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A recent report by Axis AMC shed light on the burgeoning Indian mutual fund industry. Since March 2021, the MF industry has grown at a CAGR (compounded annual growth rate) of 23.65%, touching an AUM (asset under management) of Rs 67.25 lakh crore in October 2024. <keyword id="20300870" type="General" weightage="20" keywordseo="Equity-Mutual-Funds" source="keywords">Equity mutual funds</keyword>, which garnered Rs 41,886.69 crore during the month, saw a 58.96% YoY growth. The biggest contributor to the equity segment was sectoral funds, which captured 29.3% of net equity sales in October 2024. In all, they brought in Rs 12,278.78 crore during October 2024. The AUM of <keyword id="20890471" type="General" weightage="20" keywordseo="Hybrid-Funds" source="keywords">hybrid funds</keyword> also stood at Rs 9.24 lakh crore during the month, registering an annual growth of 47.8% and inflows worth Rs 16,863.30 crore during October 2024. Amidst this, the arbitrage funds led in net sales, capturing 3.61% of their AUM with monthly inflows worth Rs 7,181.70 crores. There and more people are entering the Indian markets, as is evident in the growing SIP corpus (Systematic Investment Plans), which saw contributions worth Rs 25,323 crore in October 2024, a 54.7% year-over-year growth. In October 2024, about 63,69,919 new SIPs were registered, taking the number of SIP accounts to a record high of 10,12,34,212 The growth in equity investments was largely led by retail investors and HNIs (high-net-worth individuals). Since March 2021, the retail segment in mutual funds has seen a 31.2% CAGR, while banks and foreign investors have recorded a CAGR of 31.8% during the same period. Corporations were the biggest contributors to debt mutual funds. Notably, the AUM of debt funds grew 14.8% over the previous year to stand at Rs 10,65,037 crore as of October 2024. The category saw net sales worth Rs 47,699 crore last month. Also testimony to the growing interest of investors in mutual funds were the figures of <keyword id="23958398" type="General" weightage="20" keywordseo="Passive-Mutual-Funds" source="keywords">passive mutual funds</keyword>, which recorded net sales worth Rs 8,025 crore during the month. Out of this, just index funds observed net sales of Rs 7,931 crore in the previous month. AUM from the top 30 Indian cities grew at 22.6% CAGR, whereas other cities grew at 27.8% CAGR since March 2021. FY25 also seemed to be the year where NFOs received an enthusiastic response from investors. So far, a total of 124 NFO schemes have managed to collect a total of over Rs 77,932 crore.

Mutual funds in spotlight: Industry grew at 23.65% CAGR since March 2021

Tensions in Middle-East are rapidly inching closer to their zenith, with Iran firing about 200 ballistic missiles at Israel late yesterday night. In response today, the Indian markets witnessed their worst decline in two months, with Sensex dipping around 1,769 points, or 2.1% to close at 82,497.10. <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords">Nifty</keyword> followed suit and was also down by 2.1% to close the day at 25,250.10. As a result, about Rs 11 lakh crore were wiped off the market today. The decline was broad-based, with sectors like realty (dipped by over 4%) auto, and energy suffering the most. Broader indices also fell, losing nearly 2% each. The Hang Seng index, which had rallied over 14% during the last week, largely on the back of various stimulus measures announced by the central bank to stir consumption in the Chinese economy, also slumped around 1.47%. With the possibility of an all-out war between Iran and Israel looming on the horizon, threatening to happen sooner than later, markets are expected to remain volatile in near future. Even the India VIX, seen as a gauge of uncertainty and investor fear in the market, jumped over 9% during the day. The war could throw a huge spanner on India's crude oil import plans. As of August 2024, about 44.6% of India's crude oil imports came from <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>. Israel has already promised significant retaliation, in response to Iran's attack in the days to come. And the strong possibility of a full-blown Israeli attack in Middle East, particularly major oil fields in Iran has sent the crude oil prices surging. Closer home, ONGC (Oil and Natural Gas Corporation) was amongst the biggest gainers on NSE today. <h2>Should Indian investors worry? </h2>But is the impending action in Middle-East the only reason behind today's drastic fall? Vishnu Kant Upadhyay, AVP, Research &amp; Advisory at Master Capital Services notes that while it plays a significant role, other factors are also at play. "Recent regulatory changes in the F&amp;O segment by SEBI is expected to impact trading volumes, as retail participation may decline due to the increased contract size and limits on weekly expiries. Meanwhile, strength in the Chinese market, following the People’s Bank of China (PBoC) stimulus package, has also diverted foreign investment to China, where valuations remain more attractive compared to India", he noted. But Upadhyay believes that the extension of losses in Indian markets wont last long. "From a technical perspective, as long as prices hold above the 25,250–25,100 zone, any decline could present an opportunity to build fresh long positions. A stock-specific approach is advisable, with sectors such as Oil, IT, PSU Banks, Metals, and Chemicals likely to outperform in the coming days", he adds. Shrikant Chouhan, Head Equity Research, Kotak Securities observes that as long as market is trading below 25,365/82,800, the weak sentiment is likely to continue. On the down side, it could slip till 25,150-25,025/82,200-82,000 as well. On the other side, one quick technical pullback is likely if the market succeeds to trade above 25,365/82,800. Above the same, it could bounce back till 25,475-25,500/83,100-83,300. The current market texture is volatile hence; level based trading would be the ideal strategy for the day traders. <h2><keyword id="20760178" type="General" weightage="20" keywordseo="mutual-fund-investors" source="keywords">Mutual fund investors</keyword>, stay put</h2>In the aftermath of a <keyword id="19968045" type="General" weightage="20" keywordseo="market-correction" source="keywords">market correction</keyword>, most mutual fund investors often face a critical decision- should they stop their SIPs (<keyword id="21047553" type="General" weightage="20" keywordseo="Systematic-Investment-Plans" source="keywords">Systematic Investment Plans</keyword>) or to view the downturn as a valuable opportunity to acquire more mutual fund units? By continuing SIPs during such downturns, investors can take advantage of 'rupee-cost averaging,' i.e. accumulating more units when prices are down. This approach not only lowers the average cost per unit, but also positions the portfolio for greater returns when the market eventually recovers, and softens the impact of short-term volatility. Swapnil Aggarwal, Director, VSRK Capital explains that alongside maintaining regular investments, revisiting your asset allocation is also essential in these turbulent times. A well-diversified portfolio, that balances equities with safer assets like bonds can withstand market fluctuations more effectively. You can consider shifting some investments into bond funds or other stable instruments, which can provide a cushion against further declines. <h2>What happens next? </h2>While the immediate impact of a market correction may lead to declines in the NAV (Net Asset Value) of mutual funds, disciplined investors can view this as a moment to reassess their strategies. Focusing on your <keyword id="20908416" type="General" weightage="20" keywordseo="long-term-financial-goals" source="keywords">long-term financial goals</keyword> will let you turn market volatility into opportunity! The market will remain keenly focused on the evolving situation in the Middle East. What will also be equally important are the US monthly jobs data due tomorrow, which could determine the size of Fed's next interest rate move in November.

Nifty, Sensex in freefall today as Iran mounts attack on Israel. Here's what experts think you should do

Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords" meta.keywordsubtype="org" meta.entityname="Sebi" meta.hostid="153" meta.entityid="Sebi">SEBI</keyword> has asked the <keyword id="20677983" type="General" weightage="20" keywordseo="mutual-fund-industry" source="keywords">mutual fund industry</keyword> to proactively conduct stress tests, a key component of <keyword id="20383727" type="General" weightage="20" keywordseo="risk-management" source="keywords">risk management</keyword> for the financial sector, which will help strengthen the ecosystem, its whole-time member Ananth Narayan Gopalakrishnan said on Friday. The regulator's stress testing emphasizes the need to assess and manage liquidity risks, especially in small and midcap equity schemes. Speaking at a mutual fund event, Gopalakrishnan highlighted the importance of modelling stress scenarios not just for individual schemes or fund houses, but for the entire mutual fund ecosystem. "It is also important to model stress scenarios for the entire composite mutual fund ecosystem. I would strongly encourage the industry and <keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords" meta.keywordsubtype="org" meta.entityname="AMFI" meta.hostid="153" meta.entityid="AMFI">AMFI</keyword> to take the lead and proactively conduct objective and credible industry wide stress tests. themselves," Gopalakrishnan said. He also emphasized the need to find better ways to communicate the risks associated with different mutual fund schemes. The SEBI official mentioned that while the current risk measurement system is straightforward and has had a significant impact, it doesn't fully capture the differences in risks among various investment schemes. According to him, many schemes are just labelled as high risk, even though they have different kinds of risks. The goal is to improve this system to better reflect those differences, while keeping it simple and easy to understand. One possible approach is to consider the portfolio's volatility and liquidity from stress tests to give a clearer picture. "While ensuring simplicity and ease of understanding remains a key objective, perhaps the underlying volatility of the portfolio along with the liquidity of the portfolio from stress tests could be used to provide better colour all around," he added. This comes at a time when the holdings of mutual funds by <keyword id="20234284" type="General" weightage="20" keywordseo="domestic-institutional-investors" source="keywords">Domestic Institutional Investors</keyword> (DIIs) and individuals have risen from about 54.3% of free float of all mid cap and small cap companies, as of March 2020 to 60.6% as of March 2024. Several fund houses have proactively stopped lump sum investments in some small-cap schemes and also capped the amount that can be invested through <keyword id="20675888" type="General" weightage="20" keywordseo="systematic-investment-plan" source="keywords">Systematic Investment Plan</keyword> (SIP) into small-cap schemes. He also highlighted the potential mismatch between the demand for paper and the supply of fresh paper coming into the ecosystem. Gopalakrishnan said the industry can make more progress in streamlining operations and improving efficiency for investors. "At a time when instantaneous fund transfers have become ubiquitous in our country, perhaps we should look to improve our internal processes and the security settlement ecosystem, to ensure that funds are passed on to investors on the day of the settlement itself, rather than a day after or two days after," he added. Over the last few years, the mutual fund industry has made impressive strides, and is now playing a crucial role in channeling financial savings towards risk capital formation. This was driven by stable macros, increased formalization, robust corporate earnings, digitisation and user friendly access. Moreover, the number of mutual fund investors has grown significantly from about 2 crore as of March 2019 to nearly 4.7 crore as of June 2024, an impressive compounded annual growth rate of 18% during that period. Gopalakrishnan mentioned that several exciting initiatives are in the works, developed with input from all stakeholders. These include a proposed low-ticket SIP, further breaking down regular SIPs into smaller, more accessible units (sachetisation and tokenization), and the introduction of "mutual funds lite" regulations. These new regulations will simplify rules for passively managed funds, reducing the compliance burden and encouraging competition and innovation. Additionally, a new class of higher-risk schemes is proposed for investors with a greater capacity to handle risk.

SEBI asks mutual fund industry to proactively conduct stress test

India's investment ecosystem is undergoing a seismic shift, with index investing gaining unprecedented traction among investors, according to a report by Motilal Oswal. The younger generation, including Gen Z and Millennials, shows a stronger inclination towards index funds as compared to older investors. They also prefer index funds over ETFs for better returns and liquidity. A recent report by Axis AMC also highlighted the growing appetite for ETFs, which witnessed net sales of Rs 15,403 crore in October 2024. While 46% of younger investors favor index funds, only 35% of Gen X and Boomers do so. Millennials and Gen X investors also have a keen interest in factor or smart beta funds, reflecting their appetite for innovative, albeit aggressive investment strategies. Passive funds have become a core component of investor portfolios, with 80% of investors increasing their allocation to these funds in 2024, compared to 53% last year. The Axis report echoed similar sentiments, noting that net sales in the passive category inched up to Rs 8,025 crore in October 2024. The combined assets under management (AUM) of passive funds have surged from Rs 7 lakh crore in September 2023 to over Rs 11 lakh crore by September 2024—a 1.5x growth in just one year. The survey also noted a growing popularity of ETFs, with 57% of respondents investing in them, up from 41% in 2023. Of these, 26% invest solely in ETFs, while 31% have diversified between ETFs and index funds. This rising preference is matched by a commitment to long-term investment. A significant 81% of investors plan to hold their passive investments for over three years, highlighting sustained confidence in the growth potential of these funds. Sectoral indices like Nifty IT and Nifty Bank dominate as the top choice for passive fund investors, selected by 67% of respondents. Benchmark indices such as the Nifty 50 and Nifty 500 follow closely, preferred by 61% of investors. A recent, similar report by stock broker Angel One also throws a spotlight on how young India plans and prefers mutual funds when it comes to savings and investments. The report, titled "Young Indians' Saving Habits Outlook 2024," compiled by Fin One, stated that 45% of respondents aged 22-35 have made it a point to save up some of their savings in mutual funds. A year ago, this figure stood at just 32%. Most of these investors make their way into mutual funds via SIPs, or systematic investment plans. 52% of respondents in the age cohort of 22-35 are now using SIPs to invest in mutual funds, up from 44% in the previous year. As for what was the driving factor behind beginning their investment journey, 42% underlined the past performance of funds, while 38% noted that advice from financial advisors remained a key consideration. 38% of young Indians are now increasingly focusing on building an emergency corpus, compared to 28% the year before. This shift underscores the drastic change in financial sensibilities brought forth by the pandemic and the consequent desire for greater financial resilience. In fact, approximately 4 out of every 5 surveyed investors maintained a dedicated, separate savings account. Out of the 1,650 individuals studied under the FinOne survey, a staggering majority made their first foray into the stock market in their early twenties. Nearly 2 in every 5 investors pick stock as their preferred choice of investment, followed by mutual funds and then savings bank accounts. While 45% of those surveyed picked stocks as their chosen investment avenue, 20% preferred mutual funds, and 15% wanted to keep their money in a savings bank account.

Gen Z and Millennials prefer stocks and mutual funds; index funds trump over ETFs, say recent reports

<ul><li>Starting your <keyword id="4147449" type="General" weightage="20" keywordseo="tax-investments" source="Orion">tax investments</keyword> early gives you time to do proper <keyword id="136807" type="General" weightage="20" keywordseo="tax-planning" source="Orion">tax planning</keyword> </li><li>When you invest early, your investments get more time to grow and therefore you can reap the benefit of the power of compounding</li><li>Leaving your tax investments for the end of the financial year may lead to rushed tax-saving investments that may not align with your financial goals</li></ul>If you have opted for the <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword>, you have several tax-saving options to choose from. If you are employed, you would need to make a declaration of your tax-saving investments to your company at the beginning of the financial year, so that the company can factor in your tax rebates while deducting at source. However, you have time till March 31 of 2025 to make those investments, or slightly earlier, when your employer asks for proof. Many of us tend to postpone our tax-saving investments till the last quarter of the financial year. As a result, we might be forced to make rushed decisions before the financial year ends and that is not a wise thing to do. Here is why you should start your tax-saving investments now and not wait any further. Maximising tax savings By initiating your tax-saving investments early in the financial year, you open the door to several opportunities for maximising tax deductions. “Whether it's channelling funds into ELSS mutual funds or committing to long-term fixed deposits, early investment allocation sets the stage for tax savings while simultaneously helping you to invest for future aspirations — be it retirement, educational, homeownership and so on,” says Abhishek Soni, CEO, Tax2Win, an income tax portal. Systematic investment approach Investing in tax-saving instruments shouldn’t just be for the purpose of saving taxes. Your tax-saving investments need to be aligned with your financial goals. Starting your tax investments early gives you time to do proper tax planning. “Through avenues like SIPs (Systematic Investment Plans), you can cultivate a habit of regular contributions, steadily building your investment portfolio over time. This disciplined approach provides financial stability,” says Soni. Also, if you leave your tax-saving investments till the end of the financial year, you may be short of cash and not have enough money to make adequate tax-saving investments. “Starting investments early fosters a culture of prudent saving and investment,” says Archit Gupta, Founder and CEO, Cleartax. Harnessing the power of compounding When you invest early, your investments get more time to grow and therefore you can reap the benefits of the power of compounding. This would apply to any investment under section 80C like a public provident fund (PPF) or equity-linked savings scheme (ELSS). “By initiating investments early rather than later, you facilitate the organic growth of your portfolio over time. This growth not only accrues returns on your principal sum but also compounds returns on the profits accumulated in preceding years,” says Gupta. Suppose you want to invest ₹60,000 in ELSS. A SIP of ₹5,000 for 12 months, will give you more returns compared to investing a lump sum of ₹60,000 in February or March before the financial year ends, where your investment will just start earning returns. Capitalising on incentives For many, April-June is the season of appraisals and incentives — a windfall that can be used for tax planning purposes. Redirecting these bonuses or raises toward tax-saving investments is a wise idea, lest you spend it on something you do not really need. Overall, tax planning should be a constant endeavour throughout the financial year for the long-term success of your financial goals, and should not be a one-time decision towards the end.

Why you should start your tax-saving investments now and not wait any further

There is nothing called a <keyword id="15380108" type="General" weightage="20" keywordseo="beneficial-date-for-investors" source="Orion">beneficial date for investors</keyword> in the case of <keyword id="6359303" type="General" weightage="20" keywordseo="systematic-investment-plan" source="Orion">systematic investment plan</keyword> (<keyword id="35471" type="General" weightage="20" keywordseo="SIP" source="Orion">SIP</keyword>) of <keyword id="6357979" type="General" weightage="20" keywordseo="mutual-funds" source="Orion">mutual funds</keyword>, said <keyword id="13446789" type="General" weightage="20" keywordseo="WhiteOak-Capital-AMC" source="Orion">WhiteOak Capital AMC</keyword> on Saturday. According to a study made by the company, the date of investment does not make any difference as regards returns. "The study of the last 26 years' index data reveals no meaningful difference between the average return of different dates' 10 years SIPs," WhiteOak AMC said. In the long term it hardly matters if the investor invests via Daily, Weekly, or Monthly SIP Frequency, as per the company. All three frequencies end up generating somewhat similar returns. What is important is to focus on investing a small amount regularly for the long term. According to the fund house, the mid-cap segment is a good investment option for investors seeking to invest via the long-term SIP route. It added that small and midcap (SMID) segments may offer many opportunities for potential higher growth. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/consumer-complaints-need-to-be-resolved-quickly-says-rbi-governor/articleshow/95158160.cms">Consumer complaints need to be resolved quickly, says RBI Governor</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/no-country-better-than-india-in-using-tech-to-protect-clients-securities-sebi-chief/articleshow/95144947.cms">No country better than India in using tech to protect clients' securities: SEBI chief</a>

Date of SIP investment doesn't matter, says Whiteoak AMC

<keyword id="19895437" type="General" weightage="20" keywordseo="investment" source="keywords">Investment</keyword> in <keyword id="20300870" type="General" weightage="100" keywordseo="equity-mutual-funds" source="keywords">equity mutual funds</keyword> surged over five-fold to Rs 94,151 crore in the June 2024 quarter against Rs 18,358 crore a year ago, driven by a strong <keyword id="21477327" type="General" weightage="20" keywordseo="economic-environment" source="keywords">economic environment</keyword>, supportive <keyword id="22575274" type="General" weightage="20" keywordseo="government-fiscal-policies" source="keywords">government fiscal policies</keyword>, <keyword id="19900618" type="General" weightage="20" keywordseo="investors" source="keywords">investors</keyword> confidence and robust <keyword id="21990858" type="General" weightage="20" keywordseo="stock-return" source="keywords">stock return</keyword>. This has also pushed the industry's assets under management (<keyword id="20019621" type="General" weightage="20" keywordseo="AUM" source="keywords">AUM</keyword>) by 59 per cent to Rs 27.68 lakh crore in June from Rs 17.43 lakh crore a year ago, data from the Association of Mutual Funds in India (<keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords">AMFI</keyword>) showed. The robust gain in the asset base was also replicated in the growth of investors in equity mutual funds, with the number of folios closing at 13.3 crore, adding an investor base of over 3 crore. The significant gain in equity folios indicates broader participation across investor segments, driven by improved <keyword id="19929245" type="General" weightage="20" keywordseo="financial-literacy" source="keywords">financial literacy</keyword> and accessible investment platforms, Trivesh D, COO of stock trading platform Tradejini, told PTI. According to the AMFI data, equity-oriented mutual fund schemes invested Rs 94,151 crore in the quarter ended June 2024. This comprises Rs 18,917 crore in April, Rs 34,697 crore in May and Rs 40,537 crore in June. The investment in equity-oriented mutual funds jumped five-fold to Rs 94,151 crore in the June quarter from Rs 18,358 crore in the quarter ended June 2023 and increased 32 per cent Rs 71,280 crore witnessed in the preceding March 2024 quarter. "The confluence of political stability, supportive government policies, and a favourable economic environment has significantly contributed to the impressive inflows into equity mutual funds, signalling a positive outlook for the sector," Trivesh said. Strong macroeconomic fundamentals, bolstered by supportive government fiscal policies like higher-than-budgeted tax collection growth, reduced revenue expenditures, and increased capital spending have helped in increasing the allocation to equity mutual funds, Feroze Azeez, Deputy CEO, Anand Rathi Wealth, told PTI. He further said that investors' confidence in the markets and historically strong returns given by Indian equities with relatively low risk also helped investors to move towards equity mutual funds. Additionally, the shift was further fuelled by a transition from traditional investments like deposits to mutual funds in pursuit of higher returns. "The long-term outlook remains positive, with expectations of 11-13 per cent annual returns for Indian equities, and equity mutual funds potentially delivering even higher returns," Azeez said. Within the equity segment, sectoral or thematic category attracted Rs 46,731 crore during the quarter under review, followed by Multi-cap (Rs 10,077 crore), Flexicap (Rs 8,387 crore), Large &amp; Midcaps (Rs 7,948 crore), Smallcap (Rs 7,197 crore) and Midcap (Rs 6,927 crore). Large-cap funds witnessed an infusion of Rs 1,991 crore during the April-June quarter of the current financial year (FY25). Moreover, inflows into the systematic investment plan (<keyword id="19956399" type="General" weightage="20" keywordseo="SIP" source="keywords">SIP</keyword>) have been rising continuously for the past several months. The monthly SIP contributions crossed the Rs 21,000 crore mark in June, with the total inflow reaching an all-time high of Rs 21,262 crore. This shows investors' commitment to disciplined and long-term investing. The fund infusion through the SIP route was Rs 62,537 crore in the April-June quarter of FY25, a remarkable surge from Rs 43,211 crore in the same quarter preceding the fiscal.

Investment in equity mutual funds surge 5-fold to Rs 94,151 cr in June qtr amid robust eco environment

<ul><li>The systematic withdrawal plan route lets one create a <keyword id="468185" type="General" weightage="20" keywordseo="regular-income" source="Orion">regular income</keyword> from mutual fund investments like a pension. </li><li>Insurance <keyword id="3265123" type="General" weightage="20" keywordseo="annuity-plans" source="Orion">annuity plans</keyword> can create a regular income, but the rate of return is low and does not beat inflation. </li><li><keyword id="417910" type="General" weightage="20" keywordseo="rental-income" source="Orion">Rental income</keyword> can also provide regular income but comes with high upfront costs and uncertainties. </li></ul>While investments are meant to create wealth, at certain times, one may also require a regular income from investments. While retired people need to set up funds so that they get a regular income post retirement, anybody might have the requirement to generate regular income. We take a look at a few investment options to generate regular income. <cmsannotation type="cmsannotation" annotationid="Mutual funds" comment="Subhead" text="Mutual funds"><keyword id="6357979" type="General" weightage="20" keywordseo="mutual-funds" source="Orion">Mutual funds</keyword></cmsannotation> Mutual funds are one of the best options to generate a regular income. Mutual funds offer a lot of flexibility. Through mutual funds you can get into each and every asset class apart from real estate- equity, debt, gold and even government bonds at a very low cost. “The systematic withdrawal plan (SWP) route works as well as a pension. You invest in a lump sum you set up a date, and that particular date, every month or at whatever frequency you want, the money will be credited to your account just like a pension,” says Suhas Harshe, money coach at MoniYogi Suhas Harshe, a financial planning firm. Also when you withdraw money from mutual funds, it does not get taxed as income from other sources and gets taxed as capital gains. If you get an income from a FD or from rental income, it is treated as income from other sources and falls into a 30% tax bracket if you fall in that category. But in mutual funds SWPs, long term equity funds capital gains enjoy a favourable tax treatment with indexation benefits that you do not get anywhere else. <cmsannotation type="cmsannotation" annotationid="Dividend paying stocks" comment="Subhead" text="Dividend paying stocks"><keyword id="138054" type="General" weightage="20" keywordseo="dividend-paying-stocks" source="Orion">Dividend paying stocks</keyword></cmsannotation> Investing in dividend-paying stocks can be a way to earn regular income. The benefits of such stocks include the potential for a higher income compared to traditional options like bonds or fixed deposits. Additionally, there's a chance that the value of these stocks may increase over time, offering the opportunity for capital growth. However, it's important to keep in mind the drawbacks, such as the uncertainty of stock prices, as they can fluctuate, impacting your income. Companies may also reduce or eliminate dividends in challenging economic conditions. <cmsannotation type="cmsannotation" annotationid="Annuity plans" comment="Subhead" text="Annuity plans">Annuity plans</cmsannotation> Insurance annuities can also provide a regular income, especially after retirement. “For a risk averse investor one could explore annuities as an option for regular income,” says Abhishek Kumar, founder and chief investment advisor at SahajMoney, a financial planning firm. However, annuities have their downsides as well. One notable drawback is their susceptibility to inflation, as fixed annuities might not keep up with rising living costs, eroding the income's real value. High upfront fees, charges, and early withdrawal penalties can also be burdensome, reducing the initial investment and limiting liquidity for unforeseen financial needs. <cmsannotation type="cmsannotation" annotationid="Rental income" comment="Subhead" text="Rental income">Rental income</cmsannotation> Rental income can provide a regular income source but offers both advantages and disadvantages. On the positive side, it provides a steady income stream, often in the form of monthly or quarterly rent payments. Real estate also has the potential for long-term capital appreciation, serving as a wealth-building strategy alongside rental income. Additionally, it offers the security of owning a tangible asset with less susceptibility to market volatility compared to stocks. However, there are drawbacks to consider. Acquiring a rental property can incur a high cost “To buy a rental property, the amount that you need to invest upfront is huge. Also once a tenant leaves and a new tenant comes, there is a gap in your income,” says Harshe. Property management can be time-consuming and costly, including dealing with tenant issues and maintenance. Real estate values can fluctuate, and selling quickly in adverse market conditions can be challenging. Economic factors can also affect rental demand and income potential. What investment option you choose to generate a regular income would depend on several factors. But one or more options can be considered to generate a regular income, after keeping in mind the pros and the cons.

For a regular, steady income from investments, consider these options

<ul><li>Your situation is unique and your financial plan needs to be crafted as per your specific situation. </li><li>Fear of missing out (<keyword id="1489344" type="General" weightage="20" keywordseo="fomo" source="Orion">FOMO</keyword>) is real when it comes to <keyword id="25456" type="General" weightage="20" keywordseo="financial-planning" source="Orion">financial planning</keyword>, especially investing. </li><li>Understanding that there is no one-size-fits-all solution enables us to tailor <keyword id="15416146" type="General" weightage="20" keywordseo="financial-strategies" source="Orion">financial strategies</keyword> to our own needs. </li></ul>Ahmedabad-based Pranav Jain found out when talking to a colleague that the colleague was investing ₹45,000 in mutual funds (MF) systematic investment plans (SIPs) every month. Since Jain has a similar salary, he felt he was not doing enough as he invests only ₹20,000 a month in MF SIPs. What Jain is feeling is normal as we all tend to compare ourselves to people around us when it comes to the phone we use, the car we drive and so on. Financial planning is no different. However, this can be a problem. Let us understand why. <cmsannotation type="cmsannotation" annotationid="Your situation is unique" comment="Subhead" text="Your situation is unique">Your situation is unique</cmsannotation> Just as it’s not justified to compare your doctor’s prescription with someone else’s prescription, personal financial matters should not be compared with others. “Your situation is unique. A financial plan needs to be crafted as per your specific situation,” says Arijit Sen, a SEBI-registered investment advisor, and co-founder of Merry Mind, a financial advisory firm. While you might be paying EMI for a house, someone else may be living in their parent’s house or paying a lower rent. So naturally, the other person will have a higher investible surplus even for a similar salary. Similarly, it is easy to feel inadequate when you figure out that your friend could send his son abroad but you’re not in a position to do so. Hence, it is important to acknowledge your own financial position. Here, you do not know what sort of situation your friend may be in or how far he has taken a hit in the retirement kitty in order to send his son abroad. <cmsannotation type="cmsannotation" annotationid="Do not fall into the FOMO trap" comment="Subhead" text="Do not fall into the FOMO trap">Do not fall into the FOMO trap</cmsannotation> Fear of missing out (FOMO) is real when it comes to financial planning, especially investing. FOMO in investing refers to making impulsive investment decisions driven by the fear of missing out on a potentially profitable opportunity. This often leads to poor investment choices and can result in financial losses as individuals act hastily without proper research or consideration of their long-term financial goals. “A prime example of FOMO that we encounter over and over again is when investors think it's easy to make money trading the stock markets, just because people are talking about making a quick buck,” sas Deepak Gagrani, Founder of MADHUBAN FINVEST, a financial services firm. He adds that a professional financial advisor helps reduce external noise and better align investment decisions with a person's risk tolerance and financial goals. <cmsannotation type="cmsannotation" annotationid="Retirement plans may differ" comment="Subhead" text="Retirement plans may differ">Retirement plans may differ</cmsannotation> Just like your kid’s education, your retirement plan may differ. Where the objective varies, the process to achieve the required corpus is expected to be different too. Someone may like to start his/her own business after retirement. On the other hand, a couple may desire to move back to their hometown and lead a relaxed life. “How you want to lead your retired life is your choice. The retirement corpus required for the above stated retirees will definitely vary,” says Sen. <cmsannotation type="cmsannotation" annotationid="Social media is all about winners" comment="Subhead" text="Social media is all about winners">Social media is all about winners</cmsannotation> We live in an era of social media. One might feel bad that their friend is vacationing in the Maldives while they are spending their holiday in Goa. Similar comparisons can occur when it comes to investments. People tend to put only the good part of their lives on social media. Similarly, when it comes to investments, people take to social media to talk about their successes. “As an investor, you should be aware of the fact that people generally don't like to talk about their mistakes or bad decisions on their financial path,” says Gagrani. <cmsannotation type="cmsannotation" annotationid="Some thumb rules to follow" comment="Subhead" text="Some thumb rules to follow">Some thumb rules to follow</cmsannotation> While it is important to understand that your situation is different, there are still some basic rules of thumb you should follow to get started on your financial planning. These rules are of course not set in stone, but nevertheless are widely recognised as a method to help you start off on the right note. We look at a few such thumb rules. <cmsannotation type="cmsannotation" annotationid="Personal finance thumb rules" comment="Subhead" text="Personal finance thumb rules"><keyword id="35448" type="General" weightage="20" keywordseo="personal-finance" source="Orion">Personal finance</keyword> thumb rules</cmsannotation> <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Emergency Fund </td><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Save at least 3-6 months' worth of living expenses in a high-yield savings account for unexpected emergencies. </td></tr><tr><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">50/30/20 Rule </td><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Allocate 50% of your income for necessities, 30% for discretionary spending, and 20% for savings and debt repayment. </td></tr><tr><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Debt-to-Income Ratio </td><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Keep your total debt (including mortgages and loans) below 36% of your gross income to maintain financial stability. </td></tr><tr><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Retirement Savings </td><td style="border-left:solid #d9d9e3 0.75pt;border-right:solid #d9d9e3 0.75pt;border-bottom:solid #d9d9e3 0.75pt;border-top:solid #d9d9e3 0.75pt;vertical-align:bottom;background-color:#f7f7f8;padding:1pt 1pt 1pt 1pt;overflow:hidden;overflow-wrap:break-word;">Save and invest at least 15% of your income for retirement to ensure a comfortable future. Take advantage of employer-sponsored retirement plans and consider diversifying your investments. </td></tr></tbody></table> These thumb rules can serve as general guidelines to help individuals make sound financial decisions and work toward achieving their financial goals. However, it's essential to tailor them to your specific circumstances and seek professional financial advice when needed. <cmsannotation type="cmsannotation" annotationid="The final word" comment="Subhead" text="The final word">The final word</cmsannotation> The journey of financial planning is as unique as the individual embarking on it. Attempting to compare your financial path to another's is akin to comparing apples to oranges. Recognising this individuality is paramount in achieving financial success and well-being. Understanding that there is no one-size-fits-all solution enables us to tailor financial strategies to our own needs, aspirations, and life circumstances. Whether it's saving for education, retirement, or simply building wealth, embracing the diversity of financial planning allows us to make informed decisions that align with our personal goals.

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