A balanced mutual fund is a fund that invests in both equity and debt, and within equity it invests in large cap, mid cap, and small cap shares as well. These type of funds are meant to diversify away a little of your equity risk by exposure to debt, while maintaining decent returns as well.
In this post I look at some good balanced funds present in the Indian space, and the way I’ve gone about making this list is to select mutual funds that have been around for at least 5 years or longer, and have performed near the top of their category in that period.
Like the post on best ELSS mutual funds – this one is not in any particular order of returns, but I thought I’d order it according to expenses, and that’s only for my own ease while preparing it.
It doesn’t mean the first one is the best, and the last one worst – there’s really no way to tell (as far as I know) what fund is going to perform the best in the next few years, and in absence of that you have to narrow down your options and then choose what appears the best to you.
With that said, here is the list of some of the best – balanced mutual funds in India.
NRE (Non Resident External) and NRO (Non Resident Ordinary) are two types of accounts that NRIs (Non Resident Indians) can open if they need a way to transfer money, open a fixed deposit, or buy mutual funds, and stocks in India.
What follows is a sequence of events that will take place, and some pointers that you might find useful while getting a NRE or NRO account.
How to open a NRE or NRO Account?
1. Contact the Bank
There are usually two ways of getting in touch with a bank: either have them call you, or you call their helpline.
Banks like HDFC and HSBC have this option where you can fill up a contact form and then their representative calls you. Whereas SBI lists out its call center numbers for various countries and you can call them to discuss opening an NRE / NRO account.
The first step is to talk to a bank representative because once you talk to the rep – he will inquire which account you need to open, whether it’s joint or single account, and accordingly tell you what documents you need to open the account, and email you the forms as well.
2. Book an appointment to fill the form
Don’t be daunted if you see a big 10 page attachment in your email. The paperwork is not as intimidating as it looks. It will take about 20 minutes to fill up, and can’t be done on your own, but it’s not all that bad.
Because you need help to fill up the form – the bank rep will book an appointment with you (usually telephonic) to go over the forms and walk you through them.
You will have to print them ahead of time and you can fill the easier sections yourself. Leave anything you’re not sure of because there are a lot of things there that aren’t very intuitive. For instance at one point you will encounter a question asking you if you’re politically exposed, and you’ll be tempted to say hell yeah – I’ve been  exposed so bad I’m radioactive. While that may be true, it’s not what they’re asking. So, don’t try to fill the entire form without their help.
Oh, and keep a black pen handy; filling up tons of information while on the phone is a pain in itself – you don’t want to make it worse by having to hunt for black pens!
There are a lot of parts that they will just ask you to skip over or leave empty, so it’s really not as bad as it looks.
3. Get the documents ready
They will ask for documents based on your country of residence and what type of account you’re opening but here are some common ones that you should be ready with.
Copy of first and last page of passport
Copy of the visa page on your passport
Two residence proofs – this can be things like your driver’s license, phone or utility bills, bank statements, pay – stubs etc.
The filled up account opening forms.
Passport photograph.
On their website – some banks have asked for these to be notarized, but in reality they don’t always need that. Self – attested documents also do, which is nothing more than signing on every document yourself.
4. Write a check in USD or your currency
You will need to write a check in order to open the account, and this can be done in USD or a few other foreign currencies. They will tell you if you can give the check in the currency of your country, or the alternative if that’s not possible.
5. Mail it to the PO Box or India Address
In some cases the banks will have a PO Box in your country of residence where you can send the documents instead of sending it to India.
However, before you decide to mail the documents to the PO Box check with them to see if there is a difference in processing time if the documents are sent to a PO Box instead of the India address.
These documents are generally processed in India, and sending your documents to a PO box may add to a delay of as much as 15 – 20 days, so before you decide where to send the documents it’s better to check with them on what they advise, and what the difference in cost is.
The bank rep will follow up with you and its a good idea to email him letting him know that you’ve mailed the documents so they can keep a track of when they receive it, and help in processing.
The one thing that’s missing from this post is recommendation on where to open an account, and that’s because I have no answer to that and nor do I have a reasonable way to compare one bank with another. You can choose one with which you’ve had good experience in the past and I’m afraid I don’t have much more input on that.
I’m really keen to hear on your experience with opening an NRE or NRO account so please do share that in comments, and of course all questions and other observations are welcome.
One of the most frequent questions on the NPS post is how one can open a NPS account, and though things have improved in the past few months – most of the times opening a NPS account is not as easy as it should be.
I tried to look at the various ways you can open a NPS account, and thought I’d make a list of NPS account opening options I’m aware of. In doing this research I found that there is reasonably good information about where you can go to open an account, but it’s just that it’s not very well known.
For instance, on the PFRDA website – you can see the number of PoP-SP (Point of Presence Service Providers) (pdf) and it’s quite clear that SBI with 3,820 registered branches is quite clearly in the lead, followed by Alankit Assignments with 890 branches, India Post NPS Nodal Office with 807 branches and State Bank of Hyderabad with 714 branches.
This is an interesting stat, and the PDF itself has got a list of number of all PoPs, and gives an approximate idea of where you’re more likely get someone who can open an account for you.
With that said let’s take a look at the various options to open a NPS account.
Open a NPS Account with ICICI DIRECT
This is probably the easiest way to open a NPS account because if you have a ICICI DIRECT account, then you can log into your account and open a NPS account without any additional documentation. They don’t currently have the facility to open a Tier II account, but say that it will be introduced shortly.
I don’t know of any other online broker other than ICICI at this point in time that’s offering this service.
Open a NPS account through CAMS Online
CAMS is another registered PoP-SP that allows you to fill up the form online and enter information to open a NPS account.
This info was left by Dr. Shetti in a comment, and I’m not familiar with how the entire process looks like, so before you start entering the details there I suggest giving them a call and find out more.
Point of Presence(POP) Computer Age Management Services Pvt. Ltd.
PFRDA Unit
Rayala Towers, 158, Anna Salai
Chennai – 600 002.
Phone : 044 – 30212 636 / 662 / 678 / 789 / 808 / 900 / 987 / 989
Fax : 044 – 2841 1893
Email :[email protected]
If someone has first hand experience with this then please do leave a comment.
Go to a bank branch that’s a registered NPS PoP-SP
This is going to be the way most people open a NPS account – going to a bank branch and opening one. The trouble is that a lot of people find that when they go to the bank – the employees don’t even know what NPS is!
The PFRDA website has this excel sheet which has a list of all branches along with address and phone numbers where you can open a NPS account. So, if you’re in Gurgaon – you can just search for that in this file and it will show you the branch that’s present near you.
If you don’t have an ICICI Direct account and are interested in opening a NPS account, then this file should prove to be a good starting point for you as it will tell you where you can go and find some people who actually know what NPS is.
In due time – the number of branches will increase, and it will become easier to open an account, but till then some of you might have to struggle a little bit with this.
In my last post about how much insurance you need – I wrote about my thoughts on how you could go about calculating your life insurance needs, and both Sumant and Hema brought out a significant limitation with the way I went about the calculation.
I was taking into account the annual expenses, expected rate of return from investment and liquid assets, but ignored liabilities completely. For someone who has taken a home loan for 15 lacs that their spouse or parent will be responsible for – that’s a pretty big miss.
Thanks to both of you for pointing that out, and I thought I’d try my hand at making a small little life insurance calculator that will take into account all these things, and then calculate a number for you.
You will need to input the annual expenses that your family will incur, input the liabilities that they will have to pay off, enter a rate at which you expect them to invest this money like 8% if you’re thinking bank FDs, enter assets that they can en-cash, and this calculator will then calculate an apt cover for you.
The way this works is that it will take the annual expense, and use the expected rate of return to see how much capital you should have to generate that much money annually. Then it will add the liability number to that, and subtract the asset number from it.
Here is the calculator – play with it and let me know what you think.
Annual Expense
Outstanding Loan
Expected Return in %
Liquid Assets
Insurance Needed
As always – feedback from you smart people is welcome, and thanks to Sumant and Hema again!
This is another post from the Suggest a Topic page, and this time we’re going to take a look at the recently launched MOSt Shares NASDAQ 100 ETF from Motilal Oswal.
The MOSt NASDAQ 100 ETF plans to track the NASDAQ 100 Index (NDX) of course, and this isn’t a fund of funds, which means that it will look to invest in the underlying stocks directly, and you won’t have to incur double fees.
The few other international funds I’ve seen so far are fund of funds which means double fees for investors as they bear the fee of the fund, and then the underlying fund as well.
While the SID (Scheme Information Document) does state this ETF can invest in other NDX based ETFs, it appears to me that for the most part the intention is to directly invest in the underlying stocks, and that’s a good thing.
The expense ratio of MOSt NASDAQ 100 ETF is 1% of recurring expenses, and that’s among the lower ones charged in the Indian ETF space, which is a good thing as well.
Having looked at the basic things, let me now explore 3 factors that are not easily apparent when you’re looking at this ETF, but are something that you should be familiar with.
The NASDAQ 100 Index
The first thing to do is to get familiar with the index itself. In this case the NASDAQ 100 Index, which comprises of 100 of the largest companies listed on NASDAQ based on market capitalization. Â These are primarily technology companies, but there are other companies like Vodafone, Whole Foods, Wynn Resorts in the index as well. The complete list can be found at the bottom of this post which I’ve taken from the SID itself.
Apple is by far the biggest constituent of this index with about  20.65% weight, and QUALCOMM is the second largest constituent with 5.03% weight.
Here is a pie chart that shows the top constituents along with their respective weights and you can see that the top 12 stocks make 50% of the index.
NASDAQ 100 Components
So, if I were to invest in this index I’d have to have a good feeling about the US technology market in general and these stocks in particular – at least about Apple.
Exchange Rate Movements
Since this ETF will raise money in INR and then invest it in USD – that exposes it to exchange rate fluctuations, and this is something you need to keep in mind or it might surprise you later.
From the risk factors in the SID:
As the Scheme will invest in securities which are denominated in foreign currencies, fluctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the Fund.
To understand this think of a situation where this ETF didn’t exist and you wanted to invest Rs. 90,000 in the NASDAQ 100 Index.
You’d give this money to your cousin in US and ask him to invest it on your behalf. The current exchange rate is about 45 rupees to a dollar, so this will amount to approximately $2,000 with which your cousin buys the ETF.
Let’s suppose the market stagnates for a year, and the NASDAQ 100 doesn’t move at all. Your patience runs up, and you ask your cousin to sell the holding and send you the money.
Your cousin sells the holding and gets the $2000 back, but the exchange rate has now moved to 1 USD = 40 INR, so that $2000 only translates to Rs. 80,000.
So even though the index didn’t move at all you made a loss due to exchange rate movement. The reverse is also true and if the exchange rate moves to 1 USD = 50 INR you will stand to gain.
This will be true for any international ETF and is more of a feature than a bug. Just be cognizant of this factor when investing in the MOSt NASDAQ ETF.
Taxation
This ETF is treated as a scheme other than an equity oriented fund for taxation purpose, and that’s probably a drawback given that equity funds are treated more favorably for tax purposes, and your investment really is equity investment.
Conclusion
This is an interesting product, and the people I’ve spoken to who’re interested in this product were primarily looking to diversify their equity holdings a little bit by investing in the equity of a developed market. If that’s your goal with it then I suggest that you also enable foreign trading on your equity account and see what options you have there. I’m not very well familiar with that option, but it does exist. If you were inclined to take a position on US technology stocks then of course this is a fit for you.
As always – I won’t make any recommendations on whether you should buy it or not, but if you had any other questions or observations please leave a comment.
Today I’m going to share the claim settlement ratio of all 23 life insurance companies in India for the December 2010 quarter. Rejections are simply claims that the insurance company has refused to pay, and lower the rejection – better it is for you.
This is very interesting data, and the one thing that jumps out at you is the low rejections by LIC.
Here is the first chart which shows the percentage of claims rejected by all the insurance companies for the December 2010 quarter. (Exceptions in time period are noted in the last table which has the raw data.)
Rejected as a percentage of new and outstanding
(click for larger image)
Now, when I looked at this two questions came to my mind:
1. How much difference does the relative volume make to these numbers?
2. Are these numbers skewed because of the 2 year rule?
Let’s think about the question of relative volume first. The new plus outstanding claims of Religare was 47 for that period, so even if they rejected 2 claims that would be a rejection rate of close to 5%; that they rejected 20 doesn’t exactly inspire confidence, but you can easily see why this number can’t be compared with LIC which has about 2.3 lac policies for that period.
The 2 year rule is that insurance companies can’t reject policies that are older than 2 years unless they can prove fraud. Loney – who is easily the most prolific commenter here has dug up the relevant act as well, and here is how it quotes:
Section 45 of Insurance Act, 1938 states: In accordance with Section 45 of Insurance Act, 1938, no policy of life insurance shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal of insurance or any report of a medical officer, or a referee, or a friend of the insured, or in any other document leading to the
issue of the policy, was inaccurate or false, unless the insurer shows that such statements was on material factor or suppressed facts which it was material to disclose and that it was fraudulently made by the policyholder and that the policyholder knew at the time of making that the statement was false or that it suppressed facts which it was material to disclose.
So, are these rejections influenced by the fact that some insurers have been around for much longer, Â and most of their claims are from policies that are older than 2 years.
So, let’s look at the data only for rejected claims that are less than 2 years old across life insurers.
Rejected Claims less than 2 years as a percentage of new and outstanding
The numbers don’t seem to change much, and finally let’s take a look at the ratio of claim rejections between claims that are more than 2 years old and less than 2 years old.
Proportion of Rejected Claims
As expected, the claims that are less than 2 years old are rejected more often than claims that are older than 2 years, and obviously that will weigh on some of the newer insurers.
However, no matter what way I look at it LIC’s low claim rejections jump out at me. That they are expensive when compared with others makes the choice of a term plan difficult, but this is certainly something worth keeping in mind – especially for people who smoke socially or have minor health problems that can later become a cause for denial of your claim if not declared properly.
I’m enclosing the raw data in this table below, so you can use it if you want, and the sources are the same as mentioned in my earlier post, so I’m not pasting those ugly links again.
There is this thing I keep hearing that Sachin’s centuries are not all that lucky for India, and we generally lose when he scores them.
A lot of people have this impression, and I thought I’d dig deeper and figure out if there’s anything behind this.
The data that I found surprised me quite a bit.
Sachin’s centuries only result in about 69% wins for India whereas Sehwag’s 14 centuries have led to 13 wins!
Similarly the winning percentage for Ponting, Jayasuriya and Ganguly who have scored many more than Sehwag is much higher as well.
Looking at all the data – I see that there is a simple explanation, but I won’t spoil the fun for you and let you enjoy this little graphic with a lot of other interesting stats as well.
So, you see – it just happens that Sachin has scored more of his centuries against tougher opponents, and while his centuries have in general markedly improved India’s winning chances; those chances were so low to begin with that it gives a semblance that India doesn’t win as often as it should.
I want to buy gold for my sisters marriage which will be in december 2012.
So i am planning to buy gold(in solid form) for making jewellery for her wedding.
Please let me know which month is the best to buy gold in solid form.
Before I could get to the answer – Niraj Kothari replied to it in a very comprehensive manner, and I think his response has some good insight for people who are planning to purchase gold in the near future for a wedding or some other occasion, so I’m bumping it up to a full post.
Even if you’re not planning to buy gold – this is a good thing to be aware of.
Dear Amit,
First of all, it is highly unpredictable to say in which month the gold rate will be lesser/ optimal so that you can buy buy pure gold .
I suggest you the below options by which I hope that you can take advantage of current high gold rate fluctuations and also get some benefit from jewellers schemes
1. You can go with monthly savings scheme / monthly fixed amount investment scheme with reputed jewellers in your city, the advantages of such type of schemes are
a. These monthly fixed amount investment schemes give you a bonus amount at the end of the    scheme.
Ex: Deposit Rs.5000 / month for 13 months and get a bonus of Rs.5000 at the end of 14th month , so you will be benefitted to buy gold worth Rs.70000/- though you have deposited Rs.65000/- in total for 13 months.
b. These schemes have some discount on the making charges*
* The discount should be taken in written on the day when you start the scheme.
c. Usually the gold price is taken on the final day on which you purchase the jewellery.
d. Make sure that whether the jeweller is offering the bonus only on purchase of gold jewellery or also on purchase of on gold bullion( 24kt gold ).
e. The jewellery which you purchase should be all BIS 916 hallmarked on every product.
Ex: If you buy a 6 piece bangle set, EACH BANGLE should be 916 BIS hallmarked for 22kt gold and 958 Bis hallmarked for 23kt Gold.
2. You must have decided how many grams of gold jewellery you are planning to buy for your sisters marriage, so for Example , If I assume it to be 200 grams and you 20 more months in hand.
So, you can buy just 10.000 grams 24kt pure gold of 99.50 purity or above every month on a fixed date , this way you will make an average price at which you buy gold and also it won’t overload your investment portfolio/monthly budget.
At the end of Nov.2012 you will accumulate 200.00 grams of 24kt gold, now when you go to a jeweller to exchange this 22kt gold jewellery , make sure of the below mentioned points.
a. Your 24kt gold should be converted in cash at that day’s prevailing 24kt gold purchase rate of the jeweller.( Rs.100 – Rs.300 / 10 grams is difference between sale and purchase price of 24kt gold at reputed jewellers )
b. You pay ornament rate + making charges to the jeweller for the jewellery you purchase , in this total amount your 24kt gold total value should be deducted.
c. Again make sure you buy in Bill/ and all the jewellery is 916 BIS hallmarked.
Hope the above information is useful to you…
I think there is value in exploring this option not so much because of the math of it but because of the psychological benefit of setting aside a certain sum every month for a very specific purpose with a jeweler. If you decide to get into a scheme with a jeweler where you invest a sum regularly to get a bonus at the end, then make sure to compare that with at least a bank recurring deposit, and see that it’s not too far off.
Be it stocks or other assets – regular investing is likely to trump timing the market as far as the retail investor is concerned.
Finally – thank you to Niraj for sharing his experience with everyone.
Ranjan Varma has started Rupee Camp which is a personal finance workshop meant to be a structured program to provide people with money skills. I’ve obviously not attended this so I don’t know how good it is but I do like Ranjan’s blog, so I thought I’d let OneMint readers know about his initiative. The workshop will be held in Mumbai and the cost is Rs. 3,000. If you are interested in this kind of thing then head over to his blog and check it out.
From what I can understand the reasons for abstaining is that information coming out of Libya is not credible, and there isn’t enough clarity on who will do what once the resolution is carried out.
RBI raised the repo and reverse repo by 25 basis points or 0.25% this week, and their guidance indicates that more hikes can be expected in the future. Earlier this week I tweeted out that Repo is the rate at which liquidity is injected and reverse repo is the rate at which it is absorbed by the RBI, and that might be a short and useful thing to remember as these terms are used more frequently in the future.
As I’ve said earlier – I’m trying to create a directory of financial services providers here, and today I’m going to post a profile of another financial adviser – Shiv.
He has been pretty active on the infrastructure bond posts and has been answering questions clearly and honestly, so I invited him to create a profile here.
The post below is in his own words:
Hi my name is Shiv. I am an Independent Financial Advisor and the Proprietor of a Financial Planning & Investment Services firm, Ojas Capital. I’m going to list out my services on this page, and you can use the comments section to ask me any questions that you may have about any of the current Infrastructure Bonds issues or anything else.
