Fixed Deposit

Fixed deposits has traditionally been and still is the most popular investment option in India. As per RBI's report on household savings, 56% of household financial assets are invested in Bank FDs. Corporate Fixed Deposits are term deposits like bank FDs. They offer fixed rate of interest and principal amount on maturity. However, instead of banks, corporate FDs are offered by non banking financial companies (NBFCs). Corporate FDs are very popular among informed investors since offer higher returns compared to bank FDs.

Bank FD versus Corporate FD

Rate of return:

Interest rates of corporate FDs are usually higher than interest rates of banks FDs. For example, current 3 - 5 year FD interest in SBI is 6.1%, whereas Bajaj Finance is offering 7% interest rate on 3 - 4 year FD.

Tenure:

The tenure for bank FDs range from 7 days to 10 years. The tenure for corporate FDs range from 12 months to maximum 4 - 6 years. If you want to invest for very long tenure, e.g. 8 to 10 years, then bank FD will be the only term deposit option for you. However, for shorter tenures you may consider corporate FDs.

Lock-in period:

There is no lock-in period in bank FDs. Corporate FDs may have lock-in period. Usually lock-in period for corporate FDs is 3 months; you cannot make any withdrawal prior to the completion of the lock-in period. However, not all corporate FDs may have lock-in periods.

Premature withdrawals:

Premature withdrawals are allowed in both bank and corporate FDs. However, penalties may apply for premature withdrawals may be applicable for both bank and corporate FDs. If you want the flexibility of making premature withdrawals, then bank FDs will be the more favourable option for two reasons (a) no lock-in period (higher liquidity) and (b) lesser premature withdrawal penalty. While bank FDs may offer more flexibility for premature withdrawals, you should weigh this as a trade-off against higher returns offered by corporate FDs.

Taxation:

Taxation of bank FDs and corporate FDs is the same. The interest paid by the FD is added to your income and taxed as per your income tax slab.

Points to consider for investing in corporate FDs

Interest rate:

Different NBFCs offer different interest rates on their FDs. You should compare different FDs and make informed investment decisions. However, you should also take credit risk into consideration.

Credit risk:

Credit risk refers to the NBFC's failure of meeting interest and / or principal payment obligations, exposing the investor to potential loss of income and / or capital. You should consider the credit rating of the instrument and make informed investment decisions.

Tenures:

corporate FDs may offer different interest rates for different tenures; interest rates are usually higher for longer tenures. You should decide as per investment needs.

Mode of interest pay-out:

corporate FDs offer both periodic (non cumulative) and cumulative interest pay-out. In periodic interest payout, the interest will be paid to monthly, quarterly, half yearly or yearly; the rate of interest will differ for different pay-out intervals. In cumulative interest pay-out the interest is re-invested and you get the benefits of compound interest. You should decide on cumulative or non cumulative interest depending on your investment needs.

What are bonds?

How do bonds work?

Taxation Saving

Planning For Tax Saving Investments Efficiently & Filing Income Tax Return . ITR represents an individual's income and the taxes that are to be paid on that income during the financial year starting on 1st April till 31st Mar

Life Insurance

Life is unpredictable. So, it is important to ensure that your family and loved ones are taken care of financially in case something happens to you. This is where life insurance comes in. It can provide some financial peace of mind if the worst were to happen.Life insurance offers a way to replace the loss of income that occurs when someone dies. Life insurance is insurance for you and your family's peace of mind. With a life insurance policy in place, you can

• Provide financial support to your loved ones
• Protect your home mortgage, loans, credit card borrowings etc.
• Provide financial support to your loved ones to achieve their goals in your absence
• Provide financial support to your loved ones to maintain their lifestyle, no matter what happens
• Take care of your estate planning needs
• Look at other retirement saving/investment vehicles

Health Insurance

When should we take medi-claim policy?

Health insurance is the insurance which protects us from any health emergencies & incurred hospitalization expenses. In this busy and hectic life everybody should have a health insurance policy which can be very useful in time of emergencies. Health insurance, also known as medi-claim policy, allows you to claim cashless hospitalization or reimbursement up to the sum insured limit.

Why Mediclaim policy needed?

• Every human suffers from some illness or injury in lifetime.
• Emergencies or illness can come anytime without giving any warning.
• There are no good facilities in government hospitals whereas private hospitals are too expensive.
• Doctor's fees, diagnostic charges as well as the medicines value are too expensive.
• Health is wealth.

PMS

Portfolio Management Services or PMS, is a service offered by the Portfolio Manager or an asset management company, is an investment portfolio in stocks, fixed income, debt, cash and other securities, managed by a professional fund manager that can potentially be tailored to meet specific investment objectives. Unlike mutual funds, where investors own units of the mutual fund scheme, in a PMS, the investors own individual securities. Although the portfolio managers may oversee hundreds of portfolios, your account may be unique.

Types of PMS

• Discretionary PMS: Under this service, the choice as well as the timings of the investment decisions is solely lies with the Portfolio Manager.
• Non-Discretionary: Under this service, while the portfolio manager will suggest only the investment ideas, the investor will decide the investment timings and decisions regarding the portfolio. However the execution of the trades is done by the PMS portfolio manager.
• Advisory: Under this service, while the PMS portfolio manager only suggests the investment ideas, the decision as well as the execution of the investment decisions rest solely with the Investors.

Benefits of a PMS

• Professional Management: The PMS Service provides professional management of stock portfolios with the main objective of delivering long-term performance while minimising risk.
• Continuous Monitoring: The PMS fund manager, constantly monitors the portfolio and periodic changes are made by him/her to optimise the performance.
• Flexibility: The Portfolio Manager has fair amount of flexibility in terms of holding cash, for example, it can keep the cash holding even up to 100% depending upon his./her understanding of the market conditions. The portfolio manager can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of foreseeable opportunities in the market situation.
• Risk Control: The research team of the PMS Service, provides real time information to support the fund management team and thus control the risk.
• Ease of Operation: Portfolio Management Service provides the clients with a customised service and takes care of all the administrative aspects and provides periodic portfolio reporting. It discloses the overall status of the portfolio, holding and performance on a daily basis. For this, the PMS Service provides a login ID and password for the investor to check his/her PMS details.
• Custom made Advice: For select clients, the PMS provider gives the benefit of tailor made investment advice designed to achieve investors various financial goals.

AIF

Alternative Investment Funds (AIF)

Alternative Investment Funds or AIF in short, are defined as privately pooled investment funds and categorized by The Securities Exchange Board of India (SEBI) as Category I AIF, Category II AIF, and Category III AIF. It is a fund of funds (FOF) that invests in asset classes other than stocks, bonds, Government securities, fixed deposits or cash. It pools money from various HNI investors and invests them under different investment categories as specified by the SEBI for the benefit of investors.

Assets Under Management (AUM)

Assets under management (AUM) under AIF can include start-ups, SME funds, infrastructure funds, private equity funds, venture capital or even hedge funds that may be trading in listed or unlisted derivatives depending on the fund type.

Minimum Investment Amount

The minimum investment amount to invest in an AIF is Rs 1.00 Crore depending on the type of AIF. Therefore, it can be called as product meant for the HNIs.

Advantages of AIF

• Diversification
• AIFs have considerable freedom to decide where to invest unlike most other funds or mutual funds which are totally regulated and follow the fund/scheme guidelines as mandated by SEBI.
• Various non-traditional investment options available to AIFs which generally are not available to all investors, particularly retail investors.

How AIF works?

Alternative Investment Funds or AIF raise money to form an investment fund pool that invests in non-traditional assets classes that the ordinary investors may not have access through any other products like Mutual Funds. Money can be pooled from various types of investors, example - Resident Investors, NRIs or non-resident investors or foreign investors.

Who can invest in AIF?

AIFs are mainly aimed at high net worth or HNI individuals who are ready to invest minimum Rs 1.00 Crore and take high risk. While the return potential of AIF may be very high, the risk is also very high. Therefore, this is not meant for all investors excepting those who are well versed with these kind of investing.

In summary,

• If you have a large amount to invest in one instrument
• You have the ability to sustain the risk
• You are ready to remain invested with long lock-in periods

Child Future Saving

Secure Your Child’s Financial Future

Why Choose Our Child Savings Plan?

Our Child Future Savings Plan is designed to help you systematically save and invest for your child's future, ensuring financial security when they need it the most.

Key Benefits:

• Flexible Contribution Options: Choose a savings schedule that fits your financial situation, whether it's monthly, quarterly, or yearly.
• High-Interest Growth: Your savings will accumulate with competitive interest rates, helping you maximize returns.
• Tax Benefits: Enjoy tax advantages on your contributions, ensuring you save more efficiently.
• Guaranteed Security: Your funds are protected, providing peace of mind for your child's future.
• Education & Life Goal Planning: Use the savings for college tuition, skill development, or major life milestones like buying a home or starting a business.
• Early Withdrawal Options: Access funds when needed for important expenses, subject to plan terms.

Who Can Benefit from This Plan?

• Parents planning for their child's higher education expenses
• Guardians looking for a secure savings option for a child's future
• Families wanting to invest in long-term financial security for their children
• Anyone seeking a tax-efficient way to save for their child's important life goals

Retirement Saving

Retirement planning is the plan and action of accumulating a certain corpus by the time you are of retirement age. It is a plan for living the choice of life you have dreamt for your silver years. This essentially means that you need to plan for a steady source of income for yourself at the time that you retire from your active career.

Why should you plan for retirement?

Planning for retirement is a very important financial decision you should make if you want to live a stress free independent life when your steady income from your job or work stops.

Steps of retirement planning

1. The first step to plan your retirement is to decide what kind of life you see for yourself in your retirement. Do you want to live a quiet life in the countryside growing your own vegetables, or would you want to live in a community with like minded people. Would you like to spend time reading books, or travelling the world? The type of life you want to live will decide how much money you would need to save up for those days.
2. The next step is to take stock of your assets. Your value of your existing assets will make up some of your retirement corpus. The rest of the corpus needs to be built over the time you have left till your retirement.
3. A very important consideration while planning for your retirement is to take a look at how much time you still have till the time your retirement sets in. As a rule of thumb, the longer you have for your investment till your retirement, the larger the corpus you can build, helping you to come closer to your dream life. The investments you plan will have to be done with respect to the time left as well as your risk appetite.
4. The next step is to plan the investment avenues that can help you reach your goals. You can take your pick from a variety of options like, ETFs, NPS or mutual funds that may offer you the growth of equity or the assurance of debt. You may also consider investing in some good stocks for added returns.

Legacy Saving

Plan Today for an Enduring Legacy

Legacy planning is not all about leaving possessions—it's about keeping your family safe, ensuring your wishes are followed, and moving your money in the way that works best for you. Our Legacy Planning Services help you create a complete plan to keep and pass your property with comfort and assurance.

Why Legacy Planning Matters

Without a well-thought-out plan, your money could end up somewhere you don't want it to, and your loved ones could face unnecessary financial and legal complexities. Our expert guidance ensures your legacy will last for generations.

Major Advantages of Our Estate Planning Services

• Asset Protection & Wealth Transfer: Safeguard your wealth and transfer it with ease.
• Save Taxes & Attorney Fees: Avoid estate taxes, probate fees, and unnecessary legal troubles.
• Personalized Estate Plans: Wills, trusts, and other legal structures tailored to your unique requirements.
• Philanthropic Give: Establish charitable gifts or foundations to leave a lasting legacy.
• Business Succession Planning: Secure the future of your business and hand it over smoothly.
• Power of Attorney & Healthcare Directives: Leave your healthcare and financial choices to capable hands.

Our Legacy Planning Services include

• Estate Planning: Preparing wills, trusts, and estate transfer plans.
• Tax Optimization: Positioning assets to reduce tax imposition on beneficiaries.
• Trust & Wealth Management: Protecting and growing your wealth for generations.
• Business Succession Planning: Ensuring smooth transition for family businesses or partnerships.
• Charitable & Philanthropic Planning: Creating charitable foundations or gifts that are meaningful to you.
• Legal & Financial Advice: Obtaining legal and financial advice to successfully execute your plan.

Who Should Be Considering Legacy Planning?

• Individuals with major assets who are looking to limit tax and legal issues.
• Parents and grandparents who wish to secure their family's financial future.
• Business leaders developing long-term stability and transition plans.
• Those who wish to make a significant charitable gift.

Direct Stocks

What is Private/Direct Equity Investment?

Private equity investment refers to investing in private limited companies i.e. companies that are not listed in stock exchanges. The investment tenure in private equity is usually quite long e.g. 5 to 10 years. The minimum investment in private equity is usually quite large. As an asset class, private equity is suited for high net worth investors (HNIs), ultra high net worth investors (UHNI), Corporates and Institutional Investors. Usually private equity investments are made in company which is one step away from Initial Public Offering (IPO). However, these investments can also be made at an earlier stage of a company's growth. However, private equity investments are not usually made in very early stage ventures.

How does a Private Equity Fund work?

Private equity (PE) funds are pooled funds like mutual funds or Portfolio Management Services (PMS). However, the number of investors in a private equity is much smaller compared to MFs or PMS. The fund is managed by investment professionals known as General Partners (GP). The investors will participate in the PE fund as Limited Partners (LP). The GP will look for investment opportunities in private companies with high revenue growth prospects and strong profit margins. Such companies may look for capital infusion to fund the next stage of growth, increase business scalability to multiply revenues and profits. Private equity investors look for very high returns on investment, usually multiples of growth e.g. 10 or 15 times growth of their investment. Exit opportunities (redemption or sale) are discussed with the promoters of the company at the time of investment. Exit is usually through IPO or through strategic sale to a company who wants to acquire a stake in the company - majority or minority stake.

Who should invest in Private Equity?

Private Equity Investments can give you much higher investments than traditional equity investments i.e. stocks or mutual funds, as mentioned earlier, returns of Private Equity investments is usually in terms of multiples e.g. 10X, 20X etc. However, private equity investment is usually for investors with very high risk appetites and very long investment tenures. You should also have sufficient knowledge of the industry and business model of the investee company; you should work with a financial advisor who has knowledge of the industry and business. The liquidity of private equity investments is very low; you need to wait till the planned exit either through IPO or strategic sale. Private equity investments is not for your usual life-stage financial goals e.g. children's education, children's marriage, retirement planning etc. Your core portfolio should tak care your life-stage goals. Private equity is purely for wealth creation

How to invest in Private Equity?

As per Bain Consulting report, private equity investments in India exceeded $60 billion in 2022. Most of the private equity investments are from institutional investors. In recent years, there is growing interest in Private Equity from HNI / UHNI investors. There are several ways of investing in Private Equity. You can become an LP in PE fund. Alternatively, you can invest in Alternative Investment Funds (AIF), which in turn in invest in private equity, venture capital, pre IPO opportunities.

Unlisted Shares

There were many public issues where we have seen successful listings of RBL Bank, Avenue Supermarts, Ujjivan Finance and many more. Most of these shares were actively traded in the unlisted space where investors saw significant gains when the stock got listed.

Benefits

• Novel Investment option aiding in diversification of overall portfolio.
• Entry to new age businesses at an early stage providing scope of immense growth.
• Availability in smaller ticket sizes allows portfolio creation of unlisted securities.
• Limited correlation with listed market space leads to stable prices in short term.
• Exposure to vast unlisted small and medium enterprises.

Key Risks

• Price/Valuation Discovery of shares in unlisted space can be difficult; unlike listed space.
• Stock Liquidity is mainly dependent on demand and supply. If there is a poor demand for any unlisted stock, then it may lengthen investment cycle in case of non-listing of the scrip.
• Transaction and Trading price are outside the purview of Regulatory Authority
• One-year Lock-in stock listing; exposes investor to volatility post listing.
• Early-stage companies could pose higher risk for a business model failure.

Gold & Silver

Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments to decline.

Why Invest in Gold?

Your savings plan won't yield the desired result until you invest your savings wisely. Always choose your investment options with your financial goals and risk appetite in mind. Gold as an investment option has the following benefits:

Hedge Against Inflation

When you invest, you must keep in mind the impact inflation will have on your returns. Gold investment acts as a hedge against inflation. Inflation lowers the buying power of the currency. In India, inflation exceeds the interest rates on some occasions, making the actual return on investments negative.

Multiple Options to Choose From

Your investment in gold does not have to be physical. You could choose to invest in gold online also. Apart from the physical and virtual investment choices, there are multiple asset classes for gold investment.

When you plan to buy gold in the physical form, the choices range from jewelry and coins to bars. If you wish to invest in gold online, your choices are digital gold, Gold ETFs, or Gold Mutual funds.

• Each investment option has its merits. You can pick the one that suits your risk appetite and investment and savings policy.
• Buying gold online in various forms eliminates the security and purity problems associated with buying physical gold as an investment.

Helps Diversify Your Portfolio

A diversified portfolio reduces your investment risk. When you make your savings plan, include products that are not closely correlated to each other in your portfolio. Investment in gold reduces the overall volatility and risk of your portfolio.

High Liquidity

High liquidity is another advantage of investing in gold. Whether you invest in gold online or buy it in the physical form, selling gold is not difficult. When you need funds quickly, selling physical assets like property might pose a challenge but not gold. You can find buyers easily for physical gold and gold you own in the form of digital gold or gold ETFs.

NPS

National Pension Scheme or NPS as it is popularly known, was initially launched by the Government in 2004 with the objective of changing the pension of retiring Government employees from defined benefit to defined contribution plan. In 2009, the scheme was opened for citizens of India. The broader objective of NPS is to convert India from a pension less society to a pensioned society like many developed economies.

Investment options in NPS

In NPS the contributors can decide where to invest their contributions to the National Pension Scheme. investor can decide between two choices:

• Active Choice:

This is for informed investors who can decide where they want to invest their NPS contributions. There are four asset classes that you can choose from, depending on your risk appetite and investment needs. You can invest in multiple asset classes.

• Asset Class E: Equity
• Asset Class D: corporate debt
• Asset Class G: Government bonds
• Asset Class A: Alternative investments like REITs, AIFs, InvITs etc.
• Auto Choice:

This is for investors who cannot decide on their own, where they to invest their NPS contributions. This option is like a life-cycle fund, where the asset allocation depends on the investor's age. There are three options in auto choice:

• Aggressive lifecycle fund: In this equity allocation is higher than the other two options
• Moderate lifecycle fund: In this equity allocation is higher than conservative but lower than the aggressive option
• Conservative lifecycle fund: In this equity allocation is lower than the other two options

Types of NPS accounts

Tier I Account:

• This account does not allow premature withdrawal before retirement (60 years of age).
• You can open a Tier I NPS account, with a deposit of Rs 500.
• You can claim tax deductions of up to Rs 50,000 from your taxable income under Section 80CCD by investing in Tier I account.

Tier II Account:

• This account allows withdrawal prior to retirement age.
• You can open a Tier II NPS account, with a deposit of Rs 1,000.
• Tier I Account is mandatory requirement to open a Tier II Account.
• Tier II NPS account is a voluntary savings facility; you cannot avail Section 80CCD tax benefits in Tier II account.

Pension fund managers

Private sector employees can select among 11 pension fund managers. However, Government employees have to select from SBI Pension Fund, LIC Pension Fund and UTI retirement Solutions only.

• SBI Pension Funds Pvt. Ltd.
• LIC Pension Fund Ltd.
• UTI retirement Solutions Ltd.
• HDFC Pension Management Co. Ltd.
• ICICI Prudential Pension Fund Management Co. Ltd.
• Kotak Mahindra Pension Fund Ltd.
• Aditya Birla Sun Life Pension Management Ltd.
• Tata Pension Management Ltd.
• Max Life Pension Fund Management Ltd.
• Axis Pension Fund Management Ltd.

NPS taxation on maturity

As per NPS rules, you can withdraw up to 60% in lump sum on maturity. This withdrawal is totally tax exempt, making NPS an extremely tax efficient investment option. The remaining 40% must be in re-invested in purchasing annuities (annuity is a fixed monthly sum received by the investor). Life Insurance Corporation of India (LIC) is the default annuity service provider, but you can also choose from 13 other annuity service providers empanelled with PFRDA. The annuities received by you, will be added to your income and taxed as per your income tax rate.

If you want to open an NPS account, do contact us at MC Financial Services.