● If you are a new investor wondering where to begin your investment journey, let the Diwali bonus provide you with some inspiration.

● Use the Diwali bonus to begin a new SIP that can be tied to a specifi c fi nancial goal.

● You can use SIPs to meet short, medium-term or long-term goals.

● To meet short-term goals consider Debt Funds, Balanced Funds to meet medium-term goals and pure Equity Funds to meet long-term goals.

The thought of a Diwali bonus in your salary account brings a smile to your face. But if you are planning to blow it all up on the purchase of new gadget or something that gives you temporary gratifi cation this Diwali, hold on! You can use your Diwali bonus and strengthen your fi nancial future by investing in Mutual Funds.

Build a Contingency FundLife can be unpredictable and you never know when an unforeseen fi nancial emergency stares at you in the face. You can prepare yourself for such emergencies by building an emergency fund :● The emergency fund should take care

of 3-6 months of expenses.● Consider using your bonus

to invest in Liquid Funds.● Liquid Funds are low-risk

Debt-oriented Funds from an interest rate perspective.

● They invest in securities with a short maturity period.

● Units can be redeemed at your will within a day.

Begin a new Systematic Investment Plan (SIP) Do not want to invest the entire bonus as a lump sum

as you have earmarked a portion of it towards an important purchase? Well then, consider beginning a fresh SIP with the remaining amount.

For more details, follow us on Twitter @utimutualfund; Email queries or suggestions: info@beswatantra.com Please mention ‘Swatantra in HT’ in subject line. For more such fi nancial advice, head to our website: http://www.utiswatantra.com

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A reader asked us: What are some of the fi nancial lessons that you can learn from Diwali?

HERE’S WHAT THE EXPERT SAID

Everybody likes to add variety to their Diwali celebrations with different sweets, fi recrackers, clothes etc. Similarly, diversifi cation in your portfolio will let you enjoy different benefi ts that entail different fi nancial instruments. Doing this also reduces

the amount of risk within a portfolio. A balanced portfolio will hold investments with varying risk levels, cutting the overall risk level of similar investments held together.

It is often seen that consumers ignore critical decisions when planning their fi nances. The cost of not taking correct decisions is high and, sooner or later, will impact their future for a long time. Make plans wisely and make this Diwali more fruitful.

EXPERT SPEAK

A. K. Parthibarajan

IFA

GURUSPEAKHow can I be ready for emergencies?

(Importance of investments)?

Building a good emergency corpus fund is a pre-requisite that should come before investing for the long term. Once you are done with building this corpus, you would be able to divert your savings to do SIP

investments in wealth-building portfolios. For those who are intending to build a contingency fund must ensure that their contingency fund should be separate from your existing bank accounts. This would help in curbing the urge to utilise you contingency money. Don’t keep all the money in a savings account. You could also consider a fl exi-deposit that banks offer. Also, consider parking a portion of it in a liquid or short-term debt fund.

Mari PIFA

A reader asked us: I want to invest in gold. How can Mutual Funds help?

HERE’S WHAT THE EXPERT SAID

One needs to consider the additional cost, for example storage cost, while buying physical gold from an investment perspective. Investors in India typically purchase gold in physical form, which along with real estate forms a big portion of the country’s household savings. This

savings dynamic is now changing where investors are also considering options such as gold exchange traded funds, gold fund of funds and sovereign gold bonds other than physical gold. Gold ETFs can be easily held in a dematerialized form. This, in turn, helps in saving on the storage cost and also avoid security risk. Being listed on an exchange, their pricing is transparent and their purity is guaranteed by the asset management company.

EXPERT SPEAK

RM AnnamalaiIFA

GURUSPEAKIs Diwali a good time to start investing?

Diwali is perhaps the most important festival celebrated by Hindus all around the world. The theme, Victory Of Light Over Dark is associated with the festival. Given its auspiciousness, the NSE opens the stock market for an hour on this day, which is

referred to as "Muhurat Trading". It is believed that trading on this day brings wealth and prosperity. The past performance of the market shows that Diwali does have a signifi cant effect on returns and volume of trade in the stock market.

This Diwali gives a big opportunity to investors because several stocks are undervalued. As market sentiment turns weak, the opportunistic investor who has stayed away from the market all this while may fi nd attractive opportunities.

Arjun McIFA

THIS DIWALI BURST THESE

MUTUAL FUND

MYTHS

TRUTH A lower NAV means that a Fund is cheap is a misconception. The NAV of a Fund increases or decreases on the price of its underlying assets (Equity, Debt or both). When you decorate your home for Diwali, you do not go only by the price tags, you check the quality and assess whether such accessories match the décor of your home. A similar approach should be taken while selecting Funds.

● The NAV of a Fund decreases with the rise or fall of the securities held in its portfolio.

● A newer Fund has a lower NAV vis-à-vis an older Fund because it had a shorter time to grow.

● Instead of using NAV as a parameter for Fund selection, look at other factors such as past performance record, comparative performance with peers, the benchmark index and Fund House pedigree.

It is that time of the year when lights dispel the darkness. As you prepare to celebrate Diwali, you are thinking of fi recrackers, burning lamps and fragrances of savouries. Of these, we all can agree that bursting crackers is a very fun Diwali activity.

TRUTH It is commonly believed that MFs are only long-term investments. This is true only if you tie your investment to an Equity MF to meet a long-term goal. Just like you do not need to prepare all year long for Diwali celebrations, and can get started a few days ahead, so long as you plan right, you can meet your short-term

goals too by selecting the right kind of Funds.

● Equity MFs work best for long-term goals as Equities provide the best

infl ation-adjusted returns over a long period.

● You can use Debt-oriented Funds that

invest in Fixed Income Securities

with varying maturities to meet short-term goals.

● You can invest in Funds such as Liquid Funds, Short-term Debt Funds and Ultra Short-term Funds to meet goals that range from

a few weeks to a year.

MYTHMutual Funds

(MFs) invest only in the Stock

Market

MYTHYou can only invest in MFs for the long-term

MYTHMFs are

only for the rich

TRUTH Just as Diwali can be celebrated by one and all within their means, MFs are for everyone as well.

● You do not need to have a lot of money to begin investing in MFs.

● You can begin investing with only ` 500 per month through the Systematic Investment Plan (SIP) route.

● You can fi nd a Fund that can meet your specifi c needs like Tax saving or saving for a long-term goal.

● You can increase the SIP amount as your salary increases.

HERE’S HOW YOU CAN BEST USE YOUR DIWALI BONUS

SWATANTRA KUMAR EXPLAINSPROSPECT THEORY

Prospect theory shows that as long as prospects are in the positive domain, investors choose certainty over the chances of a larger gain. On the other hand, when prospects turn negative, investors prefer the probability of larger losses over the certainty of smaller ones. This is because the emotional impact of a perceived loss is greater than the happiness of an equivalent future gain.

This explains why most people in India

prefer the certainty of physical Gold over future returns on fi nancial assets.

Diversify your risk by investing across asset classes. Rather than concentrating your portfolio on assets like real

estate and gold, you could look at fi nancial

assets. If your goal is to achieve an annual return on

your investment above the infl ation rate, construct your portfolio in a manner that you maintain an adequate balance across asset classes.

A bird in hand is worth two in the bush. You have often heard someone wise in the family say that.

What next? Make

the best use of Mutual Funds to invest your Diwali bonus

TRUTH Diwali doesn’t just mean bursting of crackers. There are many more activities to enjoy such as lighting diyas, making rangoli, spreading happiness among the less privileged, and worshipping Goddess Laxmi. Similarly, there is more to MFs than just investing in Stock Markets or Equities.

● MFs invest in various avenues like Equity, Debt, Fixed Income and even Gold.

● There is a wide range of Funds that purely invest in the above-mentioned categories and there are hybrids that invest in a combination of Equity and Debt in varying proportions.

● You can choose a Fund that matches your specifi c fi nancial goal, risk appetite, and investment time.

Secure your future with an STP You can use your bonus as a lump sum to invest in a Liquid Fund and thereafter begin an STP or a Systematic Transfer Plan. Here is how it helps.● With an STP, you can transfer a specifi c sum of

your money on a monthly basis from a Liquid Fund into an Equity Fund of

your choice.● By doing so, you effectively

avoid the risk of timing the market.● The Equity Fund can then be tied to a long-term goal such as building a higher education fund for your kids or

meeting retirement goals.

SIP CAN ILLUMINATE YOUR FINANCIAL LIFE.

It's never too late to ensure a bright fi nancial life

- Start today!

TRUTH

THIS YEAR, WE

SUGGEST BURSTING CERTAIN MYTHS

THAT STAND IN YOUR PATH OF WEALTH

CREATION.

MYTHLow Net Asset Value (NAV) = Cheap fund

For more on fi nancial independence for children, tune into UTI Swatantra Facebook Live on 14th November, 2018 from 5:00 pm onwards and catch the live show on 'Let your children and their SIPs grow together'.

In the next edition: The best gift that you can give your child is a fi nancially secure life. In the upcoming edition, let's look at interesting ways of making your child fi nancially independent.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

This Diwali, gift yourself a fi nancially secure future. How? Wait for our edition on World Savings Day on 30th October, 2018. We have some interesting saving and investing tips for you.

For more on this topic, you can watch our enlightening live show. SIP it up this World Savings Day

with our experts, only on UTI Swatantra Facebook Live on 30th October, 2018 from 5:00 pm onwards.

WORLD SAVINGS

DAY SPECIAL EDITION

*� is content was created exclusively for UTI Swatantra. Visit http://www.utiswatantra.com for more information

*� is content was created exclusively for UTI Swatantra. Visit http://www.utiswatantra.com for more information

*� is content was created exclusively for UTI Swatantra. Visit http://www.utiswatantra.com for more information