Getting Bad returns from your mutual fund? Do the Rolling Returns Analysis!

Not happy with your mutual fund performance?

Do you think its a bad mutual fund, because it is not doing well from last many years?

A lot of mutual funds investors lose their patience looking at their mutual fund’s returns after they invest for 2-3 yrs. Its commonly suggested that an equity mutual fund will perform very good over the long term and one can expect double-digit returns, however, if the fund does not return back good returns within 2-3 yrs itself, the investors get very nervous and start judging their mutual fund quality and wonder if they made a right choice or not!

Today I will tell you how to judge the returns of mutual funds using “Rolling Returns” analysis, which will help you to get more confidence in your mutual fund and will help you learn many aspects!

Let’s start!

You Returns will invest a lot depending on when you invested!

Before we go into rolling returns, let’s understand the issue!

Take HDFC Midcap opportunities growth for example

  • 10 yrs CAGR return: 14.96%
  • 5 yrs CAGR return: 11.26%

At the time of writing this article, the returns from this fund are very good. But can this fund give bad returns in a 2 yr period. The truth is that this same “good fund” can give very different kind of returns in a 2/3 yr period depending on when you bought the fund.

Here is some data.

Mutual Funds returns when invested for 2 yrs timeframe in HDFC Midcap opportunities

You can see that the 2 yrs return can be 22.8%, 0%, 39.5% or -5.1% depending on when a person entered the fund. So a lot depends on when you entered in the fund.

Now let’s see the same thing for 3 yr time frame. Mutual Funds returns when invested for 3 yrs timeframe in HDFC Midcap opportunities

Again, you can see that for a 3 yr period – the experience can be very very different. It’s not always possible to enter at the lowest point and many times, investors invest their money for the long term when the near term returns are going to be bad. However, they never get prepared for this.

Investor mind is also not designed to stay calm when returns go in negative and that’s when investors make a wrong choice of exiting the funds even if at the fundamental level, the fund has no issues and its just the volatility of the equity which is driving the fund into negative return zone!

You can see that this approach of just looking at the point to point return does not give you enough detailed information about the fund and its volatility.

Rolling Returns – What it is and How to look at it!

Rolling return means a series of returns data for each and everyday investment for a certain time frame.

So in our example of HDFC Midcap opportunities, lets assume a period of 14 yrs from 1st Jan 2007 to 30th Dec 2020. Thats approx 5110 days. If you do a 2 yr rolling return analysis, it means that a period if investing for 2 yrs and you are plotting the CAGR return for each day of investment from the start. (that’s 730 days of investment)

So you invest on

  • 1st Jan 2020 and exit on 1st Jan 2022 (1st instance)
  • 2nd Jan 2020 and exit on 2nd Jan 2022 (2nd Instance)
  • 3rd Jan 2020 and exit on 3rd Jan 2022 (3rd Instance)
  • ….
  • ….
  • ….
  • 30th Dec 2018 and exit on 30th Dec 2020 (4380 instances: 5110 – 730)

So you can plot these 4380 data points and that graph is called a rolling returns graph. In the same way, you can have a 3 yr, 5 yr or even 10 yr rolling return graph.

Check out the example of HDFC Midcap opportunities rolling return chart for 2 and 3 yrs period for last 14 yrs. You can see that in a 2 yr period, the highest CAGR has been around 60% and the lowest at -16% .. So it’s possible to see your investment go down by 16% in a 2yr period as per old data. The same kind of data is there for 3 yrs period too!

rolling returns data for last 2 and 3 yrs period

Rolling return graph will give you a deeper understanding of how volatile fund returns have been and even the probability of your return being in a certain range (only with past data). Note that its only historical data and the maximum and minimum returns can change depending on future performance.

Rolling Return data analysis

If you look at the chart above, you can conclude that if you want to invest in this fund – then you can see a downside of up to 10% in a 3 yr period because it has happened in the past. Also, you can see flat returns even in 5 yrs period which has happened in the past.

This kind of analysis tells you that because of volatility even this kind of good funds can see a period of non-performance and flat returns.

I hope I was able to explain what is rolling return in a simple manner.


Remember that rolling returns exercise is a great tool for analyzing the mutual fund, but it’s not the final exercise in itself. There are many other kinds of analysis which is possible and this exercise alone does not give any final judgement.

If you are not happy with your fund performance, then I suggest going through this exercise!

Do share your comments on this!

How to do KYC for Mutual Funds? Its quick and easy!

Are you a new investor in mutual funds ? If yes, then you might be having these questions in mind.

  • What is KYC ?
  • What do I need to do to register my KYC?
  • Whom should I approach?
  • Do I need to do my KYC every time before investing into mutual funds?

So, in this article you will get the answer of all such queries.



What is KYC ?

KYC i.e. Know Your Client is a process required by RBI norms which needs to be completed before starting any investments. It is used as an eligibility test of an investor to prevent illegal activities like money laundering. So, if you are planning to start investing in mutual funds, you need to register your KYC first.

Do I need to do my KYC every time before investing into mutual funds ?

No, as KYC is one time exercise (central process) needs to be done before investing. Once your KYC is registered you need not to undergo same process again while investing with different mutual fund houses.

How can I register my KYC ?

For KYC registration, KYC form has to be filled with all the details and needs to be submitted along with self attested copies of required documents (as discussed below).

Also note, that if you want to invest in mutual funds (Resident or NRI), Click here to know about Jagoinvestor mutual fund services. We also help you in getting your KYC done

From where can I get the KYC form ?

You get get the KYC form via 3 sources:

  1. For this you need to visit the website of CAMS KRA, Karvy or other registrars.
  2. Or you can also visit the website of the fund house where you want to start your investments.
  3. Or you can reach an Independent Financial Advisor.

What documents are required to be attached with KYC form ?

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For Resident Indian following documents are required :

  1. Copy of photo ID proof such as Aadhaar, Passport, Voter ID, or Driving license etc.
  2. Copy of address Proof eg. Electricity bill, Aadhaar etc.
  3. Copy of PAN card
  4. Two passport size photos
For Non-Resident Individuals(NRIs) following documents are required :

  1. Copy of Passport is compulsory
  2. Copy of Overseas Address Proof
  3. Copy of Indian PAN card
  4. Two passport size photos
  5. Copy of other national or Citizenship Identification Number or Taxpayer Identification Number


Important Points:

  1. POI card needed for POI
  2. In case your overseas address is not in English, you need to get it translated by a translator in your city and get their stamp
  3. In case you do not want to travel to India just for making investments, you can always give POA to someone trusted who can do the process for you.
  4. In person verification is mandatory for true identity verification. So, Fund houses or registrars does IPV via video calls.

Where can I check my KYC status?

Once your KYC form along with required documents is submitted to the registrars(CAMS, Karvy, Sundaram etc.) It will take 4 to 5 days in registration. Once it is registered you can start investing into mutual funds. You will get the  alert about the registration via mail or SMS. However, if you want you can check status of your KYC by entering your PAN in either of the links below:

You can also refer these links for downloading KYC application form.

Conclusion :

For KYC you need not to go anywhere, it can be done from your home. So, if you are planning to start investing in Mutual Funds, KYC is the first step to it. And if you are having any trouble in KYC or while investing, do let us know in the comment section.

Balanced Advantage Mutual Funds – Reduces Risk and gives good return at the same time !

In the world of mutual funds, there are various kinds of categories for different requirements and risk appetite. One of the categories I want to talk about today is the “Balanced Advantage” Category.

What are Balanced Advantage Mutual funds?

In one line, a balanced advantage fund dynamically shifts between equity and debt depending on the market valuations. What it means is that when the markets are over heated and high, the fund decreases its exposure to equity and move the money into debt, so that if the markets fall, the down side is protected.

In the same way, when the markets are on the lower side, the fund increases the exposure to equity and reduces the debt side.

This strategy significantly reduces the volatility of the fund compared to an equity fund and at the same time, the returns potential also comes down.

A lot of funds in this category also name their funds as “Dynamic Asset Allocation Fund” rather than “Balanced Advantage”

Some of the examples of the funds in this category are

  • ICICI Prudential Balanced Advantage Fund
  • Motilal Oswal Most Focused Dynamic Equity Fund
  • Aditya Birla Balanced Advanced Fund
  • Kotak Balanced Advantage Fund
  • Reliance Balanced Advantage Fund
  • HDFC Balanced Advantage Fund

How does a Balanced Advantage Mutual fund work?

A balanced advantage fund uses a predefined algorithm and based on Market PE or P/BV or some other internal indicator to determine if markets are on the higher side or lower side and then based on that they keep increasing or decreasing the equity exposure.

To explain you more about this, I will take an example of how the ICICI Prudential Balanced Advantage fund which was the first fund of this type in the mutual fund Industry and very successful in that category.

Disclaimer : I am taking the example of ICICI balanced mutual fund only because it’s the biggest in the category and quite old one in Industry and we have some data to show. It’s not a recommendation to buy. We have some equally good funds from other AMC’s also.

They use P/BV (price to book value) as an indicator to decide is markets are over heated or not.

Equity Exposure changes with Market movements

Below you can see how the equity exposure has changed over time from Apr 2010 – Sept 2014. You can see that equity exposure increases when Sensex levels go down and vice versa.

balanced advantage equity exposure

Limits downside and upside

The main benefit of Balanced Advantage funds is that it controls and extreme upside or downside. So you will not see very deep losses, but at the same time, you will also not see very high profits.

However, the balanced advantage funds will provide decent market returns (but not comparable to pure equity funds)

balanced advantage wealth creation

Even in the flat markets, you can see that the balanced advantage category has generated positive returns by taking advantage of the volatility.

balanced advantage performance flat market

Who should invest in Balanced Advantage (or Dynamic Asset Allocation) funds?

Now the big question is – Which kind of investors should invest in Balanced Advantage fund and When?

Who should invest?

It’s mainly for those investors whose focus is on reducing the risk, but at the same time enjoying better returns than Fixed Deposits. The fund value will still be volatile, but the intensity will not be as high as a pure equity fund. From Returns point, it will give decent return of 2-3% above FD returns, but that is all you should expect over a long term.

When to Invest?

As you have seen that the equity exposure is already controlled by the fund itself, you can actually invest anytime you want. There is no need to time the market, because the fund itself times the market internally. There are no issues if you want to put lump sum or SIP.

Who should not invest?

An investor who wants higher return potential and can take the higher volatility, should not be ideally investing in these funds. However, if you are unsure of the markets levels and want to play safe, you can invest lump sum in balanced advantage fund and then setup a STP (Systematic transfer plan) to an equity fund. This will reduce the risk to some extent.

Important: Don’t confuse this category of funds with “Balanced Funds”. Balanced Funds are those mutual funds that have a mix of equity and debt in their portfolio with equity exposure of around 65-70% and rest Debt.

A good choice for Retired Investors

I think these kinds of mutual funds are a very good choice for retired investors who want returns better than the fixed instruments and at the same time, can’t handle too much volatility in their portfolio. So some part of their portfolio can surely be invested in balanced advantage or dynamic asset allocation funds (same thing, but different name)

If you want to invest in balanced advantage mutual funds, you can contact the Jagoinvestor team to know the process and get a well-designed portfolio.

Let me know if you have any questions regarding this fund of a mutual fund? Was it clear enough?

Investing in Mutual Funds vs Direct Stocks – Which is better option?

Should you invest directly in stocks of companies or rather buy mutual funds? Which option is more “suitable” for you?

A lot of investors feel that they should invest directly in shares, because that’s what mutual fund do at the end of the day, however stock investing is a very different game altogether and the dynamics are very different there. Let’s see them one by one.

which is the best option to invest your hard earned money? Direct stocks or mutual funds?


#1 – Knowledge Required

Most of the people think that investing in stocks is as simple as buying some stocks using hot tips and then waiting for the stock to become multibagger in next few months / years.

Experienced investors know that nothing is far from truth. They know that it requires great amount of knowledge and expertise to study the company’s balance sheets and choose the right stocks for future. There are investors who have spent their life time in studying how to do stock investing and still they make big mistakes.

So coming to the point, stock investing is not a child’s play. It takes years of hard work and a lot of knowledge to pick the correct stocks, where as you do not need much knowledge when it comes to mutual funds investing.

Infact, mutual funds as a product is created for those investors who can’t spend much time themselves to study stock investing. You can just pick a “reasonably good” mutual fund on your own using some basic rules or hire a financial advisor who can do that for you.

#2 – No control on stocks chosen

When you invest in mutual funds, you can not control which stocks go in and go out from time to time. That is the job of the fund manager. You only invest in the mutual fund and give your money to the professional management. So you have ZERO control on the stocks which are chosen by the fund manager.

However when you do direct stock investing, you are the fund manager and you have full control over it. So based on your study, gut feeling, logic, hearsay, hot tips, you can buy and sell the stocks, but that’s not the case with mutual funds.

The person who is taking the decision of buying and selling of stocks is a professional who knows the game.

#3 – Professional Manager

There is a different between a pilot controlling the airplane and the doctor doing the same. There is a great chance that the airplane will crash if it’s handled by a doctor (unless he an additional qualification of flying planes).

The same happens when it comes to equities. A mutual fund is managed by a very high quality and professional fund manager who has years of knowledge of various things like economy, credit cycle, interest rates cycle, economy, fundamental analysis, taxation, businesses and has years of experience of equity markets across various countries. They have completed professional studies related to wealth management.

Structure of Mutual funds


When they manage and take decisions on which stock to buy or sell, they have very deep understanding the sectors and that business. They visit the companies, their factories and meet their top management. They have hidden knowledge sometimes on what is going on within the companies and can predict the future of companies in a better way compared to a normal person.

However, most of the equity investors feel they can successfully invest in direct stocks with great expertise for long term and generate great returns just like a professional manager.

An IT engineer sitting in a cubical at TCS or Infosys can surely buy some stocks based on hot tips, but can’t match the expertise of a professional fund manager who earns crores of salaries in fund houses (and if they can match, it then why not leave your job and shift to Mumbai)

#4 – Volatility & Return

This is very important point, hence read very carefully.

When you buy a mutual fund, you are investing a very large portfolio of different stocks which can range from 30-100 companies.

So your profits and losses are dependent on a large number of stocks, hence the risk is distributed among those stocks and in the same way the returns you get is the average of all. In short there is lower risk and lower return potential compared to a small 4-10 stock portfolio.

When you are a direct stock investor, how many stocks will you buy will decide how volatile is the returns from your portfolio. Most of the direct equity investors bet on very few stocks, they buy 5-10 stocks only (some times only 2-3). So each stock size is quite large in the portfolio and any change (up or down) impacts the overall portfolio return.

Most of the investors are not equipped to handle very high return or very high loss. If there is very huge return, investors sell their stocks and want to lock in the profits and in the same way if there is a steep loss, they want to sell it off and get out of the “risky” game.

In both the cases, investors feel the urge to get out and wait on the sideline, rather than stay in the game – because it’s emotionally very over whelming to handle it.

This is exactly the reason why you will find investors who have a mutual fund for last 10 yrs, but very rarely you will find an investor holding the same stock for 10 yrs.

#5 – Automatic Investments (SIP)

When you invest in mutual funds, there is a standard facility of automatic investing called SIP . This is a great way to automate your investing and create a habit of regular investing. This suits an investor who wants to systematically invest a fixed amount each month on a given date.

However when you buy stocks, you have to manually invest in each stock every month if you want to regularly invest in them. This becomes practically challenging and inefficient because human mind is lazy as per design. No matter how many reminders you set and how “committed” you are, after few months of “success” , it all falls apart for 99% of the investors.

Some portals like HDFC securities have now started the SIP in equities also, so what I am saying does not apply to each and every platform.

#6 – 80C Benefits

Direct stock investing has no 80C tax benefits, however if you invest in ELSS (tax saving mutual funds), you can avail the taxation benefits.

This is one small reason why you can prefer mutual funds over direct stocks

#7 – Active vs. Passive Involvement

Mutual funds are made for those investors who have no knowledge and no time on their side. Once you invest in mutual funds, your involvement is very limited in reviewing the funds over time. The important decisions of which stock to buy, when to buy, how much to buy is taken care by the fund manager and his specialized team of 5-20 research analysts.

How mutual fund works?

However, if you decide to directly invest in shares, all this has to be done by you. Even though it’s not exhausting like day trading, but still you have to study companies, keep a track of what’s happening with each companies in your portfolio, control your emotions (true for mutual funds also) and what not.

In short, you have to be quite active in direct stock investing. It gets tough to focus on stock investing because of so many things in life.

#8 – Fees and Cost

When you buy stocks directly, you only have to incur the demat account charges along with STT and transaction charges if any.

However when you invest in mutual funds, you have to pay something called as Expense Ratio. This is the fees which is charged on daily basis out of the funds, however you never see it yourself and all the NAV’s which are published are post-expense ratio.

These charges are in range of 2-2.5% for equity mutual funds (less charges for debt funds). So this is one point where direct stocks are better than mutual funds, but only if you are able to generate the same returns like mutual funds yourself. There is no harm to pay the fees if the fund manager is able to generate value for you in your wealth creation process.

Investing in stocks directly, just because you will save expense ratio is like not spending money on salt while preparing a dish, because you will save some money. You need to focus on the final taste.

However if you can do successful stock investing on your own, it does not make any sense to invest via mutual funds.

#9 – Emotional Bias

This one is Epic.

Your creation is always special for you and hence when you buy a stock based on whatever research and study you do, it gets very tough later to accept that you were wrong (incase you were) . You will become very biased about your buying decision and will not sell at the right time.

It gets very tough to accept that you were idiot in past for believing in a stock purchase decision and will not sell when the right time comes.

This is exactly why bad equity investors become long term investors. They stay with bad investments for many years and eventually loose. It’s your money and it’s your decision.


However when you invest in mutual funds, all the decisions are taken by a professional who is earning a salary for performance. They take decisions based on logic and keep the emotions out of their system. If their process says “SELL” , they sell it . If it says “BUY” , they buy it ! .


Finally, there are some benefits of going directly with stocks and in the same way with mutual funds. However , direct stock investing is a specialized game to play and it’s not everyone’s cup of tea. For those investors, who want to play little safe with their wealth creation, should choose equity mutual funds rather than trying to burn their fingers in direct equities.

Disclaimer – I would like to disclose that we as a company deal in mutual funds (click here if you want to invest in mutual funds), however we have tried to make sure that we are not biased when we are talking about direct stocks vs mutual funds. In some cases, direct stocks can really outperform mutual funds, but for general masses, mutual funds are better structured products when it comes to long term wealth creation.

What are Shariah compliant mutual funds? – An Ethical investment

Have you ever heard about Shariah-compliant mutual funds?

We get a lot of Muslim leads who want to invest in mutual funds and a lot of them mention that they would like to invest in mutual funds which are shariah compliant.

So lets look at the subject!

Shariah investment

Examples of Shariah-based Mutual Funds

Shariah-based mutual funds are just like other mutual funds which are structured according to the shariah rules. The restrictions or prohibitions mentioned above are considered to screen and select the funds and ensure that they are Shariah-compliant.

There are three funds in India which are shariah compliant –

1. Goldman Sachs CNX Nifty Shariah BeES Fund

2. Taurus Ethical Fund

3. Tata Ethical Fund

Let us look at some of the restrictions as per Shariah law.

1. Prohibition of interest

Payment of interest on your investment is considered as unjust or morally unfair. It prohibits the interest paid on all the loans.

Islamic finances rely on sharing the ownership of assets instead of borrowing or lending and thus along with the ownership of the business (buying shares of that business), it tends to share the profit as well as losses of the company also.

2. Restricted businesses

One of the important segments of this investment is that the companies which are involved in the business activities which are prohibited as per the shariah law cannot be part of shariah investment. It includes the businesses of Alcohol, drugs, gambling, and other immoral trades.

3. High risk

The main motive of Islamic investment is to avoid excessive risk because Islam forbids gambling. And this is the reason why derivatives are ruled out of it.

FAQ’s related to Shariah Mutual Funds

Q1. Who can invest in Shariah Mutual funds or Shariah investment?

Though this fund is based on Shariah Islamic law, it is not restricted for any investor. Which means anyone including individuals, NRI’s, HUF, companies or any other institute can invest in Shariah Mutual fund.

Q2. Is there any tax benefit on this investment in Shariah mutual funds?

Till now there is no tax benefit on the investment of Shariah Mutual funds.

Q3. Can an investor from other religion invest in Shariah ethical Fund?

Yes, any investor can invest in Shariah Mutual Funds irrespective of their religion.

Q4. What is the minimum amount for these funds?

You can start this investment with minimum of Rs.500. If you want to start your investments, we can help you. Just share your details with us and our team will call you

So this is all about Shariah investment, I hope you have got answers to all your queries. Still, if you have any doubts please share your query in the comment section.

NRI investment in mutual funds – A complete and detailed guide

Most of the NRI’s who are new to mutual funds have this confusion if they can invest in mutual funds in India or not?

In this article, I will share with you all the rules, restrictions and some of the important points that NRI investors should know before investing in Mutual funds.

Can NRI invest in mutual funds in India?

The simple answer is YES. NRI’s can invest in mutual funds in India.

In the case of NRIs, no special approvals are to be taken from SEBI or RBI, however the documentation can be little more and in case of US and Canadian NRI’s, there are some limitations in terms of which AMC’s they can invest in.

So let’s look at the basics first.

NRE or NRO accounts should be used

An NRI can invest in mutual funds only from an NRE or NRO bank account. The Non-Resident External Rupee (NRE) account is a rupee account from which money can be sent back to the country of your residence and the Non-Resident Ordinary Rupee (NRO) account is a non-repatriable rupee account.

Here is a detailed 30 min video explaining NRE/NRO accounts along with various other basics for NRI’s

Which means that if you are living in particular country and you want to invest in Indian mutual funds, but later in future, you want to redeem back the money and use it back in your country, then its better to invest by NRE account as its repatriable, otherwise NRO account can be used.

Procedure for Investing

For an NRI the procedure of applying in a mutual fund is similar to the one followed by residents.

Step #1 – KYC (Know your client)

This is one-time documentation required to invest in mutual funds and its a requirement set by SEBI. For doing your KYC, the following documents are required.

  1. Copy of Passport is compulsory
  2. Copy of Overseas Address Proof (in English)
  3. Copy of Indian PAN card
  4. Two passport size photos
  5. The fully Filled KYC form

You can complete your KYC either by taking support from a mutual fund distributor or directly submitting the filled KYC form at CAMS or KARVY Offices in your city by personally visiting them.

Important Points:

  1. Incase of POI, the POI card is also required in documentation
  2. In case your overseas address is not in English, you need to get it translated by a translator in your city and get their stamp
  3. In case you do not want to travel to India just for making investments, you can always give POA (Power of attorney) to someone trusted who can do the process for you. In our case, a lot of NRI readers of jagoinvestor, courier us their documents and we help them in doing their KYC and starting their investments.

Once your KYC form along with required documents is submitted to the registrars(CAMS, Karvy, Sundaram, etc.) It will take 4 to 5 days in registration. Once it is registered you can start investing into mutual funds. You will get the alert about the registration via mail or SMS. However, if you want you can check the status of your KYC by entering your PAN in either of the links below:

You can also refer to these links for downloading the KYC application form.


There is something called FATCA, which is also added in KYC documentation these days and it’s done for all investors. However, its mainly required for US and Canada investors. One has to provide information like country of tax residence, tax identification number from that country, country of birth, country of citizenship, etc.

Once the FATCA is submitted, NRI can start investing in mutual funds.

NRI’s from the US and Canada

Now, since the last few years – most fund houses in India don’t allow NRIs from the US and Canada to invest with them due to cumbersome compliance requirements under FATCA or Foreign Account Tax Compliance Act. When FATCA came into place, fund houses stopped taking investments from the USA and Canada because of the complexity associated with the compliance. However now, following fund houses accept NRI investments from US and Canada

  • Birla Sun Life Mutual Fund
  • SBI Mutual Fund
  • UTI Mutual Fund
  • ICICI Prudential Mutual Fund
  • DHFL Pramerica Mutual Fund
  • L&T Mutual Fund
  • PPFAS Mutual Fund
  • Sundaram Mutual Fund

Some of these fund houses have certain conditions on which they allow investors based in the USA and Canada to put money in their schemes. For example, ICICI Prudential AMC, Birla Sun Life Mutual Fund and SBI Mutual Fund allow investments only through the offline transaction with an additional declaration signed by the client. Similarly, L&T Mutual Fund doesn’t allow US and Canada based clients to invest in close-ended funds.

So, if you are the US or Canada NRI then look after the procedure and norms of Mutual funds in regards to NRIs of US/Canada before investing. We help a lot of our US and Canada clients to invest in mutual funds by making sure that their portfolio is designed well out of these limited sets of AMC which allows investments.

What if I was investing in mutual funds and moved to the USA, now I am an US NRI??

In this case, if the AMC you were investing with, continues to accept US NRIs then you just need to update the documents and have your FATCA verified, else you can just keep your investments as it is.

How do redemptions work for NRI?

When an NRI investor redeems the money from the mutual funds, the amount is credited back to your bank account after deduction of the applicable taxes in the form of TDS. Below are the taxation rules

NRI Taxation rules

NRI investors often fear that they will have to pay double tax when they invest in India. Well, this will not be the case, if India has signed the Double Taxation Avoidance Treaty (DTAA) with the respective country. For instance, India has signed this treaty with the US. Hence, you can claim tax relief in the US, if you have already paid taxes in India.

So if you have already paid X amount in India as tax, and If your taxation in the current country is Y, then you just need to pay Y-X tax in your country, provided the double taxation avoidance treaty is signed (in most cases its there for sure). Some documentation will be required for this benefit.

Equity and Debt taxation

The gains from equity mutual funds (funds where the composition of equity and equity-related instruments in the portfolio is 65% and above) are taxable based on the holding period. Short term capital gains (holding period 12 months or less than 12 months) attract tax at the rate of 15%. However, Long Term Capital Gains (holding period more than 12 months), in excess of Rs 1 Lakh, are taxable at the rate of 10%.

In case of debt funds (Hybrid funds with less than 65% equity exposure, Gold funds etc all are Non-Equity funds) Short Term Capital Gains (holding period less than 3 years) are taxable at the rate of 30%. Holding the fund for more than three years will result in a 20% tax on the gains with indexation benefit. LTCG on non-listed funds will be taxed at 10% without indexation.

Below given table shows the rate of TDS for NRI redemption on the basis of different holding periods and the type of funds.

Tax rate for TDS on NRI Mutual fund redemption 

If you are an NRI and you wish to start investing in Mutual funds, you can contact our team here.

If you are looking for Financial Planning, then visit our NRI Financial Planning page here

We have more than 100+ NRI clients across the globe who are doing their wealth creation using our help. We will help you in all the process and investing process.

We hope this article cleared the confusion about rules, regulations and taxation part of NRI investing.

5 min guide to link Aadhaar number with mutual funds online

Recently, the government has asked mutual fund companies (and many other financial institutions) to link Aadhaar card number of their customers with their financial investments.

This means that if you are a mutual fund investor, you are supposed to link your aadhaar numbers to your mutual fund folios.

How to link aadhaar card number with mutual funds folio online

How to link Aadhaar number with the mutual fund?

There are various online and offline options of linking your Aadhaar number with a mutual fund folios. You can do this linking process through the transfer agent’s platform like CAMS and Karvy who provides services to multiple mutual fund companies

We will mainly look at just CAMS (15 mutual funds) and Karvy (17 mutual funds) serviced mutual funds in this article.

UPDATE: How to check your Aadhaar linking status?

Now you can check your Aadhaar linking status with CAMS and Karvy online. Here are the links :


Karvy –

Link Aadhaar in Mutual Funds (from CAMS website)

CAMS services 15 mutual funds companies right now as follows. You just need to follow the process of linking your aadhaar once and it will be automatically updated in all the mutual funds. Here is the list of CAMS serviced funds.

  • HDFC Mutual Fund
  • DSPBR Mutual Fund
  • Birla Sunlife Mutual Fund
  • HSBC Mutual Fund
  • ICICI Prudential Mutual Fund
  • IDFC Mutual Fund
  • IIFL Mutual Fund
  • Kotak Mutual Fund
  • L&T Mutual Fund
  • Mahindra Mutual Fund
  • PPFAS Mutual Fund
  • SBI Mutual Fund
  • Shriram Mutual Fund
  • Tata Mutual Fund
  • Union Mutual Fund

The process to link Aadhaar number in CAMS website

We have created a short video showing the process to link aadhaar with your folios.

Here are steps are given below to link your Aadhaar number with a mutual funds portfolio.

Step 1: Visit this page on the CAMS website and enter your PAN number and select Mobile in the 2nd option and enter the mobile number (you can also select a date of birth or email in the 2nd option).

link aadhaar with mutual funds on cams list

Step 2: On the next screen it will ask for your aadhaar number, a mobile number linked with your aadhaar and email id (which is optional). Then click on submit

link aadhaar with mutual funds on cams list

Step 3: You will receive one OTP which is to be entered on the next page

Enter OTP to link aadhaar with mutual funds

So this was the process to link your uidai number with your fund folios in various AMC which are serviced by CAMS.

Link Aadhaar in Mutual Funds (from KARVY website)

Let us also see how to link aadhaar to mutual funds using the Karvy link. Below is a video explaining the process if you don’t want to look at screenshots.

Karvy is the first organization in this field of business providing service to over 90 million investor accounts. A list of the mutual funds is given below to which Karvy is providing service.

  • Axis Mutual Fund
  • Baroda Pioneer Mutual Fund
  • BOI AXA Mutual Fund
  • Canara Robeco
  • DHFL Pramerica Mutual Fund
  • IDBI Mutual Fund
  • Canara Robeco
  • INVESCO Mutual Fund
  • JM Financial Mutual Fund
  • LIC Mutual Fund
  • Mirae Asset Mutual Fund
  • Motilal Oswal Mutual Fund
  • Peerless Mutual Fund
  • Principal Mutual Fund
  • Reliance MF
  • Quantum Mutual Fund
  • Taurus Mutual Fund
  • UTI MF

Step 1: Click here to go to the Karvy platform. There you need to enter your PAN number and you will get OTP for verification. Enter that to move to the next step

How to link aadhaar number with mutual funds folios in Karvy serviced mutual funds

Step 2: On the next page, you will see all the AMC’s where you have the investment and a space to enter your aadhaar number. Make sure all the AMC’s are checked marked.

How to link aadhaar number with mutual funds folios in Karvy serviced mutual funds

Once you click on submit, you will see the final acknowledgement that the processing will take place now.

You can also update Aadhaar using the SMS facility

Linking your Aadhaar number with your portfolio using SMS service is the easiest way. You just have to send an SMS which includes ADRLNK<space>PAN number<space>Aadhaar number and send it to 9212993399 from your registered mobile number.

Karvy will do the further linking procedure by considering this as valid information.

Update Aadhaar in Franklin Templeton mutual fund

Franklin Templeton mutual fund is not serviced by CAMS or KARVY, hence you need to do the process for it separately on its website by visiting this link

You need to enter your PAN and other details to start the process.

update aadhaar Franklin mutual fund

Note that it looks like Sundaram mutual fund has still not started the process for aadhaar linking as I was not able to get any information on this. If you have invested in Sundaram funds, kindly get in touch with their customer care to complete this.

How to link aadhaar number with folios by filling up a form?

Both Karvy and cams provide an option of linking your folios with the aadhaar by filling up a form. This will be helpful for those who don’t have a mobile number and email linked with a mutual fund folio. You just need to download the forms and fill up all the relevant information and submit it to CAMS or KARVY office.

Why do we need to link Aadhaar to mutual funds?

According to PMLA i.e Prevention of Money Laundering Act SEBI has made it mandatory for each and every investor to link their Aadhaar number to the mutual fund portfolio. This step is taken forward to prevent money laundering and keep track of all the investments and transactions within the country.

If you don’t do this linking then your folios will the frozen and you will not be able to redeem the money or make any transactions unless you update the aadhaar number. So please take this on priority.

Is this applicable to NRI Investors?

No, This is not applicable for NRI investors, HUF and even non-individuals (like companies and partnership firms)

Let us know if you have any questions regarding this in the comments section or you can also read this FAQ list to get more clarity on this issue

Basic Services Demat Account – a no frills account for small investors

Do you hold a Demat account or planning to get one? Then you should know what is a Basic Service Demat Account because it can be helpful for you if you are planning to trade very less and want to save on yearly maintenance charges.

Basic Services Demat account as its name suggests is a basic version of a full-fledged Demat account that provides basic level services. It’s ideal for those whose portfolio size is quite small. We will look at the details in this article. But before that, do you know what is Demat account at the first place?

Features of BSDA Account

What is the Basic Services Demat Account?

Demat or Dematerialized Account means an electronic account that holds various financial securities (especially shares) in an electronic format securely. Demat account is a compulsory account for those who want to buy company stocks from the stock market.

Demat accounts are under the control of SEBI i.e. Security and Exchange Board of India. Now, from 27 August 2012, SEBI has brought a guideline that every Demat provider will have to provide “Basic Demat accounts” available to every beginner in the share market so that it can encourage the people to invest in trading. This will be helpful for achieving wide financial inclusion.

So all those investors, who want to trade less and have a portfolio size of small amounts can open a basic Services Demat Account (BSDA) and save on the annual maintenance charges.

Where to open a Demat account or BSDA account?

You can open your Demat account or BSDA at any bank like SBI, ICICI, HDFC, Kotak Mahindra and many other banks, or with a stock broking companies Angel broking, 5Paisa, Sherkhan, etc. directly. Opening both Demat Account and Basic Service Demat Account is free at both banks and broking companies, but again the AMC varies.

These banks and broking companies provide free services for the first year and from 2nd year onwards they may start to apply charges on the basis of transactions. So before applying for a BSDA or Demat account check for all the details on the website of that particular bank.

How are Basic Services Demat account different?

Basic services Demat Account is a Demat account which can be opened with any Demat Service provider of your choice when your holdings are expected to be below Rs.2,00,000/-.

If we are maintaining holdings of value less then Rs 50,000/- then no annual maintenance will be charged from our account. In case our holdings are between 50,000 to 2,00,000/- then the annual maintenance of Rs. 100 /- will be charged.

In case our holdings exceed 200000/- then our BSDA account will be converted into Regular Demat account. This initiative is to promote retail investment and to promote retail investors to hold securities in Demat form.

Difference between a normal demat account and basic services demat account

How is the value of holding determined?

The DP i.e. Depository Participants will keep calculating the daily closing prices of securities (stocks, mutual fundsetc.) to determine the portfolio size.

This will be calculated after every trading day and then it will be compared with the limits set for your BSDA account. The moment your portfolio value exceeds the limits, you will be charged the fees for the normal Demat account or the slab you fall into on a pro data basis.

Check the video below for more.

Services provided for Basic Service Demat account

Now you must be clear about normal Demat Account and BSDA. Generally, the Basic Service Demat Account provides all the major facilities covered in normal Demat Account. But other that those services, there are few services in BSDA which are a little bit different than normal Demat Account. These services are as given below:

1) Transaction statement:

When your BSDA account is active and balance is maintained then you will get the transaction statement of your account quarterly. But if you don’t have any transactions in a quarter and your no security balance then you will not get the transaction reports or statement.

The statements are available in two forms i.e. electronic and physical document or hard copy. Electronic statements are free of cost; you don’t need to pay any charges for that. But if you want the statement in hard copy then your first two statements will be provided for free of cost and for additional statements you will have to pay the charge which will not exceed Rs.25.

2) Annual holding statement:

One annual holding statement ho holding of the account is sent to the registered address of the account holder. These documents will be sent in physical or electronic form i.e. via e-mail as per the account holder’s choice.

3) SMS Alert:

The account holder should register his mobile number to get the facility of SMS alert. Here you will get SMS for every transaction in your account.

4) Delivery Instruction Slip (DIS):

Two delivery Instruction Slips will be provided to you for free at the time of opening the Basic Services Demat Account.

These are the services which are slightly different in the case of Basic Service Demat Account then normal Demat Account. If you want to read more details about the services and charges of BSDA then you can download the circular by SEBI.

Can I convert my current Demat account into BSDA?

Yes, if you feel you are not making much use of your Demat account or if your portfolio is of less size, you can contact your DP to get your Demat converted to basic services Demat account.

This Basic Services Demat Account is a kind of free account because you don’t need to pay any maintenance charge if your transactions are below Rs.50,000. And Rs.100 only if your transactions are between Rs.50,000 to rs.2,00,000.

I hope you get all the basic details about BSDA. Do let us know if you need more details about the Basic Service Demat Account…..

ELSS vs PPF – where to invest for your tax saving? (20 yrs data analysis)

Most of the people who want to do tax saving in 80C are confused if they should invest in PPF or ELSS (tax saving mutual funds). Both PPF and ELSS offer taxation benefits of up to Rs 1.5 lacs under sec 80C.

PPF vs ELSS - which one is better to invest?

ELSS vs PPF – Meaning

Let’s start with their meaning and what exactly they are.

PPF means public provident fund. Its a govt scheme which is run by the post office and its a very safe financial product. There is no risk to it because it’s guaranteed by the govt of India. Its quite famous among investors for its safety and assured returns.

On the other hand ELSS (Equity linked saving scheme) is fairly new financial product in India (from last 15 yrs). It’s mainly an equity mutual fund that gives you an income tax benefit. Equity mutual funds mainly invest in stocks of companies, which makes sure that they deliver high returns, but at the same time they are risky (actually volatile) and their returns keep going up and down.

Now, let’s compare PPF and ELSS on various parameters.

#1 – Returns

The returns in PPF change every year and it’s around 7.5-8 %. Right now its 7.8% and it keeps on changing from time to time which is notified by govt. Earlier many years back, PPF returns were in a range of 12% and then it came down to 9%. But from the last few years, it’s hovering around 8%.

In the case of ELSS, it’s linked to the market and the returns are not fixed in the short term. Some years it can be 20 %, some times it can be 50% and in some years it can be -25% also. So you can see that the returns are totally dependent on stock markets and how well they perform. However, in the long term, you can be assured that you will get a return in the range of 12-18%.  The returns are not at all guaranteed by anyone.

#2 – Lock-in Period

Your PPF investments are locked in for 15 yrs, but some partial money can be withdrawn after 7 yrs. So basically its a very long term product, and if you are investing in PPF, you should be ready to lock you money for a very long time. After 15 yrs, you can again extend your PPF for another 5 yrs (any number of times) and your money will again be locked for that 5 yrs.

On the other hand, ELSS has a lock-in for just 3 yrs. You can take out your money after 3 yrs. The important point to note here is that each investment is locked in for 3 yrs, so if you have a SIP running in an ELSS fund, then each installment is locked for 36 months.

So if you want money in 4-5 yrs, ELSS is a better choice compared to PPF from a liquidity point of view.

#3 – RISK

PPF is not at all risky because its value does not go down. PPF is also guaranteed by govt, so there are no changes in fraud. If you plot the graph of your PPF value, you will see a straight line going up. However, note that PPF has a totally different kind of risk, which is that it does not give inflation-adjusted positive returns. This means that its returns match the inflation and in the end, you do not have any net returns.

On the other hand, ELSS is volatile, which is often referred to as “RISK” . The value of ELSSS keeps going up and down depending on the stock market movements. In the short term, you might experience a downturn and loss in value, but over the longer-term, you will see good results.

As most of the investors are risk-averse and do not like to see a dip in the value of their investments, most of the investors stay away from ELSS or stocks in general and lose the chance to experience great returns at the same time.

#4 – Taxation

PPF is tax-free. There is no tax on PPF returns. Whatever returns you get in PPF is 100% tax-exempt.

Earlier ELSS was also tax-exempt after 1 yr, but with budget 2017-2018, now any gains in equity mutual funds or stocks are taxable @10% when you sell them, but you get an exemption of Rs 1 lac per yr. This means that if your profit after selling ELSS is 4 lacs, then you have to pay a 10% tax on 3 lacs. However, even after this taxation, the post-tax returns of ELSS are much better than any other investment option.

Here is an infographic that shows you a quick comparison between PPF and ELSS.

ppf vs elss - where to invest for tax saving under 80C

How to invest in PPF or ELSS?

If you want to invest in the PPF account, you can open a PPF account in a post office or any bank (generally SBI is very famous for PPF). Note that it does not matter where you are opening your PPF account, if you open with the post office, SBI, or ICICI .. at all the places you are going to get the same interest because ultimately it’s controlled by POST OFFICE only.

The banks are just a medium to invest and nothing else.

If you want to invest in ELSS, then you can choose any fund house (there are many AMC like ICICI, HDFC, SBI, Motilal Oswal etc). You can either go to their website directly or contact an advisor (You can also invest in ELSS through Jagoinvestor help)

Returns of ELSS and PPF from the last 20 years

It’s important to check how PPF and ELSS have performed in the last 20 yrs (1996 – 2016) so that you get a fair idea on their performance and which one is better from a long term point of view. So we took one of the famous ELSS (HDFC Tax Saver) as an example along with PPF and calculated how the value in both will increase over time if someone invests Rs 1 lac in both the financial product.

PPF vs ELSS - difference in returns in last 20 years

In the above table, you can see that Rs 1 lac of yearly investment for 20 yrs have accumulated to Rs 54 lacs in PPF, whereas it becomes 2.2 crores in the ELSS, which means that ELSS gave 5 times more returns than PPF.

However, this difference is more visible only after 10 yrs passed and compounding starts kicking in.

In the initial years, there was no big difference in their values. See the graph given below. You will get a clear idea of how ELSS has performed incredibly towards the end of tenure.

elss vs ppf returns in last 20 years

Important Note :

The example of HDFC Tax Saver is taken only for the illustration purpose. This is not a recommendation, and right now HDFC Tax saver is not the best option for tax saving. There are many other ELSS funds which can be chosen other than HDFC Tax saver. Kindly contact your Financial Advisor for any recommendations.

So after studying the table data and graph, I hope it becomes easier for you to know the difference between the returns from PPF and ELSS investments. If you still have any confusion or any doubt in your mind, feel free to ask us by leaving your query in our comment section.

1 small trick which can drastically increase your saving rate each month

Do you want to save more money each month?

Today, I am going to reveal a secret trick that will help you to increase your monthly investments by some margin. This trick is more of a psychological shift in the way you think about money, emergencies and how much should you invest.

However, this is applicable to only those who are already investing some money on a regular basis each month.

Let’s start …

One small trick which can help investors in saving more money each month

You might be thinking that my secret is nothing but making your savings “automatic”. But no, it’s not the case. Making your investments “automatic” is just the first step, but there is something else that will take your savings to the next level.

Let’s get into it!

Here is how most people invest their money

  • They earn a salary
  • They spend money on their regular expenses (Rent, Grocery, Movies, travel)
  • Some money is left at the end of the month
  • and finally, a partial amount out of that is invested

Did you see that last line?

Only a “partial” amount is invested in the leftover savings at the end of the month is invested, not FULL.

Let’s dig deeper into this …

Take a sheet of paper (or open an excel sheet). Write down the total income you get in a month on the left-hand side, and on the right side, mention all kinds of expenses you have. Put Rent, Groceries, Maid expenses, Travelling, Eating out, movies and whatnot.

Now add up all the expenses and find the total expenses and deduct it from the total income you get each month. You will get your Monthly Surplus!. This is the amount you are left over each month and you should ideally invest this whole amount.

Below is a template which you can use for the calculation

How to calculate monthly surplus>

What is your monthly surplus?

Will you start a Recurring deposit for that amount or start an SIP?

I guess the answer is NO.

As an example, if a person is earning Rs 1 lacs per month and their expenses are around Rs 60,000, their monthly surplus is Rs 40,000 per month.

But this person will probably invest only Rs 15,000-20,000 per month on a regular basis. They will keep the rest as “Margin of Safety” amount which they might need, because what if they suddenly need it?

margin of safety

The margin of safety is a simple concept, it’s just an “extra buffer” for “what if things go wrong” kind of situations.

This is called a traditional style of cash flow handling which is a very intuitive and natural way of thinking. We all do it and it feels right!

But there are some problems with this approach

traditional cash flow planning

But there is one big problem

While this traditional method looks very natural, there is one big issue with it. Here it is!

Once your investments are set, you feel a sudden excitement that now your investments are in shape, but because you have left a big margin of safety (the extra buffer), your expenses will automatically expand and eat away your margin of safety.

The mere availability of the buffer money will create various short term demands in your financial life and you will use that buffer each month.

Suddenly you will start ordering various things online (most of the time things which are not required), your eating outs will increase, upgrading your phone will appear within your budget, etc.

Supply creates its own Demand – Economics 101

The availability of money will create the demands in your expenses and almost all the time you will justify them. So from Rs 60,000 expenses, you will see that automatically it’s reaching Rs 80,000.

And after some time you will be used to Rs 80,000 per month expenses.

Just imagine, if the person had started a Rs 30,000 SIP and left just Rs 10,000 as a margin of safety? Can you see that here the person still has a margin of safety and invests 50% more amount each month?

What about Rs 35,000 SIP and just Rs 5,000 as a margin of safety?

Welcome to 10% margin Cash flow Management System

This is the crux of the system.

We all feel that we need to keep a big margin of safety because in our mind things will go wrong. And they will!

There is no doubt that things can go wrong in some months and some unexpected expenses can come up which can really disturb your regular investments and that’s why most of the people leave a big buffer between expenses and investments.

However, let’s deal with reality.

Most of the times these emergencies are not real emergencies and if we didn’t have enough margin of safety, we would have justified them as “not important” expenses!

Also, you should not depend on your monthly cash flows for emergencies and have a separate fund that can be touched in case a real surprise expense comes up. I call this new system as “10% margin Cash flow System”

10% margin Cash flow system

Here is how you design this cash flow system

Step 1: Write down all your expenses and make sure you put realistic numbers, neither less nor very big.

Step 2: Calculate 10% of your expenses and that’s your margin of safety. If your expenses are Rs 40,000 per month, then your margin of safety is Rs 4,000

Step 3: This margin of safety amount is the only extra money you will keep with you each month apart from your expenses, and even this money should be auto invested in a liquid fund, which can be redeemed on a short term notice of 24 hours.

Step 4: Make sure that before you start your actual investments on a monthly basis, you create enough emergency funds which can be 3X of the size of your monthly expense. Any sudden surprise expenses which are outside of your regular expenses list will be taken care of from this emergency fund and not your monthly surplus.

Step 5: Set up your investments in an automatic mode (like SIP in a mutual fund, or a recurring deposit or a combination of both) for all the money left other than regular expenses and 10% MOS (margin of safety)

Here is how it looks like

Taking the same example of Rs 1 lac income, the guy has Rs 60,000 expenses in total. His margin of safety is Rs 6,000. Rest amount left is Rs 34,000

For the first month, he puts this full 34,000 in a liquid fund. If any additional money is left from the 6,000 MOS then he puts that in an emergency fund, else he can spend it. For next 2 months, he puts 68,000 more in a liquid fund and his total liquid fund amount is around Rs 1 lacs +

Now, this guy will set up his SIP of Rs 34,000 per month.

Now imagine what happens in 4th month

In 4th month, here is how it looks like

  • Rs 34,000 SIP is executed and the money gets invested (make sure the SIP date is in the start of the month)
  • Rs 60,000 is the regular expenses
  • If there is any need of extra spending, then Rs 6,000 extra is already there (most of the months should be like this)
  • If for some reason, some surprise expenses come up, you redeem that much money from liquid fund and use it.
  • Repeat!

Can you see how the whole game changes here?

Margin cash flow planning

I hope you got the whole idea of this new model now.

You can always withdraw the money if a real emergency arises

I tried this concept on one of my friends last year. I asked my friend if he will be able to do any SIP?

He said “NO”.

His expenses were almost equal to his income. However, I said that he should start a small Rs 5,000 SIP. He said that he will not be able to because he is not left with any money at the end of the month.

My simple solution was – “Withdraw the money in a month if you really need it”

His SIP ran for the next 12 months

He finally started his SIP with a lot of reluctance and the SIP ran for 12 months straight ! with 1-2 withdrawals in between. However, my friend was proved wrong.

The mere unavailability of money made sure that he had to fit his expenses into this “visible income”.

So don’t worry and dare to start a bigger SIP then you can handle, in the worst case, you can always STOP it, you can always redeem some money back if you need it. But in my experience in most cases, people are able to handle bigger investments each month compared to what they imagine.

Let us know if you liked this article and if you are going to implement this new model of investing?

Do you really think this unconventional way of cash flow management can bring different in your financial life?