Should you invest in small cap mutual funds

1. A mutual fund's risk depends on its exposure to companies.
2. There's also no guarantee that a risky fund will generate high returns.
3. The fund manager's ability, hence track record, to patiently select stocks for these 3 types of funds is of paramount importance because:-
a) Risk levels in the broader market keep changing,
b) It's his own perception of the individual stock during selection,
c) Various sectors tend to move in different cycles,
d) He has a larger universe of stocks to select from, and
e) He has to withstand redemption pressure from "impatient" investors.
4. A better way to select small-cap funds is higher star ratings and long-term returns among this specific category since these indicate a proven track record and performance history.
5. Choose a fund through peer performance ranking across a common time period, preferably from within the top 25%.
6. As no single fund stays in the top quartile at all times, check how soon it rebounded after slipping, and whether it continued to stay in the top 50% for over a year.
7. Review annually and replace a laggard if it slipped for four quarters in ranking, as the fund manager cannot correct such downfall soon enough.
8. Patiently investing in small-cap funds through SIPs is also preferable, with 5-yr+ time frame for allowing cost-averaging during a full market cycle.
9. As per Sebi's mandate, a small-cap fund will invest 65% min. (up to 100%) in small-cap stocks, while the rest can be all others like large-cap, mid-cap and debt products, depending on the investment style decided by various AMCs. 

Some of the best small cal funds to invest in India are :
1. SBI small cap fund
2. Reliance small cap fund
3. HDFC small cap Fund

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Surround yourself with successful, high-earners to get Rich

Who you hang out with matters more than you may think. In fact, your net worth tends to mirror that of your closest friends, Siebold points out.

"Successful people generally agree that consciousness is contagious, and that exposure to people who are more successful has the potential to expand your thinking and catapult your income," the self-made millionaire writes. "We become like the people we associate with, and that's why winners are attracted to winners."

Looking for a new crew to roll with? Consider joining a high-end tennis, golf, health, or business club, Eker suggests in "secrets of the millionarie mind". "If there's no way you can afford to join a high-end club, have coffee or tea in the classiest hotel in your city," he writes. "Get comfortable in this atmosphere and watch the patrons, noticing they're no different from you."

The 4 Types of People to Surround Yourself With for Success

Relentless workers.

You probably know somebody who is a relentless worker, or perhaps you are one yourself. These types of workers push us to work harder each and every day. While measuring personal success against the success of another is like comparing apples and oranges, we can measure our drive with the drive of other relentless workers. True passion and commitment will breed a successful business.

Positive attitudes.

People tend to be better at what they’re doing if they’re happy. Negative attitudes can drag down work ethic and they don’t offer any inspiration for success or innovation. Surrounding yourself with negative people can bog down your creativity and drive and it could ultimately be the downfall of your business. People with positive attitudes can actually have the opposite effect, facilitating your leap towards success more effectively. Bringing happiness inside the workplace will keep morale high and will keep people looking forward.

People who ask questions.

Albert Einstein once said “the important thing is to not stop questioning.” As entrepreneurs, we should constantly be asking questions about ourselves and our business. However, no single person will think of every important question. People who ask questions may provide a different angle on an issue or an idea, and these questions could ultimately lead to an important breakthrough for you or your business. Perspective is everything.

Dreamers.

Some non-entrepreneurial types will consider all entrepreneurs “dreamers.” However, we understand that setting goals and working hard will help us achieve what many consider to be unachievable. To keep this drive going, we should always be surrounding ourselves with people who have similar goals in mind. These dreamers don’t even need to be involved in the same industry as you or your business; the important thing is that you keep close people with big plans for themselves. Seeing other people’s drive will keep you hungry to reach your goals.

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How to combat long term inflation

1. Invest in equity MFs, preferably a portfolio of 1 fund each in multicap, Hybrid Aggressive, and ELSS funds (if income becomes taxable), through long-term SIPs, starting with at least 10% of first month's earnings itself,
2. Utilize fixed income products as a contingency / rebalancing corpus,
3. Always consider inflation impact while building a retirement corpus during the earning years itself,
4. Aim to accumulate a growth-oriented, inflation-beating corpus of 25 times estimated annual retirement expenses during the earning years,
5. Aim to withdraw 5-6% (or up to 10% at a later stage) for annual retirement needs, to enjoy it for your entire life and also bequeath it later to your kith and kin.
6. A Ready reckoner of corpus that gets created from just Rs.1000 SIP investment for 30 years (i.e. Rs.3.6 lakh only):-
a) Rs.12 lakh from Recurring Deposit at 7% CAGR,
b) Rs.15 lakh from Post Office / Debt fund at 8% CAGR,
c) Rs. 22 lakh from ELSS / Large cap fund at 10% CAGR,
d) Rs. 35 lakh from Balanced / Multi-cap fund at 12% CAGR, and
e) Rs. 70 lakh from Mid-cap / Small-cap fund at 15% CAGR.

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How To Invest In Mutual Funds

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

• https://www.cvlkra.com/
• https://kra.ndml.in/
• https://www.nsekra.com/
• https://camskra.com/
• https://www.karvykra.com/

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.

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.

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.

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Building Wealth Is Very Easy

• ·        Warren Buffet is one of the richest people in the world because he saved and invested - and didn't follow get rich quick schemes.
• ·        Wealth is attainable to everyone with good financial habits, and you may already be on the right path.
• ·        Spending less money than you earn, saving for retirement, and investing money are simple ways to become wealthy.

Owning bitcoin won't guarantee future wealth - but the right saving and investing strategies will.

Owning bitcoin won't guarantee future wealth - but the right saving and investing strategies will.

At least according to Warren Buffett, who considers cryptocurrency a get-rich-quick scheme. Though chances are slim you'll end up with the multi-billion-dollar fortune Buffett has, there are sensible ways to build wealth without betting on a bubble.

It's hard to put a number on "wealth" because it's personal and it depends on many factors, including where you live. Generally, having wealth means not having to worry about being able to pay your bills and knowing a comfortable retirement at a decent age is feasible.

These 11 indicators are easy to follow and will help you build wealth - whatever that means to you. Even better, a lot of these tips go hand-in-hand and require little work or maintenance.

If you are already following this advice, congratulations! You are on the road to being wealthy.

You started saving for retirement as soon as you started working.

A portion of every paycheck — including the first one when you start working — should be set aside for savings.

Retirement may seem like a long way down the line when you first start your career, but the wait will be even longer if you don't prepare. Saving as early as possible triggers compound interest and can lead to a huge difference in the long run.

You always make loan payments on time and in full.

Whether its a student loan or a mortgage, it is best to make all payments in full and on time. Paying off less and missing loan payments will end up costing more in the long run.

You clip coupons and look for good deals.

Just because you can afford to shop at Whole Foods or your hip local market doesn't mean you should, especially if you want to end up wealthy.

The USDA says that a family of four can spend between $150 and $300 a week on groceries. Shaving those expenses in half can really accumulate on the savings side. Shopping at a store like Costco, known for its bulk products and huge savings, is economical and fun.

You are financially prepared for an emergency.

Life is full of unexpected surprises — and sometimes the unexpected can be costly. That's why it's crucial to save for a rainy day in the form of an emergency fund.

While the conventional wisdom is to save enough money to cover you for at least three months with no steady income, the more you save, the more freedom and safety you have for when the inevitable emergency hits.

You don't spend all the extra money you have.

If your company gives out bonuses and your first thought is to spend it all on a night out with expensive entertainment and gourmet dining, you may be doing it wrong.

While this extra income may feel like house money, you should think of it as money earned. Treating yourself in small doses if fine, but it also makes sense to do something productive with this influx of cash, such as adding to your investment portfolio or paying down debts.

You contribute more than the default to retirement.

Your pension will likely come with a default contribution amount — say, 4%. While putting that 4% into a 401(k) or IRA is a great start, you can easily increase that amount to great effect, especially if your employer has a matching program.

According to Business Insider's Lauren Lyons Cole, who is a financial planner, investing through a retirement account means you save money on taxes, while making sure your financial future is more secure. Instead of coasting by on the default, try maxing out your 401(k) and IRA.

You have everything you need, but not everything you want.

Living below your means is a good indicator of financial responsibility. When you live in this state, all your basic needs are taken care of. You can afford additional luxury goods but resist the temptation to spend at will, meaning that your money goes to saving instead of the newest gadget.

You consistently earn raises and promotions.

Having a steady job and salary is nice, but it is even better when you are rewarded for hard work. A good career can quickly become a dead-end job if your salary doesn't even keep up with inflation.

Make sure to get the periodic raise you deserve — it can be as simple as asking.

You don't spend too much on housing.

Warren Buffett is one of the richest people in the world but lives in a house he bought in 1958 for $31,500. He told BBC, "I'm happy there. I'd move if I thought I'd be happier someplace else."

Buffett, like all of us, doesn't need a pricey mansion to be happy and his modest home is a sign of thriftiness that has allowed him to spend his finances on things he values more. If you're spending less than the recommended 30% of your income on housing expenses, you're in good shape.

Your investment portfolio is aggressive but diversified.

The best long-term investments are low-cost, diversified, and aggressive. You don't want to waste money by throwing it at unnecessary expense fees or by putting all your eggs in one basket. It is also important to have the right mix of stocks and bonds based on your age and how much risk you can handle.

The absolute worst investment is not having any investment at all.

You don't have credit card debt.

Credit card debt is a huge barrier to building wealth for millions of Americans. Debt can be a giant financial burden and decrease your credit score, restricting financial opportunities, like becoming a homeowner.

It is best to avoid credit card debt in general, but if you find yourself in the hole, there are some smart ways to get out of it.

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Investing Mistakes of Young Investors

It's a fact that "the most important thing is likely to be what is not changing and what will likely never change", and that happens to be, unfortunately, well-known investing mistakes, some of which are enumerated below - with the hope that young investors would eliminate them in the early years of their investment journey itself:-
1. No financial goals and asset allocation strategy.
2. Over-weighting in high-risk, short-term, non-diversified products.
3. Asset duplication in portfolio due to inadequate knowledge.
4. Ignoring inflation and taxation when setting goals.
5. Not choosing suitable options for specific goals as per risk profile.
6. Not prioritizing and reviewing financial goals for allocating resources.
7. Using one strategy for all investments and expecting unrealistic returns.
8. Basing investment decisions on emotions, "uncle's" advice and complexity.
9. Maintaining an extreme view of conservatism or aggressiveness.
10. Greedily timing the market and refusing course correction.

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