This week in personal finance: Tips to select a good mutual fund; how credit card usage could impact your future home loan
Asset allocation review & rebalance can be undertaken either at the end of fixed pre-determined time periods and/or based on significant deviations from one’s original allocations.
The world of investing is fraught with many uncertainties. One among them is the sudden change of your money manager. The mutual fund industry, which has been attracting some of the highest inflows in recent times, has seen exactly that with some high-profile exists of chief investment officers or fund manager during recent days.
Among those who have left their funds are Anup Maheshwari, CIO from DSP BlackRock Mutual Fund, Gopal Agrawal, CIO from Tata Mutual Fund and Ravi Gopalkrishnan, head equities from Canara Robecco AMC.
How should investors view such change in their money manager? Often investors are in a quandary when they read about the exit of the CIO/fund manager(s) of a fund they are invested in. It is natural to worry, but irrational to exit the fund without analysing the situation. Here are six things investors should do in this situation.
While the profile and the past performance of the fund manager might be an important element in your decision in choosing the fund you should invest in, choosing a fund involves looking at various other parameters. The task is made difficult by the presence of a plethora of funds in the financial market and selecting the same as per one’s risk appetite, becomes very difficult most of the time.
This involves analysing relevant questions like determining your financial goals, your investment plans and the amount of risk one can afford. This planning will eventually demarcate the number of investments you need to do. Therefore, while selecting a fund for investing your money, you should keep these points in mind.
Once invested, a periodic review of the fund is of top priority. Have you assessed how your investment portfolio has been doing? Which are the assets or holdings that are giving you good returns and which are not performing well? Did you give a thought on rebalancing your portfolio?
Asset allocation review & rebalance can be undertaken either at the end of fixed pre-determined time periods such as every year and/or based on significant deviations from one’s original allocations. The tax implications are also important.
However, the rebalancing has to be done only if there are some definite triggers. Here are some of them.
Investors put in money in various asset classes to make profits. One of the major worry is possible losses. That is because many investors fail to worry about return of capital instead of return. Return on capital is the buzzword that rules the world of investments. Many end up chasing returns at the cost of capital. Here are five factors that would help you to reduce the chance of loss of capital.
Issuance of a credit card marks the entry into the world of credit for most millennials. The journey that starts with a credit card generally peaks when one opts for a home loan, thanks to sky-high home prices. Obtaining a home loan at an attractive rate is a task for many. If one uses a credit card prudently, it can help strike a better home loan deal. Here is how it works.
Lenders prefer to offer home loans to individuals that have a credit score in excess of 750. This score is not built overnight. If a borrower has been repaying the loan on time, it can help build a credit score over a period of time. Here is how your credit card usage aids in building a credit score and obtain a home loan at an attractive rate of interest.
Creating a retirement fund should be a part of every personal long-term financial plan. While doing so, diversification forms a critical part of the retirement investment strategy. It is essential to ensure the risk from over exposure to one asset class is minimized. By balancing investments over time across multiple asset classes, investors can ensure accumulation of sufficient retirement corpus. Here are a few retirement planning products that one should opt for.