Vintage Cars
Till a few years ago, collecting vintage and classic cars and restoring them was a nascent business among enthusiasts with deep pockets who had a good understanding of car mechanics. However, it has become a serious business in the past few years.

Currently, there are just 5000 vintage cars up for grabs. But the demand is huge and hence the price of these cars is also quite high. Buying a vintage car will make you dearer by at least Rs. 5 crores and when it comes to the upper limit, well..lets not talk about it. However, such investments offer lucrative returns ranging from 12% to 25% within a span of 10 years. The sale of these national treasures is prohibited abroad by Indian law and that is what saves these from further declining in number. Owning a vintage car can be a matter of pride and hence cars such as those custom-made for Maharajas or used by the womenfolk of a royal household are worth a fortune. Such a rare classic promises to bring unimaginable returns and pride of ownership.

Wine
This might amuse many but for ones who can resist gulping it down, wine can become serious investment avenue. It is proving to be one of the most exotic alternative investments with returns at 10-50% a bottle. But the key to success is to stay invested for long. The investment horizon for wines to mature can be as high as 25 years. You can invest in wines in 3 ways:

• Buy bottles: This is the most traditional way to invest in wine. A thorough examination of the brand, vintage, longevity, history of the producer, consistency, score and storage conditions are essential to determine the quality of the wine. Moreover, it is advisable to store your wine in the country from where you have procured it rather than importing because import duty is much higher than the storage costs abroad.
• Wine funds: You can also invest in wine through specialty funds that buy wine. The funds will send you a share certificate with details of your investment, including a net asset value of the share. They will also give you regular updates on the value of your wine. The minimum lock-in period varies across funds. At the time of exit, you receive the net profit depending on the growth in the value of the wine.
• Wine futures: If you want to invest in wine even before it is bottled, opt for wine futures. These are also called wine primeurs. Investing in wine that has not been tasted is considered riskier than buying bottles or buying wine funds. However, if you are confident about the returns then there is no harm in it.

Another advantage of investing in wine is that it is not liable to capital gains tax (CGT), because of a tax regulation called the “Wasting asset rule”. This says that if an asset has a life of 50 years or more no CGT is payable on it. Hence, wine can be a very profitable investment option if done the right way.

Stamps and coins
Stamp and coin collection has been a hobby for many people for many years now. But now, it has emerged into an investment option. An attractive feature of collecting and investing in coins is that it is much cheaper and affordable as compared to other collectibles. Hence, it is not just for the High Net worth Individuals. Rare stamps offer a fine safe investment, where the investor’s capital is guaranteed, and is coupled with the potential for strong returns in the medium to long term. Stamps are a long term investment where you can expect returns in the range of 10-15 % over 5-10 years horizon. The record for the costliest Indian stamp stands at about Rs. 74,50,000 for a single example of the 1854 blue and pale red ‘Four Annas’ which was bought in October 2010. However, rare stamps are regularly sold for Rs. 50 lakhs and more. Rare coins can be as expensive as Rs 5 lakhs. One can expect a return of around 15% on rare coins. You can buy coins through online auctions as well as from rare coin dealers. However, one needs to do research regarding the rarity and desirability of the stamps and coins before investing.

Paintings
Buying art as an investment is a relatively new phenomenon in the Indian market. Of late, people have started recognizing the fact that paintings are more than just a pretty wall adornment. If well-picked, they also have the potential to translate into decent sums of money. Consider this, a Pablo Picasso painting was sold for $106.5 million at Christie’s in New York, setting the world record for any work of art sold at an auction. This art fever is catching up in India as well with several HNIs willing to shell out huge sums of money to buy such extravagant pieces of art. And it’s worth investing as the returns from investing in artwork are very rewarding. But before that, one must see how much does one need to invest in order to get these high returns. If you are really serious about investing then you must have at least Rs. 1 crore with you and preferably much more. Because the more funds that you are willing to put in, the more returns you will get. Returns can range from 15% to 20%. During the time frame between 1995 and 2001, the annual appreciation in the value of investments in art was only around 5%. By 2006, it had picked up and there was great euphoria around investment in paintings.

Vintage Guitars
You would be thinking that guitars are purchased only by guitarists. But that is not true. In fact, for some people, guitar is a form of art; wall art or as a free standing sculpture. But now, buying guitars, especially vintage guitars, has become a financial investment. Well-known brands such as Gibson and Fender can make great investments. A Vintage Guitar can start from anywhere around Rs 20000 and might end up into Rs 5 lakhs or even more. A vintage guitar could give you returns in the range of 10% to 50% depending on its make and its age. Generally, guitars made before World War II are the most sought after and hence provide the greatest returns. If you really want to invest in these, there are various exhibitions held in India which showcase these musical masterpieces. Apart from this, there are musical shops as well which sell vintage guitars such as Jhankar, a Kolkata based music shop which deals in vintage guitars. For guitar enthusiasts, this is a double treat because they are able to hold on to a musical instrument which they love and also earn income from it.

Memorabilia
The memorabilia market is vast and is growing at a fast pace. Memorabilia could be anything, from Sachin Tendulkar’s cricket bat to Mahatma Gandhi’s spectacles. It could be anything that has some emotional values attached to it. The largest markets, however, are sports and entertainment, and the most popular trading is done through auction houses, specialty dealers, and internet auction sites like eBay. Make sure you invest in the big names in sports, entertainment or historical memorabilia as these will increase in value over time. A Madonna costume was once sold at an astounding Rs. 1.25 crores. A baseball bat was auctioned for an amazing Rs. 15 crores. Similarly, a Superman comic book was auctioned for Rs. 11 crores. When it comes to returns, you can easily earn in the range of 10% to 15% in a span of 10 years. I believe we all remember Vijay Mallaya’s pride in buying Tipu Sultan’s sword some years ago.

Luxury Watches
The main features to look out for our rarity, complexity and the condition which makes all the difference when looking for a luxury watch. But while there are major gains to be made, it takes a good eye to know the difference between a clever investment, and a waste of time. In such a vast and specialist industry where prices range from $1,500 into the millions, it’s difficult to know where to start. But as a prospective investor, you can head to an auction to find some of the most lucrative deals on luxury time pieces. While looking for rare watches, there are to brands which are considered to be meant for the ultra-rich, Rolex and Patek Philippe. An investor who purchased an 18 carat white gold Patek Philippe for $430,000 in 1995 can now sell it at its current market value which is a whopping $3.47 million. So the returns are very promising. And when you consider the fact that it is a recession proof investment, you have all the more reason to smile. The most important thing that one needs to keep in mind while investing in luxury watches is not the amount that you are going to invest, but the quality and brand of the watch.

Having read about all these, it should be well understood that most of the above do not have an organised market where you can buy and sell these at a market rate. You have to put in a good amount of efforts in finding the right buyer/ seller and the getting the right price. Another important key to investing in any of these is the time element. Most of these investments generally pass from generations to generations and keep appreciating in value over time.
So folks, now if you happen to win a lottery or hit a jackpot, you know how to utilise it.

Happy investing.
Rohit Roy and Praveen Bajaj

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Dividend Vs Growth Option

Dividend Re-Investment Option

Many AMCs might offer you Dividend re-investment option, under which dividend declared is actually re-invested in the same fund at the then prevailing NAV. This option is not very different from growth option except the fact that re-invested dividend is also eligible for benefit under 80C. However, dividend declared attracts dividend distribution tax (DDT) and compulsorily gets invested in the same fund. This beats the purpose of declaring dividends and leads to un-necessary payout of DDT reducing the fund size. Not many AMCs have this option and hence the same has not been declared in details here.

Let’s Talk Numbers

Back to dividend and growth option, apart from the above mentioned qualitative difference, I tried to analyze the quantitative performance of two options. I extracted data for ELSS of 4 popular AMCs and compared the returns from growth and dividend options. Dividend received from the two options in various financial years were assumed to be invested at the then prevailing fixed deposit rates.

Following is the result-

I find that dividend option is slightly better even at the then prevailing conservative interest rates. In case you can invest the dividend income at a better rate, you overall return from the investment increases.

How do they compare?

Benefit of opting for dividend option is the flexibility that you get out of getting the cash and being able to decide what to do with the available liquidity. In case you think the fund is better, you can any which way invest the dividend in the fund back. Cost that you pay for it is the DDT that AMC deducts before paying the dividend to you. From my analysis, even after paying the DDT and investing at the FD rates, dividend option gives slightly better returns

Moneybol Recommendation

Thus what it all boils down to is the re-investment risk. In case you can manage this re-investment rate properly, it is recommended to opt for dividend option. But in case you are a conservative investor who does not enjoy liquidity a lot and want to get worry-free investment, growth option is better. With online investing (read here) made easier, you should decide for yourself how to invest rather than depending on financial advisors for such small but important decisions.

Whatever it is, take informed decision and not arbitrary ones.

Happy and profitable investing.

Authors – Priyesh Kesharwani and Praveen Bajaj

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In such difficult times we have to ask a few difficult questions to ourselves before committing our money to any mutual fund scheme. Here I give you three questions which you must contemplate on –

1. Do I understand the risk associated with market linked instruments like mutual fund? It may be safer than direct investment in shares but it has got its own problems and risks. Because of enough diversification, stock specific risk might be reduced but the market risk still remains.
2. How to make intelligent choices between different types of funds –balanced versus diversified equity (all stocks), open-ended versus closed-ended, SIP versus lump sum?
3. What is the objective of buying the mutual fund? For tax saving you’ve tax saver funds (ELSS), if you are bullish on a particular sector, say pharma, you have sector specific funds like “Reliance Pharma Fund”, if you want regular cash flow from your investment, you can opt for dividend option of a fund.

4 mistakes mutual fund investors should avoid

1. Not reading Offer Document Carefully: Don’t miss reading about the following things in the offer document (prospectus) of any mutual fund AMC
   1. Verify that you have received an updated version of the offer document. Otherwise, your decision will be based on out dated information, specially the historical performance of the fund.
   2. Investment objective of the fund. It can be – to generate regular income or long term capital appreciation or to closely match returns of a benchmark or something else.
   3. Risk factors should be properly evaluated against your own risk appetite. Credit risk, market risk, interest-rate risk etc. are all crucial and should be analyzed based on your expectations (protection of capital or regular flow of income or something else) from the investment.
   4. We’ve all heard that past performance is not an indication of future returns.  However, we must read the historical performance of the fund critically, looking at both the long and short-term performances.
   5. Fees and expenses include various commissions named as entry load and exit load. Though entry load is restricted by SEBI but there are certain adjustments with your NAV to compensate the middle-men. These are paid in the form of upfront and trailing commissions.
2. Choosing sectoral funds without analyzing the sector: It is very important to understand the risk-return profile of a sector fund.  Investment in sector fund has to be timed very cautiously as the return will have the seasonality effect of the underlying sector. If you have entered into the right sector at the right time and if that sector performs, your investment in the fund will give you substantial return, most of the time more than market returns. For example Reliance Diversified Power Sector Fund gave handsome returns in the period 2004-06. Downside of sector funds is that individuals like us can seldom time the market properly.  If you have not seen 2-3 market cycles, then you should remain away from sector funds.
3. Investing based on short term performance of the fund: Reading too much into 1 month, 3 months and 6 months performances, without checking the consistency of returns in longer terms like 3 years and 5 years can be very risky. Relying on researches like “last month, equity funds with higher exposure in defensive sectors like health care and FMCG, fared the best” can be misleading as the trend may be very short lived.
4. Not knowing the underlying securities of your fund: Without knowing the composition of the portfolio of your fund, it is not possible to get the desired diversification. Take an instance where you invest in a few mutual funds to obtain a diversified portfolio. However, if all these funds hold same underlying shares, bonds, etc. you are not getting the required diversification. You must also know on what sectors your fund is overweight and on what sector it is underweight, which helps you map it to your risk appetite.

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While there are many of them, I think ETFs is among the best of them all. When I mention this term, most of the people I have come across have heard it (courtesy advertisement by NSE, broking houses, fund houses etc) but not many are sure about its advantages. Let is try and clear the air around this investment vehicle..

EXCHANGE TRADED FUND…FREEDOM IN INVESTMENT

ETF is nothing but, almost similar to stocks or shares. If we know what is shares we are done with ETF. Let me make it clear it is investment fund traded online in stock market. ETFs offer public investor a share of ownership in stocks, commodity, or bonds, and trades close to its Net Assets Value over the trading day. It can be bought and sold throughout the day like stocks on security exchange through a broker-dealer.  ETF combines the valuation feature of both a mutual fund and unit investment trust. ETF provide the investor the opportunity to buy and sell an entire portfolio of stocks in a single security easily. ETF can track the performance of a growing number of different index funds.  ETF can help investors to build a diversified portfolio which is easy to track. ETF can also be called as basket of assets like an index fund, which is traded online. The price of ETF changes constantly as they are traded throughout the day.

ETF VS MUTUAL FUND…ARE THEY SAME????

Simply Nooo..!!! I am sure we have come across people with the misconception that “ETF is Mutual Fund”. Reply by reading this article or simply forward this article. The fact is, ETFs are different from mutual fund in many ways. Unlike Mutual Fund, ETFs can be bought on margins but index mutual funds cannot be bought on margins. Furthermore you can short sell or else can buy at limit price whereas it is not possible in Mutual Fund to short sell. The most important difference between the two is that ETFs are traded at any share brokerage firms but index Mutual Fund cannot be traded at any brokerage firm.

ETFs do not sell or redeem their individual shares at net asset value, or NAV like Mutual Fund.

ETFs…..WHATS MORE????

It’s a general behaviour when we go to purchase anything like clothes etc, we want varieties. Variety offer us choices. There are different types of ETFs. The first and the most popular ETF in the U.S till now is the SPDR S&P 500 ETF. It tracks one of the most popular indexes in the world.

There are various types of ETFs. Some of the important ETFs are as follows:

INDEX ETFs

Most ETF are index funds that contain securities and track the performance of a stock market index either by the content of the index or a representative sample of the securities in the index.

Conclusion : Easy way to invest in whole index.

COMMODITY ETFs OR ETCs…..YES IT IS POSSIBLE

Commodity ETFs invest in commodities, such as precious metal and futures. The first ETF was Gold – ETF which was offered in many of the countries. Gold – ETF or Exchange-traded commodities (ETCs) are investment vehicles (asset backed bonds, fully collateralised) that track the performance of an underlying commodity index including total return indices based on a single commodity.

Commodity ETFs also trade just like share with a simple logic of high return, high liquidity and high safety.  Commodity Indices include energy, metals and agriculture.

BOND ETFs

Simply, ETF that invest in bonds is known as bond ETFs. Bond ETFs includes government Treasury bond and the bonds issued by the companies.

LEVERAGED ETFs

Leveraged ETFs are a special type of ETF that attempt to achieve return that is more sensitive to the market.  Leveraged ETFs require the use of financial engineering techniques, including the use of equity swaps, derivatives and rebalancing to achieve the desired return. The most common way to construct leveraged ETFs is by trading futures contracts.

In India, as of now we have ETFs on benchmark indices like Nifty 50, Bank Nifty, Infra Index, PSU Bank Index, Government Securities, Hang Seng Index, Nasdaq 100 and Shariah Index. Prices of these ETFs in India can be tracked at http://www.nseindia.com/content/etfsparks.htm#

WHY ETF????

One key advantage that ETFs have over traditional mutual funds is trading flexibility. ETF is traded throughout the day, so it is easy to buy and sell whenever you want. In term of cost, annual expenses charged to the investor are considerably less than the vast majority of mutual funds.

CONCLUSION

ETFs have a lot to offer. They’re flexible and low-cost, and their underlying portfolios are protected from the impact of investor trading, making them more tax-efficient than most mutual funds. There are also ETFs that address specific subsectors that regular mutual funds do not.

Nevertheless look carefully before you leap. ETFs’ cost advantage isn’t always as large as it might seem, and trading costs can quickly add up. Particularly if you’re in the market for a fund that tracks a broad index such as the NSE Nifty, or if you wish to invest regular sums of money, it’s tough to make a case yet for choosing an ETF over one of the existing low-cost mutual –fund options.

I know there is a lot of gap to be filled regarding the topic. I will try to post soon on this. Your valuable comments, suggestions and advice will lead a great understanding. Please feel free to comment below.

Author: Satish Tayal, MBA (ISBM) is an intern at Kredent Group

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Why investors are shifting to online investing?

This has become more relevant ever since SEBI has banned the entry load on mutual funds. Banning of entry load has made it very difficult for independent financial advisors (IFAs) to service individual clients. The advisors, if smart enough, can at the most earn Rs. 50 as upfront fees from an investor wishing to invest Rs. 10000. Earning this Rs. 50 will involve travelling, communication, time and knowledge. Hence many independent advisors have stopped distributing mutual funds. This is making it difficult for investors to execute transactions physically; hence many investors are shifting to online investing.

Why invest online – Advantages of investing in mutual funds online?

No Paperwork – You don’t have to fill lengthy complicated forms, submit or get it submitted along with cheque, KYC forms and then wait for physical account statements to know the status of your portfolio. In case of investing online you can do all the transactions effortlessly on a PC with internet connection and can also know the status of your account at any point of time.

Alteration at the click of a mouse – You can buy, sell and change the SIP amounts, etc. very easily through online service providers.

Many options under single platform - The biggest benefit of online mode is the ability to invest in multiple funds of different AMCs from one platform and even track their performance by having a single portfolio.

Research Support – get expert advice, research reports, financial calculators, portfolio management services as value add options.

Now the basic and original question with which I started –

How to invest in mutual funds online?

There are various ways in which this can be done. Few of them are as mentioned below –

Independent websites – There are sites which offer online investing services across AMCs. fundsindia.com and fundsupermart.co.in are two such sites.

Online Share Brokers – icicidirect.com, sharekhan.com, indiainfoline.com, etc. in addition to stock broking also offer online services for investment in mutual funds.  Onetime registration by doing the necessary paperwork is required.

Mutual Fund Websites – You can invest in mutual funds through each mutual fund’s website also. However, there are two major problems – Firstly, for the first time you have to fill up a physical application form and then you can do future transactions under the same folio number. Secondly, you have to register with each mutual fund separately.

Having said all these, many investors still hesitate to invest online and are comfortable having face-to-face interaction with the advisors. If you are one of them then ignore this article, otherwise let me know your views on this by posting a comment below.

Author – Vineet Patawari

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Investors are recommended to study the past performance of the ELSS mutual funds to predict future behavior. While these mutual funds are safer than other investments, they are not completely free of fluctuation.

In the event that the investor dies prematurely, the investor will name an heir to the ELSS mutual fund. They heir can access the funds after one year from the date of allotment.

Growth Option:

This option only pays the investor at maturation of the investment. When the mutual fund reaches maturation, the investor will receive any interest accumulated over the course of the investment. The investor will receive a lump sum when the mutual fund matures. This option does not provide any steady income until the investment matures.

Dividend Option:

With this option, the investor will receive monthly income. The income will fluctuate depending upon the variable interest rates and growth rates. The total value over the three years is also typically less than the growth option. This option is recommended for someone who needs immediate results or access to their dividends.

Dividend Reinvestment Option:

With this option, the investor may invest the dividends earned from the mutual fund investment. The reinvested growth dividends do not qualify for tax deduction. However, this option allows for individuals who want greater tax efficiency and who are also willing to remain invested in equities through potential ups and downs.

Which ELSS Mutual Fund are Recommended for Tax Reductions?

Depending upon the ELSS mutual fund chosen, each option allows favorable tax savings. With a systematic investment plan (SIP), the tax planning is scheduled for the beginning of the year. Some mutual funds possess a rate of dividend as much as 400%. The Principal Personal Tax Saver is one of the best ELSS mutual funds on the market for saving on taxes and yielding a lucrative return.

The Income Tax Act protects the ELSS tax benefit under section 80c. This would be a part of the combined investment limit. To avoid tax problems or to avoid filing back taxes, consider this as an option to manage the return on your investment. Filing back taxes can be a tedious time consuming experience. Use ELSS mutual funds to alleviate the effects of this particular experience.
Guest Blogger: Gin Fisher

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ULIPs as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component.

However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs.

They are as follows:

Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house.

ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity.

This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter.

ULIP investors also have the flexibility to alter the premium amounts during the policy’s tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one’s convenience clearly gives ULIP investors an edge over their mutual fund counterparts.

Expenses

In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India.

For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors.

Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale.

Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times ‘unwieldy’ expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated.

Portfolio disclosure

Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio.

There is lack of consensus on whether ULIPs are required to disclose their portfolios. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand.

Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions.

Flexibility in altering the asset allocation

Offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds.

If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load.

On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches).

Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull market when the ULIP investor’s equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan.

Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor’s marginal tax rate.

Please feel free to provide suggestion, feedback or any alteration/addition to this article. Your comments will help us in improving this article. We will include relevant comments in the body of the article (with acknowledgement)

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Foreign investment in India is the safest way for a company to grow and expand. This is because due to the favorable exchange rate a lot of work can be done in what seems a small investment for a foreign company. The most popular method of investment is through mutual funds. Through this method a foreign investor can even make an indirect investment in Indian stocks legally. There are many places where you can learn more about mutual funds for example you can refer to various online tutorials which would give you a step by step guidance regarding the mutual fund basics.

India is blessed with a lot of resources which if properly utilized could go a long way in expanding your business. Due to the favorable exchange rate you can have highly qualified personnel working for you and managing your business in the most efficient and cost effective manner.

The Indian community is very technology oriented and keep themselves updated on the latest trends. This is also a country which has a rich cultural background and thus makes a key source for fashion related and decorative services. The Indian government has also laid down laws favorable for potential investors. It is true what they say that together we grow. Through the collaboration of different tactics, work experience and professional opinion many boundaries can be crossed.

Author Bio:

The moneybol.com website provides good updated information on many categories like mutual fund basics, investment tips, economy review, finance, share tips, about mutual funds, stock market today etc.,

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Exchange Traded Funds (ETFs) are becoming a real threat to the big super and mutual funds. They’re easy to manage yourself, useful for SMSF operators, and their returns are pretty good, given the state of the global markets and the soggy, slow moving cash and bond rates. The most important thing about the ETFs is that they provide direct access to the highly mobile indices that the funds use themselves.

ETFs and indices- Portfolio structures

Another thing investors need to consider when setting up working portfolios which indices to target. Getting the structure right, and creating exposure to indices used to be very hard work indeed, even for professional fund managers. With ETFs, it’s very easy. The ETFs are designed to work on specific indices.

One of the reasons ETFs are so investor- friendly is that they take the arduous decision making out of the stock selections. Buying in to an ETF means buying in to the pick of that index. Indices are much easier to target than trying to buy a range of stocks, all with different returns on investment and those adorable deferred dividends, etc which drive most investors up the wall at some point.

Getting started with ETFs.

That means you can set up your portfolio to cover a range of indices. If you’re new to the ETF market, it’s a good idea to keep things simple. The ETF market includes some quite complex products. You need to learn this market step by step, so your judgment and investment instincts are kept well informed at all times. A typical starter ETF portfolio will include things like blue chips, always useful for getting returns from this often pricey, as well as jumpy, index.

Note: The blue chips are also a good way of seeing how ETF performance, market performance and stock performance interact. These are valuable lessons in themselves, and you’ll also be able to put dollar figures on your choices and your investment options.

Unlike mutuals and super, there’s also direct access to real time market values for ETFs. The simple fact of being able to sell ETFs in the market is a working valuation of your holdings when you need one. That’s particularly useful when you need verifiable asset values in a hurry.

Riding the indices

Using indices as investment vehicles compared to individual stocks is effectively providing yourself with multiple income streams, rather than the snail- like effect of investing in a stock and hoping it goes up, not down. The critical risk factor of putting all your eggs in one shaky corporate basket during earthquake season on the markets is also avoided.

If you’re doing DIY superannuation, your natural need is for something a bit more trustworthy than a CEO’s glowing review of his own performance as the basis for investment. ETFs are a type of natural insurance against the very debatable merits of reliance on “market sentiment”, “pundits” and the rest of the equity sales pitch culture. Indices aren’t sentimental. They can be analyzed, but not particularly influenced by rhetoric and other non- cashable commodities.

The ETF ride on the indices is a lot less bumpy than the ride on the markets themselves.

Related posts:

1. Things you want to know about Exchange Traded Fund (ETFs)
2. How to invest in mutual funds online?
3. ELSS Mutual Funds