With March ending around the corner most of the individuals are busy evaluating investment options for their tax planning. Different advisors giving different advice depending on commission they get from your investment. So the question is which investment option to choose?


Baxi Inestment

   – Investment in PPF – Has 15 year lock in
   – Employee’s share of PF contribution – Not all private employers provide it
   – Life Insurance Premium payment – Long lock in depending on term chosen
   – Principal Repayment of home loan – One has to buy property for this benefit

– Investment in Sukanya Samridhi Account – A daughter is must
– ULIPS – Bad History of returns
– ELSS – Shortest lock in of 3 years and average of 12%+ returns over long term
– Five year deposit scheme – Lock in of 5 years

The dilemma is which option to choose?

No doubt about ELSS as it is the best performing investment option for tax planning with least lock in. However, the question is should you invest in ELSS? All financial advisors will suggest ELSS all insurance agents will suggest insurance, those not involved in financial service business will advise PPF and Sukanya Samriddhi and you will get a new advice and experience from each one of your friends and relatives whom you talk with.

Buy sorry to tell you all are right in their opinions but wrong for you. Why? Because the tool you select depends on your spending habits. I have seen people investing in ELSS just because they can use the money in 3 years, for such people ELSS is worst option. There are people who invest for 35 years with LIC with risk-free moderate returns, for such people ELSS is the best option. Select your investment option based on your spending habit.

If you are thoughtless and extravagant in spending, go for long term options like LIC policies. If you are a thoughtful spender go for ELSS option.

Remember LIC offers plans with 19%-21% annual returns too. It is just that we are not aware about them. For knowing such plan read more.

In today's article I would like to draw your attention on "Why we don't need an insurance policy?"

Baxi Investment LIC

Insurance in India is majority times sold and not purchased. In most of the sales calls I have done majority people have insurance policy because some of their relative had taken LIC agency and as a result they sold them a policy which they could not refuse. This is a fact which we have to agree upon.

Think of an example where the bread earner is going out of town for a week leaving family behind. The first thing he will do is give money for more than 7 days to the other members in case he is late in returning. But when it comes to Insurance we do not care. We think of one week absence than why don't we think of sudden permanent absence?

The article title says it right, We don't need insurance policy but we need to be insured.

For an unmarried person amount of insurance must be at least 5 times annual income depending on dependents while for a married person it must be at least 10 times of annual income.

So now ask your self, Do we need insurance policy? or Do we need to be insured?

While buying insurance the first question comes to our mind is, which insurer to select? this question comes to our mind because of constant advertisements bombarded by private insurers claiming to be the best. People try to act smart by looking at claim ratios of various companies which is a misleading figure because if you compare LIC which had 30 crore+ policies in force while others have not even 10% in force it is obvious figures can not be compared.

One must stick to the giant whose policy is guaranteed for repayment by the Government of India. There is no question of default or closure of company.

So think over are you Insured??? If you want to get your insurance needs assessed do get in touch with us.

Hardik Baxi,

Baxi Investment



The country of millennials is at crossroads. While the seniors would prefer the age-old ways of personal meet ups, the generation Y is opting for online snap messages. When the septuagenarians seek solace in golden hits of 50s and shastriya sangeet, youth are tapping to rap and rock.

While the seniors still find confidence in fixed deposits (FDs) and public provident fund (PPF), but are those the right way to go about investments in the current era, when the pace of inflation is neck-to-neck with the interest rates?


So, when you are zeroing down on tax-saving investments for the year, don’t forget to change with the era. A dash of equity is what would dress up your portfolio in tune with the time. There are three tax-saving instruments, which help you stitch equity in your portfolio — namely Equity linked savings scheme (ELSS) offered by mutual funds, Unit-Linked Insurance Plan (Ulips) from life insurers and National Pension Scheme (NPS) by Pension Fund Regulatory Authority.

ELSS, which have generated a 5-year return of 15.87%, and 10-year returns of 17.24%, would be the right fit.

Hemant Rustagi, CEO, Wiseinvest Advisors, nods in affirmity, “The other tax-saving instruments are debt-heavy. Even NPS, after the changes brought about, restricts the equity component to 75% and it starts decreasing by the time you are at the peak of your career. Only ELSS offers the long-term advantage of equity.”

What does one look for in a tax-saving investment option? Value for money, good returns, safety low-lock-in, ease of investing, transparency, one that syncs well with your overall investing objectives. ELSS offer all of these with the lowest lock-in of 3-years compared with 10-years plus of ULIP, retirement age lock-in of NPS, 15-year lock-in of PPF and 5-year lock-in of NSC, Senior Citizen Savings Scheme and tax-saving FDs.

Zaharah Sheriff, founder at Fedwinteg Knowledge Series, says “In the game of investments getting the asset allocation right is far more important than anything else.”

Tax and ELSS


A brickbat which has been raised against ELSS is that the gains from the investment exceeding Rs 1 lakh would be subject to capital gains tax of 10.4%. In response to the tax axe, Sheriff says, “When you are paying a tax, one should assess, the 10% of tax is being deducted as a percentage of what. If the gains are higher than other debt and hybrid tax-saving investments, then you would always end up gaining better compounded returns.”

Take for instance, an amount of Rs 1 lakh being invested for a period of 10 years in a mutual fund, where the gains are taxed and another in a debt or hybrid instrument earning lower returns without any tax on gains.

Assuming the mutual fund investments earn 15% returns, the value would swell to Rs 4.04 lakh, while the other investment earning 7% would grow to Rs 1.97 lakh. Even if one has to bear the tax of 10.4% (amounting to Rs 21,273 for the gain above Rs 1 lakh in MF), you would be better off with Rs 1.86 lakh on the overall investment in MF compared with the other debt or hybrid investment.

Table_ELSS story

Hence, Rustagi rightly points out, “When the 10-year returns are in the range of 20-21%, even after paying a 10% tax on the gains you are still better off in the long-run.”

Selecting schemes


With more than 200 tax-saving schemes available in the market in different plans, how should one select the best ones?

Durgesh Pandya, MD, My Advisor Finserv, suggests, “Opt for schemes that are 5-10 years old and not the ones that are at the New Fund Offering (NFO) stage. Zero down on a reputed fund house that has a stable fund management team, instead of linking the decision to cost of fund management and short-term performance. Select one or maximum two ELSS schemes to park your funds every year and stay invested for the long horizon.”

But investing the money in a single shot isn’t what advisors recommend. The situation gets a little tricky for those thinking of a Systematic Investment Plan (SIP) through the year. “Instead of starting a SIP, it is better to create a kitty in a liquid fund and invest as lumpsum or in two-three tranches in the ELSS scheme to ensure that you aren’t stuck with a longer-lock in on each investment tranche and get the gains of market ups and downs.

ELSS Returns

Ignore lock-in for wealth creation


Sheriff suggests that “Even though ELSS has a 3-year lock-in, one should always treat equity investments with a 5-year horizon.”

Moreover, when investors lock-in funds in other low-return instruments for a longer-horizon, a similar attitude and stickiness in ELSS would be rewarding.

Pandya exemplifies, “Even though the tenure of PPF is 15 years, majority investors are habituated to extend the tenure by 5 years twice, investing Rs 1 lakh for a total period of 25-30 years. If investors stick to for the same time horizon, then they would garner a wealth of Rs 5 crore on the investment of Rs 30 lakh even if we go by a conservative estimate of 15% returns on the investments.”

Though there is a lock-in of 3 years, one should consider it as an investment buddy for a long-term perspective. “Over the 2-8 year time frame, ELSS has outperformed even diversified equity funds. The lock-in has acted as an advantage from fund management perspective as the fund manager is able to take long-term bets by avoiding redemption pressure,” Pandya adds.

Thus bid your tax woes adios and go with the right choice.

Youth is the time when one wishes to remain carefree and enjoy life to the hilt.


But, it is also the time when sensible decisions related to life and making sound future plans can help to have a comfortable life later on. In order to build lifelong wealth, one must start investing in early twenties only.


If you don't invest in early years, you are missing out on opportunities to increase your financial worth in the later years of life. Money multiplies over the years, and more the number of years you put in, more the returns.


Here are 8 BIG reasons why you should invest your money in your early twenties!

1. You Seed Your Money At The Right Time

Investing your money in twenties can allow you to seed it for substantial number of years. Most investment vehicles, such as stocks, certificates of deposit, or bonds, offer returns on your money over the long term. This return allows your money to build, creating wealth over years, by the time you are ready to reap the returns.


2. Earn Higher Returns At A Young Age

In order to grow your money while you are still earning, you need to put it in a place where it can earn a high rate of return. The higher the rate of return, the more money you will make while sitting. Investment vehicles tend to offer the opportunity to earn higher rates of return than savings accounts. Therefore, if you wish to be a wealthy person, by the time you are ready to make a family, you must start investing money in early twenties.


3. Reach Your Financial Goals At The Appropriate Times

Early investing can help you reach big financial goals at just the right time, which is the prime of your life. If your money is earning a higher rate of return than a savings account, you will be earning more money both over the long term and within a faster period. This return on your investments can be used toward major financial goals, such as getting married, buying a home, buying a car, starting your own business, and starting a family.


4. Save On Your Tax Returns

Some investments like mutual funds etc., allow you to save on your taxes too. If you are in a job where your taxes are not paid by the company, you must invest your money in your early years, which can help you to save a big chunk on your taxes, without breaking the law. You can use that money in later years, to build something substantial for life.


5. Make Good Use of Company Investment Plans

Some companies offer to contribute equalled investments into employee investment plans. Especially for young investors to encourage financial planning in young minds. If the organisation you work for, have this kind of provision, you must make good use of it in the early twenties itself. So that you are ready to reap good profits, even if you plan a job shift.

6. You Can Start and Expand a Business At Early Stages In Life

Early investing must be an important part of business creation and expansion. If you have entrepreneurial bent, early investing will go a long way for you. Many big investors like to support young entrepreneurs who have a certain capital in hand, and contribute to the creation of new jobs and new products. They enjoy the process of creating and establishing new businesses and building them into successful entities that can provide them with a strong return on their investment.


7. Support Others At Right Age

If you have invested your money in the early years, you can help others do the same who are younger than you and need help to establish their ventures, by the time you reach a certain age. Many young investors are seen investing in people, whether they are business owners, artists, or manufacturers. These young and able investors feel good helping others achieve their goals. This way, you can not only build on your financial credits, but you can build on a happy life too.


8. You Can Save For Voluntary Retirements

If you are working you should be saving money for retirement. And if you start to save or invest at the right time, in early twenties that is, you can take sabbaticals from work, or early retirement, whenever you wish to. Put your retirement savings into a portfolio of investments, such as stocks, bonds, mutual funds, real estate, businesses, or precious metals. Then, at retirement age, you can live off funds earned from these investments.

Hope this gives you a little insight and you make some sane decisions regarding your finances in your early twenties only.

Hello readers,

The title of today's article is "Buying potatoes from health insurance companies", yes you heard it right. This is how our Indian mentality works. Recently I had 5 sales calls from them there was a group of 3 elderly gentleman looking for health cover. They inquired me regarding plan details, its advantages and limitations. On completion of my presentation they told your company is charging 33000 Rs. while other is charging 27000 Rs. They concluded we do not wish to buy health insurance from your company. They had gathered so that they can bargain the amount of premium the way we bargain with hawkers that if we buy thrice the quantity what discount will you offer us.

The situation was like Mr. A is selling potatoes for 10 Rs. a Kg while Mr. B is selling it at 11 Rs. a Kg and hence we will purchase from Mr. A. People do not understand that the bargaining and hunting for low price strategy is for commodities where all supplies are same. The same strategy cannot be applied for Insurance. 

Comparing premiums for same same insured and selecting one with lowest premium is a type of suicide. The insurance market is highly competitive with companies incurring losses or normal profits. None of them can afford to provide more at less price or provide less at more price. The difference in pricing is due to difference in features.

So please those who are reading the article please understand that you have to purchase insurance and not potatoes. The strategy of bargain and less price for same quantity is not applicable here. Here there is a contract which is full of conditions, medical terms, highlighted advantages, undisclosed limitations and much more.

Compare features and not premium as we are buying a serious product and not potatoes.

Hardik Baxi

Baxi Investment

Investing in tax planning schemes is a key priority for those who are yet to finalise their tax related investments for the current financial year. Apart from investing in Public Provident Fund (PPF), mediclaim and term life insurance, one should consider Equity Linked Saving Schemes (ELSS) for the purpose of tax planning. Popularly known as tax saving funds, ELSS is one of the tax saving vehicles that qualifies for deduction under Section 80C.

ELSS is a typical diversified mutual fund equity scheme that comes with tax breaks and requires a lock- in period of three years from the date of the investment. If you invest in an ELSS through a systematic investment plan (SIP), each investment will be locked in for three-years from its respective investment date.


Importance of ELSS funds


By investing in ELSS mutual funds, one is eligible for tax deduction up to Rs. 1,50,000 u/s Section 80C of Income Tax Act. If you invest Rs. 1,50,000 in ELSS, you will save Rs. 45,000 (30% on top tax bracket). So the amount that you plan to invest in ELSS can be deducted from your income before calculating taxes. This is subject to an overall cap of Rs. 1,50,000 on the investment amount along with other tax saving instruments.

From April 1, long term capital gains made on transfer of equity mutual funds that have an equity exposure of 65 per cent or more will have to pay a 10 per cent tax on long-term capital gains above Rs 1 lakh a year. The LTCG made till January 31, 2018, however, remains grandfathered, i.e., gains will remain tax-exempt.

Start investment early

Many tax-payers normally tend to start investing in ELSS funds only towards the end of the financial year, when the time to submit investment proof is upon them. This is a bad investment and tax-planning strategy. In such a situation, one could face cash flow related problems towards the end of the financial year. Moreover, investing towards the end of the year forces the investors to put lump sum amount in ELSS. This, in turn, creates the risk of market timing. If the equity markets are up, the investor ends up purchasing the fund's units at higher valuations, which in turn affects his returns. One should always plan their tax related investments in advance and invest through SIP route in ELSS to get the benefit of rupee cost averaging.

Continue to invest beyond three years

Of all the tax-saving products, ELSS funds offer the shortest lock-in of three years. In other products, the lock-in period varies from 5 to 15 years. A common mistake most investors make is to redeem their investments in ELSS as soon as the three-year lock-in ends. Since the underlying asset class here is equities, they should stay invested for a time horizon of at least five-seven years to garner good returns. Hence, one should not pull out his money as soon as the three year lock-in ends. While ELSS gives tax break, it also has the potential to generate superior returns when compared to other asset classes as well as beat inflation in the long run. ELSS funds are best in the tax saving lot till date as these funds suit every category of investor.

Betting on the current best performers

The funds that are topping the charts currently (in terms of trailing returns over the past one or three years) may not be the best choice for you. Instead, investors should focus on funds that have a track record of consistency. To select a consistent fund, one must compare the fund's performance with the average returns generated by the category year-wise for the past five or seven years. Another alternative is to compare rolling returns. This is a good measure for capturing consistency. Another commonly observed mistake is that investors put their money in a new ELSS fund every year. Over an 8-10 year period, they end up accumulating a large number of ELSS funds. This causes excessive diversification and results in cumbersome portfolios that become hard to monitor.

Key Takeaways

Investors looking to save on tax should avoid ELSS funds if they are not comfortable with equities. ELSS is an ideal tax saving vehicle only for those investors who are willing to stay invested for the long term, understand volatility and are willing to ride through it. Further, one should plan these investments as early in the year as possible. If you haven't done so, then this is the right time to plan for the next financial year in April itself. And once you start, there's no need to stop investing next year. Since the best way to invest regularly in a fund is through SIP, you should just start one in a carefully-chosen ELSS fund and let it run for a long duration.

What you need to get started with Mutual Fund investing?
To start investing in a fund scheme you need a PAN, bank account and be KYC (know your client) compliant. The bank account should be in the name of the investor with the Magnetic Ink Character Recognition (MICR) and Indian Financial System Code (IFSC) details. These details are mentioned on every cheque leaf and it is common for an agent or distributor to seek a cancelled bank cheque leaf.

How to get your KYC?
The need for KYC is to comply with the market regulator SEBI in accordance with the Prevention of Money laundering Act, 2002 ('PMLA'), which undergo changes from time to time.

KYC process is investor friendly and is uniform across various SEBI regulated intermediaries in the securities market such as Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes and others. This way, a single KYC eliminates duplication of the KYC process across these intermediaries and makes investing more investor friendly.

Documents required to be submitted along with KYC application

  • Recent passport size photograph
  • Proof of identity such as a copy of PAN card or UID (Aadhaar) or passport or voter ID or driving licence
  • Proof of address passport or driving license or ration card or registered lease/sale agreement of residence or latest bank A/C statement or passbook or latest telephone bill (only landline) or latest electricity bill or latest gas bill, which are not older than three months.

You will need to submit copies of all these documents by self-attesting them along with originals for verification. In case the original of any document is not produced for verification, then the copies should be properly attested by entities authorised for attesting the documents. In case you are unable to furnish proper documents, it could result in delays in getting a KYC.

Resident Indians can get it attested by: Notary public, Gazetted officer, Manager of a scheduled commercial or co-operative bank or multinational foreign banks. Make sure the name, designation and seal is affixed on the copy.

NRIs can get attestation from: Authorised officials of overseas branches of scheduled commercial banks registered in India, notary public, court magistrate, judge, Indian Embassy in the country where the client resides.

How to check your KYC status?
Existing investors and those who have submitted their applications can check the status on KYC compliance with their PAN number with any of the KYC Registration agency

Mutual fund application form
Each mutual fund scheme has a form that investors need to fill. If you start investing in the systematic investment plan (SIP), you need to fill in two forms: one to open an account with the mutual fund and the other to specify your SIP details such as frequency, monthly instalment amount, and date on which the SIP sum is to be invested.

Investing for Minors
If you wish to invest in the name of a minor, you need to fill in a third-party declaration form.

  • Only parents are allowed to invest on behalf of their children
  • Documents that establish the parent's relationship with the child should be submitted (Passport, birth certificate or any other ID proof)
  • If the child has no parents in case of an eventuality, then a court-appointed guardian can invest if necessary documentary proof is submitted to establish the relationship between the minor child and the guardian

Growth, Dividend or Dividend Re-investment
When investing in mutual funds, there are three options that are available in which you could invest: growth, dividend and dividend reinvestment. One is normally expected to select one of the three options when filling an investment form, however, in case if you do not fill any of the option, the fund house selects the default option for the scheme as mentioned in its Scheme Information Document (SID), which is most often the growth option. Investors have the flexibility to change the investment option at a later date to suit their convenience.

Growth option: In this option, the scheme does not pay any dividend, but continues to grow. Therefore, nothing is received by you as a unit holder and hence, there is nothing to reinvest in the scheme. Any gains made by selling the fund holdings are invested back into the scheme, which can be seen in the NAV (net asset value) of the scheme, which rises over time. But, the number of units with the investor remains the same.

Dividend payout: In this option, the mutual fund scheme pays you from the profits made by the scheme at regular periods which could be monthly, quarterly, half-yearly or yearly in case of debt funds and at irregular intervals in case of equity funds. A liquid fund also provides for a daily or weekly dividend option. However, you should be aware that dividends are not guaranteed, which means a fund is not bound to pay out a dividend; it may or may not pay a dividend.

Dividend reinvestment: In this option, the dividend is not paid to you, instead it is reinvested in the fund scheme itself by buying more units on your behalf.

Each of the three options has its share of pros and cons, which will vary depending on your needs. As investors, the treatment of gains and taxes are the two essential features that differentiate these options. If evaluating the returns from an investment at a point of time, there is no difference among the three options. The difference emerges in an implicit form with respect to the applicable taxes.

Further, it is important to consider the tax impact when selecting between the growth, dividend payout or dividend reinvestment options as the post-tax returns' differs between the options. This difference occurs because, the tax treatment is different for long-term and short-term holding period. The tax treatment also differs for equity and debt funds.

Capital Gains from Mutual Funds

Equity and Equity-oriented Hybrid Funds

Short-term holdings (less than one year) Long-term holdings (more than one year)
Taxed as short-term capital gains, currently 15% Gains in excess of Rs 1 lakh are taxed at 10%

All Other Funds

Short-term holdings (less than three years) Long-term holdings (more than three years)
Taxed as per applicable income slab 20% with indexation

Dividend Income from funds

Type of investment Dividend Distribution Tax
Equity and Equity-oriented Hybrid Funds 10%*
All Other Funds 25%*
* for individuals and HUF, plus surcharge as applicable and 4% education cess

Where and how to buy funds?
Like the many mutual fund schemes to choose from, there are several ways in which one can invest in them. One can invest online or offline or in direct as well as regular plans. Like everything else, each option has its limitations and advantages, which vary for each investor.

Direct Plan: Since January 1, 2013, all mutual fund houses have rolled out a new plan under all of their existing fund schemes-the Direct Plan. These plans are targeted at investors who do not make their mutual fund investments through distributors and hence have a lower expense ratio compared to existing fund schemes of the AMC.

This means that you, as an investor, will get an opportunity to earn a slightly higher return from your mutual fund despite it having the same portfolio. The direct plans will not charge distribution expenses or commission, resulting in these plans having lower annual charges and eventually, a different (higher) NAV compared to the regular plans.

Through intermediaries: There is a wide variety of intermediaries available. These include most banks, distribution companies having national or regional presence, some stock brokers (including online brokers) and a large number of individuals and small financial advisory companies. All intermediaries have to be registered with the Association of Mutual Fund in India (AMFI), which also maintains a searchable online directory at www.amfiindia.com. The website also lists intermediaries who have been suspended for malpractice to protect investors from going back to them.

The intermediary, normally brings the required mutual fund application form, helps you fill the forms, submit the forms and other documents to the Mutual Fund office and sometimes even brings in the Account Statement. But, all these services come to you for a fee. Typically, agents charge a flat fee for these services.

Through IFAs: IFAs are independent Financial Advisors, who are individuals who act as agents to facilitate a mutual fund investment. They help you fill the application form and also submit the same with the AMC.

Directly with the AMC: You can invest in a mutual fund scheme by investing directly through the AMC. The first time you invest in any Mutual Fund, you may have to go to the AMC's office to make your investment. Subsequently, future investments in different fund schemes of the same AMC can be made online (provided this facility is offered by the AMC) or offline, using the folio number in your name. Some AMCs may extend the facility of sending an agent to help you fill the application form, collect the cheque and send the acknowledgement.

Through Online Portals: There are several third party online portals, from where you can invest in various mutual fund schemes across AMCs. Most of the portals have tie-ups with banks to facilitate easy fund transfer at the time of investing. These portals charge an initial fee to setup an account and facilitate future smooth online access to invest and redeem your investments.

Through your bank: Banks are also intermediaries who distribute fund schemes of different AMCs. You can invest directly at your bank branch into fund schemes that you wish to invest in.

Through Demat and Online Trading Account: If you have a demat account, you can buy and sell mutual funds schemes through this account.

Electronic Money Transfer
The traditional way to transfer money from one bank account to another is to write a cheque and then deposit it. The advent of technology has ensured that one need not go through such a tedious process anymore. Over the years, the RBI has introduced several steps that has resulted in paperless transfer of funds through electronic funds transfer (EFT). There are several other acronyms that one comes across, especially when transferring funds online or through electronic clearances such as RTGS, NEFT, IMPS and ECS. Each of these plays an important role in ensuring your investments are timely and you do not lose time when investing. Each of these options plays a role in the way your investments are treated in a mutual fund.

Electronic Clearing Service (ECS): ECS is an electronic mode of payment or receipt for transactions that are repetitive and periodic in nature. For this reason, ECS is most preferred and useful when investing through SIP. Essentially, ECS facilitates bulk transfer of money from one bank account to many bank accounts or vice versa.

Primarily, there are two variants of ECS-ECS Credit and ECS Debit. ECS Credit is used by an institution for affording credit to a large number of beneficiaries having accounts with bank branches at various locations within the jurisdiction of a ECS Centre by raising a single debit to the bank account of the user institution. ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.

ECS Debit is used by an institution for raising debits to a large number of accounts maintained with bank branches at various locations within the jurisdiction of an ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of mutual fund SIPs, because these are periodic or repetitive in nature and payable to the user institution by large number of investors.

National Electronic Fund Transfer (NEFT): This is a nationwide payment system facilitating one-to-one funds transfer. Under this scheme, individuals, firms and corporate can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Individuals who do not have a bank account (walk-in customers) can also deposit cash (up to R50,000) at the NEFT-enabled branches with instructions to transfer funds using NEFT. At present, NEFT operates in hourly batches - there are twelve settlements from 8 AM to 7 PM on weekdays and six settlements from 8 AM to 1 PM on working Saturdays.

Electronic Funds Transfer (EFT): This is a paperless method by which money is transferred from one bank account to other bank account without the cheque or currency notes. The transaction is done at bank ATM or using Credit Card or Debit card. In the RBI-EFT system you need to authorise the bank to transfer money from your bank account to other bank account that is called as beneficiary account. Funds transfers using this service can be made from any branch of a bank to any other branch of any bank, both inter-city and intra-city. RBI remains intermediary between the sender's bank called as remitting bank and the receiving bank and affects the transfer of funds. Using this method, funds are credited into the receiver's account either on the same day or within a maximum period of four days, depending upon the time at which the EFT instructions are given and the city in which the beneficiary account is located. Usually the transactions done in first half of the day will get first priority of transfer than the transaction done in second half.

Real Time Gross Settlement (RTGS): The real time gross settlement is an instantaneous funds-transfer system, wherein the money is transferred in real time. With this system you can transfer money to other bank account within two hours. In this system there is a limit that you have to transfer money only above Rs2 lakh and for money below R2222222 lakh transactions, banks are instructed to offer the NEFT facility to their customers. This is because; RTGS is mainly used for high value clearing. The RTGS facility is available only up to 4:30 PM on weekdays and up to 2:00 PM on working Saturdays.

Interbank Mobile Payments Service (IMPS) Facility: IMPS is a platform provided by National Payments Corporation of India (NPCI). IMPS allows existing unit holders to use mobile technology/instruments as a channel for accessing their bank accounts and initiating inter bank fund transaction in a with convenience and in a secured manner. It allows to invest 24*7 via mobile phone.

How does it work?

  • Unitholder needs to register for Mobile Banking with his Bank
  • The bank issues a unique MMID (Mobile Money Identifier) which is a combination of his bank account and bank code and also issues an M-PIN, a secret password.
  • Unitholder can now perform transaction using mobile banking application or SMS / USSD facility as provided by his Bank. For example: If unitholder wants to invest Rs. 10,000 in a mutual fund scheme using the mobile application, he needs to follow the following steps - In the mobile application; provide the
    • MMID of the scheme
    • His Mutual Fund Folio No.
  • Amount to Invest/transfer
  • MPIN issued by the bank remitting bank validates the details and debits the account of the Unitholder. It passes on the information to the beneficiary party (AMC in this case) via NPCI.
  • AMC shall, after validating the details, credit the folio/scheme account with the appropriate units and shall also provide an SMS/email confirmation to the Unitholder informing of the allotment

Unitholder should ensure that the Mobile number registered with Bank for IMPS facility is the same as mobile number registered with Mutual Fund for the folio.

Electronic payments
IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. This is an 11 digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating or destination banks or branches and also to route the messages appropriately to the concerned banks or branches.

Critical illness is an illness that is a major illness affecting an important organ of the body. Examples of critical illnesses – heart attack, stroke, cancer, kidney, lungs, liver failure etc. The longer that we are living, the more the chances of any of these critical illnesses striking us. 99% of clients that I have met are usually aware of hospitalisation policy, for example, a “Mediclaim” policy.

They are not aware of the risk of the outgo on account of major illnesses that critically threaten a patient’s life. Critical Illness typically requires ICU, nursing, specialised medicines and tests that are costly. Typical critical illness such as cancer can cost upwards of Rs 20 lakh. Most of the hospitalisation policies for medical treatment do not cover such large amounts. It is therefore important to have a separate insurance policy for the risk of major illness striking us.

The difference between a hospitalisation policy and critical illness policy is this – hospitalisation policy gives you reimbursement of all the hospitalisation costs such as surgery, ICU et cetera. It will not cover many items such as medicines, cost of stay of the relatives, some diagnostic costs, and nursing cost required at home. Sometimes in chronic illness, these other costs are higher than the main surgery or the hospitalisation cost.

Unlike hospitalisation insurance, critical illness policy will pay you a lumpsum upon diagnosis of a critical illness. It is not dependent on submitting hospital bills and is therefore not a reimbursement policy. For example, if one has a critical illness of Rs 30 lakh and one is detected with a major liver disease, he/she will get a lump-sum claim of Rs 30 lakh without requiring any bills or other questions.

Many of the critical illnesses are chronic in nature which means they are present for a long time and require long-term care and treatment. This automatically increases the cost of treatment and burden of this cost falls on the financial savings of the patient.

Today it is a happy development that most health insurance companies offer critical illness plans. There are many life insurance companies who offer critical illness “rider” to be added on to life insurance plans. This money is the cash that will sustain the person for all myriad costs that he/she will have to incur in order to treat herself back to health.

1. An Emotional Guide: In investing, emotions play the devil's role. If left unchecked, they can easily ruin one's entire financial life. Hence, there is so much talk of taking emotions out of financial decision making. A financial advisor does just that by playing the role of an emotional anchor in your financial journey. He will help you stick to your goals and financial plans, irrespective of whether markets are riding waves or are in dire straits. He/she will help in managing your emotions of greed, hope and fear in different market times. These are aspects most important when we consider a life-time of investments.

2. Helps you in Understanding Self: You often don't know what you don't know. A true financial advisor attempts to draw a full picture of you in financial terms. He aspires to see not only the present but also the future. Perhaps, he knows more about you than you know about yourself, if you have been honest with him. It is with the help of a financial advisor that you can dissect your financial life to minute details and plan for every small and big financial goal. He will be able to help you find and fill your weaknesses and build on your strengths as you progress in your life. He will even warn you of dangers and risks which you do not see. While undergoing a proper financial planning, the advisor will also help you spell out your financial goals and priorities them as per your needs and risk profile. The entire process and experience can unravel new things for you.

3. Ensures Continuity in your Plans: It is one thing to make a plan and another to stick to it. Paul Samuelson once said, “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” However, it is not easy as short term, immediate concerns often overshadow our long term commitments. A financial adviser is one who can help you maintain continuity in investing. More than anything else, it is the time in market rather than superior products or market timing that dictates returns in the long run. The financial advisor helps you to be patient and reap the full benefits of time and continuity in investments.

4. Source of Experience & Knowledge: A financial advisor often carries with him knowledge and wisdom that he has gained from being in the industry full time, for many years and his constant learning in the business. Financial services is an industry that requires regular studies and being updated of all new developments, be it regulations, market situations or product features. As individual investors, this may be too much & may come at the cost of your time, energy and money. Knowledge and wisdom is difficult to gather and should not be mistaken for information, which is readily available. Whenever you are lost or are facing any doubts or need any help in a financial decision, your financial advisor will be there for you.

5. Motivation to Excel: No one dives into a swimming pool eagerly for the first time, often it is either an instructor or a friend or a parent behind you who pushes you. Like any parent or teacher, a financial advisor has one hidden desire from each of his clients. He wants them to outgrow themselves and become bigger and better investors, in all aspects. Driven by this desire, a financial advisor would push you to do things you may not be fully prepared with. Whether it is controlling spending, forcing you to avoid unverified investments out of greed, making you save for your goals or forcing you to invest more, behind every decision is the desire for your long term well-being. Perhaps, most of the investors would not be even half of their portfolio worth today, had it not been for their financial advisors. He sets newer, higher goals and aspirations for you which you never thought were possible. The constant nagging, motivation, control and aspirational attitude bridges the gap between what you already are and what you can possibly be.

6. Life long Partner: A financial advisor sees you not just a single transaction driven customer, but as a potential, life long partner in your financial journey. The long term relationship is something that he values and expects from every good investor. For him you are never an individual, but a family that can extend into different generations. Hence, it is important for you to have a trust worthy financial advisor. This is a journey where he will be there in all ups and downs in your personal life (and markets) and will help you avoid and face various challenges in life. As the ultimate aim is financial well-being, a financial advisor will seek not only grow but also protect your wealth, always keeping the bigger picture in mind. As a mutually beneficial relationship, the financial advisor sees his well-being only conditional upon your well-being, to its fullest extent.

7. The obvious reasons: Well, the obvious reasons for which you think a financial advisor is required, actually comes last in our list. Reasons like operational support, saving time, consolidation of entire investment portfolio, keeping regular track of investments, regular portfolio review, timely communication of portfolio and transaction information, resolving any queries or issues in investments, keeping abreast with regulatory requirements, etc., are the many additional reasons why a financial advisor is needed. He helps you do all this which in turn helps you save a lot of time, hassles, efforts and worries. With the advent of technology and digital processes, a financial advisor uses them as his tools as a master, keeping control and managing them smartly to bring greater convenience for clients.

Useful, simple to understand and easy to execute. Those should be the qualities that your first fund investments should have.

For beginners, these requirements are generally best satisfied by tax-saving funds or balanced funds. Here's why. When you start investing in mutual funds, it makes sense to invest in a fund that invests mostly in equity. The reason for this is that you are likely to have no equity investments at all. Investors at an early stage of their investing life generally have bank deposits, PPF and other fixed-income investments. Since equity is the best form of long-term investment, and mutual funds the easiest and safest way to invest in equity, it follows that the type of fund you choose must be an equity fund. There are two types of funds that are uniquely suitable as beginners' funds. These are Tax-Saving Funds and Balanced Funds.

Tax Savings Funds: Tax saving funds are also called ELSS funds as their formal name in the tax law is Equity-Linked Savings Scheme. They are basically all-equity funds, investments in which are eligible for tax exemptions under Section 80C of the Income Tax Act. Under Section 80C, you can invest up to Rs. 1.5 lakh in a set of investments, one of which is ELSS funds. Since they are equity funds, one should invest in them for long-term. This long-term imperative is compulsorily enforced because under the tax laws, investments made into these funds are locked in for at least three years. Because of this lock-in, investors tend to have a good experience of getting reasonable returns from these funds. Moreover, the tax-break acts as a natural boost to returns.

Balanced Funds: Balanced funds, also called hybrid funds combine equity and debt investments in a certain ratio. In order to maintain this ratio, the fund manager will typically disinvest from holdings that have gained more and invest in holdings that have gained less. This, of course, is asset rebalancing.

Effectively, the gains that are made in equity are protected by debt. The great advantage of balanced funds is that they are inherently safer than pure equity funds. They gain well when the markets gain but when the markets fall, they fall less sharply, thus protecting the gains that were made in the good times.

A guest lecture was organised by Mr. Himanshu J. Shah at Shree Mahavir Jain Charitra Kalyan Ratnashram, Songadh. Students of Standard 11th & 12th commerce were to be addressed.

It was a wonderful experience to interact with the lively students who had many questions in their minds. To my utter surprise they were aware about crypto currencies, block chain and recent issues at domestic and international economic levels.

The students were briefed about Investment, available investment alternatives, choice of investment alternatives, tax planning, importance of financial planning, equity analysis using technical and fundamental analysis. Students were also given detailed understanding of how the Elliott Wave Theory works and how it is implemented on the Indian stock market.

I am very thankful to the trustee members and Mr. Himanshu Shah for this opportunity of interacting with such bright students.

Guest Lecture at, Shree Mahavir Jain Charitra Kalyan Ratnashram, Songadh


Financial Planning is an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life. In other works, financial planning is a systematic approach whereby the financial planner /adviser helps the customer to maximize his existing financial resources by utilizing financial tools to achieve his financial goals.

In mathematics terms, financial planning can be described with three major components:

  • Financial Resources – FR
  • Financial Tools – FT
  • Financial Goals – FG.

When you want to maximize your existing financial resources by using various financial tools to achieve your financial goals, that is financial planning.

Financial Planning: FR + FT = FG

Financial planning is about the process of meeting once life goals through proper management of one's finances. Life goals can include buying a home, saving for child's education or planning for retirement. It is a process that consists of specific steps that help one to take a big-picture look at where you are financially. Using these steps one can work out where he are now, what he may need in the future and what he must do to reach his goals.

Financial Planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. By viewing each financial decision as part of the whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

The need for financial planning thus arises from the need to meet the financial goals that enable the achievement of one's life goals. Generally everyone invests in the various available avenues but very few investments are linked to individual goals. All of us have goals to be fulfilled at every stage of life. Life and financial goals are very diverse and are as under :

  • Protecting Oneself & Family against Financial Risks : The loss of a job, a serious illness, a legal problem, a sudden death, an accident or a natural disaster will prompt seeking a financial advice. Financial planning will help in analyzing ones insurance needs (disability and long-term care) in relation to ones overall financial circumstances and goals. Moreover, in addition to all these uncertain risks, all investments have certain risks as well, such as market risk, inflation risk, interest rate risk & reinvestment risk. Financial Planning helps in reducing and managing all these risks. Prevention is better than cure so its better to start planning.
  • Organize and Manage Finances : Many people have complex financial life, yet lack the time, expertise, discipline and objectivity to put their finances in order. Financial Planning will help in examining the overall net worth, financial situation, goals and objectives, and recommend strategies to get the most from their investments, so that life's goals are achieved.
  • Achieving Personal Goals Such as Child Education, Marriage, Car, Home : Everyone has his own set of individual financial goals. Yours may include funding a child's college education, enjoying a comfortable retirement, purchasing a home, starting your own business, minimizing your tax costs, or any combination thereof. But no matter which financial goals you choose, developing a comprehensive financial plan will help you in achieving them in a systematic manner.
  • To be Able to Retire Peacefully : Retirement is like going on a long vacation where the expenses are increasing and there is no regular income, hence it is very important to have enough retirement kitty before retirement. Moreover as the life expectancy has increased nowadays, there should be enough kitty to avail the medical expenses, which will also increase at the time of retirement due to the rising cost of living and inflation. With the help of Financial Planning one can get a clear picture of the kind of lifestyle one wishes at the time of retirement and hence can plan accordingly.
  • Passing Wealth to Next Generation : Estate planning will ensure that your assets will be used to benefit the people that you choose, and in the amounts chosen by you. A Financial planners is needed to discuss wills, living wills, powers of attorney, life insurance, trusts and other estate planning issues. A well-drafted estate plan provides assurance that the taxes and costs associated with your death will be minimized.

Benefits of Financial Planning:

  • Knowing & understanding your financial needs / goals.
  • Achieving your goals with optimum use of resources
  • Understanding impact of investment choices
  • Adapting to changes in personal & financial situations
  • Peace of mind – ensuring that your goals are not compromised

Yesterday was the best day to start your investments. If you missed it, you should start your investments today. Delay it further only if you want to forgo some extra returns.

Don't worry too much about getting everything right. If you are following the basic rules, you will definitely get it right. It is quite usual for you to feel a bit nervous when you are investing in unfamiliar instruments for the first time. But you will learn on the way. So, don't let your nervousness delay your investments further.

As said before, always try to match your investment horizon with your investment choice. This will help you eliminate unwanted choices, and identify the right ones. It will also save you a lot of headache later. As a rule, avoid risky investments like stocks, equity mutual funds for short-term goals. This is because equity can be extremely risky and volatile in the short-term. You should try to preserve your capital and try to secure stable returns for short-term needs. However, if you have time in hand, you can be a little adventurous and invest in equity. It will help you earn a few extra percentages. This is because equity has the potential to offer superior returns than any other asset class over a long period of time.

Don't forget to review your investments periodically. Investing and forgetting all about it is not a great strategy. You should regularly check how your investments have done over a period of time. Always compare the performance of a mutual fund of your choice with its peers and the relevant benchmark. If you find that the performance is not up to the mark, put it in a watch list. Track it for the next few months and try to find out the reason for its underperformance. If you find reasons to believe that it is not going to bounce back again, sell it. There is no point in continuing with a bad investment because it robs you a chance to make more money elsewhere.

You should also sell your risky investments at least two years before your goal and park the proceeds in a safe avenue. This is to ensure that you have the money safely parked somewhere when you need it.


Yes you heard it right. A financial advisor writing an article on why we do not need a financial advisor.

Why do we need a financial advisor? 

We usually do not take medicines without consulting a doctor, why? It is because we know that if we take wrong medicine it can harm us not only today but can create long term complications too.

We usually do not take independent legal decisions without consulting a lawyer, why? It is because we know it can harm us not only financially but can also lead to loss of reputation and social disgrace.

Than why don’t we need a financial advisor?????

The answer is, impact of our wrong financial decisions are felt over long term which we usually blame on others starting from the Government, its policies, our family, relatives, friends and lastly our destiny. But it is no one’s fault. It is because we have taken wrong financial decisions.

Read the above once or twice or even thrice till you get the message.

Than ask yourself do I need a financial advisor?

Hardik Baxi,

Baxi Investment.

Under Indian tax laws, savers have a complete range of tax saving instruments like Public Provident Fund (PPF), Tax-saving fixed deposits, National Savings Certificate (NSC), Equity-linked Saving Scheme (ELSS) and others. Yet, individuals often take sub-optimal investment decisions with their tax-saving investments. Why does this happen?

One common reason is that there is a confusion of goals between saving tax and making investments. The typical investor makes this decision either in late March under the duress of having the deadline slip by, or under pressure by a salesperson who drives home the fact that time is running out. The pressure may intensify if the salesperson is a relative or a friend. At the end of the day, we make sub-optimal investment decisions and when we realise the fact later, we console ourselves by saying that at least we got tax benefits for the investments. This approach proves expensive in the long run.

This dual concern prevents clear-headed thinking about just exactly what one is getting out of an investment and whether the quantum of disadvantages are actually worth the quantum of tax benefits that are being obtained. Investors should work on eliminating both these sources of poor decision-making-time pressure as well as not thinking through about these investments. Eliminating time pressure is simple. Just plan these investments as early in the year as possible and once you start in time, there's no need to stop after a year.

For most people, the investment that should make most sense is an ELSS. Salary-earners generally have some of the permitted amount going into fixed income through PF deductions. And, to balance that, equity is advisable. ELSS is unique in being the only viable tax-saving investment within Rs 1.5 lakh limit that brings the benefits of equity returns. Sure, there are two other options that give equity-linked returns - ULIPs and the National Pension System (NPS). However, ULIPs have a longer lock-in period of 5 years, coupled with high costs and poor transparency. The NPS is a retirement solution rather than a savings one. It has only partial exposure to equity and a very long lock-in period that effectively extends till retirement age. There's no way a three year lock-in product like the ELSS can be compared to the NPS.

For many beginner investors, it makes an excellent gateway product in which they get the first taste of equity investing and of mutual funds. You end up investing in these funds because the tax-saving attracts you and it has the shortest lock-in. This experience encourages investors to invest in equity mutual funds over and above their tax-saving needs. Once you get used to long-term equity returns, you end up trying other types of equity investments as well.

Equity investment carry higher risk over the short-term. However, for investment periods of five years or more, the risk on equity investments is considerably lower. When you take inflation into account, bank FDs and similar deposits turn out to be sub-optimal because of inflation. Like all equity investments, the best way of investing in an ELSS is through monthly SIPs throughout the year. SIP also gives the dual advantage of avoiding any last minute rush. At the beginning of every year, estimate the amount you have left over from the Rs 1.5 lakh limit after statutory deductions, divide it by 12 and start an SIP. Simple.

Broadly speaking, your investment choice should be guided by two things: investment horizon and risk appetite. Always remember, your short to medium-term goals should be funded by using safe or relatively-safer debt investments. This is because you cannot afford to lose money when you don't have much time in hand. Always invest in bank deposits and liquid funds for goals that have to be met within a few months or in a year. Use bank deposits and short-term debt schemes to take care of goals that have to be met within a couple of years. And for long-term goals, invest in equity. Long-term is five years or more.

Short-term investment options

Bank deposits: They are the safest and they also offer assured returns. However, the trouble with fixed deposits is that the interest is taxed. Use them only for keeping contingency funds, and money needed in the next few months to a year.

Company deposits: They offer slightly higher returns, but they are also a little more risky. Always stick to higher-rated deposits. Do not compromise on ratings for higher returns. Also, never put your entire investments in a single company, spread your investment across a few companies.

Debt schemes: They no longer have the tax advantage, but they may still offer slightly superior returns. However, use them carefully. Also, you should find out whether it is worth your while. This is because there won't be much difference in returns if the amount involved is small. It is extremely important that your investment horizon should match with the fund. For example, use liquid funds to park money for a few weeks or months. Ultra short-term funds are suitable to park money for a few months to a year. Short-term funds are ideal to park money for a two to three years.

Long-term investment options

Long-term debt schemes: If you have an investment horizon of more than three years, investments in debt schemes still make sense. This is because long-term capital gains from these schemes are taxed at 20 per cent with the indexation benefit, which is beneficial to those in the highest tax bracket.

Equity mutual funds: If you have an investment horizon of five years or longer, you should pick equity mutual fund schemes. If you are looking to save taxes under Section 80 C of the Income Tax Act, pick one or two Equity Linked Savings Scheme (ELSS) or tax planning schemes. If you are a conservative investor new to the market, pick one or two equity-oriented balanced schemes. Balanced schemes invest in a mix of equity (at least 65 per cent) and debt, and they are less volatile than pure equity schemes because the debt portion offers a cushion in times of volatility. Others can pick up one or two diversified equity schemes to fund their long-term needs.

Stocks: Investing directly in stocks can be extremely rewarding, but it is also equllay risky. You should attempt it only if you have a sound knowledge about the working of the stock market. You should also have enough time in hand to pick stocks and monitor them.

Tax saving options

Public Provident Fund: Ideal long-term tax saving option for conservative investors. The contributions to it qualify for tax deductions and interest earned is also tax free.

ELSS or Tax planning mutual funds: The best tax saving option for aggressive investors. They have a mandatory lock-in period of three years, but invest only if can wait for more if the market gets into a bad phase.

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