E-Learning

Currency

  • Why do we need currency derivatives?

    Currency futures are needed if your business is influenced by fluctuations in currency exchange rates. If you are in India and are importing something, you have done the costing of your imports on the basis of a certain exchange rate between the Indian Rupee and the relevant foreign currency.

  • How do currency derivatives work?

    Currency Futures Exchanges. Unlike forex, wherein contracts are traded via currency brokers, currency futures are traded on exchanges that provide regulation in terms of centralized pricing and clearing. The market price for a currency futures contract will be relatively the same regardless of which broker is used.

MUTUAL FUND

Mutual funds collect money from investors and invest in various securities / debt instruments that meet the goals of the fund. Mutual fund investment is looked upon as a good tool to get good returns over the long term. Depending on the structure of the mutual fund, these can be categorized as open ended and close-ended funds.

Why Mutual funds are needed?

Mutual funds not only offers various features and benefits specially designed for investors but also are managed by an expert team of professionals who are well versed with the market. Some of the features are as under:-

  • Professionally Managed
  • Diversification of Risk
  • Systematic Investment Planning
  • Safe, Secure and Transparent
  • Low Cost with Higher Returns
  • Tax Benefits
  • Wealth Creation

Different objectives of Mutual Funds

The most common objective of investment is growth. The primary objective of any growth fund is capital appreciation over the medium to long term. Growth mutual funds are generally invested primarily in small to large cap stocks.

Fixed income funds are mutual funds which give you returns at fixed intervals – monthly, quarterly or half yearly. It depends on the performance of the fund as well. The objective here is higher return with minimum risk. Therefore, the funds are invested in debt funds for money market instruments which ensure regular income with minimal risk. These funds are ideal for senior citizens or investors who are risk averse.

A balanced fund is a mutual fund that contains a stock component, a bond component and may be money market component. These funds try to generate better returns than income funds but still because of exposure to equity there are some inherent risk.

How to Buy Mutual Funds?

You can buy Mutual funds through Farsight under the existing Client Account. No separate DP Account is required. From time to time Farsight uploads in its website the NAV of different schemes. It provides a peer comparison amongst various types of Mutual Funds like Equity, Debt, Money Market, Hybrid etc.

Farsight provides an online platform to subscribe or redeem mutual funds units. The back office is also online where investor can go through it at his own convenience.

For any query relating to Mutual Fund, please contact at mutualfund@farsightshares.com

How can one invest in mutual funds?

There are two preferred way of Investments:

  • Lump sum investment: This type of investment means investing in mutual fund all at once. This could be bonus, savings or returns received from any other type of investment.
  • Systematic investment plan: This type of investment means investment in mutual funds can be made on a regular basis, i.e. every quarter, every month or every week.
How can an investor share the growth of mutual funds?
  • Dividend payments: Mutual Funds particularly the Income Funds declared dividends on regular basis. This is tax free like company dividend.
  • Capital gains via increase in Net asset value: Mutual Fund particularly Growth Fund concentrate on rewarding the investors through capital appreciation which is reflected in their increased Net Asset Value. An income generated from the sale or redemption of the mutual fund units at a higher NAV than the cost is termed as capital gain. This again is tax free / low taxed subject to various conditions.
  • What is Net Asset Value (NAV): The net asset value is the value of a unit of a mutual fund. NAV is calculated on the basis of the total market value of the funds assets minus the total value of its liabilities divided by number of units. It is the price at which you buy, sell or redeem the unit of a scheme.

Types of Mutual Fund based on Asset Class

Primarily investing in stocks, they also go by the name Equity funds.

Mainly invest in a mix of debt or fixed income securities such as Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities of different time horizons.

A money market fund (also called a money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as Treasury bills and commercial paper.

A hybrid fund is an investment fund that is characterized by diversification among two or more asset classes. These funds typically invest in a mix of stocks and bonds. They may also be known as asset allocation funds.

Income funds are mutual funds, ETFs or any other type of fund that seek to generate an income stream for shareholders by investing in securities that offer dividends or interest payments.

Liquid funds are simply debt mutual funds that invest your money in very short-term market instruments such as treasury bills, government securities and call money that hold least amount of risk. These funds can invest in instruments up to a maturity of 91 days.

Aggressive Growth Fund. Aggressive Growth Fund is a type of mutual fund which is not risk-averse in its selection of investments and aims to achieve the highest capital gains. As an investor, an aggressive growth fund is best suited for those who are prepared to take on high-risk.

  • Is it a good time to invest in mutual funds?

    Investments may be started as early as possible. Waiting for the right time and delaying investing, may cost you those precious returns. Any day is the best time to invest in mutual funds. Remember to invest as per your financial goals and risk tolerance..

  • Are mutual funds safe?

    Though mutual fund is considered as a safe way of investing for return, the underlying fact is that none of the mutual funds are safe though degree of risk vary with the nature and objective of mutual funds and its mode of investment.

  • Is it good to invest in mutual funds?

    Mutual funds are often attractive to investors because they are widely diversified. Diversification helps to minimize risk to an investment. A few of the major fund types are bond funds, stock funds, balanced funds and index funds. Bond funds hold fixed-income securities as asset..

  • Is it the right time to invest in SIP?

    You should invest in equity mutual funds only if you have an investment horizon of five to seven years. They are ideal to meet your long-term financial goals. That is why many investors invest through Systematic Investment Plan (SIP) that allows investors make investments at regular intervals.

  • Choice between mutual funds or stock market?

    Stocks are riskier than mutual funds. By pooling a lot of stocks in a stock fund or bonds in a bond fund, mutual funds reduce the risk of investing. The trade off is that most mutual funds won’t increase as much as the best stock performers.

  • What are the risks of a mutual fund?

    The level of risk in a mutual fund depends on what it invests in. Stocks are generally riskier than bonds, so an equity fund tends to be riskier than a fixed income fund. Plus some specialty mutual funds focus on certain kinds of investments, such as emerging markets, to try to earn a higher return.

  • Whether some SIP eligible for 80c deduction?

    Yes, SIP investments in the ELSS qualify for a tax deduction under section 80C of the Income Tax Act, 1961.

  • How can I redeem my Mutual Fund?

    The proceeds from the redemption will be credited to the registered bank account.Such units can be redeemed onlinethrough a trading account or the AMCs website. You simply have to log in, select thefund and the number of units you wish to redeem and confirm your order.

  • How do I stop SIP?

    You can log into your mutual fund account online and choose ‘cancel SIP’. Your SIP will cancel within 30 days of the cancellation request. If you have invested through any online agent, you can cancel SIP through their portal..

  • Is SIP safe?

    SIP is generally marketed as a safe and sure route for investments in equities to create wealth over the long term. SIP is certainly safe for mutual funds and distributors because they get committed continuous money for the long term on which they can earn a fixed percentage of fees and commissions.

GENERAL INSURANCE

Insurance contracts that do not come under the ambit of life insurance are called general insurance. The different forms of general insurance are fire, marine, motor, accident and other miscellaneous non-life insurance.

  • Why do we need Health insurance cover?

    Health insurance, also called, medical insurance or simply medi claim, covers the cost of an individual’s medical and surgical expenses. The individual pays a fixed sum (premium), every year for the health cover.

  • What is Motor insurance?

    Insurance for the damage or theft of your motor vehicle, two-wheeler, three-wheeler or four-wheeler, is covered under this type of insurance. The damage caused to the vehicle can be caused natural or man-made circumstances, the extent of which would change from policy to policy..

  • What is Other Insurance?

    Personal accident policy
    Group Insurance policy
    Travel Insurance
    Marine insurance
    Commercial insurance

  • What is underwriting?

    The process of evaluating risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

  • What is an insurance valuation?

    An insurance valuation is a thorough assessment of the rebuild cost of the property In the event of any issue to the building, the insurance value could determine the potential pay out you receive from the insurer, it is for this reason that we recommend having an up to date valuation prepared every 3 years.

  • Does the insurance company disclose the investments made in each fund?

    The insurance company usually provides investment information at periodic intervals through news bulletins and other means.

  • Can I buy insurance for my children too?

    Yes, we do have a Unit Link Child plan..

  • Is insurance better than other savings plan?

    Other savings plans like Bank Fixed Deposits, NSC, PPF have short maturity tenures, compared to life insurance policies. (Eg.: NSC for 6 years, PPF for 15 years & life insurance can be up to 100 years).

  • What is the difference between traditional life insurance and unit-linked life insurance?

    The main difference is in the flexibility in the choice of investments. In the case of unit-linked life insurance, the insurance company would usually offer a choice of different funds (say, with a differential mix of bond and equity investments) in which the policyholder can opt to invest his/her contributions

    In the case of traditional life insurance, the policyholder is usually offered a guaranteed sum assured. In addition, non-guaranteed bonuses in the form of a share in the profits of the fund may also be offered depending on whether the policy is a participating policy or not. The premium amounts are usually fixed at the outset and the same quantum of premium needs to be paid throughout the term of the policy.

  • Why is it important to include health insurance in your financial planning?

    The role of insurance in your financial plan. Insurance is an important element of any sound financial plan. Different kinds of insurance help protect you and your loved ones in different ways against the cost of accidents, illness, disability, and death.

  • I have a physical disability, but I am economically independent. Will it disable me from getting life insurance coverage?

    A physical disability like polio or loss of any limb should not in any way exemplify you from getting life coverage. However depending on the severity of the disability there might be an increase in the premium charged..

  • What is Life Insurance?

    Life Insurance is a contract between you and a life insurance company, which provides your beneficiary with a pre-determined amount in case of your death during the contract term.

  • How many types of life insurance solution?

    There are two basic types of life insurance policies viz. Traditional Whole Life and Term Life Insurance.
    A whole life is a policy you pay till death of the policy holder and term life is a policy for a fixed amount of time.

    • Term Insurance
    • Unit linked insurance plan (ULIP)
    • Money back policy
    • Endowment plan
    • Whole life plan
  • What is Term Insurance?

    Term insurance is a life insurance product offered by an insurance company which offers financial coverage to the policy holder for a specific time period.

  • What is the Unit-Linked Insurance Plan (ULIP)?

    ULIP is a life insurance product, which provides risk cover for the policy holder along with investment options to invest in any number of qualified investments..

  • What is Money Back Policy?

    Money back plan is a life insurance product as well as an investment plan which provides life insurance cover against death of the policy holder along with periodic returns as a percentage of sum assured.

What type of Pension Plan available in India

Plan Type Features
Deferred Annuity Systematic premium or one lump sum premium over the tenure

Pension begins after completing the term

No taxation (unless you withdraw the corpus)

Immediate Annuity Only lumpsum investment allowed

Pension begins immediately after investment

Income Tax exempts tax on the premiums

The nominee can claim the pension or the corpus after the passing of policyholder

With Cover Pension Plan Comes with a ‘cover’ policy – policyholder’s dependents are entitled to a lump sum after he/she expires

The insurance amount is not large a most of the premium goes towards building the corpus

Life Annuity Pension paid till death

‘With spouse’ option – spouse continues to receive after the policyholder’s demise

National Pension Scheme (NPS) Launched and managed by the central government

Your money will be distributed in equity and debt markets as your preference.

Withdraw 60% when you retire, and the rest should be used to buy the annuity

The tax levied on the 20% of the corpus you withdraw upon maturity

Pension Funds Better returns once it matures

Regulated by the government body, Pension Fund Regulatory & Development Authority (PFRDA)

Currently, 6 fund houses in India are authorized to offer pension funds.

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