Are Mutual Funds better than PMS

A mutual fund is an investment vehicle consisting of a portfolio of stocks, bonds, etc by a professional fund manager. The money is collected from the investors and is invested collectively by the professional fund manager.

Are Mutual Funds better than PMS

Portfolio Management Service (PMS) offers professional management of investment to deliver high-risk adjusted returns. Qualified fund managers manage investors’ money by investing it in a portfolio of investment assets like stocks, bonds, fixed-income securities, etc for a fee.

These are pretty similar, but here are some differences between them-

• A mutual fund is a pool of funds whereas a PMS is a portfolio designed for you in your demat account.

• The minimum investment amount in the case of a mutual fund is as low as Rs 500 whereas a PMS requires a minimum of Rs 50 lakhs.

• Equity Mutual funds have to invest up to 65 % in equity of the market condition. Whereas PMS are flexible with their investments and can increase or decrease their allocation to equity based on market conditions and investor requirements.

• PMS focuses on performance and can make investment decisions such that the absolute returns are maximized. A PMS can have a concentrated portfolio whereas MFs portfolios are more diversified.

• PMS is required to make timely disclosures to the clients, whereas in the case of MFs they are strictly regulated and all the information is in the public domain including the portfolio.

• Investing in mutual funds is easy. If the investor’s KYC is complete, investment can happen right away. Whereas PMS documentation takes 15-20 days to complete and then only investments can be made.

An investor must choose PMS only when the set of mutual funds is not able to provide the same exposure. Usually, a portfolio size of Rs 2-3 crore will let an investor allocate Rs 50 lacs in a PMS.

Tax Saving using SIPs

While Systematic Investment Plans (SIPs) have an array of benefits, one of their main advantages includes the possibility of tax saving, under the Indian Income Tax Laws. In the new year, most people look for tax-saving SIP as it helps to accumulate wealth while also reducing tax outflow.

Tax Saving using SIPs

SIPs are considered a good tax-saving investment especially when one needs to save a part of their income from taxes. With SIP, you can save on your taxes and also get higher returns on your investment.

Under Sec.80(c) of the Income Tax Act, 1961, investing in equity-linked savings schemes through SIP enables one to claim a deduction of Rs 1.5 lakh from the taxable income. SIPs also help to plan monthly cash effectively.

How to save via SIP in ELSS

To uplift more participation and long-term equity investment, the Government of India formed this tax-deductible category of mutual funds. Along with tax saving schemes, these ELSS funds also help in long-term capital appreciation; thereby making this the most preferred option for tax saving as well as investment.

One can take the SIP route to invest in ELSS which can help to benefit from rupee cost averaging on a longer horizon.

Start Tax Planning Early

It is always better to start your investment as early as possible in a financial year rather than waiting till the end of the financial year and doing a lump sum investment.

In this way, you can avoid any last-moment fanatic investment and also accumulate higher capital on your investment. Through the electronic clearing service (ECS) mandate, the SIP amount will be directly deducted from the bank account.

Conclusion

These are a few SIPs tax benefits that you need to know. In Other cases, one can also invest in SIP notwithstanding the market volatility. While choosing a SIP scheme, it’s advised to be clear about financial goals, so that along with your SIP income tax benefit you can achieve your desired returns.

Invest in Mutual Funds in your 40s

It’s never too late to plan for the future, and if you are in your 40s then probably you have achieved a lot but you still have time to plan your retirement.

Invest in Mutual Funds in your 40s

Here are some points that would work well for you at this age:

• You still have some time, if your job/business is bothering you gif with added responsibility it is adding pressure then, review your finances and think about what you want to survey for the rest of your life.

• Think about retirement, if you have not given it a thought yet, now is the time. It’s not that far anymore. Plan it well so that you can enjoy it later then.

• Be prepared for sudden medical expenses, and don’t ignore your health assuming you will never fall sick. Because with age the chances of experiencing medical issues rise as well, hence plan for it well.

• Invest as per your goal/needs, do not blindly follow your best-friend investment strategy, as his needs would differ from yours. Invest in assets as per your goals and risk appetite.

Understand and choose your fund –

1. Short-term goals (1 month – 12 months)

2. Medium-term goals (12 months – 5 years)

3. Long-term goals (above 5 years)

At the age of 40s, you should be settled into your long-term career, instead of just working at your job. You should also preferably have the sufficient financial security to take care of your family goals and also indulge your loved ones and yourself.

Although you must start your savings and investment journey as soon as possible, it’s more important to at least start investing. With the best asset allocation strategies, you can surely be able to enjoy better capital appreciation of your investments.