ManagementParadise.com : Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond


Go Back   ManagementParadise.com Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Quiz , Marketplace and Community games > Stock Markets Tips & Gyan !!

Really helpful ...............for beginners in stock market..

Really helpful ...............for beginners in stock market..

Discuss Really helpful ...............for beginners in stock market.. within the Stock Markets Tips & Gyan !! forums, part of the Quiz , Marketplace and Community games category; With less than 6 months left for the close of the financial year, smart investors would have commenced their annual ...

Reply

 

LinkBack Thread Tools Display Modes
Advertisements
How to select a tax-saving fund ???
Old
Pratik Bharti
pratikbharti is just really nicepratikbharti is just really nicepratikbharti is just really nicepratikbharti is just really nicepratikbharti is just really nice
 
pratikbharti
Asst. Manager (Marketing) at Welspun Maxsteel Limited
 
Status: Offline
Posts: 2,514
Join Date: Nov 2006
Lightbulb How to select a tax-saving fund ??? - October 31st, 2007

With less than 6 months left for the close of the financial year, smart investors would have commenced their annual tax planning exercise. Tax-saving funds (also referred to as equity linked savings schemes -- ELSS) are popular avenues among risk-taking investors. Apart from providing benefits under Section 80C (investments in tax-saving funds are eligible for deduction from gross total income), they serve another important purpose. Tax-saving funds offer risk-taking investors the opportunity to invest in line with their risk appetite, while conducting the tax-planning exercise.

To begin with, investors need to determine what portion of their investible surplus (subject to an upper limit of Rs 100,000 under Section 80C) will be apportioned to tax-saving funds. The principles of asset allocation are applicable to tax-planning as well. Hence, apart from market-linked avenues like tax-saving funds, assured return schemes like Public Provident Fund, National Savings Certificate and tax-saving fixed deposits should also find a place in the tax-planning kitty. The investor's risk appetite and investment objectives should play a part in determining the allocation to various investment avenues.

Having decided on the allocation to be made to equities (within the tax-saving sphere), the next step is to select a tax-saving fund. Broadly speaking, a tax-saving fund isn't very different from a conventional equity fund. Hence the parameters relevant while selecting an equity fund are applicable to a tax-saving fund as well. The 3-Yr lock-in is a differentiating factor that needs to be taken into account. Following is a 5-step strategy for investing in a tax-saving fund:

1. Scrutinise the fund house first

At Personalfn, we maintain that a fund house should make the grade before any of its funds can be considered for investment purpose. Hence, before selecting a tax-saving fund, ensure that its fund house passes muster. The fund house must be strong on investment processes; in other words, star fund managers shouldn't hold sway over the decision-making process. While a star fund manager can help the fund's cause only so long as he is associated with the fund house, a process-driven investment approach has longevity.

2. Avoid funds with a restrictive investment mandate

Investors should steer clear of tax-saving funds that have a restrictive investment mandate. For instance, some tax-saving funds are known to be positioned as mid and small cap offerings. Investors in such a fund could find themselves in an unenviable situation, if the mid/small cap segment hits a rough patch and large cap stocks emerge as the season's flavour. The situation is accentuated on account of the 3-Yr lock-in. While in a conventional equity fund, the investor has the opportunity to liquidate his investments, the 3-Yr lock-in, prevents him from doing so in a tax-saving fund.

3. Seek diversification

A common feature in several fund houses is that the tax-saving fund mirrors the fund house's flagship equity fund. Therefore, it is not uncommon to see the tax-saving fund have a portfolio and an investment style similar to that of the flagship equity fund. For the sake of diversification, investors should avoid being invested in two funds offering the same investment proposition. The financial planner has an important role to play in evaluating the portfolios and investment styles of various funds and helping investors avoid duplication in their portfolios.

4. Evaluate the fund on the returns front

Investors must evaluate the tax-saving fund's performance on the returns front over longer time frames i.e. at least 3 years. This is pertinent, given that the same is the minimum investment time frame for a tax-saving fund. Also, the fund's performance vis-�-vis its benchmark index and peers should be evaluated. Finally, investors should study how the fund fared during downturns in equity markets. While it is not uncommon to find even mediocre funds deliver a sterling performance in rising markets, it is in a downturn (read bear phase) that funds are truly tested.

5. Evaluate the fund on other parameters

There is a lot more to a mutual fund than just returns. Its performance on risk parameters like volatility control and risk-adjusted return must be studied. Also the fund should have a track record of adhering to its stated investment mandate at all times. Only when the fund makes the grade on all these parameters and does so consistently, should it be considered for investment purpose.
Advertisements


------------------------------------------------------
[B]“When you doubt your power, you give power to your doubts.”[/B]
------------------------------------------------------

You can contact me on : [B]pratikbharti@managementparadise.com
[email address]
[/B]
Friends: (17)
Reply With Quote
Related to Really helpful ...............for beginners in stock market..
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
hi need project on stock market eankur Miscellaneous Project Reports 6 December 10th, 2009 04:38 PM
What Is The Stock Market? Roshni Bhatia Stock Markets Tips & Gyan !! 4 July 21st, 2009 04:08 PM
Stock market nikunj Resolve Your Query - Get Help and discuss Projects 3 January 14th, 2007 12:01 PM
Analysts - Do They Really Know The Stock Market? Praveen Gurwani Stock Markets Tips & Gyan !! 0 December 25th, 2006 02:30 PM
Why stock Market is Rising vengabeats Stock Markets Tips & Gyan !! 3 January 8th, 2006 12:56 PM
 

Re: Really helpful ...............for beginners in stock market..
Old
java07
java07 is an unknown quantity at this point
 
java07
 
Institute: ICFAI
Status: Offline
Posts: 2
Join Date: Nov 2007
Re: Really helpful ...............for beginners in stock market.. - November 13th, 2007

Thanks for sharing the same
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
Vineet Sharma
mirchi.foreever is an unknown quantity at this point
 
mirchi.foreever
 
Institute: NCCu
Status: Offline
Posts: 17
Join Date: Dec 2007
Re: Really helpful ...............for beginners in stock market.. - December 11th, 2007

you guys have awesome information
thanks a lot for sharing it.........
great work done by the you all
hats off to you.............
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
Viral Parekh
viralelec is an unknown quantity at this point
 
viralelec
AM at STATE BANK
 
Status: Offline
Posts: 13
Join Date: Sep 2007
Re: Really helpful ...............for beginners in stock market.. - January 24th, 2008

gr8 yaar....
gd work....
best info re...
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
chandhok86
chandhok86 is an unknown quantity at this point
 
chandhok86
 
Institute: AMITY
Status: Offline
Posts: 10
Join Date: Jan 2008
Re: Really helpful ...............for beginners in stock market.. - January 26th, 2008

nice one dude... keep posting... ur data is really vry gud
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
chandhok86
chandhok86 is an unknown quantity at this point
 
chandhok86
 
Institute: AMITY
Status: Offline
Posts: 10
Join Date: Jan 2008
Re: Really helpful ...............for beginners in stock market.. - January 26th, 2008

very helpful article..
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
Aditya Marwaha
adityam12345 is an unknown quantity at this point
 
adityam12345
 
Institute: jhadavpur
Status: Offline
Posts: 65
Join Date: Nov 2007
Re: Really helpful ...............for beginners in stock market.. - March 6th, 2008

gr8 forum ..... sm very useful material i cu gather frm here .......... thanks
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
Aditya Marwaha
adityam12345 is an unknown quantity at this point
 
adityam12345
 
Institute: jhadavpur
Status: Offline
Posts: 65
Join Date: Nov 2007
Re: Really helpful ...............for beginners in stock market.. - March 6th, 2008

cn sm1 help me out : hw is the valuation of a bond done ???
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
mayank_parmar
mayank_parmar is an unknown quantity at this point
 
 
Institute: XIME
Status: Offline
Posts: 64
Join Date: Jun 2008
Re: Really helpful ...............for beginners in stock market.. - June 8th, 2008

hey... really informative.... i'm to
o a beginner in dis field... really helpful
Friends: (0)
Reply With Quote
Re: Really helpful ...............for beginners in stock market..
Old
firewire1234
firewire1234 is an unknown quantity at this point
 
firewire1234
 
Status: Offline
Posts: 11
Join Date: Jun 2008
Re: Really helpful ...............for beginners in stock market.. - June 10th, 2008

Thanks vengabeats, bonddonraj and pratik...really...
so much of information...
i was researchin so much...on net i dint get nethin...
and here in one post i got so much of info...
i guess more than what i need

i dont have that much of knowledge what u people have but i can this link i got..
i think it is very useful...

List of Calculators...

thats the only way i can payback.

Thanks yaar!
Friends: (0)
Reply With Quote
Reply

Bookmarks

Tags
beginners, helpful, importance notes, market, stock, stock market

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On


» Login
Forgot Password?  New User?
  

» Ads





» Recent Threads

9 Tricks Of The...
Last post by Hrishita Sahay
27 Minutes Ago 03:03 AM
1 Replies
Make Money thurough...
Last post by Hrishita Sahay
1 Hour Ago 02:28 AM
2 Replies
Lawn Bowls Mens Triples...
Last post by Vinod Gupta
1 Hour Ago 02:20 AM
0 Replies
DEFINATIONS OF EVERY... ( 1 2 3... Last Page)
Last post by Hrishita Sahay
1 Hour Ago 02:19 AM
63 Replies
OPENMAT 2014 Exam Dates...
Last post by Pramit Singh
1 Hour Ago 01:48 AM
0 Replies
Solution manual on... ( 1 2 3)
Last post by Bhautik Kawa
2 Hours Ago 01:13 AM
20 Replies
Indian Rupee Update by...
Last post by Epic Research
2 Hours Ago 01:04 AM
2 Replies
Asian Markets Update by...
Last post by Epic Research
2 Hours Ago 01:02 AM
2 Replies
Solution manual on... ( 1 2)
Last post by Bhautik Kawa
2 Hours Ago 12:59 AM
18 Replies
Test bank on Business...
Last post by ?? ?
16 Hours Ago 11:09 AM
3 Replies
List The TOP 20... ( 1 2 3)
Last post by Neeta Khanna
22 Hours Ago 04:38 AM
20 Replies
Top List of Various MBA...
Last post by Pramit Singh
1 Day Ago 02:08 AM
0 Replies
Should mobile phones be...
Last post by Hrishita Sahay
1 Day Ago 01:39 AM
1 Replies
Marketing Research notes ( 1 2 3... Last Page)
Last post by Hrishita Sahay
1 Day Ago 01:36 AM
33 Replies
Mere Negligence of...
Last post by Stella Lauren
1 Day Ago 01:20 AM
0 Replies

» Projects Helpline

Retail Management Notes
Last post by Bhautik Kawa
3 Days Ago 12:26 AM
ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.


Management Paradise
About Us
Press
Jobs
Contact Us
Kartik Raichura
Legal
Terms & Conditions
Privacy Policy
Disclaimer
Copyrights
Help
Zeitgeist
Support
FAQs
Tour
Feedback
Partners
Follow
Copyright © 2004 - 2013 Management Paradise. Site Developed by Available.co.in