Ten questions you must ask yourself for boosting your portfolio

Ten questions you must ask yourself for boosting your portfolio
by Nutan Gupta 12/05/2017

It is always hard to lose money on your investments. Apart from taking a financial toll on you, it also negatively affects the overall performance of your portfolio. Here are ten questions you must ask yourself which will help you to boost the performance of your portfolio:

1. How much money do you have on hand?

Having too much cash to trade when the market is at its peak can limit your profits by a considerable margin. You have to figure out how much money you want to be invested and how much you want as cash to invest in the future. A common strategy is to have 50% of your portfolio money as investments when the market is down so that you can invest the remaining 50% when the market rises.

2. Do you have international exposure?

Trading in stocks internationally can allow an investor to book profits if the Indian share market is not doing very well. You have to question yourself if you want to have international exposure or the Indian share market is good enough to achieve your financial goals. By looking at your portfolio, you can figure out if the profits from the Indian share market enough or you should trade in international stocks.

3. Have you invested in ETFs?

Exchange traded funds are one of the best investment options right now; they mimic the operations of an index fund and gives exposure to the stocks of several companies at once. When you trade in an ETF, you don’t have to buy the shares of companies separately but have to invest in an ETF of your choice to get exposure to the stocks of every company of that ETF. If you still haven't invested in an ETF, you should positively consider investing in one.

4. Are you over diversified?

While diversification is a good thing to spread risk across various investments, over-diversification can lead to complexity of the portfolio. Having few investments of superior quality is always better than having many investments of ordinary quality. You have to figure out if you are having problems in monitoring and controlling your investments. If the answer is yes, you are definitely over-diversified, and you should consider selling some of the investments which are not doing good.

5. Is your broker’s performance satisfactory?

Why are you incurring losses in your investments? Is it you or the advice of your stockbroker? You should analyze your every trade before moving on to the next one and figure out the primary cause of your loss. Consult your friends and relative and ask them about the facilities their stockbroker provides them to make their trade successful. If you find that the performance of your stockbroker is not up to the market standards, you should hire a better stockbroker for your future trades.

6. How much time are you spending on market research?

You could be spending 5 minutes on researching a company and would still wonder what you did wrong when you incur a loss. You have to thoroughly research the company and the investment before you invest your money in its stocks. If you find yourself with limited knowledge about the market, try reading investment books and financial articles to kick-start your successful investment career.

7. Are you trading on your own?

Having someone else trade for you is like giving someone your own money to buy things you would want ten years from now. No one knows your financial condition better than you, and only you can figure out the amount of money you are comfortable losing in the share market. If you are having someone else trade for you, you should immediately stop and take matters into your own hands. It will be only after trading on your own; you will find success in your investing career.

8. Do you have some financial goals?

Every decision you will take during the investment process will be directed towards achieving your financial goals. There is no point in investing if you do not know what you are investing for. Make some long term and short term financial goals and make every possible effort to achieve them. Every time you make an investment decision ask yourself this question: Will this investment help me to achieve my financial goals?

9. Is your investment strategy adequate?

If you are making continuous losses on your investments, maybe it is the time that you rethink your investment strategy. It could be possible that you have made huge profits in the past, but the fact that you are incurring consecutive losses makes your investment strategy obsolete to the present market conditions. Consult your stockbroker and come up with a new and adequate strategy for your investments.

10. Are you overspending?

Is your broker charging you with high commission? Are you paying taxes that can be avoided? Always go with a brokerage firm that charges flat brokerage fees and not a commission and consult your stockbroker about different ways you can cut your taxes. It will enable you to increase your profits by a huge margin and you will have more money to invest in the share market. 

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7 things to remember while doing financial planning

7 things to remember while doing financial planning
by Nutan Gupta 12/05/2017

Financial planning is an essential part of securing a financially secure future for you and your loved ones. Financial planning allows you to identify your financial goals and guides you through the investment process by helping you allocate your funds better. Without financially planning the future, there is no way all the future expenses can be covered without creating a financial burden on the whole family.

To help you plan better, here are 7 things that you should keep in mind:

1. Financial goals

Every plan has some goals that need to be fulfilled. In the same way, while doing financial planning, you should set some financial goals which you want to achieve in the future. How much money would you need to cover all of your future expenses? In how much time do you want to achieve financial freedom? You must ask questions like these to yourself so that you can define your financial plan by way of your financial goals.

You should try to make your every financial goal a SMART goal. A SMART goal would mean that the goal is specific, measurable, achievable, relevant, and time bound.

2. Risk appetite

While doing financial planning, you should always identify your risk appetite towards investing. By looking at your financial condition and the money you can save on a regular basis, you should first determine how much you can afford to invest. It is important to keep in mind that the investment market is risky and there is a chance that you can lose all of your invested money. Identifying your risk appetite would allow you to avoid financial burdens even if you were to lose your money while investing.

3. Minimize your expenditure

An ideal financial plan would require you to invest in different investment schemes over an extended period. You should try to reduce your expenses in every little place possible to maximize your savings. More the money you have with you to invest, lesser will be the time taken to achieve your financial goals.

A good way to cut your expenses is to always go with a brokerage firm which charges a flat brokerage fee rather than a commission. Paying commission on every transaction not only lowers your savings but also reduces your profits at every stage of the investment process.

4. Avoid the herd

Investing, only because everyone else is investing is one of the biggest investment mistakes. You have to understand that your financial status, needs, desires, financial goals; everything that influences your future life are significantly different from everyone else.

You should always conduct your research about the investment option before taking an investment decision as no one knows what you want to achieve and what you stand to lose better than you.

5. Regularly monitor your investments

The share market is highly dependent on the external market forces like the inflation rate, interest rates, and other government policies. That makes the stock market highly risky and volatile. You should continuously monitor your investments as to know how your money is doing in the market. If you find that one of your investments is turning bad, you can cut your losses by selling your investment immediately.

6. Rainy day funds

Never underestimate the importance of a rainy day fund for helping you in your worst times. Always consider saving for an emergency fund that can provide you with a regular source of income for 3 to 6 months. This contingency plan will allow you to cover your expenses if you lose your job or meet with an emergency, without having to sell your investments.

7. Never ignore the taxes

Tax saving is the best tool for increasing your gains and reducing your losses. You will have to pay taxes for every income you make. The slabs may change, the taxable amount may change, but the fact that you are bound by law to pay a certain amount of your income as taxes will never change. It affects every aspect of your financial plan, from your income to every asset you may buy or sell in the future.

You can take the advice of your broker or a tax planner if you think your taxes are lowering your savings in a big way. You should plan for tax saving instruments as early as possible by calculating the exemptions and deductions that you are entitled to under various sections.

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Should you invest in Liquid Funds?

Should you invest in Liquid Funds?
by Prashanth Menon 26/05/2017
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Liquid Funds are a popular investment option to park your surplus money for a brief period of time, at a rate of interest which is higher than what a bank generally offers. This is an open-ended debt scheme which invests in treasury bills, money market instruments, commercial paper and certificate of deposits for up to 91 days.

There are a number of factors which make Liquid Funds an attractive option.

Lower risks

To begin with, Liquid Funds are supposed to be least risky as they hold high quality papers. Among the different categories of debt funds, liquid funds have the shortest maturities. They earn returns from the accrual on the instruments and these funds do not involve trading.

Liquid Funds are often compared with Ultra short term funds. However, the two are different on many counts. Firstly, the maturity period for the Ultra short term fund is more than three months and often goes up to a year. Ultra short-term funds are a riskier preposition on the basis of the quality of papers they hold. Furthermore, Liquid Funds do not charge an exit load, whereas Ultra short-term funds put an exit load on the investor.

Better returns

In general, Liquid Funds give returns of over 6-8%. Compare this to the average 4% rate of interest offered by most banks for savings account. The better returns easily make it an obvious choice from an investor’s point of view.

Easy liquidity

There is no exit load charged on liquid funds. In fact, there are now provisions in some funds that allow an investor to redeem their funds within a few hours. Hence, the process that used to take a couple of days earlier is now complete within some hours. Overall, on the basis of the cut-off schedule for redemption, an investor receives money the next day.


Liquid funds are taxed like any other debt fund. When profits are realized in less than three years, the same are taxed as per your tax rate, while the profits realized after three years are taxed at 20% with indexation. Investors who come in the 30% tax bracket can opt for a dividend payout if they require cash on a regular basis.


Liquid Funds give an investor the option of investing their capital for a very short duration of time at an attractive rate of interest. The option of redeeming the funds within a span of some hours makes the investment option a very lucrative one.

These funds are best suited as a contingency fund where you can set aside some amount of your investment by a creating a contingency fund.

This route also works well when an investor wants to invest lump sum money and then, in course of time, transfer it systematically it to equity funds. In general, it is not advisable to invest lump sum in equities market at a time when the markets are volatile or are richly valued. Liquid Funds can be a useful tool during such times as money can be parked here with an instruction for STP into an equity fund at regular intervals. By doing so, an investor can protect the investment against the volatility and, at the same time, the money is already invested in an option that gives better returns.

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Bull Put Spread

Bull Put Spread
by Nilesh Jain 26/05/2017

What is Bull Put Spread Option strategy?

A Bull Put Spread involves one short put with higher strike price and one long put with lower strike price of the same expiration date. A Bull Put Spread is initiated with flat to positive view in the underlying assets.

When to initiate Bull Put Spread

Bull Put Spread Option strategy is used when the option trader believes that the underlying assets will rise moderately or hold steady in the near term. It consists of two put options – short and long put. Short put’s main purpose is to generate income, whereas long put is bought to limit the downside risk.

How to Construct the Bull Put Spread?

Bull Put Spread is implemented by selling At-the-Money (ATM) Put option and simultaneously buying Out-the-Money (OTM) Put option of the same underlying security with the same expiry. Strike price can be customized as per the convenience of the trader.

Probability of making money

A Bull Put Spread has a higher probability of making money as compared to Bull Call Spread. The probability of making money is 67% because Bull Put Spread will be profitable even if the underlying assets holds steady or rise. While, Bull Call Spread has probability of only 33% because it will be profitable only when the underlying assets rise.


Sell 1 ATM Put and Buy 1 OTM Put

Market Outlook

Neutral to Bullish


Earn income with limited risk

Breakeven at expiry

Strike Price of Short Put - Net Premium received


Difference between two strikes - premium received


Limited to premium received

Margin required


Let’s try to understand with an example:

Nifty Current spot price (Rs)


Sell 1 ATM Put of strike price (Rs)


Premium received (Rs)


Buy 1 OTM Put of strike price (Rs)


Premium paid (Rs)


Break Even point (BEP)


Lot Size


Net Premium Received (Rs)


Suppose Nifty is trading at Rs 9300. If Mr. A believes that price will rise above 9300 or hold steady on or before the expiry, so he enters Bull Put Spread by selling 9300 Put strike price at Rs 105 and simultaneously buying 9200 Put strike price at Rs 55. The net premium received to initiate this trade is Rs 50. Maximum profit from the above example would be Rs 3750 (50*75). It would only occur when the underlying assets expires at or above 9300. In this case, both long and short put options expire worthless and you can keep the net upfront credit received that is Rs 3750 in the above example. Maximum loss would also be limited if it breaches breakeven point on downside. However, loss would be limited to Rs 3750(50*75).

For the ease of understanding, we did not take in to account commission charges. Following is the payoff chart and payoff schedule assuming different scenarios of expiry.

The Payoff Schedule:

On Expiry Nifty closes at

Payoff from Put Sold 9300 (Rs)

Payoff from Put Bought 9200 (Rs)

Net Payoff (Rs)














































Payoff diagram




Impact of Options Greeks:


Delta: Delta estimates how much the option price will change as the stock price changes. The net Delta of Bull Put Spread would be positive, which indicates any downside movement would result in loss.

Vega: Bull Put Spread has a negative Vega. Therefore, one should initiate this strategy when the volatility is high and is expected to fall.

Theta: Time decay will benefit this strategy as ATM strike has higher Theta as compared to OTM strike.

Gamma: This strategy will have a short Gamma position, so any downside movement in the underline asset will have a negative impact on the strategy.

How to manage Risk?

A Bull Put Spread is exposed to limited risk; hence carrying overnight position is advisable.

Analysis of Bull Put Spread Options strategy:

A Bull Put Spread Options strategy is limited-risk, limited-reward strategy. This strategy is best to use when an investor has neutral to Bullish view on the underlying assets. The key benefit of this strategy is the probability of making money is higher as compared to Bull Call Spread.

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e-KYC Explained

e-KYC Explained
by Prasanth Menon 26/05/2017

How to do e-KYC?

Investors have to provide physical documents as verification of their Proof of Identity and Proof of Address. Submission and verification of these documents are requisite for investors to access financial products. However, with the enablement of Aadhaar based e-KYC service from UIDAI provides investors an instant, electronic, non repudiable proof of identity and proof of address along with date of birth and gender.

What is e-KYC service?

e-KYC that stands for electronic-KYC is only possible for those individual who have Aadhaar numbers. As per RBI, while using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising your name, age, gender, and photograph electronically to the bank. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification. The purpose of authentication is to enable investors to provide their identity and for the service providers to supply services and give access to the benefits.

The authentication and e-KYC services are available to different sectors of the industry ranging from Banks, Insurance companies, Government Organizations, Passport Offices, Airports, Depository Participants, Payment Gateway Provider and more.

Advantages of Aadhaar authentication and e-KYC

  • Easy to use process

  • Elimination of paper verification, movement and storage

  • Easy authorization system for investors

  • Real time, faster and instant results

  • Promotes paperless environment

  • Forged documents risk reduces

How to use this facility

  • The investor has to log into the KRA website (always use this service from a SEBI approved company) and enter basic details such as PAN number, email id, AMC name, bank name, date of birth, mode of holding and tax status.

  • Following this activity, the KYC compliance status of the investor will be displayed. If the investor is not KYC compliant, the individual is required to add their Aadhaar number and registered mobile number.

  • Once the user provide required details including Aadhaar number and registered mobile number, then the Aadhaar authentication screen is displayed.

  • Meanwhile, an OTP is sent to the registered mobile number, which has to be entered on the screen along with pin code.

  • Following Aadhaar authentication, the investor is required to upload a self attested copy of e-Aadhaar.

  • After this, the investor will be asked to select consent declaration displayed on the screen for further processing of the request.

  • Final stage of the process commences here wherein the Aadhaar and registered mobile number of the investor is verified with the Aadhaar database of the UIDAI.

  • Post successful confirmation, the screen displays that the investor is e-KYC verified and can carry out transactions in mutual funds.

The above mentioned is an easy and straightforward process to complete e-KYC if instructions are followed to properly and any investor can do it by themselves. A noteworthy pointer to remember is that this facility is currently available only for individual investors with single mode of holding. Also, as per Sebi rules, an individual is currently permitted an investment of Rs 50,000 each financial year per mutual fund for Aadhaar based e-KYC using OTP verification. However, if investor intends to do investment above Rs Rs 50,000 in a financial year, then in-person verification is a requisite.

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Best Mutual Funds to invest in as Assets Under Management reach record high

Best Mutual Funds to invest in as Assets Under Management reach record high
by Priyanka Sharma 26/05/2017

The Mutual Fund industry has witnessed a steady surge in investment in the recent past, especially among retail investors. According to the data published by the Association of Mutual Funds in India, the Average Assets Under Management (AAUM) of the Indian Mutual Fund industry for the month of March 2017 stood at Rs 18.58 lakh crore. For an investor, it has become increasingly important to know about different MF options available and the respective returns.

Within a 10 year period, the AUM of the Indian MF Industry has grown from Rs 3.26 lakh crore as on March 31, 2007 to Rs 17.55 lakh crore as on March 31, 2017. Perhaps one of the highlights of this trend is that there has been a consistent increase in the number of folios under equity and the ELSS schemes. Data showed that the total number of accounts, or folios as per Mutual Fund parlance, as on March 31, 2017 stood at 5.54 crore, while the number of folios under equity, ELSS and balanced schemes, wherein the maximum investment is from retail segment, stood at Rs 4.44 crore.

Today, an average Indian investor is more aware about Mutual Fund investments and wants to create wealth in a systematic and planned manner. Indian Mutual Funds have currently about 1.35 crore SIP accounts through which investors regularly invest in Indian Mutual Fund schemes. AMFI data shows that the MF industry added about 6.26 lakh SIP accounts each month on an average during the current financial year, with an average SIP size of about Rs 3,200 per SIP account.

Given the heightened interest of an average investor and the plethora of investment opportunities available today, here is a list of funds across different segments, including Balanced Funds, Large-cap and mid-cap and multi-cap funds, and debt funds, besides others.

Balanced Funds

Scheme Name

Corpus (Rs cr)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

Expense Ratio (%)

HDFC Prudence Fund(G)







ICICI Pru Balanced Fund(G)







Birla SL Balanced '95 Fund(G)







Large Cap

Scheme Name

Corpus (Rs cr)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

Expense Ratio (%)

SBI BlueChip Fund-Reg(G)







Birla SL Top 100 Fund(G)







IIFL India Growth Fund-Reg(G)








Scheme Name

Corpus (Rs cr)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

Expense Ratio (%)

Reliance Growth Fund(G)







Birla SL Equity Fund(G)







Franklin India Prima Plus Fund(G)







DSPBR Small & Mid Cap Fund-Reg(G)







Reliance Mid & Small Cap Fund(G)








Scheme Name

Corpus (Rs Cr)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

Expense Ratio (%)

UTI Mid Cap Fund(G)







SBI Magnum MidCap Fund-Reg(G)







Franklin India Prima Fund(G)







HDFC Mid-Cap Opportunities Fund(G)








Scheme Name

Corpus (Rs Cr)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

Expense Ratio (%)

Franklin India Smaller Cos Fund(G)







Reliance Small Cap Fund(G)