Importance of Saving , Money management to children, Young.

How to open an NPS account online: A step-by-step guide

The National Pension System (NPS), also known as National Pension Scheme, is a retirement product that will help you accumulate wealth. It is a market-linked product that needs you to invest regularly in the funds of your choice. To open your account online, you will need to have a mobile number, an email ID and an active bank account with Net banking facility.

Here is how to open an NPS account online:

1. Go to the eNPS website . Click on registration.

2. The online subscriber registration page will open. Click on new registration. Select new registration, enter your Virtual ID number, and generate an OTP. Enter the OTP you receive on your registered mobile number and click on continue.

3. After you click ?continue'', an acknowledgement number will be generated along with your name. Then select ?OK''

4. Enter your personal details and click on the ?Save and proceed''.

5. The next step will ask you to enter your bank details in which you have online banking facilities. After entering the details, click on ?Save and proceed''.

6. Now you have to decide the portfolio allocation among four available funds: equity fund, in which you can put up to 50% of your money; alternative investment fund, in which you can''t put more than 5% of your money; a government securities fund; and a corporate bond fund. Once you enter the allocation details, you need to update the nominee details in the next step.

7. After you update your nominee details, you have to upload a cancelled cheque of your account, photograph and your specimen signature.

8. In the final stage, you have to make your first contribution towards NPS subject to a minimum investment of Rs 500.

9. On successful completion of payment, your permanent retirement account number (PRAN) will be generated along with the payment receipt.

10. After making the contributions you go to the next page, which is the e-sign/print registration form page. If you choose to e-sign with Aadhaar, an OTP for the purpose of authentication will be sent to your registered mobile number. Once you key in the OTP and Aadhaar gets authenticated, your registration will be considered as signed electronically.

The NPS provides several benefits to users

Under NPS, the pension wealth, which accumulates over a period of time till retirement grows with a compounding effect.

Contribution to NPS Tier-I account is eligible for tax deduction under the Income Tax Act, 1961. An additional tax rebate of Rs 50, 000 is also allowed for contributions made to NPS Tier-I under Section 80CCD (1B) of the Income Tax Act, 1961.

Subscribers can withdraw up to 25% of their own contributions before attaining the age of superannuation. This is, however, subject to some conditions.

Under NPS, PFRDA has increased the maximum age limit from 60 years to 65 years for joining NPS. NPS provides transparency and portability through online access of the pension account by NPS subscribers.

**Source: MINT

Let Your Money Grow

Having an emergency fund can ease financial, emotional pressure

Vidya, an old client, called me at 9 pm once. I found it a bit strange because I do not receive calls from clients so late, but I took the call. She told me her husband, Venkat, who is a heart patient, had to undergo a bypass surgery immediately. He was denied health insurance by many companies because of his ailment. In the couple's last review two weeks before, they were asked to keep six to eight months' expenses in a flexi bank fixed deposit (FD) for any emergency. 

Unfortunately, that didn't happen. Vidya had stopped working, and to meet daily expenses, they had to stop their systematic investment plans (SIPs) too. Their next option was to redeem the investments they had accumulated to fund their son's higher education. However, the money would take five working days to reach her bank account and the payment to the hospital had to be made immediately. So, she had to borrow money from her brother for five days.

In another case, Bharati, a single mother, who has worked with us for eight years, came weeping one day that her father had been hospitalized and she was falling short of ?1 lakh. He was in ICU and the daily bill was ?1 lakh. Though her brother had arranged some funds, the hospital was not sending him home because of the shortage. I helped her out immediately.

In both the cases, the families didn't have health insurance or an emergency fund, and the events were unforeseen, yet, needed immediate financial resolution. Moreover, the medical emergencies created a dent in the family's cash flow needs and goals.

Mahendra was working in a successful e-commerce company. But the company got merged with another and his team was no longer required. He was laid off with a compensation of two months' salary. There were many issues to deal with at that juncture: the family's expenses and loans, and the fact that loss of income would severely affect his financial goals in the future, with increasing inflation. With a break in income, he would need to invest one-and-a-half times more to meet the same goal that is three years away.

If there is a medical emergency, and a family member or relative needs immediate medical attention or hospitalisation, there may also be emergency travel expenses to provision for. In case the need to stay is longer, one would also need to be able to pay for the family's fixed expenses and loans during the period.

Many such situations warrant the need to have an emergency fund. But apart from unplanned emergencies, there could be other situations to deal with.

For instance, when a couple is planning for a child, it is imperative for them to set aside 15-18 months of expenses as reserves in an emergency fund, especially if the woman plans to take a sabbatical from work. While her contribution to family expenses would stop, with the addition of a new family member, the household budget would go up.

When a bread earner of a family is bitten by the startup bug, there are innumerable discussions around the topic with the financial planner. There is anxiety about the fact that the startup may not work, and also about the family's expenses, such as children's education and vacation, given that a startup needs undivided time and attention. It's important to analyse the household budget for the gestation period of the startup becoming profitable and create an emergency fund to meet it.

Creating an emergency fund

So what should you consider while creating an emergency fund? Emergency fund requirements differ for different people, depending on whether they are married, unmarried, have a single income but no children, have double income and children, or have double income but no children.

However, the thumb rule is to set aside 6 to 12 months of one's expenses, committed savings and liabilities to provide for a safe emergency fund. If it is not possible for you to set aside a large chunk as an emergency fund all at once, it's best to set aside an certain amount every month for 12 -24 months until the targeted emergency fund amount is reached.

Here are some of the instruments that can help you create an emergency fund.

Bank flexi FD: The best way to access money immediately is through a flexi FD option. This instrument gives better returns than what a savings bank account offers. It also and allows immediate access to funds at the click of a button or at the swipe of a card at an ATM.

Liquid fund: A liquid fund is a good option if the there is a need for a large emergency fund, since the absolute gains one makes in a liquid fund scores over those in a flexi FD.

Once the emergency fund is used, ensure that it is replenished by monitoring your budget for a few months, or cutting back on certain discretionary expenses. Saying no to family night outs for some time can pay off when a family member needs your support, both financially and emotionally.

**Source: MINT

Starting your SIPs late? Never mind

In investing, if you start early, you can build substantial wealth over time and achieve your goals easily. But what if you are middle-aged already and haven't started investing? Is your opportunity gone?

Don't lose heart. While you can't turn the wheel of time backward, you can still achieve your goals by being disciplined and prudent. If you are starting late, your investment strategy should have two legs: investing a higher amount systematically and channelling your old investments into equity. Equity beats other investment classes over the long term and is even more crucial when you have limited time at hand.

But a word of caution: with equity, keep a long-term horizon. Equity is volatile in the short term, so don't panic if the market falls. Invest through SIPs. SIPs ensure that you average out your investment cost over time, which improves your returns.

Your two-pronged strategy

Let's confess it. If you start investing early, you will have to contribute smaller sums to arrive at your goal corpus. So, when you start investing late, you must make up for the lost time. Let's say you want to accumulate a corpus of Rs1 crore by 60 years. If you start investing when you are 25, you need to do a monthly SIP of Rs1,540 in an equity fund to arrive at this amount. If you start at 40, you will have to contribute Rs10,009. (In both the cases, we have assumed an annualised return of 12 per cent.)

The second part of your strategy is optimising. Over time, we all end up saving some money in various avenues. These could be fixed deposits, insurance policies, Public Provident Fund (PPF) and so on. Many of these avenues invest only in debt and hence don't provide good returns on your corpus. You can divert money from all such sources to your equity funds through systematic transfers.

To do this, first of all make a list of all your investments done so far. Then analyse them individually. For insurance, go for Term-insurance plans and surrender your other unit-linked and endowment policies. Unit-linked and endowment plans provide neither good returns nor sufficient insurance. Likewise, reduce your PPF contribution to the minimum so as to keep the account active until maturity. If you save income tax through the PPF, you can opt for a good tax-saving mutual fund. Tax-saving funds have a shorter lock-in period and beat the PPF over the long term in terms of returns. If you have invested in property (other than the house you live in), you can consider selling it and moving the money to equity funds systematically. Land and property have a poor return profile as compared to equity. Also, they are illiquid and managing them is fraught with hassles.

In order to make systematic transfers, first park the corpus in debt funds (they should be from the same fund house as the equity fund to which you want to transfer the corpus) and then transfer it to equity funds over time. Don't make a lump-sum transfer into equity funds as you may catch a market peak.

**Source: Value Research

Update on ABSL - Pure Value Fund Growth

Market Outlook:

Beaten down mid- and small-cap stocks are in the limelight again, as sentiments have turned positive and valuations have started moderating. The broader markets have outperformed large caps and there has been a reasonable degree of valuation catch-up. Since 1^st February 2019, the Nifty Small Cap 100 and Nifty Midcap 100 have outperformed large caps, having risen 9.6% and 8.6% respectively while Nifty 50 was up 8.1% (returns till 2^nd April-19). We expect this optimism to continue going into the election months as the markets take on a more risk-on approach owing to the following factors:

·         General Elections – A stable and decisive government at the center will make it easier to drive and continue fiscal and policy reforms. Reforms like Direct Tax Code and simplification of GST will help businesses and consumers both.

·         Easing Liquidity – With central banks globally including the RBI moving towards a dovish monetary policy stance, we can expect global liquidity to improve, driving asset prices.

·         Improving Portfolio flows - FIIs have invested a net $2.43 billion in stocks in March 2019 and with better economic outlook for India vis-à-vis other EMs, we can expect the portfolio flows to continue.

·         US-China Trade Talks – US and China seem close to signing a new trade agreement while US also delayed tariff increases on Chinese goods scheduled for March 1^st 2019.  A resolution is expected soon and will be positive for the global trade & economy. Any positive outcomes on this front will be good news for the emerging markets including India.

·         Moderating Inflation – Inflation in India has moderated to the lower end of RBI’s target range of 2%-6% (2.57% in Feb’19) and is expected to be in this range. Moderate / lower inflation is generally equity positive.

·         Stable Crude price – Crude oil prices remaining stable will help India manage both its fiscal and current account deficits and also keep the input costs in check for most manufacturing companies

·         Resolution of IBC/NCLT cases – Banks have started to report improving asset quality and big resolutions like Essar Steel, Bhushan Power & Steel etc will boost the entire banking sector while recapitalization of weaker banks which help credit growth.

Product Update and portfolio position:

·         ABSL Pure Value Fund continues to follow a value based investment philosophy that is followed by the world’s most successful investment gurus like Warren Buffet, Benjamin Grahim and Charlie Munger. It looks to invest in stocks that have adequate safety of margin (buying stocks at lower prices than their value with healthy margin) and strong fundamentals such as earnings growth, dividends, cash flow, book value, etc.

·         It predominantly follows a bottom up stock picking approach while sector call is taken based on value unlocking opportunity possible in the next 6 months to 2 years. Basis this investment style, we have avoided exposure to sectors such as IT, Pharma and Banking (PSU) in the last couple of years and that strategy has worked very well in the past.

·         CY 2018 has had a volatile journey for equity markets, where the fund has also underperformed the broader benchmark index. We were O/W on Oil & gas, metals, textiles, chemicals and U/W on IT and Pharma. Rising crude oil prices and depreciation of INR improved performance for export oriented sectors - IT and Pharma. We do not follow benchmark hugging strategy, thus our stocks will fall more during market correction. Overall, these had an impact on the fund’s performance.

·         In the last 4 years, AUM of the fund has increased from Rs 1000 Cr to Rs 4000 Cr while it continues to be an ideal choice for investors looking for higher returns with higher risk and will continue to have a higher number of stocks of which large number will be small and midcap stocks.

·         Portfolio changes - We have increased our exposure in the banking sector which is now at ~12% owing to value unlocking opportunity occurring to us. Going forward, the fund will continue to remain value focused and after the correction in the market, we continue to hold stocks which we think are likely to give 12-15% earnings growth. Outlook for Nifty earnings is 15% over next 2-3 years. We expect the fund to continue to outperform with a sizeable margin though there could be bouts of volatility & marginal underperformance

·         Market outlook: Due to the recent market correction, lot of value stocks have come off very sharply. Some stocks which have good quality with earnings visibility have become more expensive. For eg: HUL typically trades at 40-45 is now trading at 55 times. Correction has helped us to look for structural themes in the small and midcap space

·         GDP, IIP, high frequency data points have started to improve indicating a turnaround in the micro-economy. Rural economy is starting to pick up with government focus on rural India and improving farm income, recent MSP hikes, should lead to strong rural consumption growth. We have also seen growth in auto, consumer staples - 9-10% volume growth in last 1-2 quarters and expect double digit growth in FY19.  as capacity utilization increases private sector capex should take place subsequently.

·         We continue to remain bullish on markets in medium to long-term perspective despite short term concerns due to election season would limit upside. We expect earnings momentum should continue into this fiscal year and market should take off from here on. In the small & midcap space, we believe valuations are at reasonable levels and there would be enough ideas to scale up faster. We are fairly confident that earnings growth for them will be strong and returns should be higher than large cap in next 2-3 years leading to subsequent market gains. From a risk point of view – global currency, economic growth and rising oil price could put pressure on INR.

·         Market cap break-up: Portfolio is currently 55-60% into midcaps, 25-30% large caps & hold 10-15% small caps. Will tend to opportunistically increase exposure to midcap/small-caps going forward. Recently added I.G. Petrochemicals Ltd. (IGPL), a small cap stock (1400 market cap), expected to double in 2-3 years period.

In this backdrop, ABSL Pure Value Fund, which has a Mid/Small Cap bias (over 65%) in the portfolio is expected to do well. Our returns have picked up strongly in the past 1 – 1.5 months (12.9% since 18-Feb-2019) as our value bets in the small-midcap space have begun to deliver.

Parameter	1 Mth	2 Mths	3 Mths	6 Mths	1 Yr	3 Yrs	5 Yrs	Since Inception
ABSL Pure Value Fund	0.23	9.52	0.64	3.5	-18.32	10.86	16.71	15.99
S&P BSE Enhanced Value	4.36	17.29	6.29	10.33	-13.96	8.32	3.43	2.29
Nifty 50	3.84	6.5	7.43	13.31	11.32	14.77	11.34	13.82

·         The philosophy of the fund continues to remain value focused, and hold stocks which we think are likely to give over 12-15% earnings growth. The portfolio is largely skewed towards Consumption & Exports oriented themes with high conviction in commodities like metals, chemicals, oils. In terms of market cap positioning, it will continue its aggressive stance.

·         Bottom-line for investors: You have made money in ABSL Pure Value Fund. Unless your risk appetite has changed or you need money, stay invested from long term perspective.

Source : Aditya Birla Capital product Note.