Example

• Mr. X has invests in 2 different schemes, Scheme-A and Scheme-B. He invests Rs 10 lakh in both the schemes.
• NAV of Scheme-A is Rs 10
• NAV of Scheme-B is Rs 50
• Units to be allocated
• Scheme-A: 100000 units (Rs 1,000,000 / 10)
• Scheme-A: 20000 units (Rs 1,000,000 / 50)
• Returns earned in both the schemes are 10% after a year.

Here the revised NAV per unit is Rs 11 for Scheme-A and Rs 55 for Scheme-B. The initial amount invested for both the schemes is Rs 10 lakh. The only difference is the number of units allocated, the units allocated in Scheme-A is higher than Scheme-B. But the NAV and the return for both the schemes are the same. So, the role of NAV is not the only factor to measure the performance of the fund.

Mutual fund NAVs are the book value of the scheme. When investing in any scheme, an investor must check the past performance of the scheme. Also, an investor must look at the returns earned by the fund over the years.

Open-Ended Scheme: This scheme does not have a fixed maturity period; an investor can buy or sell at the NAV-related price. Here, the NAV is very important.

Close-Ended Scheme These schemes have a fixed maturity period and the investors can only invest during the initial issue days open for subscription, after which you can only buy or sell the already issued units. Here, the market price of the units will vary from the NAV due to demand-supply factors, market factors.

Interval Scheme This scheme is a combination of both schemes. They may be traded on stock exchanges or be open for sale/redemption during predetermined intervals at NAV-based prices.

There are two ways where an Investor can invest their money. Lump-sum: Where an Investor invest the desired amount at one-go for certain time to achieve his/her goal. Systematic Investment Plan (SIP): Popularly known as SIP, where an Investor invest the small amount on weekly/Monthly/ Quarterly basis. This allows them to invest in the stock market without trying to second guess its movements. SIP is an approach where investor disciplines themselves to save money to create a big wealth.

Monthly investment of Rs.1000 for 35 years (total Rs.4.20 Lacs) can make you earn close to one crore and that too legally!

Portfolio Management Services (PMS), service offered by the Portfolio Manager, is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique.

• Discretionary

  Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

• Non Discretionary

  Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager.

• Advisory

  Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. Note: In India majority of Portfolio Managers offer Discretionary Services.

The Investment solutions provided by PMS cater to a niche segment of clients. The clients can be Individuals or Institutions entities with high net worth. The offerings are usually ideal for investors: who are looking to invest in asset classes like equity, fixed income, structured products etc,who desire personalised investment solutions ,who desire long-term wealth creation ,who appreciate a high level of service.

Apart from cash, the client can also hand over an existing portfolio of stocks, bonds or mutual funds to a Portfolio Manager that could be revamped to suit his profile. However the Portfolio Manager may at his own sole discretion sell the said existing securities in favour of fresh investments.

The tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly. However, the investor should consult his tax advisor for the same. The Portfolio Manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing his/ her tax liabilities.

• Professional Management

  The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk.

• Continuous Monitoring

  It is important to recognize that portfolios need to be constantly monitored and periodic changes made to optimize the results.

• Risk Control

  A research team responsible for establishing the client's investment strategy and providing the PMS provider real time information to support it, backs any firm's portfolio managers.

• Hassle Free Operation

  Portfolio Management Service provider gives the client a customised service. The company takes care of all the administrative aspects of the client's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance.

• Flexibility

  The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities.

• Transparency

  PMS provide comprehensive communications and performance reporting. Investors will get regular statements and updates from the firm. Web-enabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide:

  • The current value of the securities you own;
  • The cost basis of each security;
  • Details of account activity (such as purchases, sales and dividends paid out or reinvested);
  • Your portfolio's asset allocation;
  • Your portfolio's performance in comparison to a benchmark;
  • Market commentary from your Portfolio Manager

• Customised Advice

  PMS give select clients the benefit of tailor made investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed to few company's stock, a separately managed account provides you with the ability to exclude that stock from your portfolio.

Individuals and Non-Individuals such as HUFs, partnerships firms, sole proprietorship firms and Body Corporate.

Yes. All investments involve a certain amount of risk, including the possible erosion of the principal amount invested, which varies depending on the security selected. For example, investments in small and mid-sized companies tend to involve more risk than investments in larger companies.

Applicants can seek registration as an AIF in one of the following categories, and in sub-categories thereof, as may be applicable:

• Category I AIF:

  AIFs which invest in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, social venture funds, infrastructure funds and such other Alternative Investment Funds as may be specified.

  • Venture capital funds (Including Angel Funds)
  • SME Funds o Social Venture Funds o Infrastructure funds.

• Category II AIF:

  AIFs which do not fall in Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations, 2012. Various types of funds such as real estate funds, private equity funds (PE funds), funds for distressed assets, etc. are registered as Category II AIFs.

• Category III AIF

  AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs

“Angel fund” is a sub-category of Venture Capital Fund under Category IAlternative Investment Fund that raises funds from angel investors and invests in accordance with the provisions of Chapter III-A of AIF Regulations. In case of an angel fund, it shall only raise funds by way of issue of units to angel investors. "Angel investor" means any person who proposes to invest in an angel fund and satisfies one of the following conditions, namely,

• an individual investor who has net tangible assets of at least two crore rupees excluding value of his principal residence, and who:
  • has early stage investment experience, or
  • has experience as a serial entrepreneur, or
  • is a senior management professional with at least ten years of experience; ('Early stage investment experience' shall mean prior experience in investing in start-up or emerging or early-stage ventures and 'serial entrepreneur' shall mean a person who has promoted or co-promoted more than one start-up venture.)
• a body corporate with a net worth of at least ten crore rupees; or
• an AIF registered under these regulations or a VCF registered under the SEBI (Venture Capital Funds) Regulations, 1996. Angel funds shall accept, up to a maximum period of 3 years, an investment of not less than `25 lakh from an angel investor.

Debt fund is an Alternative Investment Fund (AIF) which invests primarily in debt or debt securities of listed or unlisted investee companies according to the stated objectives of the Fund. These funds are registered under Category II. In this regard, it is clarified that, since Alternative Investment Fund is a privately pooled investment vehicle, the amount contributed by the investors shall not be utilised for purpose of giving loans.

Fund of Funds, in general parlance as gathered from publicly available sources s an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. In the context of AIFs, a Fund of Fund is an AIF which invest in another AIF.

Tax deducted at source, or TDS, is interest directly deducted from people when they receive payments, salaries, fees, commissions, rent or income from any other sources. The interest earned from Fixed Deposit is taxable, as the rest of your income. When filing your taxes, you must declare your FD under ‘Income from other sources’, depending on the taxable amount limit, as per your financier. If you deposit a large sum in your FD, tax deductions are incurred at source.

Fixed Deposit (FD) is a reliable investment tool for preserving and growing savings. The rate of interest on your deposit depends on the tenure you choose, and the frequency of interest payouts. The FD formula for calculation of interest is listed below:?

• A=P(1+r/n)^n*t
• Where
• A is maturity amount
• P is principal amount
• R is rate of interest
• T is number of years is compounded interest frequency

For those looking to avoid the complexities of manual calculations, there is always an option to use the online FD Calculator that evaluates your returns within a few minutes.

Choosing between cumulative and non-cumulative FD can be tricky, but it is important to understand your own requirements. For those with a need to get periodic income, investing in a non-cumulative fixed deposit can be a great choice. However, if you’re looking to grow your capital over a specific period, consider investing in a cumulative fixed deposit.

Investing in fixed deposits for a specific tenure can help you gain from fixed and steady interest rates. However, unforeseen circumstances may warrant urgent financing, which is why you may want to liquidate your savings before the end of your investment tenure.

Yes, the penalty on withdrawing your deposit prematurely from a non-banking financial company depends on when you choose to withdraw from your deposit. As per the Reserve Bank of India, here are the guidelines on penalty for premature withdrawal of fixed deposit

Thus, instead of withdrawing prematurely, it is always advisable to take a Loan against Fixed Deposit, to cater to immediate needs without having to liquidate your savings. This can help you get the desired cash flow without losing out on the interest.