Q 1. How does one plan for Retirement?

Retirement is like any other goal for which you must invest separately. If you have time on your side, you must have a higher allocation to equities as per your risk appetite. Set a value for the money that you would need for retirement and factor the impact of inflation into your expenses. Medical costs could be a key expenses post retirement so ensure you have a health insurance cover. Invest regularly through SIPs in mutual fund. To receive an annuity form your retirement corpus you could use a systematic withdrawal plan (SWP) and fix your monthly withdrawal. You may contact your IMPERIAL FINSOL for the detailed calculations.

Q 2. What are the returns we should reasonably aim for every year on our mutual fund portfolio?

Firstly, a mutual fund portfolio must aim to beat inflation. Next, one must check whether fund returns are consistently beating the respective benchmark returns. One must also check how the fund is performing vis-a-vis category peers. There are various star-rankings available from independent research agencies that one can refer for verifying how funds perform vis-a-vis peers. A short term deviation in returns is acceptable but being a consistent laggard with benchmarks or peers would call for the fund being replaced in the portfolio.

Q 3. What is good time duration for SIP’s in mutual funds?

There is no ideal time duration for SIPs. One can even subscribe to perpetual SIPs where is no end date. However, your mutual fund portfolio must have an investment horizon to match your goals. Further, equity funds must have a 5-year plus investment horizon while debt funds can have a shorter investment horizon.

Q 4. The down-payment for my new house is delayed by 3 months. Is there any product in mutual funds where i can park my funds for this short duration without much risk ?

The simplest and least risky product within mutual fund is liquid funds where you can park money for 1 day or even 3 months. Many corporates and banks also park their short term treasury surplus with liquid funds. They also have the potential to offer better post-tax returns than savings bank deposits as well as provide high liquidity with redemption requests being processed usually within one working day. As of March 31, 2016, investors had parked almost Rs.2 lakh crore in liquid funds. (Source – AMFI).I am text block. Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Q 5. My current allocation is 100% towards equity mutual funds. I want to now diversify and invest a small portion in debt funds as well. What Kinds of debt products should i look out for?

There are two ways you can diversify, one, by investing in pure debt funds and two, by investing in hybrid funds which offer a combination of equity and debt in varying proportions. In case of the latter, you may choose a balanced fund (which has a predominant equity component) or a dynamic asset allocation fund. The latter swings its allocation between equity and debt based on market dynamics mostly using a formula like a PE (Price to Earnings) ratio, etc. In case of pure debt funds, you may choose between short term and long term debt funds base on your investment horizon. The former are preferable for less than 3 year investment horizon while the latter are preferred for a more than 3 years horizon.

Q 6. I have just begun my first job and am keen to start investing. When is the right time to invest ?

The earliest time is always the best time. Ideally one should start investing from their first pay cheque to benefit from the power of compounding. You should, however, chalk out your financial goals and invest according to financial plan that is best suited to your goals. If you do not have the required expertise to figure out which investments will work out best for you, it is best to seek the help of a professional financial advisior IMPERIAL FINSOL.

Q 7. What were the consumer insights that led to you to develop the clutter Breaking SIP campaign?

With the overload of options that people have today for consuming information, attention spans are at a premium. Brands do not have the luxury for having the undivided attention of their prospective customers. This demands that messaging is memorable, one that the consumer relates to and is easy to digest.

SIP is s great first time investor into mutual funds. Even for existing mutual fund investors it is a very effective tool to create a corpus over the long term to achieve their financial goals. The task at hand was to develop a message that is easy to understand and relate to. EMIs are a part of every retails consumer’s life. They understand that it is something that they pay regularly over the long term, which is what is required to invest via an SIP. We called it the “Good EMI” which is an “investment” and not an “instalment’.

Q 8. Some observers suggest that from a stage a few years ago where a large Proportion of SIPs were 1 year tenure for amounts between Rs. 1000 2000 (trail phase), SIPs now seem to be moving centre stage as an integral part of an urban family’s savings and investment options. Would you say this is a fair comment? Does data from your own SIP book this out?

We still have a long way to go to make mutual funds as the No. 1 choice of investors as less than 5% Indians (by folio count) invests in mutual funds. However, we are slowly beginning to see a change in investors psyche towards this instrument though the reasons for this change are multi-pronged. Firstly, people have learnt through the industry’s investor education initiatives as well as out of their personal experience (whether it is the 2008 crisis or otherwise) that equity is a long term asset class which can be volatile in the short term. Another reason for this change is the declining interest rate trend witnessed by

Traditional assured returns avenues making goal planning increasingly difficult. While a combination of these factors have given some amount of traction to SIPs in mutual funds, the simplicity and affordability of SIPs has also helped to attract new investors.