Investing your hard earned money can be a daunting task. On the other hand keeping money in the banks or slipping it into FD may be easy, but is unintelligent. To solve the predicament, one should choose safe investments options such as debt mutual funds in the beginning and over time move their portfolio to include higher growth potential investments such as equity funds. 

Most of the people procrastinate or avoid investing because they find it difficult to

  • Identify right investment products
  • Undergo piles of paperwork
  • Track investments
  • Manage the tax part

Well the good news is that these arguments have lost their relevance in recent times. With innovations in technology and finance, investing can not only be safe, but also seamless and rewarding. The key thing is that it’s never too early to start investing money. But there are few recent developments in Indian ecosystem that have made the investing all the easy and simple.

Unbiased advice for the right investment product

Everyone has a different expectation from investments. Some people want it safe – “i should not loose my money”, whereas some want higher returns than anyone else. Some people don’t want to invest for too long whereas some may not need to money anytime soon. For a common man, it is indeed difficult to choose from 10,000+ mutual funds, ETFs, Bonds etc. the right product.

Robo-advisor solves this problem to a great extend. A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Recently there have been a few robo advisors in India. A good such advisor would do three things –

  1. curate a list of best performing product for each category by doing unbiased analysis
  2. understand the risk profile and goals of the investor and define correct investment requirements
  3. matchmake between the investor and the product

An unbiased advisor would minimise the costs of investment by recommending zero commission schemes under direct plans and asset allocation to maximise the risk adjusted returns.

Direct plan – as an investor you have an option to invest in regular scheme or direct scheme. These are identical except the fact that direct scheme have zero commissions whereas regular schemes have 0.5-1.5% commissions for the distributors.

Asset allocation – never put all your eggs in the same basket. Good asset allocation would distribute the money in 4-5 schemes such that for a given risk, the expected profits would be highest.

Piles of paperwork is gone

Till recently regulatory requirements for an investment involved a lot of paperwork. One was required to submit Know Your Customer (KYC). This involved signing forms and submitting hard copy of personal documents such as PAN and address proof. Nowadays, the entire KYC can be done on mobile or web, within 2 minutes. All you need to do is whatsapp/email photos of PAN, address proof. There exists options such as Groww, where you can start investing 100% paperless on the mobile app or website. The subsequent investments/withdrawals can be done with just a tap on the mobile. Most of the modes of digital payments are supported with these new platforms- NEFT, IMPS, debit card, mandate There is no need to remember the Folio No. (investment account with a mutual fund) or keep the investment documents or statements to transact. 

In addition to the technology advancements in the financial space, India stack is playing a pivotal role in digitizing most of the regulatory requirements for investments.

Tracking is available on mobile

One of the biggest fears of investing is “how would i withdraw my money; how would i find the agent who sold me the scheme?”. People fear that they need to keep the investment related papers safely and keep checking them to make sure they don’t forget. Fortunately there are multiple options available nowadays to see all your investments, withdraw etc. online. For e.g. cams, karvy gives you option of tracking/managing all your investments based on pan/registered email ID at one place. Besides these, if you chose your investment platform right, you get all the tracking, switching, withdrawing on your mobile. 

Taxation is simplified

Filing taxes can a tedious task. Good thing is that the investments in mutual fund are subject to only capital gain tax. So no need to worry for TDS. Better, the equity or balanced funds don’t even have any tax if invested for more than one year. Just look at the annual statement and you would know what is your income from other sources. Tax calculation is very simple and most of the investment platforms would provide with the exact calculations w.r.t the investments.  Here is a detailed description of taxation on the investments in Mutual Funds.

Overall, it’s the time that one should stop losing money by keeping it in the banks and start investing.