wealth managers in delhi – Net Brokers

Understanding Value Funds

Akhil Chugh — Sat, 11 Sep 2021 06:57:49 +0000

Understanding Value Funds

By Akhil Chugh

Date September 11, 2021

Mutual funds use various strategies to grow wealth. Some funds choose to invest in tried and tested large-cap stocks while others choose to invest in high-quality debt and fixed income securities.

But certain mutual funds stand out for their unique investment approach and unorthodox strategies. One of them is the Value fund!

The well-known phrase, “If you can’t handle me at my worst, you don’t deserve me at my best”, very well applies to a Value fund. In this blog, we’ll help you understand the underlying principles of a Value fund.

What are Value Funds?

A Value Fund is designed around a unique investment strategy known as “Value Investing”, popularized by legends like Warren Buffet. The strategy revolves around selecting stocks that are fundamentally undervalued in price.

When an investor (or a fund manager) adopts a value investing strategy, he looks for stocks that are undervalued and trade for less than their respective intrinsic values. The assumption is that these stocks are undervalued due to deficiencies in the market or investor ideology. Value fund managers are able to identify inefficiencies in these markets.

Theoretically, once these inefficiencies are corrected by the market, the value investor will gain from a share price increase.

There are many companies in the market whose stock price is not the true indicator of their worth. They are intrinsically more valuable and have a lot of potential to grow.

Therefore, a Value fund is an equity fund that invests in stocks of companies having ‘value’. Value fund invests in multiple companies that have long-term potential but are currently flying under the radar.

According to SEBI (Securities & Exchange Board of India), a Value fund is an open-ended equity scheme that follows a value investing strategy with a minimum investment of 65% in equity and equity-related instruments.

Many people are under the assumption that value investing means buying cheap stocks or penny stocks. But this is not true. Most Value funds have diversified portfolios with a significant presence of both large and mid-cap companies in their portfolios.

Features of a Value Fund

Equity fund that invests across all market caps
Invest in undervalued stocks with future potential to grow
Offers a high dividend yield
A long-term investment option to generate returns
Heavily relies on judgement of a fund manager

Who Should Invest in Value Fund?

Seasoned investors who understand macro trends.
Investors with moderate to high-risk appetite who are ready to take selective bets for higher returns.
Investors with a long-term investment horizon as a Value fund relies on the future potential of undervalued stocks.

Past SIP Performance of Top Value Funds

Based on our analysis and research at Net Brokers, below mentioned schemes are currently the best schemes in the Value fund category. These funds fare well on quantitative and qualitative parameters and have the potential to deliver superior growth in the long run.

Key Takeaways from Net Brokers:

Value Funds are for long-term investments only – If a stock is undervalued, it is possibly because of being a cornered stock. It could take years for the market to realize a company’s true potential. Thus, for short-term gains, Value funds are not exactly ideal.
While Value funds have a lower downside due to their investment in undervalued stocks, they can still be susceptible to value trap. The anticipated turnaround may never come forcing the fund to sell off the investment at lower or sub-optimal prices. Thus, Value funds are suitable for investors with high-risk appetite.
Even if you are an aggressive investor, the exposure to these funds should be restricted to under 15% of your portfolio as they can be volatile at times.
Investors should stay invested in Value Funds for at least 7 years to derive the maximum benefit from the entire investment cycle.

Before picking the Value fund, investors should ensure that the scheme is aligned with their investment objective, risk appetite & personalized asset allocation plan.

For more information, get in touch with us today!

Download our mutual fund app & start investing in different mutual fund schemes to attain your long-term financial goals.

Happy investing!

The post Understanding Value Funds appeared first on Net Brokers.

4 Common Myths About Wealth Creation

Akhil Chugh — Thu, 04 Mar 2021 07:21:27 +0000

4 Common Myths About Wealth Creation

By Akhil Chugh

Date March 4, 2021

Creating wealth in the long term to achieve financial freedom and security is a goal for most of the people. There are many alternative ways to get there — savings, investments, passive income, etc. But the most important ingredient in wealth creation is patience and careful planning.

Creating wealth is the process of earning consistent returns, it is about maintaining the right investment behaviour and staying on course and true to your asset allocation.

There are also many myths about wealth that colour the perceptions of those who wish to attain it. Let’s discuss top 4 myths that can change your approach to wealth creation:

1. Saving is enough to become wealthy:

Some people think that saving enough amount of money will make them wealthy. While saving is important, saving alone cannot make you rich. The only way to be truly rich is when you can make your money work for you. Making money work for you means putting your money to such use where it keeps multiplying without you being directly involved. It is imperative to understand that saving in itself would not have any value unless and until it is invested in return generating assets like Mutual Funds.

2. Large amount is needed to make investments:

Many people think that large sum of money is required to start their investment journey. However, the fact is that you can start investing with amount as less as Rs 500 monthly SIPs. Start by choosing a fund based on your risk profile and investment objective and enjoy the benefits of compounding in coming years. In later years, SIPs can be topped up with increasing income to generate higher returns.

Even monthly SIP of Rs 10000/month for 25 years, assuming 12% rate of return annually, can lead to the huge corpus of Rs 1,68,62,065. This is the magic of compounding.

In case of any query, take a help from your financial consultant to start your journey of wealth creation.

3. Retirement planning is for old:

It is common belief among all youngsters that retirement planning is only for old. This is one of the myth with far reaching consequences as early start can make a huge impact on the total retirement corpus in the future.

Through the power of compounding, a SIP helps your money to earn interest which is added back to your principal to earn more interest over time. So the longer you stay invested, the more time your money gets to grow.

Consider an example, there are two friends – Suraj and Dheeraj. Suraj starts investing Rs 10000 per month in a mutual fund at the age of 25 years and Dheeraj starts investing the same amount at the age of 30 years in the same mutual fund till the age 60. Assuming they got an average rate of 12% each year, Suraj’s accumulated corpus at the age of 60 will be Rs 5,45,90,315 and Dheeraj’s accumulated corpus would be Rs 3,05,20,133. So by starting 5 years early, Suraj will get Rs 2,40,70,182 more than Dheeraj! This clearly shows how an early start can increase your total corpus manifold, enabling you to fulfil your financial goals.

4. Understanding market timing is very important:

With Sensex nearing 50,000 and NIFTY near 15,000 it might seem to new investors that market is overheated and they have missed the boat. However, timing doesn’t really matter if you start investing in mutual funds via SIPs for long term. By investing in Mutual Funds vis SIPs, you buy more when the markets are low and less when markets are high. Thus, averaging out your purchasing cost in the long run.

It is not possible to time the market even for market experts, so SIPs are a great way for new investors to start their investment journey and grow their wealth.

Invest & grow with SIPs!

The post 4 Common Myths About Wealth Creation appeared first on Net Brokers.

Financial Resolutions for 2021

Akhil Chugh — Mon, 04 Jan 2021 11:19:31 +0000

Financial Resolutions for 2021

By Akhil Chugh

Date January 4, 2021

The coronavirus pandemic threw everyone out of the loop in 2020. And as the year comes to the end, its time to reflect, reset and prepare for 2021. Year-end provides a perfect opportunity for us as humans to take a psychological pause and look at starting over things on an optimistic note.

So now is the time to devise a plan to get your personal finances back on track. Net Brokers have come up with top financial resolutions that our clients can make now for their financial growth in 2021.

1. Build an emergency fund:

Having a sufficient amount of emergency corpus can make the difference between muddling though a crisis or falling off a cliff. No matter how much is your salary or monthly EMIs, keeping a 5-10% of it in an emergency fund – preferably in a liquid and safe investments such as liquid mutual funds can make a difference in times of crisis. Investors should make it a resolution to have money saved in an emergency fund – 3x monthly income is a good start, 6x Is ideal and 12x would be good to have.

2. Spend within your budget:

Like slimming down your weight is good for your health, trimming the fat in your monthly budget is a good way to bolster the health of your personal finances. But like diet, this do need a discipline. Keep track of your income and monthly expenses, avoid unnecessary debts and try to cut down on impulsive spending. Learn the art of balancing the urge to spend and the need to manage your expenses within a budget, to keep your finances in order.

3. Define each financial goal as short, mid or long-term:

Categorize each financial goal as short, mid, or long-term with a specific target in mind and with a particular target date to complete the same. Below is the guide to help you define your goals

Short-term financial goals: six months to five years
Mid-term financial goals: five to 10 years
Long-term financial goals: more than 10 years

4. Prioritize your financial goal:

Prioritize your goals and Label each goal as critical, need, or want. In case of shortage of funds, it will help you decide what to fund first. Suppose you have a short-term goal to build up your emergency fund and its “critical”. There is another short-term financial goal to renovate your office which is running just fine – that’s a “want”. If funds become tight one month, prioritising will help you know where to put your money first.

5. Seek financial consultation:

It is very important to seek the consultation of a professional & unbiased financial professional to help you in your financial planning and investments. With growing complexities of financial markets and plethora of funds available in the market from balanced mutual funds to multi-cap mutual funds, it is highly recommended to take help from a finance professional, who can chalk out a right investment plan for your based on your goals and risk apetite.

Many of us are more than happy to see 2020 come to a close. As you celebrate the start of a new year, think about the ways you can better your financial picture and have something to be proud of next December.

Happy New Year!

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The post Financial Resolutions for 2021 appeared first on Net Brokers.

5 Personal Finance Lessons from 2020

Akhil Chugh — Fri, 11 Dec 2020 12:07:40 +0000

5 Personal Finance Lessons from 2020

By Akhil Chugh

Date December 11, 2020

With one of the biggest pandemic crisis in the last 75 years, this year has taught us many hard learned lessons, including financial ones. As the year draws to a close, it’s right to say that tough times are also great teachers. We’ve all learned something about the social, political, physical and environmental forces that have affected everyone. And, in some ways, our lives have changed. And Covid-19 has increased the importance of being financially prepared at all times to withstand any adverse circumstances. But as an investor, what lessons have we learnt from 2020?

Here are 5 important personal finance lessons that Net Brokers would like you to consider:

1. Importance of an Emergency Fund:

You never know when you might have an emergency or lose your income, and Covid-19 is the perfect example of why everyone needs emergency savings. If you do not already have an emergency fund, start by setting up a monthly SIP that automatically allocates funds to a low cost, easily accessible investment account. You can begin by saving whatever you can afford with the aim to build it up to six months’ worth of living expenses. Investors should keep the emergency funds in low-risk and liquid fixed income assets.

2. Stay Invested:

The first few months of 2020 reminded us that markets don’t always go up. Seeing your hard earned savings going down with the stock market is quite scary, but it’s the time to not get tempted to book your losses by withdrawing at the bottom. By end of 2020 market has recovered well and is at all-time high and the rollercoaster ride is an essential reminder to investors not to try time the market and about the importance of sticking to your long term investment goals. Patience & discipline can pay wonderful rewards in the long run.

3. Benefits of Portfolio Diversification:

An investor with a diversified portfolio not only could ride through the difficult time, but could actually take advantage of all type of situation. Different asset classes perform well at different times and having them in your portfolio means your risk will be spread and minimised. Your investment portfolio should ideally reflect your planned asset allocation & current risk appetite appropriately. Rebalance and diversify your portfolio as per the circumstances and your risk profile.

4. Save, Save & Save More:

Outbreak of Covid-19 and its impact on economic situation of every individuals has clearly taught us the difference between the essential, necessity & luxury of life. Living without going out for movies, without eating at lavish restaurants is not that difficult after all! This has given us a scope to cut our expenses on not-so essential things and focus on saving more. Set out how much you need for essential expenses like bills and debt repayments, saving for the future and spending on things you enjoy. You might need to give up a few luxuries and save for your long-term financial goals. All the luxuries in the world can’t make up for the peace of mind financial freedom & security brings.

5. Importance of Professional Support:

At the start of 2020 most financial plans did not account for a virus and the economic impact of lockdown on it. But when your financial plan goes out of the window, get professional support and help. Building a relationship with a financial expert is one of the best investments you can make for success of your financial plan. Having someone to help you navigate the complex and technical world of finances can make your journey a lot less bumpy and more enjoyable. Find someone you trust and can rely on for support during such challenging times.

Covid-19 caught all of us off guard, however this is also an opportunity to learn from it and be better prepared for any adverse situation in future. So start preparing today by creating adequate emergency fund, staying on your investment course and saving as much as you can.

For any financial guidance, call us at +91-9811264927!

The post 5 Personal Finance Lessons from 2020 appeared first on Net Brokers.