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How will I fund my children’s higher education?Saving for your children's higher education is high in your investment priority.The easiest thing to do, and what most of you may end up doing is dig intoyour retirement savings such as your Employee Provident Fund (EPF) topay for it. That is not a good idea. Saving for your golden years should remaina top priority for you to lead a life of peace and dignity. What do you do?

First, save for your children’s education and your retirement concurrently.You cannot fulfil one, and then move on to the other. It will be too late, andtoo less a period for you to save sufficiently.

Second, clearly delineate your children’s education portfolio and yours, anddiscipline yourself not to dig into your retirement portfolio when you aretempted to.

Third, if you aspire big for your children, then you’ve got to go that extramile in terms of choosing smart asset classes. A deposit in your kid’s name,or a Public Provident Fund (PPF), or if it is a girl child, the new-foundSukanya Samriddhi - all these do not fit in as ‘smart products’.

If you do not have equities as a part of your children’s portfolio, you aremost likely going to land in trouble. Check out any Recurring Deposits (RD)calculator. You will find that you will not get to your goal unless you savelarge sums of money.

That means cutting down your retirement savings is an imprudent thing todo. The more prudent thing would be to add equities as a part of yourchildren’s education portfolio.

Fourth, if you aspire big, start investing early. That will not only help youcompound your investment, but more importantly, it will give you sufficienttime to take risks, i.e., to invest in equities and benefit from it.

But what if you still fall short of funds for your children’s education? Thereare enough loan options for higher education that your child can go for, andrepay without much trouble once he/she lands a job. Of course, one note ofcaution: it would not be a good idea to take the loan on your name (while youare probably in your late 40s or 50s) instead of your child's name.

It is fine to be attached to your children; however, it is prudent to detachyourself a bit when it comes to their financial needs.

Vidya BalaHead – Mutual Fund Research

FundsIndia.com

July 2015 � Volume 05 � 07

A month to rememberGreetings fromFundsIndia!

June was a goodmonth for

FundsIndia.com. We successfullycompleted our third round offunding by raising Rs. 70 crore, ledby Faering Capital, withparticipation from Inventus andFoundation Capital, our existinginvestors.

We celebrated the sixth anniversaryof the launch of FundsIndia.comwith all our employees too! In2009, we had held a press meet ina small conference room inChennai, and we were able togarner modest coverage of theevent. This year, on the same day,we held a press conference inMumbai to announce our funding,and our growth plans. It wasattended by leading journalistsfrom all national dailies, and thenews was carried in all major dailiesaround the country and online.

To cap it off, towards the end ofthe month, we received theCNBC-UTI National Award forBest Online Advisory for thesecond year in a row. This is themoment where we look back withpride, and look forward with hopeand confidence. Thanks for being apart of this wonderful journey.

Happy investing!

Srikanth MeenakshiCo-Founder & COOFundsIndia.com

The Equity Fund Playbook for Rookie Investors

It’s a ‘long-only’ game:While mutual funds are not justabout equity funds, you need equities to generate wealthin the long term. If you decide to invest in equity funds,long is the only way. Else, it is best to stay away. Everytime you feel confident that you can invest in mutual fundsfor a year, think of a year such as 2008 when the marketsdeclined by much more than 50 per cent.

That means you would have lost half your money and notrecouped it at all (because you came in with a one-yeartime frame). To add to it, you would probably shun thisefficient wealth-building product forever simply becauseyou had a wrong time frame for it. There are multiple fundcategories in debt to suit your short-term needs. Go forthem if you need money in the near term.

Stay invested: An elementary point, but not many seemto get it, going by the investment behaviour of manyinvestors who do not hold their equity funds for even sixmonths. Believe me, you cannot exit a fund even for poorperformance in that short frame of time!

Added to it, the market fluctuations can easily force youto exit your fund, or stop your Systematic InvestmentPlans (SIPs), making you take decisions in fear. Avoid thefear (when the equity market declines), or the temptation(when the equity market rises) to exit unless you have usefor the money. The best you can do is not to watch yourfund’s movements daily. It is the biggest favour you can dofor your own self.

Often times, we are so obsessed with returns (and not theactual value of money) that we lose sight of the wealthwe need to build. Suppose you had invested Rs. 1 lakh ina fund, and it gave 60 per cent returns in a single year. Yes,you have Rs. 1,60,000 and you might be tempted to exit.

Fine. But what next?

Instead, letting this money lie for say 10 years will havefetched you over Rs. 4 lakh (assuming a 15 per cent annualreturn). Staying invested will add ‘wealth’, and not just‘returns’ to your portfolio.

Non-stop SIPs: You can stop your SIPs and move toanother scheme when a fund is not performing well.Stopping SIPs before your intended tenure is the worstyou can do for your portfolio.

Let us take an example of say Franklin Prima. Had youstopped SIPs by mid-2008 (started in mid 2007) but justheld the fund, your returns by December 2009 would havebeen a measly 0.7 per cent annually. Had you continuedthe SIPs into 2008 and 2009, then by December 2009,your returns would have been 26 per cent annually.

This is because the best period to average at low cost wasthe second half of 2008 and early 2009. By continuingyour SIPs, you gave the fund a chance to average at reallylow market values.

But more than anything else, by stopping your SIPs, youare stopping your investment/saving process for yourfuture, fearing near-term movements. Avoid that at allcost. If you are really worried about your fund’sperformance, check with your advisor on whether youshould change the fund.

Risk = loss:Our advisors come across investors who saythey are ‘willing to take risk’. They mean that they arewilling to buy equity funds for a short period, or are finewith taking risky bets such as a large exposure to mid-capfunds or sector funds.

But what does risk mean to you? For most of you, it

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Vidya Bala

If you are among the many FundsIndia investors who have started investing in mutual funds inrecent months, here’s a ‘Playbook’ for all of you.It is simply about how we can, together, play the mutual fund game right! Playing the game thisway will make your investing life simpler and needless to say, richer.

The current non-system in international monetary policy is a source of substantial risk, both tosustainable growth as well as to the financial sector. It is not an industrial country problem, nor anemerging market problem, it is a problem of collective action.Dr Raghuram Rajan, Governor, Reserve Bank of India

means more returns. Sorry, risk is simply first about losingmoney – losing 50-60 per cent in a single year such as2008, and then waiting for a good while to build wealth.Your ability to take risk means your ability to lose money.Most of us do not have that kind of risk appetite.

When you pick a ready-made portfolio from FundsIndia,or our advisory team customises one for you, we ensurethat the risks are contained through the right categoryallocation and asset allocation.

When you choose to go overboard with a few categories,especially based on the lure of the past one-year returns,you are entering the risk zone.

If it is short, it is slippery: This is true not only in termsof time frame, but also for choosing funds based onshort-term performance. Many investors get enamouredby short-term performance, especially when the returnslook spectacular. The question is whether such a repeatperformance is possible, more so, with sector funds. Takea look at the table.

You will be surprised to know that the chart toppers in2013, especially technology funds, were in the bottomquartile of 2014’s performance chart.

Worse still, the international fund that was among thetoppers in 2013 delivered just 1.3 per cent in 2014, whatwith the rupee appreciation also pulling down its returns.2014 had all mid-cap funds hitting the roofs. But now in2015, we know that they have already taken a bit of aknock.

So, what are we trying to say here? Go by consistent

performers. How will you know a fund is consistent? Theywould be consistent if they do not swing wildly – that isif they don’t top charts in one year, and hit the dust thenext.

Of course, this is no easy task for you to decipher, whichis why we have our Select Funds list – researched andhandpicked after quantitative and qualitative filters.

This is your answer when you ask our advisors why we donot have some ‘top’ fund in our list: They happen to betop that year; that’s all. They are not consistent. They canpull down your returns the next year.

Finally, the playbook essential: If you want to build a lotof wealth, it is easy to do so in calculators by adjustingthe annual returns from 15 to 20 to 30, or even 40 percent. That’s a number game. If you want a lot of money,you need to save a lot of money and for a long enoughperiod. Elementary, but hard to follow.

While equities certainly deliver superior returns, it is unfairand unreasonable to expect the equity market to createmiracles. Instead of upping your return expectations, tryto up your savings. SIPs and step-up SIPs are a good wayto do this regularly.

While none of us can, nor will give you any guarantee onhow much funds will deliver, I can say for sure that byplaying by these rules, you will certainly have enough inyour pocket to play your life the way you’d like it.

Vidya BalaHead – Mutual Fund Research

FundsIndia.com

www.fundsindia.com

What fools call wasting time is most of the time the best investment.Nicholas Nassim Taleb

2013 2014

ICICI Prudential Technology SBI Small & Mid CapFranklin Infotech Sundaram SMILEBirla Sun Life New Millennium UTI Transportation and LogisticsICICI Prudential US Bluechip Equity DSP BlackRock Micro CapICICI Prudential Exports & Other Services Birla Sun Life Pure ValueDSP BlackRock Technology.com Reliance Small CapBirla Sun Life International Equity - Plan A Canara Robeco Emerging EquitiesSBI Pharma Franklin Build India

Chart Toppers

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FundsIndia Features: Group to grow

There is no great earnings visibility for the next two quarters. We are possibly undergoing a mix ofprice and time correction, which may well get worse before it gets better. The learning for us is tohang in there; for investors it should be that they increase investment to generate wealth.Lalit Nambiar, Head – Research, UTI Mutual Fund

News flash: Your fund manager isn’t the only personresponsible for the profitability of your investments. Youare responsible too.

Yes, instead of just logging in to your FundsIndia accountand looking at your Dashboard to see how much returnsyou’ve earned over the past 24 hours, it’s time you increasethe profitability of your investments by doing somethingsimple. It’s time you group to grow.

Remember the first rule of successful investing? It is to seta goal. Now, once you know why exactly you’re investing,several aspects fall into place.

Time frame: When do you want to achieve your goal?Are you investing for the long-term or the short-term?These questions will help you determine your choice ofinvestments.

Risk: Usually, when saving for short-term goals, it is bestto avoid risky investment options such as equity mutualfunds. You could go for safer options such as short-termdebt funds.

Amount: You need to have a target number in mind foryour goal. This number should be practically set. Also, domake sure you account for inflation when you set a target.

The funds: Once you put all the above points together,you’ll be able to identify the type of funds you can investin, and the number of funds that you require in order toaccomplish your goal within the stipulated time period.Now is the time for you to group to grow.

In order to ensure you successfully invest for your goal,you must do the following:

Create a portfolio: You can maintain as many portfoliosas you want depending on the number of goals you want

to achieve. It is highly recommended that you build andmanage one portfolio per goal, as it will ensure ease ininvesting, maintaining and tracking. To create a portfolio,you just have to login to your FundsIndia account. In theDashboard page, you’ll find the button – ‘New Portfolio’on the right side of the page.

Describe your goal: On clicking the ‘New Portfolio’button, you’ll be taken to a page where you can enter thename of your new portfolio, and a short description forthe same. You can use the description field to enter yourtarget amount, or / and any other information pertainingto your goal and portfolio. After entering this information,click ‘Submit’.

Invest for your goal: To do this, you’ll have to addinvestments to your portfolio. When you select any mutualfund for investment, either through the lump sum orSystematic Investment Plan (SIP) route, you can select theportfolio for which you’re investing from a drop-downmenu. Voilà! Your investment will be added to it.

Monitor and maintain – FundsIndia.com gives youunprecedented power in monitoring the performance ofyour portfolio to make sure you efficiently manage yourinvestments. We’ll tell you more about the powerfulportfolio tools that come with your FundsIndia account inthe posts to come.

It’s time you get responsible for the performance of yourinvestments. Set goals, and group your investments forthem in portfolios, and watch them grow. After all,successful investing is just simple investing.

Noorain Mohammed NadimHead - Corporate Communications

FundsIndia.com

This article is a part of our new series – ‘FundsIndia Features’, an initiative to educate our customers on howbest they can take advantage of their FundsIndia account to build superior investment habits.

In this post, we discuss ‘Portfolios’ with FundsIndia, and why building a portfolio is crucial to achieve goals.

Noorain Mohammed

www.fundsindia.com

I also feel that apart from financial inclusion to individuals, there is a large mass of small businessesout there, who deserve to be touched by inclusion. They need access to credit at better rates andcannot necessarily be backed by credit ratingsT T Srinivasaraghavan, Managing Director, Sundaram Finance

MF investing vveerrssuuss Stock investing

Profit booking:When a stock price touches crazy levelsand the value it will deliver for that price is likely to belower, you may consider selling it partially or completelyif you hold it in your portfolio.

You need to actively monitor your stock portfolio andvary its exposure to stocks and sectors. These actions arevital for securing your returns on your stock portfolio. Canyou follow a similar approach for mutual fund investing?

The answer is no. Mutual fund investing is much simplerthan stock investing. First, the fund manager is doing theprocess of watching over-valued stocks and changingholdings accordingly.

To do fund changes on top of it would not only beunnecessary, but it would leave you with avoidable exitloads and taxes. Chasing stocks and sectors, and changingschemes would be futile when you hold a fund portfolio.

What you could do, of course, is look at changing fundsif its strategy changes, or if it has been a longunderperformer. You can then use a market upswing toexit it. If you wish to do periodic rebalancing, then lookat market levels and book profits from equities and deploythem in debt, when equity markets become overheated.

NAV is not the same as stock price: While investing ina stock, the current market price of the stock is theimportant information both technically, and whilefundamentally analysing stocks.

Based on the current price, the historical price movementof the stock, as well as its intrinsic value (usingfundamental valuations), one can decide whether it is agood time to buy a stock.

With mutual funds, many investors like a Rs 10-Net Asset

Value (NAV) New Fund Offer (NFO) because they thinkit is ‘cheap’. How can it be cheap when at the time of theNFO, the portfolio of stocks is not even built? Othersconsider a fund with an NAV of Rs. 25 cheaper than theone with a Rs. 100 NAV. Whether it is an NAV of Rs.1,000, or Rs. 10, it does not matter.

The NAV is only a representation of the value of 1 unitof your portfolio. That value includes the money you putin and the gains the fund delivered. For instance, let usassume a 20 year old fund’s NAV is Rs. 700. A 2-year-oldfund’s NAV is Rs. 14. Both have the same portfolio.

You may think that the Rs. 14 NAV is cheaper and it couldgive quicker returns. But in reality, if the underlyingportfolio appreciates by 10 per cent, the NAV of Rs. 700will increase to Rs. 770, and the NAV of Rs. 14 willincrease to Rs. 15.4. Growth prospect of the underlyingportfolio is more important than the fund’s NAV.

Stock performance versus Mutual fund performance:The future performance of a stock depends upon thecompany’s fundamentals such as revenue and profitgrowth, management credibility, market share, and so on.So, it is possible both fundamentally and technically toforecast a stock’s performance based on its business plans,its current financial status, and so on.

But the future performance of the fund depends uponthe fund objective, fund management capability and fundhouse process, to name a few. This is because the basketof stocks that a fund holds is subject to change constantly.A few stocks may be replaced with new ones.

N Sathyamoorthy Analyst, Mutual Fund Research

FundsIndia.com

Why is stock investing different from mutual fund investing and what should be your approachwhile investing in mutual funds? Read on.

“Price is what you pay, value is what you get,” - Warren Buffett.

N Sathyamoorthy

www.fundsindia.com

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Tata MotorsThe stock is trading in a consolidation band of Rs. 420 toRs. 450. The short-term trend of the stock looks bearish.It has a strong support at Rs. 420 and Rs. 400. Itsresistance is placed at Rs. 470 and Rs. 495. The stock willturn bullish above Rs. 470 levels. Its short-term trend lineis at Rs. 460, while the 50-day simple moving average is atRs. 485. Its long-term target is at Rs. 545, while its stoploss is at Rs. 385.

This column is targeted at investors who are registered customers ofFundsIndia for trading and investing in equity as well as prospectiveinvestors who wish to open an equity account with FundsIndia.

It was a volatile month with a positive bias for the Nifty.It continues to remain strong after it managed to reboundfrom the low of 7,940.3. The upward trend remains intactas long as the index trades above 8,270. Its strong supportis at 8,270 and 8,160, while its immediate resistance is at8,490 and 8,720. The latest 200-day simple movingaverage is at 8,370. At current levels, the possibility of acorrection remains low. A close below 8,270 will lead tofurther weakness to test 8,160.

Perumal RajaTechnical Analyst (Equity Research Desk)

FundsIndia.com

ICICI BankSince early 2015, ICICI Bank has remained volatile witha negative bias. The stock has strong support at Rs. 280,while its resistance is placed at Rs. 325 and Rs. 345. Acontinuation pattern indicates that a long-term upwardtrend will emerge. Its 50-day simple moving average is atRs. 310. A breakout above Rs. 325 will lead to amedium-term upward trend, with the target at Rs. 365.Stop loss is at Rs. 270.

Technical View Nifty

Disclaimer: Mutual fund investments are subject to market risks. Please read the scheme information and other related documents beforeinvesting. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund,or designing a portfolio that suits your needs. Wealth India Financial Services Pvt. Ltd. (with ARN code 69583) makes no warranties orrepresentations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, howevercaused, in connection with the use of, or reliance on its products or related services. The terms and conditions of the website are applicable.Think FundsIndia, a monthly publication of Wealth India Financial Services Pvt. Ltd., is for information purposes only. Think FundsIndiais not, and should not, be construed as a prospectus, scheme information document, offer document or recommendation. Information inthis document has been obtained from sources that are credible and reliable in the opinion of the Editor.Publisher:Wealth India Financial Services Pvt Ltd. Editor: Srikanth Meenakshi

Our digital banking is not a product. It is a philosophy. Our objective is to provide for all yourfinancial requirements in a convenient manner, which means you deal with us when you want,how you want and where you want in the fastest time possible.Aditya Puri, Managing Director HDFC Bank

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Q: I want to invest Rs. 10,000 per month in an Equity Linked Savings Scheme (ELSS) fund. Please let me know howmany funds should I choose and how it can be diversified.

I am tracking a few ELSS funds from February 2015. I see that the Net Asset Value (NAV) increases when the sharemarket goes up, and it declines when the market goes down.

Over the past three years, the markets did well. Suppose the markets decline after three years, will I face a loss?

A: As ELSS funds invest in equity markets, they will, naturally, decline and grow with the market. You should not beput down by short-term declines. Over a long term period of 5-10 years, the chances of negative returns (historically)in the market have so far been nil (unless something was terribly wrong with the economy).

ELSS funds too need a long time frame of investment. You can expect good fund managers, who actively manageportfolios, to contain declines in falls, and outperform in rallies, ultimately delivering some higher returns than themarket.

The lock-in period for ELSS may be three years, but like any other equity fund, you should consider at least a five-yearholding to play out volatility.

Besides, the fact that you will invest through a Systematic Investment Plan (SIP) will give you an edge in terms ofhelping you average costs – that is buying more in market dips and less during rallies.

For the amount mentioned by you, two funds should do. Ensure that you are not too stressed with day-to-day volatility.Consider this as a long-term investment, with tax benefits being only an add-on.

Vidya Bala, Head Mutual Fund Research

FundsIndia.com

Q & A

1 What is the name of the central bank of the UnitedStates of America?

2 Which was the first dedicated mid-cap fund in India?

3 What is the name of the business newspaper ownedby the The Hindustan Times group?

4 Who is the author of ‘The Great Crash 1929’?

5 Name the person in the image. Hehas been at the helm of one of themost regarded asset managementcompanies in India.

Answers may be sent to quiz@fundsindia.com.

Answers for June 2015 Investment Quiz: 1 Parag Parikh 2Kothari Pioneer Taxshield (now Franklin Taxshield) 3Atul Gawande 4 Dhirendra Kumar 5 NirmalaSeetharaman

Winner for June 2015 Investment Quiz: Narayan Rao

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FundsIndia Select Funds Investment Quiz

To invest, please call 0 7667 166 166

Equity (High risk)

BNP Paribas Mid-Cap IDFC Premier Equity

Franklin India High Growth Mirae Asset Emerging

Franklin Prima Reliance Equity

Franklin Smaller Companies Religare Mid & Small

HDFC Mid-Cap SBI Magnum Mid Cap

ICICI Pru Value Discovery UTI Mid Cap

Please click here for a complete listing of our preferredfunds.

Savings, Investments and Insurance – Three Different Animals - Does the title surprise you?Then it’s mainly because you have been using these three terms interchangeable, without knowingthe actual difference between them.Read more at Marketplace, the official blog of FundsIndia.com

Recommended Book

About us: FundsIndia.com is India's leading online investment platform. It offers a wide range of investment optionssuch as mutual funds, equities, corporate deposits, bonds, loans, insurance and 24 Karat gold, to name a few, in oneconvenient online location. FundsIndia.com also offers a host of value-added services such as free investment advisoryservices, different types of Systematic Investment Plans (SIPs), trigger-based investing, Smart Solutions for importantlife goals, an Android App, and more that further enrich your investment experience.

Equity Performance Snapshot

Index 1 Year 5 Years 10 YearsCNX Nifty 10.7 9.6 14.3

S&P BSE Sensex 10.1 9.5 14.5

CNX Mid-Cap 18.4 9.7 15.4

CNX Small-Cap -0.5 7.4 12.7

CNX 100 12.3 9.9 14.5

CNX 500 12.5 9.3 13.7

CNX Bank 21.6 14.2 17.7

CNX Energy -9.6 -1.6 8.7

CNX FMCG 14.3 19.1 19.3

CNX Infrastructure -1.4 -0.8 8.5

CNX IT 13.3 13.4 13.9

MSCI Emerging Markets -8.4 1.1 5.5

MSCI World Index -0.3 10.8 4.4Returns (in per cent as of June 29, 2015) for less than one year is on an absolutebasis, and for more than one year on a compounded annual basis.