AIF's has been the funds’ ability to customize & curate products across asset classes. These funds are managed by experienced fund managers who adopt sophisticated strategies. Therefore, these funds do not correlate to the stock market & help investors add diversification & reduce volatility in their portfolios. Proprietary investment techniques coupled with strategic diversification has led to higher returns compared to mutual funds, stocks & bonds.
→ The growth must also be attributed to growing investor awareness & flexibility in product offerings. More HNI's are setting up professionally-run family offices with specific investment mandates & allocation strategies. Investors can appropriate a portion of investable capital to different alternative products based on their risk appetite & target returns.
→ AIF's funds are generally subject to higher volatility, liquidity & credit risks than investments in traditional securities, which may act as a deterrent for investors. Investors today, however, have access to various products that offer high liquidity & low volatility. Most importantly, well-managed funds with a keen focus on comprehensive credit analysis & monitoring can greatly reduce the credit risk involved. For example, venture debt has the potential to yield high double-digit returns with reasonable certainty owing to the nature of the product. It also allows investors to participate in the equity upside, while earning a relatively predictable return on the debt component with regular payouts.
→ Although a long way to go, the investment narrative of India is changing as investors have started to embrace India’s growth story with domestic investors playing a pivotal role. This is driven by the belief that the country can build shared prosperity by transforming the way the economy creates value.

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Comparison : Safety of Savings Bank A/c, Fixed Deposits Vs Stocks & Mutual Fund Investments

Comparison : Safety of Savings Bank A/c, Fixed Deposits Vs Stocks & Mutual Fund Investments

→ In Fixed Deposits & Saving Account, your money doesn't grow but eventually die in fight against Inflation.
→ But In Stock market, your money will Grow & will transform into Wealth Creation.
→ If you don't much understand about Investing than Invest your Hard earned savings in Sector leaders in SIP mode or do SIP in ETF's (Niftybees, Juniorbees, N100 & GoldBees)
→ Real Investing is to be done for a time horizon 5-10-15-20 Years - Not for 3 months to 24 months period.
→ There is very big difference in Investor & Trader.
→ Lifestyle inflation is the biggest threat to our financial independence & retirement planning.
→ You are not truly Wealthy, until & unless you own your Time & Wisdom.
→ It might take months, years OR a Decade, but ultimately everything in Stock Market will revert back to you in More Meaningful & Fruitful Way if you truly desire.

→ "Try to be a master on PATIENCE". Only patience will makes your successful in stock market.
→ The journey will be very Long & Difficult.

→ When we Invest knowing all the facts in Mind & the Right Vision, Big Money Follows.

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