Intermediate

India is a nation of savers, but such savings find their way into different investments, including traditional investment products, real estate, mutual funds, and cash. When one has just entered into the world of investing, he/ she is more likely to be guided by friends, family, office colleagues, etc.

However, one should also understand the shades of investing and avoid making serious investment mistakes. Here are 5 do’s for rookie investors:

5 Don'ts When Using Star Ratings

When hunting for a fund, star ratings are a great starting point. They provide a composite, visual measure of a fund’s historical risk-adjusted return compared to peers: in any particular category, funds clocking the top-10% risk-adjusted returns get a five-star rating, followed by the next 22.5%, 35%, 22.5% and 10%, respectively, from four to one stars.But they can also be misleading. Here are five don’ts to consider when checking out the 5-star rated funds.

Buying stocks is not easy. It requires a great amount of leg work. And the entire exercise is complicated by emotion. But it is possible to benefit from specific equities in your investment portfolio. Here are some cautionary moves before you sink your money into stocks.

As much as anything else, successful investing requires something perhaps even more rare: the ability to identify and overcome one's own psychological weaknesses.In this article, we focus on how the insights from the field of behavioural finance can benefit individual investors. Primarily, we're interested in how we can learn to spot and correct investing mistakes in order to yield greater profits.

5 ULIP Charges You Must Know

Insurance companies have often found themselves at the receiving end for imposing stiff fees or costs since these charges shrink the investible portion of the premium paid. This battle raged prominently in the case of unit linked insurance plans, or ULIPs, for years.More importantly, these charges are often not plainly communicated to the policy buyers.We help you understand the key charges that tag along with ULIPs.

Alpha is the first Greek alphabet, but in Mutual funds and investments, Alpha is the yardstick to which the investment performance of a mutual fund scheme is generally tied with. Alpha denotes the excess returns generated by the fund as against the expected returns from such funds. 

It tends to reflect the outperformance or underperformance of the fund as against the market returns. Here are seven things you must know about Alpha:

Income Tax provisions allow deduction under Section 80C up to Rs. 1.50 lakh in a financial year, which effectively reduces the taxable income. There is a large bouquet of investment options listed under the section, wherein the investor can invest and take the tax benefit. While some options provide market-linked returns, like Equity Linked Savings Scheme (ELSS), Unit Linked Insurance Policies (ULIP), etc., some options provide fixed returns to the investments.

One should not keep all its eggs in the same basket. Such a piece of advice rightfully focuses on the importance of different asset classes within the investment portfolio. While one may have invested in various asset classes in an optimal proportion, the ratio can subsequently change due to the relative outperformance/ underperformance of different asset classes. It becomes vital for the investors to periodically rebalance the investment portfolio to keep it aligned with the investor risk appetite.

Here is a step-by-step guide to portfolio rebalancing:

To reach a holistic assessment, performance should be viewed adroitly to unearth a fund’s realistic potential.

5 Steps to Decipher Past Performance

If you have ever invested in mutual funds, chances are that you would have narrowed down on one that put up some very good numbers in the recent past. Despite the bold disclaimers about past performance not necessarily being sustained in the future, investors have a hard time resisting the numbers. Past performance is undoubtedly very luring, but should you rely on it?