What Is The Difference Between Exchange Traded Funds (ETFs) and Mutual Funds (MFs)?

ETFs vs. Mutual Funds

It’s important for investors to understand the key differences between traditional mutual funds (open-end) and exchange-traded funds (ETFs). Each has its advantages and disadvantages. This knowledge can translate into making informed investment decisions.


ETF's can be bought or sold just like stocks through stock exchanges anywhere across the country. While, mutual funds do not see price variation during trading hours as the Net Asset Value (NAV) is set at the end of each trading day. This gives an added advantage to ETF over traditional funds.

Rate of Return:  Most of the ETFs track a particular index and are considered to have lower expenses than actively managed mutual funds. However, when investing in an ETF, an investor needs to pay commission to the broker. Investment in ETFs works out to be cheaper when compared with traditional mutual funds or index funds in terms of fees and other expenses.

Sales Load: ETFs do not attract any sales load or there are no minimum investment, where as traditional mutual funds, may have both.

ETFs does not attract Taxation ETFs are considered more tax efficient when compared to mutual funds. 

While mutual funds and ETFs are different, both can offer exposure to a diversified basket of securities and can be good vehicles to help meet investor objectives. What is important is for investors to pick the best choice for their specific investing needs, whether an ETF, an open-ended mutual fund, or a combination of both.

Investments Worth Considering For Your Retirement Funds

Investments Worth Considering For Your Retirement Funds.

Retirement can be a period of our lives we don’t think about too much. Especially while we are in our twenties and thirties. It’s just not something we want to consider, the whole growing old thing. It can be a chapter of our lives that can seem far away. Sometimes priorities in our lives take over. But before we know it we will be hitting the age where we retire from work and then what? What do we do then? How do we cope and live? This is why it is essential to think about retirement as soon as you can. The earlier you begin to plan for your future the brighter it will be. Both in experience and financially.


Finances, in particular, can be a worrying subject for us all. Some of us may even be struggling to make ends meet now yet alone be thinking about money away for savings and our future. I can understand that. Living in the present is important and getting by month to month is just what we have to do to survive. But with careful planning and consideration anyone can make some plans for the future. It will be worth it to you in the long run. So I thought I would share with you some worthy investments to consider. Some are for thinking about now, some are for a few years time. But all of them can make your retirement a much brighter period of life. Besides, why shouldn't you enjoy that stage?


Equity release

If you own your property right now, then you have already made a good decision for your future. Owning at least one property ensures that you have some form of investment to consider in the future. This is where equity release can come in when it comes to your retirement. For those of you that are unfamiliar with the term, equity release means releasing equity from your property. So If your property has a loan but is worth more than that, then the difference is your equity and your profit.

This money is yours to what you will. Some people would leave the equity in the property as part of the estate to be left when they pass away. However, others may want to use that money to live or experience life in their retirement. Funds could go towards traveling with your loved ones or experiencing new things with your family. Creating lasting memories. Or, if you haven't considered any other funding for your retirement, this lump sum could just be what you need to survive the rest of your years.

The first thing to do is to invest in a property as soon as possible. Once you have done that you have at least one investment that will pay off in the future.


Creating a property portfolio

Property is a great investment, we have already discussed that. So why stop at one property when you know it can be quite a lucrative profit earner. This means you could potentially buy and sell property over the years. One great way to do this is to buy a property that needs work, and then sell on once it is saleable. Or you could build a portfolio and rent out properties to other people.

It’s worth speaking to your bank as you will need some good financial backing. But in the future, this could be the only nest egg you need to have a great retirement.

Investing in pension schemes in work or personally

Pensions are another great source of income for your retirement. You may be lucky enough to receive a workplace pension from your employer. Sometimes these can be quite lucrative and beneficial to you. However, it is also worth considering a personal pension as these can be much more profitable to you in the future.

There are many options to consider, so it’s worth speak to someone who is an expert in pensions. You might find you only need to contribute a small amount, but something is better than nothing in these cases.


Considering the investment of funds in precious metals

Sometimes funds can be spent if you have easy access to them. We are only human after all. So something worth your consideration would be to have the funds turned into precious metals like gold. A gold bullion investment could work out well for you as the value of metals doesn’t tend to depreciate as some things can.

Once you need the funds just cash in the gold bars and you will have your cash. You may even find you make money as not only does the value not depreciate as much but it can increase over time.

Taking a risk with stocks and shares

Stocks and shares can be a big money earner. But they can also be risky. The beauty of these is that the investment is flexible. So if you find that your stocks and shares are rising you could sell them and cash in on the profit quickly. But you may also lose, so sometimes it’s worth hanging on in there.

Stocks and shares can be a great investment, but you need to be clever with your choices. So it’s worth getting advice from professionals who can offer some great advice. It may also be worth investing money that you don’t mind losing. Smaller amounts at a time may be better. This is because the market can change overnight, you may have money one day, and then that company goes bust the next day, and you lose it all. It’s a risk, but it can be a profitable one that is for sure.


High interest savings accounts

Finally, the last investment to consider would be good old-fashioned high interest savings accounts. You can still get some good deals if you hunt them out. Often these won’t be instant access, so you have to be happy to lock your money away for a period. But it can be a nice pay off by taking the interest rate to the end of it’s term. It can be considered one of the safest ways to invest your money, but it won’t necessarily offer you the highest return.

I hope this has made you think about your retirement funds.

Benefits Of The 1031 Tax Exchange For Property Investors

Benefits Of The 1031 Tax Exchange For Property Investors

If you’re a property investor - or are considering putting your money into real estate, - make sure you are aware of the 1031 exchange. It’s a common strategy that many investors use to limit their exposure to tax. In IRC 1031, investors can sell or give up a property and reinvest the proceeds into another, with the tax due being deferred. Let’s take a closer look at some of the many benefits the 1031 exchange can bring anyone seeking to bolster their property portfolio.

Defer your taxes

As we mentioned above, the 1031 exchange enables you to defer the tax you have to pay on a sold property at a later date. In effect, this allows you to use money due to the government to grow your property holding and defer your tax-deferred exchanges.


The 1031 exchange allows you to reinvest that tax money into new property, giving you more leverage when it comes to prices. You might be able to buy a property that is significantly more valuable than you could before, as an example. Or, you could even purchase several properties, and enjoy all the investment benefits that come with it.

Climb the ladder

With this in mind, it’s clear that it is possible to use the 1031 exchange to trade up your property for one of higher value. And, you can keep doing this for as long as you wish. This puts you in a position of plowing as much money as possible into your portfolio and growing it to a level that would otherwise be out of reach. It will help you become a lot more competitive. Even with a single property, there are significant tax gains to draw upon. You can expect a large increase in your cash flow and your net worth will rise. Not only that but when your portfolio is passed down to your kids, it could be possible for them to eliminate a lot of their tax burden. We’ll look a little closer at that later.

Easing your responsibilities

As any property investor will tell you, the process isn’t as easy as buying a building and watching the profits roll in. You will be responsible for your tenants, and when you ramp this up across several properties, it can be a high workload. Not to mention the expense! Struggling investors can instead use the 1031 exchange to replace current properties with managed alternatives. It’s an easier way to manage your portfolio when your responsibilities are bursting at the seams.

No legacy

As Benjamin Franklin once said, nothing is certain in life except death and taxes. And, even death can’t escape the IRS - your heirs will be liable for all your unpaid tax. However, if you die after using 1031, things are a little different. You will still accumulate capital gains tax that needs to be paid. But, your heirs will not be liable for those accumulations. Instead, they will only have to pay for the adjusted, current value of the property.

New KYC Norms for your Mutual Fund Investments

New KYC Norms Mean for Your Mutual Fund Investments

All mutual fund investors, whether new or existing, will have to provide additional Know Your Customer (KYC) details to their fund houses.


Key Points:

  • In September this year, the Association of Mutual Funds of India (AMFI) came out with a circular directing mutual fund companies to collect additional information from new investors from November 1, 2015 to comply with norms of the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). The mutual fund body advised fund houses to make the additional KYC information mandatory for investors from January 1, 2016.
  • The additional KYC details a mutual fund investor has to provide under FATCA and CRS include gross annual income, net worth, occupation, source of wealth and country of birth.
  • If the investor is tax resident in any country other than India, the additional information required will include tax identification number and country of tax residency.

How to update?

  • An investor can update the information both online and offline. For investments in more than one mutual fund, investors have the option to update the information online by visiting the respective website of the fund house.
  • The investor can also download the form and submit it on the point-of-services (POS) or the nearest office of the mutual fund house.
  • To avoid updating the KYC information with multiple fund houses, the investor can simply update it with the registrars.
  • If mutual fund investor is serviced by a single registrar, they don't have to have to update the information with both the registrars. But in case they want to start a new investment in a mutual fund which is using services of the other registrar, they have to update the information with both registrars.

Coffee Day Enterprises IPO Review

Coffee Day Enterprises (CDEL) is entering the market with an initial public offer (IPO) to raise Rs 1,150 crore at a price band of Rs 316-328 per equity share. The company owns the popular coffee chain – CafĂ© Coffee Day – and is the largest coffee retail company in India. The company also has diversified business interests through its subsidiaries across segments like logistics, financial services, hospitality, and technology parks.

The entire issue is for fresh equity which would be used by the company to finance the expansion of its coffee business, repayment and pre-payment of loans to the parent company as well as subsidiary and utilise the rest for general corporate purposes. At present, its promoters hold 63.3 per cent stake in the company; post-issue the shareholding will come down to 52.6 per cent.


Issue Details:

 Issue Open: Oct 14, 2015 - Oct 16, 2015
 Issue Size: Equity Shares of Rs. 10
 Issue Size: Rs. 1,150.00 Crore
 Face Value: Rs. 10 Per Equity Share
 Issue Price: Rs. 316 - Rs. 328 Per Equity Share
 Market Lot: 45 Shares
 Minimum Order Quantity: 45 Shares
 Listing At: BSE, NSE

At the higher end of the issue price, adjusting for the valuation of the listed plays (SLL and Mindtree) along with IT play, the coffee business is available at 25-26x its FY2015 EV/EBITDA which is in line with some of the listed comparable companies and thus is not cheap. However, given the strong brand image, extensive distribution reach and growing disposable income in India, the company is an attractive play on urban discretionary consumption and investors could look at it with mid-to-long term investment horizon. There may be listing gains, which risky traders would want to take to.

SEBI increases lot sizes to Rs. 5 lakhs

In a major move that could change the game in derivatives market, the Securities and Exchange Board of India (SEBI) has increased the minimum contract size in equity derivatives segment from Rs. 2 lakhs to Rs. 5 lakhs.

nifty futures

Accordingly, the framework for determination of lot size for derivatives contracts is modified as under:

  • The lot size for derivatives contracts in equity derivatives segment shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs. 5 lakhs and Rs. 10 lakhs.
  •  For stock derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 25, provided the lot size is not less than 50. However, if the contract value of the stock derivatives at the minimum lot size of 50 is greater than Rs. 10 lakhs, then lot size shall be fixed as a multiple of 5, provided the lot size is not less than 10.
  •  For index derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 5, provided the lot size is not less than 10.

The aforesaid provisions shall be made effective from the next trading day after expiry of October 2015 contracts. The stock exchanges shall review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month,

This move will impact derivatives volumes in the short-run, since retail participation will be reduced substantially.