Tag: investing

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by Incredible Planet Staff

What Can You Invest In 2020?


Business

With investment options both online and offline booming like never before, there has never been a more interesting time to look into investing. Hundreds of tools and guides are available on all aspects of trading, but if you are new to the field it can seem overwhelming. Today we’re going over some of the basics to catch you up to speed on the fast moving markets. As well as cover some of the best options to invest in.

Before going into building your investment portfolio, covering why not to put all eggs in one basket and other such advice, it is important to understand on a fundamental level the different types of possibilities there are for investors.

Investing in stocks

Stocks are still one of the most popular and historically solid ways of investing, but in February and March of 2020 there has been some significant risks involved. That’s why its more important now than ever to spread the risk over several smaller investments in different fields and business models, so that when one market is performing opposite of how you traded, it will not affect your entire portfolio. It is not just enough to buy Microsoft, Google and Apple stock, since they are all related to technology and depending on many of the same market signals.

Despite the upset so far of the year, stocks are still expected to be the major driving force for years to come. There are many advantages to such a popular trading method, availability, small fees, many brokers and tons of publicly traded businesses make it popular, regardless or even because of the risk. Another thing to keep in mind is that the stock market since its inception has only risen in value on a whole. Therefore one of the key things to do is avoiding loss, even more important than gaining.

Investing in real estate

Another very popular but slightly more costly affair is real estate. Speculating in brick and mortar is probably as old as currency itself. Prime locations, up and coming areas, as well as a general increase in the GDP and wages make real estate a potentially solid pick. And while the initial entry fee can be quite steep, there are newer communal options available where you as an individual investor don’t have to fork out all the money needed for a house or apartment complex, and instead share in the risk and rewards with other shareholders as co-owners of the property.

Investing in raw materials and commodities

Another ancient form of trade has to do with what the earth provides, from oil and natural gasses to gold and iron, mankind has always harvested earths bounties and then sold them for a profit. Generally speaking these types of investments are susceptible to quick changes, and often you will need a lot of capital to earn a decent return on your investment. There’s a few different types of methods depending on your capital. You can buy whatever silver or oil you want and store it physically, or you can trade on platforms that allow future contracts, which are bound by time.

 


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by Incredible Planet Staff

Myths and Facts About Mutual Funds Investing


Business

Mutual Funds are an ideal tool for investments, preferred by millions, not only in India but across the globe. They come in different types, and an investor can select from these types based on their risk profile, expected rate of return and the intended period of the investment. In India, mutual funds investments are picking up the pace very quickly.

However, a majority of the population in India still prefers traditional investments, which offer security of the principal amount and assured, but lower returns. Investors avoid investing in mutual funds primarily due to lack of awareness and of course, some myths that continue to surround them. These myths are widely prevalent among the masses of India which are yet to take a closer look at the financial markets. Here are some of the myths surrounding mutual funds that we’re going to demolish.

  1. Myth: Mutual Funds are very risky

Some investors share a perception that Mutual Funds are very risky, and their capital may get eroded entirely. This isn’t true. At the same time, mutual funds also aren’t entirely risk-free.

Fact: Mutual Funds do involve risks

Mutual Funds invest the money collected from the investors into equity and debt markets. Equity shares are traded regularly in stock exchanges and undergo price fluctuates frequently. Even the value of debt instruments changes on a regular basis due to interest rate fluctuations. These price changes directly affect the NAV of the Mutual Funds and have some potential downside risk as well. But the risk is generally not worrisome, as over the long-term equity and debt markets have historically remained stable.

  1. Myth: Mutual Funds involve heavy investment

The myth that investing in mutual funds require large sums of money discourages masses from investing in the most preferred form of investment.

Fact: Investment in Mutual Funds can be started with a minimal amount

Most mutual funds require only Rs 5000 as the initial capital to begin with, with minimum additional investment being Rs 1000. If investors go the SIP (Systematic Investment Plan) route, they can begin with as low as Rs 500 every month. For example, the large cap fund from investing online reliance mutual fund offers monthly SIP investment options for as low as Rs 100.

  1. Myth: Higher rated Mutual Funds are better

Investors often select funds based on their performance and ratings. They prefer investing only in top rated funds and would stay away from the underrated funds. This is understandable, but

Fact: Top rated funds can’t guarantee the same performance

Often, historically high performing funds haven’t been able to achieve the same returns. This is due to multiple reasons – like churning of the portfolio, change of the fund manager and management, and just general market conditions. Selecting funds based on their past performance alone can be a deceptive way of choosing funds for investment. Always keep an eye out for other factors.

  1. Myth: You must have expert knowledge of the markets before investing in mutual funds

There are many who don’t invest in mutual funds because of the myth that it requires an in-depth knowledge of the markets, and experience/expertise as an investor.

Fact: Mutual Fund investment requires layman knowledge

Mutual Funds are professionally managed by highly qualified and experienced fund managers. Investors just need to have some basic, essential awareness about how they work, the risks involved, and if their mutual fund pick aligns with their personal wealth goals before investing.

  1. Myth: Mutual Funds must be invested for a long term

A widely prevailing myth is that mutual funds cannot be redeemed in the short term, and that investors must hold the investment for the long term.

Fact: Investment in Mutual Funds can be done from short term basis to long term basis

Mutual funds, just like equity shares, can be redeemed at any time except for some funds (like ELSS) which have a mandatory lock-in period of 3 years. Debt fund categories like overnight funds, ultra-short duration funds, liquid funds, short duration funds have tenures like 1 day, 90 days, 365 days as well.

  1. Myth: Dividend option is better than Growth option

 People naturally prefer to receive regular income in the form of dividends, and typically go for the dividend option in the mutual funds they pick over the growth option. Ultimately, this has led to a widespread belief among the investors that it is better to opt for dividends than growth.

Fact: Growth option can be a lot more beneficial than the dividend option in the long term

A fund declaring dividend must pay Dividend Distribution Tax (DDT) of 10% post April 1, 2018, while investors must pay tax on the gain on sale of equity-oriented funds only on the threshold amount of Rs 1 Lakh or more. Retail mutual fund investors can benefit by choosing the growth option over dividend. Additionally, in the growth option, the fund reinvests the dividend which it would have paid out to investors. Thus, the power of compounding comes into play, ensuring the growth option will achieve higher returns over the dividend option.

Busting these myths and better understanding mutual funds could bring in more transparency, and therefore more potential investors into the markets. Higher cash inflows due to additional investments could also help in strengthening not only the liquidity and mutual fund industry, but also the nationwide stock exchanges and the market. This is already happening as more people begin to look at mutual funds more seriously. It’d be prudent to not get left behind.

by Incredible Planet Staff

What to Consider Before Buying a Holiday Villa


People

While purchasing a second home is a dream of many, the reality is that it isn’t a decision that can (or should) be made lightly. It can make financial and logistical sense, but only if you ask yourself some serious questions.

Here are eight things to think about before taking the exciting (but slightly overwhelming) leap, and buying a holiday villa.

1. Can I afford it?

Despite popular opinion, real estate is not a liquid investment. You can’t presume or even count on the fact that you will be in a position to sell your holiday villa for a profit or even break-even — especially in your first few years of ownership.

There are definitely specific locales that are more likely to increase in value than others, Cassia at The Fields in Dubai being one of them. But it is up to you to do your research and speak with knowledgeable real estate professionals in your desired area.

2. Have I calculated all the costs?

When asking yourself whether or not you can actually afford a holiday villa, it is crucial that you keep in mind all of the costs. The price tag on the property is only a part (a hefty chunk, but still just a portion) of what you will need to spend.

Calculate the cost of utilities, HOA or condo fees, property taxes, insurance and the cost of furnishing a new home even down to the forks, candles, and rugs.

Bear in mind that if you are buying a holiday villa in a resort area, you and your family may also want skis, snowboards, kayaks, water toys or other gear. Oh, and don’t forget the travel costs to get there and back!

3. How often am I going to be able to visit?

Speaking of travel costs, another area where you need to be realistic is when it comes to how often you are genuinely going to be able to visit.

It should go without saying that your holiday villa should be in a destination that you love and want to return to often (have you seen the Meydan Villas in Dubai or holiday villas in Thassos, Greece?)!

That being said, take into account the price of roundtrip travel, your ability to get time off work or your children out of school, and the length of travel time and the time differences.

4. Am I interested in renting out my holiday villa?

If you aren’t going to be able to frequent the villa often enough to make the purchase advantageous, then consider renting out your unit. In addition to the monetary benefits, it will also ensure that your holiday villa isn’t sitting uninhabited for lengthy stretches of time.

However, if you do choose to rent out your holiday villa, you must be aware that this route will also come with expenses. For example, in between tenants, you will be required to pay for cleaning. You may also have to invest in advertising your villa, and possibly even for property management.

Furthermore, if your holiday villa is located in a resort, there is a good chance the resort will be required to take a percentage.

5. Am I even allowed to rent it out?

First things first, not all holiday villas can be rented out. With the growth of sites such as Airbnb, many condo associations and cities have set specific rules for rentals.

As mentioned previously, some resorts may also necessitate you to utilize their in-house programs, which will decide specifications for things such as interior furnishings and amenities.

If you are considering renting out your second home, make sure to research the specific rules of the community or neighborhood thoroughly prior to making an offer.

6. What is the realistic calculation of my return on investment?

For many people, owning a vacation home is part of their overall investment strategy. If this is the case for you, ensure that you are not being blindsided by the longing for a second place, and make sure it is actually a smart money move.

Sit down with your accountant or financial advisor, and estimate a realistic calculation of your returns, and then compare it against other uses of the same money.

7. How will I protect the villa when it is unoccupied?

The fact of the matter is that unoccupied homes invite unwelcome guests or intruders. For this reason, safeguard yourself and your belongings, and take steps to prevent your holiday villa from appearing uninhabited.

Your plan of action may include installing lights on timers, or asking friends or neighbors to come over, collect the mail, and park in your driveway. Brainstorm ways to make it not so visible that someone isn’t permanently home.

8. Do I have a foolproof plan for emergencies?

However, in the case of an emergency, you want to guarantee you have a plan of action. If you are unable to visit the villa regularly, identify someone who can.

Within the first couple of weeks of owning the home, introduce yourself to a hardworking and trustworthy handyman or better yet, a property manager who can arrange for any repairs quickly and safely.

After discussing these questions with your family, you will be in a sensible mindset to make the thrilling decision to add a second home to your family’s lifestyle!

by Mandy Bular

Reasons Residents Must Hire Professionals for Effective Financial Planning


People

There exist several misconceptions about the role of a financial planner. Financial planning is most definitely, an ongoing process of interaction and active engagement. In this context, you must realize that a doctor and a professional financial planner need to coordinate and work cohesively for securing and improving the financial future of the physician.

If you have just started your medical career, do you actually require professional assistance from a financial consultant? Would a financial expert make any real difference to your financial status and future security and financial stability? It has been proved beyond doubt that financial advice could prove to be fruitful at the inception of a doctor’s career more than ever.

Here are a few valid reasons for hiring a financial planner very early in your medical career.

For Gaining Clarity about Expenditure

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It is pretty common for residents to keep grumbling that he has spent way too much while training and is currently not able to enjoy his life with his new salary to the extent he had been hoping to. A qualified financial advisor would be coming up with projections of how excessive spending today would be impacting adversely your net worth about ten years from now. When you are able to visualize your financial future clearly, you would be compelled to think before spending and make better financial decisions while in training. Hire a professional who specializes in financial planning for doctors.

For Assisting You in Adjusting or Setting Objectives

An integral part of financial planning is to discuss and then decide your precise priorities while chalking out your career and financial security goals for future. Planning compels you to consider reflecting and articulating your aspirations and dreams. Planning involves setting your future objectives and mapping out a path for fulfilling them while keeping in mind the roadblocks and probabilities. Assumptions regarding your future are the building blocks of your financial plan. However, when those assumptions seem to change, you need to work together with your financial planner to update your plan of action.

For Keeping You Away from Bad Deals

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Numerous doctors have invested in overpriced life insurance policies simply because they seemed to be great deals. The job of qualified financial advisors is chiefly to safeguard you from making wrong decisions. He would be pointing out the bad deals and protect you from stupid unprofitable deals.

For Helping You in Investing Wisely

A financial planner would be helping you with your retirement plan. He would be reviewing all your investment choices and assisting you every step of the way in building an effective portfolio. An appropriate portfolio at the beginning of your career would be boosting your retirement savings to a great extent.

Conclusion

Your financial future would be stable and safe under the guidance of a financial advisor. He would be educating you about intricacies of finances and would prevent you from making irrational or emotionally-charged decisions. He would be acting as your voice of reason and stopping you from taking panicky decisions. Remember that a qualified and proficient financial advisor could heal your financial situation whenever you seek their assistance. However, the sooner you hire one, rest assured to remain fiscally fit during your lifetime.