9 Best Long Term Electrical Vehicle /EV Sector Stocks to Invest Systematically in India

(Published on 22-Feb-2021)

The souring of fuel prices is the new buzz word now in India, in fact in all countries across the Globe. This again telling us the importance for looking towards alternate fuels. When coming to alternate fuel segment, the Electrical energy segment is giving promising future for cheaper and reliable energy resource. The recent developments in the Electrical vehicles and Batteries are also giving us a hope for best alternative fuel to Automobile Industry. To decrease the dependency on expensive traditional fuels such as Petrol, Diesel etc., the Government of India is fully dedicated to make India a 100% EV nation by 2030. All these factors contributing for a revolution in EV segment and it is about to accelerate in India now. Hence, the Electrical vehicle segment would become Multi-bagger stocks in the near long term.

Why EV Stocks are to Buy / Invest now?

• The most important thing is that the EV vehicles could create $300 billion domestic battery market by 2030
• The Govt. has been continuously pinching the domestic auto markets for manufacturing electric vehicles to ensure the successful implementation
• There is a demand for electric mobility as the roll-out for same is being targeted by 2023 for 3-Wheeler, 2025 for 2-Wheeler and 2030 for 4-wheeler to replace from current ICE
• Also Govt. introduced FAME 2 scheme (Fast Adoption and Manufacturing of Electric and Hybrid vehicles) which provides subsidy for EV buyers having an outlay of Rs. 10,000 crores
• As compared to other countries, the market share of EV is extremely low and having great potential to grow
• The Indian Govt. is fully dedicated to make India a 100% EV nation by 2030
• Auto Industry contributes 7.1% to India GDP and India is 4th largest Auto Industry in the world. By end of 2021, India can become 3rd largest Auto Industry in the world and EV sales are less than 1% of total auto sales. It means lot of potential is there to develop in EV segment.

Opportunities for EV segment:

• Strict emission rules
• Govt. support for charging infrastructure companies
• Green transport initiative by Govt. and Private corps
• Because of the recent developments, India became surplus in electricity and plenty of electricity is available
• The electrical energy is clean and green energy and reduces air and sound pollution significantly
• Reduces the fuel imports and saves foreign currency reserves
• The electrical energy is very cheaper and saves the consumer pockets

Challenges Currently India Facing in EV segment:

• EV Components manufacturing
• Charging Infrastructure
• Initial cost of electrical vehicles

3 Main Categories in Electrical Vehicle / EV Industry:

1. Lithium Ion Battery Manufacturing companies
2. Charging Infrastructure companies / EV Infrastructure companies
3. Electric Vehicle Manufacturing companies
• 2-Wheeler
• 3 & 4-wheeler

9 Best Long Term Electrical Vehicle /EV Sector Stocks to Invest in India

1. Tata Chemicals

• Key Ingredients production
• Agro sciences, Nutritional sciences, Material sciences
• Energy sciences: Lithium Ion battery
• Unique ability to build Circular Economy around Lithium-ion technology
• Company acquired land in Dholera, Gujarat, where the company plans to build an integrated business which includes cell manufacturing, battery recycling and battery production
• currently it has technology tie-ups and R&D partnership in the lithium battery and the battery re-cycling businesses
• Company has tie-ups with CSIR-CECRI, ISRO and C-MET to strengthen a lithium-based energy storage solution strategy.
• The company is already in talks with a couple of auto majors to supply the batteries in 3-year time from now
• Strong local distribution network and export of batteries from India
• Good dividend history of last 5 years

2. Exide Industries

• India's largest manufacturer of Batteries and energy storage solutions, planning to build Li-Ion battery manufacturing facility by launching new JV with Leclanche to power the growth of India's EV market
• Manufacturing plan has been set up in Gujarat
• Exide Industries and Sydney-based Ecoult are setting up a new Li-Ion battery manufacturing plant in East India named Ultra Battery
• Company has low Debt-to-Equity ration at -0..25 times
• Stock is technically in a Bullish range
• High Institutional Holdings at 32.78%

3. Amara Raja Batteries:

• India's second largest traditional battery maker, is ready to enter electrical car battery space.
• Planning to build a Li-Ion assembly plant as it seeks to grab a slice of the market for electric power packs that are set to grow to $300 billion by 2030
• The company is aiming to be a Rs. 10,000 crore entity in the next 2-3 years as the company clocks a solid double-digit growth
• Working with IIT Chennai for Li battery technology

4. Tata Power:

• Largest Integrated Power Value chain company
• Commitment towards:
• 60% green energy share by 2025
• Carbon neutral company by 2050
• EV Charging infrastructure
• Already set up 170 charging points and expanding
• Agreement to set up EV charging points at petrol and diesel pump

5. M&M:

• Passenger vehicle segment market share is 7.1%
• EV pioneer in India
• R&D center in Bangalore to focus on EV manufacturing
• Strategic alliance with foreign companies for technology and production methods

6. Tata Motors:

• Passenger vehicle market share: 4.8%
• 2nd company to enter EV market after M&M
• major focus on EV business
• The recent developments happening in Tata Power and Tata Chemicals in Electrical energy segment will be leveraged by Tata Motors
• With a major focus area on electrical buses, it plans to be a producer of 4 lakh buses in near future
• In the passenger segment, Tata Motors has 3 EV variant cars namely Tigor, Tiago, and Nano
• EV Car sales:
• In last 3 quarters, produced 1600 units
• Expectation for next quarter: 1400 units

7. Minda Industries:

• World's best performing Indian auto parts maker
• Building expertise in Light-weight components
• Increased the R&D costs to enter the EV segment
• 62 manufacturing plants
• Germany design centers in Taiwan, Japan & Spain

8. Maruti Suzuki:

• India's largest Automobile company in 4-wheerler segment and one of the most trusted company by Indian car owners
• Aggressive player in EV
• Wide reach in Indian Markets
• Wagon R electric vehicle in the second half of 2021

9. Hero Motocorp:

• Largest 2 wheeler company in the world
• 2nd largest EV 2-wheeler firm in India in FY20. It has already launched a range of path-breaking and innovative electric scooters.
• Expecting to expand its reach to about 50 cities across country in 5 year and also world-wide.
• In 2018, it opened its flagship product Ather 450 for pre-orders in Bengaluru and delivered the same during September. Now, it is targeting Chennai and will eventually take it up to 30 cities by end of FY2023.
• A new manufacturing facility is expected to be set up to produce 1 million vehicles a year.
• Also, having plans to set-up 6,500 charging points over the next 5 years which will boost the sales of EV
• The aggressive plans of Ather would give a first mover advantage and indirectly benefit to Hero Motocorp

Conclusion:

On a nutshell, India's automotive market looks poised for the- Road to EV boom. At one place it has ‘Charging infrastructure’ and ‘Upfront cost’ as barriers to its progress. At the same time, it is armed with gleaming opportunities like ‘Public procurement’, ‘Strict Emission Norms’, and ‘Rs.10,000 crore FAME2 Scheme’. The Electrical Vehicle Industry is growing faster and you can surely vouch for its progress. 

All the above stocks are good for Long term investment. Systematic investment approach is most suggestible.

Disclaimer:

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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Best Sectors and Stocks to Invest After Union Budget 2021

(Published on 04-Feb-2021)

The much awaited Union Budget 2021-22 has been presented our FM on 01-Feb-2021. This is the first digital budget in the history of India. Also, this is the first Budget presenting after the unlock from Corona Pandemic episode. As expected, Government has focused on Healthcare sector's improvements to strengthen the existing national health institutions and Mobile hospitals. After Healthcare sector, the Government focused on Infrastructure which is the backbone sector to generate employment in the country. Also, the Government focusing on Disinvestment, which is the main asset monetization for the Government. Transportation also one of the key sector that would be benefiting from the Budget 2021-22. Based on the Budget highlights, there are few sectors and stocks that would emerge in the next coming years.

Key Highlights of Union Budget 2021-22:

1. First digital Budget in the history of India
2. Vehicle Scrapping Policy. Vehicle Fitness Test after 20 years in case of Personal vehicle and 15 years in case of commercial vehicles
3. 64,180 crores allocated for New Health Schemes
4. 35,000 crores allocated for Covid Vaccine
5. 7 Mega Textile Investment parks will be launched in 3 years
6. 54 lakh crore provided for Capital Expenditure
7. 1.18 lakh crore for Ministry of Roads
8. 1.10 lakh crore allocated to Railways
9. Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74 %.
10. Deposit Insurance cover (DICGC Act 1961 to be amended). Easy and time bound access of deposits to help depositors of stress banks.
11. Proposal to revive definition of ‘Small Companies’ under Companies Act 2013. Capital less than 2 Cr. and Turnover Less than 20 Cr.
12. Disinvestment: IPO of LIC, Announced Disinvestment of Companies will be completed in FY 2021-22

The six pillars on which the Union Budget resting are:

1. Health and Well-Being
2. Physical and Financial capital and infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum government Maximum governance

Sectors & Stocks to Invest for Long Term after the Union Budget 2021-22:

The Union Budget 2021 giving importance to some sectors which offers not only a direction for growth but also a strong intent for reforms. Expecting the following sectors will become the most benefited sectors in the coming years.

1. Healthcare:

Healthcare would be the most benefited sector from Union Budget. As expected health has been given a prominent platform and was the first pillar of the budget speech and has increased in the allocation of around 138% is definitely a welcome move. Steps will be taken for improving Health & Wellbeing with the help of Vaccines, Health Systems, Nutrition, Swachh Bharat, Clean Air etc. Additional funds and support will be provided to Healthcare sectors to Health India.

Stocks to Watch: Sun pharma, Dr. Reddy, IPCA Labs, Fortis Healthcare, Dabur

2. Infrastructure:

The central government has taken pride in reforms since the pandemic clutched India’s economic growth. A higher allocation towards capital expenditure with a focus on roads, infra and railways can give a significant growth impetus to the economy. To meet this expectations, Central Government has been expanding the National Infrastructure Pipeline (NIP) to 7400 projects and allocating Rs. 102 Lakh crores fund. Development Financial Institution will be set up with a capital of Rs 75,000 crore. A new bill will be introduced for the same. It will be a professionally managed body to provide, enable and catalyze infra financing with a capital of Rs 20,000 crore. The aim of the institution is to have a lending portfolio of at least Rs 5 lakh crore in three years. All these factors will benefit the Infrastructure sector in the coming years.

Stocks to Watch: L&T, Ramco Cement, Siemens, JK Lakshmi Cement, Kalpataru Power, Rail Vikas Nigam, Voltamp Transformers

3. BFSI

The government has finally announced to set up an asset reconstruction company that will take over the bad loans of banks, giving them flexibility to finance the economic recovery. Besides the IDBI, two more PSBs will be disinvested. Initial Public Offer (IPO) of the LIC of India will be issued during the next fiscal year. The estimated target for disinvestment in 2021-22 is 1.75 lakh crore. Non-core assets such as surplus land with ministries and of the Public Sector Enterprises PSEs will be sold through a Special Purpose Vehicle (SPV) in the form of a company. Apart from these, the increase of Deposit Insurance from existing 1 Lakh to 5 Lakhs, Proposal to increase the existing FDI limit from 49% to 74% are some of the key benefit points mentioned in the Budget to boost BFSI sector.

Stocks to Watch: Kotak Bank, Indus Ind Bank, HDFC Bank, Bajaj Finance, Bajaj Finserv, HDFC Life Insurance, ICICI Pru Life Insurance

4. Agriculture

Taking the importance of Agriculture in the mind, the Government has taken decisions to boost the Agriculture sector. Decisions like Agriculture infrastructure fund to be made available for APMCs for augmenting their infrastructure, 1,000 more Mandis to be integrated into the E-NAM market place, Five major fishing hubs, including Chennai, Kochi and Paradip, to be developed etc. will help to boost the Agriculture sector.

Stocks to Watch: PI Industries, Chambal Fertilizers, Bayer Corp, UPL, Dhanuka Agritech

5. IT / Tech Sector

The exemption in the dividend distribution tax will encourage the IT sector. Not only this, the current International atmosphere is very promising to the IT sector. Indian Government is also focusing on digitization of various departments and services. All these factors will certainly benefit to the IT industry in the coming years.

Stocks to watch: TCS, Infy, HCL Tech, TechM, Wipro

6. Automobile

The new Vehicle Scrapping Policy, Development of new Highways and Road works will boost the Automobile Industry. Under the voluntary vehicle scrapping policy, personal vehicles would undergo a fitness test after 20 years, whereas commercial vehicles would need to take it after completing 15 years. These factors are favorable to Automobile Industry.

Stocks to watch: Maruti Suzuki, Hero Motocorp, M & M, Ashok Leyland, VST Tillers & Tractors, Escorts, Tata Motors, Bajaj Auto

Conclusion

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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Best Systematic Transfer Plans / STPs to Invest in India for 2021

Many readers are asking me to provide the details about good Mutual funds to invest for lumpsum amounts. But I suggest Mutual funds are suitable for investing in systematic approach. Do we have any best way to invest lumpsum amounts in Mutual funds and get better and consistent returns? Yes, we have Systematic Transfer Plan (STP), which is the most suitable option to invest lumpsum amounts. The STP process transfers funds in one Mutual fund (generally Debt Mutual fund) into another Mutual fund (generally Equity Mutual fund) of same fund house  at regular intervals systematically . This is the proved way of investing lumpsum amounts in Mutual funds. We will see the complete details about STP and the best Mutual funds to invest through STP approach for the year 2021.

What is Systematic Transfer Plan / STP?

Systematic Transfer Plan is suggested to invest lumpsum amounts into a Debt Mutual fund and on periodic basis certain amount will be transferred to an Equity fund of same house house systematically. Depending on the lump-sum amount, the investor can decide the period over which he wants to deploy the money in the market. Typically, the larger the amount, the longer the time period. Also, based on the risk appetite, the investor can go the suitable risk profile Mutual funds as his/her target Mutual fund. The basic idea behind an STP is to earn a little extra on the lump sum while it is being deployed in equity, since debt funds provide better returns than a normal savings bank account.

STP has some similar features of Systematic Investment Plan (SIP). One of the differences between STP and SIP is the source of investment. In case of the former, money is transferred usually from a debt fund and in case of latter; it is the investor's bank account. Since it is similar to SIP, STP also helps in Rupee Cost Averaging. A good debt Mutual fund always yields better returns than a Bank Account, hence STP always yields better returns than SIP.

Why Systematic Transfer Plan / STP?

1. To invest lumpsum amounts in Mutual funds and to earn additional income over the Debt Mutual funds
2. Money invested in debt fund generally yields returns till the time it is transferred to equity fund. The returns in debt funds are usually higher than savings bank account and aims to assure relatively better performance.
3. The selection of Target Equity Mutual fund is based on your risk profile. Generally Small cap Mutual funds earns better returns than Large cap Mutual funds during Markets upwards journey.
4. Systematic Transfer Plan (STP) enables a disciplined and planned transfer of funds between two mutual fund schemes. In most cases, investors initiate an STP from a debt fund to an equity fund.
5. The returns made via STP are pretty reliable. This is because the amount in source fund (debt fund) generates interest until you transfer the entire amount.
6. STP can also be initiated from Equity Mutual fund to a Debt Mutual fund of same fund house. Generally, when your financial goals are nearing to your timelines, then you can do STP from the existing Equity Mutual fund to Debt Mutual fund to reduce the Market risks.
7. An STP re-balances the portfolio by moving investments from debt to equity funds or vice versa.

Things to Remember While Setting STP

1. STP happens between the mutual funds of the same fund house (AMC)
2. STP is executed as redeem in one fund and purchase in another, on the same day
3. Choose source funds that have no exit load
4. Choose destination funds according to your investment goals and risk profile
5. Every transfer from one fund to another is considered as redemption and new investment. The redemption is usually taxable. 
6. The money transferred within the first three years from a debt fund is subject to short-term capital gains tax (STCG). 
7. But even with this tax aspect, the returns earned would be higher than those in a bank account.

When to Go for STP?

• Go for STP only when you have lumpsum amounts for investing which are not required in near future.
• Go for STP when your financial goals are nearing in the existing Equity Mutual funds
• Go for STP to rebalance your Mutual fund portfolio

Best Systematic Transfer Plans / STPs to Invest in India for 2021

Conclusion

STP is the best way of investing the lump sum in unpredictable markets. Through STP, you invest the lump sum in the debt funds and set regular transfer to desired Equity funds. STP helps you reduce the risk of investing in equity funds.

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Top 3 Best IT / Technology Sector Mutual Funds to Invest in India for 2021

(Published on 03-Dec-2020)

Technology is the buzz word now-a-days. During this pandemic situations, people looking for smart devices and applications to make their life safe and ease. This covid-19 brought us many lessons and opportunities. Technology is going to play major role in the coming days. All IT and IT enabled companies are changing their business strategy and allowing the employees to work from home. This will reduce the operational costs to the IT companies. This change creating huge demand for Technology and IT enabled companies.  There are many other factors also that are boosting the growth of this industry like technological advancement, economic needs, digital India movement, encouraging domestic IT/IT-enabled industries, 5G revolution in Telecom etc. Considering these factors, the information technology industry can be assumed to continue to grow. And hence IT stocks can be treated as one of the best sectors for long-term investment in India.

What are IT / Technology sector Mutual funds:

Technology or IT sector Mutual funds are Sector or Thematic Mutual funds, primarily invests in Technology or Technology enabled companies in India. 

The technology related businesses include: 

• Computer hardware manufacturers, 
• Software manufacturers,
• Electronics services,
• Technology services,
• Information technology,
• Business data processing,
• Entertainment streaming etc.

Why IT / Technology sector Mutual funds:

1. The revival of US Economy
2. Need of smart devices and applications
3. Availability of high-speed internet at cheaper prices
4. Digital India movement
5. On-going Technology Advancements
6. Increasing demand for E-commerce
7. Encouragement for domestic IT / IT-enabled companies from Government
8. Pandemic situations
9. One IT Mutual fund have exposure to many IT stocks
10. Can invest in small amounts through SIP approach
11. For diversification in Mutual fund Portfolio

3 Best IT / Technology Sector Mutual Funds to Invest in 2021:

1. ICICI Prudential Technology Fund:

This is my first choice for investing from IT sector Mutual funds. This fund is a top performer from the last 5 years and giving consistent top performance in its category. Since last 1-year the yielding are 60+%, which is best in any sector Mutual fund. Almost 95% of its portfolio consists Equity and the remaining in Cash and other assets. The top 5 companies in its portfolio are Infosys, Tech Mahindra, HCL Tech, TCS and Bharti Airtel. Investors with high risk profile can invest into this fund with time horizon between 3 yrs - 5 yrs through SIP approach.

2. Franklin India Technology Fund:

If you are looking for a actively managed and consistent performer in IT sector fund, then Franklin India Technology fund is the best choice. If you take the performances on any time frames, the fund performances are slightly better than of the category based performances. The portfolio mainly consists of 94% Technology stocks and the remaining in Cash assets. The fund includes 90% of Large-cap companies and the remaining in Mid & Small cap companies. The top 5 stocks includes Infosys, TCS, Franklin Tech, HCL Tech and Bharti Airtel.

3. Aditya Birla Sun Life Digital India Fund:

Aditya Birla Sun Life Digital India Fund is the second biggest IT sector fund after ICICI Pru Technology fund. It has around 600+ Crores in its assets. One of the good consistent performer since last 5 years. This fund invests exclusively in large cap technology stocks (97%) from Technology, Services and Communications sectors. The top 5 companies includes Infosys, TCS, TechM , HCL Tech and Bharti Airtel.

Points to Remember Before Investing into Sector Mutual funds:

• Sector Mutual funds are highly volatile in nature
• Suitable for Investors having high risk profile 
• Invest in SIP approach for medium to high time horizons
• Always remember higher risk higher returns
• Your investments into sector mutual funds should not be more than 15% of your total Mutual fund investments.
• If these sector mutual fund units are sold after 1 year from the date of investment, gains upto Rs 1 lakh in a financial year are exempt from tax. Gains over Rs 1 lakh are taxed at the rate of 10%.
• If these sector mutual fund units are sold within 1 year from the date of investment, entire amount of gain is taxed at the rate of 15%.

Conclusion:

Sector Mutual funds are high risk in nature, but if you select right sector, then the returns would also be higher. The IT sector is a promising sector for the coming years. Those who are able to take high risk and wanted to invest through SIP approach for a minimum of 3-year period, can choose any of the above 3 IT / Technology sector mutual funds.

Disclaimer:

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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Top 10 Government Schemes to Invest in India in 2021

(Published on 24-Nov-2020)

To encourage the habit of savings or investment, the Government of India has started multiple schemes for its citizens to invest. Most people either keep the money in cash or keep that in savings or Fixed Deposit Account. Savings account typically gives a return of around 3%-5% whereas Fixed Deposit can give a slightly higher return of around 6%. However, there are other factors such as Tax, Age etc. that should also be kept in mind while making these decisions. We have listed Top 10 Government Schemes for you to invest.

Top 10 Government Schemes to Invest in India in 2021

1. Sukanya Samridhi Yojana – Savings for Girl Child

As part of India's Government initiative Beti Bachao Beti Padhao campaign, the Sukanya Samriddhi Yojana (SSY), a small savings scheme, was launched in 2015. SSY is a scheme that revolves around the intention of the welfare of women and girl child in India. With the least amount of contribution of just Rs. 250, the scheme's applicants can avail higher returns of 7.6% along with tax benefits of maximum Rs. 1.5 lakh under section 80C of the Income Tax Act (1961). Sukanya Samriddhi Yojana calculator can assist in determining the returns you receive as per the invested amount and tenure

2. Public Provident Fund – Retirement Savings Scheme

PPF or "Public Provident Fund" is a retirement savings tax-free scheme, which is offered by the Government of India. The minimum deposit amount is Rs. 500 per annum and the maximum limit is Rs 1,50,000 per annum. A PPF account matures after the completion of 15 years from the end of the year in which the account was opened. At maturity, you can extend the PPF account indefinitely in blocks of 5 years at a time. The interest on the account is set every quarter and is paid by the Government of India. The applicable PPF interest rate for this quarter is fixed at 7.1%. The interest and maturity proceeds are exempted from tax, under Section 80C of Income Tax Act. The PPF accounts can be opened at any post office or in any authorized Bank. You can find out the maturity amount using PPF Calculator

3. Employee Provident Fund - Retirement Savings Scheme

Employees Provident Fund is another tax-free retirement benefit program primarily for all the salaried persons, especially belonging to the private/unorganized sector PF. It is a kind of savings scheme, where the employee contributes a specified proportion of his salary and an equal contribution is made by his employer, to form a retirement fund for the employee. On retirement, the employee receives a lump sum amount, including self and employer’s contribution, along with interest on both. Current PF interest rate is 8.5% at the moment. PF Calculator can help you determine total PF at retirement at the current interest rate.

4. National Savings Certificate (VIII Issue)

National Savings Certificate is an excellent investment for adults as it's safe (guaranteed by Government of India), pays guaranteed interest income (at maturity) and provides tax exemption under 80C. You need a minimum of Rs 100 to open an account and there is no upper limit to the investment. Currently, the rate of interest is 6.8%, which the government revises every quarter. NSC Calculator computes the interest gained and final maturity amount on your investment. This scheme is available through most of the post-offices of India. 

5. Post Office Recurring Deposit (RD)

India Post Recurring Deposit or RD Account provides allows individuals to open a 5-year post office recurring deposit account. The interest rates get revised periodically, and currently, you can earn an interest of 5.8% p.a. which can be checked via Post Office RD Calculator. The interest gets compounded every quarter and this ensures the sum of money multiplies when it reaches the maturity time.

6. Post Office Time Deposit or Fixed Deposit

Post Office Time Deposit, commonly known as Post Office Fixed Deposit, is a fixed deposit scheme that is similar to bank Fixed Deposit. You can invest a certain amount for a fixed period at a fixed rate of interest. The return from POFD is guaranteed and backed by the government of India and allows investments for a varied amount of times such as 1 year, 2 years, 3 years, and 5 years. Post Office Time Deposit calculator calculates of future savings based upon your deposit amount, post office’s interest rate and time horizon of investment.

7. Post Office Monthly Income Scheme (MIS)

Post Office Monthly Income Scheme (Post Office MIS) is one of the highest-earning schemes having an interest rate of 6.6% p.a., and maturity of 5 years. One can invest a maximum of Rs 4.5 lakh in a single account and Rs 9 lakh in a joint account. Check total interest earned using Post Office MIS Calculator

8. Post Office Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme (SCSS) is a savings tool for those above 60 years of age which provides senior citizens with a secure and a steady source of income after retirement. SCSS offers an attractive interest rate of 7.4% and is available at various Public / Private sector banks and in Post Offices. This scheme has a maturity period for 5 years which can be extended once by an additional 3 years as per Senior Citizen Savings Scheme Calculator

9. Kisna Vikas Patra – Fixed Income Investment

Kisan Vikas Patra (KVP) is a money double scheme of government of India where your principal grows at a rate of 6.9% per annum and gets doubled in 124 months. This scheme is available through most of the post-offices of India. You can use the KVP Calculator to compute the final amount that you can get at maturity

10. National Pension Scheme (NPS)

National Pension Scheme is a pension scheme to encourage adults to plan for their retirement. The scheme allows you to contribute regularly in NPS account during your working life. Post-retirement, you can withdraw a part of the corpus in a lumpsum amount and remaining in instalments to secure a regular income after retirement. This scheme not only provide good returns but also attractive tax benefits. This scheme has additional tax benefits of Rs 50,000 over and above Rs 1,50,000 under section 80C and 80CCD

Disclaimer

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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4 Best Financial Strategies to be Considered for Your Personal Financial Planning in 2021

The year 2020 is really a full of surprises that no one has expected. This is really a nightmare to many across the Globe. The Covid-19 virus made the year 2020 as the worst year ever. Economies around the world collapsed, job losses are at peak and several stocks and sectors witnessed a doom. Apart from the Covid-19, Natural disasters and Political uncertainties between India and China leaded to further bloodbath in 2020. Many of us declared 2020 is a cursed year. Covid-19 taught us many lessons particularly with respect to finance. We still don't know when the vaccine would be available to every one in the country. Hence, we need to be more cautious about our financial planning in the coming year 2021. 

Why We Need Personal Financial Planning:

1. Financial Planning is nothing but the understanding of your financial goals which includes both short-term as well as long-term financial goals.
2. Financial Planning gives you a whole new approach to your budget and tell about improving control over your financial lifestyle.
3. The savings created from a good financial planning can prove beneficial in difficult times.
4. A good financial plan guide you in helping to choose the right types of investments to meet your needs.
5. Financial planning provides security to your family and provides peace of mind for you and your loved ones.

4 Best Financial Strategies for Your Personal Financial Planning in 2021:

Considering the worst scenarios happened in year 2020, one should accept that the times we are living is unprecedented and unpredicted. Hence, you may face additional challenges in your financial planning. You should reprioritizes your financial goals to meet any future uncertainties. Here I am suggesting 4 financial strategies to be considered for your financial planning to make the most of what's left of 2020 and set the stage for a more financially sound 2021.

1. Maintaining Emergency Fund:

The pandemic corona virus triggered an economic dip to many employees and self-employed. Any sudden job cuts or any medical emergency may damage your finances. So, if you aren't prepared for the unexpected challenges that life throws your way from time to time and find yourself in a very difficult spot. Hence, every one has to maintain an Emergency fund to meet any serious financial consequences. But how much you need? Thumb rule says, you should maintain a sum which is equal to a minimum of 6 months of your monthly salary. For eg. if you are earning Rs. 10,000 per month then your Emergency fund should be a minimum of Rs. 60,000. This will give you a cushion to meet your basic needs until you find a new job or business. Where to keep this amount? Many of us keep this amount in Bank Savings account or Bank FDs, but my suggestion is to keep this amount into a Liquid Mutual fund. A good Liquid Mutual fund yields better returns than a Bank savings account or some times Bank FDs. Apart from this, if you keep your funds in a Liquid fund for a period of 3 years then that amount will be considered as long-term capital and you will enjoy the tax relaxations on this. Liquid Mutual funds invest the money into Government Bonds and Securities, hence the security is high and completely insulated from stock market. You can also build your Emergency fund by investing into a Liquid Mutual fund through SIP approach. I suggest do not touch this amount unless you have any emergency situation.

Here's my suggested Liquid Mutual funds for the year 2021:

2. Maintaining Term Policy:

Because of Covid 19 there are around 1.3 Lakhs deaths happened in India. Among these deaths, most of them are bread-winners of their respective families. Just imaging, how the family will take care of the future financial needs in the absence of the family's head? Many of our Indians did not have awareness on the importance of having Term policy. The Term policy is an Insurance policy that gives coverage for a specified period of time through a guaranteed death benefit paid in case of death of insured during the specified time period. Premiums are calculated by the insurance company on the basis of an individual’s health, age and life expectancy. If the policyholder dies before the expiry of the specified time period of insurance- Payout will be the face value of the policy. If the policyholder dies after the expiry of the specified time period of insurance- There will be no payout. It is safe to take a Term insurance plan at least 10 - 12 times of your annual income. For eg. if your annual income is Rs 1,00,000 then your Term Insurance would be for the sum of Rs 10,00,000 - Rs 12,00,000. But one should not consider buying an Insurance plan as their investment. An Insurance plan is just to take care of the dependents and shouldn't be considered as return bearing investment. Do not forget to consider the Riders along with the Base Plan.

Some good suggested Term Policies:

3. Maintaining Health Insurance:

During these days, people are understanding the importance of having Health Insurance. The medical inflation rates in India are increasing day by day and it is becoming difficult to meet the medical expense for common people. Hence, every person / family should have health insurance. This will provide the risk coverage during emergency medical situations. Emergency medical expenses may result in severe financial distress. You may have to dip into your savings or sell your assets to meet such expenses. When you buy a health plan, you are assured of financial stability during a medical emergencies. Insurance providers offering different types of plans to maximize coverage and benefits. Some of the coverage includes pre and post-hospitalization expenses, hospitalization costs, day care processes, and domiciliary treatment. 

Here are some good Family Health Insurance policies:

4. Maintaining Financial Goals:

Your personal financial planning is incomplete unless you include your financial goals. Financial goals may have short-term as well a long-term based on the type of the financial target. Children's higher education, marriages, retirement needs are some of long-term financial goals. On the other hand, buying a vehicle / furniture, taking vacation etc. comes under short-term financial goals. If you have already set financial goals, this is the right time to review your existing Financial Goals and re-balance them with the upcoming challenges. For eg. you may have spouse, children or wishing a new Home or Vehicle. According to these new additions in your wish list, you need to add your financial goals accordingly. You may also get a promotion or a job change where there will be significant salary hikes. In this case, your allocation of funds should also be appropriate to maintain the current life style in future. Mutual funds are my top priority in choosing the right investment to your Financial goals. Be cautious about setting too many or unrealistic financial goals. Otherwise, you may not be able to accomplish any of them. maintain a checklist to keep track of how you are doing throughout the year, so that you can make any necessary modifications. Consider meeting with your financial adviser to review the goals and objectives that you have established.

Some of my suggested Mutual funds to meet your financial goals in 2021:

Conclusion:

We hope this new year will brings us new opportunities and usher this new year with new resolutions and challenges.

                            Wishing you a Happy and Bright New Year - 2021

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