The Reserve Bank of Indian (RBI) and the government are keen on retail investors accessing the government securities market. In its latest attempt, RBI has allowed demat account holders to invest in G-Secs (Government Security) through depository participant banks. Buying G-Secs can be as simple as buying equity stocks through a broker.

Direct Investing

Direct investing is appropriate for investors, who are looking for fixed payouts in the form of interest payments. G-Secs are safe as there is a guarantee by the government, with respect to interest and principal payments. Also, there are no intermediary costs as you buy directly from the government.

Gilt Funds

Gilt Funds are mutual funds where you invest only in government securities. Usually risk averse, and conservative investors, who want to invest in the shadow of secure government bonds prefer it. Here, the investors are protected from credit risks.

If you are not interested in investing directly in the G-Secs, you can buy Gilt Funds. It is same as buying any other mutual fund scheme.  You can directly approach a fund house or visit their website. Even after the recent initiatives from the government, investing through the funds route is still quite easier.

But why would a person, who already indirectly holds government papers through PPF or bank FDs, be interested in Gilts? There are two types of people who may benefit from the Gilt Funds. First, the high net worth individuals, who may want to benefit from the extra yield that listed bonds sometimes give. Secondly, working individuals, who would otherwise buy an annuity for their post retirement income.

In conclusion, you should have at least a 3 to 4 year investment horizon, and moderate risk appetite to invest in mutual funds. You should consult with your financial advisors to discuss whether these mutual funds suit your investment strategy or not.

For more information, visit: - http://www.bajajcapital.com/

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Choosing the right product, is the toughest part in any investment decision, be it Mutual Funds, stocks or commodities. The biggest mistake that investors usually make is by choosing a product simply on the basis of its past performance. There are also other considerations to ponder, such as charges, downside risk, consistency etc. Let us look at some important factors that you must consider while choosing a mutual fund.

Quality of Fund Houses

Faith is an important factor in Mutual Fund investment. In order to choose the best scheme according to your needs and requirements, you must first identify reliable fund houses. The fund houses need to have a strong history in the financial market and a decent track record and consistency. A strong base is the key to a stronger empire. Thus, consistency is the key, and a good Mutual Fund scheme is one that manages to outperform its benchmark over 3-5 years. Choose a trustworthy fund house.

May The Odds Be In Your Favour

Risks are a part of every venture in life. In the investment sector too, nothing can be achieved without taking risks. However, for every prudent man, the proportion of risk vis a vis the returns should be a big decisive factor. What would make a worthy Mutual Fund? Same level of risk, yet more returns than the others. There is no greatness in risking everything for very little return, and this should be kept in mind while choosing your fund.

PortfolioDiversification

The basic characteristic of a Mutual Fund is to facilitate diversification across assets, stocks etc. Such a portfolio tends to be at a lower risk than other portfolios concentrated in a particular area. Portfolios of various schemes of fund houses are available for a quick-glance at the websites of the fund houses, and these schemes should be carefully observed and analyzed, perhaps with the help of a financial advisor. A well-diversified portfolio history is what makes the fund worth investing in.

These are some of the factors that every investor must keep in mind while investing. Choose the best Mutual Fund for yourself, and never regret, despite the risk taken.

For more information visit- http://www.bajajcapital.com/

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Creative: I want to save taxes on Rs. 50,000. Should I invest in NPS or equity MFs?

Answer: NPS is one of the better products available in market in order to plan for your Golden Years. It is usually compared with provident fund. Employees’ Provident Fund (EPF) and Public Provident Fund are considered to be debt-oriented products with fixed returns. As compared to them NPS gives higher returns over the long term due to the provision of allocating 50% to equity in its portfolio. NPS is taken superior to many insurance-linked retirement products too being less expensive and by investment product in nature.

NPS, in comparison to Mutual Funds-oriented retirement solutions has its own merits. The long-term lock-in that NPS has protects an investor from premature withdrawals and the fixed nature of its index-based equity exposure rescues him from selecting between various funds and maintaining a portfolio through the years. Thus, it becomes beneficial for an investor who wants a low-cost, low-maintenance and pure investment retirement product. Mutual Funds offer high returns for disciplined investors and for those who can, either by themselves or with the help of an adviser, manage a retirement portfolio. 

However, investing in NPS or such instruments purely for tax deductions will do no good. The right approach is to first analyse if NPS fulfills your retirement needs or not and if so, use tax incentive as a fillip.

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