Four Important Tips to Invest in Debt Funds

Financial Market in India offers different types of instruments to match the risk appetite of different investors. Products in the equity segment are labelled as high-risk entities that reap substantial returns while those in the debt segment are labelled low-risk investment vehicles that guarantee assured returns.

Debt instruments are popular for their assured return rates, which are somewhat lower than their equity counterparts. Since the returns are low, the risk associated with such investments is minimum. As a result they are considered as safe means of investments.

However, debt funds do not offer easy liquidity. So, mutual fund companies provide debt funds to overcome this shortcoming. Unlike debt vehicles, these funds are standardized and the investor does not require extensive financial knowledge to make the purchase decision.

Here are the four simple and easy tips to invest in debt funds:

1>    Plan the tenure

Debt funds invest predominantly in bonds and debentures. All these instruments offer substantial gain over a period of time. As a result, you should invest in debt funds for a long time in order to reap substantial capital appreciation. Furthermore, investment tenure should be more than a year in order to gain double digit returns.

2>    Compare the NAV values

NAV or Net Asset Value plays a crucial role while choosing the right debt fund. NAV value will not depend on the fluctuating market conditions in case of these instruments. However, the value gets affected with the cash flow of the fund. Funds with higher cash flow are often labelled stable as the NAV value does not fluctuate rapidly.

3>    Assess the Credit Quality

Credit rating is a vital parameter considered while purchasing a debt fund. Credit risk analyzing bodies like CRISIL determine the credit rating for all the debt schemes. Schemes that carry lower ratings often compensate their buyers with favorable returns. However, the one with higher ratings are considered the safest.

4>    Determine the Scheme's Portfolio

Debt funds do not necessarily invest in a single instrument. Fund managers choose different instruments in order to get balanced returns as well as to diversify credit risk. Understand the portfolio and determine the credit risk associated with every underlying instrument. This way you can get better insights on how the scheme will perform in the long run.

Top 10 Equity Mutual Fund in India for Ambitious Investor

Mutual funds are often considered relatively safe investment option in comparison to equities. This statement is true as direct investment in stocks involves huge amount of risk. Furthermore, you need substantial amount of working, proven knowledge to convert market fluctuations into monetary equivalents.
To mitigate the equity risk and to tap favorable returns from market fluctuations, Fund managers have launched several schemes. Amongst the various schemes they formulate, equity funds are known to be the top-gainers.

Here are the top 10 equity mutual funds in India that promise double-digit, positive returns to the investors for the year 2014.

1> Birla Sun Life Long Term Advantage Fund
This growth fund is offering a whopping double-digit return of 63.3% for 1 year of investment. Managed by Mahesh Pati, the fund has consistently performed well over the past few years. The standard benchmark for this scheme is S&P BSE 200.

2> Axis Long Term Equity Fund
With an annual return rate of 78.1%, this scheme from the Axis fund house continues to be one of the consistent top-performers. Benchmarked against S&P BSE 200, this diversified scheme invests predominantly in Banking, automotive, and technology sector.

3> BNP Paribas Equity Fund
With an unmatched growth rate of 51.4% for a year, this CNX Nifty benchmarked growth fund continues to lure investors, even today. The portfolio is diversified and returns are equated.

4> Quantum Long-term Equity Fund
Marked against the S&P BSE SENSEX, this growth fund is the best call for long term growth. With portfolio packed with technology and oil/chemical giants, this fund is expected to promise good returns in future.

5> DSP BlackRock Equity Fund
This diversified portfolio fund is a dividend based scheme ideal for regular investors. Managed by Apoorva Shah, this scheme promises substantial returns of 46.3% for a single year.

6> Kotak NIFTY ETF
This CNX NIFT benchmarked fund is offering an average annual return rate of 43.7% consistently. Managed by young and able fund manager Deepak Gupta, this scheme has managed to offer positive returns even during troubled times.

7> Franklin India Smaller Companies Fund
Offering annual returns of 99.7%, this scheme is the cynosure of Mid-Cap top performers. Benchmarked against CNX Midcap, this fund continues to attract moderate risk-taking investors all over the country.

8> Reliance Small Cap
The multifaceted Reliance fund house has managed to show some magic with equities by launching this fund. Grabbing a surprising return rate of 124.2% for a year, S&P BSE SMALL CAP benchmarked fund has attracted several risk-taking investors.

9> Franklin India High Growth Fund
With a stable return rate of 76.1% for a year, this CNX 500 benchmarked has grabbed the attention of several investors lately. With a strong, diversified portfolio, the risk associated with this scheme is relatively moderate.

10> ICICI Prudential and other Services Fund
A strong market player from the ICICI fund house, this service-themed fund offers a double digit return of 61.2% for a year. Themed around the service industry, this fund shows consistency in returns, even during troubled times.

How Used Car Loans Work?

Buying a brand new car can prove to be costly deal. So, many people consider buying a pre-owned or used car. Prices of pre-owned cars are quite lower than their out-of-factory counterparts. Furthermore, used car is the best option to hone and sharpen your driving skills.

The prices of pre-owned cars vary according to their age, type, make and model. You may either pay for the car in cash or use a financing option like pre-owned car loan.

Borrowing a pre-owned car loan can be difficult and substantial amount of time and resources are spent to sanction it. Here is a clear-cut overview of how car loans work and what financiers consider before sanctioning a used car loan.

      1.      Age of the car plays a crucial role

The age of the car plays a crucial role in the loan sanctioning process. If the car is more than 15 years old, than borrowing options get ruled out. Similarly age of the car also decides the tenure of loan. For instance, if your prospect car is 2 years old, then you can easily get a loan for tenure of 5 years.

      

      2.      Model of the Car is a deciding factor

Principal amounts of pre-owned car loans vary according to the model and make of the car, along with its age. If the car model is still available in the market, then you will get a loan easily. However, if it has phased out, then financing becomes difficult.

     

      3.      Buying a car from established dealer aids the loan process

Established car dealers have organized process to take care of cars documentation. Proper documentation speeds up the loan sanctioning process.

     

      4.      Valuation of the car decides the nuances of the loan

On applying for a pre-owned car loan, banks and NBFCs like Magma send valuation experts to examine the car. Valuation is done on the basis of car model, manufacturing year, number of kilometers run, claims history, and the whereabouts of the car. Valuation and credit profile of the borrower determines the interest rate, loan value, and repayment options for used car loan.

Once valuation and loan estimation is complete, you have to submit important documents to the financier. Document processing and loan sanctioning takes around 8 to 10 working days.